<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1999
REGISTRATION NO. 333-38057
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
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.
------------------------
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>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 21, 1999
PROSPECTUS
3,500,000 SHARES
[LOGO]
COMMON STOCK
------------------------------------------------------------
CVC is offering 3,000,000 shares of common stock in its initial public offering.
Two of its stockholders are selling an aggregate of 500,000 shares in this
offering. CVC will not receive any of the proceeds from the sale of shares by
the selling stockholders.
CVC has applied to list the shares on the Nasdaq National Market under the
symbol "CVCI."
Anticipated Price Range $11.00 to $13.00 a share.
INVESTING IN THE SHARES INVOLVES RISKS. RISK FACTORS BEGIN ON PAGE 4.
<TABLE>
<CAPTION>
Per Share Total
--------- -----------
<S> <C> <C>
Public Offering Price....................................... $ $
Underwriting Discount....................................... $ $
Proceeds to CVC............................................. $ $
Proceeds to Selling Stockholders............................ $ $
</TABLE>
The selling stockholders have granted the underwriters the right to purchase up
to 525,000 additional shares within 30 days to cover any over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Lehman Brothers expects to deliver these shares on , 1999.
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
PRUDENTIAL SECURITIES
SG COWEN
WARBURG DILLON READ LLC
, 1999
<PAGE>
[DESCRIPTION OF ARTWORK]
[Back of front cover of prospectus] Across the top of the page is a caption:
"CVC makes the CONNEXION-Registered Trademark-." In the center of the page is a
graphic of a globe with the CVC logo in the center and images consisting of,
clockwise from the top left corner of the globe: a photograph of a
microprocessor with a caption "Integrated Circuits;" a caption: "MRAM;" a
photograph of a disk drive with a caption: "Disk Drives;" a caption: "RF
Communications Devices;" a photograph of several microchips with a caption:
"Digital Signal Processing;" a photograph of a cluster of fiber optics with a
caption: "Fiber Optic Communications;" and a caption: "Optical Coatings." At the
bottom of the page is a paragraph: "CVC is a worldwide supplier of process
equipment used to manufacture magnetic recording heads for disk drives and
advanced semiconductor devices for computers and communications systems."
[Inside of front cover foldout section, left panel] Across the top of the
left and center panels is the caption: "We deliver integrated thin film process
solutions." In the top right corner is a paragraph: "CVC's
CONNEXION-REGISTERED TRADEMARK- Cluster Tool offers data storage and
semiconductor customers a selection of integrated thin film process solutions
using Physical Vapor Deposition including sputtering and Ion Beam Deposition and
Metal-Organic Chemical Vapor Deposition." A second paragraph is below the first
and reads as follows: "CVC's CONNEXION-REGISTERED TRADEMARK- Cluster Tool
Technology enables Advanced Interconnect Metallization and other fabrication
processes for advanced applications." In the top left corner is a photograph of
silicon wafers with the caption: "Patterned Silicon Wafers." In the center left
side is a photograph of the Connexion MOCVD process module with a caption:
"CONNEXION-REGISTERED TRADEMARK-MOCVD process module for barrier and copper
deposition layers." In the bottom left is a photograph of an ion beam etch
cluster tool with a caption: "Ion Beam Etch Cluster Tool." In the bottom center
is a scanning electron micrograph of MOCVD copper with a caption: "Scanning
Electron Micrograph (SEM) of MOCVD copper seed/fill of approx. 0.10 mm." In the
bottom right is a photograph of a Connexion MOCVD process module with a caption:
"CONNEXION-REGISTERED TRADEMARK- MOCVD process module, open view with copper
wafer." In the center right is a photograph of a Connexion module with a
caption: "CONNEXION-REGISTERED TRADEMARK- 800 with four MOCVD modules and two
PVD modules." In the center of the page is a photograph of a circuit chip with a
caption: "Silicon integrated Circuit Chip."
[Inside of front cover foldout section, center panel] In the upper left
corner is a paragraph: "CVC's CONNEXION-Registered Trademark- Cluster Tool
Technology enables the manufacturing of MR and GMR Recording Heads for Disk
Drive and MRAM devices." In the upper left corner is a photograph of the GMR
cluster tool system with a caption: "CONNEXION-Registered Trademark-
Multi-target PVD GMR Cluster Tool System." In the center right side is a
photograph of a Connexion GMR multistation process module with the caption:
"CONNEXION-Registered Trademark- GMR multi-station process module with 13-inch
targets." In the bottom left is a photograph of a ion beam deposition cluster
tool with a caption: "Ion Beam Deposition Cluster Tool." In the bottom right is
a photograph of a hard disk drive with the caption: "Hard Disk Drive". In the
bottom center is a photograph enlargement of the hard disk drive with the
caption: "Giant Magnetoresistive Head." In the center is a graphic cutaway of
the giant magnetoresistive head with the layers labeled, from top to bottom:
"Ta(80A), NiMn(200A), NiFe (25A), Co (15A), Cu (25A), Co (15A), NiFe (50A), Te
(35A)." In the center right side is photograph of Connexion module with a
caption: "CONNEXION-Registered Trademark- 800 Cluster Tool System with five PVD
modules and one etch module."
[Inside of front cover foldout section, right panel] In the upper left
corner is a caption: "CVC Provides Worldwide Service and Support." Under this
caption is the paragraph: "CVC operator advanced product development, systems
engineering, applications engineering, customer service and technical support
centers in New York, California, Virginia, Texas, Minnesota, Europe and Asia."
In the upper right corner is a photograph of a Connexion central wafer handler
with a caption: "CONNEXION-Registered Trademark- Central Wafer Handler supports
six process modules and a high throughput robot." In the bottom left corner is a
screen photograph from the Connexion software application with a caption: "CVC
Open CONNEXION-Registered Trademark- Plug and Play software application." In the
bottom center is a photograph of Ion sources with caption: "Ion Sources." In the
right corner is a photograph of a technician next to the Connexion Cluster Tool
with the caption: "Front view of CONNEXION-Registered Trademark- 800 Cluster
Tool System with dual load lock doors." On the bottom right is a photograph of a
microchip held against patterned silicon wafers.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 1
Risk Factors......................... 4
Use of Proceeds...................... 13
Dividend Policy...................... 13
Capitalization....................... 14
Dilution............................. 15
Selected Consolidated Financial
Data............................... 16
Unaudited Pro Forma Combined
Statements of Operations........... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 18
</TABLE>
<TABLE>
Business............................. 27
<CAPTION>
PAGE
----
<S> <C>
Management........................... 42
Certain Transactions................. 51
Principal and Selling Stockholders... 52
Description of Capital Stock......... 54
Shares Eligible for Future Sale...... 57
Underwriting......................... 59
Legal Matters........................ 61
Experts.............................. 61
Additional Information............... 61
Index to Consolidated Financial
Statements......................... F-1
</TABLE>
ABOUT THIS PROSPECTUS
Investors should rely only on the information contained in this prospectus.
CVC and the underwriters have not authorized anyone to provide any different or
additional information. This prospectus is not an offer to sell or a
solicitation of an offer to buy common stock in any jurisdiction where it is
unlawful. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock. This preliminary prospectus is
subject to completion prior to this offering.
This prospectus makes forward-looking statements. Investors should consider
any statements that are not statements of historical fact to be forward-looking
statements. The words "believes," "anticipates," "plans," "expects," "seeks,"
"estimates" and similar expressions identify forward-looking statements. There
are a number of important factors that could cause the results of CVC to differ
materially from those indicated by such forward-looking statements, including
those discussed under the section of this prospectus entitled "Risk Factors."
All references to "we," "us," "our" or "CVC" in this prospectus means CVC,
Inc. and its subsidiaries.
CONNEXION-Registered Trademark- and OPTILIN-Registered Trademark- are
registered trademarks of CVC. OPEN CONNEXION-TM-, Millenion-TM- and INFINITY-TM-
are trademarks of CVC.
All trademarks and trade names appearing in this prospectus are the property
of their respective holders.
Until , 1999, all dealers selling shares of the common stock,
whether or not participating in this offering, 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.
i
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES APPEARING ELSEWHERE IN THIS
PROSPECTUS. EXCEPT AS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS
(1) ASSUMES THAT THE OVER-ALLOTMENT OPTION GRANTED TO THE UNDERWRITERS IS NOT
EXERCISED; (2) ASSUMES CONVERSION AND REDEMPTION OF ALL SHARES OF OUTSTANDING
PREFERRED STOCK AND (3) GIVES RETROACTIVE EFFECT TO A TWO-FOR-THREE REVERSE
STOCK SPLIT TO BECOME EFFECTIVE UPON THE CLOSING OF THIS OFFERING.
OUR BUSINESS
CVC is a worldwide supplier of process equipment used to manufacture
magnetic recording heads for disk drives and advanced semiconductor devices for
computers and communications systems. Our equipment either deposits or removes
thin film layers as steps in the process of manufacturing magnetic recording
heads and semiconductor devices. Our customers include most of the leading
manufacturers of magnetic recording heads for the data storage industry such as
Alps, Fujitsu, IBM, Read-Rite, Seagate Technology, TDK and Yamaha, as well as
manufacturers of semiconductor devices, such as Anadigics, Analog Devices,
Honeywell and M/A-COM.
The manufacture of magnetic recording heads, which read and write
information onto disk drives, and semiconductor devices requires from tens to
hundreds of processing steps. Both magnetic recording heads and semiconductor
devices are formed by depositing or removing extremely thin, uniform layers of
conducting or insulating films onto surfaces called "substrates" or "wafers."
The need to increase the storage density of disk drives has led to the
development of smaller, more advanced magnetic recording heads with multiple
layers of different materials and surface structures. In order to increase the
performance of semiconductor devices, semiconductor manufacturers are shrinking
the geometries and line widths of integrated circuits, while at the same time
adding multiple layers of insulating or conducting materials. The process of
manufacturing magnetic recording heads and semiconductor devices is constantly
evolving to address the demand for smaller devices with higher performance and
requires advanced process equipment.
Our principal product, the CONNEXION Cluster Tool system, is designed for
the highly uniform, repetitive steps required for the manufacturing of devices
involving multiple thin film layers and a wide range of materials. The CONNEXION
Cluster Tool system allows our customers to attach up to six process modules to
a central substrate handling platform. This architecture provides a controlled
vacuum environment in which multiple steps are performed without exposing the
substrate to outside contamination. We believe that the CONNEXION Cluster Tool
system is well suited for next generation applications involving deposition of
advanced materials like copper. Since 1993, we have shipped more than 100
CONNEXION Cluster Tool systems, including more than 400 process modules.
CVC 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. Our executive offices are located at 525 Lee
Road, Rochester, New York, 14606, and our telephone number is (716) 458-2550.
1
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common stock offered by CVC.................. 3,000,000 shares
Common stock offered by the selling
stockholders............................... 500,000 shares
Common stock to be outstanding after the
offering................................... 11,492,707 shares
Use of proceeds.............................. Approximately $15.0 million for repayment of
debt, $10.0 million for the redemption of the
Series D Redeemable Preferred Stock,
$6.3 million for capital expenditures and the
balance for general corporate purposes. See
"Use of Proceeds." CVC will not receive any
of the proceeds from the sale of shares by
the selling stockholders.
Proposed Nasdaq National Market symbol....... CVCI
</TABLE>
Common stock to be outstanding after the offering excludes 2,234,040 shares
issuable upon exercise of stock options outstanding as of September 30, 1999 and
790,760 shares issuable upon the exercise of an outstanding warrant held by
Seagate Technology.
2
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following table summarizes the financial data of our business. The pro
forma results for fiscal 1999 assume the acquisition of Commonwealth Scientific
Corporation occurred on October 1, 1998 and give effect to the automatic
conversion of all the outstanding shares of Series A Convertible Preferred Stock
and Series B Convertible Preferred Stock into common stock, as well as the
conversion of Series C Convertible Preferred Stock into common stock and into
Series D Redeemable Preferred Stock, all of which will occur upon the closing of
this offering.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------------
PRO FORMA
1995 1996 1997 1998 1999 1999
-------- -------- -------- -------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues.................................. $21,358 $48,378 $62,588 $68,173 $82,915 $101,841
Gross margin.............................. 5,728 14,623 21,302 26,154 32,413 33,989
Income from operations.................... 143 3,376 4,095 2,367 3,706 678
Net income................................ 130 3,179 2,045 264 1,571 62
Net income per share:
Basic................................... $ 0.18 $ 4.32 $ 2.67 $ 0.26 $ 1.01 $ 0.01
Diluted................................. 0.02 0.46 0.29 0.04 0.18 0.01
Weighted average shares outstanding:
Basic................................... 735 735 765 1,021 1,561 8,267
Diluted................................. 5,302 6,914 6,992 7,070 8,589 9,361
</TABLE>
Assuming only the conversion of the outstanding shares of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock into common
stock, as well as the conversion of the Series C Convertible Preferred Stock
into common stock and into Series D Redeemable Preferred Stock, pro forma basic
earnings per share for the year ended September 30, 1999 was $0.21. Diluted
earnings per share is unchanged from the historical diluted earnings per share
amount presented above.
The following table summarizes our balance sheet as of September 30, 1999.
The pro forma column reflects the automatic conversion of all the outstanding
shares of Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock into common stock and Series C Convertible Preferred Stock into
common stock and into Series D Redeemable Preferred Stock, all of which will
occur upon the closing of this offering. The pro forma as adjusted column gives
effect to the sale of 3,000,000 shares of common stock offered by CVC, at an
assumed initial public offering price of $12.00 per share, after deducting the
underwriting discount and estimated offering expenses, and the application of
the estimated net proceeds. See "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
----------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 434 $ 434 $ 8,014
Working capital........................................ 22,104 22,104 39,100
Total assets........................................... 75,917 75,917 83,497
Short-term borrowings and current portion of long-term
debt................................................. 13,217 13,217 3,801
Long-term debt, less current portion................... 8,493 8,493 2,909
Preferred stock...................................... 19,895 10,000 --
Common stockholders' equity.......................... 11,698 21,593 54,173
Total stockholders' equity............................. 31,593 31,593 54,173
</TABLE>
3
<PAGE>
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK IS RISKY. YOU SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISKS, AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS.
WE EXPERIENCE FLUCTUATIONS IN OUR OPERATING RESULTS WHICH MAY ADVERSELY IMPACT
OUR STOCK PRICE.
Our quarterly operating results have fluctuated significantly in the past,
and we expect this trend to continue. A principal reason is that we derive a
substantial portion of our revenue from the sale of a relatively small number of
systems which typically range in price from approximately $1.0 million to
$4.0 million. As a result, our revenues and results of operations for any one
quarter may be adversely affected by factors relating to the timing of orders
and shipments of these systems. Additional factors which affect our quarterly
operating results include:
- specific economic conditions in the data storage and semiconductor
industries
- cyclical patterns of capital spending by customers
- modification or cancellation of customer orders
- continued market acceptance of our systems and our customers' products
- shipment delays
- loss of a significant customer
- increased research and development or marketing costs associated with our
introduction of new products
- introduction of new products by our customers
- our ability to successfully introduce new products on a timely basis
- changes in our pricing policies or those of our competitors
- production and quality problems
- the publication of opinions by industry analysts about us, our products or
our competitors
Many of these factors are beyond our control, and our operating results for
any particular quarter may differ materially from our expectations or those of
the market. In addition, our operating results may not be indicative of future
operating results, which may adversely impact the price of our common stock.
YEAR 2000 PROBLEMS OF OUR CUSTOMERS COULD CAUSE THEM TO DELAY PAYMENT FOR
PRODUCTS THAT WE HAVE SHIPPED TO THEM, WHICH COULD CAUSE OUR REVENUES TO
DECREASE.
Our customers or potential customers may be affected by Year 2000 issues
that may, in part (1) cause a delay in payments for products shipped, (2) cause
customers to expend significant resources on Year 2000 compliance matters,
rather than investing in our products or (3) cause customers to defer placing
orders for our systems in the first quarter of our fiscal 2000 or beyond. These
issues may impact our operating results in the first quarter of fiscal 2000, our
first quarter as a public company.
A SIGNIFICANT AMOUNT OF OUR REVENUES IS RECORDED LATE IN EACH QUARTER. WE MAY BE
UNABLE TO ADJUST SPENDING QUICKLY ENOUGH TO COMPENSATE FOR SHORTFALLS IN
QUARTERLY REVENUES, AND AS A RESULT OUR OPERATING RESULTS COULD BE ADVERSELY
AFFECTED.
We have historically recorded a significant amount of our revenues for each
quarter late in the quarter, while our expenses have been incurred more evenly
throughout the period. The concentration
4
<PAGE>
of product shipments late in the quarter is primarily due to customer order
patterns and the length of our production cycle. This concentration increases
the risk of shipment delays and, consequently, the risk that quarterly revenue
expectations will not be met. Our revenues for a particular period could be
materially reduced if an anticipated order for even one system is not received
in time to permit shipment during that period. In addition, a significant
portion of our expenses is relatively fixed.
We also have limited visibility on revenues for future quarterly periods and
face risks of revenue shortfalls due to our limited sales backlog in current
periods. If the number of systems we actually ship, and thus the amount of
revenues we are able to record, late in any particular quarter is below
expectations for any reason, the adverse effect may be magnified by our
inability to adjust spending quickly enough to compensate for the revenue
shortfall.
THE SUCCESS OF OUR BUSINESS DEPENDS ON THE DEMAND FOR PRODUCTS FROM DATA STORAGE
AND SEMICONDUCTOR MANUFACTURERS, WHOSE INDUSTRIES ARE HIGHLY CYCLICAL.
Our business depends in large part upon the demand for products from data
storage and semiconductor manufacturers. The data storage and semiconductor
industries accounted for the following percentages of our net sales for the
periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Data Storage.......................................... 88% 77% 85%
Semiconductor......................................... 9% 21% 9%
</TABLE>
The data storage and semiconductor industries have been characterized by
cyclicality. These industries have experienced significant economic downturns at
various times in the last decade, characterized by slowing product demand,
inventory surpluses, accelerated erosion of average selling prices and
production overcapacity. In the recent past, these downturns have materially
reduced demand for the type of capital equipment and process technology that we
offer. In addition, because of (1) our continuing need to invest in research and
development, (2) our substantial capital equipment requirements and (3) our
extensive ongoing customer service and support requirements worldwide, our
ability to reduce expenses in response to any downturn or slowdown in the rate
of capital investment by manufacturers in these industries may be limited.
In the recent past, the data storage and semiconductor industries have
experienced inventory oversupply and poor operating results. Our business could
be harmed if slowdowns in the rate of capital investment or inventory surpluses
in the data storage and semiconductor industries occur in the future.
OUR REVENUES AND PROFITS MAY DECREASE IF WE LOSE ANY OF OUR MAJOR CUSTOMERS.
Our customer base is highly concentrated among a limited number of large
customers, primarily because the data storage industry is dominated by a small
number of large companies. In particular, purchases by Seagate Technology, also
our largest stockholder, have historically accounted for a significant portion
of our revenues. The loss of any of these customers, and the loss of Seagate
Technology in particular, could result in a material decrease in our revenues.
The following table sets forth the percentage of our total revenues derived from
sales to our five largest customers, as well as Seagate Technology on a
stand-alone basis, for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Five Largest Customers................................ 79% 71% 79%
Seagate Technology.................................... 47% 31% 34%
</TABLE>
5
<PAGE>
We anticipate that our revenue will continue to depend on a limited number of
major customers, although the companies considered to be major customers and the
percentage of our revenue represented by each major customer may vary from
quarter to quarter.
We generally do not have long-term purchase agreements with our customers
and do not have any written agreements that require customers to purchase fixed
minimum quantities of our products. Our sales to specific customers tend to vary
significantly from year to year depending upon our customers' budgets for
capital expenditures and new product introductions. The loss of, or reduced
demand for products or related services from, any of our major customers could
harm our business. If any of these large manufacturers discontinues its
relationship with us or suffers economic downturns, our operating results could
suffer.
IF WE DO NOT RESPOND EFFECTIVELY AND ON A TIMELY BASIS TO RAPID TECHNOLOGICAL
CHANGE, OUR ABILITY TO ATTRACT AND MAINTAIN CUSTOMERS COULD BE DIMINISHED.
The data storage and semiconductor manufacturing industries are subject to
rapid technological change and new product introductions and enhancements, as
well as evolving industry standards. Our ability to remain competitive will
depend in part upon our ability to develop new and enhanced systems at
competitive prices in a timely and cost-effective manner and to accurately
predict technology transitions. In addition, new product introductions or
enhancements by our competitors could cause a decline in sales or loss of market
acceptance of our existing products. Increased competitive pressure could also
lead to intensified price competition, resulting in lower margins, which could
adversely impact our business.
Because new product development commitments must be made well in advance of
sales, new product decisions must anticipate both the future demand for the
products under development and the equipment required to produce such products.
We cannot be certain that we will be successful in developing, manufacturing and
marketing new products or in enhancing existing products.
WE OPERATE IN AN EXTREMELY COMPETITIVE MARKET, AND IF WE FAIL TO COMPETE
EFFECTIVELY, OUR BUSINESS MAY BE HARMED.
The data storage and semiconductor capital equipment industries are
intensely competitive. Established companies, both domestic and foreign, compete
with each of our product lines. Many of our competitors have greater financial,
engineering, manufacturing and marketing resources than we do. A substantial
investment is required by customers to evaluate, test, select and integrate
capital equipment into a production line. As a result, once a manufacturer has
selected a particular vendor's capital equipment, we believe that the
manufacturer generally relies upon that equipment for the specific production
line application and frequently will attempt to consolidate its other capital
equipment requirements with the same vendor. Accordingly, if a particular
customer selects a competitor's capital equipment, we expect to experience
difficulty in selling to that customer for a significant period of time. We
believe that our ability to compete successfully depends on a number of factors
both within and outside of our control, including:
- price
- product quality
- breadth of product line
- system performance
- cost of ownership
- global technical service and support
6
<PAGE>
- success in developing or otherwise introducing new products
We cannot be certain that we will be able to compete successfully in the
future.
THE SUCCESS OF OUR BUSINESS DEPENDS ON CONTINUED MARKET ACCEPTANCE OF OUR
CONNEXION CLUSTER TOOL SYSTEM.
Our principal product is a line of capital equipment known as the CONNEXION
Cluster Tool system which, together with its associated process modules, is used
to manufacture magnetic recording heads and semiconductor devices. We believe
that continued future growth depends in large part upon our ability to gain
increased customer acceptance for our CONNEXION Cluster Tool system and related
technology. The following table sets forth the percentage of our net sales
derived from sales of the CONNEXION Cluster Tool systems for the periods
indicated:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
CONNEXION Cluster Tool system......................... 85% 83% 71%
</TABLE>
Continued acceptance of the CONNEXION Cluster Tool system will depend on
factors, including:
- cost of ownership
- performance and reliability
- ability to manufacture on a successful and timely basis
- availability of customer support
If we fail to continually enhance the CONNEXION Cluster Tool system, the
future marketplace acceptance of that product could be diminished. We cannot
assure you that we will be successful in obtaining increased market acceptance
of the CONNEXION Cluster Tool system or any future enhanced version of the
system. If we fail to gain sufficient customer acceptance for this system, our
business could be harmed.
WE HAVE INVESTED SIGNIFICANT RESOURCES IN THE DEVELOPMENT OF ADVANCED COPPER
DEPOSITION TECHNOLOGY. IF WE FAIL TO SUCCESSFULLY DEVELOP ADVANCED COPPER
DEPOSITION PROCESSES THAT ARE ACCEPTED BY THE MARKETPLACE, OUR LONG-TERM GROWTH
COULD BE DIMINISHED.
To date, we have invested significantly, and expect to continue investing
significantly in the development of advanced copper deposition technology for
high performance integrated circuit fabrication for the semiconductor market.
Currently, we expect that in fiscal 2000, approximately 20% of our research and
development budget will be dedicated to the development of our copper deposition
technology. The development of this technology is emerging and highly complex
and the market for equipment incorporating this technology is not expected to
reach commercial viability until after 2000. Recently, several semiconductor
device manufacturers have announced that they have made advancements in
copper-based technology. These and other competitors with substantially greater
resources than ours are investing in research and development of similar
technologies and may achieve market acceptance of their products before us. We
cannot assure you that our efforts in this area will be technologically
successful or, even if technologically successful, will be commercially accepted
by the marketplace. If we fail to achieve commercial success in our pursuit of
copper-based technology for the semiconductor industry, our long-term growth
prospects could be diminished.
7
<PAGE>
SALES TO INTERNATIONAL MARKETS CONSTITUTE A SIGNIFICANT AND GROWING PORTION OF
OUR TOTAL REVENUES. OUR OPERATING RESULTS COULD BE HARMED BY ECONOMIC DOWNTURNS
IN FOREIGN MARKETS AND OUR DEPENDENCE ON INTERNATIONAL SALES REPRESENTATIVES.
An increasing portion of our revenues in recent years has been derived from
sales in international markets. International sales are subject to various
risks. The following table sets forth for the periods indicated the percentage
of our total revenues derived from sales to customers located outside of the
United States:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Non-U.S. Customers.................................... 31% 38% 53%
</TABLE>
We intend to continue to expand our operations outside the United States and
enter additional international markets, which will require significant
management attention and financial resources. International business presents
additional risks, including:
- periodic recessions in foreign economies as they impact our particular
sector
- the risk of government-financed competition
- changes in trade policies and tariff regulations
- worldwide political and economic instability
- difficulties in obtaining U.S. export licenses and managing businesses
abroad
Our international sales are denominated in U.S. dollars. As a result,
changes in the value of foreign currencies relative to the value of the U.S.
dollar can render our products comparatively more expensive. Although we have
not been significantly negatively impacted in the past by foreign currency
changes in Japan, Korea, Taiwan and Europe, these conditions could negatively
impact our international sales in future periods. Further, our international
sales are made primarily through several independent sales representatives and a
third-party distributor. We cannot be certain that they will continue to market
and distribute our products successfully, if at all. Our implementation of new
distribution and sales arrangements could result in delays and disruptions in
our international sales and customer support efforts, which could reduce our
sales, damage our reputation and adversely impact our business.
THE LOSS OF ANY OF OUR KEY PERSONNEL COULD ADVERSELY IMPACT OUR ABILITY TO MEET
CUSTOMER AND TECHNOLOGICAL DEMANDS.
Because of our small size and our need for employees with both executive and
advanced technical skills, we depend in significant part upon the continued
contributions of our officers and key personnel. Our key personnel are critical
to our success, and many of them would be difficult to replace. Many of our
employees are not bound by long-term employment or noncompetition agreements,
and competitors in the high technology industry in which we compete may attempt
to recruit them. The loss of our officers or other key personnel could cause our
business to suffer.
WE MAY HAVE DIFFICULTY ATTRACTING AND RETAINING QUALIFIED PERSONNEL, WHICH COULD
ADVERSELY IMPACT OUR ABILITY TO EXECUTE OUR BUSINESS STRATEGY.
The competition for personnel throughout our industry can be significant.
Because of this competition for qualified labor, we have occasionally
experienced delays in meeting our staffing requirements. Our future success will
depend on our ability to attract and retain qualified technical, marketing and
management personnel, particularly highly skilled design, process and test
engineers. The market for such personnel has become intensely competitive,
particularly in California where there
8
<PAGE>
has been a significant increase in the business activities of other companies in
the data storage and semiconductor manufacturing sectors.
Any protracted inability on our part to recruit, train and retain adequate
numbers of qualified personnel could adversely affect our ability to
manufacture, sell and support our products, which could harm our business.
WE MAY EXPERIENCE DIFFICULTY INTEGRATING OUR RECENT ACQUISITION.
We recently acquired Commonwealth Scientific Corporation. Realization of the
potential benefits from this acquisition may not occur unless the products,
technologies and personnel of Commonwealth are successfully integrated with our
operations in a timely and efficient manner. Any diversion of the attention of
management, and any difficulties encountered in the transition process, could
reduce the revenues of the combined enterprise, or cause the financial condition
and operating results of the combined enterprise to suffer. If we are not able
to successfully integrate Commonwealth and its services and products into our
operations, our business could be harmed.
WE MAY BE UNABLE TO CONSUMMATE POTENTIAL ACQUISITIONS OR SUCCESSFULLY INTEGRATE
THEM WITH OUR BUSINESS WHICH COULD SLOW OUR GROWTH.
As part of our continued strategy to expand the range of our product
offerings and technologies, we intend to make acquisitions of complementary
businesses, technologies, services or products if appropriate opportunities
arise. However, we may be unable to identify suitable acquisition or investment
candidates at reasonable prices or on reasonable terms. Additionally, regardless
of whether suitable candidates are available, we may be unable to consummate
future acquisitions or investments, which could harm our growth strategy. If we
do consummate acquisitions, we could have difficulty integrating the acquired
products, personnel or technologies. These difficulties could disrupt our
ongoing business, distract our management and employees and increase our
expenses.
WE HAVE A LENGTHY SALES CYCLE WHICH MAY INCREASE OUR EXPOSURE TO CUSTOMER
CANCELLATIONS OR DELAYS IN ORDERS.
Sales of our systems depend, in significant part, upon the decision of an
existing or prospective customer to add new manufacturing capacity or to expand
existing manufacturing capacity, both of which involve a significant capital
commitment. We may experience delays in finalizing system sales following
initial system qualification while the customer evaluates and receives approvals
for the initial purchase of our systems. In general, for new customers or
applications our sales cycle could take 12 to 18 months to complete. During this
time, we may expend substantial funds and management effort. Lengthy sales
cycles subject us to a number of significant risks, including inventory
obsolescence and fluctuations in operating results over which we have little or
no control.
PROTECTION OF OUR INTELLECTUAL PROPERTY RIGHTS MAY RESULT IN COSTLY LITIGATION.
There has been substantial litigation regarding patent and other
intellectual property rights in the data storage, semiconductor and related
industries. We have been, and may in the future be, notified of allegations that
we may be infringing intellectual property rights possessed by others. In the
future, protracted litigation and expense may be incurred if necessary to defend
ourselves against alleged infringement of third party rights. Any such
litigation, even if ultimately successful in our defense, could result in
substantial cost and diversion of time and effort by our management, which by
itself could have a negative impact on our business. Adverse determinations in
that litigation could:
- result in our loss of proprietary rights
- subject us to significant liabilities, including treble damages in some
instances
9
<PAGE>
- require us to seek licenses from third parties, which licenses may not be
available on reasonable terms or at all
- prevent us from manufacturing or selling our products
Any of these outcomes could harm our business.
OUR SUCCESS DEPENDS, IN PART, ON INTELLECTUAL PROPERTY WHICH MAY BE DIFFICULT TO
PROTECT AND COULD AFFECT OUR ABILITY TO COMPETE EFFECTIVELY.
We believe that our success depends, in part, on our ability to obtain and
protect patents protecting our proprietary technology. As of September 30, 1999,
we had obtained 17 U.S. patents, had received notices of allowance on four U.S.
patent applications and had 37 U.S. patent applications pending. In addition, we
had obtained two foreign patents from the United Kingdom and had 18 foreign
patent applications pending on our behalf as of that date.
We cannot assure you that:
- pending patent applications or any future applications will be approved
- any patents will provide us with competitive advantages or will not be
challenged by third parties
- the patents of others will not have an adverse effect on our ability to do
business
We cannot assure you that others will not independently develop similar
products, duplicate our products or, if patents are issued to us, design around
these patents. In addition, we may be forced to expend time and resources on
protracted litigation to defend our intellectual property rights against third
parties. Further, because patents may afford less protection under foreign law
than is available under U.S. law, we cannot assure you that any foreign patents
issued to us will adequately protect our proprietary rights.
In addition to patent protection, we also rely upon trade secret protection,
employee and third-party nondisclosure agreements and other intellectual
property protection methods to protect our confidential and proprietary
information. Despite these efforts, we cannot be certain that:
- others will not independently develop substantially equivalent proprietary
information and techniques
- others will not otherwise gain access to our trade secrets
- others will not disclose our technology
- we can meaningfully protect our trade secrets
WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS, AND IN SOME CASES SOLE SUPPLIERS.
ANY DISRUPTION OR TERMINATION OF THESE SUPPLY CHANNELS MAY HARM OUR BUSINESS.
We purchase components, subassemblies and services from a limited number of
suppliers and occasionally from a single source. Disruption or termination of
certain of these sources could occur, and these disruptions could have at least
a temporary adverse effect on our operations. A prolonged inability on our part
to obtain components included in our systems could adversely impact our sales or
our ability to attract and maintain customers.
10
<PAGE>
FAILURE BY US TO IDENTIFY AND REMEDIATE ALL MATERIAL YEAR 2000 RISKS COULD CAUSE
A SIGNIFICANT DISRUPTION TO OUR BUSINESS. WE COULD BE REQUIRED TO EXPEND
SIGNIFICANT INTERNAL RESOURCES ON YEAR 2000 REMEDIATION OR THE YEAR 2000
PROBLEMS OF OUR SUPPLIERS COULD CAUSE A DELAY IN SUPPLYING GOODS AND SERVICES TO
US.
We have identified the following risks you should be aware of:
- we cannot be certain that the entities on whom we rely for certain goods
and services that are important to our business will be successful in
addressing all of their software and systems problems in order to operate
without disruption in the Year 2000 and beyond
- although we have made efforts to notify our customers who have purchased
potential non-compliant products, we cannot be sure that customers who
purchased such products will not assert claims against us alleging that
such products should have been Year 2000 compliant at the time of
purchase, which could result in costly litigation and divert management's
attention.
We cannot, however, be certain that we have identified all of the potential
risks. Failure by us to identify and remediate all material Year 2000 risks
could cause a significant disruption of our business.
OUR STOCK PRICE MAY BE VOLATILE DUE TO THE LACK OF A PRIOR PUBLIC MARKET FOR OUR
STOCK AND THE FACT THAT WE OPERATE IN SEVERAL HIGH-TECHNOLOGY INDUSTRIES.
There has not been a public market for our common stock. We cannot predict
the extent to which investor interest in us will lead to the development of a
trading market or how liquid that market might become. Further, we cannot
guarantee that the price of our common stock will not decline below the initial
public offering price. Stock prices of companies in our industry have
experienced price fluctuations which have often been unrelated to the operating
performance of affected companies. The initial public offering price may not be
indicative of prices that will prevail in the trading market. Various factors
could cause the market price of our common stock to fluctuate substantially.
These factors may include:
- news announcements relating to us, our competitors, customers or other
entities regarding quarterly operating results, technology advances or
production overcapacity
- general trends in our industry
- changes in market conditions in the data storage and semiconductor
industries
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against these companies. This type of litigation, or similar
litigation, could harm our business.
A LIMITED NUMBER OF STOCKHOLDERS WILL HAVE THE ABILITY TO INFLUENCE OUR POLICIES
FOLLOWING THE OFFERING.
A substantial majority of our capital stock is held by a limited number of
stockholders. After completion of this offering, assuming no exercise of
currently exercisable stock options, our principal stockholders and executive
officers and directors will beneficially own approximately 61% of the shares of
common stock outstanding, 67% if Seagate Technology exercises in full its
warrant to purchase common stock. In particular, Seagate Technology is our
largest stockholder and two of its representatives are members of our board of
directors. Following completion of this offering, Seagate Technology will own
2,428,313 shares representing approximately 21% of our outstanding common stock.
In addition, if Seagate Technology exercises in full a warrant for the common
stock that it holds, it would own an aggregate of approximately 26% of our
outstanding common stock.
Accordingly, this limited number of stockholders, including Seagate
Technology, will likely for some time influence the election of our board of
directors, control major decisions of corporate policy and
11
<PAGE>
determine the outcome of any major transaction or other matter submitted to our
stockholders or board of directors, including potential mergers or acquisitions
and amendments to our certificate of incorporation. Stockholders other than
these principal stockholders are therefore likely to have little or no influence
on decisions regarding such matters.
THE PRICE OF OUR STOCK COULD DECREASE AS A RESULT OF SHARES BEING SOLD IN THE
MARKET AFTER THE OFFERING.
The market price of our common stock could drop as a result of sales of a
large number of shares of common stock in the market after the offering, or the
perception that these sales could occur. These factors also could make it more
difficult for us to raise funds through future offerings of common stock.
There will be 11,492,707 shares of common stock outstanding immediately
after the offering. Of these shares, the shares sold in the offering will be
freely transferable without restriction or further registration under the
Securities Act, except for any shares purchased by our "affiliates" as defined
in Rule 144 under the Securities Act. The remaining 7,992,707 shares of common
stock outstanding will be "restricted securities" as defined in Rule 144. These
shares may be sold in the future without registration under the Securities Act
to the extent permitted by Rule 144 or an exemption under the Securities Act. In
addition, additional shares of common stock subject to outstanding vested stock
options could also be sold. The holders of 7,218,197 shares of common stock will
also have registration rights allowing them to cause us to register their shares
under the Securities Act.
12
<PAGE>
USE OF PROCEEDS
The estimated net proceeds to us from the sale of 3,000,000 shares of our
common stock in this offering are estimated to be approximately $32.6 million.
This is based on an assumed initial public offering price of $12.00 per share,
after deducting underwriting discounts and estimated offering expenses payable
by us. We will not receive any proceeds from the sale of our common stock by the
selling stockholders.
We intend to use approximately $15.0 million of the proceeds from the
offering to repay the outstanding balance under several loan agreements. These
loan agreements include: (1) a line of credit with an interest rate at prime
plus 1/4%; (2) a term loan which matures October 2001 with an interest rate at
prime plus 1/2%; (3) a note payable which matures October 2000 with an interest
rate at 8%; and (4) three capital leases with maturity dates of March 2000,
August 2000, and January 2002, and interest rates of 13.9%, 16.5%, and 8.1%. In
addition, we intend to use approximately $10.0 million to redeem the Series D
Redeemable Preferred Stock, approximately $6.3 million for capital expenditures,
including demonstration tools and equipment and expansion and improvement of
existing facilities and the balance of the net proceeds will be used for general
corporate purposes. Pending such uses, our net proceeds from this offering will
be invested in short-term, interest-bearing, investment grade securities. The
Series D Redeemable Preferred Stock is held by Advent International Corporation.
Advent is one of our major stockholders and a representative of Advent is a
member of our Board of Directors.
DIVIDEND POLICY
We have never paid or declared cash dividends on our common stock. We
currently intend to retain all future earnings for our business and do not
anticipate paying cash dividends in the foreseeable future. We are currently
restricted under the terms of some of our 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: (1) our operating
results, (2) capital requirements and (3) restrictions in loan agreements.
13
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of September 30, 1999.
Our capitalization is presented:
- on an actual basis;
- on a pro forma basis to give effect to the automatic conversion of all
outstanding shares of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock into common stock, as well as the conversion
of Series C Convertible Preferred Stock into common stock and Series D
Redeemable Preferred Stock, all of which will occur upon the closing of
this offering; and
- on a pro forma as adjusted basis to reflect our receipt of the net
proceeds from the sale of 3,000,000 shares of common stock in this
offering at an assumed initial public offering price of $12.00 per share
after deducting the underwriting discount and estimated offering expenses,
the repayment of approximately $15.0 million of debt, of which
approximately $12.3 million relates to debt outstanding as of
September 30, 1999 and the redemption of all outstanding shares of
Series D Redeemable Preferred Stock for $10.0 million.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term borrowings and current portion of long-term
debt...................................................... $13,217 $13,217 $ 3,801
Long-term debt, less current portion........................ 8,493 8,493 2,909
Stockholders' equity:
Preferred stock, $0.01 par value, 502,500 shares
authorized; shares issued and outstanding:
Series C, $0.01 par value; 200,000 shares authorized and
100,000 shares issued and outstanding, actual; 0
shares issued and outstanding pro forma; and 0 shares
issued and outstanding pro forma as adjusted.......... 9,855 -- --
Series D, $0.01 par value; 200,000 shares authorized; 0
shares issued and outstanding, actual; 100,000 shares
issued and outstanding, pro forma; 0 shares issued and
outstanding, pro forma as adjusted.................... -- 10,000 --
Series B, $0.01 par value; 100,000 shares authorized;
60,492 shares issued and outstanding, actual; 0 shares
issued and outstanding, pro forma; 0 shares issued and
outstanding, pro forma as adjusted.................... 8,355 -- --
Series A, $0.01 par value; 2,500 shares authorized;
1,685 shares issued and outstanding, actual; 0 shares
issued and outstanding, pro forma; 0 shares issued and
outstanding, pro forma as adjusted.................... 1,685 -- --
Common stock, $0.01 par value per share; 50,000,000 shares
authorized; 2,360,767 shares issued and outstanding,
actual; 8,492,707 shares issued and outstanding, pro
forma; 11,492,707 shares issued and outstanding, pro
forma as adjusted....................................... 24 85 115
Additional paid-in capital................................ 9,305 19,139 51,689
Warrant................................................... 14 -- --
Unamortized deferred compensation......................... (135) (135) (135)
Retained earnings......................................... 2,784 2,798 2,798
Minimum pension liability................................. (294) (294) (294)
------- ------- -------
Total stockholders' equity.............................. 31,593 31,593 54,173
------- ------- -------
Total capitalization.................................... $53,303 $53,303 $60,883
======= ======= =======
</TABLE>
Common stock to be outstanding after the offering excludes 2,234,040 shares
issuable upon exercise of stock options outstanding as of September 30, 1999 and
790,760 shares issuable upon the exercise of an outstanding warrant held by
Seagate Technology.
See "Selected Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and Notes thereto included in this prospectus.
14
<PAGE>
DILUTION
The pro forma net tangible book value of the common stock as of
September 30, 1999 was $30,445,000, or $3.59 per share, after giving effect to
the automatic conversion of all outstanding shares of Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock into an aggregate of 6,131,940 shares of common stock which will
occur upon the consummation of this offering. After giving effect to the sale of
the common stock pursuant to this offering at an assumed initial public offering
price of $12.00 per share, and after deducting the underwriting discount and
estimated expenses of the offering, the adjusted pro forma net tangible book
value at September 30, 1999 would have been $63,025,000, or $5.48 per share.
Pro forma net tangible book value per share before the offering has been
determined by dividing pro forma net tangible book value (total tangible assets
less total liabilities) by the pro forma number of shares of common stock
outstanding at September 30, 1999. The offering will result in an increase in
pro forma net tangible book value per share of $1.89 to existing stockholders
and an immediate and substantial dilution of $6.52 to new investors who purchase
shares in the offering. Dilution is determined by subtracting pro forma net
tangible book value per share from the assumed initial public offering price of
$12.00 per share. The following table illustrates this dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $ 12.00
Pro forma net tangible book value per share at September
30, 1999................................................ $ 3.59
Increase attributable to sale of common stock in the
offering (1)............................................ 1.89
--------
Pro forma net tangible book value per share after the
offering.................................................. 5.48
--------
Dilution to persons who purchase shares in the offering..... $ 6.52
========
</TABLE>
- ------------------------
(1) After deduction of the underwriting discount and estimated offering expenses
totaling $3,420,000.
The following table summarizes, on a pro forma basis as of September 30,
1999, the differences between the total consideration paid and the average price
per share paid by the existing shareholders and the new investors with respect
to the number of shares of common stock purchased from us based on an assumed
initial public offering price of $12.00 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)................ 8,492,707 73.9% $ 8,557,634 19.2% $ 1.01
New investors............................ 3,000,000 26.1 36,000,000 80.8% 12.00
---------- ----- ----------- ===== ------
Total.................................. 11,492,707 100.0% $44,557,634 100.0%
</TABLE>
- ------------------------
(1) The sale by the selling stockholders in the offering will reduce the number
of shares held by existing stockholders to 7,992,707 shares, or 70% 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
3,500,000 shares, or 30% of the total number of shares of common stock to be
outstanding after the offering. See "Principal and Selling Stockholders."
These tables do not assume exercise of stock options or warrants outstanding
as of September 30, 1999. At September 30, 1999, an aggregate of 2,234,040
shares of common stock were issuable upon the exercise of outstanding options at
a weighted average exercise price of $3.62 per share. Upon consummation of this
offering, a warrant will become convertible into 790,760 shares of common stock
at $5.58 per share. To the extent that outstanding options and this warrant are
exercised in the future, there will be further dilution to new investors.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of CVC set forth below as of
September 30, 1998 and 1999 and for each of the years ended September 30, 1997,
1998 and 1999 are derived from CVC's audited consolidated financial statements,
which appear elsewhere in this prospectus. The selected consolidated financial
data as of September 30, 1995, 1996, and 1997 and for each of the years ended
September 30, 1995 and 1996 have been derived from audited consolidated
financial statements of CVC not included in this prospectus. The pro forma
September 30, 1999 balance sheet data reflects the automatic conversion of all
the outstanding shares of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock into common stock, as well as the conversion of
Series C Convertible Preferred Stock into common stock and into Series D
Redeemable Preferred Stock. The data should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto and with Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues.................................................... $21,358 $48,378 $62,588 $68,173 $82,915
Cost of goods sold.......................................... 15,630 33,755 41,286 42,019 50,502
------- ------- ------- ------- -------
Gross margin................................................ 5,728 14,623 21,302 26,154 32,413
Operating expenses:
Research and development.................................. 1,214 4,346 9,055 12,615 12,630
Sales and marketing....................................... 2,924 4,777 5,613 7,696 10,081
General and administrative................................ 1,447 2,124 2,539 3,476 4,822
In-process R&D write-off.................................. -- -- -- -- 1,174
------- ------- ------- ------- -------
Total..................................................... 5,585 11,247 17,207 23,787 28,707
Income from operations...................................... 143 3,376 4,095 2,367 3,706
Interest and other, net..................................... (559) (197) (593) (1,154) (198)
Write-off of deferred charges............................... -- -- -- (675) --
------- ------- ------- ------- -------
Income (loss) before income taxes........................... (416) 3,179 3,502 538 3,508
Income taxes (benefit)...................................... (546) -- 1,457 274 1,937
------- ------- ------- ------- -------
Net income.................................................. $ 130 $ 3,179 $ 2,045 $ 264 $ 1,571
======= ======= ======= ======= =======
Net income per share:
Basic..................................................... $ 0.18 $ 4.32 $ 2.67 $ 0.26 $ 1.01
Diluted................................................... 0.02 0.46 0.29 0.04 0.18
Weighted average shares outstanding:
Basic..................................................... 735 735 765 1,021 1,561
Diluted................................................... 5,302 6,914 6,992 7,070 8,589
</TABLE>
Assuming the conversion of the outstanding shares of Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock into common stock and
the conversion of Series C Convertible Preferred Stock into common stock and
into Series D Redeemable Preferred Stock, basic pro forma earnings per share for
the year ended September 30, 1999 was $0.21. Diluted earnings per share is
unchanged from the historical diluted earnings per share amount.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
-----------------------------------------------------------------
PRO FORMA
1995 1996 1997 1998 1999 1999
-------- -------- -------- -------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 3,157 $ 730 $ 2,161 $ 106 $ 434 $ 434
Working capital............................................. 5,429 8,816 9,259 10,904 22,104 22,104
Total assets................................................ 23,554 31,837 43,833 42,764 75,917 75,917
Short term borrowings and current portion of long-term
debt...................................................... 188 894 2,295 5,689 13,217 13,217
Long-term debt, less current portion........................ 3,528 5,635 5,309 11,379 8,493 8,493
Preferred stock........................................... 10,040 10,040 10,040 10,040 19,895 10,000
Common stockholders' equity (deficit)..................... (3,857) (721) 1,388 1,940 11,698 21,593
Total stockholders' equity.................................. 6,183 9,319 11,428 11,980 31,593 31,593
</TABLE>
16
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
The following unaudited pro forma statements of operations for the year
ended September 30, 1999 give effect to the May 10, 1999 acquisition of
Commonwealth Scientific Corporation. The unaudited pro forma statements of
operations are based on the statements of operations for CVC, appearing
elsewhere in this prospectus, and the statements of operations of Commonwealth
as if the acquisition occurred on October 1, 1998. The Commonwealth statements
of operations have been modified to conform to CVC's fiscal year end by
combining the quarterly operating results for the quarters ended December 31,
1998 and March 31, 1999 with the interim results for the period April 1 to
May 9, 1999. These unaudited pro forma statements of operations should be read
in conjunction with the historical financial statements and notes thereto of CVC
and Commonwealth included elsewhere in this prospectus.
The unaudited pro forma combined statements of operations give effect to the
following pro forma adjustments necessary to reflect the acquisition of
Commonwealth:
- Reduction in operating expenses related to the restructuring activities
undertaken, solely comprised of Commonwealth employees terminated as of or
shortly after the acquisition;
- Elimination of the write-off of the portion of the purchase price
allocated in-process research and development, due to its one-time nature;
- Amortization of goodwill and other intangibles over periods ranging from
five to seven years; and
- Decrease in income taxes related to adjustments.
Amounts are in thousands, except for per share data.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999
----------------------------------------------------
CVC COMMONWEALTH ADJUSTMENTS COMBINED
-------- ------------ ----------- --------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS:
Revenues...................................... $82,915 $ 18,926 $ -- $101,841
Cost of goods sold............................ 50,502 17,350 -- 67,852
------- -------- --------- --------
Gross margin.................................. 32,413 1,576 -- 33,989
Operating expenses............................ 27,482 6,538 (840) 33,180
In-process R&D write-off...................... 1,174 -- (1,174) --
Goodwill and intangibles amortization......... 51 -- 80 131
------- -------- --------- --------
Total operating expenses.................... 28,707 6,538 (1,934) 33,311
------- -------- --------- --------
Income (loss) from operations................. 3,706 (4,962) 1,934 678
Interest and other, net....................... (198) (305) -- (503)
------- -------- --------- --------
Income (loss) before income taxes............. 3,508 (5,267) 1,934 175
Income taxes (benefit)........................ 1,937 (1,488) (336) 113
------- -------- --------- --------
Net income (loss)............................. $ 1,571 $ (3,779) $ 2,270 $ 62
======= ======== ========= ========
Net income per share:
Basic....................................... $ 1.01 $ 0.03
Diluted..................................... 0.18 0.01
Weighted average shares outstanding:
Basic....................................... 1,561 772 2,333
Diluted..................................... 8,589 772 9,361
</TABLE>
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. CVC'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS
INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THE PROSPECTUS.
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
"SELECTED CONSOLIDATED FINANCIAL DATA" AND THE CONSOLIDATED FINANCIAL STATEMENTS
AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
CVC is a worldwide supplier of process equipment used to manufacture
magnetic recording heads for disk drives and advanced semiconductor devices for
computers and communications equipment. CVC's principal product is the CONNEXION
Cluster Tool system, which provides integrated deposition and etch equipment
based on a central substrate handling platform and a series of interchangeable
thin film deposition and etch processing modules. CVC also derives revenue from
the sale of sources, spare parts, enhancements, and field service contracts.
System revenues represented 71% in fiscal 1999, 83% in fiscal 1998 and 85% in
fiscal 1997 of CVC's total revenue. In order to expand its technology and
broaden its offering of process modules, CVC acquired Commonwealth Scientific
Corporation in May 1999. Commonwealth's primary products are ion beam etch, ion
beam deposition and diamond-like carbon process modules for the data storage
industry and ion beam sources principally used by suppliers of optical
equipment.
CVC's growth in the past four years has been primarily due to the expansion
of the disk drive industry and transition of the industry to magnetoresistive,
or MR, heads and giant magnetoresistive, or GMR, heads. During fiscal 1999,
fiscal 1998 and fiscal 1997, 85%, 77% and 88% of CVC's revenue was derived from
sales made to manufacturers of magnetic recording heads and 9%, 21%, and 9% was
derived from sales to manufacturers of semiconductor devices, with the remainder
of the revenue derived from ancillary products and services. CVC's top four
customers for fiscal 1999, were Seagate, IBM, TDK and Alps, all of whom
manufacture magnetic recording heads. CVC expects that these customers will
continue to account for a significant portion of CVC's fiscal 2000 revenues and
that significant customer concentration will continue for the foreseeable
future.
CVC recognizes revenue from system sales, enhancements and spare parts at
the time of shipment. Provisions for estimated installation and warranty costs
are recorded at the time revenue is recognized. Revenue on field service
contracts is deferred and recognized on a straight-line basis over the period of
the contract.
Revenue derived from system sales is dependent upon the timing of orders,
customer requirements for additional manufacturing capacity and CVC's ability to
respond on a timely basis to rapid technological developments. CVC's customers
typically place large orders, which could cause revenues to fluctuate
significantly from period to period. Orders for system sales range in price from
approximately $1.0 million to $4.0 million, depending on the configuration of
the system. For example, in the second half of fiscal 1998 and the first quarter
of fiscal 1999, CVC's revenues were adversely affected by reduced orders from
magnetic head manufacturers, who experienced reduced demands, inventory
surpluses and poor operating results and as a result, deferred capital
expenditures of fabrication equipment. In recent quarters, magnetic head
manufacturers have increased capital spending to acquire new process
technologies that enable them to produce GMR heads. Because the data storage and
semiconductor industries are highly cyclical, and orders in CVC's backlog are
subject to cancellation or rescheduling, CVC's visibility on revenues for future
periods is limited, and its operating results could fluctuate significantly from
period to period.
International sales accounted for 53%, 38% and 31% of our total revenues in
fiscal 1999, fiscal 1998 and fiscal 1997. CVC expects that international sales
will continue to account for a significant
18
<PAGE>
portion of our revenue in the foreseeable future. CVC's international sales are
denominated in U.S. dollars. As a result, changes in the value of foreign
currencies relative to the value of the U.S. dollar can render our products
comparatively more expensive. Although CVC has not been significantly negatively
impacted in the past by foreign currency changes in Japan, Korea, Taiwan and
Europe, such conditions could negatively impact its international sales in
future periods.
CVC's gross margin is influenced by a number of factors related to the mix
of revenues within a particular period. For example, systems for new process
applications tend to have lower margins initially than those for existing
processes. As a result, sales to semiconductor manufacturers, whose process
requirements tend to be unique, generally have a lower gross margin than sales
to magnetic recording head manufacturers, who typically purchase systems for
which we have significantly more processing experience. Sales to international
customers typically have a lower gross margin than sales to domestic customers.
In addition, revenues from ion beam sources, enhancements, spare parts and field
service contracts typically have a higher gross margin than system margins. As a
result of these factors, CVC expects its gross margin to fluctuate from period
to period.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
revenues for certain items in CVC's consolidated statement of operations data.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Revenues.................................................... 100.0% 100.0% 100.0%
Cost of goods sold.......................................... 66.0 61.6 60.9
----- ----- -----
Gross margin................................................ 34.0 38.4 39.1
Operating expenses
Research and development.................................. 14.5 18.5 15.2
Sales and marketing....................................... 9.0 11.3 12.2
General and administrative................................ 4.0 5.1 5.8
In-process R&D write-off.................................. -- -- 1.4
----- ----- -----
Total..................................................... 27.5 34.9 34.6
Income from operations...................................... 6.5 3.5 4.5
Interest and other, net..................................... (0.9) (1.7) (0.3)
Write-off of deferred charges............................... -- (1.0) --
----- ----- -----
Income before income taxes.................................. 5.6 0.8 4.2
Income taxes................................................ 2.3 0.4 2.3
----- ----- -----
Net income.................................................. 3.3 0.4 1.9
===== ===== =====
</TABLE>
YEAR ENDED SEPTEMBER 30, 1999 COMPARED TO YEAR ENDED SEPTEMBER 30, 1998
REVENUES. Revenues increased 21.6% to $82.9 million for the year ended
September 30, 1999 from $68.2 million for the year ended September 30, 1998. The
increase is primarily attributable to additional sales resulting from the
Commonwealth acquisition of $13.3 million and increased sales to data storage
customers of $7.0 million, which offset lower sales of CVC's systems to
semiconductor customers of $7.0 million.
GROSS MARGIN. Gross margin increased to 39.1% of revenues for the year
ended September 30, 1999 from 38.4% for the year ended September 30, 1998. Gross
margin contribution in fiscal 1999 was affected by the lower margins of 30.9% on
sales of the product lines from the Commonwealth acquisition. Gross margins
excluding the impact of the Commonwealth acquisition product lines would
19
<PAGE>
have been 40.7%. The lower gross margins in fiscal 1998 reflect the higher
percentage of new system sales to semiconductor customers, which usually have
lower margins.
RESEARCH AND DEVELOPMENT. Research and development expenses were unchanged
at $12.6 million for fiscal 1999 compared to fiscal 1998. As a percentage of
revenues, research and development expenses decreased to 15.2% for fiscal 1999
compared to 18.5% for fiscal 1998. The higher relative expenditure level in
fiscal 1998 is primarily attributable to material expenses of $0.9 million
associated with the completion of a government contract. Expenses in fiscal 1999
reflect additional research and development expenses of $1.3 million from the
acquisition of Commonwealth, higher depreciation expense of $1.1 million due to
additional capitalization of demonstration tools, partially offset by lower
personnel costs of $0.9 million and lower material costs of $0.2 million related
to internal development projects. Although fiscal 1999 expenditure levels were
unchanged compared to fiscal 1998, CVC believes that research and development
expenditures are essential to maintaining its competitive position in the data
storage and semiconductor markets and expects these expenditure levels to
increase in absolute dollars for the foreseeable future.
SALES AND MARKETING. Sales and marketing expenses increased by 31.0% to
$10.1 million for fiscal 1999 from $7.7 million for fiscal 1998. As a percentage
of revenues, sales and marketing expenses increased to 12.2% for fiscal 1999
from 11.3% for fiscal 1998. The increase is attributable to the addition of
personnel and their related expenses of $1.6 million as a result of the
Commonwealth acquisition, additional personnel and related expenses in field
service of $0.6 million to support CVC's expanded product offering and customer
base, and increased expenses of $0.4 million for product demonstrations.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
38.7% to $4.8 million for fiscal 1999 from $3.5 million for fiscal 1998. As a
percentage of revenues, administrative expenses were 5.8% for fiscal 1999, and
5.1% for fiscal 1998. The increase in general and administrative expenses
reflects additional administration expenses of $0.5 million due to the
Commonwealth acquisition, as well as additional accruals for doubtful accounts
of $0.3 million, and other accruals for post-employment and pension benefits of
$0.2 million.
IN-PROCESS R&D WRITE-OFF. During fiscal 1999, as part of the purchase of
Commonwealth, the value assigned to research expenditures on products in the
development stage which have not reached technological feasibility and for which
there is no alternative future use were written off in accordance with
applicable accounting rules. This write-off amounted to approximately
$1.2 million.
The in-process technology acquired from Commonwealth consists of four
technology groupings: ion source products, etch modules, deposition modules, and
dielectric deposition modules, which have assigned values of $0.2 million,
$0.5 million, $0.3 million and $0.2 million. Descriptions of these groupings are
as follows:
- Ion source products, including both ion sources and power supplies, are
being designed for use in applications that include etching, deposition,
surface modification, and ion assist.
- The etch modules are being designed to support the market requirements for
ion beam processing applications.
- The deposition modules are being designed to support very thin metallic
film through ion beam sputter deposition of target materials.
- The dielectric deposition modules are being designed to support very thin
dielectric film through ion beam sputter deposition of target materials.
20
<PAGE>
As of the date of acquisition, $4.5 million had been expended to develop
these R&D projects. The estimated cost to complete these projects is
approximately $2.9 million, to be incurred through fiscal 2000.
There is a risk associated with the completion of the R&D projects, and CVC
cannot assure that any of the projects will have technological and commercial
success without the successful completion of the remaining R&D efforts on the
acquired in-process technologies. Without the successful completion of the
remaining R&D efforts, CVC would not realize the future revenues and profits
attributed to the acquired R&D. CVC believes, however, that the failure of any
particular in-process R&D project would not materially impact CVC's financial
position or operating results.
At September 30, 1999, the estimated development completion dates and costs
of the in-process R&D projects acquired from Commonwealth are consistent with
the estimates made at the acquisition date.
INTEREST AND OTHER, NET. Interest and other, net decreased to $0.2 million
for fiscal 1999 from the $1.2 million for fiscal 1998. The decrease in interest
and other, net primarily reflects reduced interest expense of $0.1 million due
to the reduction of borrowings with the proceeds from the sale of preferred
stock in December 1998, a one-time gain of $0.4 million associated with the sale
of two non-core product lines and a one-time lawsuit settlement of $0.5 million
for patent infringement.
INCOME TAXES. Income tax expense for fiscal 1999 amounted to $1.9 million
compared to $0.3 million for fiscal 1998. The effective tax rate for fiscal 1999
was 55.2% compared to the effective rate of 50.9% for fiscal 1998. The increase
is the result of the non-deductible in-process R&D write-off.
YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO YEAR ENDED SEPTEMBER 30, 1997
REVENUES. Revenues increased 8.9% to $68.2 million in fiscal 1998 from
$62.6 million in fiscal 1997. The increase in revenues is primarily attributable
to increased systems sales of $7.4 million and spare sales of $0.9 million to
new semiconductor customers. The majority of this increased volume was to new
customers placing their initial system order. Partially offsetting these
increases was decreased system sales to data storage customers by $5.0 million
as demand decreased due to a general downturn in the industry.
GROSS MARGIN. Gross margin increased to 38.4% of revenues in fiscal 1998
from 34.0% in fiscal 1997. The margin improvement was attributable to lower
systems manufacturing costs as the result of efficiencies derived from repeat
orders and increased sales of higher margin spares at 57% and enhancements at
64%.
RESEARCH AND DEVELOPMENT. Research and development expenses increased 39.3%
to $12.6 million in fiscal 1998 from $9.1 million in fiscal 1997. As a
percentage of revenues, research and development expenses increased to 18.5% in
fiscal 1998 from 14.5% in fiscal 1997. The increase is attributable to increased
expenditures for an expanded demonstration program of $0.3 million, increased
personnel costs due to the hiring of engineers in the fourth quarter 1997 to
support the expanded demonstration program and new development projects of $1.5
million, increased depreciation of $0.6 million as well as expenses related to
government contracts of $0.5 million.
SALES AND MARKETING. Sales and marketing expenses increased 37.1% to
$7.7 million in fiscal 1998 from $5.6 million in fiscal 1997. As a percentage of
revenues, sales and marketing expenses increased to 11.3% in fiscal 1998 from
9.0% in fiscal 1997. The increase is attributable to the addition of marketing
personnel to support the semiconductor market of $0.5 million, the addition of
field service personnel of $0.8 million, increased trade show and advertising
expense of $0.3 million, and higher commissions resulting from increased system
sales of $0.1 million.
21
<PAGE>
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
36.9% to $3.5 million in fiscal 1998 from $2.5 million in fiscal 1997. As a
percentage of revenues, general and administrative expenses increased to 5.1% in
fiscal 1998 compared to 4.0% in fiscal 1997. The increase is attributable to
the full year impact of additional employees hired in fiscal 1997 as well as
several new hires in
fiscal 1998 of $0.4 million, an increase of $0.2 million in consulting services
directly related to the implementation of a new computer system and an increase
of $0.1 million in depreciation for computer systems installed in fiscal 1998
and fiscal 1997.
INTEREST AND OTHER, NET. Interest and other, net increased to $1.2 million
in fiscal 1998 from $0.6 million in fiscal 1997, reflecting an increase in
borrowings on the credit line and interest expense on a new $8.0 million term
loan.
WRITE-OFF OF DEFERRED CHARGES. In fiscal 1997, costs were incurred relative
to preparing CVC for its initial public offering. During the fourth quarter of
fiscal 1998, the intent to complete the public offering was withdrawn due to
continued weakness in the data storage and semiconductor industries and the
equity market for initial public offerings and, accordingly, these costs were
charged against current period earnings.
INCOME TAXES. Income tax expense in fiscal 1998 was $0.3 million compared
to $1.5 million in fiscal 1997. The effective tax rate for fiscal 1998 was 50.9%
compared to the effective rate of 41.6% in fiscal 1997. The increase of 9.3% was
due to permanent non-tax deductible expenses and a low level of profitability,
partially offset by the utilization of a valuation allowance related to net
operating loss carryforwards.
22
<PAGE>
QUARTERLY OPERATING RESULTS
The following tables set forth CVC's operating results for each of the eight
quarters ended September 30, 1999. 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 CVC considers
necessary to present fairly this information when read in conjunction with CVC's
Consolidated Financial Statements and Notes thereto and Management's Discussion
and Analysis of Financial Condition and Results of Operations included elsewhere
in this prospectus. CVC's operating results for any one quarter are not
necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
DEC 31, MAR 31, JUNE 30, SEPT 30, DEC 31, MAR 31, JUNE 30, SEPT 30,
1997 1998 1998 1998 1998 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS:
Revenues.................................. $19,346 $20,529 $14,400 $13,898 $14,655 $17,788 $23,352 $27,120
Cost of goods sold........................ 12,307 13,108 8,265 8,339 8,249 10,983 14,934 16,336
------- ------- ------- ------- ------- ------- ------- -------
Gross margin.............................. 7,039 7,421 6,135 5,559 6,406 6,805 8,418 10,784
Operating expenses
Research and development................ 2,867 4,009 2,968 2,771 2,439 2,546 3,504 4,141
Sales and marketing..................... 1,885 1,913 1,620 2,278 1,930 1,832 2,633 3,686
General and administrative.............. 1,028 865 1,006 577 812 902 1,238 1,870
In-process R&D write-off................ -- -- -- -- -- -- 1,174 --
------- ------- ------- ------- ------- ------- ------- -------
Total................................... 5,780 6,787 5,594 5,626 5,181 5,280 8,549 9,697
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from operations............. 1,259 634 541 (67) 1,225 1,525 (131) 1,087
Interest and other, net................... (211) (305) (414) (224) (326) 190 (220) 158
Write-off of deferred charges............. -- -- -- (675) -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes......... 1,048 329 127 (966) 899 1,715 (351) 1,245
Income taxes (benefit).................... 436 137 53 (352) 419 757 348 413
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)......................... $ 612 $ 192 $ 74 $ (614) $ 480 $ 958 $ (699) $ 832
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DEC 31, MAR 31, JUNE 30, SEPT 30, DEC 31, MAR 31, JUNE 30, SEPT 30,
1997 1998 1998 1998 1998 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF REVENUE:
Revenues.................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross margin.............................. 36.4 36.1 42.6 40.0 43.7 38.3 36.0 39.8
Operating expenses
Research and development................ 14.8 19.5 20.6 19.9 16.6 14.3 15.0 15.3
Sales and marketing..................... 9.8 9.3 11.2 16.4 13.2 10.3 11.3 13.6
General and administrative.............. 5.3 4.2 7.0 4.2 5.5 5.1 5.3 6.9
In-process R&D write-off................ -- -- -- -- -- -- 5.0 --
------ ------ ------ ------ ------ ------ ------ ------
Total................................... 29.9 33.0 38.8 40.5 35.3 29.7 36.6 35.8
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) from operations............. 6.5 3.1 3.8 (0.5) 8.4 8.6 (0.6) 4.0
Interest and other, net................... (1.1) (1.5) (2.9) (1.6) (2.2) 1.1 (0.9) 0.6
Write-off of deferred charges............. -- -- -- (4.9) -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss)......................... 3.2% 0.9% 0.5% (4.4%) 3.3% 5.4% (3.0%) 3.1%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
CVC's quarterly and annual operating results are affected by a wide variety
of factors that could materially and adversely affect revenues and profitability
from period to period, including:
- specific economic conditions in the data storage and semiconductor
industries
- the timing of significant orders
- cyclical patterns of capital spending by customers
- modification or cancellation of customer orders
- continued market acceptance of our systems and our customers' products
- shipment delays
- loss of a significant customer
- increased research and development or marketing costs associated with our
introduction of new products
- introduction of new products by our customers
23
<PAGE>
- our ability to successfully introduce new products on a timely basis
- changes in our pricing policies or those of our competitors
- production and quality problems
- the publication of opinions by industry analysts about us, our products or
our competitors
CVC's revenues have fluctuated over the past eight quarters primarily due to
the overall decline in the data storage and semiconductor markets in 1998, which
adversely affected CVC's sales for the last two quarters of fiscal 1998 and the
first quarter of fiscal 1999. CVC's quarterly gross margin is influenced by a
number of factors relating to the level and mix of revenues for products
carrying different gross margins, as well as the type of customer, whether data
storage or semiconductor manufacturers, and type of order, whether a repeat or
new application. Repeat orders generally have lower costs associated with the
order due to manufacturing efficiencies. Gross margin as a percentage of sales
increased during the last two quarters of fiscal 1998 and the first quarter of
fiscal 1999 due to: (1) a higher percentage of total revenues generated from
increased sales of spare parts and enhancements carrying relatively higher gross
margins and (2) a higher percentage of total system revenues generated from
repeat system sales to data storage customers carrying relatively higher gross
margins. Gross margin as a percentage of sales decreased during the third and
fourth quarters of fiscal 1999 in part due to the consolidation of
Commonwealth's operating results from May 10, 1999, the date of the acquisition.
Sales and marketing as a percentage of sales increased during the fourth
quarter of fiscal 1998 due to an increase in advertising, customer
demonstrations and exhibits expense. Sales and marketing as a percentage of
sales increased during the fourth quarter of fiscal 1999 due to an increase in
distribution commisions, employee relocation and customer service expenses
associated with the integration of Commonwealth. General and administrative
expenses as a percentage of sales increased during the fourth quarter of fiscal
1999 due to an increase in allowances for bad debt, accounting fees and business
system implementation all associated with the integration of Commonwealth.
Due to potential quarterly fluctuations in operating results, CVC 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 CVC's net sales or operating results were below the
expectations of public market securities analysts and investors, the price of
the common stock would likely be materially adversely affected.
LIQUIDITY AND CAPITAL RESOURCES
In recent years, CVC has financed its capital and operating needs
principally through the sale of $10.0 million of its preferred securities,
advances from customers, and borrowings under various credit facilities. As of
September 30, 1999, CVC had working capital of $22.1 million, including cash and
cash equivalents of $0.4 million, compared to working capital of $10.9 million
and $9.3 million at September 30, 1998 and 1997. Operating activities in fiscal
1999 used cash flow of $4.8 million, as compared with fiscal 1998 in which
operating activities used cash of $6.9 million and fiscal 1997 in which
operating activities provided cash of $3.1 million. In fiscal 1999, increased
accounts receivable and reduced customer advances used cash of $12.0 million and
$2.4 million, respectively, and were partially offset by increased depreciation
of $4.2 million, increased net income of $1.6 million reduced inventories of
$1.4 million, in process R&D write-off of $1.2 million, increased accounts
payable of $0.7 million, and decreased other assets of $0.5 million. The
significant increase in the use of cash for accounts receivables from 1998 to
1999 is due to the increased fourth quarter revenue year over year from
$13.9 million to $27.1 million. The use of cash in operating activities in
fiscal 1998 was a direct result of a $7.5 million decrease in advances from
customers generally attributable to lower order rates from customers, and a
$2.8 million decrease in accounts payable. These decreased liabilities were
partially offset by $2.2 million in depreciation and reduced levels of
receivables and inventory, which provided cash of $1.3 million and
$1.7 million, respectively. These net changes reflect lower fourth quarter sales
in fiscal 1998 as compared to fiscal 1997 by approximately $5.1 million combined
with
24
<PAGE>
overall inventory level reductions. Of the cash provided from operating
activities in 1997, net income provided $2.0 million, depreciation and
amortization another $1.3 million, and increases in accounts payable, advances
from customers, and other liabilities provided $4.6 million, $3.0 million and
$1.3 million, respectively. Increases in accounts receivable and inventories
used $3.4 million and $5.8 million of operating cash flow in 1997.
In fiscal 1999, 1998 and 1997, CVC invested $4.0 million, $6.6 million and
$2.8 million, respectively, in capital expenditures. The capital expenditures
were primarily for facilities, machinery and equipment, computers and related
equipment, and demonstration system tools. CVC has invested heavily in
demonstration tools for use at its facilities in order to demonstrate new
product capabilities for its magnetic head and semiconductor device customers.
Although CVC currently has no significant capital commitments, it expects to
spend approximately $6.0 million on capital expenditures over the next
12 months.
As of September 30, 1999, CVC's principal source of liquidity consisted of a
$15.0 million line of credit under a demand line and term loan agreement, under
which there were $10.7 million in borrowings. As of the end of the third quarter
in fiscal 1999, CVC was not in compliance with one financial test relating to
minimum backlog levels to be met under the agreement and thus, CVC was in
technical default of the agreement. The lender has waived in writing its rights
regarding prior lack of compliance and, as of September 30, 1999, CVC was in
compliance with all covenants in this agreement. Borrowings associated with term
loans from a commercial bank as of September 30, 1999 amounted to $8.0 million.
One such loan requires monthly payments of principal and interest at prime plus
1/2% while the other term loan requires monthly payments of principal and
interest at 8.39%. CVC also has available an equipment line of credit at
September 30, 1999 which allows for maximum borrowings of $3.0 million.
Borrowings under the agreement are at an interest rate of prime. There are no
amounts outstanding under the equipment line of credit at September 30, 1999.
CVC has a mortgage credit facility which requires monthly payments of principal
and interest at 5.29% on the first $500,000 of the mortgage credit facility
through October 1, 1999, after which the rate increases to 8.29% through
September 30, 2002, consistent with the interest rate on $1,500,000 of the
credit facility. Subsequent to September 30, 2002, CVC may select the interest
rate on the remaining principal from fixed or variable interest rate
alternatives.
CVC's principal liquidity requirements are expected to be for working
capital, capital expenditures, demonstration equipment, and if appropriate,
acquisitions. CVC intends to use the proceeds of the offering for general
corporate purposes, including approximately $6.3 million for capital
expenditures relating to facility expansion and manufacturing and demonstration
equipment, $15.0 million for repayment of debt, $10.0 million to reduce the
Series D Redeemable Preferred Stock, and the balance for additional working
capital. See "Use of Proceeds." CVC believes that cash from operations, and bank
borrowings, together with the net proceeds of the sale of common stock by CVC in
the offering, will be adequate to fund operations for at least the next
12 months.
CVC's long-term capital requirements will be affected by many factors,
including the success of CVC's current product offerings, CVC'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. CVC plans to finance its long-term capital needs with
the net proceeds of this offering, together with borrowings and cash flow from
operations. To the extent that such funds are insufficient to finance CVC's
activities, CVC 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.
YEAR 2000
The Year 2000 issue is the result of computer programs using two digits
rather than four to define the applicable year. Any of CVC's computer programs
or hardware or other equipment that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather
25
<PAGE>
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.
In order to upgrade its overall business systems' hardware and software and
to enable those systems to properly use dates beyond December 31, 1999, CVC
installed a new business system in May 1999 which has been certified by the
vendor as Year 2000 compliant. In addition, CVC is in the process of completing
its inventory and assessment of its desktop systems and laptops. CVC currently
uses standard "off the shelf" vendor-supplied software on its desktop systems
and laptops. Many of these vendors are still implementing their Year 2000
compliance programs and CVC will implement the Year 2000 compliant versions as
required when those solutions are available. CVC has run internal tests on its
desktop systems and laptops and believes it has identified those systems and
laptops which require upgrade or replacement. CVC currently expects that such
remediation efforts will be complete by November 1999. CVC believes that with
these and other modifications or replacements of its business systems' existing
software and, in some cases, hardware, its computer programs should be able to
continue to operate effectively after December 31, 1999. However, if such
modifications and replacements are not made, or are not completed in a timely
manner, the Year 2000 issue could have a material adverse impact on CVC's
operations. With respect to its facilities and technical support systems such as
security, voice mail and phone systems, CVC has contacted its suppliers of those
systems and suppliers have informed CVC that the non-information technology
systems they provide to CVC are Year 2000 compliant.
CVC also relies directly and indirectly on the external systems of its
customers, suppliers, subcontractors, utilities providers and other third
parties. CVC has contacted these third parties about their Year 2000 readiness.
These third parties have either informed CVC that the systems they provide to
CVC are either Year 2000 compliant or are in the process of upgrading those
systems that are not Year 2000 compliant. For those systems that are not Year
2000 compliant, CVC and the particular supplier are in the process of upgrading
the affected systems, a process which CVC currently expects to be complete by
November 1999. To date, CVC is not aware of any third-party Year 2000 issues
that could materially impact its results of operations, liquidity or capital
resources. However, CVC has no means of ensuring that the third parties that it
deals with will be Year 2000 ready. If the systems of any third parties with
which CVC interacts experience Year 2000 problems, CVC's business, financial
condition or results of operations could be materially adversely affected. CVC
cannot be certain that the systems of third parties with which it interacts will
not suffer from Year 2000 problems.
CVC's new products are designed to be Year 2000 ready; however, some of its
older products will require upgrades for Year 2000 readiness. CVC intends to
provide, in some cases upgrades for these older products, some of which will be
provided to customers without charge. Notwithstanding these efforts, if any of
CVC's products fails to perform or causes a system malfunction due to the onset
of Year 2000, customers could bring claims against CVC, which could have a
material adverse effect on CVC's business, results of operations or financial
condition. Moreover, CVC's customers could choose to convert to other Year 2000
ready products in order to avoid such malfunctions, which could have a material
adverse effect on CVC's business, results of operations or financial condition.
CVC has formulated a Year 2000 contingency plan. CVC's reasonably likely
worst case scenario with respect to the Year 2000 issue would be disruption of
its internal operating systems, particularly its accounting and billing systems.
A disruption of this type may adversely impact CVC's business by creating a
delay in payment by our customers and a corresponding increase in CVC's accounts
receivable. We may also be required to purchase alternative hardware and
software systems, incurring additional costs and suffering additional delays
associated with implementing new systems. While we are confident we would be
able to remediate these problems, the delays associated with remediation would
harm our business. CVC cannot be certain, however, that any measures it adopts
will prevent the occurrence of Year 2000 problems, which could have a material
adverse effect on its business, results of operations or financial condition.
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<PAGE>
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Effective October 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income", which
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption had no impact on the Company's net income
or stockholders' equity. SFAS No. 130 requires changes to the minimum pension
liability, to be included in other comprehensive income. Prior year financial
statements have been reclassified to conform to the requirements of SFAS No.
130.
In April 1998, the Accounting Standards Executive Committee issued Statement
of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities."
Start-up activities are defined broadly as those one-time activities relating to
opening a new facility, introducing a new product or service, conducting
business in a new territory, conducting business with a new class of customer,
commencing some new operation or organizing a new entity. Under SOP 98-5, the
cost of start-up activities should be expensed as incurred. SOP 98-5 is
effective for CVC's fiscal year 2000 financial statements and CVC does not
expect its adoption to have a material effect on its financial condition or
results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The new standard
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 is effective for all quarters of fiscal years
beginning after June 15, 2000. CVC does not expect SFAS No. 133 to have a
material effect on its financial condition or results of operations.
27
<PAGE>
BUSINESS
INTRODUCTION
CVC is a worldwide supplier of process equipment used to manufacture
magnetic recording heads for disk drives and advanced semiconductor devices for
computers and communications equipment. Our equipment either deposits or removes
thin film layers as steps in the process of manufacturing magnetic recording
heads and semiconductor devices. Since 1993, we have shipped more than 100
CONNEXION Cluster Tool systems, including more than 400 process modules. Our
customers include many of the leading manufacturers of magnetic recording heads
for the data storage industry such as Alps, Fujitsu, IBM, Read-Rite, Seagate
Technology, TDK and Yamaha, as well as manufacturers of semiconductor devices
such as Anadigics, Analog Devices, Honeywell and M/A-COM.
INDUSTRY BACKGROUND
THE DATA STORAGE INDUSTRY
In order to satisfy market demand for devices with greater storage capacity,
the disk drive industry has developed new types of recording heads enabling
greater areal density. Areal density is the measure of stored bits per square
inch in the recording surface of a disk. According to data storage industry
sources, areal densities have been increasing approximately 60% per year since
1990. The growth in areal density, or storage capacity, has been facilitated by
the evolution of recording head manufacturing technology from inductive heads
to, or MR heads, magnetoresistive heads to the more recent introduction of giant
magnetoresistive heads, or GMR heads.
According to TrendFocus, giant magnetoresistive head shipments are expected
to increase from 0.4 billion units in 1999 to 1.2 billion units in 2002, while
the shipment of magnetoresistive heads are expected to decrease from
0.5 billion units in 1999 to limited shipments by 2002. The disk drive
industry's expected growth and transition to technologically advanced recording
heads reflect a number of factors, including:
- the exchange of increasing volumes of data among users across the Internet
and intranets;
- the rapid accumulation of data resulting from growth of digital content,
including audio, video and data;
- continued improvements in computing price performance ratios, including
the emergence of the sub-$1,000 personal computer; and
- the introduction of new applications for storage devices such as digital
cameras, auto navigation, video on demand and personal digital assistants,
or PDAs.
Magnetic recording heads are manufactured using various thin film deposition
and etch processes, which provide magnetic, conductive and insulating
properties. More advanced heads typically require the deposition of
approximately 18 to 28 thin film layers of different materials. CVC believes
that the data storage industry's current transition to more advanced
technologies will require the data storage industry to make investments in
advanced processing equipment to support both the technology transition and
anticipated volume growth.
THE SEMICONDUCTOR INDUSTRY
The manufacture of semiconductors involves multiple thin film processing
steps. Certain types of semiconductor devices that utilize exotic substrates,
such as Gallium Arsenide, or GaAs, are more difficult to produce due to physical
characteristics such as lower maximum tolerable processing temperatures and less
mechanical strength of the substrates. However, these substrates enable the
fabrication of high-speed, high-performance devices with low power consumption
that make them ideally suited for advanced communications applications, such as
portable communication devices, including digital pagers and cellular phones.
Due to the characteristics of these exotic substrates, the fabrication of
devices involving these substrates requires advanced process equipment that can
provide multiple, highly uniform, precision thin film materials.
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<PAGE>
In order to increase the performance and reduce the cost of semiconductor
devices, manufacturers have continued to shrink line widths, while at the same
time adding multiple layers of metal interconnect materials. Semiconductor
manufacturers currently use aluminum or aluminum alloys to interconnect the
various layers of a semiconductor device. As semiconductor line widths shrink
below 0.18 microns, or 0.18 millionths of a meter, copper is increasingly being
used as an alternative to aluminum interconnects. Copper provides less
resistance to electron flow at narrow line widths and makes it possible to build
high speed devices using fewer interconnect layers than would be necessary with
aluminum. The deposition of copper interconnect material requires two steps:
(1) the deposition of a barrier layer, to protect the insulating layers from
being contaminated by copper, and (2) the deposition of seed and copper fill
layers, which serve as the interconnect. The deposition of interconnect material
involves very specialized substrate processing equipment, including metal
deposition equipment. According to Dataquest, copper deposition equipment sales
are expected to grow from $200 million in 1999 to $700 million in 2003.
SUBSTRATE PROCESSING
The manufacture of magnetic recording heads and semiconductors requires from
tens to hundreds of fabrication processing steps. Many of these steps involve
the controlled application or removal of layers of materials to or from a base
material, or substrate, or on a previously deposited layer. The application of
materials to a wafer, known as deposition, involves the building up of extremely
thin films of electrically insulating or conducting materials. These layers can
range from over one-thousandth to less than one-millionth of a millimeter in
thickness. A wide range of materials and deposition processes are used to build
up thin film layers on substrates to achieve specific performance
characteristics. The removal of material from substrates, known as etching,
involves the precise removal of residue or excess material using dry plasma or
ion beams in order to build a specific pattern, for example, to form a
semiconductor device.
The process of manufacturing magnetic recording heads and semiconductors is
constantly evolving to address the demand for smaller devices with higher
performance. Devices with smaller features sizes and higher levels of
performance require new materials or more manufacturing steps involving multiple
layers of thin film materials. To successfully develop new manufacturing
processes, thin film recording head and semiconductor manufacturers require
sophisticated processing equipment that:
- incorporates highly specialized processing and systems knowledge;
- enables the precise, uniform deposition of a wide range of thin film
materials;
- supports a variety of deposition and etching processes on an integrated
platform; and
- provides the ability to transition to new materials and fabrication
processes efficiently.
THE CVC SOLUTION
CVC is a worldwide supplier of process equipment for the data storage and
semiconductor industries. CVC provides thin film deposition and etching
equipment based on a central substrate-handling platform to which a series of
interchangeable process modules can be connected. CVC's process equipment
incorporate its expertise in:
- the deposition and removal of multiple thin film materials in a vacuum
environment;
- advanced physics and material science;
- engineering of microelectronic and atomic components; and
- proprietary software that controls the deposition and etching processes.
CVC's products are designed for the highly uniform, repetitive steps
required for the manufacturing of devices involving multiple thin film layers
and a wide range of materials.
CVC's CONNEXION Cluster Tool system is a modular system with stations for
connecting up to six modules around a central substrate-handling platform. Each
module performs a different manufacturing process on the substrate. CVC's
CONNEXION Cluster Tool system enables the
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<PAGE>
integration of modules supplied by either CVC or third-parties. CVC currently
offers a wide range of advanced process modules for deposition and etching of
thin film layers. The CONNEXION Cluster Tool, combined with a wide range of
process modules, enables the manufacture of highly uniform devices through the
integration of various processes in a vacuum controlled environment. CVC's
integrated, modular-based systems provide functional flexibility that enables
data storage and semiconductor manufacturers to quickly transition to new
process technologies, improve time-to-market of higher performance products and
improve manufacturing yields.
STRATEGY
CVC's objective is to enhance its position as a leading worldwide developer
of thin film processing technologies for the data storage and semiconductor
industries. Key elements of CVC's strategy include:
MAINTAIN TECHNOLOGICAL LEADERSHIP IN THE DATA STORAGE INDUSTRY. Since 1990,
CVC has focused on the development of integrated thin film process technologies
that enable the manufacture of advanced magnetic heads used in data storage
applications. To date, CVC has shipped more than 100 of its cluster tool
systems, including more than 400 process modules. CVC intends to continue to
combine its expertise in the processing of thin films with the modular design of
its CONNEXION Cluster Tool system to develop increasingly efficient and
cost-effective integrated process solutions for the data storage industry.
EXPAND DATA STORAGE LEADERSHIP INTO THE SEMICONDUCTOR MARKET. CVC intends
to leverage its accumulated expertise in thin film head processing by targeting
selected semiconductor markets that require advanced thin film processes. CVC
believes that its CONNEXION Cluster Tool systems is well suited for the
fabrication of advanced semiconductors, advanced storage devices and optical
components. CVC plans to continue to identify and develop products that address
integrated process solutions where thin film process technologies play a
critical role.
CAPITALIZE ON CLOSE RELATIONSHIPS WITH INDUSTRY LEADERS. CVC has
established strategic relationships with a number of industry-leading data
storage and semiconductor manufacturers. By working closely with industry
leaders early in their research and development stage, CVC can identify and
develop customized integrated process solutions that better address customers'
existing and future processing requirements. Having met the specific needs of
market leaders with innovative integrated process solutions, CVC is able to
leverage the experience gained to create products that will meet the demands of
an expanded set of customers across a range of applications and process
technologies. CVC's ability to implement new process solutions also helps CVC
meet its customers' time-to-market demands and advances CVC's goal of having
products designed early into its customers' production and planning cycles.
TARGET ADVANCED INTERCONNECT OPPORTUNITIES IN THE SEMICONDUCTOR
INDUSTRY. Since 1993, CVC has committed significant resources to the
development of advanced interconnect technology for high-performance integrated
circuit fabrication. CVC has developed a module that enables deposition of both
barrier and copper layers in an integrated system. CVC has delivered a
developmental integrated copper and barrier deposition system to one of its
strategic customers and intends to continue to develop solutions to meet the
requirements of emerging advanced interconnect technologies.
CONTINUE TO PROVIDE SUPERIOR CUSTOMER SERVICE ON A WORLDWIDE BASIS. CVC is
focused on delivering a high level of customer satisfaction by providing
superior customer service through a dedicated customer service group consisting
of 53 full-time employees and a research development group consisting of 103
full-time employees, as well as through distributors and sales representatives
in the United States, Japan, East Asia and Europe. CVC believes that its focus
on customer service combined with CVC's process and systems expertise has
enhanced its reputation in the data storage and semiconductor industries. CVC's
CONNEXION Cluster Tool system is used by a majority of the
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<PAGE>
leading magnetic recording head manufacturers in the data storage industry. CVC
believes this broad industry representation is due in part to its superior
worldwide customer service.
BROADEN PRODUCT OFFERINGS THROUGH INTERNAL DEVELOPMENT AND
ACQUISITIONS. CVC plans to continue to expand its product offerings through
both internal development and acquisitions of complementary businesses, products
and technologies. Since the market introduction of the CONNEXION Cluster Tool
system in 1993, CVC has continuously enhanced and expanded its product offerings
in response to the evolving needs of its customers through internal research and
development. In 1998, CVC developed and introduced capabilities that 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. In May 1999, CVC expanded its existing family of
process modules through the acquisition of Commonwealth, a provider of ion beam
deposition and etching modules.
PRODUCTS
CONNEXION CLUSTER TOOL SYSTEM
CVC's principal product is its CONNEXION Cluster Tool system. The CONNEXION
Cluster Tool system is based on a central substrate-handling platform and a
series of interchangeable thin-film deposition and etching processing modules.
CVC's CONNEXION Cluster Tool system enables the integration of process modules
supplied by either CVC or third parties. Since 1993, CVC has shipped more than
100 of these systems, including more than 400 process modules. The diagrams
below illustrate two typical configurations of the CONNEXION Cluster Tool system
incorporating various process modules offered by CVC.
<TABLE>
<CAPTION>
DATA STORAGE SEMICONDUCTOR
GMR CONFIGURATION GAAS CONFIGURATION
<S> <C>
[LOGO] [LOGO]
A. SEVEN STATION CENTRAL WAFER HANDLER D. SINGLE-TARGET PVD MODULE
B. MULTI-TARGET ION BEAM DEPOSITION MODULE E. EIGHT STATION CENTRAL WAFER HANDLER
F. INDUCTIVELY-COUPLED-PLASMA SOFT CLEAN
C. MULTI-TARGET PVD MODULE MODULE
</TABLE>
Depending on the configuration, individual systems range from $1.0 million
to more than $4.0 million, and individual process modules range from
approximately $350,000 to $2.0 million.
CVC believes that the advantages provided by its CONNEXION Cluster Tool
system include the following:
ABILITY TO PROCESS A WIDE RANGE OF MATERIALS. The modular design of the
CONNEXION Cluster Tool system provides customers the ability to process a wide
range of materials. This ability allows CVC's customers to address their rapidly
evolving manufacturing and material requirements across multiple applications.
The following table provides an overview of the materials and applications
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addressed by CVC's CONNEXION Cluster Tool systems for the data storage and
semiconductor industries:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DATA STORAGE
MATERIALS GROUPS SPECIFIC MATERIALS PRODUCT APPLICATIONS
Conductors Aluminum Tantalum
Chromium Titanium
Copper Titanium/Tungsten
Gold Tungsten
Molybdenum
Platinum
Magnetic Materials Aluminum Silicon Iron Iridium Manganese Inductive,
Cobalt Chromium Iron Manganese Magnetoresistive and
Platinum Iron Tantalum Nitride Giant
Cobalt Iron Nickel Iron Magnetoresistive
Cobalt Platinum Nickel Iron Rhodium Recording Heads
Cobalt Zirconium Nickel Manganese for Disk Drives
Tantalum Platinum Chromium Manganese
Cobalt Zirconium Platinum Manganese
Niobium
Insulating Materials Aluminum Nitride Silicon Nitride
Aluminum Oxide Silicon Oxide
Wear-Resistant Diamond-like-carbon, or DLC
Coatings
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SEMICONDUCTOR DEVICES
MATERIALS GROUPS SPECIFIC MATERIALS PRODUCT APPLICATIONS
Conductors Aluminum (alloys) Titanium Gallium Arsenide
Cobalt Titanium Silicide and Silicon
Copper Titanium Tungsten Nitride Semiconductors
Gold Tungsten
Nickel
Platinum
Barrier/Liner/Glue/ Tantalum Titanium
Layers Tantalum Nitride Titanium Nitride Logic and Memory
Integrated Circuits
High-k Dielectrics Barium Strontium Tantalum Pentoxide
Titanate Titanium Oxide Analog and Mixed
Signal Integrated
Other Specialty Blue Phosphor Silicon Chromium Carbon Circuits
Materials Chromium Silicon Nitride Tantalum Nitride
Nickel Chromium Zinc Oxide
Silicon Chromium
</TABLE>
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<PAGE>
FLEXIBILITY OF MODULAR DESIGN. The modular design of the CONNEXION Cluster
Tool system provides customers the flexibility to cost effectively transition
from the development stage to full production. In the development stage,
customers can use a process module as a fully-functional, stand-alone tool to
develop and test individual fabrication steps. Following the successful
development of individual process steps, a customer can combine multiple process
modules with CVC's CONNEXION Cluster Tool platform to form an integrated
production system. Furthermore, the modular design allows customers to
reconfigure systems that are in production to address the evolving manufacturing
processes required by magnetic recording head and semiconductor manufacturers.
The flexibility to exchange modules enables customers to quickly develop new
fabrication processes, improving time-to-market of higher performance products,
with a lower capital investment.
BENEFITS OF INTEGRATED PLATFORM. The integrated platform of the CONNEXION
Cluster Tool system provides customers with the ability to combine various
deposition and etching modules on a single platform in a vacuum controlled
environment. The benefits of a vacuum controlled environment include high
uniformity and reduced incidences of cross contamination and damage from
external handling. CVC's integrated platform enables customers to achieve
improved manufacturing yields, enhanced tool uptime and device reliability and
performance.
HIGHLY SPECIALIZED PROCESS SOLUTIONS. CVC provides customers highly
specialized process solutions, including a variety of energy sources and
components. These solutions enable CVC's customers to achieve high uniformity
over a wide range of substrate materials and sizes, as well as control of the
composition materials, atomic microstructures and surface/interface properties.
CVC PROCESS MODULES
CVC offers process modules for different methods of depositing thin films on
a wafer, or substrate, such as physical vapor deposition, mainly a physical
technique, and chemical vapor deposition, mainly a chemical technique. CVC also
offers modules for different methods of removing, or etching, portions of thin
films from a wafer or a substrate. CVC obtained its ion beam deposition, etching
and its diamond like carbon processing modules through its acquisition of
Commonwealth Scientific Corporation in May 1999.
Below is a brief description of CVC's process modules:
PHYSICAL VAPOR DEPOSITION--PLASMA SPUTTERING MODULE
Physical vapor deposition, or PVD, by plasma sputtering is used to deposit a
wide range of magnetic, conductive and insulating materials on various
substrates with different topographies. PVD is performed in a high vacuum
chamber by applying a strong direct current or radio frequency electric field to
an inert gas, usually argon, to create a plasma. 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 both a single wafer PVD module and a multi-station PVD module for the
sequential deposition of various materials within a single vacuum chamber.
PHYSICAL VAPOR DEPOSITION--ION BEAM DEPOSITION MODULE
PVD by ion beam deposition is used to deposit a wide range of very thin
magnetic, conductive and insulating materials on various substrates with
different topographies. Ion beam deposition is performed in a high vacuum
chamber by focusing an ion beam generated by a radio frequency or direct current
ion beam source toward a target made of the desired material to be deposited.
The beam of energetic ions hits the target and ejects atoms of the desired
material toward the wafer or substrate, building up a thin film layer in a
slower, more directional manner than with sputtering. In addition, in some
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<PAGE>
processes, a second ion beam is directed toward the substrate to control the
microstructure of the thin film while depositing the desired material.
METAL-ORGANIC CHEMICAL VAPOR DEPOSITION MODULE
Metal-organic chemical vapor deposition, or MOCVD, is used to deposit
various materials such as aluminum, copper, tungsten, titanium, titanium
nitride, tantalum and tantalum nitride. The MOCVD process causes precursor
materials that contain atoms of the material to be deposited to react at the
heated wafer or substrate surface resulting in the formation of the thin film
layer of the material. MOCVD uses a metal organic compound distributed through a
liquid delivery system as the source of the material to be deposited.
ION BEAM ETCH MODULE
Etching by ion beam is used to transfer a desired device pattern to the
substrates. An ion beam directed toward the substrate can also be used to remove
contaminants such as oxide layers or for substrate conditioning to improve
adhesion. Ion beam etching is performed in a high vacuum chamber by focusing an
ion beam generated by a radio frequency and direct current ion beam source
toward the wafer or substrate.
DIAMOND-LIKE-CARBON MODULE
Ion beam deposition of thin diamond-like-carbon, or DLC, is used to deposit
hard coating layers as wear and corrosion protection for thin-film heads and
magnetic media. The ion beam diamond-like-carbon module employs a
carbon-containing gas flow through an ion source mounted onto a vacuum process
chamber to deposit thin layers of diamond-like-carbon on wafers or other
substrates. CVC's ion beam diamond-like-carbon deposition system sources are
currently used in production by the thin-film head manufacturers. As hard disk
storage densities increase, the distance between the recording head and magnetic
media are decreasing to below 100 Angstroms. The next-generation advanced giant
magnetoresistive heads will require dense and defect-free diamond-like-carbon
films below 50 Angstroms. To address this requirement, CVC has developed a
filtered cathodic arc diamond-like-carbon deposition cluster module which
enables controlled deposition of high-quality ultrathin diamond-like-carbon
layers. This cluster module will enable CVC to effectively serve the
diamond-like-carbon application for several future generations of thin film
recording heads and magnetic media.
INDUCTIVELY-COUPLED-PLASMA SOFT CLEAN MODULE
CVC offers a multi-zone inductively-coupled-plasma, or ICP, soft clean
module for surface preparation prior to material depositions. CVC's ICP module
technology employs the design features of the ICP system licensed by CVC from
Texas Instruments and enhanced by CVC through internal developments. The 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 PROCESSING/RAPID THERMAL CHEMICAL VAPOR DEPOSITION MODULE
CVC's rapid thermal processing, or RTP, module with multi-zone temperature
control optimizes temperature and process uniformity and repeatability control.
CVC's RTP and rapid thermal chemical vapor deposition, or RTCVD, module is
designed for various thermal processing applications including anneal, oxidation
and CVD processes.
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<PAGE>
600 SERIES PHYSICAL VAPOR DEPOSITION SYSTEMS
Introduced in 1988, the 610 and 611 products are PVD sputtering deposition
systems, handling up to 6-inch diameter substrates. The 611 system is equipped
with a loadlock and eight work stations 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.
ION BEAM SOURCES AND POWER SUPPLIES
With its acquisition of Commonwealth, CVC obtained a range of ion sources,
as well as the power supplies used to operate these sources. Ion beam processing
is used in a variety of advanced research and development applications, as well
as the production of thin film etch and deposition applications where precise
control and repeatability of multilayer thin films are critical. CVC provides
these products as components to companies supplying equipment to the precision
optics, opthalmics and optoelectronics industries. In addition, CVC uses its ion
beam sources and power supplies in its IBD, IBE and DLC process modules.
CUSTOMERS
CVC's customers include many of the leading manufacturers of thin film
magnetic recording heads for the data storage industry, as well as manufacturers
of semiconductor devices. During fiscal year 1999, approximately 85% of CVC's
revenues were derived from sales made to thin film magnetic recording head
manufacturers and approximately 9% of CVC's revenues were from sales to
semiconductor device manufacturers. Customers of CVC who have purchased at least
one system from it during fiscal 1998 and 1999 include:
<TABLE>
<CAPTION>
DATA STORAGE SEMICONDUCTOR
- ------------ -------------
<S> <C>
Alps Electronics Anadigics
Applied Magnetics Analog Devices
Fujitsu Honeywell
Headway Technologies Inc. Kodak
Hitachi Metals M/A-COM
IBM Xerox
Read-Rite
Samsung Electronics
Seagate Technology
TDK
Yamaha
</TABLE>
Of these customers, Seagate, IBM and TDK each accounted for 10% or more of
CVC's revenues in fiscal 1999 and Seagate, Headway and Alps each accounted for
10% or more of CVC's revenues in fiscal 1998.
RELATIONSHIP WITH SEAGATE TECHNOLOGY
Seagate Technology, which provides products for storing, managing and
accessing digital information on computers and data communications systems, is
CVC's largest customer, as well as its largest stockholder. Seagate Technology
accounted for 47% of CVC's total revenue in fiscal 1997, 31% of CVC's total
revenue in fiscal 1998 and 34% of CVC's total revenue in fiscal 1999. In
addition, Seagate Technology is CVC's largest stockholder. In 1995, Seagate
Technology made an equity investment of approximately $9.0 million in CVC. In
connection with this investment, Seagate
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<PAGE>
Technology obtained the right to elect two members of CVC's Board of Directors.
That right will terminate upon consummation of this offering.
Following completion of this offering, Seagate Technology will own shares
representing approximately 21% of CVC's outstanding common stock. In addition,
pursuant to a warrant acquired by it in 1995, Seagate Technology has the right
to acquire an additional 790,760 shares of common stock at an exercise price of
$5.58 per share. Assuming full exercise of this warrant, Seagate Technology
would own an aggregate of approximately 26% of CVC's outstanding common stock
following completion of this offering.
BACKLOG
CVC's backlog consists generally of product orders for which a purchase
order has been received and which are scheduled for shipment within twelve
months. Because a large percentage of CVC's orders require products to be
shipped in the same quarter in which the orders are received, and due to
possible changes in delivery schedules, cancellations of orders and delays in
shipment, CVC does not believe that the level of backlog at any point in time is
an accurate indicator of its performance.
MARKETING AND SALES
CVC sells its products in the United States and Europe through its direct
sales force that is supported by its 29-person marketing and sales organization.
In Japan and Europe, CVC uses distributors to sell its products. CVC markets its
products in China, Korea, Taiwan, Malaysia, Singapore and Thailand through
independent sales representatives. International sales accounted for 31% of
CVC's total revenues for fiscal 1997, 38% for fiscal 1998 and 53% for fiscal
1999. CVC's sales and marketing organization uses 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 CVC's
process technologies, as well as complementary technologies offered by other
equipment providers. CVC works closely with the senior management and research
and development personnel of its existing customer base to gain insight into
their industries and to focus on selling new process technologies tailored to
their customers' requirements.
The sales cycles for CVC'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 extensive participation by CVC'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.
CUSTOMER SERVICE AND SUPPORT
Prompt and effective field service and support is critical to CVC's sales
efforts, due to the substantial commitments made by customers that purchase
CVC's equipment. As of September 30, 1999, CVC had 53 full-time employees
dedicated to customer service and support. CVC's strategy of supporting its
installed base through both customer support and research and development groups
has served to encourage the use of CVC's equipment and process technologies in
customer production applications. CVC's 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 CVC's
Fremont, California, Rochester, New York and Alexandria, Virginia research and
demonstration facilities. CVC believes that its marketing efforts are enhanced
by the technical expertise of its
36
<PAGE>
engineers who also provide customer process support and participate in industry
forums, conferences and user groups.
CVC generally warrants its new systems for 15 months from the date of
shipment. CVC generally warrants to an original purchaser of its new systems
that the products and parts manufactured or assembled by CVC and the application
software supplied will be free from defects in materials and workmanship under
normal use. Installation is included in the price of the system. CVC'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 CVC's systems. For a fee, CVC trains its customers' service
engineers to perform routine services, and, in addition, CVC provides its
customers with 24-hour a day, seven day a week, telephone consultation services.
CVC also has customer support centers located in New York, California, Texas,
Minnesota, Virginia, Northern Ireland and Japan.
RESEARCH AND DEVELOPMENT
The data storage and semiconductor manufacturing industries are
characterized by rapid technological change and requirements for new product
introductions and enhancements. CVC'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, CVC devotes a significant portion of its
personnel and financial resources to research and development programs and seeks
to maintain close relationships with its customers to remain responsive to their
equipment needs. CVC continuously conducts research and development efforts in
existing products to extend performance and process capabilities as well as on
next generation products.
In the data storage market, CVC has recently developed and introduced
capabilities that 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. CVC has also developed a
magnetic orientation device to achieve more accurate and programmable
characteristics of magnetic thin films. In the area of advanced interconnect
technologies, CVC has been developing leading-edge metal-organic chemical vapor
deposition barrier and copper metallization processes for high-performance
semiconductor interconnect applications. CVC operates process development and
applications engineering facilities in New York, California, Virginia and Texas
with process and metrology capabilities for data storage thin film recording
head and semiconductor technologies.
As of September 30, 1999, CVC had 103 full-time employees dedicated to its
research and development programs. In fiscal 1997, 1998 and 1999, CVC expended
$9.1 million, $12.6 million and $12.6 million on these programs, constituting
15%, 19% and 15% of revenues during those periods, respectively. Research and
development expenditures consist primarily of salaries, project materials and
other costs associated with CVC's ongoing research and development efforts. CVC
expects in future years that research and development expenditures will continue
to represent a substantial percentage of revenues. CVC augments its internal
technology development efforts by licensing technology from others and
establishing strategic research and development relationships with universities
and various major customers.
Trade, industry standards and development consortia, such as SEMI, SEMATECH
and SEMI/ SEMATECH, help to define the methods, measurement parameters,
manufacturing requirements and specifications influencing commercial
transactions within the data storage and semiconductor industry. Christine
Whitman, the chief executive officer of CVC, serves on the Board of Directors of
SEMI/ SEMATECH. CVC believes that its involvement with these organizations has
helped to ensure that CVC's new products conform to industry standards and
emerging requirements.
37
<PAGE>
MANUFACTURING
CVC's manufacturing activities consist primarily of assembling and testing
components and subassemblies which are acquired from third party suppliers and
then integrated by CVC into finished systems. The manufacturing operations are
conducted in CVC's 90,000 square foot facility in Rochester, New York and its
32,000 square foot facility in Alexandria, Virginia. As of September 30, 1999,
CVC had 168 full-time employees dedicated to its manufacturing efforts. CVC
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 CVC's manufacturing facilities.
Quality control of suppliers is maintained through incoming verification of
components, in-process inspection during equipment assembly and final inspection
and operation of all manufactured equipment prior to shipment. CVC's customers
frequently participate in systems testing during the final assembly and
inspection process.
CVC's Rochester and Fremont facilities are ISO 9001 certified. CVC believes
that ISO 9001 certification, a quality assurance model for companies that
design, produce, install and inspect items as part of their businesses, offers
CVC a competitive advantage over competitors that are not ISO 9001 certified
and, in some cases, is a condition of doing business with its customers.
CVC procures components and subassemblies included in its products from a
limited group of suppliers and occasionally from a single source. CVC does not
maintain long-term supply contracts with its key suppliers but believes that
alternative suppliers could be found if necessary.
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. CVC 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 CVC's products, thereby adversely affecting CVC's operating
results.
In the data storage market, CVC's current competitors include Balzers
Process Systems, Nordiko and Veeco Instruments. In the semiconductor market,
CVC's competitors include Applied Materials, Balzers Process Systems and
Novellus. Some of CVC'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 CVC.
CVC 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 and technology innovation
- product quality and reliability
- product performance
- breadth of its product line
- price
38
<PAGE>
- technical service and support
- adequacy of manufacturing quality and capacity and sources of raw
materials
- efficiency of production
- delivery capabilities
- protection of CVC's products by intellectual property laws
CVC believes it competes favorably in the data storage and semiconductor
manufacturing markets based on its multiple processing capabilities, customer
support and the cost of ownership of its equipment.
CVC 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.
PATENTS AND OTHER INTELLECTUAL PROPERTY
CVC relies on a combination of patent, copyright, trademark and trade secret
laws and non-disclosure agreements to protect its proprietary process and
equipment technology. Although CVC believes that its patents and its other
intellectual property rights 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 or
similar rights.
As of September 30, 1999, CVC had obtained 17 issued U.S. patents, had
received notices of allowance on four U.S. patent applications and had 37 U.S.
patent applications pending. CVC has also obtained two foreign patents from the
United Kingdom and had 18 foreign patent applications pending on its behalf as
of that date. In addition, in connection with the acquisition of Commonwealth
Scientific Corporation, CVC has licensed and been assigned rights to several
jointly-owned patents but there can be no assurance that such licensed and
assigned rights are sufficiently broad for current or contemplated uses.
CVC holds patents which it believes to be material to its business covering
the components used for physical vapor deposition for the data storage
marketplace and rapid thermal processing. These patents have durations of not
less than eleven years. Through its acquisition of Commonwealth, CVC also holds
patents covering ion beam processing with durations of not less than eleven
years. In addition, CVC holds exclusive licenses to ion source technology
obtained in the acquisition of Commonwealth, which extend to the term of the
underlying patents, varying in length from five to eleven years.
The data storage and semiconductor industries are characterized by frequent
litigation regarding patent and other intellectual property rights. Although CVC
is not aware of any pending or threatened patent litigation involving it, there
can be no assurance that third parties will not assert claims against CVC with
respect to existing or future products or technologies. In the event of
litigation to determine the validity of any third-party claims, that litigation,
whether or not determined in favor of CVC, could result in significant expense
to CVC and divert the efforts of CVC's technical and management personnel from
productive tasks. In the event of an adverse ruling in such litigation, CVC
might be required to discontinue the use of processes, cease the manufacture,
use and sale of infringing products, expend significant resources to develop
non-infringing technology, or obtain licenses to the infringing technology. In
the event of a successful claim against CVC and CVC's failure to develop or
license a substitute technology at a reasonable cost, CVC's business could be
harmed.
39
<PAGE>
CVC cannot give any assurance that its 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 negative impact on CVC's business. CVC cannot give any assurance that others
will not independently develop similar products, duplicate its products or, if
patents are issued to CVC, design around these patents. CVC also relies upon
trade secret protection and employee and third-party nondisclosure agreements to
protect its confidential and proprietary information. Despite these efforts, CVC
cannot give any assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to its trade secrets or disclose such technology or that CVC can
meaningfully protect its trade secrets.
EMPLOYEES
As of September 30, 1999, CVC had a total of 394 full-time employees at all
of its locations, consisting of 168 in manufacturing, 103 in research and
development, 29 in marketing and sales, 53 in customer service and support, 35
in administration and 6 in facilities maintenance.
As of September 30, 1999, 47 employees at CVC'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, 2001. CVC believes that its
relations with its employees, and the bargaining unit which represents the Local
342 members, are good.
FACILITIES
CVC's principal office is located in Rochester, New York, and consists of
90,000 square feet used for manufacturing, research and development and
administration. CVC entered into a financing agreement with the County of Monroe
Industrial Development Agency in 1974 under which this agency's bond proceeds
were used to purchase the land and construct the Rochester facility for lease to
CVC. On September 29, 1997, CVC entered into an amended lease agreement with the
County of Monroe Industrial Development Agency that extended the term of the
original lease from the year 2000 to December 31, 2007. Upon the expiration of
this amended lease, CVC is obligated to purchase the Rochester facility from
this agency for nominal consideration.
As part of its acquisition of Commonwealth Scientific Corporation in
May 1999, CVC obtained two operating facilities. These facilities are located in
Alexandria, Virginia. The principal administrative office is in an owned
building which is approximately 22,000 square feet. The manufacturing and
engineering functions are located in a separate leased facility of approximately
32,000 square feet. This facility is leased under two separate leases for
approximately 28,000 square feet and 4,250 square feet of contiguous space. The
leases on this facility are scheduled to expire on January 31, 2000 and
September 14, 2001.
In addition, CVC leases 14,400 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 3,400 square
feet in Dallas, Texas, for engineering, equipment design, process development,
sales and customer support. CVC also leases space in Minneapolis, Minnesota,
Japan, Northern Ireland, Singapore and Taiwan for sales and customer support.
Although CVC 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, CVC 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 CVC.
40
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of CVC are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Christine B. Whitman................... 48 President, Chief Executive Officer and Chairman
Giovanni Nocerino, Ph.D................ 47 Executive Vice President, Sales & Service
Emilio O. DiCataldo.................... 48 Senior Vice President and Chief Financial Officer
Mehrdad M. Moslehi, Ph.D............... 39 Senior Vice President and Chief Technology Officer
Christopher J. Mann.................... 41 Senior Vice President, Marketing
Richard J. Chicotka, Ph.D.............. 58 Vice President, Engineering
Richard A. Kellogg..................... 57 Vice President, Manufacturing
Judd C. Prozeller...................... 48 Vice President, Quality & Human Resources
Robert C. Fink......................... 64 Director
Maurice F. Holmes...................... 56 Director
Douglas A. Kingsley.................... 37 Director
Thomas C. McDermott.................... 63 Director
Seiya Miyanishi........................ 53 Director
George R. Thompson, Jr.*............... 69 Director
Donald L. Waite........................ 66 Director
</TABLE>
- ------------------------
* Mr. Thompson has advised CVC that upon consummation of this offering he will
retire as a director.
Ms. Whitman joined CVC Products in 1978 and has served as President, Chief
Executive Officer and Chairman of CVC 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 Frontier Telephone of Rochester and The M&T
Bank. 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 Al Sigl
Center Partners' Foundation Board of Governors and is a member of the Board of
Trustees of Rochester Institute of Technology.
Dr. Nocerino joined CVC in 1997 as Executive Vice President, Sales &
Service. From 1994 to 1997, Dr. Nocerino worked as Vice President and General
Manager of Sales and Marketing at Varian Associates, a supplier of semiconductor
manufacturing equipment. Prior to his employment at Varian Associates,
Dr. Nocerino was Executive Vice President with Materials Research Corporation, a
subsidiary of Sony and a manufacturer of thin film equipment and material for
the data storage and semiconductor industries. Dr. Nocerino holds a joint honors
B.Sc. in Physics and Electronic Engineering and a Ph.D. from the University of
Manchester, England.
Mr. DiCataldo joined CVC 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 worked
for 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. Moslehi joined CVC in 1994 as Senior Vice President and Chief Technology
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
41
<PAGE>
cleaning. Dr. Moslehi is named as an inventor on over 80 U.S. 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 MS and 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, Marketing after having served as Senior Vice President, Data
Storage from 1997 to June 1999. Mr. Mann has previously held the positions of
Field Service Manager, Engineering Services Manager and Vice President, Data
Storage at CVC. Prior to joining CVC in 1979, Mr. Mann worked for Sperry in the
United Kingdom.
Dr. Chicotka joined CVC in 1995 as Vice President, Operations, and since
1998 has served as Vice President, Engineering. 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 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. Kellogg joined CVC in 1999 and currently serves as Vice President,
Manufacturing. From 1998 to 1999, he consulted with CVC and other firms in the
materials management area. From 1997 to 1998, Mr. Kellogg held the position of
Vice President, Materials for Lam Research Corporation, a manufacturer of
semiconductor processing equipment. From 1994 to 1997, Mr. Kellogg was Vice
President of Operations for Varian Thin Film Systems, a manufacturer of plasma
vapor deposition systems and, after its acquisition, with Novellus Systems. He
spent the period from 1989 to 1994 with Libbey Owens Ford Glass as General
Manager of its Shelbyville operations. Mr. Kellogg holds a BA from Lake Forest
College.
Mr. Prozeller joined CVC in 1995 and currently serves as Vice President,
Quality and Human Resources. 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 in 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. Fink has been a director of CVC since 1997. In 1993, Mr. Fink joined Lam
Research Corporation, a manufacturer of semiconductor processing equipment, and
formerly served as the Chief Operating Officer, following Lam's acquisition of
Drytek, Inc. Mr. Fink served as the President of Drytek from 1983 to 1988. 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 in Metallurgical Engineering from
Polytechnical Institute of New York.
Mr. Holmes has been a director of CVC since October 1999. Since
January 1999, Mr. Holmes has been a Professor of the Practice of Management and
Engineering Systems at the Massachusetts Institute of Technology, as well as
holding a dual professorship with both its Sloan School of Management and School
of Engineering. Prior to this, Mr. Holmes served as Corporate Vice President and
the Chief Engineer for Xerox Corporation beginning in 1994. Mr. Holmes received
a BS degree from the University of Pittsburgh and a MS in Mechanical and
Aerospace Science from the University
42
<PAGE>
of Rochester. He currently is a director of Frontier Telephone Company of
Rochester, Optical Dynamics Corporation and Storage Technology Corporaton. In
addition, Mr. Holmes serves on the Board of Trustees of Rochester Institute of
Technology and the Ford Design Institute.
Mr. Kingsley has been a director of CVC since 1998. Mr. Kingsley is a Senior
Vice President of Advent International Corporation, a venture capital firm,
where he has been employed since 1990. From 1985 through 1988 Mr. Kingsley was a
sales engineer for Teradyne, Inc., a manufacturer of automatic test equipment
for the electronics industry. Mr. Kingsley is a graduate of Dartmouth College
and Harvard Business School. He is a director of LeCroy Corporation and a member
of the Board of Overseers of the Boston Symphony Orchestra.
Mr. McDermott has been a director of CVC since October 1999. From 1994 to
1997, Mr. McDermott was Chairman of the Board, Chief Executive Officer and
President of Goulds Pumps, Inc. From 1986 to 1993, Mr. McDermott was the
President and Chief Operating Officer of Bausch & Lomb. Prior to this,
Mr. McDermott served in a variety of management positions at Bausch & Lomb, and
also was a member of its Board of Directors from 1983 until 1993. Mr. McDermott
received a BS degree and an Honorary Doctoral Degree from Providence College. He
currently is a director of Goulds Pumps, Inc., Canandaigua Brands, Inc. and
Thomas & Betts Corporation. In addition, Mr. McDermott serves on the Board of
Governors of Strong Memorial Hospital and as a Trustee of Rochester Institute of
Technology.
Mr. Miyanishi has been a director of CVC since 1990. Since 1987,
Mr. Miyanishi has served as President and Chief Executive Officer of Nikko
Tecno, a company based in Japan and involved 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. Thompson became a director of, as well as a consultant to, CVC upon
CVC's acquisition of Commonwealth Scientific Corporation in May 1999.
Mr. Thompson was a co-founder of Commonwealth Scientific and was President, CEO
and Chairman of the Board from 1970 to 1999. Prior to founding Commonwealth, he
served in various engineering and marketing positions with Systems Research
Laboratories, Barry Controls Inc., and Bromion, Inc. Mr. Thompson is Chairman of
the Board of Marshall National Bank and Trust Co. in Marshall, Virginia.
Mr. Thompson attended the University of Virginia and received a BS in General
Engineering from M.I.T.
Mr. Waite has been a director of CVC since 1995. Since 1983, Mr. Waite has
served in various positions for Seagate Technology, most recently as Senior
Administrative Officer, Senior 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 CVC are elected by CVC's 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 CVC.
Mr. Thompson has advised CVC that upon consummation of this offering he will
resign his directorship.
DIRECTOR COMMITTEES AND COMPENSATION
DIRECTOR COMMITTEES
The Audit Committee of CVC's board of directors consists of
Messrs. Kingsley, McDermott, Thompson and Waite. The Audit Committee:
- reviews with CVC's independent accountants the scope and timing of their
audit services;
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<PAGE>
- the accountants' report on CVC's consolidated financial statements
following completion of their audit; and
- CVC's policies and procedures with respect to internal accounting and
financial controls.
In addition, the Audit Committee makes annual recommendations to CVC's board of
directors for the appointment of independent accountants for the ensuing year.
The Compensation Committee of CVC's board of directors consists of
Messrs. Fink, Holmes and Kingsley. The Compensation Committee:
- reviews and evaluates the compensation and benefits of all officers of
CVC;
- reviews general policy matters relating to compensation and benefits of
employees of CVC;
- makes recommendations concerning these matters to CVC's board of
directors; and
- administers CVC's stock option plans. See "--Stock Plans."
DIRECTOR COMPENSATION
Directors who are employees of CVC will receive no additional compensation
for their services as members of CVC's board of directors or as members of Board
committees. Directors who are not employees of CVC are paid an annual retainer
of $8,000, payable in shares of common stock, as well as additional fees paid in
cash of $1,500 for each meeting of the Board and $500 for each meeting of a
Board committee attended by such director. In addition, chairmen of Board
committees are paid an additional amount of $1,000 in cash. CVC's directors are
reimbursed for their out-of-pocket and travel expenses incurred in connection
with their service as directors.
CVC's Nonemployee Directors' 1999 Stock Option Plan contains provisions
pursuant to which options for 7,500 shares of common stock are granted to each
nonemployee director upon commencement of service on the Board, and options for
2,000 shares of common stock are granted to each nonemployee director on
March 31 of each year of continued service on the Board. CVC has authorized and
reserved 200,000 shares of common stock for issuance under this plan.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation for fiscal 1997, 1998
and 1999, respectively, of the chief executive officer and each of the other
four most highly compensated executive officers of CVC whose total salary and
bonus for fiscal 1999 exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
ANNUAL COMPENSATION OPTIONS/SARS
------------------------------------- LONG-TERM
OTHER ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS COMPENSATION(2)
- --------------------------- -------- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Christine B. Whitman
President, Chief Executive
Officer and Chairman... 1999 $178,652 $28,000 -- 33,333 $2,936
1998 173,040 47,600 -- -- 2,647
1997 167,250 46,600 -- 51,000 2,325
Giovanni Nocerino
Executive Vice President,
Sales & Service........ 1999(6) 224,950 -- $75,654(3) -- 3,085
1998 183,333 -- 16,535 160,000 --
1997 -- -- -- -- --
Mehrdad M. Moslehi
Senior Vice President and
Chief Technical Officer.. 1999 158,489 10,000 -- 16,667 2,700
1998 147,054 31,100 -- -- 2,576
1997 140,078 29,100 -- 12,000 1,905
Christopher J. Mann
Senior Vice President,
Marketing.............. 1999 158,487 -- 41,127(4) 16,667 3,810
1998 147,290 27,100 77,731(4) -- 4,153
1997 122,406 28,500 31,962(4) 22,500 2,506
Emilio O. DiCataldo
Senior Vice President and
Chief Financial Officer.. 1999 152,148 25,000 --(5) 30,000 2,213
1998 146,692 31,800 -- -- 1,900
1997 142,551 34,400 46,930 48,000 1,330
</TABLE>
- ------------------------
(1) 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 executive officer for each fiscal
year.
(2) Represents matching contributions made by CVC on behalf of the executive
officer to its 401(k) Plan.
(3) Represents automobile allowance of $1,901 and sales commissions of $73,754.
(4) Represents automobile allowance of $10,488 and sales commissions of $30,639
in 1999, automobile allowance of $10,488 and sales commissions of $67,243 in
1998 and automobile allowance of $10,488 and sales commissions of $21,474 in
1997.
(5) Represents relocation expense of $17,500, relocation allowance of $26,670
and dues of $2,760.
(6) No information for fiscal 1997 is presented as Mr. Nocerino joined CVC in
fiscal 1998. Mr. Nocerino became one of our executive officers in the fall
of 1997.
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<PAGE>
The following table sets forth information regarding the option grants made
during fiscal 1999 to each of the executive officers. CVC issued no stock
appreciation rights in fiscal 1999.
OPTION GRANTS
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
TOTAL STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OR OPTION TERM
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME OPTIONS FISCAL 1999 ($/SHARE) DATE 5% 10%
- ---- ---------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Christine B. Whitman.............. 33,333 10.70% $6.00 5/14/09 $ 255,254 $ 322,099
Giovanni Nocerino................. -- -- -- -- -- --
Mehrdad M. Moslehi................ 16,667 5.35 6.00 5/14/09 127,631 161,054
Christopher J. Mann............... 16,667 5.35 6.00 5/14/09 127,631 161,054
Emilio O. DiCataldo............... 30,000 9.63 6.00 5/14/09 229,731 289,892
</TABLE>
The following table sets forth information regarding exercise of options and
the number and value of options held at September 30, 1999, by each of the
officers listed below.
YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END(1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Christine B. Whitman.......................... 353,600 53,733 $4,243,200 $ 644,796
Giovanni Nocerino............................. 53,333 106,667 639,996 1,280,004
Mehrdad M. Moslehi............................ 3,200 21,467 38,400 257,604
Christopher J. Mann........................... 206,000 25,667 2,472,000 308,004
Emilio O. Dicataldo........................... 142,800 49,200 1,713,600 590,400
</TABLE>
- ------------------------
(1) The value of the unexercised, in-the-money options on September 30, 1999 is
based on the difference between the assumed initial public offering price of
the common stock ($12.00 per share) and the per share option exercise price,
multiplied by the number of shares of common stock underlying the options.
STOCK OPTION PLANS
STOCK OPTION PROGRAM
Until June 1996, CVC had an informal stock option program under which
selected employees were granted non-qualified options to purchase shares of
common stock. The primary purpose of this program had been to provide long-term
incentives to selected CVC employees and to further align their interests with
those of CVC. Under this program, the Compensation Committee and/or CVC's board
of directors:
- selected the participants;
- determined the number of shares of common stock offered to each
participant;
- determined the terms of the repurchase rights for each participant; and
- determined other terms of sale.
46
<PAGE>
Options granted under this informal plan generally vested over a period of
three-to-five years from the date of grant and were exercisable at the fair
market value of a share of common stock at the date of grant. Under this
program, options to purchase 1,473,840 shares of common stock have been granted,
of which options to purchase 321,333 shares of common stock have been exercised
and options to purchase 120,000 shares of common stock have been cancelled.
1996 STOCK OPTION PLAN
CVC's 1996 Stock Option Plan was adopted by CVC's board of directors
effective June 30, 1996 under which selected employees were granted nonqualified
stock options and incentive stock options to purchase shares of common stock.
The primary purpose of this plan was to provide long-term incentives to selected
CVC employees and to further align their interests with those of CVC. Under the
plan, the Compensation Committee and/or CVC's board of directors:
- selected the participants;
- determined the form and number of shares of common stock offered to each
participant;
- determined the exercise period of each option;
- determined the terms of the repurchase rights for each participant; and
- determined other terms of sale.
Options granted to employees under this plan were generally at fair market
value as of the grant date based upon valuations obtained contemporaneously from
an independent appraiser. Options granted generally vested over a period of
three-to-five years from the date of grant and were exercisable at the fair
market value of a share of common stock at the date of grant.
As of September 30, 1999, options to purchase 582,134 shares of common stock
have been granted under this plan, of which options to purchase 16,600 shares of
common stock have been exercised and options to purchase 184,833 shares have
been cancelled. This plan was terminated as of August 30, 1999.
1997 STOCK OPTION PLAN
CVC's 1997 Stock Option Plan was adopted by CVC's board of directors
effective October 16, 1997, under which stock options may be granted to
employees of CVC and its subsidiaries. This plan permits the grant of stock
options that qualify as incentive stock options under Section 422 of the
Internal Revenue Code and nonqualified stock options which do not so qualify.
CVC has initially authorized and reserved 1,833,333 shares of common stock for
issuance under this plan, with the number of shares authorized and reserved
being increased annually in an amount equal to 5% of the total number of shares
of common stock issued by CVC in the preceding fiscal year, with a maximum
aggregate of shares issued under this plan not to exceed 3,333,333. As of
September 30, 1999, 736,002 options had been granted. Options to purchase
185,734 shares have been cancelled and 133 shares have been exercised as of
September 30, 1999. The shares may be unissued shares or treasury shares. If an
option expires or terminates for any reason without having been exercised in
full, the unpurchased shares subject to that option will again be available for
grant under the plan.
The Compensation Committee administers the plan. Subject to the limitations
set forth therein, the Compensation 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;
47
<PAGE>
- the exercise price of each option, which may not be less than the fair
market value of the underlying common stock;
- the time or times at which the options will become exercisable;
- the duration of the exercise period;
- 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;
- 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
- 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 CVC and its subsidiaries are
eligible to receive grants of stock options under this plan, as selected by the
Compensation Committee. The maximum term of options granted under this plan is
ten years from the date of grant. The maximum number of shares of common stock
that may be subject to options granted to any participant of the plan during any
one calendar year is 333,333. Options granted under the plan will generally
become vested and exercisable over a five-year period in equal annual
installments, unless the Compensation Committee specifies a different vesting
schedule. However, in the event of a change of control upon a transaction such
as a merger, consolidation, sale of all or substantially all of the assets of
CVC or a change in the composition of a majority of CVC's Board, then each
option that was not then vested prior to such event will become fully vested and
immediately exercisable unless assumed or substituted by the successor
corporation.
All options granted under this plan are nontransferable by the optionee,
except for transfers approved by the Compensation Committee to 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 Compensation Committee will have
the discretion to determine the extent to which any unvested options shall
become vested and exercisable. 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. However, all unexercised options will be
immediately forfeited by any employee who is terminated as a result of any of
the following:
- embezzlement or misappropriation of corporate funds;
- conviction for a felony;
- misconduct resulting in material injury to us;
- significant activities harmful to our reputation or the reputation of any
of our subsidiaries;
- a significant violation of our corporate policies;
- willful refusal to perform, or substantial disregard of, the duties
properly assigned to the option holder; or
- a significant violation of any contractual, statutory or common law duty
of loyalty to us or any of our subsidiaries.
In addition, the exercise price of an option is payable in cash or, in the
discretion of the Compensation 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. This plan has a term of
48
<PAGE>
ten years, subject to earlier termination or amendment by CVC's board of
directors, and all options granted under its plan prior to its termination
remain outstanding until they have been exercised or are terminated in
accordance with their terms. CVC's board of directors may amend this plan at any
time.
1999 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
CVC's board of directors has adopted the 1999 Nonemployee Director Stock
Option Plan. Under this plan, stock options are granted to each member of CVC's
board of directors who is not an employee of CVC. See "--Director Committees and
Compensation" and "--Director Compensation."
ASSUMPTION OF COMMONWEALTH STOCK OPTIONS
In connection with the closing of the acquisition of Commonwealth Scientific
Corporation, all outstanding options to purchase shares of Commonwealth as of
the closing were assumed by CVC. These non-qualified options are governed by
stand alone agreements with each respective optionee. As of September 30, 1999,
options to purchase an aggregate of 270,697 shares of common stock are held by
former optionees of Commonwealth.
PENSION PLAN
CVC 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 CVC, as well as benefits
employees may be entitled to receive under prior retirement plans of CVC. This
plan was frozen effective September 30, 1991 and no further benefits will be
accrued under it. Mr. Christopher Mann will receive $157.68 and Ms. Christine
Whitman will receive $394.28, each 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 are Messrs. Fink, Holmes
and Kingsley. None of these directors was at any time during the fiscal year
ended September 30, 1999, nor at any other time within the past five years, an
officer or employee of CVC. No executive officer of CVC serves as a member of a
board of directors or compensation committee of any entity which has one or more
executive officers serving as a member of CVC's board of directors or its
Compensation Committee.
AGREEMENTS WITH EMPLOYEES
CVC has entered into severance agreements with Ms. Whitman, Messrs.
DiCataldo, Mann, Kellogg, Prozeller and Sowers and Drs. Moslehi, Chicotka and
Nocerino. These agreements provide that these employees will serve CVC in their
offices for a term of three years, with automatic one-year renewals, subject to
earlier termination as provided for in the these agreements. These agreements
set forth the following minimum base salary during the term of the particular
agreement for the following employees: (1) Ms. Whitman - $168,000;
(2) Mr. Chicotka - $127,688; (3) Mr. DiCataldo - $140,369;
(4) Mr. Kellogg - $142,000; (5) Mr. Mann - $124,162;
(6) Mr. Moslehi - $142,771; (7) Mr. Nocerino - $220,000;
(8) Mr. Prozeller - $110,000; and (9) Mr. Sowers - $120,000. These amounts are
subject to possible increase at the sole discretion of the Compensation
Committee. Each employee is also eligible to receive, at the sole discretion of
the Compensation Committee, an annual bonus based on the contribution of the
employee towards achievement of the annual business goals of CVC. Under these
agreements, the employees are entitled to participate in the employee benefit
plans of CVC and are eligible for the grant of stock options, in the sole
discretion of the Compensation Committee.
In addition, these agreements provide that the employee is entitled to a
lump-sum cash severance payment in the following circumstances:
49
<PAGE>
- upon a termination by CVC of the employee without cause; and
- upon a termination by the employee of his employment with CVC, within six
months immediately following an acquisition, merger, reorganization of CVC
or other similar transaction or event.
This lump-sum severance payment is equal to the employee's base salary as in
effect immediately prior to termination multiplied by a number of months
(24 months for Ms. Whitman, 18 months for Mr. DiCataldo, 12 months for Drs.
Moslehi, Chicotka, Nocerino and Messrs. Mann, Kellogg, Prozeller and Sowers) and
then discounted to present value from the dates such payments would otherwise
have been made.
Upon an acquisition, merger, reorganization or other similar transaction or
event, 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 provision has been made for (1) continuation of any such CVC option plan
and/or the assumption of such options by a successor corporation or (2) the
substitution for such options of new options covering the stock of a successor
corporation, with appropriate adjustments. An employee terminated after any of
these types of transactions or events will retain the right to exercise any
options to purchase shares of common stock for 12 months following the date of
such termination or, if earlier, the expiration of the original term of the
option.
These agreements include restrictive covenants for the benefit of CVC
relating to non-disclosure by the employee of CVC's confidential business
information and CVC's right to inventions and technical improvements of the
employee.
50
<PAGE>
CERTAIN TRANSACTIONS
Advent International Group is a principal stockholder of CVC. Mr. Kingsley,
a director of CVC, is a Managing Director of Advent.
Seagate Technology is a principal stockholder of CVC, as well as a major
customer. Mr. Waite, a director of CVC, is an officer of Seagate Technology.
In December 1998, CVC sold an aggregate of 100,000 shares of Series C
Convertible Preferred Stock for a price of $10.00 per share and a warrant to
purchase an aggregate of 200,000 shares of common stock to entities affiliated
with Advent International Corporation in a private placement. The Series C
Convertible Preferred Stock is automatically converted into 1,016,260 shares of
common stock, as well as 100,000 shares of Series D Redeemable Preferred Stock
upon consummation of this offering. The Series D Redeemable Preferred Stock
will, in turn, be redeemed by CVC upon the consummation of this offering for a
redemption price of $10.0 million. The warrant will be terminated upon
consummation of this offering. See "Description of Capital Stock."
Also, in connection with that transaction, CVC entered into an Amended and
Restated Registration Rights Agreement with Advent, Seagate Technology, Nikko
Tecno and executive officers and stockholders of CVC who are parties to this
agreement. Such agreement grants demand and piggy-back registration rights to
Seagate Technology and Advent with respect to shares of common stock issuable
upon conversion of all outstanding shares of the Series B and Series C Senior
Convertible Redeemable Preferred Stock, and also grants piggy-back registration
rights to the executive officers and stockholders of CVC who are parties to this
agreement. See "Description of Capital Stock--Registration Rights." In addition,
CVC entered into an Amended and Restated Stockholders' Agreement with Advent,
Seagate Technology, Nikko Tecno and the executive officers and stockholders of
CVC who are parties to this agreement providing for voting and pre-emptive
rights with respect to the acquisition and sale of shares by CVC and certain
matters affecting corporate governance. These rights will terminate when the
Series A, Series B and Series C Senior Convertible Redeemable Preferred Stock
are converted into common stock upon the consummation of this offering.
As part of CVC's acquisition of Commonwealth in May 1999, CVC entered into a
consulting agreement with George R. Thompson, Jr., the former Chief Executive
Officer of Commonwealth and a current director of CVC. Under the terms of this
consulting agreement, CVC is obligated to pay Mr. Thompson an aggregate amount
of $525,000 over the three-year period following the acquisition, as
consideration for consulting services provided by him to CVC. In addition,
Mr. Thompson is entitled to benefits, such as an automobile allowance and health
insurance coverage. This consulting agreement may be terminated by Mr. Thompson
for any reason at any time and by the Company in the following circumstances:
- if Mr. Thompson (1) materially breaches his obligations under a
non-competition agreement; (2) is convicted of a felony or any offense
involving misappropriation of money; or (3) willfully fails or refuses to
perform his duties under this agreement or
- upon Mr. Thompson's death.
Nikko Tecno, a Japanese corporation, is a principal stockholder and a
distributor of CVC's products in Japan. Mr. Miyanishi, a director of CVC, is the
President and Chief Executive Officer of Nikko Tecno. CVC borrowed from Nikko
Tecno $1.5 million in November 1990 and $1.0 million in December 1991 under two
unsecured notes that required quarterly interest payments calculated at an
annual rate of 9%. The principal of the $1.0 million note was paid in October
1997. The principal of the $1.5 million note was paid in January 1999. See Notes
to Consolidated Financial Statements.
Christine Whitman, CVC's Chairman, President and Chief Executive Officer
currently serves as a director of M&T Bank, with whom CVC has outstanding credit
agreements.
With respect to all of the transactions listed above, CVC believes that the
terms of these transactions were, at the time entered into, no less favorable
than CVC could have obtained with
non-affiliated parties.
51
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of CVC's common stock as of October 15, 1999, by each person or entity
known to CVC to own beneficially more than 5% of the outstanding shares of
common stock, each of CVC's directors and the named executive officers, the
selling stockholders who are Anne G. Whitman and George R. Thompson, Jr. and all
directors and executive officers as a group. Unless otherwise indicated below,
to the knowledge of CVC, 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 OWNED
PRIOR TO THE AFTER THE
OFFERING(1)(2) SHARES TO BE OFFERING(1)(2)
-------------------- SOLD IN THE --------------------
BENEFICIAL OWNER NUMBER PERCENT OFFERING NUMBER PERCENT
- ---------------- --------- -------- ------------ --------- --------
<S> <C> <C> <C> <C> <C>
Seagate Technology(3)........................ 3,219,073 34.7 -- 3,219,073 26.2
920 Disc Drive
Scotts Valley, CA 95066-4544
Nikko Tecno(4)............................... 1,412,316 16.6 -- 1,412,316 12.3
P.O. Box 139
Central Tokyo, Japan
Advent International Group(5)................ 1,017,593 12.0 -- 1,017,593 8.9
75 State Street
Boston, MA 02109
Anne G. Whitman(6)........................... 1,108,800 13.1 300,000 808,800 7.0
Christine B. Whitman(7)...................... 726,400 8.2 -- 726,400 6.1
Giovanni Nocerino............................ 106,667 1.2 -- 106,667 *
Emilio O. DiCataldo.......................... 146,000 1.7 -- 146,000 1.3
Mehrdad M. Moslehi(7)........................ 307,200 3.6 -- 307,200 2.7
Christopher J. Mann.......................... 263,360 3.0 -- 263,360 2.3
Richard J. Chicotka.......................... 85,600 1.0 -- 85,600 *
Richard A. Kellogg........................... 8,267 * -- 8,267 *
Judd C. Prozeller............................ 28,133 * -- 28,133 *
Robert C. Fink............................... 4,888 * -- 4,888 *
Douglas A. Kingsley(8)....................... 1,017,593 12.0 -- 1,017,593 8.9
Seiya Miyanishi(9)........................... 1,412,316 16.6 -- 1,412,316 12.3
George R. Thompson, Jr.(7)(10)............... 862,449 10.2 200,000 662,449 5.8
Donald L. Waite(11).......................... 3,219,073 34.7 -- 3,219,073 26.2
Thomas C. McDermott.......................... -- -- -- -- --
Maurice F. Holmes............................ -- -- -- -- --
All directors and executive officers as a
group
(15 persons)(12)........................... 8,187,946 80.0% -- 7,987,946 60.4
</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, 1999. 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--358,400 shares; Giovanni Nocerino--106,667
shares; Emilio O. DiCataldo--146,000 shares; Mehrdad M. Moslehi--3,200
shares; Christopher J. Mann--207,400 shares; Richard J.
52
<PAGE>
Chicotka--85,600 shares; Richard A. Kellogg--8,267 shares; Judd C.
Prozeller--28,133 shares; and Robert C. Fink--2,222 shares.
(3) Includes 2,419,680 shares of common stock issuable upon conversion of
outstanding shares of Series B Convertible Preferred Stock and 790,760
additional shares of common stock issuable upon exercise of a warrant held
by Seagate Technology.
(4) Includes 1,392,000 shares of common stock issuable upon conversion of
Series A Convertible Preferred Stock.
(5) Includes ownership by the following venture capital funds managed by Advent
International Corporation: (1) 853,658 shares of common stock issuable to
Global Private Equity III Limited Partnership upon conversion of outstanding
shares of Series C Convertible Preferred Stock, (2) 130,793 shares of common
stock issuable to Advent PGGM Global Limited Partnership upon conversion of
outstanding shares of Series C Convertible Preferred Stock, (3) 12,907
shares of common stock issuable to Advent Partners GPE III Limited
Partnership upon conversion of outstanding shares of Series C Convertible
Preferred Stock, (4) 3,861 shares of common stock issuable to Advent
Partners (NA) GPE III Limited Partnership upon conversion of outstanding
shares of Series C Convertible Preferred Stock and (5) 15,041 shares of
common stock issuable to Advent Partners Limited Partnership upon conversion
of outstanding shares of Series C Convertible Preferred Stock. Advent is the
general partner for all of the above limited partnerships.
(6) Includes an aggregate of 38,400 shares of common stock held by
Ms. Whitman's three children pursuant to trust agreements with The Chase
Manhattan Bank. Ms. Whitman disclaims beneficial ownership of these shares.
Anne G. Whitman is not related to Christine B. Whitman and has at no time
held any position, office or other material relationship with CVC or any of
its predecessors or affiliates, except as a shareholder of CVC.
(7) The stockholders' address is: c/o CVC, Inc., 525 Lee Road, Rochester, New
York, 14606.
(8) Represents 1,017,593 shares owned by Advent. Mr. Kingsley is a Senior Vice
President of Advent International Corporation, the venture capital firm
which is the manager of the funds affiliated with the Advent International
Group. Mr. Kingsley disclaims beneficial ownership of the shares of common
stock owned by Advent except to the extent of his indirect pecuniary
interest therein as a partner in Advent.
(9) Represents 1,412,316 shares of common stock beneficially owned by Nikko
Tecno of which Mr. Miyanishi is a director, officer and principal
stockholder. Mr. Miyanishi disclaims beneficial ownership of the shares of
common stock owned by Nikko Tecno except to the extent of his indirect
pecuniary interest therein as a stockholder of Nikko Tecno. Mr. Miyanishi's
address is: c/o Nikko Tecno, P.O. Box 139, Central Tokyo, Japan.
(10) Includes 50,869 shares of common stock held by Mr. Thompson's daughter,
Eleanor Thompson, and 50,869 shares of common stock held by his son, G.
Richard Thompson. Mr. Thompson disclaims beneficial ownership of the shares
of common stock held by his children.
(11) Represents 3,219,073 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 indirect pecuniary
interest therein as a stockholder of Seagate Technology.
(12) Includes (1) 1,412,316 shares held of record by Nikko Tecno, the ownership
of which is attributed to a Mr. Miyanishi, (2) 1,017,593 shares held of
record by Advent, the ownership of which is attributed to Mr. Kingsley,
(3) 3,219,073 shares held of record by Seagate Technology, the ownership of
which is attributed to a director of CVC and (4) 50,869 shares of common
stock held
53
<PAGE>
by Mr. Thompson's daughter, Eleanor Thompson, and 50,869 shares of common
stock held by his son, G. Richard Thompson.
Anne G. Whitman and George R. Thompson, Jr. have granted to the underwriters
an option to purchase up to an aggregate of 525,000 shares of common stock to
cover over-allotments, if any. Such option may be exercised at any time within
30 days from the date of this prospectus, in whole or in part. If the
underwriters option is exercised in full, Ms. Whitman would beneficially own
483,800 shares representing 4.2% of shares outstanding and Mr. Thompson would
beneficially own 462,449, shares representing 4.0% of shares outstanding. The
percentage beneficial ownership of the other stockholders listed above will not
change as a result of the exercise of the underwriter's over-allotment option.
54
<PAGE>
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED STOCK
Upon the completion of this offering, the authorized capital stock of CVC
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.
COMMON STOCK
Assuming conversion of all outstanding Series A, Series B and Series C
Convertible Preferred Stock, at September 30, 1999 there were 8,492,707 shares
of common stock issued and outstanding held by approximately 66 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 CVC's board of directors out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up of
CVC, 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
the 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 CVC may designate and issue in the future.
PREFERRED STOCK
As of September 30, 1999, 1,685 shares of Series A Convertible Preferred
Stock, 60,492 shares of Series B Convertible Preferred Stock, 100,000 shares of
Series C Convertible Preferred Stock and no shares of Series D Redeemable
Preferred Stock were issued and outstanding. Simultaneously with the closing of
this offering, the outstanding shares of Series A Convertible Preferred Stock
will automatically be converted into an aggregate of 2,696,000 shares of common
stock and the Series B Convertible Preferred Stock will automatically be
converted into 2,419,680 shares of common stock. At the same time, the Series C
Convertible Preferred Stock will automatically be converted into 1,016,260
shares of common stock and 100,000 shares of Series D Redeemable Preferred
Stock. The Series D Redeemable Preferred Stock will, in turn, be redeemed by CVC
upon the consummation of this offering for a redemption price of $10.0 million.
Upon the closing of the offering, the conversion of the outstanding
Series A, Series B and Series C Convertible Preferred Stock, the redemption of
the Series D Redeemable Preferred Stock and the filing of an Amended and
Restated Certificate of Incorporation of CVC removing the designation of those
series, CVC's 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 Certificate of
Incorporation, CVC's board of directors is authorized, subject to any
limitations prescribed by law, without further 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
CVC's board of directors.
The purpose of authorizing CVC's 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.
55
<PAGE>
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 CVC. CVC has no present plans to issue any shares of preferred stock.
REGISTRATION RIGHTS
Upon consummation of this offering, the holders of 7,218,197 shares of
common stock will be entitled to rights with respect to the registration of
these shares under the Securities Act. These registration rights have been
waived with respect to the offering. Under the terms of an agreement between CVC
and the holders of the shares eligible for registration, if CVC 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,
these holders are entitled to notice of registration and are entitled to include
their eligible shares in the offering, provided that the managing underwriters
have the right to limit the number of these shares included in the registration.
Holders of 3,435,940 shares of the shares eligible for registration may also
require CVC to file a registration statement under the Securities Act at its
expense with respect to these securities, and CVC is required to use its best
efforts to effect that registration, subject to, among other things, the right
of CVC not to effect any registration within six months following this offering.
Further, stockholders may require CVC to file additional registration statements
on Form S-3 when that form becomes available to CVC. All expenses incurred in
connection with such registrations must be borne by CVC, other than underwriting
discounts and commissions.
WARRANTS
CVC has issued a warrant to Seagate Technology 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 May 22, 1995, the date this warrant was issued. Upon the consummation of this
offering, this warrant will become exercisable for 790,760 shares of common
stock at an exercise price of $5.58 per share of common stock.
CVC has issued warrants to Advent to purchase an aggregate of 133,333 shares
of common stock at an exercise price of $15.00 per share during the four-year
period commencing on December 1, 2001. This warrant, however, will terminate
upon the consummation of this offering.
LIMITATIONS ON DIRECTOR LIABILITY
CVC's Certificate of Incorporation provides that, to the fullest extent
permitted by the Delaware General Corporation Law, none of its directors will be
personally liable to CVC or its stockholders for monetary damages.
Section 102(b)(7) of the Delaware General Corporation Law currently provides
that a director's liability for breach of fiduciary duty to a corporation may be
eliminated, except for liability:
- for any breach of the director's duty of loyalty to the corporation or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law, for unlawful
dividends or unlawful stock repurchases or redemptions; and
- for any transaction from which the director derives an improper personal
benefit.
Any amendment to these provisions of the Delaware General Corporation Law
will automatically be incorporated by reference into CVC's Certificate of
Incorporation without any vote on the part of its stockholders unless otherwise
required, including this provision in CVC's Amended and Restated
56
<PAGE>
Certificate. These provisions may, however, discourage or deter stockholders or
management from bringing a lawsuit against directors for a breach of their
fiduciary duties, even though such an action, if successful, might otherwise
benefit us and our stockholders.
CVC's By-laws provide that CVC will indemnify its directors and officers to
the fullest extent permitted by Delaware law. Generally, CVC is required to
indemnify our directors and officers for all:
- judgments;
- fines;
- settlements;
- legal fees; and
- other expenses incurred in connection with pending or threatened legal
proceedings because of the director's or officer's position with CVC.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
CVC is subject to the provisions of Section 203 of the Delaware General
Corporation Law. Under Section 203, 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 generally prohibited
for a three-year period following the date that such a stockholder became an
interested stockholder, unless:
- the corporation has elected in its original certificate of incorporation
not to be governed by Section 203. CVC did not make this election;
- 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;
- 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
- the business combination was approved by the board of directors of the
corporation and ratified by two-thirds of the voting stock not owned by
the interested stockholder.
The three-year prohibition also does not apply to some business combinations
proposed by an interested stockholder following the announcement or notification
of an extraordinary transaction 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 under Section 203 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 under Section 203
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 CVC and therefore could discourage attempts to acquire CVC.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock will be BankBoston,
N.A.
57
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, CVC will have 11,492,707 shares of common
stock outstanding. Of these shares, the 3,500,000 shares of common stock sold in
the offering will be freely tradable without restriction under the Securities
Act. However, any shares purchased by "affiliates" of CVC, as that term is
defined in Rule 144 under the Securities Act, generally may be sold only in
compliance with the limitations of Rule 144 described below. Affiliates include
directors, officers and holders of 10% or greater of the total outstanding
shares of common stock.
SALES OF RESTRICTED SECURITIES
The remaining shares of common stock outstanding upon completion of the
offering are deemed "restricted securities" under Rule 144. Of the restricted
securities, up to 1,168,737 shares will be eligible for sale in the public
market after the offering pursuant to Rule 144(k) under the Securities Act;
1,167,409 of these shares are subject to the 180-day lock-up agreements
described below, but will be eligible for sale in the public market immediately
upon the closing of the offering. Of the remaining restricted securities
outstanding, 4,702,873 shares will be eligible for resale under Rule 144
commencing 90 days after the date of this prospectus; all 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
securities who beneficially owns shares that were not acquired from CVC or an
affiliate of CVC within the previous year 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 114,773
shares immediately after the 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 of restricted securities under Rule 144 are subject
to manner of sale provisions, notice requirements and the availability of
current public information about CVC. A person who is not deemed an affiliate of
CVC at any time during the three months preceding a sale, and who beneficially
owns shares that were not acquired from CVC 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 CVC.
Any employee, officer or director of or consultant to CVC 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. Affiliates can sell
their Rule 701 shares without having to comply with Rule 144's one-year
holding-period restrictions, but must otherwise comply with its volume
limitations and manner of sale provisions.
OPTIONS
Upon completion of the offering, 1,901,379 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 the offering;
1,758,730 of these shares underlying these options are subject to the 180-day
lock-up agreements. An additional 1,283,065 shares of common stock are available
for future grants under CVC's stock option plans.
CVC 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 CVC's stock option plans
that do not qualify for an exemption under Rule 701 from the registration
requirements of the Securities Act. CVC has agreed with the Underwriters not to
file these
58
<PAGE>
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.
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
CVC's future ability to raise capital through an offering of equity securities.
59
<PAGE>
UNDERWRITING
Each underwriter named below has agreed to purchase from CVC and the selling
stockholders the number of shares of common stock set forth opposite its name.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ -------------
<S> <C>
Lehman Brothers Inc.........................................
Prudential Securities Incorporated..........................
SG Cowen Securities Corporation.............................
Warburg Dillon Read LLC.....................................
---------
Total................................................... 3,500,000
=========
</TABLE>
The underwriters will purchase the shares pursuant to an underwriting
agreement with CVC and the selling stockholders. The underwriters will pay CVC
and the selling stockholders the public offering price less the underwriting
discount specified on the cover page of this prospectus. CVC estimates that its
expenses for this offering will be $ . Certain conditions contained in the
underwriting agreement must be satisfied before the underwriters are required to
purchase the shares, including the delivery of legal opinions by legal counsel.
The underwriters will purchase either all of the shares or none of them.
The underwriters have advised CVC and the selling stockholders that they
will offer the shares directly to the public initially at the public offering
price and to selected dealers, who may include underwriters, at the public
offering price less a selling concession not to exceed $ per
share. The underwriters may allow, and these dealers may reallow, a concession
not to exceed $ per share to certain brokers and dealers. After the
initial offering of the shares the underwriters may change the public offering
price and other selling terms.
The following table shows the per share and total public offering price,
underwriting discount to be paid by CVC and the selling stockholders to the
underwriters and the proceeds before expenses to CVC and the selling
stockholders. This information is presented assuming either no exercise or full
exercise by the underwriters of their over-allotment option.
<TABLE>
<CAPTION>
PER
SHARE WITHOUT OPTION WITH OPTION
-------- -------------- -----------
<S> <C> <C> <C>
Public offering price....................................... $ $ $
Underwriting discount....................................... $ $ $
Proceeds, before expenses, to CVC........................... $ $ $
Proceeds to selling stockholders............................ $ $ $
</TABLE>
The underwriters will offer the shares subject to prior sale, withdrawal,
cancellation or modification of offer of the shares without notice, and to their
receipt and acceptance of the shares. The underwriters may reject any order to
purchase shares.
The selling stockholders have granted the underwriters an option,
exercisable not later than 30 days after the date of this prospectus, to
purchase up to 525,000 additional shares at the public offering price less the
underwriting discount specified on the cover page of this prospectus. To the
extent that the underwriters exercise this option, each of the underwriters will
have a firm commitment, subject to conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by it shown in
the above table bears to each underwriter's initial purchase commitment, and CVC
and the selling stockholders will be obligated to sell such shares to the
underwriters. The underwriters may exercise such option only to cover
over-allotments.
60
<PAGE>
Each of the officers and directors of CVC, and certain stockholders of CVC,
including the selling stockholders, have agreed not to offer, sell, pledge or
otherwise dispose of any shares of common stock, directly or indirectly, or
engage in hedging transactions with respect to the common stock, for a period of
180 days after the date of this prospectus, without the prior written consent of
Lehman Brothers Inc. Stockholders who have agreed to this lock-up arrangement
hold an aggregate of shares of common stock and options to purchase an
aggregate of shares of common stock. CVC has agreed not to sell or
otherwise dispose of any shares of common stock for a period of 180 days,
subject to exceptions. Lehman Brothers Inc. may, in its sole discretion and at
any time without notice, release all or any portion of the shares subject to
such lock-up agreements. See "Shares Eligible for Future Sale."
Prior to this offering, there has been no public market for the shares of
common stock. The initial public offering price will be negotiated by the
representatives of the underwriters, CVC and representatives of the selling
stockholders. The underwriters will consider, among other things and in addition
to prevailing market conditions, CVC's historical performance and capital
structure, estimates of business potential and earning prospects, an overall
assessment of CVC's management and the consideration of the above factors in
relation to market valuation of companies in related businesses.
At CVC's request, the underwriters have reserved for sale, at the initial
public offering price, up to of the shares of common stock offered
in this offering for CVC's directors, officers, employees and related persons.
The number of shares of common stock available for sale to the general public
will be reduced to the extent these individuals purchase the reserved shares.
Any reserved shares which are not so purchased will be offered by the
underwriters to the general public on the same basis as the other shares offered
hereby.
Application has been made to have the common stock approved for quotation on
the Nasdaq National Market under the symbol "CVCI."
CVC and the selling stockholders have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act, and
to contribute, under specified circumstances, to payments that the underwriters
may be required to make in respect thereof.
Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
certain selling group members to bid for and purchase shares of common stock. As
an exception to these rules, the underwriters are permitted to engage in
transactions that stabilize the price of the common stock. Such transactions may
consist of bids or purchases for the purposes of pegging, fixing or maintaining
the price of the common stock.
If the underwriters create a short position in the common stock in
connection with this offering, i.e., they sell more shares than are set forth on
the cover page of this prospectus, the underwriters may reduce that short
position by purchasing common stock in the open market. The underwriters also
may elect to reduce any short position by exercising all or part of their
over-allotment option.
The underwriters also may impose a penalty bid on certain underwriters and
selling group members. This means that if the underwriters purchase shares of
common stock in the open market to reduce the underwriters' short position or to
stabilize the price of the common stock, they may reclaim the amount of the
selling concession from the underwriters and selling group members who sold
those shares as part of this offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it was to discourage resales of the security by purchasers in an
offering.
61
<PAGE>
Neither CVC nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
CVC nor any of the underwriters makes any representation that the underwriters
will engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.
Any offers in Canada will be made only pursuant to an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
such sale is made.
Purchasers of the shares of common stock offered by this prospectus may be
required to pay stamp taxes and other charges under the laws and practices of
the country of purchase, in addition to the public offering price.
The underwriters have informed CVC that they do not intend to confirm sales
of shares of common stock to any accounts over which they exercise discretionary
authority in excess of 5% of the shares offered by them.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for CVC by Dewey Ballantine LLP, New York, New York and for the
Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.
EXPERTS
The consolidated financial statements of CVC as of September 30, 1999 and
1998 and for the three years in the period ended September 30, 1999 included in
this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Commonwealth Scientific Corporation as of
March 31, 1999 and 1998, and for the three years in the period ended March 31,
1999, included in this prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein upon the authority of said firm as experts in
giving said reports.
ADDITIONAL INFORMATION
CVC has filed with the Securities and Exchange Commission, 450
Fifth Street, 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 the information set forth in this
registration statement and the exhibits and schedules thereto. For further
information with respect to CVC 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 SEC 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 SEC,
Washington, D.C. 20549 upon the payment of the fees prescribed by the SEC. The
SEC maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants, such as CVC,
that file electronically with the SEC. The SEC's free investor information
service can be reached at 1-800-SEC-0330.
62
<PAGE>
CVC, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
CVC, INC.
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
ACQUIRED COMPANY (COMMONWEALTH SCIENTIFIC CORPORATION)
Report of Independent Public Accountants.................... F-24
Balance Sheets.............................................. F-25
Statements of Operations.................................... F-27
Statements of Stockholders' Equity.......................... F-28
Statements of Cash Flows.................................... F-29
Notes to Financial Statements............................... F-23
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To 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 21, 1999. 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 cash
flows present fairly, in all material respects, the financial position of
CVC, Inc. (the "Company") and its subsidiaries at September 30, 1999 and
1998, and the results of their operations and their cash flows for each of
the three years in the period ended September 30, 1999 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."
PricewaterhouseCoopers LLP
October 18, 1999
F-2
<PAGE>
CVC, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
----------------------------------------
1999 PRO FORMA
1998 1999 (NOTE 1)
-------- ----------- ---------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 106 $ 434 $ 434
Accounts receivable--trade (includes related party
receivables of $1,397 and $4,105 at September 30, 1998
and 1999, respectively), less allowance for doubtful
accounts of $345 and $887 at September 30, 1998 and
1999, respectively...................................... 7,026 21,559 21,559
Inventories............................................... 18,811 29,187 29,187
Deferred income taxes..................................... 1,431 2,819 2,819
Other current assets...................................... 1,055 1,396 1,396
------- ------- -------
28,429 55,395 55,395
Property, plant and equipment, net.......................... 13,901 19,374 19,374
Goodwill and other intangible assets, net................... 434 1,148 1,148
------- ------- -------
Total assets........................................ $42,764 $75,917 $75,917
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term
debt.................................................... $ 5,689 $13,217 $13,217
Accounts payable.......................................... 7,221 11,279 11,279
Advances from customers (includes related party amounts of
$463 at September 30, 1998)............................. 1,167 1,483 1,483
Other current liabilities................................. 3,448 7,312 7,312
------- ------- -------
17,525 33,291 33,291
Long-term debt (includes related party note of $1,500 at
September 30, 1998)....................................... 11,379 8,493 8,493
Deferred income taxes....................................... 1,393 1,554 1,554
Other liabilities........................................... 487 986 986
------- ------- -------
Total liabilities................................... 30,784 44,324 44,324
Commitments (Note 14)
Stockholders' equity:
Preferred stock, $.01 par value per share; 502,500 shares
authorized; shares issued and outstanding:
Series C--100,000 shares at September 30, 1999
(liquidation preference of $10,000,000)................. -- 9,855 --
Series D--100,000 shares pro forma (liquidation preference
of $10,000,000)......................................... -- -- 10,000
Series B--60,492 shares at September 30, 1998 and 1999
(liquidation preference of $9,000,000).................. 8,355 8,355 --
Series A--1,685 shares at September 30, 1998 and 1999
(liquidation preference of $1,685,000).................. 1,685 1,685 --
Common Stock, $.01 par value per share; 50,000,000 shares
authorized; 1,057,929 shares issued and outstanding
at September 30, 1998, and 2,360,767 shares issued and
outstanding at September 30, 1999......................... 11 24 85
Additional paid-in capital.................................. 1,099 9,305 19,139
Warrant..................................................... -- 14 --
Unamortized deferred compensation........................... (252) (135) (135)
Retained earnings........................................... 1,213 2,784 2,798
Minimum pension liability................................... (131) (294) (294)
------- ------- -------
Total stockholders' equity.................................. 11,980 31,593 31,593
------- ------- -------
Total liabilities and stockholders' equity.................. $42,764 $75,917 $75,917
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
CVC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Revenues (includes sales to related party of $29,244,
$21,322, and $28,408, for the years ended September 30,
1997, 1998 and 1999, respectively)........................ $62,588 $68,173 $82,915
Cost of goods sold (includes cost of goods sold to related
party of $17,352, $11,115, and $15,167 for the years ended
September 30, 1997, 1998 and 1999, respectively).......... 41,286 42,019 50,502
------- ------- -------
Gross margin................................................ 21,302 26,154 32,413
Operating expenses
Research and development.................................. 9,055 12,615 12,630
In-process R&D write-off.................................. -- -- 1,174
Sales and marketing....................................... 5,613 7,696 10,081
General and administrative................................ 2,539 3,476 4,822
------- ------- -------
17,207 23,787 28,707
------- ------- -------
Income from operations...................................... 4,095 2,367 3,706
Other income/(expense)
Write-off of deferred charges............................. -- (675) --
Interest and other income................................. 11 171 1,037
Interest expense.......................................... (604) (1,325) (1,235)
------- ------- -------
(593) (1,829) (198)
------- ------- -------
Income before income taxes.................................. 3,502 538 3,508
Income taxes................................................ 1,457 274 1,937
------- ------- -------
Net income.................................................. $ 2,045 $ 264 $ 1,571
======= ======= =======
Net income per share:
Basic..................................................... $ 2.67 $ 0.26 $ 1.01
======= ======= =======
Diluted................................................... $ 0.29 $ 0.04 $ 0.18
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
CVC, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SERIES C SERIES B SERIES A
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
-------------------- -------------------- --------------------
NUMBER NUMBER NUMBER
OF SHARES AMOUNT OF SHARES AMOUNT OF SHARES AMOUNT
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1996.................... 60,492 $8,355 1,685 $1,685
Net income....................................
Minimum pension liability.....................
Tax impact on pension liability...............
Comprehensive earnings......................
Deferred compensation.........................
Amortization of deferred compensation.........
Issuance of common stock......................
------- ------ ------ ------ ------- ------
Balance at September 30, 1997................. 60,492 8,355 1,685 1,685
Net income....................................
Minimum pension liability.....................
Tax impact on pension liability...............
Comprehensive earnings......................
Deferred compensation.........................
Amortization of deferred compensation.........
Issuance of common stock......................
------- ------ ------ ------ ------- ------
Balance at September 30, 1998................. -- -- 60,492 8,355 1,685 1,685
Net income....................................
Minimum pension liability.....................
Tax impact on pension liability...............
Comprehensive earnings......................
Deferred compensation.........................
Amortization of deferred compensation.........
Issuance of preferred stock and warrant....... 100,000 $9,855
Issuance of common stock......................
------- ------ ------ ------ ------- ------
Balance at September 30, 1999................. 100,000 $9,855 60,492 $8,355 1,685 $1,685
======= ====== ====== ====== ======= ======
<CAPTION>
COMMON STOCK
------------------------------- UNAMORTIZED MINIMUM
NUMBER PAR PAID-IN DEFERRED RETAINED PENSION
OF SHARES VALUE CAPITAL WARRANT COMPENSATION EARNINGS LIABILITY
--------- -------- -------- -------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1996.................... 735,160 $ 7 $ 454 $(1,096) $ (86)
Net income.................................... 2,045
Minimum pension liability..................... (2)
Tax impact on pension liability............... 1
Comprehensive earnings......................
Deferred compensation......................... 261 $(261)
Amortization of deferred compensation......... 7
Issuance of common stock...................... 114,100 2 56
--------- --- ------ ---- ----- ------- -----
Balance at September 30, 1997................. 849,260 9 771 (254) 949 (87)
Net income.................................... 264
Minimum pension liability..................... (74)
Tax impact on pension liability............... 30
Comprehensive earnings......................
Deferred compensation......................... 109 (109)
Amortization of deferred compensation......... 111
Issuance of common stock...................... 208,669 2 219
--------- --- ------ ---- ----- ------- -----
Balance at September 30, 1998................. 1,057,929 11 1,099 -- (252) 1,213 (131)
Net income.................................... 1,571
Minimum pension liability..................... (271)
Tax impact on pension liability............... 108
Comprehensive earnings......................
Deferred compensation......................... (12) 12
Amortization of deferred compensation......... 105
Issuance of preferred stock and warrant....... $ 14
Issuance of common stock...................... 1,302,838 $13 8,218
--------- --- ------ ---- ----- ------- -----
Balance at September 30, 1999................. 2,360,767 $24 $9,305 $ 14 $(135) $ 2,784 $(294)
========= === ====== ==== ===== ======= =====
<CAPTION>
TOTAL
--------
<S> <C>
Balance at October 1, 1996.................... $ 9,319
Net income.................................... 2,045
Minimum pension liability..................... (2)
Tax impact on pension liability............... 1
-------
Comprehensive earnings...................... 2,044
Deferred compensation......................... --
Amortization of deferred compensation......... 7
Issuance of common stock...................... 58
-------
Balance at September 30, 1997................. 11,428
Net income.................................... 264
Minimum pension liability..................... (74)
Tax impact on pension liability............... 30
-------
Comprehensive earnings...................... 220
Deferred compensation......................... --
Amortization of deferred compensation......... 111
Issuance of common stock...................... 221
-------
Balance at September 30, 1998................. 11,980
Net income.................................... 1,571
Minimum pension liability..................... (271)
Tax impact on pension liability............... 108
-------
Comprehensive earnings...................... 1,408
Deferred compensation......................... --
Amortization of deferred compensation......... 105
Issuance of preferred stock and warrant....... 9,869
Issuance of common stock...................... 8,231
-------
Balance at September 30, 1999................. $31,593
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
CVC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
SEPTEMBER 30,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 2,045 $ 264 $ 1,571
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
In-process R&D write-off.................................. -- -- 1,174
Depreciation and amortization............................. 1,285 2,167 4,180
Provision for deferred taxes.............................. 461 (259) (166)
Changes in operating assets and liabilities --
Accounts receivable (including related party)........... (3,406) 1,262 (12,046)
Inventories............................................. (5,767) 1,721 1,449
Other assets............................................ (405) (931) 456
Accounts payable........................................ 4,556 (2,772) 746
Advances from customers (including related party)....... 3,035 (7,485) (2,402)
Other liabilities....................................... 1,299 (890) 200
------- ------- -------
Total adjustments..................................... 1,058 (7,187) (11,597)
------- ------- -------
Net cash provided (used) by operating activities...... 3,103 (6,923) (4,838)
------- ------- -------
Cash flows from investing activities:
Capital expenditures...................................... (2,805) (4,817) (1,755)
------- ------- -------
Net cash used by investing activities................. (2,805) (4,817) (1,755)
------- ------- -------
Cash flows from financing activities:
Net proceeds from line of credit.......................... 527 3,612 6,540
Payments on notes payable (including related party)....... -- (1,127) (1,500)
Proceeds from long-term debt.............................. 2,000 8,000 --
Payments on long-term debt and capital lease
obligations............................................. (1,452) (1,021) (8,111)
Net proceeds from issuance of preferred stock and
warrant................................................. -- -- 9,869
Net proceeds from issuance of common stock................ 58 221 123
------- ------- -------
Net cash provided by financing activities............. 1,133 9,685 6,921
------- ------- -------
Net increase (decrease) in cash and cash equivalents........ 1,431 (2,055) 328
Cash and cash equivalents, beginning of period.............. 730 2,161 106
------- ------- -------
Cash and cash equivalents, end of period.................... $ 2,161 $ 106 $ 434
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash investing transaction:
Equipment capitalized from inventory...................... $ -- $ 1,828 $ 2,258
Equipment transferred to inventory........................ -- $ -- $ 198
Cash paid during the year for:
Interest.................................................. $ 542 $ 1,287 $ 1,237
Income taxes.............................................. $ 782 $ 1,430 $ 1,100
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATION
The consolidated financial statements of CVC, Inc. and subsidiaries (CVC or
the Company) include the consolidated accounts of CVC, Inc., CVC Products Inc.,
Commonwealth Scientific Corporation, since acquisition on May 10, 1999, and CVC
Process Solutions, Inc. CVC is a leading worldwide supplier of fabrication
equipment providing thin film process solutions for the manufacture of magnetic
recording heads and advanced semiconductor devices for computers and
communications systems. The Company maintains offices in Rochester, New York;
Alexandria, Virginia; Fremont, California; Garland, Texas; Minneapolis,
Minnesota; Japan and Northern Ireland.
All significant intercompany balances and transactions have been eliminated
in consolidation.
UNAUDITED PRO FORMA BALANCE SHEET
The Company's Series A and Series B Convertible Preferred Stock
automatically convert into common stock and the Company's Series C Convertible
Preferred Stock automatically converts into common stock and Series D Redeemable
Preferred Stock concurrent with the closing of an initial public offering
(Note 10). 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 for pro forma purposes is
assumed to occur as of September 30, 1999.
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 and
disclosure of contingent 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, accounts receivable (including related party receivables--Note 12)
and accrued expenses. 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments, including cash
and cash equivalents, accounts receivable, accounts payable and accrued
expenses, approximates their fair value at September 30, 1998 and 1999, as the
maturities 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.
F-7
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
REVENUE RECOGNITION
Revenue from the sale of equipment is recognized upon shipment. Provisions
for estimated product warranty and installation costs are recorded at the time
revenue is recognized. The Company generally warrants its new systems for
15 months from the date of shipment. Such warranties provide that new systems
are free from defects in materials and workmanship under normal use.
Amounts received from customers prior to product shipment are classified as
advances from customers.
CASH AND CASH EQUIVALENTS
Cash and 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. The Company provides inventory reserves for excess, obsolete or
slow-moving inventory based on changes in customer demand, technology
developments, and other economic factors.
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 any gains or losses from sale recorded in the statement of
operations.
CAPITALIZED SOFTWARE COSTS
The Company capitalizes the costs associated with purchased software for
resale and subsequently amortizes such costs on a units-of-production basis over
their estimated remaining economic life, generally 3 years. These amounts, which
are included in other assets, are reported at the lower of the unamortized cost
or net realizable value and are immaterial.
ASSET IMPAIRMENT
The Company regularly assesses all of its long-lived assets for impairment
when events or circumstances indicate, in accordance with Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The assessment
is accomplished by comparing the estimated undiscounted future cash flows of the
asset grouping with the respective carrying amount as of the date of assessment.
Should aggregate future cash flows be less than the carrying value of the
assets, a write-down would be
F-8
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
required, measured by the difference between the carrying value of the assets
and the discounted future cash flows.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
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 financial
statement carrying amounts and the tax basis of such assets and liabilities.
The asset and liability 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.
NEW ACCOUNTING STANDARDS
Effective October 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income", which
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption had no impact on the Company's net income
or stockholders' equity. SFAS 130 requires changes to the minimum pension
liability, to be included in other comprehensive income. Prior year financial
statements have been reclassified to conform to the requirements of SFAS 130.
In April 1998, the Accounting Standards Executive Committee issued Statement
of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities."
Start-up activities are defined broadly as those one-time activities relating to
opening a new facility, introducing a new product or service, conducting
business in a new territory, conducting business with a new class of customer,
commencing some new operation or organizing a new entity. Under SOP 98-5, the
cost of start-up activities should be expensed as incurred. SOP 98-5 is
effective for the Company's fiscal year 2000 financial statements and the
Company does not expect its adoption to have a material effect on the Company's
financial condition or results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The new standard
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 is effective for all quarters of fiscal years
beginning after June 15, 2000. The Company does not expect SFAS No. 133 to have
a material effect on the Company's financial condition or results of operations.
F-9
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
STOCK SPLITS
On October 14, 1997, the Company declared a 3-for-1 stock split in the form
of a stock dividend to stockholders of record at the close of business on
October 31, 1997. This stock split increased the number of common shares
outstanding by 849,260. 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.
On August 30, 1999, the Company declared a 2-for-3 reverse stock split
effective for stockholders of record upon the closing of an initial public
offering. This reverse stock split decreased the number of common shares
outstanding by 1,172,688. All references in the consolidated financial
statements referring to share prices, conversion rates, per share amounts, stock
option plans and common shares issued and/or outstanding have been adjusted
retroactively for the 2-for-3 reverse stock split.
NOTE 2--ACQUISITION
On May 10, 1999, the Company acquired Commonwealth Scientific Corporation
(Commonwealth), a Virginia based company which offers ion beam modules and
systems which provide ion beam etching, deposition and diamond-line carbon (DLC)
processes and ion beam sources for research and development (R&D) and original
equipment manufacturer customers. The purchase price of $8,498,000 was comprised
of the issuance of 1,268,799 shares of the Company's common stock, exchanged and
assumed options in Commonwealth for options to purchase 286,228 shares of the
Company's common stock, and related acquisition costs. The issuance of the
Company's stock was recorded at fair market value, and the assumed options were
recorded at fair market value using the Black-Scholes option pricing model. The
acquisition was accounted for using the purchase method of accounting. The
purchase price was allocated as follows (in thousands):
<TABLE>
<S> <C>
Net tangible assets of Commonwealth......................... $6,298
Purchased in-process R&D.................................... 1,174
Intangible assets:
Workforce in place........................................ 704
Current technology........................................ 265
Goodwill.................................................. 57
------
Total purchase price........................................ $8,498
======
</TABLE>
The net tangible assets includes a write-up of Commonwealth's property to
fair market value by $600,000 and the recognition of a restructuring liability
approximating $550,000. Approximately $140,000 of the restructuring liability
relates to severance costs associated with the reduction of Commonwealth's
workforce by approximately 20%, or 29 employees. The reduction of the workforce
and the payment of termination benefits was completed by September 30, 1999.
Approximately $410,000 of the restructuring liability relates to existing lease
obligations or cancellation penalties associated with facilities which will be
exited. Lease payments will be made through fiscal 2000. At September 30, 1999,
approximately $200,000 has been charged against the restructuring liability. The
Company believes that the amounts remaining under the restructuring liability
are adequate to cover the remaining lease obligations.
F-10
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--ACQUISITION (CONTINUED)
The purchased in-process R&D includes the value of products in the
development stage, which have not reached technological feasibility and for
which there is no alternative future use. In accordance with applicable
accounting rules, purchased in-process R&D is required to be expensed.
Accordingly, the amount of $1,174,000 was expensed in the third quarter of
fiscal 1999.
The company used independent professional appraisal consultants to assess
and allocate value to the acquired in-process R&D. The allocated value was
determined using the income approach, which involves estimating the discounted
after-tax cash flows attributable to projects based on the projects' stage of
completion.
A discount rate of 35% was applied to the projects' cash flows and there
were no material changes from historical pricing, margins, and expense levels.
Management believes that the assumptions used in the forecasts were reasonable
at the time of the business combination. No assurance can be given, however,
that the underlying assumptions used to estimate expected project sales,
development costs, or profitability will be realized as estimated. For these
reasons, actual results may vary from the projected results.
Estimated net cash inflows from the acquired in-process technology are
projected to commence in fiscal 2001.
The amortization periods of intangible assets related to workforce in place,
current technology and goodwill are seven years, five years and seven years,
respectively.
The operating results of Commonwealth have been included in the Company's
consolidated statement of operations from the date of acquisition. The unaudited
pro forma results below assume the acquisition occurred on October 1, 1997 (in
thousands):
<TABLE>
<CAPTION>
PRO FORMA
---------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1999
------------------ ------------------
<S> <C> <C>
Net sales........................................... $112,060 $101,841
Operating income.................................... 4,782 678
Net income.......................................... 1,524 62
Net income per share:
--Basic........................................... $ 0.67 $ 0.03
--Diluted......................................... $ 0.18 $ 0.01
</TABLE>
The pro forma results include amortization of the intangibles presented
above and cost reductions related to the restructuring charges, and excludes the
write-off of the in-process R&D in each period. The pro forma results are not
necessarily indicative of what actually would have occurred if the acquisition
had been completed as of the beginning of each of the fiscal periods presented,
nor are they necessarily indicative of future consolidated results.
F-11
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--INVENTORIES
Inventories consisted of the following at September 30, 1998 and 1999 (in
thousands):
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Component parts........................................... $ 8,976 $15,421
Work-in-process........................................... 5,615 11,674
Finished goods............................................ 4,917 4,117
------- -------
19,508 31,212
Less--reserve for obsolescence........................ (697) (2,025)
------- -------
$18,811 $29,187
======= =======
</TABLE>
NOTE 4--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at September 30,
1998 and 1999 (in thousands):
<TABLE>
<CAPTION>
1998 1999
-------- ---------
<S> <C> <C>
Land.................................................... $ 625 $ 2,225
Buildings and improvements.............................. 5,954 7,548
Machinery and equipment................................. 10,358 22,048
------- ---------
16,937 31,821
Less--Accumulated depreciation........................ (4,721) (12,447)
------- ---------
12,216 19,374
Construction-in-process................................. 1,685 --
------- ---------
$13,901 $ 19,374
======= =========
</TABLE>
Construction-in-process was mainly comprised of machinery and equipment
which was placed in service subsequent to September 30, 1998.
Included in property, plant and equipment is $2,220,000 and $2,494,000 for a
building and certain equipment held under capital lease agreements at
September 30, 1998 and 1999, respectively. Related accumulated amortization at
September 30, 1998 and 1999 was $403,000 and $558,000, respectively.
Total depreciation and amortization expense on plant and equipment was
$1,215,000, $1,874,000 and $3,697,000 in 1997, 1998 and 1999, respectively.
Total depreciation expense on assets under capital leases was $56,000 in 1997
and 1998 and $102,000 in 1999.
F-12
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5--OTHER CURRENT LIABILITIES
Other current liabilities consisted of the following at September 30, 1998
and 1999 (in thousands):
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Accrued payroll and benefits................................ $ 874 $1,981
Other current liabilities................................... 2,574 5,331
------ ------
$3,448 $7,312
====== ======
</TABLE>
NOTE 6--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 industrial revenue bond obligation required monthly payments of principal
and interest at 8% (approximately $19,000 in total). In September 1997, the
Company refinanced the remaining principal of the industrial revenue bond with
the proceeds of a new mortgage credit facility with a principal of $2,000,000.
The lease term extends to December 31, 2007, at which time title to the property
passes, upon payment of nominal consideration by the Company. The new mortgage
credit facility requires monthly payments of approximately $16,000 through
October 1, 2007, calculated based upon an amortization period of twenty years.
In addition, on October 1, 2007, the Company will pay a final installment equal
to the outstanding principal and interest on the credit facility based upon the
actual term of this facility which is ten years. The interest rate on $500,000
of the mortgage credit facility is 5.29% until October 1, 1999 after which the
rate increases to 8.29% through September 30, 2002, consistent with the interest
rate on $1,500,000 of the credit facility. Beginning October 1, 2002, the
Company will likely elect to pay interest on the remaining principal at the then
prime rate plus one-half percent, or a rate equal to 225 basis points above the
yield on U.S. treasury bonds. The obligation is secured by certain land and
buildings with a net book value of $2,386,000 at September 30, 1999.
In November 1990, the Company borrowed $1,500,000 from a company whose
president is a director and shareholder of the Company. In December 1991, the
Company borrowed an additional $1,000,000 from this company. The borrowings were
evidenced by notes, which were unsecured and required quarterly interest
payments at 9%. The $1,000,000 note was paid in full in November 1997 and the
$1,500,000 note was paid in full in January 1999. Interest expense on these
notes totaled $225,000, $138,000 and $34,000 in 1997, 1998 and 1999,
respectively.
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.
In April 1998, the Company borrowed $8,000,000 from a commercial bank. The
seven year term loan requires monthly payments of principal and interest at
8.39% until April 2005. The obligation is secured by certain personal property
and other intangibles of the Company including patents, patent applications and
trademarks.
In connection with the acquisition of Commonwealth, the Company assumed a
$1,214,000 unsecured note payable to a third party. The 18-month note requires
payments of principal and interest at 8% until October 2000.
F-13
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6--NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
The Company also has a $15,000,000 bank line of credit at September 30, 1999
which allows for maximum borrowings based on certain financial criteria.
Allowable borrowings based on this criteria at September 30, 1999 were
$13,819,000. Borrowings under the agreements are at an interest rate of prime.
There was approximately $10,679,000 outstanding under the line of credit at
September 30, 1999.
The Company also has available an equipment line of credit at September 30,
1999 which allows for maximum borrowings of $3,000,000 based on certain
financial criteria. Borrowings under the agreement are at an interest rate of
prime. There were no amounts outstanding under the line of credit at
September 30, 1999.
The debt agreements contain 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 was in
compliance with all covenants at September 30, 1998 and 1999.
A summary of the notes payable and long-term debt outstanding at
September 30, 1998 and 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Term loan, 5 year........................................ $ 1,850 $ 1,250
Term loan, 7 year........................................ 7,624 6,723
Notes payable due related party.......................... 1,500 --
Mortgage credit facility................................. 1,955 1,906
Note payable to third party.............................. -- 891
Future minimum payments under capital leases payable
through January 2002................................... -- 261
Borrowings on line of credit............................. 4,139 10,679
------- --------
17,068 21,710
Less--Current portion................................ (5,689) (13,217)
------- --------
$11,379 $ 8,493
======= ========
</TABLE>
The aggregate maturities for debt over the next five years and thereafter
are as follows (in thousands): 2000--$13,217, 2001--$1,900, 2002--$1,296,
2003--$1,313, and 2004--$1,433.
F-14
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--INCOME TAXES
The components of income taxes (benefit) for the years ended September 30,
1997, 1998 and 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal.......................................... $ 604 $ 417 $1,806
State............................................ 392 116 297
------ ------- ------
996 533 2,103
Deferred:
Federal.......................................... 475 (211) (143)
State............................................ (14) (48) (23)
------ ------- ------
461 (259) (166)
------ ------- ------
$1,457 $ 274 $1,937
====== ======= ======
</TABLE>
The significant components of deferred tax assets and liabilities at
September 30, 1998 and 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........................ $ 175 $ 344
Inventories............................................. 455 1,076
State and federal tax credits........................... 122 209
Allowance for doubtful accounts......................... 138 373
Accrued compensation and benefits....................... 240 398
Other accruals.......................................... 577 1,053
------- -------
1,707 3,453
------- -------
Deferred tax liabilities:
Unamortized inventory accounting change................. (605) (424)
Property, plant and equipment........................... (962) (1,343)
------- -------
(1,567) (1,767)
------- -------
Deferred tax asset valuation allowance.................... (102) (421)
------- -------
Net deferred tax asset.................................... $ 38 $ 1,265
======= =======
</TABLE>
F-15
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--INCOME TAXES (CONTINUED)
The differences between income taxes (benefit) at the U.S. statutory rate
and the effective rate for the years ended September 30, 1997, 1998 and 1999 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Provision at federal statutory rate.................. $1,191 $183 $ 1,193
State taxes, net of federal benefit.................. 213 45 226
Permanent items...................................... 53 101 546
Release of valuation allowance....................... -- (53) (130)
Other................................................ -- (2) 102
------ ---- -------
Income tax expense................................... $1,457 $274 $ 1,937
====== ==== =======
</TABLE>
During 1998 and 1999, the valuation allowance, which relates to net
operating loss carryforwards and state investment credits, was reduced by
$53,000 and $130,000, respectively, due to the increased likelihood the benefits
will be recognized. As a result of the acquisition of Commonwealth, in 1999, a
number of permanent items were recorded by the Company and the valuation
allowance increased by the assumed amount of $449,000.
The net operating tax loss carryforwards of approximately $820,000 expire at
various times through 2019.
F-16
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8--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 $92,000, $222,000 and $278,000 in fiscal years 1997, 1998 and
1999, 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. Approximately $122,000 and $381,000 is included in other
liabilities at September 30, 1998 and 1999, respectively, for accrued pension
costs. Further, 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 stockholders' equity,
net of income taxes.
NOTE 9--POSTRETIREMENT HEALTH CARE BENEFITS
The Company provides health care and life insurance benefits to certain
retired hourly employees as well as health care benefits to salaried retirees
employed prior to December 31, 1996. As permitted under SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," the
Company has elected to amortize the unfunded accrued postretirement benefit
obligation at adoption over a 20-year period.
Details of costs for retiree benefits for the years ended September 30,
1997, 1998 and 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Service cost............................................ $ 68 $ 90 $150
Interest cost on benefit obligation..................... 82 78 90
Amortization............................................ 56 56 60
---- ---- ----
Retiree health care cost................................ $206 $224 $300
==== ==== ====
</TABLE>
An analysis of amounts shown in the consolidated balance sheet at
September 30, 1998 and 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $ 810 $ 607
Active participants...................................... 465 787
------- ------
1,275 1,394
Unrecognized prior service cost............................ (39) (65)
Unrecognized net gain...................................... 73 163
Unrecognized transition obligation......................... (944) (889)
------- ------
Retirement benefit liability............................... $ 365 $ 603
======= ======
</TABLE>
F-17
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9--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 rate of
9.5% in 1999 and grades down uniformly to 4.5% in 2010 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, 1999 accumulated postretirement benefit obligation by $190,000,
and the 1999 service cost plus interest by $55,000. Decreasing the health care
inflation rate by 1% would decrease the September 30, 1999 accumulated
postretirement benefit obligation by $155,000, and the 1999 service cost plus
interest by $42,000. The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.50%.
NOTE 10--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 1,600 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. The Series A Preferred Stock will be automatically converted to
2,696,000 shares of common stock upon the closing of an initial public offering
with a price per share in excess of $12.50 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 40 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. The Series B Preferred Stock will
be automatically converted to 2,419,680 shares of common stock upon the closing
of an initial public offering with a price per share in excess of $12.50 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 790,760 shares of the Company's Common
Stock at an exercise price of $5.58 per share in lieu of Series B Preferred
Stock.
In December 1998, the Company issued 100,000 shares of Series C
Non-Cumulative Convertible Preferred Stock (Series C Preferred Stock). The
Series C Preferred Stock is convertible at any time at the option of the holder
into common stock at the rate of 10.1626 shares of common stock for each share
of Series C Preferred Stock. Preferred voting rights are one vote for each share
of common stock into which the preferred shares may be converted. The Series C
Preferred Stock will be automatically converted to 1,016,260 shares of common
stock as well as 100,000 shares of Series D Redeemable
F-18
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10--STOCKHOLDERS' EQUITY (CONTINUED)
Preferred Stock upon the closing of an initial public offering with a price per
share in excess of $12.50 and aggregate gross proceeds of $10,000,000.
In connection with the issuance of Series C Preferred Stock, the holder was
granted a seven-year warrant to purchase an aggregate of 133,333 shares of
common stock at $15 per share. The warrant cannot be exercised until
December 10, 2001. Additionally, the warrant will no longer be exercisable upon
an initial public offering. A fair value of $14,000 was assigned to this warrant
at the time of purchase.
On October 14, 1997, the Company filed a Certificate of Amendment to the
Certificate of Incorporation which increased total authorized common stock to
50,000,000 shares, $.01 par value, and total authorized preferred stock to
502,500 shares, $.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 June 30,
1995. Options generally vest over a 3 to 5 year period and expire after
10 years from the date of grant.
In October 1997, the Board of Directors and stockholders approved a new
stock option plan, the 1997 Stock Option Plan (the "Plan"), under which options
may be granted to employees of the Company. The Plan permits the grant of stock
options that qualify as incentive stock options under Section 422 of the
Internal Revenue Code, and nonqualified stock options, which do not so qualify.
In 1999, the Board of Directors amended the plan, which increased the amount of
shares authorized under the plan by 1,000,000 shares. Additionally, the Board of
Directors has authorized the Company to increase the number of shares available
for issuance under the plan by an amount equal to five percent of the total
number of shares of common stock issued by the Company during the preceding
fiscal year. As of September 30, 1998 and 1999, the Company has authorized and
reserved 833,333 and 1,833,333 shares, respectively, of common stock for
issuance under the Plan; and, options available for grant under the Plan were
523,333 and 1,283,065 shares, respectively.
During fiscal 1997 and 1998, approximately 203,333 and 160,000 options,
respectively, were granted to employees at an amount which was less than the
fair market value as of the grant date. Accordingly, the Company recorded
unamortized deferred compensation expense for such options which vest over a
3 to 5 year period. Compensation expense is being amortized over the vesting
period and unamortized compensation expense has been recorded as a reduction in
stockholders' equity. During fiscal 1997, 1998 and 1999, compensation expense
recognized in the statements of operations approximated $7,000, $111,000 and
$105,000, respectively.
Under the provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company has elected to continue to account for its employee
stock plans in accordance with the provisions of APB Opinion No. 25 which
requires compensation costs to be recognized based on the intrinsic value of
options at the grant date. Had compensation cost for the Company's stock option
plan been determined based on the fair value at the grant date for awards in
fiscal years 1997, 1998 and 1999
F-19
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10--STOCKHOLDERS' EQUITY (CONTINUED)
consistent with the provisions of SFAS No. 123, the Company's net earnings and
earnings per share would have been the following (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C> <C>
Net income (loss) As reported................................ $2,045 $ 264 $1,571
Pro forma.................................. $1,954 $ (12) $1,276
Basic earnings per share As reported................................ $ 2.67 $ 0.26 $ 1.01
Pro forma.................................. $ 2.55 $(0.01) $ 0.82
Diluted earnings per share As reported................................ $ 0.29 $ 0.04 $ 0.18
Pro forma.................................. $ 0.28 $ 0.00 $ 0.15
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model (minimum value method) with the weighted
average assumptions of risk free interest rates (based on anticipated length of
time until exercise) ranging from 4.24% to 5.65% and expected lives of 3 to 5
years.
A summary of the status of the Company's stock option plan for the three
years ended September 30, 1999 is as follows:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at October 1, 1996..................... 1,585,040 $1.32
Granted........................................ 406,600 $4.76
Canceled....................................... (118,000) $1.86
Exercised...................................... (120,200) $0.74
---------
Outstanding at September 30, 1997.................. 1,753,440 $2.12
Granted........................................ 427,667 $7.80
Canceled....................................... (205,995) $9.08
Exercised...................................... (199,338) $0.84
---------
Outstanding at September 30, 1998.................. 1,775,774 $2.82
Assumed in acquisition......................... 286,228 $6.00
Granted........................................ 311,669 $7.12
Cancelled...................................... (116,257) $6.28
Exercised...................................... (23,374) $3.15
--------- -----
Outstanding at September 30, 1999.................. 2,234,040 $3.62
</TABLE>
The weighted average fair value of options granted during fiscal 1997 and
1998 was $1.94. The weighted-average fair value of options granted during fiscal
1999 was $1.58.
The weighted-average exercise price of options granted to employees during
1997 and 1998 at an amount which was less than fair market value was $5.30 and
$5.73, respectively. The weighted-average fair value of such options granted in
1997 and 1998 was $2.67 and $2.37, respectively.
During 1999, 57,333 options were issued at a weighted average exercise price
of $6.00 which was higher than fair market value at the date of grant.
F-20
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10--STOCKHOLDERS' EQUITY (CONTINUED)
A summary of the options outstanding and exercisable as of September 30,
1999 is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- --------------------------------------------------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER OF REMAINING EXERCISE NUMBER OF EXERCISE
RANGE OF EXERCISE OPTIONS CONTRACTUAL PRICE PER OPTIONS PRICE PER
PRICES PER SHARE OUTSTANDING LIFE IN YEARS SHARE OUTSTANDING SHARE
- --------------------- ----------- ------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
0$.63-$ 1.25......... 840,507 2.3 $0.66 840,507 $0.66
3$.00-$ 4.17......... 488,624 5.8 $3.59 387,291 $3.57
4$.85-$12.00......... 904,909 7.5 $6.39 255,671 $6.05
--------- --- ----- --------- -----
0$.63- 12.00......... 2,234,040 5.2 $3.62 1,483,469 $2.35
</TABLE>
NOTE 11--EARNINGS PER SHARE
Basic earnings per share (EPS) is computed by dividing income available to
common shareholders by the weighted average number of common shares actually
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company.
The following table illustrates the calculation of both basic and diluted
EPS for the years ended September 30, 1997, 1998 and 1999 (in thousands):
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE
Net income available to common shareholders................. $2,045 $ 264 $1,571
Weighted average number of common shares.................... 765 1,021 1,561
------ ------ ------
Basic earnings per share.................................... $ 2.67 $ 0.26 $ 1.01
====== ====== ======
DILUTED EARNINGS PER SHARE
Net income available to common shareholders................. $2,045 $ 264 $1,571
====== ====== ======
Weighted average number of common shares.................... 765 1,021 1,561
Common equivalent shares related to stock options and
convertible preferred stock............................... 6,227 6,049 7,028
------ ------ ------
Weighted average common and common equivalent shares........ 6,992 7,070 8,589
====== ====== ======
Diluted earnings per share.................................. $ 0.29 $ 0.04 $ 0.18
====== ====== ======
</TABLE>
Certain antidilutive outstanding options and warrants were excluded from the
computation of diluted EPS since their exercise prices exceed the average market
price of the common shares during the period. The antidilutive stock options and
warrants so excluded at the end of September 30, 1997, 1998 and 1999 and their
associated exercise prices are summarized below. The options and warrants expire
at various times between 2002 and 2008.
<TABLE>
<CAPTION>
1997 1998 1999
------------------ ------------------- -------------------
<S> <C> <C> <C>
Number of options and warrants...... 815,333 836,000 396,070
Exercise price...................... $ 5.58-$5.73 $ 5.58-$12.00 $ 6.45-$18.00
</TABLE>
F-21
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12--TRANSACTIONS WITH RELATED PARTIES
At September 30, 1998, the Company had borrowings of $1,500,000 from a
company whose president is a director and shareholder of the Company (Note 6).
Seagate Technology (Seagate), which provides products for storage,
retrieval, and management of data on computer and data communications systems,
is the Company's largest customer and a significant stockholder. Revenues, cost
of goods sold, accounts receivable and unearned revenue associated with
transactions between the Company and Seagate are reported as related party in
the consolidated 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.
During 1999, the Company's President and Chief Executive Officer, who is
also a shareholder, was elected to the Board of Directors of the Company's
Financial Institution, M&T Bank.
NOTE 13--SEGMENT DATA, SIGNIFICANT CUSTOMERS AND GEOGRAPHIC INFORMATION
The Company adopted the provisions of SFAS No. 131, "Disclosures About
Segments and Related Information," effective October 1, 1998. In connection with
the adoption of SFAS 131, the Company determined that it operates in one
business segment.
For the year ended September 30, 1997, sales to the Company's two largest
customers comprised 47% and 11% of revenues, respectively. For the year ended
September 30, 1998, sales to the Company's three largest customers comprised
31%, 16% and 11% of revenues, respectively. For the year ended September 30,
1999, sales to the Company's three largest customers comprised 34%, 18% and 14%
of revenues, respectively.
Export sales to customers (including related party sales) outside the United
States represents 31%, 38% and 53% of the Company's revenues for the fiscal
years ended September 30, 1997, 1998 and 1999, respectively. Total sales were
made to the following geographic regions:
<TABLE>
<CAPTION>
NORTHERN
USA IRELAND JAPAN OTHER TOTAL
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
1997................. $43,126,000 5,409,000 9,767,000 4,286,000 $62,588,000
1998................. 42,284,000 13,194,000 9,075,000 3,620,000 $68,173,000
1999................. 39,130,000 11,672,000 20,505,000 11,608,000 $82,915,000
</TABLE>
NOTE 14--COMMITMENTS
The Company leases various equipment and facilities under operating lease
agreements. Rental expense under operating lease agreements was approximately
$289,000, $774,000 and $1,318,000 in fiscal years 1997, 1998 and 1999,
respectively. The future minimum lease payments under non-cancelable lease
agreements are $1,430,000 in 2000, $1,028,000 in 2001, $201,000 in 2002 and
$25,000 in 2003 and $4,000 in 2004.
NOTE 15--WRITE-OFF OF DEFERRED CHARGES
During fiscal 1998, the Company incurred costs related to a potential
initial public offering. These costs were accounted for as a deferred asset with
the intent of deducting such amounts from contributed equity upon receipt of the
proceeds from the initial public offering. During the fourth quarter of fiscal
1998, the Company withdrew its intent to complete the public offering and,
accordingly, these costs were charged against current period earnings.
F-22
<PAGE>
CVC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16--SUBSEQUENT EVENT
In October 1999, the Company's Series C Preferred Stock, Series B Preferred
Stock, Series A Preferred Stock, and Common Stock shareholders approved an
amendment to the Amended and Restated Certificate of Incorporation which
provides for a 2-for-3 reverse stock split (Note 1) as well as the elimination
of the $12.50 price per share requirement for the automatic conversion of
Series C Preferred Stock, Series B Preferred Stock, and Series A Preferred Stock
into common stock upon the closing of an initial public offering.
F-23
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and the Board of Directors of
Commonwealth Scientific Corporation:
We have audited the accompanying balance sheets of Commonwealth Scientific
Corporation (the "Company," a Virginia corporation), a wholly owned subsidiary
of CVC, Inc. (the "Parent," a Delaware corporation), as of March 31, 1998 and
1999, and the related statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended March 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Commonwealth Scientific
Corporation as of March 31, 1998 and 1999, and the results of its operations and
its cash flows for each of the three years in the period ended March 31, 1999,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Vienna, Virginia
May 17, 1999
F-24
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 378,920 $ 326,623
Accounts receivable, net of allowance for doubtful
accounts of $233,000 and $300,000 at March 31, 1998 and
1999, respectively...................................... 5,556,183 3,160,366
Inventories............................................... 15,601,983 13,837,715
Prepaid expenses and other current assets................. 206,630 134,410
Income taxes receivable................................... -- 732,905
Deferred income taxes..................................... 456,188 539,070
----------- -----------
Total current assets.................................. 22,199,904 18,731,089
----------- -----------
PROPERTY AND EQUIPMENT, at cost:
Land...................................................... 703,900 703,900
Building and improvements................................. 839,153 882,025
Leasehold improvements.................................... 476,489 623,896
Manufacturing and test equipment.......................... 5,191,647 6,332,468
Office furniture and fixtures............................. 480,691 496,417
----------- -----------
7,691,880 9,038,706
Less--Accumulated depreciation and amortization........... (3,503,079) (4,147,289)
----------- -----------
Net property and equipment............................ 4,188,801 4,891,417
----------- -----------
OTHER ASSETS................................................ 67,497 55,631
----------- -----------
Total assets.......................................... $26,456,202 $23,678,137
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-25
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 4,387,666 $ 4,197,963
Accrued expenses.......................................... 2,209,071 3,632,967
Lines of credit........................................... 2,584,574 3,393,173
Current portion of long-term obligations.................. 308,788 551,540
Deposits on sales contracts............................... 6,109,603 2,796,684
----------- -----------
Total current liabilities............................. 15,599,702 14,572,327
LONG-TERM OBLIGATIONS, net of current portion............... 1,677,718 2,067,830
DEFERRED INCOME TAX LIABILITY............................... 202,620 221,117
----------- -----------
Total liabilities..................................... 17,480,040 16,861,274
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 10,000,000 shares authorized,
333,180 and 336,680 shares issued at March 31, 1998 and
1999, respectively...................................... 333,180 336,680
Additional paid-in capital................................ 751,320 782,820
Retained earnings......................................... 7,902,662 5,708,363
Treasury stock; 6,900 shares at cost...................... (11,000) (11,000)
----------- -----------
Total stockholders' equity............................ 8,976,162 6,816,863
----------- -----------
Total liabilities and stockholders' equity............ $26,456,202 $23,678,137
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-26
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
------------------------------------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES........................................... $ 35,366,323 $ 33,982,554 $ 43,597,852
COST OF SALES....................................... (23,445,963) (23,344,034) (34,473,248)
------------ ------------ ------------
Gross profit.................................. 11,920,360 10,638,520 9,124,604
------------ ------------ ------------
OPERATING EXPENSES:
Research and development.......................... 3,645,520 3,746,433 4,005,021
Selling and marketing............................. 2,376,572 3,013,517 3,408,480
General and administrative........................ 1,447,319 1,635,329 2,072,667
Commissions....................................... 1,558,193 1,509,848 1,992,786
------------ ------------ ------------
Total operating expenses...................... 9,027,604 9,905,127 11,478,954
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS....................... 2,892,756 733,393 (2,354,350)
INTEREST EXPENSE, NET............................... (163,470) (239,036) (425,949)
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES................... 2,729,286 494,357 (2,780,299)
INCOME TAX (PROVISION) BENEFIT...................... (911,000) (151,000) 586,000
------------ ------------ ------------
NET INCOME (LOSS)................................... $ 1,818,286 $ 343,357 $ (2,194,299)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-27
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN RETAINED TREASURY
COMMON STOCK CAPITAL EARNINGS STOCK TOTAL
------------ ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, March 31, 1996............ $318,880 $614,900 $ 5,741,019 $(10,600) $ 6,664,199
Exercise of stock options........ 4,000 43,720 -- -- 47,720
Net income....................... -- -- 1,818,286 -- 1,818,286
-------- -------- ----------- -------- -----------
BALANCE, March 31, 1997............ 322,880 658,620 7,559,305 (10,600) 8,530,205
Exercise of stock options........ 10,300 92,700 -- -- 103,000
Purchase of treasury stock....... -- -- -- (400) (400)
Net income....................... -- -- 343,357 -- 343,357
-------- -------- ----------- -------- -----------
BALANCE, March 31, 1998............ 333,180 751,320 7,902,662 (11,000) 8,976,162
Exercise of stock options........ 3,500 31,500 -- -- 35,000
Net loss......................... -- -- (2,194,299) -- (2,194,299)
-------- -------- ----------- -------- -----------
BALANCE, March 31, 1999............ $336,680 $782,820 $ 5,708,363 $(11,000) $ 6,816,863
======== ======== =========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-28
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------------------
1997 1998 1999
---------- ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income...................................... $1,818,286 $ 343,357 $(2,194,299)
Adjustments to reconcile net income to net cash (used
in) provided by operating activities-
Depreciation and amortization........................ 620,589 930,211 1,249,908
(Gain) loss on disposal of equipment................. 8,912 7,179 (148,229)
Changes in assets and liabilities:
Accounts receivable................................ (1,215,469) (672,405) 2,395,817
Inventories........................................ 538,938 (5,417,308) 1,764,268
Prepaid expenses and other current assets.......... 38,564 (83,214) 72,220
Income taxes receivable/payable.................... -- (217,443) (732,905)
Deferred income taxes.............................. (81,337) (30,506) (64,385)
Other assets....................................... -- -- 11,866
Accounts payable and accrued expenses.............. 761,920 870,127 1,234,193
Income tax payable................................. (225,416) -- --
Deposits on sales contracts........................ (450,043) 2,988,206 (3,312,919)
---------- ---------- -----------
Net cash provided by (used in) operating
activities..................................... 1,814,944 (1,281,796) 275,535
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................... (2,004,735) (1,147,768) (1,952,524)
Proceeds from disposal of equipment.................... -- -- 148,229
---------- ---------- -----------
Net cash used in investing activities............ (2,004,735) (1,147,768) (1,804,295)
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit........................... 4,256,574 6,854,568 13,878,298
Payments on lines of credit............................ (4,080,865) (5,122,408) (13,069,699)
Borrowings on long-term obligations.................... 20,000 1,012,000 1,082,140
Payments on long-term obligations...................... (248,512) (290,237) (449,276)
Exercise of stock options.............................. 47,720 103,000 35,000
Purchase of treasury stock............................. -- (400) --
---------- ---------- -----------
Net cash (used in) provided by financing
activities..................................... (5,083) 2,556,523 1,476,463
---------- ---------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS..... (194,874) 126,959 (52,297)
CASH AND CASH EQUIVALENTS, beginning of year............. 446,835 251,961 378,920
---------- ---------- -----------
CASH AND CASH EQUIVALENTS, end of year................... $ 251,961 $ 378,920 $ 326,623
========== ========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for--
Interest............................................. $ 136,650 $ 186,245 $ 355,654
========== ========== ===========
Income taxes......................................... $1,217,747 $ 406,360 $ 205,875
========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-29
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS
Commonwealth Scientific Corporation (the "Company"), a wholly owned
subsidiary of CVC, Inc. (the "Parent"), is engaged in the development,
production, sale, service, and repair of precision equipment for the purpose of
etching or deposition at submicron levels by means of ion beam technology. The
Company was acquired by CVC, Inc., on May 10, 1999 (see Note 13). The Parent is
committed to the necessary support of the operations and capital requirements of
the Company.
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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates made by management include the adequacy
of reserves for doubtful accounts, obsolete and excess inventories, and customer
warranty obligations. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenue is recognized when all significant risks of ownership are
transferred and all significant related acts of performance are completed, which
is generally upon shipment of products.
SIGNIFICANT CUSTOMER
During fiscal year 1997, 28, 14, and 11 percent of net sales were derived
from three customers. In fiscal year 1999, the Company had one customer who
accounted for 32 percent of net sales. No other customer accounted for more than
10 percent of net sales.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are provided using the straight-line method
for financial reporting purposes over the following estimated useful lives:
<TABLE>
<S> <C>
Building and improvements................................... 5 to 31.5 years
Manufacturing and test equipment............................ 5 years
Office furniture and fixtures............................... 5 to 7 years
</TABLE>
Repair and maintenance costs are charged to expense when incurred. Renewals
and betterments that significantly increase the useful life of the related asset
are capitalized. Leasehold improvements are amortized over the expected useful
life or the lease term, whichever is shorter.
The Company implemented Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, "during 1996. As of March 31, 1999, management
determined there had been no impairment of long-lived assets as defined by SFAS
No. 121.
The Company's anticipated gross revenues, the remaining estimated lives of
tangible assets, or both could be reduced significantly in the near term due to
changes in technology, available financing, or
F-30
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999 (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
competitive pressures in any of the Company's individual markets. As a result,
the carrying amount of long-lived assets could be reduced materially in the near
term.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are recognized as expenses in the period
incurred.
WARRANTY SERVICES
The Company recognizes the estimated cost of warranty obligations at the
time the related products are sold. A one-year warranty on materials and
workmanship is offered on products sold.
DEPOSITS ON SALES CONTRACTS
The Company negotiates progress payments on projects that require
significant engineering development and/or several months to complete.
CASH AND CASH EQUIVALENTS
For financial reporting purposes, the Company considers demand deposits and
all highly liquid investments with a maturity of three months or less to be cash
and cash equivalents. As of March 31, 1998 and 1999, cash equivalents consisted
principally of investments in overnight reverse repurchase agreements and
commercial paper. The Company maintains bank accounts with federally insured
financial institutions. At times, balances may exceed insured limits.
2. INVENTORIES:
Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market. Work in progress and finished goods include
provisions for direct labor and manufacturing overhead. Inventories were
composed of the following as of March 31, 1998 and 1999:
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Raw materials...................................... $ 7,006,170 $ 7,247,963
Work in progress................................... 8,062,980 6,666,877
Finished goods..................................... 1,035,053 852,875
----------- -----------
16,104,203 14,767,715
Less--Inventory reserve............................ (502,220) (930,000)
----------- -----------
$15,601,983 $13,837,715
=========== ===========
</TABLE>
The Company's products are subject to technological change and changes in
the Company's competitive market. Management has provided reserves for excess
and obsolete inventories. It is possible that new product launches could result
in unforeseen changes in inventory requirements for which no reserve has been
provided.
F-31
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999 (CONTINUED)
3. ACCRUED LIABILITIES:
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Commissions payable.................................. $ 540,162 $ 914,872
Vacation accrual..................................... 406,674 420,683
Installation and warranty accrual.................... 280,000 895,019
Accrued payroll...................................... 462,416 373,397
Other................................................ 519,819 1,028,996
---------- ----------
Total............................................ $2,209,071 $3,632,967
========== ==========
</TABLE>
4. LINES OF CREDIT:
The Company has a bank line of credit, subject to annual approval, which
provides for borrowings up to the lesser of $1,800,000 or an amount equal to
70 percent of eligible accounts receivable that have been outstanding not more
than 90 days. Amounts borrowed under the line are payable on demand. Interest
accrues at the bank's prime rate plus 0.5 percent (8.25 percent at March 31,
1999) and is payable monthly. The amount borrowed on the line of credit was
approximately $1,385,000 and $693,000 at March 31, 1998 and 1999, respectively.
The Company has two bank lines of credit for inventory that provide for
borrowings up to $3,500,000. Amounts borrowed under these lines of credit are
payable on due dates between June 2001 and January 2002. Interest accrues at the
bank's prime rate plus 1.0 percent (8.75 percent at March 31, 1999) and is
payable monthly. The amount borrowed on the line of credit was $1,200,000 and
$2,700,000 at March 31, 1998 and 1999, respectively.
All lines of credit discussed above are collateralized by the same assets as
the notes payable to a bank discussed in Note 5. One of the inventory lines of
credit is personally guaranteed by the president of the Company in an amount up
to $2,000,000. The remaining amounts outstanding under the lines of credit,
together with the long-term obligations described below, are guaranteed by the
president of the Company in an amount up to $1,000,000. As further described in
Note 13, all amounts outstanding under these lines of credit were paid in full
subsequent to March 31, 1999.
F-32
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999 (CONTINUED)
5. LONG-TERM OBLIGATIONS:
Long-term obligations as of March 31, 1998 and 1999, are summarized as
follows:
<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Equipment loan payable to a bank, bearing interest at the
bank's prime rate plus 0.5% (8.25% at March 31, 1999).
Principal payments of $24,764 plus interest are payable
monthly. The note matures in October 2004................. $1,956,369 $1,659,199
Equipment loan payable to a bank, bearing interest at the
bank's prime rate plus 0.5% (8.25% at March 31, 1999).
Principal payments of $11,917 plus interest are payable
monthly. The note matures in November 2003................ -- 638,333
Automobile loan payable to a bank, bearing interest at the
bank's prime rate plus 0.5% (8.25% at March 31, 1999).
Principal payments of $417 plus interest are payable
monthly. The note matures in December 2000................ 13,750 8,751
Future minimum payments under capital leases, payable
through March 2002........................................ 18,535 355,105
---------- ----------
1,988,654 2,661,388
Less--Interest included in capital lease payments........... (2,148) (42,018)
---------- ----------
Total................................................... 1,986,506 2,619,370
Less--Current portion....................................... (308,788) (551,540)
---------- ----------
$1,677,718 $2,067,830
========== ==========
</TABLE>
The bank notes and lines of credit are secured by all the Company's present
and future fixtures, equipment, supplies, inventory, work in progress, accounts
receivable and contract rights, and a first lien deed of trust on the Company's
real property and improvements. These borrowings are personally guaranteed by
the president of the Company in an amount up to $1,000,000 pursuant to the
guarantee on the lines of credit described in Note 4. According to the terms of
the loan agreements, the Company must satisfy various covenants, including a
debt to equity ratio of less than 2 to 1, a current ratio of greater than 1 to
1, a net worth of at least $7,500,000, and debt service coverage of greater than
1 to 1 among other restrictions. The Company was not in compliance with the
tangible net worth and debt service coverage ratios, consignments, sale and
transfer of assets, and capital expenditure and lease obligation covenants as of
March 31, 1999. The Company received a waiver from the bank for these covenant
violations in April 1999.
Future minimum principal payments under long-term obligations are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31,
-----------
<S> <C>
2000........................................................ $ 551,540
2001........................................................ 553,422
2002........................................................ 537,386
2003........................................................ 440,170
2004........................................................ 363,503
Thereafter.................................................. 173,349
----------
$2,619,370
==========
</TABLE>
F-33
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999 (CONTINUED)
5. LONG-TERM OBLIGATIONS: (CONTINUED)
As further described in Note 13, all amounts due under these bank loans were
paid in full subsequent to March 31, 1999.
6. STOCK AND STOCK OPTIONS:
During fiscal year 1985, the Company's stockholders approved a stock option
plan (the "Stock Option Plan") for key employees, officers, and directors of the
Company for 100,000 shares of stock, of which 76,150 shares were granted as of
March 31, 1999. The Company's stock option plan expired in fiscal year 1994. The
options outstanding under the Stock Option Plan are fully vested two years after
the grant date and are exercisable for three years.
Options issued after fiscal year 1994 but prior to March 1999 were issued
after the expiration of the Stock Option Plan and are classified as nonqualified
for tax purposes. The terms and conditions of these options are identical to
those options issued under the Stock Option Plan described above.
The options issued in March 1999 were also issued after the expiration of
the Stock Option Plan and are also classified as nonqualified for tax purposes.
These options vest immediately and are exercisable for five years.
The following table summarizes the Company's stock option activity for each
of the three years in the period ended March 31, 1999:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
SHARES EXERCISE PRICE PRICE PER SHARE
--------- ---------------- --------------------
<S> <C> <C> <C>
OPTIONS OUTSTANDING AT MARCH 31, 1996............... 54,250 $12.13 $10.00--$15.00
Granted........................................... -- -- --
Canceled/expired/forfeited........................ (8,000) 10.85 10.85
Exercised......................................... (4,000) 11.93 11.93
------- ------ --------------------
OPTIONS OUTSTANDING AT MARCH 31, 1997............... 42,250 12.40 10.00-- 15.00
Granted........................................... -- -- --
Canceled/expired/forfeited........................ (9,700) 10.77 10.00-- 15.00
Exercised......................................... (10,300) 10.00 10.00
------- ------ --------------------
OPTIONS OUTSTANDING AT MARCH 31, 1998............... 22,250 14.21 10.00-- 15.00
Granted........................................... 59,254 27.28 26.00-- 28.00
Canceled/expired/forfeited........................ (7,050) 25.79 15.00-- 28.00
Exercised......................................... (3,500) 10.00 10.00
------- ------ --------------------
OPTIONS OUTSTANDING AT MARCH 31, 1999............... 70,954 $24.18 $10.00--$28.00
======= ====== ====================
</TABLE>
As of March 31, 1998 and 1999, 22,250 and 42,354 options, respectively, are
exercisable. The weighted-average remaining life for options outstanding at
March 31, 1999, was approximately four years.
The Financial Accounting Standards Board ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," defines a fair value based method of accounting for an employee
stock option or similar equity instrument. Under the fair value based method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period.
F-34
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999 (CONTINUED)
6. STOCK AND STOCK OPTIONS: (CONTINUED)
SFAS No. 123 allows an entity to continue to use the intrinsic value method
as defined by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and management has elected to do so. Under the
intrinsic value method, compensation cost is the excess, if any, of the quoted
market price of the stock at grant date or other measurement date over the
amount an employee must pay to acquire the stock. The Company has elected to
continue to apply APB Opinion No. 25 to its stock-based compensation awards to
employees. Entities electing to remain with the accounting in APB Opinion
No. 25 must make pro forma disclosures of net income and earnings per share as
if the fair value based method of accounting had been applied. Accordingly, net
(loss) income would be as follows for each of the three years in the period
ended March 31, 1999:
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA
YEAR NET (LOSS) NET (LOSS)
ENDED INCOME INCOME
- ----- ----------- -----------
<S> <C> <C>
1997................................................... $ 1,818,286 1,811,114
1998................................................... 343,357 340,489
1999................................................... (2,194,299) $(2,439,258)
</TABLE>
The fair value of each option is estimated using the Black Scholes option
pricing model with the following assumption used for grants: no dividend yield,
no volatility, risk-free interest rate of 5.5 percent, and expected life of
5 years.
7. INCOME TAXES:
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." SFAS 109 requires the determination of deferred
tax liabilities and assets based on the differences between the financial
statement and income tax basis of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse. The
measurement of a deferred tax asset is adjusted by a valuation allowance, if
necessary, to recognize tax benefits only to the extent that based on available
evidence it is more likely than not that they will be realized.
The (benefit) provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1997 1998 1999
--------- -------- ---------
<S> <C> <C> <C>
CURRENT:
Federal.................................... $ 933,000 $190,000 $(500,000)
State...................................... 148,000 30,000 (57,000)
--------- -------- ---------
1,081,000 220,000 (557,000)
LESS--GENERAL BUSINESS INCOME TAX CREDITS.... (116,000) (58,000) --
--------- -------- ---------
965,000 162,000 (557,000)
--------- -------- ---------
DEFERRED:
Federal.................................... (46,000) (9,000) (26,000)
State...................................... (8,000) (2,000) (3,000)
--------- -------- ---------
(54,000) (11,000) (29,000)
--------- -------- ---------
(BENEFIT) PROVISION FOR INCOME TAXES......... $ 911,000 $151,000 $(586,000)
========= ======== =========
</TABLE>
F-35
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999 (CONTINUED)
7. INCOME TAXES: (CONTINUED)
The components of the net deferred tax assets are as follows:
<TABLE>
<CAPTION>
1998 1999
--------- ---------
<S> <C> <C>
DEFERRED TAX ASSETS:
Warranty reserves................................... $ 104,000 $ 305,000
Obsolescence reserves............................... 186,000 344,000
Bad-debt reserves................................... 86,000 111,000
Commission accrual.................................. -- 162,000
Vacation accrual.................................... 125,000 104,000
Other............................................... 55,000 31,000
Valuation allowance................................. (100,000) (518,000)
--------- ---------
GROSS DEFERRED TAX ASSETS............................. 456,000 539,000
DEFERRED TAX LIABILITIES:
Depreciation and amortization....................... 202,000 221,000
--------- ---------
NET DEFERRED TAX ASSETS............................... $ 254,000 $ 318,000
========= =========
</TABLE>
A reconciliation of the statutory income tax rate to the effective tax rate
included in the statements of operations is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1998 1999
---------- -------- -----------
<S> <C> <C> <C>
Income (Loss) before income tax........................... $2,729,286 $494,357 $(2,780,299)
Tax rate.................................................. 34% 34% 34%
---------- -------- -----------
Income tax expense (benefit) at statutory rate............ 927,957 168,081 (945,302)
Increases (decreases) in tax resulting from:
State income taxes, net of Federal income tax benefit... 97,514 19,920 (37,620)
Other................................................... (114,471) (37,001) (21,078)
Change in valuation allowance........................... -- -- 418,000
---------- -------- -----------
Actual tax expense (benefit).............................. $ 911,000 $151,000 $ (586,000)
========== ======== ===========
Effective tax rate........................................ 33.4% 30.5% 21.1%
========== ======== ===========
</TABLE>
8. COMMITMENTS AND CONTINGENCIES:
LEASES
In addition to the equipment under capital leases discussed in Note 5, the
Company has rental agreements for certain other real property and equipment
expiring at various dates through January 2002. The Company has the option to
purchase the equipment at termination of the lease for
F-36
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999 (CONTINUED)
8. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
$1. The Company incurred approximately $398,000 and $624,697 in rent expense in
fiscal years 1998 and 1999, respectively. Future minimum lease and rental
commitments are as follows:
<TABLE>
<S> <C>
2000........................................................ $537,310
2001........................................................ 242,154
2002........................................................ 153,762
--------
$933,226
========
</TABLE>
PURCHASE COMMITMENTS
At March 31, 1999, the Company had contractual commitments to purchase
approximately $780,000 of inventory to be delivered within six months of fiscal
year end.
9. GEOGRAPHIC INFORMATION:
The information below summarizes the Company's product sales, service, and
other income for each of the fiscal years in the period ended March 31, 1999:
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Domestic.............................. $13,913,015 $15,624,769 $27,058,936
International......................... 21,453,308 18,357,785 16,538,916
----------- ----------- -----------
$35,366,323 $33,982,554 $43,597,852
=========== =========== ===========
</TABLE>
10. RELATED PARTY:
During 1998 and 1999, a company owned by a former officer of the Company
performed research and development activities on the Company's behalf. In
addition, the officer received royalties on sales of certain of the Company's
products. During fiscal years 1998 and 1999, the Company paid approximately
$656,000 and $894,000, respectively, under that arrangement.
11. EMPLOYEE BENEFIT PLAN:
The Company established an employee contribution plan (the "Benefit Plan"),
effective January 1, 1987, under Section 401(k) of the Internal Revenue Code.
Any employee who has attained age 21 and has completed one year of service with
the Company is eligible to participate. Each participant may contribute amounts
to the Benefit Plan, subject to limits by the Internal Revenue Service, in
pretax contributions ranging from 1 to 15 percent of base salary. The Company
will match 50 percent of each participant's contribution up to $500 per year. At
the end of each fiscal year, the Company may contribute a percentage of its
profits to the Benefit Plan. The Company made discretionary contributions of
$50,000 and $0 to the Benefit Plan for the years ended March 31, 1998 and 1999,
respectively.
F-37
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
NOTES TO FINANCIAL STATEMENTS AS OF MARCH 31, 1999 (CONTINUED)
12. THE YEAR 2000 ISSUE:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. The effects of the Year 2000 Issue may be
experienced before, on, or after January 1, 2000, and if not addressed, the
impact on operations and financial reporting may range from minor errors to
significant systems failure, which could affect an entity's ability to conduct
normal business operations. It is not possible to be certain that all aspects of
the Year 2000 Issue affecting an entity, including those related to the efforts
of customers, suppliers, or other third parties, will be fully resolved.
13. SUBSEQUENT EVENTS:
On May 10, 1999, CVC, Inc., acquired all the outstanding common stock of the
Company. As consideration, CVC, Inc., gave to each holder of Company stock
6.03601 shares of its common stock for each share of Company common stock held,
subject to certain adjustments described below. The merger agreement between
CVC, Inc., CVC Acquisition Corp., Commonwealth Scientific Corporation, and
Certain Stockholders Thereof, dated April 1, 1999, provides for 975,000 shares
to be held in escrow pending determination of the final purchase price. As of
May 10, the Company adopted CVC, Inc.'s year-end of September 30, 1999. The
final purchase price is dependent upon a number of representations and
warranties, including minimum net worth requirements and tax and environmental
liability considerations.
In May 1999, CVC, Inc., repaid the entire balance (approximately $5,700,000
of principal and accrued interest) due under the Company's lines of credit, as
well as the long-term equipment and automobile loans payable to the Company's
bank. No further obligations exist under these debt instruments.
On April 1, 1999, the Company converted approximately $1.2 million in
accounts payable due to a creditor to an unsecured note payable, bearing
interest at 8 percent per annum. Beginning May 15, 1999, principal and interest
payments of $71,790 are payable monthly. Interest will accrue at a rate of
10 percent per annum in the event of the Company's failure to pay the amounts
due within ten days of the due date. Monthly installments shall continue until
the entire indebtedness is repaid; however, any remaining indebtedness, if not
sooner paid, shall be due and payable on October 15, 2000.
F-38
<PAGE>
3,500,000 SHARES
[LOGO]
COMMON STOCK
-------------
PROSPECTUS
, 1999
---------------------
LEHMAN BROTHERS
PRUDENTIAL SECURITIES
SG COWEN
WARBURG DILLON READ LLC
<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.............................. 265,000
Legal fees and expenses..................................... 300,000
Printing and engraving expenses............................. 150,000
Transfer agent and registrar fees........................... 18,000
Miscellaneous............................................... 87,973
----------
Total................................................... $ 900,000
==========
</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 as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
II-1
<PAGE>
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.
The following figures give effect to a 20-1 stock split in December 1995, a
3-1 stock split in October 1997 and a 2-3 reverse stock split in
September 1999.
During the fiscal year ended September 30, 1996, the Company granted options
to acquire an aggregate of 194,200 shares of common stock at an exercise price
of $4.04 to various directors, officers, employees and/or consultants.
On March 18, 1997, Mehrdad Moslehi, Senior Vice President and Chief
Technical Officer, purchased 20,000 shares of common stock for $12,500 pursuant
to the exercise of such individual's stock options.
On March 18, 1997, Patrick Borrelli purchased 200 shares of common stock for
$808 pursuant to the exercise of such individual's stock options.
On April 1, 1997, the Company issued 9,900 shares of common stock to various
non-employee directors as payment of their annual retainer.
On June 9, 1997, Mehrdad Moslehi, Senior Vice President and Chief Technical
Officer, purchased 60,000 shares of common stock for $37,500 pursuant to the
exercise of such individual's stock options.
On August 11, 1997, Yong Jin Lee purchased 20,000 shares of common stock for
$12,500 pursuant to the exercise of such individual's stock options.
On September 15, 1997, Cecil Davis purchased 20,000 shares of common stock
for $25,000 pursuant to the exercise of such individual's stock options.
During the fiscal year ended September 30, 1997, the Company granted options
to acquire an aggregate of 406,600 shares of common stock at exercise prices
ranging from $3.00 to $5.73 to various directors, officers, employees and/or
consultants.
II-2
<PAGE>
On October 21, 1997, Rhen Zhou purchased 1,334 shares of common stock for
$5,389 pursuant to the exercise of such individual's stock options.
On October 31, 1997, Carla Reif purchased 668 shares of common stock for
$2,699 pursuant to the exercise of such individual's stock options.
On November 5, 1997, Cecil Davis purchased 33,333 shares of common stock for
$41,666 pursuant to the exercise of such individual's stock options.
On November 18, 1997, Mehrdad Moslehi purchased 48,000 shares of common
stock for $30,240 pursuant to the exercise of such individual's stock options.
On December 2, 1997, Mehrdad Moslehi purchased 112,000 shares of common
stock for $70,360 pursuant to the exercise of such individual's stock options.
On December 8, 1997, Jeff Dobbs purchased 1,334 shares of common stock for
$5,383 pursuant to the exercise of such individual's stock options.
On December 8, 1997, George Heltz purchased 668 shares of common stock for
$2,699 pursuant to the exercise of such individual's stock options.
On March 24, 1998, Peter Schwartz purchased 667 shares of common stock for
$2,695 pursuant to the exercise of such individual's stock options.
On April 1, 1998, the Company issued 9,331 shares of common stock to various
non-employee directors as payment of their annual retainer.
On September 1, 1998, Jalil Kamali purchased 1,334 shares of common stock
for $5,389 pursuant to the exercise of such individual's stock options.
During the fiscal year ended September 30, 1998, the Company granted options
to acquire an aggregate of 427,667 shares of common stock at exercise prices
ranging from $5.73 to $12.00 to various directors, officers, employees and/or
consultants.
In December 1998, the Company issued and sold 100,000 shares of Series C
Convertible Preferred Stock to Advent International Corporation for a price of
$10.00 per share. Upon completion of the offering, these shares are convertible
into 1,016,260 shares of such common stock. The Company also sold to Advent
International Corporation warrants to purchase an aggregate of 133,333 shares of
common stock at an exercise price of $15.00 during the four-year period
commencing on December 1, 2001, which warrant terminates upon consummation of
this offering. See "Certain Transactions" and "Description of Capital Stock."
In May 1999, the Company issued 1,268,799 shares of common stock, to former
shareholders of Commonwealth Scientific Corporation as part of its acquisition
of Commonwealth.
On May 14, 1999 the Company issued 10,665 shares of common stock to various
non-employee directors as payment of their annual retainer.
On July 2, 1999 Robert Matthews purchased 8,000 shares of common stock for
$10,000 pursuant to the exercise of such individual's stock options.
On September 14, 1999, Kitaek Kang purchased 2,133 shares of common stock
for $9,670 pursuant to the exercise of such individual's stock options.
On September 23, 1999, David Kolczynski purchased 7,200 shares of common
stock for $29,052 pursuant to the exercise of such individual's stock options.
On September 30, 1999, Zeming Liu purchased 1,200 shares of common stock for
$6,870 pursuant to the exercise of such individual's stock options.
II-3
<PAGE>
On September 30, 1999, David Day purchased 4,841 shares of common stock for
$18,007 pursuant to the exercise of such individual's stock options.
During the fiscal year ended September 30, 1999, the Company granted options
to acquire an aggregate of 311,669 shares of common stock at exercise prices
ranging from $6.00 to $11.70 to various directors, officers, employees and/or
consultants. In addition, the company assumed 286,228 shares of common stock at
exercise prices ranging from $3.72 to $6.95 as part of its acquisition of
Commonwealth.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1.1 Underwriting Agreement.*
3.1 Amended and 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 Amended and Restated 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 Amended and Restated Registration Rights Agreement, dated
May 10, 1999, 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.**
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
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.**
10.20 $3,000,000 Term Loan Agreement, dated September 30, 1996, by
Registrant and M&T Company.**
10.21 Letter of Credit Reimbursement Agreement dated November 21,
1995 between CVC Holdings Inc. and M&T Trust Company.**
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.**
10.26 U.S. $1,000,000 subordinated Promissory Note, dated December
20, 1991, between the Registrant and Nikko Tecno Co., Inc.**
10.27 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Giovanni Nocerino.**
10.29 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Emilio O. Dicataldo.**
10.30 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Mehrdad M. Moslehi.**
10.31 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Christopher J. Mann.**
10.32 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Richard J. Chicotka.**
10.33 Securities Purchase Agreement, dated December 10, 1998,
among the Registrant and entities affiliated with Advent
International Corporation.**
10.34 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Global Private Equity III Limited
Partnership.**
10.35 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Advent PGGM Global Limited
Partnership.**
10.36 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Advent GPE III Limited
Partnership.**
10.37 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Advent Partners (NA) GPE III.**
10.38 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Advent Partners Limited
Partnership.**
10.39 Merger Agreement, dated as of April 1, 1999, among the
Registrant, CVC Acquisition Corp., Commonwealth Scientific
Corporation and the 5% Stockholders.**
10.40 Escrow Agreement, dated as of May 10, 1999, among the
Registrant, Commonwealth Scientific Corporation and M&T
Company.**
10.41 Consulting Agreement, dated as of May 10, 1999, between the
Registrant and George R. Thompson, Jr.**
10.42 Union Agreement, dated October 31, 1998, between the
Registrant and Local 342, International Union of Electronic,
Electrical, Salaried, Machine & Furniture Workers.*
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <S>
10.43 Amended and Restated Stockholders Agreement, dated as of
May 10, 1999, among the Registrant and certain of its
stockholders.**
10.44 Loan Agreement, dated March 31, 1998, between CVC Products,
Inc. and Manufacturers and Trust Company.+
10.45 Letter Amendment, dated September 30, 1998 to Loan Agreement
dated March 31, 1998, between CVC Products, Inc. and
Manufacturers and Traders Trust Company.*
10.46 Letter Amendment, dated February 19, 1999 to Loan Agreement
dated March 31, 1998, between CVC Products, Inc. and
Manufacturers and Traders Trust Company.*
10.47 Amendment, dated September 22, 1999 to Loan Agreement, dated
March 31, 1998 between CVC Products, Inc. and Manufacturers
and Traders Trust Company.+
10.48 Patent Collateral Assignment and Security Agreement, dated
September 22, 1999, between Commonwealth Scientific
Corporation and Manufacturers and Traders Trust Company.+
10.49 Amended and Restated Patent Collateral Assignment and
Security Agreement, dated September 22, 1999, among, CVC
Products, Inc. and Manufacturers and Traders Trust Company.+
10.50 Trademark Collateral Assignment and Security Agreement,
dated September 22, 1999, between Commonwealth Scientific
Corporation and Manufacturers and Traders Trust Company.+
10.51 Acknowledgement and Agreement, dated September 22, 1999
among Registrant, CVC Products, Inc. and Manufacturers and
Traders Trust Company.+
10.52 General Security Agreement, dated September 22, 1999 between
CVC Process Solutions, Inc. and Manufacturers and Traders
Trust Company.*
10.53 General Security Agreement, dated September 3, 1999 between
Commonwealth Scientific Corporation and Manufacturers and
Traders Trust Company.+
10.54 Continuing Guaranty, dated September 22, 1999 among
Registrant, Commonwealth Scientific Corporation and
Manufacturers and Traders Trust Company.+
10.55 Continuing Guaranty, dated September 22, 1999 among
Registrant, CVC Process Solutions, Inc. and Manufacturers
and Traders Trust Company.+
10.56 Master Equipment Lease No. 1, dated April 7, 1998 between
CVC Products, Inc. and M&T Financial Corporation.+
10.57 Lease Agreement, dated February 1, 1995, between North Point
Associates Limited Partnership and Commonwealth Scientific
Corporation.+
10.58 Lease Agreement, dated August 14, 1996 between North Point
Associates Limited Partnership and Commonwealth Scientific
Corporation.+
11.0 Computation of Earnings Per Share.**
21.1 List of Subsidiaries.+
23.1 Consent of PricewaterhouseCoopers LLP.+
23.2 Consent of Arthur Andersen LLP.+
23.3 Consent of Dewey Ballantine LLP (contained in Exhibit 5.1).*
24.1 Power of Attorney (included on page II-5).**
27.1 Financial Data Schedule.**
</TABLE>
(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.
II-6
<PAGE>
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-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to the 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 21, 1999.
<TABLE>
<S> <C> <C>
CVC, INC.
BY: /S/ CHRISTINE B. WHITMAN
-----------------------------------------
Christine B. Whitman
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
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 the 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
Amendment to the Registration Statement has been signed by the following persons
on October 21, 1999 in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Chairman of the Board, Chief
/s/ CHRISTINE B. WHITMAN* Executive Officer and
--------------------------------------- President (principal executive October 21, 1999
Christine B. Whitman officer)
Senior Vice President and Chief
/s/ EMILIO O. DICATALDO Financial Officer (principal
--------------------------------------- accounting and financial October 21, 1999
Emilio O. DiCataldo officer)
/s/ ROBERT C. FINK* Director
--------------------------------------- October 21, 1999
Robert C. Fink
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MAURICE F. HOLMES* Director
--------------------------------------- October 21, 1999
Maurice F. Holmes
/s/ DOUGLAS A. KINGSLEY* Director
--------------------------------------- October 21, 1999
Douglas A. Kingsley
/s/ THOMAS C. MCDERMOTT* Director
--------------------------------------- October 21, 1999
Thomas C. McDermott
/s/ SEIYA MIYANISHI* Director
--------------------------------------- October 21, 1999
Seiya Miyanishi
/s/ GEORGE R. THOMPSON, JR.* Director
--------------------------------------- October 21, 1999
George R. Thompson, Jr.
/s/ DONALD L. WAITE* Director
--------------------------------------- October 21, 1999
Donald L. Waite
</TABLE>
<TABLE>
<S> <C>
*By: /s/ EMILIO O. DICATALDO
-------------------------------------------
Emilio O. DiCataldo
(ATTORNEY IN FACT)
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Underwriting Agreement.*
3.1 Amended and 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 Amended and Restated 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 Amended and Restated Registration Rights Agreement, dated
May 10, 1999, 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.**
10.20 $3,000,000 Term Loan Agreement, dated September 30, 1996, by
Registrant and M&T Company.**
10.21 Letter of Credit Reimbursement Agreement dated November 21,
1995 between CVC Holdings Inc. and M&T Trust Company.**
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.**
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.26 U.S. $1,000,000 subordinated Promissory Note, dated December
20, 1991, between the Registrant and Nikko Tecno Co., Inc.**
10.27 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Giovanni Nocerino.**
10.29 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Emilio O. Dicataldo.**
10.30 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Mehrdad M. Moslehi.**
10.31 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Christopher J. Mann.**
10.32 Employment Agreement, dated as of December 15, 1997, between
the Registrant and Richard J. Chicotka.**
10.33 Securities Purchase Agreement, dated December 10, 1998,
among the Registrant and entities affiliated with Advent
International Corporation.**
10.34 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Global Private Equity III Limited
Partnership.**
10.35 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Advent PGGM Global Limited
Partnership.**
10.36 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Advent GPE III Limited
Partnership.**
10.37 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Advent Partners (NA) GPE III.**
10.38 Common Stock Purchase Warrant, dated December 10, 1998,
between the Registrant and Advent Partners Limited
Partnership.**
10.39 Merger Agreement, dated as of April 1, 1999, among the
Registrant, CVC Acquisition Corp., Commonwealth Scientific
Corporation and the 5% Stockholders.**
10.40 Escrow Agreement, dated as of May 10, 1999, among the
Registrant, Commonwealth Scientific Corporation and M&T
Company.**
10.41 Consulting Agreement, dated as of May 10, 1999, between the
Registrant and George R. Thompson, Jr.**
10.42 Union Agreement, dated October 31, 1998, between the
Registrant and Local 342, International Union of Electronic,
Electrical, Salaried, Machine & Furniture Workers.*
10.43 Amended and Restated Stockholders Agreement, dated as of
May 10, 1999, among the Registrant and certain of its
stockholders.**
10.44 Loan Agreement, dated March 31, 1998, between CVC Products,
Inc. and Manufacturers and Trust Company.+
10.45 Letter Amendment, dated September 30, 1998 to Loan Agreement
dated March 31, 1998, between CVC Products, Inc. and
Manufacturers and Traders Trust Company.*
10.46 Letter Amendment, dated February 19, 1999 to Loan Agreement
dated March 31, 1998, between CVC Products, Inc. and
Manufacturers and Traders Trust Company.*
10.47 Amendment, dated September 22, 1999 to Loan Agreement, dated
March 31, 1998 between CVC Products, Inc. and Manufacturers
and Traders Trust Company.+
10.48 Patent Collateral Assignment and Security Agreement, dated
September 22, 1999, between Commonwealth Scientific
Corporation and Manufacturers and Traders Trust Company.+
10.49 Amended and Restated Patent Collateral Assignment and
Security Agreement, dated September 22, 1999, among, CVC
Products, Inc. and Manufacturers and Traders Trust Company.+
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.50 Trademark Collateral Assignment and Security Agreement,
dated September 22, 1999, between Commonwealth Scientific
Corporation and Manufacturers and Traders Trust Company.+
10.51 Acknowledgement and Agreement, dated September 22, 1999
among Registrant, CVC Products, Inc. and Manufacturers and
Traders Trust Company.+
10.52 General Security Agreement, dated September 22, 1999 between
CVC Process Solutions, Inc. and Manufacturers and Traders
Trust Company.*
10.53 General Security Agreement, dated September 3, 1999 between
Commonwealth Scientific Corporation and Manufacturers and
Traders Trust Company.+
10.54 Continuing Guaranty, dated September 22, 1999 among
Registrant, Commonwealth Scientific Corporation and
Manufacturers and Traders Trust Company.+
10.55 Continuing Guaranty, dated September 22, 1999 among
Registrant, CVC Process Solutions, Inc. and Manufacturers
and Traders Trust Company.+
10.56 Master Equipment Lease No. 1, dated April 7, 1998 between
CVC Products, Inc. and M&T Financial Corporation.+
10.57 Lease Agreement, dated February 1, 1995, between North Point
Associates Limited Partnership and Commonwealth Scientific
Corporation.+
10.58 Lease Agreement, dated August 14, 1996 between North Point
Associates Limited Partnership and Commonwealth Scientific
Corporation.+
11.0 Computation of Earnings Per Share.**
21.1 List of Subsidiaries.+
23.1 Consent of PricewaterhouseCoopers LLP.+
23.2 Consent of Arthur Andersen LLP.+
23.3 Consent of Dewey Ballantine LLP (contained in Exhibit 5.1).*
24.1 Power of Attorney (included on page II-5).**
27.1 Financial Data Schedule.**
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed
+ Filed herewith
<PAGE>
EXHIBIT 3.1
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "CVC, INC.", FILED IN THIS OFFICE ON THE TWENTIETH DAY OF APRIL, A.D. 1999,
AT 11 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
[SEAL]
AUTHENTICATION: 9697764
DATE: 04-21-99
<PAGE>
CERTIFICATE OF AMENDMENT TO
RESTATED CERTIFICATE OF INCORPORATION OF
CVC, INC.
CVC, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is CVC, Inc.
2. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Delaware on October 19, 1990. Such
certificate was amended pursuant to a Restated Certificate of Incorporation of
the Corporation filed with the Secretary of State of the State of Delaware on
May 18, 1995, which such Restated Certificate of Incorporation was subsequently
amended pursuant to a Certificate of Amendment filed with the Secretary of State
of the State of Delaware on March 14, 1996, further amended pursuant to a
Certificate of Amendment filed with the Secretary of the State of Delaware on
October 15, 1997 and subsequently amended pursuant to a Certificate of Amendment
filed with the Secretary of the State of Delaware on December 10, 1998.
3. The Amended and Restated Certificate of Incorporation is hereby further
amended as follows:
A. Article IV shall be amended to include the following immediately after
Section 4 of Article IV:
Section 5. Voting Rights and Directors.
(a) Except as otherwise provided herein or required by law, the
holder of each share of Common Stock issued and outstanding shall have one vote
with respect to such share and the holder of each share of Preferred Stock shall
be entitled with respect to such share to a number of votes equal to the number
of shares of Common Stock into which such share of Preferred Stock could be
converted at the record date for determination of the stockholders entitled to
vote on such matters, or, if no such record date is established, at the date
such vote is taken or any written consent of stockholders is solicited, such
votes to be counted together with all other shares of stock of the Company
having general voting power and not separately as a class (except as required by
Section 5(b) below or the General Corporation Law of Delaware). Holders of
Common Stock and Preferred Stock shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation.
Fractional votes by the holders of Preferred Stock shall not, however, be
permitted and any fractional voting rights shall (after aggregating all shares
into which shares of Preferred Stock held by each holder could be converted) be
rounded to the nearest whole number.
Page 1 of 3
<PAGE>
(b) The Board of Directors of the Corporation shall consist of not
less than three (3) members, the exact number to be fixed from time to time
solely by resolution of the Board of Directors acting by not less than a
majority of the directors then in office. The holders of the Series B Preferred,
voting separately as a class, shall be entitled to elect two (2) members of the
Board of Directors. The holders of Common Stock and Series A Preferred, voting
together, shall be entitled to elect five members of the Board of Directors. At
any meeting held for the purpose of electing or removing directors, (i) the
presence in person or by proxy of the holders of the majority of the shares of
Series B Preferred then outstanding shall constitute a quorum of the Series B
Preferred for the purpose of electing or removing directors by holders of the
Series B Preferred and (ii) the presence in person or by proxy of the holders of
a majority of shares of Common Stock and Series A Preferred (on an as converted
into Common Stock basis) then outstanding shall constitute a quorum of Common
Stock and Series A Preferred for the purpose of electing or removing directors
by holders of Common Stock and Series A Preferred. A vacancy in any directorship
elected by the holders of the Series B Preferred shall be filled only by vote or
written consent in lieu of a meeting of the holders of the Series B Preferred. A
vacancy in any directorship elected by the holders of Common Stock and Series A
Preferred shall be filled only by vote or written consent in lieu of a meeting
of the holders of Common Stock and the Series A Preferred. Any member of the
Board of Directors elected by the holders of the Series B Preferred may only be
removed by the vote of the holders of not less than a majority of the shares of
Series B Preferred voting thereon. Any member of the Board of Directors elected
by the holders of Common Stock and Series A Preferred may only be removed by the
vote of the holders of not less than a majority of the shares of Common Stock
and Series A Preferred (on an as converted into Common Stock basis) voting
thereon.
(c) At all elections of members of the Board of Directors of the
Corporation, if any holder of stock of this Corporation entitled to vote at an
election shall have given the Corporation written notice of its intention to
cumulate his or her votes for the election of members of the Board of Directors
prior to commencement of the voting for such members, then each holder entitled
to vote for members of the Board of Directors shall be entitled to as many votes
as shall equal the number of votes which (except for this provision as to
cumulative voting) such holder would be entitled to cast for the election of
directors with respect to his or her shares of stock multiplied by the number of
directors to be elected by such holder either (i) by casting all such holder's
votes for a single director or (ii) by distributing such holder's votes among
the number of directors to be voted for, or for any two or more of them as such
holder may see fit.
Section 6. No Reissuance of Series B Preferred. No share or shares
of Series B Preferred acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall
be canceled, returned and eliminated from the shares which the Corporation shall
be authorized to issue.
Page 2 of 3
<PAGE>
IN WITNESS WHEREOF, CVC, INC. has caused this Certificate to be
signed by Christine B. Whitman, its President, this 20 day of April, 1999.
CVC, Inc.
/s/ Christine B. Whitman
-------------------------------------
Christine B. Whitman
President and Chief Executive Officer
Page 3 of 3
<PAGE>
State of Delaware
Office of the Secretary of State PAGE 1
-------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "CVC, INC.", FILED IN THIS OFFICE ON THE TENTH DAY OF DECEMBER, A.D. 1998, AT
11 O'CLOCK A.M.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
[SEAL] AUTHENTICATION: 9673169
DATE: 04-07-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:00 AM 12/10/1998
981474583 -- 2244345
CERTIFICATE OF AMENDMENT TO
RESTATED CERTIFICATE OF INCORPORATION
CVC, INC.
(Pursuant to Section 242)
CVC, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is CVC, Inc.
2. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Delaware on October 19, 1990. Such
certificate was amended pursuant to a Restated Certificate of Incorporation of
the Corporation filed with the Secretary of State of the State of Delaware on
May 18, 1995, which was subsequently amended pursuant to a Certificate of
Amendment filed with the Secretary of State of the State of Delaware on October
15, 1997.
3. This Amended and Restated Certificate of Incorporation is hereby
further amended as follows:
A. Article IV shall be deleted and replaced in its entirety with the
following:
"Article IV
(a) The Corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock." The total number of shares
which the Corporation is authorized to issue is 50,502,500 The total number of
shares of Common Stock which the Corporation is authorized to issue is
50,000,000, par value $.01 per share. The total number of shares of Preferred
Stock which the Corporation is authorized to issue is 502,500, par value $.01
per share, of which (i) 2,500 shares, $.01 par value per share, shall be
designated "8% Non-Cumulative Convertible Preferred Stock" (the "Series A
Preferred"), (ii) 100,000 shares, $.01 par value per share, shall be designated
"Series B Non-Cumulative Convertible Preferred Stock" (the "Series B
Preferred"), (iii) 200,000 shares, $.01 par value per share, shall be designated
"Series C Senior Convertible Redeemable Preferred Stock" (the "Series C
Preferred"), and (iv) 200,000 shares, $.01 par value par share, shall be
designated "Series D Redeemable Preferred Stock" (the "Series D Preferred"). The
Series A Preferred, the Series B Preferred, the Series C Preferred and the
Series D Preferred shall collectively be referred to as the "Preferred Stock."
The Corporation shall from time to time in accordance with the laws of the
State of Delaware increase the authorized amount of its Common Stock if at any
time the number of shares of Common Stock remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred Stock.
<PAGE>
The relative rights, preferences, privileges and restrictions granted to
or imposed upon the Preferred Stock and the Common Stock or the holders thereof
are as follows:
Section 1. Dividends. The holders of the Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, dividends at the
rate of $80.00 per share for Series A Preferred, $11.90 per share for Series B
Preferred and $8.00 per share for Series C Preferred (in each case as adjusted
for any stock splits, stock dividends, recapitalization and the like with
respect to such shares) per annum as the Board of Directors may from time to
time determine out of funds legally available therefor. No dividends shall be
paid on the Series A Preferred during any fiscal year of the Corporation until
dividends in the total amount of $11.90 per share on the Series B Preferred
shall have been paid or declared and set apart during that fiscal year. No
dividends shall be paid on the Series A Preferred and Series B Preferred during
any fiscal year of the Corporation until dividends in the total amount of $8.00
per share on the Series C Preferred shall have been paid or declared and set
apart during that fiscal year. No dividends (other than those payable solely in
the Common Stock of the Corporation) shall be paid on any Common Stock of the
Corporation during any fiscal year of the Corporation until dividends in the
total amount of $80.00 per share of Series A Preferred, $11.90 per share of
Series B Preferred and $8.00 per share of Series C Preferred (in each case as
adjusted for any stock splits, stock dividends, recapitalization and the like
with respect to such shares) shall have been paid or declared and set apart
during that fiscal year. The right to such dividends on shares of Preferred
Stock shall not be cumulative, and no right shall accrue to holders of Preferred
Stock by reason of the fact that dividends on said shares are not declared in
any prior year.
After payment of such dividends to the holders of the Preferred Stock, any
additional dividends declared shall be distributed among all the holders of the
Common Stock.
Section 2. Liquidation Preference. In the event of a Liquidity Event (as
hereinafter defined), before any distribution or payment may be made with
respect to the Common Stock or any other series or class of capital stock
ranking on liquidation junior to the Preferred Stock, holders of each share of
Preferred Stock shall be entitled to be paid out of the assets of the
Corporation available for distribution to holders of the Corporation's capital
stock of all classes, whether such assets are capital, surplus, or capital
earnings, as follows:
(a) The holders of the Series C Preferred or Series D Preferred
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of the Series A
Preferred, Series B Preferred and Common Stock, by reason of their ownership of
such stock, the amount equal to the sum of (i) $100.00 per share for each share
of Series C Preferred (as adjusted for stock splits, stock dividends,
recapitalizations and the like with respect to such stock) (the "Liquidation
Cash Payment"), (ii) an amount equal to all declared, but unpaid dividends or
distributions on the Series C Preferred and (iii) if the Series C Preferred has
not been converted in accordance with Section 4(b) or 4(d), the number of shares
of
<PAGE>
Common Stock issuable upon conversion of such shares of Series C Preferred had
such Series C Preferred been converted into shares of Series D Preferred and
Common Stock immediately prior to such Liquidity Event. If the assets and funds
thus distributed among the holders of the Series C Preferred or Series D
Preferred pursuant to this Section 2(a) shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series C Preferred or
Series D Preferred in proportion to the preferential amount that each such
holder is otherwise entitled to receive.
(b) The holders of the Series B Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Series A Preferred and
the Common Stock by reason of their ownership of such stock, the amount equal to
the sum of (i) $148.78 per share for each share of Series B Preferred (as
adjusted for stock splits, stock dividends, recapitalization and the like with
respect to such stock), and (ii) an amount equal to all declared but unpaid
dividends or distributions on the Series B Preferred. If the assets and funds
thus distributed among the holders of the Series B Preferred pursuant to this
Section 2(b) shall be insufficient to permit the payment to such holders of the
full aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series B Preferred in proportion to the preferential
amount that each such holder is otherwise entitled to receive.
(c) After payment has been made to the holders of the Series C
Preferred and the Series B Preferred of the full amounts to which they shall be
entitled as set forth in the first sentence of Section 2(a) and Section 2(b),
respectively, then the holders of the Series A Preferred shall be entitled to
receive the amount equal to the sum of (i) $1,000 per share for each share of
Series A Preferred then held by them (as adjusted for stock splits, stock
dividends, recapitalization and the like with respect to such stock), and (ii)
an amount equal to declared but unpaid dividends or distributions on the Series
A Preferred. If the assets and funds thus distributed among the holders of the
Series A Preferred pursuant to this Section 2(c) shall be insufficient to permit
the payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
pursuant to this Section 2(c) shall be distributed ratably among the holders of
the Series A Preferred in proportion to the preferential amount that each such
holder is otherwise entitled to receive.
(d) After payment has been made to the holders of the Preferred
Stock of the full amounts to which they shall be entitled as set forth in
Section 2(a) through Section 2(c) above, then the entire remaining assets and
funds of the Corporation legally available for distribution, if any, shall be
distributed on a pro rata basis on the outstanding Common Stock.
(e) For purposes of this Section 2, the term "Liquidity Event" shall
mean any one or more of the following: (i) a liquidation, dissolution or
winding-up of the
<PAGE>
Corporation, whether voluntary or involuntary; (ii) a sale, merger,
recapitalization, reorganization or consolidation involving the Corporation, as
the result of which those persons who hold at least 50% of the voting stock of
the Corporation immediately prior to such transaction do not hold more than 50%
of the voting stock of the Corporation (or the surviving or resulting entity)
after giving effect to such transaction; or (iii) the sale of all or
substantially all of the assets of the Corporation.
(f) Any securities to be delivered to the holders of the Preferred
Stock and Common Stock upon a merger, reorganization or sale of substantially
all the assets of the Corporation shall be valued as follows:
(1) if traded on a securities exchange or on the NASDAQ Stock
Market, the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the ten business day period ending three (3)
business days prior to the closing of such merger, reorganization or sale;
(2) if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the ten business day
period ending three (3) business days prior to the closing; and
(3) if there is no active public market, the value shall be
the fair market value thereof as mutually determined by the Corporation and the
holders of not less than a majority of the outstanding shares of Series B
Preferred and Series C Preferred voting as a single class, provided that if the
Corporation and the holders of a majority of the outstanding shares of Series B
Preferred and Series C Preferred are unable to reach agreement, then by
independent appraisal by an investment banker hired and paid by the Corporation,
but reasonably acceptable to the holders of a majority of the outstanding shares
of Series B Preferred and Series C Preferred voting as a single class.
(g) Notwithstanding the foregoing, in the event that on or before
December 10, 1999. the Corporation shall merge or consolidate with or into any
other corporation or sell, lease or convey all or substantially all of its
property or business (a "Year 1 Transaction") and the aggregate consideration
payable to the holders of the Series C Preferred under this Section 2 as a
result of the Year 1 Transaction would be equal to or greater than the product
of(x) $200 and (y) the number of shares of Series C Preferred issued and
outstanding immediately prior to the consummation of the Year 1 Transaction (the
"Series C Return"), then the Liquidation Cash Payment may, at the option of the
Corporation, be reduced by an amount of not more than 50% thereof; provided that
the Common Stock issuable upon the conversion of the Series C Preferred in
accordance with Section 4(b) or 4(d) (as the case may be) shall be increased, if
necessary, by that number of fully paid and nonassessable shares of Common Stock
(the "Additional Liquidation Shares") such that the aggregate consideration to
be received by the holders of the Series C Preferred as a result of the Year 1
Transaction shall be no less than an amount equal to the Series C Return;
provided further, however, that the foregoing shall in no way limit the
aggregate consideration payable to the Holders of the Series C Preferred as a
result of the Year 1 Transaction to the Series C Return. The
<PAGE>
Additional Liquidation Shares and any other shares of Common Stock distributable
to the holders of the Series C Preferred as a result of a Year 1 Transaction
shall be valued at the per share value of the Year 1 Transaction.
Section 3. Redemption.
(a) At the individual option of each holder of shares of Series B
Preferred and Series C Preferred, the Corporation shall redeem, on December
10, 2003 (the "Redemption Date"), the number of shares of Series B Preferred and
Series C Preferred, respectively, held by such holder that is specified in a
request (the "Redemption Request") for redemption delivered to the Corporation
by the holder on or prior to December 10, 2003, with respect to the shares of
Series B Preferred, by paying in cash therefor, $148.78 per share of Series B
Preferred (as adjusted for stock splits, stock dividends, recapitalization and
the like with respect to such shares) plus all declared but unpaid dividends on
such shares and, with respect to the shares of Series C Preferred, by paying to
the holders of the shares of Series C Preferred (i) $100.00 per share of Series
C Preferred (as adjusted for stock splits, stock dividends, recapitalization and
the like with respect to such shares) ("Redemption Cash Payment"), (ii) an
amount equal to all declared, but unpaid dividends or distributions on the
Series C Preferred and (iii) by distributing to the holders of the shares of
Series C Preferred the number of shares of Common Stock issuable upon conversion
of such shares of Series C Preferred had such Series C Preferred been converted
into shares of Series D Preferred and Common Stock immediately prior to such
Redemption.
(b) In the event of a Liquidity Event, the holders of the Series D
Preferred may, at their election, require the Corporation to redeem all (but not
less than all) of the shares of Series D Preferred held by such holders for an
aggregate amount (if all originally issued and outstanding Series C Preferred
was converted into Series D Preferred and all such shares of Series D Preferred
are then outstanding) equal to $100.00 per share (as adjusted for stock splits,
stock dividends, recapitalization and the like with respect to such shares).
Upon the occurrence of a Qualified Public Offering, the Corporation may either
(i) redeem the number of shares of Series D Preferred held by such holder (if
all originally issued and outstanding Series C Preferred was converted into
Series D Preferred and all such shares of Series D Preferred are then
outstanding) by paying in cash an aggregate amount (if all originally issued
Series C Preferred was converted into Series D Preferred and all such Series D
Preferred are then outstanding) equal to $100.00, (as adjusted for stock splits,
stock dividends, recapitalization and the like with respect to such shares), or
(ii) exchange each such share of Series D Preferred for such number of shares of
Common Stock such that at the per share offer price in connection with a
Qualified Public Offering the value of the aggregate number of shares so
delivered would (if all originally issued Class C Preferred Stock was converted
into Series D Preferred and all such shares of Series D Preferred are then
outstanding) equal to $100.00 per share of Series D Preferred (as adjusted for
stock splits, stock dividends, recapitalization and the like with respect to
such shares). "Qualified Public Offering" is defined to mean the closing of an
underwritten public offering by the Company pursuant to a registration statement
filed and declared effective under the Act covering the offer
<PAGE>
and sale of Common Stock for the account of the Company in which the aggregate
net proceeds to the Company equal at least $20,000,000 and in which the price
per share of Common Stock equals or exceeds $8.33.
(c) At least ten (l0) but no more than twenty (20) days prior to the
Redemption Date written notice shall be mailed, first class postage prepaid, to
each holder of the Series B Preferred, Series C Preferred or the Series D
Preferred (as the case may be) which has given the Corporation a Redemption
Request at the address set forth in the Redemption Request, notifying such
holder of the place at which payment may be obtained on the Redemption Date for
the shares of Series B Preferred, Series C Preferred or the Series D Preferred
(as the case may be) specified in the Redemption Request and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the shares to
be redeemed (the "Redemption Notice"). On or after the Redemption Date, each
holder of Series B Preferred, Series C Preferred or the Series D Preferred (as
the case may be) to be redeemed shall surrender to this Corporation the
certificate or certificates representing such shares, in the manner and at the
place designated in the Redemption Notice, and thereupon the Redemption Price of
such shares shall be payable to the order of the person whose name appears on
such certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. In the event less than all the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(d) From and after the Redemption Date, unless there shall have been
a default in payment of the Redemption Price, all rights of the holders of
shares of Series B Preferred, Series C Preferred or the Series D Preferred (as
the case may be) designated for redemption in the Redemption Request as holders
of Series B Preferred, Series C Preferred or the Series D Preferred (as the case
may be) (except the right to receive the Redemption Price without interest upon
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever. If the
funds of the Corporation legally available for redemption of shares of Series B
Preferred, Series C Preferred or the Series D Preferred (as the case may be) on
the Redemption Date are insufficient to redeem the total number of shares of
Series B Preferred, Series C Preferred or the Series D Preferred (as the case
may be) to be redeemed on such date, those funds which are legally available
will be used to redeem the maximum possible number of such shares ratably among
the holders of such shares to be redeemed based upon their holdings of Series B
Preferred, Series C Preferred or the Series D Preferred (as the case may be).
The shares of Series B Preferred, Series C Preferred or the Series D Preferred
(as the case may be) not redeemed shall remain outstanding and entitled to all
the rights and preferences provided herein. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
shares of Series B Preferred, Series C Preferred or the Series D Preferred (as
the case may be) such funds will immediately be used to redeem the balance of
the shares which the Corporation has become obliged to redeem on any Redemption
Date, but which it has not redeemed.
<PAGE>
(e) Notwithstanding the foregoing, in the event of a Year 1
Transaction on or before December 10, 1999, and the aggregate consideration
payable to the holders of the Series C Preferred under this Section 2 as a
result of the Year 1 Transaction would be equal to or greater than Series C
Return, then the Redemption Cash Payment may, at the option of the Corporation,
be reduced by an amount of not more than 50% thereof; provided that the Common
Stock issuable upon the conversion of the Series C Preferred in accordance with
Section 4(b) or 4(d) (as the case may be) shall be increased, if necessary, by
that number of fully paid and nonassessable shares of Common Stock (the
"Additional Redemption Shares") such that the aggregate consideration to be
received by the holders of the Series C Preferred as a result of the Year 1
Transaction shall be no less than an amount equal to the Series C Return;
provided further, however, that the foregoing shall in no way limit the
aggregate consideration payable to the Holders of the Series C Preferred as a
result of the Year 1 Transaction to the Series C Return. The Additional
Redemption Shares and any other shares of Common Stock distributable to the
holder of the Series C Preferred as a result of a Year 1 Transaction shall be
valued at the per share value of the Year 1 Transaction.
Section 4. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert Series A Preferred and Series B Preferred. Each
share of Series A Preferred and Series B Preferred shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of such
share, at the office of the Corporation or any transfer agent for such Preferred
Stock, into such number of fully paid and nonassessable shares of Common Stock,
(i) in the case of the Series A Preferred, as is determined by dividing $1,000
by the then applicable Series A Conversion Price and (ii) in the case of the
Series B Preferred, as is determined by dividing $148.78 by the then applicable
Series B Conversion Price. The price at which shares of Common Stock shall be
deliverable upon conversion of the Series A Preferred (the "Series A Conversion
Price") shall initially be $0.42 per share of Common Stock and the price at
which shares of Common Stock shall be deliverable upon conversion of the Series
B Preferred (the "Series B Conversion Price") shall initially be $2.48 per share
of Common Stock. Such initial Series A Conversion Price and Series B Conversion
Price shall be subject to adjustment as hereinafter provided.
(b) Conversion of Series C Preferred. Each share of Series C
Preferred shall be convertible, at the option of the holder thereof, at any time
commencing after the fifth anniversary of the date of issuance of such share, at
the office of the Corporation or any transfer agent for such preferred stock
into (i) one (1) fully paid and nonassessable share of Series D Preferred Stock
and (ii) such number of fully paid and nonassessable shares of Common Stock,
which is determined by dividing the product of the number of shares of Series C
Preferred outstanding and $100.00 per share (as adjusted for stock splits, stock
dividends, recapitalization and the like with respect to such shares) by then
applicable purchase price per share of $6.56 (as adjusted in accordance with
Section 4(h) below) (the "Series C Conversion Price"), and which
<PAGE>
number of shares of Common Stock shall initially be 1,524,390. The Series C
Conversion Price shall initially be $6.56 per share of Common Stock. Any holder
of Series C Preferred who wishes to exercise such right of conversion shall give
written notice thereof to the Corporation, setting forth the number of shares
of Series C Preferred to be converted, and shall exchange with the Corporation
its certificates evidencing shares of Series C Preferred for certificates
evidencing the shares of Series D Preferred and Common Stock issuable upon
conversion thereof. Once a holder of Series C Preferred has given notice of its
intent to convert, it shall be deemed to have effected such conversion and shall
be deemed to be the record holder of the Series D Preferred Stock and Common
Stock, issuable upon such conversion; provided, however, that if such holder has
elected to convert in connection with a proposed Liquidity Event, and such
Liquidity Event is not consummated, such election to convert may be rescinded.
(c) Automatic Conversion of Series A Preferred and Series B
Preferred. Each share of the Series A Preferred and Series B Preferred shall
automatically be converted into shares of Common Stock at the then effective
Series A Conversion Price and Series B Conversion Price as applicable,
immediately prior to the closing of a Qualified Public Offering at a price per
share (determined without regard to underwriter commissions and expenses) of not
less than Eight Dollars and Thirty-Three Cents $8.33 (as adjusted for stock
splits, stock dividends, recapitalization and the like) and aggregate gross
proceeds to the Corporation of not less than Ten Million Dollars ($10,000,000),
before deduction of underwriting discounts and commissions and registration
expenses. In the event of such an offering, the person(s) entitled to receive
the Common Stock issuable upon such conversion of such Preferred Stock shall not
be deemed to have converted such Preferred Stock until immediately prior to the
closing of such Qualified Public Offering.
(d) Automatic Conversion of Series C Preferred. Upon the occurrence
of (i) a Liquidity Event or (ii) the closing of a Qualified Public Offering,
which is based on an equity valuation of the Company of not less than
$100,000,000, each share of Series C Preferred shall be converted immediately
prior to the Liquidity Event or Qualified Public Offering (as the case may be)
into (i) one fully paid and nonassessable (1) share of Series D Preferred and
(ii) such number of fully paid and nonassessable shares of Common Stock as
determined by dividing the product of the number of shares of Series C Preferred
outstanding and $100.00 per share (as adjusted for stock splits, stock
dividends, recapitalization and the like with respect to such shares) by the
Series C Conversion Price, which aggregate number of shares of Common Stock if
100,000 shares of such Series C Preferred were to be converted shall initially
be 1,524,390. In the event of such an offering, the person(s) entitled to
receive Common Stock issuable upon conversion of Series C Preferred shall not be
deemed to have converted such shares of Series C Preferred until immediately
prior to the closing of such Qualified Public Offering.
(e) Conversion of Series D Preferred. Holders of shares of the
Series D Preferred shall have no right to convert such shares into shares of
Common Stock or any other series or capital stock of the Corporation.
<PAGE>
(f) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall (after aggregating all shares into which shares of Preferred
Stock held by each holder could be converted) pay cash equal to such fraction
multiplied by the Series A Conversion Price or Series B Conversion Price, as
applicable, then in effect. Before any holder of Preferred Stock shall be
entitled to convert the same into full shares of Common Stock and to receive
certificates therefor, the holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent, and shall give written notice to the Corporation at such office
that the holder elects to convert all or any number of shares of the Preferred
Stock represented by such certificate or certificates, provided, however, that
in the event of an automatic conversion pursuant to this Section 4, the
outstanding shares of Preferred Stock shall be converted automatically without
any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent, and provided further, that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such automatic conversion unless the certificates evidencing such shares of
Preferred Stock are either delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation shall,
as soon as practicable after such delivery, or such agreement and
indemnification in the case of a lost certificate, issue and deliver at the
office of the Corporation or of any transfer agent, as the case may be, to such
holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid and a
check payable to the holder in the amount of any cash amounts payable as the
result of a conversion into a fractional share of Common Stock. Such conversion
shall not terminate the rights of the holders of the Preferred Stock or Common
Stock issuable upon conversion of the Preferred Stock to receive dividends which
have been declared with respect to the Preferred Stock prior to the date of
conversion. Except as provided above, such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Preferred Stock to be converted, or in the case of
automatic conversion immediately prior to the close of business on the date of
closing of a Qualified Public Offering, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock at the close of business on such date. If the conversion is in
connection with a firm commitment Offering, the conversion may, at the option of
any holder tendering the Preferred Stock for conversion, be conditioned upon the
closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock
issuable upon such conversion of the Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities.
<PAGE>
(g) Series B Preferred and Series C Preferred Conversion Price
Adjustments. The Series B Conversion Price and the Series C Conversion Price
shall be subject to adjustment from time to time as follows:
(i) Special Definitions. For purposes of this Section 4(g),
the following definitions shall apply:
(1) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
(2) "Original Issue Date" shall mean the date on which
the first share of Series B Preferred or Series C Preferred, as applicable, was
first issued.
(3) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Common Stock and Preferred Stock) or other
securities convertible into or exchangeable for Common Stock.
(4) "Conversion Price" shall be the Conversion Price of
the Series B Preferred or the Series C Preferred, as applicable.
(5) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 4(g)(iii) below, deemed
to be issued) by the Corporation after the Original Issue Date other than shares
of Common Stock issued or issuable:
(A) upon conversion of shares of the Preferred
Stock or the exercise or conversion of any Options outstanding on the Original
Issue Date;
(B) to officers, directors, employees and
consultants of the Corporation or any subsidiary thereof, pursuant to a stock
option plan, stock purchase plan or other employee stock incentive plan approved
by the Board of Directors or other stock arrangements which have been approved
by the Board of Directors;
(C) pursuant to any event for which adjustment has
already been made pursuant to this Section 4(g);
(D) as a dividend or distribution on the Preferred
Stock;
(E) as a dividend or distribution on the Common
Stock;
<PAGE>
(F) upon any subdivision or split up of Common
Stock; or
(G) upon any capital reorganization of the
Corporation.
(ii) No Adjustment of Conversion Price. No adjustment in the
Conversion Price shall be made in respect of the issuance of Additional Shares
of Common Stock unless the consideration per share for an Additional Share of
Common Stock issued or deemed to be issued by the Corporation is less than the
Conversion Price, in effect on the date of and immediately prior to such issue.
(iii) Deemed Issue of Additional Shares of Common Stock.
Except as provided in Section 4(g)(i)(5) above, in the event the Corporation at
any time or from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 4(g)(v) below) of such Additional
Shares of Common Stock would be less than the Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(1) no further adjustment in the Conversion Price shall
be made upon the subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(2) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or increase or
decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the initial
Conversion Prices thereof set forth in Section 4(a) above (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
<PAGE>
(3) on the expiration or cancellation of any Options or
the termination of the right to convert or exchange any Convertible Securities
which shall have not been exercised, if the Conversion Price shall have been
adjusted upon the original issuance thereof or shall have been subsequently
adjusted pursuant to clause (2) above, the Conversion Price shall be recomputed
as if the only Additional Shares of Common Stock issued were shares of Common
Stock, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the consideration
received therefore was the consideration actually received by the Corporation
for the issue of all such Options, whether or not exercised, plus the
consideration actually received by the Corporation upon such exercise, or for
the issue of all such Convertible Securities which were actually converted or
exchanged plus the consideration actually received by the Corporation upon such
conversion or exchange, if any; and
(4) no readjustment pursuant to clause (2) or clause (3)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the initial Conversion Price on the original
adjustment date (unless the Conversion Price is increased above the initial
Conversion Price pursuant to Section 4(h)(2) or (h)(4)), or (ii) the Conversion
Price that would have resulted from any issuances of Additional Shares of Common
Stock (other than those the subject of such adjustments) between the original
adjustment date and such readjustment date; and
(iv) Adjustment of Conversion Price Upon Isuance of Additional
Shares of Common Stock. In the event this Corporation shall issue Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Section 4(g)(iii), but excluding stock dividends,
subdivisions or split-ups that are the subject of adjustment pursuant to Section
4(h)) without consideration or for a consideration per share less than the
Conversion Price applicable on and immediately prior to such issue, then and in
such event, the Conversion Price shall be reduced concurrently with such issue,
to a price (calculated to the nearest cent) determined by multiplying the
Conversion Price in effect on the date of and immediately prior to such issue by
a fraction, the numerator of which shall be the sum of (i) the number of shares
of Common Stock outstanding immediately prior to such issue (on a fully diluted
as converted basis), including without limitation the number of shares of Common
Stock issuable upon conversion of the Preferred Stock outstanding immediately
prior to such issue and (ii) the number of shares of Common Stock which the
aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at the Conversion
Price in effect on the date of and immediately prior to such issue; and the
denominator of which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue (on a fully diluted as
converted basis), including without limitation the number of shares of Common
Stock issuable upon conversion of the Preferred Stock outstanding immediately
prior to such issue and (ii) the number of such Additional Shares of Common
Stock so issued.
<PAGE>
(v) Determination of Consideration. For purposes of this
Section 4(g), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation;
(B) insofar as it consists of property other than cash,
be computed at the fair value thereof at the time of such issue, as determined
in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The consideration per
share received by the Corporation for Additional Shares of Common Stock deemed
to have been issued pursuant to Section 4(g)(ii) and 4(g)(iii), relating to
Options and Convertible Securities, shall be determined by dividing
(A) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the (ii) aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such options for Convertible Securities and the
conversion or exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(h) Adjustment of Conversion Price of Series A Preferred, Series B
Preferred and Series C Preferred. The Series A Conversion Price, the Series B
Conversion Price and the Series C Conversion Price shall be subject to
adjustment from time to time as follows:
(1) Adjustments for Subdivisions of Common Stock. If the
number of shares of Common Stock outstanding at any time after filing this
Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware is increased by a stock dividend payable in shares of Common Stock
or by a subdivision or
<PAGE>
split up of stock, then the Series A Conversion Price, the Series B Conversion
Price and the Series C Conversion Price then in effect shall, concurrently with
the effectiveness of such dividend, subdivision or split up, be proportionately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of Preferred Stock shall be increased in proportion to such increase
of outstanding shares of Common Stock.
(2) Adjustments for Combinations of Common Stock. If the
number of shares of Common Stock outstanding at any time after filing this
Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware is decreased by a combination of the outstanding shares of Common
Stock, then the Series A Conversion Price, the Series B Conversion Price and the
Series C Conversion Price then in effect shall, concurrently with the
effectiveness of such combination, be proportionately increased so that the
number of shares of Common Stock issuable upon conversion of each share of such
Preferred Stock shall be decreased in proportion to such decrease in outstanding
shares of Common Stock.
(3) Adjustments for Stock Dividends and Other Distributions.
In the event the Corporation at any time or from time to time makes or fixes a
record date for the determination of holders of Common Stock entitled to receive
any distribution (excluding any repurchases of securities by the Corporation not
made on a pro rata basis from all holders of any class of the Corporation's
securities) payable in property or in securities of the Corporation other than
shares of Common Stock, then and in each such event the holders of Preferred
Stock shall receive at the time of such distribution, the amount of property or
the number of securities of the Corporation that they would have received had
their Preferred Stock been converted into Common Stock on the date of such
event.
(4) Adjustments for Reclassification, Exchange and
Substitution. Except as provided in Section 2 upon a Liquidity Event, if the
Common Stock issuable upon conversion of the Preferred Stock shall be changed
into the same or a different number of shares of any other class or classes of
stock, whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares provided for above), each share of
Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Corporation deliverable upon such Liquidity Event.
(i) Amendments to Certificate of Incorporation. The Corporation
shall not amend its Certificate of Incorporation without the approval, by vote
or written consent, by the holders of at least a majority of the then
outstanding shares of Preferred Stock, voting together as a separate class, if
such amendment would amend any of the rights, preferences, privileges of or
limitations provided for herein for the benefit of any shares of Preferred
Stock. Without limiting the generality of the preceding sentence, the
Corporation will not amend its Certificate of Incorporation without the approval
by the holders of at least a majority of the then outstanding shares of
Preferred Stock, voting as a separate class, if such amendment would:
<PAGE>
(i) change the relative seniority rights of the holders of
Preferred Stock as to the payment of dividends in relation to the holders of any
other capital stock of the Corporation, or create any other class or series of
capital stock entitled to seniority as to the payment of dividends in relation
to the holders of Preferred Stock;
(ii) reduce the amount payable to the holders of Preferred
Stock upon the voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, or change the relative seniority of the liquidation
preferences of the holders of Preferred Stock to the rights upon liquidation of
the holders of other capital stock of the Corporation, or change the dividend
rights of the holders of Preferred Stock;
(iii) cancel or modify the redemption rights of the holders of
the Preferred Stock provided for in Section 3 herein; or
(iv) cancel or modify the rights of the holders of the
Preferred Stock provided for in this Section 4.
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price, Series B Conversion
Price and the Series C Conversion Price pursuant to this Section 4, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Series A Conversion Price, the Series B Conversion Price and the Series C
Conversion Price, as applicable, at the time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of Preferred Stock. Notwithstanding
the foregoing, no adjustment of the Series A Conversion Price, the Series B
Conversion Price and the Series C Conversion Price shall be made if the amount
of any such adjustment would be an amount less than $1.00, but any such amount
shall be carried forward and an adjustment with respect thereof shall be made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount(s) so carried forward, shall aggregate an
increase or decrease of $1.00 or more.
(k) Notices of Record Date. In the event that the Corporation shall
propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
<PAGE>
(ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(iii) to effect any reclassification or recapitalization of
its Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation
shall send to the holders of the Preferred Stock:
(1) at least twenty (20) days' prior written notice of
the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect
of the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii) and
(iv) above, at least twenty (20) days' prior written notice of the date when the
same shall take place (and specifying the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or given by first
class mail, postage prepaid, addressed to the holders of Preferred Stock at the
address for each such holder as shown on the books of the Corporation.
(v) Reservation of Shares. The Corporation shall reserve at
all times so long as any shares of Preferred Stock remain outstanding, free from
preemptive rights, out of its treasure stock or its authorized but unissued
shares of Common Stock, or both, solely for the purposes of effecting the
conversion of the shares of Preferred Stock, sufficient shares of Common Stock
to provide for the conversion of all outstanding shares of Preferred Stock.
(vi) Valid Issuance. All shares of Common Stock which may be
issued upon conversion of the shares of Preferred Stock will upon issuance by
the Corporation be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof and
the Corporation shall take no action which will cause a contrary result."
<PAGE>
IN WITNESS WHEREOF, CVC, INC. has caused this Certificate to be signed by
Christine B. Whitman, its President, this 10th day of December, 1998.
CVC, Inc.
/s/ Christine B. Whitman
-------------------------------------
Christine B. Whitman
President and Chief Executive Officer
<PAGE>
State of Delaware
Office of the Secretary of State PAGE 1
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "CVC HOLDINGS, INC.", CHANGING ITS NAME FROM "CVC HOLDINGS, INC." TO "CVC,
INC.", FILED IN THIS OFFICE ON THE FIFTEENTH DAY OF OCTOBER, A.D. 1997, AT 12
O'CLOCK P.M.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
[SEAL]
2244345 8100 AUTHENTICATION: 9673170
991134439 DATE: 04-07-99
<PAGE>
CERTIFICATE OF AMENDMENT TO
RESTATED CERTIFICATE OF
INCORPORATION OF
CVC HOLDINGS, INC.
CVC Holdings, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is CVC Holdings, Inc.
2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on October 19, 1990,
and was amended pursuant to a Restated Certificate of Incorporation of the
Corporation filed with the Secretary of State of the State of Delaware on May
18, 1995.
3. This Restated Certificate of Incorporation is hereby further
amended as follows:
A. Article I shall be deleted and replaced in its entirety with the
following:
Article I
The name of the Corporation is CVC, Inc.
B. The second and third sentences of Article IV(a) shall be deleted
and replaced in their entirety by the following:
The total number of shares which the Corporation is authorized to
issue is 50,102,500. The total number of shares of Common Stock which the
Corporation is authorized to issue is 50,000,000, par value $.01 per share.
C. The first sentence of Section 5(b) of Article IV shall be deleted
and replaced in its entirety by the following:
The Board of Directors of the Corporation shall consist of not less
than three (3) members, the exact number to be fixed from time to time solely by
resolution of the Board of Directors acting by not less than a majority of the
directors then in office.
4. The amendments to the Restated Certificate of Incorporation as
hereinabove set forth have been duly adopted in accordance with Section 242 of
the General Corporation Law of the State of Delaware.
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:00 PM 10/15/1997
971347839 -- 2244345
<PAGE>
IN WITNESS WHEREOF, CVC Holdings, Inc. has caused this Certificate to be
signed by Christine B. Whitman, its President, this 15th day of October, 1997.
CVC HOLDINGS, INC.
/s/ Christine B. Whitman
-------------------------------------
Christine B. Whitman
President
NY--95063.2
2
<PAGE>
State of Delaware
Office of the Secretary of State PAGE 1
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "CVC HOLDINGS, INC.", FILED IN THIS OFFICE ON THE FOURTEENTH DAY OF MARCH,
A.D. 1996, AT 9 O'CLOCK A.M.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
[SEAL]
AUTHENTICATION: 9673171
DATE: 04-07-99
2244345 8100
991134439
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 03/14/1996
960075034 -- 2244345
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CVC HOLDINGS, INC.
THE UNDERSIGNED, being the President and Secretary of CVC Holdings,
Inc., a corporation organized and existing under the laws of the State of
Delaware (the "Corporation"), do hereby certify as follows:
1. The name of the Corporation is CVC Holdings, Inc.
2. The Certificate of Incorporation of the Corporation is hereby
amended to effect a 20:1 stock split and in connection therewith every share of
Common Stock, par value $.01 per share, of the Corporation issued on the date
this Certificate of Amendment is filed with the Secretary of State of Delaware
shall be converted into and shall become twenty (20) new shares of the Common
Stock, par value $.01 per share, of the Corporation.
3. Article IV of the Certificate of Incorporation of the Corporation
is hereby amended to increase the number of shares of Common Stock which the
Corporation shall have authority to issue from 1,500,000 to 7,500,000 shares of
Common Stock by deleting the initial paragraph thereof and replacing it with the
following:
The Corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock." The total number of
shares which the Corporation is authorized to issue is 7,602,500.
The total number of shares of Common Stock which the Corporation is
authorized to issue is 7,500,000, par value $.01 per share. The
total number of shares of Preferred Stock which the Corporation is
authorized to issue is 102,500, par value $.01 per share, of which
2,500 shares shall be designated 8% Non-Cumulative Convertible
Preferred Stock (the "Series A Preferred") and 100,000 shares shall
be designated Series B Non-Cumulative Convertible Preferred Stock
(the "Series B Preferred"). The Series A Preferred and the Series B
Preferred shall collectively be referred to as the "Preferred
Stock."
4. This amendment to the Certificate of Incorporation of the
Corporation herein certified has been approved and adopted pursuant to Section
242 of the General Corporation law of the State of Delaware (the "DGCL"). This
amendment was approved by written consent in lieu of a meeting of the
stockholders pursuant to Section 228 of the DGCL and written notice of such
approval has been provided as required by such section.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this certificate as of
the 13th day of March, 1996.
/s/ Christine Whitman
----------------------------------------
Christine Whitman, President
ATTEST:
/s/ Christopher Mann
- ------------------------
Christopher Mann
Secretary
<PAGE>
State of Delaware
Office of the Secretary of State PAGE 1
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"CVC HOLDINGS, INC.", FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF MAY, A.D.
1995, AT 4:15 O'CLOCK P.M.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
[SEAL]
AUTHENTICATION: 9673172
DATE: 04-07-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:15 PM 05/18/1995
950110716 -- 2244345
RESTATED CERTIFICATE OF INCORPORATION
OF
CVC HOLDINGS, INC.
(Pursuant to Sections 242 & 245)
CVC Ho1dings, Inc., a corporation (the "Corporation") organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "GCL"), hereby certifies as follows:
FIRST: The name of the Corporation is CVC Holdings, Inc.
SECOND: The date on which the initial Certificate of Incorporation
of the Corporation was filed with the Secretary of State of the State of
Delaware is October 19, 1990, under the name CVC Holdings, Inc.
THIRD: The Board of Directors of the Corporation, pursuant to the
GCL, adopted resolutions amending, integrating and restating the
Certificate of Incorporation to read in full as set forth in the Restated
Certificate of Incorporation attached hereto as Exhibit A.
FOURTH: Pursuant to resolutions of the Board of Directors, the
Restated Certificate of Incorporation was thereafter submitted to the
stockholders of the Corporation for their approval, which approval was
given by written consent of the stockholders pursuant to Section 228 and
in accordance with Section 245 of the GCL.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested by its duly authorized officers, this 18th day of May, 1995.
CVC HOLDINGS, INC.
/s/ Christine B. Whitman
-------------------------------------
Christine B. Whitman
President
ATTEST:
By: /s/ Andrew C. Peskoe
-----------------------------------
Name: Andrew C. Peskoe
------------------------------
[ILLEGIBLE] Secretary
<PAGE>
RESTATED CERTIFICATE OF
INCORPORATION OF
CVC HOLDINGS, INC.
Article I
The name of the Corporation is CVC Holdings, Inc.
Article II
The address of the Corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent. The name of its registercd agent at such address is The Prentice-Hall
Corporation System, Inc.
Article III
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
Article IV
(a) The Corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock." The total number of shares
which the Corporation is authorized to issue is 1,602,500. The total number of
shares of Common Stock which the Corporation is authorized to issue is
1,500,000, par value $.01 per share. The total number of shares of Preferred
Stock which the Corporation is authorized to issue is 102,500, par value $.01
per share, of which 2,500 shares shall be designated 8% Non-Cumulative
Convertible Preferred Stock (the "Series A Preferred") and 100,000 shares shall
be designated Series B Non-Cumulative Convertible Preferred Stock (the "Series B
Preferred"). The Series A Preferred and the Series B Preferred shall
collectively be referred to as the "Preferred Stock."
The Corporation shall from time to time in accordance with the laws of the
State of Delaware increase the authorized amount of its Common Stock if at any
time the number of shares of Common Stock remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred Stock.
The relative rights, preferences, privileges and restrictions granted to
or imposed upon the Preferred Stock and the Common Stock or the holders thereof
are as follows:
Section 1. Dividends. The holders of the Series A Preferred and Series B
Preferred shall be entitled to receive, when and as declared by the Board of
Directors, dividends at the rate of $80.00 per share for Series A Preferred and
$11.90 per share for Series B Preferred (in each case as adjusted for any stock
splits, stock dividends, recapitalizations and the like with respect to such
shares) per annum as the Board of Directors may from time to time determine out
of funds legally available therefor. No dividends shall be paid on the Series A
Preferred during any fiscal year of the Corporation until dividends in the total
amount of $11.90 per share on the Series B Preferred shall have been paid or
declared and set apart during that fiscal year. No dividends (other than those
payable solely in the Common Stock of the Corporation) shall be paid on any
Common Stock of the Corporation during any fiscal year of the Corporation until
dividends in the total amount of $80.00 per share of Series A Preferred and
$11.90 per
<PAGE>
share of the Series B Preferred (in each case as adjusted for any stock splits,
stock dividends, recapitalizations and the like with respect to such shares)
shall have been paid or declared and set apart during that fiscal year. The
right to such dividends on shares of Preferred Stock shall not be cumulative,
and no right shall accrue to holders of Preferred Stock by reason of the fact
that dividends on said shares are not declared in any prior year.
After payment of such dividends to the holders of the Preferred Stock, any
additional dividends declared shall be distributed among all the holders of the
Common Stock.
Section 2. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the stockholders of the Corporation shall be made in the
following manner:
(a) The holders of the Series B Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Series A Preferred and
the Common Stock by reason of their ownership of such stock, the amount equal to
the sum of (i) $148.78 per share for each share of Series B Preferred then held
by them (as adjusted for stock splits, stock dividends, recapitalizations and
the like with respect to such stock), and (ii) an amount equal to all declared
but unpaid dividends or distributions on the Series B Preferred. If the assets
and funds thus distributed among the holders of the Series B Preferred pursuant
to this Section 2(a) shall be insufficient to permit the payment to such holders
of the full aforesaid preferential amount, then the entire assets and funds of
the Corporation legally available for distribution shall be distributed ratably
among the holders of the Series B Preferred in proportion to the preferential
amount that each such holder is otherwise entitled to receive.
(b) After payment has been made to the holders of the Series B
Preferred Stock of the full amounts to which they shall be entitled as set forth
in the first sentence of Section 2(a), then the holders of the Series A
Preferred shall be entitled to receive the amount equal to the sum of(i) $1,000
per share for each share of Series A Preferred then held by them (as adjusted
for stock splits, stock dividends, recapitalizations and the like with respect
to such stock), and (ii) an amount equal to declared but unpaid dividends or
distributions on the Series A Preferred. If the assets and funds thus
distributed among the holders of the Series A Preferred pursuant to this Section
2(b) shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution pursuant to this Section 2(b)
shall be distributed ratably among the holders of the Series A Preferred in
proportion to the preferential amount that each such holder is otherwise
entitled to receive.
(c) After payment has been made to the holders of the Preferred
Stock of the full amounts to which they shall be entitled as set forth in
Section 2(a) and in Section 2(b) above, then the entire remaining assets and
funds of the Corporation legally available for distribution, if any, shall be
distributed on a pro rata basis on the outstanding Common Stock.
(d) For purposes of this Section 2, a merger or consolidation of the
Corporation with or into any other corporation or corporations, or the merger of
any other corporation or corporations into the Corporation (other than any
merger or consolidation in which stockholders of the Corporation immediately
prior to such merger or consolidation beneficially own a majority of the voting
shares of the surviving corporation immediately following such merger or
consolidation), or a sale of all or
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substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation.
(e) Any securities to be delivered to the holders of the Preferred
Stock and Common Stock upon a merger, reorganization or sale of substantially
all the assets of the Corporation shall be valued as follows:
(1) if traded on a securities exchange or on the NASDAQ Stock
Market, the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the ten business day period ending three (3)
business days prior to the closing of such merger, reorganization or sale;
(2) if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the ten business day
period ending three (3) business days prior to the closing; and
(3) if there is no active public market, the value shall be
the fair market value thereof as mutually determined by the Corporation and the
holders of not less than a majority of the outstanding shares of Series B
Preferred voting as a single class, provided that if the Corporation and the
holders of a majority of the outstanding shares of Series B Preferred are unable
to reach agreement, then by independent appraisal by an investment banker hired
and paid by the Corporation, but reasonably acceptable to the holders of a
majority of the outstanding shares of Series B Preferred voting as a single
class.
Section 3. Redemption of Series B Preferred.
(a) At the individual option of each holder of shares of Series B
Preferred, the Corporation shall redeem, on March 31, 2002 (the "Redemption
Date"), the number of shares of Series B Preferred held by such holder that is
specified in a request (the "Redemption Request") for redemption delivered to
the Corporation by the holder on or prior to March 1, 2002, by paying in cash
therefor, $148.78 per share of Series B Preferred (as adjusted for stock splits,
stock dividends, recapitalizations and the like with respect to such shares)
plus all declared but unpaid dividends on such shares (the "Redemption Price").
(b) At least 10 but no more than 20 days prior to the Redemption
Date written notice shall be mailed, first class postage prepaid, to each holder
of the Series B Preferred which has given the Corporation a Redemption Request
at the address set forth in the Redemption Request, notifying such holder of the
place at which payment may be obtained on the Redemption Date for the shares of
Series B Preferred specified in the Redemption Request and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the shares to
be redeemed (the "Redemption Notice"). On or after the Redemption Date, each
holder of Series B Preferred to be redeemed shall surrender to this Corporation
the certificate or certificates representing such shares, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
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(c) From and after the Redemption Date, unless there shall have been
a default in payment of the Redemption Price, all rights of the holders of
shares of Series B Preferred designated for redemption in the Redemption Request
as holders of Series B Preferred (except the right to receive the Redemption
Price without interest upon surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever. If the funds of the Corporation legally available for
redemption of shares of Series B Preferred on the Redemption Date are
insufficient to redeem the total number of shares of Series B Preferred to be
redeemed on such date, those funds which are legally available will be used to
redeem the maximum possible number of such shares ratably among the holders of
such shares to be redeemed based upon their holdings of Series B Preferred. The
shares of Series B Preferred not redeemed shall remain outstanding and entitled
to all the rights and preferences provided herein. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
shares of Series B Preferred such funds will immediately be used to redeem the
balance of the shares which the Corporation has become obliged to redeem on any
Redemption Date, but which it has not redeemed.
Section 4. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of the Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for the Preferred Stock, into such number of fully paid and nonassessable shares
of Common Stock, in the case of the Series A Preferred, as is determined by
dividing $1,000 by the then applicable Series A Conversion Price, and in the
case of the Series B Preferred, as is determined by dividing $148.78 by the then
applicable Series B Conversion Price, determined as hereinafter provided, in
effect at the time of conversion. The price at which shares of Common Stock
shall be deliverable upon conversion of the Series A Preferred (the "Series A
Conversion Price") shall initially be $25 per share of Common Stock and the
price at which shares of Common Stock shall be deliverable upon conversion of
the Series B Preferred (the "Series B Conversion Price") shall initially be
$148.78 per share of Common Stock. Such initial Series A Conversion Price and
Series B Conversion Price shall be subject to adjustment as hereinafter
provided.
(b) Automatic Conversion. Each share of the Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Series A Conversion Price or Series B Conversion Price, as applicable,
immediately prior to the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement on Form S-I (or any
successor form) under the Securities Act of 1933, as amended, covering the offer
and sale of Common Stock for the account of the Corporation 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 Corporation of not less than Ten Million Dollars ($10,000,000),
before deduction of underwriting discounts and commissions and registration
expenses. In the event of such an offering, the person(s) entitled to receive
the Common Stock issuable upon such conversion of the Preferred Stock shall not
be deemed to have converted such Preferred Stock until immediately prior to the
closing of such underwritten public offering.
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(c) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall (after aggregating all shares into which shares of Preferred
Stock held by each holder could be converted) pay cash equal to such fraction
multiplied by the Series A Conversion Price or Series B Conversion Price, as
applicable, then in effect. Before any holder of Preferred Stock shall be
entitled to convert the same into full shares of Common Stock and to receive
certificates therefor, the holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent, and shall give written notice to the Corporation at such office
that the holder elects to convert all or any number of shares of the Preferred
Stock represented by such certificate or certificates; provided, however, that
in the event of an automatic conversion pursuant to Section 3(b), the
outstanding shares of Preferred Stock shall be converted automatically without
any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent, and provided further, that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such automatic conversion unless the certificates evidencing such shares of
Preferred Stock are either delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation shall,
as soon as practicable after such delivery, or such agreement and
indemnification in the case of a lost certificate, issue and deliver at the
office of the Corporation or of any transfer agent, as the case may be, to such
holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid and a
check payable to the holder in the amount of any cash amounts payable as the
result of a conversion into a fractional share of Common Stock. Such conversion
shall not terminate the rights of the holders of the Preferred Stock or Common
Stock issuable upon conversion of the Preferred Stock to receive dividends which
have been declared with respect to the Preferred Stock prior to the date of
conversion. Except as provided in Section 4(b) above, such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Preferred Stock to be converted, or in the
case of automatic conversion immediately prior to the close of business on the
date of closing of the offering, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock at
the close of business on such date. If the conversion is in connection with a
firm commitment underwritten public offering of securities registered pursuant
to the Securities Act, the conversion may, at the option of any holder tendering
the Preferred Stock for conversion, be conditioned upon the closing with the
underwriter of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon such conversion
of the Preferred Stock shall not be deemed to have converted such Preferred
Stock until immediately prior to the closing of such sale of securities.
(d) Series B Preferred Conversion Price Adjustments. The Series B
Conversion Price shall be subject to adjustment from time to time as follows:
(i) Special Definitions. For purposes of this Section 4(d),
the following definitions shall apply:
(1) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
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(2) "Series B Original Issue Date" shall mean the date
on which the first share of Series B Preferred was first issued.
(3) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Common Stock and Preferred Stock) or other
securities convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 4(d)(iii) below, deemed
to be issued) by the Corporation after the Series B Original Issue Date other
than shares of Common Stock issued or issuable:
(A) upon conversion of shares of the Preferred
Stock or the exercise or conversion of any Options outstanding on the Series B
Original Issue Date;
(B) to officers, directors, employees and
consultants of the Corporation or any subsidiary thereof, pursuant to a stock
option plan, stock purchase plan or other employee stock incentive plan approved
by the Board of Directors or other stock arrangements which have been approved
by the Board of Directors;
(C) pursuant to any event for which adjustment has
already been made pursuant to this Section 4(d);
(D) as a dividend or distribution on the Preferred
Stock;
(E) as a dividend or distribution on the Common
Stock;
(F) upon any subdivision or split up of Common
Stock; or
(G) upon any capital reorganization of the
Corporation.
(ii) No Adjustment of Conversion Price. No adjustment in the
Series B Conversion Price shall be made in respect of the issuance of Additional
Shares of Common Stock unless the consideration per share for an Additional
Share of Common Stock issued or deemed to be issued by the Corporation is less
than the Series B Conversion Price, in effect on the date of and immediately
prior to such issue.
(iii) Deemed Issue of Additional Shares of Common Stock.
Except as provided in Section 4(d)(i)(4) above, in the event the Corporation at
any time or from time to time after the Series B Original Issue Date shall issue
any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined
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pursuant to Section 4(d)(v) below) of such Additional Shares of Common Stock
would be less than the Series B Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common are
deemed to be issued:
(1) no further adjustment in the Series B Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or increase or
decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Series B Conversion Price computed upon the
initial conversion prices thereof set forth in Section 4(a) above (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(3) on the expiration or cancellation of any Options or
the termination of the right to convert or exchange any Convertible Securities
which shall have not been exercised, if the Series B Conversion Price shall have
been adjusted upon the original issuance thereof or shall have been subsequently
adjusted pursuant to clause (2) above, the Series B Conversion Price shall be
recomputed as if the only Additional Shares of Common Stock issued were shares
of Common Stock, if any, actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and the consideration
received therefore was the consideration actually received by the Corporation
for the issue of all such Options, whether or not exercised, plus the
consideration actually received by the Corporation upon such exercise, or for
the issue of all such Convertible Securities which were actually converted or
exchanged plus the consideration actually received by the Corporation upon such
conversion or exchange, if any; and
(4) no readjustment pursuant to clause (2) or clause (3)
above shall have the effect of increasing the Series B Conversion Price to an
amount which exceeds the lower of (i) the initial Series B Conversion Price on
the original adjustment date (unless the Series B Conversion Price is increased
above the initial Series B Conversion Price pursuant to Section 4(e)(2) or
(e)(4)), or (ii) the Series B Conversion Price that would have resulted from any
issuances of Additional Shares of Common Stock (other than those the subject of
such adjustments) between the original adjustment date and such readjustment
date; and
(iv) Adjustment of Series B Conversion Price Upon Issuance of
Additional Shares of Common Stock. In the event this Corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 4(d)(iii), but excluding stock
dividends, subdivisions or split-ups that are the subject of adjustment pursuant
to Section 4(e)) without consideration or for a consideration per share less
than the Series B Conversion Price applicable on and immediately prior to such
issue, then and in such event, the Series B Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying the Series B Conversion Price in effect on the date of
and immediately prior to such issue by a fraction, the numerator of which shall
be the sum of (i) the number of shares of Common Stock
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outstanding immediately prior to such issue (on a fully diluted as converted
basis), including without limitation the number of shares of Common Stock
issuable upon conversion of the Preferred Stock outstanding immediately prior to
such issue and (ii) the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of Additional
Shares of Common Stocks so issued would purchase at the Series B Conversion
Price in effect on the date of and immediately prior to such issue; and the
denominator of which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue (on a fully diluted as
converted basis), including without limitation the number of shares of Common
Stock issuable upon conversion of the Preferred Stock outstanding immediately
prior to such issue and (ii) the number of such Additional Shares of Common
Stock so issued.
(v) Determination of Consideration. For purposes of this Section
4(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation;
(B) insofar as it consists of property other than cash,
be computed at the fair value thereof at the time of such issue, as determined
in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The consideration per
share received by the Corporation for Additional Shares of Common Stock deemed
to have been issued pursuant to Section 4(d)(ii) and 4(d)(iii), relating to
Options and Convertible Securities, shall be determined by dividing
(A) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such options for Convertible Securities and the
conversion or exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
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(e) Adjustment of Conversion Price of Both Series A Preferred and
Series B Preferred. The Series A Conversion Price and the Series B Conversion
Price shall be subject to adjustment from time to time as follows:
(1) Adjustments for Subdivisions of Common Stock. If the
number of shares of Common Stock outstanding at any time after filing this
Restated Certificate of incorporation with the Secretary of State of the State
of Delaware is increased by a stock dividend payable in shares of Common Stock
or by a subdivision or split up of stock, then the Series A Conversion Price and
the Series B Conversion Price then in effect shall, concurrently with the
effectiveness of such dividend, subdivision or split up, be proportionately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of Preferred Stock shall be increased in proportion to such increase
of outstanding shares of Common Stock.
(2) Adjustments for Combinations of Common Stock. If the
number of shares of Common stock outstanding at any time after filing this
Restated Certificate of incorporation with the Secretary of State of the State
of Delaware is decreased by a combination of the outstanding shares of Common
Stock, then the Series A Conversion Price and the Series B Conversion Price then
in effect shall, concurrently with the effectiveness of such combination, be
proportionately increased so that the number of shares of Common Stock issuable
upon conversion of each share of such Preferred Stock shall be decreased in
proportion to such decrease in outstanding shares of Common Stock.
(3) Adjustments for Stock Dividends and Other Distributions.
In the event the Corporation at any time or from time so time makes, or fixes a
record date for the determination of holders of Common Stock entitled to receive
any distribution (excluding any repurchases of securities by the Corporation not
made on a pro rata basis from all holders of any class of the Corporation's
securities) payable in property or in securities of the Corporation other than
shares of Common Stock, then and in each such event the holders of Preferred
Stock shall receive at the time of such distribution, the amount of property or
the number of securities of the Corporation that they would have received had
their Preferred Stock been converted into Common Stock on the date of such
event.
(4) Adjustments for Reclassification, Exchange and
Substitution. Except as provided in Section 2 upon any liquidation, dissolution
or winding up of the Corporation, if the Common Stock issuable upon conversion
of the Preferred Stock shall be changed into the same or a different number of
shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for above), each share of Preferred Stock shall
thereafter be convertible into the number of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such share of Preferred Stock shall
have been entitled upon such reorganization or reclassification.
(f) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or By-laws 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 Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Preferred Stock against impairment
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(g) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price or Series B
Conversion Price pursuant to this Section 4, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each bolder of Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Series A Conversion Price or the Series
B Conversion Price, as applicable, at the time in effect, and (iii) the number
of shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of Preferred Stock. Notwithstanding
the foregoing, no adjustment of the Series A Conversion Price or the Series B
Conversion Price shall be made if the amount of any such adjustment would be an
amount less than $1.00, but any such amount shall be carried forward and an
adjustment with respect thereof shall be made at the time of and together with
any subsequent adjustment which, together with such amount and any other
amount(s) so carried forward, shall aggregate an increase or decrease of $1.00
or more.
(h) Notices of Record Date. In the event that the Corporation shall
propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(iii) to effect any reclassification or recapitalization of
its Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the
Corporation shall send to the holders of the Preferred Stock:
(1) at least 20 days' prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii) and
(iv) above, at least 20 days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event).
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Each such written notice shall be delivered personally or given by first
class mail, postage prepaid, addressed to the holders of Preferred Stock at the
address for each such holder as shown on the books of the Corporation.
(v) Reservation of Shares. The Corporation shall reserve at
all times so long as any shares of Preferred Stock remain outstanding, free from
preemptive rights, out of its treasure stock or its authorized but unissued
shares of Common Stock, or both, solely for the purposes of effecting the
conversion of the shares of Preferred Stock, sufficient shares of Common Stock
to provide for the conversion of all outstanding shares of Preferred Stock.
(vi) Valid Issuance. All shares of Common Stock which may be
issued upon conversion of the shares of Preferred Stock will upon issuance by
the Corporation be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof and
the Corporation shall take no action which will cause a contrary result.
Section 5. Voting Rights and Directors.
(a) Except as otherwise provided herein or required by law, the
holder of each share of Common Stock issued and outstanding shall have one vote
with respect to such share and the holder of each share of Preferred Stock shall
be entitled with respect to such share to a number of votes equal to the number
of shares of Common Stock into which such share of Preferred Stock could be
converted at the record date for determination of the stockholders entitled to
vote on such matters, or, if no such record date is established, at the date
such vote is taken or any written consent of stockholders is solicited, such
votes to be counted together with all other shares of stock of the Company
having general voting power and not separately as a class (except as required by
Section 5(b) below, Section 6 or by the General Corporation Law of Delaware).
Holders of Common Stock and Preferred Stock shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation.
Fractional votes by the holders of Preferred Stock shall not, however, be
permitted and any fractional voting rights shall (after aggregating all shares
into which shares of Preferred Stock held by each holder could be convened) be
rounded to the nearest whole number.
(b) The Board of Directors shall consist of seven (7) members. The
holders of the Series B Preferred, voting separately as a class, shall be
entitled to elect two (2) members of the Board of Directors. The holders of
Common Stock and Series A Preferred, voting together, shall be entitled to elect
the remaining members of the Board of Directors. At any meeting held for the
purpose of electing or removing directors, (i) the presence in person or by
proxy of the holders of the majority of the shares of Series B Preferred then
outstanding shall constitute a quorum of the Series B Preferred for the purpose
of electing or removing directors by holders of the Series B Preferred and (ii)
the presence in person or by proxy of the holders of a majority of shares of
Common Stock and Series A Preferred (on an as converted into Common Stock basis)
then outstanding shall constitute a quorum of Common Stock and Series A
Preferred for the purpose of electing or removing directors by holders of Common
Stock and Series A Preferred. A vacancy in any directorship elected by the
holders of the Series B Preferred shall be filled only by vote or written
consent in lieu of a meeting of the holders of the Series B Preferred. A vacancy
in any directorship elected by the holders of Common Stock and Series A
Preferred shall be filled only by vote or written consent in lieu of a meeting
of the holders or Common Stock and the Series A Preferred. Any member of the
Board of Directors elected by the holders of the Series B
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Preferred may only be removed by the vote of the holders of not less than a
majority of the shares of Series B Preferred voting thereon. Any member of the
Board of Directors elected by the holders of Common Stock and Series A Preferred
may only be removed by the vote of the holders of not less than a majority of
the shares of Common Stock and Series A Preferred (on an as converted into
Common Stock basis) voting thereon.
(c) At all elections of members of the Board of Directors of the
Corporation, if any holder of stock of this Corporation entitled to vote at an
election shall have given the Corporation written notice of its intention to
cumulate his or her votes for the election of members of the Board of Directors
prior to the commencement of the voting for such members, then each holder
entitled to vote for members of the Board of Directors shall be entitled to as
many votes as shall equal the number of votes which (except for this provision
as to cumulative voting) such holder would be entitled to cast for the election
of directors with respect to his or her shares of stock multiplied by the number
of directors to be elected by such holder either (i) by casting all such
holder's votes for a single director or (ii) by distributing such holder's votes
among the number of directors to be voted for, or for any two or more of them as
such holder may see fit.
Section 6. Covenants. In addition to any other rights provided by law, so
long as any Series B Preferred shall be outstanding, the Corporation shall not,
without first obtaining the written consent of the holders of not less than a
majority of the then outstanding shares of Series B Preferred:
(a) amend or repeal any provision of, or add any provision to, this
Corporation's Restated Certificate of Incorporation if such action would change
adversely the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series B Preferred;
(b) amend or repeal any provision of the charter document of CVC
Products, Inc., or authorize or issue any securities of CVC Products, Inc.;
(c) authorize or issue any shares of any class or series of stock or
any bonds, debentures, notes or other obligations convertible into or
exchangeable for, or having option rights to purchase, any shares of stock of
this Corporation, which shares have any preference or priority senior to or on
parity with the Series B Preferred as to dividend rights, voting rights,
redemption rights or liquidation preferences;
(d) redeem or purchase any of the Series A Preferred or any of the
Common Stock, provided, however, that this restriction shall not apply to the
repurchase or shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Corporation upon or
after termination of the employment, consulting or other relationship between
the Corporation and such persons; provided, further, that such repurchase is not
made at a price greater than the original purchase price of such shares pursuant
to vesting or similar provisions;
(e) authorize or issue options or warrants to purchase in excess of
4,000 shares of Common Stock (appropriately adjusted for stock splits, stock
dividends and recapitalizations) to officers, directors, employees and
consultants of the Corporation or CVC Products, Inc. and in excess of 20,000
shares of Common Stock (appropriately adjusted for stock splits, stock dividends
and recapitalizations) to officers, directors, employees and consultants of the
Corporation or CVC Products, Inc. pursuant to stock option plans, stock purchase
plans or other employee stock incentive plans;
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(f) adopt, amend or repeal the by-laws of the Corporation if such
action would change adversely the preferences or powers of, or restrictions
provided for the benefit of, the Series B Preferred;
(g) consummate a sale of all or substantially all of the
Corporation's assets, any merger or consolidation of the Corporation with or
into any other entity, or any other transaction or series of related
transactions which would result in the holders of the outstanding voting power
of the Corporation immediately prior to such transaction or transactions holding
less than a majority of the voting power of the surviving entity, immediately
following such transaction or transactions;
(h) provide for the voluntary liquidation, dissolution or winding up
of the Corporation;
(i) sell, distribute or otherwise transfer any securities of CVC
Products, Inc. held by the Corporation; or transfer a substantial amount of
assets from CVC Products, Inc. to any other subsidiary of the Corporation;
(j) authorize a merger, consolidation, recapitalization or
reorganization of CVC Products, Inc., or authorize the sale of all or
substantially all of the assess of CVC Products, Inc., or otherwise liquidate,
wind up or dissolve CVC Products, Inc.; or
(k) declare or pay any dividend or other distribution on the Common
Stock or any series of Preferred Stock other than the Series B Preferred.
Section 7. No Reissuance of Series B Preferred. No share or shares of
Series B Preferred acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares should
be canceled, returned and eliminated from the shares which the Corporation shall
be authorized to issue.
Article V
In furtherance and not in limitation of powers conferred upon the
stockholders by statute, the Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the by-laws of the Corporation, subject to
the power of the stockholders to alter or repeal the by-laws made or altered by
the Board of Directors.
Article VI
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganiza-
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tion of the Corporation as consequence of such compromise or arrangement, the
said compromise or arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
Article VII
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or as may hereafter be amended, a director of the corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.
The Corporation may indemnify to the fullest extent permitted by law any
person (including the representative of such person's estate and such person's
successors and assigns) made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he or she is or was a director, officer or employee of the
Corporation or served at any other enterprise as a director, officer or employee
at the request of the Corporation.
Neither any amendment nor repeal of this Article VII nor the adoption of
any provision of this Corporation's Restated Certificate of Incorporation
inconsistent with this Article VII shall eliminate or reduce the effect of this
Article VII in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article VII, would accrue or arise,
prior to such amendment, repeal or adoption of an inconsistent provision.
Article VIII
Except as otherwise required in the by-laws of the Corporation, election
of directors need not be by written ballot.
Article IX
The Corporation is to have perpetual existence.
Article X
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
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Exhibit 3.2
RESTATED BY-LAWS
OF
CVC HOLDINGS, INC.
(A Delaware Corporation)
ARTICLE I
STOCK AND STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the President or a Vice-President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
corporation certifying the number of shares owned by him in the corporation. Any
and all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificate representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share of stock. If the corporation does not
issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share of stock as of the time when those entitled to receive
such fractions are determined, (3) issue scrip or warrants in registered or
bearer form which shall entitle the holder to receive a certificate
<PAGE>
for a full share upon the surrender of such scrip or warrants aggregating a full
share. A certificate for a fractional share shall, but such scrip or warrants
shall not unless provided therein, entitle the holder to exercise voting rights,
to receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Director's may cause scrip
or warrants to be issued subject to the condition that they shall become void if
not exchanged for certificates representing full shares of stock before a
specified date, or subject to the condition that the shares of stock for which
scrip or warrants are exchangeable may be sold by the corporation and the
proceeds thereof distributed to the holders of scrip or warrants, or subject to
any other conditions which the Board of Directors may determine.
3. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunder authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to or dissent from any corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion, or exchange of stock,
or for the purpose of any other lawful action, the directors may fix, in
advance, a date as the record date for any such determination of stockholders.
Such date shall not be more than sixty days nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other action. If no
record date is fixed, the record date for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the day on
which the first written consent is expressed; and the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. When a determination of stockholders of record entitled to notice of or
to vote at any meeting of stockholders has been made as provided in this
paragraph, such determination shall apply to any adjournment thereof; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
5. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed from time to time by the Board of Directors, provided, that the first
annual meeting shall be held on a date within thirteen months after the
organization of the corporation,
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and each successive annual meeting shall be held on date within thirteen months
after the date of the preceding annual meeting. A special meeting shall be held
on the date and at the time fixed by the Board of Directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the Board of Directors may
from time to time fix. Whenever the Board of Directors shall fail to fix such
place, the meeting shall be held at the principal executive office of the
corporation.
- CALL. Annual meetings and special meetings may be called by the
Board of Directors, the President, or any two or more directors, and shall be
called by the President or a Vice President or the Secretary at the written
demand of the holders of at least one-fourth of all outstanding shares entitled
to vote on the action proposed to be taken at such meeting, which demand shall
state the purpose or purposes of the proposed meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall
be given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at his record address or at such other
address which he may have furnished by request in writing to the Secretary of
the corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and place is made at the meeting, it shall
not be necessary to give notice of the adjourned meeting unless the directors,
after adjournment, fix a new record date for the adjourned meeting. Notice need
not be given to any stockholder who submits a written waiver of notice signed by
him before or after the time stated therein. Attendance of a person at a meeting
of stockholders shall constitute a waiver of notice of such meeting, except when
the Stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who was charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting
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of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city or other
municipality or community where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote in
person or by proxy at any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the stockholders.
The Secretary of the corporation, or in his absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the chairman of the meeting shall appoint a
secretary of the meeting.
- PROXY REPRESENTATION. Each stockholder entitled to vote at a
meeting of stockholders, or to express consent or dissent to corporate action
without a meeting, may authorize another person or persons to act for him by
proxy. Every proxy must be signed by the stockholder or by his attorney-in-fact.
No Proxy shall be voted or acted upon after three years from its date unless
such proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and, if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
Proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the corporation
generally.
- INSPECTORS AND JUDGES. The Board of Directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If an inspector or inspectors or judge or judges are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by appointment made by
the directors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector or judge, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector or judge at such meeting with strict impartiality and
according to the best of his ability. The inspectors or judges, if any, shall
determine the number of shares of stock outstanding and the voting power of
each, the shares of stock represented at the meeting, the existence of a quorum
and the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and shall receive votes, ballots or consent, hear and determine
all challenges and questions arising in connection with the right to vote, count
and tabulate all votes, ballots or consents, determine the result, and do such
acts as are proper to
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conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting, the inspector or inspectors or judge or
judges, if any, shall make a report in writing of any challenge, question or
matter determined by him or them and execute a certificate of any fact found by
him or them.
- QUORUM. The holders of a majority of the outstanding shares of
stock entitled to vote, present in person or represented by proxy, shall
constitute a quorum at a meeting of stockholders for the transaction of any
business. The stockholders present may adjourn the meeting despite the absence
of a quorum.
- VOTING. Except as otherwise provided by the General Corporation
Law or by the Certificate of Incorporation, each share of stock entitled to vote
shall entitle the holder thereof to one vote. In the election of directors, a
plurality of the votes cast shall elect. Directors shall be elected by
cumulative voting, if and as provided in the Certificate of Incorporation. Any
other action shall be authorized by a majority of the votes cast except where
the General Corporation Law or these by-laws or the Certificate of Incorporation
prescribes a different percentage of votes and/or a different exercise of voting
power. In the election of directors, voting need not be by ballot. Voting by
ballot shall not be required for any other corporate action except as otherwise
provided by the General Corporation Law.
6. STOCKHOLDER ACTION WITHOUT A MEETING. Any action required by the
General Corporation Law to be taken or which may be taken at any annual or
special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business of the corporation shall
be managed by or under the direction of the Board of Directors of the
corporation. The use of the phrase "whole Board" herein refers to the total
number of directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Delaware. The
number of directors shall be no less than three, nor more than ten, such number
to be fixed from time to time solely by resolution of the Board of Directors.
The number of directors may be increased or decreased by action of the
stockholders or of the Board.
3. ELECTION AND TERM. The first Board of Directors, unless the
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<PAGE>
members thereof shall have been named in the Certificate of Incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors have been
elected and qualified or until their earlier resignation or removal. Thereafter,
directors who are elected at an annual meeting of stockholders, and directors
who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors have been elected and qualified or until their
earlier resignation or removal. 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 cause, may be filled only by the vote
or written consents 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.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meeting shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the President, or any two (2) of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. The notice of any regular or special meeting shall specify
the business to be transacted at the meeting and/or the purpose or purposes for
which such meeting is being called, and no other business or purpose may be
conducted or considered at such meeting. Notice need not be given to any
director who submits a written waiver of notice signed by him before or after
the time of the meeting. Attendance of any such person at a meeting shall
constitute a waiver of notice of such meeting, except when he attends a meeting
for the sole purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting need be specified in any written waiver of notice.
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- QUORUM AND ACTION. A majority of the whole Board shall constitute
a quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board, except
that if the number of directors constituting the whole Board is one, then one
director shall constitute a quorum. A majority of the directors present, whether
or not a quorum is present, may adjourn a meeting to another time and place.
Except as herein otherwise provided, and except as otherwise provided by the
General Corporation law and the Certificate of Incorporation, the act of the
Board shall be the act by vote of a majority of the directors present at a
meeting at which a quorum is present.
- CHAIRMAN OF THE MEETING. The President shall preside at all
meetings. If, for any reason, the President is not present at any meeting, any
director chosen by the Board shall preside.
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 shared 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 case 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.
6. COMMITTEES. The Board may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of any committee who may replace any absent
or disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution of the Board and except as hereinafter
provided, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it. No
such committee shall the power or authority to amend the Certificate of
Incorporation, adopt an agreement of merger or consolidation, recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommend to the stockholders a dissolution
of the corporation or a revocation of a dissolution, declare a dividend,
authorize the issuance of stock, elect or remove any officer, amend or repeal
any resolution adopted by the Board or take any action prohibited by the General
Corporation Law. The notice provisions of these By-Laws pertaining to directors'
meetings shall also apply to all committee meetings.
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7. ACTION IN WRITING. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
8. PARTICIPATION BY CONFERENCE PHONE. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board or
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
provision shall constitute presence in person at such meeting.
9. COMPENSATION OF DIRECTORS. The Board, by the affirmative vote of
a majority of directors in office and regardless of any personal interest of any
of them, may establish reasonable compensation of all directors and of the
President.
ARTICLE III
OFFICERS
1. DESIGNATION. The directors shall elect a President and a
Secretary, and may elect one or more Vice Presidents (including Executive,
Senior and/or Assistant Vice Presidents), a Treasurer, Assistant Secretaries,
Assistant Treasurers, and such other officers and agents as are desired. The
President may but need not be a director. Any number of offices may be held by
the same person, except that no officer shall, in more than one capacity,
execute, acknowledge or verity any instrument required by the General
Corporation Law or these By-Laws to be executed, acknowledged or verified by two
or more officers.
2. TERMS OF OFFICE. Unless otherwise provided in the resolution of
election or appointment, each officer shall hold office until the meeting of the
Board following the next annual meeting of stockholders and until his successor
has been elected and qualified.
3. PRESIDENT. The President shall be the chairman of the Board of
Directors and chief executive officer of the corporation shall preside at all
meetings of the Board and of the stockholders, and shall be a member ex officio
of all committees of the Board. The President shall also be the chief operating
officer of the corporation, and shall have general and active management,
direction and supervision over the business and affairs of the corporation and
over its several subordinate officers.
4. VICE PRESIDENTS. Each Vice President shall have such powers and
perform such duties as the Board or the President may prescribe. In the absence
or inability of the President to act, the Vice Presidents (in the order
determined by the President or by the Board, or if there be no such
determination, in the order of the election of Executive Vice Presidents, then
of Senior Vice Presidents, then of Vice
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Presidents, and finally of Assistant Vice Presidents, may perform all the duties
and may exercise any of the powers of the President. The performance of any such
duty by a Vice President shall be conclusive evidence of his power to act.
5. SECRETARY. The Secretary shall have charge of the minutes of all
proceedings of the shareholders and of the Board. He shall attend to the giving
of all notices to shareholders and directors. He shall have charge of the seal
of the corporation and shall attest the same by his signature whenever required.
He shall have charge of the record of shareholders of the corporation, and of
such other books and papers as the Board may direct. He shall have all such
powers and duties as generally are incident to the position of Secretary or as
may be assigned to him by the President or the Board..
6. TREASURER. The Treasurer shall have charge of all funds and
securities of the Corporation, shall endorse the same for deposit or collection
when necessary and shall deposit the same to the credit of the corporation in
such banks or depositaries as the President may authorize. He may endorse all
commercial documents requiring endorsements for or on behalf of the corporation
and may sign all receipts and vouchers for payments made to the corporation. He
shall have all such powers and duties as generally are incident to the position
of Treasurer or as may be assigned to him by the President or by the Board.
7. ASSISTANT SECRETARIES. In the absence or inability of the
Secretary to act, any Assistant Secretary may perform all the duties and
exercise all the powers of the Secretary. The performance of any such duty shall
be conclusive evidence of his power to act. An Assistant Secretary shall also
perform such other duties as the President, the Secretary or the Board may
assign to him.
8. ASSISTANT TREASURERS. In the absence or inability of the
Treasurer to act, an Assistant Treasurer may perform all the duties and exercise
all the powers of the Treasurer. The performance of any such duty shall be
conclusive evidence of his power to act. An Assistant Treasurer shall also
perform such other duties as the President, the Treasurer or the Board may
assign to him.
9. REMOVAL. The Board may remove any officer for cause or without
cause.
ARTICLE IV
INDEMNIFICATION
1. LIMITATION OF CERTAIN LIABILITY OF DIRECTORS. To the fullest
extent permitted by the Delaware General Corporation Law as the same exists or
may hereafter be amended, a director of the corporation shall not be liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as director.
2. INDEMNIFICATION AND INSURANCE. (a) Each person who was or is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a
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"proceeding") by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer 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 of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in paragraph (b) hereof, the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this Section 2 shall be a contract right and shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including without
limitation service to an employee benefit plan) in advance of the final
disposition of a proceeding shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Section 2 or otherwise. The
corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) If a claim under paragraph (a) of this Section 2 is not paid in
full by the corporation within ninety days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the corporation. Neither the failure of the corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that
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indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the corporation (including its
Board of Directors independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
3. EXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses conferred in this Article shall not be deemed exclusive of
any other right to which any person seeking indemnification or payment of
expenses may be entitled under any statute, provision the Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
4. INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
ARTICLE V
CONTRACTS, LOANS, CHECKS, NOTES, DRAFTS, ETC.
Contracts, checks, notes, drafts, acceptances, bills of exchange and
other instruments, orders or obligations for the payment of money shall be
signed by the President or by such officer or officers or person or persons as
the Board or the President shall from time to time determine.
ARTICLE VI
CORPORATE SEAL
The corporate seal shall be in such form as the Board shall
prescribe.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board.
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ARTICLE VIII
AMENDMENTS
The Board of Directors shall have the power to make, alter or repeal
the By-Laws of the corporation subject to the power of the stockholders to alter
or repeal the By-Laws made or altered by the Board of Directors. The
stockholders shall also have the power to make, alter or repeal the By-Laws of
the corporation.
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Exhibit 10.1
CVC, INC.
AMENDED AND RESTATED 1997 STOCK OPTION PLAN
ARTICLE I
PURPOSE
This CVC, Inc. Amended and Restated 1997 Stock Option Plan is
intended to advance the interests of the Company and its stockholders and
subsidiaries by attracting, retaining and motivating the performance of selected
officers, employees and consultants of the Company of high caliber and potential
upon whose judgment, initiative and effort the Company is largely dependent for
the successful conduct of its business, and to encourage and enable such persons
to acquire and retain a proprietary interest in the Company by ownership of its
stock. Options granted under the Plan may either be "incentive stock options"
intended to qualify as such under the Internal Revenue Code, or "nonqualified
stock options," which are not intended to so qualify. The Plan, as amended and
restated provided herein, is effective as of September 30, 1999, subject to the
approval of the Plan by the holders of at least a majority of the outstanding
shares of Common Stock.
ARTICLE II
DEFINITIONS
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Company's Common Stock, par value $.01
per share.
(d) "Committee" means the Compensation Committee of the Board or any
other committee of the Board appointed by the Board to administer the Plan from
time to time.
(e) "Company" means CVC, Inc., a Delaware corporation.
(f) "Date of Grant" means the date on which an Option becomes
effective in accordance with Section 6.1 hereof.
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(g) "Eligible Person" means any person who is an officer, employee
or consultant of the Company or any Subsidiary, or any person who is determined
by the Committee to be a prospective officer, employee or consultant of the
Company or any Subsidiary.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" of a share of Common Stock as of a given
date means the closing sales price of the Common Stock on the Nasdaq National
Market on the trading day immediately preceding the date as of which Fair Market
Value is to be determined or, in the absence of any reported sales of Common
Stock on such date, on the first preceding date on which any such sale shall
have been reported. If Common Stock is not listed on the Nasdaq National Market
on the date as of which Fair Market Value is to be determined, the Committee
shall determine in good faith the Fair Market Value in whatever manner it
considers appropriate.
(j) "Incentive Stock Option" means a stock option granted under the
Plan that is intended to meet the requirements of Section 422 of the Code and
the regulations promulgated thereunder.
(k) "Nonqualified Stock Option" means a stock option granted under
the Plan that is not an Incentive Stock Option.
(l) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted under the Plan.
(m) "Optionee" means an Eligible Person to whom an Option has been
granted, which Option has not expired, under the Plan.
(n) "Option Price" means the price at which each share of Common
Stock subject to an Option may be purchased, determined in accordance with
Section 6.2 hereof.
(o) "Plan" means this CVC, Inc. Amended and Restated 1997 Stock
Option Plan.
(p) "Stock Option Agreement" means an agreement between the Company
and an Optionee under which the Optionee may purchase Common Stock under the
Plan.
(q) "Subsidiary" means a subsidiary corporation of the Company,
within the meaning of Section 424(f) of the Code.
(r) "Ten Percent Owner" means an Optionee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten percent
of the total combined voting power of all classes of stock of the Company, its
parent, if any, or any Subsidiary, within the meaning of Sections 422(b)(6) and
424(d) of the Code.
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ARTICLE III
ELIGIBILITY
All Eligible Persons are eligible to receive a grant of an Option
under the Plan. The Committee shall, in its sole discretion, determine and
designate from time to time those Eligible Persons who are to be granted an
Option.
ARTICLE IV
ADMINISTRATION
4.1 Committee Members. The Plan shall be administered by a Committee
comprised of no fewer than two persons selected by the Board. Solely to the
extent deemed necessary or advisable by the Board, each Committee member shall
meet the definition of a "nonemployee director" for purposes of such Rule 16b-3
under the Exchange Act and of an "outside director" under Section 162(m) of the
Code. The Board shall also have the authority to exercise the powers and duties
of the Committee under the Plan.
4.2 Committee Authority. Subject to the express provisions of the
Plan, the Committee shall have the authority, in its discretion, to determine
the Eligible Persons to whom an Option shall be granted, the time or times at
which an Option shall be granted, the number of shares of Common Stock subject
to each Option, the Option Price of the shares subject to each Option and the
time or times when each Option shall become exercisable and the duration of the
exercise period. Subject to the express provisions of the Plan, the Committee
shall also have discretionary authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, to determine the details
and provisions of each Stock Option Agreement, and to make all the
determinations necessary or advisable in the administration of the Plan. All
such actions and determinations by the Committee shall be conclusively binding
for all purposes and upon all persons. No Committee member shall be liable for
any action or determination made in good faith with respect to the Plan, any
Option or any Stock Option Agreement entered into hereunder.
4.3 Delegation of Authority. The Committee shall have the right,
from time to time, to delegate to one or more officers of the Company the
authority of the Committee to grant and determine the terms and conditions of
Options awarded under the Plan, subject to such limitations as the Committee
shall determine; provided, however, that no such authority may be delegated with
respect to Options awarded to any Optionee who the Committee determines may be
subject to Rule 16b-3 under the Exchange Act or Section 162(m) of the Code.
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ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Number of Shares. Subject to adjustment pursuant to the
provisions of Section 5.2 hereof, the number of shares of Common Stock which may
be issued and sold hereunder shall initially be 2,750,000 shares, provided that,
effective as of each fiscal year beginning on October 1, 2000, a number of
shares shall be added to the number of shares available for issuance under the
Plan that is equal to 5% of the total number of shares of Common Stock issued by
the Company during the immediately preceding fiscal year. Notwithstanding the
foregoing, the maximum aggregate number of shares of Common Stock issued and
sold under the Plan shall not exceed 5,000,000 shares. Shares of Common Stock
issued and sold under the Plan may be either authorized but unissued shares or
shares held in the Company's treasury. The number of shares of Common Stock
reserved for issuance under the Plan shall at no time be less than the maximum
number of shares which may be purchased at any time pursuant to outstanding
options. Shares of Common Stock covered by an Option that shall have been
exercised shall not again be available for an Option grant. If an Option shall
terminate or expire for any reason (including, without limitation, the
cancellation of an Option pursuant to Section 6.7 hereof) without being wholly
exercised, the number of shares to which such Option termination relates shall
again be available for grant hereunder.
5.2 Adjustments. In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger or consolidation, or
the sale, conveyance, or other transfer by the Company of all or substantially
all of its property, or any other change in the corporate structure or shares of
the Company, pursuant to any of which events the then outstanding shares of
Common Stock are split up or combined, or are changed into, become exchangeable
at the holder's election for, or entitle the holder thereof to, other shares of
stock or any other consideration, or in the case of any other transaction
described in Section 424(a) of the Code, the Committee may change the number and
kind of shares (including by substitution of shares of another corporation)
subject to the Options and/or the Option Price of such shares in the manner that
it shall deem to be equitable and appropriate. In no event may any such change
be made to an Incentive Stock Option which would constitute a "modification"
within the meaning of Section 424(h)(3) of the Code without the consent of any
affected Optionee. In the event of any merger, consolidation, reorganization, or
similar corporate event in which shares of the Common Stock are to be exchanged
for payment of cash (the "Cash Consideration") the Committee may, in its
discretion, (i) make equitable adjustments as provided above, or (ii) cancel any
outstanding Option in exchange for payment in cash, if any, equal to the excess
of the Cash Consideration for the shares underlying such Option over the Option
Price for such shares.
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ARTICLE VI
OPTIONS
6.1 Grant of Option. An Option may be granted to any Eligible Person
selected by the Committee. The grant of an Option shall first be effective upon
the date it is approved by the Committee, except to the extent the Committee
shall specify a later date upon which the grant of an Option shall first be
effective. Each Option shall be designated, at the discretion of the Committee,
as an Incentive Stock Option or a Nonqualified Stock Option, provided that
Incentive Stock Options may only be granted to Eligible Persons who are
considered employees of the Company or any Subsidiary for purposes of Section
422 of the Code. The Company and the Optionee shall execute a Stock Option
Agreement which shall set forth such terms and conditions of the Option as may
be determined by the Committee to be consistent with the Plan, and which may
include additional provisions and restrictions that are not inconsistent with
the Plan.
6.2 Maximum Limit. Notwithstanding anything elsewhere in the Plan to
the contrary, the maximum number of shares of Common Stock that may be subject
to Options granted to any Optionee during any one calendar year shall be 500,000
shares (subject to adjustment as provided in Section 5.2 hereof).
6.3 Option Price. The Option Price shall be determined by the
Committee; provided, however, that the Option Price shall not be less than 100
percent of the Fair Market Value of a share of Common Stock on the trading date
immediately preceding the Date of Grant.
6.4 Vesting; Term of Option. Unless otherwise specified by the
Committee in the Stock Option Agreement for an Optionee, an Option shall vest
and become exercisable in cumulative annual installments, each of which shall
relate to one-fifth of the number of shares of Common Stock originally covered
thereby (as may be adjusted in accordance with Section 5.2 hereof), on the
first, second, third, fourth and fifth anniversaries of the Date of Grant,
respectively, provided that the Optionee remains an Eligible Person on each such
anniversary. Notwithstanding the foregoing, the Committee, in its sole
discretion, may accelerate the exercisability of any Option at any time, and an
Option may become vested and exercisable in accordance with the provisions of
Articles VII and IX hereof. The period during which a vested Option may be
exercised shall be ten years from the Date of Grant, unless a shorter exercise
period is specified by the Committee in the Stock Option Agreement for an
Optionee.
6.5 Option Exercise; Withholding. Subject to such terms and
conditions as shall be specified in a Stock Option Agreement, an Option may be
exercised in whole or in part at any time, with respect to whole shares only,
within the period permitted for the exercise thereof, and shall be exercised by
written notice of intent to exercise the Option with respect to a specified
number of shares delivered to the Company at its principal office, and payment
in full to the Company at said office of the amount of the Option Price for the
number of shares of the Common Stock with respect to which the Option is then
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being exercised. Payment of the Option Price shall be made (i) in cash or by
cash equivalent, (ii) at the discretion of the Committee, in Common Stock that
has been held by the Optionee for at least six months (or such other period as
the Committee may deem appropriate for purposes of applicable accounting rules),
valued at the Fair Market Value of such shares determined on the date of
exercise, (iii) at the discretion of the Committee, by a delivery of a notice
that the Optionee has placed a market sell order (or similar instruction) with a
broker with respect to shares of Common Stock then issuable upon exercise of the
Option, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option Price
(conditioned upon the payment of such net proceeds), (iv) at the discretion of
the Committee, by a combination of the methods described above, or (v) by such
other method as may be approved by the Committee and set forth in the Stock
Option Agreement. In addition to and at the time of payment of the Option Price,
the Optionee shall pay to the Company the full amount of all federal and state
withholding and other employment taxes required to be withheld in connection
with such exercise, in any manner consistent with the foregoing that is approved
by the Committee and set forth in the Stock Option Agreement.
6.6 Limited Transferability of Option. All Options shall be
nontransferable except (i) upon the Optionee's death, by the Optionee's will or
the laws of descent and distribution or (ii) in the case only of Nonqualified
Stock Options on a case-by-case basis as may be approved by the Committee in its
discretion, in accordance with the terms provided below. Each Option Agreement
for a Nonqualified Stock Option shall provide that the Optionee may, during his
or her lifetime and subject to the prior approval of the Committee at the time
of proposed transfer, transfer all or part of the Option to a family member (as
defined below), provided that any such transfer is made by the Optionee for
estate and tax planning, donative purposes, or pursuant to a domestic relations
order, and no consideration (other than nominal consideration or interests in a
family partnership, family corporation or other family-related entity) is
received by the Optionee therefor. The transfer of a Nonqualified Stock Option
shall be subject to such other terms and conditions as the Committee may in its
discretion impose from time to time, including a condition that the portion of
the Option to be transferred be vested and exercisable by the Optionee at the
time of the transfer. Subsequent transfers of an Option transferred under this
Section 6.6 shall be prohibited other than by will or the laws of descent and
distribution upon the death of the transferee.
For purposes hereof, a "family member" shall mean any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the participant's household (other than a
tenant or employee), a trust in which these persons have more than fifty percent
of the beneficial interest, a foundation in which these persons (or the
participant) control the management of assets, and any other entity in which
these persons (or the participant) own more than fifty percent of the voting
interests.
No transfer of an Option by the Optionee by will or by laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been
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furnished with written notice thereof and an authenticated copy of the will
and/or such other evidence as the Committee may deem necessary to establish the
validity of the transfer. During the lifetime of an Optionee, the Option shall
be exercisable only by him, except that, in the case of an Optionee who is
legally incapacitated, the Option shall be exercisable by his guardian or legal
representative.
6.7 Cancellation, Substitution and Amendment of Options. The
Committee shall have the authority to effect, at any time and from time to time,
with the consent of the affected Optionees, (i) the cancellation of any or all
outstanding Options and the grant in substitution therefor of new Options
covering the same or different numbers of shares of Common Stock and having an
Option Price which may be the same as or different than the Option Price of the
cancelled Options or (ii) the amendment of the terms of any and all outstanding
Options.
ARTICLE VII
ADDITIONAL RULES FOR ISOs
7.1 Ten Percent Owners. Notwithstanding any other provisions of this
Plan to the contrary, in the case of an Incentive Stock Option granted to a Ten
Percent Owner, (i) the period during which any such Incentive Stock Option may
be exercised shall not be greater than five years from the Date of Grant and
(ii) the Option Price of such Incentive Stock Option shall not be less than 110
percent of the Fair Market Value of a share of Common Stock on the Date of
Grant.
7.2 Annual Limits. No Incentive Stock Option shall be granted to an
Optionee as a result of which the aggregate fair market value (determined as of
the date of grant) of the stock with respect to which incentive stock options
are exercisable for the first time in any calendar year under the Plan, and any
other stock option plans of the Company, any Subsidiary or any parent
corporation, would exceed $100,000, determined in accordance with Section 422(d)
of the Code. This limitation shall be applied by taking options into account in
the order in which granted.
7.3 Termination of Employment. An Incentive Stock Option may provide
that such Option may be exercised not later than three months following
termination of employment of the Optionee with the Company and all Subsidiaries,
subject to special rules relating to death and disability, as and to the extent
determined by the Committee to be consistent with the requirements of Section
422 of the Code and Treasury Regulations thereunder.
7.4 Disqualifying Dispositions. If shares of Common Stock acquired
by exercise of an Incentive Stock Option are disposed of within two years
following the Date of Grant or one year following the transfer of such shares to
the Optionee upon exercise, the Optionee shall, within 10 days after such
disposition, notify the Company in writing of the date and terms of such
disposition and provide such other information regarding the disposition as the
Committee may reasonably require.
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7.5 Other Terms and Conditions. Any Incentive Stock Option granted
hereunder shall contain such additional terms and conditions, not inconsistent
with the terms of this Plan, as are deemed necessary or desirable by the
Committee, which terms, together with the terms of this Plan, shall be intended
and interpreted to cause such Incentive Stock Option to qualify as an "incentive
stock option" under Section 422 of the Code. A Stock Option Agreement for an
Incentive Stock Option may provide that such Option shall be treated as a
Nonqualified Stock Option to the extent that certain requirements applicable to
"incentive stock options" under the Code shall not be satisfied. An Incentive
Stock Option shall by its terms be nontransferable otherwise than by will or by
the laws of descent and distribution, and shall be exercisable during the
lifetime of an Optionee only by such Optionee.
ARTICLE VIII
TERMINATION OF SERVICE
8.1 Death. Unless otherwise provided and set forth in the Stock
Option Agreement, if an Optionee shall die at any time after the Date of Grant
and while he is an Eligible Person, the executor or administrator of the estate
of the decedent, or the person or persons to whom an Option shall have been
validly transferred in accordance with Section 6.6 hereof pursuant to will or
the laws of descent and distribution, shall have the right, during the period
ending one year after the date of the Optionee's death (subject to Sections 6.4
and 7.1 hereof concerning the maximum term of an Option), to exercise the
Optionee's Option to the extent that it was exercisable at the date of the
Optionee's death and shall not have been previously exercised. The Committee may
determine at or after grant to make any portion of his Option that is not
exercisable at the date of death immediately vested and exercisable.
8.2 Disability. Unless otherwise provided by the Committee and set
forth in the Stock Option Agreement, if an Optionee's employment or other
service with the Company or any Subsidiary shall be terminated as a result of
his permanent and total disability (within the meaning of Section 22(e)(3) of
the Code) at any time after the Date of Grant and while he is an Eligible
Person, the Optionee (or in the case of an Optionee who is legally
incapacitated, his guardian or legal representative) shall have the right,
during a period ending one year after the date of his disability (subject to
Sections 6.4 and 7.1 hereof concerning the maximum term of an Option), to
exercise an Option to the extent that it was exercisable at the date of such
termination of employment or other service and shall not have been exercised.
The Committee may determine at or after grant to make any portion of his Option
that is not exercisable at the date of termination of employment or other
service due to disability immediately vested and exercisable.
8.3 Termination for Cause. Unless otherwise provided by the
Committee and set forth in the Stock Option Agreement, if an Optionee's
employment or other service
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with the Company or any Subsidiary shall be terminated for cause, the Optionee's
right to exercise any unexercised portion of an Option shall immediately
terminate and all rights thereunder shall cease. For purposes of this Section
8.3, termination for "cause" shall include, but not be limited to, embezzlement
or misappropriation of corporate funds, any acts of dishonesty resulting in
conviction for a felony, misconduct resulting in material injury to the Company
or any Subsidiary, significant activities harmful to the reputation of the
Company or any Subsidiary, a significant violation of Company or Subsidiary
policy, willful refusal to perform, or substantial disregard of, the duties
properly assigned to the Optionee, or a significant violation of any
contractual, statutory or common law duty of loyalty to the Company or any
Subsidiary. Notwithstanding the foregoing, in the event an Optionee is party to
an employment (or similar) agreement with the Company or any Subsidiary that
defines the term "cause," such definition shall apply for purpose of the Plan.
The Committee shall have the power to determine whether the Optionee has been
terminated for cause and the date upon which such termination for cause occurs.
Any such determination shall be final, conclusive and binding upon the Optionee.
8.4 Other Termination of Service. Unless otherwise provided by the
Committee and set forth in the Stock Option Agreement, if an Optionee's
employment or other service with the Company or any Subsidiary shall be
terminated for any reason other than death, permanent and total disability or
termination for cause, the Optionee shall have the right, during the period
ending 90 days after such termination (subject to Sections 6.4 and 7.1 hereof
concerning the maximum term of an Option and subject to the terms of any
employment agreement between the Company or a Subsidiary and the Optionee), to
exercise an Option to the extent that it was exercisable at the date of such
termination and shall not have been exercised. For purposes of this Section 8.4,
an Optionee shall not be considered to have terminated employment or other
service with the Company or any Subsidiary until the expiration of the period of
any military, sick leave or other bona fide leave of absence, up to a maximum
period of 90 days (or such greater period during which the Optionee is
guaranteed reemployment either by statute or contract).
ARTICLE IX
CHANGE IN CONTROL
9.1 Change in Control. Unless otherwise provided by the Committee
and set forth in the Stock Option Agreement, upon a "change in control" of the
Company (as defined below), each outstanding Option, to the extent that it shall
not otherwise have become vested and exercisable, shall automatically become
fully and immediately vested and exercisable, without regard to any otherwise
applicable vesting requirement under Section 6.4 hereof; provided, however, that
no such vesting shall occur if provision has been made in writing in connection
with such transaction for (a) the continuation of the Plan and/or the assumption
of such Options by a successor corporation (or a parent or subsidiary thereof)
or (b) the substitution for such Options of new options covering the stock of a
successor corporation (or a parent or subsidiary thereof), with appropriate
adjustments as to the number and kinds of shares and exercise prices. In the
event of any
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such continuation, assumption or substitution, the Plan and/or such Options
shall continue in the manner and under the terms so provided.
9.2 Definition. For purposes of Section 9.1 hereof, a "change in
control" of the Company shall mean:
(i) an acquisition subsequent to the date hereof by any person,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person"), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of either (A) the then
outstanding shares of Common Stock or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (1) any acquisition
directly from the Company, other than an acquisition by virtue of the
exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company, (2) any acquisition by the
Company and (3) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company;
(ii) a change in the composition of the Board such that during any
period of two consecutive years, individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company
to effect a transaction described in paragraphs (i), (iii) or (iv) of this
section) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority of the members thereof;
(iii) the consummation of a merger, consolidation, reorganization or
similar corporate transaction which has been approved by the stockholders
of the Company, whether or not the Company is the surviving company in
such transaction, in which outstanding shares of Common Stock are
converted into (A) shares of stock of another company, other than a
conversion into shares of voting common stock of the successor corporation
(or a holding company thereof) representing 80% of the voting power of all
capital stock thereof outstanding immediately after the merger or
consolidation or (B) other securities (of either the Company or another
company) or cash or other property;
(iv) the approval by the stockholders of the Company of (A) the sale
or other disposition of all or substantially all of the assets of the
Company or (B) a complete liquidation or dissolution of the Company; or
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(v) the adoption by the Board of a resolution to the effect that any
person has acquired effective control of the business and affairs of the
Company.
ARTICLE X
STOCK CERTIFICATES
10.1 Issuance of Certificates. Subject to Section 10.2 hereof, the
Company shall issue a stock certificate in the name of the Optionee (or other
person exercising the Option in accordance with the provisions of the Plan) for
the shares of Common Stock purchased by exercise of an Option as soon as
practicable after due exercise and payment of the aggregate Option Price for
such shares. A separate stock certificate or separate stock certificates shall
be issued for any shares of Common Stock purchased pursuant to the exercise of
an Option that is an Incentive Stock Option, which certificate or certificates
shall not include any shares of Common Stock that were purchased pursuant to the
exercise of an Option that is a Nonqualified Stock Option.
10.2 Conditions. The Company shall not be required to issue or
deliver any certificate for shares of Common Stock purchased upon the exercise
of any Option granted hereunder or any portion thereof prior to fulfillment of
all of the following conditions:
(i) the completion of any registration or other qualification of
such shares, under any federal or state law or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body, that the Committee shall in its sole
discretion deem necessary or advisable;
(ii) the obtaining of any approval or other clearance from any
federal or state governmental agency which the Committee shall in its sole
discretion determine to be necessary or advisable;
(iii) the lapse of such reasonable period of time following the
exercise of the Option as the Committee from time to time may establish
for reasons of administrative convenience;
(iv) satisfaction by the Optionee of all applicable withholding
taxes or other withholding liabilities; and
(v) if required by the Committee, in its sole discretion, the
receipt by the Company from an Optionee of (i) a representation in writing
that the shares of Common Stock received upon exercise of an Option are
being acquired for investment and not with a view to distribution and (ii)
such other representations and warranties as are deemed necessary by
counsel to the Company.
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10.3 Legends. The Company reserves the right to legend any
certificate for shares of Common Stock, conditioning sales of such shares upon
compliance with applicable federal and state securities laws and regulations.
ARTICLE XI
EFFECTIVE DATE, TERMINATION AND AMENDMENT
11.1 Effective Date. The Plan shall become effective upon its
adoption by the Board and its approval by the stockholders of the Company.
11.2 Termination. The Plan shall terminate on the date immediately
preceding the tenth anniversary of the date the Plan is adopted by the Board.
The Board may, in its sole discretion and at any earlier date, terminate the
Plan. Notwithstanding the foregoing, no termination of the Plan shall in any
manner affect any Option theretofore granted without the consent of the Optionee
or the permitted transferee of the Option.
11.3 Amendment. The Board may at any time and from time to time and
in any respect, amend or modify the Plan. Solely to the extent deemed necessary
or advisable by the Board, for purposes of complying with Sections 422 or 162(m)
of the Code or rules of any securities exchange or for any other reason, the
Board may seek the approval of any such amendment by the Company's stockholders.
Any such approval shall be by the affirmative votes of the stockholders of the
Company present, or represented, and entitled to vote at a meeting duly held in
accordance with applicable state law and the Certificate of Incorporation and
By-Laws of the Company. Notwithstanding the foregoing, no amendment or
modification of the Plan shall in any manner affect any Option theretofore
granted without the consent of the Optionee or the permitted transferee of the
Option.
ARTICLE XII
MISCELLANEOUS
12.1 Employment or other Service. Nothing in the Plan, in the grant
of any Option or in any Stock Option Agreement shall confer upon any Eligible
Person the right to continue in the capacity in which he is employed by or
otherwise provides services to the Company or any Subsidiary. Notwithstanding
anything contained in the Plan to the contrary, unless otherwise provided in a
Stock Option Agreement, no Option shall be affected by any change of duties or
position of the Optionee (including a transfer to or from the Company or any
Subsidiary), so long as such Optionee continues to be an Eligible Person.
12.2 Rights as Shareholder. An Optionee or the permitted transferee
of an Option shall have no rights as a shareholder with respect to any shares
subject to such Option prior to the purchase of such shares by exercise of such
Option as provided herein. Nothing contained herein or in the Stock Option
Agreement relating to any Option shall
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create an obligation on the part of the Company to repurchase any shares of
Common Stock purchased hereunder.
12.3 Other Compensation and Benefit Plans. The adoption of the Plan
shall not affect any other stock option or incentive or other compensation plans
in effect for the Company or any Subsidiary, nor shall the Plan preclude the
Company from establishing any other forms of incentive or other compensation for
employees of the Company or any Subsidiary. The amount of any compensation
deemed to be received by an Optionee as a result of the exercise of an Option or
the sale of shares received upon such exercise shall not constitute compensation
with respect to which any other employee benefits of such Optionee are
determined, including, without limitation, benefits under any bonus, pension,
profit sharing, life insurance or salary continuation plan, except as otherwise
specifically determined by the Board or the Committee or provided by the terms
of such plan.
12.4 Plan Binding on Successors. The Plan shall be binding upon the
Company, its successors and assigns, and the Optionee, his executor,
administrator and permitted transferees.
12.5 Construction and Interpretation. Whenever used herein, nouns in
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.
12.6 Severability. If any provision of the Plan or any Stock Option
Agreement shall be determined to be illegal or unenforceable by any court of law
in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
12.7 Governing Law. The validity and construction of this Plan and
of the Stock Option Agreements shall be governed by the laws of the State of
Delaware.
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Exhibit 10.3
CVC, INC.
1999 NONEMPLOYEE DIRECTORS'
STOCK OPTION PLAN
ARTICLE I
PURPOSE
The CVC, Inc. 1999 Nonemployee Directors' Stock Option Plan is
intended to advance the interests of CVC, Inc., and its stockholders by
attracting, retaining and motivating the performance of nonemployee directors of
CVC, Inc., and to encourage and enable such directors to acquire and retain a
proprietary interest in CVC, Inc., by ownership of its stock.
ARTICLE II
DEFINITIONS
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Company's Common Stock, par value $.015
per share.
(d) "Company" means CVC, Inc., a Delaware corporation.
(e) "Date of Grant" means the date on which an Option is granted in
accordance with Section 5.1 hereof.
(f) "Fair Market Value" means the closing price of the Common Stock
on the Nasdaq National Market on the date as of which fair market value is to be
determined or, in the absence of any reported sales of Common Stock on such
date, on the first preceding date on which any such sale shall have been
reported. If Common Stock is not listed on Nasdaq National Market on the date as
of which fair market value is to be determined, the Board shall determine in
good faith the fair market value in whatever manner it considers appropriate.
<PAGE>
(g) "Nonemployee Director" means any member of the Board who is not
an employee of the Company.
(h) "Option" means a stock option granted under the Plan.
(i) "Optionee" means a person to whom an Option has been granted,
which Option has not expired under the Plan.
(j) "Option Price" means the price at which each share of Common
Stock subject to an Option may be purchased, determined in accordance with
Section 5.2 hereof.
(k) "Plan" means this CVC, Inc. 1999 Nonemployee Directors' Stock
Option Plan.
(l) "Stock Option Agreement" means an agreement between the Company
and an Optionee under which the Optionee may purchase Common Stock under the
Plan.
ARTICLE III
ADMINISTRATION
Subject to the express provisions of the Plan, the Board shall have
discretionary authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the details and provisions of
each Stock Option Agreement, and to make all the determinations necessary or
advisable in the administration of the Plan. All such actions and determinations
by the Board shall be conclusively binding for all purposes and upon all
persons. The Board shall not be liable for any action or determination made in
good faith with respect to the Plan, any Option or any Stock Option Agreement
entered into hereunder.
ARTICLE IV
SHARES OF STOCK SUBJECT TO PLAN
4.1 Number of Shares. Subject to adjustment pursuant to the
provisions of this Article IV, the maximum number of shares of Common Stock
which may be issued and sold hereunder shall be 200,000 shares. Shares of Common
Stock issued and sold under the Plan may be either authorized but unissued
shares or shares held in the Company's treasury. Shares of Common Stock covered
by an Option that shall have been exercised shall not again be available for an
Option grant. If an Option shall terminate for any reason without being wholly
exercised, the number of shares to which such Option termination relates shall
again be available for grant hereunder.
4.2 Antidilution. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger or
consolidation, or the sale,
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conveyance, lease or other transfer by the Company of all or substantially all
of its property, or any other change in the corporate structure or shares of the
Company, pursuant to any of which events the then outstanding shares of Common
Stock are split up or combined, or are changed into, become exchangeable at the
holder's election for, or entitle the holder thereof to, other shares of stock,
or in the case of any other transaction described in Section 424(a) of the Code,
the Board may change the number and kind of shares (including by substitution of
shares of another corporation) subject to the Options and/or the Option Price of
such shares in the manner that it shall deem to be equitable and appropriate.
ARTICLE V
OPTIONS
5.1 Grant of Options. Each Nonemployee Director shall receive a
grant of an Option to purchase 7,500 shares of Common Stock on the date
following the effective date of the Plan that he or she first becomes a member
of the Board, or any later date specified by the Board (the "Initial Grant"). In
addition to the foregoing, each Nonemployee Director shall receive a grant of an
Option to purchase 2,000 shares of Common Stock on the March 31 of each calendar
year following the effective date of the Plan (the "Annual Grant"). The Company
and the Optionee shall execute a Stock Option Agreement which shall set forth
such terms and conditions of an Option granted hereunder as may be determined by
the Board to be consistent with the Plan, and which may include additional
provisions and restrictions that are not inconsistent with the Plan.
5.2 Option Price. The Option Price of each share of Common Stock
subject to an Option shall be 100 percent of the Fair Market Value of a share of
Common Stock on the trading date immediately preceding the Date of Grant.
5.3 Vesting; Term of Option. Each Initial Grant of an Option shall
vest and become exercisable in cumulative annual installments, each of which
shall relate to one-third of the total number of shares of the Initial Grant, on
the first, second, and third anniversaries of the Date of Grant, provided that
the Optionee is a member of the Board on each such date. Each Annual Grant of an
Option shall become 100 percent vested and exercisable on the first anniversary
of the Date of Grant, provided that the Optionee is a member of the Board on
such date. The period during which a vested Option may be exercised shall be ten
years from the Date of Grant.
5.4 Option Exercise. An Option may be exercised in whole or in part
at any time, with respect to whole shares only, within the period permitted for
the exercise thereof, and shall be exercised by written notice of intent to
exercise the Option with respect to a specified number of shares delivered to
the Company at its principal office, and payment in full to the Company at said
office of the amount of the Option Price for the number of shares of the Common
Stock with respect to which the Option is then being exercised. Payment of the
Option Price shall be made (i) in cash or by cash equivalent, (ii) in Common
Stock valued at the Fair Market Value of such shares on the trading date
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immediately preceding the date of exercise or (iii) by a combination of such
cash and such Common Stock.
5.5 Limited Transferability of Option. All Options shall be
nontransferable except (i) upon the Optionee's death, by the Optionee's will or
the laws of descent and distribution or (ii) on a case-by-case basis as may be
approved by the Board in its discretion, in accordance with the terms provided
below. Each Option Agreement shall provide that the Optionee may, during his or
her lifetime and subject to the prior approval of the Board at the time of
proposed transfer, transfer all or part of the Option to a Permitted Transferee
(as defined below), provided that such transfer is made by the Optionee for
estate and tax planning purposes or donative purposes and no consideration
(other than nominal consideration) is received by the Optionee therefor. The
transfer of an Option shall be subject to such other terms and conditions as the
Board may in its discretion impose from time to time, including a condition that
the portion of the Option to be transferred be vested and exercisable by the
Optionee at the time of the transfer. Subsequent transfers of an Option
transferred under this Section 5.5 shall be prohibited other than by will or the
laws of descent and distribution upon the death of the transferee.
For purposes hereof, a "Permitted Transferee" shall be any member of
the Optionee's immediate family or a charitable institution (each defined
below), or a trust for the exclusive benefit of such immediate family members
and/or charitable institution, or to a partnership or limited liability company
the equity interests of which are owned exclusively by the Optionee and/or one
or more members of his or her immediate family. For purposes of the preceding
definition, (i) the "immediate family" of the Optionee shall mean and include
the Optionee's spouse, any descendant of the Optionee or his or her spouse
(including descendants by adoption), and any descendant of either parent of the
Optionee (including descendants by adoption), and (ii) a "charitable
institution" shall mean and include any organization described in each of
section 170(b)(1)(A), 170(c), 2055(a) and 2522(a) of the Code, as well as any
charitable remainder trust created under section 664 of the Code, the income
beneficiary of which is a member of the Optionee's immediate family or a trust
or other entity described above in this Section 5.5.
No transfer of an Option by the Optionee by will or by laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Board may deem
necessary to establish the validity of the transfer. During the lifetime of an
Optionee, the Option shall be exercisable only by him, except that, in the case
of an Optionee who is legally incapacitated, the Option shall be exercisable by
his guardian or legal representative.
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ARTICLE VI
TERMINATION OF SERVICE
6.1 Death. If an Optionee shall die at any time after the Date of
Grant and while he is a member of the Board, the executor or administrator of
the estate of the decedent, or the person or persons to whom an Option shall
have been validly transferred in accordance with Section 5.5 hereof pursuant to
will or the laws of descent and distribution, shall have the right, during the
period ending one year after the date of the Optionee's death (subject to
Section 5.3 hereof concerning the maximum term of an Option), to exercise the
Optionee's Option to the extent that it was exercisable at the date of such
Optionee's death and shall not have been previously exercised.
6.2 Disability. If an Optionee's service as a member of the Board
shall be terminated as a result of his permanent and total disability (within
the meaning of Section 22(e)(3) of the Code) at any time after the Date of
Grant, the Optionee (or in the case of an Optionee who is legally incapacitated,
his guardian or legal representative) shall have the right, during a period
ending one year after the date of his disability (subject to Section 5.3 hereof
concerning the maximum term of an Option), to exercise an Option to the extent
that it was exercisable at the date of such Optionee's disability and shall not
have been previously exercised.
6.3 Removal for Cause. If an Optionee shall be removed from the
Board for cause, the Optionee's right to exercise any unexercised portion of an
Option shall immediately terminate and all rights thereunder shall cease. An
Optionee shall be considered to have been removed for "cause" for purposes of
this Section 6.3 when he shall have been removed from the Board by the
stockholders of the Company for cause in accordance with applicable state law
and the Certificate of Incorporation and By-Laws of the Company.
6.4 Other Termination of Service. If an Optionee's service as a
member of the Board shall be terminated for any reason other than death,
permanent and total disability or removal for cause, the Optionee shall have the
right, during the period ending 90 days after such termination (subject to
Section 5.3 hereof concerning the maximum term of an Option), to exercise an
Option to the extent that it was exercisable at the date of such termination of
service and shall not have been previously exercised.
ARTICLE VII
CHANGE IN CONTROL
7.1 Change in Control. Upon a "change in control" of the Company (as
defined below), each outstanding Option, to the extent that it shall not
otherwise have become exercisable, shall become fully and immediately vested and
exercisable (without regard to the otherwise applicable installment exercise
requirement under Section 5.3 hereof).
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7.2 Definition. For purposes of Section 7.1 hereof, a "change in
control" of the Company shall mean:
(i) an acquisition subsequent to the date hereof by any person,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person"),
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of either (A) the then outstanding shares of Common
Stock or (B) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the following: (1)
any acquisition directly from the Company, other than an acquisition by virtue
of the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company, (2) any acquisition by the
Company and (3) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company;
(ii) a change in the composition of the Board such that during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this paragraph) whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority of the members thereof;
(iii) the approval by the stockholders of the Company of a merger,
consolidation, reorganization or similar corporate transaction, whether or not
the Company is the surviving corporation in such transaction, in which
outstanding shares of Common Stock are converted into (A) shares of stock of
another company, other than a conversion into shares of voting common stock of
the successor corporation (or a holding company thereof) representing 80% of the
voting power of all capital stock thereof outstanding immediately after the
merger or consolidation or (B) other securities (of either the Company or
another company) or cash or other property;
(iv) the approval by the stockholders of the Company of (A) the sale
or other disposition of all or substantially all of the assets of the Company or
(B) a complete liquidation or dissolution of the Company; or
(v) the adoption by the Board of a resolution to the effect that any
person has acquired effective control of the business and affairs of the
Company.
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ARTICLE VIII
STOCK CERTIFICATES
8.1 Issuance of Certificates. Subject to Section 8.2 hereof, the
Company shall issue a stock certificate in the name of the Optionee (or other
person exercising the Option in accordance with the provisions of the Plan) for
the shares of Common Stock purchased by exercise of an Option as soon as
practicable after due exercise and payment of the aggregate Option Price for
such shares.
8.2 Conditions. The Company shall not be required to issue or
deliver any certificate for shares of Common Stock purchased upon the exercise
of any Option granted hereunder or any portion thereof prior to fulfillment of
all of the following conditions:
(a) the completion of any registration or other qualification of
such shares, under any federal or state law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, that the Board shall in its sole discretion deem necessary or advisable;
(b) the obtaining of any approval or other clearance from any
federal or state governmental agency that the Board shall in its sole discretion
determine to be necessary or advisable;
(c) the lapse of such reasonable period of time following the
exercise of the Option as the Board from time to time may establish for reasons
of administrative convenience;
(d) satisfaction by the Optionee of any applicable withholding taxes
or other withholding liabilities; and
(e) if required by the Board, in its sole discretion, the receipt by
the Company from an Optionee of (i) a representation in writing that the shares
of Common Stock received upon exercise of an Option are being acquired for
investment and not with a view to distribution and (ii) such other
representations and warranties as are deemed necessary by counsel to the
Company.
8.3 Legends. The Company reserves the right to legend any
certificate for shares of Common Stock, conditioning sales of such shares upon
compliance with applicable federal and state securities laws and regulations.
ARTICLE IX
EFFECTIVE DATE, TERMINATION AND AMENDMENT
9.1 Effective Date. The Plan shall become effective upon its
adoption by the Board and its approval by the stockholders of the Company;
provided, however, that the Plan shall not be effective and any Options granted
hereunder shall be null and void if,
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<PAGE>
prior to March 31, 2000, an initial public offering of the Common Stock shall
not have been consummated.
9.2 Termination. The Plan shall terminate on the tenth anniversary
of the date the Plan is approved by the stockholders of the Company. The Board
may, in its sole discretion and at any earlier date, terminate the Plan.
Notwithstanding the foregoing, no termination of the Plan shall in any manner
affect any Option theretofore granted without the consent of the Optionee or the
permitted transferee of the Option.
9.3 Amendment. The Board may at any time and from time to time and
in any respect, amend or modify the Plan. Solely to the extent deemed necessary
or advisable by the Board, for purposes of complying with rules of any
securities exchange or for any other reason, the Board may seek the approval of
any such amendment by the Company's stockholders. Any such approval shall be by
the affirmative votes of the stockholders of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with
applicable state law and the Certificate of Incorporation and By-Laws of the
Company. Notwithstanding the foregoing, no amendment or modification of the Plan
shall in any manner affect any Option theretofore granted without the consent of
the Optionee or the permitted transferee of the Option.
ARTICLE IX
MISCELLANEOUS
10.1 Service on Board. Nothing in the Plan, in the grant of any
Option or in any Stock Option Agreement shall confer upon any Nonemployee
Director the right to continue service as a member of the Board.
10.2 Rights as Shareholder. An Optionee or the permitted transferee
of an Option shall have no rights as a shareholder with respect to any shares
subject to such Option prior to the purchase of such shares by exercise of such
Option as provided herein. Nothing contained herein or in the Stock Option
Agreement relating to any Option shall create an obligation on the part of the
Company to repurchase any shares of Common Stock purchased hereunder.
10.3 Plan Binding on Successors. The Plan shall be binding upon the
Company, its successors and assigns, and the Optionee, his executor,
administrator and permitted transferees.
10.4 Construction and Interpretation. Whenever used herein, nouns in
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.
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10.5 Severability. If any provision of the Plan or any Stock Option
Agreement shall be determined to be illegal or unenforceable by any court of law
in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
10.6 Governing Law. The validity and construction of this Plan and
of the Stock Option Agreements shall be governed by the laws of the State of
Delaware.
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EXHIBIT 10.44
Manufacturers and Traders Trust Company
M&T Place, 255 East Avenue
P.O. Box 22900, Rochester, NY 14692
February 19, 1999
Mr. Emilio DiCataldo
Senior Vice President & CFO
CVC Products, Inc.
525 Lee Road
Rochester, New York 14606
Re: Loan Agreement Dated March 31, 1998
Dear Emilio:
Reference is made to the Loan Agreement (the "Agreement") dated March 31, 1998,
amended as per Letter Agreement dated September 30, 1998, between CVC Products,
Inc. (the "Borrower") and M&T Bank (the "Bank"). We hereby further amend the
agreement as follows:
Insert #1 - b (viii) "Borrowing Base", shall also include a sub-limit for
demonstration inventory/equipment at an advance rate of 25% to a maximum of
$1,000,000.00 and to also include up to $500,000.00 in a second collateral
mortgage against the value of the company's real estate at 525 Lee Road,
Rochester, New York. The $500,000.00 collateral mortgage availability is subject
to completion of an increase in the Bank's mortgage lien by $500,000.00.
b (ix) - Borrower will submit Borrowing Base Certificate within 30 days after
the end of each calendar month and as further detailed in this paragraph of the
agreement.
Insert #6, b - Tangible Net Worth covenant as amended in September 30, 1998,
letter shall strike the final phrase "plus the increase in tangible net worth as
a result of any private equity placement or public offering".
Paragraph d - Cash flow ratio as of January 31, 1999, 1.30:1.
Paragraph g - Capital expenditure limitation for fiscal year ending September
30, 1999, or any fiscal year thereafter shall be $6,000,000.00 and shall be
calculated net of any cash proceeds from the sale of any demonstration tools
which are capitalized in Borrower's fixed assets.
<PAGE>
Mr. Emilio DiCataldo
Senior Vice President & CEO
CVC Products, Inc.
February 19, 1999
Page 2
We will have Woods, Oviatt prepare amended loan documentation and the new
collateral mortgage once you have completed your due diligence and analysis with
respect to the pending Commonwealth Scientific merger as it may relate to any
loan covenants in the agreement. The Borrower will pay all fees and expenses
incurred in loan documentation, including closing costs, attorneys' fees,
environmental audit, etc. associated with this transaction. Borrower
acknowledges that not every ancillary provision imposing duties, burdens, or
limitations on Borrower and to be contained in the final documentation customary
for these types of transactions can be set forth in this letter.
Except as amended above, all other covenants, financial covenants, terms and
conditions of this agreement remain in effect. This amendment shall be
conditioned upon the acceptance by the Borrower and the Guarantor as indicated
below.
Sincerely,
MANUFACTURERS AND TRADERS TRUST COMPANY
/s/ William E. Holston
William E. Holston
Vice President
WEH/ac
Accepted as of March 8, 1999
CVC PRODUCTS, INC.
/s/ Emilio DiCataldo
- -----------------------------
Borrower
CVC PRODUCTS, INC.
/s/ Emilio DiCataldo
- -----------------------------
Guarantor
<PAGE>
RECEIVED
NOV [ILLEGIBLE] 1998
Manufacturers and Traders Trust Company
M&T Place, 255 East Avenue
P.O. Box 22900, Rochester, NY 14692
September 30, 1998
Mr. Emilio DiCataldo
Senior Vice President/CFO
CVC Products, Inc.
525 Lee Road
Rochester. New York 14606
Dear Emilio:
Reference is made to the Term Loan Agreement (the "Agreement") dated April 14,
1998, between CVC Products, Inc. (the "Borrower") and Manufacturers and Traders
Trust Company ("Bank"). We hereby amend the following financial covenants
included in insert No.6 to the levels indicated below:
b. Tangible Net Worth:
Borrower shall not at any time have a tangible net worth of less than
$11,900,000.00 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. plus the
increase in tangible net worth as a result of any private equity placement
or public offering.
c. Total Liabilities to Tangible Net Worth:
9/30/98 3.0:1
10/31/98 3.0:1
11/30/98 3.0:1
12/31/98 2.5:1
1/31/99 2.5:1
2/28/99 2.5:1
3/31/99 2.5:1
4/30/99 2.5:1
5/31/99 2.5:1
6/30/99 2.5:1
7/31/99 2.5:1
8/31/99 2.5:1
9/30/99 2.5:1 and thereafter
<PAGE>
Mr. Emilio DiCataldo
Senior Vice President/CEO
CVC Products, Inc.
September 30, 1998
Page 2
d. Cash Flow Ratio:
9/30/98 1.45:1
10/31/98 1.45:1
11/30/98 1.45:1
12/31/98 1.1:1
1/31/99 1.45:1
2/28/99 1.45:1
3/31/99 1.75:1
4/30/99 1.75:1
5/31/99 2.0:1
6/30/99 2.0:1
7/31/99 2.25:1
8/31/99 2.25:1
9/30/99 2.5:1 and thereafter
e. Backlog:
9/98 $ 8,000,000.00
10/98 $ 8,000,000.00
11/98 $10,000,000.00
12/98 $13,000,000.00
1/99 $13,000,000.00
2/99 $13,000,000.00
3/99 $15,000,000.00
4/99 $15,000,000.00
5/99 $15,000,000.00
6/99 $18,000,000.00
7/99 $18,000,000.00
8/99 $18,000,000.00
9/99 $18,000,000.00 and thereafter
<PAGE>
Mr. Emilio DiCataldo
Senior Vice President/CEO
CVC Products, Inc.
September 30, 1998
Page 3
f. Maximum Quarterly Negative Income:
9/98 $700,000.00
12/98 $100,000.00
3.99 $100,000.00
6/99 $100,000.00
12/99 $100,000.00 and thereafter
g. Capital Expenditures:
For fiscal year ending September 30, 1998, Borrower shall not make capital
expenditures which exceed $6,700,000.00 and shall not make capital
expenditures which exceed $4,500,000.00 for fiscal year ending September
30, 1999. or any fiscal year thereafter.
We also hereby amend paragraph (ix) on page R-6 as follows:
Borrower also will submit to Bank within fifteen (15) days after the end of each
calendar month a Borrowing Base Certificate reporting on the Borrowing Base as
of the end of the previous month, together with all supporting documentation
requested by Bank and a monthly backlog report. Each Borrowing Base Certificate
shall be in form satisfactory to the Bank and certified to Bank by Borrower's
Chief Financial Officer. Borrower will also, within thirty (30) days of the end
of each calendar month, provide the Bank with a certificate executed by its
Chief Financial Officer, stating that he has read this Agreement, knows its
contents, and that to his knowledge, Borrower is in compliance with all
financial covenants contained in this Agreement, and no Event of Default has
occurred under the Agreement, and no conditions exist, which with notice, lapse
of time or both, would constitute an Event of Default under this Agreement. The
certificate shall also show the computations required to establish Borrower's
compliance with each financial covenant during the period covered by the
certificate. Borrower shall also provide Bank with such additional financial and
other information as Bank shall reasonably, from time to time, request.
<PAGE>
Mr. Emilio DiCataldo
Senior Vice President/CEO
CVC Products, Inc.
September 30, 1998
Page 4
Except as amended above, all other covenants, financial covenants, terms and
conditions of this agreement remain in effect. Consent of this amendment shall
be conditioned upon the acceptance by the Borrower and Guarantor as indicated
below:
Sincerely,
MANUFACTURERS AND TRADERS TRUST COMPANY
/s/ William E. Holston
William E. Holston
Vice President
WEH/ac
Accepted as of Sept 30, 1998
CVC PRODUCTS, INC.
/s/ Emilio DiCataldo
- -----------------------------
CVC HOLDINGS, INC.
/s/ Emilio DiCataldo
- -----------------------------
<PAGE>
MANUFACTURERS AND TRADERS TRUST COMPANY
to
CVC PRODUCTS, INC.
================================================================================
CREDIT FACILITIES
================================================================================
Closing Date: April 14, 1998
WOODS, OVIATT, GILMAN, STURMAN
& CLARKE LLP
Attorneys for Manufacturers and
Traders Trust Company
Gary F. Amendola, Esq.
44 Exchange Street
Rochester, New York 14614
Telephone: (716) 454-5370
<PAGE>
Table of Contents
Manufacturers and Traders Trust Company ("Bank")
CVC Products, Inc. ("Products")
CVC Holdings, Inc. ("Holdings")
CVC, Inc. ("CVC")
Credit Facilities
Closing Date: April 14, 1998
- --------------------------------------------------------------------------------
1. Closing letter.
2. Loan Agreement, with Rider and Exhibits "A" through "H" attached,
executed by Bank and Products ("Agreement")
3. $8,000,000.00 Term Note, with Rider attached, executed by Products.
4. $10,000,000.00 Grid Note executed by Products.
5. Amended and Restated Continuing Guaranty of the obligations of
Products executed by CVC formerly known as Holdings.
6. Amended and Restated Continuing Guaranty of the obligations of CVC,
formerly known as Holdings, executed by Products.
7. Amended and Restated General Security Agreement, executed by
Products, with Addendum and copy of the Perfection Certificate
attached.
8. Amended and Restated General Security Agreement executed by CVC with
Addendum and copy of the Perfection Certificate attached.
9. Perfection Certificate, executed by Products, with Schedules "1"
through "4" attached.
10. Perfection Certificate, executed by CVC, with Schedules "1" through
"4" attached.
<PAGE>
11. Patent Collateral Assignment and Security Agreement, executed by
Products, CVC and Bank, with a copy of the Recordation Form Cover
Sheet, executed by Gary F. Amendola.
12. Trademark Collateral Assignment and Security Agreement, executed by
Products, CVC and Bank, with a copy of the Recordation Form Cover
Sheet, executed by Emilio O. DiCataldo.
13. Landlord Waivers for 525 Lee Road, Rochester, New York; 4530 West
77th Street, Edina, Minnesota; 2914 Montopolis Drive, Austin, Texas;
3100 Laurelview Court, Fremont, California and 329 Oaks Trail,
Garland, Texas.
14. Preliminary Borrowing Base Certificate, executed by Products.
15. Officers Certificate, with Exhibits "A" through "C" attached,
executed by CVC.
16. Officers Certificate, with Exhibits "A" through "C", attached
executed by Products.
17. Opinion Letter of Nixon, Hargrave, Devans and Doyle LLP, with
Borrower's Certificate executed by Products attached.
18. Good Standing Certificate for Products from the Delaware Secretary
of State dated March 25, 1998, with Certificate of Authority from
the New York Secretary of State dated March 25, 1998 attached.
19. Good Standing Certificate from the Delaware Secretary of State for
CVC dated March 27, 1998 with New York State Certificates of
Authority dated March 25, 1998 and April 2, 1998.
20. Application of Proceeds executed by Products.
21. Certificate of Liability Insurance and Evidence of Property
Insurance forms prepared on Acord Forms 25-S and 27S respectively.
22. Woods, Oviatt's bill for services and estimated disbursements
totaling $13,042.50.
<PAGE>
[Letterhead of Woods, Oviatt, Glilman, Sturman & Clarke LLP]
Writer's Direct Dial Number:
(716) 987-2832
April 24, 1998
Via Courier
CVC Products, Inc.
525 Lee Road
Rochester, New York 14606
Attn: Mr. Emilio O. DiCataldo, Senior Vice President
and Chief Executive Officer
Re: CVC Products, Inc. ("Products") and CVC, Inc. ("CVC")
Dear Emilio:
On April 14, 1998 ("Closing Date"), I assisted my client, Manufacturers
and Traders Trust Company ("Bank") in closing various credit facilities provided
to Products. In that connection, I enclose a binder which, unless otherwise
noted, contains copies of the loan documents executed on the Closing Date. Also
enclosed is one set of unbound copies as you requested.
In the binder you will find copies of the following:
1. This letter.
2. Loan Agreement, with Rider and Exhibits "A" through "H" attached,
executed by Bank and Products ("Agreement").
3. $8,000,000.00 Term Note, with Rider attached, executed by Products.
4. $10,000,000.00 Grid Note executed by Products to evidence loans made
under the Line of Credit provided for in Insert I(b) of the Addendum
to the Agreement.
5. Amended and Restated Continuing Guaranty of the obligations of
Products executed by CVC formerly known as CVC Holdings, Inc.
("Holdings").
6. Amended and Restated Continuing Guaranty of the obligations of CVC,
<PAGE>
CVC Products, Inc.
Attn: Emilio DiCataldo, Sr. VP and CEO
April 24, 1998
Page 2
formerly known as Holdings, executed by Products.
7. Amended and Restated General Security Agreement, executed by
Products, with Addendum and copy of the Perfection Certificate
attached.
8. Amended and Restated General Security Agreement executed by CVC with
Addendum and copy of the Perfection Certificate attached.
9. Perfection Certificate, executed by Products, with Schedules "1"
through "4" attached.
10. Perfection Certificate, executed by CVC, with Schedules "1" through
"4" attached.
11. Patent Collateral Assignment and Security Agreement, executed by
Products, CVC and Bank, with a copy of the Recordation Form Cover
Sheet, executed by Gary F. Amendola.
12. Trademark Collateral Assignment and Security Agreement, executed by
Products, CVC and Bank, with a copy of the Recordation Form Cover
Sheet, executed by you.
13. Landlord Waivers for 525 Lee Road, Rochester, New York; 4530 West
77th Street, Edina, Minnesota; 2914 Montopolis Drive, Austin, Texas;
3100 Laurelview Court, Fremont, California and 329 Oaks Trail,
Garland, Texas.
14. Preliminary Borrowing Base Certificate, executed by Products.
15. Officers Certificate, with Exhibits "A" through "C" attached,
executed by CVC.
16. Officers Certificate, with Exhibits "A" through "C", attached
executed by Products.
17. Opinion Letter of Nixon, Hargrave, Devans and Doyle LLP, with
Borrower's Certificate executed by Products attached.
18. Good Standing Certificate for Products from the Delaware Secretary
of State dated March 25, 1998, with Certificate of Authority from
the New York Secretary of State dated March 25, 1998 attached.
<PAGE>
CVC Products, Inc.
Attn: Emilio DiCataldo, Sr. VP and CEO
April 24, 1998
Page 3
19. Good Standing Certificate from the Delaware Secretary of State for
CVC dated March 27, 1998 with New York State Certificates of
Authority dated March 25, 1998 and April 2, 1998.
20. Application of Proceeds executed by Products.
21. Certificate of Liability Insurance and Evidence of Property
Insurance forms prepared on Acord Forms 25-S and 27S respectively
("Certificates") evidencing personal property coverage for CVC and
Products.
22. Woods, Oviatt's bill for services and estimated disbursements
totaling $13,042.50.
By copy of this letter, we are forwarding a binder to Kevin Recchia, Esq.
at Nixon, Hargrave, Devans & Doyle, LLP.
If you have any questions with respect to any of the above, please do not
hesitate to call me. I enjoyed meeting you and closing this transaction with you
and Kevin.
Very truly yours,
WOODS, OVIATT, GILMAN, STURMAN & CLARKE LLP
/s/ Gary F. Amendola
Gary F. Amendola
GFA:jkb
Enclosures
cc Manufacturers and Traders Trust Company
Attn: Mr. William Holston, Vice President
Nixon, Hargrave, Devans & Doyle, LLP
Attn: Kevin Recchia, Esq. (w/enc.)
<PAGE>
**The inserts herein are contained in a Rider annexed hereto which is
incorporated herein and an integral part hereof.
[LOGO] M&T Bank
LOAN AGREEMENT
(Corporation or Partnership)
As of
Buffalo, New York March 31, 1998 $____________
BORROWER: CVC PRODUCTS, INC.
a |X| Delaware corporation |_| general partnership |_| limited partnership |_|
___________ having its chief executive office at 525 Lee Road, Rochester, New
York 14606 Attention: Emilio O. DiCataldo, Sr. 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 LOANS.
See Insert No. 1
e. 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 arid, 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
[ILLEGIBLE] 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 30.
f. Accounting; Tax Returns and Payment of Claims. The Borrower does
and 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 the Existing
Bank Documents (defined below) 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.
j. Financial and Other Information; Certificates of No Default.
During the term of this 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 filings with the Securities
and Exchange Commission and the Pension Benefit Guaranty Corporation and shall
provide, in form satisfactory to the Bank: (i) within 30 days after the end of
each of its first 11 fiscal months consolidated statements of income and cash
flows for the month for the corresponding month 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 month end; (ii) within 120 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
by Price Waterhouse or another independent certified public accountant
acceptable to the Bank in its reasonable discretion all such statements shall be
certified by Borrower's chief financial officer 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;
k. Inspections. Promptly upon the Bank's request, Borrower will
permit the Bank's officers, attorneys or other agents at reasonable times 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
CLB-106 (11/90)
<PAGE>
8. NOTICES. Written notices to the Borrower by the Bank may be
delivered in person or in writing and mail shall be deemed delivered when
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 stated 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. See Insert 10.
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 supersedes 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.
13. See Insert No. 11
ACCEPTED: CVC PRODUCTS, INC.
MANUFACTURES AND TRADERS TRUST COMPANY By: /s/ Emilio O. DiCataldo
----------------------------------
Name: Emilio O. DiCataldo
By: /s/ William Holston Title: Sr. Vice President & Chief
------------------------ Executive Officer
Name: William Holston
Title Vice President Date: April 14, 1998
Date: April 14, 1998 TIN # 16-1017191
Witness: /s/ [ILLEGIBLE]
-----------------------------
(Signature)
/s/ [ILLEGIBLE]
-----------------------------
(Typed Name)
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998 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 acknowledged to me that __he
executed the above instrument for and on behalf of said
partnership.
|X| Corporation to me known, who being duly sworn, did depose and say
that __he resides at __________________________________
that __he is the Sr. VP & 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/ Gary F. Amendola
---------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
Authorization Confirmed: /s/ William E. Holston
<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 million 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 (March 31, 1 998).
4. Debt to Real Lease, Inc. for equipment purchased or leased from
NORESCO in the principal amount of $25,000.00.
5. Additional indebtedness, provided that no such single additional
debt exceeds $100,000.00 and the aggregate amount of such additional
debt does not exceed $250,000.00.
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.
<PAGE>
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.
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, Inc.
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
current 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 LOAN AGREEMENT
DATED MARCH 31, 1998 BETWEEN
CVC PRODUCTS, INC.
AND
MANUFACTURERS AND TRADERS TRUST COMPANY
This RIDER is made to a certain Loan Agreement, dated as of March 31,
1998, between CVC PRODUCTS, INC. ("Borrower") and MANUFACTURERS AND TRADERS
TRUST COMPANY ("Bank"). This Rider is an integral part of the Loan Agreement,
which together with this Rider, and as subsequently extended, amended or
replaced, is collectively referred to as the "Agreement."
Page 1 Inserts
Insert No. 1
The Bank shall provide the following credit facilities to the Borrower:
a. $8,000,000.00 Term Loan
(i) Subject to the terms and conditions herein, as of March 31, 1998
("Effective Date"), Bank agrees to lend to the Company, and the Company agrees
to borrow from Bank a term loan in the principal amount of Eight Million Dollars
($8,000,000.00) (the "Term Loan").
(ii) The Term Loan will be evidenced by a single Term Note ("1998
Term Note") substantially in the form of Exhibit A, annexed here to, which
Borrower shall execute and unconditionally deliver to the Bank on the Effective
Date (defined below) and which shall have the blanks completed to conform
herewith and which will:
(A) Be dated the Effective Date.
(B) Be payable to the order of Bank in the principal amount
of Eight Million Dollars ($8,000,000.00).
(C) Except as otherwise provided therein, accrue interest
payable at all times prior to an Event of Default
(defined below), computed on the basis of a 360 day year
for the actual number of days elapsed, at the fixed rate
of 8.39% per annum.
(D) 84 consecutive equal monthly payments of $126,249.81
principal and interest each, which is an amount required
to fully amortize the principal amount of the 1998 Term
Note with
<PAGE>
interest over the amortization period of the Note, which
is seven years. The then unpaid principal balance of the
1998 Term Note, if any, plus any unpaid accrued
interest, shall be all due and payable on April 1, 2005
("Maturity").
(E) The Borrower shall have the option of paying the
principal sum outstanding under the 1998 Term Note to
Bank 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 Bank at least three (3) business
days prior to making such payment; provided, however,
that, together with such prepayment, Borrower shall pay
to the Bank the prepayment premium provided for in the
1998 Term Note together with all accrued and unpaid
interest and expenses owing pursuant to the 1998 Term
Note together with the exit referred to in clause (iii)
below.
(iii) If Borrower pays any principal outstanding under the 1998
Term Note before the scheduled payment thereof for any reason (including
acceleration thereof as the result of an event of default), then an exit fee
shall be due from the Borrower to the Bank in addition to any prepayment premium
which may be due under the 1998 Term Note. In such event, the exit fee shall
equal (a) the amount by which the prepaid principal is greater than Borrower's
Excess Cash Flow (defined below), multiplied by two percent (2%). Borrower
acknowledges that such exit fee shall be liquidated damages and not a penalty,
and shall be due and paid in addition to the then outstanding principal, accrued
interest and other charges owing under this Agreement and any of the other
related documents which Borrower is obligated to Bank (including the prepayment
premium due under the 1998 Term Note).
As used herein, "Excess Cash Flow" means for the twelve (12) months
ended as of the calendar month immediately preceding the date on which a
principal prepayment is made ("Measuring Period"), Borrower's Net Income
(defined below) for such period plus (A) the sum of depreciation and
amortization to the extent deducted in determining such Net Income minus (B)
Capital Expenditures (defined below), made during such period unless the Capital
Expenditures are financed by Bank expressly for the purpose of financing the
Capital Expenditures, minus (C) any payments on account of borrowed money by
Parent (defined below) and/or Borrower (other than payment with respect to
indebtedness outstanding under the 1998 Grid Note defined below) made during
such period minus (D) principal payments on capitalized lease obligations made
during such period minus (E) distributions, dividends and amounts paid or
accrued for the repurchase of stock by the Borrower during the Measuring Period,
all as determined in accordance with GAAP (defined below) used in the
preparation of Borrower's financial statements on a consistent basis.
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b. $10,000,000.00 Line of Credit.
(i) Subject to the terms and conditions of this Agreement, Bank
shall establish on the Effective Date for the benefit of Borrower a
discretionary line of credit ("Line of Credit") in the maximum principal amount
equal to the lesser of Ten Million Dollars ($10,000,000.00) or the then existing
Borrowing Base (the "Maximum Credit"). Borrowing Base is defined below. Loans
under the Line of Credit are discretionary with Bank and conditioned upon prior
approval by Bank.
(ii) The fact that a particular loan request pursuant to the Line of
Credit is disapproved by Bank shall have no effect on the Line of Credit, nor on
Borrower's rights to make future requests for loans under the Line of Credit,
nor on Borrower's obligation to pay the 1998 Grid Note (defined below) and any
other indebtedness of Borrower to Bank in full. Provided that Bank gives
approval to the requested borrowing, Borrower may borrow, repay and reborrow
under the Line of Credit, so long as the unpaid principal balance of the Grid
Note does not exceed the Maximum Credit.
(iii) Requests for a loan under the Line of Credit may be oral (in
person or by telephone) or in writing from an authorized person named in the
1998 Grid Note ("Authorized Person") and shall specify a date which shall be a
business day in New York State and the amount to be borrowed. Borrower will be
bound by such instructions. Borrower hereby indemnifies and holds Bank harmless
from any liability (including Bank's reasonable attorneys' fees) which may arise
as a result of Bank's reliance on telephone requests for borrowing and/or
prepayment instructions from any person identifying himself as an Authorized
Person. Each borrowing shall be in the minimum principal amount of $25,000.00 or
a $5,000.00 integral multiple thereof, except for a borrowing in a lesser amount
equal to the unused portion of the Maximum Credit.
(iv) Each Approved Loan shall be processed by debiting the Line of
Credit and crediting Borrower's checking account with Bank for the amount of the
Approved Loan or by forwarding or applying the Approved Loan proceeds as
otherwise agreed by Bank and Borrower. The Approved Loan shall be deemed made
immediately upon the crediting of the Approved Loan proceeds to Borrower's
checking account with Bank or forwarding or applying the Approved Loan proceeds
as otherwise agreed by Bank and Borrower. Each Approved Loan, together with the
unpaid principal balance of all previous Approved Loans, shall be automatically
refinanced and consolidated into one loan, referred to below as the
"Consolidated Loan."
(v) The Consolidated Loan is payable on demand and shall be
evidenced by an Amended and Restated Grid Note (with blanks appropriately
completed) (the "1998 Grid Note"), which Borrower shall execute and deliver to
Bank on the Effective Date. The 1998 Grid Note shall be in the form of Exhibit
B, with blanks appropriately completed.
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(vi) All outstanding amounts under the Line of Credit, (except as
specifically provided in the Grid Note), shall bear interest until paid in full
at the floating rate of one-quarter percent (.25%) above the Bank's prime rate.
Interest shall be calculated based on actual days elapsed divided by a year of
three hundred sixty (360) days. Changes in the rate of interest applicable to
the Grid Note shall become effective automatically and without notice at the
time of changes in the Bank's prime rate.
(vii) Payments of all accrued interest under the 1998 Grid Note
shall be made on the first day of each month commencing May 1, 1998 unless
payment of the 1998 Grid Note is sooner demanded by Bank, in which case all
accrued interest shall be immediately due and payable in full. Principal
outstanding pursuant to the 1998 Grid Note shall be due and payable in full at
any time upon demand by Bank. In the event Borrower becomes aware, or receives
notice (oral or written) from Bank, that principal amounts outstanding under the
Line of Credit exceed the Maximum Credit at any time, Borrower promptly shall
make a principal payment to Bank sufficient to reduce outstanding principal
amounts to the Maximum Credit without the necessity of a demand by Bank.
(viii) As used in this Agreement, the following definitions shall
apply:
"Accounts" all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by Borrower or
in which Borrower now has or hereafter acquires any interest.
"Borrowing Base" means, on any date, (a) the sum of (i) eighty
percent (80%) of Borrower's Eligible Accounts and (ii) forty percent (40%) of
Borrower's Eligible Inventory (up to a maximum amount of $8,500,000.00), less
(b) the sum of (i) the unpaid principal amount outstanding under the 1998 Term
Note and (ii) the outstanding stated amount of all outstanding letters of credit
which were issued by the Bank (after approval by the Bank for the account of the
Borrower or CVC, Inc. ("Parent") and that are outstanding and (iii) any deposits
or advances from customers to the extent that such customers are account debtors
with respect to any Eligible Accounts. For purposes of this calculation,
Eligible Receivables and Eligible Inventory shall be as set forth in the most
recent Borrowing Base Certificate delivered to Bank.
"Effective Date" means March 31, 1998.
"Eligible Accounts" an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services, provided
that it meets the following requirements:
(a) The Account is an Account that has been in existence for 90 days or
less and is payable by its terms in no more than 30 days from the
invoice date except that the portion of the Account related to
installation of tools shall be in existence no more than 180 days
from the date of shipment;
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(b) The Account arose (i) from the performance of services by Borrower
that have been fully and satisfactorily performed or (ii) from the
absolute sale of goods by Borrower in which Borrower had the sole
and complete ownership and that have been shipped or delivered to
and finally accepted without dispute by the account debtor without
return, rejection, loss or damage and as to which Borrower or the
Bank has possession of a shipping or delivery receipt;
(c) The Account is a legal, valid and binding obligation of the Account
Debtor and is not subject to any offset, counterclaim, defense,
credit, allowance or adjustment except a discount for prompt
payment, or to any dispute, objection or complaint by the Account
Debtor concerning his, her or its liability on the Account;
(d) The Account arose in the ordinary course of Borrower's business and
no notice of bankruptcy, insolvency, failure, suspension or
termination of business or financial embarrassment of the Account
Debtor has been received by Borrower or the Bank;
(e) The account debtor is not an affiliate (defined below) of Borrower
(other than Seagate Technology) or a supplier (or an affiliate of a
supplier) of goods or services to Borrower;
(f) The Account is not an employee accounts receivable, bill and hold
accounts receivable (i.e., accounts relating to goods not yet
shipped but invoiced), uncollectible accounts receivable, accounts
receivable arising from progressive billings (i.e., accounts
receivable from billings for work performed on a partially completed
contract), accounts receivable arising from guaranteed sales with
buy back provisions (i.e., sales in which the Borrower is obligated
to repurchase inventory or merchandise sold to customers), accounts
receivable from the United States of America or agency or department
thereof (unless assignment and notice thereof is effected in
accordance with the Assignment of Claims Act)
(g) The full amount reflected on Borrower's records and on any invoice
delivered to the Bank relating to the Account is owing to Borrower
and no partial prepayments thereon have been made.
(h) Each representation and warranty with respect to the Account made by
Borrower to the Bank in any security agreement executed by Borrower
is true and complete;
(i) The Account is subject to the perfected first priority security
interest of the Bank and to no other security interest, lien,
assignment or encumbrance of any kind; and
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(j) The Bank has not notified Borrower that the Account or the Account
Debtor, in the Bank's reasonable judgment, is unsatisfactory.
"Eligible Inventory' means all first quality inventories of finished
products, work-in-process inventory and raw materials owned by the Borrower,
valued at the lower of cost (on a FIFO basis) or market, minus all perishable or
non-saleable inventories and such reserves as Borrower has historically
established, including, but not limited to, (a) shrinkage reserves, (b) markdown
reserves, and (c) reserves which restore standard costs to actual costs. Neither
so-called mold inventories or inventories on consignment, (except that with
respect to consignments, Eligible Inventory shall include inventory shipped to
customers at sites located in the United States for evaluation by the customer,
provided that no more than 75 days elapse from the date of shipment and further
provided that the aggregate value of such Eligible Inventory on consignment does
not exceed $2,500,000.00), are Eligible Inventories and all such inventories
shall be excluded from the calculation thereof. Eligible Inventories must arise
from the Borrower's ordinary course of business as it exists on the date of this
Agreement, must at all times be subject to the perfected, first priority
security interest of Bank and no other lien, must be located on Borrower's
premises within the United States (which are covered by a landlord/mortgagee
waiver acceptable to the Bank), must conform in all respects to warranties
contained in this Agreement and all security or other related agreements and
documents, and must not be subject to a licensing agreement with third parties
unless Bank shall have received consents or acknowledgements or other assurances
satisfactory to the Bank from such third parties as may be deemed necessary or
desirable to facilitate Bank's realization upon such inventory. Any inventory
subject to an Eligible Account shall also not constitute Eligible Inventory. The
calculation of Eligible Inventory must be satisfactory to the Bank in its
reasonable discretion.
(ix) Borrower also will submit to Bank within thirty (30) days after
the end of each calendar month a Borrowing Base Certificate reporting on the
Borrowing Base as of the end of the previous month together with all supporting
documentation requested by Bank and a monthly backlog report. Each Borrowing
Base Certificate shall be in form satisfactory to the Bank and certified to Bank
by Borrower's Chief Financial Officer. Borrower will also, within forty-five
(45) days of the end of each of its first three fiscal quarters, provide Bank
with a certificate executed by its Chief Financial Officer, stating that he has
read this Agreement, knows its contents and that to his knowledge, Borrower is
in compliance with all financial covenants contained in this Agreement, and no
Event of Default has occurred under the Agreement, and no conditions exists,
which, with notice, lapse of time or both, would constitute an Event of Default
under this Agreement. The certificate shall also show the computations required
to establish Borrower's compliance with each financial covenant during the
period covered by the certificate. Borrower shall also provide Bank with such
additional financial and other information as Bank shall reasonably, from time
to time, request.
(x) Bank may perform full field audits of Borrower's accounts
receivable and inventories at Borrower's expense twice a year. Bank reserves the
right, in its sole
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discretion and at its own expense, to perform field audits of Borrower's
accounts receivable and inventories more than twice per year.
(xi) The Line of Credit will terminate on the demand by Bank of
amounts outstanding under the 1998 Grid Note. Bank may also terminate Borrower's
right to make requests for loans under the Line of Credit at any time by giving
Borrower written notice of termination without making a demand for payment of
the 1998 Grid Note. The giving of such notice by Bank shall not effect Bank's
rights under this Agreement or under the 1998 Grid Note or under any other
agreement, instrument or document made by Borrower with or in favor of Bank, nor
on Borrower's obligation to pay the 1998 Grid Note in full according to its
terms.
c. $2,000,000.00 Loan Limit.
(i) Subject to the terms and conditions of this Agreement, the Bank
hereby establishes for the benefit of the Borrower a discretionary offering
basis loan limit ("Loan Limit") in the maximum principal amount outstanding at
any one time of Two Million Dollars ($2,000,000.00) less the aggregate principal
amount (or in the case of an operating lease payment amount) due under all
capital and operating leases existing between Borrower and M&T Financial
Corporation. Under the Loan Limit, an authorized officer of the Bank, in his
sole discretion, may make advances to Borrower under the Loan Limit on the terms
specified below. Borrower acknowledges that such officer may refuse to make any
advances under the Loan Limit to Borrower for any reason, or for no reason
whatsoever.
(ii) Provided that all of the conditions for advances contained
herein are satisfied, including approval of a requested advance, advances under
the Loan Limit will be made from time to time at the request of the Borrower by
credits to the Borrower's accounts at the Bank.
(iii) Unless extended by the Bank in writing in its sole discretion,
the Loan Limit will be available until terminated by Bank upon written notice to
the Borrower. Borrower acknowledges that Bank may terminate the Loan Limit at
any time in its sole discretion.
(iv) With each advance under the Loan Limit, the Borrower shall
execute a term note evidencing such indebtedness to the Bank (each such note, a
"Loan Limit Note"). Each Loan Limit Note shall be in substantially the form of
Exhibit C attached hereto. Each such note, shall be dated the date the Borrower
executes the note, be payable to the order of Bank, be in the principal amount
of the advance and provide for interest accruing, prior to an Event of Default,
at the variable rate equal to the Bank's prime rate plus one-half percent
(1/2%). Each Loan Limit Note shall further provide that, unless sooner
accelerated, the original principal amount evidenced thereby shall be repayable
in such number of months as may be selected by Bank which shall not be less than
thirty-six (36) months nor more than sixty (60) months. Accrued interest under
each Loan Limit Note shall be due on
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the first day of each calendar month, with the first interest payment due on the
first day of the first month following the date on which the note is executed
and continuing thereafter until the note is paid in full. All remaining
principal and accrued interest shall be due and payable in full on the Loan
Limit Note's maturity date.
d. Up-Front Fee. On the Effective Date, Borrower shall pay Bank a facility
fee of $50,000 ("Up-Front Fee"), which shall be fully earned as of the Effective
Date and upon payment thereof shall be non-refundable.
Insert No. 2
(i) The proceeds of the Term Loan shall be used only by Borrower only for
the purposes indicated in an Application of Proceeds executed by Borrower on the
date this Agreement was executed Borrower ("Closing Date").
(ii) The proceeds of the Approved Loan made by Bank to Borrower on the
Closing Date ($_______) shall be used by Borrower only for the purposes set
forth in the Application of Proceeds executed by Borrower on the Closing Date.
The proceeds of all other Approved Loans made under the Line of Credit shall be
used only for Borrower's working capital purposes.
(iii) The proceeds of all advances under the Loan Limit shall only be used
for purchases of equipment and Capital Assets. Borrower shall provide Bank with
a copy of the purchase orders and paid invoices for the equipment purchased. In
no event shall any advance under the Loan Limit (or any other borrowing by
Borrower) fund more than one hundred percent (100%) of the lesser of the cost or
the fair market value of the equipment for which an advance is requested
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:
"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
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of hazardous substances and the regulations, rules, ordinances, by-laws,
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, by-law, policy, guideline, procedure,
interpretation, decision, order or directive, whether existing as of the date
hereof, previously enforced or subsequently enacted.
Insert No. 4
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. 5
All of the following constitute additional representations and warranties
made by Borrower:
a. Financial Statements. All financial statements furnished by Borrower to
Bank (including, without limitation, the consolidated balance sheets as of
September 30, 1997 and December 31, 1997 of Parent and the related consolidated
statements of operations, shareholders' equity and cash flows for the twelve
(12) and three (3) months then ended, respectively, are complete and correct,
have been prepared in accordance with Generally Accepted Accounting Principles
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 the December 31, 1997 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 December 31, 1997, there has been no material
adverse change in the condition, financial or otherwise, of the Borrower.
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b. Registration Statement. Borrower has provided Bank with a true and
complete copy of Amendment No. 2 to Registration Statement (File No. 333-38057)
filed by Parent with the Securities and Exchange Commission on January 16, 1998
and such Registration Statement (including the prospectus contained therein)
does not, and in the future neither the Registration Statement nor any
supplement nor amendment thereto, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated or
incorporated by reference therein or necessary to make the statements therein
not misleading (and in the case of the prospectus, not misleading in light of
the circumstances under which they were made).
c. Subsidiaries and Affiliates. The Borrower is a wholly-owned subsidiary
of the Parent and neither Borrower nor Parent has any subsidiaries or
affiliates, except those listed in the attached "Schedule of Permitted
Subsidiaries and Affiliates." Parent's sole asset is the capital stock of
Borrower. Borrower is not a party to any material transaction with any affiliate
other than as described in the footnotes to the Borrower's September 30, 1997
financial statements and all such transactions are in the ordinary course of
business and upon fair and reasonable terms not materially less favorable than
Borrower could obtain or 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 Parent, Borrower or any subsidiary of Parent or Borrower.
"control," "controlled by" or "under common control" means, but is not
limited to, the beneficial ownership (as defined in Rule 13(d) promulgated by
the Securities Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended) of ten percent (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 ten percent (l0%) 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.
d. Capitalization. All of the outstanding shares and other equity
interests of Parent and Borrower are duly authorized, validly issued and fully
paid and were issued in compliance with all federal, state and foreign
securities laws. 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 any shares or other equity securities of the
Borrower or Parent.
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e. 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.
f. Existing Indebtedness. Except as disclosed in the attached "Schedule of
Permitted Indebtedness," neither Parent nor Borrower has any outstanding
indebtedness or contingent liabilities (including, without limitation,
"off-balance sheet" liabilities) other than those liabilities disclosed in the
Borrowers' balance sheet, dated as of December 31, 1997, and wages, salary,
trade payables and operating leases incurred in the ordinary course of business
since such date. Without limiting the foregoing, neither Parent nor Borrower is
an account party with respect to any letters of credit other than those issued
by Bank. 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 on
any long-term debt, including, without limitation, any debt owed to Nikko Tecno
Co., Inc. ("Nikko Debt") (other than debt to Bank) at any time for any reason
(whether before or after maturity thereof) or unscheduled payments of interest
on Nikko Debt.
g. 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 the Employee Retirement Security Act of 1974, as
amended ("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 multi-employer plan or multiemployer plan. No action,
event or transaction has occurred that could give rise to a lien, security
interest or encumbrance on the assets of Parent or Borrower as a result of the
application of relevant provisions of the Internal Revenue Code of 1986, as
amended ("IRC"), or ERISA, and the ERISA Plans are in material compliance with
all requirements of the IRC and ERISA and none of the ERISA Plans are
underfunded.
h. Margin Securities. No proceeds of any loans made pursuant to this
Agreement 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.
i. 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.
j. Existing Bank Documents. The following agreements, instruments, notes
and documents executed by the Borrower with or in favor of the Bank or M&T Real
Estate, Inc. ("M&T Real Estate"), as indicated are (except as expressly set
forth in this Agreement) in full
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force and effect, are valid and binding obligations of Borrower without offset
or defense of any kind and Borrower is not in breach or 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) Term Loan Agreement, dated September 30, 1996, between
Borrower and Bank;
(ii) $3,000,000 Term Note, dated September 30, 1996, executed by
Borrower in favor of Bank;
(iii) Existing Grid Notes;
(iv) Continuing Guaranty, dated September 30, 1996, executed by
Borrower in favor of Bank;
(v) Letter of Credit Reimbursement Agreement, dated March __,
1997, executed by Borrower in favor of Bank;
(vi) General Security Agreement, dated February 2, 1996, as amended
by Amendment No. 1, executed by Borrower in favor of Bank;
(vii) Continuing Guaranty, dated February 2, 1996, executed by
Parent in favor of Bank;
(viii) Letter of Credit Reimbursement Agreement, dated November 21,
1995, executed by Parent in favor of Bank;
(ix) General Security Agreement, dated February 2, 1996, executed
by Parent in favor of Bank;
(x) Landlord/Mortgagee Waiver, dated February 2, 1996, executed by
Parent in favor of Bank;
(xi) Mortgage Note dated September 29, 1997, made by Borrower
payable to the order of M&T Real Estate in the face amount of
$2,000,000 ("Note");
(xii) Mortgage dated as of September 29, 1997, made by County of
Monroe Industrial Development Agency ("Agency") and Borrower
to M&T Real Estate covering certain real property known as 525
Lee Road, City of Rochester, Monroe County, New York;
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(xiii) General Assignment of Rents dated as of September 29, 1997
made by Borrower to M&T Real Estate;
(xiv) Environmental Compliance and Indemnity Agreement dated
September 29, 1997 executed by Parent in favor of M&T Real
Estate; and
(xv) Continuing Guaranty dated September 29, 1997 executed by
Parent in favor of M&T Real Estate.
The agreements, notes, instruments and documents listed in (i) through
(xv) above are referred to as the "Existing Bank Documents." Without limiting
the foregoing, all representations and warranties made in the Existing Bank
Documents are deemed repeated and made as of the date hereof and are true and
correct in all respects.
k. Except as specified in a Recordation Form Cover Sheet on Form PTO 1595,
provided to Bank by Borrower on or about April 9, 1998, Borrower has no patents
issued by the U.S. Patents and Trademark Office ("PTO"), nor has Borrower filed
any other applications for patents with the PTO.
Insert No. 6
a. Current Ratio. Borrower shall not at any time have a Current Ratio of
less than 1.35 to 1.0.
b. Tangible Net Worth. Borrower shall not at any time have a Tangible Net
Worth of less than $12,000,000.00 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.
c. Total Liabilities to Tangible Net Worth. Borrower shall not at any time
have a ratio of Total Liabilities to Tangible Net Worth (i) from the date hereof
through and including September 29, 1998 of more than 3.1 to 1.00; (ii) from
September 30, 1998 through and including September 29, 1999 of more than 2.5 to
1.00; and (c) thereafter September 30, 1999 of more than 2.0 to 1.0; provided,
however, if at any time Parent closes on a public offering of its common or
other capital stock, it shall not have at any time as of and after such closing
Total Liabilities to Tangible Net Worth of more than 1.5 to 1.0.
d. Cash Flow Ratio. Borrower shall not have a Cash Flow Ratio of less than
2.5 to 1.0 as of the end of any fiscal quarter.
e. Backlog. Borrower shall not have confirmed orders from customers which
will result in aggregate net sales to Borrower during the succeeding twelve (12)
months following the measurement date (i) after the date hereof and through and
including September 30,
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1998 of less than $15,000,000.00 and (ii) as of and after October 1, 1998 of
less than $18,000,000.00
f. Maximum Negative Net Income. Borrower shall not for any fiscal quarter
after the date hereof have Net Income of less than negative $100,000.00.
g. Capital Expenditures. For the prior rolling twelve month period,
Borrower shall not make Capital Expenditures which exceed $6,500,000.00 during
such prior period.
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 GAAP 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 GAAP 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 GAAP 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 GAAP 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 twelve (12)
months immediately following the Measurement Period (excluding the Nikko Debt in
the unpaid amount thereof on the date hereof) and (ii) distributions, dividends
and amounts paid or accrued for the repurchase of stock by the Borrower during
the Measurement Period.
"GAAP" and "Generally Accepted Accounting Principles" shall mean those
principles, methods and practices set forth in the Opinion and Pronouncements of
the Accounting
R-14
<PAGE>
Principles Board and the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants 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 GAAP as in effect from time to time, applied on a basis
consistent with Borrower's consolidated financial statements as of and for the
twelve (12) months period ended September 30, 1997.
Insert No. 7
m. 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 for value any capital stock of the Borrower or the subsidiaries or any
warrants, rights or options 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-15
<PAGE>
Insert No. 8
which, either individually or together with all other debt of Borrower or
any Guarantor (including Parent) for which payment has been demanded or
accelerated, has an unpaid principal of $100,000.00 or more
Insert No. 9
As used in this Agreement, (i) any amount due under this Agreement
includes, without limitation, any principal, interest, fees or expenses due
under the 1998 Term Note, the 1998 Grid Note and/or the Loan Limit or any of the
Existing Bank Documents; (ii) "any agreement with the Bank" includes any
agreement, note or instrument with the Bank, M&T Real Estate or any Bank
affiliate (which includes, without limitation, this Agreement, the 1998 Term
Note, the 1998 Grid Note and the Existing Bank Documents); (iii) "accelerated"
or "acceleration" means indebtedness that becomes due at maturity, by notice
after the occurrence of an event of default or which becomes due as a result of
a demand.
Each of the following shall constitute an additional Event of Default
under this Agreement:
i. Borrower and/or Parent is in default (beyond any applicable cure
period) under or any Event of Default occurs under any note or other agreement
entered into at any time by Borrower and/or Parent in favor of M&T Real Estate,
Inc.
j. Borrower and/or Parent is in default (beyond any applicable cure
period) under or any Event of Default occurs under any note or other agreement
entered into at any time by Borrower and/or Parent in favor of M&T Financial
Corporation.
Notwithstanding paragraphs 4(d) and (e) above, it shall not be an Event of
Default if the Borrower has any lien involuntarily 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.
R-16
<PAGE>
Notwithstanding the foregoing, the Bank shall be entitled to demand and
receive payment in full at any time of all outstanding and unpaid principal
under the 1998 Grid Note and all accrued interest thereon as well as all fees
and expenses due hereunder and such right to demand payment shall not be
altered, modified or abridged in any way as a result of anything herein
(including any covenants or Events of Default) or anything in any related
documents, including the Existing Bank Documents.
Insert No. 10
9. TERM; SURVIVAL. The repayment schedule for the Loans are set forth in
the respective Note for each Loan. This Agreement shall continue in full force
and effect until the Termination Date. Borrower's obligation to pay Bank's
expenses shall survive the Termination Date. Each of Borrower's representations,
warranties, covenants and agreements shall survive until the Termination Date
and shall be presumed to have been relied upon by Bank.
When used in this Agreement, the indicated terms have the specified
meaning:
a. The term "Entity" means any person, partnership, corporation, limited
liability company, limited liability partnership, joint venture, other business
association of any nature or kind, or government, governmental agency or
governmental entity of any nature or kind.
b. The term "Guarantor" means any Entity (including Parent) which
guaranties to Bank payment of the Indebtedness or any part thereof.
c. The term "Indebtedness" means any and all monetary obligations,
whenever arising (whether now existing or hereafter arising), of Borrower to
Bank, direct or contingent, and whether represented by a Note, guaranty, other
agreement or otherwise.
d. The term "Loan Documents" means any and all Notes and other agreements
executed at any time by any Entity in connection with this Agreement. The
Existing Bank Documents shall also be deemed Loan Documents under this
Agreement.
e. The term "Note" means any promissory note, or other instrument,
executed by Borrower in favor of Bank at any time, whether under this Agreement
or otherwise, including but not limited to the 1998 Term Note, the 1998 Grid
Note, all Loan Limit Notes, and the $3,000,000.00 Term Note dated September 30,
1996, executed by Borrower in favor of Bank.
f. The term "Termination Date" means the date that the Indebtedness is
paid in full and Borrower no longer has any rights to borrow or to request to
borrow under any agreement entered into at any time by Borrower in favor of
Bank.
Insert No. 11
R-17
<PAGE>
13. Conditions Precedent. The obligation of Bank to make the Term Loan and
its right to approve advances under the Line of Credit and the Loan Limit are
subject to the fulfillment to each of the following conditions to Bank's
satisfaction:
a. The representations and warranties in this Agreement and all other
related documents shall be true and correct;
b. No event shall have occurred that constitutes an Event of Default;
c. Bank shall have received the following agreements, notes, instruments,
certificates and opinions, each of which shall be satisfactory to Bank in form
and substance:
(i) A complete Officers' Certificate from the Borrower and Parent in
the form provided by Bank executed by the Secretary of each such entity;
(ii) A complete Perfection Certificate from the Borrower and Parent
in the form provided by Bank executed by an officer of each such entity;
(iii) A copy of a certificate of the Secretary of State of the state
of incorporation of Borrower and Parent, respectively, dated within seven (7)
days of the Effective Date, listing the charter of Borrower and Parent and each
amendment thereto on file in his office and certifying that (A) such amendments
are the only amendments to the Borrower's or Parents' charter on file in his
office, (B) the Borrower and Parent have paid all franchise taxes to the date of
such certificate and (C) Borrower and Parent are duly incorporated and in good
standing under the laws of the state of its incorporation;
(iv) A copy of a certificate of the Secretary of State of New York,
dated within seven (7) days of the Effective Date, certifying to the fact that
Parent is in good standing as a foreign corporation under the laws of the State
of New York and the same certificate from every other jurisdiction in which
Borrower and Parent are required to qualify to do business;
(v) The 1998 Term Note and 1998 Grid Note duly executed by Borrower;
(vi) A Continuing Guaranty of all obligations, whenever arising, of
Borrower to Bank, executed by Parent and a Continuing Guaranty of all
obligations, whenever arising, of Parent to Bank executed by Borrower ("New
Guaranties"). The New Guaranties shall be in the form of Exhibit D, with blanks
appropriately completed. In addition, both Borrower and Parent shall each
execute General Security Agreements in favor of Bank ("New Security
Agreements"), which shall be in the form of Exhibit E, with blanks appropriately
completed. Neither the execution of the New Guaranties, nor the execution of the
New Security Agreements shall modify, amend, limit or terminate the obligations
of Borrower and Parent and the rights of Bank under the Existing Bank Documents
referred to in Insert 5x (iv), (vi), (vii) and (x) above.
R-18
<PAGE>
(vii) A Patent Collateral Assignment and Security Agreement in the
form of Exhibit F attached hereto, duly executed by Borrower;
(viii) A Trademark Collateral Security and Pledge Agreement in the
form of Exhibit G attached hereto, duly executed by Borrower.
(ix) An opinion letter from Nixon, Hargrave, Devans & Doyle, LLP,
counsel for Borrower and Parent in the form of Exhibit H attached hereto; and
(x) The Bank shall have received a Landlord/Mortgagee Waiver
Agreement in form acceptable to Bank from each landlord and each mortgagee of
any real property on which Borrower or Parent conducts any of its business.
d. There shall have occurred no material adverse change in the business
condition (financial or otherwise), operations, performance, properties or
prospects of Parent and Borrower since December 31, 1996.
e. There shall exist no litigation pending or threatened in any court or
before any court or other governmental authority that (a) could reasonably be
expected to (i) have a material adverse effect on the business, condition
(financial or otherwise), operations, performance, properties or prospects of
Borrower or Parent or affect the ability of Borrower or Parent to perform its
obligations under this Agreement or any of the related loan documents.
f. The Borrower shall have paid the Bank the Up-Front Fee and all fees and
expenses due hereunder, including all fees and expenses due incurred by Bank in
connection with the preparation, negotiations and execution of this Agreement
and all related agreements, instruments and documents.
g. All of the information provided by or on behalf of Borrower to Bank
prior to its commitment letter, dated March 4, 1998, to Borrower (the
"Pre-Commitment Information") shall be true and correct in all material aspects,
and no development or change shall have occurred, and no additional information
shall have come to the attention of the Bank that (i) has resulted in or could
reasonable be expected to result in a change in, or deviation from, the
Pre-Commitment Information or (ii) has had or could reasonably be expected to
result in a material adverse effect on the business, condition (financial or
otherwise), operations, performance, properties or prospects of Borrower or
Parent.
In addition to the foregoing conditions precedent, all legal details in
connection with the Agreement and all Loan Documents shall have met with the
approval of Woods, Oviatt, Gilman, Sturman & Clarke LLP, counsel for Bank.
Further, Bank, at its sole option, may extend the time in which Borrower is
required to provide any of the documents required to be delivered under this
Agreement or to satisfy or otherwise fulfill any condition set forth above. Such
extensions shall not operate as a waiver of the requirement that such
R-19
<PAGE>
document be provided and Borrower's failure to provide such document or
documents to Bank after the Effective Date shall, after twenty (20) days (or
less if reasonable under the circumstances) advance notice to Borrower, at
Bank's option, constitute an Event of Default under this Agreement. The
requirement that the Borrower deliver to the Bank any loan document called for
under this Agreement may only be waived in a writing signed by Bank.
14. This Agreement supersedes and replaces the Term Loan Agreement dated
September 30, 1996, between Borrower and Bank, which is referred to in Insert
5j(i) of this Addendum.
15. Upon the execution of this Agreement, all Borrower's rights to borrow
or to request to borrow under any existing revolvers, or lines of credit or loan
limits with Bank shall be terminated and Borrower's sole right to request to
borrow under a line of credit with Bank shall be under the $10,000,000.00 line
of credit provided for in Insert 1b of this Addendum and Borrower's sole right
to request to borrow under any Loan Limit shall be under the $2,000,000.00 Loan
Limit provided for in Insert 1c of this Addendum.
16. Anything contained in any Loan Document to the contrary
notwithstanding, if any provision of any Loan Document provides for notice to
Borrower which is contrary to the notice provision contained in Section 8 of the
preprinted form of this Agreement ("Section 8"), the terms of Section 8 shall
control. Anything contained in any Loan Document to the contrary
notwithstanding, if any provision of any Loan Documents call for delivery of
financial statements, borrowing base certificates, certificates of no default or
other financial information which conflicts with, or is in addition to, the
provisions of Section 2j of this Agreement and/or Insert 1 b(ix) of the Addendum
to this Agreement (collectively, "Required Financial Provisions"), the terms of
the Required Financial Provisions shall control, and the conflicting or
additional requirements shall be deemed null and void.
17. Anything contained in this Agreement and/or in any Loan Document to
the contrary notwithstanding, Bank may automatically debit any account of
Borrower maintained at Bank for any amount (including but not limited to
principal, interest and/or late charges), which becomes due Bank under this
Agreement and/or under any Note or otherwise, when due.
18. Borrower and Bank acknowledge and agree that anything contained in
Insert 1c of this Addendum (which provides for a $2,000,000.00 Loan Limit), to
the contrary notwithstanding, Borrower shall have no rights to request to borrow
under the Loan Limit and Bank shall have no obligations under the Loan Limit. As
of the Closing Date, the Loan Limit provisions of insert 1c and Exhibit C to
this Agreement shall be deemed deleted.
IN WITNESS WHEREOF, Borrower and Bank have executed this Rider on the date
indicated in the acknowledgement, effective as of March 31, 1998.
R-20
<PAGE>
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
-------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and
Chief Financial Officer
Accepted:
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ William Holston
------------------------
Name: William Holston
Title: Vice President
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On this 14th day of April, 1998, 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 within Instrument, and that
he signed his name thereto by order of the Board of Directors.
/s/ Gary F. Amendola
---------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
R-21
<PAGE>
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On this 14th day of April, 1998, 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 within Instrument, and that he signed his
name thereto by order of the Board of Directors.
/s/ Gary F. Amendola
---------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
The undersigned executed this Rider for purposes of making the
representations, warranties and covenants contained in Insert 5j(vii), (viii),
(ix), (x), (xiv) and (xv), of this Addendum in favor of Bank.
CVC, INC.
By: /s/ Emilio O. DiCataldo
-------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and
Chief Finance Officer
STATE OF NEW YORK )
COUNTY OF MONROE ) SS:
On this 14th day of April, 1998, before me personally came Emilio
DiCataldo, to me known, who, being by me duly sworn, did depose and say that
he is the Senior VP - CFO of CVC, 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/ Gary F. Amendola
---------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
R-22
<PAGE>
[LOGO] M&T Bank
Manufactures and Traders Trust Company
TERM NOTE
Rochester, New York as of March 31, 1998 $8,000,000.00
BORROWER: CVC PRODUCTS, INC.
a(n) |_| individual(s) |_| partnership |X| corporation |_| trust |_| __________
organized under the laws of Delaware
Address of residence/chief executive office: 525 Lee Road, Rochester, New York
14606
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M&T Plaza, Buffalo, NY 14240.
Promise to Pay. For value received, Borrower promises to pay to the order of the
Bank, on the dates set forth below, the principal sum of EIGHT MILLION and
00/100 Dollars ($8,000,000.00) (the "Principal") plus interest as agreed below
and all reasonable fees and costs (including without limitation reasonable
attorneys' fees and disbursements whether for internal or outside counsel) the
Bank incurs in order to collect any amount due under this Note, to negotiate or
document a workout, or restructuring, or to preserve its rights or realize upon
any guaranty or other security for the payment of this Note ("Expenses").
Interest. The unpaid Principal balance of this Note shall earn interest
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366) from and including the date the proceeds of this Note were
disbursed to, but not including, the date all amounts hereunder are paid in
full, at a rate per year which shall on each day be:
|X| 8.39%
|_| equal to the rate in effect on that day as the rate announced by the Bank
as its prime rate of interest.
|_| _______% above the rate in effect on that day as the rate announced by the
Bank as its prime rate of interest.
If no rate is specified above, interest shall accrue at the Maximum Legal Rate
(defined below).
Maximum Legal Rate. It is the intent of the Bank and Borrower that in no event
shall 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 canceled, and, if received by the Bank, shall be refunded to
Borrower.
Default Rate. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 5% per
year above the otherwise applicable rate per year.
Repayment of Principal and Interest; Late Charge. Payments shall be made in
immediately available United States funds at any banking office of the Bank.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay a late
charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount or
(c) the Bank's then current late charge as announced from time to time. If this
Note is secured by a one- to six-family owner-occupied residence, the late
charge shall equal 2% of the delinquent amount and shall be payable if payment
is not received within fifteen days of its due date. Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to remaining
principal.
The Maturity Date of this Note is April 1, 2005.
|_| Borrower shall pay the entire Principal on the Maturity Date. In addition,
until the outstanding Principal is paid in full, payments of all accrued
and unpaid interest in amounts which will vary will become due and payable
on the _______ day of each:
|_| month |_| quarter |_| year commencing on ____________, 19__.
|X| Borrower shall pay 84 consecutive level |X| monthly |_| quarterly |_|
annual installments consisting of both Principal and interest, amortized
over a period of 7 years, commencing on May 1, 1998 and also due on the
first day of each month thereafter. Each payment will equal $126,249.81
except that the last payment will equal all remaining amounts due under
this Note.
IF A PAYMENT IS RECEIVED AFTER THE DUE DATE, MORE INTEREST WILL BE DUE
THAN PLANNED AND LESS MONEY APPLIED TO PRINCIPAL. REPEATED LATE PAYMENTS
WILL CAUSE AN UNEXPECTED PRINCIPAL BALANCE 10 REMAIN UNPAID AT THE END OF
THE TERM.
CLB-102 (12/94) 360-Day Base
<PAGE>
Prepayment Premium. During the term of this Note, Borrower shall have the option
of paying the Principal to the Bank in advance of the Maturity Date, in whole or
in part, at any time and from time to time. Upon making any prepayment of the
Principal Sum in whole, Borrower shall pay to the Bank all interest and Expenses
owing pursuant to this Note and remaining unpaid. Each partial prepayment of
Principal 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."
Representations and Warranties. Borrower represents to and agrees with the Bank
that now and until this Note is paid in full:
a. Business Purpose. The Loan proceeds shall be used only for a business
purpose and not for any personal, family or household purposes unless the
following box is checked: |_| Personal Loan.
b. Good Standing; Authority. Borrower is an entity or sole proprietor (i)
duly organized and existing and in good standing under the laws of the
jurisdiction in which it was formed, (ii) duly qualified, in good standing and
authorized to do business in every 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 or in the future.
c. Legality. The execution, issuance, delivery to the Bank and performance
by Borrower of this Note (i) are in furtherance of 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 Borrower; and (iii) have been duly authorized by all necessary
corporate or partnership action.
d. 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 to the conduct of Borrower's business and for Borrower's
due issuance of this Note have been duly obtained and are in full force and
effect. The Borrower is in compliance with all conditions of each Approval.
e. Financial and Other Information. See Addendum
f. Accounting; Tax Returns and Payment of Claims. 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 Borrower or any of its assets, income or franchises, as well as
all amounts owed to mechanics, materialmen, landlords, suppliers and the like in
the ordinary course of business.
g. Title to Assets; Insurance. Borrower has good and valid title to each
of its assets free of security interests and mortgages and other liens except as
disclosed in its financial statements or on a schedule attached to or pursuant
to the Bank's prior written consent. Borrower will maintain its property in good
repair and will maintain and on request provide the Bank with evidence of
insurance coverage satisfactory to the Bank including without limitation fire
and hazard, liability, worker's 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 (each
an "Action") which involves Borrower or its assets and might have a material
adverse effect upon Borrower or threaten the validity of this Note or any
related document or transaction. Borrower will immediately notify the Bank in
writing upon acquiring knowledge of any such Action.
i. Notice of Change of Address and of Default. Borrower will immediately
notify the Bank in writing (i) of any change in its address or of the location
of any collateral securing this Note, (ii) of the occurrence of any Event of
Default defined below, (iii) of any material change in Borrower's ownership or
management and (iv) of any material adverse change in Borrower's ability to
repay this Note.
j. No Transfer of Assets. Until this Note is paid in full, Borrower shall
not without the prior written consent of the Bank (i) sell or otherwise dispose
of substantially all of its assets, (ii) acquire substantially all of the assets
of another entity, (iii) if it is a corporation, participate in an merger,
consolidation or other absorption or (iv) agree to do any of these things.
The inserts herein are contained in a Rider attached hereto which is made
a part hereof incorporated herein.
2
<PAGE>
Events of Default; Acceleration. An event of default ("Event of Default") will
have occurred if: (a) Borrower fails to pay when due any amount due under this
Note; See Insert No. 3.
Right of Setoff. The Bank shall have the right to set off against the amounts
owing under this Note any property held in a deposit or other account with the
Bank or otherwise owing by the Bank in any capacity to Borrower or any
Guarantor.
Miscellaneous. This Note, together with any related loan and security agreements
and guaranties, contains the entire agreement between the Bank and Borrower with
respect to the Note, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Bank. All rights and
remedies of the Bank under applicable law and this Note or amendment of any
provision of this note are cumulative and not exclusive. No single, partial or
delayed exercise by the Bank of any right or remedy shall preclude the
subsequent exercise by the Bank at any time of any right or remedy of the Bank
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Bank. This Note shall be
governed by the laws of the State of New York, without regard to its principles
of conflict of laws. This Note is a binding obligation enforceable against
Borrower and its successors and assigns and shall inure to the benefit of the
Bank and its successors and assigns. If a court deems any provision of this Note
invalid, the remainder of the Note shall remain in effect. Section headings are
for convenience only. Singular number includes plural and neuter gender includes
masculine and feminine as appropriate.
Notices. Notices to Borrower by the Bank may be delivered in person, in writing
or by telephone with subsequent confirmation by mail or teletransmission.
Written notice shall be deemed delivered by mail when received or refused after
being deposited in the United States mail or transmitted to Borrower at the last
address of Borrower shown on the Bank's records. Notice to the Bank by Borrower
must be in writing, refer specifically to this Note and be delivered in person
or by registered mail directed to the Bank at the address stated on page one.
Notices shall be deemed delivered only when actually received by an officer of
the Bank. Borrower will notify the Bank promptly of any change of address.
Joint and Several. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this Note.
Borrower's Consents. In any action or other legal proceeding relating to this
Note, Borrower (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, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original.
TRIAL BY JURY. BORROWER AND THE BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION IN CONNECTION WITH THIS NOTE.
|X| This Note is given in partial replacement of and in substitution for, but
not in payment of, a note dated January 30, 1998, in the original
principal amount of $10,000,000.00 issued by Borrower (or
_________________) to the Bank.
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #____________ with the Bank automatically for any
amount which becomes due under this Note.
Tax ID/SS# 16-1017191 CVC PRODUCTS, INC.
------------ -------------------------
BORROWER
by: /s/ Emilio O. DiCataldo
-------------------------------
Emilio O. DiCataldo Senior Vice
President and CFO
/s/ Gary F. Amendola
- ------------------------------------- --------------------------------------
Signature of Witness
Gary F. Amendola
- ------------------------------------- --------------------------------------
Typed Name of Witness
The inserts herein are contained in a Rider attached hereto which is made a part
hereof and incorporated herein.
3
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, 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 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 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/ Gary F. Amendola
---------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
ACKNOWLEDGMENT
STATE OF _________)
:SS.
COUNTY OF ________)
On the ______ day of _________________________ in the
year 19__, before me personally came ____________________
_________________________________________________________
|_| 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 the behalf of
said partnership.
|_| Corporation to me known, who, being by me duly sworn, did depose and
say that __he resides in ________________________________
________________________________________________________;
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.
______________________________________
Notary Public
FOR BANK USE ONLY
Authorization Confirmed: /s/ William E. Holston
-------------------------------------------------------
Disbursement of Funds:
Credit A/C #_____________ Off Ck #_____________ Payoff Obligation #_____________
$_____________ $_____________ $_____________
CLB-102 (12/94) 360-Day Base
4
<PAGE>
RIDER TO AN $8,000,000.00 TERM NOTE
DATED AS OF MARCH 31, 1998 EXECUTED
BY CVC PRODUCTS, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY
This RIDER, to a certain $8,000,000 Term Note, dated as of March 31, 1998,
is made by CVC PRODUCTS, INC. ("Borrower") in favor of MANUFACTURERS AND TRADERS
TRUST COMPANY ("Bank"). This Rider is an integral part of the Term Note.
Insert No. 1. - The following is the addition to the first sentence of the
"Prepayment Premium" section of the preprinted form of this Note:
"upon three days prior written notice received by Bank, provided
however that the prepayment is accompanied by a Redemption Premium
calculated as follows: The Redemption Premium shall be equal to the
amount by which the sum of the Discounted Values (as determined
below) of the Prepaid Installments of principal and interest on the
Note exceeds the amount of the prepayment; but this amount shall
never be less than 1 % of the principal amount prepaid. Bank shall
in good faith determine such Discounted Values by discounting all of
the Prepaid Installments of principal and interest at the Applicable
Treasury Rate (as determined below) from the date on which the
prepayment is made through the respective scheduled payment dates.
The Applicable Treasury Rate to be applied shall be the yield which
is imputed from linear interpolation from current daily yields of
U.S. Treasury obligations having maturities as close as practicable
to the Average Life to Stated Maturity (as determined below) of the
Prepaid Installments of principal (as of the third day prior to the
date on which the prepayment is made) as published in the Federal
Reserve Statistical Release H.15 (519) or if such yield is not so
published, a similar rate based upon a comparable index as
determined by Bank. The Average Life to Stated Maturity of the
Prepaid Installments of principal shall be the number of months
obtained by determining (A) the sum of the products obtained by
multiplying (i) the amount of each Prepaid Installment of principal
by (ii) the number of months from the date the prepayment is made
through the scheduled payment date for such Prepaid Installment of
principal and (B) dividing such sum by the sum of the Prepaid
Installments of principal.
Upon making any prepayment of the unpaid principal balance of this
Note in full, Borrower shall also pay Bank all accrued interest and
Expenses owing on this Note. Each partial principal prepayment shall
be applied in inverse order
<PAGE>
of maturity to the principal included in the installments provided
for in the preprinted portion of this Note labelled "Repayment of
Principal and Interest; Late Charge.
In the event the Maturity Date of this Note is accelerated following
an Event of Default by the Borrower, 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 case, to the extent permitted by law, Bank shall be entitled
to the amount necessary to satisfy the entire indebtedness, plus the
appropriate prepayment premium calculated in accordance with this
Section."
Insert No. l.A.
the Loan Agreement of even date herewith between Bank and Borrower, as
amended, extended and replaced
Insert No. 2
or (b) any Event of Default occurs under the Loan Agreement of even date
herewith between Bank and Borrower ("Agreement"), as such Agreement is amended,
extended or replaced from time to time. Certain capitalized terms used in this
Rider have the definition given to them in the Agreement.
Insert No. 3
As used in this Note (i) "any agreement with the Bank" includes any
agreement, note or instrument with the Bank (which includes, without limitation,
the Agreement Note, the 1998 Grid Note and the Existing Bank Documents); (ii)
"accelerated" or "acceleration" means indebtedness that becomes due at maturity,
by notice after the occurrence of an Event of Default or which becomes due as a
result of a demand. All defined terms in the Agreement shall have the same
meaning herein unless otherwise defined herein.
Automatically upon the commencement of Borrower's or any 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 any other Event of Default hereunder, at the
Bank's option, all amounts hereunder shall become immediately due and payable.
Miscellaneous
Replacement of Representation and Warranty "e" of the preprinted form:
R-2
<PAGE>
"Borrower shall provide Bank with such financial and other
information as Borrower is required to provide Bank under a Loan
Agreement entered into by Borrower and Bank on or about the date
this Note was executed ("Loan Agreement"), as the Loan Agreement is
extended, amended and replaced.
IN WITNESS WHEREOF, Borrower has executed and unconditionally delivered
this Rider together with the preprinted form of this Note on the date indicated
in the acknowledgement, effective as of March 31, 1998.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
-------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and
Chief Financial Officer
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On this 14th day of April, 1998, 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.
/s/ Gary F. Amendola
---------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
R-3
<PAGE>
[LOGO] M&T Bank
Manufacturers and Traders Trust Company
GRID NOTE
Rochester, New York As of March 31, 1998 $ 10,000,000.00
BORROWER: CVC PRODUCTS, INC. a(n) |_| individual(s) |_| partnership |X|
corporation |_| ________________ organized under the laws of Delaware Address of
residence/chief executive office: ______________________________________________
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M & T Plaza, Buffalo, NY 14240.
Promise to Pay. For value received, Borrower promises to pay to the order of the
Bank on demand, the principal sum of _______________________ TEN MILLION and
00/100 Dollars ($10,000,000.00) (the "Maximum Principal Amount") or the
outstanding principal amount of this Note (the "Outstanding Principal Amount"),
if less; plus interest as agreed below and reasonable (including without
limitation/reasonable attorneys fees and disbursements, whether for internal or
outside counsel) the Bank incurs in order to collect any amount due under this
Note, to negotiate or document a workout, or restructuring, or to preserve its
right or realize upon any guaranty or other security for the payment of this
Note ("Expenses").
Interest. The outstanding Principal Amount of this Note shall earn interest
calculated on the basis of 360-day year for the actual number of days of each
year (365 or 366) from and including the date the proceeds of this Note were
disbursed to, but not including, the date all amounts hereunder are paid in full
at a rate per year which shall on each day be:
|_| __________%.
|_| equal to the rate in effect on that day as the rate announced by the Bank as
its prime rate of interest.
|X| 1/4% above the rate in effect on that day as the rate announced by the Bank
as its prime rate of interest.
If no rate is specified above, interest shall accrue at the Maximum Legal Rate
(defined below) at all times prior to payment in full.
Payments; Late Charge; Default Rate. Payments shall be made in immediately
available United States funds at any banking office of the Bank. Absent
demand for payment in full, interest shall be due and payable monthly. If
payment is not received within five days of its due date, Borrower shall pay a
late charge equal to the greatest of (a) 5% of the delinquent amount, (b) the
Bank's then current late charge as announced by the Bank from time to time, or
(c) $50.00. In addition, if the Bank has not actually received any payment under
this Note within thirty days after its due date, from and after such thirtieth
day the interest rate for all amounts outstanding under this Note shall
automatically increase to 5% above the otherwise applicable rate per year.
Payments may be applied in any order in the sole discretion of the Bank but,
prior to demand, shall be applied first to past due interest, Expenses, late
charges, and principal payments, if any, which are past due, then to current
interest and Expenses and late charges, and last to remaining principal.
Maximum Legal Rate. It is the intent of the Bank and of Borrower that in no
event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law ( the "Maximum Legal Rate"). Solely to the extent
necessary to prevent interest under this Note from exceeding the Maximum Legal
Rate, any amounts 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 Bank, shall be refunded to
Borrower.
Setoff. The Bank shall have the right to set off against the amounts owing under
this Note any property held in a deposit or other account with the Bank or
otherwise owing by the Bank in any capacity to Borrower or any guarantor or
endorser of this Note.
Authorized Representatives. This Note is issued by Borrower to the Bank in
connection with a certain line of credit or loan limit made available by the
Bank to Borrower (the "Credit"). The Bank may make any loan pursuant to the
Credit (the "Loan(s)") in reliance upon any oral, telephonic, written,
teletransmitted or other request (the "Request(s)") that the Bank in good faith
believes to be valid and to have been made by Borrower or on behalf of Borrower
by CHRISTINE WHITMAN or EMILIO DiCATALDO (each an "Authorized Person"). The Bank
may act on the Request of any Authorized Person until the Bank shall have
received from Borrower, and had a reasonable time to act on, written notice
revoking the authority of such Authorized Person. The Bank shall incur no
liability to Borrower or to any other person as a direct or indirect result of
making any Loan pursuant to this paragraph.
Demand Facility. The Bank may modify, restrict, suspend or terminate the Credit
at any time for any reason and without affecting Borrower's then existing
obligation under this Note. This is a demand Note and all Loans hereunder shall
become immediately due and payable upon demand by the Bank; provided, however,
that the Outstanding Principal Amount of this Note and all accrued and unpaid
interest shall automatically become immediately due and payable if Borrower or
any guarantor or endorser of this Note commences or has commenced against it any
bankruptcy or insolvency proceeding. Borrower hereby waives protest, presentment
and notice of any kind in connection with this Note.
Bank Records Conclusive. The Bank shall set forth on a schedule attached to this
Note or maintained on computer, the date and original principal amount of each
Loan and the date and amount of each payment to be applied to the Outstanding
Principal Amount of this Note. The Outstanding Principal Amount set forth on any
such schedule shall be presumptive evidence of the Outstanding Principal Amount
of this Note and of all Loans. No failure by the Bank to make, and no error by
the Bank in making, any annotation on any such schedule shall affect Borrower's
obligation to pay the principal and interest of each Loan or any other
obligation of Borrower to the Bank pursuant to this Note.
Purpose. Borrower certifies (a) that no Loan will be used to purchase margin
stock except with the Bank's express prior written consent for each such
purchase and (b) that all Loans shall be used for a business purpose, and not
for any personal, family or household purpose, unless the following box is
checked:
|_| Personal Loan. If this box is check, the initial advance must be an amount
greater than $25,000.
Authorization. Borrower, if a corporation, partnership, trust or other entity,
represents that it is duly organized and in good standing or duly constituted in
the state of its organization and is duly authorized to do business in all
jurisdictions material to the conduct of its business; that the execution,
delivery and performance of this Note have been duly authorized by all necessary
regulatory and corporate or partnership action or by its governing instrument;
that this Note has been duly executed by an authorized officer, partner or
trustee and constitutes a binding obligation enforceable against Borrower and
not in violation of any law, court order or agreement by which Borrower is
bound; and that Borrower's performance is not threatened by any pending or
threatened litigation.
<PAGE>
Miscellaneous. This Note, together with any related loan and security
agreements, contains the entire agreement between the Bank and Borrower with
respect to each Loan, and supersedes every course of dealing, other conduct,
oral agreement and representation previously made by the Bank. The Bank's rights
and remedies under applicable law and this Note are cumulative and not
exclusive. No single, partial or delayed exercise by the Bank of any right or
remedy shall preclude the subsequent exercise by the Bank at any time of any
right or remedy of the Bank without notice. No waiver or amendment of any
provision of this Note shall be effective unless made specifically in writing by
the Bank. This Note shall be governed by the laws of the State of New York,
without regard to its principles of conflict of laws. This Note is a binding
obligation enforceable against Borrower and its successors and assigns and shall
inure to the benefit of the Bank and its successors and assigns. If a court
deems any provision of this Note invalid, the remainder of the Note shall remain
in effect. Section heading are for convenience only. Singular number includes
plural and neuter gender includes masculine and feminine as appropriate.
Joint and Several. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this
Note.
Borrower's Consents. In any action or other legal proceeding relating to this
Note, Borrower (a) consents to the personal jurisdiction of any State or federal
court location in the State of New York, and (b) agrees that a copy of this Note
kept in the Bank's course of business may be admitted into evidence as an
original.
WAIVER OF JURY TRIAL. BORROWER AND THE BANK EACH WAIVE ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION IN CONNECTION WITH THIS NOTE.
|X| Replacement Note. This Note is given in partial replacement of and in
substitution for, but not in payment of, two 800 Notes heretofore executed by
Borrower in favor of Bank, as further specified in an Application of Proceeds
executed by Borrower on the date this Note was executed.
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
available funds in Borrower's deposit account # 15226103 with the Bank
automatically for any amount which becomes due under this Note or as directed by
an Authorized Person, by telephone.
CVC PRODUCTS, INC.
---------------------------------------------
BORROWER
Tax ID/SS # 16-1017191 by: /s/ Emilio O. DiCataldo
---------------- ---------------------------------------------
Emilio O. DiCataldo, Senior Vice President
/s/ Gary F. Amendola and Chief Financial Officer
- ---------------------------- ---------------------------------------------
Signature of Witness
Gary F. Amendola
- ----------------------------
Typed Name of Witness
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, before me
personally came EMILIO O. DiCATALDO
|_| Individual(s) to me known to me to be person(s) described in and who
executed the above instrument, an __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 acknowledge 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 Vice President and Chief
Financial Office 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/ Gary F. Amendola
--------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
FOR BANK USE ONLY
Authorization Confirmed: /s/ William E. Holston
--------------------------------------------------------
Disbursement of Funds:
Credit A/C # Off Ck # Payoff Obligation #
------------- ------------ -----------
$ $ $
------------- ------------ -----------
<PAGE>
[LOGO] M&T Bank
Manufactures and Traders Trust Company
TERM NOTE
Rochester, New York ___________________________, 19__ $_________________
BORROWER: CVC PRDDUCTS, INC.
a(n) |_| individual(s) |_| partnership |_| corporation |_| trust |_| __________
organized under the laws of Delaware
Address of residence/chief executive office: 525 Lee Road, Rochester, New York
14606
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M&T Plaza, Buffalo, NY 14240.
Promise to Pay. For value received, Borrower promises to pay to the order of the
Bank, on the dates set forth below, the principal sum of ______________________
Dollars ($_____________) (the "Principal") plus interest as agreed below and all
reasonable fees and costs (including without limitation reasonable attorneys
fees and disbursements whether for internal or outside counsel) the Bank incurs
in order to collect any amount due under this Note, to negotiate or document a
workout, or restructuring, or to preserve its rights or realize upon any
guaranty or other security for the payment of this Note ("Expenses").
Interest. The unpaid Principal balance of this Note shall earn interest
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366) from and including the date the proceeds of this Note were
disbursed to, but not including, the date all amounts hereunder are paid in
full, at a rate per year which shall on each day be:
|_| ________%
|_| equal to the rate in effect on that day as the rate announced by the Bank
as its prime rate of interest.
|X| .5% above the rate in effect on that day as the rate announced by the Bank
as its prime rate of interest.
If no rate is specified above, interest shall accrue at the Maximum Legal Rate
(defined below).
Maximum Legal Rate. It is the intent of the Bank and Borrower that in no event
shall 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 canceled, and, if received by the Bank, shall be refunded to
Borrower.
Default Rate. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 5% per
year above the otherwise applicable rate per year.
Repayment of Principal and Interest; Late Charge. Payments shall be made in
immediately available United States funds at any banking office of the Bank.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay a late
charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount or
(c) the Bank's then current late charge as announced from time to time. If this
Note is secured by a one- to six-family owner-occupied residence, the late
charge shall equal 2% of the delinquent amount and shall be payable if payment
is not received within fifteen days of its due date. Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to remaining
principal.
The Maturity Date of this Note is __________________,199/20__.
|_| Borrower shall pay the entire Principal on the Maturity Date. In addition,
until the outstanding Principal is paid in full, payments of all accrued
and unpaid interest in amounts which will vary will become due and payable
on the _______ day of each:
|_| month |_| quarter |_| year commencing on ____________, 19__.
|X| Borrower shall pay the Principal in _______ consecutive |X| monthly |_|
quarterly |_| annual payments due on the first day of each month
commencing on _____________,19__. In addition, until the outstanding
Principal is paid in full, payments of all accrued and unpaid interest in
amounts which will vary will become due and payable as of the 1st day of
each: |X| month |_| quarter |_| year commencing on ___________________,
19__. Each Principal payment will equal $______________ except that the
last Principal payment will also include all other amounts due hereunder.
|_| Borrower shall pay _______ consecutive level |_| monthly |_| quarterly
|_| annual installments consisting of both Principal and interest,
amortized over a period of _______ years, commencing on _________________,
19__. Each payment will equal $ except that the last payment will equal
all remaining amounts due under this Note.
IF A PAYMENT IS RECEIVED AFTER THE DUE DATE, MORE INTEREST WILL BE DUE
THAN PLANNED AND LESS MONEY APPLIED TO PRINCIPAL. REPEATED LATE PAYMENTS
WILL CAUSE AN UNEXPECTED PRINCIPAL BALANCE TO REMAIN UNPAID AT THE END OF
THE TERM.
CLB-102 (12/94) 360-Day Base
<PAGE>
Prepayment Premium. During the term of this Note, Borrower shall have the option
of paying the Principal to the Bank 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
Bank at least three (3) business days prior to making such payment; provided,
however, that together with such prepayment, Borrower shall pay to the Bank a
premium equal to the product of (a) one percent of the Principal prepaid
multiplied by (b) the number of years remaining in the Term, rounded up to the
next whole year. For example, if the Term is five years, the premium shall equal
5% of the Principal Sum prepaid before the first anniversary of this Note, 4% of
the Principal Sum prepaid before the second anniversary of this Note, etc. Upon
making any prepayment of the Principal Sum in whole, Borrower shall pay to the
Bank all interest and Expenses owing pursuant to this Note and remaining unpaid.
Each partial prepayment of Principal 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 by Borrower, 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 Bank shall be entitled to the amount necessary to satisfy the entire
indebtedness, plus the appropriate prepayment premium calculated in accordance
with the preceding paragraph.
Representations and Warranties. Borrower represents to and agrees with the Bank
that now and until this Note is paid in full:
a. Business Purpose. The Loan proceeds shall be used only for a business
purpose and not for any personal, family or household purposes unless the
following box is checked: |_| Personal Loan.
b. Good Standing; Authority. Borrower is an entity or sole proprietor (i)
duly organized and existing and in good standing under the laws of the
jurisdiction in which it was formed, (ii) duly qualified, in good standing and
authorized to do business in every 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 or in the future.
c. Legality. The execution, issuance, delivery to the Bank and performance
by Borrower of this Note (i) are in furtherance of 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 Borrower; and (iii) have been duly authorized by all necessary
corporate or partnership action.
d. 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 to the conduct of Borrower's business and for Borrower's
due issuance of this Note have been duly obtained and are in full force and
effect. The Borrower is in compliance with all conditions of each Approval.
e. Financial and Other Information. Borrower shall provide Bank with such
financial and other information as Borrower is required to provide Bank with
pursuant to a Loan Agreement into by Borrower and Bank as of March 31, 1998, as
extended, amended and replaced.
f. Accounting; Tax Returns and Payment of Claims. 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 Borrower or any of its assets, income or franchises, as well as
all amounts owed to mechanics, materialmen, landlords, suppliers and the like in
the ordinary course of business.
g. Title to Assets; Insurance. Borrower has good and marketable title to
each of its assets free of security interests and mortgages and other liens
except as disclosed in its financial statements or on a schedule attached to
this Note or pursuant to the Bank's prior written consent. Borrower will
maintain its property in good repair and will maintain and on request provide
the Bank with evidence of insurance coverage satisfactory to the Bank including
without limitation fire and hazard, liability, worker's 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 (each
an "Action") which involves Borrower or its assets and might have a material
adverse effect upon Borrower or threaten the validity of this Note or any
related document or transaction. Borrower will immediately notify the Bank in
writing upon acquiring knowledge of any such Action.
i. Notice of Change of Address and of Default. Borrower will immediately
notify the Bank in writing (i) of any change in its address or of the location
of any collateral securing this Note, (ii) of the occurrence of any Event of
Default defined below, (iii) of any material change in Borrower's ownership or
management and (iv) of any material adverse change in Borrower's ability to
repay this Note.
j. No Transfer of Assets. Until this Note is paid in full, Borrower shall
not without the prior written consent of the Bank (i) sell or otherwise dispose
of substantially all of its assets, (ii) acquire substantially all of the assets
of another entity, (iii) if it is a corporation, participate in an merger,
consolidation or other absorption or (iv) agree to do any of these things.
2
<PAGE>
Events of Default; Acceleration. An event of default ("Event of Default") will
have occurred if: (a) Borrower fails to pay when due any amount due under this
Note; or (b) any Event of Default occurs under a Loan Agreement entered into by
Bank and Borrower as of March 31, 1998, as the Loan Agreement is extended,
amended or replaced from time to time. All amounts hereunder shall become
immediately due and payable the Bank's option, upon the occurrence of any Event
of Default.
Right of Setoff. The Bank shall have the right to set off against the amounts
owing under this Note any property held in a deposit or other account with the
Bank or otherwise owing by the Bank in any capacity to Borrower or any
Guarantor.
Miscellaneous. This Note, together with any related loan and security agreements
and guaranties, contains the entire agreement between the Bank and Borrower with
respect to the Note, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Bank. All rights and
remedies of the Bank under applicable law and this Note or amendment of any
provision of this note are cumulative and not exclusive. No single, partial or
delayed exercise by the Bank of any right or remedy shall preclude the
subsequent exercise by the Bank at any time of any right or remedy of the Bank
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Bank. This Note shall be
governed by the laws of the State of New York, without regard to its principles
of conflict of laws. This Note is a binding obligation enforceable against
Borrower and its successors and assigns and shall inure to the benefit of the
Bank and its successors and assigns. If a court deems any provision of this Note
invalid, the remainder of the Note shall remain in effect. Section headings are
for convenience only. Singular number includes plural and neuter gender includes
masculine and feminine as appropriate.
Notices. Notices to Borrower by the Bank may be delivered in person, in writing
or by telephone with subsequent confirmation by mail or teletransmission.
Written notice shall be deemed delivered by mail when received or refused after
being deposited in the United States mail or transmitted to Borrower at the last
address of Borrower shown on the Bank's records. Notice to the Bank by Borrower
must be in writing, refer specifically to this Note and be delivered in person
or by registered mail directed to the Bank at the address stated on page one.
Notices shall be deemed delivered only when actually received by an officer of
the Bank. Borrower will notify the Bank promptly of any change of address.
Joint and Several. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this Note.
Borrower's Consents. In any action or other legal proceeding relating to this
Note, Borrower (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, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original.
TRIAL BY JURY. BORROWER AND THE BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION IN CONNECTION WITH THIS NOTE.
|_| This Note is given in replacement of and in substitution for, but not in
payment of, a note dated ________________, 19__, in the original principal
amount of $__________________ issued by Borrower (or _________________) to
the Bank.
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #____________ with the Bank automatically for any
amount which becomes due under this Note.
Tax ID/SS# 16-1017191 CVC PRODUCTS, INC.
------------ -------------------------
BORROWER
By:________________________
Name: Emilio 0. DiCataldo
Title: Senior Vice President and CFO
_____________________________________ ______________________________________
Signature of Witness
_____________________________________ ______________________________________
Typed Name of Witness
3
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the ______ day of _________________________ in the
year 1998, 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 the behalf of
partnership.
|X| Corporation to me known, who, being by me duly sworn, did depose and
say that __he resides in 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.
______________________________________
Notary Public
ACKNOWLEDGMENT
STATE OF _________)
:SS.
COUNTY OF ________)
On the ______ day of _________________________ in the
year 1998, before me personally came ____________________
_________________________________________________________
|_| 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 the behalf of
partnership.
|_| Corporation to me known, who, being by me duly sworn, did depose and
say that __he resides in ________________________________
_________________________________________________________
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.
______________________________________
Notary Public
FOR BANK USE ONLY
Authorization Confirmed: _______________________________________________________
Disbursement of Funds:
Credit A/C #_____________ Off Ck #_____________ Payoff Obligation #_____________
$_____________ $_____________ $_____________
CLB-102 (12/94) 360-Day Base
4
<PAGE>
AMENDED AND RESTATED
[LOGO] M&T Bank CONTINUING GUARANTY
(Corporation or Partnership)
GUARANTOR: CVC, INC. formerly known as 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
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. Any prior extension of credit by Bank to Borrower shall
also constitute consideration for this Guaranty.
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 or Borrower'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, or failure to perfect a security interest in, 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 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; (D) any composition, extension, moratoria or other
statutory relief granted to Borrower; or (E) 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
Banks reliance on or enforcement of this Guaranty.
(c) Waiver of Subrogation. Notwithstanding any other provision in this
Guaranty, Guarantor irrevocably waives, without notice, any right it may have at
law or in equity (including without limitation any law subrogating Guarantor to
the rights of the Bank) to seek contribution, indemnification or any other form
of reimbursement from Borrower or any other obligor or guarantor of the
Obligations for any disbursement made under this Guaranty 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
Banks 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 provide Bank with same
financial statements and other information Borrower is required to provide Bank
under a Loan Agreement entered into by Bank and Borrower on or about the date
this Guaranty was executed ("Loan Agreement"), as the Loan Agreement is
extended, amended and replaced. 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.
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 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.
<PAGE>
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 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 to Jurisdiction. In any action or other legal
proceeding relating to this Guaranty, Guarantor (a) consents to the personal
jurisdiction of any State of federal court located in the State of New York, (b)
waives objection to the laying of venue, (c) waives personal service of process
and subpoenas, (d) consents to service of process and subpoenas by registered or
certified mail directed to Guarantor at the last address shown in the Bank's
records relating to this Guaranty, with such service to be deemed completed five
days after mailing, (e) waives any right to assert any counterclaim or setoff or
any defense based upon a statute of limitations or upon a claim of laches, (f)
waives any right to attack a final judgment that is obtained as a direct or
indirect result of any such action and (g) consents to each such final judgment
being sued upon in any court having jurisdiction. A separate action may be
brought against Guarantor whether or not action is brought against or joined
with Borrower or any other party.
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.
14. This Guaranty restates and amends a Continuing Guaranty of payments of
the Obligations executed by Guarantor in favor of Bank on or about February 2,
1996.
GUARANTOR:
TIN # 16-1383279 CVC, INC.
---------- ---------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior Vice President
and Chief Financial Officer
---------------------------------------------
Typed Name and Title
By:
---------------------------------------------
---------------------------------------------
Typed Name and Title
Dated: April 14, 1998
---------------------------------------
NOTICE: FOR PURPOSES OF THIS GUARANTY "OBLIGATIONS" IS
NOT LIMITED TO PRESENTLY EXISTING INDEBTEDNESS,
LIABILITIES AND OBLIGATIONS.
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, before me personally came EMILIO
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 acknowledge 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 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/ Gary F. Amendola
--------------------------------------
Notary Public
FOR BANK USE ONLY
Authorization Confirmed:
GARY F. AMENDOLA
/s/ William E. Holston Notary Public, State of New York
- ----------------------- Qualified in Monroe County
Signature Commission Expires Oct. 31, 98
<PAGE>
AMENDED AND RESTATED
[LOGO] 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 INC. formerly known as 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 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. Any prior extension of credit by Bank to Guarantor shall
also constitute consideration for this Guaranty.
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 or Borrower'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, or failure to perfect a security interest in, 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 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; (D) any composition, extension, moratoria or other
statutory relief granted to Borrower; or (E) 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
Banks reliance on or enforcement of this Guaranty.
(c) Waiver of Subrogation. Notwithstanding any other provision in this
Guaranty, Guarantor irrevocably waives, without notice, any right it may have at
law or in equity (including without limitation any law subrogating Guarantor to
the rights of the Bank) to seek contribution, indemnification or any other form
of reimbursement from Borrower or any other obligor or guarantor of the
Obligations for any disbursement made under this Guaranty 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
Banks 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 provide Bank with such
financial and other information as Guarantor is required to provide Bank under a
Loan Agreement entered into by Guarantor and Bank on or about the date this
Guaranty was executed ("Loan Agreement"), as the Loan Agreement is extended,
amended and replaced. 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.
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 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.
<PAGE>
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 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 to Jurisdiction. In any action or other legal
proceeding relating to this Guaranty, Guarantor (a) consents to the personal
jurisdiction of any State of federal court located in the State of New York, (b)
waives objection to the laying of venue, (c) waives personal service of process
and subpoenas, (d) consents to service of process and subpoenas by registered or
certified mail directed to Guarantor at the last address shown in the Bank's
records relating to this Guaranty, with such service to be deemed completed five
days after mailing, (e) waives any right to assert any counterclaim or setoff or
any defense based upon a statute of limitations or upon a claim of laches, (f)
waives any right to attack a final judgment that is obtained as a direct or
indirect result of any such action and (g) consents to each such final judgment
being sued upon in any court having jurisdiction. A separate action may be
brought against Guarantor whether or not action is brought against or joined
with Borrower or any other party.
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.
14. This Guaranty restates and amends a Continuing Guaranty of payments of
the Obligations executed by Guarantor in favor of Bank on or about February 2,
1996.
GUARANTOR:
TIN # 16-1017191 CVC PRODUCTS, INC.
---------- ---------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior Vice President
and Chief Financial Officer
---------------------------------------------
Typed Name and Title
By:
---------------------------------------------
---------------------------------------------
Typed Name and Title
Dated: April 14, 1998
---------------------------------------
NOTICE: FOR PURPOSES OF THIS GUARANTY "OBLIGATIONS" IS
NOT LIMITED TO PRESENTLY EXISTING INDEBTEDNESS,
LIABILITIES AND OBLIGATIONS.
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, before me personally came EMILIO
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 acknowledge 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 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/ Gary F. Amendola
--------------------------------------
Notary Public
FOR BANK USE ONLY
Authorization Confirmed:
GARY F. AMENDOLA
/s/ William E. Holston Notary Public, State of New York
- ----------------------- Qualified in Monroe County
Signature Commission Expires Oct. 31, 98
<PAGE>
AMENDED AND RESTATED
[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, New York 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") See Addendum for additional Secured
Parties heretofore or hereafter (1) granting any loan, credit or other financial
accommodation to, or in reliance upon any guaranty, endorsement or other
assurance of, the undersigned (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
(xi) Products, and (xii) Investment Property
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 each Secured Party a security interest in, and assigns, pledges and
hypothecates to each 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, the financial statements and other information required to be
provided to Bank as set forth in a Loan Agreement entered into by Debtor and
Bank on or about the date this Agreement was executed, and 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) or 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 or 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 or 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.
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<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 premises 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 nor 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
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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, any amendment of any such
financing statement or any application for any certificate of title or notice of
lien relating to any Goods included in 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 4ii
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 premises 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
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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 presentation 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
potion 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 effect 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 as
of the date of this Agreement.
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 lapse 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 duly 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.
vii. 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 any 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
end 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:
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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 respects 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 thereof or of any other such right or
remedy. No notice or demand of any kind, and no attempted but unsuccessful
notice or demand of any kind, by the Secured Party prior to exercising any such
right or remedy on any one occasion, 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 duly 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 or 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 duly 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 or
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
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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 Obligations, (xix) any change in the ownership or membership of any
Debtor, Primary Obigor, Other Obligor or other Person, (xx) any change in the
location, business, name, 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 at 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 or of 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 or 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 portion of the
Obligations arising after such receipt of such notice and the expiration of such
period of time and constituting a liability, cost or expense 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 (ii) 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 on 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 so 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 preceeding, (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 assert any
final judgment that is obtained as a direct or indirect result of any such
action or other legal proceeding, and (vii) consents
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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.
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
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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, See Addendum, Instruments,
Investment Property 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 of 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. See Addendum.
f. "General Intangible" has the meaning given it for purposes of Article 9
of the Uniform Commercial Code of the State of New York, is 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 of 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 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
Parties or to any 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 indirect 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.
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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, trade 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 of such Person are hereafter directly or indirectly assigned or
otherwise transferred.
17. The attached Addendum is an integral part of this Security Agreement.
Dated April 14, 1998 CVC PRODUCTS, INC.
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By: /s/ Emilio O. DiCataldo
---------------------------------------
Name: Emilio O. DiCataldo
---------------------------------------
Title: Senior Vice President and CFO
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, 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 acknowledge 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 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.
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
------------------------------------
Notary Public
FOR BANK USE ONLY: Authorization Confirmed. /s/ William E. Holston
------------------------------------
Exhibit A
See Schedule attached to a Loan Agreement between Bank and Borrower executed the
same date this Security Agreement was executed.
Permitted Financing Statements and Other Evidences of Lien (Section 4x):
11
<PAGE>
Permitted Transfers, Pledges and Other Actions with Respect to Uncertificated
Securities (Section 4y):
Exceptions to Representations and Warranties (Clauses (v), (vi), (vii), (viii),
(ix) and (x) of Section 9a):
Description of Real Property on Which Crop or Timber Located (Clause (xiii) of
Section 9a):
Permitted Liens (Clause (i) of Section 16i):
QUESTIONNAIRE
* See attached Perfection Certificate
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)?
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?
3. What is the address (including county) of the residence, only place of
business or chief executive office of the undersigned?
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?
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?
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?
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?
Dated April 14, 1998 CVC PRODUCTS, INC.
--------------------- ---------------------------------------
By: /s/ Emilio O. DiCataldo
---------------------------------------
Name: Emilio O. DiCataldo
---------------------------------------
Title: Senior Vice President and CFO
12
<PAGE>
ADDENDUM TO AN AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
DATED AS OF MARCH 31, 1998
EXECUTED BY
CVC PRODUCTS, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY AND OTHERS
This ADDENDUM is made to an Amended and Restated General Security
Agreement ("Agreement"), dated as of March 31, 1998, executed by CVC PRODUCTS,
INC. ("Borrower") in favor of MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank")
and others. This Addendum is an integral part of the Agreement.
1. This Agreement restates and amends a General Security Agreement
executed by Borrower in favor of Bank on or about February 2, 1996, as
previously amended.
2. M&T Real Estate, Inc. ("RE") and M&T Financial Corporation ("MFC"),
each of whose principal place of business is located at One M&T Plaza, Buffalo,
New York, are each additional Secured Parties under this Agreement.
Manufacturers and Traders Trust Company ("M&T"), RE and MFC are collectively
referred to in this Agreement as "Secured Parties" and individually as a
"Secured Party". M&T may also be at times referred to in this Agreement as
"Bank". CVC Products, Inc. is at times referred to in this Agreement as
"Borrower", "Debtor", "undersigned" and "Undersigned". All references in this
Agreement to "Secured Party" shall be deemed to be to "Secured Parties or any
Secured Party."
3. The following is inserted between the words "General Intangibles" and
"Instruments" in the fourth line of the first sentence of Section 16b
(Definition of Collateral) of the preprinted portion of this Agreement:
"(including but not limited to all patents and patent applications,
rights under all licenses, trade secrets, trademarks, copyrights and
other intellectual property of any nature or kind (collectively
"Intellectual Property"), whether such Intellectual Property is now
owned by the undersigned or in which the undersigned now has any
interest or such Intellectual Property is hereafter acquired by the
undersigned or in which the undersigned hereafter acquires any
interest),"
4. Section 16e of the preprinted form of the General Security Agreement is
deemed deleted and replaced with the following:
"e. An Event of Default occurs or exists at any time that an Event
of Default occurs or exists under the Loan Agreement entered into by
Debtor and Bank on or about the date this General Security Agreement
was executed ("Loan Agreement"),
<PAGE>
as the Loan Agreement is amended, extended or replaced from time to
time."
IN WITNESS WHEREOF, Borrower has executed this Addendum, together with the
preprinted form of the Agreement, on the date indicated in the Acknowledgement,
effective as of March 31, 1998.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
----------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
STATE OF NEW YORK)
COUNTY OF MONROE) ss:
On this 14th day of April, 1998, 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 CFO 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/ GARY F. AMENDOLA
---------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
<PAGE>
PERFECTION CERTIFICATE
(CVC PRODUCTS, INC.)
In order to induce Manufacturers and Traders Trust Company ("Bank") to
make certain credit facilities available to CVC Products, Inc. ("Borrower"), the
undersigned, a duly authorized officer of Borrower hereby certifies to Bank as
follows:
1. Names.
(a) Prior to and on the date hereof, the exact corporate name of
Borrower, as it appears in its Certificate of Incorporation, its state of
incorporation and its federal employer identification number are as follows:
State of Federal EIN or
Name Incorporation Registration No.
- ---- ------------- ----------------
CVC, Inc. Delaware #16-101-7191
(b) Set forth below is each other corporate name that Borrower has
had since its organization, together with the date of the relevant change:
None
(c) Except as set forth in Schedule 1 annexed hereto, Borrower has
not changed its identity or corporate structure in any way within the past five
years. For purposes of this Certificate, changes in identity or corporate
structure include mergers, consolidations and acquisitions, as well as any
change in form, name, nature or jurisdiction of corporate organization. If any
such change has occurred, Schedule 1 annexed hereto includes the information
required by paragraphs 1, 2 and 3 of this Certificate as to each acquiree or
constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade
names or similar appellations) used by Borrower or any of its divisions or other
business units at any time during the past five years:
CVC
<PAGE>
2. Current Locations.
(a) The chief executive office of Borrower is located at the
following address:
525 Lee Road
Rochester, New York 14606
(b) The following are all locations where Borrower maintains any
books or records relating to any Accounts, in addition to the addresses listed
in part 2(a) above:
None
(c) Listed on Schedule 2 are all the places of business of Borrower
not identified above.
(d) The following are all locations not identified above where
Borrower maintains any Inventory or Equipment:
Same as above
(e) The following are the names and addresses of all Persons other
than Borrower which have possession of any Inventory or Equipment owned by
Borrower:
None
3. Prior Locations. Set forth below is all of the business locations, not
otherwise listed above, which were maintained by Borrower at any time during the
past five (5) years:
Fremont, California - Warm Springs Boulevard
4. Unusual Transactions. All Accounts have been originated by Borrower and
all Inventory and Equipment has been acquired by Borrower in the ordinary course
of business.
Yes
5. Intellectual Property. Attached hereto as Schedule 3 is a list of all
the patents, patent rights, patent applications, copyrights and copyright
applications, trademarks, trademark rights,
-2-
<PAGE>
patent licenses, copyright licenses and trademark licenses now owned or used by
Borrower.
6. Lien Search Reports.
(a) Attached hereto as Schedule 4 are the financing statements or
other filings filed against Borrower in the Uniform Commercial Code filing
office or offices in each jurisdiction identified in paragraphs 2 or 3 above
with respect to Borrower; and
(b) No other financing statement or other filing under the Uniform
Commercial Code has been made in the name of Borrower.
IN WITNESS WHEREOF, the undersigned has executed this Certificate through
its duly authorized officer as of this 14th day of April, 1998.
CVC Products, Inc.
By: /s/ Emilio 0. DiCataldo
----------------------------------
Name: Emilio 0. DiCataldo
Title: Senior Vice President
-3-
<PAGE>
SCHEDULE 1
Changes in Identity or Corporate Structure
NONE
<PAGE>
SCHEDULE 2
Business Locations
(1) 525 Lee Road
Rochester, New York 14606
(2) 3100 Laurelview Court
Fremont, California 94538
(3) 329 Oaks Trail
Garland, Texas 75043
(4) 2914 Montopolis Drive
Austin, Texas 78741
(5) 4530 West 77th Street
Edina, Minnesota 55435
(6) 21 Clarendon Street
Londonderry, Northern Ireland BT487EP
<PAGE>
SCHEDULE 3
Intellectual Property
See Audit Report dated October 8, 1997 from Baker & Botts
as modified by 7 page report prepared by Bill Hulsey
captioned "B-Patent Assets"
<PAGE>
SCHEDULE 4
LIEN SUMMARY
<TABLE>
<CAPTION>
Financing Statement #
------------------------
Date NYDOS Monroe Texas Calif. Secured Creditor Collateral
- ---- ----- ------ ----- ------ ---------------- ----------
State State
----- -----
<S> <C> <C> <C> <C> <C> <C>
10/03/88 88-08783 Chemical Bank specific equip.
- --------------------------------------------------------------------------------------------------------------------
08/26/91 181800 91-6164 Machine Tool Finance leased equip.
- --------------------------------------------------------------------------------------------------------------------
06/04/93 119980 Advanta Leasing Corp. specific equip.
06/10/93 93/3747
- --------------------------------------------------------------------------------------------------------------------
06/03/94 94-4250 Storage Technology leased equip.
06/06/94 115717
- --------------------------------------------------------------------------------------------------------------------
09/12/94 94-6798 Storage Technology leased equip.
- --------------------------------------------------------------------------------------------------------------------
11/02/95 95-7847 Breed Technologies specific equip.
- --------------------------------------------------------------------------------------------------------------------
02/07/96 96/1028 Manufacturers and fixture filing
Traders Trust Company
and M&T Real Estate
02/07/96 96/1031 Manufacturers and Blanket
02/09/96 028550 Traders Trust Company
02/15/96 028241 and M&T Real Estate, Inc.
02/13/96 9604560823
- --------------------------------------------------------------------------------------------------------------------
03/11/96 96/1786 Breed Technologies specific equip.
- --------------------------------------------------------------------------------------------------------------------
09/30/97 97/6148 M&T Real Estate fixture filing
10/06/97 205889
- --------------------------------------------------------------------------------------------------------------------
09/30/97 97/6150 COMIDA fixture filing
10/06/97 205892 equip., payments
and lease rights,
insurance and
condemnation
awards
- --------------------------------------------------------------------------------------------------------------------
09/30/97 97/6146 M&T Real Estate fixture filing
10/06/97 205895 equip., insurance
and condemnation
awards
</TABLE>
No filings with Minnesota Secretary of State
<PAGE>
AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
[LOGO] MANUFACTURERS AND TRADERS TRUST COMPANY
Name(s) of Undersigned CVC, INC. ("Debtor" or "Undersigned"), formerly known as
CVC HOLDINGS, INC.
Address(es) of Undersigned 525 Lee Road, Rochester, New York 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") See Addendum for additional Secured
Parties. 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
- ----------------- ---------------------------------------------------------
(Name) Type of entity and, if not an individual, jurisdiction in
which organized)
_________________________________ having his or her residence or its only place
of business or chief executive office
at 525 Lee Road, Rochester, New York 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
receiver 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
(xi) Products, and (xii) Investment Property.
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 each Secured Party a security interest in, and assigns, pledges and
hypothecates each 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, the financial and other information required to be provided
to Bank by Borrower under a Loan Agreement entered into by Borrower and Bank on
or about the date this Agreement was executed and 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 at 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 at 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 or 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 at 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 title 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
interns 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 Debtors business, (I) abandon, assign, sell, lease, exchange or
otherwise transfer or 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, (Ill) 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.
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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 premises 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) identity 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 much 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 Doctor 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 solo 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 at
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 attorneys 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
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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 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, any amendment of any such
financing statement or any application for any certificate of title or notice of
lien relating to any Goods included in 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 4ii
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 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 premises 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
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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 or 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 effect on the value of any of the Collateral as security
for the payment of the Obligations or otherwise be incontinent 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 manor 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 Land.
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 protein 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 as
of the date of this Agreement
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 lapse 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, one 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 duly 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 nor 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 any 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:
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i. Each Instrument, Document and Deposit Account included in the
Collateral at such time is genuine, as 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 respects 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 thereof or of any other such right or
remedy. No notice or demand of any kind, and no attempted but unsuccessful
notice or demand of any kind, by the Secured Party prior to exercising any such
right or remedy on any one occasion, 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 duly 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 or 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 duly 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 or
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
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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 Obligations, (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, name, 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 or of 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 much 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 portion of the
Obligations arising after such receipt of such notice and the expiration of such
period of time and constituting a liability, cost or expense described in
Section 4j 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 Now 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 an 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) waive; in each such
action end other legal proceeding each right to trial by jury and each right to
assert any counterclaim or staff 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
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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 Debtors 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 mother 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.
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 front 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 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
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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, Investment Proper, 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 at, 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 of
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. See Addendum.
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 of 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 or, 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
exiting 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
Parties or to any 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, trade 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 of such Person are hereafter directly or indirectly assigned or
otherwise transferred.
17. The attached Addendum is an integral part of this Security Agreement.
Dated [ILLEGIBLE], 1998 CVC, INC.
----------------- -----------------------------
By: Emilio O. DiCataldo
-----------------------------
Name: Emilio O. DiCataldo
-----------------------------
Title: Senior Vice President and CFO
-----------------------------
ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, 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
Vice President and CFO of CVC, 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.
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires, Oct 31, 94
FOR BANK USE ONLY: Authorization confirmed. /s/ [ILLEGIBLE]
-----------------------
Exhibit A See Schedule attached to a Loan
Agreement between Bank and Borrower
executed the same date this Security
Agreement was executed.
Permitted Financing Statements and Other Evidences of Lien (Section 4x):
11
<PAGE>
Permitted Transfers, Pledges and Other Actions with Respect to Uncertificated
Securities (Section 4y):
Exceptions to Representations and Warranties (Clauses (v), (vi), (vii), (viii),
(ix) and (x) of Section 9a):
Description of Real Property on Which Crop or Timber Located (Clause (xiii) of
Section 9a):
Permitted Liens (Clause (i) of Section 16l):
QUESTIONNAIRE *See attached Perfection Certificate
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)?
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?
3. What is the address (including county) of the residence, only place of
business or chief executive office of the undersigned?
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?
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?
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?
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 Goads 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?
Dated: April 14, 1998 CVC, INC.
------------------------ -----------------------------
By: /s/ Emilio O. DiCataldo
-----------------------------
Name: Emilio O. DiCataldo
-----------------------------
Title: Senior Vice President and CFO
-----------------------------
12
<PAGE>
ADDENDUM TO AN AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
DATED AS OF MARCH 31, 1998
EXECUTED BY CVC, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY AND OTHERS
This ADDENDUM is made to an Amended and Restated General Security
Agreement ("Agreement"), dated as of March 31, 1998, executed by CVC, INC.
("Borrower") in favor of MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank") and
others. This Addendum is an integral part of the Agreement.
1. This Agreement restates and amends a General Security Agreement
executed by Borrower (under its former name of "CVC Holdings, Inc.") in favor of
Bank on or about February 2, 1996, as previously amended, if at all.
2. M&T Real Estate, Inc. ("RE") and M&T Financial Corporation ("MFC"),
each of whose principal place of business is located at One M&T Plaza, Buffalo,
New York, are each additional Secured Parties under this Agreement.
Manufacturers and Traders Trust Company ("M&T"), RE and MFC are collectively
referred to in this Agreement as "Secured Parties" and individually as a
"Secured Party". M&T may also be at times referred to in this Agreement as
"Bank". CVC, Inc. is at times referred to in this Agreement as "Debtor",
"undersigned" and "Undersigned". All references in this Agreement to "Secured
Party" shall be deemed to be to "Secured Parties or any Secured Party."
3. The following is inserted between the words "General Intangibles" and
"Instruments" in the fourth line of the first sentence of Section 16b
(Definition of Collateral) of the preprinted portion of this Agreement:
"(including but not limited to all patents and patent applications,
rights under all licenses, trade secrets, trademarks, copyrights and
other intellectual property of any nature or kind (collectively
"Intellectual Property"), whether such Intellectual Property is now
owned by the undersigned or in which the undersigned now has any
interest or such Intellectual Property is hereafter acquired by the
undersigned or in which the undersigned hereafter acquires any
interest),"
4. Section 16e of the preprinted form of the General Security Agreement is
deemed deleted and replaced with the following:
"e. An Event of Default occurs or exists at any time that an Event
of Default occurs or exists under the Loan Agreement entered into by
Borrower (CVC Products, Inc.) and Bank on or about the date this
Agreement was executed ("Loan
<PAGE>
Agreement"), as the Loan Agreement is amended, extended or replaced
from time to time."
IN WITNESS WHEREOF, Debtor has executed this Addendum, together with the
preprinted form of the Agreement, on the date indicated in the Acknowledgement,
effective as of March 31, 1998.
CVC, INC.
By: /s/ Emilio O. DiCataldo
----------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
STATE OF NEW YORK)
COUNTY OF MONROE) ss:
On this 14th day of April, 1998, 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 CFO of CVC, 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/ GARY F. AMENDOLA
---------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
2
<PAGE>
PERFECTION CERTIFICATE
(CVC, INC.)
In order to induce Manufacturers and Traders Trust Company ("Bank") to
make certain credit facilities available to CVC Products, Inc., the undersigned,
a duly authorized officer of CVC, Inc. ("Parent") (which owns all of the issued
and outstanding stock of CVC Products, Inc.) hereby certifies to Bank as
follows:
1. Names.
(a) Prior to and on the date hereof, the exact corporate name of
Parent, as it appears in its Certificate of Incorporation, its state of
incorporation and its federal employer identification number are as follows:
State of Federal EIN or
Name Incorporation Registration No.
- ---- ------------- ----------------
CVC, Inc. Delaware #16-138-3279
(b) Set forth below is each other corporate name that Parent has had
since its organization, together with the date of the relevant change:
Previous Name - CVC Holdings, Inc.
Effective Date of Name Change - 10/15/97
(c) Except as set forth in Schedule 1 annexed hereto, Parent has not
changed its identity or corporate structure in any way within the past five
years. For purposes of this Certificate, changes in identity or corporate
structure include mergers, consolidations and acquisitions, as well as any
change in form, name, nature or jurisdiction of corporate organization. If any
such change has occurred, Schedule 1 annexed hereto includes the information
required by paragraphs 1, 2 and 3 of this Certificate as to each acquiree or
constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade
names or similar appellations) used by Parent or any of its divisions or other
business units at any time during the past five years:
CVC
<PAGE>
2. Current Locations.
(a) The chief executive office of Parent is located at the following
address:
525 Lee Road
Rochester, New York 14606
(b) The following are all locations where Parent maintains any books
or records relating to any Accounts, in addition to the addresses listed in part
2(a) above:
None
(c) Listed on Schedule 2 are all the places of business of Parent
not identified above.
(d) The following are all locations not identified above where
Parent maintains any Inventory or Equipment:
See Schedule 2
(e) The following are the names and addresses of all Persons other
than Parent which have possession of any Inventory or Equipment owned by Parent:
None
3. Prior Locations. Set forth below is all of the business locations, not
otherwise listed above, which were maintained by Parent at any time during the
past five (5) years:
Fremont, California - Warm Springs Boulevard
4. Unusual Transactions. All Accounts have been originated by Parent and
all Inventory and Equipment has been acquired by Parent in the ordinary course
of business.
Yes
5. Intellectual Property. Attached hereto as Schedule 3 is a list of all
the patents, patent rights, patent applications, copyrights and copyright
applications, trademarks, trademark rights, patent licenses, copyright licenses
and trademark licenses now owned or used by Parent.
-2-
<PAGE>
6. Lien Search Reports.
(a) Attached hereto as Schedule 4 are the financing statements or
other filings filed against Parent in the Uniform Commercial Code filing office
or offices in each jurisdiction identified in paragraphs 2 or 3 above with
respect to Parent; and
(b) No other financing statement or other filing under the Uniform
Commercial Code has been made in the name of Parent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate through
its duly authorized officer as of this 14th day of April, 1998.
CVC, Inc.
By: /s/ Emilio 0. DiCataldo
----------------------------------
Name: Emilio 0. DiCataldo
Title: Senior Vice President
-3-
<PAGE>
SCHEDULE 1
Changes in Identity or Corporate Structure
See answer to Question 1(b) on Perfection Certificate
<PAGE>
SCHEDULE 2
Business Locations
(1) 525 Lee Road
Rochester, New York 14606
(2) 3100 Laurelview Court
Fremont, California 94538
(3) 329 Oaks Trail
Garland, Texas 75043
(4) 2914 Montopolis Drive
Austin, Texas 78741
(5) 4530 West 77th Street
Edina, Minnesota 55435
(6) 21 Clarendon Street
Londonderry, Northern Ireland BT487EP
<PAGE>
SCHEDULE 3
Intellectual Property
See Baker & Botts IP Audit Report as of 10/8/97
as updated in a 7 page report
prepared by Bill Hulsey captioned
"B Patent Assets"
<PAGE>
SCHEDULE 4
LIEN SUMMARY
CVC, INC.
<TABLE>
<CAPTION>
Financing Statement #
------------------------
Date NYDOS Monroe Texas Calif. Minn.
- ---- ----- ------ ----- ------ ----
State State State
----- ----- -----
<S> <C> <C> <C> <C> <C>
none none none none none
</TABLE>
CVC HOLDINGS, INC.
<TABLE>
<CAPTION>
Financing Statement #
------------------------
Date NYDOS Monroe Texas Calif. Secured Creditor Collateral
- ---- ----- ------ ----- ------ ---------------- ----------
State State
----- -----
<S> <C> <C> <C> <C> <C> <C>
02/07/96 96/1029 Manufacturers and fixture [ILLEGIBLE]
Traders Trust Company
02/07/96 96/1030 Manufacturers and Blanket
02/09/96 028551 Traders Trust Company
02/15/96 028242
02/13/96 9604560806
</TABLE>
no filings with Minnesota Secretary of State
<PAGE>
================================================================================
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
Dated as of March 31, 1998
among
CVC, INC.
CVC PRODUCTS, INC.
and
MANUFACTURERS AND TRADERS TRUST COMPANY
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page No.
- ------- --------
1. DEFINITIONS ......................................................... 2
2. GRANT OF SECURITY INTEREST .......................................... 4
3. REPRESENTATIONS, WARRANTIES AND COVENANTS ........................... 4
4. NO TRANSFER OR INCONSISTENT AGREEMENTS .............................. 5
5. AFTER-ACQUIRED PATENTS, ETC. ........................................ 5
5.1 After-acquired Patents ..................................... 5
5.2 Amendment to Schedule ...................................... 5
6. PATENT PROSECUTION .................................................. 6
6.1 Assignors Responsible ...................................... 6
6.2 Assignors' Duties, etc. .................................... 6
6.3 Assignors' Enforcement Rights .............................. 6
6.4 Protection of Patents, etc. ................................ 7
6.5 Notification by Assignors .................................. 7
7. LICENSE BACK TO ASSIGNORS ........................................... 7
8. REMEDIES ............................................................ 7
9. COLLATERAL PROTECTION ............................................... 8
10. POWER OF ATTORNEY ................................................... 8
11. FURTHER ASSURANCES .................................................. 9
12. TERMINATION ......................................................... 9
13. COURSE OF DEALING ................................................... 9
14. EXPENSES ............................................................ 10
15. OVERDUE AMOUNTS ..................................................... 10
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION ......................... 10
17. RIGHTS AND REMEDIES CUMULATIVE ...................................... 10
18. NOTICES ............................................................. 11
19. AMENDMENT AND WAIVER ................................................ 11
20. GOVERNING LAW; CONSENT TO JURISDICTION .............................. 12
21. WAIVER OF JURY TRIAL ................................................ 12
22. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC. ............................. 12
22. MISCELLANEOUS ....................................................... 13
<PAGE>
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT dated as of March 31,
1998, between CVC, INC., a Delaware corporation ("Parent"), CVC PRODUCTS, INC.,
a Delaware corporation ("Borrower" and, together with Parent, "Assignors"), both
of which have their principal places of business at 525 Lee Road, Rochester, New
York, and MANUFACTURERS AND TRADERS TRUST COMPANY, having an office at One M&T
Plaza, Buffalo, New York 14203 (the "Bank").
WHEREAS, the Borrower and the Bank are parties to a Loan Agreement, dated
as of March 31, 1998, (as amended and in effect from time to time, the "Loan
Agreement");
WHEREAS, it is a condition precedent to the Bank making any loans or
otherwise extending credit to the Borrower under the Loan Agreement that the
Assignors execute and deliver to the Bank this Agreement;
WHEREAS, the Borrower has previously executed and delivered to the Bank a
General Security Agreement, dated as of February 2, 1996, as amended (the
"Original Borrower Security Agreement"), pursuant to which the Borrower granted
to the Bank a first priority perfected security interest in all of the
Borrower's personal property and fixture assets, including, without limitation,
the patents and patent applications listed on Schedule A attached hereto, all to
secure the payment and performance of all the indebtedness of the Borrower to
the Bank, whenever arising and, on even date herewith, Borrower has executed and
delivered an Amended and Restated General Security Agreement ("Restated Borrower
Security Agreement") in favor of Bank, pursuant to which the Original Borrower
Security Agreement has been amended and restated; and
WHEREAS, the Parent has previously executed and delivered to Bank a
General Security Agreement, dated as of February 2, 1996 (the "Original Parent
Security Agreement"), pursuant to which the Parent granted to the Bank a first
priority perfected security interest in all of the Parent's personal property
and fixture assets, including, without limitation the patents and patent
applications listed on Schedule A attached hereto, to the extent that the Parent
has an interest therein, all to secure the payment and performance of all of the
indebtedness of the Parent to the Bank, whenever arising, and, on even date
herewith, Parent has executed and delivered an Amended and Restated General
Security Agreement ("Restated Parent Security Agreement") in favor of Bank,
pursuant to which the Original Parent Security Agreement has been amended and
restated; and
WHEREAS, this Patent Agreement (defined below) is supplemental to the
provisions contained in the Restated Borrower Security Agreement and the
Restated Parent Security Agreement (together, the "Security Agreements");
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE>
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Loan Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Patent Agreement referred to below:
Assignors means Borrower and Parent, collectively and individually.
Event of Default means any "Event of Default" which has occurred under the
Restated Borrower Security Agreement or the Restated Parent Security Agreement.
Obligations means, collectively, any indebtedness, liabilities and
obligations for payment of money, regardless of kind, class or form and whether
for the payment of principal or of interest or otherwise, incurred, for any
business, commercial, agricultural or consumer purposes 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 an 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 tortuous, liquidated or unliquidated, arising by
operation of law or otherwise, that are now or hereafter owing by either
Assignors in any capacity, whether alone or otherwise, to the Bank in any
capacity, whether or not allowed as a claim against such Assignors in any case
or other proceeding pursuant to any bankruptcy or insolvency statute, regulation
or other law or 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.
Patent Agreement means this Patent Collateral Assignment and Security
Agreement, as amended and in effect from time to time.
Patent Collateral means all of the Assignors' right, title and interest in
and to all of the Patents, the Patent License Rights, and all other Patent
Rights, and all additions, improvements, and accessions to, all substitutions
for and replacements of, and all products and Proceeds (including insurance
proceeds) of any and all of the foregoing, and all books and records and
technical information and data describing or used in connection with any and all
such rights, interest, assets or property.
Patent License Rights means any and all past, present or future rights and
interests of the Assignors pursuant to any and all past, present and future
licensing agreements in favor of the Assignors, or to which either Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignors or the Bank to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
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Patent Rights means any and all past, present or future rights in, to and
associated with the Patents throughout the world, whether arising under federal
law, state law, common law, foreign law, or otherwise, including but not limited
to the following: all such rights arising out of or associated with the Patents;
the right (but not the obligation) to register claims under any federal, state
or foreign patent law or regulation; the right (but not the obligation) to sue
or bring opposition or bring cancellation proceedings in the name of the
Assignors or the Bank for any and all past, present and future infringements of
or any other damages or injury to the Patents or the Patent Rights, and the
rights to damages or profits due or accrued arising out of or in connection with
any such past, present or future infringement, damage or injury; and the Patent
License Rights.
Patents means all patents and patent applications, whether United States
or foreign, that are owned by the Assignors or in which the Assignors have any
right, title or interest, now or in the future, including but not limited to:
(a) the patents and patent applications listed on Schedule A hereto (as
the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other country, and all
applications for letters patent of the United States or any other country;
(c) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right to
make, use, practice and/or sell (or license or otherwise transfer or dispose of)
the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute applications
for such Patents.
Proceeds means any consideration received from the sale, exchange,
license, lease or other disposition or transfer of any right, interest, asset or
property which constitutes all or any part of the Patent Collateral, any value
received as a consequence of the ownership, possession, use or practice of any
Patent Collateral, and any payment received from any insurer or other person or
entity as a result of the destruction or the loss, theft or other involuntary
conversion of whatever nature of any right, interest, asset or property which
constitutes all or any part of the Patent Collateral.
PTO means the United States Patent and Trademark Office or any successor
agency or office.
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2. GRANT OF SECURITY INTEREST.
To secure the payment and performance in full of any and all Obligations,
the Assignors hereby grant, assign, transfer and conveys to the Bank, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. THE BANK ASSUMES NO LIABILITY
ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH COLLATERAL SECURITY.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Assignors represent, warrant and covenant that: (i) Schedule A
attached hereto sets forth a true and complete list of all the patents, rights
to patents and patent applications now owned, licensed, controlled or used by
the Assignors; (ii) the issued Patents are subsisting and have not been adjudged
invalid or unenforceable, in whole or in part, and there is no litigation or
proceeding pending concerning the validity or enforceability of the issued
Patents; (iii) to the best of the Assignors' knowledge, each of the issued
Patents is valid and enforceable; (iv) to the best of the Assignors' knowledge,
there is no infringement by others of the issued Patents or Patent Rights; (v)
no claim has been made that the use of any of the Patents does or may violate
the rights of any third person, and to the best of the Assignors' knowledge
there is no infringement by the Assignors of the patent rights of others; (vi)
the Assignors indicated on Schedule A attached hereto is the sole and exclusive
owner of the entire and unencumbered right, title and interest in and to each of
the Patents (other than ownership and other rights reserved by third party
owners with respect to Patents which the Assignors are licensed to practice or
use as indicated on Schedule A attached hereto), free and clear of any liens,
charges, encumbrances and adverse claims, including without limitation pledges,
assignments, licenses, shop rights and covenants by the Assignors not to sue
third persons, other than the security agreement and mortgage created by the
Security Agreement and this Patent Agreement; (vii) the Assignors have the
unqualified right to enter into this Patent Agreement and perform its terms and
have entered and will enter into written agreements with each of their present
and future employees, agents, consultants, licensors and licensees which will
enable them to comply with the covenants herein contained; (viii) this Patent
Agreement, together with the Security Agreements, will create in favor of the
Bank a valid and perfected first priority security interest in the Patent
Collateral upon making the filings referred to in clause (ix) of this Section 3;
and (ix) except for the filing of financing statements with the Monroe County
Clerk and the Secretary of State for the State of New York under the Uniform
Commercial Code and the filing of this Patent Agreement with the PTO, no
authorization, approval or other action by, and no notice to or filing with, any
governmental or regulatory authority, agency or office is required either (1)
for the grant by the Assignors or the effectiveness of the security interest and
assignment granted hereby or for the execution, delivery and performance of this
Patent Agreement by the Assignors, or (2) for the perfection of or the exercise
by the Bank of any of its rights and remedies hereunder.
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4. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Bank's prior written consent, the Assignors will not (i)
mortgage, pledge, assign, encumber, grant a security interest in, transfer,
license or alienate any of the Patent Collateral, or (ii) enter into any
agreement (for example, a license agreement) that is inconsistent with the
Assignors' obligations under this Patent Agreement or the Security Agreements.
The Bank will not unreasonably delay in responding to any request by the
Assignors for a consent to any action prohibited by this Section 4.
5. AFTER-ACQUIRED PATENTS, ETC.
5.1 After-acquired Patents.
If, before the Obligations shall have been finally paid and
satisfied in full and both Assignors no longer have a right to request advances
from Bank and all lines of credit terminated by Bank, the Assignors shall obtain
any right, title or interest in or to any other or new patents, patent
applications or patentable inventions, or become entitled to the benefit of any
patent application or patent or any reissue, division, continuation, renewal,
extension, or continuation-in-part of any of the Patent Collateral or any
improvement on any of the Patent Collateral, the provisions of this Patent
Agreement shall automatically apply thereto and the Assignors shall promptly
give to the Bank notice thereof in writing and execute and deliver to the Bank
such documents or instruments as the Bank may reasonably request further to
transfer title thereto to the Bank as required herein.
5.2 Amendment to Schedule.
The Assignors authorize the Bank to modify this Patent Agreement, without the
necessity of the Assignors' further approval or signature, by amending Schedule
A hereto to include any future or other Patents or Patent Rights under Section 2
or Section 5 hereof.
6. PATENT PROSECUTION.
6.1 Assignors Responsible.
The Assignors shall assume full and complete responsibility for the
prosecution, grant, enforcement or any other necessary or desirable actions in
connection with the Patent Collateral, and shall hold the Bank harmless from any
and all costs, damages, liabilities and expenses which may be incurred by the
Bank in connection with the Bank's title to any of the Patent Collateral or any
other action or failure to act in connection with this Patent Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignors shall retain patent counsel acceptable to the Bank. The Bank shall not
unreasonably delay in responding to any written inquiry as to the acceptability
of patent counsel proposed by the Assignors.
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6.2 Assignors' Duties, Etc.
The Assignors shall have the duty, through patent counsel acceptable
to the Bank, to prosecute diligently any patent applications of the Patents
pending as of the date of this Patent Agreement or thereafter, to make
application for unpatented but reasonably patentable inventions and to preserve
and maintain all rights in the Patents, including without limitation the payment
when due of all maintenance fees and other fees, taxes and other expenses which
shall be incurred or which shall accrue with respect to any of the Patents. Any
expenses incurred in connection with such applications and actions shall be
borne by the Assignors. The Assignors shall not abandon any filed patent
application, or any pending patent application or patent, without the consent of
the Bank, which consent shall not be unreasonably withheld. The Bank hereby
appoints the Assignors as its agent for all matters referred to in the foregoing
provisions of this Section 6 and agrees to execute any documents necessary to
confirm such appointment. Upon the occurrence and during the continuance of an
Event of Default, the Bank may terminate such agency by providing written notice
of termination to the Assignors. The Bank shall not unreasonably delay in
responding to any written inquiry as to the acceptability of patent counsel
pursuant to this Section 6.2 or the abandonment of any patent application.
6.3 Assignors' Enforcement Rights.
The Assignors shall have the right, with the consent of the Bank,
which shall not be unreasonably withheld, to bring suit or other action in the
Assignors' own name(s) to enforce the Patents and the Patent Rights. The Bank
shall be required to join in such suit or action as may be necessary to assure
the Assignors' ability to bring and maintain any such suit or action in any
proper forum so long as the Bank is completely satisfied that such joinder will
not subject the Bank to any risk of liability. The Assignors shall promptly,
upon demand, reimburse and indemnify the Bank for all damages, costs and
expenses, including legal fees, incurred by the Bank pursuant to this Section 6.
6.4 Protection of Patents, Etc.
In general, the Assignors shall take any and all such actions
(including but not limited to institution and maintenance of suits, proceedings
or actions) as may be necessary or appropriate to properly maintain, protect,
preserve, care for and enforce the Patent Collateral. The Assignors shall not
take or fail to take any action, nor permit any action to be taken or not taken
by others under their control, which would affect the validity, grant or
enforcement of any of the Patent Collateral.
6.5 Notification by Assignors.
Promptly upon obtaining knowledge thereof, the Assignors will notify
the Bank in writing of the institution of, or any final adverse determination
in, any proceeding in the PTO or any similar office or agency of the United
States or any foreign country, or any court, regarding the validity of any of
the Patents or the Assignors' rights, title or interests in and to any of the
Patent Collateral, and of any event which does or
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<PAGE>
reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Assignors or the Bank to dispose of any of the
Patent Collateral or the rights and remedies of the Bank in relation thereto
(including, but not limited to, the levy of any legal process against any of the
Patent Collateral).
7. LICENSE BACK TO ASSIGNORS.
Unless and until there shall have occurred and be continuing an Event of
Default and the Bank has notified the Assignors that the license granted
hereunder is terminated, the Bank hereby grants to the Assignors the sole and
exclusive, nontransferable, royalty-free, worldwide right and license under the
Patents to make, have made for them, use, sell and otherwise practice the
inventions disclosed and claimed in the Patents for the Assignors' own benefit
and account and for none other; provided, however, that the foregoing right and
license shall be no greater in scope than, and limited by, the rights assigned
to the Bank by the Assignors hereby. The Assignors agree not to sell, assign,
transfer, encumber or sublicense their interest in the license granted to the
Assignors in this Section 7, without the prior written consent of the Bank. Any
such sublicenses granted on or after the date hereof shall be terminable by the
Bank upon termination of the Assignors' license hereunder.
8. REMEDIES.
If any Event of Default shall have occurred and be continuing, then upon
notice by the Bank to the Assignors: (i) the Assignors' license with respect to
the Patents as set forth in Section 7 shall terminate; (ii) the Assignors shall
immediately cease and desist from the practice, manufacture, use and sale of the
inventions claimed, disclosed or covered by the Patents; and (iii) the Bank
shall have, in addition to all other rights and remedies given it by this Patent
Agreement, the Loan Agreement, the Security Agreements, and all other
agreements, instruments and documents executed by Borrower and/or Parent in
favor of Bank at any time, those allowed by law and the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in the State of New
York and, without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without other notice (except as
set forth next below) or demand whatsoever to the Assignors, all of which are
hereby expressly waived, and without advertisement, sell or license at public or
private sale or otherwise realize upon the whole or from time to time any part
of the Patent Collateral, or any interest which the Assignors may have therein,
and after deducting from the proceeds of sale or other disposition of the Patent
Collateral all reasonable expenses (including all reasonable expenses for
broker's fees and legal services), shall apply the residue of such proceeds
toward the payment of the Obligations as set forth in the Security Agreements.
Notice of any sale, license or other disposition of any of the Patent Collateral
shall be given to the Assignors at least five (5) days before the time that any
intended public sale or other disposition of such Patent Collateral is to be
made or after which any private sale or other disposition of such Patent
Collateral may be made, which the Assignors hereby agrees shall be reasonable
notice of such public or private sale or
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<PAGE>
other disposition. At any such sale or other disposition, the Bank may, to the
extent permitted under applicable law, purchase or license the whole or any part
of the Patent Collateral or interests therein sold, licensed or otherwise
disposed of.
9. COLLATERAL PROTECTION.
If the Assignors shall fail to do any act that they have covenanted to do
hereunder, or if any representation or warranty of the Assignors shall be
breached, the Bank, in their own name or that of the Assignors (in the sole
discretion of the Bank), may (but shall not be obligated to) do such act or
remedy such breach (or cause such act to be done or such breach to be remedied),
and the Assignors agree promptly to reimburse the Bank for any cost or expense
incurred by the Bank in so doing.
10. POWER OF ATTORNEY.
If any Event of Default shall have occurred and be continuing, the
Assignors do hereby make, constitute and appoint the Bank (and any officer or
agent of the Bank as the Bank may select in its exclusive discretion) as the
Assignors' true and lawful attorney-in-fact, with the power to endorse the
Assignors' name on all applications, documents, papers and instruments necessary
for the Bank to use any of the Patent Collateral, to practice, make, use or sell
the inventions disclosed or claimed in any of the Patent Collateral, to grant or
issue any exclusive or nonexclusive license of any of the Patent Collateral to
any third person, or necessary for the Bank to assign, pledge, convey or
otherwise transfer title in or dispose of the Patent Collateral or any part
thereof or interest therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts which the Assignors
are obligated to execute and do hereunder. The Assignors hereby ratify all that
such attorney shall lawfully do or cause to be done by virtue hereof, and
releases the Bank from any claims, liabilities, causes of action or demands
arising out of or in connection with any action taken or omitted to be taken by
the Bank under this power of attorney (except for the Bank's gross negligence or
willful misconduct). This power of attorney shall be irrevocable for the
duration of this Patent Agreement.
11. FURTHER ASSURANCES.
The Assignors shall, at any time and from time to time, and at their
expense, make, execute, acknowledge and deliver, and file and record as
necessary or appropriate with governmental or regulatory authorities, agencies
or offices, such agreements, assignments, documents and instruments, and do such
other and further acts and things (including, without limitation, obtaining
consents of third parties), as the Bank may request or as may be necessary or
appropriate in order to implement and effect fully the intentions, purposes and
provisions of this Patent Agreement, or to assure and confirm to the Bank the
grant, perfection and priority of the Bank's security interest in any of the
Patent Collateral.
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<PAGE>
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full and neither of the Assignors have any right to request
advances from Bank under a line of credit, this Patent Agreement shall terminate
and the Bank shall, upon the written request and at the expense of the
Assignors, execute and deliver to the Assignors all deeds, assignments and other
instruments as may be necessary or proper to reassign and reconvey to and
re-vest in the Assignors the entire right, title and interest to the Patent
Collateral previously granted, assigned, transferred and conveyed to the Bank by
the Assignors pursuant to this Patent Agreement, as fully as if this Patent
Agreement had not been made, subject to any disposition of all or any part
thereof which may have been made by the Bank pursuant hereto or the Security
Agreements.
13. COURSE OF DEALING.
No course of dealing among the Assignors and the Bank, nor any failure to
exercise, nor any delay in exercising, on the part of the Bank, any right, power
or privilege hereunder or under the Security Agreements shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
the Bank in connection with the preparation of this Patent Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances
or otherwise protecting, maintaining or preserving any of the Patent Collateral,
or in defending or prosecuting any actions or proceedings arising out of or
related to any of the Patent Collateral, shall be borne and paid by the
Assignors.
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Assignors hereunder shall
be a debt secured by the Patent Collateral and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Loan Agreement.
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<PAGE>
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE BANK
ASSUMES NO LIABILITIES OF THE ASSIGNORS WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNORS' OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNORS, AND THE
ASSIGNORS SHALL INDEMNIFY THE BANK FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND
CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE BANK WITH RESPECT TO SUCH
LIABILITIES.
17. RIGHTS AND REMEDIES CUMULATIVE.
All of the Bank's rights and remedies with respect to the Patent
Collateral, whether established hereby or by the Security Agreements or by any
other agreements or by law, shall be cumulative and may be exercised singularly
or concurrently. This Patent Agreement is supplemental to the Security
Agreements, and nothing contained herein shall in any way derogate from any of
the rights or remedies of the Bank contained therein. Nothing contained in this
Patent Agreement shall be deemed to extend the time of attachment or perfection
of or otherwise impair the security interest in any of the Patent Collateral
granted to the Bank under the Security Agreements.
18. NOTICES.
All notices and other communications made or required to be given pursuant
to this Patent Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as follows:
(a) if to the Assignors, at CVC, Inc. and CVC Products, Inc., Attention:
Emilio 0. DiCataldo, Senior Vice President and Chief Financial Officer, at the
address first listed above or at such other address for notice as the Assignors
shall last have furnished in writing to the person giving the notice; and
(b) if to the Bank, at One M&T Plaza, Buffalo, New York 14203, Attention:
Collateral Department or at such other address for notice as the Bank shall last
have furnished in wiring to the person giving the notice, with copies to the
Bank at 255 East Avenue, Rochester, New York 14604, Attention: William Holston,
Vice President.
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<PAGE>
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand to a responsible officer of the
party to which it is directed, at the time of the receipt thereof by such
officer, (ii) if sent by registered or certified first-class mail, postage
prepaid, two (2) Business Days after the posting thereof, and (iii) if sent by
telegraph, telecopy, or telex, at the time of the dispatch thereof, if in normal
business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.
19. AMENDMENT AND WAIVER.
This Patent Agreement is subject to modification only by a writing signed
by the Bank and the Assignors, except as provided in Section 5.2. The Bank shall
not be deemed to have waived any right hereunder unless such waiver shall be in
writing and signed by the Bank. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion.
20. GOVERNING LAW; CONSENT TO JURISDICTION
THIS PATENT AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. The Assignors agree that any suit for the enforcement of this
Patent Agreement may be brought in the courts of the County of Monroe or any
federal court sitting therein and consents to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon the
Assignors by mail at the address specified in Section 18. The Assignors hereby
waive any objection that they may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
21. WAIVER OF JURY TRIAL.
THE ASSIGNORS WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS PATENT AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Assignors waive any right which
they may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Assignors (i) certify
that neither the Bank nor any representative, agent or attorney of the Bank has
represented, expressly or otherwise, that the Bank would not, in the event of
litigation, seek to enforce the foregoing waivers, and (ii) acknowledges that,
in entering into the Loan Agreement and the other agreements, notes, instruments
and documents executed in connection therewith to which the Bank is a party, the
Bank is relying upon, among other things, the waivers and certifications
contained in this Section 21.
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<PAGE>
22. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC.
Notwithstanding anything herein to the contrary, Bank shall not be deemed
to have unreasonably delayed in responding to a request for a consent hereunder
or the approval of a counsel proposed by Assignors whom the Bank must consent to
unless Bank fails to respond to a request for such consent or acceptance of
proposed counsel for 10 days after such request is submitted and Assignors
thereafter notify Bank in writing that they believe Bank has unreasonably
delayed in responding to such request and Bank continues for more than 10 days
after its receipt of such notice to respond to such request. In any event, the
sole remedy for Assignors if Bank unreasonably delayed in responding to any such
request shall be that it loses its right to consent to any such action or to
approve any such counsel.
23. MISCELLANEOUS.
The headings of each section of this Patent Agreement are for convenience
only and shall not define or limit the provisions thereof. This Patent Agreement
and all rights and obligations hereunder shall be binding upon the Assignors and
their respective successors and permitted assigns, and shall inure to the
benefit of the Bank and its successors and assigns. In the event of any
irreconcilable conflict between the provisions of this Patent Agreement and the
Loan Agreement, or between this Patent Agreement and the Security Agreements,
the provisions of the Loan Agreement or the Security Agreements, as the case may
be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignors acknowledge receipt of a copy of this Patent
Agreement. All obligations of the Assignors hereunder shall be joint and
several.
IN WITNESS WHEREOF, this Patent Agreement has been executed as of the day
and year first above written.
CVC, INC.
By: /s/ Emilio O. DiCataldo
----------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
----------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
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MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ William Holston
---------------------------
Name: William Holston
Title: Vice President
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<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998 personally appeared Emilio 0.
DiCataldo to me known personally, and who, being by me duly sworn, deposes and
says that he is the Senior Vice President and CFO of CVC, INC., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and he acknowledged said instrument to be the free act
and deed of said corporation.
---------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998 personally appeared Emilio 0.
DiCataldo to me known personally, and who, being by me duly sworn, deposes and
says that he is the Senior Vice President and CFO of CVC PRODUCTS, INC., and
that said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and he acknowledged said instrument to be
the free act and deed of said corporation.
---------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998 personally appeared William Holston
to me known personally, and who, being by me duly sworn, deposes and says that
he is the Vice President of MANUFACTURERS AND TRADERS TRUST COMPANY, and that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors, and he acknowledged said instrument to be the free
act and deed of said corporation.
---------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
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SCHEDULE A
ISSUED AND PENDING PATENTS
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<PAGE>
SCHEDULE A
A. U.S. Patents 5,248,402 and 5,630,916
B. Patent Assets
1. Pending Patent Applications
The following patent applications are currently pending in the United
States Patent and Trademark Office:
File No.: CVC1100
Former File No. 021208.0151
Title: Apparatus and Method for Multizone
High-Density Inductively-Coupled Plasma
Generation.
Filing Date: 07/05/97
Serial No.: US97/12243 (PCT)
Status: New National Stage Reminder 10/10/98
New National Stage Reminder 01/10/99
File No.: CVC1100
Former File No. 021208.0156
Title: Apparatus and Method for Multizone
High-Density Inductively-Coupled Plasma
Generation.
Filing Date: 07/09/97
Serial No.: 86109690 (Taiwan)
Status: Pending
File No.: CVC1100
Former File No. 021208.0165
Title: Apparatus and Method for Multizone
High-Density Inductively-Coupled Plasma
Generation.
Filing Date: 09/12/97
Serial No.: 08/928,617 (Divisional)
Status: Foreign Filing Reminder 07/12/98
Foreign Filing Due 09/12/98
Application Status Check 03/12/99
(1)
<PAGE>
File No.: CVC1100
Former File No. 021208.0102
Title: Apparatus and Method for Multizone
High-Density Inductively-Coupled Plasma
Generation.
Filing Date: 07/10/96
Serial No.: 04/678,065
Status: 3 Mon OA: Due Date 05/13/98
3 Mon OA: 1st Extension 06/13/98
3 Mon OA: 2nd Extension 07/13/98
3 Mon OA: 6 Month Final 01/13/98
File No.: CVC1130
Former File No. 021208.0196
Title: Apparatus and Method for Automated
Calibration of Temperature Sensors in Rapid
Thermal Processing Equipment
Filing Date: 07/10/96
Serial No.: 196810502.9 (Germany)
Status: Deferred Exam 07/10/03
File No.: CVC1130
Former File No. 021208.0145
Title: Apparatus and Method for Automated
Calibration of Temperature Sensors in Rapid
Thermal Processing Equipment
Filing Date: 07/10/96
Serial No.: US96/11545 (PCT)
Status: Pending
File No.: CVC1130
Former File No. 021208.0113
Title: Apparatus and Method for Automated
Calibration of Temperature Sensors in Rapid
Thermal Processing Equipment
Filing Date: 07/10/95
Serial No.: 60/000,989 (Provisional)
Status: Abandoned
(2)
<PAGE>
File No.: CVC1130
Former File No. 021208.0135
Title: Apparatus and Method for Automated
Calibration of Temperature Sensors in Rapid
Thermal Processing Equipment
Filing Date: 07/10/96
Serial No.: 08/680,244
Status: Pending
File No.: CVC1150
Former File No. 021208.0105
Title: Hermitically-Sealed Inductively-Coupled
Plasma Source Structure and Method of Use
Filing Date: 07/10/96
Serial No.: 08/677,849
Status: Pending
File No.: CVC1170
Former File No. 021208.0142
Title: High Magnetic Flux Cathode Apparatus
and Method for High-Productivity Physical-
Vapor Deposition
Filing Date: 07/10/96
Serial No.: US96/11565 (PCT)
Status: Pending
File No.: CVC1170
Former File No. 021208.0195
Title: High Magnetic Flux Cathode Apparatus
and Method for High-Productivity Physical-
Vapor Deposition
Filing Date: 07/10/96
Serial No.: (United Kingdom)
Status: Pending
File No.: CVC1170
Former File No. 021208.0109
Title: High Magnetic Flux Cathode Apparatus
and Method for High-Productivity Physical-
Vapor Deposition
Filing Date: 07/10/95
Serial No.: 60/000,852
Status: Abandoned
(3)
<PAGE>
File No.: CVC1170
Former File No. 021208.0104
Title: High Magnetic Flux Cathode Apparatus
and Method for High-Productivity Physical-
Vapor Deposition
Filing Date: 07/10/96
Serial No.: 08/677,951
Status: Appeal Brief Due: 03/29/98
AppBrf: 1st Extension 04/29/98
AppBrf: 2nd Extension 05/29/98
AppBrf: 3rd Extension 06/29/98
AppBrf: Notice of Appeal Due 07/29/98
AppBrf: 6 Month Final Date 07/29/98
US-Final Office Follow-Up Date 07/29/98
File No.: CVC1190
Former File No. 021208.0194
Title: High Magnetic Flux Permanent Magnet
Apparatus and Method for High-Productivity
Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: (Japan)
Status: Deferred Exam 07/10/03
File No.: CVC1190
Former File No. 021208.0141
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: US96/11564 (PCT)
Status: Pending
File No.: CVC1190
Former File No. 021208.0193
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: (United Kingdom)
Status: Pending
(4)
<PAGE>
File No.: CVC1190
Former File No. 021208.0108
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/95
Serial No.: 60/000,990
Status: Abandoned
File No.: CVC1190
Former File No. 021208.0108
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: 08/677,956
Status: Pending
File No.: CVC1210
Former File No. 021208.0110
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/95
Serial No.: 60/000,980 (Provisional)
Status: Abandoned
File No.: CVC1210
Former File No. 021208.0110
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: 08/677,893
Status: Abandoned
(5)
<PAGE>
File No.: CVC1210
Former File No. 021208.0187
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 10/27/97
Serial No.: 08/958,877
Status: Foreign Filing Reminder 04/27/98
Foreign Filing Due 10/27/98
Status Check 04/27/99
File No.: CVC1230
Former File No. 021208.0197
Title: Programmable Ultraclean Electromagnetic
Substrate Rotation Apparatus and Method
for Microelectronics Manufacturing
Equipment
Filing Date: 07/10/96
Serial No.: (Japan)
Status: Deferred Exam 07/10/03
File No.: CVC1230
Former File No. 021208.0146
Title: Programmable Ultraclean Electromagnetic
Substrate Rotation Apparatus and Method
for Microelectronics Manufacturing
Equipment
Filing Date: 07/10/96
Serial No.: US96/11563 (PCT)
Status: Pending
File No.: CVC1230
Former File No. 021208.0112
Title: Programmable Ultraclean Electromagnetic
Substrate Rotation Apparatus and Method
for Microelectronics Manufacturing
Equipment
Filing Date: 07/10/95
Serial No.: 60/001,003 (Provisional)
Status: Pending
(6)
<PAGE>
File No.: CVC1230
Former File No. 021208.0112
Title: Programmable Ultraclean Electromagnetic
Substrate Rotation Apparatus and Method
for Microelectronics Manufacturing
Equipment
Filing Date: 07/19/96
Serial No.: 08/677,980
Status: Pending
File No.: CVC1250
Former File No. 021208.0104
Title: Segmented Target Cathode Apparatus
and Method for Microelectronics
Manufacturing Equipment
Filing Date: 07/11/96
Serial No.: 08/678,297
Status: Pending
File No.: CVC1270
Former File No. 021208.0106
Title: Multi-Zone Gas Injection Apparatus and
Method for Microelectronics Manufacturing
Equipment
Filing Date: 07/11/96
Serial No.: 08/678,297
Status: Pending
File No.: CVC1290
Former File No. 021208.0107
Title: Rapid Thermal Processing High Performance
Multizone Illuminator for Water Backside
Heating
Filing Date: 04/13/95
Serial No.: 08/421,210
Status: Pending
File No.: CVC1310
Former File No. 021208.0114
Title: Multizone Illuminator for Rapid Thermal
Processing
Filing Date: 07/11/96
Serial No.: 08/678,321
Status: Pending
(7)
<PAGE>
Docket No.:
================================================================================
FORM PTO-1595 (Modified) U.S. DEPARTMENT OF COMMERCE
(Rev. 6-93)
OMB No. 0651-0011 (exp. 4/94) Patent and Trademark Office
Copyright 1994-97 LegalStar
[ILLEGIBLE] REV02
RECORDATION FORM COVER SHEET
PATENTS ONLY
Tab settings [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
To the Honorable Commissioner of Patents and Trademarks: Please record the
attached original documents or copy thereof.
- --------------------------------------------------------------------------------
1. Name of conveying party(ies):
CVC Products, Inc. and CVC, INC.
Additional names(s) of conveying party(ies) |_| Yes |X| No
- --------------------------------------------------------------------------------
2. Name and address of receiving party(ies):
Name: Manufacturers & Traders Trust
Internal Address: ________________________________________________
__________________________________________________________________
__________________________________________________________________
Street Address: One M&T Plaza
City: Buffalo State: NY ZIP: 14240
Additional name(s) & address(es) attached? |X| Yes |_| No
- --------------------------------------------------------------------------------
3. Nature of conveyance:
|_| Assignment |_| Merger
|X| Security Agreement |_| Change of Name
|_| Other
Execution Date: Apr. 14, 1998
- --------------------------------------------------------------------------------
4. Application number(s) or registration numbers(s):
If this document is being filed together with a new application, the
execution date of the application is: ______________________________
A. Patent Application No.(s) B. Patent No.(s)
08/928,617 08/677,956 08/678,297 5,248,402
08/678,065 08/677,893 08/421,210 5,630,916
08/680,244 08/958,877 08/678,321
08/677,849 08/677,980
08/677,951
Additional numbers attached? |X| Yes |_| No
- --------------------------------------------------------------------------------
5. Name and address of party to whom correspondence concerning document
should be mailed:
Name: Gary F. Amendola
Internal Address: Woods, Oviatt, Gilman, Sturman & Clarke, LLP
Street Address: 44 Exchange Street
City: Rochester State: NY ZIP: 14604
- --------------------------------------------------------------------------------
6. Total number of applications and patents involved: |___|
- --------------------------------------------------------------------------------
7. Total fee (37 CFR 3.41):...........................$ _____________
|_| Enclosed
|_| Authorized to be charged to deposit account
- --------------------------------------------------------------------------------
8. Deposit account number
__________________________________________________________________
================================================================================
DO NOT USE THIS SPACE
- --------------------------------------------------------------------------------
9. Statement and signature.
To the best of my knowledge and belief, the foregoing information is true
and correct and any attached copy is a true copy of the original document
Gary F. Amendola /s/ Gary F. Amendola 4-14-98
------------------------ ------------------------- -------------------
Name of Person Signing Signature Date
Total number of pages including cover sheet, attachments, and document: |___|
================================================================================
<PAGE>
================================================================================
TRADEMARK COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
Dated as of March 31, 1998
between
CVC PRODUCTS, INC.,
CVC, INC.
and
MANUFACTURERS AND TRADERS TRUST COMPANY
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page No.
- ------- --------
1. DEFINITIONS ........................................................... 1
2. GRANT OF SECURITY INTEREST ............................................ 4
2.1 Collateral Assignment of Pledged Trademarks ....................... 4
2.2 Conditional Assignment ............................................ 5
2.3 Supplemental to Security Agreement ................................ 5
3. REPRESENTATIONS, WARRANTIES AND COVENANTS ............................. 6
4. INSPECTION RIGHTS ..................................................... 7
5. NO TRANSFER OR INCONSISTENT AGREEMENTS ................................ 7
6. AFTER-ACQUIRED TRADEMARKS, ETC. ....................................... 7
6.1 After-acquired Trademarks ......................................... 7
6.2 Amendment to Schedule ............................................. 7
7. TRADEMARK PROSECUTION ................................................. 8
7.1 Assignors Responsible ............................................. 8
7.2 Assignor's Duties, Etc. ........................................... 8
7.3 Assignor's Enforcement Rights ..................................... 8
7.4 Protection of Trademarks, Etc. .................................... 9
7.5 Notification by Assignor .......................................... 9
8. REMEDIES .............................................................. 9
9. COLLATERAL PROTECTION ................................................. 10
10. POWER OF ATTORNEY ..................................................... 10
11. FURTHER ASSURANCES .................................................... 11
12. TERMINATION ........................................................... 11
13. COURSE OF DEALING ..................................................... 11
14. EXPENSES .............................................................. 11
15. OVERDUE AMOUNTS ....................................................... 12
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION ........................... 12
17. NOTICES ............................................................... 12
18. AMENDMENT AND WAIVER .................................................. 13
19. GOVERNING LAW; CONSENT TO JURISDICTION ................................ 13
20. WAIVER OF JURY TRIAL .................................................. 13
21. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC. ............................... 14
21. MISCELLANEOUS ......................................................... 14
<PAGE>
TRADEMARK COLLATERAL
SECURITY AND PLEDGE AGREEMENT
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT dated as of March 31,
1998, between CVC, INC., a Delaware corporation ("Parent"), CVC PRODUCTS, INC.,
a Delaware corporation ("Borrower" and, together with Parent, the "Assignors"),
both having their principal place of business at 525 Lee Road, Rochester, New
York, and MANUFACTURERS AND TRADERS TRUST COMPANY, having an office at One M&T
Plaza, Buffalo, New York 14203 (the "Bank").
WHEREAS, the Borrower and the Bank are parties to a Loan Agreement, dated
as of March 31, 1998, (as amended and in effect from time to time, the "Loan
Agreement");
WHEREAS, it is a condition precedent to the Bank making any loans or
otherwise extending credit to the Borrower under the Loan Agreement that the
Assignors execute and deliver to the Bank this Agreement;
WHEREAS, the Borrower has previously executed and delivered to the Bank a
General Security Agreement, dated as of February 2, 1996, as amended (the
"Original Borrower Security Agreement"), pursuant to which the Borrower granted
to the Bank a first priority perfected security interest in all of the
Borrower's personal property and fixture assets, including, without limitation,
the trademarks, service marks, trademark and service mark registrations and
trademark and service mark registration applications listed on Schedule A
attached hereto, all to secure the payment and performance of all the
indebtedness of the Borrower to the Bank, whenever arising and, on even date
herewith, Borrower has executed and delivered an Amended and Restated General
Security Agreement ("Restated Borrower Security Agreement") in favor of Bank,
pursuant to which the Original Borrower Security Agreement has been amended and
restated; and
WHEREAS, the Parent has previously executed and delivered to Bank a
General Security Agreement, dated as of February 2, 1996 (the "Original Parent
Security Agreement"), pursuant to which the Parent granted to the Bank a first
priority perfected security interest in all of the Parent's personal property
and fixture assets, including, without limitation the patents and patent
applications listed on Schedule A attached hereto, to the extent that the Parent
has an interest therein, all to secure the payment and performance of all of the
indebtedness of the Parent to the Bank, whenever arising, and, on even date
herewith, Parent has executed and delivered an Amended and Restated General
Security Agreement ("Restated Parent Security Agreement") in favor of Bank,
pursuant to which the Original Parent Security Agreement has been amended and
restated; and
WHEREAS, this Trademark Agreement (defined below) is supplemental to the
provisions contained in the Restated Borrower Security Agreement and the
Restated Parent Security Agreement (together, the "Security Agreements");
<PAGE>
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Loan Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Trademark Agreement referred to below:
Assignors means Borrower and Parent, collectively and individually.
Associated Goodwill means all goodwill of the Assignors and their
businesses, products and services appurtenant to, associated with or symbolized
by the Trademarks and the use thereof.
Events of Default means any "Event of Default" which has occurred under
the Restated Borrower Security Agreement or the Restated Parent Security
Agreement.
Obligations means, collectively, any indebtedness, liabilities and
obligations for payment of money, regardless of kind, class or form and whether
for the payment of principal or of interest or otherwise, incurred, for any
business, commercial, agricultural or consumer purposes 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 an 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 tortuous, liquidated or unliquidated, arising by
operation of law or otherwise, that are now or hereafter owing by either
Assignor in any capacity, whether alone or otherwise, to the Bank in any
capacity, whether or not allowed as a claim against such Assignor in any case or
other proceeding pursuant to any bankruptcy or insolvency statute, regulation or
other law or 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.
Pledged Trademarks means all of the Assignor's right, title and interest
in and to all of the Trademarks, the Trademark Registrations, the Trademark
License Rights, the Trademark Rights, the Associated Goodwill, the Related
Assets, and all accessions to, substitutions for, replacements of, and all
products and proceeds of any and all of the foregoing.
PTO means the United States Patent and Trademark Office.
Related Assets means all assets, rights and interests of the Assignors
that uniquely
- 2 -
<PAGE>
reflect or embody the Associated Goodwill, including the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of the
Trademarks; and
(b) the following documents and things in the possession or under the
control of the Assignors, or subject to their demand for possession or control,
related to the production, delivery, provision and sale by the Assignors, or any
affiliate, franchisee, licensee or contractor, of products or services sold by
or under the authority of the Assignors in connection with the Trademarks or
Trademark Rights, whether prior to, on or subsequent to the date hereof:
(i) all lists, contracts, ancillary documents and other information
that identify, describe or provide information with respect to any
customers, dealers or distributors of the Assignors, their affiliates or
franchisees or licensees or contractors, for products or services sold
under or in connection with the Trademarks or Trademark Rights, including
all lists and documents containing information regarding each customer's,
dealer's or distributor's name and address, credit, payment, discount,
delivery and other sale terms, and history, pattern and total of purchases
by brand, product, style, size and quantity;
(ii) all agreements (including franchise agreements), product and
service specification documents and operating, production and quality
control manuals relating to or used in the design, manufacture,
production, delivery, provision and sale of products or services under or
in connection with the Trademarks or Trademark Rights;
(iii) all documents and agreements relating to the identity and
locations of all sources of supply, all terms of purchase and delivery,
for all materials, components, raw materials and other supplies and
services used in the manufacture, production, provision, delivery and sale
of products or services under or in connection with the Trademarks or
Trademark Rights; and
(iv) all agreements and documents constituting or concerning the
present or future, current or proposed advertising and promotion by the
Assignors (or any of their affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with the
Trademarks or Trademark Rights.
Trademark Agreement means this Trademark Collateral Security and Pledge
Agreement, as amended and in effect from time to time.
Trademark License Rights means any and all past, present or future rights
and
- 3 -
<PAGE>
interests of the Assignors pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Assignors, or to which the
Assignors are a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Assignors or the
Bank to enforce, and sue and recover for, any breach or violation of any such
agreement to which the Assignors are a party.
Trademark Registrations means all past, present or future federal, state,
local and foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Assignors or the Bank, and to take any and all actions necessary or
appropriate to maintain such registrations in effect and renew and extend such
registrations.
Trademark Rights means any and all past, present or future rights in, to
and associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignors or the Bank for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks means all of the trademarks, service marks, designs, logos,
indicia, trade names, corporate names, company names, business names, fictitious
business names, trade styles, elements of package or trade dress, and other
source and product or service identifiers, used or associated with or
appurtenant to the products, services and businesses of the Assignors, that (i)
are set forth on Schedule A hereto, or (ii) have been adopted, acquired, owned,
held or used by the Assignors or are now owned, held or used by the Assignors,
in the Assignors' business, or with the Assignors' products and services, or in
which the Assignors have any right, title or interest, or (iii) are in the
future adopted, acquired, owned, held and used by the Assignors in the
Assignors' business or with the Assignors' products and services, or in which
the Assignors in the future acquire any right, title or interest.
Use means, with respect to any Trademark, all uses of such Trademark by,
for or in connection with the Assignors or their business or for the direct or
indirect benefit of the Assignors or their business, including all such uses by
the Assignors themselves, by any of the affiliates of the Assignors, or by any
franchisee, licensee or contractor of the Assignors.
2. GRANT OF SECURITY INTEREST.
- 4 -
<PAGE>
2.1 Collateral Assignment of Pledged Trademarks.
To secure the payment and performance in full of any and all
Obligations, the Assignors hereby grant, assign, transfer and conveys to the
Bank, BY WAY OF COLLATERAL SECURITY, all of the Trademark Collateral. THE BANK
ASSUMES NO LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH COLLATERAL
SECURITY.
2.2 Supplemental to Security Agreements.
Pursuant to the Security Agreements the Assignors have granted to
the Bank a continuing security interest in and lien on the Collateral (including
the Pledged Trademarks). The Security Agreements, and all rights and interests
of the Bank in and to the Collateral (including the Pledged Trademarks)
thereunder, are hereby ratified and confirmed in all respects. In no event shall
this Trademark Agreement, the grant, assignment, transfer and conveyance of the
Pledged Trademarks hereunder, or the recordation of this Trademark Agreement (or
any document hereunder) with the PTO, adversely affect or impair, in any way or
to any extent, the Security Agreements, the security interest of the Bank in the
Collateral (including the Pledged Trademarks) pursuant to the Security
Agreements and this Trademark Agreement, the attachment and perfection of such
security interest under the Uniform Commercial Code (including the security
interest in the Pledged Marks), or any present or future rights and interests of
the Bank in and to the Collateral under or in connection with the Security
Agreements, this Trademark Agreement or the Uniform Commercial Code. Any and all
rights and interests of the Bank in and to the Pledged Trademarks (and any and
all obligations of the Assignors with respect to the Pledged Trademarks)
provided herein, or arising hereunder or in connection herewith, shall only
supplement and be cumulative and in addition to the rights and interests of the
Bank (and the obligations of the Assignor) in, to or with respect to the
Collateral (including the Pledged Trademarks) provided in or arising under or in
connection with the Security Agreements and shall not be in derogation thereof.
2.3 License Back to Assignors.
Unless and until there shall have occurred and be continuing an Event of
Default and the Bank has notified the Assignors that the license granted
hereunder is terminated, the Bank hereby grants to the Assignors the sole and
exclusive, nontransferable, royalty-free, worldwide right and license under the
Trademarks to make, have made for them, use, sell and otherwise practice the
inventions disclosed and claimed in the Trademarks for the Assignors' own
benefit and account and for none other; provided, however, that the foregoing
right and license shall be no greater in scope than, and limited by, the rights
assigned to the Bank by the Assignors hereby. The Assignors agree not to sell,
assign, transfer, encumber or sublicense their interest in the license granted
to the Assignors in this Section 2.3, without the prior written consent of the
Bank. Any such sublicenses granted on or after the date hereof shall be
terminable by the Bank upon termination of the Assignors' license hereunder.
- 5 -
<PAGE>
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Assignors represent, warrant and covenant that: (i) Schedule A sets
forth a true and complete list of all Trademarks and Trademark Registrations now
owned, licensed, controlled or used by the Assignor; (ii) the Trademarks and
Trademark Registrations are subsisting and have not been adjudged invalid or
unenforceable, in whole or in part, and there is no litigation or proceeding
pending concerning the validity or enforceability of the Trademarks or Trademark
Registrations; (iii) to the best of the Assignors' knowledge, each of the
Trademarks and Trademark Registrations is valid and enforceable; (iv) to the
best of the Assignors' knowledge, there is no infringement by others of the
Trademarks, Trademark Registrations or Trademark Rights; (v) no claim has been
made that the use of any of the Trademarks does or may violate the rights of any
third person, and to the best of the Assignors' knowledge, there is no
infringement by the Assignors of the trademark rights of others; (vi) the
Assignors are the sole and exclusive owners of the entire and unencumbered
right, title and interest in and to each of the Trademarks (other than ownership
and other rights reserved by third party owners with respect to Trademarks that
the Assignors are licensed to use), free and clear of any liens, charges,
encumbrances and adverse claims, including pledges, assignments, licenses,
registered user agreements and covenants by the Assignors not to sue third
persons, other than the security interest and assignment created by the Security
Agreements and this Trademark Agreement; (vii) the Assignors have the
unqualified right to enter into this Trademark Agreement and to perform its
terms and have entered and will enter into written agreements with each of their
present and future employees, agents, consultants, licensors and licensees that
will enable them to comply with the covenants herein contained; (viii) the
Assignors have used, and will continue to use, proper statutory and other
appropriate proprietary notices in connection with their use of the Trademarks;
(ix) the Assignors have used, and will continue to use for the duration of this
Trademark Agreement, consistent standards of quality in their manufacture and
provision of products and services sold or provided under the Trademarks; (x)
this Trademark Agreement, together with the Security Agreements, will create in
favor of the Bank a valid and perfected first priority security interest in the
Pledged Trademarks upon making the filings referred to in clause (xi) of this
Section 3; and (xi) except for the filing of financing statements with the
Monroe County Clerk and the Secretary of State for the State of New York under
the Uniform Commercial Code and the recording of this Trademark Agreement with
the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignors or the effectiveness of the
security interest and assignment granted hereby or for the execution, delivery
and performance of this Trademark Agreement by the Assignors, or (B) for the
perfection of or the exercise by the Bank of any of its rights and remedies
hereunder.
- 6 -
<PAGE>
4. INSPECTION RIGHTS.
The Assignors hereby grant to the Bank and its employees and agents the
right to visit the Assignors' plants and facilities that manufacture, inspect or
store products sold under any of the Trademarks, and to inspect the products and
quality control records relating thereto upon advance notice and at reasonable
times during regular business hours.
5. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Bank's prior written consent and except for licenses of the
Pledged Trademarks in the ordinary course of the Assignor's business consistent
with its past practices, the Assignors will not (i) mortgage, pledge, assign,
encumber, grant a security interest in, transfer, license or alienate any of the
Pledged Trademarks, or (ii) enter into any agreement (for example, a license
agreement) that is inconsistent with the Assignors' obligations under this
Trademark Agreement or the Security Agreements.
6. AFTER-ACQUIRED TRADEMARKS, ETC.
6.1 After-acquired Trademarks.
If, before the Obligations shall have been finally paid and
satisfied in full and neither of the Assignors have any rights to request
borrowings under a line of credit with Bank and all lines of credit provided by
Bank have been terminated, the Assignors shall obtain any right, title or
interest in or to any other or new Trademarks, Trademark Registrations or
Trademark Rights, the provisions of this Trademark Agreement shall automatically
apply thereto and the Assignors shall promptly provide to the Bank notice
thereof in writing and execute and deliver to the Bank such documents or
instruments as the Bank may reasonably request further to implement, preserve or
evidence the Bank's interest therein.
6.2 Amendment to Schedule.
The Assignors authorize the Bank to modify this Trademark Agreement
without the necessity of the Assignors' further approval or signature, by
amending Schedule A hereto and the Annex to the Assignment of Marks to include
any future or other Trademarks, Trademark Registrations or Trademark Rights
under Section 2 or Section 6.
- 7 -
<PAGE>
7. TRADEMARK PROSECUTION.
7.1 Assignors Responsible.
The Assignors shall assume full and complete responsibility for the
prosecution, defense, enforcement or any other necessary or desirable actions in
connection with the Pledged Trademarks, and shall hold the Bank harmless from
any and all costs, damages, liabilities and expenses that may be incurred by the
Bank in connection with the Bank's interest in the Pledged Trademarks or any
other action or failure to act in connection with this Trademark Agreement or
the transactions contemplated hereby. In respect of such responsibility, the
Assignors shall retain trademark counsel acceptable to the Bank. The Bank shall
not unreasonably delay in responding to any request to approve counsel proposed
by the Assignors.
7.2 Assignors' Duties, Etc.
The Assignors shall have the right and the duty, through trademark
counsel acceptable to the Bank, to prosecute diligently any trademark
registration applications of the Trademarks pending as of the date of this
Trademark Agreement or thereafter, to preserve and maintain all rights in the
Trademarks and Trademark Registrations, including the filing of appropriate
renewal applications and other instruments to maintain in effect the Trademark
Registrations and the payment when due of all registration renewal fees and
other fees, taxes and other expenses that shall be incurred or that shall accrue
with respect to any of the Trademarks or Trademark Registrations. Any expenses
incurred in connection with such applications and actions shall be borne by the
Assignors. The Assignors shall not abandon any filed trademark registration
application, or any Trademark Registration or Trademark, without the consent of
the Bank, which consent shall not be unreasonably withheld.
7.3 Assignors' Enforcement Rights.
The Assignors shall have the right and the duty to bring suit or
other action in the Assignors' own name to maintain and enforce the Trademarks,
the Trademark Registrations and the Trademark Rights. The Assignors may require
the Bank to join in such suit or action as necessary to assure the Assignors'
ability to bring and maintain any such suit or action in any proper forum if
(but only if) the Bank is completely satisfied that such joinder will not
subject the Bank to any risk of liability. The Assignors shall promptly, upon
demand, reimburse and indemnify the Bank for all damages, costs and expenses,
including legal fees, incurred by the Bank pursuant to this Section 7.3.
7.4 Protection of Trademarks, Etc.
In general, the Assignors shall take any and all such actions
(including institution and maintenance of suits, proceedings or actions) as may
be necessary or appropriate to properly maintain, protect, preserve, care for
and enforce the Pledged Trademarks. The Assignors shall not take or fail to take
any action, nor permit any action
- 8 -
<PAGE>
to be taken or not taken by others under its control, that would adversely
affect the validity, grant or enforcement of the Pledged Trademarks.
7.5 Notification by Assignors.
Promptly upon obtaining knowledge thereof, the Assignors will notify
the Bank in writing of the institution of, or any final adverse determination
in, any proceeding in the PTO or any similar office or agency of the United
States or any foreign country, or any court, regarding the validity of any of
the Trademarks or Trademark Registrations or the Assignors' rights, title or
interests in and to the Pledged Trademarks.
8. REMEDIES.
Upon the occurrence and during the continuance of an Event of Default, the
Bank shall have, in addition to all other rights and remedies given it by this
Trademark Agreement (including, without limitation, those set forth in Section
2.2), the Loan Agreement, the Security Agreements and all of the other
agreements, instruments and documents executed by the Assignors with or in favor
of the Bank at any time, those allowed by law and the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in the State of New
York, and, without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without other notice (except as
set forth next below) or demand whatsoever to the Assignors, all of which are
hereby expressly waived, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Pledged Trademarks,
or any interest that the Assignors may have therein, and after deducting from
the proceeds of sale or other disposition of the Pledged Trademarks all
reasonable expenses incurred by the Bank in attempting to enforce this Trademark
Agreement (including all reasonable expenses for broker's fees and legal
services), shall apply the residue of such proceeds toward the payment of the
Obligations as set forth in or by reference in the Security Agreements. Notice
of any sale, license or other disposition of the Pledged Trademarks shall be
given to the Assignors at least five (5) days before the time that any intended
public sale or other public disposition of the Pledged Trademarks is to be made
or after which any private sale or other private disposition of the Pledged
Trademarks may be made, which the Assignors hereby agree shall be reasonable
notice of such public or private sale or other disposition. At any such sale or
other disposition, the Bank may, to the extent permitted under applicable law,
purchase or license the whole or any part of the Pledged Trademarks or interests
therein sold, licensed or otherwise disposed of.
9. COLLATERAL PROTECTION.
If the Assignors shall fail to do any act that it has covenanted to do
hereunder, or if any representation or warranty of the Assignors shall be
breached, the Bank, in its own name or that of the Assignors (in the sole
discretion of the Bank), may (but shall not be obligated to) do such act or
remedy such breach (or cause such act to be done or such
- 9 -
<PAGE>
breach to be remedied), and the Assignors agrees promptly to reimburse the Bank
for any cost or expense incurred by the Bank in so doing.
10. POWER OF ATTORNEY.
If any Event of Default shall have occurred and be continuing, the
Assignors do hereby make, constitute and appoint the Bank (and any officer or
agent of the Bank as the Bank may select in its exclusive discretion) as the
Assignors' true and lawful attorney-in-fact, with full power of substitution and
with the power to endorse the Assignors' name on all applications, documents,
papers and instruments necessary for the Bank to use the Pledged Trademarks, or
to grant or issue any exclusive or nonexclusive license of any of the Pledged
Trademarks to any third person, or to take any and all actions necessary for the
Bank to assign, pledge, convey or otherwise transfer title in or dispose of any
of the Pledged Trademarks or any interest of the Assignors therein to any third
person, and, in general, to execute and deliver any instruments or documents and
do all other acts that the Assignors are obligated to execute and do hereunder.
The Assignors hereby ratify all that such attorney shall lawfully do or cause to
be done by virtue hereof and releases the Bank from any claims, liabilities,
causes of action or demands arising out of or in connection with any action
taken or omitted to be taken by the Bank under this power of attorney (except
for the Bank's gross negligence or willful misconduct). This power of attorney
is coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
11. FURTHER ASSURANCES.
The Assignors shall, at any time and from time to time, and at its
expense, make, execute, acknowledge and deliver, and file and record as
necessary or appropriate with governmental or regulatory authorities, agencies
or offices, such agreements, assignments, documents and instruments, and do such
other and further acts and things (including, without limitation, obtaining
consents of third parties), as the Bank may request or as may be necessary or
appropriate in order to implement and effect fully the intentions, purposes and
provisions of this Trademark Agreement, or to assure and confirm to the Bank the
grant, perfection and priority of the Bank's security interest in the Pledged
Trademarks.
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full and neither of the Assignors have any rights to request an
advance under any line of credit and all lines of credit provided by Bank have
been terminated, this Trademark Agreement shall terminate and the Bank shall,
upon the written request and at the expense of the Assignors, execute and
deliver to the Assignors all deeds, assignments and other instruments as may be
necessary or proper to reassign and reconvey to and re-vest in the Assignors the
entire right, title and interest to the Pledged Trademarks previously granted,
assigned, transferred and conveyed to the Bank by the Assignors pursuant to this
Trademark Agreement, as fully
- 10 -
<PAGE>
as if this Trademark Agreement had not been made, subject to any disposition of
all or any part thereof that may have been made by the Bank pursuant hereto or
the Security Agreements.
13. COURSE OF DEALING.
No course of dealing between the Assignors and the Bank, nor any failure
to exercise, nor any delay in exercising, on the part of the Bank, any right,
power or privilege hereunder or under the Security Agreements or any other
agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and expenses incurred by the
Bank in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Assignors.
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Assignors hereunder shall
be a debt secured by the Pledged Trademarks and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the applicable notes evidencing such Obligations.
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE BANK
ASSUMES NO LIABILITIES OF THE ASSIGNORS WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNORS' OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNORS, AND THE ASSIGNORS SHALL
INDEMNIFY THE
- 11 -
<PAGE>
BANK FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS, INCLUDING LEGAL FEES,
INCURRED BY THE BANK WITH RESPECT TO SUCH LIABILITIES.
17. NOTICES.
All notices and other communications made or required to be given pursuant
to this Trademark Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as follows:
(a) if to the Assignors, at 525 Lee Road, Rochester, New York Attention:
Emilio O. DiCataldo, Senior Vice President and CFO, or at such other address for
notice as the Assignors shall last have furnished in writing to the person
giving the notice; and
(b) if to the Bank, at One M&T Plaza, Buffalo, New York 14203, Attention:
Collateral Department, or at such other address for notice as the Bank shall
last have furnished in writing to the person giving the notice, with copies to
Bank at 525 East Avenue, Rochester, New York 14604, Attention: William Holston,
Vice President.
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand to a responsible officer of the
party to which it is directed, at the time of the receipt thereof by such
officer, (ii) if sent by registered or certified first-class mail, postage
prepaid, two (2) Business Days after the posting thereof, and (iii) if sent by
telegraph, telecopy, or telex, at the time of the dispatch thereof, if in normal
business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.
18. AMENDMENT AND WAIVER.
This Trademark Agreement is subject to modification only by a writing
signed by the Bank and the Assignors, except as provided in Section 6.2. The
Bank shall not be deemed to have waived any right hereunder unless such waiver
shall be in writing and signed by the Bank. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right on any future occasion.
19. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS TRADEMARK AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. The Assignors agree that any suit for the enforcement of this
Trademark Agreement may be brought in the courts of the County of Monroe or any
federal court sitting therein and consents to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon the
Assignors by
- 12 -
<PAGE>
mail at the address specified in Section 17. The Assignors hereby waive any
objection that they may now or hereafter have to the venue of any such suit or
any such court or that such suit is brought in an inconvenient court.
20. WAIVER OF JURY TRIAL.
THE ASSIGNORS WAIVETHEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS TRADEMARK AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Assignors waive any right which
they may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Assignors (i)
certifies that neither the Bank nor any representative, agent or attorney of the
Bank has represented, expressly or otherwise, that the Bank would not, in the
event of litigation, seek to enforce the foregoing waivers, and (ii)
acknowledges that, in entering into the Loan Agreement and the other agreements,
instruments or documents to which the Bank is a party, the Bank is relying upon,
among other things, the waivers and certifications contained in this Section 20.
21. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC.
Notwithstanding anything herein to the contrary, Bank shall not be deemed
to have unreasonably delayed in responding to a request for a consent hereunder
or the approval of a counsel proposed by Assignors whom the Bank must consent to
unless Bank fails to respond to a request for such consent or acceptance of
proposed counsel for 10 days after such request is submitted and Assignors
thereafter notify Bank in writing that they believe Bank has unreasonably
delayed in responding to such request and Bank continues for more than 10 days
after its receipt of such notice to respond to such request. In any event, the
sole remedy for Assignors if Bank unreasonably delayed in responding to any such
request shall be that it loses its right to consent to any such action or to
approve any such counsel.
22. MISCELLANEOUS.
The headings of each section of this Trademark Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Trademark Agreement and all rights and obligations hereunder shall be binding
upon the Assignors and their respective successors and assigns, and shall inure
to the benefit of the Bank and its successors and assigns. In the event of any
irreconcilable conflict between the provisions of this Trademark Agreement and
the Loan Agreement, or between this Trademark Agreement and the Security
Agreements, the provisions of the Loan Agreement or the Security Agreements, as
the case may be, shall control. If any term of this Trademark Agreement shall be
held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall in no way be affected
- 13 -
<PAGE>
thereby, and this Trademark Agreement shall be construed and be enforceable as
if such invalid, illegal or unenforceable term had not been included herein. The
Assignors acknowledge receipt of a copy of this Trademark Agreement.
IN WITNESS WHEREOF, this Trademark Agreement has been executed as of the
day and year first above written.
CVC, INC.
By: /s/ Emilio O. DiCataldo
---------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
---------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ William Holston
---------------------------------------
Name: William Holston
Title: Vice President
- 14 -
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998, personally appeared Emilio O.
DiCataldo to me known personally, and who, being by me duly sworn, deposes and
says that he is the Senior Vice President and CFO of CVC, INC., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and he acknowledged said instrument to be the free act
and deed of said corporation.
-------------------------------
GARY F. AMENDOLA Notary Public
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, ___
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998, personally appeared Emilio O.
DiCataldo to me known personally, and who, being by me duly sworn, deposes and
says that he is the Senior Vice President and CFO of CVC PRODUCTS, INC., and
that said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and he acknowledged said instrument to be
the free act and deed of said corporation.
-------------------------------
GARY F. AMENDOLA Notary Public
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, ___
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998, personally appeared William Holston
to me known personally, and who, being by me duly sworn, deposes and says that
he is the Vice President of MANUFACTURERS AND TRADERS TRUST COMPANY, and that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors, and he acknowledged said instrument to be the free
act and deed of said corporation.
-------------------------------
GARY F. AMENDOLA Notary Public
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, ___
- 15 -
<PAGE>
SCHEDULE A
Trademarks and Trademark Registrations
- 16 -
<PAGE>
SCHEDULE A
2. CVC's U.S. Trademark Assets. The following Table 5 details CVC's
trademark assets.
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
CONNEXION(R) U.S. Trademark Registration Semiconductor and data
1,834,335, issued May 3, storage wafer processing
1994 equipment, comprising
physical vapor
deposition, rapid thermal
processing chemical vapor
deposition, including
RTCVD and MOCVD, and
inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
CVC Not Registered, but used as Relating to goods and
trademark or slogan to services in the area of
associate with CVC's good Semiconductor and data
and services storage wafer processing
equipment, comprising
physical vapor
deposition, rapid thermal
process, chemical vapor
deposition, including
RTCVD and MOCVD, and
inductively-coupled
plasma equipment
================================================================================
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
(LOGO) Not registered, but used as a Relating to goods and
CVC trademark services in the area of
Semiconductor and data
storage wafer processing
equipment, comprising
physical vapor
deposition, rapid thermal
processing, chemical
vapor deposition,
including RTCVD and
MOCVD, and inductively-
coupled plasma equipment
- --------------------------------------------------------------------------------
OPEN CONNEXION(TM) Registration application Software systems for
prepared awaiting review and semiconductor and data
filing storage wafer processing
equipment, comprising
physical vapor
deposition, rapid thermal
processing chemical vapor
deposition, including
RTCVD and MOCVD, and
inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
Connect with CVC(TM) Not registered, but used as Slogan relating to goods
trademark or slogan to and services in the area
associate with CVC's goods. of semiconductor and data
storage wafer processing
equipment, comprising
physical vapor
deposition, rapid thermal
processing chemical vapor
deposition, including
RTCVD and MOCVD, and
inductively-coupled
plasma equipment
================================================================================
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
Infinity(TM) Not registered, but used as Relating to goods in the
trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition.
- --------------------------------------------------------------------------------
The CONNEXION(TM) Not registered, but used as Relating to goods in the
400(TM) trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition, rapid thermal
processing chemical vapor
deposition, including
RTCVD and MOCVD, and
inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
The CONNEXION(TM) Not registered, but used as Relating to goods in the
500(TM) trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition, rapid thermal
processing chemical vapor
deposition, including
MOCVD and RTCVD, and
inductively-coupled
plasma equipment
================================================================================
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
The CONNEXION(TM) Not registered, but used as Relating to goods in the
600(TM) trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition, rapid thermal
processing chemical vapor
deposition, including
MOCVD and RTCVD, and
inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
The CONNEXION(TM) Not registered, but used as Relating to goods in the
800(TM) trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition, rapid thermal
processing chemical vapor
deposition, including
MOCVD and RTCVD, and
inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
Multi-Comp(TM) Not registered, but used as Relating to goods in the
trademark to associate with area of semiconductor
CVC's goods. wafer processing
equipment, comprising
rapid thermal processing
and rapid thermal
chemical-vapor deposition
equipment
- --------------------------------------------------------------------------------
Multi-Probe(TM) Not registered, but used as Relating to goods in the
trademark to associate with area of semiconductor
CVC's goods. wafer processing
equipment, comprising
rapid thermal processing
and rapid thermal
chemical-vapor deposition
equipment
================================================================================
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
Pulsar(TM) Not registered, but used as Relating to goods in the
trademark to associate with area of semiconductor
CVC's goods. wafer processing
equipment, comprising
rapid thermal processing
and RTCVD equipment
- --------------------------------------------------------------------------------
Series 400(TM) Not registered, but used as Relating to goods in the
trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition equipment
- --------------------------------------------------------------------------------
Series 500(TM) Not registered, but used as Relating to goods in the
trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition equipment
- --------------------------------------------------------------------------------
Series 600(TM) Not registered, but used as Relating to goods in the
trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition equipment
- --------------------------------------------------------------------------------
Universal Thermal Not registered, but used as Relating to goods in the
Module(TM) or UTM(TM) trademark to associate with area of semiconductor
CVC's goods. wafer processing
equipment, comprising
rapid thermal processing
and chemical-vapor
deposition equipment
including RTCVD and MOCVD
equipment
================================================================================
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
Universal Plasma Not registered, but used as Relating to goods in the
Module(TM) or UPM(TM) trademark to associate with area of semiconductor and
CVC's goods. data storage wafer
processing equipment,
comprising physical vapor
deposition and
inductively-coupled plasma
processing equipment
================================================================================
CVC has no prior opinions or similar documents relating to the scope or
validity of its trademarks. No maintenance fees are presently due for CVC's
existing CONNEXION(TM) trademark registration. In addition, there are no
documents relating to litigation or licenses involving CVC's trademarks, related
foreign filings, and product-line information related to the trademarks.
3. CVC's Foreign Trademark Assets. To date, CVC holds no foreign trademark
registrations. Nor does CVC, as of the date of this Intellectual Property Audit
Report, have pending any foreign trademark applications. To the extent that CVC
uses a particular mark for a product it sells in a foreign market, those marks
appearing in Table 5, above, represent the only marks CVC uses outside the
United States.
There are no prior opinions or documents relating to the scope or
validity of CVC's trademarks outside the United States. Nor are there any
foreign patent and trademark office actions or maintenance fee dates due at this
time. No documents relating to litigation or licenses involving CVC's
trademarks, related foreign filings, and product-line information related to the
use of trademarks outside the United States were discovered in this Intellectual
Property Audit.
E. Copyright Assets and Related Intellectual Property Assets
1. Overview. The Copyright Act establishes copyright protection "in
original works of authorship fixed in any tangible medium of expression." Each
word in this phrase must be satisfied in order to create a copyright. The work
must be original, meaning that it was created by the author--that is, it
"originated" with the author, not someone else but it need not be highly unique
or creative, which is required for some other forms of intellectual property
protection, such as patents. A work must be fixed in some tangible way in order
to create a copyright. Authors cannot simply come up with brilliant ideas for
books or songs and carry them
<PAGE>
================================================================================
FORM PTO-1595 U.S. DEPARTMENT OF COMMERCE
(Rev. 6-93) Patent and Trademark Office
OMB No. 0651-0011 (exp. 4/94)
RECORDATION FORM COVER SHEET
TRADEMARKS ONLY
Tab settings [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
To the Honorable Commissioner of Patents and Trademarks: Please record the
attached original documents or copy thereof.
- --------------------------------------------------------------------------------
1. Name of conveying party(ies):
CVC Products, Inc. and CVC, INC.
|_| Individual(s)
|_| General Partnership
|X| Corporation-State (DE)
|_| Association
|_| Limited Partnership
|_| Other ________________________________________________________
Additional name(s) of conveying party(ies) attached? |_| Yes |_| No
- --------------------------------------------------------------------------------
2. Name and address of receiving party(ies):
Name: Manufacturers and Traders Trust Company
Internal Address: ________________________________________________
__________________________________________________________________
__________________________________________________________________
Street Address: One M&T Plaza
City: Buffalo State: NY ZIP: 14203
|_| Individual(s) citizenship______________________________________
|_| Association____________________________________________________
|_| General Partnership____________________________________________
|_| Limited Partnership____________________________________________
|X| Corporation-State______________________________________________
|_| Other__________________________________________________________
If assignee is not domicile in the United States, a domestic representative
designation is attached: |_| Yes |_| No
(Designations must be separate document form assignment)
Additional name(s) & address(es) attached? |X| Yes |_| No
- --------------------------------------------------------------------------------
3. Nature of conveyance:
|X| Assignment |_| Merger
|_| Security Agreement |_| Change of Name
|_| Other
Execution Date: 4/14/98
- --------------------------------------------------------------------------------
4. Application number(s) or registration numbers(s):
A. Trademark Application No.(s)
B. Trademark registration No. (s)
1,834,335 (issued 5/3/94)
Additional numbers attached? |X| Yes |_| No
- --------------------------------------------------------------------------------
5. Name and address of party to whom correspondence concerning document
should be mailed:
Name: Gordon E. Forth, Esq.
Internal Address: Woods, Oviatt, Gilman, Sturman & Clarke, LLP
Street Address: 44 Exchange Street
City: Rochester State: NY ZIP: 14614
- --------------------------------------------------------------------------------
6. Total number of applications and patents involved: |1|
- --------------------------------------------------------------------------------
7. Total fee (37 CFR 3.41):...........................$40.00
|X| Enclosed
|_| Authorized to be charged to deposit account
- --------------------------------------------------------------------------------
8. Deposit account number
__________________________________________________________________
(Attach duplicate copy of this page if paying by deposit account)
================================================================================
DO NOT USE THIS SPACE
- --------------------------------------------------------------------------------
9. Statement and signature.
To the best of my knowledge and belief, the foregoing information is true
and correct and any attached copy is a true copy of the original document
Emilio O. DiCataldo /s/ Emilio O. DiCataldo
------------------------ ------------------------- -------------------
Name of Person Signing Signature Date
Total number of pages including cover sheet, attachments, and document: |2|
================================================================================
Mail documents to be recorded with required cover sheet information to:
Commissioner of Patents and Trademarks, Box Assignments
Washington, D.C. 20231
<PAGE>
[LETTERHEAD OF NIXON, HARGRAVE, DEVANS & DOYLE LLP]
April 14, 1998
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203
RE: CVC Products, Inc.
Gentlemen:
We have acted as special counsel to CVC Products, Inc., a Delaware
corporation ("Borrower"), in connection with certain credit facilities to be
made by Manufacturers and Traders Trust Company ("Bank") to Borrower pursuant to
a certain Loan Agreement of even date herewith ("Closing Date") between Bank and
Borrower, dated as of March 31, 1998 (the "Loan Agreement"). Furthermore, we
have acted as special counsel to CVC, Inc., a Delaware corporation ("Parent")
and have advised it in connection with certain matters pertaining to the Loan
Agreement. Unless otherwise noted, the agreements referred to in (i) through
(ix) below were executed on the Closing Date, as of March 31, 1998. We are
giving the opinions set forth below at the request of Borrower and Parent.
In our capacity as special counsel to Borrower and Parent, we have
reviewed the Loan Agreement and the following documents, as executed:
(i) $8,000,000 Term Note, dated as of March 31, 1998, executed by
Borrower in favor of Bank ("Term Note");
(ii) $10,000,000 Grid Note, dated as of March 31, 1998, executed by
Borrower in favor of Bank ("Grid Note");
(iii) Trademark Collateral Security and Pledge Agreement executed by
Borrower, Parent and Bank dated as of March 31, 1998 ("Trademark
Agreement");
(iv) Patent Collateral Assignment and Security Agreement executed by
Borrower, Parent and Bank dated as of March 31, 1998 ("Patent
Agreement");
(v) Amended and Restated Continuing Guaranty, dated as of March 31,
1998, executed by Borrower in favor of Bank ("Borrower Guaranty");
<PAGE>
Nixon, Hargrave, Devans & Doyle LLP
Manufacturers and Traders Trust Company
April 14, 1998
Page 2
(vi) Amended and Restated General Security Agreement, dated as of March
31, 1998, executed by Borrower in favor of Bank ("Borrower GSA");
(vii) Amended and Restated Continuing Guaranty, dated as of March 31.
1998, executed by Parent in favor of Bank ("Parent Guaranty");
(viii) Amended and Restated General Security Agreement, dated as of March
31. 1998, executed by Parent in favor of Bank ("Parent GSA"); and
(ix) Landlord/Mortgagee Waiver, dated as of March 31, 1998. executed by
Parent in favor of Bank ("Landlord Waiver").
The Term Note, Grid Note, Borrower Guaranty and Borrower GSA are
hereinafter collectively referred to as the "Borrower Loan Documents." The
Parent Guaranty, Parent GSA and Landlord Waiver are hereinafter collectively
referred to as the "Guarantor Loan Documents." The Borrower Loan Documents, the
Guarantor Loan Documents, the Trademark Agreement and the Patent Agreement are
referred to collectively as the "Loan Documents."
We have also examined the Certificate of Incorporation and By-Laws of
Borrower and Parent and copies, certified or otherwise identified to our
satisfaction, of such other documents, records and certificates of public
officials and of the Borrower and Parent, made such inquiries of officers of
Borrower and Parent and considered such questions of law as we deemed necessary
for the purpose of rendering the opinions set forth herein.
As to questions of fact material to the opinions set forth herein, we
have, when relevant facts were not independently established, made inquiries as
to such questions of fact of officers of Borrower and Parent and relied upon
certificates of, and information received from, officers of Borrower and Parent,
in each case, copies of which are annexed hereto as exhibits. As to any opinions
expressed herein "to our knowledge," such knowledge is based solely upon
certificates of, and information received from, officers of Borrower and Parent
and any actual knowledge we may have from any other source. We have not
independently investigated or verified the facts represented in such
certificates or information and do not opine as to the accuracy of any such
facts.
In rendering the opinions set forth below, we have assumed that:
A. Authority of Bank. Bank has all requisite power and authority to (i)
consummate the transactions described in the Loan Documents, (ii) execute and
deliver the Loan Documents to which it is a party and (iii) perform its
obligations thereunder.
B. Execution by Bank. Bank has duly and validly authorized, executed and
delivered the Loan Documents to which it is a party.
C. Modifications. There are no oral or written modifications of or
amendments to the Loan Documents.
<PAGE>
Nixon, Hargrave, Devans & Doyle LLP
Manufacturers and Traders Trust Company
April 14, 1998
Page 3
D. Authenticity of Documents. All documents submitted to us as originals
are authentic and complete; all documents submitted to us as certified,
photostatic or conformed copies conform to the original documents; all
signatures on all documents are genuine; and all public records reviewed are
accurate and complete.
E. Ownership of Collateral. Borrower is in possession of, and owns or has
all applicable rights to use,s the collateral described in the Trademark
Agreement and Patent Agreement. Borrower and Parent are the owners of the
collateral described in the Borrower GSA and Parent GSA, respectively.
F. Recording of Trademark Agreement and Patent Agreement. The Trademark
Agreement and Patent Agreement will be duly recorded in the appropriate
recording offices.
Based on the foregoing it is our opinion that:
1. Borrower and Parent are corporations duly organized, validly existing
and in good standing under the laws of the State of Delaware and are also duly
qualified to do business in, and are in good standing as foreign corporations
under, the laws of the State of New York.
2. Borrower has the requisite corporate power and authority to (a) own and
operate its property in New York State, to lease the Property it leases in New
York State and, to our knowledge, to conduct its business as it is presently
conducted in New York State (b) execute, deliver and perform its obligations
under the Borrower Loan Documents, (c) borrow under the Loan Agreement and (c)
grant the security interests provided for in the Trademark Agreement, Patent
Agreement and Borrower GSA.
3. Parent has the requisite corporate power and authority to (a) own and
operate its property in New York State, to lease the Property it leases in New
York State and, to our knowledge, to conduct its business as it is presently
conducted in New York State (b) execute, deliver and perform its obligations
under the Guarantor Loan Documents and (c) grant the security interests provided
for in the Guarantor GSA.
4. Borrower's execution and delivery of, and performance of its
obligations under, the Borrower Loan Documents, the Trademark Agreement and the
Patent Agreement have been duly authorized by all necessary corporate action on
the part of Borrower, and the Borrower Loan Documents, the Trademark Agreement
and the Patent Agreement have been duly executed and delivered by Borrower.
5. Parent's execution and delivery of, and performance of its obligations
under, the Guarantor Loan Documents, the Trademark Agreement and the Patent
Agreement have been duly authorized by all necessary corporate action on the
part of Parent, and the Guarantor Loan Documents, the Trademark Agreement and
the Patent Agreement have been duly executed and delivered by Parent.
<PAGE>
Nixon, Hargrave, Devans & Doyle LLP
Manufacturers and Traders Trust Company
April 14, 1998
Page 4
6. The Borrower Loan Documents, the Trademark Agreement and the Patent
Agreement are the valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms.
7. The Guarantor Loan Documents, the Trademark Agreement and the Patent
Agreement are the valid and binding obligations of Parent, enforceable against
the Parent in accordance with their respective terms.
8. The execution and delivery of the Borrower Loan Documents, the
Trademark Agreement and the Patent Agreement by Borrower, do not (a) conflict
with or result in a breach of any provision of the Certificate of Incorporation
or By-Laws of Borrower, or (b) to our knowledge, (i) result in a breach of any
of the provisions of, or constitute a default under, any agreement or instrument
to which Borrower is a party or by which any of Borrower's assets is bound, (ii)
violate any existing judgment, order, writ, injunction or decree expressly
applicable to Borrower, (iii) violate any existing law, rule, regulation or
ordinance applicable to Borrower or (iv) result in the creation or imposition of
any lien, charge or encumbrance or any nature whatsoever upon any properties of
Borrower, except as contemplated by the Borrower Loan Documents, the Trademark
Agreement and the Patent Agreement.
9. The execution and delivery of the Guarantor Loan Documents, the
Trademark Agreement and the Patent Agreement by Parent, do not (a) conflict with
or result in a breach of any provision of the Certificate of Incorporation or
By-Laws of Parent, or (b) to our knowledge, (i) result in a breach of any of the
provisions of, or constitute a default under, any agreement or instrument to
which Parent is a party or by which any of Parent's assets is bound, (ii)
violate any existing judgment, order, writ, injunction or decree expressly
applicable to Parent, (iii) violate any existing law, rule, regulation or
ordinance applicable to Parent or (iv) result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any properties of
Parent, except as contemplated by the Guarantor Loan Documents, the Trademark
Agreement and the Patent Agreement.
10. No consent authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required by
(i) the due execution, delivery and performance by Borrower under the Borrower
Loan Documents, the Trademark Agreement and the Patent Agreement (ii) the
borrowings contemplated by Borrower under the Loan Agreement, or (iii) the grant
by Borrower of security interests granted by it under any of the Borrower Loan
Documents, the Trademark Agreement or the Patent Agreement pursuant to the UCC.
11. No consent authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required by
(i) the due execution, delivery, and performance by Parent under the Guarantor
Loan Documents, the Trademark Agreement and the Patent Agreement or (ii) the
grant by Parent of security interests granted by it under any of the Guarantor
Loan Documents, the Trademark Agreement or the Patent Agreement pursuant to the
UCC.
<PAGE>
Nixon, Hargrave, Devans & Doyle LLP
Manufacturers and Traders Trust Company
April 14, 1998
Page 5
12. To our knowledge, there is no action, suit or proceeding pending, or
overtly threatened by written communication, against Borrower or expressly
affecting its assets wherein an unfavorable decision, ruling or finding, in any
case or in the aggregate, would materially adversely affect the Borrower's
financial condition or any of its assets, or the validity or enforceability of
any of the Borrower Loan Documents, the Trademark Agreement or the Patent
Agreement.
13. To our knowledge, there is no action, suit or proceeding pending, or
overtly threatened by written communication, against Parent or expressly
effecting its assets wherein an unfavorable decision, ruling or finding, in any
case or in the aggregate, would materially adversely affect Parent's financial
condition or any of its assets, or the validity or enforceability of any of the
Guarantor Loan Documents, the Trademark Agreement or the Patent Agreement.
The opinions expressed above are subject to the following qualifications:
(a) the enforceability of the Loan Documents may be limited by the
time of recording of the Patent Agreement and the Trademark Agreement, and
by applicable bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance, and other similar laws now or hereafter in effect
relating to or affecting creditor's rights generally;
(b) the enforcement of rights and remedies under the Loan Documents
may be limited by (i) general principles of equity, regardless of whether
such enforcement is considered in a proceeding in equity or at law, or
(ii) the policies underlying applicable law;
(c) we express no opinion as to the enforceability of the self-help,
non-judicial remedies provided to Bank in the Loan Documents (including,
inter alia, remedies purportedly based upon the appointment of Bank as
attorney-in-fact of Borrower);
(d) certain provisions in the Loan Documents may be rendered
unenforceable or limited by applicable laws and judicial decisions; but
such laws and judicial decisions do not render the Loan Documents legally
inadequate remedies for the realization of the principal benefits and
security intended to be provided thereby;
(e) enforceability of the Loan Documents may be limited by any
unconscionable or inequitable conduct on Bank's part, defenses arising
from Bank's failure to act in accordance with the terms and conditions of
the Loan Documents and defenses arising as a result of Bank's failure to
act in good faith and in a commercially reasonable manner;
(f) we express no opinion as to the validity or enforceability of
any waiver of service of judicial process, or any provisions of any of the
Loan Documents which might be construed as a waiver of counterclaims or
defenses;
<PAGE>
Nixon, Hargrave, Devans & Doyle LLP
Manufacturers and Traders Trust Company
April 14, 1998
Page 6
(g) we express no opinion as to (i) compliance with or the effect of
any applicable health, safety, zoning, land use, environmental, tax,
anti-trust or securities law, rule, regulation or ordinance; (ii) the
existence or state of title of any real or personal property which may be
the subject of any of the Loan Documents; (iii) the priority of any liens
or security interest created or purported to be created by any of the Loan
Documents; (iv) the perfection of any security interest in the Collateral;
or (v) the Banl&s right to collect any payment due to the extent that such
payment constitutes a penalty, forfeiture or late payment charge;
(h) we express no opinion as to the enforceability of the provisions
of the Grid Note and Loan Agreement requiring payment on demand;
(i) we express no opinion as to the enforceability of Section 6.2 of
the Trademark Agreement or Section 5.2 of the Patent Agreement;
(j) we express no opinion as to the enforceability of the provisions
of Section 8 of the Trademark Agreement with respect to the sale of any
Trademark apart from its Associated Goodwill and the business symbolized
by such Trademark; and
(k) we express no opinion as to the enforceability of the Trademark
Agreement to the extent that it purports to independently assign the
Pledged Trademarks as opposed to being an assignment in furtherance of a
security interest granted in the Pledged Trademarks.
This opinion is specifically limited to the present General Corporation
Law of the State of Delaware and the present internal laws of the State of New
York and federal law of the United States, and no opinion is expressed as to the
effect that the law of any other jurisdiction might have upon the subject matter
of the opinions expressed herein under the conflicts of law principles or
otherwise.
This opinion is being rendered solely for the benefit of Bank in
connection with the transactions contemplated by the Loan Documents. No other
person may rely on this opinion for any purpose without the express written
consent of the undersigned. This opinion is limited to the matters set forth
herein, no opinion may be inferred or implied beyond the matters expressly
stated herein, and this opinion must be read in conjunction with the
assumptions, limitations, exceptions and qualifications set forth in this
letter.
This opinion is rendered as of the date hereof, and no opinion is
expressed as to matters referred to herein on any subsequent date.
Very truly yours,
/s/ Nixon, Hargrave, Devans & Doyle LLP
<PAGE>
BORROWER'S CERTIFICATE
I, Emilio O. DiCataldo, as a Senior Vice President and Chief Financial
Officer of CVC Products, Inc., a Delaware corporation ("Borrower"), do hereby
certify to Nixon, Hargrave, Devans & Doyle LLP ("NHD&D"), in connection with
their opinion of counsel (the "Opinion"), dated April 14. 1998. addressed to
Manufacturers and Traders Trust Company ("M&T"), as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Opinion.
2. Except as may be set forth in the Officer's Certificate delivered to
M&T dated April 2, 1998, there have been no amendments to the Articles of
Incorporation or By Laws of Borrower.
3. To the best of my knowledge, Borrower has the requisite corporate power
and authority to conduct its business as it is presently conducted.
4. To the best of my knowledge, Borrower's execution and delivery of the
Borrower Loan Documents, the Trademark Agreement and the Patent Agreement and
Borrower's performance of its obligations under the Borrower Loan Documents, the
Trademark Agreement and the Patent Agreement do not (a) result in a breach of
any of the provisions of, or constitute a default under, any agreement or
instrument to which Borrower is a party or by which any of Borrower's assets is
bound, (b) violate any existing judgment, order, writ, injunction or decree
expressly applicable to Borrower, (c) violate any existing law, rule, regulation
or ordinance applicable to Borrower or (d) result in the creation or imposition
of any lien charge or encumbrance of any nature whatsoever upon any properties
of Borrower, except as contemplated by the Borrower Loan Documents the Trademark
Agreement and the Patent Agreement. Furthermore, Borrower is currently not a
party to, nor are Borrower's assets bound by, any agreements or instruments with
any financial or lending institution, other than Lender, which place limitations
on Borrower's ability to incur additional indebtedness.
5. To the best of my knowledge, there is no action, suit or proceeding
pending, or overtly threatened by written communication, against Borrower or
expressly affecting its assets wherein an unfavorable decision, ruling or
finding, in any case or in the aggregate, would materially adversely affect the
validity or enforceability of any of the Borrower Loan Documents the Trademark
Agreement or the Patent Agreement.
6. Borrower has consented to the issuance of the Opinion by NHD&D to M&T.
Dated: April 14, 1998 /s/ Emilio O. DiCataldo
--------------------------------
Emilio O. DiCataldo
Sr. V.P. & CFO
CVC Product, Inc.
<PAGE>
PARENT'S CERTIFICATE
I, Emilio O. DiCataldo, as a Senior Vice President and Chief Financial
Officer of CVC, Inc., a Delaware corporation ("Parent"), do hereby certify to
Nixon, Hargrave, Devans & Doyle LLP ("NHD&D"), in connection with their opinion
of counsel (the "Opinion"), dated April 14, 1998, addressed to Manufacturers and
Traders Trust Company ("M&T"), as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Opinion.
2. Except as may be set forth in the Officers Certificate delivered to M&T
dated April 2, 1998, there have been no amendments to the Articles of
Incorporation or By Laws of Parent.
3. To the best of my knowledge, Parent has the requisite corporate power
and authority to conduct its business as it is presently conducted.
4. To the best of my knowledge, Parent's execution and delivery of the
Guarantor Loan Documents, the Trademark Agreement and the Patent Agreement and
Parent's performance of its obligations under the Guarantor Loan Documents, the
Trademark Agreement and the Patent Agreement do not (a) result in a breach of
any of the provisions of, or constitute a default under, any agreement or
instrument to which Parent is a party or by which any of Parent's assets is
bound, (b) violate any existing judgment order, writ, injunction or decree
expressly applicable to Parent (c) violate any existing law, rule, regulation or
ordinance applicable to Parent or (d) result in the creation or imposition of
any lien charge or encumbrance of any nature whatsoever upon any properties of
Parent, except as contemplated by the Guarantor Loan Documents, the Trademark
Agreement and the Patent Agreement. Furthermore, Parent is currently not a party
to, nor are Parent's assets bound by, any agreements or instruments with any
financial or lending institution, other than Lender, which place limitations on
Parent's ability to incur additional indebtedness.
5. To the best of my knowledge, there is no action, suit or proceeding
pending, or overtly threatened by written communication, against Parent or
expressly affecting its assets wherein an unfavorable decision, ruling or
finding, in any case or in the aggregate, would materially adversely affect the
validity or enforceability of any of the Guarantor Loan Documents, the Trademark
Agreement or the Patent Agreement.
6. Parent has consented to the issuance of the Opinion by NHD&D to M&T.
Dated: April 14, 1998 /s/ Emilio O. DiCataldo
--------------------------------
Emilio O. DiCataldo
Sr. V.P. & CFO
CVC, Inc.
<PAGE>
[LOGO] M&T Bank
Manufactures and Traders Trust Company
TERM NOTE
Rochester, New York as of March 31, 1998 $8,000,000.00
BORROWER: CVC PRODUCTS, INC.
a(n) |_| individual(s) |_| partnership |X| corporation |_| trust |_| __________
organized under the laws of Delaware
Address of residence/chief executive office: 525 Lee Road, Rochester, New York
14606
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M&T Plaza, Buffalo, NY 14240.
Promise to Pay. For value received, Borrower promises to pay to the order of the
Bank, on the dates set forth below, the principal sum of EIGHT MILLION and
00/100 Dollars ($8,000,000.00) (the "Principal") plus interest as agreed below
and all reasonable fees and costs (including without limitation reasonable
attorneys fees and disbursements whether for internal or outside counsel) the
Bank incurs in order to collect any amount due under this Note, to negotiate or
document a workout, or restructuring, or to preserve its rights or realize upon
any guaranty or other security for the payment of this Note ("Expenses").
Interest. The unpaid Principal balance of this Note shall earn interest
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366) from and including the date the proceeds of this Note were
disbursed to, but not including, the date all amounts hereunder are paid in
full, at a rate per year which shall on each day be:
|X| 8.39%
|_| equal to the rate in effect on that day as the rate announced by the Bank
as its prime rate of interest.
|_| _______% above the rate in effect on that day as the rate announced by the
Bank as its prime rate of interest.
If no rate is specified above, interest shall accrue at the Maximum Legal Rate
(defined below).
Maximum Legal Rate. It is the intent of the Bank and Borrower that in no event
shall 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 canceled, and, if received by the Bank, shall be refunded to
Borrower.
Default Rate. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 5% per
year above the otherwise applicable rate per year.
Repayment of Principal and Interest; Late Charge. Payments shall be made in
immediately available United States funds at any banking office of the Bank.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay a late
charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount or
(c) the Bank's then current late charge as announced from time to time. If this
Note is secured by a one- to six-family owner-occupied residence, the late
charge shall equal 2% of the delinquent amount and shall be payable if payment
is not received within fifteen days of its due date. Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to remaining
principal.
The Maturity Date of this Note is April 1, 2005.
|_| Borrower shall pay the entire Principal on the Maturity Date. In addition,
until the outstanding Principal is paid in full, payments of all accrued
and unpaid interest in amounts which will vary will become due and payable
on the _______ day of each:
|_| month |_| quarter |_| year commencing on ____________, 19__.
|X| Borrower shall pay 84 consecutive level |X| monthly |_| quarterly |_|
annual installments consisting of both Principal and interest, amortized
over a period of 7 years, commencing on May 1, 1998 and also due on the
first day of each month thereafter. Each payment will equal $ 126,249.81
except that the last payment will equal all remaining amounts due under
this Note.
IF A PAYMENT IS RECEIVED AFTER THE DUE DATE, MORE INTEREST WILL BE DUE
THAN PLANNED AND LESS MONEY APPLIED TO PRINCIPAL. REPEATED LATE PAYMENTS
WILL CAUSE AN UNEXPECTED PRINCIPAL BALANCE TO REMAIN UNPAID AT THE END OF
THE TERM.
CLB-102 (12/94) 360-Day Base
<PAGE>
Prepayment Premium. During the term of this Note, Borrower shall have the option
of paying the Principal to the Bank in advance of the Maturity Date, in whole or
in part, at any time and from time to time. Upon making any prepayment of the
Principal Sum in whole, Borrower shall pay to the Bank all interest and Expenses
owing pursuant to this Note and remaining unpaid. Each partial prepayment of
Principal 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."
Representations and Warranties. Borrower represents to and agrees with the Bank
that now and until this Note is paid in full:
a. Business Purpose. The Loan proceeds shall be used only for a business
purpose and not for any personal, family or household purpose, unless the
following box is checked: |_| Personal Loan.
b. Good Standing; Authority. Borrower is an entity or sole proprietor (i)
duly organized and existing and in good standing under the laws of the
jurisdiction in which it was formed, (ii) duly qualified, in good standing and
authorized to do business in every 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 or in the future.
c. Legality. The execution, issuance, delivery to the Bank and performance
by Borrower of this Note (i) are in furtherance of 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 Borrower; and (iii) have been duly authorized by all necessary
corporate or partnership action.
d. 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 to the conduct of Borrower's business and for Borrower's
due issuance of this Note have been duly obtained and are in full force and
effect. The Borrower is in compliance with all conditions of each Approval.
e. Financial and Other Information. See Addendum
f. Accounting; Tax Returns and Payment of Claims. 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 Borrower or any of its assets, income or franchises, as well as
all amounts owed to mechanics, materialmen, landlords, suppliers and the like in
the ordinary course of business.
g. Title to Assets; Insurance. Borrower has good and valid title to each
of its assets free of security interests and mortgages and other liens except as
disclosed in its financial statements or on a schedule attached to or pursuant
to the Bank's prior written consent. Borrower will maintain its property in good
repair and will maintain and on request provide the Bank with evidence of
insurance coverage satisfactory to the Bank including without limitation fire
and hazard, liability, worker's 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 (each
an "Action") which involves Borrower or its assets and might have a material
adverse effect upon Borrower or threaten the validity of this Note or any
related document or transaction. Borrower will immediately notify the Bank in
writing upon acquiring knowledge of any such Action.
i. Notice of Change of Address and of Default. Borrower will immediately
notify the Bank in writing (i) of any change in its address or of the location
of any collateral securing this Note, (ii) of the occurrence of any Event of
Default defined below, (iii) of any material change in Borrower's ownership or
management and (iv) of any material adverse change in Borrower's ability to
repay this Note.
j. No Transfer of Assets. Until this Note is paid in full, Borrower shall
not without the prior written consent of the Bank (i) sell or otherwise dispose
of substantially all of its assets, (ii) acquire substantially all of the assets
of another entity, (iii) if it is a corporation, participate in an merger,
consolidation or other absorption or (iv) agree to do any of these things.
The inserts herein are contained in a Rider attached hereto which is made
a part hereof and incorporated herein.
2
<PAGE>
Events of Default; Acceleration. An event of default ("Event of Default") will
have occurred if: (a) Borrower fails to pay when due any amount due under this
Note; See Insert No. 3.
Right of Setoff. The Bank shall have the right to set off against the amounts
owing under this Note any property held in a deposit or other account with the
Bank or otherwise owing by the Bank in any capacity to Borrower or any
Guarantor.
Miscellaneous. This Note, together with any related loan and security agreements
and guaranties, contains the entire agreement between the Bank and Borrower with
respect to the Note, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Bank. All rights and
remedies of the Bank under applicable law and this Note or amendment of any
provision of this note are cumulative and not exclusive. No single, partial or
delayed exercise by the Bank of any right or remedy shall preclude the
subsequent exercise by the Bank at any time of any right or remedy of the Bank
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Bank. This Note shall be
governed by the laws of the State of New York, without regard to its principles
of conflict of laws. This Note is a binding obligation enforceable against
Borrower and its successors and assigns and shall inure to the benefit of the
Bank and its successors and assigns. If a court deems any provision of this Note
invalid, the remainder of the Note shall remain in effect. Section headings are
for convenience only. Singular number includes plural and neuter gender includes
masculine and feminine as appropriate.
Notices. Notices to Borrower by the Bank may be delivered in person, in writing
or by telephone with subsequent confirmation by mail or teletransmission.
Written notice shall be deemed delivered by mail when received or refused after
being deposited in the United States mail or transmitted to Borrower at the last
address of Borrower shown on the Bank's records. Notice to the Bank by Borrower
must be in writing, refer specifically to this Note and be delivered in person
or by registered mail directed to the Bank at the address stated on page one.
Notices shall be deemed delivered only when actually received by an officer of
the Bank. Borrower will notify the Bank promptly of any change of address.
Joint and Several. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this Note.
Borrower's Consents. In any action or other legal proceeding relating to this
Note, Borrower (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, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original.
TRIAL BY JURY. BORROWER AND THE BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION IN CONNECTION WITH THIS NOTE.
|X| This Note is given in partial replacement of and in substitution for, but
not in payment of, a note dated January 30, 1998, in the original
principal amount of $10,000,000.00 issued by Borrower (or
_________________) to the Bank.
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #____________ with the Bank automatically for any
amount which becomes due under this Note.
Tax ID/SS# 16-1017191 CVC PRODUCTS, INC.
------------ -------------------------
BORROWER
by: /s/ Emilio O. DiCataldo
-------------------------------
EMILIO O. DICATALDO, Senior Vice
President and Chief Financial
Officer
/s/ Gary F. Amendola
- ------------------------------------- --------------------------------------
Signature of Witness
Gary F. Amendola
- ------------------------------------- --------------------------------------
Typed Name of Witness
The inserts herein are contained in a Rider attached hereto which is made a part
hereof incorporated herein.
3
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, 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 the behalf of
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 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/ Gary F. Amendola
---------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
ACKNOWLEDGMENT
STATE OF _________)
:SS.
COUNTY OF ________)
On the ______ day of _________________________ in the
year 19__, before me personally came ____________________
_________________________________________________________
|_| 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 the behalf of
partnership.
|_| Corporation to me known, who, being by me duly sworn, did depose and
say that __he resides in ________________________________
_________________________________________________________
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.
______________________________________
Notary Public
FOR BANK USE ONLY
Authorization Confirmed: /s/ William E. Holston
-------------------------------------------------------
Disbursement of Funds:
Credit A/C #_____________ Off Ck #_____________ Payoff Obligation #_____________
$_____________ $_____________ $_____________
CLB-102 (12/94) 360-Day Base
4
<PAGE>
RIDER TO AN $8,000,000.00 TERM NOTE
DATED AS OF MARCH 31, 1998 EXECUTED
BY CVC PRODUCTS, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY
This RIDER, to a certain $8,000,000 Term Note, dated as of March 31, 1998,
is made by CVC PRODUCTS, INC. ("Borrower") in favor of MANUFACTURERS AND TRADERS
TRUST COMPANY ("Bank"). This Rider is an integral part of the Term Note.
Insert No. 1. - The following is the addition to the first sentence of the
"Prepayment Premium" section of the preprinted form of this Note:
"upon three days prior written notice received by Bank, provided
however that the prepayment is accompanied by a Redemption Premium
calculated as follows: The Redemption Premium shall be equal to the
amount by which the sum of the Discounted Values (as determined
below) of the Prepaid Installments of principal and interest on the
Note exceeds the amount of the prepayment; but this amount shall
never be less than 1% of the principal amount prepaid. Bank shall in
good faith determine such Discounted Values by discounting all of
the Prepaid Installments of principal and interest at the Applicable
Treasury Rate (as determined below) from the date on which the
prepayment is made through the respective scheduled payment dates.
The Applicable Treasury Rate to be applied shall be the yield which
is imputed from linear interpolation from current daily yields of
U.S. Treasury obligations having maturities as close as practicable
to the Average Life to Stated Maturity (as determined below) of the
Prepaid Installments of principal (as of the third day prior to the
date on which the prepayment is made) as published in the Federal
Reserve Statistical Release H.15 (519) or if such yield is not so
published, a similar rate based upon a comparable index as
determined by Bank. The Average Life to Stated Maturity of the
Prepaid Installments of principal shall be the number of months
obtained by determining (A) the sum of the products obtained by
multiplying (i) the amount of each Prepaid Installment of principal
by (ii) the number of months from the date the prepayment is made
through the scheduled payment date for such Prepaid Installment of
principal and (B) dividing such sum by the sum of the Prepaid
Installments of principal.
Upon making any prepayment of the unpaid principal balance of this
Note in full, Borrower shall also pay Bank all accrued interest and
Expenses owing on this Note. Each partial principal prepayment shall
be applied in inverse order
<PAGE>
of maturity to the principal included in the installments provided
for in the preprinted portion of this Note labelled "Repayment of
Principal and Interest; Late Charge.
In the event the Maturity Date of this Note is accelerated following
an Event of Default by the Borrower, 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 case, to the extent permitted by law, Bank shall be entitled
to the amount necessary to satisfy the entire indebtedness, plus the
appropriate prepayment premium calculated in accordance with this
Section."
Insert No. 1.A.
the Loan Agreement of even date herewith between Bank and Borrower, as
amended, extended and replaced
Insert No. 2
or (b) any Event of Default occurs under the Loan Agreement of even date
herewith between Bank and Borrower ("Agreement"), as such Agreement is amended,
extended or replaced from time to time. Certain capitalized terms used in this
Rider have the definition given to them in the Agreement.
Insert No. 3
As used in this Note (i) "any agreement with the Bank" includes any
agreement, note or instrument with the Bank (which includes, without limitation,
the Agreement Note, the 1998 Grid Note and the Existing Bank Documents); (ii)
"accelerated" or "acceleration" means indebtedness that becomes due at maturity,
by notice after the occurrence of an Event of Default or which becomes due as a
result of a demand. All defined terms in the Agreement shall have the same
meaning herein unless otherwise defined herein.
Automatically upon the commencement of Borrower's or any 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 any other Event of Default hereunder, at the
Bank's option, all amounts hereunder shall become immediately due and payable.
Miscellaneous
Replacement of Representation and Warranty "e" of the preprinted form:
R-2
<PAGE>
"Borrower shall provide Bank with such financial and other
information as Borrower is required to provide Bank under a Loan
Agreement entered into by Borrower and Bank on or about the date
this Note was executed ("Loan Agreement"), as the Loan Agreement is
extended, amended and replaced.
IN WITNESS WHEREOF, Borrower has executed and unconditionally delivered
this Rider together with the preprinted form of this Note on the date indicated
in the acknowledgement, effective as of March 31, 1998.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
----------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and Chief
Financial Officer
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On this 14th day of April, 1998, 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.
/s/ Gary F. Amendola
--------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
R-3
<PAGE>
[LOGO] M&T Bank
Manufacturers and Traders Trust Company
GRID NOTE
Rochester, New York As of March 31, 1998 $ 10,000,000.00
BORROWER: CVC PRODUCTS, INC. a(n) |_| individual(s) |_| partnership |X|
corporation |_| ________________ organized under the laws of Delaware Address of
residence/chief executive office: ______________________________________________
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M & T Plaza, Buffalo, NY 14240.
Promise to Pay. For value received, Borrower promises to pay to the order of the
Bank on demand, the principal sum of _______________________ TEN MILLION and
00/100 Dollars ($10,000,000.00) (the "Maximum Principal Amount") or the
outstanding principal amount of this Note (the "Outstanding Principal Amount"),
if less; plus interest as agreed below and all reasonable fees and costs
(including without limitation reasonable attorneys fees and disbursements,
whether for internal or outside counsel) the Bank incurs in order to collect any
amount due under this Note, to negotiate or document a workout, or
restructuring, or to preserve its right or realize upon any guaranty or other
security for the payment of this Note ("Expenses").
Interest. The outstanding Principal Amount of this Note shall earn interest
calculated on the basis of 360-day year for the actual number of days of each
year (365 or 366) from and including the date the proceeds of this Note were
disbursed to, but not including, the date all amounts hereunder are paid in full
at a rate per year which shall on each day be:
|_| __________%.
|_| equal to the rate in effect on that day as the rate announced by the Bank as
its prime rate of interest.
|X| 1/4% above the rate in effect on that day as the rate announced by the Bank
as its prime rate of interest.
If no rate is specified above, interest shall accrue at the Maximum Legal Rate
(defined below) at all times prior to payment in full.
Payments; Late Charge; Default Rate. Payments shall be made in immediately
available United States funds at any banking office of the Bank. Absent
demand for payment in full, interest shall be due and payable monthly. If
payment is not received within five days of its due date, Borrower shall pay a
late charge equal to the greatest of (a) 5% of the delinquent amount, (b) the
Bank's then current late charge as announced by the Bank from time to time, or
(c) $50.00. In addition, if the Bank has not actually received any payment under
this Note within thirty days after its due date, from and after such thirtieth
day the interest rate for all amounts outstanding under this Note shall
automatically increase to 5% above the otherwise applicable rate per year.
Payments may be applied in any order in the sole discretion of the Bank but,
prior to demand, shall be applied first to past due interest, Expenses, late
charges, and principal payments, if any, which are past due, then to current
interest and Expenses and late charges, and last to remaining principal.
Maximum Legal Rate. It is the intent of the Bank and of Borrower that in no
event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law ( the "Maximum Legal Rate"). Solely to the extent
necessary to prevent interest under this Note from exceeding the Maximum Legal
Rate, any amounts 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 Bank, shall be refunded to
Borrower.
Setoff. The Bank shall have the right to set off against the amounts owing under
this Note any property held in a deposit or other account with the Bank or
otherwise owing by the Bank in any capacity to Borrower or any guarantor or
endorser of this Note.
Authorized Representatives. This Note is issued by Borrower to the Bank in
connection with a certain line of credit or loan limit made available by the
Bank to Borrower (the "Credit"). The Bank may make any loan pursuant to the
Credit (the "Loan(s)") in reliance upon any oral, telephonic, written,
teletransmitted or other request (the "Request(s)") that the Bank in good faith
believes to be valid and to have been made by Borrower or on behalf of Borrower
by CHRISTINE WHITMAN or EMILIO DiCATALDO (each an "Authorized Person"). The Bank
may act on the Request of any Authorized Person until the Bank shall have
received from Borrower, and had a reasonable time to act on, written notice
revoking the authority of such Authorized Person. The Bank shall incur no
liability to Borrower or to any other person as a direct or indirect result of
making any Loan pursuant to this paragraph.
Demand Facility. The Bank may modify, restrict, suspend or terminate the Credit
at any time for any reason and without affecting Borrower's then existing
obligation under this Note. This is a demand Note and all Loans hereunder shall
become immediately due and payable upon demand by the Bank; provided, however,
that the Outstanding Principal Amount of this Note and all accrued and unpaid
interest shall automatically become immediately due and payable if Borrower or
any guarantor or endorser of this Note commences or has commenced against it any
bankruptcy or insolvency proceeding. Borrower hereby waives protest, presentment
and notice of any kind in connection with this Note.
Bank Records Conclusive. The Bank shall set forth on a schedule attached to this
Note or maintained on computer, the date and original principal amount of each
Loan and the date and amount of each payment to be applied to the Outstanding
Principal Amount of this Note. The Outstanding Principal Amount set forth on any
such schedule shall be presumptive evidence of the Outstanding Principal Amount
of this Note and of all Loans. No failure by the Bank to make, and no error by
the Bank in making, any annotation on any such schedule shall affect Borrower's
obligation to pay the principal and interest of each Loan or any other
obligation of Borrower to the Bank pursuant to this Note.
Purpose. Borrower certifies (a) that no Loan will be used to purchase margin
stock except with the Bank's express prior written consent for each such
purchase and (b) that all Loans shall be used for a business purpose, and not
for any personal, family or household purpose, unless the following box is
checked:
|_| Personal Loan. If this box is check, the initial advance must be an amount
greater than $25,000.
Authorization. Borrower, if a corporation, partnership, trust or other entity,
represents that it is duly organized and in good standing or duly constituted in
the state of its organization and is duly authorized to do business in all
jurisdictions material to the conduct of its business; that the execution,
delivery and performance of this Note have been duly authorized by all necessary
regulatory and corporate or partnership action or by its governing instrument;
that this Note has been duly executed by an authorized officer, partner or
trustee and constitutes a binding obligation enforceable against Borrower and
not in violation of any law, court order or agreement by which Borrower is
bound; and that Borrower's performance is not threatened by any pending or
threatened litigation.
<PAGE>
Miscellaneous. This Note, together with any related loan and security
agreements, contains the entire agreement between the Bank and Borrower with
respect to each Loan, and supersedes every course of dealing, other conduct,
oral agreement and representation previously made by the Bank. The Bank's rights
and remedies under applicable law and this Note are cumulative and not
exclusive. No single, partial or delayed exercise by the Bank of any right or
remedy shall preclude the subsequent exercise by the Bank at any time of any
right or remedy of the Bank without notice. No waiver or amendment of any
provision of this Note shall be effective unless made specifically in writing by
the Bank. This Note shall be governed by the laws of the State of New York,
without regard to its principles of conflict of laws. This Note is a binding
obligation enforceable against Borrower and its successors and assigns and shall
inure to the benefit of the Bank and its successors and assigns. If a court
deems any provision of this Note invalid, the remainder of the Note shall remain
in effect. Section heading are for convenience only. Singular number includes
plural and neuter gender includes masculine and feminine as appropriate.
Joint and Several. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this
Note.
Borrower's Consents. In any action or other legal proceeding relating to this
Note, Borrower (a) consents to the personal jurisdiction of any State or federal
court location in the State of New York, and (b) agrees that a copy of this Note
kept in the Bank's course of business may be admitted into evidence as an
original.
WAIVER OF JURY TRIAL. BORROWER AND THE BANK EACH WAIVE ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION IN CONNECTION WITH THIS NOTE.
|X| Replacement Note. This Note is given in partial replacement of and in
substitution for, but not in payment of, two 800 Notes heretofore executed by
Borrower in favor of Bank, as further specified in an Application of Proceeds
executed by Borrower on the date this Note was executed.
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
available funds in Borrower's deposit account # 15226103 with the Bank
automatically for any amount which becomes due under this Note or as directed by
an Authorized Person, by telephone.
CVC PRODUCTS, INC.
---------------------------------------------
BORROWER
Tax ID/SS # 16-1017191 by: /s/ Emilio O. DiCataldo
---------------- ---------------------------------------------
Emilio O. DiCataldo, Senior Vice President
and Chief Financial Officer
/s/ Gary F. Amendola
- ---------------------------- ---------------------------------------------
Signature of Witness
Gary F. Amendola
- ----------------------------
Typed Name of Witness
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, before me
personally came EMILIO O. DiCATALDO
|_| Individual(s) to me known to me to be person(s) described in and who
executed the above instrument, an __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 acknowledge 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 Vice President and Chief
Financial Office 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/ Gary F. Amendola
--------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
FOR BANK USE ONLY
Authorization Confirmed: /s/ William E. Holston
--------------------------------------------------------
Disbursement of Funds:
Credit A/C # Off Ck # Payoff Obligation #
------------- ------------ -----------
$ $ $
------------- ------------ -----------
<PAGE>
AMENDED AND RESTATED
(LOGO) M&T Bank CONTINUING GUARANTY
(Corporation or Partnership)
GUARANTOR: CVC, INC. formerly known as 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
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. Any prior extension of credit by Bank to Borrower shall
also constitute consideration for this Guaranty.
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 or Borrower'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, or failure to perfect a security interest in, 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 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; (D) any composition, extension, moratoria or other
statutory relief granted to Borrower; or (E) 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
Banks reliance on or enforcement of this Guaranty.
(c) Waiver of Subrogation. Notwithstanding any other provision in this
Guaranty, Guarantor irrevocably waives, without notice, any right it may have at
law or in equity (including without limitation any law subrogating Guarantor to
the rights of the Bank) to seek contribution, indemnification or any other form
of reimbursement from Borrower or any other obligor or guarantor of the
Obligations for any disbursement made under this Guaranty 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
Banks 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 provide Bank with
the same financial statements and other information Borrower is required to
provide Bank under a Loan Agreement entered into by Bank and Borrower on or
about the date this Guaranty was executed ("Loan Agreement"), as the Loan
Agreement is extended, amended and replaced. 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.
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 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 all 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.
<PAGE>
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 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 to Jurisdiction. In any action or other legal
proceeding relating to this Guaranty, Guarantor (a) consents to the personal
jurisdiction of any State of federal court located in the State of New York, (b)
waives objection to the laying of venue, (c) waives personal service of process
and subpoenas, (d) consents to service of process and subpoenas by registered or
certified mail directed to Guarantor at the last address shown in the Bank's
records relating to this Guaranty, with such service to be deemed completed five
days after mailing, (e) waives any right to assert any counterclaim or setoff or
any defense based upon a statute of limitations or upon a claim of laches, (f)
waives any right to attack a final judgment that is obtained as a direct or
indirect result of any such action and (g) consents to each such final judgment
being sued upon in any court having jurisdiction. A separate action may be
brought against Guarantor whether or not action is brought against or joined
with Borrower or any other party.
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.
14. This Guaranty restates and amends a Continuing Guaranty of payments of
the obligations executed by Guarantor in favor of Bank on or about February 2,
1996.
GUARANTOR:
TIN # 16-1383279 CVC, INC.
---------- ---------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior Vice President
and Chief Financial Officer
---------------------------------------------
Typed Name and Title
By:
---------------------------------------------
---------------------------------------------
Typed Name and Title
Dated: April 14, 1998
---------------------------------------
NOTICE: FOR PURPOSES OF THIS GUARANTY "OBLIGATIONS" IS
NOT LIMITED TO PRESENTLY EXISTING INDEBTEDNESS,
LIABILITIES AND OBLIGATIONS.
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, before me personally came EMILIO
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 acknowledge 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 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/ Gary F. Amendola
--------------------------------------
Notary Public
FOR BANK USE ONLY
Authorization Confirmed:
GARY F. AMENDOLA
/s/ William E. Holston Notary Public, State of New York
- ----------------------- Qualified in Monroe County
Signature Commission Expires Oct. 31, 98
<PAGE>
AMENDED AND RESTATED
(LOGO) 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 INC. formerly known as 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 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. Any prior extension of credit by Bank to Guarantor shall
also constitute consideration for this Guaranty.
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 or Borrower'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, or failure to perfect a security interest in, 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 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; (D) any composition, extension, moratoria or other
statutory relief granted to Borrower; or (E) 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
Banks reliance on or enforcement of this Guaranty.
(c) Waiver of Subrogation. Notwithstanding any other provision in this
Guaranty, Guarantor irrevocably waives, without notice, any right it may have at
law or in equity (including without limitation any law subrogating Guarantor to
the rights of the Bank) to seek contribution, indemnification or any other form
of reimbursement from Borrower or any other obligor or guarantor of the
Obligations for any disbursement made under this Guaranty 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
Banks 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 provide Bank with such
financial and other information as Guarantor is required to provide Bank under a
Loan Agreement entered into by Guarantor and Bank on or about the date this
Guaranty was executed ("Loan Agreement"), as the Loan Agreement is extended,
amended and replaced. 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.
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 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 all 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.
<PAGE>
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 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 to Jurisdiction. In any action or other legal
proceeding relating to this Guaranty, Guarantor (a) consents to the personal
jurisdiction of any State of federal court located in the State of New York, (b)
waives objection to the laying of venue, (c) waives personal service of process
and subpoenas, (d) consents to service of process and subpoenas by registered or
certified mail directed to Guarantor at the last address shown in the Bank's
records relating to this Guaranty, with such service to be deemed completed five
days after mailing, (e) waives any right to assert any counterclaim or setoff or
any defense based upon a statute of limitations or upon a claim of laches, (f)
waives any right to attack a final judgment that is obtained as a direct or
indirect result of any such action and (g) consents to each such final judgment
being sued upon in any court having jurisdiction. A separate action may be
brought against Guarantor whether or not action is brought against or joined
with Borrower or any other party.
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.
14. This Guaranty restates and amends a Continuing Guaranty of payments of
the obligations executed by Guarantor in favor of Bank on or about February 2,
1996.
GUARANTOR:
TIN # 16-1017191 CVC PRODUCTS, INC.
---------- ---------------------------------------------
By: /s/ Emilio O. DiCataldo
------------------------------------------
Emilio O. DiCataldo, Senior Vice President
and Chief Financial Officer
---------------------------------------------
Typed Name and Title
By:
---------------------------------------------
---------------------------------------------
Typed Name and Title
Dated: April 14, 1998
---------------------------------------
NOTICE: FOR PURPOSES OF THIS GUARANTY "OBLIGATIONS" IS
NOT LIMITED TO PRESENTLY EXISTING INDEBTEDNESS,
LIABILITIES AND OBLIGATIONS.
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, before me personally came EMILIO
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 acknowledge 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 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/ Gary F. Amendola
--------------------------------------
Notary Public
FOR BANK USE ONLY
Authorization Confirmed:
GARY F. AMENDOLA
/s/ William E. Holston Notary Public, State of New York
- ----------------------- Qualified in Monroe County
Signature Commission Expires Oct. 31, 98
<PAGE>
AMENDED AND RESTATED
(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, New York 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") See Addendum for additional Secured
Parties heretofore or hereafter (1) granting any loan, credit or other financial
accommodation to, or in reliance upon any guaranty, endorsement or other
assurance of, the undersigned (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
(xi) Products, and (xii) Investment Property
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 each Secured Party a security interest in, and assigns, pledges and
hypothecates to each 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, the financial statements and other information required to be
provided to Bank as set forth in a Loan Agreement entered into by Debtor and
Bank on or about the date this Agreement was executed, and 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) or 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 or 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
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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 or 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.
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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 premises 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 nor 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
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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, any amendment of any such
financing statement or any application for any certificate of title or notice of
lien relating to any Goods included in 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 4ii
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 premises 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
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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 presentation 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
potion 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 effect 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 as
of the date of this Agreement.
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 lapse 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 duly 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.
vii. 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 any 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 pert 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
end 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:
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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 respects 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 thereof or of any other such right or
remedy. No notice or demand of any kind, and no attempted but unsuccessful
notice or demand of any kind, by the Secured Party prior to exercising any such
right or remedy on any one occasion, 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 duly 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 or 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 duly 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 or
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
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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 Obligations, (xix) any change in the ownership or membership of any
Debtor, Primary Obigor, Other Obligor or other Person, (xx) any change in the
location, business, name, 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 at 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 or of 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 or 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 portion of the
Obligations arising after such receipt of such notice and the expiration of such
period of time and constituting a liability, cost or expense 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 (ii) 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 on 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 so 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 preceeding, (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 assert any
final judgment that is obtained as a direct or indirect result of any such
action or other legal proceeding, and (vii) consents
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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.
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, See Addendum, Instruments, Investment
Property Documents, Deposit Accounts and money of each Debtor other than any
ConsumerGoods 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 of 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. See Addendum.
f. "General Intangible" has the meaning given it for purposes of Article 9
of the Uniform Commercial Code of the State of New York, is 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 of 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 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
Parties or to any 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 indirect 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, trade 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 of such Person are hereafter directly or indirectly assigned or
otherwise transferred.
17. The attached Addendum is an integral part of this Security Agreement.
Dated April 14, 1998 CVC PRODUCTS, INC.
--------------------- ---------------------------------------
By: /s/ Emilio O. DiCataldo
---------------------------------------
Name: Emilio O. DiCataldo
---------------------------------------
Title: Senior Vice President and CFO
ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, 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 acknowledge 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 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.
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
------------------------------------
Notary Public
FOR BANK USE ONLY: Authorization Confirmed. /s/ William E. Holston
------------------------------------
Exhibit A
See Schedule attached to a Loan Agreement between Bank and Borrower executed the
same date this Security Agreement was executed.
Permitted Financing Statements and Other Evidences of Lien (Section 4x):
11
<PAGE>
Permitted Transfers, Pledges and Other Actions with Respect to Uncertificated
Securities (Section 4y):
Exceptions to Representations and Warranties (Clauses (v), (vi), (vii), (viii),
(ix) and (x) of Section 9a):
Description of Real Property on Which Crop or Timber Located (Clause (xiii) of
Section 9a):
Permitted Liens (Clause (i) of Section 161):
QUESTIONNAIRE
* See attached Perfection Certificate
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)?
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?
3. What is the address (including county) of the residence, only place of
business or chief executive office of the undersigned?
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?
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?
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?
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?
Dated April 14, 1998 CVC PRODUCTS, INC.
--------------------- ---------------------------------------
By: /s/ Emilio O. DiCataldo
---------------------------------------
Name: Emilio O. DiCataldo
---------------------------------------
Title: Senior Vice President and CFO
12
<PAGE>
ADDENDUM TO AN AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
DATED AS OF MARCH 31, 1998
EXECUTED BY
CVC PRODUCTS, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY AND OTHERS
This ADDENDUM is made to an Amended and Restated General Security
Agreement ("Agreement"), dated as of March 31, 1998, executed by CVC PRODUCTS,
INC. ("Borrower") in favor of MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank")
and others. This Addendum is an integral part of the Agreement.
1. This Agreement restates and amends a General Security Agreement
executed by Borrower in favor of Bank on or about February 2, 1996, as
previously amended.
2. M&T Real Estate, Inc. ("RE") and M&T Financial Corporation ("MFC"),
each of whose principal place of business is located at One M&T Plaza, Buffalo,
New York, are each additional Secured Parties under this Agreement.
Manufacturers and Traders Trust Company ("M&T"), RE and MFC are collectively
referred to in this Agreement as "Secured Parties" and individually as a
"Secured Party". M&T may also be at times referred to in this Agreement as
"Bank". CVC Products, Inc. is at times referred to in this Agreement as
"Borrower", "Debtor", "undersigned" and "Undersigned". All references in this
Agreement to "Secured Party" shall be deemed to be to "Secured Parties or any
Secured Party."
3. The following is inserted between the words "General Intangibles" and
"Instruments" in the fourth line of the first sentence of Section 16b
(Definition of Collateral) of the preprinted portion of this Agreement:
"(including but not limited to all patents and patent applications,
rights under all licenses, trade secrets, trademarks, copyrights and
other intellectual property of any nature or kind (collectively
"Intellectual Property"), whether such Intellectual Property is now
owned by the undersigned or in which the undersigned now has any
interest or such Intellectual Property is hereafter acquired by the
undersigned or in which the undersigned hereafter acquires any
interest),"
4. Section 16e of the preprinted form of the General Security Agreement is
deemed deleted and replaced with the following:
"e. An Event of Default occurs or exists at any time that an Event
of Default occurs or exists under the Loan Agreement entered into by
Debtor and Bank on or about the date this General Security Agreement
was executed ("Loan Agreement"),
<PAGE>
as the Loan Agreement is amended, extended or replaced from time to
time."
IN WITNESS WHEREOF, Borrower has executed this Addendum, together with the
preprinted form of the Agreement, on the date indicated in the Acknowledgement,
effective as of March 31, 1998.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On this 14th day of April, 1998, 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 CFO 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/ Gary F. Amendola
--------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, 98
<PAGE>
PERFECTION CERTIFICATE
(CVC PRODUCTS, INC.)
In order to induce Manufacturers and Traders Trust Company ("Bank") to
make certain credit facilities available to CVC Products, Inc. ("Borrower"), the
undersigned, a duly authorized officer of Borrower hereby certifies to Bank as
follows:
1. Names.
(a) Prior to and on the date hereof, the exact corporate name of
Borrower, as it appears in its Certificate of Incorporation, its state of
incorporation and its federal employer identification number are as follows:
State of Federal EIN or
Name Incorporation Registration No.
- ---- ------------- ----------------
CVC, Inc. Delaware #16-101-7191
(b) Set forth below is each other corporate name that Borrower has
had since its organization, together with the date of the relevant change:
None
(c) Except as set forth in Schedule 1 annexed hereto, Borrower has
not changed its identity or corporate structure in any way within the past five
years. For purposes of this Certificate, changes in identity or corporate
structure include mergers, consolidations and acquisitions, as well as any
change in form, name, nature or jurisdiction of corporate organization. If any
such change has occurred, Schedule 1 annexed hereto includes the information
required by paragraphs 1, 2 and 3 of this Certificate as to each acquiree or
constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade
names or similar appellations) used by Borrower or any of its divisions or other
business units at any time during the past five years:
CVC
<PAGE>
2. Current Locations.
(a) The chief executive office of Borrower is located at the
following address:
525 Lee Road
Rochester, New York 14606
(b) The following are all locations where Borrower maintains any
books or records relating to any Accounts, in addition to the addresses listed
in part 2(a) above:
None
(c) Listed on Schedule 2 are all the places of business of Borrower
not identified above.
(d) The following are all locations not identified above where
Borrower maintains any Inventory or Equipment:
Same as above
(e) The following are the names and addresses of all Persons other
than Borrower which have possession of any Inventory or Equipment owned by
Borrower:
None
3. Prior Locations. Set forth below is all of the business locations, not
otherwise listed above, which were maintained by Borrower at any time during the
past five (5) years:
Fremont, California - Warm Springs Boulevard
4. Unusual Transactions. All Accounts have been originated by Borrower and
all Inventory and Equipment has been acquired by Borrower in the ordinary course
of business.
Yes
5. Intellectual Property. Attached hereto as Schedule 3 is a list of all
the patents, patent rights, patent applications, copyrights and copyright
applications, trademarks, trademark rights,
-2-
<PAGE>
patent licenses, copyright licenses and trademark licenses now owned or used by
Borrower.
6. Lien Search Reports.
(a) Attached hereto as Schedule 4 are the financing statements or
other filings filed against Borrower in the Uniform Commercial Code filing
office or offices in each jurisdiction identified in paragraphs 2 or 3 above
with respect to Borrower; and
(b) No other financing statement or other filing under the Uniform
Commercial Code has been made in the name of Borrower.
IN WITNESS WHEREOF, the undersigned has executed this Certificate through
its duly authorized officer as of this 14th day of April, 1998.
CVC Products, Inc.
By: /s/ Emilio O. DiCataldo
------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President
-3-
<PAGE>
SCHEDULE 1
Changes in Identity or Corporate Structure
NONE
<PAGE>
SCHEDULE 2
Business Locations
(1) 525 Lee Road
Rochester, New York 14606
(2) 3100 Laurelview Court
Fremont, California 94538
(3) 329 Oaks Trail
Garland, Texas 75043
(4) 2914 Montopolis Drive
Austin, Texas 78741
(5) 4530 West 77th Street
Edina, Minnesota 55435
(6) 21 Clarendon Street
Londonderry, Northern Ireland BT487EP
<PAGE>
SCHEDULE 3
Intellectual Property
See Audit Report dated October 8, 1997 from Baker & Botts
as modified by 7 page report prepared by Bill Halsey
Captioned "B-Patent Assets"
<PAGE>
SCHEDULE 4
LIEN SUMMARY
<TABLE>
<CAPTION>
Financing Statement #
---------------------
Date NYDOS Monroe Texas Calif. Secured Creditor Collateral
- ---- ----- ------ State State ---------------- ----------
----- -----
<S> <C> <C> <C> <C> <C> <C>
10/03/88 88-08783 Chemical Bank specific equip.
- -------------------------------------------------------------------------------------------------------------------
08/26/91 181800 91-6164 Machine Tool Finance leased equip.
- -------------------------------------------------------------------------------------------------------------------
06/04/93 119980 Advanta Leasing Corp. specific equip.
06/10/93 93/3747
- -------------------------------------------------------------------------------------------------------------------
06/03/94 94-4250 Storage Technology leased equip.
06/06/94 115717
- -------------------------------------------------------------------------------------------------------------------
09/12/94 94-6798 Storage Technology leased equip.
- -------------------------------------------------------------------------------------------------------------------
11/02/95 95-7847 Breed Technologies specific equip.
- -------------------------------------------------------------------------------------------------------------------
02/07/96 96/1028 Manufacturers and fixture filing
Traders Trust Company
and M&T Real Estate
02/07/96 96/1031 Manufacturers and Blanket
02/09/96 028550 Traders Trust Company
02/15/96 028241 and M&T Real Estate, Inc.
02/13/96 9604560823
- -------------------------------------------------------------------------------------------------------------------
03/11/96 96/1786 Breed Technologies specific equip.
- -------------------------------------------------------------------------------------------------------------------
09/30/97 97/6148 M&T Real Estate fixture filing
10/06/97 205889
- -------------------------------------------------------------------------------------------------------------------
09/30/97 97/6150 COMIDA fixture filing
10/06/97 205892 equip. payments
and lease rights
insurance and
condemnation awards
- -------------------------------------------------------------------------------------------------------------------
09/30/97 97/6146 M&T Real Estate fixture filing
10/06/97 205895 equip., insurance
and condemnation
awards
</TABLE>
No filings with Minnesota Secretary of State
<PAGE>
AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
[LOGO] MANUFACTURERS AND TRADERS TRUST COMPANY
Name(s) of Undersigned CVC, INC. ("Debtor" or "Undersigned"), formerly known as
CVC HOLDINGS, INC.
Address(es) of Undersigned 525 Lee Road, Rochester, New York 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
- ----------------- ---------------------------------------------------------
(Name) Type of entity and, if not an individual, jurisdiction in
which organized)
_________________________________ having his or her residence or its only place
of business or chief executive office
at 525 Lee Road, Rochester, New York 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
receiver 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
(xi) Products, and (xii) Investment Property.
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 each Secured Party a security interest in, and assigns, pledges and
hypothecates each 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.
* See Addendum for additional Secured Parties.
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d. Each Debtor shall provide to the Secured Party, in form satisfactory to
the Secured Party, the financial and other information required to be provided
to Bank by Borrower under a Loan Agreement entered into by Borrower and Bank on
or about the date this Agreement was executed and 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 at 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 at 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 or 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 at 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 title 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
interns 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
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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 Debtors business, (I) abandon, assign, sell, lease, exchange or
otherwise transfer or 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, (Ill) 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.
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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 premises 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) identity 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 much 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 Doctor 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 solo 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 at
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 attorneys 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
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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 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, any amendment of any such
financing statement or any application for any certificate of title or notice of
lien relating to any Goods included in 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 4ii
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 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 premises 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
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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 or 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 effect on the value of any of the Collateral as security
for the payment of the Obligations or otherwise be incontinent 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 manor 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 Land.
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 protein 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 as
of the date of this Agreement
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 lapse 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, one 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 duly 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 nor 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 any 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:
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i. Each Instrument, Document and Deposit Account included in the
Collateral at such time is genuine, as 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 respects 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 thereof or of any other such right or
remedy. No notice or demand of any kind, and no attempted but unsuccessful
notice or demand of any kind, by the Secured Party prior to exercising any such
right or remedy on any one occasion, 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 duly 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 or 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 duly 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 or
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
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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 Obligations, (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, name, 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 or of 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 much 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 portion of the
Obligations arising after such receipt of such notice and the expiration of such
period of time and constituting a liability, cost or expense described in
Section 4j 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 Now 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 an 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) waive; in each such
action end other legal proceeding each right to trial by jury and each right to
assert any counterclaim or staff 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
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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 Debtors 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 mother 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.
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 front 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 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
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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, Investment Proper, 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 at, 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 of
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. See Addendum.
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 of 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 or, 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
exiting 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
Parties or to any 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.
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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, trade 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 of such Person are hereafter directly or indirectly assigned or
otherwise transferred.
17. The attached Addendum is an integral part of this Security Agreement.
Dated [ILLEGIBLE], 1998 CVC, INC.
----------------- -----------------------------
By: Emilio O. DiCataldo
-----------------------------
Name: Emilio O. DiCataldo
-----------------------------
Title: Senior Vice President and CFO
-----------------------------
ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 14th day of April in the year 1998, 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
Vice President and CFO of CVC, 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.
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires, Oct 31, 98
FOR BANK USE ONLY: Authorization confirmed. /s/ [ILLEGIBLE]
-----------------------
Exhibit A See Schedule attached to a Loan
Agreement between Bank and Borrower
executed the same date this Security
Agreement was executed.
Permitted Financing Statements and Other Evidences of Lien (Section 4x):
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Permitted Transfers, Pledges and Other Actions with Respect to Uncertificated
Securities (Section 4y):
Exceptions to Representations and Warranties (Clauses (v), (vi), (vii), (viii),
(ix) and (x) of Section 9a):
Description of Real Property on Which Crop or Timber Located (Clause (xiii) of
Section 9a):
Permitted Liens (Clause (i) of Section 16l):
QUESTIONNAIRE *See attached Perfection Certificate
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)?
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?
3. What is the address (including county) of the residence, only place of
business or chief executive office of the undersigned?
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?
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?
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?
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 Goads 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?
Dated: April 14, 1998 CVC, INC.
------------------------ -----------------------------
By: /s/ Emilio O. DiCataldo
-----------------------------
Name: Emilio O. DiCataldo
-----------------------------
Title: Senior Vice President and CFO
-----------------------------
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ADDENDUM TO AN AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT
DATED AS OF MARCH 31, 1998
EXECUTED BY CVC, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY AND OTHERS
This ADDENDUM is made to an Amended and Restated General Security
Agreement ("Agreement") dated as of March 31, 1998, executed by CVC, INC.
("Borrower") in favor of MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank") and
others. This Addendum is an integral part of the Agreement.
1. This Agreement restates and amends a General Security Agreement
executed by Borrower (under its former name of "CVC Holdings, Inc.") in favor of
Bank on or about February 2, 1996, as previously amended, if at all.
2. M&T Real Estate, Inc. ("RE") and M&T Financial Corporation ("MFC"),
each of whose principal place of business is located at One M&T Plaza, Buffalo,
New York, are each additional Secured Parties under this Agreement.
Manufacturers and Traders Trust Company ("M&T"), RE and MFC are collectively
referred to in this Agreement as "Secured Parties" and individually as a
"Secured Party". M&T may also be at times referred to in this Agreement as
"Bank". CVC, Inc. is at times referred to in this Agreement as "Debtor",
"undersigned" and "Undersigned". All references in this Agreement to "Secured
Party" shall be deemed to be to "Secured Parties or any Secured Party."
3. The following is inserted between the words "General Intangibles" and
"Instruments" in the fourth line of the first sentence of Section 16b
(Definition of Collateral) of the preprinted portion of this Agreement:
"(including but not limited to all patents and patent applications,
rights under all licenses, trade secrets, trademarks, copyrights and
other intellectual property of any nature or kind (collectively
"Intellectual Property"), whether such Intellectual Property is now
owned by the undersigned or in which the undersigned now has any
interest or such Intellectual Property is hereafter acquired by the
undersigned or in which the undersigned hereafter acquires any
interest),"
4. Section 16e of the preprinted form of the General Security Agreement is
deemed deleted and replaced with the following:
"e. An Event of Default occurs or exists at any time that an Event
of Default occurs or exists under the Loan Agreement entered into by
Borrower (CVC Products, Inc.) and Bank on or about the date this
Agreement was executed ("Loan
<PAGE>
Agreement"), as the Loan Agreement is amended, extended or replaced
from time to time."
IN WITNESS WHEREOF, Debtor has executed this Addendum, together with the
preprinted form of the Agreement, on the date indicated in the Acknowledgement,
effective as of March 31, 1998.
CVC, INC.
By: /s/ Emilio O. DiCataldo
------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On this 14th day of April, 1998, 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 CFO of CVC, 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/ Gary F. Amendola
----------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
2
<PAGE>
PERFECTION CERTIFICATE
(CVC, INC.)
In order to induce Manufacturers and Traders Trust Company ("Bank") to
make certain credit facilities available to CVC Products, Inc., the undersigned,
a duly authorized officer of CVC, Inc. ("Parent") (which owns all of the issued
and outstanding stock of CVC Products, Inc.) hereby certifies to Bank as
follows:
1. Names.
(a) Prior to and on the date hereof, the exact corporate name of
Parent, as it appears in its Certificate of Incorporation, its state of
incorporation and its federal employer identification number are as follows:
State of Federal EIN or
Name Incorporation Registration No.
- ---- ------------- ----------------
CVC, Inc. Delaware #16-138-3279
(b) Set forth below is each other corporate name that Parent has had
since its organization, together with the date of the relevant change:
Previous Name - CVC Holdings, Inc.
Effective Date of Name Change - 10/15/97
(c) Except as set forth in Schedule 1 annexed hereto, Parent has not
changed its identity or corporate structure in any way within the past five
years. For purposes of this Certificate, changes in identity or corporate
structure include mergers, consolidations and acquisitions, as well as any
change in form, name, nature or jurisdiction of corporate organization. If any
such change has occurred, Schedule 1 annexed hereto includes the information
required by paragraphs 1, 2 and 3 of this Certificate as to each acquiree or
constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade
names or similar appellations) used by Parent or any of its divisions or other
business units at any time during the past five years:
CVC
<PAGE>
2. Current Locations.
(a) The chief executive office of Parent is located at the following
address:
525 Lee Road
Rochester, New York 14606
(b) The following are all locations where Parent maintains any books
or records relating to any Accounts, in addition to the addresses listed in part
2(a) above:
None
(c) Listed on Schedule 2 are all the places of business of Parent
not identified above.
(d) The following are all locations not identified above where
Parent maintains any Inventory or Equipment:
See Schedule 2
(e) The following are the names and addresses of all Persons other
than Parent which have possession of any Inventory or Equipment owned by Parent:
None
3. Prior Locations. Set forth below is all of the business locations, not
otherwise listed above, which were maintained by Parent at any time during the
past five (5) years:
Fremont, California - Warm Springs Boulevard
4. Unusual Transactions. All Accounts have been originated by Parent and
all Inventory and Equipment has been acquired by Parent in the ordinary course
of business.
Yes
5. Intellectual Property. Attached hereto as Schedule 3 is a list of all
the patents, patent rights, patent applications, copyrights and copyright
applications, trademarks, trademark rights, patent licenses, copyright licenses
and trademark licenses now owned or used by Parent.
-2-
<PAGE>
6. Lien Search Reports.
(a) Attached hereto as Schedule 4 are the financing statements or
other filings filed against Parent in the Uniform Commercial Code filing office
or offices in each jurisdiction identified in paragraphs 2 or 3 above with
respect to Parent; and
(b) No other financing statement or other filing under the Uniform
Commercial Code has been made in the name of Parent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate through
its duly authorized officer as of this 14th day of April, 1998.
CVC, Inc.
By: /s/ Emilio O. DiCataldo
------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President
-3-
<PAGE>
SCHEDULE 1
Changes in Identity or Corporate Structure
See answer to Question 1(b) on Perfection Certificate
<PAGE>
SCHEDULE 2
Business Locations
(1) 525 Lee Road
Rochester, New York 14606
(2) 3100 Laurelview Court
Fremont, California 94538
(3) 329 Oaks Trail
Garland, Texas 75043
(4) 2914 Montopolis Drive
Austin, Texas 78741
(5) 4530 West 77th Street
Edina, Minnesota 55435
(6) 21 Clarendon Street
Londonderry, Northern Ireland BT487EP
<PAGE>
SCHEDULE 3
Intellectual Property
See Baker & Botts IP Audit Report as of 10/8/97
as updated in a 7 page report
prepared by Bill Halsey captioned
"B Patent Assets"
<PAGE>
SCHEDULE 4
LIEN SUMMARY
CVC, INC.
Financing Statement #
---------------------
Date NYDOS Monroe Texas Calif. Minn.
- ---- ----- ------ State State State
----- ----- -----
none none none none none
CVC HOLDINGS, INC.
<TABLE>
<CAPTION>
Financing Statement #
---------------------
Date NYDOS Monroe Texas Calif. Secured Creditor Collateral
- ---- ----- ------ State State ---------------- ----------
----- -----
<S> <C> <C> <C> <C> <C> <C>
02/07/96 96/1029 Manufacturers and fixture filing
Traders Trust Company
02/07/96 96/1030 Manufacturers and Blanket
02/09/96 028551 Traders Trust Company
02/15/96 028242
02/13/96 9604560806
</TABLE>
no filings with Minnesota Secretary of State
<PAGE>
PERFECTION CERTIFICATE
(CVC PRODUCTS, INC.)
In order to induce Manufacturers and Traders Trust Company ("Bank") to
make certain credit facilities available to CVC Products, Inc. ("Borrower"), the
undersigned, a duly authorized officer of Borrower hereby certifies to Bank as
follows:
1. Names.
(a) Prior to and on the date hereof, the exact corporate name of
Borrower, as it appears in its Certificate of Incorporation, its state of
incorporation and its federal employer identification number are as follows:
State of Federal EIN or
Name Incorporation Registration No.
- ---- ------------- ----------------
CVC, Inc. Delaware #16-101-7191
(b) Set forth below is each other corporate name that Borrower has
had since its organization, together with the date of the relevant change:
None
(c) Except as set forth in Schedule 1 annexed hereto, Borrower has
not changed its identity or corporate structure in any way within the past five
years. For purposes of this Certificate, changes in identity or corporate
structure include mergers, consolidations and acquisitions, as well as any
change in form, name, nature or jurisdiction of corporate organization. If any
such change has occurred, Schedule 1 annexed hereto includes the information
required by paragraphs 1, 2 and 3 of this Certificate as to each acquiree or
constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade
names or similar appellations) used by Borrower or any of its divisions or other
business units at any time during the past five years:
CVC
<PAGE>
2. Current Locations.
(a) The chief executive office of Borrower is located at the
following address:
525 Lee Road
Rochester, New York 14606
(b) The following are all locations where Borrower maintains any
books or records relating to any Accounts, in addition to the addresses listed
in part 2(a) above:
None
(c) Listed on Schedule 2 are all the places of business of Borrower
not identified above.
(d) The following are all locations not identified above where
Borrower maintains any Inventory or Equipment:
Same as above
(e) The following are the names and addresses of all Persons other
than Borrower which have possession of any Inventory or Equipment owned by
Borrower:
None
3. Prior Locations. Set forth below is all of the business locations, not
otherwise listed above, which were maintained by Borrower at any time during the
past five (5) years:
Fremont, California - Warm Springs Boulevard
4. Unusual Transactions. All Accounts have been originated by Borrower and
all Inventory and Equipment has been acquired by Borrower in the ordinary course
of business.
Yes
5. Intellectual Property. Attached hereto as Schedule 3 is a list of all
the patents, patent rights, patent applications, copyrights and copyright
applications, trademarks, trademark rights,
-2-
<PAGE>
patent licenses, copyright licenses and trademark licenses now owned or used by
Borrower.
6. Lien Search Reports.
(a) Attached hereto as Schedule 4 are the financing statements or
other filings filed against Borrower in the Uniform Commercial Code filing
office or offices in each jurisdiction identified in paragraphs 2 or 3 above
with respect to Borrower; and
(b) No other financing statement or other filing under the Uniform
Commercial Code has been made in the name of Borrower.
IN WITNESS WHEREOF, the undersigned has executed this Certificate through
its duly authorized officer as of this 14th day of April, 1998.
CVC Products, Inc.
By: /s/ Emilio O. DiCataldo
------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President
-3-
<PAGE>
SCHEDULE 1
Changes in Identity or Corporate Structure
NONE
<PAGE>
SCHEDULE 2
Business Locations
(1) 525 Lee Road
Rochester, New York 14606
(2) 3100 Laurelview Court
Fremont, California 94538
(3) 329 Oaks Trail
Garland, Texas 75043
(4) 2914 Montopolis Drive
Austin, Texas 78741
(5) 4530 West 77th Street
Edina, Minnesota 55435
(6) 21 Clarendon Street
Londonderry, Northern Ireland BT487EP
<PAGE>
SCHEDULE 3
Intellectual Property
See Audit Report dated October 8, 1997 from Baker & Botts
as modified by 7 page report prepared by Bill
Halsey captioned "B Patent Assets"
<PAGE>
SCHEDULE 4
LIEN SUMMARY
<TABLE>
<CAPTION>
Financing Statement #
---------------------
Date NYDOS Monroe Texas Calif. Secured Creditor Collateral
- ---- ----- ------ State State ---------------- ----------
----- -----
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/03/88 88-08783 Chemical Bank specific equip.
- -------------------------------------------------------------------------------------------------------------------
08/26/91 181800 91-6164 Machine Tool Finance leased equip.
- -------------------------------------------------------------------------------------------------------------------
06/04/93 119980 Advanta Leasing Corp. specific equip.
06/10/93 93/3747
- -------------------------------------------------------------------------------------------------------------------
06/03/94 94-4250 Storage Technology leased equip.
06/06/94 115717
- -------------------------------------------------------------------------------------------------------------------
09/12/94 94-6798 Storage Technology leased equip.
- -------------------------------------------------------------------------------------------------------------------
11/02/95 95-7847 Breed Technologies specific equip.
- -------------------------------------------------------------------------------------------------------------------
02/07/96 96/1028 Manufacturers and fixture filing
Traders Trust
Company
and M&T Real Estate
02/07/96 96/1031 Manufacturers and Blanket
02/09/96 028550 Traders Trust
02/15/96 028241 Company
02/13/96 9604560823 and M&T Real Estate,
Inc.
- -------------------------------------------------------------------------------------------------------------------
03/11/96 96/1786 Breed Technologies specific equip.
- -------------------------------------------------------------------------------------------------------------------
09/30/97 97/6148 M&T Real Estate fixture filing
10/06/97 205889
- -------------------------------------------------------------------------------------------------------------------
09/30/97 97/6150 COMIDA fixture filing
10/06/97 205892 equip., payments
and lease rights,
insurance and
condemnation award
- -------------------------------------------------------------------------------------------------------------------
09/30/97 97/6146 M&T Real Estate fixture filing
10/06/97 205895 equip., insurance
and condemnation
awards
</TABLE>
No filings with Minnesota Secretary of State
<PAGE>
PERFECTION CERTIFICATE
(CVC, INC.)
In order to induce Manufacturers and Traders Trust Company ("Bank") to
make certain credit facilities available to CVC Products, Inc., the undersigned,
a duly authorized officer of CVC, Inc. ("Parent") (which owns all of the issued
and outstanding stock of CVC Products, Inc.) hereby certifies to Bank as
follows:
1. Names.
(a) Prior to and on the date hereof, the exact corporate name of
Parent, as it appears in its Certificate of Incorporation, its state of
incorporation and its federal employer identification number are as follows:
State of Federal EIN or
Name Incorporation Registration No.
- ---- ------------- ----------------
CVC, Inc. Delaware #16-138-3279
(b) Set forth below is each other corporate name that Parent has had
since its organization, together with the date of the relevant change:
Previous Name - CVC Holdings, Inc.
Effective Date of Name Change - 10/15/97
(c) Except as set forth in Schedule 1 annexed hereto, Parent has not
changed its identity or corporate structure in any way within the past five
years. For purposes of this Certificate, changes in identity or corporate
structure include mergers, consolidations and acquisitions, as well as any
change in form, name, nature or jurisdiction of corporate organization. If any
such change has occurred, Schedule 1 annexed hereto includes the information
required by paragraphs 1, 2 and 3 of this Certificate as to each acquiree or
constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade
names or similar appellations) used by Parent or any of its divisions or other
business units at any time during the past five years:
CVC
<PAGE>
2. Current Locations.
(a) The chief executive office of Parent is located at the following
address:
525 Lee Road
Rochester, New York 14606
(b) The following are all locations where Parent maintains any books
or records relating to any Accounts, in addition to the addresses listed in part
2(a) above:
None
(c) Listed on Schedule 2 are all the places of business of Parent
not identified above.
(d) The following are all locations not identified above where
Parent maintains any Inventory or Equipment:
See Schedule 2
(e) The following are the names and addresses of all Persons other
than Parent which have possession of any Inventory or Equipment owned by Parent:
None
3. Prior Locations. Set forth below is all of the business locations, not
otherwise listed above, which were maintained by Parent at any time during the
past five (5) years:
Fremont, California - Warm Springs Boulevard
4. Unusual Transactions. All Accounts have been originated by Parent and
all Inventory and Equipment has been acquired by Parent in the ordinary course
of business.
Yes
5. Intellectual Property. Attached hereto as Schedule 3 is a list of all
the patents, patent rights, patent applications, copyrights and copyright
applications, trademarks, trademark rights, patent licenses, copyright licenses
and trademark licenses now owned or used by Parent.
-2-
<PAGE>
6. Lien Search Reports.
(a) Attached hereto as Schedule 4 are the financing statements or
other filings filed against Parent in the Uniform Commercial Code filing office
or offices in each jurisdiction identified in paragraphs 2 or 3 above with
respect to Parent; and
(b) No other financing statement or other filing under the Uniform
Commercial Code has been made in the name of Parent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate through
its duly authorized officer as of this 14th day of April, 1998.
CVC, Inc.
By: /s/ Emilio O. DiCataldo
------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President
-3-
<PAGE>
SCHEDULE 1
Changes in Identity or Corporate Structure
See answer to Question 1(b) on Perfection Certificate
<PAGE>
SCHEDULE 2
Business Locations
(1) 525 Lee Road
Rochester, New York 14606
(2) 3100 Laurelview Court
Fremont, California 94538
(3) 329 Oaks Trail
Garland, Texas 75043
(4) 2914 Montopolis Drive
Austin, Texas 78741
(5) 4530 West 77th Street
Edina, Minnesota 55435
(6) 21 Clarendon Street
Londonderry, Northern Ireland BT487EP
<PAGE>
SCHEDULE 3
Intellectual Property
See Baker & Botts IP Audit Report as of 10/8/97
as updated in a 7 page report prepared by
Bill Halsey captioned "B Patent Assets"
<PAGE>
SCHEDULE 4
LIEN SUMMARY
CVC, INC.
Financing Statement #
---------------------
Date NYDOS Monroe Texas Calif. Minn.
- ---- ----- ------ State State State
----- ----- -----
none none none none none
CVC HOLDINGS, INC.
<TABLE>
<CAPTION>
Financing Statement #
---------------------
Date NYDOS Monroe Texas Calif. Secured Creditor Collateral
- ---- ----- ------ State State ---------------- ----------
----- -----
<S> <C> <C> <C> <C> <C> <C>
02/07/96 96/1029 Manufacturers and fixture filing
Traders Trust Company
02/07/96 96/1030 Manufacturers and Blanket
02/09/96 028551 Traders Trust Company
02/15/96 028242
02/13/96 9604560806
</TABLE>
no filings with Minnesota Secretary of State
<PAGE>
================================================================================
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
Dated as of March 31, 1998
among
CVC, INC.
CVC PRODUCTS, INC.
and
MANUFACTURERS AND TRADERS TRUST COMPANY
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page No.
- ------- --------
1. DEFINITIONS......................................................... 2
2. GRANT OF SECURITY INTEREST.......................................... 4
3. REPRESENTATIONS, WARRANTIES AND COVENANTS........................... 4
4. NO TRANSFER OR INCONSISTENT AGREEMENTS.............................. 5
5. AFTER-ACQUIRED PATENTS, ETC......................................... 5
5.1 After-acquired Patents ................................ 5
5.2 Amendment to Schedule.................................. 5
6. PATENT PROSECUTION.................................................. 6
6.1 Assignors Responsible.................................. 6
6.2 Assignors' Duties, etc................................. 6
6.3 Assignors' Enforcement Rights.......................... 6
6.4 Protection of Patents, etc............................. 7
6.5 Notification by Assignors.............................. 7
7. LICENSE BACK TO ASSIGNORS........................................... 7
8. REMEDIES............................................................ 7
9. COLLATERAL PROTECTION............................................... 8
10. POWER OF ATTORNEY................................................... 8
11. FURTHER ASSURANCES.................................................. 9
12. TERMINATION......................................................... 9
13. COURSE OF DEALING................................................... 9
14. EXPENSES............................................................ 10
15. OVERDUE AMOUNTS..................................................... 10
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION......................... 10
17. RIGHTS AND REMEDIES CUMULATIVE...................................... 10
18. NOTICES............................................................. 11
19. AMENDMENT AND WAIVER................................................ 11
20. GOVERNING LAW; CONSENT TO JURISDICTION.............................. 12
21. WAIVER OF JURY TRIAL................................................ 12
22. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC.............................. 12
22. MISCELLANEOUS....................................................... 13
<PAGE>
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT dated as of March 31,
1998, between CVC, INC., a Delaware corporation ("Parent"), CVC PRODUCTS, INC.,
a Delaware corporation ("Borrower" and, together with Parent, "Assignors"), both
of which have their principal places of business at 525 Lee Road, Rochester, New
York, and MANUFACTURERS AND TRADERS TRUST COMPANY, having an office at One M&T
Plaza, Buffalo, New York 14203 (the "Bank").
WHEREAS, the Borrower and the Bank are parties to a Loan Agreement, dated
as of March 31, 1998, (as amended and in effect from time to time, the "Loan
Agreement");
WHEREAS, it is a condition precedent to the Bank making any loans or
otherwise extending credit to the Borrower under the Loan Agreement that the
Assignors execute and deliver to the Bank this Agreement;
WHEREAS, the Borrower has previously executed and delivered to the Bank a
General Security Agreement, dated as of February 2, 1996, as amended (the
"Original Borrower Security Agreement"), pursuant to which the Borrower granted
to the Bank a first priority perfected security interest in all of the
Borrower's personal property and fixture assets, including, without limitation,
the patents and patent applications listed on Schedule A attached hereto, all to
secure the payment and performance of all the indebtedness of the Borrower to
the Bank, whenever arising and, on even date herewith, Borrower has executed and
delivered an Amended and Restated General Security Agreement ("Restated Borrower
Security Agreement") in favor of Bank, pursuant to which the Original Borrower
Security Agreement has been amended and restated; and
WHEREAS, the Parent has previously executed and delivered to Bank a
General Security Agreement, dated as of February 2, 1996 (the "Original Parent
Security Agreement"), pursuant to which the Parent granted to the Bank a first
priority perfected security interest in all of the Parent's personal property
and fixture assets, including, without limitation the patents and patent
applications listed on Schedule A attached hereto, to the extent that the Parent
has an interest therein, all to secure the payment and performance of all of the
indebtedness of the Parent to the Bank, whenever arising, and, on even date
herewith, Parent has executed and delivered an Amended and Restated General
Security Agreement ("Restated Parent Security Agreement") in favor of Bank,
pursuant to which the Original Parent Security Agreement has been amended and
restated; and
WHEREAS, this Patent Agreement (defined below) is supplemental to the
provisions contained in the Restated Borrower Security Agreement and the
Restated Parent Security Agreement (together, the "Security Agreements");
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE>
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Loan Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Patent Agreement referred to below:
Assignors means Borrower and Parent, collectively and individually.
Event of Default means any "Event of Default" which has occurred under the
Restated Borrower Security Agreement or the Restated Parent Security Agreement.
Obligations means, collectively, any indebtedness, liabilities and
obligations for payment of money, regardless of kind, class or form and whether
for the payment of principal or of interest or otherwise, incurred, for any
business, commercial, agricultural or consumer purposes 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 an 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 tortuous, liquidated or unliquidated, arising by
operation of law or otherwise, that are now or hereafter owing by either
Assignors in any capacity, whether alone or otherwise, to the Bank in any
capacity, whether or not allowed as a claim against such Assignors in any case
or other proceeding pursuant to any bankruptcy or insolvency statute, regulation
or other law or 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.
Patent Agreement means this Patent Collateral Assignment and Security
Agreement, as amended and in effect from time to time.
Patent Collateral means all of the Assignors' right, title and interest in
and to all of the Patents, the Patent License Rights, and all other Patent
Rights, and all additions, improvements, and accessions to, all substitutions
for and replacements of, and all products and Proceeds (including insurance
proceeds) of any and all of the foregoing, and all books and records and
technical information and data describing or used in connection with any and all
such rights, interest, assets or property.
Patent License Rights means any and all past, present or future rights and
interests of the Assignors pursuant to any and all past, present and future
licensing agreements in favor of the Assignors, or to which either Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignors or the Bank to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
-2-
<PAGE>
Patent Rights means any and all past, present or future rights in, to and
associated with the Patents throughout the world, whether arising under federal
law, state law, common law, foreign law, or otherwise, including but not limited
to the following: all such rights arising out of or associated with the Patents;
the right (but not the obligation) to register claims under any federal, state
or foreign patent law or regulation; the right (but not the obligation) to sue
or bring opposition or bring cancellation proceedings in the name of the
Assignors or the Bank for any and all past, present and future infringements of
or any other damages or injury to the Patents or the Patent Rights, and the
rights to damages or profits due or accrued arising out of or in connection with
any such past, present or future infringement, damage or injury; and the Patent
License Rights.
Patents means all patents and patent applications, whether United States
or foreign, that are owned by the Assignors or in which the Assignors have any
right, title or interest, now or in the future, including but not limited to:
(a) the patents and patent applications listed on Schedule A hereto (as
the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other country, and all
applications for letters patent of the United States or any other county;
(c) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the right to
make, use, practice and/or sell (or license or otherwise transfer or dispose of)
the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute applications
for such Patents.
Proceeds means any consideration received from the sale, exchange,
license, lease or other disposition or transfer of any right, interest, asset or
property which constitutes all or any part of the Patent Collateral, any value
received as a consequence of the ownership, possession, use or practice of any
Patent Collateral, and any payment received from any insurer or other person or
entity as a result of the destruction or the loss, theft or other involuntary
conversion of whatever nature of any right, interest, asset or property which
constitutes all or any part of the Patent Collateral.
PTO means the United States Patent and Trademark Office or any successor
agency or office.
-3-
<PAGE>
2. GRANT OF SECURITY INTEREST.
To secure the payment and performance in full of any and all Obligations,
the Assignors hereby grant, assign, transfer and conveys to the Bank, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. THE BANK ASSUMES NO LIABILITY
ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH COLLATERAL SECURITY.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Assignors represent, warrant and covenant that: (i) Schedule A
attached hereto sets forth a true and complete list of all the patents, rights
to patents and patent applications now owned, licensed, controlled or used by
the Assignors; (ii) the issued Patents are subsisting and have not been adjudged
invalid or unenforceable, in whole or in part, and there is no litigation or
proceeding pending concerning the validity or enforceability of the issued
Patents; (iii) to the best of the Assignors' knowledge, each of the issued
Patents is valid and enforceable; (iv) to the best of the Assignors' knowledge,
there is no infringement by others of the issued Patents or Patent Rights; (v)
no claim has been made that the use of any of the Patents does or may violate
the rights of any third person, and to the best of the Assignors' knowledge
there is no infringement by the Assignors of the patent rights of others; (vi)
the Assignors indicated on Schedule A attached hereto is the sole and exclusive
owner of the entire and unencumbered right, title and interest in and to each of
the Patents (other than ownership and other rights reserved by third party
owners with respect to Patents which the Assignors are licensed to practice or
use as indicated on Schedule A attached hereto), free and clear of any liens,
charges, encumbrances and adverse claims, including without limitation pledges,
assignments, licenses, shop rights and covenants by the Assignors not to sue
third persons, other than the security agreement and mortgage created by the
Security Agreement and this Patent Agreement; (vii) the Assignors have the
unqualified right to enter into this Patent Agreement and perform its terms and
have entered and will enter into written agreements with each of their present
and future employees, agents, consultants, licensors and licensees which will
enable them to comply with the covenants herein contained; (viii) this Patent
Agreement, together with the Security Agreements, will create in favor of the
Bank a valid and perfected first priority security interest in the Patent
Collateral upon making the filings referred to in clause (ix) of this Section 3;
and (ix) except for the filing of financing statements with the Monroe County
Clerk and the Secretary of State for the State of New York under the Uniform
Commercial Code and the filing of this Patent Agreement with the PTO, no
authorization, approval or other action by, and no notice to or filing with, any
governmental or regulatory authority, agency or office is required either (1)
for the grant by the Assignors or the effectiveness of the security interest and
assignment granted hereby or for the execution, delivery and performance of this
Patent Agreement by the Assignors, or (2) for the perfection of or the exercise
by the Bank of any of its rights and remedies hereunder.
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4. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Bank's prior written consent, the Assignors will not (i)
mortgage, pledge, assign, encumber, grant a security interest in, transfer,
license or alienate any of the Patent Collateral, or (ii) enter into any
agreement (for example, a license agreement) that is inconsistent with the
Assignors' obligations under this Patent Agreement or the Security Agreements.
The Bank will not unreasonably delay in responding to any request by the
Assignors for a consent to any action prohibited by this Section 4.
5. AFTER-ACQUIRED PATENTS, ETC.
5.1 After-acquired Patents.
If, before the Obligations shall have been finally paid and
satisfied in full and both Assignors no longer have a right to request advances
from Bank and all lines of credit terminated by Bank, the Assignors shall obtain
any right, title or interest in or to any other or new patents, patent
applications or patentable inventions, or become entitled to the benefit of any
patent application or patent or any reissue, division, continuation, renewal,
extension, or continuation-in-part of any of the Patent Collateral or any
improvement on any of the Patent Collateral, the provisions of this Patent
Agreement shall automatically apply thereto and the Assignors shall promptly
give to the Bank notice thereof in writing and execute and deliver to the Bank
such documents or instruments as the Bank may reasonably request further to
transfer title thereto to the Bank as required herein.
5.2 Amendment to Schedule.
The Assignors authorize the Bank to modify this Patent Agreement, without the
necessity of the Assignors' further approval or signature, by amending Schedule
A hereto to include any future or other Patents or Patent Rights under Section 2
or Section 5 hereof.
6. PATENT PROSECUTION.
6.1 Assignors Responsible.
The Assignors shall assume full and complete responsibility for the
prosecution, grant, enforcement or any other necessary or desirable actions in
connection with the Patent Collateral, and shall hold the Bank harmless from any
and all costs, damages, liabilities and expenses which may be incurred by the
Bank in connection with the Bank's title to any of the Patent Collateral or any
other action or failure to act in connection with this Patent Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignors shall retain patent counsel acceptable to the Bank. The Bank shall not
unreasonably delay in responding to any written inquiry as to the acceptability
of patent counsel proposed by the Assignors.
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6.2 Assignors' Duties, Etc.
The Assignors shall have the duty, through patent counsel acceptable
to the Bank, to prosecute diligently any patent applications of the Patents
pending as of the date of this Patent Agreement or thereafter, to make
application for unpatented but reasonably patentable inventions and to preserve
and maintain all rights in the Patents, including without limitation the payment
when due of all maintenance fees and other fees, taxes and other expenses which
shall be incurred or which shall accrue with respect to any of the Patents. Any
expenses incurred in connection with such applications and actions shall be
borne by the Assignors. The Assignors shall not abandon any filed patent
application, or any pending patent application or patent, without the consent of
the Bank, which consent shall not be unreasonably withheld. The Bank hereby
appoints the Assignors as its agent for all matters referred to in the foregoing
provisions of this Section 6 and agrees to execute any documents necessary to
confirm such appointment. Upon the occurrence and during the continuance of an
Event of Default, the Bank may terminate such agency by providing written notice
of termination to the Assignors. The Bank shall not unreasonably delay in
responding to any written inquiry as to the acceptability of patent counsel
pursuant to this Section 6.2 or the abandonment of any patent application.
6.3 Assignors' Enforcement Rights.
The Assignors shall have the right, with the consent of the Bank,
which shall not be unreasonably withheld, to bring suit or other action in the
Assignors' own name(s) to enforce the Patents and the Patent Rights. The Bank
shall be required to join in such suit or action as may be necessary to assure
the Assignors' ability to bring and maintain any such suit or action in any
proper forum so long as the Bank is completely satisfied that such joinder will
not subject the Bank to any risk of liability. The Assignors shall promptly,
upon demand, reimburse and indemnify the Bank for all damages, costs and
expenses, including legal fees, incurred by the Bank pursuant to this Section 6.
6.4 Protection of Patents, Etc.
In general, the Assignors shall take any and all such actions
(including but not limited to institution and maintenance of suits, proceedings
or actions) as may be necessary or appropriate to properly maintain, protect,
preserve, care for and enforce the Patent Collateral. The Assignors shall not
take or fail to take any action, nor permit any action to be taken or not taken
by others under their control, which would affect the validity, grant or
enforcement of any of the Patent Collateral.
6.5 Notification by Assignors.
Promptly upon obtaining knowledge thereof, the Assignors will notify
the Bank in writing of the institution of, or any final adverse determination
in, any proceeding in the PTO or any similar office or agency of the United
States or any foreign country, or any court, regarding the validity of any of
the Patents or the Assignors' rights, title or interests in and to any of the
Patent Collateral, and of any event which does or
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reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Assignors or the Bank to dispose of any of the
Patent Collateral or the rights and remedies of the Bank in relation thereto
(including, but not limited to, the levy of any legal process against any of the
Patent Collateral).
7. LICENSE BACK TO ASSIGNORS.
Unless and until there shall have occurred and be continuing an Event of
Default and the Bank has notified the Assignors that the license granted
hereunder is terminated, the Bank hereby grants to the Assignors the sole and
exclusive, nontransferable, royalty-free, worldwide right and license under the
Patents to make, have made for them, use, sell and otherwise practice the
inventions disclosed and claimed in the Patents for the Assignors' own benefit
and account and for none other; provided, however, that the foregoing right and
license shall be no greater in scope than, and limited by, the rights assigned
to the Bank by the Assignors hereby. The Assignors agree not to sell, assign,
transfer, encumber or sublicense their interest in the license granted to the
Assignors in this Section 7, without the prior written consent of the Bank. Any
such sublicenses granted on or after the date hereof shall be terminable by the
Bank upon termination of the Assignors' license hereunder.
8. REMEDIES.
If any Event of Default shall have occurred and be continuing, then upon
notice by the Bank to the Assignors: (i) the Assignors' license with respect to
the Patents as set forth in Section 7 shall terminate; (ii) the Assignors shall
immediately cease and desist from the practice, manufacture, use and sale of the
inventions claimed, disclosed or covered by the Patents; and (iii) the Bank
shall have, in addition to all other rights and remedies given it by this Patent
Agreement, the Loan Agreement, the Security Agreements, and all other
agreements, instruments and documents executed by Borrower and/or Parent in
favor of Bank at any time, those allowed by law and the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in the State of New
York and, without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without other notice (except as
set forth next below) or demand whatsoever to the Assignors, all of which are
hereby expressly waived, and without advertisement, sell or license at public or
private sale or otherwise realize upon the whole or from time to time any part
of the Patent Collateral, or any interest which the Assignors may have therein,
and after deducting from the proceeds of sale or other disposition of the Patent
Collateral all reasonable expenses (including all reasonable expenses for
broker's fees and legal services), shall apply the residue of such proceeds
toward the payment of the Obligations as set forth in the Security Agreements.
Notice of any sale, license or other disposition of any of the Patent Collateral
shall be given to the Assignors at least five (5) days before the time that any
intended public sale or other disposition of such Patent Collateral is to be
made or after which any private sale or other disposition of such Patent
Collateral may be made, which the Assignors hereby agrees shall be reasonable
notice of such public or private sale or
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<PAGE>
other disposition. At any such sale or other disposition, the Bank may, to the
extent permitted under applicable law, purchase or license the whole or any part
of the Patent Collateral or interests therein sold, licensed or otherwise
disposed of.
9. COLLATERAL PROTECTION.
If the Assignors shall fail to do any act that they have covenanted to do
hereunder, or if any representation or warranty of the Assignors shall be
breached, the Bank, in their own name or that of the Assignors (in the sole
discretion of the Bank), may (but shall not be obligated to) do such act or
remedy such breach (or cause such act to be done or such breach to be remedied),
and the Assignors agree promptly to reimburse the Bank for any cost or expense
incurred by the Bank in so doing.
10. POWER OF ATTORNEY.
If any Event of Default shall have occurred and be continuing, the
Assignors do hereby make, constitute and appoint the Bank (and any officer or
agent of the Bank as the Bank may select in its exclusive discretion) as the
Assignors' true and lawful attorney-in-fact, with the power to endorse the
Assignors' name on all applications, documents, papers and instruments necessary
for the Bank to use any of the Patent Collateral, to practice, make, use or sell
the inventions disclosed or claimed in any of the Patent Collateral, to grant or
issue any exclusive or nonexclusive license of any of the Patent Collateral to
any third person, or necessary for the Bank to assign, pledge, convey or
otherwise transfer title in or dispose of the Patent Collateral or any part
thereof or interest therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts which the Assignors
are obligated to execute and do hereunder. The Assignors hereby ratify all that
such attorney shall lawfully do or cause to be done by virtue hereof, and
releases the Bank from any claims, liabilities, causes of action or demands
arising out of or in connection with any action taken or omitted to be taken by
the Bank under this power of attorney (except for the Bank's gross negligence or
willful misconduct). This power of attorney shall be irrevocable for the
duration of this Patent Agreement.
11. FURTHER ASSURANCES.
The Assignors shall, at any time and from time to time, and at their
expense, make, execute, acknowledge and deliver, and file and record as
necessary or appropriate with governmental or regulatory authorities, agencies
or offices, such agreements, assignments, documents and instruments, and do such
other and further acts and things (including, without limitation, obtaining
consents of third parties), as the Bank may request or as may be necessary or
appropriate in order to implement and effect fully the intentions, purposes and
provisions of this Patent Agreement, or to assure and confirm to the Bank the
grant, perfection and priority of the Bank's security interest in any of the
Patent Collateral.
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<PAGE>
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full and neither of the Assignors have any right to request
advances from Bank under a line of credit, this Patent Agreement shall terminate
and the Bank shall, upon the written request and at the expense of the
Assignors, execute and deliver to the Assignors all deeds, assignments and other
instruments as may be necessary or proper to reassign and reconvey to and
re-vest in the Assignors the entire right, title and interest to the Patent
Collateral previously granted, assigned, transferred and conveyed to the Bank by
the Assignors pursuant to this Patent Agreement, as fully as if this Patent
Agreement had not been made, subject to any disposition of all or any part
thereof which may have been made by the Bank pursuant hereto or the Security
Agreements.
13. COURSE OF DEALING.
No course of dealing among the Assignors and the Bank, nor any failure to
exercise, nor any delay in exercising, on the part of the Bank, any right, power
or privilege hereunder or under the Security Agreements shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
the Bank in connection with the preparation of this Patent Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances
or otherwise protecting, maintaining or preserving any of the Patent Collateral,
or in defending or prosecuting any actions or proceedings arising out of or
related to any of the Patent Collateral, shall be borne and paid by the
Assignors.
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Assignors hereunder shall
be a debt secured by the Patent Collateral and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Loan Agreement.
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<PAGE>
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE BANK
ASSUMES NO LIABILITIES OF THE ASSIGNORS WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNORS' OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNORS, AND THE
ASSIGNORS SHALL INDEMNIFY THE BANK FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND
CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE BANK WITH RESPECT TO SUCH
LIABILITIES.
17. RIGHTS AND REMEDIES CUMULATIVE.
All of the Bank's rights and remedies with respect to the Patent
Collateral, whether established hereby or by the Security Agreements or by any
other agreements or by law, shall be cumulative and may be exercised singularly
or concurrently. This Patent Agreement is supplemental to the Security
Agreements, and nothing contained herein shall in any way derogate from any of
the rights or remedies of the Bank contained therein. Nothing contained in this
Patent Agreement shall be deemed to extend the time of attachment or perfection
of or otherwise impair the security interest in any of the Patent Collateral
granted to the Bank under the Security Agreements.
18. NOTICES.
All notices and other communications made or required to be given pursuant
to this Patent Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as follows:
(a) if to the Assignors, at CVC, Inc. and CVC Products, Inc., Attention:
Emilio O. DiCataldo, Senior Vice President and Chief Financial Officer, at the
address first listed above or at such other address for notice as the Assignors
shall last have furnished in writing to the person giving the notice; and
(b) if to the Bank, at One M&T Plaza, Buffalo, New York 14203, Attention:
Collateral Department or at such other address for notice as the Bank shall last
have furnished in wiring to the person giving the notice, with copies to the
Bank at 255 East Avenue, Rochester, New York 14604, Attention: William Holston,
Vice President.
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<PAGE>
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand to a responsible officer of the
party to which it is directed, at the time of the receipt thereof by such
officer, (ii) if sent by registered or certified first-class mail, postage
prepaid, two (2) Business Days after the posting thereof, and (iii) if sent by
telegraph, telecopy, or telex, at the time of the dispatch thereof, if in normal
business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.
19. AMENDMENT AND WAIVER.
This Patent Agreement is subject to modification only by a writing signed
by the Bank and the Assignors, except as provided in Section 5.2. The Bank shall
not be deemed to have waived any right hereunder unless such waiver shall be in
writing and signed by the Bank. A waiver ss.2 any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion.
20. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS PATENT AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. The Assignors agree that any suit for the enforcement of this
Patent Agreement may be brought in the courts of the County of Monroe or any
federal court sitting therein and consents to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon the
Assignors by mail at the address specified in Section 18. The Assignors hereby
waive any objection that they may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
21. WAIVER OF JURY TRIAL.
THE ASSIGNORS WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS PATENT AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Assignors waive any right which
they may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Assignors (i) certify
that neither the Bank nor any representative, agent or attorney of the Bank has
represented, expressly or otherwise, that the Bank would not, in the event of
litigation, seek to enforce the foregoing waivers, and (ii) acknowledges that,
in entering into the Loan Agreement and the other agreements, notes, instruments
and documents executed in connection therewith to which the Bank is a party, the
Bank is relying upon, among other things, the waivers and certifications
contained in this Section 21.
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<PAGE>
22. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC.
Notwithstanding anything herein to the contrary, Bank shall not be deemed
to have unreasonably delayed in responding to a request for a consent hereunder
or the approval of a counsel proposed by Assignors whom the Bank must consent to
unless Bank fails to respond to a request for such consent or acceptance of
proposed counsel for 10 days after such request is submitted and Assignors
thereafter notify Bank in writing that they believe Bank has unreasonably
delayed in responding to such request and Bank continues for more than 10 days
after its receipt of such notice to respond to such request. In any event, the
sole remedy for Assignors if Bank unreasonably delayed in responding to any such
request shall be that it loses its right to consent to any such action or to
approve any such counsel.
23. MISCELLANEOUS.
The headings of each section of this Patent Agreement are for convenience
only and shall not define or limit the provisions thereof. This Patent Agreement
and all rights and obligations hereunder shall be binding upon the Assignors and
their respective successors and permitted assigns, and shall inure to the
benefit of the Bank and its successors and assigns. In the event of any
irreconcilable conflict between the provisions of this Patent Agreement and the
Loan Agreement, or between this Patent Agreement and the Security Agreements,
the provisions of the Loan Agreement or the Security Agreements, as the case may
be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignors acknowledge receipt of a copy of this Patent
Agreement. All obligations of the Assignors hereunder shall be joint and
several.
IN WITNESS WHEREOF, this Patent Agreement has been executed as of the day
and year first above written.
CVC, Inc.
By: /s/ Emilio O. DiCataldo
------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
CVC Products, Inc.
By: /s/ Emilio O. DiCataldo
------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
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MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ William Holston
------------------------------------
Name: William Holston
Title: Vice President
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<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998 personally appeared Emilio O.
DiCataldo to me known personally, and who, being by me duly sworn, deposes and
says that he is the Senior Vice President and CFO of CVC, INC., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and he acknowledged said instrument to be the free act
and deed of said corporation.
----------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998 personally appeared Emilio O.
DiCataldo to me known personally, and who, being by me duly sworn, deposes and
says that he is the Senior Vice President and CFO of CVC PRODUCTS, INC., and
that said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and he acknowledged said instrument to be
the free act and deed of said corporation.
----------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998 personally appeared William Holston
to me known personally, and who, being by me duly sworn, deposes and says that
he is the Vice President of MANUFACTURERS AND TRADERS TRUST COMPANY, and that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors, and he acknowledged said instrument to be the free
act and deed of said corporation.
----------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, [ILLEGIBLE]
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<PAGE>
SCHEDULE A
ISSUED AND PENDING PATENTS
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<PAGE>
SCHEDULE A
A. U.S. Patents 512481402 and 51630916
B. Patent Assets
1. Pending Patent Applications
The following patent applications are currently pending in the United
States Patent and Trademark Office:
File No.: CVC1100
Former File No. 021208.0151
Title: Apparatus and Method for Multizone
High-Density Inductively-Coupled Plasma
Generation
Filing Date: 07/09/97
Serial No.: US97/12243 (PCT)
Status: New National Stage Reminder 10/10/98
New National Stage Reminder 01/10/99
File No.: CVC1100
Former File No. 021208.0156
Title: Apparatus and Method for Multizone
High-Density Inductively-Coupled Plasma
Generation
Filing Date: 07/09/97
Serial No.: 86109690 (Taiwan)
Status: Pending
File No.: CVC1100
Former File No. 021208.0165
Title: Apparatus and Method for Multizone
High-Density Inductively-Coupled Plasma
Generation
Filing Date: 09/12/97
Serial No.: 08/928,617 (Divisional)
Status: Foreign Filing Reminder 07/12/98
Foreign Filing Due 09/12/98
Application Status Check 03/12/99
(1)
<PAGE>
File No.: CVC1100
Former File No. 021208.0102
Title: Apparatus and Method for Multizone
High-Density Inductively-Coupled Plasma
Generation
Filing Date: 07/10/96
Serial No.: 08/678,065
Status: 3 Mon. OA: Due Date 05/13/98
3 Mon. OA: 1st Extension 06/13/98
3 Mon. OA: 2nd Extension 07/13/98
3 Mon. OA: 6 Month Final 08/13/98
File No.: CVC1130
Former File No. 021208.0196
Title: Apparatus and Method for Automated
Calibration of Temperature Sensors in Rapid
Thermal Processing Equipment
Filing Date: 07/10/96
Serial No.: 19681502.9 (Germany)
Status: Deferred Exam 07/10/03
File No.: CVC1130
Former File No. 021208.0145
Title: Apparatus and Method for Automated
Calibration of Temperature Sensors in Rapid
Thermal Processing Equipment
Filing Date: 07/10/96
Serial No.: US96/11545 (PCT)
Status: Pending
File No.: CVC1130
Former File No. 021208.0113
Title: Apparatus and Method for Automated
Calibration of Temperature Sensors in Rapid
Thermal Processing Equipment
Filing Date: 07/10/95
Serial No.: 60/000,989 (Provisional)
Status: Abandoned
(2)
<PAGE>
File No.: CVC1130
Former File No. 021208.0135
Title: Apparatus and Method for Automated
Calibration of Temperature Sensors in Rapid
Thermal Processing Equipment
Filing Date: 07/10/96
Serial No.: 08/680,244
Status: Pending
File No.: CVC1150
Former File No. 021208.0105
Title: Hermitically-Sealed Inductively-Coupled
Plasma Source Structure and Method of Use
Filing Date: 07/10/96
Serial No.: 08/677,849
Status: Pending
File No.: CVC1170
Former File No. 021208.0142
Title: High Magnetic Flux Cathode Apparatus
and Method for High-Productivity Physical-
Vapor Deposition
Filing Date: 07/10/96
Serial No.: US/96/11565 (PCT)
Status: Pending
File No.: CVC1170
Former File No. 021208.0195
Title: High Magnetic Flux Cathode Apparatus
and Method for High-Productivity Physical-
Vapor Deposition
Filing Date: 07/10/96
Serial No.: (United Kingdom)
Status: Pending
File No.: CVC1170
Former File No. 021208.0109
Title: High Magnetic Flux Cathode Apparatus
and Method for High-Productivity Physical-
Vapor Deposition
Filing Date: 07/10/95
Serial No.: 60/000,852
Status: Abandoned
(3)
<PAGE>
File No.: CVC1170
Former File No. 021208.0104
Title: High Magnetic Flux Cathode Apparatus
and Method for High-Productivity Physical-
Vapor Deposition
Filing Date: 07/10/96
Serial No.: 08/677,951
Status: Appeal Brief Due: 03/29/98
AppBrf: 1st Extension 04/29/98
AppBrf: 2nd Extension 05/29/98
AppBrf: 3rd Extension 06/29/98
AppBrf: Notice of Appeal Due 07/29/98
AppBrf: 6 Month Final Date 07/29/98
US-Final Office Follow-Up Date 07/29/98
File No.: CVC1190
Former File No. 021208.0194
Title: High Magnetic Flux Permanent Magnet
Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: (Japan)
Status: Deferred Exam 07/10/03
File No.: CVC1190
Former File No. 021208.0141
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: US96/11564 (PCT)
Status: Pending
File No.: CVC1190
Former File No. 021208.0193
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: (United Kingdom)
Status: Pending
(4)
<PAGE>
File No.: CVC1190
Former File No. 021208.0108
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/95
Serial No.: 60/000,990
Status: Abandoned
File No.: CVC1190
Former File No. 021208.0108
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: 08/677,956
Status: Pending
File No.: CVC1210
Former File No. 021208.0110
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/95
Serial No.: 60/000,980 (Provisional)
Status: Abandoned
File No.: CVC1210
Former File No. 021208.0110
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 07/10/96
Serial No.: 08/677,893
Status: Abandoned
(5)
<PAGE>
File No.: CVC1210
Former File No. 021208.0187
Title: High Magnetic Flux Permanent Magnet
Array Apparatus and Method for High
Productivity Physical Vapor Deposition
Filing Date: 10/27/97
Serial No.: 08/958,877
Status: Foreign Filing Reminder 04/27/98
Foreign Filing Due 10/27/98
Status Check 04/27/99
File No.: CVC1230
Former File No. 021208.0197
Title: Programmable Ultraclean Electromagnetic
Substrate Rotation Apparatus and Method for
Microelectronics Manufacturing Equipment
Filing Date: 07/10/96
Serial No.: (Japan)
Status: Deferred Exam 07/10/03
File No.: CVC1230
Former File No. 021208.0146
Title: Programmable Ultraclean Electromagnetic
Substrate Rotation Apparatus and Method for
Microelectronics Manufacturing Equipment
Filing Date: 07/10/96
Serial No.: US96/11563 (PCT)
Status: Pending
File No.: CVC1230
Former File No. 021208.0112
Title: Programmable Ultraclean Electromagnetic
Substrate Rotation Apparatus and Method for
Microelectronics Manufacturing Equipment
Filing Date: 07/10/95
Serial No.: 60/001,003 (Provisional)
Status: Pending
(6)
<PAGE>
File No.: CVC1230
Former File No. 021208.0112
Title: Programmable Ultraclean Electromagnetic
Substrate Rotation Apparatus and Method for
Microelectronics Manufacturing Equipment
Filing Date: 07/19/96
Serial No.: 08/677,980
Status: Pending
File No.: CVC1250
Former File No. 021208.0104
Title: Segmented Target Cathode Apparatus and
Method for High Microelectronics
Manufacturing Equipment
Filing Date: 07/11/96
Serial No.: 08/678,297
Status: Pending
File No.: CVC1270
Former File No. 021208.0106
Title: Multi-Zone Gas Injection Apparatus and
Method for Microelectronics Manufacturing
Equipment
Filing Date: 07/11/96
Serial No.: 08/678,297
Status: Pending
File No.: CVC1290
Former File No. 021208.0107
Title: Rapid Thermal Processing High Performance
Multizone Illuminator for Water Backside
Heating
Filing Date: 04/13/95
Serial No.: 08/421,210
Status: Pending
File No.: CVC1310
Former File No. 021208.0114
Title: Multizone Illuminator for Rapid Thermal
Processing
Filing Date: 07/11/96
Serial No.: 08/678,321
Status: Pending
(7)
<PAGE>
Docket No.:
================================================================================
RECORDATION FORM COVER SHEET
PATENTS ONLY
Form PTO-1595 (Modified) U.S. DEPARTMENT OF COMMERCE
(Rev 6-93) Patent and Trademark Office
OMB No. 0651-0011 (exp. 4/94)
Copyright 1994-1997 LegalStar
[ILLEGIBLE]REV02
Tab Settings [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
To the Honorable Commisioner of Patents and Trademarks:
Please record the attached original documents or copy thereof.
- --------------------------------------------------------------------------------
1. Name of conveying party(ies):
CVC Products, Inc. and
CVC, Inc.
Additional names(s) of conveying party(ies): |_| Yes |X| No
- --------------------------------------------------------------------------------
2. Name and Address of receiving party(ies):
Name: Manufacturers & Traders Trust Company
Internal Address: _________________________
___________________________________________
___________________________________________
Street Address: One M&T Plaza
City: Buffalo State: NY Zip: 14240
Additional name(s) & address(es) attached? |X| Yes |_| No
- --------------------------------------------------------------------------------
3. Nature of conveyance:
|_| Assignment |_| Merger
|X| Security Agreement |_| Change of Name
|_| Other ___________________________________
Execution Date: April 14, 1998
- --------------------------------------------------------------------------------
4. Application number(s) or registration numbers(s):
If this document is being filed together with a new application, the
execution date of the application is: _______________________________
A. Patent Appplication No.(s) B. Patent No.(s)
08/928,617 08/677,956 08/678,297 5,248,402
08/678,065 08/677,893 08/421,210 5,630,916
08/680,244 08/958,877 08/678,321
08/677,849 08/677,980
08/677,951
Additonal numbers attached? |X| Yes |_| No
- --------------------------------------------------------------------------------
5. Name and address of party to whom correspondence concerning document should
be mailed:
Name: Gary F. Amendola
Internal Address: Woods, Oviatt, Gilman, Sturman & Clarke, LLP
Street Address: 44 Exchange Street
City: Rochester State: NY Zip: 14604
- --------------------------------------------------------------------------------
6. Total number of applications and patents involved: |_|
- --------------------------------------------------------------------------------
7. Total fee (37 (CFR 3.41):...........$ __________________
|_| Enclosed
|_| Authorized to be charged to deposit account
- --------------------------------------------------------------------------------
8. Deposit account number:
_________________________________________________________
================================================================================
DO NOT USE THIS SPACE
- --------------------------------------------------------------------------------
Statement and signature.
To the best of my knowledge and belief, the foregoing information is true and
correct and any attached copy is a true copy of the orignal document.
Gary F. Amendola /s/ Gary F. Amendola 4-14-98
- --------------------------- ------------------------------ -----------------
Name of Person Signing Signature Date
Total number of pages including cover sheet, attachments, and document |_|
================================================================================
<PAGE>
================================================================================
TRADEMARK COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
Dated as of March 31, 1998
between
CVC PRODUCTS, INC.,
CVC, INC.
and
MANUFACTURERS AND TRADERS TRUST COMPANY
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page No.
- ------- --------
1. DEFINITIONS ......................................................... 1
2. GRANT OF SECURITY INTEREST .......................................... 4
2.1 Collateral Assignment of Pledged Trademarks ................... 4
2.2 Conditional Assignment ........................................ 5
2.3 Supplemental to Security Agreement ............................ 5
3. REPRESENTATIONS, WARRANTIES AND COVENANTS ........................... 6
4. INSPECTION RIGHTS ................................................... 7
5. NO TRANSFER OR INCONSISTENT AGREEMENTS .............................. 7
6. AFTER-ACQUIRED TRADEMARKS, ETC ...................................... 7
6.1 After-acquired Trademarks ..................................... 7
6.2 Amendment to Schedule ......................................... 7
7. TRADEMARK PROSECUTION ............................................... 8
7.1 Assignors Responsible ......................................... 8
7.2 Assignor's Duties, Etc ........................................ 8
7.3 Assignor's Enforcement Rights ................................. 8
7.4 Protection of Trademarks, Etc ................................. 9
7.5 Notification by Assignor ...................................... 9
8. REMEDIES ............................................................ 9
9. COLLATERAL PROTECTION ............................................... 10
10. POWER OF ATTORNEY ................................................... 10
11. FURTHER ASSURANCES .................................................. 11
12. TERMINATION ......................................................... 11
13. COURSE OF DEALING ................................................... 11
14. EXPENSES ............................................................ 11
15. OVERDUE AMOUNTS ..................................................... 12
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION ......................... 12
17. NOTICES ............................................................. 12
18. AMENDMENT AND WAIVER ................................................ 13
19. GOVERNING LAW; CONSENT TO JURISDICTION .............................. 13
20. WAIVER OF JURY TRIAL ................................................ 13
21. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC .............................. 14
21. MISCELLANEOUS ....................................................... 14
<PAGE>
TRADEMARK COLLATERAL
SECURITY AND PLEDGE AGREEMENT
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT dated as of March 31,
1998, between CVC, INC., a Delaware corporation ("Parent"), CVC PRODUCTS, INC.,
a Delaware corporation ("Borrower" and, together with Parent, the "Assignors"),
both having their principal place of business at 525 Lee Road, Rochester, New
York, and MANUFACTURERS AND TRADERS TRUST COMPANY, having an office at One M&T
Plaza, Buffalo, New York 14203 (the "Bank").
WHEREAS, the Borrower and the Bank are parties to a Loan Agreement, dated
as of March 31, 1998, (as amended and in effect from time to time, the "Loan
Agreement");
WHEREAS, it is a condition precedent to the Bank making any loans or
otherwise extending credit to the Borrower under the Loan Agreement that the
Assignors execute and deliver to the Bank this Agreement;
WHEREAS, the Borrower has previously executed and delivered to the Bank a
General Security Agreement, dated as of February 2, 1996, as amended (the
"Original Borrower Security Agreement"), pursuant to which the Borrower granted
to the Bank a first priority perfected security interest in all of the
Borrower's personal property and fixture assets, including, without limitation,
the trademarks, service marks, trademark and service mark registrations and
trademark and service mark registration applications listed on Schedule A
attached hereto, all to secure the payment and performance of all the
indebtedness of the Borrower to the Bank, whenever arising and, on even date
herewith, Borrower has executed and delivered an Amended and Restated General
Security Agreement ("Restated Borrower Security Agreement") in favor of Bank,
pursuant to which the Original Borrower Security Agreement has been amended and
restated; and
WHEREAS, the Parent has previously executed and delivered to Bank a
General Security Agreement, dated as of February 2, 1996 (the "Original Parent
Security Agreement"), pursuant to which the Parent granted to the Bank a first
priority perfected security interest in all of the Parent's personal property
and fixture assets, including, without limitation the patents and patent
applications listed on Schedule A attached hereto, to the extent that the Parent
has an interest therein, all to secure the payment and performance of all of the
indebtedness of the Parent to the Bank, whenever arising, and, on even date
herewith, Parent has executed and delivered an Amended and Restated General
Security Agreement ("Restated Parent Security Agreement") in favor of Bank,
pursuant to which the Original Parent Security Agreement has been amended and
restated; and
WHEREAS, this Trademark Agreement (defined below) is supplemental to the
provisions contained in the Restated Borrower Security Agreement and the
Restated Parent Security Agreement (together, the "Security Agreements");
<PAGE>
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Loan Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Trademark Agreement referred to below:
Assignors means Borrower and Parent, collectively and individually.
Associated Goodwill means all goodwill of the Assignors and their
businesses, products and services appurtenant to, associated with or symbolized
by the Trademarks and the use thereof.
Events of Default means any "Event of Default" which has occurred under
the Restated Borrower Security Agreement or the Restated Parent Security
Agreement.
Obligations means, collectively, any indebtedness, liabilities and
obligations for payment of money, regardless of kind, class or form and whether
for the payment of principal or of interest or otherwise, incurred, for any
business, commercial, agricultural or consumer purposes 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 an 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 tortuous, liquidated or unliquidated, arising by
operation of law or otherwise, that are now or hereafter owing by either
Assignor in any capacity, whether alone or otherwise, to the Bank in any
capacity, whether or not allowed as a claim against such Assignor in any case or
other proceeding pursuant to any bankruptcy or insolvency statute, regulation or
other law or 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.
Pledged Trademarks means all of the Assignor's right, title and interest
in and to all of the Trademarks, the Trademark Registrations, the Trademark
License Rights, the Trademark Rights, the Associated Goodwill, the Related
Assets, and all accessions to, substitutions for, replacements of, and all
products and proceeds of any and all of the foregoing.
PTO means the United States Patent and Trademark Office.
Related Assets means all assets, rights and interests of the Assignors
that uniquely
-2-
<PAGE>
reflect or embody the Associated Goodwill, including the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of the
Trademarks; and
(b) the following documents and things in the possession or under the
control of the Assignors, or subject to their demand for possession or control,
related to the production, delivery, provision and sale by the Assignors, or any
affiliate, franchisee, licensee or contractor, of products or services sold by
or under the authority of the Assignors in connection with the Trademarks or
Trademark Rights, whether prior to, on or subsequent to the date hereof:
(i) all lists, contracts, ancillary documents and other information
that identify, describe or provide information with respect to any
customers, dealers or distributors of the Assignors, their affiliates or
franchisees or licensees or contractors, for products or services sold
under or in connection with the Trademarks or Trademark Rights, including
all lists and documents containing information regarding each customer's,
dealer's or distributor's name and address, credit, payment, discount,
delivery and other sale terms, and history, pattern and total of purchases
by brand, product, style, size and quantity;
(ii) all agreements (including franchise agreements), product and
service specification documents and operating, production and quality
control manuals relating to or used in the design, manufacture,
production, delivery, provision and sale of products or services under or
in connection with the Trademarks or Trademark Rights;
(iii) all documents and agreements relating to the identity and
locations of all sources of supply, all terms of purchase and delivery,
for all materials, components, raw materials and other supplies and
services used in the manufacture, production, provision, delivery and sale
of products or services under or in connection with the Trademarks or
Trademark Rights; and
(iv) all agreements and documents constituting or concerning the
present or future, current or proposed advertising and promotion by the
Assignors (or any of their affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with the
Trademarks or Trademark Rights.
Trademark Agreement means this Trademark Collateral Security and Pledge
Agreement, as amended and in effect from time to time.
Trademark License Rights means any and all past, present or future rights
and
-3-
<PAGE>
interests of the Assignors pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Assignors, or to which the
Assignors are a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Assignors or the
Bank to enforce, and sue and recover for, any breach or violation of any such
agreement to which the Assignors are a party.
Trademark Registrations means all past, present or future federal, state,
local and foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Assignors or the Bank, and to take any and all actions necessary or
appropriate to maintain such registrations in effect and renew and extend such
registrations.
Trademark Rights means any and all past, present or future rights in, to
and associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignors or the Bank for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks means all of the trademarks, service marks, designs, logos,
indicia, trade names, corporate names, company names, business names, fictitious
business names, trade styles, elements of package or trade dress, and other
source and product or service identifiers, used or associated with or
appurtenant to the products, services and businesses of the Assignors, that (i)
are set forth on Schedule A hereto, or (ii) have been adopted, acquired, owned,
held or used by the Assignors or are now owned, held or used by the Assignors,
in the Assignors' business, or with the Assignors' products and services, or in
which the Assignors have any right, title or interest, or (iii) are in the
future adopted, acquired, owned, held and used by the Assignors in the
Assignors' business or with the Assignors' products and services, or in which
the Assignors in the future acquire any right, title or interest.
Use means, with respect to any Trademark, all uses of such Trademark by,
for or in connection with the Assignors or their business or for the direct or
indirect benefit of the Assignors or their business, including all such uses by
the Assignors themselves, by any of the affiliates of the Assignors, or by any
franchisee, licensee or contractor of the Assignors.
2. GRANT OF SECURITY INTEREST.
-4-
<PAGE>
2.1 Collateral Assignment of Pledged Trademarks.
To secure the payment and performance in full of any and all
Obligations, the Assignors hereby grant, assign, transfer and conveys to the
Bank, BY WAY OF COLLATERAL SECURITY, all of the Trademark Collateral. THE BANK
ASSUMES NO LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH COLLATERAL
SECURITY.
2.2 Supplemental to Security Agreements.
Pursuant to the Security Agreements the Assignors have granted to
the Bank a continuing security interest in and lien on the Collateral (including
the Pledged Trademarks). The Security Agreements, and all rights and interests
of the Bank in and to the Collateral (including the Pledged Trademarks)
thereunder, are hereby ratified and confirmed in all respects. In no event shall
this Trademark Agreement, the grant, assignment, transfer and conveyance of the
Pledged Trademarks hereunder, or the recordation of this Trademark Agreement (or
any document hereunder) with the PTO, adversely affect or impair, in any way or
to any extent, the Security Agreements, the security interest of the Bank in the
Collateral (including the Pledged Trademarks) pursuant to the Security
Agreements and this Trademark Agreement, the attachment and perfection of such
security interest under the Uniform Commercial Code (including the security
interest in the Pledged Marks), or any present or future rights and interests of
the Bank in and to the Collateral under or in connection with the Security
Agreements, this Trademark Agreement or the Uniform Commercial Code. Any and all
rights and interests of the Bank in and to the Pledged Trademarks (and any and
all obligations of the Assignors with respect to the Pledged Trademarks)
provided herein, or arising hereunder or in connection herewith, shall only
supplement and be cumulative and in addition to the rights and interests of the
Bank (and the obligations of the Assignor) in, to or with respect to the
Collateral (including the Pledged Trademarks) provided in or arising under or in
connection with the Security Agreements and shall not be in derogation thereof.
2.3 License Back to Assignors.
Unless and until there shall have occurred and be continuing an Event of
Default and the Bank has notified the Assignors that the license granted
hereunder is terminated, the Bank hereby grants to the Assignors the sole and
exclusive, nontransferable, royalty-free, worldwide right and license under the
Trademarks to make, have made for them, use, sell and otherwise practice the
inventions disclosed and claimed in the Trademarks for the Assignors' own
benefit and account and for none other; provided however, that the foregoing
right and license shall be no greater in scope than, and limited by, the rights
assigned to the Bank by the Assignors hereby. The Assignors agree not to sell,
assign, transfer, encumber or sublicense their interest in the license granted
to the Assignors in this Section 2.3, without the prior written consent of the
Bank. Any such sublicenses granted on or after the date hereof shall be
terminable by the Bank upon termination of the Assignors' license hereunder.
-5-
<PAGE>
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Assignors represent, warrant and covenant that: (i) Schedule A sets
forth a true and complete list of all Trademarks and Trademark Registrations now
owned, licensed, controlled or used by the Assignor; (ii) the Trademarks and
Trademark Registrations are subsisting and have not been adjudged invalid or
unenforceable, in whole or in part, and there is no litigation or proceeding
pending concerning the validity or enforceability of the Trademarks or Trademark
Registrations; (iii) to the best of the Assignors' knowledge, each of the
Trademarks and Trademark Registrations is valid and enforceable; (iv) to the
best of the Assignors' knowledge, there is no infringement by others of the
Trademarks, Trademark Registrations or Trademark Rights; (v) no claim has been
made that the use of any of the Trademarks does or may violate the rights of any
third person, and to the best of the Assignors' knowledge, there is no
infringement by the Assignors of the trademark rights of others; (vi) the
Assignors are the sole and exclusive owners of the entire and unencumbered
right, title and interest in and to each of the Trademarks (other than ownership
and other rights reserved by third party owners with respect to Trademarks that
the Assignors are licensed to use), free and clear of any liens, charges,
encumbrances and adverse claims, including pledges, assignments, licenses,
registered user agreements and covenants by the Assignors not to sue third
persons, other than the security interest and assignment created by the Security
Agreements and this Trademark Agreement; (vii) the Assignors have the
unqualified right to enter into this Trademark Agreement and to perform its
terms and have entered and will enter into written agreements with each of their
present and future employees, agents, consultants, licensors and licensees that
will enable them to comply with the covenants herein contained; (viii) the
Assignors have used, and will continue to use, proper statutory and other
appropriate proprietary notices in connection with their use of the Trademarks;
(ix) the Assignors have used, and will continue to use for the duration of this
Trademark Agreement, consistent standards of quality in their manufacture and
provision of products and services sold or provided under the Trademarks; (x)
this Trademark Agreement, together with the Security Agreements, will create in
favor of the Bank a valid and perfected first priority security interest in the
Pledged Trademarks upon making the filings referred to in clause (xi) of this
Section 3; and (xi) except for the filing of financing statements with the
Monroe County Clerk and the Secretary of State for the State of New York under
the Uniform Commercial Code and the recording of this Trademark Agreement with
the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignors or the effectiveness of the
security interest and assignment granted hereby or for the execution, delivery
and performance of this Trademark Agreement by the Assignors, or (B) for the
perfection of or the exercise by the Bank of any of its rights and remedies
hereunder.
-6-
<PAGE>
4. INSPECTION RIGHTS.
The Assignors hereby grant to the Bank and its employees and agents the
right to visit the Assignors' plants and facilities that manufacture, inspect or
store products sold under any of the Trademarks, and to inspect the products and
quality control records relating thereto upon advance notice and at reasonable
times during regular business hours.
5. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Bank's prior written consent and except for licenses of the
Pledged Trademarks in the ordinary course of the Assignor's business consistent
with its past practices, the Assignors will not (i) mortgage, pledge, assign,
encumber, grant a security interest in, transfer, license or alienate any of the
Pledged Trademarks, or (ii) enter into any agreement (for example, a license
agreement) that is inconsistent with the Assignors' obligations under this
Trademark Agreement or the Security Agreements.
6. AFTER-ACQUIRED TRADEMARKS, ETC.
6.1 After-acquired Trademarks.
If, before the Obligations shall have been finally paid and
satisfied in full and neither of the Assignors have any rights to request
borrowings under a line of credit with Bank and all lines of credit provided by
Bank have been terminated, the Assignors shall obtain any right, title or
interest in or to any other or new Trademarks, Trademark Registrations or
Trademark Rights, the provisions of this Trademark Agreement shall automatically
apply thereto and the Assignors shall promptly provide to the Bank notice
thereof in writing and execute and deliver to the Bank such documents or
instruments as the Bank may reasonably request further to implement, preserve or
evidence the Bank's interest therein.
6.2 Amendment to Schedule.
The Assignors authorize the Bank to modify this Trademark Agreement
without the necessity of the Assignors' further approval or signature, by
amending Schedule A hereto and the Annex to the Assignment of Marks to include
any future or other Trademarks, Trademark Registrations or Trademark Rights
under Section 2 or Section 6.
-7-
<PAGE>
7. TRADEMARK PROSECUTION
7.1 Assignors Responsible.
The Assignors shall assume full and complete responsibility for the
prosecution, defense, enforcement or any other necessary or desirable actions in
connection with the Pledged Trademarks, and shall hold the Bank harmless from
any and all costs, damages, liabilities and expenses that may be incurred by the
Bank in connection with the Bank's interest in the Pledged Trademarks or any
other action or failure to act in connection with this Trademark Agreement or
the transactions contemplated hereby. In respect of such responsibility, the
Assignors shall retain trademark counsel acceptable to the Bank. The Bank shall
not unreasonably delay in responding to any request to approve counsel proposed
by the Assignors.
7.2 Assignors' Duties, Etc.
The Assignors shall have the right and the duty, through trademark
counsel acceptable to the Bank, to prosecute diligently any trademark
registration applications of the Trademarks pending as of the date of this
Trademark Agreement or thereafter, to preserve and maintain all rights in the
Trademarks and Trademark Registrations, including the filing of appropriate
renewal applications and other instruments to maintain in effect the Trademark
Registrations and the payment when due of all registration renewal fees and
other fees, taxes and other expenses that shall be incurred or that shall accrue
with respect to any of the Trademarks or Trademark Registrations. Any expenses
incurred in connection with such applications and actions shall be borne by the
Assignors. The Assignors shall not abandon any filed trademark registration
application, or any Trademark Registration or Trademark, without the consent of
the Bank, which consent shall not be unreasonably withheld.
7.3 Assignors' Enforcement Rights.
The Assignors shall have the right and the duty to bring suit or
other action in the Assignors' own name to maintain and enforce the Trademarks,
the Trademark Registrations and the Trademark Rights. The Assignors may require
the Bank to join in such suit or action as necessary to assure the Assignors'
ability to bring and maintain any such suit or action in any proper forum if
(but only if) the Bank is completely satisfied that such joinder will not
subject the Bank to any risk of liability. The Assignors shall promptly, upon
demand, reimburse and indemnify the Bank for all damages, costs and expenses,
including legal fees, incurred by the Bank pursuant to this Section 7.3.
7.4 Protection of Trademarks, Etc.
In general, the Assignors shall take any and all such actions
(including institution and maintenance of suits, proceedings or actions) as may
be necessary or appropriate to properly maintain, protect, preserve, care for
and enforce the Pledged Trademarks. The Assignors shall not take or fail to take
any action, nor permit any action
-8-
<PAGE>
to be taken or not taken by others under its control, that would adversely
affect the validity, grant or enforcement of the Pledged Trademarks.
7.5 Notification by Assignors.
Promptly upon obtaining knowledge thereof, the Assignors will notify
the Bank in writing of the institution of, or any final adverse determination
in, any proceeding in the PTO or any similar office or agency of the United
States or any foreign country, or any court, regarding the validity of any of
the Trademarks or Trademark Registrations or the Assignors' rights, title or
interests in and to the Pledged Trademarks.
8. REMEDIES.
Upon the occurrence and during the continuance of an Event of Default, the
Bank shall have, in addition to all other rights and remedies given it by this
Trademark Agreement (including, without limitation, those set forth in Section
2.2), the Loan Agreement, the Security Agreements and all of the other
agreements, instruments and documents executed by the Assignors with or in favor
of the Bank at any time, those allowed by law and the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in the State of New
York, and, without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without other notice (except as
set forth next below) or demand whatsoever to the Assignors, all of which are
hereby expressly waived, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Pledged Trademarks,
or any interest that the Assignors may have therein, and after deducting from
the proceeds of sale or other disposition of the Pledged Trademarks all
reasonable expenses incurred by the Bank in attempting to enforce this Trademark
Agreement (including all reasonable expenses for broker's fees and legal
services), shall apply the residue of such proceeds toward the payment of the
Obligations as set forth in or by reference in the Security Agreements. Notice
of any sale, license or other disposition of the Pledged Trademarks shall be
given to the Assignors at least five (5) days before the time that any intended
public sale or other public disposition of the Pledged Trademarks is to be made
or after which any private sale or other private disposition of the Pledged
Trademarks may be made, which the Assignors hereby agree shall be reasonable
notice of such public or private sale or other disposition. At any such sale or
other disposition, the Bank may, to the extent permitted under applicable law,
purchase or license the whole or any part of the Pledged Trademarks or interests
therein sold, licensed or otherwise disposed of.
9. COLLATERAL PROTECTION.
If the Assignors shall fail to do any act that it has covenanted to do
hereunder, or if any representation or warranty of the Assignors shall be
breached, the Bank, in its own name or that of the Assignors (in the sole
discretion of the Bank), may (but shall not be obligated to) do such act or
remedy such breach (or cause such act to be done or such
-9-
<PAGE>
breach to be remedied), and the Assignors agrees promptly to reimburse the Bank
for any cost or expense incurred by the Bank in so doing.
10. POWER OF ATTORNEY.
If any Event of Default shall have occurred and be continuing, the
Assignors do hereby make, constitute and appoint the Bank (and any officer or
agent of the Bank as the Bank may select in its exclusive discretion) as the
Assignors' true and lawful attorney-in-fact, with full power of substitution and
with the power to endorse the Assignors' name on all applications, documents,
papers and instruments necessary for the Bank to use the Pledged Trademarks, or
to grant or issue any exclusive or nonexclusive license of any of the Pledged
Trademarks to any third person, or to take any and all actions necessary for the
Bank to assign, pledge, convey or otherwise transfer title in or dispose of any
of the Pledged Trademarks or any interest of the Assignors therein to any third
person, and, in general, to execute and deliver any instruments or documents and
do all other acts that the Assignors are obligated to execute and do hereunder.
The Assignors hereby ratify all that such attorney shall lawfully do or cause to
be done by virtue hereof and releases the Bank from any claims, liabilities,
causes of action or demands arising out of or in connection with any action
taken or omitted to be taken by the Bank under this power of attorney (except
for the Bank's gross negligence or willful misconduct). This power of attorney
is coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
11. FURTHER ASSURANCES.
The Assignors shall, at any time and from time to time, and at its
expense, make, execute, acknowledge and deliver, and file and record as
necessary or appropriate with governmental or regulatory authorities, agencies
or offices, such agreements, assignments, documents and instruments, and do such
other and further acts and things (including, without limitation, obtaining
consents of third parties), as the Bank may request or as may be necessary or
appropriate in order to implement and effect fully the intentions, purposes and
provisions of this Trademark Agreement, or to assure and confirm to the Bank the
grant, perfection and priority of the Bank's security interest in the Pledged
Trademarks.
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full and neither of the Assignors have any rights to request an
advance under any line of credit and all lines of credit provided by Bank have
been terminated, this Trademark Agreement shall terminate and the Bank shall,
upon the written request and at the expense of the Assignors, execute and
deliver to the Assignors all deeds, assignments and other instruments as may be
necessary or proper to reassign and reconvey to and re-vest in the Assignors the
entire right, title and interest to the Pledged Trademarks previously granted,
assigned, transferred and conveyed to the Bank by the Assignors pursuant to this
Trademark Agreement, as fully
-10-
<PAGE>
as if this Trademark Agreement had not been made, subject to any disposition of
all or any part thereof that may have been made by the Bank pursuant hereto or
the Security Agreements.
13. COURSE OF DEALING.
No course of dealing between the Assignors and the Bank, nor any failure
to exercise, nor any delay in exercising, on the part of the Bank, any right,
power or privilege hereunder or under the Security Agreements or any other
agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and expenses incurred by the
Bank in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Assignors.
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Assignors hereunder shall
be a debt secured by the Pledged Trademarks and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the applicable notes evidencing such Obligations.
16. NO ASSUMPTION OF LIABILITY, INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE BANK
ASSUMES NO LIABILITIES OF THE ASSIGNORS WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNORS' OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNORS, AND THE ASSIGNORS SHALL
INDEMNIFY THE
-11-
<PAGE>
BANK FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS, INCLUDING LEGAL FEES,
INCURRED BY THE BANK WITH RESPECT TO SUCH LIABILITIES.
17. NOTICES.
All notices and other communications made or required to be given pursuant
to this Trademark Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as follows:
(a) if to the Assignors, at 525 Lee Road, Rochester, New York Attention:
Emilio O. DiCataldo, Senior Vice President and CFO, or at such other address for
notice as the Assignors shall last have furnished in writing to the person
giving the notice; and
(b) if to the Bank, at One M&T Plaza, Buffalo, New York 14203, Attention:
Collateral Department, or at such other address for notice as the Bank shall
last have furnished in writing to the person giving the notice, with copies to
Bank at 525 East Avenue, Rochester, New York 14604, Attention: William Holston,
Vice President.
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand to a responsible officer of the
party to which it is directed, at the time of the receipt thereof by such
officer, (ii) if sent by registered or certified first-class mail, postage
prepaid, two (2) Business Days after the posting thereof, and (iii) if sent by
telegraph, telecopy, or telex, at the time of the dispatch thereof, if in normal
business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.
18. AMENDMENT AND WAIVER.
This Trademark Agreement is subject to modification only by a writing
signed by the Bank and the Assignors, except as provided in Section 6.2. The
Bank shall not be deemed to have waived any right hereunder unless such waiver
shall be in writing and signed by the Bank. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right on any future occasion.
19. GOVERNING LAW, CONSENT TO JURISDICTION.
THIS TRADEMARK AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. The Assignors agree that any suit for the enforcement of this
Trademark Agreement may be brought in the courts of the County of Monroe or any
federal court sitting therein and consents to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon the
Assignors by
-12-
<PAGE>
mail at the address specified in Section 17. The Assignors hereby waive any
objection that they may now or hereafter have to the venue of any such suit or
any such court or that such suit is brought in an inconvenient court.
20. WAIVER OF JURY TRIAL.
THE ASSIGNORS WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS TRADEMARK AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Assignors waive any right which
they may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Assignors (i)
certifies that neither the Bank nor any representative, agent or attorney of the
Bank has represented, expressly or otherwise, that the Bank would not, in the
event of litigation, seek to enforce the foregoing waivers, and (ii)
acknowledges that, in entering into the Loan Agreement and the other agreements,
instruments or documents to which the Bank is a party, the Bank is relying upon,
among other things, the waivers and certifications contained in this Section 20.
21. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC.
Notwithstanding anything herein to the contrary, Bank shall not be deemed
to have unreasonably delayed in responding to a request for a consent hereunder
or the approval of a counsel proposed by Assignors whom the Bank must consent to
unless Bank fails to respond to a request for such consent or acceptance of
proposed counsel for 10 days after such request is submitted and Assignors
thereafter notify Bank in writing that they believe Bank has unreasonably
delayed in responding to such request and Bank continues for more than 10 days
after its receipt of such notice to respond to such request. In any event, the
sole remedy for Assignors if Bank unreasonably delayed in responding to any such
request shall be that it loses its right to consent to any such action or to
approve any such counsel.
22. MISCELLANEOUS.
The headings of each section of this Trademark Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Trademark Agreement and all rights and obligations hereunder shall be binding
upon the Assignors and their respective successors and assigns, and shall inure
to the benefit of the Bank and its successors and assigns. In the event of any
irreconcilable conflict between the provisions of this Trademark Agreement and
the Loan Agreement, or between this Trademark Agreement and the Security
Agreements, the provisions of the Loan Agreement or the Security Agreements, as
the case may be, shall control. If any term of this Trademark Agreement shall be
held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall in no way be affected
-13-
<PAGE>
thereby, and this Trademark Agreement shall be construed and be enforceable as
if such invalid, illegal or unenforceable term had not been included herein. The
Assignors acknowledge receipt of a copy of this Trademark Agreement.
IN WITNESS WHEREOF, this Trademark Agreement has been executed as of the
day and year first above written.
CVC, INC.
By: /s/ Emilio O. DiCataldo
----------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
----------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ William Holston
----------------------------------
Name: William Holston
Title: Vice President
-14-
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998, personally appeared Emilio O.
DiCataldo to me known personally, and who, being by me duly sworn, deposes and
says that he is the Senior Vice President and CFO of CVC, INC., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and he acknowledged said instrument to be the free act
and deed of said corporation.
---------------------------------------
GARY F. AMENDOLA Notary Public
Notary Pubic, State of New York
Qualified in Monroe County,
Commission Expires Oct. 31___________
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998, personally appeared Emilio 0.
DiCataldo to me known personally, and who, being by me duly sworn, deposes and
says that he is the Senior Vice President and CFO of CVC PRODUCTS, INC., and
that said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and he acknowledged said instrument to be
the free act and deed of said corporation.
---------------------------------------
GARY F. AMENDOLA Notary Public
Notary Pubic, State of New York
Qualified in Monroe County,
Commission Expires Oct. 31___________
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of April, 1998, personally appeared William Holston
to me known personally, and who, being by me duly sworn, deposes and says that
he is the Vice President of MANUFACTURERS AND TRADERS TRUST COMPANY, and that
said instrument was signed and sealed on behalf of said corporation by authority
of its Board of Directors, and he acknowledged said instrument to be the free
act and deed of said corporation.
---------------------------------------
GARY F. AMENDOLA Notary Public
Notary Pubic, State of New York
Qualified in Monroe County,
Commission Expires Oct. 31___________
-15-
<PAGE>
SCHEDULE A
Trademarks and Trademark Registrations
-16-
<PAGE>
SCHEDULE A
2. CVC's U.S. Trademark Assets. The following Table 5 details CVC's
trademark assets.
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
CONNEXION(R) U.S. Trademark Registration Semiconductor and data
1,834,335, issued May 3, storage wafer processing
1994 equipment, comprising
physical vapor deposition,
rapid thermal processing
chemical vapor deposition,
including RTCVD and MOCVD, and
inductively-coupled plasma
equipment
- --------------------------------------------------------------------------------
CVC Not Registered, but used as Relating to goods and services
trademark or slogan to in the area of Semiconductor
associate with CVC's good and data storage wafer
and services processing equipment,
comprising physical vapor
deposition, rapid thermal
process, chemical vapor
deposition, including RTCVD and
MOCVD, and inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
[SYMBOL] Not registered, but used as Relating to goods and
CVC a trademark services in the area of
Semiconductor and data storage
wafer processing equipment,
comprising physical vapor
deposition, rapid thermal
processing, chemical vapor
deposition, including RTCVD and
MOCVD, and inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
OPEN CONNEXION(TM) Registration application Software systems for
prepared awaiting review semiconductor and data
and filing storage wafer processing
equipment, comprising physical
vapor deposition, rapid thermal
processing chemical vapor
deposition, including RTCVD and
MOCVD, and inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
Connect with Not registered, but used as Slogan relating to goods and
CVC(TM) trademark or slogan to services in the area of
associate with CVC's goods. semiconductor and data
storage wafer processing
equipment, comprising physical
vapor deposition, rapid thermal
processing chemical vapor
deposition, including RTCVD and
MOCVD, and inductively-coupled
plasma equipment
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
Infinity(TM) Not registered, but used as Relating to goods in the area
trademark to associate with of semiconductor and data
CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition.
- --------------------------------------------------------------------------------
The CONNEXION(R) Not registered, but used as Relating to goods in the area
400(TM) trademark to associate with of semiconductor and data
CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition, rapid thermal
processing chemical vapor
deposition, including RTCVD and
MOCVD, and inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
The CONNEXION(R) Not registered, but used as Relating to goods in the area
500(TM) trademark to associate with of semiconductor and data
CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition, rapid thermal
processing chemical vapor
deposition, including MOCVD and
RTCVD, and inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
The CONNEXION(R) Not registered, but used as Relating to goods in the area
600(TM) trademark to associate with of semiconductor and data
CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition, rapid thermal
processing chemical vapor
deposition, including MOCVD and
RTCVD, and inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
The CONNEXION(R) Not registered, but used as Relating to goods in the area
800(TM) trademark to associate with of semiconductor and data
CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition, rapid thermal
processing chemical vapor
deposition, including MOCVD and
RTCVD, and inductively-coupled
plasma equipment
- --------------------------------------------------------------------------------
Multi-Comp(TM) Not registered, but used as Relating to goods in the area
trademark to associate with of semiconductor wafer
CVC's goods. processing equipment,
comprising rapid thermal
processing and rapid thermal
chemical-vapor deposition
equipment
- --------------------------------------------------------------------------------
Multi-Probe(TM) Not registered, but used as Relating to goods in the area
trademark to associate with of semiconductor wafer
CVC's goods. processing equipment,
comprising rapid thermal
processing and rapid thermal
chemical-vapor deposition
equipment
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
Pulsar(TM) Not registered, but used as Relating to goods in the area
trademark to associate with of semiconductor wafer
CVC's goods. processing equipment,
comprising rapid thermal
processing and RTCVD equipment
- --------------------------------------------------------------------------------
Series 400(TM) Not registered, but used as Relating to goods in the area
trademark to associate with of semiconductor and data
CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition equipment
- --------------------------------------------------------------------------------
Series 500(TM) Not registered, but used as Relating to goods in the area
trademark to associate with of semiconductor and data
CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition equipment
- --------------------------------------------------------------------------------
Series 600(TM) Not registered, but used as Relating to goods in the area
trademark to associate with of semiconductor and data
CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition equipment
- --------------------------------------------------------------------------------
Universal Thermal Not registered, but used as Relating to goods in the area
Module(TM) trademark to associate with of semiconductor wafer
or UTM(TM) CVC's goods. processing equipment,
comprising rapid thermal
processing and chemical-vapor
deposition equipment including
RTCVD and MOCVD equipment
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
Table 5: CVC'S Trademark Assets
- --------------------------------------------------------------------------------
Mark Status Goods Protected
================================================================================
Universal Plasma Not registered, but used as Relating to goods in the area
Module(TM) trademark to associate with of semiconductor and data
or UPM(TM) CVC's goods. storage wafer processing
equipment, comprising physical
vapor deposition and
inductively-couple plasma
processing equipment
================================================================================
CVC has no prior opinions or similar documents relating to the scope or
validity of its trademarks. No maintenance fees are presently due for CVC's
existing CONNEXION(R) trademark registration. In addition, there are no
documents relating to litigation or licenses involving CVC's trademarks, related
foreign filings, and product-line information related to the trademarks.
3. CVC's Foreign Trademark Assets. To date, CVC holds no foreign trademark
registrations. Nor does CVC, as of the date of this Intellectual Property Audit
Report, have pending any foreign trademark applications. To the extent that CVC
uses a particular mark for a product it sells in a foreign market, those marks
appearing in Table 5, above, represent the only marks CVC uses outside the
United States.
There are no prior opinions or documents relating to the scope or
validity of CVC's trademarks outside the United States. Nor are there any
foreign patent and trademark office actions or maintenance fee dates due at this
time. No documents relating to litigation or licenses involving CVC's
trademarks, related foreign filings, and product-line information related to the
use of trademarks outside the United States were discovered in this Intellectual
Property Audit.
E. Copyright Assets and Related Intellectual Property Assets
1. Overview. The Copyright Act establishes copyright protection "in
original works of authorship fixed in any tangible medium of expression." Each
word in this phrase must be satisfied in order to create a copyright. The work
must be original, meaning that it was created by the author--that is, it
"originated" with the author, not someone else but it need not be highly unique
or creative, which is required for some other forms of intellectual property
protection, such as patents. A work must be fixed in some tangible way in order
to create a copyright. Authors cannot simply come up with brilliant ideas for
books or songs and carry them
<PAGE>
Form PTO-1595 (Modified) U.S. DEPARTMENT OF COMMERCE
(Rev 6-93) Patent and Trademark Office
OMB No. 0651-0011 (exp. 4/94)
RECORDATION FORM COVER SHEET
TRADEMARKS ONLY
Tab settings [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
To the Honorable Commissioner of Patents and Trademarks: Please record the
attached original documents or copy thereof.
- --------------------------------------------------------------------------------
1. Name of conveying party(ies):
CVC PRODUCTS, INC.
and CVC, INC.
|_| Individual(s)
|_| General Partnership
|X| Corporation-State (DE)
|_| Association
|_| Limited Partnership
|_| Other_________________________________________________________________
Additional name(s) of conveying party(ies) attached |_| Yes |_| No
- --------------------------------------------------------------------------------
2. Name and address of receiving party(ies)
Name: Manufacturers and Traders Trust Company
Internal Address: ________________________________________________________
Street Address: One M&T Plaza
City: Buffalo State: NY ZIP: 14203
|_| Individual(s) citizenship_____________________________________________
|_| Association___________________________________________________________
|_| General Partnership___________________________________________________
|_| Limited Partnership___________________________________________________
|X| Corporation-State_____________________________________________________
|_| Other_________________________________________________________________
If assignee is not domiciled in the United States, a domestic representative
designation is attached: |_| Yes |_| No
(Designations must be a separate document from assignment) Additional name(s) &
address(es) attached |_| Yes |_| No
- --------------------------------------------------------------------------------
3. Nature of conveyance:
|X| Assignment
|_| Security Agreement
|_| Merger
|_| Change of Name
|_| Other_________________________________________________________________
Execution Date: 4/14/98
- --------------------------------------------------------------------------------
4. Application number(s) or patent number(s):
A. Trademark Application No.(s)
B. Trademark Registration No.(s)
1,834,335 (issued 5/3/94)
Additional numbers attached? |_| Yes |X| No
- --------------------------------------------------------------------------------
5. Name and address of party to whom correspondence concerning document
should be mailed:
Name: Gordon E. Forth, Esq.
Internal Address: Woods, Oviatt, Gilman,
Sturman & Clarke LLP
__________________________________________________________________________
Street Address: 44 Exchange Street
__________________________________________________________________________
City: Rochester State: NY ZIP: 14614
- --------------------------------------------------------------------------------
6. Total number of applications and registrations involved: .......... 1
- --------------------------------------------------------------------------------
7. Total fee (37 CFR 3.41).................$40.00
|X| Enclosed
|_| Authorized to be charged to deposit account
- --------------------------------------------------------------------------------
8. Deposit account number:
__________________________________________________________________________
(Attach duplicate copy of this page if paying by deposit account)
- --------------------------------------------------------------------------------
DO NOT USE THIS SPACE
- --------------------------------------------------------------------------------
9. Statement and signature.
To the best of my knowledge and belief, the foregoing information is true and
correct and any attached copy is a true copy of the original document.
Emilio O. DiCataldo /s/ Emilio O. DiCataldo
- ---------------------- ----------------------- ----------------
Name of Person Signing Signature Date
Total number of pages including cover sheet, attachments, and document: |2|
- --------------------------------------------------------------------------------
Mail documents to be recorded with required cover sheet information to:
Commissioner of Patents & Trademarks, Box Assignments
Washington, D.C. 20231
<PAGE>
[LOGO] M&T Bank
Manufacturers and Traders Trust Company
LANDLORD/MORTGAGEE WAIVER
Re: Premises: 525 Lee Road, Rochester, New York 14606
Borrower: CVC, INC.
Collateral: All presently owned and after-acquired personal property and
fixtures
Bank: Manufacturers and Traders Trust Company
One M&T Plaza, Buffalo, New York 14240
The undersigned is the holder of an interest as owner, mortgagee or
otherwise (the "Holder") in certain real property, commonly described as stated
above, which Premises are owned by or leased to the Borrower identified above.
The Holder has been advised that Manufacturers and Traders Trust Company
(the "Bank") is about to extend credit to the Borrower to be secured by a
security interest held by the Bank in the property of the Borrower identified
above as the Collateral. The Bank's extension of credit to the Borrower is
conditioned upon the Holder's subordination of any and all claims, interests or
liens the Holder has or may have with respect to the Collateral.
The Holder, intending to be legally bound, does hereby acknowledge that
the Bank as the holder of a perfected security interest in the Collateral and
hereby subordinates to the Bank's lien any claim, interest or lien the Holder
may have in any fixtures that may be included in the Collateral. The Holder
hereby agrees that the Bank may at any time enter upon the Premises and remove
the Collateral without liability to the Holder except for damage to the Premises
directly resulting from such removal. The Holder will not seek to levy execution
on or foreclose any lien or other security interest in the Collateral or
otherwise apply the value of the Collateral to satisfy any claim of the Holder
against the Borrower until all obligations owing by the Borrower to the Bank
have been irrevocably paid in full. The Holder will notify any successor in
interest of all or any part of such real property of this consent and
disclaimer, which shall be binding upon the Holder's personal representatives,
successors and assigns.
Date: April 14, 1998 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 14th day of April, l998, before me personally came______________________
|_| Individual(s) to me known to be the person(s) described in and who
executed the foregoing 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 firm of______________________
and known to me to be the individual described in, and
who executed, the foregoing instrument in the name of
said firm and _____ he duly acknowledged to me that __he
executed the same for and in behalf of said firm.
|X| Corporation to me known, who, being by me duly sworn, did depose and
say that __he resides in [ILLEGIBLE]
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/ Gary F. Amendola
----------------------------------------
GARY F. AMENDOLA Notary Public
Notary Pubic, State of New York
Qualified in Monroe County
Commission Expires Oct. 31, _____
<PAGE>
LANDLORD'S WAIVER AND CONSENT
Date: April 9, 1998
West 77 Pentagon Park LLC, a Delaware limited liability company ("Landlord")
consents to the security interest of Manufacturers and Traders Trust Company
(the "Lender") in all present and future equipment, accounts, inventory and
general intangibles (the "Collateral"), constituting property of CVC Products,
Inc. ("Tenant/Debtor"), located at 4530 W. 77th Street, Suite 221, Edina,
Minnesota 55435 (the "Leased Premises") and all proceeds of the Collateral.
Landlord acknowledges that Lender's rights to the Collateral shall be prior to
any claim by Landlord.
Lender agrees to pay Landlord Rent and Additional Rent as provided for under the
lease between Landlord and Debtor dated May 17, 1997, (the "Lease"), but on a
per diem basis, during any period Lender occupies the Leased Premises after
termination of the Lease, and Lender agrees to pay Landlord for the reasonable
costs incurred by Landlord in repairing any damage that Lender or its agents or
Contractors cause to the Premises or the real estate of which the Premises are a
part.
Under no circumstances shall Lender retain possession of the Premises for more
than thirty (30) days following dispatch to Lender of notice of the termination
of the Lease without Landlord's prior consent. Lender shall promptly provide
Landlord with written notice of any default by Debtor. Any notice which is to be
given by Lender or Landlord, to be effective, shall be delivered by messenger,
or mailed by certified mail, return receipt requested, to the following address
(or such other address as may be specified by a party by notice given to the
other party in the manner provided herein):
If to Lender: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, NY 14240
If to Landlord: West 77 Pentagon Park LLC
c/o Northco Corporation
4900 Viking Drive
Edina, MN 55435
Landlord further acknowledges and/or agrees as follows:
1. Tenant is in lawful possession of the Premises referred to above.
2. Landlord has not present knowledge of any default by Tenant under the
terms of the Lease.
<PAGE>
3. Landlord shall provide Lender with written notice of any default under or
breach of the Lease which, if left uncurred beyond any applicable cure
period, may cause a termination of the Lease by Landlord.
West 77 Pentagon Park LLC
By Northco Corporation, Managing Agent
for West 77 Pentagon Park LLC
By: /s/ Eva Stevens
--------------------------------------
Its: Vice President
Manufacturers and Traders Trust Company
By: /s/ William E. Holston
--------------------------------------
Its: Vice President
<PAGE>
[LOGO] M&T Bank
Manufacturers and Traders Trust Company
LANDLORD/MORTGAGEE WAIVER
Re: Premises: 2914 Montopolis Drive, Suite 290, Austin, Texas 78741
Borrower: CVC Products, Inc., 525 Lee Road, Rochester, New York 14606
Collateral: All presently owned and after acquired personal property
Bank: Manufacturers and Traders Trust Company
One M&T Plaza, Buffalo, New York 14240
The undersigned is the holder of an interest as owner, mortgagee or
otherwise (the "Holder") in certain real property, commonly described as stated
above, which Premises are owned by or leased to the borrower identified above.
The Holder has been advised that Manufacturers and Traders Trust Company
(the "Bank") is about to extend credit to the Borrower to be secured by a
security interest held by the Bank in the property of the Borrower identified
above as the Collateral. The Bank's extension of credit to the Borrower is
conditioned upon the Holder's subordination of any and all claims, interests or
liens the Holder has or may have with respect to the Collateral.
The Holder, intending to be legally bound, does hereby acknowledge that
the Bank is the holder of a perfected security interest in the Collateral and
hereby subordinates to the Bank's lien any claim, interest or lien the Holder
may have in the Collateral. The Holder hereby agrees that the Bank may at any
time enter upon the Premises and remove the Collateral without liability to the
Holder except for damage to the Premises directly resulting from such removal.
The Holder will not seek to levy execution on or foreclose any lien or other
security interest in the Collateral or otherwise apply the value of the
Collateral to satisfy any claim of the Holder against the Borrower until all
obligations owing by the Borrower to the Bank have been irrevocably paid in
full. The Holder will notify any successor in interest of all or any part of
such real property of this consent and disclaimer, which shall be binding upon
the Holder's personal representatives, successors and assigns.
Date: April 9, 1998 Brock Consulting Group, Inc.
by: J. V. Brook, President
--------------------------
[SEAL] Notary Public * State of Texas *
CONNIE J. FREASIER
Notary Public, State of Texas
My Commission Expires
APRIL 20, 2000
STATE OF Texas )
:SS.
COUNTY OF Travis )
On the 9th day of April, 1998, before me personally came J. Vaughn Brock
|_| Individual(s) to me known to be the person(s) described in and who
executed the foregoing 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 firm of_____________________________________________
________________________________________________________
and known to me to be the individual described in, and
who executed, the foregoing instrument in the name of
said firm and __he duly acknowledged to me that __he
executed the same for and in behalf of said firm.
|X| Corporation to me known, who, being duly sworn, did depose and say
that __he resides in
Travis County, Texas
that __he is the President
of Brock Consulting Group, 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/ Connie J. Freasier
----------------------
Notary Public
<PAGE>
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made and entered into by and
between Security Capital Industrial Trust, a Maryland Real Estate Investment
Trust, ("Landlord"), and Manufacturers and Traders Trust Company ("Lender") as
of the _______ day of April, 1998.
WITNESSETH:
Whereas, Landlord and CVC Holdings, Inc. a Delaware Corporation ("Tenant") have
entered into that certain lease dated November 7, 1995, (the "Lease") pursuant
to which Tenant is leasing certain premises located at $100 Laurelview Court,
Fremont, CA (the "Premises") from Landlord;
Whereas, pursuant to the Landlord's Lien/Security Agreement provision of the
Lease if any, or California law, Tenant has granted to Landlord a [ILLEGIBLE] of
Tenant's personal property ("Personal Property") located in the Premises
(collectively, the "Landlord's Lien");
Whereas, in connection with the Tenant obtaining a line of credit or providing
any financing or refinancing for the purchase of any personal property for the
Premises ("Personal Property Financing") with Lender, Tenant has requested, and
Landlord has agreed, subject to certain conditions, to subordinate the
Landlord's Lien to any personal property liens of Lender.
NOW, THEREFORE, in consideration of the [ILLEGIBLE] covenants contained herein,
and for other consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord, Tenant and Lender hereby agree as follows:
1. Notwithstanding the Landlord's Lien/Security Agreement provision of
the Lease if any, or any provisions of California law, the
Landlord's Lien shall be subordinate and subject to the lien placed
on the Personal Property by the Lender in connection with the
Personal Property Financing.
2. Lender hereby agrees that it shall not occupy and/or possess the
Premises for more than a fourteen (14) day period.
3. Lender hereby agrees that it shall indemnify and hold Landlord
harmless from any liability, loss, cost, damage caused while in
possession of the Premises and/or expenses (including, without
limitation, Landlord's attorneys' fees) incurred by or asserted
against Landlord arising out of any action by or on behalf of the
Lender in connection with Lender's enforcement action involving
Tenant's Personal Property.
4. Lender hereby agrees that it shall be required to repair any damage
to the Premises caused by Lender, or Lender's agents, during the
period in which it is in possession of the Premises.
5. Lender, or Lender's agents, shall not hold any auction or sale of
the Personal Property on the Premises.
6. This Agreement shall in all respects be a continuing agreement and
shall remain in full force and effect so long as the Personal
Property Financing is in effect and so long as the Tenant (or the
Lender) occupies or is in possession of the Premises.
7. The term Tenant includes CVC Holdings, Inc.'s wholly owned
subsidiary, CVC Products, Inc.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
Lender and the Landlord as of the day and year first written above.
LENDER:
Manufacturers and Traders Trust Company
By: /s/ William E. Holston
-------------------------------------
Name: William E. Holston
----------------------------------
Title: Vice President
---------------------------------
LANDLORD:
Security Capital Industrial Trust
Maryland Real Estate Investment Trust
General Partner
By:
-------------------------------------
Name: Ned K. Anderson
----------------------------------
Title: Senior Vice President
---------------------------------
<PAGE>
CVC PRODUCTS, INC.
ACCOUNTS RECEIVABLE AGING AS 0F MARCH 31, 1998
REVISED 4/14/98
<TABLE>
<CAPTION>
-------------------------------------------
DESCRIPTION INVOICE AGING
-------------------------------------------
BALANCE 0-30 31-60
<S> <C> <C> <C> <C>
Balance Forward: 13,378,322.66 7,274,008.44 883,183.66
Installation aged balsed on ship date
Analog 8115 Inv 44123(s invoiced 3.25) 1/19/98 0.00 330,373.65 0.00
Analog 8116 Inv 44245 (no s invoice yet) 1/31/98 0.00 281,996.35 (281.995.35)
AMC 8096 (final 10% and all st needs invoicing 43724+4368 11/13/97 0.00 403,742.03 0.00
Boeing matching credits with charges 0.00 88,004.25 28.44
DAS Devices sales tax billed 3.10 1/22/98 0.00 61,062.80 0.00
IBM 8089 value $892,302.84 +above tax cost. (s inv 3.30 29 3/31/98 0.00 0.00 0.00
NYS ENERGY RES AUTHORITY 10% hold back 0.00 9.956.30 0.00
Read Rite 998l (S invoice 2.24) 40421 9/28/96 0.00 0.00 11,366.46
Read Rite 9983 (s invoiced 2.24) 40671 10/31/96 0.00 0.00 74,342.70
Read Rite 9984 (s invoiced 12,223.04 on 2.24) 41049 12/31/96 0.00 22,223.70 12,223.04
Read Rite 9985 (Invoiced 2.24) 41050 12/31/96 0.00 0.00 26,349.61
Read Rite 8068 (10% phases 3.9 signed Off 5% not billed)4 9/30/97 0.00 612,612.51 0.00
Read Rite 8067 (10% billed 1/27 5% not billed yet) 43626 11/7/97 0.00 165,306.27 0.00
Seagate 8053/43887 12/11/97 0.00 66,456.00 0.00
Seagate 8053/43888 12/11/97 0.00 66,456.00 0.00
Seagate 8051/43995 12/29/97 0.00 66,456.00 0.00
Seagate 6051/44017 12/31/97 0.00 66,456.00 0.00
Seagate 9875/44019 12/31/97 0.00 66,456.00 0.00
Seagate 9875/44020 12/31/97 0.00 66.456.00 0.00
Seagate 9900/44021 12/31/97 0.00 66.456.00 0.00
Seagate 9900/44022 12/31/97 0.00 66,456.00 0.00
Seagate 8l48/44770 value $409,602.68 pd 4/6 379,796.04 3/30/98 0.00 0.00 0.00
Seagate 8l67/44820 value $146,714.40 3/31/98 0.00 0.00 0.00
Sematech 9998 42455 (Completed Beam 3.9) pd 480K 4/2/9 6/25/97 0.00 600,000.00 0.00
Suny Albany Res Foundation value $154,506.40 s inv 3.18 3/18/98 0.00 0.00 0.00
Actus Commerce Inc. 8059/44635 value $176,500.00 3/16/98 0.00 0.00 0.00
Actus Commerce Inc. 8125/44810 value $384,564.00 3/31/98 0.00 0.00 0.00
Viking Tech Corp 8113 5% simple recpt 4.3 (final 5% not yet 11/20/97 0.00 220,000.00 0.00
Seagate Ir. 44143 S invoiced 2.18 8082 1/28/98 0.00 0.00 10,000.00
Seagate Ir 8l03 (s inv 2/27) 43910 12/15/97 0.00 0.00 210,914.90
Seagate IR 8082/42940 (no S invoice) 8/22/98 0.00 195,635.80 0.00
Seagate IR 8082/42709 7/24/97 0.00 22,784.00 0.00
Seagate IR 8169/44740 Value $1,081,064.00 3/25/98 0.00 0.00 0.00
Seagate IR 8l70/4479l Value $l,019,905.00 3/31/98 0.00 0.00 0.00
Seagate IR 8171/44821 Value $964,100.00 3/31/98 0.00 0.00 0.00
Seagate IR 8172/44822 Value $535,796.00 3/31/98 0.00 0.00 0.00
Sharp 9952/42518 s invoiced 3.10 9/26/96 0.00 94,115.75 0.00
Adjusted GL (Aging after Reclass) 13,378,322.66 10,813,487.85 955,413.46
===========================================
Percentages 100.00% 80.83% 7.14%
-------------------------------------------
Value of Installs in current A/R for March Shipments 1,559,082.01
-------------------------------------------
Other A/R (non install related) 6,023,648.06 5,458,690.27 955,413.48
-------------------------------------------
Total Value of installs 5,354,777.68 5,000,580.87 72,201.36
===========================================
-------------
13,378,322.66
=============
<CAPTION>
------------------------------------------------------------
DESCRIPTION AGING
------------------------------------------------------------
61-90 OVER 90 OVER 120 OVER 180
<S> <C> <C> <C> <C>
882,433.08 1,758,081.71 1,008,962.20 1,571,653.57
Balance Forward:
Installation aged balsed on ship date
Analog 8115 Inv 44123(s invoiced 3.25) (330,373.65) 0.00 0.00 0.00
Analog 8116 Inv 44245 (no s invoice yet) 0.00 0.00 0.00 0.00
AMC 8096 (final 10% and all st needs invoicing 43724+4368 0.00 0.00 (403,742.03) 0.00
Boeing matching credits with charges 0.00 (88,032.69) 0.00 0.00
DAS Devices sales tax billed 3.10 (61,062.80) 0.00 0.00 0.00
IBM 8089 value $892,302.84 +above tax cost. (s inv 3.30 29 0.00 0.00 0.00 0.00
NYS ENERGY RES AUTHORITY 10% hold back 0.00 (9,956.30) 0.00 0.00
Read Rite 998l (S invoice 2.24) 40421 0.00 0.00 0.00 (11,366.46)
Read Rite 9983 (s invoiced 2.24) 40671 0.00 0.00 0.00 (74,342.70)
Read Rite 9984 (s invoiced 12,223.04 on 2.24) 41049 0.00 0.00 0.00 (34,440.74)
Read Rite 9985 (Invoiced 2.24) 41050 0.00 0.00 0.00 (26,349.61)
Read Rite 8068 (10% phases 3.9 signed Off 5% not billed)4 0.00 0.00 0.00 (512,612.51)
Read Rite 8067 (10% billed 1/27 5% not billed yet) 43626 0.00 0.00 (165,306.27) 0.00
Seagate 8053/43887 0.00 (66,456.00) 0.00 0.00
Seagate 8053/43888 0.00 (66.456.00) 0.00 0.00
Seagate 8051/43995 0.00 (66,456.00) 0.00 0.00
Seagate 6051/44017 (66,456.00) 0.00 0.00 0.00
Seagate 9875/44019 (66,456.00) 0.00 0.00 0.00
Seagate 9875/44020 (66,456.00) 0.00 0.00 0.00
Seagate 9900/44021 (66,456.00) 0.00 0.00 0.00
Seagate 9900/44022 (66.456.00) 0.00 0.00 0.00
Seagate 8l48/44770 value $409,602.68 pd 4/6 379,796.04 0.00 0.00 0.00 0.00
Seagate 8l67/44820 value $146,714.40 0.00 0.00 0.00 0.00
Sematech 9998 42455 (Completed Beam 3.9) pd 480K 4/2/9 0.00 0.00 0.00 (600,000.00)
Suny Albany Res Foundation value $154,506.40 s inv 3.18 0.00 0.00 0.00 0.00
Actus Commerce Inc. 8059/44635 value $176,500.00 0.00 0.00 0.00 0.00
Actus Commerce Inc. 8125/44810 value $384,564.00 0.00 0.00 0.00 0.00
Viking Tech Corp 8113 5% simple recpt 4.3 (final 5% not yet 0.00 0.00 (220,000.00) 0.00
Seagate Ir. 44143 S invoiced 2.18 8082 (10,000.00) 0.00 0.00 0.00
Seagate Ir 8l03 (s inv 2/27) 43910 0.00 0.00 (219,914.90) 0.00
Seagate IR 8082/42940 (no S invoice) 0.00 0.00 0.00 (195,635.80)
Seagate IR 8082/42709 0.00 0.00 0.00 (22,784.00)
Seagate IR 8169/44740 Value $1,081,064.00 0.00 0.00 0.00 0.00
Seagate IR 8l70/4479l Value $l,019,905.00 0.00 0.00 0.00 0.00
Seagate IR 8171/44821 Value $964,100.00 0.00 0.00 0.00 0.00
Seagate IR 8172/44822 Value $535,796.00 0.00 0.00 0.00 0.00
Sharp 9952/42518 s invoiced 3.10 0.00 0.00 0.00 (94,115.75)
Adjusted GL (Aging after Reclass) 148,716.63 1,480,724.72 (0.00) 0.00
============================================================
Percentages 1.11% 10.92% 0.00% 0.00%
------------------------------------------------------------
Value of Installs in current A/R for March Shipments
------------------------------------------------------------
Other A/R (non install related) 148,716.63 1,480,724.72
------------------------------------------------------------
Total Value of installs (733,716.45) (199,388.00) (1,008,962.20) (1,571,653.57)
============================================================
</TABLE>
<PAGE>
OFFICER'S CERTIFICATE
The undersigned, Secretary of CVC, INC., a Delaware corporation (the
"Company"), hereby certifies to MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank")
to induce Bank to extend past, present and/or future credit to the Company as
follows.
1. Attached hereto as Exhibit A is a true copy of Company's Certificate of
Incorporation and all amendments thereto to date. We agree to forward to Bank
copies of all amendments to Company's Certificate of Incorporation.
2. Attached hereto as Exhibit B is a true copy of Company's current ByLaws
and all amendments to date and as in effect on the date that the resolutions set
forth Exhibit C were adopted by the Board of Directors. We agree to forward to
Bank copies of all future amendments to Company's By-Laws.
3. The persons whose names are set forth below have been duly elected to
the offices set opposite their respective names and are authorized by the Board
of Directors of Company to execute and deliver on behalf of the Company any
agreement, note, guaranty or other document or instrument, entered into, or to
be entered into by Company with or in favor of the Bank:
Name Office Signature
---- ------ ---------
Christine Whitman Chairman,
Chief Executive Office
& President /s/ Christine Whitman
-----------------------
Emilio O. DiCataldo Senior Vice President
& Chief Financial Officer /s/ Emilio O. DiCataldo
-----------------------
The signature of each officer is set forth after his or her respective name.
4. Attached hereto as Exhibit C is a true copy of the resolutions which
have been duly adopted by the Company's duly elected Board of Directors on March
4,1998 such resolutions are in full force and effect and have not been modified,
altered, rescinded or superseded in any respect.
IN WITNESS WHEREOF, the undersigned of April 2, 1998.
/s/ [ILLEGIBLE]
-------------------------------
Name:
Title:
<PAGE>
CERTIFICATE OF AMENDMENT TO
RESTATED CERTIFICATE OF
INCORPORATION OF
CVC HOLDINGS, INC.
CVC Holdings, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is CVC Holdings. Inc.
2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on October 19, 1990,
and was amended pursuant to a Restated Certificate of Incorporation of the
Corporation filed with the Secretary of State of the State of Delaware on May
18, 1995.
3. This Restated Certificate of Incorporation is hereby further
amended as follows:
A. Article I shall be deleted and replaced in its entirety with the
following:
Article I
The name of the Corporation is CVC, Inc.
B. The second and third sentences of Article IV(a) shall be deleted
and replaced in their entirety by the following:
The total number of shares which the Corporation is authorized to
issue is 50,102,500. The total number of shares of Common Stock which the
Corporation is authorized to issue is 50,000,O00, par value $.01 per share.
C. The first sentence of Section 5(b) of Article IV shall be deleted
and replaced in its entirety by the following:
The Board of Directors of the Corporation shall consist of not less
than three (3) members, the exact number to be fixed from time to time solely by
resolution of the Board of Directors acting by not less than a majority of the
directors then in office.
4. The amendments to the Restated Certificate of Incorporation as
hereinabove set forth have been duly adopted in accordance with Section 242 of
the General Corporation Law of the State of Delaware.
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:00 PM 10/15/1997
971347839 -- 2244345
<PAGE>
IN WITNESS WHEREOF, CVC Holding, Inc. has caused this Certificate to be
signed by Christine B. Whitman, its President, this 15th day of October, 1997.
CVC HOLDINGS, INC.
/s/ Christine B. Whitman
------------------------
Christine B. Whitman
President
2
<PAGE>
Meeting of the Board of Directors
of CVC, Inc.
October 14, 1997
The Meeting was called to order by telephonic conference at 4:00
p.m. by Christine Whitman, Chairman of the Board. Ms. Whitman, James Geater,
Victor Mann, Seiya Miyanishi, Andrew Peskoe and Donald Waite were in attendance,
representing a quorum of the Board of Directors. Brendan Hegarty was not
immediately available. Ms. Whitman served as Chairman of the Meeting and
requested that Mr. Peskoe serve as Secretary. Also attending at the request of
the Board were Emilio DiCataldo and Frederick Kanner.
Ms. Whitman introduced the first order of business: the
consideration of minutes for the August 26, 1997 meeting previously circulated
to the Board. Mr. Waite suggested two modifications, which were accepted and, as
so modified, such minutes were unanimously adopted.
In response to Mr. Waite's inquiry, Ms. Whitman briefed the Board on
the status of Veeco and Lam discussions and the most recent communications. Mr.
Waite expressed his view that such efforts constituted adequate diligence at
this time, and requested that any meaningful offer be given due consideration in
the future.
Mr. Kanner outlined the proposed Certificate of Amendment to the
Certificate of Incorporation (the "Amendment") of the corporation, including the
change of name, increase in authorized shares, and increase in Board size. The
Board discussed that the insertion of "blank check" preferred stock would be
considered at a later meeting. The Board also agreed to reconsider increasing
the authorized common shares to 100 million based on the estimate of franchise
taxes to be obtained by Mr. DiCataldo. The Board also discussed and concurred
that the minimum Board size would be set at three with the actual Board size
determined by the Board and that the initial Board was set at eight effective
upon filing of the Amendment.
Mr. Hegarty joined the telephone meeting at this juncture. Ms.
Whitman nominated Robert Fink to fill the vacancy on the Board to be created by
the increase in Board size. The Board discussed his qualifications, particularly
his experience in the semiconductor equipment industry, his operating (and
inventory control) experience and his public company experience. It was
resolved, after motion duly made and seconded, that upon filing of the
Amendment, the Board be increased from 7 to 8 and that upon Common Stockholder
and Class A Preferred Stockholder approval, Mr. Fink be so elected as a
director. It was further resolved that Mr. Fink serve on the Compensation
Committee upon his appointment to the Board.
<PAGE>
The Board discussed and approved a three for one stock split
effective October 31, 1997.
The Board discussed and authorized the filing of a Registration
Statement on Form S-1, contemplating an offering (on a firm commitment basis) of
3 million shares by the Company and 900,000 shares by Anne Whitman with a 15%
over allocation to the underwriters (resulting in a maximum sale by the Company
of 3,585,00 shares).
The Board discussed and approved the appointment of: Boston
Equiserve as transfer agent for the Company's shares, and the Pricing Committee
for the proposed offering of Ms. Whitman, Mr. Fink, Mr. Miyanishi and Mr. Waite.
The Board next turned to stock option plan matters, discussing and
approving a new Non-employee Director Stock Option Plan (previously distributed
to the directors) providing initial grants of 10,000 (post-split) options to new
non-employee directors, annual 3,000 (post-split) option grants to each
non-employee director and maximum option grants of 250,000, and the 1997 Stock
Option Plan for key employees (previously distributed to the directors) with
maximum grants of 1,250,000 options. It was pointed out that both plans had been
reviewed in advance by the Compensation Committee, which was recommending they
be approved by the full Board. For the Director Plan it was resolved that the
exercise price of grants allocated before the contemplated offering be set at
the offering price.
The Board discussed the proposed Employment Agreements for
executives (previously distributed to the Board) and the terms contemplated. The
Board requested advice as to certain labor law and accounting issues and Mr.
Kanner and Mr. DiCataldo undertook to obtain such advice. The Board approved
these agreements with the modification that the option extension on a change of
control be limited to 12 months, and with the provision that the labor law and
tax issues be resolved. These agreements were approved first without and then
with Ms. Whitman voting, as she was an employment agreement signatory.
The Board discussed and approved the draft director Indemnification
Agreements (previously distributed to the Board).
The Board discussed and ratified the sales and grants of options
made outside the formal stock option plans from the inception of the
Corporation, set forth in the schedules distributed, such ratification was
approved without Ms. Whitman and Mr. Peskoe voting and then with their vote as
each was an optionee.
The Board nominated and elected Mr. DiCataldo as an assistant
secretary of the corporation and of CVC Products, Inc.
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<PAGE>
After motion duly made and seconded the resolutions attached hereto
as Exhibit 1 were unanimously adopted and approved.
There being no further business to come before the Meeting, on
motion duly made and seconded, the meeting was adjourned and the conference call
terminated at 6:30 P.M.
/s/ Andrew C. Peskoe
------------------------
Andrew C. Peskoe,
Secretary of the Meeting
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<PAGE>
Exhibit 1
Amendment of Certificate of Incorporation
RESOLVED, that the Board of Directors deems it advisable and in the
best interests of the Corporation to approve and adopt the amendments to the
Corporation's Certificate of Incorporation as hereinafter set forth:
1. Article I shall be deleted and replaced in its entirety with the
following:
Article I
The name of the Corporation is CVC, Inc.
2. The second and third sentences of Article IV(a) shall be deleted
and replaced in their entirety by the following:
The total number of shares which the Corporation is authorized to
issue is 50,102,500. The total number of shares of Common Stock which the
Corporation is authorized to issue is 50,000,000, par value $.01 per share.
3. The first sentence of Section 5(b) of Article IV shall be deleted
and replaced in its entirety by the following:
The Board of Directors of the Corporation shall consist of not less
than three (3) members, the exact number to be fixed from time to time solely by
resolution of the Board of Directors acting by not less than a majority of the
directors then in office.
RESOLVED, that the aforesaid amendments to the Certificate of
Incorporation of the Corporation be, and hereby are, adopted and approved in all
respects; and further
RESOLVED, that the proper officers of the Corporation be, and each
of them hereby is, authorized and directed to submit the proposed amendments to
a vote of the stockholders of the Corporation in accordance with the
requirements of the Delaware General Corporation Law; and further
RESOLVED, that the proper officers of the Corporation be, and each
of them hereby is, authorized and directed, in the name and on behalf of the
Corporation, to prepare, execute and deliver all such other documents and
certificates and take all actions (including without limitation the filing of a
Certificate of Amendment to the Certificate of Incorporation) such officer or
officers may in his or their discretion deem necessary or appropriate in order
to cry out the full intent and purposes of the foregoing resolutions, the
<PAGE>
preparation, execution, delivery or performance thereof by such officer or
officers to be conclusive evidence of the approval thereof by the Corporation;
and further
RESOLVED, that the proper officers of the Corporation are, and each
of them hereby is, authorized, empowered and directed, in the name of and on
behalf of the Corporation, to do, or cause to be done, all such acts or things
and to make, execute and deliver, or cause to be made, executed or delivered,
all such additional agreements, documents, instruments, payments, applications
and certificates, and to take, or cause to be taken, such additional action as
may be or become reasonably necessary, appropriate or convenient to carry out
and put into effect the purposes of the foregoing resolutions, in connection
with the amendments to Certificate of Incorporation of the Corporation, in the
name and on behalf of the Corporation and under its corporate seal or otherwise,
the authority for execution, certification, delivery and filing of such
agreements, documents and instruments and the taking of such action to be
conclusively evidenced thereby and all actions heretofore taken by the officers
in connection with the foregoing matters with respect to the Certificate of
Incorporation of the Corporation are hereby approved, and confirmed in all
respects; and further
Size of the Board
RESOLVED, that effective upon the filing of the Certificate of
Amendment to the Certificate of Incorporation of the Corporation with the
Secretary of State of the State of Delaware, the size of the Board of Directors
of the Corporation shall be increased from seven to eight; and further
Approval of Stock Split
RESOLVED, that the Board of Directors deems it advisable and in the
best interests of the Corporation to effect a three-for-one stock split (the
"Stock Split") of the Corporation's common stock, par value $.01 per share (the
"Common Stock"); and further
RESOLVED, that the Stock Split effectuated in the form of a stock
dividend be, and it hereby is, declared on the Common Stock of the Corporation,
such dividend to be effective on the close of business on October 31, 1997, and
to be payable to stockholders of record at the close of business on October 31,
1997 (the "Record Date"), said dividend to be paid in shares of Common Stock of
the Corporation to the stockholders in proportion to their respective holdings
at the rate of two additional shares of Common Stock for each one share of
Common Stock held at the close of business on the Record Date; and further
RESOLVED, that the Corporation shall not be deemed to be obligated
to, and the Corporation shall not, issue any fractional shares of Common Stock
of the Corporation in connection with the stock dividend and that the number of
shares of Common Stock to be issued to each stockholder of the Corporation in
connection with the stock dividend be, and it hereby is, rounded to the lowest
whole number; and further
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<PAGE>
RESOLVED, that the proper officers of the Corporation are authorized
and directed to issue shares of the Corporation's authorized but unissued Common
Stock in payment of the stock dividend; and further
RESOLVED, that for each share of Common Stock issued in payment of
the stock dividend out of authorized but unissued Common Stock, the amount of
one cent ($0.01) per share, representing the par value of each such share, be
charged against the Corporation's additional paid-in capital account and
credited to the Corporation's common stock account, and further
RESOLVED, that upon issuance of the Common Stock of the Corporation
in payment of the stock dividend as provided herein, all such shares shall be
duly and validly authorized and issued, fully paid and non-assessable shares of
Common Stock of the Corporation; and further
RESOLVED, that the proper officers of the Corporation are authorized
and directed to do and perform all further acts necessary to carry out the
intent of the foregoing resolutions with respect to any required regulatory
filings; and further
RESOLVED, that the proper officers of the Corporation are, and each
of them hereby is, authorized, empowered and directed, in the name of and on
behalf of the Corporation, to do, or cause to be done, all such acts or things
and to make, execute and deliver, or cause to be made, executed or delivered,
all such additional agreements, documents, instruments, payments, applications
and certificates, and to take, or cause to be taken, such additional action as
may be or become reasonably necessary, appropriate or convenient to carry out
and put into effect the purposes of the foregoing resolutions, in connection
with the Stock Split, in the name and on behalf of the Corporation and under its
corporate seal or otherwise, the authority for execution, certification,
delivery and filing of such agreements, documents and instruments and the taking
of such action to be conclusively evidenced thereby and all actions heretofore
taken by the officers in connection with the foregoing matters with respect to
the Stock Split are hereby approved, and confirmed in all respects.
Offering Resolutions
RESOLVED, that a public offering (the "Offering") of up to 3,900,000
shares (after giving effect to the Stock Split) of the Corporation's Common
Stock, plus up to 585,000 additional shares (after giving effect to the Stock
Split) of Common Stock to cover over-allotments (collectively, the "Shares"), to
be made through a group of underwriters (the "Underwriters") to be managed by BT
Alex. Brown, Hambrecht & Quist and Paine Webber, Incorporated (the
"Representatives") be, and it hereby is, approved, and further
RESOLVED, that in connection with the Offering, the officers of the
Corporation be, and they hereby are, authorized and directed to issue up to
3,585,000 shares of the Corporation's authorized but unissued Common Stock; and
further
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<PAGE>
RESOLVED, that the proper officers and directors of the Corporation
be, and each of them hereby is, authorized and directed to prepare and to
execute, in the name and on behalf of the Corporation, and to procure all
necessary signatures to, a filing with the Securities and Exchange Commission
(the "Commission") of the Corporation's Registration Statement on Form S-1 (the
"Registration Statement") relating to the proposed public offering of the
Shares, in substantially the form previously submitted to the directors, with
such changes therein and additions thereto as the officers and directors of the
Corporation executing the Registration Statement may in their discretion deem
appropriate, the execution thereof to be conclusive evidence of the approval
thereof by the Corporation, and to file the Registration Statement when so
executed, together with the appropriate exhibits thereto, with the Commission
under the Securities Act of 1933, as amended (the "Act"); and further
RESOLVED, that the proper officers and directors of the Corporation
be, and each of them hereby is, authorized and directed to prepare, execute in
the name and on behalf of the Corporation, procure all necessary signatures to,
and file with the Commission any amendment(s) or post-effective amendment(s) to
the Registration Statement deemed by them necessary or advisable to effect the
registration of the Shares under the Act, their approval of any such
amendment(s) or post-effective amendment(s) to be conclusively evidenced by
their execution thereof; and to appear, together with legal counsel, on behalf
of the Corporation before the Commission in connection with any matter relating
to the Registration Statement and any amendment(s) or post-effective
amendment(s) thereto; and further
RESOLVED, that the proper officers and directors of the Corporation
who are required to or do execute the Registration Statement be, and each of
them hereby is, authorized to execute and deliver a power-of-attorney appointing
Christine B. Whitman and Emilio O. DiCataldo to be the attorneys-in-fact and
agents with full power of substitution and resubstitution, for each of such
directors and officers and in their name, place and stead, in any and all
capacities, to sign any amendment(s) to the Registration Statement, including
any post-effective amendment(s), to file the same with the Commission and to
perform all other acts necessary in connection with any matter relating to the
Registration Statement and any amendment(s) or post-effective amendment(s)
thereto; and further
RESOLVED, that Christine B. Whitman, be, and hereby is, designated
to act on behalf of the Corporation as the agent for service to be named in the
Registration Statement and authorized to receive notices and communications from
the Commission in connection with the Registration Statement; and further
RESOLVED, that the proper officers of the Corporation be, and each
of them hereby is, authorized and empowered, in the name and on behalf of the
Corporation, to make or cause to be made, and to execute and deliver, all such
additional agreements, documents, instruments and certificates, with the
corporate seal of the Corporation affixed thereto and attested by the Secretary
of the Corporation, or unattested, or without such seal, and to do or cause to
be done all such acts and things, and to take all such steps, and to make all
such payments and remittances, as any one or more of such officers may at any
time or from time to time deem necessary or desirable in connection with or in
furtherance of the registration
-4-
<PAGE>
of the Shares under the Act and otherwise in order to carry out the full intent
and purposes of the foregoing resolutions; and further
RESOLVED, that the officers of the Corporation be, and each of them
hereby is, authorized and directed, in the name and on behalf of the
Corporation, to take any and all actions which he or they may deem necessary or
advisable in order to effect the registration or qualification (or exemption
therefrom) of the Shares for issue, offer, sale or trade under the Blue Sky or
securities laws of any of the States of the United States of America and in
connection therewith to execute, acknowledge, verify, deliver, file or cause to
be published any applications, reports, surety bonds, consents to service of
process, appointments of attorneys to receive service of process and other
papers and instruments which may be required under such laws, and to take any
and all action which he or they may deem necessary or advisable in order to
maintain any such registration or qualification for as long as he or they or the
Representatives deem necessary or as required by law; and further
RESOLVED, that the Board of Directors hereby adopts the form of any
resolution or resolutions required by any agency or authority of the
jurisdictions referred to in the preceding resolution to be filed in connection
with the qualification or registration of the Shares, provided that (i) in the
opinion of an officer of the Corporation the adoption of such resolution or
resolutions is necessary or advisable, and (ii) the Secretary of the Corporation
evidences such adoption by inserting with the minutes of this meeting copies of
such resolution or resolutions which will thereupon be deemed to be adopted by
this Board with the same force and effect as if presented to and adopted at this
meeting; and further
RESOLVED, that the officers of the Corporation be, and each of them
hereby is, authorized and directed to execute and deliver, in the name and on
behalf of the Corporation, all such documents required to be filed, or to supply
the Representatives with all necessary information to make such filings, and to
pay all filing fees, in connection with any matter relating to any requirement
of the National Association of Securities Dealers, Inc. (the "NASD") in
connection with the offering of the Shares, and shall have authority to make
such changes in, or take any further action with respect to, any document or
matter relative thereto as may be necessary to conform with the requirements for
review by the NASD; and further
RESOLVED, that the actions of the officers of the Corporation in
preparing, in the name and on behalf of the Corporation, an Application for
Initial Inclusion of the Shares in the Nasdaq National Market and the related
Listing Agreement, in substantially the form previously submitted to the
directors (collectively, the "Nasdaq Application"), and in filing the Nasdaq
Application, when so executed, with the NASD be, and said actions hereby are,
ratified, approved, confirmed and adopted in all respects; and further
RESOLVED, that the actions of each of the officers of the
Corporation relating to the Nasdaq Application be, and they hereby are,
ratified, approved, confirmed and adopted in all respects; and further
RESOLVED, that the proper officers of the Corporation be, and each
of them hereby is, authorized and empowered in the name and on behalf of the
Corporation (i) to
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<PAGE>
execute under its corporate seal attested by the Secretary, if desired, and
cause to be filed any and all further instruments, documents and papers, to take
any and all other actions which he or they or counsel for the Corporation deem
necessary, desirable or appropriate to cause such Shares to be authorized by the
NASD to be listed or to be added to the list upon official notice of issuance
including, but not limited to, a Registration Statement on Form 8-A under the
Securities Exchange Act of 1934, as amended; (ii) if requested in connection
with the foregoing, to execute under its corporate seal attested by the
Secretary, if desired, and cause to be filed with the NASD a questionnaire,
agreement and any other document required in support of said application for
listing; and (iii) to appear and represent the Corporation before any
departmental committee of the NASD in connection with said application for
listing or in any matter incidental thereto; and further
RESOLVED, that the proper officers of the Corporation be, and each
of them hereby is, authorized and directed, in the name and on behalf of the
Corporation, to execute, deliver and file any and all such documents required to
be filed, including without limitation a Nasdaq National Market ("NMS")
Application for Initial Public Offerings and a Nasdaq NMS Listing Agreement and
to pay any and all filing fees, in connection with any matter relating to the
inclusion of the Shares in the Nasdaq National Market; and further
RESOLVED, that Boston Equiserve be, and it hereby is, appointed as
transfer agent and registrar for the Common Stock of the Corporation; and
further
RESOLVED, that Boston Equiserve be, and it hereby is, authorized and
directed, as Transfer Agent for the Common Stock of the Corporation, to
countersign as such Transfer Agent stock certificates for the Shares, when such
certificates shall be delivered to it, duly executed on behalf of the
Corporation, and as Registrar for the Common Stock of the Corporation, to
register such certificates to or upon the order of the Corporation; that by this
resolution is adopted any resolution which may be required by the Transfer Agent
and Registrar to evidence its appointment as such and which is filed with the
records of the Corporation; and further
RESOLVED, that in connection with the Offering, the Board of
Directors hereby constitutes a committee of this Board comprised of Christine B.
Whitman, Robert C. Fink, Seiya Miyanishi and Donald Waite (the "Pricing
Committee"), to negotiate with the Representatives and determine and establish
the per share price at which the shares shall be (i) offered to the public
pursuant to the Registration Statement and (ii) sold to the Underwriters; and
further
RESOLVED, that all actions taken by the Board of Directors in
connection with the public offering of the Shares, and all actions taken by the
directors and officers of the Corporation in connection therewith be, and each
action hereby is ratified, approved, confirmed and adopted in all respects; and
further
RESOLVED, that the officers and directors of the Corporation be, and
each of them hereby is, authorized and empowered to take final action on all
such matters as he may deem necessary or advisable to carry out the terms of the
Registration Statement, and the intent and purposes of the foregoing resolutions
in connection with the registration, issue,
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<PAGE>
exchange and delivery of the Common Stock; and to authorize such further action
as the officers or directors may deem necessary or desirable to effect the
intent of the foregoing resolutions; and further
Stock Option Plans
RESOLVED, that the Board of Directors deems it advisable and in the
best interests of the Corporation to adopt and approve the 1997 Nonemployee
Directors' Stock Option Plan, substantially in the form previously delivered to
the Board of Directors, and hereby adopts and approves the form, terms and
provisions of the 1997 Nonemployee Directors' Stock Option Plan in all respects;
and further
RESOLVED, that the proper officers of the Corporation are hereby
authorized and directed to issue up to 250,000 shares of Common Stock of the
Corporation pursuant to the terms and provisions of the 1997 Nonemployee
Directors' Stock Option Plan; and further
RESOLVED, that the exercise price of any options under the 1997
Nonemployee Directors' Stock Option Plan that are allocated to members of the
Company's Board of Directors prior to completion of the Offering shall be
exercisable at a price equal to the initial public offering price in the
Offering; and further
RESOLVED, that the Board of Directors deems it advisable and in the
best interests of the Corporation to adopt and approve the 1997 Stock Option
Plan, substantially in the form previously delivered to the Board of Directors,
and hereby adopts and approves the form, terms and provisions of the 1997 Stock
Option Plan in all respects; and further
RESOLVED, that the proper officers of the Corporation are hereby
authorized and directed to issue up to 1,250,000 shares of Common Stock of the
Corporation pursuant to the terms and provisions of the 1997 Stock Option Plan;
and further
Employment Agreements
RESOLVED, that the Board of Directors deems it advisable and in the
best interests of the Corporation to enter into the employment agreements
between the Corporation and each of the following executive officers of the
Corporation, Christine D. Whitman, Emilio O. DiCataldo, Mehrdad M. Moslehi,
Christopher J. Mann and Robert J. Chicotka (the "Employment Agreements"),
substantially in the form previously delivered to the Board of Directors; and
further
RESOLVED, that, subject to the modifications and limitations set
forth in the preamble to these resolutions, the form, terms and provisions of
the Employment Agreements be, and hereby are, adopted and approved in all
respects; and that the Corporation be, and it hereby is, authorized and directed
to enter the Employment Agreements in substantially such form; and further,
RESOLVED, that the proper officers of the Corporation are hereby
authorized and directed, in the name of and on behalf of the Corporation to
execute and deliver the
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<PAGE>
Employment Agreements, with such modifications or changes as the proper officers
may approve; and that the execution and delivery of the Employment Agreements by
the proper officers shall be conclusive evidence that the same have been
authorized and approved; and further
Indemnification Agreements
RESOLVED, that the Board of Directors deems it advisable and in the
best interests of the Corporation to enter into the indemnification agreements
between the Company and the members of the Board of Directors of the Corporation
(the "Indemnification Agreements") substantially in the form previously
delivered to the Board of Directors; and further
RESOLVED, that the form, terms and provisions of the Indemnification
Agreements be, and hereby are, adopted and approved in all respects; and that
the Corporation be, and it hereby is, authorized and directed to enter the
Indemnification Agreements in substantially such form; and further,
RESOLVED, that the proper officers of the Corporation are hereby
authorized and directed, in the name of and on behalf of the Corporation to
execute and deliver the Indemnification Agreements; and further.
Ratification of Prior Grants of Stock Options
RESOLVED, that in order to complete the Corporation's records, the
Board of Directors hereby ratifies the grant or sale of stock options that were
granted or sold between the inception of the Corporation and the adoption,
effective June 30, 1996, of the CVC Holdings, Inc. Stock Option Plan, as such
options were listed substantially in the form previously delivered to the Board
of Directors.
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CVC HOLDINGS, INC.
THE UNDERSIGNED, being the President and Secretary of CVC Holdings,
Inc., a corporation organized and existing under the laws of the State of
Delaware (the "Corporation"), do hereby certify as follows:
1. The name of the Corporation is CVC Holdings, Inc.
2. The Certificate of Incorporation of the Corporation is hereby
amended to effect a 20:1 stock split and in connection therewith every share of
Common Stock, par value $.01 per share, of the Corporation issued on the date
this Certificate of Amendment is filed with the Secretary of State of Delaware
shall be converted into and shall become twenty (20) new shares of the Common
Stock, par value $.01 per share, of the Corporation.
3. Article IV of the Certificate of Incorporation of the Corporation
is hereby amended to increase the number of shares of Common Stock which the
Corporation shall have authority to issue from 1,500,000 to 7,500,000 shares of
Common Stock by deleting the initial paragraph thereof and replacing it with the
following:
The Corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock." The total number of
shares which the Corporation is authorized to issue is 7,602,500.
The total number of shares of Common Stock which the Corporation is
authorized to issue is 7,500,000, par value $.01 per share. The
total number of shares of Preferred Stock which the Corporation is
authorized to issue is 102,500, par value $.01 per share, of which
2,500 shares shall be designated 8% Non-Cumulative Convertible
Preferred Stock (the "Series A Preferred") and 100,000 shares shall
be designated Series B Non-Cumulative Convertible Preferred Stock
(the "Series B Preferred"). The Series A Preferred and the Series B
Preferred shall collectively be referred to as the "Preferred
Stock."
4. This amendment to the Certificate of Incorporation of the
Corporation herein certified has been approved and adopted pursuant to Section
242 of the General Corporation law of the State of Delaware (the "DGCL"). This
amendment was approved by written consent in lieu of a meeting of the
stockholders pursuant to Section 228 of the DGCL and written notice of such
approval has been provided as required by such section.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this certificate
as of the 13th day of March 1996.
/s/ Christine Whitman
------------------------------
Christine Whitman, President
ATTEST:
/s/ Christopher Mann
- ------------------------------
Christopher Mann
Secretary
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
CVC HOLDINGS, INC.
(Pursuant to Sections 242 & 245)
CVC Holdings, Inc., a corporation (the "Corporation") organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "GCL"), hereby certifies as follows:
FIRST: The name of the Corporation is CVC Holdings, Inc.
SECOND: The date on which the initial Certificate of Incorporation
of the Corporation was filed with the Secretary of State of the State of
Delaware is October 19, 1990, under the name CVC Holdings, Inc.
THIRD: The Board of Directors of the Corporation, pursuant to the
GCL, adopted resolutions amending, integrating and restating the
Certificate of Incorporation to read in full as set forth in the Restated
Certificate of Incorporation attached hereto as Exhibit A.
FOURTH: Pursuant to resolutions of the Board of Directors, the
Restated Certificate of Incorporation was thereafter submitted to the
stockholders of the Corporation for their approval, which approval was
given by written consent of stockholders pursuant to Section 228 and in
accordance with Section 245 of the GCL.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested by its duly authorized officers, this 18th day of May, 1995.
CVC HOLDINGS, INC.
/s/ Christine B. Whitman
-----------------------------
Christine B. Whitman,
President
ATTEST:
By: /s/ Andrew C. Pesrer
---------------------------
Name: Andrew C. Pesrer
-------------------------
Sr. Secretary
<PAGE>
RESTATED CERTIFICATE OF
INCORPORATION OF
CVC HOLDINGS, INC.
Article I
The name of the Corporation is CVC Holdings, Inc.
Article II
The address of the Corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent. The name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
Article III
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
Article IV
(a) The Corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock." The total number of shares
which the Corporation is authorized to issue is 1,602,500. The total number of
shares of Common Stock which the Corporation is authorized to issue is
1,500,000, par value $.0l per share. The total number of shares of Preferred
Stock which the Corporation is authorized to issue is 102,500, par value $.0l
per share, of which 2,500 shares shall be designated 8% Non-Cumulative
Convertible Preferred Stock (the "Series A Preferred") and 100,000 shares shall
be designated Series B Non-Cumulative Convertible Preferred Stock (the "Series B
Preferred"). The Series A Preferred and the Series B Preferred shall
collectively be referred to as the "Preferred Stock."
The Corporation shall from time to time in accordance with the laws of the
State of Delaware increase the authorized amount of its Common Stock if at any
time the number of shares of Common Stock remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred Stock.
The relative rights, preferences, privileges and restrictions granted to
or imposed upon the Preferred Stock and the Common Stock or the holders thereof
are as follows:
Section 1. Dividends. The holders of the Series A Preferred and Series B
Preferred shall be entitled to receive, when and as declared by the Board of
Directors, dividends at the rate of $80.00 per share for Series A Preferred and
$11.90 per share for Series B Preferred (in each case as adjusted for any stock
splits, stock dividends, recapitalizations and the like with respect to such
shares) per annum as the Board of Directors may from time to time determine out
of funds legally available therefor. No dividends shall be paid on the Series A
Preferred during any fiscal year of the Corporation until dividends in the total
amount of $11.90 per share on the Series B Preferred shall have been paid or
declared and set apart during that fiscal year. No dividends (other than those
payable solely in the Common Stock of the Corporation) shall be paid on any
Common Stock of the Corporation during any fiscal year of the Corporation until
dividends in the total amount of $80.00 per share of Series A Preferred and
$11.90 per
<PAGE>
share of Series B Preferred (in each case as adjusted for any stock splits,
stock dividends, recapitalizations and the like with respect to such shares)
shall have been paid or declared and set apart during that fiscal year. The
right to such dividends on shares of Preferred Stock shall not be cumulative,
and no right shall accrue to holders of Preferred Stock by reason of the fact
that dividends on said shares are not declared in any prior year.
After payment of such dividends to the holders of the Preferred Stock, any
additional dividends declared shall be distributed among all the holders of the
Common Stock.
Section 2. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the stockholders of the Corporation shall be made in the
following manner:
(a) The holders of the Series B Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Series A Preferred and
the Common Stock by reason of their ownership of such stock, the amount equal to
the sum of (i) $148.78 per share for each share of Series B Preferred then held
by them (as adjusted for stock splits, stock dividends, recapitalizations and
the like with respect to such stock), and (ii) an amount equal to all declared
but unpaid dividends or distributions on the Series B Preferred. If the assets
and funds thus distributed among the holders of the Series B Preferred pursuant
to this Section 2(a) shall be insufficient to permit the payment to such holders
of the full aforesaid preferential amount, then the entire assets and funds of
the Corporation legally available for distribution shall be distributed ratably
among the holders of the Series B Preferred in proportion to the preferential
amount that each such holder is otherwise entitled to receive.
(b) After payment has been made to the holders of the Series B
Preferred of the full amounts to which they shall be entitled as set forth in
the first sentence of Section 2(a), then the holders of the Series A Preferred
shall be entitled to receive the amount equal to the sum of (i) $1,000 per share
for each share of Series A Preferred then held by them (as adjusted for stock
splits, stock dividends, recapitalizations and the like with respect to such
stock), and (ii) an amount equal to declared but unpaid dividends or
distributions on the Series A Preferred. If the assets and funds thus
distributed among the holders of the Series A Preferred pursuant to this Section
2(b) shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution pursuant to this Section 2(b)
shall be distributed ratably among the holders of the Series A Preferred in
proportion to the preferential amount that each such holder is otherwise
entitled to receive.
(c) After payment has been made to the holders of the Preferred
Stock of the full amounts to which they shall be entitled as set forth in
Section 2(a) and in Section 2(b) above, then the entire remaining assets and
funds of the Corporation legally available for distribution, if any, shall be
distributed on a pro rata basis on the outstanding Common Stock.
(d) For purposes of this Section 2, a merger or consolidation of the
Corporation with or into any other corporation or corporations, or the merger of
any other corporation or corporations into the Corporation (other than any
merger or consolidation in which stockholders of the Corporation immediately
prior to such merger or consolidation beneficially own a majority of the voting
shares of the surviving corporation immediately following such merger or
consolidation), or a sale of all or
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substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation.
(e) Any securities to be delivered to the holders of the Preferred
Stock and Common Stock upon a merger, reorganization or sale of substantially
all the assets of the Corporation shall be valued as follows:
(1) if traded on a securities exchange or on the NASDAQ Stock
Market, the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the ten business day period ending three (3)
business days prior to the closing of such merger, reorganization or sale;
(2) if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the ten business day
period ending three (3) business days prior to the closing; and
(3) if there is no active public market, the value shall be
the fair market value thereof as mutually determined by the Corporation and the
holders of not less than a majority of the outstanding shares of Series B
Preferred voting as a single class, provided that if the Corporation and the
holders of a majority of the outstanding shares of Series B Preferred are unable
to reach agreement, then by independent appraisal by an investment banker hired
and paid by the Corporation, but reasonably acceptable to the holders of a
majority of the outstanding shares of Series B Preferred voting as a single
class.
Section 3. Redemption of Series B Preferred.
(a) At the individual option of each holder of shares of Series B
Preferred, the Corporation shall redeem, on March 31, 2002 (the "Redemption
Date"), the number of shares of Series B Preferred held by such holder that is
specified in a request (the "Redemption Request") for redemption delivered to
the Corporation by the holder on or prior to March 1, 2002, by paying in cash
therefor, $148.78 per share of Series B Preferred (as adjusted for stock splits,
stock dividends, recapitalizations and the like with respect to such shares)
plus all declared but unpaid dividends on such shares (the "Redemption Price").
(b) At least 10 but no more than 20 days prior to the Redemption
Date written notice shall be mailed, first class postage prepaid, to each holder
of the Series B Preferred which has given the Corporation a Redemption Request
at the address set forth in the Redemption Request, notifying such holder of the
place at which payment may be obtained on the Redemption Date for the shares of
Series B Preferred specified in the Redemption Request and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the shares to
be redeemed (the "Redemption Notice"). On or after the Redemption Date, each
holder of Series B Preferred to be redeemed shall surrender to this Corporation
the certificate or certificates representing such shares, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
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(c) From and after the Redemption Date, unless there shall have been
a default in payment of the Redemption Price, all rights of the holders of
shares of Series B Preferred designated for redemption in the Redemption Request
as holders of Series B Preferred (except the right to receive the Redemption
Price without interest upon surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever. If the funds of the Corporation legally available for
redemption of shares of Series B Preferred on the Redemption Date are
insufficient to redeem the total number of shares of Series B Preferred to be
redeemed on such date, those funds which are legally available will be used to
redeem the maximum possible number of such shares ratably among the holders of
such shares to be redeemed based upon their holdings of Series B Preferred. The
shares of Series B Preferred not redeemed shall remain outstanding and entitled
to all the rights and preferences provided herein. At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
shares of Series B Preferred such funds will immediately be used to redeem the
balance of the shares which the Corporation has become obliged to redeem on any
Redemption Date, but which it has not redeemed.
Section 4. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of the Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for the Preferred Stock, into such number of fully paid and non-assessable
shares of Common Stock, in the case of the Series A Preferred, as is determined
by dividing $1,000 by the then applicable Series A Conversion Price, and in the
case of the Series B Preferred, as is determined by dividing $148.78 by the then
applicable Series B Conversion Price, determined as hereinafter provided, in
effect at the time of conversion. The price at which shares of Common Stock
shall be deliverable upon conversion of the Series A Preferred (the "Series A
Conversion Price") shall initially be $25 per share of Common Stock and the
price at which shares of Common Stock shall be deliverable upon conversion of
the Series B Preferred (the "Series B Conversion Price") shall initially be
$148.78 per share of Common Stock. Such initial Series A Conversion Price and
Series B Conversion Price shall be subject to adjustment as hereinafter
provided.
(b) Automatic Conversion. Each share of the Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Series A Conversion Price or Series B Conversion Price, as applicable,
immediately prior to the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement on Form S-1 (or any
successor form) under the Securities Act of 1933, as amended, covering the offer
and sale of Common Stock for the account of the Corporation 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 Corporation of not less than Ten Million Dollars ($10,000,000),
before deduction of underwriting discounts and commissions and registration
expenses. In the event of such an offering, the person(s) entitled to receive
the Common Stock issuable upon such conversion of the Preferred Stock shall not
be deemed to have converted such Preferred Stock until immediately prior to the
closing of such underwritten public offering.
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(c) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the
Corporation shall (after aggregating all shares into which shares of Preferred
Stock held by each holder could be converted) pay cash equal to such fraction
multiplied by the Series A Conversion Price or Series B Conversion Price, as
applicable, then in effect. Before any holder of Preferred Stock shall be
entitled to convert the same into full shares of Common Stock and to receive
certificates therefor, the holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent, and shall give written notice to the Corporation at such office
that the holder elects to convert all or any number of shares of the Preferred
Stock represented by such certificate or certificates; provided, however, that
in the event of an automatic conversion pursuant to Section 3(b), the
outstanding shares of Preferred Stock shall be converted automatically without
any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent, and provided further, that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon such automatic conversion unless the certificates evidencing such shares of
Preferred Stock are either delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation shall,
as soon as practicable after such delivery, or such agreement and
indemnification in the case of a lost certificate, issue and deliver at the
office of the Corporation or of any transfer agent, as the case may be, to such
holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as aforesaid and a
check payable to the holder in the amount of any cash amounts payable as the
result of a conversion into a fractional share of Common Stock. Such conversion
shall not terminate the rights of the holders of the Preferred Stock or Common
Stock issuable upon conversion of the Preferred Stock to receive dividends which
have been declared with respect to the Preferred Stock prior to the date of
conversion. Except as provided in Section 4(b) above, such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Preferred Stock to be converted, or in the
case of automatic conversion immediately prior to the close of business on the
date of closing of the offering, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock at
the close of business on such date. If the conversion is in connection with a
firm commitment underwritten public offering of securities registered pursuant
to the Securities Act, the conversion may, at the option of any holder tendering
the Preferred Stock for conversion, be conditioned upon the closing with the
underwriter of the sale of securities pursuant so such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon such conversion
of the Preferred Stock shall not be deemed to have converted such Preferred
Stock until immediately prior to the closing of such sale of securities.
(d) Series B Preferred Conversion Price Adjustments. The Series B
Conversion Price shall be subject to adjustment from time to time as follows:
(i) Special Definitions. For purposes of this Section 4(d),
the following definitions shall apply:
(1) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
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(2) "Series B Original Issue Date" shall mean the date
on which the first share of Series B Preferred was first issued.
(3) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Common Stock and Preferred Stock) or other
securities convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 4(d)(iii) below, deemed
to be issued) by the Corporation after the Series B Original Issue Date other
than shares of Common Stock issued or issuable:
(A) upon conversion of shares of the Preferred
Stock or the exercise or conversion of any Options outstanding on the Series B
Original Issue Date;
(B) to officers, directors, employees and
consultants of the Corporation or any subsidiary thereof, pursuant to a stock
option plan, stock purchase plan or other employee stock incentive plan approved
by the Board of Directors or other stock arrangements which have been approved
by the Board of Directors;
(C) pursuant to any event for which adjustment has
already been made pursuant to this Section 4(d);
(D) as a dividend or distribution on the Preferred
Stock;
(E) as a dividend or distribution on the Common
Stock;
(F) upon any subdivision or split up of Common
Stock; or
(G) upon any capital reorganization of the
Corporation.
(ii) No Adjustment of Conversion Price. No adjustment in the
Series B Conversion Price shall be made in respect of the issuance of Additional
Shares of Common Stock unless the consideration per share for an Additional
Share of Common Stock issued or deemed to be issued by the Corporation is less
than the Series B Conversion Price, in effect on the date of and immediately
prior to such issue.
(iii) Deemed Issue of Additional Shares of Common Stock.
Except as provided in Section 4(d)(i)(4) above, in the event the Corporation at
any time or from time to time after the Series B Original Issue Date shall issue
any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined
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pursuant to Section 4(d)(v) below) of such Additional Shares of Common Stock
would be less than the Series B Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common are
deemed to be issued:
(1) no further adjustment in the Series B Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or increase or
decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Series B Conversion Price computed upon the
initial conversion prices thereof set forth in Section 4(a) above (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(3) on the expiration or cancellation of any Options or
the termination of the right to convert or exchange any Convertible Securities
which shall have not been exercised, if the Series B Conversion Price shall have
been adjusted upon the original issuance thereof or shall have been subsequently
adjusted pursuant to clause (2) above, the Series B Conversion Price shall be
recomputed as if the only Additional Shares of Common Stock issued were shares
of Common Stock, if any, actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and the consideration
received therefore was the consideration actually received by the Corporation
for the issue of all such Options, whether or not exercised, plus the
consideration actually received by the Corporation upon such exercise, or for
the issue of all such Convertible Securities which were actually converted or
exchanged plus the consideration actually received by the Corporation upon such
conversion or exchange, if any; and
(4) no readjustment pursuant to clause (2) or clause (3)
above shall have the effect of increasing the Series B Conversion Price to an
amount which exceeds the lower of (i) the initial Series B Conversion Price on
the original adjustment date (unless the Series B Conversion Price is increased
above the initial Series B Conversion Price pursuant to Section 4(e)(2) or
(e)(4)), or (ii) the Series B Conversion Price that would have resulted from any
issuances of Additional Shares of Common Stock (other than those the subject of
such adjustments) between the original adjustment date and such readjustment
date; and
(iv) Adjustment of Series B Conversion Price Upon Issuance of
Additional Shares of Common Stock. In the event this Corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 4(d)(iii), but excluding stock
dividends, subdivisions or split-ups that are the subject of adjustment pursuant
to Section 4(c)) without consideration or for a consideration per share less
than the Series B Conversion Price applicable on and immediately prior to such
issue, then and in such event, the Series B Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying the Series B Conversion Price in effect on the date of
and immediately prior to such issue by a fraction, the numerator of which shall
be the sum of (i) the number of shares of Common Stock
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outstanding immediately prior to such issue (on a fully diluted as converted
basis), including without limitation the number of shares of Common Stock
issuable upon conversion of the Preferred Stock outstanding immediately prior to
such issue and (ii) the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of Additional
Shares of Common Stock so issued would purchase at the Series B Conversion Price
in effect on the date of and immediately prior to such issue; and the
denominator of which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue (on a fully diluted as
converted basis), including without limitation the number of shares of Common
Stock issuable upon conversion of the Preferred Stock outstanding immediately
prior to such issue and (ii) the number of such Additional Shares of Common
Stock so issued.
(v) Determination of Consideration. For purposes of this
Section 4(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 4(d)(ii) and
4(d)(iii), relating to Options and Convertible Securities, shall be determined
by dividing
(A) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such options for Convertible
Securities and the conversion or exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
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(e) Adjustment of Conversion Price of Both Series A Preferred and
Series B Preferred. The Series A Conversion Price and the Series B Conversion
Price shall be subject to adjustment from time to time as follows:
(1) Adjustments for Subdivisions of Common Stock. If the
number of shares of Common Stock outstanding at any time after filing this
Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware is increased by a stock dividend payable in shares of Common Stock
or by a subdivision or split up of stock, then the Series A Conversion Price and
the Series B Conversion Price then in effect shall, concurrently with the
effectiveness of such dividend, subdivision or split up, be proportionately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of Preferred Stock shall be increased in proportion to such increase
of outstanding shares of Common Stock.
(2) Adjustments for Combinations of Common Stock. If the
number of shares of Common stock outstanding at any time after filing this
Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware is decreased by a combination of the outstanding shares of Common
Stock, then the Series A Conversion Price and the Series B Conversion Price then
in effect shall, concurrently with the effectiveness of such combination, be
proportionately increased so that the number of shares of Common Stock issuable
upon conversion of each share of such Preferred Stock shall be decreased in
proportion to such decrease in outstanding shares of Common Stock.
(3) Adjustments for Stock Dividends and Other Distributions.
In the event the Corporation at any time or from time to time makes, or fixes a
record date for the determination of holders of Common Stock entitled to receive
any distribution (excluding any repurchases of securities by the Corporation not
made on a pro rata basis from all holders of any class of the Corporation's
securities) payable in property or in securities of the Corporation other than
shares of Common Stock, then and in each such event the holders of Preferred
Stock shall receive at the time of such distribution, the amount of property or
the number of securities of the Corporation that they would have received had
their Preferred Stock been converted into Common Stock on the date of such
event.
(4) Adjustments for Reclassification, Exchange and
Substitution. Except as provided in Section 2 upon any liquidation, dissolution
or winding up of the Corporation, if the Common Stock issuable upon conversion
of the Preferred Stock shall be changed into the same or a different number of
shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for above), each share of Preferred Stock shall
thereafter be convertible into the number of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such share of Preferred Stock shall
have been entitled upon such reorganization or reclassification.
(f) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or By-laws 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 Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Preferred Stock against impairment.
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(g) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price or Series B
Conversion Price pursuant to this Section 4, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the faces upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Series A Conversion Price or the Series
B Conversion Price, as applicable, at the time in effect, and (iii) the number
of shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of Preferred Stock. Notwithstanding
the foregoing, no adjustment of the Series A Conversion Price or the Series B
Conversion Price shall be made if the amount of any such adjustment would be an
amount less than $1.00, but any such amount shall be carried forward and an
adjustment with respect thereof shall be made at the time of and together with
any subsequent adjustment which, together with such amount and any other
amount(s) so carried forward, shall aggregate an increase or decrease of $1.00
or more.
(h) Notices of Record Date. In the event that the Corporation shall
propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(iii) to effect any reclassification or recapitalization of
its Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the
Corporation shall send to the holders of the Preferred Stock:
(1) at least 20 days' prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii) and
(iv) above, at least 20 days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event).
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Each such written notice shall be delivered personally or given by first
class mail, postage prepaid, addressed to the holders of Preferred Stock at the
address for each such holder as shown on the books of the Corporation.
(v) Reservation of Shares. The Corporation shall reserve at
all times so long as any shares of Preferred Stock remain outstanding, free from
preemptive rights, out of its treasure stock or its authorized but unissued
shares of Common Stock, or both, solely for the purposes of effecting the
conversion of the shares of Preferred Stock, sufficient shares of Common Stock
to provide for the conversion of all outstanding shares of Preferred Stock.
(vi) Valid Issuance. All shares of Common Stock which may be
issued upon conversion of the shares of Preferred Stock will upon issuance by
the Corporation be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof and
the Corporation shall take no action which will cause a contrary result.
Section 5. Voting Rights and Directors.
(a) Except as otherwise provided herein or required by law, the
holder of each share of Common Stock issued and outstanding shall have one vote
with respect to such share and the holder of each share of Preferred Stock shall
be entitled with respect to such share to a number of votes equal to the number
of shares of Common Stock into which such share of Preferred Stock could be
converted at the record date for determination of the stockholders entitled to
vote on such matters, or, if no such record date is established, at the date
such vote is taken or any written consent of stockholders is solicited, such
votes to be counted together with all other shares of stock of the Company
having general voting power and not separately as a class (except as required by
Section 5(b) below, Section 6 or by the General Corporation Law of Delaware).
Holders of Common Stock and Preferred Stock shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation.
Fractional votes by the holders of Preferred Stock shall not, however, be
permitted and any fractional voting rights shall (after aggregating all shares
into which shares of Preferred Stock held by each holder could be converted) be
rounded to the nearest whole number.
(b) The Board of Directors shall consist of seven (7) members. The
holders of the Series B Preferred, voting separately as a class, shall be
entitled to elect two (2) members of the Board of Directors. The holders of
Common Stock and Series A Preferred, voting together, shall be entitled to elect
the remaining members of the Board of Directors. At any meeting held for the
purpose of electing or removing directors, (i) the presence in person or by
proxy of the holders of the majority of the shares of Series B Preferred then
outstanding shall constitute a quorum of the Series B Preferred for the purpose
of electing or removing directors by holders of the Series B Preferred and (ii)
the presence in person or by proxy of the holders of a majority of shares of
Common Stock and Series A Preferred (on an as converted into Common Stock basis)
then outstanding shall constitute a quorum of Common Stock and Series A
Preferred for the purpose of electing or removing directors by holders of Common
Stock and Series A Preferred. A vacancy in any directorship elected by the
holders of the Series B Preferred shall be filled only by vote or written
consent in lieu of a meeting of the holders of the Series B Preferred. A vacancy
in any directorship elected by the holders of Common Stock and Series A
Preferred shall be filled only by vote or written consent in lieu of a meeting
of the holders of Common Stock and the Series A Preferred. Any member of the
Board of Directors elected by the holders of the Series B
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Preferred may only be removed by the vote of the holders of not less than a
majority of the shares of Series B Preferred voting thereon. Any member of the
Board of Directors elected by the holders of Common Stock and Series A Preferred
may only be removed by the vote of the holders of not less than a majority of
the shares of Common Stock and Series A Preferred (on an as convened into Common
Stock basis) voting thereon.
(c) At all elections of members of the Board of Directors of the
Corporation, if any holder of stock of this Corporation entitled to vote at an
election shall have given the Corporation written notice of its intention to
cumulate his or her votes for the election of members of the Board of Directors
prior to the commencement of the voting for such members, then each holder
entitled to vote for members of the Board of Directors shall be entitled to as
many votes as shall equal the number of votes which (except for this provision
as to cumulative voting) such holder would be entitled to cast for the election
of directors with respect to his or her shares of stock multiplied by the number
of directors to be elected by such holder either (i) by casting all such
holder's votes for a single director or (ii) by distributing such holder's votes
among the number of directors to be voted for, or for any two or more of them as
such holder may see fit.
Section 6. Covenant. In addition to any other rights provided by law, so
long as any Series B Preferred shall be outstanding, the Corporation shall not,
without first obtaining the written consent of the holders of not less than a
majority of the then outstanding shares of Series B Preferred:
(a) amend or repeal any provision of, or add any provision to, this
Corporation's Restated Certificate of Incorporation if such action would change
adversely the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series B Preferred;
(b) amend or repeal any provision of the charter document of CVC
Products, Inc., or authorize or issue any securities of CVC Products, Inc.:
(c) authorize or issue any shares of any class or series of stock or
any bonds, debentures, notes or other obligations convertible into or
exchangeable for, or having option rights to purchase, any shares of stock of
this Corporation, which shares have any preference or priority senior to or on
parity with the Series B Preferred as to dividend rights, voting rights,
redemption rights or liquidation preferences;
(d) redeem or purchase any of the Series A Preferred or any of the
Common Stock, provided, however, that this restriction shall not apply to the
repurchase or shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Corporation upon or
after termination of the employment, consulting or other relationship between
the Corporation and such persons; provided, further, that such repurchase is not
made at a price greater than the original purchase price of such shares pursuant
to vesting or similar provisions;
(e) authorize or issue options or warrants to purchase in excess of
4,000 shares of Common Stock (appropriately adjusted for stock splits, stock
dividends and recapitalizations) to officers, directors, employees and
consultants of the Corporation or CVC Products, Inc. and in excess of 20,000
shares of Common Stock (appropriately adjusted for stock splits, stock dividends
and recapitalizations) to officers, directors, employees and consultants of the
Corporation or CVC Products, Inc. pursuant to stock option plans, stock purchase
plans or other employee stock incentive plans;
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(f) adopt, amend or repeal the by-laws of the Corporation if such
action would change adversely the preferences or powers of, or restrictions
provided for the benefit of, the Series B Preferred;
(g) consummate a sale of all or substantially all of the
Corporation's assets, any merger or consolidation of the Corporation with or
into any other entity, or any other transaction or series of related
transactions which would result in the holders of the outstanding voting power
of the Corporation immediately prior to such transaction or transactions holding
less than a majority of the voting power of the surviving entity, immediately
following such transaction or transactions;
(h) provide for the voluntary liquidation, dissolution or winding up
of the Corporation;
(i) sell, distribute or otherwise transfer any securities of CVC
Products, Inc. held by the Corporation; or transfer a substantial amount of
assets from CVC Products, Inc. to any other subsidiary of the Corporation;
(j) authorize a merger, consolidation, recapitalization or
reorganization of CVC Products, Inc., or authorize the sale of all or
substantially all of the assets of CVC Products, Inc., or otherwise liquidate,
wind up or dissolve CVC Products, Inc.; or
(k) declare or pay any dividend or other distribution on the Common
Stock or any series of Preferred Stock other than the Series B Preferred.
Section 7. No Reissuance of Series B Preferred. No share or shares of
Series B Preferred acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares should
be canceled, returned and eliminated from the shares which the Corporation shall
be authorized to issue.
Article V
In furtherance and not in limitation of powers conferred upon the
stockholders by statute, the Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the by-laws of the Corporation, subject to
the power of the stockholders to alter or repeal the by-laws made or altered by
the Board of Directors.
Article VI
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganiza-
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tion of the Corporation as consequence of such compromise or arrangement, the
said compromise or arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
Article VII
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or as may hereafter be amended, a director of the corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.
The Corporation may indemnify to the fullest extent permitted by law any
person (including the representative of such person's estate and such person's
successors and assigns) made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he or she is or was a director, officer or employee of the
Corporation or served at any other enterprise as a director, officer or employee
at the request of the Corporation.
Neither any amendment nor repeal of this Article VII nor the adoption of
any provision of this Corporation's Restated Certificate of Incorporation
inconsistent with this Article VII shall eliminate or reduce the effect of this
Article VII in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article VII, would accrue or arise,
prior to such amendment, repeal or adoption of an inconsistent provision.
Article VIII
Except as otherwise required in the by-laws of the Corporation, election
of directors need not be by written ballot.
Article IX
The Corporation is to have perpetual existence.
Article X
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
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BY-LAWS
OF
CVC HOLDINGS, INC.
(A Delaware Corporation)
-------------------
ARTICLE I
STOCK AND
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the President or a Vice-President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
corporation certifying the number of shares owned by him in the corporation. Any
and all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificate representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate or his legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim
<PAGE>
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share of stock. If the corporation does not
issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share of stock as of the time when those entitled to receive
such fractions are determined, (3) issue scrip or warrants in registered or
bearer form which shall entitle the holder to receive a certificate for a full
share upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but such scrip or warrants shall not
unless provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the condition that they shall become void if
not exchanged for certificates representing full shares of stock before a
specified date, or subject to the condition that the shares of stock for which
scrip or warrants are exchangeable may be sold by the corporation and the
proceeds thereof distributed to the holders of scrip or warrants, or subject to
any other conditions which the Board of Directors may determine.
3. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunder authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to or dissent from any corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion, or exchange of stock,
or for the purpose of any other lawful action, the directors may fix, in
advance, a date as the record date for any such determination of stockholders.
Such date shall not be more than sixty days nor less than ten days
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before the date of such meeting, nor more than sixty days prior to any other
action. If no record date is fixed, the record date for the determination of
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting, when no prior action by the Board of Directors is necessary, shall be
the day on which the first written consent is expressed; and the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. When a determination of stockholders of record entitled to notice of or
to vote at any meeting of stockholders has been made as provided in this
paragraph, such determination shall apply to any adjournment thereof; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
5. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed from time to time by the Board of Directors, provided, that the first
annual meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting shall be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting shall be held on the date and at the time fixed by
the Board of Directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the Board of Directors may
from time to time fix. Whenever the Board of Directors shall fail to fix such
place, the meeting shall be held at the principal executive office of the
corporation.
- CALL. Annual meetings and special meetings may be called by the
Board of Directors, the President, or any two or more directors, and shall be
called by the President or a Vice President or the Secretary at the written
demand of the holders of at least one-fourth of all outstanding shares
entitled to vote on the action proposed to be taken at such meeting, which
demand shall state the purpose or purposes of the proposed meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall
be given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of
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the corporation may be examined. The notice of an annual meeting shall state
that the meeting is called for the election of directors and for the transaction
of other business which may properly come before the meeting, and shall (if any
other action which could be taken at a special meeting is to be taken at such
annual meeting) state the purpose or purposes. The notice of a special meeting
shall in all instances state the purpose or purposes for which the meeting is
called. The notice of any meeting shall also include, or be accompanied by, any
additional statements, information or documents prescribed by the General
Corporation Law. Except as otherwise provided by the General Corporation Law, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten days nor more than sixty days before the date of the meeting,
unless the lapse of the prescribed period of time shall have been waived, and
directed to each stockholder at his record address or at such other address
which he may have furnished by request in writing to the Secretary of the
corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and place is made at the meeting, it shall
not be necessary to give notice of the adjourned meeting unless the directors,
after adjournment, fix a new record date for the adjourned meeting. Notice need
not be given to any stockholder who submits a written waiver of notice signed
by him before or after the time stated therein. Attendance of a person at a
meeting of stockholders shall constitute a waiver of notice of such meeting,
except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city or other
municipality or community where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the
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meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote in person or by proxy at any
meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the President, a Vice-President, or, if none of the foregoing is
in office and present and acting, by a chairman to be chosen by the
stockholders. The Secretary of the corporation, or in his absence, an Assistant
Secretary, shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present the chairman of the meeting shall appoint
a secretary of the meeting.
- PROXY REPRESENTATION. Each stockholder entitled to vote at a
meeting of stockholders, or to express consent or dissent to corporate action
without a meeting, may authorize another person or persons to act for him by
proxy. Every proxy must be signed by the stockholder or by his attorney-in-fact.
No proxy shall be voted or acted upon after three years from its date unless
such proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and, if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the corporation
generally.
- INSPECTORS AND JUDGES. The Board of Directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If an inspector or inspectors or judge or judges are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by appointment made by
the directors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector or judge, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector or judge at such meeting with strict impartiality and
according to the best of his ability. The inspectors or judges, if any, shall
determine the number of shares of stock outstanding and the voting power of
each, the shares of stock represented at the meeting, the existence of a quorum
and the validity and effect of proxies, and
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<PAGE>
shall receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are proper
to conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting, the inspector or inspectors or judge or
judges, if any, shall make a report in writing of any challenge, question or
matter determined by him or them and execute a certificate of any fact found by
him or them.
- QUORUM. The holders of a majority of the outstanding shares of
stock entitled to vote, present in person or represented by proxy, shall
constitute a quorum at a meeting of stockholders for the transaction of any
business. The stockholders present may adjourn the meeting despite the absence
of a quorum.
- VOTING. Except as otherwise provided by the General Corporation
Law or by the Certificate of Incorporation, each share of stock entitled to vote
shall entitle the holder thereof to one vote. In the election of directors, a
plurality of the votes cast shall elect. Directors shall be elected by
cumulative voting, if and as provided in the Certificate of Incorporation. Any
other action shall be authorized by a majority of the votes cast except where
the General Corporation Law or these by-laws or the Certificate of
Incorporation prescribes a different percentage of votes and/or a different
exercise of voting power. In the election of directors, voting need not be by
ballot. Voting by ballot shall not be required for any other corporate action
except as otherwise provided by the General Corporation Law.
6. STOCKHOLDER ACTION WITHOUT A MEETING. Any action required by the
General Corporation Law to be taken or which may be taken at any annual or
special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
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ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business of the corporation shall
be managed by or under the direction of the Board of Directors of the
corporation. The use of the phrase "whole Board" herein refers to the total
number of directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of one person. On each subsequent Board
of Directors, the number of directors shall be no less than one, nor more than
seven, such number to be fixed from time to time by action of the stockholders
or of the directors, or, if the number is not fixed, the number shall be one.
The number of directors may be increased or decreased by action of the
stockholders or of the Board.
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the Certificate of Incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors have been
elected and qualified or until their earlier resignation or removal. Thereafter,
directors who are elected at an annual meeting of stockholders, and directors
who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors have been elected and qualified or until their
earlier resignation or removal. 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 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 cause, may be filled by the vote of a majority of
the directors then in office, although less than a quorum, or by the sole
remaining director, for the balance of the term thereof, or if the Board of
Directors has not filled any such vacancy, it may be filled by vote of the
stockholders.
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4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the President, or any two (2) of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. The notice of any regular or special meeting shall specify
the business to be transacted at the meeting and/or the purpose or purposes for
which such meeting is being called, and no other business or purpose may be
conducted or considered at such meeting. Notice need not be given to any
director who submits a written waiver of notice signed by him before or after
the time of the meeting. Attendance of any such person at a meeting shall
constitute a waiver of notice of such meeting, except when he attends a meeting
for the sole purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute
a quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board, except
that if the number of directors constituting the whole Board is one, then one
director shall constitute a quorum. A majority of the directors present, whether
or not a quorum is present, may adjourn a meeting to another time and place.
Except as herein otherwise provided, and except as otherwise provided by the
General Corporation Law and the Certificate of Incorporation, the act of the
Board shall be the act by vote of a majority of the directors present at a
meeting at which a quorum is present.
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- CHAIRMAN OF THE MEETING. The President shall preside at all
meetings. If, for any reason, the President is not present at any meeting, any
director chosen by the Board shall preside.
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 may be removed for cause or without cause by the holders of a majority
of the shares then entitled to vote at an election of directors, provided,
however, that, in case of the corporation having cumulative voting, no director
may be removed without cause if the votes cast 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.
6. COMMITTEES. The Board may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of any committee who may replace any absent
or disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution of the Board and except as hereinafter
provided, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it.
No such committee shall have the power or authority to amend the Certificate of
Incorporation, adopt an agreement of merger or consolidation, recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommend to the stockholders a dissolution
of the corporation or a revocation of a dissolution, declare a dividend,
authorize the issuance of stock, elect or remove any officer, amend or repeal
any resolution adopted by the Board or take any action prohibited by the General
Corporation Law. The notice provisions of these By-Laws pertaining to
directors' meetings shall also apply to all committee meetings.
7. ACTION IN WRITING. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
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8. PARTICIPATION BY CONFERENCE PHONE. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board or
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
provision shall constitute presence in person at such meeting.
9. COMPENSATION OF DIRECTORS. The Board, by the affirmative vote of
a majority of directors in office and regardless of any personal interest of any
of them, may establish reasonable compensation of all directors and of the
President.
ARTICLE III
OFFICERS
1. DESIGNATION. The directors shall elect a President and a
Secretary, and may elect one or more Vice Presidents (including Executive,
Senior and/or Assistant Vice Presidents), a Treasurer, Assistant Secretaries,
Assistant Treasurers, and such other officers and agents as are desired. The
President may but need not be a director. Any number of offices may be held by
the same person, except that no officer shall, in more than one capacity,
execute, acknowledge or verify any instrument required by the General
Corporation Law or these By-Laws to be executed, acknowledged or verified by two
or more officers.
2. TERMS OF OFFICE. Unless otherwise provided in the resolution of
election or appointment, each officer shall hold office until the meeting of the
Board following the next annual meeting of stockholders and until his successor
has been elected and qualified.
3. PRESIDENT. The President shall be the chairman of the Board of
Directors and chief executive officer of the corporation, shall preside at all
meetings of the Board and of the stockholders, and shall be a member ex officio
of all committees of the Board. The President shall also be the chief operating
officer of the corporation, and shall have general and active management,
direction and supervision over the business and affairs of the corporation and
over its several subordinate officers.
4. VICE PRESIDENTS. Each Vice President shall have such powers and
perform such duties as the Board or the President may prescribe. In the absence
or inability of the President to act, the Vice Presidents (in the order
determined by the
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President or by the Board, or if there be no such determination, in the order of
the election of Executive Vice Presidents, then of Senior Vice Presidents, then
of Vice Presidents, and finally of Assistant Vice Presidents) may perform all
the duties and may exercise any of the powers of the President. The performance
of any such duty by a Vice President shall be conclusive evidence of his power
to act.
5. SECRETARY. The Secretary shall have charge of the minutes of all
proceedings of the shareholders and of the Board. He shall attend to the giving
of all notices to shareholders and directors. He shall have charge of the seal
of the corporation and shall attest the same by his signature whenever required.
He shall have charge of the record of shareholders of the corporation, and of
such other books and papers as the Board may direct. He shall have all such
powers and duties as generally are incident to the position of Secretary or as
may be assigned to him by the President or the Board.
6. TREASURER. The Treasurer shall have charge of all funds and
securities of the Corporation, shall endorse the same for deposit or collection
when necessary and shall deposit the same to the credit of the corporation in
such banks or depositaries as the President may authorize. He may endorse all
commercial documents requiring endorsements for or on behalf of the corporation
and may sign all receipts and vouchers for payments made to the corporation. He
shall have all such powers and duties as generally are incident to the position
of Treasurer or as may be assigned to him by the President or by the Board.
7. ASSISTANT SECRETARIES. In the absence or inability of the
Secretary to act, any Assistant Secretary may perform all the duties and
exercise all the powers of the Secretary. The performance of any such duty shall
be conclusive evidence of his power to act. An Assistant Secretary shall also
perform such other duties as the President, the Secretary or the Board may
assign to him.
8. ASSISTANT TREASURERS. In the absence or inability of the
Treasurer to act, an Assistant Treasurer may perform all the duties and exercise
all the powers of the Treasurer. The performance of any such duty shall be
conclusive evidence of his power to act. An Assistant Treasurer shall also
perform such other duties as the President, the Treasurer or the Board may
assign to him.
9. REMOVAL. The Board may remove any officer for cause or without
cause.
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ARTICLE IV
INDEMNIFICATION
1. LIMITATION OF CERTAIN LIABILITY OF DIRECTORS. To the fullest
extent permitted by the Delaware General Corporation Law as the same exists or
may hereafter be amended, a director of the corporation shall not be liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as director.
2. INDEMNIFICATION AND INSURANCE. (a) Each person who was or is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "Proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
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 of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in paragraph (b) hereof, the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this Section 2 shall be a contract right and shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final
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<PAGE>
disposition; provided, however, that if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer, including
without limitation service to an employee benefit plan) in advance of the final
disposition of a proceeding shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Section 2 or otherwise. The
corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) If a claim under paragraph (a) of this Section 2 is not
paid in full by the corporation within ninety days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the corporation. Neither the failure of the corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the corporation (including its Board of
Directors independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses conferred in this Article shall not be deemed exclusive of
any other right to which any person seeking indemnification or payment of
expenses may be entitled under any statute, provision of the Certificate of
Incorporation by-law, agreement, vote of stockholders or
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<PAGE>
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
4. INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
ARTICLE V
CONTRACTS, LOANS, CHECKS, NOTES, DRAFTS, ETC.
Contracts, checks, notes, drafts, acceptances, bills of exchange and
other instruments, orders or obligations for the payment of money shall be
signed by the President or by such officer or officers or person or persons as
the Board or the President shall from time to time determine.
ARTICLE VI
CORPORATE SEAL
The corporate seal shall be in such form as the Board shall
prescribe.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board.
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<PAGE>
ARTICLE VIII
AMENDMENTS
The Board of Directors shall have the power to make, alter or repeal
the By-Laws of the corporation subject to the power of the stockholders to
alter or repeal the By-Laws made or altered by the Board of Directors. The
stockholders shall also have the power to make, alter or repeal the By-Laws of
the corporation.
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<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>
SECRETARY'S CERTIFICATE
The undersigned, Andrew C. Peskoe, Assistant Secretary of CVC, Inc.,
a Delaware corporation (the "Company"), hereby certifies as follows:
Attached hereto as Exhibit A are true and complete copies of the
resolutions duly adopted at a meeting of the Board of Directors of the Company
held on March 4, 1998, authorizing and approving the execution and delivery of
the Credit Agreement with M&T Bank as set forth in such resolutions, and the
transactions contemplated thereby. Such resolutions have not been amended,
annulled, rescinded or revoked and remain in full force and effect on the date
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 2nd day of April, 1998.
/s/ Andrew C. Peskoe,
-------------------------------------
Andrew C. Peskoe, Assistant Secretary
<PAGE>
EXHIBIT A
RESOLUTIONS
OF THE
BOARD OF DIRECTORS
OF
CVC, Inc.
RESOLVED, that the form, terms and provisions of the proposed term
loan and credit facility agreement (the "Credit Agreement"), between CVC, Inc.
(the "Corporation"), CVC Products, Inc. (the "Subsidiary") and Manufacturers and
Traders Trust Company (the "Lender") substantially on the terms that have been
submitted to the directors of the Corporation, pursuant to which, among other
things, the Lender will make to the Subsidiary and/or the Corporation term
loans in amounts up to an aggregate of $8,000,000 and revolving loans in amount
up to an aggregate of $10,000,000 (based on borrowing base availability), will
make available a $2 million capital equipment term loan and lease line and will
provide other credit all upon the terms set forth therein and in the exhibits
thereto, and all transactions referred to therein, be, and the same hereby are,
in all respects authorized and approved.
RESOLVED, that an Authorized Officer of the Corporation and/or the
Subsidiary be, and each hereby is, authorized and empowered, in the name and on
behalf of the Corporation and/or the Subsidiary, to execute and deliver to the
Lender the Credit Agreement and each exhibit thereto of which the Corporation
and/or the Subsidiary shall be a signatory, and any and all other agreements,
certificates, or other documents which may be described in the Credit Agreement
or necessary or required by the Lender, with such change or changes therein as
his Authorized Officer or Officers executing the same may approve, the execution
thereof, with such change or changes, to be conclusive evidence of such
approval.
RESOLVED, that, in connection with the loan and accommodations to be
made by the Lender to the Subsidiary, the form, terms and provisions of the Term
and Revolving Notes (the "Notes") and the equipment lease documents, be, and,
the same hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer or Officers of the Corporation
and/or the Subsidiary be, and each hereby is, authorized and empowered, in the
name and on behalf of the Corporation and/or the Subsidiary, to execute and
deliver to the Lender, upon receipt of funds evidenced thereby, the Notes and
the lease documents, with such change or changes therein as the Authorized
Officer or Officers executing the same may approve, the execution thereof, with
such change or changes, to be conclusive evidence of such approval.
A-1
<PAGE>
RESOLVED, that the Corporation and/or the Subsidiary be, and hereby
are, authorized (i) to borrow such amounts and to sell and lease back from the
Lender such equipment in such amounts as an Authorized Officer of the
Corporation and/or the Subsidiary may deem appropriate, to be evidenced by
appropriate Notes and the lease documents, (ii) to each guaranty the
indebtedness of the other to the Lender on terms acceptable to the Lender as
evidenced by agreements and guarantees requested by the Lender, (iii) to grant
security interests to the Lender in any and all assets of the Corporation and
the Subsidiary, and (iv) to pay any and all fees and associated expenses; and
the same (including all documents evidencing same) hereby are, authorized and
approved.
RESOLVED, that the agreements, instruments, notes and documents
heretofore entered into by the Corporation and/or the Subsidiary with the Lender
are hereby ratified and affirmed;
RESOLVED, that, in connection with loans to be made by the Lender to
the Subsidiary, an Authorized Officer of the Corporation and/or the Subsidiary
be, and hereby is, authorized and empowered to open and maintain such bank
accounts at such bank or banks as the Lender may request, and that any
resolutions furnished by such banks for such purposes be deemed adapted as and
for the resolutions of the Board of Directors with the same force and effect as
if fully set forth herein.
RESOLVED, that the President and Senior Vice President of the
Corporation and the Subsidiary, and any person duly authorized to act in such
capacity be, and each of them hereby is, designated an "Authorized Officer" for
purposes of these resolutions, the Credit Agreement, the Notes, the lease
documents and any other documents and instruments necessary, proper or
convenient to implement or accomplish the transactions involved in, or related
to, any thereof.
RESOLVED, that the Authorized Officers of the Corporation and/or the
Subsidiary be, and each of them hereby is, authorized and empowered, in the name
and on behalf of the Corporation and/or the Subsidiary, to execute and deliver
such certificates, documents, 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 necessity or appropriateness thereof.
A-2
<PAGE>
OFFICER'S CERTIFICATE
The undersigned, Secretary of CVC PRODUCTS, INC., a Delaware
corporation (the "Company"), hereby certifies to MANUFACTURERS AND TRADERS TRUST
COMPANY ("Bank") to induce Bank to extend past, present and/or future credit to
the Company as follows.
1. Attached hereto as Exhibit A is a true copy of Company's
Certificate of Incorporation and all amendments thereto to date. We agree to
forward to Bank copies of all amendments to Company's Certificate of
Incorporation.
2. Attached hereto as Exhibit B is a true copy of Company's current
By-Laws and all amendments to date and as in effect on the date that the written
consent set forth in Exhibit C were adopted by the Board of Directors. We agree
to forward to Bank copies of all future amendments to Company's By-Laws.
3. The persons whose names are set forth below have been duly
elected to the offices set opposite their respective names and are authorized by
the Board of Directors of Company to execute and deliver on behalf of the
Company any agreement, note, guaranty or other document or instrument, entered
into, or to be entered into by Company with or in favor of the Bank:
Name Office Signature
Christine Whitman Chairman,
Chief Executive
Office & President /s/ Christine Whitman
-----------------------
Emilio O. DiCataldo Senior Vice President & Chief
Financial Officer /s/ Emilio O. DiCataldo
-----------------------
The signature of each officer is set forth after his or her respective name.
4. Attached hereto as Exhibit C is a true copy of the written
consent of the Sole Director of the Company which such consent is in full force
and effect and has not been modified, altered, rescinded or superseded in any
respect.
IN WITNESS WHEREOF, the undersigned have executed as of April __, 1998.
/s/ [ILLEGIBLE]
-------------------------------
Name:
Title:
<PAGE>
CERTIFICATE OF INCORPORATION
OF
CVC PRODUCTS, INC.
The undersigned, for the purpose of organizing a corporation under
the General Corporation Law of the State of Delaware, hereby certifies:
FIRST: The name of the corporation is CVC PRODUCTS, INC.
SECOND: The registered office of the corporation in the State of
Delaware is located at No. 100 West Tenth Street, in the City of Wilmington,
County of New Castle. The name of the corporation's registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is one hundred thousand (100,000), which shares
shall be of one class, shall be designated Common Stock and shall be of the par
value of One Dollar ($1.00) per share.
FIFTH: The name and mailing address of the incorporator is Thomas G.
Washing, Lincoln First Tower, Rochester, New York 14603.
SIXTH: Election of the directors of the corporation need not be by
written ballot unless and to the extent the By-laws of the corporation so
provide.
SEVENTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized and empowered to make, alter, amend or repeal from time to
time the By-laws of the corporation in any manner not inconsistent with the laws
of the State of Delaware or the Certificate of Incorporation of the Corporation.
<PAGE>
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EIGHTH: The Corporation reserves the right at any time and from time
to time to amend, alter or repeal any provision contained in this Certificate of
Incorporation in the manner now or as hereafter prescribed by law, and all
rights, preferences and privileges conferred upon stockholders, directors and
officers by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are subject to the rights reserved in this Article.
IN WITNESS WHEREOF, I have signed this Certificate this 12th day of
September, 1973.
/s/ Thomas G. Washing
----------------------------
Thomas G. Washing
<PAGE>
BY-LAWS
OF
CVC PRODUCTS, INC.
ARTICLE 1
STOCKHOLDERS
Section 1. Annual Meetings. The annual meeting of the stockholders
for the election of directors and the transaction of any other proper business
shall be held each year on such day and at such hour as shall by fixed by the
Board of Directors and as set forth in the notice of annual meeting.
Section 2. Special Meetings. A special meeting of the stockholders
may be called at any time by the Board of Directors or the President and shall
be held on such day and such hour as is fixed in the call of the meeting.
Section 3. Place of Meetings. Meetings of stockholders shall be held
at the principal office of the Corporation or at such other place, within or
without the State of Delaware, as may be fixed by the Board of Directors.
Section 4. Notice of Meetings.
(a) Whenever stockholders are required or permitted to take
any action at a meeting, a written notice of the meeting shall be given which
shall state the place, date, and hour of the meeting. Notice of a special
meeting also shall state the purpose or purposes for which the meeting is
called. A copy of the notice of any meeting shall be given, personally or by
mail, not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder entitled to vote at the meeting.
(b) Whenever notice is required to be given under this
section, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting called pursuant to this
<PAGE>
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article need be specified in any written waiver of notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
(c) When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the adjournment is more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at such meeting.
Section 5. Organization. At each meeting of the stockholders, the
Chairman of the Board or, in his absence, the President or, in his absence, a
Vice President selected by the Chairman of the Board shall act as chairman of
the meeting and the Secretary or, in his absence, an Assistant Secretary, if one
be appointed, shall act as secretary of the meeting. In case at any meeting none
of the officers who have been designated to act as chairman or secretary of the
meeting, respectively, shall be present, a chairman or secretary, as the case
may be, shall be chosen by vote of a majority in interest of the stockholders of
the Corporation present in person or by proxy and entitled to vote at such
meeting.
Section 6. Quorum. At each meeting of the stockholders, the holders
of a majority of the shares entitled to vote thereat, present in person or by
proxy, shall constitute a quorum for the transaction of business.
Section 7. Voting. At each meeting of stockholders, each stockholder
shall be entitled to cast one vote for each share of stock standing in his name
on the books of the Corporation on the record date. All matters shall be
determined by a majority of the votes cast, except that directors shall be
elected by a plurality of the votes cast. Voting for directors shall not be by
written ballot unless the stockholders at a meeting so determine.
Section 8. Proxies. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may
<PAGE>
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authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
Section 9. Consent of Stockholders in Lieu of Meeting. Any action
that is required to be taken, or which may be taken, at any annual or special
meeting of shareholders, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
ARTICLE 11
BOARD OF DIRECTORS
Section 1. Number. The Board of Directors shall consist of one or
more members, the exact number to be fixed from time to time by the Board of
Directors.
Section 2. Election and Term of Directors. Directors shall be
elected at the annual meeting of the stockholders and shall hold office until
the next annual meeting and until their successors have been elected and
qualified or until their earlier resignation or removal.
Section 3. Regular Meetings. As soon as practicable after each
annual election of directors, the Board of Directors shall meet for the purposes
of organization, the election of officers, and the transaction of other
business. Other regular meetings of the Board of Directors shall be held at such
places, dates, and hours as may be fixed from time to time by the Board of
Directors. Notice of regular meetings need not be given.
Section 4. Special Meetings. A special meeting of the Board of
Directors may be called by the Chairman or any two of the directors and shall be
held at such place, date, and hour as is fixed in the call of the meeting. Oral,
telegraphic, or written notice shall be given, sent, or mailed to each director,
directed to his residence or usual
<PAGE>
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place of business, not less than 72 hours before any special meeting and shall
state the place, date, and hour of the meeting. A written waiver of notice,
signed by the person entitled to notice, whether before of after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
Section 5. Quorum and Manner of Acting. At each meeting of the Board
of Directors, the presence of a majority of the authorized number of directors
shall constitute a quorum for the transaction of business, and the vote of a
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board, provided, however, that authorization of capital
expenditures by the Corporation, which individually or when added to other
capital expenditures authorized during the same fiscal year total in excess of
$100,000, shall be authorized by a majority of the entire of Board Directors.
Members of the Board of Directors or any Committee designated by such Board may
participate in a meeting of such Board or Committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
Section 6. Consent of Directors in Lieu of Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any Committee of the Board, may be taken without a meeting if all members of
the Board or Committee, as the case may be, consent to such action in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board or Committee.
Section 7. Removal. Any director may be removed, either with or
without cause, at any time by the affirmative vote of the holders of record of a
majority of the outstanding shares of stock entitled to vote, at a special
meeting of stockholders called for the purpose, and the vacancy in the Board of
Directors caused by any such removal may be filled by the stockholders, or, if
the vacancy is not so filled, by the Board of Directors.
<PAGE>
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Section 8. Vacancies (a) Generally. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, although less than
a quorum, or by a sole remaining director.
(b) Resignations. Where one or more directors shall resign
from the Board, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignations
shall become effective.
Section 9. Compensation: The Board of Directors shall have the
authority to fix the compensation of directors for services in any capacity and
to provide that the Corporation shall reimburse each director for any expenses
paid to him on account or his attendance at any regular or special meeting of
the Board. Nothing herein contained shall be construed so as to preclude any
director from serving the Corporation in any other capacity, or from serving any
of its stockholders, subsidiaries or affiliated corporations in any capacity and
receiving proper compensation therefor.
Section 10. Executive and Other Committees: The Board of Directors
may in its discretion by resloution passed by a majority of the whole Board
designate an Executive Committee and one or more other committees, each
consisting of three or more of the directors of the Corporation, and each of
which, to the extent provided in resolution and the laws of the State of
Delaware, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation
and may authorize the seal of the Corporation to be affixed to all papers which
may require it; provided, however, that no such committee shall have power or
authority as to the following matters:
(1) The amendment of the Certificate of Incorporation of the
Corporation.
(2) The adoption of an agreement of merger or consolidation.
(3) Recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and
assets.
<PAGE>
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(4) Recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution.
(5) The amendment of the By-laws of the Corporation.
Unless a greater proportion is required by the resolution
designating a committee of the Board of Directors, a majority of the entire
authorized number of members of such committee shall constitute a quorum for the
transaction of business, and the act of a majority of the members voting on any
item of business, if a quorum votes, shall be the act of such committee.
ARTICLE III
Officers
Section 1. Officers Enumerated: The Board of Directors, as soon as
may be practicable after the annual election of directors, shall elect a
Chairman of the Board of Directors, a President, one or more Vice Presidents
(one of whom may be designated Executive Vice President), a Secretary and a
Treasurer, and from time to time may elect or appoint such other officers as it
may determine. Any two or more offices may be held by the same person.
Section 2. Term of Office: Each officer shall hold office for the
term for which he is elected or appointed and until his successor has been
elected or appointed and qualified or until his death or until he shall resign
or until he shall have been removed in the manner hereinafter provided.
Section 3. Powers and Duties: The officers of the Corporation shall
each have such powers and authority and perform such duties in the management of
the property and affairs of the Corporation as from time to time may be
prescribed by the Board of Directors and, to the extent not so prescribed, they
shall each have such powers and authority and perform such duties in the
management of the property and affairs of the Corporation, subject to the
control of the Board, as generally pertain to their respective offices.
<PAGE>
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Without limitation of the foregoing:
(a) Chairman of the Board of Directors: The Chairman of the Board of
Directors shall be the chief executive officer of the Corporation, charged with
the responsibility for the direction and supervision of its business affairs
subject only to the supervision of the Board of Directors and Executive
Committee, if such Committee shall be designated. He shall preside at all
meetings of the Board and at all meetings of stockholders.
(b) President: The President shall be the chief operating officer of
the Corporation and, subject to the general supervision of the Chairman of the
Board of Directors, shall supervise the operations of the Corporation, its
subsidiaries and affiliates. The President, in the event of death, resignation,
removal, disability or absence of the Chairman, shall possess the powers and
perform the duties of the Chairman. He shall be a director of the Corporation.
(c) Vice Presidents: The Board of Directors shall determine the
powers and duties of the respective Vice Presidents and may, in its discretion,
fix such order of seniority among the respective Vice President as it may deem
advisable.
(d) Secretary: The Secretary shall issue notices of meetings of
stockholders and directors where notices of such meetings are required by law or
these By-laws and shall keep the minutes of such meetings. He shall sign such
instruments and attest such documents as require his signature of attestation
and affix the corporate seal thereto where appropriate.
(e) Treasurer: The Treasurer shall have general charge of, and be
responsible for, the fiscal affairs of the Corporation and shall sign all
instruments and documents as require his signature.
Section 4. Temporary Absence. In case of the temporary absence or
disability of any officer of the Corporation, the Chairman, the President, Vice
President, the Secretary or the Treasurer may perform any of the duties of any
such other officer as the Board of Directors or Executive Committee may
prescribe.
Section 5. Resignations: Any officer may resign at any time by
giving written notice of his resignation to the Corporation. Any such
resignation shall take effect at the
<PAGE>
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time specified therein; and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 6. Removal: Any officer may be removed, either with or
without cause, at any time, by action of the Board of Directors.
Section 7. Vacancies: A vacancy in any office because of death,
resignation, removal or any other cause may be filled by the Board of Directors.
Section 8. Compensation: The salaries of the officers shall be fixed
from time to time by the Board of Directors. Nothing contained herein shall
preclude any officer from serving the Corporation in any other capacity,
including that of director, or from serving any of its stockholders,
subsidiaries or affiliated corporations in any capacity and receiving a proper
compensation therefor.
Section 9. Contracts, Checks, etc.: All contracts and agreements
authorized by the Board of Directors, and all checks, drafts, bills of exchange
or other orders for the payment of money, notes or other evidences of
indebtedness, issued in the note of the Corporation, shall be signed by such
person or persons and in such manner as may from time to time be designated by
the Board of Directors, which designation may be general or confined to specific
instances.
Section 10. Proxies in Respect of Securities of Other Corporations:
Unless otherwise provided by resolution adopted by the Board of Directors, the
Chairman, the President, a Vice President, or the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, or any one of them, may
exercise in the name and on behalf of the Corporation the powers and rights
which the Corporation may have as the holder of stock or other securities in any
other corporation to vote or to consent in respect of such stock or other
securities; and the Chairman, the President, a Vice President, or the Secretary
or an Assistant Secretary or the Treasurer of an Assistant Treasurer may execute
or cause to be executed in the name and on behalf of the Corporation and under
its corporate seal, or otherwise, all such ballots consents, proxies, powers of
attorney or other written instruments as they or either of them may deem
necessary in order that the Corporation may exercise such powers and rights. Any
stock
<PAGE>
- 9 -
or other securities in any other corporation which may from time to time be
owned by or stand in the name of the Corporation may, without further action, be
endorsed for sale or transfer or sold or transferred by the Chairman, the
President or a Vice President, or the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer of the Corporation or any proxy appointed in
writing by any of them. Notwithstanding the above, stock of any corporation a
majority of the outstanding capital stock of which is owned by the Corporation
shall be voted or transferred only as directed by action of the Board of
Directors of the Corporation.
ARTICLE IV
Shares and Their Transfer
Section 1. Certificates of Stock: Every stockholder shall be
entitled to have a certificate certifying the number of shares of stock of the
Corporation owned by him, signed by, or in the name of, the Corporation by the
Chairman of the Board or the President or a Vice President and by the Treasurer
or an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation. Any of or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar.
Section 2. Transfers: Certificates shall be registered for transfer
on the stock books of the Corporation in person or by attorney, but, except as
hereinafter provided in the case of loss, destruction or mutilation of
certificates, no transfer of stock shall be entered until the previous
certificate, if any, given for the same shall have been surrendered and
cancelled.
Section 3. Lost, Destroyed or Mutilated Certificates: The
Corporation may issue a new certificate of stock of the same tenor and same
number of shares in place of a certificate theretofore issued by it which is
<PAGE>
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alleged to have been lost, stolen or destroyed; provided, however, the Board of
Directors or the Executive Committee of the Corporation may require the owner of
the lost, stolen or destroyed certificate, or his legal representative, to give
the Corporation a bond of indemnity, in form and with one or more sureties
satisfactory to the Board or the Executive Committee, sufficient to indemnify it
against any claim that may be made against the Corporation on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
Section 4. Record Date: The Board of Directors may fix, in advance,
a date, which shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting, nor more than sixty (60) days prior to any
other action, as a record date for the determination of the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights with
respect to any change, conversion or exchange of stock or for the purpose of any
other lawful action. If no record date is fixed, (a) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day upon which the meeting is held, and (b) the date
for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolutions
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 5. Books and Records: The books and records of the
Corporation may be kept at such places within or without the State of Delaware
as the Board of Directors may from time to time determine.
<PAGE>
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ARTICLE V
GENERAL
Section 1. Seal. The seal of the Corporation shall be in the form of
a circle and shall bear the name of the Corporation, the year of incorporation,
and any other matters deemed appropriate by the Board of Directors.
Section 2. Indemnification. Every person heretofore, now, or
hereafter serving as a director, officer or employee of the Corporation, and
every person heretofore, now, or thereafter serving at the written request of
the Corporation (or at its oral request subsequently confined in writing) as a
director, officer or employee of another corporation or other business
association in which the Corporation owns shares of capital stock or other
proprietary interest or of which the Corporation is a creditor, shall be
indemnified and held harmless by the Corporation from and against any and all
loss, cost, liability and expense that may be imposed upon or incurred by him in
connection with or resulting from any claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative in which he may become involved
as a party or otherwise by reason of his being or having been a director,
officer or employee of the Corporation, or of another business association or
corporation in which the Corporation owns shares of capital stock or other
proprietary interest or of which the Corporation is a creditor, whether or not
he continues to be such at the time such loss, cost liability or expense shall
have been imposed or incurred. As used herein, the term "loss, cost, liability
and expense" shall include all expenses incurred in the defense of such claim,
action, suit or proceeding and the amounts of judgments, fines, or penalties
levied or rendered against any such person; provided, however, that no such
person shall be entitled to indemnity hereunder unless the Board of Directors of
the Corporation determines that such person was acting in good faith and for a
purpose which he reasonably believed to be in or not opposed to the best
interests or the Corporation, and with respect to any criminal action or
porceeding had no reasonable cause to believe his conduct was unlawful. Payments
authorized hereunder include amounts paid and expenses incurred in settling any
such claim, action, suit or proceeding whether actually commenced or threatened.
Expenses incurred with respect to any such
<PAGE>
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claim, action, suit or proceeding may be advanced by the Corporation prior to
the final disposition thereof upon receipt of an undertaking satisfactory in
from and amount to the Board of Directors by or on behalf of the recipient to
repay such amount unless it is ultimately determined that he is entitled to
indemnification. The foregoing right of indemnification shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any law, by-law, provision of a certificate of incorporation,
agreement (including but not limited to any indemnification insurance contract),
vote of stockholders or disinterested directors or otherwise.
Section 3. Fiscal Year. The fiscal year of the Corporation shall
begin October 1 and end September 30.
ARTICLE IV
AMENDMENTS
Section 1. By-Law Amendments. The by-laws of the Corporation may be
made, altered or repealed by vote of the stockholders at the time entitled to
vote in the election of directors. The by-laws may also be made, altered or
repealed by the Board of Directors, but any by-laws adopted by the Board may be
altered or repealed by the stockholders entitled to vote thereon as hereinabove
provided.
<PAGE>
SECRETARY'S CERTIFICATE
The undersigned, Andrew C. Peskoe, Assistant Secretary of CVC, Inc.,
a Delaware corporation (the "Company"), hereby certifies as follows:
Attached hereto as Exhibit A are true and complete copies of the
resolutions duly adopted at a meeting of the Board of Directors of the Company
held on March 4, 1998, authorizing and approving the execution and delivery of
the Credit Agreement with M&T Bank as set forth in such resolutions, and the
transactions contemplated thereby. Such resolutions have not been amended,
annulled, rescinded or revoked and remain in full force and effect on the date
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the 2nd day of April, 1998.
/s/ Andrew C. Peskoe
-------------------------------------
Andrew C. Peskoe, Assistant Secretary
<PAGE>
WRITTEN CONSENT
OF
THE SOLE DIRECTOR
OF CVC PRODUCTS, INC.
The undersigned, being the sole director of CVC Products, Inc., a
Delaware corporation (the "Corporation"), does hereby consent to the adoption of
the resolutions set forth on Exhibit A hereto,
IN WITNESS WHEREOF, the undersigned has executed this consent as of
the 31st day of March, 1998.
/s/ Christine B. Whitman
------------------------------
Christine B. Whitman
<PAGE>
EXHIBIT A
RESOLUTIONS
OF THE
BOARD OF DIRECTORS
OF
CVC, INC.
RESOLVED, that the form, terms and provisions of the proposed term
loan and credit facility agreement (the "Credit Agreement"), between CVC, Inc.
(the "Corporation"), CVC Products, Inc. (the "Subsidiary") and Manufacturers and
Traders Trust Company (the "Lender") substantially on the terms that have been
submitted to the directors of the Corporation, pursuant to which, among other
things, the Lender will make to the Subsidiary and/or the Corporation term loans
in amounts up to an aggregate of $8,000,000 and revolving loans in amounts up to
an aggregate of $10,000,000 (based on borrowing base availability), will make
available a $2 million capital equipment term loan and lease line and will
provide other credit accommodations, all upon the terms set forth therein and in
the exhibits thereto, and all transactions referred to therein, be, and the same
hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer of the Corporation and/or the
Subsidiary be, and each hereby is, authorized and empowered, in the name and on
behalf of the Corporation and/or the Subsidiary, to execute and deliver to the
Lender the Credit Agreement and each exhibit thereto of which the Corporation
and/or the Subsidiary shall be a signatory, and any and all other agreements,
certificates, or other documents which may be described in the Credit Agreement
or necessary or required by the Lender, with such change or changes therein as
the Authorized Officer or Officers executing the same may approve, the execution
thereof, with such change or changes, to be conclusive evidence of such
approval.
RESOLVED, that, in connection with the loan and accommodations to be
made by the Lender to the Subsidiary, the form, terms and provisions of the Term
and Revolving Notes (the "Notes") and the equipment lease documents, be, and,
the same hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer or Officers of the Corporation
and/or the Subsidiary be, and each hereby is, authorized and empowered, in the
name and on behalf of the Corporation and/or the Subsidiary, to execute and
deliver to the Lender, upon receipt of funds evidenced thereby, the Notes and
the lease documents, with such change or changes therein as the Authorized
Officer or Officers executing the same may approve, the execution thereof, with
such change or changes, to be conclusive evidence of such approval.
A-1
<PAGE>
RESOLVED, that the Corporation and/or the Subsidiary be, and hereby
are, authorized (i) to barrow such amounts and to sell and lease back from the
Lender such equipment in such amounts as an Authorized Officer of the
Corporation and/or the Subsidiary may deem appropriate, to be evidenced by
appropriate Notes and the lease documents, (ii) to each guaranty the
indebtedness of the other to the Lender on terms acceptable to the Lender as
evidenced by agreements and guarantees requested by the Lender, (iii) to grant
security interests to the Lender in any and all assets of the Corporation and
the Subsidiary, and (iv) to pay any and all fees and associated expenses; and
the same (including all documents evidencing same) hereby are, authorized and
approved.
RESOLVED, that the agreements, instruments, notes and documents
heretofore entered into by the Corporation and/or the Subsidiary with the Lender
are hereby ratified and affirmed;
RESOLVED, that, in connection with loans to be made by the Lender to
the Subsidiary, an Authorized Officer of the Corporation and/or the Subsidiary
be, and hereby is, authorized and empowered to open and maintain such bank
accounts at such bank or banks as the Lender may request, and that any
resolutions furnished by such banks for such purposes be deemed adopted as and
for the resolutions of the Board of Directors with the same force and effect as
if fully set forth herein.
RESOLVED, that the President and Senior Vice President of the
Corporation and the Subsidiary, and any person duly authorized to act in such
capacity be, and each of them hereby is, designated an "Authorized Officer" for
purposes of these resolutions, the Credit Agreement, the Notes, the lease
documents and any other documents and instruments necessary, proper or
convenient to implement or accomplish the transactions involved in, or related
to, any thereof.
RESOLVED, that the Authorized Officers of the Corporation and/or the
Subsidiary be, and each of them hereby is, authorized and empowered, in the name
and on behalf of the Corporation and/or the Subsidiary, to execute and deliver
such certificates, documents, 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 necessity or appropriateness thereof.
A-2
<PAGE>
[Letterhead of Nixon, Hargrave, Devans & Doyle LLP]
April 14, 1998
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203
RE: CVC Products, Inc.
Gentlemen:
We have acted as special counsel to CVC Products, Inc., a Delaware
corporation ("Borrower"), in connection with certain credit facilities to
be made by Manufacturers and Traders Trust Company ("Bank") to Borrower
pursuant to a certain Loan Agreement of even date herewith ("Closing
Date") between Bank and Borrower, dated as of March 31, 1998 (the "Loan
Agreement"). Furthermore, we have acted as special counsel to CVC, Inc., a
Delaware corporation ("Parent") and have advised it in connection with
certain matters pertaining to the Loan Agreement. Unless otherwise noted,
the agreements referred to in (i) through (ix) below were executed on the
Closing Date, as of March 31, 1998. We are giving the opinions set forth
below at the request of Borrower and Parent.
In our capacity as special counsel to Borrower and Parent, we have
reviewed the Loan Agreement and the following documents, as executed:
(i) $8,000,000 Term Note, dated as of March 31, 1998, executed by
Borrower in favor of Bank ("Term Note");
(ii) $10,000,000 Grid Note, dated as of March 31, 1998, executed by
Borrower in favor of Bank ("Grid Note");
(iii) Trademark Collateral Security and Pledge Agreement executed by
Borrower, Parent and Bank dated as of March 31, 1998
("Trademark Agreement");
(iv) Patent Collateral Assignment and Security Agreement executed
by Borrower, Parent and Bank dated as of March 31, 1998
("Patent Agreement");
(v) Amended and Restated Continuing Guaranty, dated as of March
31, 1998, executed by Borrower in favor of Bank ("Borrower
Guaranty");
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April 14, 1998
Page 2
(vi) Amended and Restated General Security Agreement, dated
as of March 31, 1998, executed by Borrower in favor of
Bank ("Borrower GSA");
(vii) Amended and Restated Continuing Guaranty, dated as of
March 31, 1998, executed by Parent in favor of Bank
("Parent Guaranty");
(viii) Amended and Restated General Security Agreement, dated
as of March 31, 1998, executed by Parent in favor of
Bank ("Parent GSA"); and
(ix) Landlord/Mortgagee Waiver, dated as of March 31, 1998,
executed by Parent in favor of Bank ("Landlord Waiver").
The Term Note, Grid Note, Borrower Guaranty and Borrower GSA are
hereinafter collectively referred to as the "Borrower Loan Documents." The
Parent Guaranty, Parent GSA and Landlord Waiver are hereinafter
collectively referred to as the "Guarantor Loan Documents." The Borrower
Loan Documents, the Guarantor Loan Documents, the Trademark Agreement and
the Patent Agreement are referred to collectively as the "Loan Documents."
We have also examined the Certificate of Incorporation and By-Laws
of Borrower and Parent and copies, certified or otherwise identified to
our satisfaction, of such other documents, records and certificates of
public officials and of the Borrower and Parent, made such inquiries of
officers of Borrower and Parent and considered such questions of law as we
deemed necessary for the purpose of rendering the opinions set forth
herein.
As to questions of fact material to the opinions set forth herein,
we have, when relevant facts were not independently established, made
inquiries as to such questions of fact of officers of Borrower and Parent
and relied upon certificates of, and information received from, officers
of Borrower and Parent, in each case, copies of which are annexed hereto
as exhibits. As to any opinions expressed herein "to our knowledge," such
knowledge is a based solely upon certificates of, and information received
from, officers of Borrower and Parent and any actual knowledge we may have
from any other source. We have not independently investigated or verified
the facts represented in such certificates or information and do not opine
as to the accuracy of any such facts.
In rendering the opinions set forth below, we have assumed that:
A. Authority of Bank. Bank has all requisite power and authority to
(i) consummate the transactions described in the Loan Documents, (ii)
execute and deliver the Loan Documents to which it is a party and (iii)
perform its obligations thereunder.
B. Execution by Bank. Bank has duly and validly authorized, executed
and delivered the Loan Documents to which it is a party.
C. Modifications. There are no oral or written modifications of or
amendments to the Loan Documents.
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April 14, 1998
Page 3
D. Authenticity of Documents. All documents submitted to us as
originals are authentic and complete; all documents submitted to us as
certified, photostatic or conformed copies conform to the original
documents; all signatures on all documents are genuine; and all public
records reviewed are accurate and complete.
E. Ownership of Collateral. Borrower is in possession of, and owns
or has all applicable rights to use, the collateral described in the
Trademark Agreement and Patent Agreement. Borrower and Parent are the
owners of the collateral described in the Borrower GSA and Parent GSA,
respectively.
F. Recording of Trademark Agreement and Patent Agreement. The
Trademark Agreement and Patent Agreement will be duly recorded in the
appropriate recording offices.
Based on the foregoing it is our opinion that:
1. Borrower and Parent are corporations duly organized, validly
existing and in good standing under the laws of the State of Delaware and
are also duly qualified to do business in, and are in good standing as
foreign corporations under, the laws of the State of New York.
2. Borrower has the requisite corporate power and authority to (a)
own and operate its property in New York State, to lease the Property it
leases in New York State and, to our knowledge, to conduct its business as
it is presently conducted in New York State (b) execute, deliver and
perform its obligations under the Borrower Loan Documents, (c) borrow
under the Loan Agreement and (c) grant the security interests provided for
in the Trademark Agreement, Patent Agreement and Borrower GSA.
3. Parent has the requisite corporate power and authority to (a) own
and operate its property in New York State, to lease the Property it
leases in New York State and, to our knowledge, to conduct its business as
it is presently conducted in New York State (b) execute, deliver and
perform its obligations under the Guarantor Loan Documents and (c) grant
the security interests provided for in the Guarantor GSA.
4. Borrower's execution and delivery of, and performance of its
obligations under, the Borrower Loan Documents, the Trademark Agreement
and the Patent Agreement have been duly authorized by all necessary
corporate action on the part of Borrower, and the Borrower Loan Documents,
the Trademark Agreement and the Patent Agreement have been duly executed
and delivered by Borrower.
5. Parent's execution and delivery of, and performance of its
obligations under, the Guarantor Loan Documents, the Trademark Agreement
and the Patent Agreement have been duly authorized by all necessary
corporate action on the part of Parent, and the Guarantor Loan Documents,
the Trademark Agreement and the Patent Agreement have been duly executed
and delivered by Parent.
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Nixon, Hargrave, Devans & Doyle LLP
Manufacturers and Traders Trust Company
April 14, 1998
Page 4
6. The Borrower Loan Documents, the Trademark Agreement and the
Patent Agreement are the valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective
terms.
7. The Guarantor Loan Documents, the Trademark Agreement and the
Patent Agreement are the valid and binding obligations of Parent,
enforceable against the Parent in accordance with their respective terms.
8. The execution and delivery of the Borrower Loan Documents, the
Trademark Agreement and the Patent Agreement by Borrower, do not (a)
conflict with or result in a breach of any provision of the Certificate of
Incorporation or By-Laws of Borrower, or (b) to our knowledge, (i) result
in a breach of any of the provisions of, or constitute a default under,
any agreement or instrument to which Borrower is a party or by which any
of Borrower's assets is bound, (ii) violate any existing judgment, order,
writ, injunction or decree expressly applicable to Borrower, (iii) violate
any existing law, rule, regulation or ordinance applicable to Borrower or
(iv) result in the creation or imposition of any lien, charge or
encumbrance or any nature whatsoever upon any properties of Borrower,
except as contemplated by the Borrower Loan Documents, the Trademark
Agreement and the Patent Agreement.
9. The execution and delivery of the Guarantor Loan Documents, the
Trademark Agreement and the Patent Agreement by Parent, do not (a)
conflict with or result in a breach of any provision of the Certificate of
Incorporation or By-Laws of Parent, or (b) to our knowledge, (i) result in
a breach of any of the provisions of, or constitute a default under, any
agreement or instrument to which Parent is a party or by which any of
Parent's assets is bound, (ii) violate any existing judgment. order, writ,
injunction or decree expressly applicable to Parent, (iii) violate any
existing law, rule, regulation or ordinance applicable to Parent or (iv)
result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any properties of Parent, except as
contemplated by the Guarantor Loan Documents, the Trademark Agreement and
the Patent Agreement.
10. No consent, authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required by (i) the due execution, delivery and performance by Borrower
under the Borrower Loan Documents, the Trademark Agreement and the Patent
Agreement (ii) the borrowings contemplated by Borrower under the Loan
Agreement, or (iii) the grant by Borrower of security interests granted by
it under any of the Borrower Loan Documents, the Trademark Agreement or
the Patent Agreement pursuant to the UCC.
11. No consent, authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required by (i) the due execution, delivery, and performance by Parent
under the Guarantor Loan Documents, the Trademark Agreement and the Patent
Agreement, or (ii) the grant by Parent of security interests granted by it
under any of the Guarantor Loan Documents, the Trademark Agreement or the
Patent Agreement pursuant to the UCC.
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April 14, 1998
Page 5
12. To our knowledge, there is no action, suit or proceeding
pending, or overtly threatened by written communication, against Borrower
or expressly affecting its assets wherein an unfavorable decision, ruling
or finding, in any case or in the aggregate, would materially adversely
affect the Borrower's financial condition or any of its assets, or the
validity or enforceability of any of the Borrower Loan Documents, the
Trademark Agreement or the Patent Agreement.
13. To our knowledge, there is no action, suit or proceeding
pending, or overtly threatened by written communication, against Parent or
expressly effecting its assets wherein an unfavorable decision, ruling or
finding, in any case or in the aggregate, would materially adversely
affect Parent's financial condition or any of its assets, or the validity
or enforceability of any of the Guarantor Loan Documents, the Trademark
Agreement or the Patent Agreement.
The opinions expressed above are subject to the following
qualifications:
(a) the enforceability of the Loan Documents may be limited by
the time of recording of the Patent Agreement and the Trademark
Agreement, and by applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance, and other similar laws now or
hereafter in effect relating to or affecting creditor's rights
generally;
(b) the enforcement of rights and remedies under the Loan
Documents may be limited by (i) general principles of equity,
regardless of whether such enforcement is considered in a proceeding
in equity or at law, or (ii) the policies underlying applicable law;
(c) we express no opinion as to the enforceability of the
self-help, non-judicial remedies provided to Bank in the Loan
Documents (including, inter alia, remedies purportedly based upon
the appointment of Bank as attorney-in-fact of Borrower);
(d) certain provisions in the Loan Documents may be rendered
unenforceable or limited by applicable laws and judicial decisions;
but such laws and judicial decisions do not render the Loan
Documents legally inadequate remedies for the realization of the
principal benefits and security intended to be provided thereby;
(e) enforceability of the Loan Documents may be limited by any
unconscionable or inequitable conduct on Bank's part, defenses
arising from Bank's failure to act in accordance with the terms and
conditions of the Loan Documents and defenses arising as a result of
Bank's failure to act in good faith and in a commercially reasonable
manner;
(f) we express no opinion as to the validity or enforceability
of any waiver of service of judicial process, or any provisions of
any of the Loan Documents which might be construed as a waiver of
counterclaims or defenses;
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Page 6
(g) we express no opinion as to (i) compliance with or the
effect of any applicable health, safety, zoning, land use,
environmental, tax, anti-trust or securities law, rule, regulation
or ordinance; (ii) the existence or state of title of any real or
personal property which may be the subject of any of the Loan
Documents; (iii) the priority of any liens or security interest
created or purported to be created by any of the Loan Documents;
(iv) the perfection of any security interest in the Collateral; or
(v) the Bank's right to collect any payment due to the extent that
such payment constitutes a penalty, forfeiture or late payment
charge;
(h) we express no opinion as to the enforceability of the
provisions of the Grid Note and Loan Agreement requiring payment on
demand;
(i) we express no opinion as to the enforceability of Section
6.2 of the Trademark Agreement or Section 5.2 of the Patent
Agreement;
(j) we express no opinion as to the enforceability of the
provisions of Section 8 of the Trademark Agreement with respect to
the sale of any Trademark apart from its Associated Goodwill and the
business symbolized by such Trademark; and
(k) we express no opinion as to the enforceability of the
Trademark Agreement to the extent that it purports to independently
assign the Pledged Trademarks as opposed to being an assignment in
furtherance of a security interest granted in the Pledged
Trademarks.
This opinion is specifically limited to the present General
Corporation Law of the State of Delaware and the present internal laws of
the State of New York and federal law of the United States, and no opinion
is expressed as to the effect that the law of any other jurisdiction might
have upon the subject matter of the opinions expressed herein under the
conflicts of law principles or otherwise.
This opinion is being rendered solely for the benefit of Bank in
connection with the transactions contemplated by the Loan Documents. No
other person may rely on this opinion for any purpose without the express
written consent of the undersigned. This opinion is limited to the matters
set forth herein, no opinion may be inferred or implied beyond the matters
expressly stated herein, and this opinion must be read in conjunction with
the assumptions, limitations, exceptions and qualifications set forth in
this letter.
This opinion is rendered as of the date hereof, and no opinion is
expressed as to matters referred to herein on any subsequent date.
Very truly yours,
/s/ Nixon, Hargrave, Devans & Doyle LLP
<PAGE>
BORROWER'S CERTIFICATE
I, Emilio O. DiCataldo, as a Senior Vice President and Chief Financial
Officer of CVC Products, Inc., a Delaware corporation ("Borrower"), do hereby
certify to Nixon, Hargrave, Devans & Doyle LLP ("NHD&D"), in connection with
their opinion of counsel (the "Opinion"), dated April 14, 1998, addressed to
Manufacturers and Traders Trust Company ("M&T"), as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Opinion.
2. Except as may be set forth in the Officer's Certificate delivered to
M&T dated April 2, 1998, there have been no amendments to the Articles of
Incorporation or By Laws of Borrower.
3. To the best of my knowledge, Borrower has the requisite corporate power
and authority to conduct its business as it is presently conducted.
4. To the best of my knowledge, Borrower's execution and delivery of the
Borrower Loan Documents, the Trademark Agreement and the Patent Agreement and
Borrower's performance of its obligations under the Borrower Loan Documents, the
Trademark Agreement and the Patent Agreement do not (a) result in a breach of
any of the provisions of, or constitute a default under, any agreement or
instrument to which Borrower is a party or by which any of Borrower's assets is
bound, (b) violate any existing judgment, order, writ, injunction or decree
expressly applicable to Borrower, (c) violate any existing law, rule, regulation
or ordinance applicable to Borrower or (d) result in the creation or imposition
of any lien charge or encumbrance of any nature whatsoever upon any properties
of Borrower, except as contemplated by the Borrower Loan Documents the Trademark
Agreement and the Patent Agreement. Furthermore, Borrower is currently not a
party to, nor are Borrower's assets bound by, any agreements or instruments with
any financial or lending institution, other than Lender, which place limitations
on Borrower's ability to incur additional indebtedness.
5. To the best of my knowledge, there is no action, suit or proceeding
pending, or overtly threatened by written communication, against Borrower or
expressly affecting its assets wherein an unfavorable decision, ruling or
finding, in any case or in the aggregate, would materially adversely affect the
validity or enforceability of any of the Borrower Loan Documents the Trademark
Agreement or the Patent Agreement..
6. Borrower has consented to the issuance of the Opinion by NHD&D to M&T.
Dated: April 14, 1998 /s/ Emilio O. DiCataldo
-----------------------
Emilio O. DiCataldo
Sr.V.P. & CFO
CVC Products, Inc.
<PAGE>
PARENT'S CERTIFICATE
I, Emilio O. DiCataldo, as a Senior Vice President and Chief Financial
Officer of CVC, Inc., a Delaware corporation ("Parent"), do hereby certify to
Nixon, Hargrave, Devans & Doyle LLP ("NHD&D"), in connection with their opinion
of counsel (the "Opinion"), dated April 14, 1998, addressed to Manufacturers and
Traders Trust Company ("M&T"), as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Opinion.
2. Except as may be set forth in the Officer's Certificate delivered to
M&T dated April 2, 1998, there have been no amendments to the Articles of
Incorporation or By Laws of Parent.
3. To the best of my knowledge, Parent has the requisite corporate power
and authority to conduct its business as it is presently conducted.
4. To the best of my knowledge, Parent's execution and delivery of the
Guarantor Loan Documents, the Trademark Agreement and the Patent Agreement and
Parent's performance of its obligations under the Guarantor Loan Documents, the
Trademark Agreement and the Patent Agreement do not (a) result in a breach of
any of the provisions of, or constitute a default under, any agreement or
instrument to which Parent is a party or by which any of Parent's assets is
bound, (b) violate any existing judgment, order, writ, injunction or decree
expressly applicable to Parent, (c) violate any existing law, rule, regulation
or ordinance applicable to Parent or (d) result in the creation or imposition of
any lien charge or encumbrance of any nature whatsoever upon any properties of
Parent, except as contemplated by the Guarantor Loan Documents, the Trademark
Agreement and the Patent Agreement. Furthermore, Parent is currently not a party
to, nor are Parent's assets bound by, any agreements or instruments with any
financial or lending institution, other than Lender, which place limitations on
Parent's ability to incur additional indebtedness.
5. To the best of my knowledge, there is no action, suit or proceeding
pending, or overtly threatened by written communication, against Parent or
expressly affecting its assets wherein an unfavorable decision, ruling or
finding, in any case or in the aggregate, would materially adversely affect the
validity or enforceability of any of the Guarantor Loan Documents, the Trademark
Agreement or the Patent Agreement.
6. Parent has consented to the issuance of the Opinion by NHD&D to M&T.
Dated: April 14, 1998 /s/ Emilio O. DiCataldo
-----------------------
Emilio O. DiCataldo
Sr.V.P. & CFO
CVC, Inc.
<PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
-----------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THAT "CVC PRODUCTS, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE
STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE
NOT HAVING BEEN CANCELLED OR DISSOLVED SO FAR AS THE RECORDS OF THIS OFFICE SHOW
AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF INCORPORATION, FILED THE SEVENTEENTH DAY OF SEPTEMBER, A.D.
1973, AT 10 O'CLOCK A.M.
CERTIFICATE OF CHANGE OF REGISTERED AGENT, FILED THE TWENTY-FOURTH DAY OF
OCTOBER, A.D. 1996, AT 9 O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE
ONLY CERTIFICATES ON RECORD OF THE AFORESAID CORPORATION.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO
DATE.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO
DATE.
[SEAL] /s/ Edward J. Freel
---------------------------------------
Edward J. Freel, Secretary of State
0794718 8310 AUTHENTICATION: 8993389
981115482 DATE: 03-25-98
<PAGE>
State of New York )
ss:
Department of State )
I hereby certify, that CVC PRODUCTS, INC. a DELAWARE corporation, filed an
Application for Authority to do business in the State of New York on 09/20/1973.
I further certify that no certificate of Surrender of Authority has been filed,
and so far as shown by the records of this Department, such corporation is still
authorized to do business in the State of New York.
***
Witness my hand and the official seal of
the Department of State at the City of
Albany, this 25th day of March one
thousand nine hundred and ninety-eight.
/s/ [ILLEGIBLE]
Special Deputy Secretary of State
199803260160 46
[SEAL]
<PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
-----------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THAT "CVC, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE NOT HAVING
BEEN CANCELLED OR DISSOLVED SO FAR AS THE RECORDS OF THIS OFFICE SHOW AND IS
DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF INCORPORATION, FILED THE NINETEENTH DAY OF OCTOBER, A.D.
1990, AT 4:30 O'CLOCK P.M.
CERTIFICATE OF AMENDMENT, FILED THE FOURTEENTH DAY OF DECEMBER, A.D. 1990,
AT 9 O'CLOCK A.M.
RESTATED CERTIFICATE, FILED THE EIGHTEENTH DAY OF MAY, A.D. 1995, AT 4:15
O'CLOCK P.M.
CERTIFICATE OF AMENDMENT, FILED THE FOURTEENTH DAY OF MARCH, A.D. 1996, AT
9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "CVC HOLDINGS, INC." TO
"CVC, INC.", FILED THE FIFTEENTH DAY OF OCTOBER, A.D. 1997, AT 12 O'CLOCK P.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE
ONLY CERTIFICATES ON RECORD OF THE
[SEAL] /s/ Edward J. Freel
---------------------------------------
Edward J. Freel, Secretary of State
2244345 8310 AUTHENTICATION: 8997288
981118441 DATE: 03-27-98
<PAGE>
State of Delaware
PAGE 2
Office of the Secretary of State
-----------------
AFORESAID CORPORATION.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO
DATE.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO
DATE.
[SEAL] /s/ Edward J. Freel
---------------------------------------
Edward J. Freel, Secretary of State
2244345 8310 AUTHENTICATION: 8997288
981118441 DATE: 03-27-98
<PAGE>
State of New York )
ss:
Department of State )
I hereby certify, that CVC HOLDINGS, INC. a DELAWARE corporation, filed an
Application for Authority to do business in the State of New York on 12/10/1990.
I further certify that no certificate of Surrender of Authority has been filed,
and so far as shown by the records of this Department, such corporation is still
authorized to do business in the State of New York.
***
Witness my hand and the official seal of
the Department of State at the City of
Albany, this 25th day of March one
thousand nine hundred and ninety-eight.
/s/ [ILLEGIBLE]
Special Deputy Secretary of State
199803260164 46
[SEAL]
<PAGE>
State of New York )
ss:
Department of State )
I hereby certify, that CVC HOLDINGS, INC. a DELAWARE corporation, filed an
Application for Authority to do business in the State of New York on 12/10/1990.
A certificate changing name to CVC, INC. was filed on 04/02/1998, doing business
under the fictitious name of CVC HOLDINGS.
I further certify that no certificate of surrender of Authority has been filed,
and so far as shown by the records of this Department, such corporation is still
authorized to do business in the State of New York.
***
Witness my hand and the official seal of
the Department of State at the City of
Albany, this 02nd day of April one
thousand nine hundred and ninety-eight.
/s/ [ILLEGIBLE]
Special Deputy Secretary of State
199804030038 51
[SEAL]
<PAGE>
APPLICATION OF PROCEEDS
On April 14, 1998 ("Closing Date"), CVC PRODUCTS, INC. ("Borrower"),
executed and delivered to MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank"), an
$8,000,000.00 Term Note ("Term Note"). The proceeds of the Term Note shall be
applied to partially refinance, to the extent of $8,000,000.00, the unpaid
principal balance due Bank under a $10,000,000.00 Grid Note dated January 30,
1998 ("1/30/98 Note"). Borrower acknowledges to Bank that on the Closing Date,
the 1/30/98 Note had an unpaid principal balance of $9,850,000.00.
On the Closing Date, Borrower also executed a Loan Agreement ("Loan
Agreement") which provides for, among other things, a $10,000,000.00 line of
credit ("Line"). Loans under the Line are evidenced by Borrower's $10,000,000.00
Grid Note executed by Borrower on the Closing Date ("Grid Note"). On the Closing
Date, Borrower requests a $4,988,042.50 advance under the Line, the proceeds of
which will be distributed by Bank as follows:
a. $1,850,000.00 to partially refinance the unpaid principal balance
due Bank under the 1/30/98 Note on the Closing Date.
b. $3,075,000.00 to refinance in full the unpaid principal balance due
Bank under Borrower's $4,750,000.00 Grid Note dated April 9, 1998
("4/9/98 Note").
c. $13,042.50 to pay Woods, Oviatt, Gilman, Sturman & Clarke, LLP
("Woods, Oviatt") for Bank's attorneys' fees ($8,500.00) and
estimated disbursements ($4,542.50). Borrower will pay to Woods,
Oviatt the balance due for any disbursements when billed.
d. $50,000.00 to be retained by Bank in payment of the Up-Front Fee
provided for in the Agreement.
Borrower agrees that Bank may without further notice to Borrower, debit
any account of Borrower maintained at Bank for all accrued interest due Bank on
the 1/30/98 Note, and the 4/9/98 Note through the Closing Date (or the following
business day if the proceeds of the Term Note and advance under the Line are not
advanced by Bank until that date).
<PAGE>
The above application of proceeds is acceptable to Borrower.
Borrower acknowledges that although Term Note and Grid Note are dated as
of March 31, 1998, no proceeds of either note were advanced until the Closing
Date.
Dated: April 14, 1998 CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
---------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and
Chief Financial Officer
STATE OF NEW YORK)
COUNTY OF MONROE ) SS:
On this 14th day of April, 1998, before me, the subscriber, personally
appeared 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
within Instrument, and that he signed his name thereto by order of the Board of
Directors.
/s/ Gary F. Amendola
------------------------------------
Notary Public
GARY F. AMENDOLA
Notary Public, State of New York
Qualified in Monroe County
Commission Expires Oct 31, ________
2
<PAGE>
- --------------------------------------------------------------------------------
ACORD(TM) CERTIFICATE OF LIABILITY INSURANCE CSR 10 DATE (MM/DD/YY)
CVCP000 04/13/98
- --------------------------------------------------------------------------------
PRODUCER
William Gallagher Associates
Insurance Brokers, Inc.
200 State Street
Boston, MA 02109-2694
Phone No. 617-261-6700 Fax No. 617-261-6720
- --------------------------------------------------------------------------------
INSURED
CVC Inc. & CVC Products, Inc.
525 Lee Road
Rochester NY 14606
- --------------------------------------------------------------------------------
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER
THE COVERAGE AFFORDED BY THE POLICIES BELOW.
- --------------------------------------------------------------------------------
COMPANIES AFFORDING COVERAGE
- --------------------------------------------------------------------------------
COMPANY A Royal Insurance
- --------------------------------------------------------------------------------
COMPANY B
- --------------------------------------------------------------------------------
COMPANY C
- --------------------------------------------------------------------------------
COMPANY D
- --------------------------------------------------------------------------------
COVERAGES
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVEBEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POLICY POLICY
EFFECTIVE EXPIRATION
CO DATE DATE
LTR TYPE OF INSURANCE POLICY NUMBER (MM/DD/YY) (MM/DD/YY) LIMITS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GENERAL LIABILITY GENERAL AGGREGATE $2,000,000
--------------------------------------
A |X| COMMERCIAL GENERAL LIABILITY SV013576 04/01/98 04/01/99 PRODUCTS - COMP/OP AGG $2,000,000
--------------------------------------
|_| CLAIMS MADE |X| OCCUR PERSONAL & ADV INJURY $1,000,000
--------------------------------------
|_| OWNERS & CONTRACTORS PROT EACH OCCURRENCE $1,000,000
--------------------------------------
|_| FIRE DAMAGE (Any one fire) $ 300,000
---------------------------- --------------------------------------
|_| MED EXP (Any one person) $ 10,000
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY COMBINED SINGLE UNIT $
|_| ANY AUTO --------------------------------------
|_| ALL OWNED AUTOS BODILY INJURY
|_| SCHEDULED AUTOS (Per person) $
|_| HIRED AUTOS --------------------------------------
|_| NON-OWNED AUTOS BODILY INJURY
|_| (Per accident) $
---------------------------- --------------------------------------
|_| PROPERTY DAMAGE $
- ----------------------------------------------------------------------------------------------------------------------------------
GARAGE LIABILITY AUTO ONLY - EA ACCIDENT $
--------------------------------------
|_| ANY AUTO OTHER THAN AUTO ONLY
--------------------------------------
|_| EACH ACCIDENT $
---------------------------- --------------------------------------
|_| AGGREGATE $
- ----------------------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY EACH OCCURRENCE $
--------------------------------------
|_| UMBRELLA FORM AGGREGATE $
--------------------------------------
|_| OTHER THAN UMBRELLA FORM $
- ----------------------------------------------------------------------------------------------------------------------------------
WORKERS COMPENSATION AND |_| WC STATU- |_| OTH-
EMPLOYERS' LIABILITY TORY LIMITS ER
--------------------------------------
THE PROPRIETOR/ EL EACH ACCIDENT $
PARTNERS/EXECUTIVE |_| INCL --------------------------------------
OFFICERS ARE |_| EXCL EL DISEASE - POLICY LIMIT $
--------------------------------------
EL DISEASE - EA EMPLOYEE $
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER
A Blanket Property SV013576 04/01/98 04/01/99 Limit: $36,851,933
Flood & Earthquake Sublimit: $10,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
MANUFACTURERS AND TRADERS TRUST COMPANY, ISAOA IS ADDED AS LENDER LOSS PAYEE
WITH RESPECT TO BUSINESS CONTENTS LOCATED AT THE FOLLOWING: 525 LEE RD,
ROCHESTER, NY; 329 OAKS TRAIL, GARLAND, TX; 100 LAURELVIEW CRT, FREEMONT,
CA; 2914 MONTOPOLIS DRIVE, AUSTIN, TX; 4530 WEST 77TH STREET, STE 221,
EDINA, MN
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATE HOLDER
MTBANKI
M&T FINANCIAL CORPORATION
M&T REAL ESTATE, INC.
MANUFACTURERS & TRADERS
TRUST COMPANY, ISAOA
ONE M&T PLAZA
BUFFALO NY 14240
ACORD 25-8 (1/98)
- --------------------------------------------------------------------------------
CANCELLATION
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION
DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE
TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO MAIL SUCH NOTICE
SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS
OR REPRESENTATIVES.
- --------------------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
/s/ William W. Gallagher
William Gallagher Associates
Insurance Brokers, Inc.
(C) ACORD CORPORATION 1993
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ACORD(TM) EVIDENCE OF PROPERTY INSURANCE OP ID CM DATE (MM/DD/YY)
04/09/98
THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN
FORCE, AND CONVEYS ALL THE RIGHTS AND PRIVILEGES AFFORDED UNDER THE POLICY
- --------------------------------------------------------------------------------
PRODUCER PHONE/FAX
(A/C, No., Ext.): 617-261-6700/617-261-6720
William Gallagher Associates
Insurance Brokers, Inc.
200 State Street
Boston, MA 02109-2694
- --------------------------------------------------------------------------------
CODE: SUB CODE:
- --------------------------------------------------------------------------------
AGENCY
CUSTOMER ID #: CVCP000
- --------------------------------------------------------------------------------
INSURED
CVC Inc. & CVC Products, Inc.
525 Lee Road
Rochester NY 14606
- --------------------------------------------------------------------------------
COMPANY
Royal Insurance
25 New Chardon Street
Boston MA 02114
- --------------------------------------------------------------------------------
LOAN NUMBER POLICY NUMBER
SV103576
- --------------------------------------------------------------------------------
EFFECTIVE DATE EXPIRATION DATE |_| CONTINUED UNTIL
TERMINATED IF CHECKED
04/01/99 04/01/99
- --------
THIS REPLACES PRIOR EVIDENCE DATED:
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION
001
525 Lee Road
Rochester NY 14606
- --------------------------------------------------------------------------------
COVERAGE INFORMATION
COVERAGE/PERILS/FORMS AMOUNT OF INSURANCE DEDUCTIBLE
- --------------------------------------------------------------------------------
Blanket Business Personal Property $36,851,93 $ 5,000
Flood and Earthquake Sublimit $10,000,00 $50,000
- --------------------------------------------------------------------------------
REMARKS (Including Special Conditions)
- --------------------------------------------------------------------------------
CANCELLATION
THE POLICY IS SUBJECT TO THE PREMIUMS, FORMS, AND RULES IN EFFECT FOR EACH
POLICY PERIOD. SHOULD THE POLICY BE TERMINATED, THE COMPANY WILL GIVE THE
ADDITIONAL INTEREST IDENTIFIED BELOW 30 DAYS WRITTEN NOTICE, AND WILL SEND
NOTIFICATION OF ANY CHANGES TO THE POLICY THAT WOULD AFFECT THAT INTEREST, IN
ACCORDANCE WITH THE POLICY PROVISIONS OR AS REQUIRED BY LAW.
- --------------------------------------------------------------------------------
ADDITIONAL INTEREST
NAME AND ADDRESS
M&T FINANCIAL CORPORATION
M&T REAL ESTATE, INC.
Manufacturers and Traders
Trust Company, ISAOA
One M&T Plaza
Buffalo NY 14240
ACORD 27 (3/93)
- --------------------------------------------------------------------------------
|_| MORTGAGEE |X| ADDITIONAL INSURED
|X| LOSS PAYEE |X| SECURED PARTY
- --------------------------------------------------------------------------------
LOAN #
- --------------------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
/s/ William W. Gallagher
William Gallagher Associates
Insurance Brokers, Inc.
(C) ACORD CORPORATION 1993
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ACORD(TM) EVIDENCE OF PROPERTY INSURANCE OP ID CM DATE (MM/DD/YY)
PROPERTY SCHEDULE 04/09/98
CVC, Inc. & CVC Products, Inc CVCP000 PAGE 2
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION 002
3100 Laurelview Court
Freemont CA 94538
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION 003
329 Oaks Trail, Suite 202
Garland TX 75043
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION 004
2914 Montopolis Drive
Austin TX 78741
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION 005
4530 West 77th Street, Ste 221
Edina MN 55435
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
LOCATION/DESCRIPTION
- --------------------------------------------------------------------------------
ATTACH TO EVIDENCE OF PROPERTY APPLICATION
- --------------------------------------------------------------------------------
<PAGE>
Woods, Oviatt, Gilman,
Sturman & Clarke LLP Attorneys
44 Exchange Street Federal ID. No.
Rochester, New York 14614 16-0902614
(716) 454-5370
FAX (716) 454-3968
April 14, 1998
Manufacturers and Traders
Trust Company
255 East Avenue
Rochester, New York 14604
INVOICE #8-4252
MT50.26990
Attention: Mr. William E. Holston
Vice President
Re: CVC Products, Inc.
- --------------------------------------------------------------------------------
TO COUNSEL AND SERVICES RENDERED in connection with credit facilities
provided to CVC Products, Inc. by Manufacturers and Traders Trust Company.
Total services: $ 8,500.00
Estimated Disbursements:
See attached list $ 4,542.50
----------
TOTAL SERVICES AND DISBURSEMENTS $13,042.50
INVOICES NOT PAID IN THIRTY (30) DAYS ARE SUBJECT
TO FINANCE CHARGES AT THE RATE OF 1 1/2% A MONTH.
<PAGE>
ESTIMATED
CVC DISBURSEMENTS
UCC-1 FILING FEES:
New York $ 38.00
Monroe County 49.00
Texas 150.00
California 215.00
Minnesota 125.00
------
TOTAL $ 577.00
UCC-3 AMENDMENT:
New York $ 38.00
Monroe County 48.00
California 200.00
Texas 130.00
------
TOTAL $ 416.00
UCC SEARCHES (POST):
New York $ 21.00
Monroe County 21.00
Texas 160.00
California 160.00
Minnesota 150.00
------
TOTAL $ 512.00
UCC SEARCHES (PRE-CLOSING):
New York and Monroe County $ 350.00
Texas 152.00
California 142.50
Minnesota 138.00
------
TOTAL $ 782.50
Corporate Verifications $ 75.00
Photocopies 250.00
Facsimile 220.00
Federal Express 80.00
------
TOTAL $ 625.00
Patent filings $1,240.00
Trademark filings 40.00
Patent & Trademark Search 350.00
TOTAL $1,630.00
GRAND TOTAL $4,542.50
<PAGE>
EXHIBIT 10.47
AMENDMENT TO LOAN AGREEMENT
This AMENDMENT TO LOAN AGREEMENT ("Amendment"), dated as of September 22,
1999, between MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking
corporation, with a principal office located at One M&T Plaza, Buffalo, New York
14240 (the "Bank") and CVC PRODUCTS, INC., a Delaware corporation, with a
principal office located at 525 Lee Road, Rochester, New York 14606 (the
"Borrower").
WHEREAS, the Bank and the Borrower entered into a certain Loan Agreement,
dated as of March 31, 1998, which loan agreement was amended by letter
amendments September 30, 1998 and February 19, 1999 (collectively the "Letter
Amendments") (collectively, and as amended, restated or replaced from time to
time the "Loan Agreement"); and
WHEREAS, pursuant to the Loan Agreement, the Bank agreed to provide the
Borrower with an $8,000,000 term loan (the "Term Loan"), a $10,000,000
discretionary line of credit (the "Prior Line of Credit") and a $2,000,000 loan
limit (the "Prior Loan Limit"); and
WHEREAS, pursuant to the Loan Agreement, the Bank made the Term Loan to
the Borrower, and the Borrower has utilized the Prior Line of Credit; and
WHEREAS, the Prior Loan Limit was terminated by the Bank and the Borrower
and was replaced with equipment lease financing; and
WHEREAS, the Borrower has asked the Bank to increase the amount available
under the Prior Line of Credit, to provide letters of credit, to modify the
Borrowing Base (as defined in the Loan Agreement) and to establish a new loan
limit in the amount of $3,000,000, and to make additional modifications to the
Loan Agreement; and
WHEREAS, the Bank is willing to make the above-referenced modifications
pursuant to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained herein, the parties agree to amend the Loan Agreement as
follows:
1. All capitalized terms used in this Amendment shall have the definitions
provided in the Loan Agreement, except as otherwise defined herein.
2. The Schedules of Permitted Liens, Permitted Investments, Permitted
Indebtedness and Subsidiaries and Affiliates are hereby deleted in full and
replaced with the following:
<PAGE>
Schedule of Permitted Liens
1. Landlord Liens that are not superior to the Bank's security interests.
2. Purchase money liens in an aggregate total amount not to exceed
$1,000,000 provided that such liens secure no more than 100% of the lesser of
the fair market value or cost of the property purchased.
Schedule of Permitted Investments
1. Corporate bonds in an aggregate of no more than $1 million 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.
2. Publicly traded equities.
3. Investments in entities controlled, directly or indirectly, by Parent.
Schedule of Permitted Indebtedness
1. Debt to Bank.
2. Debt secured by Permitted Liens.
3. Debt to Real Lease, Inc. for equipment purchased or leased from NORESCO
in the principal amount of $25,000.
4. Additional indebtedness provided that no such single additional debt
exceeds $100,000.00 and the aggregate amount of such additional debt does not
exceed $250,000.00.
Schedule of Subsidiaries and Affiliates
1. Seagate Technology (Affiliate)
2. Nikko Tecno Co., Inc. (Affiliate)
3. CVC, Inc.
4. Commonwealth Scientific Corporation (Affiliate)
5. CVC Process Solutions, Inc. (Affiliate)
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<PAGE>
3. Section b. in Insert 1 of the Rider to Loan Agreement, dated March 31,
1998, (as amended, restated or replaced from time to time the "Rider") between
Bank and Borrower is hereby deleted in full and replaced with the following:
b. $15,000,000.00 Line of Credit.
(i) Subject to the terms and conditions of this Agreement,
Bank shall establish on September 22, 1999 (the "Amended Effective Date") for
the benefit of Borrower a discretionary line of credit ("Line of Credit") in the
maximum principal amount equal to the lesser of Fifteen Million Dollars
($15,000,000.00) or the then existing Borrowing Base (the "Maximum Credit").
Borrowing Base is defined below. Loans under the Line of Credit are
discretionary with Bank and conditioned upon prior approval by Bank.
(ii) The fact that a particular loan request pursuant to the
Line of Credit is disapproved by Bank shall have no effect on the Line of
Credit, nor on Borrower's rights to make future requests for loans under the
Line of Credit, nor on Borrower's obligation to pay the 1999 Grid Note (defined
below) and any other indebtedness of Borrower to Bank in full. Provided that
Bank gives approval to the requested borrowing, Borrower may borrow, repay and
reborrow under the Line of Credit, so long as the unpaid principal balance of
the 1999 Grid Note does not exceed the Maximum Credit.
(iii) Requests for a loan under the Line of Credit may be oral
(in person or by telephone) or in writing from an authorized person named in the
1999 Grid Note ("Authorized Person"), shall be made at least two (2) business
days before any LIBOR Rate Loan, and shall specify a date on which funds are
requested to be made available, which date shall be a business day in New York
State, the amount to be borrowed, the type of loan and, if a LIBOR Rate Loan,
the applicable Interest Period. No more than eight (8) LIBOR Rate Loans may be
outstanding at one time. Borrower will be bound by such instructions. Borrower
hereby indemnifies and holds Bank harmless from any liability (including Bank's
reasonable attorneys' fees) which may arise as a result of Bank's reliance on
telephone requests for borrowing and/or prepayment instructions from any person
identifying himself as an Authorized Person. Each Prime Loan shall be in the
minimum principal amount of $100,000.00 or a $10,000 integral multiple thereof,
and each LIBOR Rate Loan shall be in the minimum principal amount of $500,000.00
or a $100,000 integral multiple thereof, except for a borrowing in a lesser
amount equal to the unused portion of the Maximum Credit, which must be a Prime
Loan.
(iv) Each loan made by the Bank to Borrower under the Line of
Credit ("Approved Loan") shall be processed by debiting the Line of Credit and
crediting Borrower's checking account with Bank for the amount of the Approved
Loan or by forwarding or applying the Approved Loan proceeds as otherwise agreed
by Bank and Borrower. The Approved Loan shall be deemed made immediately upon
the crediting of the Approved Loan proceeds to Borrower's checking account with
Bank or forwarding or applying the Approved Loan proceeds as otherwise agreed by
Bank and Borrower.
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(v) Each Approved Loan is payable on demand and shall be
evidenced by an Amended and Restated Standard LIBOR Grid Note (with blanks
appropriately completed) (the "1999 Grid Note"), which Borrower shall execute
and deliver to Bank on the Amended Effective Date. The 1999 Grid Note shall be
in the form of Exhibit A attached to the Amendment, with blanks appropriately
completed.
(vi) Conversions and Contributions -- The Borrower shall have
the right to convert Approved Loans of one type (i.e., Prime Loans or LIBOR Rate
Loans) into Approved Loans of another type, or continue Approved Loans of the
same type, pursuant to the terms of the 1999 Grid Note.
(vii) All outstanding amounts under the Line of Credit,
(except as specifically provided in the 1999 Grid Note), shall bear interest
until paid in full (A) for Prime Loans, at the Prime Rate and (B) for LIBOR Rate
Loans, at the LIBOR Rate. Interest shall be calculated based on actual days
elapsed divided by a year of three hundred sixty (360) days. Changes in the rate
of interest applicable to the 1999 Grid Note shall become effective
automatically and without notice at the time of changes in the Prime Rate.
(viii) Payments of all accrued interest under the 1999 Grid
Note shall be made, in the case of Prime Loans, on the first day of each month
commencing the first month after the Prime Loan is made and, in the case of
LIBOR Rate Loans, on the last day of the applicable Interest Period, except if a
LIBOR Rate Loan has a six (6) month Interest Period, interest shall be paid on
the three (3) month anniversary of such LIBOR Rate Loan and on the last day of
the Interest Period, unless payment of the 1999 Grid Note is sooner demanded by
Bank, in which case all accrued interest shall be immediately due and payable in
full. Principal outstanding pursuant to the 1999 Grid Note shall be due and
payable in full at any time upon demand by Bank. In the event Borrower becomes
aware, or receives notice (oral or written) from Bank, that principal amounts
outstanding under the Line of Credit exceed the Maximum Credit at any time,
Borrower promptly shall make a principal payment to Bank sufficient to reduce
outstanding principal amounts to the Maximum Credit without the necessity of a
demand by Bank.
(ix) LIBOR Rate Loans -- Additional provisions regarding LIBOR
Rate Loans are contained in the 1999 Grid Note.
(x) As used in this Agreement, the following definitions shall
apply:
"Accounts" means all accounts, contract rights, chattel
paper, instruments and documents, whether now owned or hereafter created or
acquired by Borrower or any Guarantor or in which Borrower or any Guarantor now
has or hereafter acquires any interest.
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<PAGE>
"Amendment" means the Amendment to Loan Agreement dated
September 22, 1999 between Bank and Borrower.
"Borrowing Base" means, on any date, (a) the sum of (i)
eighty percent (80%) of Eligible Accounts and (ii) forty percent (40%) of
Eligible Inventory, plus (b) forty percent (40%) of the net depreciated value of
Borrower's demonstration inventory and equipment less (c) (i) the unpaid
principal amount outstanding under the 1998 Term Note, (ii) the outstanding
stated amount of all outstanding letters of credit which were issued by the Bank
(after approval by the Bank) for the account of Borrower or Parent and that are
outstanding and (iii) any deposits or advances from customers to the extent such
customers are account debtors with respect to any Eligible Accounts. For
purposes of this calculation, Eligible Accounts and Eligible Inventory shall be
as set forth in the most recent Borrowing Base Certificate delivered to Bank.
"Commonwealth" means Commonwealth Scientific
Corporation, a Virginia corporation with a principal office at 500 Pendleton
Street, Arlington, Virginia 22314.
"Cost of Funds" shall mean the most recent yield on
United States Treasury Obligations adjusted to a constant maturity of the number
of years equal to the term of the applicable Loan Limit Note in effect two (2)
business days prior to the date of the Loan Limit Note 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 commonly available
source utilized by the Bank, plus the "ask" side of the number of years equal to
the term of the applicable Loan Limit Note swap spread in effect two (2)
business days prior to the date of the Loan Limit Note as set forth in
Bloomberg, L.P. or by such other quoting service, index or commonly available
data source utilized by the Bank.
"Eligible Accounts" means an Account arising in the
ordinary course of Borrower's or any Guarantor's business from the sale of goods
or rendition of services, provided that it meets the following requirements:
(a) The Account is an Account that has been in
existence for 90 days or less and is payable
by its terms in no more than 30 days from
the invoice date except that the portion of
the Account related to installation of tools
shall be in existence no more than 180 days
from the date of shipment,
(b) The Account arose (i) from the performance
of services by Borrower or any Guarantor
that have been fully and satisfactorily
performed or (ii) from the absolute sale of
goods by Borrower or any Guarantor in which
Borrower or
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<PAGE>
Commonwealth had the sole and complete
ownership and that have been shipped or
delivered to and finally accepted without
dispute by the account debtor without
return, rejection, loss or damage and to
which Borrower or any Guarantor or the Bank
has possession of a shipping or delivery
receipt;
(c) The Account is a legal, valid and binding
obligation of the account debtor and is not
subject to any offset, counterclaim,
defense, credit, allowance or adjustment
except a discount for prompt payment, or to
any dispute, objection or complaint by the
Account Debtor concerning his, her or its
liability on the Account;
(d) The Account arose in the ordinary course of
Borrower's or any Guarantor's business and
no notice of bankruptcy, insolvency,
failure, suspension or termination of
business or financial embarrassment of the
Account Debtor has been received by Borrower
or any Guarantor or the Bank;
(e) The account debtor is not an affiliate
(defined below) of Borrower or any Guarantor
(other than Seagate Technology or Nikko
Tecno Co., Inc.) or a supplier (or an
affiliate of a supplier) of goods or
services to Borrower or any Guarantor;
(f) The Account is not an employee accounts
receivable, bill and hold accounts
receivable (i.e., accounts relating to goods
not yet shipped but invoiced), uncollectible
accounts receivable, accounts receivable
arising from progressive billings (i.e.,
accounts receivable from billings for work
performed on a partially completed
contract), accounts receivable arising from
guaranteed sales with buy back provisions
(i.e., sales in which the Borrower or any
Guarantor is obligated to repurchase
inventory or merchandise sold to customers),
accounts receivable from the United States
of America or agency or department thereof
(unless assignment
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<PAGE>
and notice thereof is effected in accordance
with the Assignment of Claims Act);
(g) The full amount reflected on Borrower's or
any Guarantor's records and on any invoice
delivered to the Bank relating to the
Account is owing to Borrower or such
Guarantor and no partial prepayments thereon
have been made;
(h) Each representation and warranty with
respect to the Account made by Borrower or
any Guarantor to the Bank in any security
agreement executed by Borrower or any
Guarantor is true and complete;
(i) The Account is subject to the perfected
first priority security interest of the Bank
and to no other security interest, lien,
assignment or encumbrance of any kind; and
(j) The Bank has not notified Borrower that the
Account or the account debtor, in the Bank's
reasonable judgment, is unsatisfactory.
"Eligible Inventory" means all first quality inventories
of finished products, work-in-process inventory and raw materials owned by the
Borrower or Commonwealth, valued at the lower of cost (on a FIFO basis) or
market, minus all perishable or non-saleable inventories and such reserves as
Borrower or Commonwealth has historically established, including, but not
limited to, (a) shrinkage reserves, (b) markdown reserves, and (c) reserves
which restore standard costs to actual costs. Neither so-called mold inventories
or inventories on consignment, (except that with respect to consignments,
Eligible Inventory shall include inventory shipped to customers at sites located
in the United States for evaluation by the customer, provided that no more than
75 days elapse from the date of shipment and further provided that the aggregate
value of such Eligible Inventory on consignment does not exceed $2,500,000.00),
are Eligible Inventories and all such inventories shall be excluded from the
calculation thereof. Eligible Inventories must arise from the Borrower's or
Commonwealth's ordinary course of business as it exists on the date of this
Amendment, must at all times be subject to the perfected, first priority
security interest of Bank and no other lien, must be located on Borrower's or
Commonwealth's premises within the United States (which are covered by a
landlord/mortgagee waiver acceptable to the Bank), must conform in all respects
to warranties contained in this Amendment and all security or other related
agreements and documents, and must not be subject to a licensing agreement with
third parties unless Bank shall have received consents or acknowledgements or
other assurances satisfactory to the Bank from such third parties as may be
deemed necessary or desirable to facilitate Bank's realization
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<PAGE>
upon such inventory. Any inventory subject to an Eligible Account shall also not
constitute Eligible Inventory. The calculation of Eligible Inventory must be
satisfactory to the Bank in its reasonable discretion.
"Eurocurrency Reserve Rate" means, for any LIBOR Rate
Loan for any Interest Period therefor, the daily average of the stated maximum
rate (expressed as a decimal) at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period (or any part thereof) under Regulation D by the Bank against
"Eurocurrency Liabilities" (as such term is used in Regulation D), but without
the benefit or credit of proration, exemptions or offsets that might otherwise
be available to the Bank from time to time under Regulation D. Without limiting
the effect of the foregoing, the Eurocurrency Reserve Rate shall reflect any
other reserves required to be maintained by the Bank against any category of
liabilities that includes deposits by reference to which the LIBOR Rate for
LIBOR Rate Loans is determined, or any category of extension or credit or other
assets that include LIBOR Rate Loans.
"Fixed Rate" shall mean 1.85% above the Cost of Funds.
"Fixed Rate Loan" means a loan bearing interest at the
Fixed Rate.
"Interest Period" means, with respect to any LIBOR Rate
Loan, each period commencing on the date such LIBOR Rate Loan is made or
converted from a Prime Loan and ending on the numerically corresponding day in
the first, second, third or sixth calendar month thereafter, as the Borrower
may select, except that each Interest Period which commences on the last
business day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last business day of the appropriate subsequent calendar month.
Notwithstanding the foregoing, (i) each Interest Period
that would otherwise end on a day which is not a business day, shall end on the
next succeeding business day (or, if such next succeeding business day falls in
the next succeeding calendar month, on the next preceding business day); and
(ii) notwithstanding clause (i) above, no Interest Period shall have a duration
of less than one month without Bank's consent and, if the Interest Period for
any LIBOR Rate Loan would otherwise be a shorter period, such LIBOR Rate Loan
shall not be available hereunder for such period.
"Letters of Credit" shall mean the Letters of Credit
described in Section b.(xiv) of Insert 1 of this Rider.
"Letters of Credit Obligations" means all obligations of
the Borrower to reimburse the Bank for all amounts drawn under the Letters of
Credit pursuant to the Reimbursement Agreement (as defined below).
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<PAGE>
"LIBOR Base Rate" means, with respect to any Interest
Period for a LIBOR Rate Loan, the rate per annum equal to the quotient obtained
by dividing (and rounded upward to the nearest 1/100 of 1%) (i) LIBOR (as
determined below) on a date two Business Days prior to the beginning of an
Interest Period ("Interest Setting Date"), at which deposits in United States
Dollars for a period and in an amount, comparable to the Interest Period and the
principal amount of the LIBOR Rate Loan are offered to prime banks in the London
Interbank market at 11:00 a.m. (London time) on that day ("Reference Bank") by
(ii) a percentage equal to 100% minus the Eurocurrency Reserve Rate. LIBOR shall
be determined by the Bank on the Interest Setting Date from Telerate Page 3750
as of 11:00 a.m. (London time) on such date, or if such page or such service
ceases to display such information, from such other service or method as Bank
may select.
"LIBOR Rate" means for a loan under the Line of Credit,
the LIBOR Base Rate plus two and one quarter percent (2.25%), and for a loan
under the Loan Limit, the LIBOR Base Rate plus two and one-half percent (2.5%).
"LIBOR Rate Loan" means a loan bearing interest at the
LIBOR Rate.
"Prime Loan" means any loan under this Agreement bearing
interest at the Prime Rate.
"Prime Rate" shall mean the rate of interest designated
by the Bank as its prime rate from time to time as a guide for establishing
lending rates to customers, irrespective of the actual rate charged to any
specific customer with respect to any specific transaction.
(xi) Borrower also will submit to Bank within thirty (30) days
after the end of each calendar month a Borrowing Base Certificate reporting on
the Borrowing Base as of the end of the previous month together with all
supporting documentation requested by Bank and a monthly backlog report. Each
Borrowing Base Certificate shall be in form satisfactory to the Bank and
certified to Bank by Borrower's Chief Financial Officer. Borrower will also,
within forty-five (45) days of the end of each of its first three fiscal
quarters, provide Bank with a certificate executed by its Chief Financial
Officer, stating that he has read this Amendment, knows its contents and that to
his knowledge, Borrower is in compliance with all financial covenants contained
in this Amendment, and no Event of Default has occurred under this Amendment,
and no conditions exists, which, with notice, lapse of time or both, would
constitute an Event of Default under this Amendment. The certificate shall also
show the computations required to establish Borrower's compliance with each
financial covenant during the period covered by the certificate. Borrower shall
also provide Bank with such additional financial and other information as Bank
shall reasonably, from time to time, request.
(xii) Bank may perform full field audits of Borrower's
accounts receivable and inventories during normal business hours at Borrower's
expense once a
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year. Bank reserves the right, in its sole discretion and at its own expense, to
perform field audits of Borrower's accounts receivable and inventories more than
once per year. Notwithstanding the foregoing, during the continuance of an Event
of Default, the Bank may perform an unlimited amount of full field audits at
Borrower's expense.
(xiii) The Line of Credit will terminate on the demand by Bank
of amounts outstanding under the 1999 Grid Note. Bank may also terminate
Borrower's right to make requests for loans under the Line of Credit at any time
by giving Borrower written notice of termination without making a demand for
payment of the 1999 Grid Note. The giving of such notice by Bank shall not
effect Bank's rights under this Amendment or under the 1999 Grid Note or under
any other agreement, instrument or document made by Borrower with or in favor of
Bank, nor on Borrower's obligation to pay the 1999 Grid Note in full according
to its terms.
(xiv) Subject to the terms and conditions of this Agreement
and provided the Borrower complies with all application requirements of the Bank
for issuing letters of credit, the Borrower may request that the Bank make
standby letters of credit available for the account of the Borrower; provided
that (a) the Borrower shall not request that the Bank issue any Letter of
Credit, if, after giving effect to such issuance, the sum of the aggregate
Letter of Credit Obligations plus the aggregate outstanding principal amount of
the 1999 Grid Note would exceed the Maximum Credit; and (b) the Borrower shall
not request that the Bank issue any Letter of Credit, and the Bank will not
issue any letter of credit if after giving effect to such issuance, the
aggregate Letter of Credit Obligations would exceed $1,000,000.
The Borrower will pay to the Bank letter of credit fees
on the date of issuance of the Letters of Credit and on each anniversary date
thereafter if the Letters of Credit are renewed, equal to one and one-quarter
percent (1 1/4%) of the aggregate face amount of all outstanding Letter of
Credit, or such other amount as may be customarily charged by the Bank. In
addition, Borrower shall pay to the Bank all other fees customarily charged by
the Bank in connection with the issuance of the Letters of Credit.
Prior to issuance of any Letters of Credit hereunder,
the Borrower will execute a Letter of Credit Reimbursement Agreement (the
"Reimbursement Agreement") substantially in the form of Exhibit B attached to
the Amendment that is satisfactory to the Bank, documenting its Obligations with
respect to the Letters of Credit. To the extent of any conflict between the
terms of this Amendment and the Reimbursement Agreement or any letter of credit
application, the terms of this Amendment shall control.
4. Paragraph c. in Insert 1 of the Rider is hereby deleted in full and
replaced with the following:
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<PAGE>
c. $3,000,000.00 Loan Limit.
(i) Subject to the terms and conditions of this Agreement, the
Bank hereby establishes for the benefit of the Borrower a discretionary offering
basis loan limit ("Loan Limit") in the maximum principal amount outstanding at
any one time of Three Million Dollars ($3,000,000.00). Loans under the Loan
Limit shall be either Prime Loans, LIBOR Rate Loans or Fixed Rate Loans. Prime
Loans shall be in the minimum principal amount of $100,000, or a $10,000
integral multiple thereof, and LIBOR Rate Loans and Fixed Rate Loans shall be in
the minimum principal amount of $500,000, or a $100,000 integral multiple
thereof. Under the Loan Limit, an authorized officer of the Bank, in his sole
discretion, may make advances to Borrower under the Loan Limit on the terms
specified below. Borrower acknowledges that such officer may refuse to make any
advances under the Loan Limit to Borrower for any reason, or for no reason
whatsoever.
(ii) Provided that all of the conditions for advances
contained herein are satisfied, including approval of a requested advance,
advances under the Loan Limit will be made from time to time at the request of
the Borrower by credits to the Borrower's accounts at the Bank.
(iii) Unless extended by the Bank in writing in its sole
discretion, the Loan Limit will be available until terminated by Bank upon
written notice to the Borrower. Borrower acknowledges that Bank may terminate
the Loan Limit at any time in its sole discretion.
(iv) With each advance under the Loan Limit, the Borrower
shall execute a term note evidencing such indebtedness to the Bank (each such
note, a "Loan Limit Note"). Each Loan Limit Note shall be in substantially the
form of Exhibit C-1 attached to the Amendment if a Fixed Rate Loan and Exhibit
C-2 attached to the Amendment if a Prime Loan or LIBOR Rate Loan. Each such note
shall be dated the date the Borrower executes the note, be payable to the order
of Bank, be in the principal amount of the advance and provide for interest
accruing, prior to an Event of Default, at a rate equal to (1) the Prime Rate,
(2) the Fixed Rate or (3) the LIBOR Rate. Each Loan Limit Note shall further
provide that, unless sooner accelerated, the original principal amount evidenced
thereby shall be repayable in such number of months as may be selected by Bank
which shall not be less than thirty-six (36) months nor more than sixty (60)
months. Accrued interest under each Loan Limit Note shall be due on the first
day of each calendar month for a Prime Loan or Fixed Rate Loan, and on the last
day of the Applicable Interest Period for a LIBOR Rate Loan, except if a LIBOR
Rate Loan has a six (6) month Interest Period, interest shall be paid on the
three (3) month anniversary of such LIBOR Rate Loan and on the last day of the
Interest Period, with the first interest payment due on the first day of the
first month following the date on which the note is executed and continuing
thereafter until the note is paid in full. All remaining principal and accrued
interest shall be due and payable in full on the Loan Limit Note's maturity
date. No more than five (5) LIBOR Rate Loans may be outstanding at any one time.
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(v) The Borrower shall have the right to convert approved
loans of one type (i.e., Prime Loans or LIBOR Rate Loans, but not Fixed Rate
Loans) into approved loans of another type (but not Fixed Rate Loans), or
continue approved loans of the same type, pursuant to the terms of the Loan
Limit Note.
5. (a) The proceeds of the Approved Loan under the Line of Credit made by
Bank to Borrower on the Closing Date $8,608,000 shall be used by Borrower only
for the purposes set forth in the Application of Proceeds executed by Borrower
on the Closing Date. The proceeds of all other Approved Loans made under the
Line of Credit shall be used only for Borrower's working capital purposes and
Letters of Credit.
(b) The proceeds of all advances under the Loan Limit shall only be
used for purchases of equipment. Borrower shall provide Bank with a copy of the
purchase orders and paid invoices for the equipment purchased. In no event shall
any advance under the Loan Limit (or any other borrowing by Borrower) fund more
than one hundred percent (100%) of the lesser of the cost or the fair market
value of the equipment for which an advance is requested.
6. The representations and warranties in a, b, c, f and k of Insert 5 of
the Rider are hereby deleted in full and replaced with the following:
a. Financial Statements. All financial statements furnished by
Borrower to Bank (including, without limitation, the consolidated balance sheets
as of June 30, 1999 and September 30, 1998 of Parent and the related
consolidated statements of operations, shareholders' equity and cash flows for
the nine (9) and twelve (12) months then ended, respectively, are complete and
correct, have been prepared in accordance with Generally Accepted Accounting
Principles 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 Borrower's operations and cash flow for the
respective periods covered thereby. Since June 30, 1999, there has been no
material adverse change in the condition, financial or otherwise, of the
Borrower.
b. Registration Statement. Borrower has provided Bank with a true
and complete copy of the Amendment No. 3 to Registration Statement (File No.
356-33821) filed by Parent with the Securities and Exchange Commission on
September 10, 1999, and such Registration Statement (including the prospectus
contained therein) does not, and in the future neither the Registration
Statement nor any supplement nor amendment thereto, will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated or incorporated by reference therein or necessary to make the statement
therein not misleading (and in the case of the prospectus, not misleading in
light of the circumstances under which they were made).
c. Subsidiaries and Affiliates. The Borrower is a wholly-owned
subsidiary of the Parent and neither Borrower nor Parent has any subsidiaries or
affiliates, except those listed in the attached "Schedule of Permitted
Subsidiaries and Affiliates".
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Parent's sole assets are the capital stock of Borrower, Commonwealth and CVC
Process Solutions, Inc. Borrower is not a party to any material transaction with
any affiliate except for transactions which are in the ordinary course of
business and upon fair and reasonable terms not materially less favorable than
Borrower could obtain or 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 Parent, Borrower or any subsidiary of Parent or Borrower.
"control", "controlled by" or "under common control" means,
but is not limited to, the beneficial ownership (as defined in Rule 13(d)
promulgated by the Securities Exchange Commission pursuant to Section 13(d) of
the Securities Exchange Act of 1934, as amended) of ten percent (10%) or more of
the outstanding shares of capital stock of any corporation having 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 ten percent (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.
f. Existing Indebtedness. Except as disclosed in the attached
"Schedule of Permitted Indebtedness," neither Parent nor Borrower has any
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, 1999, and wages,
salary, trade payables and operating leases incurred in the ordinary course of
business since such date. Without limiting the foregoing, neither Parent nor
Borrower is an account party with respect to any letters of credit other than
those issued by Bank. 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 on any long-term debt (other than debt to Bank) at any time for any
reason (whether before or after maturity hereof).
k. Except as specified in Recordation Form Cover Sheet on Form PTO
1595, provided to Bank by Borrower on or about September 22, 1999, Borrower has
no patents issued by the U.S. Patents and Trademark Office ("PTO"), nor has
Borrower filed any other applications for patents with the PTO.
7. The definition of Existing Bank Documents in subparagraph (j) of Insert
5 of the Rider is hereby amended by adding to such definition the following:
(xvi) Master Lease Agreement, dated April 7, 1998, executed by
Borrower in favor of M&T Financial Corporation and Schedules Nos. 1, 2 and 3
thereto.
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8. The Tangible Net Worth, Total Liabilities to Tangible Net Worth, Cash
Flow Ratio, Backlog and Maximum Negative Net Income financial covenants
contained in Insert No. 6 of the Rider are hereby deleted in full and replaced
with the following and the Capital Expenditure covenant contained in Insert No.
6 is deleted:
b. Tangible Net Worth. Borrower shall not at any time have a
Tangible Net Worth of less than $29,000,000, as of the end of any fiscal
quarter, or 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.
c. Total Liabilities to Tangible Net Worth. Borrower shall not at
any time have a ratio of Total Liabilities to Tangible Net Worth of more than
2.5:1.0 at any time; provided, however, if at any time Parent closes on a public
offering of its common or other capital stock, it shall not have at any time as
of and after such closing Total Liabilities to Tangible Net Worth of more than
1.5 to 1.0.
d. Cash Flow Ratio. Borrower shall not have a Cash Flow Ratio of
less than 3.0 to 1.0 as of the end of any fiscal quarter.
e. Backlog. Borrower shall not have confirmed orders from customers
which will result in aggregate net sales to Borrower during the succeeding
twelve (12) months following the measurement date of less than $10,000,000.00.
f. Maximum Negative Net Income. Borrower shall not (i) for any
fiscal quarter after the date hereof have Net Income of less than negative
$500,000.00 and (ii) have Net Income of less than zero ($0) for any two
consecutive fiscal quarters
The definition of Cash Flow Ratio in Insert 6 of the Rider is
deleted and replaced with the following:
"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
(1) current maturities of Borrower's long-term debt due during the twelve (12)
months immediately following the Measurement Period and (2) distributions,
dividends and amounts paid or accrued for the repurchase of stock by the
Borrower during the Measurement Period.
In determining Cash Flow Ratio for the four fiscal quarters
commencing with September 30, 1999 through the fiscal quarter ending March 30,
2000, Net Income shall not include the in-process research and development
charge of $1,174,000 reflected in the June 30, 1999 financial statements.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made and all
financial
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<PAGE>
statements required to be delivered hereunder shall be prepared, in accordance
with GAAP as in effect from time to time, applied on a basis consistent with
Borrower's consolidated financial statements as of and for the twelve (12)
months period ended September 30, 1998.
9. The first paragraph and the last paragraph of Insert No. 9 of the Rider
are hereby deleted and replaced with the following:
As used in this Agreement, (i) any amount due under this Agreement
includes, without limitation, any principal, interest, fees or expenses due
under the 1998 Term Note, the 1999 Grid Note and/or the Loan Limit or any of the
Existing Bank Documents; (ii) "any agreement with the Bank" includes any
agreement, note or instrument with the Bank, M&T Real Estate or any Bank
affiliate (which includes, without limitation, this Amendment, the 1998 Term
Note, the 1999 Grid Note and the Existing Bank Documents); (iii) "accelerated"
or "acceleration" means indebtedness that becomes due at maturity, by notice
after the occurrence of an event of default or which becomes due as a result of
a demand.
Notwithstanding the foregoing, the Bank shall be entitled to demand
and receive payment in full at any time of all outstanding and unpaid principal
under the 1999 Grid Note and all accrued interest thereon as well as all fees
and expenses due hereunder and such right to demand payment shall not be
altered, modified or abridged in any way as a result of anything herein
(including any covenants or Events of Default) or anything in any related
documents, including the Existing Bank Documents.
10. The definition of Guarantor, Note and Loan Documents in Insert No. 10
of the Rider are hereby deleted and replaced with the following:
b. The term "Guarantor" means any Entity (including Parent and
Commonwealth Scientific Corporation and CVC Process Solutions, Inc.) which
guaranties to Bank payment of the Indebtedness of any part thereof.
d. The term "Loan Documents" means any and all Notes and other
agreements executed at any time by any Entity in connection with this Agreement
or the Amendment. The Existing Bank Documents shall also be deemed Loan
Documents under this Agreement.
e. The term "Note" means any promissory note, or other instrument,
executed by Borrower in favor of Bank at any time, whether under this Agreement
or otherwise, including, but not limited to, the 1998 Term Note, the 1999 Grid
Note, all Loan Limit Notes, and the $3,000,000.00 Term Note dated September 30,
1996, executed by Borrower in favor of Bank.
11. Paragraph 13 in Insert 11 of the Rider is hereby deleted in full.
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<PAGE>
12. The Bank's execution of this Amendment and its right to approve
advances under the Line of Credit and the Loan Limit are subject to the
fulfillment of each of the following conditions to Bank's satisfaction:
a. The representations and warranties in the Loan Agreement, the
Loan Documents, this Amendment and all other related documents shall be true and
correct;
b. No event shall have occurred that constitutes an Event of
Default, or which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default;
c. Bank shall have received the following agreements, notes,
instruments, certificates and opinions, each of which shall be satisfactory to
Bank in form and substance:
(i) A complete Officers' Certificate from the Borrower and
each Guarantor containing the following;
1. Resolutions duly adopted by Borrower's and
Guarantor's Board of Directors authorizing the execution, delivery and
performance of this Amendment and each of the other documents to be executed by
such party in connection herewith and all of the transactions contemplated
thereunder and hereunder;
2. An Incumbency Certificate for each of Borrower's and
Guarantor's officers;
3. A copy of the Certificate of Incorporation and
By-Laws of Borrower and each Guarantor and any amendments to either to date; and
4. A Certificate of Good Standing or similar subsistence
certificate in the Borrower's and Guarantor's respective state of incorporation
and each state in which the Borrower and Guarantors are qualified to do
business.
(ii) A complete Perfection Certificate from the Borrower and
each Guarantor in the form provided by Bank executed by an officer of each such
entity;
(iii) The 1999 Grid Note duly executed by Borrower;
(iv) A Continuing Guaranty of all obligations, whenever
arising, of Borrower and Parent to Bank executed by Commonwealth ("Commonwealth
Guaranty") and by CVC Process Solutions, Inc. in the form of the New Guaranties.
In addition, Commonwealth and CVC Process Solutions, Inc. shall execute a
General Security Agreement in favor of Bank, which shall be in the form of the
New Security Agreements;
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<PAGE>
(v) Borrower and Parent shall reaffirm their obligations under
the Loan Agreement, 1998 Term Note, New Guaranties, New Security Agreements, the
Existing Bank Documents and other Loan Documents pursuant to an Acknowledgement
and Agreement in form and content acceptable to the Bank;
(vi) An Amended and Restated Patent Collateral Assignment and
Security Agreement in the form of Exhibit F attached to the Loan Agreement, duly
executed by Borrower and Parent;
(vii) A Patent Collateral Assignment and Security Agreement
and a Trademark Collateral Assignment and Security Agreement executed by
Commonwealth.
(viii) An opinion letter from Nixon Peabody, LLP, counsel for
Borrower and Guarantors in form and content acceptable to the Bank and its
counsel;
(ix) The Bank shall have received a Landlord/Mortgagee Waiver
Agreement in form acceptable to Bank from each landlord and each mortgagee of
any real property on which Borrower or Guarantors conduct any of their business;
(x) The Bank shall have received UCC, judgment, tax, franchise
tax and bankruptcy searches in the States of New York, Delaware, Virginia,
California, Minnesota and Texas and such counties and other filing offices as
may be identified by Bank with respect to the Borrower and Guarantors.
(xi) The Bank shall have received patent and trademark
searches against the Borrower and Commonwealth.
d. There shall have occurred no material adverse change in the
business condition (financial or otherwise), operations, performance, properties
or prospects of Borrower and Guarantors since June 30, 1999.
e. There shall exist no litigation pending or threatened in any
court or before any court or other governmental authority that (a) could
reasonably be expected to (i) have a material adverse effect on the business,
condition (financial or otherwise), operations, performance, properties or
prospects of Borrower or Guarantors or affect the ability of Borrower or
Guarantors to perform their obligations under this Amendment, the Loan Agreement
or any of the Loan Documents.
f. The Borrower shall have paid the Bank all fees and expenses due
hereunder, including all fees and expenses (including reasonable attorneys' fees
and disbursements) incurred by Bank in connection with the preparation,
negotiations and execution of this Amendment and all related agreements,
instruments and documents.
g. All of the information provided by or on behalf of Borrower and
Guarantors to Bank prior to its letter, dated September 2, 1999, to Borrower
(the "Pre-Letter
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<PAGE>
Information") shall be true and correct in all material aspects, and no
development or change shall have occurred, and no additional information shall
have come to the attention of the Bank that (i) has resulted in or could
reasonable be expected to result in a change in, or deviation from, the
Pre-Letter Information or (ii) has had or could reasonably be expected to result
in a material adverse effect on the business, condition (financial or
otherwise), operations, performance, properties or prospects of Borrower or
Guarantors.
In addition to the foregoing conditions precedent, all legal details
in connection with this Amendment and all documents executed in connection
herewith shall have met with the approval of Woods, Oviatt, Gilman, Sturman &
Clarke LLP, counsel for Bank.
13. Borrower represents and warrants to Bank and acknowledges to Bank as
follows:
(a) The Loan Agreement and Loan Documents executed at any time by
Borrower and/or by any other Person are and remain in full force and effect,
constitute the valid and binding obligation of the Person who executed it and
are enforceable by Bank against each Person who executed it without offset
against or defense thereto of any nature or kind.
(b) All representations and warranties made by Borrower to Bank in
the Loan Agreement and the Loan Documents are true and accurate in all respects.
(c) Borrower has fully complied with all affirmative, negative and
financial covenants contained in the Loan Agreement and the Loan Documents.
(d) No Event of Default has occurred under the Loan Agreement, and
no condition exists, which, with notice, lapse of time or both, would cause or
constitute an Event of Default under the Loan Agreement.
14. The Borrower further represents and warrants to the Bank that
statements concerning year 2000 remediation efforts being undertaken by the
Borrower set forth in Amendment No. 3 to the Registration Statement (file
#356-33821) filed by Parent with the Securities and Exchange Commission on
September 10, 1999 are true and accurate.
15. The Letter Amendments are hereby terminated and of no force and
effect.
16. This Amendment is governed by New York law and may not be amended or
terminated orally. Any litigation involving the Loan Agreement and/or any Loan
Document and/or this Amendment shall, at Bank's sole option, be tried only in a
court located in Monroe County, New York. BORROWER AND BANK WAIVE THE RIGHT TO A
JURY TRIAL IN ANY ACTIONS INVOLVING THE LOAN AGREEMENT AND/OR ANY LOAN DOCUMENT
AND/OR THIS AMENDMENT. No other person or entity is a third party beneficiary of
this jury trial waiver.
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<PAGE>
IN WITNESS WHEREOF, Borrower and Bank have executed this Amendment to Loan
Agreement effective as of September 22, 1999.
CVC PRODUCTS, INC.
By: /s/ Emilio 0. DiCataldo
------------------------------------
Name: Emilio 0. DiCataldo
Title: Senior Vice President and CFO
MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ William Holston
------------------------------------
Name: William Holston
Title: Vice President
LIST OF EXHIBITS
Exhibit A - Amended and Restated Standard LIBOR Grid Note
Exhibit B - Reimbursement Agreement
Exhibit C-1 - Loan Limit Note (Fixed Rate Loan)
Exhibit C-2 - Loan Limit Note (Prime Loan or LIBOR Rate Loan)
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<PAGE>
"EXHIBIT A"
AMENDED AND RESTATED
STANDARD LIBOR GRID NOTE
Buffalo, New York September 22, 1999 $15,000,000.00
BORROWER: CVC PRODUCTS, INC.
a(n) |_| individual(s) |_| partnership |X| corporation |_| ___________ organized
under the laws of Delaware
Address of residence/chief executive office: 525 Lee Road, Rochester, New York
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M & T Plaza, Buffalo, NY 14240.
Attention: Office of General Counsel
1. DEFINITIONS. Each capitalized term shall have the meaning specified herein
and the following terms shall have the indicated meanings:
a. "Authorized Person" shall mean, each individually, Christine Whitman
or Emilio DiCataldo. Mention of the Authorized Person's name is for
reference purposes only and the Bank may rely on a person's title to
ascertain whether someone is an Authorized Person.
b. "Automatic Adjustment Date" shall mean two (2) Business Days before
the last day of the Interest Period initially selected by the
Borrower for a LIBOR Rate Loan that is subject to the Automatic
Continuation Option.
c. "Automatic Continuation Option" shall mean the option to have the
Interest Period for a LIBOR Rate Loan to automatically continue at
the same Interest Period duration initially selected by the Borrower
for such LIBOR Rate Loan as of the last day such Interest Period.
d. "Base Rate" shall mean 0 percentage points above the rate of
interest announced by the Bank as its prime rate of interest
(Prime"). If the prior blank is not filled in, the Base Rate shall
be one (1) percentage point above Prime.
e. "Base Rate Loan" shall mean a Loan which bears interest at the Base
Rate.
f. "Business Day" shall mean any day of the year on which banking
institutions in New York, New York are not authorized or required by
law or other governmental action to close and, in connection with
the LIBOR Rate, on which dealings are carried on in the London
interbank market.
g. "Continuation Date" shall mean the date on which Borrower's election
to continue a LIBOR Rate Loan for another Interest Period becomes
effective in accordance with this Note.
h. "Conversion Date" shall mean the date on which Borrower's election
to convert a Base Rate Loan to a LIBOR Rate Loan or a LIBOR Rate
Loan to a Base Rate Loan becomes effective in accordance with this
Note.
i.
j. "Draw Date" shall mean, in relation to any Loan, the Business Day on
which such Loan is made, or to be made, to Borrower pursuant to the
Note.
k.
l.
m.
n. "Loan" means a loan made to Borrower by the Bank pursuant to this
Note.
o. "Maximum Principal Amount" shall mean Fifteen Million Dollars
($15,000,000.00) or the Borrowing Base, whichever is less.
p. "Minimum Borrowing Amount" shall mean (i) for Base Rate Loans,
$100,000 with increments of $10,000 and (ii) for LIBOR Rate Loans,
$500,000 with minimum increments thereafter of $100,000.
q. "Outstanding Principal Amount" shall mean the actual outstanding
principal amount under this Note at any time.
All capitalized terms not defined herein shall have the meaning set
forth in the Loan Agreement between Bank and Borrower dated March
31, 1998, which Loan Agreement was amended by letter amendments
dated September 30, 1998 and February 19, 1999, as amended by the
Amendment to Loan Agreement between Bank and Borrower dated
September 22, 1999 (the "Loan Agreement").
2. PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES
a. Promise to Pay. For value received, Borrower promises to pay to the
order of the Bank on demand, the Maximum Principal Amount or the Outstanding
Principal Amount, if less; plus interest as set forth below and all reasonable
fees and costs (including without limitation attorneys' fees and disbursements,
whether for internal or outside counsel) the Bank incurs in order to collect any
amount due under this Note, to negotiate or document a workout or restructuring,
or to preserve its rights or realize upon any guaranty or other security for the
payment of this Note ("Expenses").
b. Interest. Each Loan shall earn interest on the Outstanding Principal
Amount thereof calculated on the basis of a 360-day year for the actual number
of days of each year (365 or 366) that on each day shall be:
i. LIBOR Rate Loans. Interest shall accrue on a LIBOR Rate Loan from
and including the first day of the Interest Period applicable
thereto until, but not including, the last day of such Interest
Period or the day the LIBOR Rate Loan is paid in full (if sooner) at
a rate per annum equal to the LIBOR Rate in effect on the following
dates (depending on the circumstance):
<PAGE>
(i) for new LIBOR Rate Loans, the Business Day the Bank receives (or
is deemed to receive) a Request for a LIBOR Rate Loan; (ii) for
conversions and continuations of LIBOR Rate Loans pursuant to
Section 4, the Business Day the Bank receives (or is deemed to
receive) the Notice of Conversion or Notice of Continuation, as the
case may be, in accordance with Section 4(b); for LIBOR Rate Loans
where the Automatic Continuation Option is selected, the Automatic
Adjustment Date for such LIBOR Rate Loan.
ii. Base Rate Loans. Interest shall accrue on a Base Rate Loan from
and including the first date the Base Rate Loan was made (i.e., the
Draw Date or the Conversion Date, as the case may be) to, but not
including, the day such Base Rate Loan is paid in full or converted,
at the rate per annum equal to the Base Rate. Any change in the Base
Rate resulting from a change in the Bank's prime rate shall be
effective on the date of such change.
c. Maximum Legal Rate. It is the intent of the Bank and of Borrower that
in no event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the "Maximum Legal Rate"). 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 canceled, and, if received by the Bank, shall be refunded to
Borrower.
d. Payments; Late Charge; Default Rate. Payments shall be made in
immediately available United States funds at any banking office of the Bank.
Absent demand for payment in full, interest shall be due and payable as follows:
unless demanded sooner, (i) in respect to each Base Rate Loan, monthly when
invoiced and (ii) in respect to each LIBOR Rate Loan, on the last day of each
Interest Period applicable thereto except if a LIBOR Rate Loan has a six month
Interest Period, interest shall be paid on the three month anniversary of the
LIBOR Rate Loan and on the last day of the Interest Period. If payment is not
received within five days of its due date, Borrower shall pay a late charge
equal to the greatest of (a) 5% of the delinquent amount, (b) the Bank's then
current late charge as announced by the Bank from time to time, or (c) $50.00.
In addition, if the Bank has not actually received any payment under this Note
within thirty days after its due date, from and after such thirtieth day the
interest rate for all amounts outstanding under this Note shall automatically
increase to 5 percentage points above the higher of the Base Rate or the highest
LIBOR Rate, and any judgment entered hereon or otherwise in connection with any
suit to collect amounts due hereunder shall bear interest at such default rate.
Payments may be applied in any order in the sole discretion of the Bank but,
prior to demand, shall be applied first to past due interest, Expenses, late
charges, and principal payments, if any, which are past due, then to current
interest and Expenses and late charges, and last to remaining principal.
e. Prepayment of LIBOR Rate Loans. If (i) Borrower pays, in whole or in
part, any LIBOR Rate Loan, before the expiration of its respective Interest Rate
Period, (ii) fails to draw down, in whole or in part, a LIBOR Rate Loan after
giving a Request therefor, (iii) otherwise tries to revoke any LIBOR Rate Loan,
in whole or in part, or (iv) there occurs a Bankruptcy Event or the applicable
rate is converted from the LIBOR Rate to the Base Rate pursuant to Section 4(d),
then Borrower shall be liable for and shall pay the Bank, on demand, the higher
of $250.00 or the actual amount of the liabilities, expenses, costs or funding
losses that are a direct or indirect result of such prepayment, failure to draw,
early termination of an Interest Period, revocation, bankruptcy or otherwise,
whether such liability, expense, cost or loss is by reason of (a) any reduction
in yield, by reason of the liquidation or reemployment of any deposit or other
funds acquired by the Bank, (b) the fixing of the interest rate payable on any
LIBOR Rate Loans or (c) otherwise. The determination by the Bank of the amount
of foregoing amount shall, in the absence of manifest error, be conclusive and
binding upon Borrower.
3. LOANS.
a. General. Any Loan hereunder shall either be in the form of a Base Rate
Loan or a LIBOR Rate Loan. No Loan, or any portion thereof, shall be made to the
extent that the sum of the (i) principal amount of the requested Loan, or any
portion thereof and (ii) the Outstanding Principal Amount of all Loans under the
Note exceeds the Maximum Principal Amount under this Note. The Bank may make any
Loan in reliance upon any oral, telephonic, written, teletransmitted or other
request (the "Request(s)") that the Bank in good faith believes to be valid and
to have been made by Borrower or on behalf of Borrower by an Authorized Person.
The Bank may act on the Request of any Authorized Person until the Bank shall
have received from Borrower, and had a reasonable time to act on, written notice
revoking the authority of such Authorized Person. The Bank shall incur no
liability to Borrower or to any other person as a direct or indirect result of
making any Loan pursuant to this paragraph.
b. Request for LIBOR Rate Loans. Borrower shall give the Bank its
irrevocable Request for a LIBOR Rate Loan specifying:
i. the Draw Date for the LIBOR Rate Loan, which shall be a two
(2) Business Days from the date the Request: provided, however
if a Request is received by the Bank after 2:00 p.m. (Eastern
Standard Time), the Request for the LIBOR Rate Loan shall be
deemed to have been received on the next Business Day;
ii. the aggregate amount of such LIBOR Rate Loan, which amount
shall not be less than the Minimum Borrowing Amount; and
iii. the applicable Interest Period (i.e., 1, 2, 3 or 6 month
Interest Period).
iv. whether Borrower is electing to have the Automatic
Continuation Option for such LIBOR Rate Loan.
c. Requests for Base Rate Loans. Borrower may request any Base Rate Loan
not later than 2:00 p.m. (Eastern Standard Time) on any proposed Draw Date
specifying the aggregate amount of such Base Rate Loan.
d. Delivery of Requests Delivery of a Notice or Request for a LIBOR Rate
Loan or a Base Rate Loan shall be made to the Bank at the following as follows,
or such other address designated by the Bank from time to time:
Manufacturers and Traders Trust Company
Attn: Julie Root
Fax No. (716) 258-8300
Telephone No. (716) 258-8262
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<PAGE>
4. CONTINUATION and CONVERSION ELECTIONS.
a. Election. An Authorized Person of Borrower may, upon irrevocable
Request to the Bank,
i. elect to convert on any Business Day any Base Rate Loan into a
LIBOR Rate Loan provided the amount converted is not less than
the Minimum Borrowing Amount; or
ii. elect to convert any or a part of LIBOR Rate Loan as of the
last day of the applicable Interest Period into a Base Rate
Loan provided no partial conversion of a LIBOR Rate Loan shall
reduce the outstanding principal amount of such LIBOR Rate
Loan to less than the Minimum Borrowing Amount; or
iii. elect to continue all or a part (subject to the Minimum
Borrowing Amount limitation) of any LIBOR Rate Loan as of the
last day of the Interest Period applicable to such LIBOR Rate
Loan with the same or different Interest Period provided no
partial continuation of a LIBOR Rate Loan with a different
Interest Period shall reduce the outstanding principal amount
of the LIBOR Rate Loan with the same Interest Period to less
than the Minimum Borrowing Amount.
b. Notice of Conversion/Continuation.
i. For an election under Section 4(a)(i) or 4(a)(iii), an
Authorized Person must deliver to the Bank by 2:00 p.m.
(Eastern Standard Time) on a Business Day a Notice of
Conversion ("Notice of Conversion") for an election under
Section 4(a)(i) or a Notice of Continuation ("Notice of
Continuation") for an election under Section 4(a)(iii)
specifying:
(a) the aggregate amount of the Loans to be converted or
continued;
(b) the duration of the requested Interest Period (i.e., 1,
2, 3 or 6 month Interest Period); and
(c) whether the Automatic Continuation Option will be
activated for such LIBOR Rate Loan.
ii. The Continuation Date or Conversion Date (as the case may be)
shall be the later of (A) two (2) Business Days from the
Business Day the Bank receives the Notice of Conversion or
Notice of Continuation (either, a "Notice") in accordance with
the foregoing Section or (B) the last day of the relevant
Interest Period if a Notice is received by the Bank more than
two (2) Business Days before the last day of an Interest
Period. If a Notice is received after 2:00 p.m. (Eastern
Standard Time), the Notice will be deemed to have been
received on the next Business Day. Notice of Continuation
received more than two (2) Business Days before the end of an
Interest Period shall be deemed to have been received two (2)
Business Days before the end of such Interest Period for
purposes of determining the LIBOR Rate for the next Interest
Period per Section 2(b)(i). Accordingly, if, for example,
Borrower has a LIBOR Rate Loan with a one month Interest
Period ending on June 15 and wants to continue the LIBOR Rate
Loan with a two month Interest Period, Borrower must deliver
its Notice of Continuation identifying the new two month
Interest Period to the Bank by 2:00 p.m. (Eastern Standard
Time) on June 13 (provided that June 13 and June 14 are
Business Days).
iii. For LIBOR Rate Loans where Borrower has elected to activate
the Automatic Continuation Option, the Bank shall
automatically continue such LIBOR Rate Loan with an same
Interest Period initially selected by the Borrower. Once the
Automatic Continuation Option has been activated for a LIBOR
Rate Loan, the submission of a Notice of Conversion or a
Notice of Continuation with a different Interest Period shall
result in the cancellation of the Automatic Continuation
Option for such LIBOR Rate Loan.
iv. For an election under Section 4(a)(ii), an Authorized Person
may deliver to the Bank a Notice of Conversion at any time
during an Interest Period up to the last day of such Interest
Period or may have the LIBOR Rate Loan automatically convert
to a Base Rate Loan pursuant to Section 4(c). Any such Notice
of Conversion delivered during an Interest Period shall be
effective on the last day of the Interest Period.
v. The Bank may take action on any Notice in reliance upon any
oral, telephonic, written or teletransmitted Notice that the
Bank in good faith believes to be valid and to have been made
by Borrower or on behalf of Borrower by an Authorized Person.
No Notice may be delivered by e-mail. The Bank may act on the
Notice from any Authorized Person until the Bank shall have
received from Borrower, and had a reasonable time to act on,
written notice revoking the authority of such Authorized
Person, The Bank shall incur no liability Borrower or to any
other person as a direct or indirect result of acting on any
Notice under this Note. The Bank, in its reasonable
discretion, may reject any Notice that is incomplete.
c. Expiration of Interest Period. If Borrower does not submit a Notice of
Continuation in accordance with Section 4(b)(i) and 4(b)(ii) so that the Bank
receives the Notice of Continuation at least two (2) Business Days before the
end of an Interest Period, the LIBOR Rate Loan shall automatically be converted
into a Base Rate Loan and such Loan shall accrue interest at the Base Rate until
two (2) Business Days after the Bank receives a Notice of Conversion pursuant to
Section 4(b)(i) and 4(b)(ii) electing to convert the Loan from a Base Rate Loan
to a LIBOR Rate Loan pursuant to Section 4(a)(i). A Notice of Continuation
received one (1) Business Day before the end of an Interest Period will not
effect a continuation of such Loan as a LIBOR Rate Loan. Rather, such LIBOR Rate
Loan shall automatically convert to a Base Rate Loan on the last day of the
Interest Period. The late Notice of Continuation, however, will be deemed to be
a Notice of Conversion that will be effective two (2) Business Days from the
date received by the Bank.
d. Conversion upon Default Unless the Bank shall otherwise consent in
writing, if (i) Borrower has failed to pay when due, in whole or in part, the
indebtedness under the Note (whether by demand or otherwise), or (ii) there
exists a condition or event which with the passage of time, the giving of notice
or both shall constitute an event of default under any of Borrower's agreement
with the Bank, if any, Borrower may not elect to have a Loan converted or
continued as a LIBOR Rate Loan or have any Loan made as a LIBOR Rate Loan.
Further, the Bank, in its sole discretion, may (i) permit any outstanding LIBOR
Rate Loans to continue until the last day of the applicable Interest Period at
which time such Loan shall automatically be converted into a Base Rate Loan or
(ii) convert any outstanding LIBOR Rate Loans into a Base Rate Loan before the
end of the applicable Interest Period applicable to such LIBOR Rate Loan.
Notwithstanding the foregoing, if Borrower commences, or has commenced against
it, any proceeding or request for relief under any bankruptcy, insolvency or
similar laws now or hereafter in effect in the United States of America or any
state or territory thereof or any foreign jurisdiction or any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims against
or winding up of affairs of Borrower (a "Bankruptcy Event"), any outstanding
LIBOR Rate Loans shall be automatically converted to Base Rate Loans without
further action by the Bank and Borrower's rights to have Base Rate Loans
converted under Section 4 shall be automatically terminated. Nothing herein
shall be construed to be a waiver by the Bank to have any Loan accrue interest
at the Default Rate of interest (which shall be calculated from the higher of
the LIBOR Rate or the Base Rate) or the right of the Bank to the amounts set
forth in Section 2(e) of this Note.
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<PAGE>
5 SETOFF. The Bank shall have the right to set off against the amounts owing
under this Note any property held in a deposit or other account with the Bank or
any of its affiliates or otherwise owing by the Bank or any of its affiliates in
any capacity to Borrower or any guarantor or endorser of this Note. Such set-off
shall be deemed to have been exercised immediately at the time the Bank or such
affiliate elect to do so.
6 DEMAND FACILITY. The Bank may modify, restrict, suspend or terminate the
credit under this Note at any time for any reason and without affecting
Borrower's then existing obligation under this Note. The Bank shall have the
sole and absolute discretion whether to make any Loan or any potion of any Loan
requested by Borrower, and the Bank may refuse to make any requested Loan even
though the sum of the requested Loan and the Outstanding Principal Amount would
not exceed the Maximum Principal Amount. This is a demand Note and all amounts
hereunder shall become immediately due and payable upon demand by the Bank;
provided, however, that the Outstanding Principal Amount of this Note and all
accrued and unpaid interest shall automatically become immediately due and
payable upon the occurrence of a Bankruptcy Event with regard to Borrower or any
guarantor or endorser of this Note. Borrower hereby waives protest, presentment
and notice of any kind in connection with this Note.
7 BANK RECORDS CONCLUSIVE. The Bank shall set forth on a schedule attached to
this Note or maintained on computer, the date and original principal amount of
each Loan and the date and amount of each payment to be applied to the
Outstanding Principal Amount of this Note. The Outstanding Principal Amount set
forth on any such schedule shall be presumptive evidence of the Outstanding
Principal Amount of this Note and of all Loans. No failure by the Bank to make,
and no error by the Bank in making, any annotation on any such schedule shall
affect the Borrower's obligation to pay the principal and interest of each Loan
or any other obligation of Borrower to the Bank pursuant to this Note.
8 PURPOSE. Borrower certifies (a) that no Loan will be used to purchase margin
stock except with the Bank's express prior written consent for each such
purchase and (b) that all Loans shall be used for a business purpose, and not
for any personal, family or household purpose.
9 AUTHORIZATION. Borrower, if a corporation, partnership, limited liability
company, trust or other entity, represents that it is duly organized and in good
standing or duly constituted in the state of its organization and is duly
authorized to do business in all jurisdictions material to the conduct of its
business; that the execution, delivery and performance of this Note have been
duly authorized by all necessary regulatory and corporate or partnership action
or by its governing instrument; that this Note has been duly executed by an
authorized officer, partner or trustee and constitutes a binding obligation
enforceable against Borrower and not in violation of any law, court order or
agreement by which Borrower is bound; and that Borrower's performance is not
threatened by any pending or threatened litigation.
10 INABILITY TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.
a Increased Costs. If the Bank shall determine that, due to either (a) the
introduction of any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the interpretation of any requirement of law or (b) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining any LIBOR
Rate Loans, then Borrower shall be liable for, and shall from time to time, upon
demand therefor by the Bank and pay to the Bank such additional amounts as are
sufficient to compensate the Bank for such increased costs.
b Inability to Determine Rates. If the Bank shall determine that for any
reason adequate and reasonable means do not exist for ascertaining LIBOR for any
requested Interest Period with respect to a proposed LIBOR Rate Loan, the Bank
will give notice of such determination to Borrower. Thereafter, the Bank may not
make or maintain LIBOR Rate Loans, as the case may be, hereunder until the Bank
revokes such notice in writing. Upon receipt of such notice, Borrower may revoke
any request for a LIBOR Rate Loan or Notice then submitted by it. If Borrower
does not revoke such notice the Bank may make, or continue the Loans, as
proposed by Borrower, in the amount specified in the applicable request
submitted by Borrower, but such Loans shall be made or continued as Base Rate
Loans instead of LIBOR Rate Loans, as the case may be.
c Illegality. If the Bank shall determine that the introduction of any law
(statutory or common), treaty, rule, regulation, guideline or determination of
an arbitrator or of a governmental authority or in the interpretation or
administration thereof, has made it unlawful, or that any central bank or other
governmental authority has asserted that it is unlawful for the Bank to make
LIBOR Rate Loans, then, on notice thereof by the Bank to Borrower, the Bank may
suspend the making of LIBOR Rate Loans until the Bank shall have notified
Borrower that the circumstances giving rise to such determination shall no
longer exist. If the Bank shall determine that it is unlawful to maintain any
LIBOR Rate Loans, Borrower shall prepay in full all LIBOR Rate Loans then
outstanding, together with accrued interest, either on the last date of the
Interest Period thereof if the Bank may lawfully continue to maintain such LIBOR
Rate Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such LIBOR Rate Loans. If Borrower is required to prepay any LIBOR Rate
Loan immediately as set forth in this subsection, then concurrently with such
prepayment, Borrower may borrow from the Bank, in the amount of such repayment,
a Base Rate Loan.
11 MISCELLANEOUS. This Note, together with any related loan and security
agreements and guaranties, contains the entire agreement between the Bank and
Borrower with respect to the Note, and supersedes every course of dealing, other
conduct, oral agreement and representation previously made by the Bank. All
rights and remedies of the Bank under applicable law and this Note or amendment
of any provision of this Note are cumulative and not exclusive. No single,
partial or delayed exercise by the Bank of any right or remedy shall preclude
the subsequent exercise by the Bank at any time of any right or remedy of the
Bank without notice. No waiver or amendment of any provision of this Note shall
be effective unless made specifically in writing by the Bank. No course of
dealing or other conduct, no oral agreement or representation made by the Bank,
and no usage of trade, shall operate as a waiver of any right or remedy of the
Bank. No waiver of any right or remedy of the Bank shall be effective unless
made specifically in writing by the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Singular number includes
plural and neuter gender includes masculine and feminine as appropriate.
12 NOTICES. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Borrower
(at its address on the Bank's records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for Borrowers relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Borrower and the Bank.
-4-
<PAGE>
13 JOINT AND SEVERAL. If there is more than one Borrower, each of them shall be
jointly and severally liable for all amounts which become due under this Note
and the term "Borrower" shall include each as well as all of them.
14 GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted by
the Bank and will be deemed to be made in the State of New York. This Note will
be interpreted in accordance with the laws of the State of New York excluding
its conflict of laws rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK STATE AND
CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT
BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT
NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING ANY ACTION,
ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER
INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN
ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION. Borrower
acknowledges and agrees that the venue provided above is the most convenient
forum for both the Bank and Borrower. Borrower waives (i) any objection to venue
and any objection based on a more convenient forum in any action instituted
under this Note; (ii) any right to assert any counterclaim or setoff or any
defense based upon a statute of limitations, upon a claim of laches or any other
legal theory; and (iii) its right to attack a final judgment that is obtained as
a direct or indirect result of any such action.
15 WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE BANK MAY
HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
NOTE OR THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT
NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY
TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO
THIS NOTE BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.
|X| Replacement Note. This Note is given in replacement of and in substitution
for but not in payment of, a note dated on or about March 31, 1998 in the
original principal amount of $10,000,000 issued by Borrower (or
________________________________________________) to the Bank.
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
available funds in Borrower's deposit account #15226103 with the Bank
automatically for any amount which becomes due under this Note or as directed by
an Authorized Person, by telephone.
TAX ID/SS# 16-1017191 CVC PRODUCTS, INC.
--------------------- ----------------------------------------
BORROWER
By: ____________________________________
Name: Emilio 0. DiCataldo
Title: Senior Vice President and CFO
____________________________________
Signature of Witness
Typed Name of Witness ____________________________________
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF ________)
On the __ day of September, in the year 1999, before me, the undersigned, a
Notary Public in and for said State, personally appeared Emilio 0. DiCataldo,
personally know to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
_________________________________________
Notary Public
-5-
<PAGE>
"EXHIBIT B"
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
[LOGO] M&T Bank One Fountain Plaza
Manufacturers and Trust Company Buffalo, New York 14203-1485
(716) 848-3696
Fax: (716) 848-3777
LETTERS OF CREDIT Date ___________________________
APPLICANT: CVC Products, Inc.
a(n) |_| individual(s) |_| partnership |X| corporation |_|
___________________organized under the laws of Delaware
Address of residence/chief executive office: 525 Lee Road, Rochester, New York
14606 Phone: __________________________ Fax: ______________________
ACCOUNT PARTY (if any): ________________________________________________________
a(n) |_| individual(s) |_| 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 as in effect in the State
of New York from time to time.
(f) "UCP" means the Uniform Customs and Practice for Documentary Credits
(1933 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 the
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 if 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 Cash (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 Drafts 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 its issuance by an increase in a related
risk-weighted capital or similar reserve 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 on 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 refunded 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 a continuing first security interest in all Documents and Property
<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 possession.
Applicant and Account Party also acknowledge the Bank's right to set off
against their obligations under this Agreement any other property of
Applicant or Account Party in any capacity held by the Bank in any
capacity. Applicant grants to the Bank a subordinate security interest in
all collateral held 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 action or omission by the Bank or its
correspondents in connection 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 intermediate 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 cause 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 related Drafts,
bills of lading, warehouse receipts or other Documents or 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 limitation 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
reimbursement 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 presented 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 is within the
maximum stated amount of the Credit. The following terms shall apply
unless Applicant gives instructions in writing expressly to the
contrary prior to the Bank's issuance of a specific 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 stated amount of the Credit; (2) Insurance for Property
under a commercial Credit need not exceed the maximum stated amount
of the Credit; and (3) the Bank may honor any Drafts or other
documents otherwise in order signed or issued by an administrator,
executor, trustee 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 its 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 notice,
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 to 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 waived discrepancies Applicant will remain
bound by the terms of this Agreement.
(f) Amendments. If a Credit is amended, modified or changed in any
respect with Applicant's consent, or if a preadvice 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 decreases
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, quality, quantity, 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 at 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 instrument 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 amounts, 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 its 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 interest at the Bank's announced
prime rate from the date of change to the expiration date of each
respective 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.
(c) No Liens. Applicant will not enter into any security agreement or
permit to be filed in any public office any financing statement
naming Applicant as debtor which creates a security interest in or
blanket lien on any of Applicant's Documents or Property or
after-acquired Property without Bank's prior written consent unless
Bank is the secured party.
(d) Legality. The transactions covered by each 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 the 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, from 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 discrepancy between
the number given and the name of the intended payee. APPLICANT
AGREES TO VERIFY ALL FUNDS TRANSFER INSTRUCTIONS WITH EXTRAORDINARY
CARE and expressly indemnifies 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>
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 declared
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 or 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
its consent), 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; (7) Applicant fails to supply new or
additional collateral within ten days of request by the Bank; or (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. All
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, Bank may require Applicant to assemble any
collateral and make it available to Bank at a place or places
designated by Bank, and Bank may use and operate any collateral.
Applicant agrees that any notice by Bank of intended sale of
collateral or similar action shall constitute reasonable notice if
mailed by regular or certified mail, postage prepaid, at least five
days prior to such action, to Applicant's most recent address in the
Bank's records.
9. Miscellaneous.
(a) Non-Waiver by Bank. No single, partial or delayed exercise by the
Bank of any right or 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 the 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 of Discretionary. The Bank may decline to issue any Credit,
or to accept any Draft prior to maturity, at the Bank's sole
discretion.
(d) Termination. This Agreement will continue in full force end effect
until terminated. It may be terminated (1) by the Bank at any time
if the Bank deems itself insecure with respect to reimbursement or
upon thirty days' notice to Applicant, 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 all 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 this Bank may be delivered by
telephone with subsequent written confirmation by mail or facsimile
transmission. 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 UCP.
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 UCP. The
provisions herein are supplemental to and not in substitution of the
UCP. As to matters not governed by the UCP, this Agreement shall be
governed by the laws of the State of New York as in effect from time
to time.
(f) Jurisdiction. In any action or other legal proceeding relating to
this Note, Applicant (1) consents to the personal 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 in original.
(g) 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: September 22, 1999 CVC Products, Inc.
-------------------------- ----------------------------------------------
Name of Applicant (Typed)
Tax ID/SS#: By:
-------------------- -------------------------------------------
Typed Name: Emilio O. DiCataldo, CFO Title
By:
- -------------------------------- -------------------------------------------
Signature of Witness Typed Name: Title
- --------------------------------
Typed Name of Witness
BANK USE ONLY:
Authorization Confirmed:
- --------------------------------
Bank Officer
-3-
<PAGE>
AUTHORIZATION AND AGREEMENT BY ACCOUNT PARTY
We join in the request to Bank to issue Credits on the terms and
conditions set forth above. In consideration thereof, we irrevocably agree that:
(1) the above Applicant has the sole right to give instructions and make
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.
Date:
-------------------------- ----------------------------------------------
Name of Account Party (Typed)
Tax ID/SS#: By:
-------------------- ------------------------------------------
Typed Name: Title
By:
- -------------------------------- ------------------------------------------
Witness Signature Typed Name: Title
- --------------------------------
Typed Name of Witness
BANK USE ONLY:
Authorization Confirmed:
- --------------------------------
Bank Officer
STATE OF ________________ )
:SS.
COUNTY OF _______________ )
On the ________________ day of ______________, 199____, before me
personally came ________________________________________________________________
|_| 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.
|_| Corporation to me known, who, being by me duly sworn, did depose and
say that he resides in _________________________________
________________________________________________________
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.
----------------------------------------------
Notary Public
STATE OF ________________ )
:SS.
COUNTY OF _______________ )
On the ________________ day of ______________, 199____, before me
personally came ________________________________________________________________
|_| 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.
|_| Corporation to me known, who, being by me duly sworn, did depose and
say that he resides in _________________________________
________________________________________________________
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.
----------------------------------------------
Notary Public
-4-
<PAGE>
"EXHIBIT C-1"
EXHIBIT C-1 TERM NOTE
[LOGO] M&T Bank
Manufacturers and Traders Trust Company
Buffalo, New York _________________________ 1999 $________________
BORROWER: CVC PRODUCTS, INC.____________________________________________________
a(n) |_| individual(s) |_| partnership |X| corporation |_| trust
|_| ____________________ organized under the laws of Delaware
Address of residence/chief executive office: 525 Lee Road, Rochester, New York.
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M & T Plaza, Buffalo, NY 14240.
Attention: Office of General Counsel
Promise to Pay. For value received, Borrower promises to pay to the order of the
Bank, on the dates set forth below, the principal sum of _______________________
Dollars ($______________) (the "Principal") plus interest as agreed below and
all reasonable fees and costs (including without limitation reasonable
attorneys' fees and disbursements whether for internal or outside counsel) the
Bank incurs in order to collect any amount due under this Note, to negotiate or
document a workout or restructuring, or to preserve its rights or realize upon
any guaranty or other security for the payment of this Note ("Expenses").
Interest. The unpaid Principal of this Note shall earn interest calculated on
the basis of a 360-day year for the actual number of days of each year (365 or
366) from and including the date the proceeds of this Note were disbursed to,
but not including, the date all amounts hereunder are paid in full, at a rate
per year which shall on each day be:
|_| ___________%.
|_| equal to the rate in effect on that day as the rate announced by the Bank
as its prime rate of interest.
|_| ___________ percentage points above the rate in effect on that day as the
rate announced by the Bank as its prime rate of interest.
If no rate is specified above, interest shall accrue at the Maximum Legal Rate
(defined below).
Maximum Legal Rate. It is the intent of the Bank and Borrower that in no event
shall 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
resident, 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
canceled, and, if received by the Bank, shall be refunded to Borrower.
Default Rate. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 5
percentage points per year above the otherwise applicable rate per year, and any
judgment entered hereon or otherwise in connection with any suit to collect
amounts due hereunder shall bear interest at such default rate.
Repayment of Principal and Interest Late Charge. Payments shall be made in
immediately available United States funds at any banking office of the Bank.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay a late
charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount or
(c) the Bank's then current late charge as announced from time to time. If this
Note is secured by a one- to six-family owner-occupied residence, the late
charge shall equal 2% of the delinquent amount and shall be payable if payment
is not received within fifteen days of its due date. Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to remaining
principal.
The Maturity Date of this Note is ________________________________,
199____/20____.
|_| Borrower shall pay the entire Principal on the Maturity Date. In addition,
until the outstanding Principal is paid in full, payments of all accrued
and unpaid interest in amounts which will vary will become due and payable
on the ___________ day of each:
|_| month |_| quarter |_| year commencing on ____________________________,
199____/20____.
|_| Borrower shall pay the Principal in _____________ consecutive |_| monthly
|_| quarterly |_| annual installments commencing on
_________________________________ 199____/20____ and on the __________ day
of each |_| month |_| quarter |_| year thereafter consisting of__________
equal installments each in the amount of $_________________________ and
ONE (1) FINAL INSTALLMENT on the Maturity Date in an amount equal to the
outstanding Principal together with all other amounts outstanding
hereunder including, without limitation, accrued interest, costs and
expenses. In addition, until the outstanding Principal is paid in full,
payments of all accrued and unpaid interest in amounts which will vary
will become due and payable on the __________ day of each: |_| month |_|
quarter |_| year commencing on _______________________________,
199____/20____.
|X| Borrower shall pay Principal and interest in __________ consecutive level
|X| monthly |_| quarterly |_| annual installments consisting of both
Principal and interest, amortized over a period of __________ years,
commencing on _______________________________________, 199____/20____ and
on the ____________ day of each |_| month |_| quarter |_| year thereafter
consisting of ___________ equal installments of Principal and interest
each in the amount of $_________________________ and ONE (1) FINAL
INSTALLMENT on the Maturity Date in an amount equal to the outstanding
Principal together with all other amounts outstanding hereunder including,
without limitation, accrued interest, costs and expenses. PLEASE NOTE THAT
THE FINAL INSTALLMENT OF PRINCIPAL SHALL BE HIGHER THAN EXPECTED IF (1) A
PAYMENT IS RECEIVED AFTER THE DUE DATE OR (2) THE INTEREST RATE UNDER THE
NOTE IS A VARIABLE RATE AND THERE IS AN INCREASE IN THE INTEREST RATE
DURING THE TERM OF THE NOTE IN THOSE SITUATIONS, MORE INTEREST WILL BE DUE
THAN PLANNED AND LESS OF THE INSTALLMENT WILL BE APPLIED TO PRINCIPAL.
Prepayment Premium. During the term of this Note. Borrower shall have the option
of paying the Principal to the Bank 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
Bank at least three (3) business days
1
<PAGE>
prior to making such payment; provided, however, as consideration of the
privilege of making such payment, Borrower shall pay to the Bank a premium equal
to the greater of (a) one percent (1%) of the Principal prepaid, or (b) an
amount equal to the present value of the difference between (i) the amount of
interest that would have accrued on the Principal during the remaining term of
the Note, at the interest rate set forth herein in effect on the date of
prepayment and (ii) the amount of interest that would have accrued on the
Principal during the remaining term of this Note at the Current Market Rate.
"Current Market Rate" shall mean 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
commonly available source utilized by the Bank. The present value calculation
used herein shall use the Current Market Rate as the discount rate and shall be
calculated as if each installment of the Principal had been made during the
remaining term of this Note. Each partial prepayment of the Principal shall be
applied in inverse order of maturity. Upon making any prepayment of the
Principal in whole, Borrower shall pay to the Bank all interest and Expenses
owing pursuant to this Note and remaining unpaid.
In the event the Maturity Date of this Note is accelerated following an Event of
Default by Borrower, 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 Bank shall be entitled to the amount necessary to satisfy the entire
indebtedness, plus the appropriate prepayment premium calculated in accordance
with the preceding paragraph.
Representations, Warranties and Covenants. See Addendum Insert No. 1
Events of Default; Acceleration. The following constitute an event of default
("Event of Default"): (i) failure by Borrower to make any payment when due
(whether at the stated maturity, by acceleration or otherwise) of the amounts
due under this Note, or any part thereof, or there occurs
2
<PAGE>
any event or condition which after notice, lapse of time or both will permit
such acceleration. See Addendum Insert No. 2
Right of Setoff. The Bank shall have the right to set off against the amounts
owing under this Note any property held in a deposit or other account with the
Bank or any Affiliates or otherwise owing by the Bank or any Affiliates in any
capacity to Borrower or any Guarantor or endorser of this Note. Such set-off
shall be deemed to have been exercised immediately at the time the Bank or such
Affiliate elect to do so.
Miscellaneous. This Note, together with any related loan and security agreements
and guaranties contains the entire agreement between the Bank and Borrower with
respect to the Note, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Bank. All rights and
remedies of the Bank under applicable law and this Note or amendment of any
provision of this Note are cumulative and not exclusive. No single, partial or
delayed exercise by the Bank of any right or remedy shall preclude the
subsequent exercise by the Bank at any time of any right or remedy of the Bank
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Bank. No course of dealing
or other conduct, no oral agreement or representation made by the Bank. and no
usage of trade, shall operate as a waiver of any right or remedy of the Bank. No
waiver of any right or remedy of the Bank shall be effective unless made
specifically in writing by the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Singular number includes
plural and neuter gender includes masculine and feminine as appropriate.
Notices. Any demand or notice hereunder or under any applicable law pertaining
hereto shall be in writing and duly given if delivered to Borrower (at its
address on the Bank's records) or to the Bank (at the address on page one and
separately to the Bank officer responsible for Borrower's relationship with the
Bank). Such notice or demand shall be deemed sufficiently given for all purposes
when delivered (i) by personal delivery and shall be deemed effective when
delivered or (ii) by mail or courier and shall be deemed effective three (3)
business days after deposit in an official depository maintained by the United
States Post Office for the collection of mail or one (1) business day after
delivery to a nationally recognized overnight courier service (e.g. Federal
Express). Notice by e-mail is not valid notice under this or any other agreement
between Borrower and the Bank.
Joint and Several. If there is more than one Borrower, each of them shall be
jointly and severally liable for all amounts and obligations which become due
under this Note and the term "Borrower" shall include each as well as all of
them.
Governing Law; Jurisdiction. This Note has been delivered to and accepted by the
Bank and will be deemed to be made in the State of New York. This Note will be
interpreted in accordance with the laws of the State of New York excluding its
conflict of laws rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK STATE IN A COUNTY OR
JUDICIAL DISTRICT WHERE THE BANK MAINTAINS A BRANCH AND CONSENTS THAT THE BANK
MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT BORROWER'S ADDRESS SET
FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN
THIS NOTE WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR
JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER INDIVIDUALLY, AGAINST ANY
SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN ANY OTHER COUNTY, STATE OR
OTHER FOREIGN OR DOMESTIC JURISDICTION. Borrower acknowledges and agrees that
the venue provided above is the most convenient forum for both the Bank and
Borrower. Borrower waives (i) any objection to venue and any objection based on
a more convenient forum in any action instituted under this Note; (ii) any right
to assert any counterclaim or setoff or any defense based upon a statute of
limitations, upon a claim of laches or any other legal theory; and (iii) its
right to attack a final judgment that is obtained as a direct or indirect result
of any such action.
Waiver of Jury Trial. BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE BANK MAY HAVE IN
ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS NOTE OR
THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT NO
REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY
TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO
THIS NOTE BY, AMONG OTHER THINGS. THE PROVISIONS OF THIS SECTION.
|_| This Note is given in replacement of and in substitution for, but not in
payment of, a note dated ________________________________ 19____/20____,
in the original principal amount of $_________________________ issued by
Borrower (or _____________________) to the Bank (or its predecessor in
interest).
3
<PAGE>
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #__________________________________ with the Bank
automatically for any amount which becomes due under this Note.
TAX ID/SS # 16-1017191 CVC PRODUCTS, INC.
----------------------- ---------------------------------------------
BORROWER
By:
-----------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
- --------------------------------- ---------------------------------------------
Signature of Witness
- --------------------------------- ---------------------------------------------
Typed Name of Witness
ACKNOWLEDGEMENT
STATE OF NEW YORK )
-------------------
: SS.
COUNTY OF )
------------------
On the ____ day of ________________, in the year 1999, before me, the
undersigned, a Notary Public in and for said State, personally appeared
_____________________________________, personally know to me or proved to me on
the basis of satisfactory evidence to be the individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.
---------------------------------------------
Notary Public
FOR BANK USE ONLY
Authorization Confirmed: _______________________________________________________
<TABLE>
<S> <C> <C> <C>
Disbursement of Funds: Credit A/C #_________ Off Ck #_________ Payoff Obligation #________
$_________ $_________ $________
</TABLE>
4
<PAGE>
ADDENDUM TO TERM NOTE
DATED AS OF _____ EXECUTED
BY CVC PRODUCTS, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY
This ADDENDUM to a certain Term Note, dated _________, is made by CVC
PRODUCTS, INC. ("Borrower") in favor of MANUFACTURERS AND TRADERS TRUST COMPANY
("Bank"). This Rider is an integral part of the Term Note.
Insert No. 1
Borrower represents and warrants to and agrees and covenants with the Bank
now and until this Note is paid in full that the representations and warranties
set forth in the Loan Agreement between Borrower and Bank dated March 31, 1998,
which Loan Agreement was amended by letter amendments dated September 30, 1998
and February 19, 1999, as amended by Amendment to Loan Agreement dated September
22, 1999 ("Loan Agreement"), are true and correct as of the date hereof, and are
reaffirmed as if fully set forth herein in full.
Insert No. 2
or (b) any Event of Default occurs under the Loan Agreement, as the Loan
Agreement is amended, extended or replaced from time to time.
As used in this Note (i) "any agreement with the Bank" includes any
agreement, note or instrument with the Bank (which includes, without limitation,
the Loan Agreement, the 1999 Term Note, the 1999 Grid Note, the Existing Bank
Documents and the Loan Documents); (ii) "accelerated" or "acceleration" means
indebtedness that becomes due at maturity, by notice after the occurrence of an
Event of Default or which becomes due as a result of a demand. All defined terms
in the Loan Agreement shall have the same meaning herein unless otherwise
defined herein.
Automatically upon the commencement of Borrower's or any 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 any other Event of Default hereunder, at the
Bank's option, all amounts hereunder shall become immediately due and payable.
<PAGE>
IN WITNESS WHEREOF, Borrower has executed and unconditionally delivered
this Addendum together with the preprinted form of this Note on the date
indicated in the acknowledgement, effective as of _______.
CVC PRODUCTS, INC.
By:
------------------------------------
Name:
Title:
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On the ____ day of _________ in the year _____ before me, the undersigned,
a Notary Public in and for said state, personally appeared ___________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
--------------------------------------------
Notary Public
R-2
<PAGE>
LIBOR TERM NOTE
EXHIBIT C-2
Manufacturers and Traders Trust Company
Buffalo New York _____________________, 1999/20____ $_____________________
BORROWER: CVC PRODUCTS, INC.
a(n) |_| individual(s) |_| partnership |X| corporation |_| trust
|_| ____________________ organized under the laws of Delaware
Address of residence/chief executive office: 525 Lee Road, Rochester, New York
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M & T Plaza, Buffalo, New York
14240. Attention: Office of General Counsel
1. DEFINITIONS. As used in this Note, each capitalized term shall have the
meaning specified in the Note or as it appears in initial capitalization.
Additionally, the following terms shall have the indicated meanings:
a. "Applicable Interest Rate" shall mean either the LIBOR Rate or the
Base Rate as the case may be.
b. "Adjustment Date" shall mean two (2) Business Days before the last
day of the Interest Period selected below (see LIBOR Rate
definition).
c. "Base Rate" shall mean zero (0) percentage point above the rate of
interest announced by the Bank as its prime rate of interest.
d. "Business Day" shall mean any day of the year on which banking
institutions in New York, New York are not authorized or required by
law or other governmental action to close and, in connection with
the LIBOR Rate on which dealings are carried on in the London
interbank market.
e. "Continuation Date" shall mean the last day of each Interest Period.
f.
g.
h.
i. "Maturity Date" is the Payment Due Day in
________________________________, 1999/20____.
j. "Payment Due Day" shall mean the same day of the calendar month as
the date of this Note (or if there is no numerically corresponding
day in a month, on the last day of such month); provided however, if
that day is not a Business Day, the Payment Due Day shall be
extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in
which case such Payment Due Day shall end on the immediately
preceding Business Day.
k. "Principal Amount" shall mean ______________________________________
Dollars ($__________________).
All capitalized terms not defined herein shall have the meaning set
forth in the Loan Agreement between Borrower and Bank dated March
31, 1998, which Loan Agreement was amended by letter amendments
dated September 30, 1998 and February 19, 1999, as amended by
Amendment to Loan Agreement dated September 22, 1999 ("Loan
Agreement").
2. PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES.
a. Promise to Pay. For value received Borrower promises to pay to the
order of the Bank on the dates set forth below, the Principal Amount, plus
interest as agreed below and all reasonable fees and costs (including without
limitation reasonable attorneys' fees and disbursements whether for internal or
outside counsel) the Bank incurs in order to collect any amount due under this
Note, to negotiate or document a workout or restructuring, or to preserve its
rights or realize upon any guaranty or other security for the payment of this
Note ("Expenses").
c. Interest. Interest shall accrue on the outstanding Principal Amount
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366) that on each day shall be:
i. If the LIBOR Rate is the Applicable Rate. Interest shall
accrue on the Principal Amount from and including the first
day of the Interest Period (with the duration selected by
Borrower) until, but not including, the last day of such
Interest Period or the day the Principal Amount is paid in
full (if sooner) at a rate per annum equal to the LIBOR Rate
in effect on the each Adjustment Date.
<PAGE>
ii. If the Base Rate is the Applicable Interest. Interest shall
accrue on the Principal Amount from and including the first
date the Base Rate is the Applicable Rate to but not
including, the day such Principal Amount is paid in full or
the Applicable Rate is converted to the LIBOR Rate, at the
rate per annum equal to the Base Rate. Any change in the Base
Rate resulting from a change in the Bank's prime rate shall be
effective on the date of such change.
d. Payment Schedule. (Check applicable box):
|_| Borrower shall pay the entire Outstanding Principal on the
Maturity Date. In addition, until the Outstanding Principal is
paid in full, Borrower shall pay all accrued and unpaid
interest, in amounts which may vary, as follows: (i) if the
LIBOR Rate is the Applicable Rate, on the last day of each
Interest Period, (ii) if the Base Rate is the Applicable Rate,
on the Payment Due Date for each month and (iii) at maturity
(whether by acceleration or otherwise) and, after such
maturity, on demand.
|_| Borrower shall pay the Outstanding Principal in __________
consecutive monthly, bi-monthly or quarterly installments
(depending on the duration of the Interest Period selected by
Borrower on page one) starting on the last day of the Interest
Period that commences on the date of this Note and on last day
of each Interest Period thereafter consisting of __________
equal installments of principal each in the amount of
$________________________ and ONE (1) FINAL INSTALLMENT on the
Maturity Date in an amount equal to the Outstanding Principal
at that time together with all other amounts outstanding
hereunder including, without limitation, accrued interest,
costs and Expense (the "Final Installment"); provided,
however, if the Applicable Rate is converted to the Base Rate,
Borrower shall pay the Outstanding Principal in consecutive
monthly installments commencing on the first Payment Due Day
after the date of such conversion and on the same Payment Due
Day thereafter until conversion back to the LIBOR Rate (at
which time Borrower shall resume the monthly, bi-monthly or
quarterly installments in the amount set forth above or as
otherwise agreed to by the Bank and Borrower in writing) or
the Maturity Date (at which time Borrower shall pay the Final
Installment) with each such installment being equal in an
amount to fully amortize the Outstanding Principal amount of
the Note in full by the Maturity Date or such other date
agreed to by the Bank and Borrower in writing. The
determination by the Bank of the foregoing amount shall, in
the absence of manifest error, be conclusive and binding upon
Borrower. In addition, until the Outstanding Principal is paid
in full, Borrower shall pay all accrued and unpaid interest,
in amounts which may vary, as follows: (i) if the LIBOR Rate
is the Applicable Rate, on the last day of each Interest
Period, (ii) if the Base Rate is the Applicable Rate, on the
Payment Due Date for each month and (iii) at maturity (whether
by acceleration or otherwise) and, after such maturity, on
demand.
e. Maximum Legal Rate. It is the intent of the Bank and Borrower that in
no event shall 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 resident, 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 canceled, and, if received by the Bank, shall be refunded to
Borrower.
f. Default Rate. If an Event of Default (defined below) occurs, the
interest rate on the unpaid Principal Amount shall immediately be automatically
increased to 5 percentage points per year above the higher of the LIBOR Rate or
the Base Rate, and any judgment entered hereon or otherwise in connection with
any suit to collect amounts due hereunder shall bear interest at such default
rate.
g. Repayment of Principal and Interest; Late Charge. Payments shall be
made in immediately available United States funds at any banking office of the
Bank. Interest will continue to accrue until payment is actually received. If
payment is not received within five days of its due date. Borrower shall pay a
late charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount
or (c) the Bank's then current late charge as announced from time to time. If
this Note is secured by a one- to six-family owner-occupied residence, the late
charge shall equal 2% of the delinquent amount and shall be payable if payment
is not received within fifteen days of its due date. Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to remaining
principal.
h. Prepayment.
i. Subject to the following, during the term of this Note,
Borrower shall have the option of paying the Principal Amount
to the Bank 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 Bank at least three (3) business days prior to
making such payment. If (i) Borrower prepays, in whole or in
part, any Principal Amount when the Applicable Rate is the
LIBOR Rate before the end of the Interest Period, (ii) there
occurs an Event of Default or the Applicable Rate is converted
from the LIBOR Rate to the Base Rate before the end of an
Interest Period pursuant to Section 3, then Borrower shall be
liable for and shall pay the Bank, on demand, the higher of
$250.00 or the actual amount of the liabilities, expenses,
costs or funding losses that are a direct or indirect result
of such prepayment (based on the entire Principal Amount
pre-paid), failure to draw, early termination of the Interest
Period, revocation, bankruptcy or otherwise. The determination
by the Bank of the foregoing amount shall, in the absence of
manifest error, be conclusive and binding upon Borrower.
ii. Upon making any prepayment of the Principal Amount in whole,
Borrower shall pay to the Bank all interest and Expenses owing
pursuant to the Note and remaining unpaid. Each partial
prepayment of the Principal Amount shall be applied in inverse
order of maturity to the principal included in the
installments provided herein.
iii. In the event the Maturity Date is accelerated following an
Event of Default by Borrower, 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 Bank shall be entitled to the amount necessary to satisfy
the entire indebtedness, plus the appropriate prepayment
premium calculated in accordance with this Section 2(h).
-2-
<PAGE>
3. CONTINUATIONS AND CONVERSIONS. See Addendum Insert No. 1.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower represents and warrants
to and agrees and covenants with the Bank that now and until this Note is paid
in full: The representations and warranties set forth in the Loan Agreement are
true and correct as of the date hereof, and are reaffirmed as if fully set forth
herein in full.
-3-
<PAGE>
5. EVENTS OF DEFAULT; ACCELERATION. The following constitute an event of default
("Event of Default"): (i) failure by Borrower to make any payment when due
(whether at the stated maturity, by acceleration or otherwise) of the amounts
due under this Note, or any part thereof, or there occurs any event or condition
which after notice, lapse of time or both will permit such acceleration. See
Addendum Insert No. 2.
6. RIGHT OF SETOFF. The Bank shall have the right to set off against the amounts
owing under this Note any property held in a deposit or other account with the
Bank or any Affiliate or otherwise owing by the Bank or any Affiliate in any
capacity to Borrower or any guarantor or endorser of this Note. Such set-off
shall be deemed to have been exercised immediately at the time the Bank or such
Affiliate elect to do so.
7. INABILITY TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.
a. Increased Costs. If the Bank shall determine that, due to either (a)
the introduction of any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the interpretation of any requirement of law or (b) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining any loans
based on LIBOR, then Borrower shall be liable for, and shall from time to time,
upon demand therefor by the Bank and pay to the Bank such additional amounts as
are sufficient to compensate the Bank for such increased costs.
b. Inability to Determine Rates. If the Bank shall determine that for any
reason adequate and reasonable means do not exist for ascertaining LIBOR for the
Interest Period specified above, the Bank will give notice of such determination
to Borrower. Thereafter, the Bank may not maintain the loan hereunder at the
LIBOR Rate until the Bank revokes such notice in writing and, until such
revocation, the Bank may convert the Applicable Rate from the LIBOR Rate to the
Base Rate.
c. Illegality. If the Bank shall determine that the introduction of any
law (statutory or common), treaty, rule, regulation, guideline or determination
of an arbitrator or of a governmental authority or in the interpretation or
administration thereof, has made it unlawful, or that any central bank or other
governmental authority has asserted that it is unlawful for the Bank to make
loans at based on LIBOR then, on notice thereof by the Bank to Borrower, the
Bank may suspend the maintaining of the loan hereunder at the LIBOR Rate until
the Bank shall have notified Borrower that the circumstances giving rise to such
determination shall no longer exist. If the Bank shall determine that it is
unlawful to maintain the loan hereunder based on LIBOR, the Bank may convert the
Applicable Rate from the LIBOR Rate to the Base Rate.
-4-
<PAGE>
8. MISCELLANEOUS. This Note, together with any related loan and security
agreements and guaranties, contains the entire agreement between the Bank and
Borrower with respect to the Note, and supersedes every course of dealing, other
conduct, oral agreement and representation previously made by the Bank. All
rights and remedies of the Bank under applicable law and this Note or amendment
of any provision of this Note are cumulative and not exclusive. No single,
partial or delayed exercise by the Bank of any right or remedy shall preclude
the subsequent exercise by the Bank at any time of any right or remedy of the
Bank without notice. No waiver or amendment of any provision of this Note shall
be effective unless made specifically in writing by the Bank. No course of
dealing or other conduct, no oral agreement or representation made by the Bank,
and no usage of trade, shall operate as a waiver of any right or remedy of the
Bank. No waiver of any right or remedy of the Bank shall be effective unless
made specifically in writing by the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Borrower hereby waives
protest, presentment and notice of any kind in connection with this Note.
Singular number includes plural and neuter gender includes masculine and
feminine as appropriate.
9. NOTICES. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Borrower
(at its address on the Bank's records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for Borrower's relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Borrower and the Bank.
10. JOINT AND SEVERAL. If there is more than one Borrower, each of them shall be
jointly and severally liable for all amounts which become due under this Note
and the term "Borrower" shall include each as well as all of them.
11. GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted by
the Bank and will be deemed to be made in the State of New York. This Note will
be interpreted in accordance with the laws of the State of New York excluding
its conflict of laws rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK STATE WHERE THE
BANK MAINTAINS A BRANCH AND CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF
PROCESS IN THE MANNER AND AT BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING
NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE
BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY
RIGHTS AGAINST BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY
PROPERTY OF BORROWER WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC
JURISDICTION. Borrower acknowledges and agrees that the venue provided above is
the most convenient forum for both the Bank and Borrower. Borrower waives (i)
any objection to venue and any objection based on a more convenient forum in any
action instituted under this Note; (ii) any right to assert any counterclaim or
setoff or any defense based upon a statute of limitations, upon a claim of
laches or any other legal theory; and (iii) its right to attack a final judgment
that is obtained as a direct or indirect result of any such action.
12. WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE BANK MAY
HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
NOTE OR THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT
NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY
TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO
THIS NOTE BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.
|_| Replacement Note. This Note is given in replacement of and in substitution
for, but not in payment of, a note dated _______________________________,
19____/20____ in the original principal amount of $_______________________
issued by Borrower (or _____________________) to the Bank (or its
predecessor in interest).
Preauthorized Transfers from Deposit Account. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #______________________________ with the Bank
automatically for any amount which becomes due under this Note.
TAX ID/SS # 16-1017191 CVC PRODUCTS, INC.
----------------------- ---------------------------------------------
BORROWER
By:
-----------------------------------------
Name: Emilio O. DiCataldo
Title: Senior Vice President and CFO
---------------------------------------------
Signature of Witness
---------------------------------------------
Typed Name of Witness
-5-
<PAGE>
ACKNOWLEDGEMENT
STATE OF NEW YORK )
:SS.
COUNTY OF _______________ )
On the ________________ day of ______________ in the year 1999, 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 in _________________________________
_______________________________________________________;
that __he is the Sr. Vice President 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.
----------------------------------------------
Notary Public
FOR BANK USE ONLY
<TABLE>
<S> <C> <C> <C>
Authorization Confirmed: ____________________________________________________________________
Product Code 22660
Disbursement of Funds: Credit A/C #_________ Off Ck #_________ Payoff Obligation #________
$_________ $_________ $_________
</TABLE>
-6-
<PAGE>
ADDENDUM TO LIBOR TERM NOTE
DATED AS OF _____ EXECUTED
BY CVC PRODUCTS, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY
This ADDENDUM to a certain LIBOR Term Note, dated ________, is made by CVC
PRODUCTS, INC. ("Borrower") in favor of MANUFACTURERS AND TRADERS TRUST COMPANY
("Bank"). This Rider is an integral part of the LIBOR Term Note.
Insert No. 1
a. Election. Borrower may, upon irrevocable request to the Bank,
i. elect to convert on any Business Day the interest rate from
the Base Rate into a LIBOR Rate provided the amount converted
is not less than the minimum borrowing amount required under
the Loan Agreement; or
ii. elect to convert the interest rate from a LIBOR Rate as of the
last day of the applicable Interest Period to a Base Rate; or
iii. elect to continue (subject to the minimum borrowing amount
limitation) any LIBOR Rate as of the last day of the Interest
Period applicable to such LIBOR Rate with the same or
different Interest Period.
b. Notice of Conversion/Continuation.
i. For an election under Section 3(a)(i) or 3(a)(iii), Borrower
must deliver to the Bank by 2:00 p.m. (Eastern Standard Time)
on a Business Day a Notice of Conversion ("Notice of
Conversion") for an election under Section 3(a)(i) or a
Notice of Continuation ("Notice of Continuation") for an
election under Section 3(a)(iii) specifying the duration of
the requested Interest Period (i.e., 1, 2, 3 or 6 month
Interest Period).
ii. The Continuation Date or Conversion Date (as the case may be)
shall be the later of (A) two (2) Business Days from the
Business Day the Bank receives the Notice of Conversion or
Notice of Continuation (either, a "Notice") in accordance with
the foregoing Section or (B) the last day of the relevant
Interest Period if a Notice is received by the Bank more than
two (2) Business Days before the last day of an Interest
Period. If a Notice is received after 2:00 p.m. (Eastern
Standard Time), the Notice will be deemed to have been
received on the next Business Day. Notice of Continuation
received more than two (2) Business Days before the end of an
Interest Period shall be deemed to have been received two (2)
Business Days before the end of such Interest Period for
purposes of determining the LIBOR Rate for the next Interest
Period. Accordingly, if, for example, Borrower has a LIBOR
Rate Loan with a one month Interest Period ending on June 15
and wants to continue the LIBOR Rate Loan with a two month
Interest Period, Borrower must deliver its Notice of
Continuation identifying the new two month Interest Period to
the Bank by 2:00 p.m. (Eastern Standard Time) on June 13
(provided that June 13 and June 14 are Business Days).
<PAGE>
iii. For an election under Section 3(a)(ii), Borrower may deliver
to the Bank a Notice of Conversion at any time during an
Interest Period up to the last day of such Interest Period or
may have the LIBOR Rate automatically convert to a Base Rate
pursuant to Section 3(c). Any such Notice of Conversion
delivered during an Interest Period shall be effective on the
last day of the Interest Period.
iv. The Bank may take action on any Notice in reliance upon any
oral, telephonic, written or teletransmitted Notice that the
Bank in good faith believes to be valid and to have been made
by Borrower or on behalf of Borrower. No Notice may be
delivered by e-mail. The Bank shall incur no liability to
Borrower or to any other person as a direct or indirect result
of acting on any Notice under this Note. The Bank, in its sole
discretion, may reject any Notice that is incomplete.
c. Expiration of Interest Period. If Borrower does not submit a Notice of
Continuation in accordance with Section 3(b)(i) and 3(b)(ii) so that the Bank
receives the Notice of Continuation at least two (2) Business Days before the
end of an Interest Period, the LIBOR Rate shall automatically be converted into
a Base Rate and this Note shall accrue interest at the Base Rate until two (2)
Business Days after the Bank receives a Notice of Conversion pursuant to Section
3(b)(i) and 3(b)(ii) electing to convert the Note from a Base Rate to a LIBOR
Rate pursuant to Section 3(a)(i). A Notice of Continuation received one (1)
Business Day before the end of an Interest Period will not effect a continuation
of a LIBOR Rate. Rather, such LIBOR Rate shall automatically convert to a Base
Rate on the last day of the Interest Period. The late Notice of Continuation,
however, will be deemed to be a Notice of Conversion that will be effective two
(2) Business Days from the date received by the Bank.
d. Conversion upon Default. Unless the Bank shall otherwise consent in
writing, if (i) Borrower has failed to pay when due, in whole or in part, the
indebtedness under the Note (whether by demand or otherwise), or (ii) there
exists a condition or event which with the passage of time, the giving of notice
or both shall constitute an event of default under any of Borrower's agreement
with the Bank, if any, Borrower may not elect to convert or continue a LIBOR
Rate. Further, the Bank, in its sole discretion, may (i) permit any outstanding
LIBOR Rate to continue until the last day of the applicable Interest Period at
which time such LIBOR Rate shall automatically be converted into a Base Rate or
(ii) convert any outstanding LIBOR Rate into a Base Rate before the end of the
applicable Interest Period applicable to such LIBOR Rate. Notwithstanding the
foregoing, if Borrower commences, or has commenced against it, any proceeding or
request for relief under any bankruptcy, insolvency or similar laws now or
hereafter in effect in the United States of America or any state or territory
thereof or any foreign jurisdiction or any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against or winding up of
affairs of Borrower (a "Bankruptcy Event"), any outstanding LIBOR Rate shall be
automatically converted to Base Rate without further action by the Bank and
Borrower's rights to have Base Rate converted under Section 3 shall be
automatically terminated. Nothing herein shall be construed to be a waiver by
the Bank to have this Note accrue interest at the Default Rate of interest
(which shall be calculated from the higher of the LIBOR Rate or the Base Rate)
or the right of the Bank to the amounts set forth in Section 2(a) of this Note.
R-2
<PAGE>
Insert No. 2
or (b) any Event of Default occurs under the Loan Agreement, as the Loan
Agreement is amended, extended or replaced from time to time.
As used in this Note (i) "any agreement with the Bank" includes any
agreement, note or instrument with the Bank (which includes, without limitation,
the Loan Agreement, the 1999 Term Note, the 1999 Grid Note, the Existing Bank
Documents and the Loan Documents); (ii) "accelerated" or "acceleration" means
indebtedness that becomes due at maturity, by notice after the occurrence of an
Event of Default or which becomes due as a result of a demand. All defined terms
in the Loan Agreement shall have the same meaning herein unless otherwise
defined herein.
Automatically upon the commencement of Borrower's or any 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 any other Event of Default hereunder, at the
Bank's option, all amounts hereunder shall become immediately due and payable.
IN WITNESS WHEREOF, Borrower has executed and unconditionally delivered
this Addendum together with the preprinted form of this Note on the date
indicated in the acknowledgement, effective as of _______.
CVC PRODUCTS, INC.
By:
------------------------------------
Name:
Title:
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On the ____ day of _________ in the year _____ before me, the undersigned,
a Notary Public in and for said state, personally appeared ___________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
--------------------------------------------
Notary Public
R-3
<PAGE>
Exhibit 10.48
================================================================================
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
Dated as of September 22, 1999
among
COMMONWEALTH SCIENTIFIC CORPORATION
and
MANUFACTURERS AND TRADERS TRUST COMPANY
================================================================================
<PAGE>
This PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT dated as of
September 22, 1999, between COMMONWEALTH SCIENTIFIC CORPORATION, a Virginia
corporation ("Assignor"), which has its principal places of business at 500
Pendleton Street, Alexandria, Virginia 22314, and MANUFACTURERS AND TRADERS
TRUST COMPANY, having an office at One M&T Plaza, Buffalo, New York 14203 (the
"Bank").
WHEREAS, CVC Products, Inc. (the "Borrower") and the Bank are parties to a
Loan Agreement, dated as of March 31, 1998, (as amended and in effect from time
to time, the "Loan Agreement"); and
WHEREAS, the Borrower and the Bank have entered into an Amendment to Loan
Agreement dated the date hereof (the "Amendment"); and
WHEREAS, it is a condition precedent to the Bank making any loans or
otherwise extending credit to the Borrower under the Loan Agreement that the
Assignor execute and deliver to the Bank this Patent Agreement; and
WHEREAS, the Assignor has executed and delivered to the Bank a General
Security Agreement, dated as of September 3, 1998 (the "Security Agreement"),
pursuant to which the Assignor granted to the Bank a first priority perfected
security interest in all of the Assignor's personal property and fixture assets,
including, without limitation, the patents and patent applications listed on
Schedule A attached hereto, all to secure the payment and performance of all the
indebtedness of the Borrower and Assignor to the Bank, whenever arising; and
WHEREAS, this Patent Agreement (defined below) is supplemental to the
provisions contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Loan Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Patent Agreement referred to below:
Assignor means Commonwealth Scientific Corporation, a Virginia
corporation.
<PAGE>
Event of Default means any "Event of Default" which has occurred
under the Security Agreement.
Obligations means, collectively, any indebtedness, liabilities and
obligations for payment of money, regardless of kind, class or form and whether
for the payment of principal or of interest or otherwise, incurred, for any
business, commercial, agricultural or consumer purposes 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 an 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 tortuous, liquidated or unliquidated, arising by
operation of law or otherwise, that are now or hereafter owing by Borrower and
Assignor in any capacity, whether alone or otherwise, to the Bank in any
capacity, whether or not allowed as a claim against Assignor in any case or
other proceeding pursuant to any bankruptcy or insolvency statute, regulation or
other law or 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.
Patent Agreement means this Patent Collateral Assignment and
Security Agreement, as amended and in effect from time to time.
Patent Collateral means all of the Assignor's right, title and
interest in and to all of the Patents, the Patent License Rights, and all other
Patent Rights, and all additions, improvements, and accessions to, all
substitutions for and replacements of, and all products and Proceeds (including
insurance proceeds) of any and all of the foregoing, and all books and records
and technical information and data describing or used in connection with any and
all such rights, interest, assets or property.
Patent License Rights means any and all past, present or future
rights and interests of the Assignor pursuant to any and all past, present and
future licensing agreements in favor of the Assignor, or to which Assignor is a
party, pertaining to any Patents, or Patent Rights, owned or used by third
parties in the past, present or future, including the right in the name of the
Assignor or the Bank to enforce, and sue and recover for, any past, present or
future breach or violation of any such agreement.
Patent Rights means any and all past, present or future rights in,
to and associated with the Patents throughout the world, whether arising under
federal law, state law, common law, foreign law, or otherwise, including, but
not limited, to the following: all such rights arising out of or associated with
the Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Assignor or the Bank for any and all past, present and future
infringements of or any other damages or injury to the Patents or the Patent
Rights, and the rights to
-2-
<PAGE>
damages or profits due or accrued arising out of or in connection with any such
past, present or future infringement, damage or injury; and the Patent License
Rights.
Patents means all patents and patent applications, whether United
States or foreign, that are owned by the Assignor or in which the Assignor has
any right, title or interest, now or in the future, including but not limited
to:
(a) the patents and patent applications listed on Schedule A
hereto (as the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other
country, and all applications for letters patent of the United States or any
other country;
(c) all re-issues, continuations, divisions,
continuations-in-part, renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the
right to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute
applications for such Patents.
Proceeds means any consideration received from the sale, exchange,
license, lease or other disposition or transfer of any right, interest, asset or
property which constitutes all or any part of the Patent Collateral, any value
received as a consequence of the ownership, possession, use or practice of any
Patent Collateral, and any payment received from any insurer or other person or
entity as a result of the destruction or the loss, theft or other involuntary
conversion of whatever nature of any right, interest, asset or property which
constitutes all or any part of the Patent Collateral.
PTO means the United States Patent and Trademark Office or any
successor agency or office.
2. GRANT OF SECURITY INTEREST.
To secure the payment and performance in full of any and all Obligations,
the Assignors hereby grant, assign, transfer and conveys to the Bank, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. THE BANK ASSUMES NO LIABILITY
ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH COLLATERAL SECURITY.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Assignor represents, warrants and covenants that, except as disclosed
in the Intellectual Property Audit Report from Gray Cary Ware & Freidenrich LLP
dated September 21, 1999: (i) Schedule A attached hereto sets forth a true and
complete list of all
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<PAGE>
the patents, rights to patents and patent applications now owned, licensed,
controlled or used by the Assignor; (ii) the issued Patents are subsisting and
have not been adjudged invalid or unenforceable, in whole or in part, and there
is no litigation or proceeding pending concerning the validity or enforceability
of the issued Patents; (iii) to the best of the Assignor's knowledge, each of
the issued Patents is valid and enforceable; (iv) to the best of the Assignor's
knowledge, there is no infringement by others of the issued Patents or Patent
Rights; (v) no claim has been made that the use of any of the Patents does or
may violate the rights of any third person, and to the best of the Assignor's
knowledge there is no infringement by the Assignor of the patent rights of
others; (vi) the Assignor indicated on Schedule A attached hereto is the sole
and exclusive owner of the entire and unencumbered right, title and interest in
and to each of the Patents (other than ownership and other rights reserved by
third party owners with respect to Patents which the Assignor is licensed to
practice or use as indicated on Schedule A attached hereto), free and clear of
any liens, charges, encumbrances and adverse claims, including without
limitation pledges, assignments, licenses, shop rights and covenants by the
Assignor not to sue third persons, other than the security agreement and
mortgage created by the Security Agreement and this Patent Agreement; (vii) the
Assignor has the unqualified right to enter into this Patent Agreement and
perform its terms and have entered and will enter into written agreements with
each of its present and future employees, agents, consultants, licensors and
licensees which will enable it to comply with the covenants herein contained;
(viii) this Patent Agreement, together with the Security Agreement, will create
in favor of the Bank a valid and perfected first priority security interest in
the Patent Collateral upon making the filings referred to in clause (ix) of this
Section 3; and (ix) except for the filing of financing statements with the City
of Alexandria and the Secretary of State for the State of Virginia under the
Uniform Commercial Code and the filing of this Patent Agreement with the PTO, no
authorization, approval or other action by, and no notice to or filing with, any
governmental or regulatory authority, agency or office is required either (1)
for the grant by the Assignor or the effectiveness of the security interest and
assignment granted hereby or for the execution, delivery and performance of this
Patent Agreement by the Assignor, or (2) for the perfection of or the exercise
by the Bank of any of its rights and remedies hereunder.
4. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Bank's prior written consent, the Assignor will not (i)
mortgage, pledge, assign, encumber, grant a security interest in, transfer,
license or alienate any of the Patent Collateral, or (ii) enter into any
agreement (for example, a license agreement) that is inconsistent with the
Assignors' obligations under this Patent Agreement or the Security Agreement.
The Bank will not unreasonably delay in responding to any request by the
Assignor for a consent to any action prohibited by this Section 4.
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<PAGE>
5. AFTER-ACQUIRED PATENTS, ETC.
5.1 After-acquired Patents.
If, before the Obligations shall have been finally paid and
satisfied in full and Assignor no longer has a right to request advances from
Bank and all lines of credit terminated by Bank, the Assignor shall obtain any
right, title or interest in or to any other or new patents, patent applications
or patentable inventions, or become entitled to the benefit of any patent
application or patent or any reissue, division, continuation, renewal,
extension, or continuation-in-part of any of the Patent Collateral or any
improvement on any of the Patent Collateral, the provisions of this Patent
Agreement shall automatically apply thereto and the Assignor shall (i) promptly
on request by the Bank and (ii) on an annual basis give to the Bank notice
thereof in writing and execute and deliver to the Bank such documents or
instruments as the Bank may reasonably request further to transfer title thereto
to the Bank as required herein.
5.2 Amendment to Schedule.
The Assignor authorizes the Bank to modify this Patent Agreement,
without the necessity of the Assignor's further approval or signature, by
amending Schedule A hereto to include any future or other Patents or Patent
Rights under Section 2 or Section 5 hereof.
6. PATENT PROSECUTION.
6.1 Assignor Responsible.
The Assignor shall assume full and complete responsibility for the
prosecution, grant, enforcement or any other necessary or desirable actions in
connection with the Patent Collateral, and shall hold the Bank harmless from any
and all costs, damages, liabilities and expenses which may be incurred by the
Bank in connection with the Bank's title to any of the Patent Collateral or any
other action or failure to act in connection with this Patent Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Assignor shall retain patent counsel acceptable to the Bank. The Bank shall not
unreasonably delay in responding to any written inquiry as to the acceptability
of patent counsel proposed by the Assignor.
6.2 Assignor's Duties, Etc.
The Assignor shall have the duty, through patent counsel acceptable
to the Bank, to prosecute diligently any patent applications of the Patents
pending as of the date of this Patent Agreement or thereafter, to make
application for unpatented but reasonably patentable inventions and to preserve
and maintain all rights in the Patents, including, without limitation, the
payment when, due of all maintenance fees and other fees, taxes and other
expenses which shall be incurred or which shall accrue with respect to any of
the Patents. Any expenses incurred in connection with such applications and
actions shall
-5-
<PAGE>
be borne by the Assignor. The Assignor shall not abandon any filed patent
application, or any pending patent application or patent, without the consent of
the Bank, which consent shall not be unreasonably withheld. The Bank hereby
appoints the Assignor as its agent for all matters referred to in the foregoing
provisions of this Section 6 and agrees to execute any documents necessary to
confirm such appointment. Upon the occurrence and during the continuance of an
Event of Default, the Bank may terminate such agency by providing written notice
of termination to the Assignor. The Bank shall not unreasonably delay in
responding to any written inquiry as to the acceptability of patent counsel
pursuant to this Section 6.2 or the abandonment of any patent application.
6.3 Assignor's Enforcement Rights.
The Assignor shall have the right, with the consent of the Bank,
which shall not be unreasonably withheld, to bring suit or other action in the
Assignor's own name(s) to enforce the Patents and the Patent Rights. The Bank
shall be required to join in such suit or action as may be necessary to assure
the Assignor's ability to bring and maintain any such suit or action in any
proper forum so long as the Bank is completely satisfied that such joinder will
not subject the Bank to any risk of liability. The Assignor shall promptly, upon
demand, reimburse and indemnify the Bank for all damages, costs and expenses,
including legal fees, incurred by the Bank pursuant to this Section 6.
6.4 Protection of Patents, Etc.
In general, the Assignor shall take any and all such actions
(including, but not limited to, institution and maintenance of suits,
proceedings or actions) as may be necessary or appropriate to properly maintain,
protect, preserve, care for and enforce the Patent Collateral. The Assignor,
shall not take or fail to take any action, nor permit any action to be taken or
not taken by others under their control, which would affect the validity, grant
or enforcement of any of the Patent Collateral.
6.5 Notification by Assignor.
Promptly upon obtaining knowledge thereof, the Assignor will notify
the Bank in writing of the institution of, or any final adverse determination
in, any proceeding in the PTO or any similar office or agency of the United
States or any foreign country, or any court, regarding the validity of any of
the Patents or the Assignor's rights, title or interests in and to any of the
Patent Collateral, and of any event which does or reasonably could materially
adversely affect the value of any of the Patent Collateral, the ability of the
Assignor or the Bank to dispose of any of the Patent Collateral or the rights
and remedies of the Bank in relation thereto (including, but not limited to, the
levy of any legal process against any of the Patent Collateral).
-6-
<PAGE>
7. LICENSE BACK TO ASSIGNORS.
Unless and until there shall have occurred and be continuing an Event of
Default and the Bank has notified the Assignor that the license granted
hereunder is terminated, the Bank hereby grants to the Assignor the sole and
exclusive, nontransferable, royalty free, worldwide right and license under the
Patents to make, have made for them, use, sell and otherwise practice the
inventions disclosed and claimed in the Patents for the Assignor's own benefit
and account and for none other; provided however that the foregoing right and
license shall be no greater in scope than, and limited by, the rights assigned
to the Bank by the Assignor hereby. The Assignor agree not to sell, assign,
transfer, encumber or sublicense their interest in the license granted to the
Assignor in this Section 7, without the prior written consent of the Bank. Any
such sublicenses granted on or after the date hereof shall be terminable by the
Bank upon termination of the Assignor's license hereunder.
8. REMEDIES.
If any Event of Default shall have occurred and be continuing, then upon
notice by the Bank to the Assignor: (i) the Assignor's license with respect to
the Patents as set forth in Section 7 shall terminate; (ii) the Assignor shall
immediately cease and desist from the practice, manufacture, use and sale of the
inventions claimed, disclosed or covered by the Patents; and (iii) the Bank
shall have, in addition to all other rights and remedies given it by this Patent
Agreement, the Loan Agreement, the Security Agreement, and all other agreements,
instruments and documents executed by Borrower and/or Parent in favor of Bank at
any time, those allowed by law and the rights and remedies of a secured party
under the Uniform Commercial Code as enacted in the State of New York and,
without limiting the generality of the foregoing, the Bank may immediately,
without demand of performance and without other notice (except as set forth next
below) or demand whatsoever to the Assignor, all of which are hereby expressly
waived, and without advertisement, sell or license at public or private sale or'
otherwise realize upon the whole or from time to time any part of the Patent
Collateral, or any interest which the Assignor may have therein, and after
deducting from the proceeds of sale or other disposition of the Patent
Collateral all reasonable expenses (including all reasonable expenses for
broker's fees and legal services), shall apply the residue of such proceeds
toward the payment of the Obligations as set forth in the Security Agreement.
Notice of any sale, license or other disposition of any of the Patent Collateral
shall be given to the Assignor, at least five (5) days before the time that any
intended public sale or other disposition of such Patent Collateral is to be
made or after which any private sale or other disposition of such Patent
Collateral may be made, which the Assignor hereby agrees shall be reasonable
notice of such public or private sale or other disposition. At any such sale or
other disposition, the Bank may, to the extent permitted under applicable law,
purchase or license the whole or any part of the Patent Collateral or interests
therein sold, licensed or otherwise disposed of.
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<PAGE>
9. COLLATERAL PROTECTION.
If the Assignor shall fail to do any act that they have covenanted to do
hereunder, or if any representation or warranty of the Assignor shall be
breached, the Bank, in their own name or that of the Assignor (in the sole
discretion of the Bank), may (but shall not be obligated to) after ten (10) days
written notice do such act or remedy such breach (or cause such act to be done
or such breach to be remedied), and the Assignor agrees promptly to reimburse
the Bank for any cost or expense incurred by the Bank in so doing.
10. POWER OF ATTORNEY.
If any Event of Default shall have occurred and be continuing, the
Assignor does hereby make, constitute and appoint the Bank (and any officer or
agent of the Bank as the Bank may select in its exclusive discretion) as the
Assignor's true and lawful attorney-in-fact, with the power to endorse the
Assignor's name on all applications, documents, papers and instruments necessary
for the Bank to use any of the Patent Collateral, to practice, make, use or sell
the inventions disclosed or claimed in any of the Patent Collateral, to grant or
issue any exclusive or nonexclusive license of any of the Patent Collateral to
any third person, or necessary for the Bank to assign, pledge, convey or
otherwise transfer title in or dispose of the Patent Collateral or any part
thereof or interest therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts which the Assignors
are obligated to execute and do hereunder. The Assignor hereby ratifies all that
such attorney shall lawfully do or cause to be done by virtue hereof, and
releases the Bank from any claims, liabilities, causes of action or demands
arising out of or in connection with any action taken or omitted to be taken by
the Bank under this power of attorney (except for the Bank's gross negligence or
willful misconduct). This power of attorney shall be irrevocable for the
duration of this Patent Agreement.
11. FURTHER ASSURANCES.
The Assignor shall, at any time and from time to time, and at its expense,
make, execute, acknowledge and deliver, and file and record as necessary or
appropriate with governmental or regulatory authorities, agencies or offices,
such agreements, assignments, documents and instruments, and do such other and
further acts and things (including, without limitation, obtaining consents of
third parties), as the Bank may request or as may be necessary or appropriate in
order to implement and effect fully the intentions, purposes and provisions of
this Patent Agreement, or to assure and confirm to the Bank the grant,
perfection and priority of the Bank's security interest in any of the Patent
Collateral.
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full and the Assignor does not have any right to request advances
from Bank under a line of credit, this Patent Agreement shall terminate and the
Bank shall, upon the written request and at the expense of the Assignor, execute
and deliver to the Assignor all deeds, assignments and other instruments as may
be necessary or proper to reassign and reconvey to and re-vest in
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<PAGE>
the Assignor the entire right, title and interest to the Patent Collateral
previously granted, assigned, transferred and conveyed to the Bank by the
Assignor pursuant to this Patent Agreement, as fully as if this Patent Agreement
had not been made, subject to any disposition of all or any part thereof which
may have been made by the Bank pursuant hereto or the Security Agreement.
13. COURSE OF DEALING.
No course of dealing among the Assignor and the Bank, nor any failure to
exercise, nor any delay in exercising, on the part of the Bank, any right, power
or privilege hereunder or under the Security Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
the Bank in connection with the preparation of this Patent Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances
or otherwise protecting, maintaining or preserving any of the Patent Collateral,
or in defending or prosecuting any actions or proceedings arising out of or
related to any of the Patent Collateral, shall be borne and paid by the
Assignor.
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Assignor hereunder shall be
a debt secured by the Patent Collateral and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Loan Agreement.
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE BANK
ASSUMES NO LIABILITIES OF THE ASSIGNORS WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNOR, AND THE ASSIGNOR
SHALL INDEMNIFY THE BANK FOR ANY AND ALL COSTS, EXPENSES,
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<PAGE>
DAMAGES AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE BANK WITH RESPECT TO
SUCH LIABILITIES.
17. RIGHTS AND REMEDIES CUMULATIVE.
All of the Bank's rights and remedies with respect to the Patent
Collateral, whether established hereby or by the Security Agreement or by any
other agreements or by law, shall be cumulative and may be exercised singularly
or concurrently. This Patent Agreement is supplemental to the Security
Agreement, and nothing contained herein shall in any way derogate from any of
the rights or remedies of the Bank contained therein. Nothing contained in this
Patent Agreement shall be deemed to extend the time of attachment or perfection
of or otherwise impair the security interest in any of the Patent Collateral
granted to the Bank under the Security Agreement.
18. NOTICES.
All notices and other communications made or required to be given pursuant
to this Patent Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as follows:
(a) if to the Assignor, at Commonwealth Scientific Corporation, 525
Lee Road, Rochester, New York 14606, Attention: Emilio 0. DiCataldo, Senior Vice
President and Chief Financial Officer, at the address first listed above or at
such other address for notice as the Assignor shall last have furnished in
writing to the person giving the notice; and
(b) if to the Bank, at One M&T Plaza, Buffalo, New York 14203,
Attention: Collateral Department or at such other address for notice as the Bank
shall last have furnished in wiring to the person giving the notice, with copies
to the Bank at 255 East Avenue, Rochester, New York 14604, Attention: William
Holston, Vice President.
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand to a responsible officer of the
party to which it is directed, at the time of the receipt thereof by such
officer, (i) if sent by registered or certified first-class mail, postage
prepaid, two (2) Business Days after the posting thereof, and (iii) if sent by
telegraph, telecopy, or telex, at the time of the dispatch thereof, if In normal
business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.
19. AMENDMENT AND WAIVER.
This Patent Agreement is subject to modification only by a writing signed
by the Bank and the Assignor, except as provided in Section 5.2. The Bank shall
not be deemed to have waived any right hereunder unless such waiver shall be in
writing and signed by
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<PAGE>
the Bank. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right on any future occasion.
20. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS PATENT AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. The Assignor agrees that any suit for the enforcement of this
Patent Agreement may be brought in the courts of the County of Monroe or any
federal court sitting therein and consents to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon the
Assignor by mail at the address specified in Section 18. The Assignor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
21. WAIVER OF JURY TRIAL.
THE ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS PATENT AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Assignor waives any right which
they may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Assignor (i)
certifies that neither the Bank nor any representative, agent or attorney of the
Bank has represented, expressly or otherwise, that the Bank would not, in the
event of litigation, seek to enforce the foregoing waivers, and (ii)
acknowledges that, in entering into the Loan Agreement and the other agreements,
notes, instruments and documents executed in connection therewith to which the
Bank is a party, the Bank is relying upon, among other things, the waivers and
certifications contained in this Section 21.
22. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC.
Notwithstanding anything herein to the contrary, Bank shall not be deemed
to have unreasonably delayed in responding to a request for a consent hereunder
or the approval of a counsel proposed by Assignor whom the Bank must consent to
unless Bank fails to respond to a request for such consent or acceptance of
proposed counsel for ten (10) days after such request is submitted and Assignor,
thereafter notify Bank in writing that they believe Bank has unreasonably
delayed in responding to such request and Bank continues for more than ten (10)
days after its receipt of such notice to respond to such request. In any event,
the sole remedy for Assignor if Bank unreasonably delayed in responding to any
such request shall be that it loses its right to consent to any such action or
to approve any such counsel.
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<PAGE>
23. MISCELLANEOUS.
The headings of each section of this Patent Agreement are for convenience
only and shall not define or limit the provisions thereof. This Patent Agreement
and all rights and obligations hereunder shall be binding upon the Assignor and
its successors and permitted assigns, and shall inure to the benefit of the Bank
and its successors and assigns. In the event of any irreconcilable conflict
between the provisions of this Patent Agreement and the Loan Agreement, or
between this Patent Agreement and the Security Agreement, the provisions of the
Loan Agreement or the Security Agreement, as the case may be, shall control. If
any term of this Patent Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Patent Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignor acknowledges receipt of a copy of this Patent
Agreement. All obligations of the Assignor hereunder shall be joint and several.
24. VIOLATION OF PATENT LICENSE
Notwithstanding anything to the contrary contained herein, Assignor is not
granting the Bank a security interest in any Patent License Rights if such a
security interest would constitute a breach of the applicable license agreement.
IN WITNESS WHEREOF, this Patent Agreement has been executed as of the day
and year first above written.
COMMONWEALTH SCIENTIFIC
CORPORATION
By: /s/ E. O. DiCataldo
-------------------------------------------
Name:
Title: Sr. V.P. & CFO
MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /s/ William E. Holston
-------------------------------------------
Name: William E. Holston
Title:Vice President
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<PAGE>
STATE OF NEW YORK )
COUNTY OF Monroe ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared Emilio O. DiCataldo
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02PE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
STATE OF NEW YORK )
COUNTY OF Monroe ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared William E. Holston,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02PE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
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<PAGE>
SCHEDULE A
ISSUED AND PENDING PATENTS
NONE
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<PAGE>
Exhibit 10.49
================================================================================
AMENDED AND RESTATED
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
Dated as of September 22, 1999
among
CVC, INC.
CVC PRODUCTS, INC.
and
MANUFACTURERS AND TRADERS TRUST COMPANY
================================================================================
<PAGE>
This AMENDED AND RESTATED PATENT COLLATERAL ASSIGNMENT AND SECURITY
AGREEMENT dated as of September 22, 1999, between CVC, INC., a Delaware
corporation ("Parent"), CVC PRODUCTS, INC., a Delaware corporation ("Borrower"
and, together with Parent, "Assignors"), both of which have their principal
places of business at 525 Lee Road, Rochester, New York, and MANUFACTURERS AND
TRADERS TRUST COMPANY, having an office at One M&T Plaza, Buffalo, New York
14203 (the "Bank").
WHEREAS, the Borrower and the Bank are parties to a Loan Agreement, dated
as of March 31, 1998, (as amended and in effect from time to time, the "Loan
Agreement"); and
WHEREAS, in connection with the Loan Agreement, Assignors delivered to the
Bank their Patent Collateral Assignment and Security Agreement dated March 31,
1998 (the "Prior Security Agreement"); and
WHEREAS, the Borrower and the Bank have entered into an Amendment to Loan
Agreement dated the date hereof (the "Amendment"); and
WHEREAS, it is a condition precedent to the Bank making any loans or
otherwise extending credit to the Borrower under the Loan Agreement that the
Assignors amend and restate the Prior Security Agreement pursuant to this Patent
Agreement; and
WHEREAS, the Borrower has previously executed and delivered to the Bank a
General Security Agreement, dated as of February 2, 1996, as amended (the
"Original Borrower Security Agreement"), pursuant to which the Borrower granted
to the Bank a first priority perfected security interest in all of the
Borrower's personal property and fixture assets, including, without limitation,
the patents and patent applications listed on Schedule A attached hereto, all to
secure the payment and performance of all the indebtedness of the Borrower to
the Bank, whenever arising and, on March 31, 1998, Borrower executed and
delivered an Amended and Restated General Security Agreement (the "Restated
Borrower Security Agreement") in favor of Bank, pursuant to which the Original
Borrower Security Agreement has been amended and restated; and
WHEREAS, the Parent has previously executed and delivered to Bank a
General Security Agreement, dated as of February 2, 1996 (the "Original Parent
Security Agreement"), pursuant to which the Parent granted to the Bank a first
priority perfected security interest in all of the Parent's personal property
and fixture assets, including, without limitation the patents and patent
applications listed on Schedule A attached hereto, to the extent that the Parent
has an interest therein, all to secure the payment and performance of all of the
indebtedness of the Parent to the Bank, whenever arising, and, on March 31,
1998, Parent executed and delivered an Amended and Restated General Security
Agreement (the "Restated Parent Security Agreement") in favor of Bank, pursuant
to which the Original Parent Security Agreement has been amended and restated;
and
<PAGE>
WHEREAS, this Patent Agreement (defined below) is supplemental to the
provisions contained in the Restated Borrower Security Agreement and the
Restated Parent Security Agreement (together, the "Security Agreements");
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree to amend and restate the
Prior Security Agreement as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Loan Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Patent Agreement referred to below:
Assignors means Borrower and Parent, collectively and individually.
Event of Default means any "Event of Default" which has occurred
under the Restated Borrower Security Agreement or the Restated Parent Security
Agreement.
Obligations means, collectively, any indebtedness, liabilities and
obligations for payment of money, regardless of kind, class or form and whether
for the payment of principal or of interest or otherwise, incurred, for any
business, commercial, agricultural or consumer purposes 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 an 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 tortuous, liquidated or unliquidated, arising by
operation of law or otherwise, that are now or hereafter owing by either
Assignors in any capacity, whether alone or otherwise, to the Bank in any
capacity, whether or not allowed as a claim against such Assignors in any case
or other proceeding pursuant to any bankruptcy or insolvency statute, regulation
or other law or 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.
Patent Agreement means this Amended and Restated Patent Collateral
Assignment and Security Agreement, as amended and in effect from time to time.
Patent Collateral means all of the Assignors' right, title and
interest in and to all of the Patents, the Patent License Rights, and all other
Patent Rights, and all additions, improvements, and accessions to, all
substitutions for and replacements of, and all products and Proceeds (including
insurance proceeds) of any and all of the foregoing, and
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all books and records and technical information and data describing or used in
connection with any and all such rights, interest, assets or property.
Patent License Rights means any and all past, present or future
rights and interests of the Assignors pursuant to any and all past, present and
future licensing agreements in favor of the Assignors, or to which either
Assignor is a party, pertaining to any Patents, or Patent Rights, owned or used
by third parties in the past, present or future, including the right in the name
of the Assignors or the Bank to enforce, and sue and recover for, any past,
present or future breach or violation of any such agreement.
Patent Rights means any and all past, present or future rights in,
to and associated with the Patents throughout the world, Whether arising under
federal law, state law, common law, foreign law, or otherwise, including, but
not limited, to the following: all such rights arising out of or associated with
the Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Assignors or the Bank for any and all past, present and future
infringements of or any other damages or injury to the Patents or the Patent
Rights, and the rights to damages or profits due or accrued arising out of or in
connection with any such past, present or future infringement, damage or injury;
and the Patent License Rights.
Patents means all patents and patent applications, whether United
States or foreign, that are owned by the Assignors or in which the Assignors
have any right, title or interest, now or in the future, including but not
limited to:
(a) the patents and patent applications listed on Schedule A
hereto (as the same may be amended pursuant hereto from time to time);
(b) all letters patent of the United States or any other
country, and all applications for letters patent of the United States or any
other country;
(c) all re-issues, continuations, divisions,
continuations-in-part, renewals or extensions thereof;
(d) the inventions disclosed or claimed therein, including the
right to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(e) the right (but not the obligation) to make and prosecute
applications for such Patents.
Proceeds means any consideration received from the sale, exchange,
license, lease or other disposition or transfer of any right, interest, asset or
property which constitutes all or any part of the Patent Collateral, any value
received as a consequence of the ownership, possession, use or practice of any
Patent Collateral, and any payment received from any insurer or other person or
entity as a result of the destruction or the loss,
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theft or other involuntary conversion of whatever nature of any right, interest,
asset or property which constitutes all or any part of the Patent Collateral.
PTO means the United States Patent and Trademark Office or any
successor agency or office.
2. GRANT OF SECURITY INTEREST.
To secure the payment and performance in full of any and all Obligations,
the Assignors hereby grant, assign, transfer and conveys to the Bank, BY WAY OF
COLLATERAL SECURITY, all of the Patent Collateral. THE BANK ASSUMES NO LIABILITY
ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH COLLATERAL SECURITY.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Assignors represent, warrant and covenant that, except as disclosed on
the Intellectual Property Audit Report from Gray Cary Ware & Freidenrich LLP
dated September 21, 1999: (i) Schedule A attached hereto sets forth a true and
complete list of all the patents, rights to patents and patent applications now
owned, licensed, controlled or used by the Assignors; (ii) the issued Patents
are subsisting and have not been adjudged invalid or unenforceable, in whole or
in part, and there is no litigation or proceeding pending concerning the
validity or enforceability of the issued Patents; (iii) to the best of the
Assignors' knowledge, each of the issued Patents is valid and enforceable; (iv)
to the best of the Assignors' knowledge, there is no infringement by others of
the issued Patents or Patent Rights; (v) no claim has been made that the use of
any of the Patents does or may violate the rights of any third person, and to
the best of the Assignors' knowledge there is no infringement by the Assignors
of the patent rights of others; (vi) the Assignors indicated on Schedule A
attached hereto is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to each of the Patents (other than ownership
and other rights reserved by third party owners with respect to Patents which
the Assignors are licensed to practice or use as indicated on Schedule A
attached hereto), free and clear of any liens, charges, encumbrances and adverse
claims, including without limitation pledges, assignments, licenses, shop rights
and covenants by the Assignors not to sue third persons, other than the security
agreement and mortgage created by the Security Agreement and this Patent
Agreement; (vii) the Assignors, have the unqualified right to enter into this
Patent Agreement and perform its terms and have entered and will enter into
written agreements with each of their present and future employees, agents,
consultants, licensors and licensees which will enable them to comply with the
covenants herein contained; (viii) this Patent Agreement, together with the
Security Agreements, will create in favor of the Bank a valid and perfected
first priority security interest in the Patent Collateral upon making the
filings referred to in clause (ix) of this Section 3; and (ix) except for the
filing of financing statements with the Monroe County Clerk and the Secretary of
State for the State of New York under the Uniform Commercial Code and the filing
of this Patent Agreement with the PTO, no authorization, approval or other
action by, and no notice to or filing with, any governmental or regulatory
authority, agency or office is required either (1) for the grant by the
Assignors or the effectiveness of
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the security interest and assignment granted hereby or for the execution,
delivery and performance of this Patent Agreement by the Assignors, or (2) for
the perfection of or the exercise by the Bank of any of its rights and remedies
hereunder.
4. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Bank's prior written consent, the Assignors will not (i)
mortgage, pledge, assign, encumber, grant a security interest in, transfer,
license or alienate any of the Patent Collateral, or (ii) enter into any
agreement (for example, a license agreement) that is inconsistent with the
Assignors' obligations under this Patent Agreement or the Security Agreements.
The Bank will not unreasonably delay in responding to any request by the
Assignors for a consent to any action prohibited by this Section 4.
5. AFTER-ACQUIRED PATENTS, ETC.
5.1 After-acquired Patents.
If, before the Obligations shall have been finally paid and
satisfied in full and both Assignors no longer have a right to request advances
from Bank and all lines of credit terminated by Bank, the Assignors shall obtain
any right, title or interest in or to any other or new patents, patent
applications or patentable inventions, or become entitled to the benefit of any
patent application or patent or any reissue, division, continuation, renewal,
extension, or continuation-in-part of any of the Patent Collateral or any
improvement on any of the Patent Collateral, the provisions of this Patent
Agreement shall automatically apply thereto and the Assignors shall (i) promptly
on request by the Bank and (ii) on an annual basis give to the Bank notice
thereof in writing and execute and deliver to the Bank such documents or
instruments as the Bank may reasonably request further to transfer title thereto
to the Bank as required herein.
5.2 Amendment to Schedule.
The Assignors authorize the Bank to modify this Patent Agreement,
without the necessity of the Assignors' further approval or signature, by
amending Schedule A hereto to include any future or other Patents or Patent
Rights under Section 2 or Section 5 hereof.
6. PATENT PROSECUTION.
6.1 Assignors Responsible.
The Assignors shall assume full and complete responsibility for the
prosecution, grant, enforcement or any other necessary or desirable actions in
connection with the Patent Collateral, and shall hold the Bank harmless from any
and all costs, damages, liabilities and expenses which may be incurred by the
Bank in connection with the Bank's title to any of the Patent Collateral or any
other action or failure to act in connection with this Patent Agreement or the
transactions contemplated hereby. In respect
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of such responsibility, the Assignors shall retain patent counsel acceptable to
the Bank. The Bank shall not unreasonably delay in responding to any written
inquiry as to the acceptability of patent counsel proposed by the Assignors.
6.2 Assignors' Duties, Etc.
The Assignors shall have the duty, through patent counsel acceptable
to the Bank, to prosecute diligently any patent applications of the Patents
pending as of the date of this Patent Agreement or thereafter, to make
application for unpatented but reasonably patentable inventions and to preserve
and maintain all rights in the Patents, including, without limitation, the
payment when, due of all maintenance fees and other fees, taxes and other
expenses which shall be incurred or which shall accrue with respect to any of
the Patents. Any expenses incurred in connection with such applications and
actions shall be borne by the Assignors. The Assignors shall not abandon any
filed patent application, or any pending patent application or patent, without
the consent of the Bank, which consent shall not be unreasonably withheld. The
Bank hereby appoints the Assignors as its agent for all matters referred to in
the foregoing provisions of this Section 6 and agrees to execute any documents
necessary to confirm such appointment. Upon the occurrence and during the
continuance of an Event of Default, the Bank may terminate such agency by
providing written notice of termination to the Assignors. The Bank shall not
unreasonably delay in responding to any written inquiry as to the acceptability
of patent counsel pursuant to this Section 6.2 or the abandonment of any patent
application.
6.3 Assignors' Enforcement Rights.
The Assignors shall have the right, with the consent of the Bank,
which shall not be unreasonably withheld, to bring suit or other action in the
Assignors' own name(s) to enforce the Patents and the Patent Rights. The Bank
shall be required to join in such suit or action as may be necessary to assure
the Assignors' ability to bring and maintain any such suit or action in any
proper forum so long as the Bank is completely satisfied that such joinder will
not subject the Bank to any risk of liability. The Assignors shall promptly,
upon demand, reimburse and indemnify the Bank for all damages, costs and
expenses, including legal fees, incurred by the Bank pursuant to this Section 6.
6.4 Protection of Patents, Etc.
In general, the Assignors shall take any and all such actions
(including, but not limited to, institution and maintenance of suits,
proceedings or actions) as may be necessary or appropriate to properly maintain,
protect, preserve, care for and enforce the Patent Collateral. The Assignors,
shall not take or fail to take any action, nor permit any action to be taken or
not taken by others under their control, which would affect the validity, grant
or enforcement of any of the Patent Collateral.
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6.5 Notification by Assignors.
Promptly upon obtaining knowledge thereof, the Assignors will notify
the Bank in writing of the institution of, or any final adverse determination
in, any proceeding in the PTO or any similar office or agency of the United
States or any foreign country, or any court, regarding the validity of any of
the Patents or the Assignors' rights, title or interests in and to any of the
Patent Collateral, and of any event which does or reasonably could materially
adversely affect the value of any of the Patent Collateral, the ability of the
Assignors or the Bank to dispose of any of the Patent Collateral or the rights
and remedies of the Bank in relation thereto (including, but not limited to, the
levy of any legal process against any of the Patent Collateral).
7. LICENSE BACK TO ASSIGNORS.
Unless and until there shall have occurred and be continuing an Event of
Default and the Bank has notified the Assignors that the license granted
hereunder is terminated, the Bank hereby grants to the Assignors the sole and
exclusive, nontransferable, royalty free, worldwide right and license under the
Patents to make, have made for them, use, sell and otherwise practice the
inventions disclosed and claimed in the Patents for the Assignors' own benefit
and account and for none other; provided however that the foregoing right and
license shall be no greater in scope than, and limited by, the rights assigned
to the Bank by the Assignors hereby. The Assignors agree not to sell, assign,
transfer, encumber or sublicense their interest in the license granted to the
Assignors in this Section 7, without the prior written consent of the Bank. Any
such sublicenses granted on or after the date hereof shall be terminable by the
Bank upon termination of the Assignors' license hereunder.
8. REMEDIES.
If any Event of Default shall have occurred and be continuing, then upon
notice by the Bank to the Assignors: (i) the Assignors' license with respect to
the Patents as set forth in Section 7 shall terminate; (ii) the Assignors shall
immediately cease and desist from the practice, manufacture, use and sale of the
inventions claimed, disclosed or covered by the Patents; and (iii) the Bank
shall have, in addition to all other rights and remedies given it by this Patent
Agreement, the Loan Agreement, the Security Agreements, and all other
agreements, instruments and documents executed by Borrower and/or Parent in
favor of Bank at any time, those allowed by law and the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in the State of New
York and, without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without other notice (except as
set forth next below) or demand whatsoever to the Assignors, all of which are
hereby expressly waived, and without advertisement, sell or license at public or
private sale or' otherwise realize upon the whole or from time to time any part
of the Patent Collateral, or any interest which the Assignors may have therein,
and after deducting from the proceeds of sale or other disposition of the Patent
Collateral all reasonable expenses (including all reasonable expenses for
broker's fees and legal services), shall apply the residue of such proceeds
toward the payment of the
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Obligations as set forth in the Security Agreements. Notice of any sale, license
or other disposition of any of the Patent Collateral shall be given to the
Assignors, at least five (5) days before the time that any intended public sale
or other disposition of such Patent Collateral is to be made or after which any
private sale or other disposition of such Patent Collateral may be made, which
the Assignors hereby agrees shall be reasonable notice of such public or private
sale or other disposition. At any such sale or other disposition, the Bank may,
to the extent permitted under applicable law, purchase or license the whole or
any part of the Patent Collateral or interests therein sold, licensed or
otherwise disposed of.
9. COLLATERAL PROTECTION.
If the Assignors shall fail to do any act that they have covenanted to do
hereunder, or if any representation or warranty of the Assignors shall be
breached, the Bank, in their own name or that of the Assignors (in the sole
discretion of the Bank), may (but shall not be obligated to) after ten (10) days
written notice do such act or remedy such breach (or cause such act to be done
or such breach to be remedied), and the Assignors agree promptly to reimburse
the Bank for any cost or expense incurred by the Bank in so doing.
10. POWER OF ATTORNEY.
If any Event of Default shall have occurred and be continuing, the
Assignors do hereby make, constitute and appoint the Bank (and any officer or
agent of the Bank as the Bank may select in its exclusive discretion) as the
Assignors' true and lawful attorney-in-fact, with the power to endorse the
Assignors' name on all applications, documents, papers and instruments necessary
for the Bank to use any of the Patent Collateral, to practice, make, use or sell
the inventions disclosed or claimed in any of the Patent Collateral, to grant or
issue any exclusive or nonexclusive license of any of the Patent Collateral to
any third person, or necessary for the Bank to assign, pledge, convey or
otherwise transfer title in or dispose of the Patent Collateral or any part
thereof or interest therein to any third person, and, in general, to execute and
deliver any instruments or documents and do all other acts which the Assignors
are obligated to execute and do hereunder. The Assignors hereby ratify all that
such attorney shall lawfully do or cause to be done by virtue hereof, and
releases the Bank from any claims, liabilities, causes of action or demands
arising out of or in connection with any action taken or omitted to be taken by
the Bank under this power of attorney (except for the Bank's gross negligence or
willful misconduct). This power of attorney shall be irrevocable for the
duration of this Patent Agreement.
11. FURTHER ASSURANCES.
The Assignors shall, at any time and from time to time, and at their
expense, make, execute, acknowledge and deliver, and file and record as
necessary or appropriate with governmental or regulatory authorities, agencies
or offices, such agreements, assignments, documents and instruments, and do such
other and further acts and things (including, without limitation, obtaining
consents of third parties), as the Bank may request or as may be necessary or
appropriate in order to implement and effect fully the intentions, purposes
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and provisions of this Patent Agreement, or to assure and confirm to the Bank
the grant, perfection and priority of the Bank's security interest in any of the
Patent Collateral.
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full and neither of the Assignors have any right to request
advances from Bank under a line of credit, this Patent Agreement shall terminate
and the Bank shall, upon the written request and at the expense of the
Assignors, execute and deliver to the Assignors all deeds, assignments and other
instruments as may be necessary or proper to reassign and reconvey to and
re-vest in the Assignors the entire right, title and interest to the Patent
Collateral previously granted, assigned, transferred and conveyed to the Bank by
the Assignors pursuant to this Patent Agreement, as fully as if this Patent
Agreement had not been made, subject to any disposition of all or any part
thereof which may have been made by the Bank pursuant hereto or the Security
Agreements.
13. COURSE OF DEALING.
No course of dealing among the Assignors, and the Bank, nor any failure to
exercise, nor any delay in exercising, on the part of the Bank, any right, power
or privilege hereunder or under the Security Agreements shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
the Bank in connection with the preparation of this Patent Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances
or otherwise protecting, maintaining or preserving any of the Patent Collateral,
or in defending or prosecuting any actions or proceedings arising out of or
related to any of the Patent Collateral, shall be borne and paid by the
Assignors.
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Assignors hereunder shall
be a debt secured by the Patent Collateral and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Loan Agreement.
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16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE BANK
ASSUMES NO LIABILITIES OF THE ASSIGNORS WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNORS' OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY PRACTICE,
USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE OR SALE OF
ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING OUT OF ANY
PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL
OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE ASSIGNORS, AND THE
ASSIGNORS SHALL INDEMNIFY THE BANK FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND
CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE BANK WITH RESPECT TO SUCH
LIABILITIES.
17. RIGHTS AND REMEDIES CUMULATIVE.
All of the Bank's rights and remedies with respect to the Patent
Collateral, whether established hereby or by the Security Agreements or by any
other agreements or by law, shall be cumulative and may be exercised singularly
or concurrently. This Patent Agreement is supplemental to the Security
Agreements, and nothing contained herein shall in any way derogate from any of
the rights or remedies of the Bank contained therein. Nothing contained in this
Patent Agreement shall be deemed to extend the time of attachment or perfection
of or otherwise impair the security interest in any of the Patent Collateral
granted to the Bank under the Security Agreements.
18. NOTICES.
All notices and other communications made or required to be given pursuant
to this Patent Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as follows:
(a) if to the Assignors, at CVC, Inc. and CVC Products, Inc.,
Attention: Emilio 0. DiCataldo, Senior Vice President and Chief Financial
Officer, at the address first listed above or at such other address for notice
as the Assignors shall last have furnished in writing to the person giving the
notice; and
(b) if to the Bank, at One M&T Plaza, Buffalo, New York 14203,
Attention: Collateral Department or at such other address for notice as the Bank
shall last have furnished in wiring to the person giving the notice, with copies
to the Bank at 255 East Avenue, Rochester, New York 14604, Attention: William
Holston, Vice President.
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand to a responsible officer of the
party to which it is directed, at the time of the receipt thereof by such
officer, (i) if sent by registered or
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certified first-class mail, postage prepaid, two (2) Business Days after the
posting thereof, and (iii) if sent by telegraph, telecopy, or telex, at the time
of the dispatch thereof, if In normal business hours in the country of receipt,
or otherwise at the opening of business on the following Business Day.
19. AMENDMENT AND WAIVER.
This Patent Agreement is subject to modification only by a writing signed
by the Bank and the Assignors, except as provided in Section 5.2. The Bank shall
not be deemed to have waived any right hereunder unless such waiver shall be in
writing and signed by the Bank. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion.
20. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS PATENT AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. The Assignors agree that any suit for the enforcement of this
Patent Agreement may be brought in the courts of the County of Monroe or any
federal court sitting therein and consents to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon the
Assignors by mail at the address specified in Section 18. The Assignors hereby
waive any objection that they may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
21. WAIVER OF JURY TRIAL.
THE ASSIGNORS WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS PATENT AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Assignors waive any right which
they may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Assignors (i) certify
that neither the Bank nor any representative, agent or attorney of the Bank has
represented, expressly or otherwise, that the Bank would not, in the event of
litigation, seek to enforce the foregoing waivers, and (ii) acknowledges that,
in entering into the Loan Agreement and the other agreements, notes, instruments
and documents executed in connection therewith to which the Bank is a party, the
Bank is relying upon, among other things, the waivers and certifications
contained in this Section 21.
22. BANK'S RIGHT TO ACCEPT OR CONSENT, ETC.
Notwithstanding anything herein to the contrary, Bank shall not be deemed
to have unreasonably delayed in responding to a request for a consent hereunder
or the approval of a counsel proposed by Assignors whom the Bank must consent to
unless Bank fails to
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respond to a request for such consent or acceptance of proposed counsel for ten
(10) days after such request is submitted and Assignors, thereafter notify Bank
in writing that they believe Bank has unreasonably delayed in responding to such
request and Bank continues for more than ten (10) days after its receipt of such
notice to respond to such request. In any event, the sole remedy for Assignors
if Bank unreasonably delayed in responding to any such request shall be that it
loses its right to consent to any such action or to approve any such counsel.
23. MISCELLANEOUS.
The headings of each section of this Patent Agreement are for convenience
only and shall not define or limit the provisions thereof. This Patent Agreement
and all rights and obligations hereunder shall be binding upon the Assignors and
their respective successors and permitted assigns, and shall inure to the
benefit of the Bank and its successors and assigns. In the event of any
irreconcilable conflict between the provisions of this Patent Agreement and the
Loan Agreement, or between this Patent Agreement and the Security Agreements,
the provisions of the Loan Agreement or the Security Agreements, as the case may
be, shall control. If any term of this Patent Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Patent Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Assignors acknowledge receipt of a copy of this Patent
Agreement. All obligations of the Assignors hereunder shall be joint and
several.
24. VIOLATION OF PATENT LICENSE
Notwithstanding anything to the contrary contained herein, Assignor is not
granting the Bank a security interest in any Patent License Rights if such a
security interest would constitute a breach of the applicable license agreement.
IN WITNESS WHEREOF, this Patent Agreement has been executed as of the day
and year first above written.
CVC, INC.
By: /s/ Emilio 0. DiCataldo
-----------------------------------
Name: Emilio 0. DiCataldo
Title: Senior Vice President and CFO
CVC PRODUCTS, INC.
By: /s/ Emilio 0. DiCataldo
-----------------------------------
Name: Emilio 0. DiCataldo
Title: Senior Vice President and CFO
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MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /s/ William E. Holston
--------------------------------------
Name: William E. Holston
Title: Vice President
STATE OF NEW YORK )
COUNTY OF Monroe ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared Emilio 0. DiCataldo
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02PE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
STATE OF NEW YORK )
COUNTY OF Monroe ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared Emilio 0. DiCataldo,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02PE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
STATE OF NEW YORK )
COUNTY OF Monroe ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared William E. Holston,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02PE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
-13-
<PAGE>
SCHEDULE A
ISSUED AND PENDING PATENTS
-14-
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 2 - Corporation Patents & Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
5,248,402 Apple-Shaped Magnetron Paul Ballentine, Issued Data storage (MR &
for Sputtering System Dorian Heimanson, 9/28/93 GMR) PVD Product;
Alan Stephens Semiconductor
interconnect products;
Specialty applications
(e.g., thin film resistors)
- ------------------------------------------------------------------------------------------------------------------------------------
5,630,916 Magnetic Orienting Device Kevin Gerrish, Paul Issued Data storage PVD
for Thin-Film Deposition Ballentine, Dorian 05/20/97 magnetic thin-films
Heimanson, Alan Stephens products
(MR, GMR, MRAM)
- ------------------------------------------------------------------------------------------------------------------------------------
5,715,361 Rapid Thermal Processing Mehrdad Moslehi, Issued RTP and RTCVD
High-Performance Multi- Yong Jin Lee, Bill 02/03/98 products for
Zone Illuminator for Wafer Messner, Cecil Davis semiconductor
Backside Heating applications (e.g.,
silicides)
- ------------------------------------------------------------------------------------------------------------------------------------
5,846,883 Apparatus and Method for Mehrdad Moslehi Issued Soft plasma clean module [PCT/US97/12243]
Multi-Zone High-Density 12/08/98 for all products
Inductively-Coupled
Plasma Generation
- ------------------------------------------------------------------------------------------------------------------------------------
5,746,897 High Magnetic Flux Dorian Heimanson, Issued Data storage PVD [PCT/US96/11564]
Permanent Magnet Array Mehrdad Moslehi, 05/05/98 products (deposition of
Apparatus and Method for Thomas Omstead, magnetic materials)
High Productivity Physical Paul Spronz
Vapor Deposition
- ------------------------------------------------------------------------------------------------------------------------------------
5,876,573 High Magnetic Flux Mehrdad Moslehi, Issued Data storage PVD
Cathode Apparatus and Dorian Heimanson, 03/02/99 products (deposition of
Method for High- Cecil Davis, Thomas magnetic materials)
Productivity Physical Omstead
Vapor Deposition.
====================================================================================================================================
</TABLE>
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 2 - Corporation Patents & Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
5,871,588 Programmable Ultraclean Mehrdad Moslehi, Issued RTP and RTCVD [PCT.US 96/11563]
Electromagnetic Substrate Yong Jin Lee 3/16/99 products (e.g., for
Rotation Apparatus and silicides)
Method for
Microelectronics
Manufacturing Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
5,937,142 Multi-Point Precision Yong Jin Lee, Issued RTP and RTCVD
Pyrometry Sensors for Rapid Mehrdad Moslehi 08/10/99 products (e.g., for
[09/209,313] Thermal Processing Equipment silicides)
- ------------------------------------------------------------------------------------------------------------------------------------
5,775,416 Temperature Controlled Chuck Dorian Heimanson Issued Data storage PVD PCT
for Vacuum Processing Thomas R. Omstead 07/07/98 products
US96/18066
- ------------------------------------------------------------------------------------------------------------------------------------
5,902,466 Sputtering Apparatus with Kevin S. Gerrish, Issued Data storage PVD
Magnetic Orienting Device Paul H. Ballentine, 05/11/99 products
for Thin-Film Deposition Dorian Heimanson,
Alan T. Stephens II
- ------------------------------------------------------------------------------------------------------------------------------------
5,936,829 Thermally Conductive Mehrdad M. Moslehi Issued Data storage PVD
Chuck for Vacuum 8/10/99 products
Processor
- ------------------------------------------------------------------------------------------------------------------------------------
08/678,297 Multi-Zone Gas Injection Mehrdad Moslehi, Issue Fee Semiconductor RTP, CVC-1270
Apparatus and Method for Thomas Omstead, Paid 5/21/99 RTCVD, and MOCUD
Microelectronics Yong Jin Lee, Scott products
Manufacturing Equipment McAllister, Ahmed
Kermani
- ------------------------------------------------------------------------------------------------------------------------------------
08/680,244 Apparatus and Method for Mehrdad Moslehi, Notice of RTP and RTCVD [PCT/US 96/11545]
Automated Calibration of Yong Jin Lee Allowance products (e.g., for
Temperature Sensors in
====================================================================================================================================
</TABLE>
-20-
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 2 - Corporation Patents & Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Rapid Thermal Processing 6/08/99 silicides 09/344,491 CPA
Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
09/064,431 Ultra High Speed Chip Mehrdad M. Moslehi 04/22/98 Semiconductor 09/187,297
Integrated Circuit Issue fee due interconnect products CIP
Interconnect Structure and 10/06/99
Fabrication Method Using
Free-Space Dielectrics
- ------------------------------------------------------------------------------------------------------------------------------------
09/207,906 Ultra High-Speed Filed Semiconductor
Semiconductor Integrated 12/08/98 interconnect products
Circuit Interconnect [Allowed]
Structure and Fabrication
Method Using Free-Space
Dielectric
- ------------------------------------------------------------------------------------------------------------------------------------
08/678,297 Multi-zone Gas Injection Filed
Apparatus and Method for 07/11/96
Microelectronics [Allowed]
Manufacturing Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
5,616,179 Process for deposition of David A. Baldwin Issued *Acquired in acquisition
diamondlike, electrically of CSC completed 10
(170,770) conductive and electron- Stephen L. Michael 04/01/97 May 1999
emissive carbon-based
films Filed
Data storage and optical
12/21/93 applications
- ------------------------------------------------------------------------------------------------------------------------------------
5,256,930 Cooled plasma source William E. Hughes Issued *Acquired in acquisition
of CSC completed 10
(833,409) 10/26/93 May 1999
Filed Data storage and optical
Ion Beam Processing
2/10/92
====================================================================================================================================
</TABLE>
-21-
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 2 - Corporation Patents & Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
products
- ------------------------------------------------------------------------------------------------------------------------------------
5,177,398 Grid Assembly for Ion Jurgen Engeman Issued *Acquired in acquisition
Beam Sources and Method of CSC completed 10
(530,857) Therefor 1/5/93 May 1999
Filed
5/31/90 Data storage and optical
Ion Beam Processing
products
- ------------------------------------------------------------------------------------------------------------------------------------
4,403,567 Workpiece Holder Harry da Costa Issued *Acquired in acquisition
of CSC completed 10
(179,960) Hugh K. Howerton 9/13/83 May 1999
William E. Hughes Filed Data storage and optical
Ion Beam Processing
Gaines W. Mark 8/21/80 products
- ------------------------------------------------------------------------------------------------------------------------------------
4,187,801 Method and Apparatus for Gaines W. Monk Issued *Acquired in acquisition
Transporting Work Pieces of CSC completed 10
2/12/80 May 1999
Filed Data storage and optical
Ion Beam Processing
12/12/77 products
====================================================================================================================================
</TABLE>
-22-
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 3 CVC Pending Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
(DIVI & 021208.0102) Apparatus Mehrdad Moslehi Filed on Soft plasma clean for
and Method for Multi-Zone High- 7/10/96 with semiconductor
Density Inductively-Coupled 7/10/95 interconnect
Plasma Generation Priority Date and silicide products
- ------------------------------------------------------------------------------------------------------------------------------------
08/677,849 Hermetically-Sealed Inductively- Mehrdad Moslehi Filed on Soft plasma clean for
Coupled Plasma Source Structure 7/10/96 with semiconductor
and Method of Use 7/10/95 interconnect
Priority Date and silicide products
- ------------------------------------------------------------------------------------------------------------------------------------
08/978,933 Apparatus and Method for Mehrdad Moslehi Filed 11/26/97 PVC module for
Inductively-Coupled Plasma- semiconductor interconnect
Enhanced Ionized Physical-Vapor and data storage products
Deposition
- ------------------------------------------------------------------------------------------------------------------------------------
Apparatus and Method for Mehrdad Moslehi, Yong Filed 06/25/99 RTP and RTCVD products 08/680,244
Automated Calibration of Jin Lee (e.g., for silicides) [PCT/US
Temperature Sensors in Rapid 96/11545]
Thermal Processing Equipment 09/344,491 CPA
- ------------------------------------------------------------------------------------------------------------------------------------
08/680,244 Apparatus and Method for Mehrdad Moslehi, Yong Filed on Semiconductor RTP and
Automated Calibration of Jin Lee 7/10/96 RTCVD modules
Temperature Sensor in Rapid
Thermal Processing Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
08/938,293 Two-Stage Sealing System for Mehrdad Moslehi Filed on Data storage PVD/IVP/IBE
Thermally Conductive Chuck 9/26/97 and semiconductor
interconnect (PVD,
MOCVD) products
- ------------------------------------------------------------------------------------------------------------------------------------
09/144,234 Pulsed Mode Deposition for Low Ajit Paranjpe, Randhir Filed on Data storage PVD products 60/066,695
Rate, Deposition of High Quality Bubber, Peter Schwartz, 09/08/98 (Provisional)
Thin Films Rajesh Nagpal
====================================================================================================================================
</TABLE>
-23-
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 3 CVC Pending Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Not yet Physical Vapor Deposition System Mehrdad Moslehi, Filed on Data storage PVD products CIP of 08/677,951
assigned Having Reduced Thickness Backing Dorian Heimanson, 12/03/98 CVC-1170-1
Plate Thomas Omstead,
Cecil J. Davis
- ------------------------------------------------------------------------------------------------------------------------------------
08/677,893 Ultra-High Vacuum Apparatus and Mehrdad Moslehi, Cecil Filed on Data storage and
Method for High-Productivity J. Davis, 07/10/96 semiconductor PVD products
Physical Vapor Deposition Dorian Heimanson
- ------------------------------------------------------------------------------------------------------------------------------------
09/209,313 Multi-Zone Illuminator for Rapid Yong Jin Lee 12/09/98 Semiconductor RTP and
Thermal Processing with Improved Mehrdad Moslehi RTCUD modules
Spatial Resolution Xiang Un Chen
- ------------------------------------------------------------------------------------------------------------------------------------
09/187,297 Improved Ultra High-Speed Chip Mehrdad M. Moslehi 11/05/98 Semiconductor interconnect
Interconnections Free Space products
Dielectrics
- ------------------------------------------------------------------------------------------------------------------------------------
5,950,723 Method of Regulating Substrate Mehrdad M. Moslehi 11/14/97 Data storage PUD/EB/IBE
Temperature In a Low Pressure and semiconductor
Environment interconnect (PUD,
MOCUD) products
- ------------------------------------------------------------------------------------------------------------------------------------
08/970,608 Method of Regulating Substrate Mehrdad M. Moslehi 11/14/97 Data storage PUD/EB/IBE
Temperature In a Low Pressure and semiconductor
interconnect (PUD,
MOCUD) products
- ------------------------------------------------------------------------------------------------------------------------------------
08/975,626 Thermally Conductive Chuck for 11/21/97
Vacuum Processor
- ------------------------------------------------------------------------------------------------------------------------------------
08/977,822 Substrate Edge Seal and Clamp for Mehrdad M. Moslehi 11/25/97 Data Storage PUD/IBD/IBE
Low-pressure Processing and semiconductor
MOCUD/PVD products
====================================================================================================================================
</TABLE>
-24-
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 3 CVC Pending Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
09/083,363 Multiple-coil electromagnet For Mehrdad M. Moslehi 05/22/98 Data storage PUD and IBD
[ES&A ?] Magnetically Orienting Thin Films products
Shiyuan Cheng
Cecil J. Davis
- ------------------------------------------------------------------------------------------------------------------------------------
09/083,742 Thin-Film Processing 05/22/98 Data storage PUD and IBD
[ES&A ?] Electromagnet For Low-Skew products
Magnetic
- ------------------------------------------------------------------------------------------------------------------------------------
09/141,180 Wafer Handler For Multi-station Mehrdad M. Moslehi 08/27/98 Cluster tool products
Tool
- ------------------------------------------------------------------------------------------------------------------------------------
09/175,487 Shutter For Thin-film Processing Mehrdad M. Moslehi 10/20/98 Data storage and
[ES&A ?] Equipment semiconductor PUD products
- ------------------------------------------------------------------------------------------------------------------------------------
09/271,959 Low-pressure Processing System Kevin Gerrish 03/18/99
for Magnetic Orientation of Thin CJ DI
Hung
- ------------------------------------------------------------------------------------------------------------------------------------
09/067,142 High-Performance Energy Transfer Yong Jin Lee 04/27/98
System and Method For Thermal
[B&B 021208.0157] Processing Applications Mehrdad M. Moslehi
Jalil Kamali
- ------------------------------------------------------------------------------------------------------------------------------------
06/146,486 Method and System For Dispensing Thomas Omstead 09/03/98 Semiconductor interconnect
Process Gas For Fabricating a MOCVD products
Device on a Substrate et al.
- ------------------------------------------------------------------------------------------------------------------------------------
09/113,852 Method For forming A Copper Film 07/10/98 Semiconductor interconnect
[B&B 021208.0203] on a Substrate products
- ------------------------------------------------------------------------------------------------------------------------------------
09/067,143 Apparatus and Method for Multi- Mehrdad M. Moslegi 04/27/98 Data storage PUD products
Target Physical Vapor Deposition
of a Multi-layer Material Structure Cecil J. Davis
Chris Mann
====================================================================================================================================
</TABLE>
-25-
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 3 CVC Pending Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
09/082,043 Apparatus and Method for Multi- Mehrdad M. Moslegi 11/20/98 Data storage PUD products
Target Physical Vapor Cecil J. Davis
Chris Mann
- ------------------------------------------------------------------------------------------------------------------------------------
09/219,147 Semiconductor Chip Interconnect Ajit Paranjpe, et. al. 12/22/98 Semiconductor interconnect
Barrier Material and Fabrication products
Method
- ------------------------------------------------------------------------------------------------------------------------------------
09/285,162 Method for Planarized Deposition Mehrdad M. Moslehi 04/01/99
of a Material
- ------------------------------------------------------------------------------------------------------------------------------------
09/282,952 Method and Apparatus for Ajit Paranjpe, et. al. 04/01/99
Deposting Tantalum-Based Thin
Films with Organiometallic
Precursor
- ------------------------------------------------------------------------------------------------------------------------------------
09/383,661 Apparatus and Method for Ajit Paranjpe 09/26/99
Electroplating a Material Layer onto Mehrdad M. Moslehi
a Wafer
- ------------------------------------------------------------------------------------------------------------------------------------
09/332,492 Method and Apparatus for Ajit Paranjpe 06/14/99
planarized Electroplating of a Mehrdad M. Moslehi
Material
- ------------------------------------------------------------------------------------------------------------------------------------
09/082,043 Apparatus and Method for Multi- Mehrdad M. Moslehi 05/20/98 Data storage PUD products
target Physical Vapor Deposition of
a Multi-layer Material Structure
Using Target Indexing
- ------------------------------------------------------------------------------------------------------------------------------------
08/928,617 Apparatus and Method for 5,246,803 09/12/97 Soft plasma clear for thin
Multizone High-Density films processing applications
Inductively-Coupled Plasma
Generation
====================================================================================================================================
</TABLE>
-26-
<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
====================================================================================================================================
Table 3 CVC Pending Patent Applications
- ------------------------------------------------------------------------------------------------------------------------------------
Patent/ Related CVC
Application Invention Title Inventor(s) Filing &/or Covered CVC Product(s) Patent/Patent
Serial No. Issue Date Application(s)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
09/205,113 High-Magnetic Flux Cathode 5,746,897 12/03/98 Data storage PUD products
Apparatus and Method for High-
Productivity Physical-Vapor
Deposition
- ------------------------------------------------------------------------------------------------------------------------------------
08/958,877 Ultra-High Vacuum Apparatus and Mehrdad M. Moslehi 10/27/97 Data storage PUD products
Method for High Productivity
Physical Vapor Deposition
- ------------------------------------------------------------------------------------------------------------------------------------
60/001,003 Rotation Apparatus and Method for Mehrdad M. Moslehi 07/10/95 Semiconductor RTP and
Microelectronics Manufacturing RTCUD products
Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
08/933,420 Method and Apparatus for High Mehrdad M. Moslehi 09/18/97 Semiconductor interconnect
Performance Integrated Circuit products
Interconnect Fabrication
- ------------------------------------------------------------------------------------------------------------------------------------
09/291,079 Method and Apparatus for High Mehrdad M. Moslehi 04/14/99 Semiconductor interconnect
Performance Integrated circuit products
Interconnect Fabrication
- ------------------------------------------------------------------------------------------------------------------------------------
09/149,234 Pulsed Mode Deposition for Low Ajit Paranjpe, Randhir 09/08/99 Data storage PUD products
Rate Film Deposition Bubber, Peter Schwartz,
Rajesh Nagpal
- ------------------------------------------------------------------------------------------------------------------------------------
Improved Ion Optics 6/21/99 Data Storage and Optical
IBD/IBE products
- ------------------------------------------------------------------------------------------------------------------------------------
Ion Assisted Deposition Source Jurgen Vaun Filed 8/6/98 Data Storage and Optical
IBD/IBE products
- ------------------------------------------------------------------------------------------------------------------------------------
Target Assembly for Ion Beam William A. Meyer ? Data Storage and Optical
Sputter Deposition with Multiple IBD/IBE products
Paddles Each Having Targets on
Both Sides
====================================================================================================================================
</TABLE>
-27-
<PAGE>
Exhibit 10.50
================================================================================
TRADEMARK COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
Dated as of September 22, 1999
between
COMMONWEALTH SCIENTIFIC CORPORATION
and
MANUFACTURERS AND TRADERS TRUST COMPANY
================================================================================
<PAGE>
This TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT dated as of
September 22, 1999, between COMMONWEALTH SCIENTIFIC CORPORATION, a Virginia
corporation (the "Assignor"), having its principal place of business at 500
Pendleton Street, Alexandria, Virginia 22314, and MANUFACTURERS AND TRADERS
TRUST COMPANY, having an office at One M&T Plaza, Buffalo, New York 14203 (the
"Bank").
WHEREAS, CVC Products, Inc. (the "Borrower") and the Bank are parties to a
Loan Agreement, dated as of March 31, 1998, (as amended and in effect from time
to time, the "Loan Agreement"); and
WHEREAS, the Borrower and the Bank have entered into an Amendment to Loan
Agreement dated the date hereof (the "Amendment"); and
WHEREAS, it is a condition precedent to the Bank making any loans or
otherwise extending credit to the Borrower under the Loan Agreement that the
Assignor execute and deliver to the Bank this Trademark Agreement; and
WHEREAS, the Assignor has executed and delivered to the Bank a General
Security Agreement, dated as of September 3, 1998 (the "Security Agreement"),
pursuant to which the Assignor granted to the Bank a first priority perfected
security interest in all of the Assignor's personal property and fixture assets,
including, without limitation, the trademarks, service marks, trademark and
service mark registrations and trademark and service mark registration
applications listed on Schedule A attached hereto, all to secure the payment and
performance of all the indebtedness of the Borrower and Assignor to the Bank;
and
WHEREAS, this Trademark Agreement (defined below) is supplemental to the
provisions contained in the Security Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Loan Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Trademark Agreement referred to below:
Assignor means Commonwealth Scientific Corporation, a Virginia
corporation.
<PAGE>
Associated Goodwill means all goodwill of the Assignor and its
businesses, products and services appurtenant to, associated with or symbolized
by the Trademarks and the use thereof.
Events of Default means any "Event of Default" which has occurred
under the Security Agreement.
Obligations means, collectively, any indebtedness, liabilities and
obligations for payment of money, regardless of kind, class or form and whether
for the payment of principal or of interest or otherwise, incurred, for any
business, commercial, agricultural or consumer purposes 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 an 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 tortuous, liquidated or unliquidated, arising by
operation of law or otherwise, that are now or hereafter owing by Borrower and
Assignor in any capacity, whether alone or otherwise, to the Bank in any
capacity, whether or not allowed as a claim against such Assignor in any case or
other proceeding pursuant to any bankruptcy or insolvency statute, regulation or
other law or 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.
Pledged Trademarks means all of the Assignor's right, title and
interest in and to all of the Trademarks, the Trademark Registrations, the
Trademark License Rights; the Trademark Rights, the Associated Goodwill, the
Related Assets, and all accessions to, substitutions for, replacements of, and
all products and proceeds of any and all of the foregoing.
PTO means the United States Patent and Trademark Office.
Related Assets means all assets, rights and interests of the
Assignor that uniquely reflect or embody the Associated Goodwill, including the
following:
(a) all patents, inventions, copyrights, trade secrets,
confidential information, formulae, methods or processes, compounds, recipes,
know-how, methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any of the
Trademarks; and
(b) the following documents and things in the possession or
under the control of the Assignor, or subject to their demand for possession or
control, related to the production, delivery, provision and sale by the
Assignor, or any affiliate, franchisee,
-2-
<PAGE>
licensee or contractor, of products or services sold by or under the authority
of the Assignor in connection with the Trademarks or Trademark Rights, whether
prior to, on or subsequent to the date hereof:
(i) all lists, contracts, ancillary documents and other
information that identify, describe or provide information with respect to any
customers, dealers or distributors of the Assignor, its affiliates or
franchisees or licensees or contractors, for products or services sold under or
in connection with the Trademarks or Trademark Rights, including all lists and
documents containing information regarding each customer's, dealer's or
distributor's name and address, credit, payment, discount, delivery and other
sale terms, and history, pattern and total of purchases by brand, product,
style, size and quantity;
(ii) all agreements (including franchise agreements),
product and service specification documents and operating, production and
quality control manuals relating to or used in the design, manufacture,
production, delivery, provision and sale of products or services under or in
connection with the Trademarks or Trademark Rights;
(iii) all documents and agreements relating to the
identity and locations of all sources of supply, all terms of purchase and
delivery, for all materials, components, raw materials and other supplies and
services used in the manufacture, production, provision, delivery and sale of
products or services under or in connection with the Trademarks or Trademark
Rights; and
(iv) all agreements and documents constituting or
concerning the present or future, current or proposed advertising and promotion
by the Assignor (or any of their affiliates, franchisees, licensees or
contractors) of products or services sold under or in connection with the
Trademarks or Trademark Rights.
Trademark Agreement means this Trademark Collateral Security and
Pledge Agreement, as amended and in effect from time to time.
Trademark License Rights means any and all past, present or future
rights and interests of the Assignor pursuant to any and all past, present and
future franchising or licensing agreements in favor of the Assignor, or to which
the Assignor is a party, pertaining to any Trademarks, Trademark Registrations,
or Trademark Rights owned or used by third parties in the past, present or
future, including the right (but not the obligation) in the name of the Assignor
or the Bank to enforce, and sue and recover for, any breach or violation of any
such agreement to which the Assignor is a party.
Trademark Registrations means all past, present or future federal,
state, local and foreign registrations of the Trademarks, all past, present and
future applications for any such registrations (and any such registrations
thereof upon approval of such applications), together with the right (but not
the obligation) to apply for such registrations (and prosecute such
applications) in the name of the Assignor or the Bank, and to take any and all
actions
-3-
<PAGE>
necessary or appropriate to maintain such registrations in effect and renew and
extend such registrations.
Trademark Rights means any and all past, present or future rights
in, to and associated with the Trademarks throughout the world, whether arising
under federal law, state law, common law, foreign law or otherwise, including
the following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Assignor or the Bank for any and all past, present and future
infringements or dilution of or any other damages or injury to the Trademarks,
the Trademark Rights, or the Associated Goodwill, and the rights to damages or
profits due or accrued arising out of or in connection with any such past,
present or future infringement, dilution, damage or injury; and the Trademark
License Rights.
Trademarks means all of the trademarks, service marks, designs,
logos, indicia, trade names, corporate names, company names, business names,
fictitious business names, trade styles, elements of package or trade dress, and
other source and product or service identifiers, used or associated with or
appurtenant to the products, services an businesses of the Assignor, that (i)
are set forth on Schedule A hereto, or (ii) have been adopted, acquired, owned,
held or used by the Assignor or are now owned, held or used by the Assignor, in
the Assignor's business, or with the Assignor's products and services, or in
which the Assignor has any right, title or interest, or (iii) are in the future
adopted, acquired, owned, held and used by the Assignor in the Assignor's
business or with the Assignor's products and services, or in which the Assignor
in the future acquires any right, title or interest.
Use means, with respect to any Trademark, all uses of such Trademark
by, for or in connection with the Assignor or its business or for the direct or
indirect benefit of the Assignor or its business, including all such uses by the
Assignor itself, by any of the affiliates of the Assignor, or by any franchisee,
licensee or contractor of the Assignor.
2. GRANT OF SECURITY INTEREST.
2.1 Collateral Assignment of Pledged Trademarks.
To secure the payment and performance in full of any and all
Obligations, the Assignor hereby grants, assigns, transfers and conveys to the
Bank, BY WAY OF COLLATERAL SECURITY, all of the Trademark Collateral. THE BANK
ASSUMES NO LIABILITY ARISING IN ANY WAY BY REASON OF ITS HOLDING SUCH COLLATERAL
SECURITY.
2.2 Supplemental to Security Agreements.
Pursuant to the Security Agreement the Assignor has granted to the
Bank a continuing security interest in and lien on the Collateral (including the
Pledged
-4-
<PAGE>
Trademarks). The Security Agreement, and all rights and interests of the Bank in
and to the Collateral (including the Pledged Trademarks) thereunder, are hereby
ratified and confirmed in all respects. In no event shall this Trademark
Agreement, the grant, assignment, transfer and conveyance of the Pledged
Trademarks hereunder, or the recordation of this Trademark Agreement (or any
document hereunder) with the PTO, adversely affect or impair, in any way or to
any extent, the Security Agreement, the security interest of the Bank in the
Collateral (including the Pledged Trademarks) pursuant to the Security Agreement
and this Trademark Agreement, the attachment and perfection of such security
interest under the Uniform Commercial Code (including the security interest in
the Pledged Marks), or any present or future rights and interests of the Bank in
and to the Collateral under or in connection with the Security Agreement, this
Trademark Agreement or the Uniform Commercial Code. Any and all rights and
interests of the Bank in and to the Pledged Trademarks (and any and all
obligations of the Assignor with respect to the Pledged Trademarks) provided
herein, or arising hereunder or in connection herewith, shall only supplement
and be cumulative and in addition to the rights and interests of the Bank (and
the obligations of the Assignor) in, to or with respect to the Collateral
(including the Pledged Trademarks) provided in or arising under or in connection
with the Security Agreement and shall not be in derogation thereof.
2.3 License Back to Assignor.
Unless and until there shall have occurred and be continuing an
Event of Default and the Bank has notified the Assignor that the license granted
hereunder is terminated, the Bank hereby grants to the Assignor the sole and
exclusive, nontransferable, royalty-free, worldwide right and license under the
Trademarks to make, have made for them, use, sell and otherwise practice the
inventions disclosed and claimed in the Trademarks for the Assignor's own
benefit and account and for none other; provided however that the foregoing
right and license shall be no greater in scope than, and limited by, the rights
assigned to the Bank by the Assignor hereby. The Assignor agrees not to sell,
assign, transfer, encumber or sublicense its interest in the license granted to
the Assignor in this Section 2.3, without the prior written consent of the Bank.
Any such sublicenses granted on or after the date hereof shall be terminable by
the Bank upon termination of the Assignor's license hereunder.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Assignor represents, warrants and covenants that, except as disclosed
on the Intellectual Property Audit Report from Gray Cary Ware & Freidenrich LLP
dated September 21, 1999: (i) Schedule A sets forth a true and complete list of
all Trademarks and Trademark Registrations now owned, licensed, controlled or
used by the Assignor; (ii) the Trademarks and Trademark Registrations are
subsisting and have not been adjudged invalid or unenforceable, in whole or in
part, and there is no litigation or proceeding pending concerning the validity
or enforceability of the Trademarks or Trademark Registrations; (iii) to the
best of the Assignor's knowledge, each of the Trademarks and Trademark
Registrations is valid and enforceable; (iv) to the best of the Assignor's
knowledge, there is no infringement by others of the Trademarks, Trademark
Registrations
-5-
<PAGE>
or Trademark Rights; (v) no claim has been made that the use of any of the
Trademarks does or may violate the rights of any third person, and to the best
of the Assignor's knowledge, there is no infringement by the Assignor of the
trademark rights of others; (vi) the Assignor is the sole and exclusive owners
of the entire and unencumbered right, title and interest in and to each of the
Trademarks (other than ownership and other rights reserved by third party owners
with respect to Trademarks that the Assignor is licensed to use), free and clear
of any liens, charges, encumbrances and adverse claims, including pledges,
assignments, licenses, registered user agreements and covenants by the Assignor
not to sue third persons, other than the security interest and assignment
created by the Security Agreement and this Trademark Agreement; (vii) the
Assignor has the unqualified right to enter into this Trademark Agreement and to
perform its terms and have entered and will enter into written agreements with
each of its present and future employees, agents, consultants, licensors and
licensees that will enable it to comply with the covenants herein contained;
(viii) the Assignor has used, and will continue to use, proper statutory and
other appropriate proprietary notices in connection with its use of the
Trademarks; (ix) the Assignor has used, and will continue to use for the
duration of this Trademark Agreement, consistent standards of quality in its
manufacture and provision of products and services sold or provided under the
Trademarks; (x) this Trademark Agreement, together with the Security Agreement,
will create in favor of the Bank a valid and perfected first priority security
interest in the Pledged Trademarks upon making the filings referred to in clause
(xi) of this Section 3; and (xi) except for the filing of financing statements
with the City of Alexandria and the Secretary of State for the State of Virginia
under the Uniform Commercial Code and the recording of this Trademark Agreement
with the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (A) for the grant by the Assignor or the effectiveness of the
security interest and assignment granted hereby or for the execution, delivery
and performance of this Trademark Agreement by the Assignor, or (B) for the
perfection of or the exercise by the Bank of any of its rights and remedies
hereunder.
4. INSPECTION RIGHTS.
The Assignor hereby grants to the Bank and its employees and agents the
right to visit the Assignor's plants and facilities that manufacture, inspect or
store products sold under any of the Trademarks, and to inspect the products and
quality control records relating thereto upon advance notice and at reasonable
times during regular business hours.
5. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Bank's prior written consent and except for licenses of the
Pledged Trademarks in the ordinary course of the Assignor's business consistent
with its past practices, the Assignor will not (i) mortgage, pledge, assign,
encumber, grant a security interest in, transfer, license or alienate any of the
Pledged Trademarks, or (ii) enter into any agreement (for example, a license
agreement) that is inconsistent with the Assignor's obligations under this
Trademark Agreement or the Security Agreement.
-6-
<PAGE>
6. AFTER-ACQUIRED TRADEMARKS, ETC.
6.1 After-acquired Trademarks.
If, before the Obligations shall have been finally paid and
satisfied in full and the Assignor does not have any rights to request
borrowings under a line of credit with Bank and all lines of credit provided by
Bank have been terminated, the Assignor shall obtain any right, title or
interest in or to any other or new Trademarks, Trademark Registrations or
Trademark Rights, the provisions of this Trademark Agreement shall automatically
apply thereto and the Assignor shall (i) promptly on request by the Bank and
(ii) on an annual basis provide to the Bank notice thereof in writing and
execute and deliver to the Bank such documents or instruments as the Bank may
reasonably request further to implement, preserve or evidence the Bank's
interest therein.
6.2 Amendment to Schedule.
The Assignor authorizes the Bank to modify this Trademark Agreement
without the necessity of the Assignor's further approval or signature, by
amending Schedule A hereto and the Annex to the Assignment of Marks to include
any future or other Trademarks, Trademark Registrations or Trademark Rights
under Section 2 or Section 6.
7. TRADEMARK PROSECUTION.
7.1 Assignor Responsible.
The Assignor shall assume full and complete responsibility for the
prosecution, defense, enforcement or any other necessary or desirable actions in
connection with the Pledged Trademarks, and shall hold the Bank harmless from
any and all costs, damages, liabilities and expenses that may be incurred by the
Bank in connection with the Bank's interest in the Pledged Trademarks or any
other action or failure to act in connection with this Trademark Agreement or
the transactions contemplated hereby. In respect of such responsibility, the
Assignor shall retain trademark counsel acceptable to the Bank. The Bank shall
not unreasonably delay in responding to any request to approve counsel proposed
by the Assignor
7.2 Assignor's Duties, Etc.
The Assignor shall have the right and the duty, through trademark
counsel acceptable to the Bank, to prosecute diligently any trademark
registration applications of the Trademarks pending as of the date of this
Trademark Agreement or thereafter, to preserve and maintain all rights in the
Trademarks and Trademark Registrations, including the filing of appropriate
renewal applications and other instruments to maintain in effect the Trademark
Registrations and the payment when due of all registration renewal fees and
other fees, taxes and other expenses that shall be incurred or that shall accrue
with respect to any of the Trademarks or Trademark Registrations. Any expenses
incurred in connection
-7-
<PAGE>
with such applications and actions shall be borne by the Assignor. The Assignor
shall not abandon any filed trademark registration application, or any Trademark
Registration or Trademark, without the consent of the Bank, which consent shall
not be unreasonably withheld.
7.3 Assignor's Enforcement Rights.
The Assignor shall have the right and the duty to bring suit or
other action in the Assignor's own name to maintain and enforce the Trademarks,
the Trademark Registrations and the Trademark Rights. The Assignor may require
the Bank to join in such suit or action as necessary to assure the Assignor's
ability to bring and maintain any such suit or action in any proper forum if
(but only if) the Bank is completely satisfied that such joinder will not
subject the Bank to any risk of liability. The Assignor shall promptly, upon
demand, reimburse and indemnify the Bank for all damages, costs and expenses,
including legal fees, incurred by the Bank pursuant to this Section 7.3.
7.4 Protection of Trademarks, Etc.
In general, the Assignor shall take any and all such actions
(including institution and maintenance of suits, proceedings or actions) as may
be necessary or appropriate to properly maintain, protect, preserve, care for
and enforce the Pledged Trademarks. The Assignor shall not take or fail to take
any action, nor permit any action to be taken or not taken by others under its
control, that would adversely affect the validity, grant or enforcement of the
Pledged Trademarks.
7.5 Notification by Assignor.
Promptly upon obtaining knowledge thereof, the Assignor will notify
the Bank in writing of the institution of, or any final adverse determination
in, any proceeding in the PTO or any similar office or agency of the United
States or any foreign country, or any court, regarding the validity of any of
the Trademarks or Trademark Registrations or the Assignor's rights, title or
interests in and to the Pledged Trademarks.
8. REMEDIES.
Upon the occurrence and during the continuance of an Event of Default, the
Bank shall have, in addition to all other rights and remedies given it by this
Trademark Agreement (including, without limitation, those set forth in Section
2.2), the Loan Agreement, the Security Agreement and all of the other
agreements, instruments and documents executed by the Assignor with or in favor
of the Bank at any time, those allowed by law and the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in the State of New
York, and, without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without other notice (except as
set forth next below) or demand whatsoever to the Assignor, all of which are
hereby expressly waived, sell or license at public or private sale or otherwise
realize upon the whole or from time to time any part of the Pledged Trademarks,
or any
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<PAGE>
interest that the Assignor may have therein, and after deducting from the
proceeds of sale or other disposition of the Pledged Trademarks all reasonable
expenses incurred by the Bank in attempting to enforce this Trademark Agreement
(including all reasonable expenses for broker's fees and legal services), shall
apply the residue of such proceeds toward the payment of the Obligations as set
forth in or by reference in the Security Agreement. Notice of any sale, license
or other disposition of the Pledged Trademarks shall be given to the Assignor at
least five (5) days before the time that any intended public sale or other
public disposition of the Pledged Trademarks is to be made or after which any
private sale or other private disposition of the Pledged Trademarks may be made,
which the Assignor hereby agrees shall be reasonable notice of such public or
private sale or other disposition. At any such sale or other disposition, the
Bank may, to the extent permitted under applicable law, purchase or license the
whole or any part of the Pledged Trademarks or interests therein sold, licensed
or otherwise disposed of.
9. COLLATERAL PROTECTION.
If the Assignor shall fail to do any act that it has covenanted to do
hereunder, or if any representation or warranty of the Assignor shall be
breached, the Bank, in its own name or that of the Assignor (in the sole
discretion of the Bank), may (but shall not be obligated to) after ten (10) days
written notice do such act or remedy such breach (or cause such act to be done
or such breach to be remedied), and the Assignor agrees promptly to reimburse
the Bank for any cost or expense incurred by the Bank in so doing.
10. POWER OF ATTORNEY
If any Event of Default shall have occurred and be continuing, the
Assignor does hereby make, constitute and appoint the Bank (and any officer or
agent of the Bank as the Bank may select in its exclusive discretion) as the
Assignor's true and lawful attorney-in-fact, with full power of substitution and
with the power to endorse the Assignor's name on all applications, documents,
papers and instruments necessary for the Bank to use the Pledged Trademarks, or
to grant or issue any exclusive or nonexclusive license of any of the Pledged
Trademarks to any third person, or to take any and all actions necessary for the
Bank to assign, pledge, convey or otherwise transfer title in or dispose of any
of the Pledged Trademarks or any interest of the Assignor therein to any third
person, and, in general, to execute and deliver any instruments or documents and
do all other acts that the Assignor is obligated to execute and do hereunder.
The Assignor hereby ratifies all that such attorney shall lawfully do or cause
to be done by virtue hereof and releases the Bank from any claims, liabilities,
causes of action or demands arising out of or in connection with any action
taken or omitted to be taken by the Bank under this power of attorney (except
for the Bank's gross negligence or willful misconduct). This power of attorney
is coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
-9-
<PAGE>
11. FURTHER ASSURANCES.
The Assignor shall, at any time and from time to time, and at its expense,
make, execute, acknowledge and deliver, and file and record as necessary or
appropriate with governmental or regulatory authorities, agencies or offices,
such agreements, assignments, documents and instruments, and do such other and
further acts and things (including, without limitation, obtaining consents of
third parties), as the Bank may request or as may be necessary or appropriate in
order to implement and effect fully the intentions, purposes and provisions of
this Trademark Agreement, or to assure and confirm to the Bank the grant,
perfection and priority of the Bank's security interest in the Pledged
Trademarks.
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full and the Assignor does not have any rights to request an
advance under any line of credit and all lines of credit provided by Bank have
been terminated, this Trademark Agreement shall terminate and the Bank shall,
upon the written request and at the expense of the Assignor, execute and deliver
to the Assignor all deeds, assignments and other instruments as may be necessary
or proper to reassign and reconvey to and re-vest in the Assignor the entire
right, title and interest to the Pledged Trademarks previously granted,
assigned, transferred and conveyed to the Bank by the Assignor pursuant to this
Trademark Agreement, as fully as if this Trademark Agreement had not been made,
subject to any disposition of all or any part thereof that may have been made by
the Bank pursuant hereto or the Security Agreement.
13. COURSE OF DEALING.
No course of dealing between the Assignor and the Bank, nor any failure to
exercise, nor any delay in exercising, on the part of the Bank, any right, power
or privilege hereunder or under the Security Agreement or any other agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and expenses incurred by the
Bank in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks shall be borne and paid by the
Assignor.
-10-
<PAGE>
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Assignor hereunder shall be
a debt secured by the Pledged Trademarks and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the applicable notes evidencing such Obligations.
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE BANK
ASSUMES NO LIABILITIES OF THE ASSIGNOR WITH RESPECT TO ANY CLAIM OR CLAIMS
REGARDING THE ASSIGNOR'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR RIGHTS OR
PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY USE, LICENSE
OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR FUTURE EVENT,
CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE ASSIGNOR, AND THE ASSIGNOR SHALL INDEMNIFY
THE BANK FOR ANY AND ALL COSTS, EXPENSES, DAMAGES AND CLAIMS, INCLUDING LEGAL
FEES, INCURRED BY THE BANK WITH RESPECT TO SUCH LIABILITIES.
17. NOTICES.
All notices and other communications made or required to be given pursuant
to this Trademark Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as follows:
(a) if to the Assignor, at 525 Lee Road, Rochester, New York 14606
Attention: Emilio 0. DiCataldo, Senior Vice President and Chief Financial
Officer, or at such other address for notice as the Assignor shall last have
furnished in writing to the person giving the notice; and
(b) if to the Bank, at One M&T Plaza, Buffalo, New York 14203,
Attention: Collateral Department, or at such other address for notice as the
Bank shall last have furnished in writing to the person giving the notice, with
copies to Bank at 255 East Avenue, Rochester, New York 14604, Attention: William
Holston, Vice President.
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand to a responsible officer of the
party to which it is directed, at the time of the receipt thereof by such
officer, (ii) if sent by registered or certified first-class mail, postage
prepaid, two (2) Business Days after the posting thereof, (iii) if sent by
telegraph, telecopy, or telex, at the time of the dispatch thereof, if in normal
business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.
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<PAGE>
18. AMENDMENT AND WAIVER.
This Trademark Agreement is subject to modification only by a writing
signed by the Bank and the Assignor, except as provided in Section 6.2. The Bank
shall not be deemed to have waived any right hereunder unless such waiver shall
be in writing and signed by the Bank. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion.
19. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS TRADEMARK AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK. The Assignor agrees that any suit for the enforcement
of this Trademark Agreement may be brought in the courts of the County of Monroe
or any federal court sitting therein and consents to the non-exclusive
jurisdiction of such court and to service of process in any such suit being made
upon the Assignor by mail at the address specified in Section 17. The Assignor
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
court.
20. WAIVER OF JURY TRIAL.
THE ASSIGNOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS TRADEMARK AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Assignor waives any right which it
may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Assignor (i)
certifies that neither the Bank nor any representative, agent or attorney of the
Bank has represented, expressly or otherwise, that the Bank would not, in the
event of litigation, seek to enforce the foregoing waivers, and (ii)
acknowledges that, in entering into the Loan Agreement and the other agreements,
instruments or documents to which the Bank is a party, the Bank is relying upon,
among other things, the waivers and certifications contained in this Section 20.
21. BANKS RIGHT TO ACCEPT OR CONSENT, ETC.
Notwithstanding anything herein to the contrary, Bank shall not be deemed
to have unreasonably delayed in responding to a request for a consent hereunder
or the approval of a counsel proposed by Assignor whom the Bank must consent to
unless Bank fails to respond to a request for such consent or acceptance of
proposed counsel for ten (10) days after such request is submitted and Assignor
thereafter notifies Bank in writing that it believes Bank has unreasonably
delayed in responding to such request and Bank continues for more than ten (10)
days after its receipt of such notice to respond to such request. In any event,
the sole remedy for Assignor if Bank unreasonably delayed in responding to any
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<PAGE>
such request shall be that it loses its right to consent to any such action or
to approve any such counsel.
22. MISCELLANEOUS.
The headings of each section of this Trademark Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Trademark Agreement and all rights and obligations hereunder shall be binding
upon the Assignor and its successors and assigns, and shall inure to the benefit
of the Bank and its successors and assigns. In the event of any irreconcilable
conflict between the provisions of this Trademark Agreement and the Loan
Agreement, or between this Trademark Agreement and the Security Agreement, the
provisions of the Loan Agreement or the Security Agreement, as the case may be,
shall control. If any term of this Trademark Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Trademark Agreement shall be construed
and be enforceable as if such invalid, illegal or unenforceable term had not
been included herein. The Assignor acknowledges receipt of a copy of this
Trademark Agreement.
IN WITNESS WHEREOF, this Trademark Agreement has been executed as of the
day and year first above written.
COMMONWEALTH SCIENTIFIC
CORPORATION
By: /s/ E. O. DiCataldo
------------------------------------
Name:
Title: Sr. V.P. & CFO
MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ William E. Holston
------------------------------------
Name: William E. Holston
Title: Vice President
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<PAGE>
STATE OF NEW YORK )
COUNTY OF Monroe ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared Emilio O. DiCataldo,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02RE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
STATE OF NEW YORK )
COUNTY OF Monroe ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared William E. Holston,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02RE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
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<PAGE>
CVC Intellectual Property Audit Attorney-Client Privilege
Client Confidential Information
<TABLE>
<CAPTION>
=======================================================================================
Table 8: CVC's Trademark Assets
- ---------------------------------------------------------------------------------------
Mark Status Goods Protected
=======================================================================================
<S> <C> <C>
Millatron3 U.S. Trademark This trademark has been registered
registration 1,148,692 to Commonwealth Scientific --
Status of the registration to be
Issued 3/24/81 verified
Corporation and it related to ion beam
etching machines in class 7.
- ---------------------------------------------------------------------------------------
RIBE(TM) U.S. Trademark This trademark has been registered
registration 1,173,999 to Commonwealth Scientific --
Status of the registration to be
Issued 10/20/81 verified
Corporation. Protects ion beam
etching machines.
- ---------------------------------------------------------------------------------------
OPTILIN(TM) U.S. Trademark This trademark has been registered
registration 2,038,220 to Commonwealth Scientific --
Status of the registration to be
2/18/97 verified
Electrostatic ion accelerators for use
in etching a variety of substrates,
namely metal, semiconductors and
insulators for use in depositing thin
films of metal semiconductors and
insulators on other surfaces in class 9.
- ---------------------------------------------------------------------------------------
MIM(TM) U.S. Trademark This trademark has been registered
registration 980,228 to Commonwealth Scientific --
Status of the registration to be
3/1274 to Commonwealth verified
Scientific Corporation
Metal and metal composites in class 14.
=======================================================================================
</TABLE>
CVC has no prior opinions or similar documents relating to the scope or
validity of its trademarks. No maintenance fees are presently due for CVC's
existing CONNEXION(R) trademark registration. In addition, there are no
documents relating to litigation or licenses involving CVC's trademarks, related
foreign filings, and product-line information related to the trademarks.
3. CVC's Foreign Trademark Assets. To date, CVC holds no foreign trademark
registrations. Nor does CVC, as of the date of this Intellectual Property Audit
Report, have pending any foreign trademark applications. To the extent that CVC
uses a particular mark for a
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<PAGE>
Exhibit 10.51
ACKNOWLEDGMENT AND AGREEMENT
This ACKNOWLEDGEMENT AND AGREEMENT ("Agreement") is made September 22,
1999 from CVC PRODUCTS, INC. ("Borrower"), a Delaware corporation, with a place
of business of 525 Lee Road, Rochester, New York, CVC, INC. ("Guarantor"), a
Delaware corporation, with a place of business of 525 Lee Road, Rochester, New
York, to MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank"), a New York banking
corporation, with its principal place of business located at One M&T Plaza,
Buffalo, New York 14240.
R E C I T A L S:
WHEREAS, Bank and Borrower entered into a Loan Agreement dated as of March
31, 1998, which loan agreement was amended by letter amendments dated September
30, 1998 and February 19, 1999 (collectively the "Letter Amendments")
(collectively, and as amended, restated or replaced from time to time the "Loan
Agreement"); and
WHEREAS, pursuant to the Loan Agreement, the Borrower executed and
delivered to the Bank its Amended and Restated General Security Agreement dated
March 31, 1998 (the "Borrower Security Agreement") and its Amended and Restated
Continuing Guaranty dated March 31, 1998 (the "Borrower Guaranty"); and
WHEREAS, pursuant to the Loan Agreement, the Guarantor executed and
delivered to Bank its Amended and Restated General Security Agreement dated
March 31, 1998 (the "Guarantor Security Agreement") and its Amended and
Restated Continuing Guaranty dated March 31, 1998 (the "Guarantor Guaranty");
and
WHEREAS, the Borrower and the Bank have entered into an Amendment to Loan
Agreement dated the date hereof (the "Amendment"); and
WHEREAS, it is a requirement of the Amendment that Borrower and Guarantor
execute and deliver this Acknowledgement and Agreement.
P R 0 V I S I O N S:
NOW, THEREFORE, in consideration of any past, present or future extension
of credit by Bank to Borrower, and in order to induce the Bank to enter into the
Amendment, the parties hereto agree in favor of Bank as follows:
1. All capitalized terms herein shall have the meanings set forth in the
Loan Agreement and Amendment unless expressly defined herein.
2. Borrower acknowledges and represents and warrants to Bank that the Loan
Agreement, 1998 Term Note and the other Loan Documents to which it is a party
each are and constitute the valid and binding obligations of the Borrower,
enforceable by the Bank
<PAGE>
against Borrower according to their respective terms, and as of the date hereof,
there are no offsets against or defenses to Borrower's liability to Bank
thereunder. Borrower further acknowledges that as of the date hereof, there is
$6,722,986.07 of outstanding unpaid principal on the 1998 Term Note.
3. Borrower represents and warrants to Bank that all of the
representations and warranties of Borrower in the Loan Agreement and other Loan
Documents are deemed repeated herein and are true and correct as of the date
hereof, and Borrower has not violated any obligation to Bank arising under any
of the Loan Documents, nor is Borrower in default thereunder, nor has any Event
of Default accrued thereunder, nor is Borrower aware of any condition, which,
with notice, lapse of time or both, would constitute a default or an Event of
Default thereunder, nor has Borrower violated any affirmative, negative or
financial covenant under any of the Loan Documents.
4. Borrower acknowledges that the defined term "Obligations" in the
Borrower Security Agreement shall include, without limitation, all liabilities
and obligations of the Borrower, now existing or hereafter arising, under the
Loan Agreement, as amended by the Amendment, including, without limitation,
under the 1999 Grid Note.
5. The Guarantor acknowledges, represents and warrants to Bank that the
Guaranty, the Guarantor Security Agreement and the other Loan Documents to which
it is a party are and constitute the valid and binding obligations of the
Guarantor, enforceable by Bank against the Guarantor according to their
respective terms, and that as of the date hereof, there are no offsets against
or defenses to the Guarantor's liability to Bank thereunder.
6. The Guarantor represents and warrants to Bank that all of the
representations and warranties of Guarantor in the Guaranty, the Guarantor
Security Agreement and the other Loan Documents to which it is a party are
deemed repeated herein and are true and correct as of the date hereof, and that
the Guarantor has not violated any obligation to Bank arising under the
Guaranty, the Guarantor Security Agreement or the other Loan Documents, nor is
the Guarantor in default thereunder, nor has any Event of Default occurred
thereunder, nor is the Guarantor aware of any condition, which, with notice,
lapse of time or both, would constitute a default or Event of Default
thereunder, nor has Guarantor violated any affirmative or negative covenant
under the Guaranty, the Guarantor Security Agreement or the other Loan
Documents.
7. Guarantor acknowledges that the term "Obligations" in the Guaranty and
Guarantor Security Agreement shall include, without limitation, all liabilities
and obligations of Borrower now existing or hereafter arising, under the Loan
Agreement, as amended by the Amendment, including, without limitation, under the
1999 Grid Note.
8. This Agreement is governed by New York law and may not be amended or
terminated orally. Any litigation involving this Agreement and/or any of the
Loan Documents shall, at Bank's sole option, be triable only in a court located
in Monroe County, New York. EACH OF THE PARTIES HERETO WAIVE THE RIGHT TO A JURY
-2-
<PAGE>
TRIAL IN ANY LITIGATION OF ANY NATURE OR KIND IN WHICH THEY OR ANY OF THEM AND
BANK ARE PARTIES. No other Entity is a third party beneficiary of this jury
trial waiver.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
first above written.
CVC PRODUCTS, INC.
By: /s/ Emilio O. DiCataldo
--------------------------------------
Name: Emilio 0. DiCataldo
Title: Senior Vice President and CFO
CVC, INC.
By: /s/ Emilio O. DiCataldo
--------------------------------------
Name: Emilio 0. DiCataldo
Title: Senior Vice President and CFO
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared Emilio 0. DiCataldo,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02RE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
STATE OF NEW YORK )
COUNTY OF MONROE ) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said state, personally appeared Emilio 0. DiCataldo,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
/s/ Kevin V. Reochia
--------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. 02RE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
-3-
<PAGE>
EXHIBIT 10.52
[LOGO] M&T BANK GENERAL SECURITY AGREEMENT
Manufacturers and Traders Trust Company
Name(s) of Undersigned CVC Process Solutions, Inc.
Address(es) of Undersigned
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, Attention: General Counsel's Office (the "Secured Party") See
Addendum for additional Secured Parties now 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. (Name), ______________________________________, a Delaware
Corporation (Type of entity and, if not an individual, jurisdiction in which
organized) _______________________________________________ having his or her
residence or its only place of business or 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) Investment Property, (x)
Obligations, (xi) Other Collateral, (xii) Other Obligor, (xiii) Permitted Lien,
(xiv) Person, (xv) Primary Obligor, (xvi) Security Interest and (xvii)
Successor.
b. Unless otherwise defined in this Agreement, capitalized terms shall
have the meanings set forth in the New York Uniform Commercial Code as in effect
as of the date of this Agreement ("UCC").
2. Security Interest; Nature of Security Interest.
a. To secure the payment of the Obligations, each of the undersigned
grants to each Secured Party a security interest in, and assigns, pledges and
hypothecates to each 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.
d. Each Debtor shall provide to the Secured Party, in form satisfactory to
the Secured Party, (i) the financial and other Information required to be
provided to Bank by Borrower under Loan Agreement dated March 31, 1998
<PAGE>
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 Investment Property 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, set off 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 Investment Property included in the Collateral, (ii) execute or
permit to exist any control agreement, 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 Investment Property or (iii) permit any such
Investment Property to be shown on the records of any Securities Intermediary or
Issuer 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 Investment Property 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 or 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 Investment Property 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
Investment Property 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.
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
3
<PAGE>
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 Investment Property 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 Investment Property 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 Investment Property 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 4ii 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
Investment Property 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 UCC 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, Investment Property, 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, Investment Property 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,
Investment Property or Deposit Account, (iii) direct such Account Debtor or
other Person to make payment with respect to such Account, Chattel Paper,
Investment Property or Deposit Account directly and solely to the Secured Party
and (iv) take control of all Proceeds of such Account, Chattel Paper, Investment
Property 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, Investment Property 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 premises 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 Investment Property 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 Investment Property 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 Investment Property 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 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 action 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 or 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
effect 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
5
<PAGE>
ii. Each Account, Chattel Paper and General Intangible 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 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.
(c) Debtor represents, warrants and covenants to the Secured Party, now
and as long as this Agreement is in effect, that (i) it has assessed its
equipment (including embedded systems), software, firmware and computer systems
(including equipment or systems supplied by others or with which Debtor's
equipment and systems exchange date data) that are material to Debtor conducting
its business and/or performing operations collectively, the "Systems") to
determine whether such Systems accurately process date data from, into, and
between the twentieth and twenty-first centuries, including leap year
calculations ("Y2K Compliant"); (ii) in sufficient time before December 31,
1999, Debtor will have corrected and redeployed any non-Y2K Compliant Systems so
that all its Systems are Y2K Compliant and all System will have been tested to
confirm that they are Y2K Compliant; and (iii) the expense of correcting and
redeploying any non-Y2K Compliant Systems and all System testing, and/or the
reasonably foreseeable consequences of any System failing to be Y2K Compliant
will not have a material adverse effect on Debtor. Upon the Secured Party's
request, Debtor shall provide the Secured Party with updates on the status of
its Systems' Year 2000 readiness.
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 Investment Property included in the
Collateral from the issuer of such Investment Property or register any transfer
or pledge of such Investment Property 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. Secured Party reserves the right to have Debtor pay,
upon demand, administrative fee(s) in regard to any administrative action
Secured Party is required or requested to take including, without limitation,
the preparation of discharges, release, or assignments to third-parties. After
such demand for payment of any cost, expense or fee hereunder, Debtor shall pay
interest at the default rate specified in any promissory note evidencing any of
the Obligations secured hereby 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 thereof or of any other such right or
remedy. No notice or demand of any kind, and no attempted but unsuccessful
notice or demand of any kind, by the Secured Party prior to exercising any such
right or remedy on any one occasion, 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 duly 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 or 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 duly 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 or
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
7
<PAGE>
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.
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, Securities Intermediary or other Person obligated
with respect to any Account, Chattel Paper, Investment Property, 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.
n. Secured Party shall have the right to set off against the amounts owing
under this Agreement any property held in a deposit or other account with
Secured Party or any of its affiliates or otherwise owing by Secured Party or
any of its Affiliates in any capacity to Debtor or any guarantor or endorser of
this Agreement. Such set-off shall be deemed to have been exercised immediately
at the time Secured Party or such Affiliate elect to do so.
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 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 UCC, whether or not described in any schedule
heretofore or hereafter 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, Investment Property, 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 of 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
UCC, 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.
<PAGE>
17. Jurisdiction. DEBTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK STATE IN A COUNTY OR
JUDICIAL DISTRICT WHERE THE SECURED PARTY MAINTAINS A BRANCH AND CONSENTS THAT
THE SECURED PARTY MAY SERVE ANY SERVICE OF PROCESS BY NATIONALLY RECOGNIZED
OVERNIGHT COURIER SERVICE DIRECTED TO DEBTOR AT DEBTOR'S ADDRESS SET FORTH
HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED ON THE BUSINESS DAY
AFTER DEPOSIT WITH SUCH COURIER; PROVIDED THAT NOTHING CONTAINED IN THIS
AGREEMENT WILL PREVENT THE SECURED PARTY FROM BRINGING ANY ACTION, ENFORCING ANY
AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST DEBTOR INDIVIDUALLY, AGAINST
ANY SECURITY OR AGAINST ANY PROPERTY OF DEBTOR WITHIN ANY OTHER COUNTY, STATE OR
OTHER FOREIGN OR DOMESTIC JURISDICTION. Debtor acknowledges and agrees that the
venue provided above is the most convenient forum for both the Secured Party and
Debtor. Debtor waives (i) any objection to venue and any objection based on a
more convenient forum in any action instituted under this Agreement; (ii) any
right to assert any counterclaim or setoff or any defense based upon a statute
of limitations, upon a claim of laches or any other legal theory; and (iii) its
right to attack a final judgment that is obtained as a direct or indirect result
of any such action.
18. Waiver of Jury Trial. DEBTOR AND THE SECURED PARTY HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY DEBTOR AND THE
SECURED PARTY MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN
CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO. DEBTOR
REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SECURED PARTY WILL NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. DEBTOR ACKNOWLEDGES
THAT THE SECURED PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE PROVISIONS OF THIS SECTION.
Dated September 22, 1999/20__ CVC Process Solutions, Inc.
By: /s/ Emilio O. DiCataldo
Name:
Title: Sr.V.P. & CFO
<PAGE>
ADDENDUM TO GENERAL SECURITY AGREEMENT
DATED SEPTEMBER 22, 1999
EXECUTED BY
CVC PROCESS SOLUTIONS, INC.
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY AND OTHERS
This ADDENDUM is made to a General Security Agreement ("Agreement"), dated
September 22, 1999, executed by CVC PROCESS SOLUTIONS, INC. ("Debtor") in favor
of MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank") and others. This Addendum is
an integral part of the Agreement.
1. M&T Real Estate, Inc. ("RE") and M&T Financial Corporation ("MFC"),
each of whose principal place of business is located at One M&T Plaza, Buffalo,
New York, are each additional Secured Parties under this Agreement.
Manufacturers and Traders Trust Company ("M&T"), RE and MFC are collectively
referred to in this Agreement as "Secured Parties" and individually as a
"Secured Party". M&T may also be at times referred to in this Agreement as
"Bank". COMMONWEALTH SCIENTIFIC CORPORATION is at times referred to in this
Agreement as "Debtor", "undersigned" and "Undersigned". All references in this
Agreement to "Secured Party" shall be deemed to be to "Secured Parties or any
Secured Party."
2. The following is inserted between the words "General Intangibles" and
"Instruments" in the fourth line of the first sentence of Section 16b
(Definition of Collateral) of the preprinted portion of this Agreement:
"(including but not limited to all patents and patent applications,
rights under all licenses, trade secrets, trademarks, copyrights and
other intellectual property of any nature or kind (collectively
"Intellectual Property"), whether such Intellectual Property is now
owned by the undersigned or in which the undersigned now has any
interest or such Intellectual Property is hereafter acquired by the
undersigned or in which the undersigned hereafter acquires any
interest),"
3. Section 16e of the preprinted form of the General Security Agreement is
deemed deleted and replaced with the following:
"e. An Event of Default occurs or exists at any time that an Event
of Default occurs or exists under the Loan Agreement entered into by
CVC Products, Inc. and Bank on March 31, 1998 ("Loan Agreement"), as
the Loan Agreement is amended, extended or replaced from time to
time."
<PAGE>
IN WITNESS WHEREOF, Debtor has executed this Addendum, together with the
preprinted form of the Agreement, on the date indicated in the Acknowledgement.
COMMONWEALTH SCIENTIFIC CORPORATION
By: /s/ Emilio O. DiCataldo
-------------------------------------
Name: Emilio O. DiCataldo
Title: Sr.V.P & CFO
STATE OF NEW YORK)
COUNTY OF MONROE) ss:
On the 22nd day of September in the year 1999 before me, the undersigned,
a Notary Public in and for said State, personally appeared Emilio 0. DiCataldo,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ Kevin V. Reochia
-----------------------------------------
Notary Public
KEVIN V. REOCHIA
Notary Public, State of New York
No. [ILLEGIBLE]
Qualified in Monroe County
Certificate Filed in Monroe County
My Commission Expires Nov. 23, 2000
-2-
<PAGE>
EXHIBIT 10.53
[LOGO] M&T BANK GENERAL SECURITY AGREEMENT
Manufacturers and Traders Trust Company
Name(s) of Undersigned Commonwealth Scientific Corporation
Address(es) of Undersigned 500 Pendelton Street Alexandria, Virginia 22314
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, Attention: General Counsel's Office (the "Secured Party") See
Addendum for additional Secured Parties now 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. (Name), ______________________________________, a Delaware
Corporation (Type of entity and, if not an individual, jurisdiction in which
organized) _______________________________________________ having his or her
residence or its only place of business or chief executive office at 525 Lee
Road, Rochester, NY 14606 [ILLEGIBLE] (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) Investment Property, (x)
Obligations, (xi) Other Collateral, (xii) Other Obligor, (xiii) Permitted Lien,
(xiv) Person, (xv) Primary Obligor, (xvi) Security Interest and (xvii)
Successor.
b. Unless otherwise defined in this Agreement, capitalized terms shall
have the meanings set forth in the New York Uniform Commercial Code as in effect
as of the date of this Agreement ("UCC").
2. Security Interest; Nature of Security Interest.
a. To secure the payment of the Obligations, each of the undersigned
grants to each Secured Party a security interest in, and assigns, pledges and
hypothecates to each 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.
d. Each Debtor shall provide to the Secured Party, in form satisfactory to
the Secured Party, (i) the financial and other Information required to be
provided to Bank by Borrower under Loan Agreement dated March 31, 1998
<PAGE>
(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 at 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 at 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 and a lender's loss payable clause
(for non-realty collateral), in form and substance satisfactory to the Secured
Party, (A) naming the Secured Party as a mortgagee or lender's loss payable, as
the case may be, 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 or lender's loss payable 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 or its best efforts to cause any issuer
of any Investment Property 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 Investment Property 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 protect and enforce its rights 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,
Investment Property, Document or Deposit Account included in the Collateral.
q. Immediately upon receiving any proxy statement, notice or other
communication relating to any Investment Property included in the 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.
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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 Investment Property 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, set off 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 Investment Property included in the Collateral, (ii) execute or
permit to exist any control agreement, 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 Investment Property or (iii) permit any such
Investment Property to be shown on the records of any Securities Intermediary or
Issuer 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 Investment Property 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 or 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 Investment Property 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
Investment Property 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.
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
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Account Debtor or other Person relating to, or give any receipt, release or
discharge relating to, any Account, Chattel Paper, General Intangible,
Instrument, Investment Property, 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 premises 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) identity or contact any Account Debtor or other Person obligated with
respect to any Account, Chattel Paper, General Intangible, Instrument,
Investment Property, 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 much 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, Investment Property, 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
Investment Property 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 Investment Property without
registration pursuant to the Securities Act of 1933.
ix. Each Debtor who or which controls any issuer of any Investment
Property included in the Collateral or otherwise has the right to effect
registration of such Investment Property pursuant to the Securities Act of 1933
shall (A) cause such Investment Property 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 Investment Property 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 Investment Property 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 Investment Property
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 any Investment Property 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 Investment
Property 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 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, any
amendment of any such financing statement or any application for any certificate
of title or notice of lien relating to any Goods included in the Collateral, (b)
endorse, or execute and deliver any instrument of assignment relating to, and
deliver any of the Collateral (including,
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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 Investment Property 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 Investment Property 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 Investment Property 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 4ii 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
Investment Property 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 UCC 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, Investment Property, 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, Investment Property 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,
Investment Property or Deposit Account, (iii) direct such Account Debtor or
other Person to make payment with respect to such Account, Chattel Paper,
Investment Property or Deposit Account directly and solely to the Secured Party
and (iv) take control of all Proceeds of such Account, Chattel Paper, Investment
Property 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, Investment Property 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 premises 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 Investment Property 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 Investment Property 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 Investment Property 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 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 action 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 or 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
effect 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
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(a) preserve any right or remedy against any prior party obligated pursuant to
any Chattel Paper, Investment Property or Instrument included in the Collateral,
whether or not such Chattel Paper, Investment Property 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 Investment Property 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, or 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, 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,
now and as long as this Agreement is in effect 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 as of the date of this Agreement.
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 lapse 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 duly 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, Investment Property,
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 control agreement,
registration of any transfer or pledge of any Investment Property included in
the Collateral, (B) outstanding order to register any transfer or pledge of any
such Investment Property, (C) notification of any security interest in, or of
any other lien or encumbrance upon, any such Investment Property or (D) such
Investment Property that is shown on the records of any Securities Intermediary
or Issuer other than in the name of any Debtor, except for registrations,
orders, notifications and Investment Property 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:
i. Each Instrument, Document and Deposit Account Investment Property
included in the Collateral at such time is genuine, as in all respects what it
purports to be, and is enforceable in accordance with its terms against each
Person obligated with respect thereto.
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ii. Each Account, Chattel Paper and General Intangible 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 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.
(c) Debtor represents, warrants and covenants to the Secured Party, now
and as long as this Agreement is in effect, that (i) it has assessed its
equipment (including embedded systems), software, firmware and computer systems
(including equipment or systems supplied by others or with which Debtor's
equipment and systems exchange date data) that are material to Debtor conducting
its business and/or performing operations collectively, the "Systems") to
determine whether such Systems accurately process date data from, into, and
between the twentieth and twenty-first centuries, including leap year
calculations ("Y2K Compliant"); (ii) in sufficient time before December 31,
1999, Debtor will have corrected and redeployed any non-Y2K Compliant Systems so
that all its Systems are Y2K Compliant and all System will have been tested to
confirm that they are Y2K Compliant; and (iii) the expense of correcting and
redeploying any non-Y2K Compliant Systems and all System testing, and/or the
reasonably foreseeable consequences of any System failing to be Y2K Compliant
will not have a material adverse effect on Debtor. Upon the Secured Party's
request, Debtor shall provide the Secured Party with updates on the status of
its Systems' Year 2000 readiness.
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 Investment Property included in the
Collateral from the issuer of such Investment Property or register any transfer
or pledge of such Investment Property 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. Secured Party reserves the right to have Debtor pay,
upon demand, administrative fee(s) in regard to any administrative action
Secured Party is required or requested to take including, without limitation,
the preparation of discharges, release, or assignments to third-parties. After
such demand for payment of any cost, expense or fee hereunder, Debtor shall pay
interest at the default rate specified in any promissory note evidencing any of
the Obligations secured hereby 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 thereof or of any other such right or
remedy. No notice or demand of any kind, and no attempted but unsuccessful
notice or demand of any kind, by the Secured Party prior to exercising any such
right or remedy on any one occasion, 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 duly 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 or 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 duly 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 or
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
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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 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 Obligations, (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, name, 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 or of 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. [Left intentionally blank]
h. Understanding that (i) because registration of any Investment Property
included in the Collateral pursuant to the Securities act of 1933 may not have
been effected, because any Investment Property 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 Investment Property 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
Investment Property, (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
Investment Property if the Secured Party sells or otherwise disposes of such
Investment Property even though the Obligations may be paid in full through
realization of a lesser price for such Investment Property 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 Investment Property 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 Investment Property.
13. Governing Law. 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.
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14. Notices. Any notice or demand hereunder shall be duly given if delivered or
mailed to Debtor (at its address on the Secured Party's records) or to the
Secured Party (at the address on page one and separately to the Secured Party
officer responsible for Debtor's relationship with the Secured Party). Such
notice or demand shall be deemed effective if delivered, upon personal delivery
or if mailed, 3 business days after deposit in an official depository maintained
by the United States Post Office for the collection of mail or 1 business day
after delivery to a nationally recognized overnight delivery service. Notice by
e-mail is not valid notice under this or any other agreement between Debtor and
the Secured Party.
15. General.
a. If there is more than one Debtor, each of them shall be jointly and
severally liable for all amounts and obligations which become due under this
Agreement and the term "Debtor" shall include each as well as all of them.
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
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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.
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, Securities Intermediary or other Person obligated
with respect to any Account, Chattel Paper, Investment Property, 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.
n. Secured Party shall have the right to set off against the amounts owing
under this Agreement any property held in a deposit or other account with
Secured Party or any of its affiliates or otherwise owing by Secured Party or
any of its Affiliates in any capacity to Debtor or any guarantor or endorser of
this Agreement. Such set-off shall be deemed to have been exercised immediately
at the time Secured Party or such Affiliate elect to do so.
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 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 UCC, whether or not described in any schedule
heretofore or hereafter 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, Investment Property, 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 of 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
UCC, 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. See Addendum.
<PAGE>
f. "General Intangible" has the meaning given it for purposes of Article 9
of the UCC, and, with respect to any Person, includes, but is not limited to,
(i) any computer software of such Person, (iii) any trademark, service mark,
trade style, trade name, patent, copyright, license or franchise of such Person
and (iv) goodwill of such Person.
g. "Goods" has the meaning given it for purposes of Article 9 of the UCC,
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
UCC, 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
exiting 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, any Secured
Party or the Secured Parties 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.
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 Investment Property, 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, trade 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 of such Person are hereafter directly or indirectly assigned or
otherwise transferred.
q. "Investment Property" has the meaning given it for purposes of Article
9 of the UCC.
<PAGE>
17. Jurisdiction. DEBTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK STATE IN A COUNTY OR
JUDICIAL DISTRICT WHERE THE SECURED PARTY MAINTAINS A BRANCH AND CONSENTS THAT
THE SECURED PARTY MAY SERVE ANY SERVICE OF PROCESS BY NATIONALLY RECOGNIZED
OVERNIGHT COURIER SERVICE DIRECTED TO DEBTOR AT DEBTOR'S ADDRESS SET FORTH
HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED ON THE BUSINESS DAY
AFTER DEPOSIT WITH SUCH COURIER; PROVIDED THAT NOTHING CONTAINED IN THIS
AGREEMENT WILL PREVENT THE SECURED PARTY FROM BRINGING ANY ACTION, ENFORCING ANY
AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST DEBTOR INDIVIDUALLY, AGAINST
ANY SECURITY OR AGAINST ANY PROPERTY OF DEBTOR WITHIN ANY OTHER COUNTY, STATE OR
OTHER FOREIGN OR DOMESTIC JURISDICTION. Debtor acknowledges and agrees that the
venue provided above is the most convenient forum for both the Secured Party and
Debtor. Debtor waives (i) any objection to venue and any objection based on a
more convenient forum in any action instituted under this Agreement; (ii) any
right to assert any counterclaim or setoff or any defense based upon a statute
of limitations, upon a claim of laches or any other legal theory; and (iii) its
right to attack a final judgment that is obtained as a direct or indirect result
of any such action.
18. Waiver of Jury Trial. DEBTOR AND THE SECURED PARTY HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY DEBTOR AND THE
SECURED PARTY MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN
CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO. DEBTOR
REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SECURED PARTY WILL NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. DEBTOR ACKNOWLEDGES
THAT THE SECURED PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE PROVISIONS OF THIS SECTION.
19. The attached Addendum is an integral part of this Security Agreement.
Dated September 3, 1999/20__ Commonwealth Scientific Corporation
By: /s/ Emilio O. DiCataldo
Name: Emilio O. DiCataldo
Title: Chief Financial Officer
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 3rd day of SEPT. in the year 1999/20__, 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 58 BRISTOL VIEW DR. FAIRPORT,
NY 14450; that __he is the CHIEF FINANCIAL OFFICER of
COMMONWEALTH SCIENTFIC CORP., 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 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.
/s/ John D. Inzana
-----------------------------------------
Notary Public
JOHN D. INZANA
Notary Public in the State of New York
Monroe County
My commission Expires March 9, 2001
FOR SECURED PARTY USE ONLY:
Authorization confirmed.________________________________________________________
12
<PAGE>
ADDENDUM TO GENERAL SECURITY AGREEMENT
DATED SEPTEMBER 3, 1999
EXECUTED BY
COMMONWEALTH SCIENTIFIC CORPORATION
IN FAVOR OF
MANUFACTURERS AND TRADERS TRUST COMPANY AND OTHERS
This ADDENDUM is made to a General Security Agreement ("Agreement"), dated
September 3, 1999, executed by COMMONWEALTH SCIENTIFIC CORPORATION ("Debtor") in
favor of MANUFACTURERS AND TRADERS TRUST COMPANY ("Bank") and others. This
Addendum is an integral part of the Agreement.
1. M&T Real Estate, Inc. ("RE") and M&T Financial Corporation ("MFC"),
each of whose principal place of business is located at One M&T Plaza, Buffalo,
New York, are each additional Secured Parties under this Agreement.
Manufacturers and Traders Trust Company ("M&T"), RE and MFC are collectively
referred to in this Agreement as "Secured Parties" and individually as a
"Secured Party". M&T may also be at times referred to in this Agreement as
"Bank". COMMONWEALTH SCIENTIFIC CORPORATION is at times referred to in this
Agreement as "Debtor", "undersigned" and "Undersigned". All references in this
Agreement to "Secured Party" shall be deemed to be to "Secured Parties or any
Secured Party."
2. The following is inserted between the words "General Intangibles" and
"Instruments" in the fourth line of the first sentence of Section 16b
(Definition of Collateral) of the preprinted portion of this Agreement:
"(including but not limited to all patents and patent applications,
rights under all licenses, trade secrets, trademarks, copyrights and
other intellectual property of any nature or kind (collectively
"Intellectual Property"), whether such Intellectual Property is now
owned by the undersigned or in which the undersigned now has any
interest or such Intellectual Property is hereafter acquired by the
undersigned or in which the undersigned hereafter acquires any
interest),"
3. Section 16e of the preprinted form of the General Security Agreement is
deemed deleted and replaced with the following:
"e. An Event of Default occurs or exists at any time that an Event
of Default occurs or exists under the Loan Agreement entered into by
CVC Products, Inc. and Bank on March 31, 1998 ("Loan Agreement"), as
the Loan Agreement is amended, extended or replaced from time to
time."
4. Notwithstanding anything to the contrary contained in the Agreement and
this Addendum, Debtor is not granting the Bank a security interest in any rights
under patent licenses if such a security interest would constitute a default
under the applicable patent license.
<PAGE>
IN WITNESS WHEREOF, Debtor has executed this Addendum, together with the
preprinted form of the Agreement, on the date indicated in the Acknowledgement.
COMMONWEALTH SCIENTIFIC CORPORATION
By: /s/ Emilio O. DiCataldo
-------------------------------------
Name: Emilio O. DiCataldo
Title: Chief Financial Officer
STATE OF NEW YORK)
COUNTY OF MONROE) ss:
On the 3rd day of September in the year 1999 before me, the undersigned, a
Notary Public in and for said State, personally appeared Emilio 0. DiCataldo,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ John D. Inzana
-----------------------------------------
Notary Public
JOHN D. INZANA
Notary Public in the State of New York
Monroe County
My Commission Expires March 9, 2001
2
<PAGE>
Exhibit 10.54
[LOGO] M&T BANK
Manufacturers and Traders Trust Company
CONTINUING GUARANTY
(Business Organization)
GUARANTOR: Commonwealth Scientific Corporation
--------------------------------------------------------------------
Name
500 Pendleton Street, Alexandria, Virginia 22314
--------------------------------------------------------------------
Address of Chief Executive Office
a |X| corporation |_| general partnership |_| limited partnership
|_| limited liability company |_| __________________________________
organized under the laws of the State of____________________________
BORROWER: CVC Products, 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 hereby unconditionally guarantees the full and prompt
payment and performance of any and all of Borrower's Obligations (as defined
below) to the Bank when due, whether at stated maturity, by acceleration or
otherwise. As used in this Guaranty, the term "Obligations" shall mean any and
all obligations, indebtedness and other liabilities of Borrower to the Bank now
or hereafter existing, of every kind and nature and all accrued and unpaid
interest thereon and all Expenses (as defined below) including without
limitation, whether such obligations, indebtedness and other liabilities (i) are
direct, contingent, liquidated, unliquidated, secured, unsecured, matured or
unmatured; (ii) are pursuant to a guaranty or surety in favor of the Bank; (iii)
were originally contracted with the Bank or with another party (including
obligations under a guaranty or surety originally in favor of such other party);
(iv) are contracted by Borrower alone or jointly with one or more other parties;
(v) are or are not evidenced by a writing; (vi) are renewed, replaced, modified
or extended; and (vii) are periodically extinguished and subsequently reincurred
or reduced and thereafter increased. Guarantor will pay or perform its
obligations under this Guaranty upon demand. This Guaranty is and is intended to
be a continuing guaranty of payment (not collection) of the Obligations
(irrespective of the aggregate amount thereof and whether or not the Obligations
from time to time exceeds the amount of this Guaranty, if limited), independent
of, in addition and without modification to, and does not impair or in any way
affect, any other guaranty, indorsement, or other agreement in connection with
the Obligations, or in connection with any other indebtedness or liability to
the Bank or collateral held by the Bank therefor or with respect thereto,
whether or not furnished by Guarantor. Guarantor understands that the Bank can
bring an action under this Guaranty without being required to exhaust other
remedies or demand payment first from other parties.
(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, Absolute, Unconditional. This Guaranty is irrevocable,
absolute, continuing, unconditional and general without any limitation. This
Guaranty is unlimited in amount unless an amount is inserted in the following
blank.
3. Guarantor's Waivers & Authorizations.
(a) Guarantor's obligations shall not be released, impaired or
affected in any way including by any of the following, all of which Guarantor
hereby waives (i) any bankruptcy, reorganization or insolvency under any law of
Borrower or that of any other party, or by any action of a trustee in any such
proceeding; (ii) any new agreements or obligations of Borrower or any other
party with the Bank; (iii) 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, or failure to perfect or continue the perfection of a security interest in
any collateral for the Obligations, (iv) any failure of Guarantor to receive
notice of any intended disposition of such collateral; (v) any fictitiousness,
incorrectness, invalidity or unenforceability, for any reason, of any instrument
or other agreement which may evidence any Obligation; (vi) any composition,
extension, stay or other statutory relief granted to Borrower including, without
limitation, the expiration of the period of any statute of limitations with
respect to any lawsuit or other legal proceeding against Borrower or any person
in any way related to the Obligations or a part thereof or any collateral
therefor; (vii) any change in form of organization, name, membership or
ownership of Borrower or Guarantor; (viii) any refusal or failure of the Bank or
any other person prior to the date hereof or hereafter to grant any additional
loan or other credit accommodation to Borrower or the Bank's or any other
party's receipt of notice of such refusal or failure; (ix) any setoff, defense
or counterclaim of Borrower with respect to the obligations or otherwise
arising, either directly or indirectly, in regard to the Obligations; or (x) any
other circumstance that might otherwise constitute a legal or equitable defense
to Guarantor's obligations under this Guaranty.
(b) 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; (iii) notice that any Obligations has been incurred or
of the reliance by the Bank upon this Guaranty; and (iv) 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. Guarantor further authorizes
the Bank, without notice, demand or additional reservation of rights against
Guarantor and without affecting Guarantor's obligations hereunder, from time to
time: (i) to renew, refinance, modify, subordinate, extend, increase,
accelerate, or otherwise change the time for payment of, the terms of or the
interest on the Obligations or any part thereof;(ii) to accept and hold
collateral from any party for the payment of the any or all of the Obligations,
and to exchange, enforce or refrain from enforcing, or release any or all of
such collateral; (iii) to accept any indorsement or guaranty of any or all of
the Obligations or any negotiable instrument or other writing intended to create
an accord and satisfaction with respect to any or all of the Obligations; (iv)
to release, replace or modify the obligation of any indorser or guarantor, or
any party who has given any collateral for any of all of the Obligations, or any
other party in any way obligated to pay any or all of the Obligations, and to
enforce or refrain from enforcing, or compromise or modify, the terms of any
obligation of any such endorser, guarantor or party; (v) to dispose of any and
all collateral
<PAGE>
securing the Obligations in any manner as the Bank, in its sole discretion, may
deem appropriate, and to direct the order and the enforcement of any and all
indorsements and guaranties relating to the Obligations in the Bank's sole
discretion; and (vi) to determine the manner, amount and time of application of
payments and credits, if any, to be made on all or any part of the Obligations
including, without limitation, if this Guaranty is limited in amount, to make
any such application to Obligations, if any, in excess of the amount of this
Guaranty.
(c) Notwithstanding any other provision in this Guaranty, Guarantor
irrevocably waives, without notice, any right he or she may have at law or in
equity (including without limitation any law subrogating Guarantor to the rights
of the Bank) to seek contribution, indemnification or any other form of
reimbursement from Borrower or any other obligor or guarantor of the Obligations
for any disbursement made under this Guaranty or otherwise.
4. Termination. This Guaranty shall remain in full force and effect as to
each Guarantor until actual receipt by the Bank officer responsible for
Borrower's relationship with the Bank of written notice of Guarantor's intent to
terminate (or Guarantor's death or incapacity) plus the lapse of a reasonable
time for the Bank to act on such notice (the "Receipt of Notice"); provided,
however, this Guaranty shall remain in full force and effect thereafter until
all Obligations outstanding, or contracted or committed for (whether or not
outstanding), before such Receipt of Notice by the Bank, and any extensions,
renewals or replacements thereof (whether made before or after such Receipt of
Notice), together with interest accruing thereon after such Receipt of Notice,
shall be finally and irrevocably paid in full. Discontinuance of this Guaranty
as to one Guarantor shall not operate as a discontinuance hereof as to any other
guarantor. Payment of all of the Obligations from time to time shall not operate
as a discontinuance of this Guaranty, unless a Receipt of Notice as above
provided has been received by the Bank. Guarantor agrees that, to the extent
that Borrower makes a payment or payments to the Bank on the Obligations, or the
Bank receives any proceeds of collateral to be applied to the Obligations, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or otherwise are required to be
repaid to Borrower, its estate, trustee, receiver or any other party, including,
without limitation, under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such repayment, the obligation or part
thereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred, notwithstanding any contrary action
which may have been taken by the Bank in reliance upon such payment or payments.
As of the date any payment or proceeds of collateral are returned, the statute
of limitations shall start anew with respect to any action or proceeding by the
Bank against Guarantor under this Guaranty.
5. Expenses. Guarantor agrees to reimburse the Bank on demand for all the
Bank's expenses, damages and losses of any kind or nature, including without
limitation costs of collection and actual attorneys' fees and disbursements
whether for internal or external counsel incurred by the Bank in attempting to
enforce this Guaranty, collect any of the Obligations including any workout or
bankruptcy proceedings or other legal proceedings or appeal, realize on any
collateral, defense of any action under the prior paragraph or for any other
purpose related to the Obligations (collectively, "Expenses"). Expenses will
accrue interest at the highest default rate in any instrument evidencing the
Obligations until payment is actually received by the Bank. Guarantor shall
provide Bank with the same financial statements and other information Borrower
is required to provide to Bank under the Loan Agreement between Bank and
Borrower dated March 31, 1998, as it may be amended, extended or replaced.
6. Financial and Other Information. 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. Guarantor understands
this Guaranty and has satisfied itself as to its meaning and consequences and
acknowledges that it has made its own arrangements for keeping informed of
changes or potential changes affecting the Borrower including the Borrower's
financial condition.
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 or its affiliates including without limitation all deposits
and other accounts owing at any time by the Bank or any of its affiliates 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. Such set-off shall be deemed to have been exercised
immediately at the time the Bank or such affiliate elect to do so. The Bank
shall also have all of the rights and remedies of a secured party under the
Uniform Commercial Code in effect in the State of New York as of the date of
this Guaranty in addition to those under this Guaranty and other applicable law
and agreements.
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 Guaranty is intended by
Guarantor to be the final, complete and exclusive expression of the agreement
between Guarantor and the Bank. 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 his or her legal representative, successors and
assigns and any participation may be granted by the Bank herein in connection
with the assignment or granting of a participation by the Bank in the
Obligations or any part thereof. 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.
Guarantor expressly disclaims any reliance on any course of dealing or usage of
trade or oral representation of the Bank including, without limitation,
representations to make loans to Borrower or enter into any other agreement with
Borrower or Guarantor. 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. 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
nevertheless is held invalid, the other provisions shall remain in effect.
Guarantor agrees that in any legal proceeding, a copy of this Guaranty kept in
the Bank's course of business may be admitted into evidence as an original.
Captions are solely for convenience and not part of the substance of this
Guaranty. If this Guaranty is limited pursuant to Paragraph 2 hereof, until the
Obligations are indefeasibly paid in full, the Guaranteed Amount shall not be
reduced in any manner whatsoever by any amounts which the Bank may realize
before or after maturity of the Obligations (by acceleration, demand or
otherwise), as a result of payments made by or on behalf of Borrower or by or on
behalf of any other person or entity other than Guarantor primarily or
secondarily liable for the Obligations or any part thereof, or otherwise
credited to Borrower
<PAGE>
or such person or entity, or as a result of the exercise of the Bank's rights
with respect to any collateral for the Obligations or any part thereof. Payments
made to the Bank by Guarantor (other than, directly or indirectly, from
collateral or other persons or entities liable for any portion of the
Obligations) after maturity of the Obligations, by acceleration or otherwise,
shall reduce the Guaranteed Amount.
10. Joint and Several. 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 the term "Guarantor" means each as well as
all of them. Guarantor also 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 or
(as appropriate) is authorized by its partnership agreement or governing
instrument. Guarantor's chief executive office is located at the above address.
12. Notices. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Guarantor
(at its address on the Bank's records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for Borrower's relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Guarantor and the Bank.
13. Governing Law and Jurisdiction. This Guaranty has been delivered to
and accepted by the Bank and will be deemed to be made in the State of New York.
Unless provided otherwise under federal law, this Guaranty will be interpreted
in accordance with the laws of the State of New York excluding its conflict of
laws rules. GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT IN ANY JUDICIAL DISTRICT OR COUNTY IN THE STATE OF
NEW YORK WHERE THE BANK MAINTAINS A BRANCH AND CONSENTS THAT THE BANK MAY EFFECT
ANY SERVICE OF PROCESS IN THE MANNER AND AT GUARANTOR'S ADDRESS SET FORTH ABOVE
FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS GUARANTY
WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT
OR EXERCISING ANY RIGHTS AGAINST GUARANTOR INDIVIDUALLY, AGAINST ANY SECURITY OR
AGAINST ANY PROPERTY OF GUARANTOR WITHIN ANY OTHER COUNTY, STATE OR OTHER
FOREIGN OR DOMESTIC JURISDICTION. Guarantor acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and
Guarantor. Guarantor hereby waives (i) any objection to venue and any objection
based on a more convenient forum in any action instituted under this Guaranty;
(ii) any right to assert any counterclaim or setoff or any defense based upon a
statute of limitations, a claim of laches or of any other legal theory; and
(iii) its right to attack a final judgment that is obtained as a direct or
indirect result of any action hereunder.
14. Waiver of Jury Trial. GUARANTOR AND THE BANK HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY GUARANTOR AND
THE BANK MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN
CONNECTION WITH THIS GUARANTY OR THE TRANSACTIONS RELATED HERETO. GUARANTOR
REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WILL NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. GUARANTOR ACKNOWLEDGES THAT
THE BANK HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS,
THE PROVISIONS OF THIS SECTION.
GUARANTOR:
DATE 9-22-99 Commonwealth Scientific Corporation
TIN# 54-080-0695 By: /s/ Emilio O. DiCataldo
------------------------------------
Name:
Title: Sr. V.P. and CFO
---------------------------------
ACKNOWLEDGMENT
STATE OF New York )
: SS.
COUNTY OF Monroe )
On the 22nd day of September in the year 1999/20___, 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 Fairport, New York; that _he is the Senior
Vice President of Commonwealth Scientific Corporation, 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 the above instrument; and that _he said his (her)
name thereto by order of the members/managers of said limited
liability company.
/s/ Kevin B. Reochia
-----------------------------------------
Notary Public
FOR BANK USE ONLY Kevin B. Reochia
Authorization Confirmed: Notary Public, State of New York
No. 02RE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
<PAGE>
CONSENT OF SHAREHOLDERS TO GUARANTY
THE OBLIGATIONS OF ANOTHER CORPORATION OR PERSON
The shareholders of ______________________________________________ (the
"Corporation") hereby by unanimous written consent or at a meeting duly called
and held on ________________________,19 /20___, adopted the following
resolution:
WE HEREBY CONSENT that:
1. The Corporation execute and deliver to Manufacturers and Traders Trust
Company (the "Bank") at this time and from time to time guaranty
agreements for all of the obligations, liabilities and indebtedness of
_______________________________________________ to the Bank, whether such
debts, liabilities and obligations be absolute or contingent, secured or
unsecured, now existing or hereafter contracted or incurred, and any and
all renewals, modifications or extensions of such indebtedness, together
with all interest, expenses of collection and attorneys' fees (the
"Guaranty");
2. The Corporation shall deliver from time to time to the Bank, as security
for the Guaranty, such collateral as may be required by the Bank,
including without limitation a mortgage, pledge or assignment of and grant
of a security interest in any or all of the real and personal property of
the Corporation wherever located;
3. Each Guaranty shall be in such form and shall contain such provisions and
terms as shall be agreed upon by the officers of the Corporation and the
Bank; and
4. The Board of Directors and the officers of the Corporation hereby are
authorized to do all things necessary to effect the purposes of this
Consent.
FOR WRITTEN CONSENT: IN WITNESS WHEREOF, each shareholder of the Guarantor
Corporation has subscribed this Consent:
Number of
Name Shares Signature Date
- ---------------------------- --------------- ------------------------ -------
- ---------------------------- --------------- ------------------------ -------
- ---------------------------- --------------- ------------------------ -------
- ---------------------------- --------------- ------------------------ -------
- ---------------------------- --------------- ------------------------ -------
If consenting stock is held by a corporation:
- ---------------------------- --------------- ------------------------ -------
Name of Corporation Number of Authorized Signature Date
Shares & Title
Total outstanding shares entitled to vote: _______________
SECRETARY'S CERTIFICATE
I, ___________________________________ Secretary of the Corporation defined
above, do hereby certify that the above Consent of Shareholders is valid and was
adopted by at least 2/3 of the shares entitled to vote, at a shareholders'
meeting duly called and held on the date stated, or by unanimous written consent
of the holders of all the shares entitled to vote.
|_| I further certify that I am sole owner of all the issued and outstanding
shares of the Corporation.
IN WITNESS WHEREOF, I have executed this Certificate this _______ day of
______________________, 19___/20___.
---------------------------------------
Secretary
<PAGE>
DIRECTORS' RESOLUTION TO AUTHORIZE GUARANTY OF CORPORATION
I, __________________________________________,Secretary of
_________________________________ (the "Corporation"), a corporation duly
organized and existing under laws of the State of _____________________________,
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 ________ day of
_______________________, 19___/20___, and still in full force and effect.
RESOLVED, that the Corporation make, execute and deliver to Manufacturers
and Traders Trust Company (the "Bank"), at this time and from time to
time, a guaranty of all obligations, liabilities and indebtedness
whatsoever which may be now or hereafter incurred to the Bank by
__________________________________________________________________ (the
"Guaranty"); and be it further
RESOLVED, that the Corporation is hereby authorized to deliver from time
to time to the Bank, as security for the Guaranty, a mortgage, pledge and
assignment of and security interest in any or all of the real and personal
property of the Corporation, wherever located, as described in security
agreements required by the Bank, of even date or heretofore or hereafter;
and be it further
RESOLVED, that the _______________________________________________________
[title(s)]
of the Corporation hereby is (are) authorized and directed to make,
execute and deliver for and on behalf of this Corporation each such
Guaranty and such other instruments, documents and papers including
without limitation security agreements, mortgages, pledges, assignments
and other instruments for the transfer of title, in such forms, and
containing such terms, provisions and conditions as may be approved by the
officer of the Corporation executing the same, such execution to be
conclusive evidence of the officer's approval and the approval of this
Board of Directors, and to perform any and all other acts, including
without limitation the delivery of collateral, and other papers which may
be required to effect the intent of these resolutions; and be it further
RESOLVED, that any and all acts, instruments and other writings previously
performed or executed and delivered by any one or more of the
Corporation's officers on behalf of the Corporation, in connection with
the transactions guaranteed hereby, are in all respects ratified, affirmed
and approved; and be it further
RESOLVED, that the foregoing resolutions shall remain in full force and
effect and may be relied upon by the Bank until a copy of a subsequent
resolution revoking or amending them, duly certified by the proper
officers of the Corporation, shall be actually received by the account
officer of the Bank responsible for the obligations guaranteed by the
Guaranty, and the Bank shall have had a reasonable time to act thereon;
any action taken by the Bank prior to such actual receipt shall be binding
upon the Corporation, irrespective of when such resolution may have been
adopted.
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
- -------------------------- ------------------------- -------------------------
- -------------------------- ------------------------- -------------------------
- -------------------------- ------------------------- -------------------------
- -------------------------- ------------------------- -------------------------
|_| 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 ________ day of
_______________________________, 19___/20___.
---------------------------------------
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>
Exhibit 10.55
[LOGO] M&T BANK
Manufacturers and Traders Trust Company
CONTINUING GUARANTY
(Business Organization)
GUARANTOR: CVC Process Solutions, Inc.
--------------------------------------------------------------------
Name
--------------------------------------------------------------------
Address of Chief Executive Office
a |X| corporation |_| general partnership |_| limited partnership
|_| limited liability company |_| __________________________________
organized under the laws of the State of____________________________
BORROWER: CVC Products, 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 hereby unconditionally guarantees the full and prompt
payment and performance of any and all of Borrower's Obligations (as defined
below) to the Bank when due, whether at stated maturity, by acceleration or
otherwise. As used in this Guaranty, the term "Obligations" shall mean any and
all obligations, indebtedness and other liabilities of Borrower to the Bank now
or hereafter existing, of every kind and nature and all accrued and unpaid
interest thereon and all Expenses (as defined below) including without
limitation, whether such obligations, indebtedness and other liabilities (i) are
direct, contingent, liquidated, unliquidated, secured, unsecured, matured or
unmatured; (ii) are pursuant to a guaranty or surety in favor of the Bank; (iii)
were originally contracted with the Bank or with another party (including
obligations under a guaranty or surety originally in favor of such other party);
(iv) are contracted by Borrower alone or jointly with one or more other parties;
(v) are or are not evidenced by a writing; (vi) are renewed, replaced, modified
or extended; and (vii) are periodically extinguished and subsequently reincurred
or reduced and thereafter increased. Guarantor will pay or perform its
obligations under this Guaranty upon demand. This Guaranty is and is intended to
be a continuing guaranty of payment (not collection) of the Obligations
(irrespective of the aggregate amount thereof and whether or not the Obligations
from time to time exceeds the amount of this Guaranty, if limited), independent
of, in addition and without modification to, and does not impair or in any way
affect, any other guaranty, indorsement, or other agreement in connection with
the Obligations, or in connection with any other indebtedness or liability to
the Bank or collateral held by the Bank therefor or with respect thereto,
whether or not furnished by Guarantor. Guarantor understands that the Bank can
bring an action under this Guaranty without being required to exhaust other
remedies or demand payment first from other parties.
(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, Absolute, Unconditional. This Guaranty is irrevocable,
absolute, continuing, unconditional and general without any limitation. This
Guaranty is unlimited in amount unless an amount is inserted in the following
blank.
3. Guarantor's Waivers & Authorizations.
(a) Guarantor's obligations shall not be released, impaired or
affected in any way including by any of the following, all of which Guarantor
hereby waives (i) any bankruptcy, reorganization or insolvency under any law of
Borrower or that of any other party, or by any action of a trustee in any such
proceeding; (ii) any new agreements or obligations of Borrower or any other
party with the Bank; (iii) 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, or failure to perfect or continue the perfection of a security interest in
any collateral for the Obligations, (iv) any failure of Guarantor to receive
notice of any intended disposition of such collateral; (v) any fictitiousness,
incorrectness, invalidity or unenforceability, for any reason, of any instrument
or other agreement which may evidence any Obligation; (vi) any composition,
extension, stay or other statutory relief granted to Borrower including, without
limitation, the expiration of the period of any statute of limitations with
respect to any lawsuit or other legal proceeding against Borrower or any person
in any way related to the Obligations or a part thereof or any collateral
therefor; (vii) any change in form of organization, name, membership or
ownership of Borrower or Guarantor; (viii) any refusal or failure of the Bank or
any other person prior to the date hereof or hereafter to grant any additional
loan or other credit accommodation to Borrower or the Bank's or any other
party's receipt of notice of such refusal or failure; (ix) any setoff, defense
or counterclaim of Borrower with respect to the obligations or otherwise
arising, either directly or indirectly, in regard to the Obligations; or (x) any
other circumstance that might otherwise constitute a legal or equitable defense
to Guarantor's obligations under this Guaranty.
(b) 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; (iii) notice that any Obligations has been incurred or
of the reliance by the Bank upon this Guaranty; and (iv) 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. Guarantor further authorizes
the Bank, without notice, demand or additional reservation of rights against
Guarantor and without affecting Guarantor's obligations hereunder, from time to
time: (i) to renew, refinance, modify, subordinate, extend, increase,
accelerate, or otherwise change the time for payment of, the terms of or the
interest on the Obligations or any part thereof;(ii) to accept and hold
collateral from any party for the payment of the any or all of the Obligations,
and to exchange, enforce or refrain from enforcing, or release any or all of
such collateral; (iii) to accept any indorsement or guaranty of any or all of
the Obligations or any negotiable instrument or other writing intended to create
an accord and satisfaction with respect to any or all of the Obligations; (iv)
to release, replace or modify the obligation of any indorser or guarantor, or
any party who has given any collateral for any of all of the Obligations, or any
other party in any way obligated to pay any or all of the Obligations, and to
enforce or refrain from enforcing, or compromise or modify, the terms of any
obligation of any such endorser, guarantor or party; (v) to dispose of any and
all collateral
<PAGE>
securing the Obligations in any manner as the Bank, in its sole discretion, may
deem appropriate, and to direct the order and the enforcement of any and all
indorsements and guaranties relating to the Obligations in the Bank's sole
discretion; and (vi) to determine the manner, amount and time of application of
payments and credits, if any, to be made on all or any part of the Obligations
including, without limitation, if this Guaranty is limited in amount, to make
any such application to Obligations, if any, in excess of the amount of this
Guaranty.
(c) Notwithstanding any other provision in this Guaranty, Guarantor
irrevocably waives, without notice, any right he or she may have at law or in
equity (including without limitation any law subrogating Guarantor to the rights
of the Bank) to seek contribution, indemnification or any other form of
reimbursement from Borrower or any other obligor or guarantor of the Obligations
for any disbursement made under this Guaranty or otherwise.
4. Termination. This Guaranty shall remain in full force and effect as to
each Guarantor until actual receipt by the Bank officer responsible for
Borrower's relationship with the Bank of written notice of Guarantor's intent to
terminate (or Guarantor's death or incapacity) plus the lapse of a reasonable
time for the Bank to act on such notice (the "Receipt of Notice"); provided,
however, this Guaranty shall remain in full force and effect thereafter until
all Obligations outstanding, or contracted or committed for (whether or not
outstanding), before such Receipt of Notice by the Bank, and any extensions,
renewals or replacements thereof (whether made before or after such Receipt of
Notice), together with interest accruing thereon after such Receipt of Notice,
shall be finally and irrevocably paid in full. Discontinuance of this Guaranty
as to one Guarantor shall not operate as a discontinuance hereof as to any other
guarantor. Payment of all of the Obligations from time to time shall not operate
as a discontinuance of this Guaranty, unless a Receipt of Notice as above
provided has been received by the Bank. Guarantor agrees that, to the extent
that Borrower makes a payment or payments to the Bank on the Obligations, or the
Bank receives any proceeds of collateral to be applied to the Obligations, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or otherwise are required to be
repaid to Borrower, its estate, trustee, receiver or any other party, including,
without limitation, under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such repayment, the obligation or part
thereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred, notwithstanding any contrary action
which may have been taken by the Bank in reliance upon such payment or payments.
As of the date any payment or proceeds of collateral are returned, the statute
of limitations shall start anew with respect to any action or proceeding by the
Bank against Guarantor under this Guaranty.
5. Expenses. Guarantor agrees to reimburse the Bank on demand for all the
Bank's expenses, damages and losses of any kind or nature, including without
limitation costs of collection and actual attorneys' fees and disbursements
whether for internal or external counsel incurred by the Bank in attempting to
enforce this Guaranty, collect any of the Obligations including any workout or
bankruptcy proceedings or other legal proceedings or appeal, realize on any
collateral, defense of any action under the prior paragraph or for any other
purpose related to the Obligations (collectively, "Expenses"). Expenses will
accrue interest at the highest default rate in any instrument evidencing the
Obligations until payment is actually received by the Bank. Guarantor shall
provide Bank with the same financial statements and other information Borrower
is required to provide to Bank under the Loan Agreement between Bank and
Borrower dated March 31, 1998, as it may be amended, extended or replaced.
6. Financial and Other Information. 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. Guarantor understands
this Guaranty and has satisfied itself as to its meaning and consequences and
acknowledges that it has made its own arrangements for keeping informed of
changes or potential changes affecting the Borrower including the Borrower's
financial condition.
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 or its affiliates including without limitation all deposits
and other accounts owing at any time by the Bank or any of its affiliates 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. Such set-off shall be deemed to have been exercised
immediately at the time the Bank or such affiliate elect to do so. The Bank
shall also have all of the rights and remedies of a secured party under the
Uniform Commercial Code in effect in the State of New York as of the date of
this Guaranty in addition to those under this Guaranty and other applicable law
and agreements.
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 Guaranty is intended by
Guarantor to be the final, complete and exclusive expression of the agreement
between Guarantor and the Bank. 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 his or her legal representative, successors and
assigns and any participation may be granted by the Bank herein in connection
with the assignment or granting of a participation by the Bank in the
Obligations or any part thereof. 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.
Guarantor expressly disclaims any reliance on any course of dealing or usage of
trade or oral representation of the Bank including, without limitation,
representations to make loans to Borrower or enter into any other agreement with
Borrower or Guarantor. 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. 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
nevertheless is held invalid, the other provisions shall remain in effect.
Guarantor agrees that in any legal proceeding, a copy of this Guaranty kept in
the Bank's course of business may be admitted into evidence as an original.
Captions are solely for convenience and not part of the substance of this
Guaranty. If this Guaranty is limited pursuant to Paragraph 2 hereof, until the
Obligations are indefeasibly paid in full, the Guaranteed Amount shall not be
reduced in any manner whatsoever by any amounts which the Bank may realize
before or after maturity of the Obligations (by acceleration, demand or
otherwise), as a result of payments made by or on behalf of Borrower or by or on
behalf of any other person or entity other than Guarantor primarily or
secondarily liable for the Obligations or any part thereof, or otherwise
credited to Borrower
<PAGE>
or such person or entity, or as a result of the exercise of the Bank's rights
with respect to any collateral for the Obligations or any part thereof. Payments
made to the Bank by Guarantor (other than, directly or indirectly, from
collateral or other persons or entities liable for any portion of the
Obligations) after maturity of the Obligations, by acceleration or otherwise,
shall reduce the Guaranteed Amount.
10. Joint and Several. 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 the term "Guarantor" means each as well as
all of them. Guarantor also 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 or
(as appropriate) is authorized by its partnership agreement or governing
instrument. Guarantor's chief executive office is located at the above address.
12. Notices. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Guarantor
(at its address on the Bank's records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for Borrower's relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Guarantor and the Bank.
13. Governing Law and Jurisdiction. This Guaranty has been delivered to
and accepted by the Bank and will be deemed to be made in the State of New York.
Unless provided otherwise under federal law, this Guaranty will be interpreted
in accordance with the laws of the State of New York excluding its conflict of
laws rules. GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT IN ANY JUDICIAL DISTRICT OR COUNTY IN THE STATE OF
NEW YORK WHERE THE BANK MAINTAINS A BRANCH AND CONSENTS THAT THE BANK MAY EFFECT
ANY SERVICE OF PROCESS IN THE MANNER AND AT GUARANTOR'S ADDRESS SET FORTH ABOVE
FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS GUARANTY
WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT
OR EXERCISING ANY RIGHTS AGAINST GUARANTOR INDIVIDUALLY, AGAINST ANY SECURITY OR
AGAINST ANY PROPERTY OF GUARANTOR WITHIN ANY OTHER COUNTY, STATE OR OTHER
FOREIGN OR DOMESTIC JURISDICTION. Guarantor acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and
Guarantor. Guarantor hereby waives (i) any objection to venue and any objection
based on a more convenient forum in any action instituted under this Guaranty;
(ii) any right to assert any counterclaim or setoff or any defense based upon a
statute of limitations, a claim of laches or of any other legal theory; and
(iii) its right to attack a final judgment that is obtained as a direct or
indirect result of any action hereunder.
14. Waiver of Jury Trial. GUARANTOR AND THE BANK HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY GUARANTOR AND
THE BANK MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN
CONNECTION WITH THIS GUARANTY OR THE TRANSACTIONS RELATED HERETO. GUARANTOR
REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WILL NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. GUARANTOR ACKNOWLEDGES THAT
THE BANK HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS,
THE PROVISIONS OF THIS SECTION.
GUARANTOR:
DATE 9-22-99 CVC Process Solutions, Inc.
TIN# 16-156-0178 By: /s/ Emilio O. DiCataldo
------------------------------------
Name:
Title: Sr. V.P. and CFO
---------------------------------
ACKNOWLEDGMENT
STATE OF New York )
: SS.
COUNTY OF Monroe )
On the 22nd day of September in the year 1999/20___, 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 Fairport, New York; that _he is the Senior
Vice President of Commonwealth Scientific Corporation, 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 the above instrument; and that _he said his (her)
name thereto by order of the members/managers of said limited
liability company.
/s/ Kevin B. Reochia
-----------------------------------------
Notary Public
FOR BANK USE ONLY Kevin B. Reochia
Authorization Confirmed: Notary Public, State of New York
No. 02RE5004858
Qualified in Monroe County
Certicate Filed in Monroe County
Commission Expires Nov. 23, 2000
<PAGE>
CONSENT OF SHAREHOLDERS TO GUARANTY
THE OBLIGATIONS OF ANOTHER CORPORATION OR PERSON
The shareholders of ______________________________________________ (the
"Corporation") hereby by unanimous written consent or at a meeting duly called
and held on ________________________,19 /20___, adopted the following
resolution:
WE HEREBY CONSENT that:
1. The Corporation execute and deliver to Manufacturers and Traders Trust
Company (the "Bank") at this time and from time to time guaranty
agreements for all of the obligations, liabilities and indebtedness of
_______________________________________________ to the Bank, whether such
debts, liabilities and obligations be absolute or contingent, secured or
unsecured, now existing or hereafter contracted or incurred, and any and
all renewals, modifications or extensions of such indebtedness, together
with all interest, expenses of collection and attorneys' fees (the
"Guaranty");
2. The Corporation shall deliver from time to time to the Bank, as security
for the Guaranty, such collateral as may be required by the Bank,
including without limitation a mortgage, pledge or assignment of and grant
of a security interest in any or all of the real and personal property of
the Corporation wherever located;
3. Each Guaranty shall be in such form and shall contain such provisions and
terms as shall be agreed upon by the officers of the Corporation and the
Bank; and
4. The Board of Directors and the officers of the Corporation hereby are
authorized to do all things necessary to effect the purposes of this
Consent.
FOR WRITTEN CONSENT: IN WITNESS WHEREOF, each shareholder of the Guarantor
Corporation has subscribed this Consent:
Number of
Name Shares Signature Date
- ---------------------------- --------------- ------------------------ -------
- ---------------------------- --------------- ------------------------ -------
- ---------------------------- --------------- ------------------------ -------
- ---------------------------- --------------- ------------------------ -------
- ---------------------------- --------------- ------------------------ -------
If consenting stock is held by a corporation:
- ---------------------------- --------------- ------------------------ -------
Name of Corporation Number of Authorized Signature Date
Shares & Title
Total outstanding shares entitled to vote: _______________
SECRETARY'S CERTIFICATE
I, ___________________________________ Secretary of the Corporation defined
above, do hereby certify that the above Consent of Shareholders is valid and was
adopted by at least 2/3 of the shares entitled to vote, at a shareholders'
meeting duly called and held on the date stated, or by unanimous written consent
of the holders of all the shares entitled to vote.
|_| I further certify that I am sole owner of all the issued and outstanding
shares of the Corporation.
IN WITNESS WHEREOF, I have executed this Certificate this _______ day of
______________________, 19___/20___.
---------------------------------------
Secretary
<PAGE>
DIRECTORS' RESOLUTION TO AUTHORIZE GUARANTY OF CORPORATION
I, __________________________________________,Secretary of
_________________________________ (the "Corporation"), a corporation duly
organized and existing under laws of the State of _____________________________,
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 ________ day of
_______________________, 19___/20___, and still in full force and effect.
RESOLVED, that the Corporation make, execute and deliver to Manufacturers
and Traders Trust Company (the "Bank"), at this time and from time to
time, a guaranty of all obligations, liabilities and indebtedness
whatsoever which may be now or hereafter incurred to the Bank by
__________________________________________________________________ (the
"Guaranty"); and be it further
RESOLVED, that the Corporation is hereby authorized to deliver from time
to time to the Bank, as security for the Guaranty, a mortgage, pledge and
assignment of and security interest in any or all of the real and personal
property of the Corporation, wherever located, as described in security
agreements required by the Bank, of even date or heretofore or hereafter;
and be it further
RESOLVED, that the _______________________________________________________
[title(s)]
of the Corporation hereby is (are) authorized and directed to make,
execute and deliver for and on behalf of this Corporation each such
Guaranty and such other instruments, documents and papers including
without limitation security agreements, mortgages, pledges, assignments
and other instruments for the transfer of title, in such forms, and
containing such terms, provisions and conditions as may be approved by the
officer of the Corporation executing the same, such execution to be
conclusive evidence of the officer's approval and the approval of this
Board of Directors, and to perform any and all other acts, including
without limitation the delivery of collateral, and other papers which may
be required to effect the intent of these resolutions; and be it further
RESOLVED, that any and all acts, instruments and other writings previously
performed or executed and delivered by any one or more of the
Corporation's officers on behalf of the Corporation, in connection with
the transactions guaranteed hereby, are in all respects ratified, affirmed
and approved; and be it further
RESOLVED, that the foregoing resolutions shall remain in full force and
effect and may be relied upon by the Bank until a copy of a subsequent
resolution revoking or amending them, duly certified by the proper
officers of the Corporation, shall be actually received by the account
officer of the Bank responsible for the obligations guaranteed by the
Guaranty, and the Bank shall have had a reasonable time to act thereon;
any action taken by the Bank prior to such actual receipt shall be binding
upon the Corporation, irrespective of when such resolution may have been
adopted.
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
- -------------------------- ------------------------- -------------------------
- -------------------------- ------------------------- -------------------------
- -------------------------- ------------------------- -------------------------
- -------------------------- ------------------------- -------------------------
|_| 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 ________ day of
_______________________________, 19___/20___.
---------------------------------------
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>
EXHIBIT 10.56
MASTER EQUIPMENT LEASE NO. 1
(True Lease)
This Master Equipment Lease dated as of April 7, 1998, together with all
Equipment Schedules annexed hereto, is between M&T Financial Corporation, a New
York corporation with its principal office at One Fountain Plaza, Buffalo, NY
14203, Attention: Counsel's Office ("Lessor"), and CVC Products, Inc. a
corporation organized under the laws of the state of Delaware with its chief
executive office at 525 Lee Road, Rochester, NY 14606 ("Lessee").
Lease. Subject to the terms hereof, Lessor shall lease to Lessee, and Lessee
shall lease from Lessor, the units of personal property (collectively, the
"Equipment" and separately, a "Unit") described on each Equipment Schedule (each
an "Equipment Schedule" or "Schedule") now or hereafter attached hereto, each of
which shall incorporate all the terms and conditions of this Master Equipment
Lease. Each Equipment Schedule shall constitute a separate lease and the term
"Lease" as used below shall refer to an individual Equipment Schedule which
incorporates this Master Equipment Lease, together with the Certificate of
Acceptance for that Schedule. In case of inconsistency, the terms of the
Schedule shall control.
Term. The "Term" of this Lease shall consist of (i) the Interim Term (if any)
and (ii) the Base Term. The Interim Term will commence on the date the Lessor
disburses funds to pay for the Equipment and shall extend to but not include the
Rent Commencement Date (the "Interim Term"). The Initial Base Term shall
commence on the earlier of (a) the Rent Commencement Date stated on the
Equipment Schedule or (b) the date of the Lessee's Certificate of Acceptance for
the Equipment (the "Acceptance Date") and shall continue for the number of
periods specified on the Schedule (the "Base Term"). Lessor is authorized to
enter the commencement date and other ministerial information on the Schedule
upon receipt of the Certificate of Acceptance. The terms and conditions of this
Lease shall continue in effect during any renewal term.
Rent; Late Charge. Lessee agrees to pay directly to Lessor at the above address
or to Lessor's Assignee the rental payments plus any interim rent as specified
on the Equipment Schedule together with all other amounts which may become due
under this Lease (the "Rent"). All Rent shall be paid without notice or demand.
If any Rent is not received within 5 days of the date due, Lessor may charge and
Lessee shall be obligated to pay a late charge in the amount specified on the
Equipment Schedule, or, if none is so specified, 5% of the delinquent amount.
Net Lease; Lessee's Obligations Absolute. This Lease is a net lease. Lessee's
obligation to pay Rent shall be absolute and unconditional and shall not be
subject to any abatement, deferral, reduction, defense, counterclaim, setoff or
recoupment for any reason, including without limitation any claim against the
manufacturer or loss of possession or use of the Equipment.
Disclaimer of Warranties; Lessee's Obligations. LESSEE ACKNOWLEDGES THAT FOR THE
PURPOSES OF UCC ARTICLE 2A THIS IS A STATUTORY FINANCE LEASE AND LESSOR IS NOT
AN AGENT OF THE MANUFACTURER OR VENDOR OF THE EQUIPMENT. LESSEE SELECTED THE
EQUIPMENT AND VENDOR. LESSEE IS SATISFIED THAT THE EQUIPMENT IS SUITABLE AND FIT
FOR LESSEE'S PURPOSES. LESSOR MAKES NO WARRANTY EITHER EXPRESS OR IMPLIED, AS
TO, WITHOUT LIMITATION, QUALITY, CONDITION, MERCHANTABILITY, DESIGN, CAPACITY,
WORKMANSHIP OR PERFORMANCE OF THE EQUIPMENT, OR ITS FITNESS FOR ANY PARTICULAR
PURPOSE. No defect or unsuitability of the Equipment or delay in delivery shall
relieve Lessee of the obligation to pay Rent or any other obligation under this
Lease. Lessor hereby assigns to Lessee any interest it may have in
manufacturers' warranties which Lessee may enforce in Lessee's name and at
Lessee's sole
1
<PAGE>
expense. Lessee knows it may have rights under any vendor purchase documents and
can contact the vendor if any for a description of such rights.
Assignment. LESSEE MAY NOT ASSIGN, SUBLEASE, TRANSFER OR DISPOSE OF ANY OF ITS
RIGHTS UNDER THIS LEASE without Lessor's prior written consent. LESSEE SHALL
REMAIN PRIMARILY LIABLE ON THE LEASE. Lessor may assign this Lease without
Lessee's consent and Lessee admits that such assignment constitutes no material
increase in Lessee's duties or risk and Lessee would not object even if it did.
Lessee's obligations under the Lease shall constitute a direct, independent and
unconditional obligation of Lessee to any Assignee of Lessor. Lessee agrees that
Lessor's Assignee shall have the right to exercise all rights, privileges and
remedies (either in its own name or in the name of Lessor) which by the terms of
this Lease are permitted to be exercised by Lessor.
Title; True Lease. Lessor has and will retain good and marketable title to and a
residual interest in the Equipment and not merely a security interest in it.
Lessor and Lessee do not intend this agreement as a disguised installment sale
or disguised security agreement. Title to any replacement parts or integral
additions to the Equipment shall automatically vest in Lessor.
Risk of Loss. Lessee assumes the entire risk of loss to the Equipment. Lessee
shall advise Lessor in writing promptly of the circumstances and extent of any
damage. If the Equipment is irreparably damaged, lost, stolen or taken by
eminent domain or otherwise, Lessee shall, at Lessor's option, (a) replace it
with like equipment approved by Lessor and transfer title to such replacement
item to Lessor, or (b) pay to Lessor all Rent due and to become due, less the
net amount of any recovery actually received by Lessor from insurance or
otherwise. When, in Lessor's sole discretion, the Equipment can be repaired,
Lessee shall at its expense promptly effect such repairs as Lessor deems
necessary for compliance with this Lease. Any insurance proceeds received by
Lessor for repair of the Equipment shall, at Lessor's option, be paid either
directly to the party completing the repairs, or to reimburse Lessee for the
cost of such repairs; provided, however, that Lessor shall have no obligation to
make any payment until receipt of evidence satisfactory to Lessor that such
repairs have been completed; and further provided that Lessor may apply such
proceeds to the payment of Rent if there shall have occurred and be continuing
an Event of Default or any event which with lapse of time or notice, or both,
would become an Event of Default. Lessee shall, upon Lessor's request,
undertake, by litigation or otherwise, in Lessee's name, the collection of any
claim against any person for such loss or taking, but Lessor shall not be
obligated to undertake the collection of any such claim.
Representations and Warranties of Lessee. Lessee represents and warrants that:
it is duly organized and in good standing under the laws of the State in which
it was formed and duly authorized to do business in each jurisdiction where
failure to be so authorized might have a material adverse effect on its
financial condition or assets; it has the legal right and power and has taken
all necessary corporate or partnership action to authorize execution, delivery
and performance of its obligations under this Lease; this Lease constitutes a
valid obligation of Lessee enforceable in accordance with its terms; and
execution, delivery and performance of this Lease will not violate the terms or
constitute a breach of any other agreement to which Lessee is a party or by
which it is bound.
Maintenance and Repairs; Business Purpose Only. Lessee at its sole expense shall
cause the Equipment to be maintained and kept in good repair according to the
manufacturer's specifications. Lessee shall use the Equipment only in the manner
and for the BUSINESS PURPOSES for which it was designed and intended.
Insurance. Lessee shall maintain at all times property damage, fire, theft and
comprehensive insurance for the full replacement value of the Equipment with
loss payable provisions in favor of Lessor as its interests may appear and
maintain public liability insurance in the amounts required by Lessor for the
relevant Equipment Schedule, naming Lessor as additional insured, all under
policies in form, substance and amount and written by companies approved
2
<PAGE>
by Lessor.
Compliance; Inspection. Lessee shall comply with all governmental laws,
regulations, requirements and rules, including without limitation environmental
and licensing laws and all manufacturer's operating instructions and warranty
requirements for the Equipment, and with the conditions and requirements of all
policies of insurance with respect to the Equipment and this Lease. At any time
during business hours, Lessor may enter the premises where the Equipment is
located, to inspect the Equipment.
Taxes and Costs. Lessee shall pay all applicable sales and other taxes, license
and registration fees, assessments and other government charges, however
designated, based upon the Equipment or the Rent or upon the operation,
maintenance, repair, return or other disposition of the Equipment, or for
titling or registering the Equipment, including taxes measured by the net income
of Lessor to the extent that such taxes are assessed in lieu of other
governmental charges. If Lessee represents that Lessee is exempt from payment of
income taxes and sales taxes, Lessee will provide Lessor with evidence of such
exemptions. Lessee shall pay all shipping and delivery charges and other
expenses incurred in connection with the Equipment and pay all lawful claims
which might become a lien on the Equipment.
General Indemnity. Lessee shall indemnify and hold Lessor harmless from and
against all claims, losses, liabilities, damages, judgments, suits, and all
legal proceedings, and any and all costs and expenses (including without
limitation attorneys' fees and disbursements whether for internal or outside
counsel), arising in connection with the manufacture, purchase, ownership,
delivery, installation, possession, use, storage, operation, failure,
maintenance, repair, return, repossession or other disposition of the Equipment
or with this Lease including without limitation claims for injury to or death of
persons and for damage to property (collectively "Claims"). Lessee shall give
Lessor and any Assignee prompt notice of any Claim.
Tax Indemnity. Lessee represents, warrants and covenants that the entire
Equipment cost to Lessor qualifies as cost of "property" for purposes of
Internal Revenue Code ss.168, as amended; no person other than Lessor has
claimed or will claim any tax deduction or credit related to the Equipment;
Lessee will take all actions requested at any time to protect Lessor's tax
ownership of the Equipment; the Equipment is not "limited use property" for
purposes of Revenue Procedures 75-28 (1975-1 C.B. 752) and 76-30 (1976 C.B.
847); and the Equipment will be placed in service within the meaning of I.R.C.
ss.168 by no later than the date specified in the Tax Rider. Lessee agrees not
to do anything to impair or lessen the value of Lessor's anticipated tax
benefits related to the Equipment (as set forth on a Tax Rider to this Lease)
and expressly agrees that Claims under the indemnity provided in the preceding
paragraph shall include any disallowance, elimination, recapture, reduction or
disqualification, in whole or in part, of any tax benefits of Lessor incurred as
a result of any act or omission or misrepresentation of Lessee (a "Loss"). If
Lessor suffers a Loss, Lessee shall pay to Lessor as additional Rent on the next
succeeding rental payment date after Lessor delivers to Lessee written notice of
a Loss, or if there is no such date, within 30 days after such notice, the
amount which, after deduction of all taxes, interest, additions to tax and
penalties that have been or will be required to be paid by Lessor at the highest
marginal corporate income or franchise tax rates under all applicable federal,
state and local laws, regulations and ordinances, will preserve the Net Economic
Return that would have been realized by Lessor had such Loss not occurred. In
the case of a Loss resulting from Lessor's inability to offset, for federal or
local income or State franchise tax purposes, income taxable at a rate equal to
Lessor's highest marginal corporate tax rate, basic Rent, and the Table of
Stipulated Loss and Early Termination Values for the related Schedule shall be
adjusted to preserve the Net Economic Return. "Net Economic Return" means the
maintenance, at a minimum, of Lessor's (i) after-tax yield (ii) after-tax
aggregate cash flows, and (iii) return on assets as computed by Lessor as of the
date of the execution of the Schedule. All of Lessor's rights and privileges
arising from the indemnity in this paragraph shall survive the expiration or
other termination of this Lease. For purposes of this indemnity the term
"Lessor" shall include any affiliated group (within the meaning of I.R.C.
3
<PAGE>
ss.1504) of which Lessor is a member for any year in which a consolidated income
tax return is filed for such affiliated group.
Location. Lessee shall not remove the Equipment from its business location
specified on the respective Equipment Schedule without Lessor's prior written
consent. Upon the expiration or termination of this Lease, unless Lessee
purchases the Equipment Lessee shall, at its sole expense, store and continue to
insure the Equipment for up to 180 days and shall deliver the Equipment to
Lessor in good condition, ordinary wear and tear excepted, at a location within
the United States designated by the Lessor.
Financial Statements. Lessee shall maintain a system of accounts established and
administered in accordance with generally accepted accounting principles and
practices for its industry consistently applied, and, within thirty (30) days
after the end of each fiscal quarter, deliver to Lessor a balance sheet as of
the end of such quarter and statement of operations and cash flows for such
quarter, and within one hundred twenty (120) days after the end of each fiscal
year, deliver to Lessor a balance sheet as of the end of such year and year end
statement of operations and cash flows for such year in each case prepared in
accordance with generally accepted accounting principles for its industry
consistently applied and certified by Lessee's chief financial officer, or, in
the case of year end financial statements, audited by an independent public
accountant firm acceptable to Lessor, to be correct and complete in accord with
Lessee's records and to present fairly the results of Lessee's operations and
cash flows and its financial position at year end.
No Liens. Lessee shall not create or suffer to exist any lien or other
encumbrance of any kind upon the Equipment or this Lease and agrees that if
Lessee breaches this covenant Lessor may cancel this Lease.
Quiet Enjoyment; Equipment is Personality. Lessor covenants that so long as no
Event of Default shall have occurred, Lessee shall be entitled to quiet
possession and use of the Equipment in accordance with this Lease. Lessor and
Lessee agree that the Equipment shall remain personal property. Lessee will
obtain and deliver upon Lessor's request any landlord and mortgagee waivers in
recordable form, satisfactory to Lessor, from all persons claiming any interest
in the real property on or in which the Equipment is located.
Events of Default. An event of default ("Event of Default") will have occurred
if (a) Lessee fails to pay any Rent within 10 days of the date due whether by
acceleration or otherwise; (b) Lessee or any guarantor of this Lease (a
"Guarantor") fails to perform when due any obligation under this Lease or any
other agreement with the Lessor; (c) any of Lessee's debts is accelerated or an
event occurs which after notice or lapse of time would permit such acceleration;
(d) Lessee or a Guarantor 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, 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 or collect any tax as required
by law, has served or filed against it or its assets any lien not permitted
above or has entered against it or its Guarantor or assets any judgment, order
or award; (e) a receiver or similar trustee is appointed for Lessee or its
Guarantor or assets (with or without its consent), or Lessee or Guarantor makes
an assignment for the benefit of creditors or commences or has commenced against
it a proceeding pursuant to any bankruptcy law, and such appointment or
proceeding is not dismissed within 60 days; or (f) any representation or
warranty made in this Lease or related documents or other statements provided by
Lessee or Guarantor proves to have been incorrect or misleading in any material
respect when made.
Remedies. Immediately upon the occurrence of any Event of Default, Lessor may,
without notice or demand, take any or all of the following steps: (a)
immediately terminate the Lease and require Lessee, at its expense, promptly to
return all or any portion of the Equipment to the possession of Lessor at such
place as Lessor may designate; (b) without process of law, enter upon the
premises where the Equipment is located and take immediate possession of
4
<PAGE>
the Equipment, free from all claims for loss or damage caused by repossession;
(c) declare immediately due and payable an amount equal to the present value of
(1) all unpaid Rent due and to become due during the entire Term, plus (2) the
purchase price payable under Lessee's purchase option, if constructively
exercised, using a factor selected by Lessor in its sole discretion to determine
present value; (d) sell, release or otherwise dispose of the Equipment as is or
with any commercially reasonable preparation, at public or private sale, in one
or more parcels, upon any terms, at such place(s) and time(s) and to such
persons or firms as Lessor deems best, without demand or notice, although Lessee
agrees ten (10) business days' written notice if given shall be deemed
reasonable notice; or (e) exercise any other right or remedy in equity or under
applicable law, including without limitation remedies of a secured party under
the Uniform Commercial Code. Lessee shall be liable for all costs and expenses
incurred by Lessor for sale or re-lease, including reasonable brokers'
commissions and attorneys' fees and disbursements, whether for internal or
outside counsel. To the extent permitted by applicable law, Lessee hereby waives
any valuation, inquisition, stay, appraisal or redemption laws which, but for
this provision, might be applicable to any sale or re-lease of the Equipment.
Lessor's Right to Cure. Lessor may at its option perform any of Lessee's
obligations omitted by Lessee, at Lessee's expense payable upon demand.
Purchase Option. Lessee shall have only such option to purchase the Equipment
upon expiration of the Lease (if any) as specified in a separate Purchase Option
Rider to the Schedule. Any option shall be suspended during the existence of any
Event of Default. If no price is specified, the price shall be the fair market
value of the Equipment as determined by the Lessor at the end of the Term.
Further Assurances. Lessee will execute all documents and take all further
actions requested by Lessor to protect Lessor's interests under this Lease,
including without limitation Uniform Commercial Code financing statements.
Lessor is authorized to file this Lease as a security agreement in lieu of a
financing statement, to file financing statements without the signature of
Lessee and to execute finaning statements on behalf of Lessee. Lessee will pay
all costs of filing financing statements with respect to this Lease, including
without limitation documentary stamp taxes. Lessee will cause Lessor's interest
in the Equipment to be noted on any certificate of title relating to the
Equipment.
Power of Attorney. Lessee irrevocably and unconditionally appoints Lessor
Lessee's Attorney-in-Fact to, at any time, in Lessee's name or otherwise (a)
execute financing statements relating to the Equipment, (b) execute applications
for certificates of title or notices of lien relating to titled Equipment, (c)
endorse checks, drafts or other instruments drawn by the issuer of insurance
covering the Equipment or (d) execute and deliver any writing and take any other
actions that the Lessor deems necessary or desirable to perfect or protect
Lessor's interests under this Lease. This power is coupled with an interest and
if Lessee is a natural person shall not be affected by any subsequent disability
of the Lessee.
Enforceability. This Lease shall be binding upon Lessee's successors and assigns
and shall be enforceable by Lessor's successors and assigns.
Non-Waiver; Etc. No course of dealing nor any delay or omission in Lessor's
exercise of any right shall operate as a waiver of any of Lessor's rights. A
waiver on any one occasion shall not bar or waive any right or remedy of Lessor
on any future occasion. No waiver or consent shall be binding upon Lessor unless
it is in writing and signed by Lessor.
No Commitment; Lessor's Right to Terminate Commitments. This Master Equipment
Lease is not a legal commitment to lend and Lessor shall have no obligation to
enter into any Schedule unless (1) Lessor has issued a
5
<PAGE>
specific commitment for such Schedule, (2) no Event of Default exists with
respect to any agreement or other obligation of Lessee in any capacity to Lessor
or any of its affiliates in any capacity, and (3) none of the following has
occurred: (a) there has been a material adverse change in Lessee's financial
position or credit standing as determined by Lessor in its sole discretion; (b)
the Equipment fails to be delivered and accepted by Lessee before the commitment
expires; (c) Lessee or any Guarantor fails to cause its counsel to deliver on
its behalf any legal opinion requested by the Lessor; (d) Lessee fails to
deliver evidence satisfactory to Lessor that Lessee has obtained and will
maintain in force during the Lease Term all federal, state and local permits,
licenses and approvals necessary for the acquisition, transportation, operation
and maintenance of the Equipment, including without limitation disposal of all
associated wastes and by-products and protection of operators and other persons
in the vicinity of the Equipment; or (e) any other condition specified in the
Schedule has not been fulfilled. Immediately upon Lessor's termination or
rejection of a Schedule or commitment based on this section, Lessee will return,
and reimburse Lessor for all sums disbursed by Lessor with respect to, the
Equipment and proposed Schedule, including without limitation all Lessor's
attorneys' fees and disbursements, whereupon, if Lessee is not in default with
respect to any agreement with Lessor, Lessor will transfer to Lessee without
warranty or recourse any rights Lessor may have with respect to the Equipment.
Miscellaneous. This Lease constitutes the entire agreement between Lessor and
Lessee relating to the Equipment and supersedes all prior dealings. This Lease
may be amended only in a writing signed by both parties. THIS LEASE SHALL BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF
CONFLICTS OF LAW, AND SHALL BE DEEMED EXECUTED AND PERFORMED IN NEW YORK; and
shall be deemed amended to the extent necessary to comply with any inconsistent
law. If any provision is nevertheless determined to be invalid, the remaining
provisions shall remain in effect. The captions in this Lease are for
convenience only.
Lessee's Waivers. Lessor and Lessee each waive any right to trial by jury in
connection with this Lease. In any action or other legal proceeding relating to
this Lease, Lessee (a) consents to the personal jurisdiction of any state or
federal court located in the State of New York, (b) waives objection to the
laying of venue, (c) waives personal service of process and subpoenas, (d)
consents to the service of process and subpoenas by registered mail directed to
the Lessee's last known address, with such service deemed complete five days
after mailing, (e) waives any right to assert any counterclaim or setoff or any
defense based upon any statute of limitations or any claim of laches, (f) waives
its right to attack any final judgment that is obtained as a direct or indirect
result of any such action and (g) consents to each such final judgment being
sued upon in any court having jurisdiction. LESSEE WAIVES ANY AND ALL RIGHTS AND
REMEDIES CONFERRED BY UCC ARTICLE 2A SECTIONS 508-522, INCLUDING WITHOUT
LIMITATION ANY RIGHTS TO (a) CANCEL OR REPUDIATE THE LEASE, (b) REJECT OR REVOKE
ACCEPTANCE OF THE EQUIPMENT, (c) RECOVER DAMAGES FROM THE LESSOR FOR BREACH OF
WARRANTY OR FOR ANY OTHER REASON, (d) CLAIM A SECURITY INTEREST IN ANY REJECTED
EQUIPMENT IN LESSEE'S POSSESSION OR CONTROL, (e) DEDUCT FROM RENT ALL OR ANY
PART OF ANY CLAIMED DAMAGES RESULTING FROM THE LESSOR'S DEFAULT UNDER THE LEASE,
(f) ACCEPT PARTIAL DELIVERY OF THE EQUIPMENT, (g) RECOVER FROM LESSOR OR
ASSIGNEE ANY GENERAL, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES FOR ANY
REASON WHATSOEVER, AND (h) SPECIFIC PERFORMANCE, REPLEVIN OR THE LIKE FOR ANY OF
THE EQUIPMENT. Lessee also waives any statutory right it may have now or in the
future to require the Lessor to sell or re-lease the Equipment or otherwise to
mitigate damages.
Early Termination; Interest on Accelerated Payment. Early Termination of any
Schedule by Lessee is permitted only upon payment in full of all amounts due
pursuant to the early termination and stipulated loss value table attached as a
rider to the Equipment Schedule. Interest shall accrue on payments due under
this paragraph from the date of
6
<PAGE>
termination until payment is actually received by Lessor at the rate of two
percent (2%) per month; provided, however, that Lessor and Lessee do not intend
for Lessee to pay interest in excess of the maximum rate permitted by law. No
partial prepayments are permitted.
Notices. Notices shall be deemed delivered upon deposit in the United States
mail postage prepaid directed to Lessor and Lessee at the addresses set forth
above or in any subsequent written notice to the other party. Lessee shall
immediately notify Lessor and any Assignee of any change in the location of the
Equipment or in Lessee's address, name, management, financial condition or form
of organization.
Application of Payments. Payment shall be applied first to Lessor's costs and
Expenses including without limitation attorney's fees, collection costs and
expenses incurred in performing Lessee's obligations under this Lease, next to
charges and fees such as late charges, and last to other Rent.
LESSEE ACKNOWLEDGES THAT ONLY LESSOR'S ORIGINAL OF EACH EQUIPMENT SCHEDULE
CONSTITUTES CHATTEL PAPER FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE. No
security interest can be perfected by possession of any other counterpart.
Accepted on: April 7, 1998 Date: April 7, 1998
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
By /s/ Emilio DiCataldo By /s/ Jeffrey S. Mastroleo
------------------------------ ------------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / Assistant Vice President
Chief Financial Officer
7
<PAGE>
EQUIPMENT SCHEDULE
UNDER MASTER EQUIPMENT LEASE AGREEMENT NO. 1
Equipment Schedule Date: April 7, 1998 Equipment Schedule No. 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lessee's Name and Address: County: Monroe Lessor's Name and Address: County: Erie
CVC Products, Inc. M&T Financial Corporation
525 Lee Road One Fountain Plaza
Rochester, NY 14606 Buffalo, NY 14203
Att: Mark Harris Phone: (716) 458-2550 x3196 Att: Counsel's Office Phone: (716) 842-5094
- ------------------------------------------------------------------------------------------------------------
</TABLE>
LESSEE: X Corporation |_| General Partnership |_| Limited Partnership |_| dba
|_| Other ________________ X Org. in Delaware
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
QTY. EQUIPMENT DESCRIPTION COST SERIAL NO.
(Manufacturer, Model No., Item)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
See Schedule A attached hereto and made a part hereof $1,210,390.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Initial Equipment Location: (if different from above)
525 Lee Road, Rochester, NY 14606 (Monroe County)
Vendor:
CVC Products, Inc., 525 Lee Road, Rochester, NY 14606
TERM AND RENTAL PAYMENTS
<TABLE>
<CAPTION>
Term End Date: 1/1/02
Term: 44 months Beginning: 4/7/98 Security Deposit $0 Last Payment: 12/01/01 Rent Commencement Date: 5/1/98
- -----------------------------------------------------------------------------------------------------------------------
Payment Number Sales Total Each Lease Advance Rent
Rent Payable and Amounts Tax Payment Rec'd by Lessor
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
X Monthly |_| Annually Periodic Rent 44 at $30,136.36 $ 0 $30,136.36 1 at $30,136.36
|_| Quarterly
|_| Semiannually Final Payment $30,136.36 $ 0 $30,136.36 to be applied to First
|_| See Schedule Payment
X Exempt
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Interim Rent: $24,109.09 For period Covering: 4/7/98 To 4/30/98
INSURANCE: Lessee's insurance policy covering the Equipment shall contain
minimum liability limits of $2,000,000 for each person,
$2,000,000 for each occurrence and insure against claims for
property damage in an amount not less than $2,000,000 .
Lease. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
personal property described above together with all substitutions, replacements,
repairs, upgrades, additions, accessories, products and proceeds (the
"Equipment"), under the terms and conditions set forth here and in the Master
Equipment Lease referenced above and incorporated herein in its entirety. LESSEE
ACKNOWLEDGES THAT ONLY LESSOR'S ORIGINAL OF THIS EQUIPMENT SCHEDULE CONSTITUTES
CHATTEL PAPER FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE, that no security
interest can be created by possession of any other counterpart, and that this
Lease can only be amended in writing. ____ (Lessee initial). THIS IS A
NON-CANCELABLE LEASE.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
By: /s/ Emilio DiCataldo By:
---------------------------- ----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / Banking Officer
Chief Financial Officer
<PAGE>
Schedule A
Equipment Description
(1) CX-8 Cluster Tool -- CVC VE Number 68105, including:
2 physical vapor deposition (PVD) modules;
1 central wafer handler, including robotics, controls, etc.;
2 load locks
(1) Orbital Welding System, including:
M207A-HP power Supply Top Assy, serial number 23750;
M9-500 Weld Head Top Assy, serial number 24078
(1) Pick up Assembly Processing Board, including:
Model 109LS Hysteresis Loop Tracer;
Option 109-665 Pickup Assembly;
Option 109-11 Pickup Assembly;
Option 109-36-7/32 Pickup Assembly;
Option DSP-1 Signal Processing Board;
Option LCD-1 Liquid Crystal Display
(2) Pulsed DC Generator
serial numbers Beta-023, Beta-028
(1) Dry Mechanical Backing Pump
<PAGE>
MTFCo
EARLY TERMINATION RIDER
to
EQUIPMENT SCHEDULE No. 2 ("SCHEDULE")
Dated April 7, 1998
to
MASTER EQUIPMENT LEASE AGREEMENT
Dated April 7, 1998 ("LEASE")
between
M&T Financial Corporation ("LESSOR")
and
CVC Products, Inc. ("LESSEE")
(I) During the term of the Lease the Lessee shall, provided there exists no
event(s) of default, have the right to purchase all but not less than all of the
scheduled equipment then under lease ("Early Termination Option") for a price
equal to the predetermined Fair Market Value as determined by the attached
Stipulated Loss Table ("Option Price"). Upon Lessee's exercise of the Early
Termination Option, Lessor shall convey to Lessee, all of Lessor's right, title
and interest in and to the Equipment on an "as-is, where-is" basis, without
recourse or warranty except against any liens placed on the Equipment by Lessor.
The Lessee may exercise the Early Termination Option upon written notice to
Lessor given not less than ninety (90) days nor more than one hundred eighty
(180) days prior to the Early Termination Date. Such notice shall be
irrevocable. Upon Lessee's exercise of the Early Termination Option, Lessee
shall pay to Lessor all due but unpaid rent under the Equipment Schedule
together with the Option Price.
In the event that the Early Termination Option is not exercised by the Lessee in
accordance with this Rider, all of Lessee's obligations under the Equipment
Schedule will continue unaffected.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS RIDER THIS 7th DAY OF APRIL
1998.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
By: /s/ Emilio DiCataldo By:
---------------------------- ----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / CFO Assistant Vice President
<PAGE>
Stipulated Loss Schedule
Lessee: CVC Products (Schedule #2)
Percent
Per Date Amount of Cost
- --------------------------------------------------
1 5/1/98 1,222,279.40 100.98
2 6/1/98 1,202,434.98 99.34
3 7/1/98 1,182,378.32 97.69
4 8/1/98 1,162,129.01 96.01
5 9/1/98 1,141,665.33 94.32
6 10/1/98 1,120,986.15 92.61
7 11/1/98 1,100,111.07 90.89
8 12/1/98 1,079,018.32 89.15
9 1/1/99 1,057,706.77 87.39
10 2/1/99 1,036,195.99 85.61
11 3/1/99 1,014,464.21 83.81
12 4/1/99 992,510.27 82.00
13 5/1/99 970,309.99 80.17
14 6/1/99 947,885.08 78.31
15 7/1/99 925,234.38 76.44
16 8/1/99 902,333.67 74.55
17 9/1/99 879,204.66 72.64
18 10/1/99 855,846.16 70.71
19 11/1/99 832,233.93 68.76
20 12/1/99 808,389.66 66.79
21 1/1/00 784,312.15 64.80
22 2/1/00 759,977.13 62.79
23 3/1/00 735,406.29 60.76
24 4/1/00 710,598.38 58.71
25 5/1/00 685,667.98 56.65
26 6/1/00 660,498.63 54.57
27 7/1/00 635,089.07 52.47
28 8/1/00 609,553.87 50.36
29 9/1/00 583,776.53 48.23
30 10/1/00 557,755.79 46.08
31 11/1/00 531,606.20 43.92
32 12/1/00 505,211.25 41.74
33 1/1/01 478,569.66 39.54
34 2/1/01 451,795.95 37.33
35 3/1/01 424,773.61 35.09
36 4/1/01 397,501.33 32.84
37 5/1/01 370,176.93 30.58
38 6/1/01 342,601.01 28.31
39 7/1/01 314,772.23 26.01
40 8/1/01 286,888.43 23.70
41 9/1/01 258,750.16 21.38
42 10/1/01 230,356.08 19.03
43 11/1/01 201,904.01 16.68
44 12/1/01 173,194.48 14.31
45 1/1/02 144,226.15 11.92
<PAGE>
MTFCo
PURCHASE OPTION RIDER
to
EQUIPMENT SCHEDULE NO. 2 ("SCHEDULE")
Dated April 7, 1998
to
MASTER EQUIPMENT LEASE AGREEMENT
Dated as of April 7, 1998 ("LEASE")
between
M&T Financial Corporation ("LESSOR")
and
CVC Products, Inc. ("LESSEE")
The paragraph in the Lease entitled Purchase Option is hereby amended as
follows:
Subject to the satisfaction of the conditions set forth below, the Lessee
shall, on the Initial Term Expiration Date, have the option to:
(1) Purchase all, but not less than all, of the Equipment under
lease for a price equal to its Fair Market Value as determined by
the Stipulated Loss Table (the "Purchase Price").
(a) Lessee's right to exercise the Purchase Option shall be
subject to the satisfaction of the following conditions
precedent: (1) No Default or Event of Default shall have
occurred and be continuing; (2) Lessee shall have given
written notice to Lessor of Lessee's desire to exercise the
Purchase Option not less than ninety (90) days nor more than
one hundred eighty (180) days prior to the Initial Term
Expiration Date; and (3) Lessor shall have received Lessee's
payment of the Purchase Price (plus any taxes) prior to the
Initial Term Expiration Date.
(b) If Lessee exercises the Purchase Option in accordance with
the terms and conditions hereof, then at the expiration of the
Initial Term, Lessee shall tender the Purchase Price in
immediately available funds and Lessor shall deliver a bill of
sale transferring to Lessee all Lessor's right, title and
interest in the Equipment: IT BEING EXPRESSLY UNDERSTOOD THAT
SUCH TRANSFER IS "AS IS, WHERE IS", WITHOUT ANY WARRANTIES,
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING
WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND
LESSOR EXPRESSLY DISCLAIMS THE SAME.
(2) Return the equipment to the Lessor without further obligation to
a location of the Lessor's choosing in the United States.
(3) Renew the Lease at its fair market rental rate as determined by
Lessor.
<PAGE>
Except as specifically amended hereby, all of the terms and conditions set forth
in the Schedule and Lease are unaffected and remain in full force and effect.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS RIDER THIS 7th DAY OF April,
1998.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
s
By: /s/ Emilio DiCataldo By:
----------------------------- -----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / CFO Assistant Vice President
2
<PAGE>
Stipulated Loss Schedule
Lessee: CVC Products (Schedule #2)
Percent
Per Date Amount of Cost
- --------------------------------------------------
1 5/1/98 1,222,279.40 100.98
2 6/1/98 1,202,434.98 99.34
3 7/1/98 1,182,378.32 97.69
4 8/1/98 1,162,129.01 96.01
5 9/1/98 1,141,665.33 94.32
6 10/1/98 1,120,986.15 92.61
7 11/1/98 1,100,111.07 90.89
8 12/1/98 1,079,018.32 89.15
9 1/1/99 1,057,706.77 87.39
10 2/1/99 1,036,195.99 85.61
11 3/1/99 1,014,464.21 83.81
12 4/1/99 992,510.27 82.00
13 5/1/99 970,309.99 80.17
14 6/1/99 947,885.08 78.31
15 7/1/99 925,234.38 76.44
16 8/1/99 902,333.67 74.55
17 9/1/99 879,204.66 72.64
18 10/1/99 855,846.16 70.71
19 11/1/99 832,233.93 68.76
20 12/1/99 808,389.66 66.79
21 1/1/00 784,312.15 64.80
22 2/1/00 759,977.13 62.79
23 3/1/00 735,406.29 60.76
24 4/1/00 710,598.38 58.71
25 5/1/00 685,667.98 56.65
26 6/1/00 660,498.63 54.57
27 7/1/00 635,089.07 52.47
28 8/1/00 609,553.87 50.36
29 9/1/00 583,776.53 48.23
30 10/1/00 557,755.79 46.08
31 11/1/00 531,606.20 43.92
32 12/1/00 505,211.25 41.74
33 1/1/01 478,569.66 39.54
34 2/1/01 451,795.95 37.33
35 3/1/01 424,773.61 35.09
36 4/1/01 397,501.33 32.84
37 5/1/01 370,176.93 30.58
38 6/1/01 342,601.01 28.31
39 7/1/01 314,772.23 26.01
40 8/1/01 286,888.43 23.70
41 9/1/01 258,750.16 21.38
42 10/1/01 230,356.08 19.03
43 11/1/01 201,904.01 16.68
44 12/1/01 173,194.48 14.31
45 1/1/02 144,226.15 11.92
<PAGE>
CERTIFICATE OF ACCEPTANCE
to
EQUIPMENT SCHEDULE NO. 2, Dated April 7, 1998,
to
MASTER EQUIPMENT LEASE AGREEMENT, Dated April 7, 1998
(the "Lease")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Leesee's Name and Address: County: Monroe Lessor's Name and Address: County: Erie
<S> <C> <C> <C>
CVC Products, Inc. M&T Financial Corporation
525 Lee Road One Fountain Plaza
Rochester, NY 14606 Buffalo, NY 14203
Attn: Mark Harris Phone: (716) 458-2550 x3196 Attn: Counsel's Office Phone: (716) 842-5094
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
QTY EQUIPMENT DESCRIPTION (Manufacturer, Model No., Serial No., Item)
- --------------------------------------------------------------------------------
See Schedule A attached hereto and made a part hereof
- --------------------------------------------------------------------------------
Initial Equipment Location (if different from Leesee's address above):
525 Lee Road, Rochester, NY 14606 (Monroe County)
Vendor:
CVC Products, 525 Lee Road, Rochester, NY 14606
Lessee hereby certifies that as of this date the Equipment described above has
been delivered to and accepted by Lessee after complete inspection and testing,
is correctly described in the Lease (with the exception of serial numbers which
if omitted now may be supplied by Lessee in the future by telephone and inserted
in the description by Lessor or Assignee), is in good working order, and is
satisfactory to Lessee in all respects. Lessee reaffirms that Lessee selected
the Equipment based upon its specifications and that Lessee's obligation to pay
all amounts due and to become due and perform all other obligations under the
Lease is absolute and that any recourse Lessee might have in case of any
nonperformance, unsuitability or other failure of the Equipment shall lie with
the manufacturer or vendor and in no case with Lessor or Assignee.
Date: April 7, 1998
LESSEE:
CVC Products, Inc.
By: /s/ Emilio DiCataldo
-----------------------------------------------
Emilio DiCataldo
Senior Vice President / Chief Financial Officer
(If Corporation, President or Vice President should
sign and give official title; if Partnership,
General Partner; if LLC, Manager)
<PAGE>
Schedule A
Equipment Description
(1) CX-8 Cluster Tool -- CVC VE Number 68105, including:
2 physical vapor deposition (PVD) modules;
1 central wafer handler, including robotics, controls, etc.;
2 load locks
(1) Orbital Welding System, including:
M207A-HP power Supply Top Assy, serial number 23750;
M9-500 Weld Head Top Assy, serial number 24078
(1) Pick up Assembly Processing Board, including:
Model 109LS Hysteresis Loop Tracer;
Option 109-665 Pickup Assembly;
Option 109-11 Pickup Assembly;
Option 109-36-7/32 Pickup Assembly;
Option DSP-1 Signal Processing Board;
Option LCD-1 Liquid Crystal Display
(2) Pulsed DC Generator
serial numbers Beta-023, Beta-028
(1) Dry Mechanical Backing Pump
<PAGE>
BILL OF SALE
TO
M&T FINANCIAL CORPORATION
KNOW ALL MEN BY THESE PRESENTS THAT: CVC Products, Inc., a Delaware
corporation with its chief executive office at 525 Lee Road, Rochester, NY 14606
(herein called the "Seller"), for and in consideration of the sum of One Dollar
($1) and other good and valuable consideration, receipt of which is hereby
acknowledged, does hereby grant, bargain, sell, assign, transfer, and set over
unto M&T Financial Corporation, a New York corporation (herein called the
"Buyer"), its successors and assigns, all right, title, and interest of the
Seller in and to the personal property described below (and, if any additional
page is annexed hereby as Schedule A, listed and described in said Schedule A)
together with all parts and accessories attached hereto (all such personal
property, parts, and accessories being herein collectively called the
"Equipment"), TO HAVE AND TO HOLD for its and their own use and benefit forever.
QUANTITY MANUFACTURER/MODEL DESCRIPTION SERIAL NO.
-------- ------------------ ----------- ----------
See Schedule A attached hereto and made a part hereof.
The Seller hereby represents and warrants to the Buyer, its successors and
assigns: (I) that the Seller has full legal and beneficial title to the
Equipment and the good and lawful right to sell the same; and (ii) that good and
marketable title to the Equipment is hereby duly vested in the Buyer free and
clear of all claims, liens, encumbrances, and rights of others of any nature.
The Seller hereby covenants and agrees to defend such title forever against all
claims and demands whatsoever.
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale to be executed
and delivered by its duly authorized officer this 7th day of April 1998.
SELLER:
CVC Products, Inc.
By: /s/ Emilio DiCataldo
-------------------------------------
Emilio DiCataldo
Senior Vice President / CFO
<PAGE>
Schedule A
Equipment Description
(1) Orbital Welding System, including:
M207A-HP power Supply Top Assy, serial number 23750;
M9-500 Weld Head Top Assy, serial number 24078
(1) Pick up Assembly Processing Board, including:
Model 109LS Hysteresis Loop Tracer;
Option 109-665 Pickup Assembly;
Option 109-11 Pickup Assembly;
Option 109-36-7/32 Pickup Assembly;
Option DSP-1 Signal Processing Board;
Option LCD-1 Liquid Crystal Display
(2) Pulsed DC Generator
serial numbers Beta-023, Beta-028
(1) Dry Mechanical Backing Pump
<PAGE>
MTFCo
CERTIFICATE OF SECRETARY
OF
LESSEE
I, Christine Whitman, President of CVC Products, Inc. (the "Company"), a
Delaware corporation, do CERTIFY in connection with Equipment Schedule No. 2
dated as of April 7, 1998 to Master Equipment Lease Agreement dated as of April
7, 1998 between M&T Financial Corporation (the "Lessor") and the Company as
lessee (the "Lease") as follows:
1. The Company's execution, delivery and performance of the Lease, the
Equipment Schedule, the Delivery and Acceptance Certificate and all
other collateral instruments and documents related to this
transaction (collectively, the "Documents") have been duly
authorized by all necessary corporate action on the part of the
Company, as evidenced by the copies of the resolution attached
hereto, and the Documents will be duly and validly executed if
executed by one of the persons whose name appears in Section 2
below;
2. The following persons are the duly elected or appointed, qualified
and acting officers of the Company holding the offices set forth
opposite their respective names below, and the signatures appearing
opposite their respective names below are the genuine signatures of
such persons:
Name Office Signature
Emilio DiCataldo Sr Vice President / CFO /s/ Emilio DiCataldo
________________________ ________________________ ______________________
________________________ ________________________ ______________________
IN WITNESS WHEREOF, I have executed this Certificate this 7th day of April
1998.
By: /s/ Christine Whitman
-------------------------------------
Christine Whitman
President / CEO
<PAGE>
MTFCo
EXHIBIT TO CERTIFICATE OF SECRETARY TO LESSEE
RESOLUTION
On motion of ____________________________________________, seconded by
_____________________________________________, the following Resolutions were
adopted by a duly constituted quorum of the Board of Directors [______________]
of CVC Products, Inc. (the "Company") present at a meeting duly called and held,
or by unanimous written consent, on _____________________, 199_.
WHEREAS, this Board has determined that in order for the Company to better
accomplish its corporate purposes, the Company needs to acquire the use of
the Equipment described on the Schedule attached hereto, and
WHEREAS, the Company has determined that the most economical and efficient
means of acquiring the use of said Equipment is pursuant to a lease
financing of the Equipment;
NOW, THEREFORE, be it
RESOLVED, that the Company is hereby authorized to enter into a Master
Equipment Lease Agreement between M&T Financial Corporation and/or M&T
Bank as Lessor and the Company as Lessee together with any appropriate
equipment schedules, all exhibits, tables, riders and amendments related
thereto, substantially in the form annexed hereto; and it is further
RESOLVED, that in furtherance of the accomplishment of the Lease, the Sr
Vice President / CFO, is hereby authorized to consult with and authorize
the appropriate officers of the Company to select and designate the
particular Equipment to be leased by the Company and the particular source
of financing the Equipment; and be it further
RESOLVED, that in furtherance of the Lease, the Sr Vice President / CFO,
is hereby authorized to execute and deliver on behalf of the Company such
agreements, indemnities, purchase orders, guarantees of performance or
payment or otherwise, leases, bills of sale, certificates or other
instruments or obligations as they or any one of them may deem necessary
or appropriate to the accomplishment of the Lease, and the execution and
delivery of any such agreement, instrument or obligation prior to the date
hereof by any such officer is in all respects hereby confirmed, ratified
and approved; and be it further
RESOLVED, that all officers of the Company are authorized and directed to
do or cause to be done all such other acts and things, to make all
payments, including rent payments, required pursuant to the Lease and
related documents, and to execute all such documents, certificates and
instruments as in his, her or their judgement may be necessary or
advisable in order to carry out the foregoing Resolutions and the
Company's obligations under the Lease, or any revised and supplemental
lease; and all actions heretofore taken by the officers of the Company in
connection with the subject of these Resolutions are hereby approved,
ratified and confirmed in all respects.
<PAGE>
EXHIBIT D
RESOLUTIONS
OF THE
BOARD OF DIRECTORS
OF
CVC, INC.
RESOLVED, that the form, terms and provisions of the proposed term loan
and credit facility agreement (the "Credit Agreement"), between CVC, Inc. (the
"Corporation"), CVC Products, Inc. (the "Subsidiary") and Manufacturers and
Traders Trust Company (the "Lender) substantially on the terms that have been
submitted to the directors of the Corporation, pursuant to which, among other
things, the Lender will make to the Subsidiary and/or the Corporation term loans
in amounts up to an aggregate of $8,000,000 and revolving loans in amounts up to
an aggregate of $10,000,000 (based on borrowing base availability), will make
available a $2 million capital equipment term loan and lease line and will
provide other credit accommodations, all upon the terms set forth therein and in
the exhibits thereto, and all transactions referred to therein, be, and the same
hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer of the Corporation and/or the
Subsidiary be, and each hereby is, authorized and empowered, in the name and on
behalf of the Corporation and/or the Subsidiary, to execute and deliver to the
Lender the Credit Agreement and each exhibit thereto of which the Corporation
and/or the Subsidiary shall be a signatory, and any and all other agreements,
certificates, or other documents which may be described in the Credit Agreement
or necessary or required by the Lender, with such change or changes therein as
the Authorized Officer or Officers executing the same may approve, the execution
thereof, with such change or changes, to be conclusive evidence of such
approval.
RESOLVED, that, in connection with the loan and accommodations to be made
by the Lender to the Subsidiary, the form, terms and provisions of the Term and
Revolving Notes (the "Notes") and the equipment lease documents, be, and, the
same hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer or Officers of the Corporation and/or
the Subsidiary be, and each hereby is, authorized and empowered, in the name and
on behalf of the Corporation and/or the Subsidiary, to execute and deliver to
the Lender, upon receipt of funds evidenced thereby, the Notes and the lease
documents, with such change or changes therein as the Authorized Officer or
Officers executing the same may approve, the execution thereof, with such change
or changes, to be conclusive evidence of such approval.
RESOLVED, that the Corporation and/or the Subsidiary be, and hereby are,
authorized (i) to borrow such amounts and to sell and lease back from the Lender
such
D-2
<PAGE>
equipment in such amounts as an Authorized Officer of the Corporation and/or the
Subsidiary may deem appropriate, to be evidenced by appropriate Notes and the
lease documents, (ii) to each guaranty the indebtedness of the other to the
Lender on terms acceptable to the Lender as evidenced by agreements and
guarantees requested by the Lender, (iii) to grant security interests to the
Lender in any and all assets of the Corporation and the Subsidiary, and (iv) to
pay any and all fees and associated expenses; and the same (including all
documents evidencing same) hereby are, authorized and approved.
RESOLVED, that the agreements, instruments, notes and documents heretofore
entered into by the Corporation and/or the Subsidiary with the Lender are hereby
ratified and affirmed;
RESOLVED, that, in connection with loans to be made by the Lender to the
Subsidiary, an Authorized Officer of the Corporation and/or the Subsidiary be,
and hereby is, authorized and empowered to open and maintain such bank accounts
at such bank or banks as the Lender may request, and that any resolutions
furnished by such banks for such purposes be deemed adopted as and for the
resolutions of the Board of Directors with the same force and effect as if fully
set forth herein.
RESOLVED, that the President and Senior Vice President of the Corporation
and the Subsidiary, and any person duly authorized to act in such capacity be,
and each of them hereby is, designated an "Authorized Officer" for purposes of
these resolutions, the Credit Agreement, the Notes, the lease documents and any
other documents and instruments necessary, proper or convenient to implement or
accomplish the transactions involved in, or related to, any thereof.
RESOLVED, that the Authorized Officers of the Corporation and/or the
Subsidiary be, and each of them hereby is, authorized and empowered, in the
name and on behalf of the Corporation and/or the Subsidiary, to execute and
deliver such certificates, documents, 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 necessity or appropriateness thereof.
D-3
<PAGE>
MTFCo
PAY PROCEEDS LETTER
Date: April 7, 1998
M&T Financial Corporation
Manufacturers and Traders Trust Company (M&T Bank)
One Fountain Plaza
Buffalo, New York 14203
Attention: Equipment Leasing
Re: Equipment Schedule No. 2 between CVC Products, Inc. (Lessee) and M&T
Financial Corporation as (Lessor) (the "Lease).
You are hereby authorized to disburse funds to purchase the Equipment for the
above Lease as directed below. We understand that under Uniform Commercial Code
Article 4A M&T Bank and all other banks handling funds transfers are entitled to
rely on the bank number and account number we provide without reference to names
or account titles, and that you have no duty to discover any discrepancies. We
have taken appropriate care to verify our instructions to you, and you will not
be liable for any loss that, may result from our error in these instructions. We
also agree to the provisions on the reverse.
================================================================================
1. Payee: M&T Financial Corporation Ein # _______________
Amount: $1,210,390.00
Ref: payoff of Schedule 1
|_| Deposit to M&T Bank
Account No. _________________________
|_| Check _________________________
|_| Funds Transfer to:
Account No. _________________________
Account Name: _________________________ Bank R/T No __________
Bank Name: _________________________ Telephone: ___________
================================================================================
2. Payee: _________________________ Ein # _______________
Amount: _________________________
Ref: _________________________
|_| Deposit to M&T Bank
Account No. _________________________
|_| Check _________________________
|_| Funds Transfer to:
Account No. _________________________
Account Name: _________________________ Bank R/T No __________
Bank Name: _________________________ Telephone: ___________
================================================================================
Agreed:
LESSEE:
CVC Products, Inc.
By: /s/ Emilio DiCataldo
--------------------------------------------
Emilio DiCataldo
Senior Vice President / Chief Financial Officer
<PAGE>
MTFCo
FUNDS TRANSFER AGREEMENT
SINGLE PAYMENT ORDER
To induce Lessor to execute the funds transfer payment order on the front of
this form, Lessee makes the following waivers and agrees to the following terms
and conditions.
1. Waiver of Lessor's Security Procedures. Lessee hereby rejects and
waives the protection of the Lessor's customary funds transfer
security procedures, and agrees that a request for personal
identification in a procedure including signature comparison shall
be deemed a commercially reasonable security procedure for purposes
of Article 4A of the Uniform Commercial Code.
2. Authorization. Lessee shall supply Lessor with all information that
Lessor requests including, but not limited to, money amounts;
beneficiary's account number, name and Lessor; value date;
supplemental instructions; and further evidence of the authority of
any of Lessee's authorized representatives to issue Payment Orders
or to do any other act contemplated under this Agreement. For
Lessee's protection, Lessor may reject any Payment Order if Lessor
is unable to obtain satisfactory verification of the Order or its
due authorization. If Lessee is an entity, the person signing this
agreement certifies that he or she is duly authorized to execute
such transaction on behalf of Lessee; and acknowledges that any
false statement will render him or her personally liable for
monetary damages as well as criminal penalties including substantial
fines and imprisonment under federal and state law.
3. Account Number Controls. Lessee ACKNOWLEDGES RECEIPT OF NOTICE THAT
M&T Lessor, ALL INTERMEDIARY LessorS AND BENEFICIARY'S Lessor ARE
ENTITLED TO RELY ON THE BENEFICIARY'S ACCOUNT NUMBER AND ANY Lessor
IDENTIFYING NUMBER AS STATED IN THE PAYMENT ORDER AS RECEIVED EVEN
IF THE NUMBER AND NAME GIVEN FOR THE BENEFICIARY REFER TO DIFFERENT
PERSONS OR LessorS. Lessee IS WARNED TO VERIFY ALL ACCOUNT NUMBERS
AND Lessor NUMBERS WITH EXTRAORDINARY CARE.
4. Risk of Clear Text. Lessee understands that all Payment Orders are
transmitted in Clear Text and Lessee assumes full responsibility for
all such Payment Orders executed by Lessor at Lessee's request.
5. Standard of Care. Lessee agrees Lessor has no responsibility beyond
executing the transaction requested with ordinary care, subject to
this Agreement. Lessor shall be conclusively deemed to have
exercised ordinary care if Lessor has followed procedures customary
in the industry or if Lessee has not followed such procedures.
6. Cancellation. Lessee shall have no right to amend a Payment Order or
to cancel it after Lessor has begun processing it. In case of Lessee
error, Lessor has no obligation but reserves the right to attempt to
assist Lessee to recover its funds.
7. Limited to Available Funds. A Payment Order is debited to Lessee's
designated account when it is executed by Lessor. Lessee agrees that
its Payment Orders shall not exceed the available balance in
Lessee's account on the execution date. If Lessee's account does not
contain sufficient available funds on that date, Lessor may reject
any or all of Lessee's Payment Orders for that date, charge any of
Lessee's other accounts with Lessor, or execute any one or more
Payment Orders on that date; and Lessor shall not be liable for any
damages (including without limitation special or consequential
damages) Lessee suffers as a result of such rejections. If Lessor
does in its discretion execute a Payment Order which results in an
overdraft in Lessee's account, Lessor shall be entitled to charge
and Lessee shall be obligated to pay interest on such overdraft.
Lessee's account will be liable for statutory overdraft charges
whether or not the overdraft Payment Order is executed.
8. Expenses. Lessee agrees to pay Lessor's customary funds transfer
fees as in effect from time to time and to reimburse Lessor for any
out-of-pocket expenses incurred by Lessor. Such fees and expenses
shall be paid in cash immediately on demand or by Lessor's debiting
Lessee's account(s) at Lessor.
9. Notice of Errors. Lessee shall promptly review the transfer
confirmation or advice mailed to Lessee by Lessor after each
transfer and notify Lessor of any discrepancy in writing as soon as
possible and in any event within 60 calendar days of the transfer.
Lessee shall also promptly review and reconcile its periodic
statements of account provided by Lessor and report any
discrepancies to Lessor in writing within 60 calendar days after the
statement date. Lessee expressly agrees that its failure to so
report any such discrepancies shall relieve Lessor of any liability
for interest on any refund to which Lessee may be entitled with
respect to such unreported discrepancies. Statements and advices
shall be deemed received 5 days after mailing.
10. Disclosure of Information. Lessee acknowledges that Lessor may be or
become required by federal regulation to report or make information
available concerning all or some classes of funds transfers.
11. Force Majeure. Lessee agrees that Lessor is not liable for any
error, interruption, delay, or failure in transmission occasioned by
any circumstances beyond Lessor's control including but not limited
to discrepancies or ambiguity in any Payment Order, funds transfer
system unavailability, weather, failure of power, other utilities or
communication media, strikes, industrial sabotage, war, governmental
interference, and error, delay, insolvency or unavailability of
other receiving, intermediary or beneficiary Lessors.
12. Indemnity. Lessee agrees to hold Lessor harmless and indemnify
Lessor for any and all claims, liabilities, demands, costs, expenses
(including but not limited to attorneys' fees and disbursements),
losses or damages of any nature whatsoever arising directly or
indirectly from any Payment Order executed pursuant to this
Agreement except for liability to Lessee caused by gross negligence
or willful misconduct of Lessor. In no event shall Lessor be liable
for any consequential or special damages.
13. Governing Law. This Agreement shall be governed by the internal laws
of New York State (including without limitation Article 4A of the
Uniform Commercial Code) and by applicable federal law and
regulations.
All notices to Lessor shall be directed to the Manager, Commercial Loan
Operations, 3rd Floor, Manufacturers and Traders Trust Company, One Fountain
Plaza, Buffalo, New York 14203; all notices to Lessee shall be directed to
Lessee at the most recent address listed in the records of Lessor.
<PAGE>
New York State Department of Taxation and Finance ST-121 (4/93)
--------------------------------
[LOGO] To Purchasers and Vendors:
Before issuing or accepting this
certificate read instructions on
the back carefully.
--------------------------------
New York State and Local Sales and Use Tax
Exempt Use Certificate
- --------------------------------------------------------------------------------
Name of vendor Name of purchaser
M&T Financial Corporation CVC Products, Inc.
- --------------------------------------------------------------------------------
Street address Street address
One Fountain Plaza 525 Lee Rd.
- --------------------------------------------------------------------------------
City State ZIP code City State ZIP code
Buffalo NY 14203 Rochester, NY 14606
- --------------------------------------------------------------------------------
1 I have been issued a New York State Certificate of Authority,
# 16-1017191 to collect
---------------------------------------------------,
(Enter your sales tax vendor identification number)
New York State and local sales and compensating use tax, and this
certificate has not expired or been suspended or revoked.
2 The purchase I am making is exempt from the state or state and local sales
and use taxes because the property or the services will be used for the
exempt purpose indicated below.
================================================================================
Part I -- Promotional Materials Single purchase certificate only
of promotional materials that will be distributed to customers or
- --- prospective customers located outside New York State for use outside the
% state. (The percentage must be filled in for this certificate to be
- --- valid.) Only these promotional materials are exempt from all state and
local sales and use taxes.
================================================================================
================================================================================
Check one: |_| Single purchase certificate |_| Blanket certificate
This form cannot be used to purchase motor fuel or diesel motor fuel exempt from
sales tax or to relieve a vendor of the liability for the lubricating oil tax or
beverage container tax.
Part II -- Manufacturing Exemptions
|_| (a) Machinery and equipment, including parts with a useful life of more
than a year when purchased for use or consumption directly and
predominantly in the production of tangible personal property, gas,
electricity, refrigeration or steam for sale, or telephone central
office equipment or station apparatus or comparable telegraph
equipment used directly and predominantly to receive or initiate and
switch telephone or telegraph communication. Paragraph (a) purchases
are exempt from all state and local sales and use taxes.
|_| (b) Parts with a useful life of one year or less, tools or supplies used
directly and predominantly in production or used directly and
predominantly in or on the telephone or telegraph equipment or
apparatus described in paragraph (a) of this part, or:
Purchases of (check one or more boxes): |_| Fuel |_| Gas
|_| Electricity |_| Refrigeration |_| Steam
for use or consumption directly and exclusively in the production of
tangible personal property, gas, electricity, refrigeration or steam
for sale.
Paragraph (b) purchases are exempt from all state and local taxes
when delivered outside New York City and subject to New York City
local sales or use tax when delivered or used in New York City.
|_| (c) Installing, repairing, maintaining or servicing of the following are
exempt from state tax, but are subject to the New York City taxes
and all other local sales and use taxes:
-- machinery or equipment used directly and predominantly in
production;
-- telephone or telegraph central office equipment or station
apparatus used directly and predominantly to receive or
initiate and switch telephone or telegraph communication;
-- parts, tools or supplies described in paragraph (b) of this
part.
Part III -- Other exemptions -- exempt from all sales and use taxes
|_| (d) Tangible personal property for use or consumption directly and
predominantly in research and development in the experimental or
laboratory sense.
|_| (e) Cartons, containers, and other wrapping and packaging materials and
supplies, for use by a vendor to package tangible personal property
for sale and actually transferred to the purchaser of the property.
|_| (f) Purchases of (check one or more boxes): |_| Gas |_| Electricity
|_| Refrigeration |_| Steam
for use or consumption directly and exclusively in research and
development in the experimental or laboratory sense.
|_| (g) Other (describe exempt use and identify the section of the Tax Law
covering this exemption.)
____________________________________________________________________
____________________________________________________________________
================================================================================
Substantial penalties will result from misuse of this certificate
(see back of this form).
- --------------------------------------------------------------------------------
Signature of owner,
partner, officer of
purchasing corporation, etc. Print name and give title Date
/s/ Emilio O. DiCataldo Emilio O. DiCataldo 5/28/98
- --------------------------------------------------------------------------------
<PAGE>
Uniform Commercial Code - FINANCING STATE - Form UCC-1
This FINANCING STATEMENT is presented to a Filing Officer for the filing
pursuant to the Uniform Commercial Code.
No. Of Additional Sheets Presented:
- ----------------------------------------------- ----------------------------
1. Debtor(s) (Last Name First) and Address(es): 4. For Filing Officer: Date,
Time, No. Filing Office
CVC Products, Inc.
525 Lee Road
Rochester, NY 14606 ----------------------------
- ----------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
M&T Financial Corporation
One Fountain Plaza
Buffalo, NY 14203
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
See Schedule A attached hereto and made a part hereof
- --------------------------------------------------------------------------------
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: |_| This statement is to be indexed in the Real
Estate Records:
No. & Street Town or City County
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. |_| This statement is filed without the debtor's signature to perfect a
security interest in collateral under a security agreement signed by
debtor authorizing secured party to file this statement.
CVC Products, Inc. M&T Financial Corporation
---------------------------------- ----------------------------------
By /s/ Emilio DiCataldo By _______________________________
-------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
================================================================================
For Bank Use Only
Borrower:
Obligor #: _________________________
Filing Jurisdiction: New York State REF #:
================================================================================
UCC-1 (1-97) File Copy-Secured Party
PLEASE RETURN COPY TO:
M&T BANK
P.O. BOX 1358
BUFFALO, NEW YORK 14240
<PAGE>
Schedule A
Equipment Description
(1) CX-8 Cluster Tool -- CVC VE Number 68105, including:
2 physical vapor deposition (PVD) modules;
1 central wafer handler, including robotics, controls, etc.;
2 load locks
(1) Orbital Welding System, including:
M207A-HP power Supply Top Assy, serial number 23750;
M9-500 Weld Head Top Assy, serial number 24078
(1) Pick up Assembly Processing Board, including:
Model 109LS Hysteresis Loop Tracer;
Option 109-665 Pickup Assembly;
Option 109-11 Pickup Assembly;
Option 109-36-7/32 Pickup Assembly;
Option DSP-1 Signal Processing Board;
Option LCD-1 Liquid Crystal Display
(2) Pulsed DC Generator
serial numbers Beta-023, Beta-028
(1) Dry Mechanical Backing Pump
Including all replacements, parts, substitutions, modifications, accessories,
additions, attachments, accessions and tools of Debtor now or hereafter
installed therein, affixed thereto or used or intended to be used in connection
therewith
<PAGE>
EQUIPMENT SCHEDULE
UNDER MASTER EQUIPMENT LEASE AGREEMENT NO. 1
Equipment Schedule Date: April 7, 1998 Equipment Schedule No. 3
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lessee's Name and Address: County: Monroe Lessor's Name and Address: County: Erie
CVC Products, Inc. M&T Financial Corporation
525 Lee Road One Fountain Plaza
Rochester, NY 14606 Buffalo, NY 14203
Att: Mark Harris Phone: (716) 458-2550 x3196 Att: Counsel's Office Phone: (716) 842-5094
- ------------------------------------------------------------------------------------------------------------
</TABLE>
LESSEE: X Corporation |_| General Partnership |_| Limited Partnership |_| dba
|_| Other ________________ X Org. in Delaware
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
QTY. EQUIPMENT DESCRIPTION COST SERIAL NO.
(Manufacturer, Model No., Item)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
See Schedule A attached hereto and made a part hereof $833,256.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Initial Equipment Location: (if different from above)
3100 Laurel View Court, Fremont, CA 94538 (Alameda County)
Vendor:
CVC Products, Inc., 525 Lee Road, Rochester, NY 14606
TERM AND RENTAL PAYMENTS
<TABLE>
<CAPTION>
Term End Date: 1/1/02
Term: 44 months Beginning: 4/7/98 Security Deposit $0 Last Payment: 12/01/01 Rent Commencement Date: 5/1/98
- -----------------------------------------------------------------------------------------------------------------------
Payment Number Sales Total Each Lease Advance Rent
Rent Payable and Amounts Tax Payment Rec'd by Lessor
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
X Monthly |_| Annually Periodic Rent 44 at $20,510.56 $1,692.12 $22,202.68 1 at $22,202.68
|_| Quarterly to be applied to First
|_| Semiannually Final Payment $20,510.56 $1,692.12 $22,202.68 Payment
|_| See Schedule
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Interim Rent: $16,408.45 For period Covering: 4/7/98 To 4/30/98
INSURANCE: Lessee's insurance policy covering the Equipment shall contain
minimum liability limits of $2,000,000 for each person,
$2,000,000 for each occurrence and insure against claims for
property damage in an amount not less than $2,000,000.
Lease. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
personal property described above together with all substitutions, replacements,
repairs, upgrades, additions, accessories, products and proceeds (the
"Equipment"), under the terms and conditions set forth here and in the Master
Equipment Lease referenced above and incorporated herein in its entirety. LESSEE
ACKNOWLEDGES THAT ONLY LESSOR'S ORIGINAL OF THIS EQUIPMENT SCHEDULE CONSTITUTES
CHATTEL PAPER FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE, that no security
interest can be created by possession of any other counterpart, and that this
Lease can only be amended in writing. ____ (Lessee initial). THIS IS A
NON-CANCELABLE LEASE.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
By: /s/ Emilio DiCataldo By:
---------------------------- ----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / Assistant Vice President
Chief Financial Officer
<PAGE>
Schedule A
Equipment Description
(1) CX-8 Central Wafer Handler,
Including Robotics and Computer System
Serial number: 308527-500
(1) ICP Module Inductively Coupled Plasma Module
Serial number: 309260-100
Equipment Location: 3100 Laurel View Court, Fremont, CA 94538 (Alameda County)
<PAGE>
MTFCo
EARLY TERMINATION RIDER
to
EQUIPMENT SCHEDULE No. 3 ("SCHEDULE")
Dated April 7, 1998
to
MASTER EQUIPMENT LEASE AGREEMENT
Dated April 7, 1998 ("LEASE")
between
M&T Financial Corporation ("LESSOR")
and
CVC Products, Inc. ("LESSEE")
(I) During the term of the Lease the Lessee shall, provided there exists no
event(s) of default, have the right to purchase all but not less than all of the
scheduled equipment then under lease ("Early Termination Option") for a price
equal to the predetermined Fair Market Value as determined by the attached
Stipulated Loss Table ("Option Price"). Upon Lessee's exercise of the Early
Termination Option, Lessor shall convey to Lessee, all of Lessor's right, title
and interest in and to the Equipment on an "as-is, where-is" basis, without
recourse or warranty except against any liens placed on the Equipment by Lessor.
The Lessee may exercise the Early Termination Option upon written notice to
Lessor given not less than ninety (90) days nor more than one hundred eighty
(180) days prior to the Early Termination Date. Such notice shall be
irrevocable. Upon Lessee's exercise of the Early Termination Option, Lessee
shall pay to Lessor all due but unpaid rent under the Equipment Schedule
together with the Option Price.
In the event that the Early Termination Option is not exercised by the Lessee in
accordance with this Rider, all of Lessee's obligations under the Equipment
Schedule will continue unaffected.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS RIDER THIS 7th DAY OF APRIL
1998.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
By: /s/ Emilio DiCataldo By:
---------------------------- ----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / CFO Assistant Vice President
<PAGE>
Stipulated Loss Schedule
Lessee: CVC Products (Schedule #3)
Percent
Per Date Amount of Cost
- ---------------------------------------------------
1 5/1/98 841,252.96 100.96
2 6/1/98 828,002.02 99.37
3 7/1/98 814,604.49 97.76
4 8/1/98 801,072.30 96.14
5 9/1/98 787,392.02 94.50
6 10/1/98 773,562.85 92.84
7 11/1/98 759,596.69 91.16
8 12/1/98 745,480.11 89.47
9 1/1/99 731,212.29 87.75
10 2/1/99 716,805.12 86.02
11 3/1/99 702,245.16 84.28
12 4/1/99 687,531.58 82.51
13 5/1/99 672,644.71 80.72
14 6/1/99 657,602.47 78.92
15 7/1/99 642,404.02 77.10
16 8/1/99 627,029.67 75.25
17 9/1/99 611,497.33 73.39
18 10/1/99 595,806.13 71.50
19 11/1/99 579,936.40 69.60
20 12/1/99 563,906.01 67.68
21 1/1/00 547,714.08 65.73
22 2/1/00 531,340.92 63.77
23 3/1/00 514,804.39 61.78
24 4/1/00 498,103.61 59.78
25 5/1/00 481,316.76 57.76
26 6/1/00 464,364.32 55.73
27 7/1/00 447,245.39 53.67
28 8/1/00 430,038.14 51.61
29 9/1/00 412,663.04 49.52
30 10/1/00 395,119.17 47.42
31 11/1/00 377,484.71 45.30
32 12/1/00 359,680.09 43.17
33 1/1/01 341,704.39 41.01
34 2/1/01 323,635.78 38.84
35 3/1/01 305,394.67 36.65
36 4/1/01 286,980.15 34.44
37 5/1/01 268,529.08 32.23
38 6/1/01 249,903.47 29.99
39 7/1/01 231,102.37 27.73
40 8/1/01 212,262.65 25.47
41 9/1/01 193,246.29 23.19
42 10/1/01 174,052.34 20.89
43 11/1/01 154,817.67 18.58
44 12/1/01 135,404.22 16.25
45 1/1/02 115,811.06 13.90
<PAGE>
MTFCo
PURCHASE OPTION RIDER
to
EQUIPMENT SCHEDULE NO. 3 ("SCHEDULE")
Dated April 7, 1998
to
MASTER EQUIPMENT LEASE AGREEMENT
Dated as of April 7, 1998 ("LEASE")
between
M&T Financial Corporation ("LESSOR")
and
CVC Products, Inc. ("LESSEE")
The paragraph in the Lease entitled Purchase Option is hereby amended as
follows:
Subject to the satisfaction of the conditions set forth below, the Lessee
shall, on the Initial Term Expiration Date, have the option to:
(1) Purchase all, but not less than all, of the Equipment under
lease for a price equal to its Fair Market Value as determined by
the Stipulated Loss Table (the "Purchase Price").
(a) Lessee's right to exercise the Purchase Option shall be
subject to the satisfaction of the following conditions
precedent: (1) No Default or Event of Default shall have
occurred and be continuing; (2) Lessee shall have given
written notice to Lessor of Lessee's desire to exercise the
Purchase Option not less than ninety (90) days nor more than
one hundred eighty (180) days prior to the Initial Term
Expiration Date; and (3) Lessor shall have received Lessee's
payment of the Purchase Price (plus any taxes) prior to the
Initial Term Expiration Date.
(b) If Lessee exercises the Purchase Option in accordance with
the terms and conditions hereof, then at the expiration of the
Initial Term, Lessee shall tender the Purchase Price in
immediately available funds and Lessor shall deliver a bill of
sale transferring to Lessee all Lessor's right, title and
interest in the Equipment: IT BEING EXPRESSLY UNDERSTOOD THAT
SUCH TRANSFER IS "AS IS, WHERE IS", WITHOUT ANY WARRANTIES,
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING
WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND
LESSOR EXPRESSLY DISCLAIMS THE SAME.
(2) Return the equipment to the Lessor without further obligation to
a location of the Lessor's choosing in the United States.
(3) Renew the Lease at its fair market rental rate as determined by
Lessor.
<PAGE>
Except as specifically amended hereby, all of the terms and conditions set forth
in the Schedule and Lease are unaffected and remain in full force and effect.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS RIDER THIS 7th DAY OF April,
1998.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
By: /s/ Emilio DiCataldo By:
---------------------------- ----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / CFO Assistant Vice President
2
<PAGE>
Stipulated Loss Schedule
Lessee: CVC Products (Schedule #3)
Percent
Per Date Amount of Cost
- ---------------------------------------------------
1 5/1/98 841,252.96 100.96
2 6/1/98 828,002.02 99.37
3 7/1/98 814,604.49 97.76
4 8/1/98 801,072.30 96.14
5 9/1/98 787,392.02 94.50
6 10/1/98 773,562.85 92.84
7 11/1/98 759,596.69 91.16
8 12/1/98 745,480.11 89.47
9 1/1/99 731,212.29 87.75
10 2/1/99 716,805.12 86.02
11 3/1/99 702,245.16 84.28
12 4/1/99 687,531.58 82.51
13 5/1/99 672,644.71 80.72
14 6/1/99 657,602.47 78.92
15 7/1/99 642,404.02 77.10
16 8/1/99 627,029.67 75.25
17 9/1/99 611,497.33 73.39
18 10/1/99 595,806.13 71.50
19 11/1/99 579,936.40 69.60
20 12/1/99 563,906.01 67.68
21 1/1/00 547,714.08 65.73
22 2/1/00 531,340.92 63.77
23 3/1/00 514,804.39 61.78
24 4/1/00 498,103.61 59.78
25 5/1/00 481,316.76 57.76
26 6/1/00 464,364.32 55.73
27 7/1/00 447,245.39 53.67
28 8/1/00 430,038.14 51.61
29 9/1/00 412,663.04 49.52
30 10/1/00 395,119.17 47.42
31 11/1/00 377,484.71 45.30
32 12/1/00 359,680.09 43.17
33 1/1/01 341,704.39 41.01
34 2/1/01 323,635.78 38.84
35 3/1/01 305,394.67 36.65
36 4/1/01 286,980.15 34.44
37 5/1/01 268,529.08 32.23
38 6/1/01 249,903.47 29.99
39 7/1/01 231,102.37 27.73
40 8/1/01 212,262.65 25.47
41 9/1/01 193,246.29 23.19
42 10/1/01 174,052.34 20.89
43 11/1/01 154,817.67 18.58
44 12/1/01 135,404.22 16.25
45 1/1/02 115,811.06 13.90
<PAGE>
CERTIFICATE OF ACCEPTANCE
to
EQUIPMENT SCHEDULE NO. 3, Dated April 7, 1998,
to
MASTER EQUIPMENT LEASE AGREEMENT, Dated April 7, 1998
(the "Lease")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Leesee's Name and Address: County: Monroe Lessor's Name and Address: County: Erie
<S> <C> <C> <C>
CVC Products, Inc. M&T Financial Corporation
525 Lee Road One Fountain Plaza
Rochester, NY 14606 Buffalo, NY 14203
Attn: Mark Harris Phone: (716) 458-2550 x3196 Attn: Counsel's Office Phone: (716) 842-5094
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
QTY EQUIPMENT DESCRIPTION (Manufacturer, Model No., Serial No., Item)
- --------------------------------------------------------------------------------
See Schedule A attached hereto and made a part hereof
- --------------------------------------------------------------------------------
Initial Equipment Location (if different from Leesee's address above):
3100 Laurel View Court, Fremont, CA 94538 (Alameda County)
Vendor:
CVC Products, 525 Lee Road, Rochester, NY 14606
Lessee hereby certifies that as of this date the Equipment described above has
been delivered to and accepted by Lessee after complete inspection and testing,
is correctly described in the Lease (with the exception of serial numbers which
if omitted now may be supplied by Lessee in the future by telephone and inserted
in the description by Lessor or Assignee), is in good working order, and is
satisfactory to Lessee in all respects. Lessee reaffirms that Lessee selected
the Equipment based upon its specifications and that Lessee's obligation to pay
all amounts due and to become due and perform all other obligations under the
Lease is absolute and that any recourse Lessee might have in case of any
nonperformance, unsuitability or other failure of the Equipment shall lie with
the manufacturer or vendor and in no case with Lessor or Assignee.
Date: April 7, 1998
LESSEE:
CVC Products, Inc.
By: /s/ Emilio DiCataldo
-----------------------------------------------
Emilio DiCataldo
Senior Vice President / Chief Financial Officer
(If Corporation, President or Vice President should
sign and give official title; if Partnership,
General Partner; if LLC, Manager)
<PAGE>
Schedule A
Equipment Description
(1) CX-8 Central Wafer Handler,
Including Robotics and Computer System
Serial number: 308527-500
(1) ICP Module Inductively Coupled Plasma Module
Serial number: 309260-100
Equipment Location: 3100 Laurel View Court, Fremont, CA 94538 (Alameda County)
<PAGE>
MTFCo
CERTIFICATE OF SECRETARY
OF
LESSEE
I, Christine Whitman, President of CVC Products, Inc. (the "Company"), a
Delaware corporation, do CERTIFY in connection with Equipment Schedule No. 3
dated as of April 7, 1998 to Master Equipment Lease Agreement dated as of April
7, 1998 between M&T Financial Corporation (the "Lessor") and the Company as
lessee (the "Lease") as follows:
1. The Company's execution, delivery and performance of the Lease, the
Equipment Schedule, the Delivery and Acceptance Certificate and all
other collateral instruments and documents related to this
transaction (collectively, the "Documents") have been duly
authorized by all necessary corporate action on the part of the
Company, as evidenced by the copies of the resolution attached
hereto, and the Documents will be duly and validly executed if
executed by one of the persons whose name appears in Section 2
below;
2. The following persons are the duly elected or appointed, qualified
and acting officers of the Company holding the offices set forth
opposite their respective names below, and the signatures appearing
opposite their respective names below are the genuine signatures of
such persons:
Name Office Signature
Emilio DiCataldo Sr Vice President / CFO /s/ Emilio DiCataldo
________________________ ________________________ ______________________
________________________ ________________________ ______________________
IN WITNESS WHEREOF, I have executed this Certificate this 7th day of April
1998.
By: /s/ Christine Whitman
-------------------------------------
Christine Whitman
President / CEO
<PAGE>
MTFCo
EXHIBIT TO CERTIFICATE OF SECRETARY TO LESSEE
RESOLUTION
On motion of ____________________________________________, seconded by
_____________________________________________, the following Resolutions were
adopted by a duly constituted quorum of the Board of Directors [______________]
of CVC Products, Inc. (the "Company") present at a meeting duly called and held,
or by unanimous written consent, on _____________________, 199_.
WHEREAS, this Board has determined that in order for the Company to better
accomplish its corporate purposes, the Company needs to acquire the use of
the Equipment described on the Schedule attached hereto, and
WHEREAS, the Company has determined that the most economical and efficient
means of acquiring the use of said Equipment is pursuant to a lease
financing of the Equipment;
NOW, THEREFORE, be it
RESOLVED, that the Company is hereby authorized to enter into a Master
Equipment Lease Agreement between M&T Financial Corporation and/or M&T
Bank as Lessor and the Company as Lessee together with any appropriate
equipment schedules, all exhibits, tables, riders and amendments related
thereto, substantially in the form annexed hereto; and it is further
RESOLVED, that in furtherance of the accomplishment of the Lease, the Sr
Vice President / CFO, is hereby authorized to consult with and authorize
the appropriate officers of the Company to select and designate the
particular Equipment to be leased by the Company and the particular source
of financing the Equipment; and be it further
RESOLVED, that in furtherance of the Lease, the Sr Vice President / CFO,
is hereby authorized to execute and deliver on behalf of the Company such
agreements, indemnities, purchase orders, guarantees of performance or
payment or otherwise, leases, bills of sale, certificates or other
instruments or obligations as they or any one of them may deem necessary
or appropriate to the accomplishment of the Lease, and the execution and
delivery of any such agreement, instrument or obligation prior to the date
hereof by any such officer is in all respects hereby confirmed, ratified
and approved; and be it further
RESOLVED, that all officers of the Company are authorized and directed to
do or cause to be done all such other acts and things, to make all
payments, including rent payments, required pursuant to the Lease and
related documents, and to execute all such documents, certificates and
instruments as in his, her or their judgement may be necessary or
advisable in order to carry out the foregoing Resolutions and the
Company's obligations under the Lease, or any revised and supplemental
lease; and all actions heretofore taken by the officers of the Company in
connection with the subject of these Resolutions are hereby approved,
ratified and confirmed in all respects.
<PAGE>
EXHIBIT D
RESOLUTIONS
OF THE
BOARD OF DIRECTORS
OF
CVC, INC.
RESOLVED, that the form, terms and provisions of the proposed term loan
and credit facility agreement (the "Credit Agreement"), between CVC, Inc. (the
"Corporation"), CVC Products, Inc. (the "Subsidiary") and Manufacturers and
Traders Trust Company (the "Lender") substantially on the terms that have been
submitted to the directors of the Corporation, pursuant to which, among other
things, the Lender will make to the Subsidiary and/or the Corporation term loans
in amounts up to an aggregate of $8,000,000 and revolving loans in amounts up to
an aggregate of $10,000,000 (based on borrowing base availability), will make
available a $2 million capital equipment term loan and lease line and will
provide other credit accommodations, all upon the terms set forth therein and in
the exhibits thereto, and all transactions referred to therein, be, and the same
hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer of the Corporation and/or the
Subsidiary be, and each hereby is, authorized and empowered, in the name and on
behalf of the Corporation and/or the Subsidiary, to execute and deliver to the
Lender the Credit Agreement and each exhibit thereto of which the Corporation
and/or the Subsidiary shall be a signatory, and any and all other agreements,
certificates, or other documents which may be described in the Credit Agreement
or necessary or required by the Lender, with such change or changes therein as
the Authorized Officer or Officers executing the same may approve, the execution
thereof, with such change or changes, to be conclusive evidence of such
approval.
RESOLVED, that, in connection with the loan and accommodations to be made
by the Lender to the Subsidiary, the form, terms and provisions of the Term and
Revolving Notes (the "Notes") and the equipment lease documents, be, and, the
same hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer or Officers of the Corporation and/or
the Subsidiary be, and each hereby is, authorized and empowered, in the name and
on behalf of the Corporation and/or the Subsidiary, to execute and deliver to
the Lender, upon receipt of funds evidenced thereby, the Notes and the lease
documents, with such change or changes therein as the Authorized Officer or
Officers executing the same may approve, the execution thereof, with such change
or changes, to be conclusive evidence of such approval.
RESOLVED, that the Corporation and/or the Subsidiary be, and hereby are,
authorized (i) to borrow such amounts and to sell and lease back from the Lender
such
D-2
<PAGE>
equipment in such amounts as an Authorized Officer of the Corporation and/or the
Subsidiary may deem appropriate, to be evidenced by appropriate Notes and the
lease documents, (ii) to each guaranty the indebtedness of the other to the
Lender on terms acceptable to the Lender as evidenced by agreements and
guarantees requested by the Lender, (iii) to grant security interests to the
Lender in any and all assets of the Corporation and the Subsidiary, and (iv) to
pay any and all fees and associated expenses; and the same (including all
documents evidencing same) hereby are, authorized and approved.
RESOLVED, that the agreements, instruments, notes and documents heretofore
entered into by the Corporation and/or the Subsidiary with the Lender are hereby
ratified and affirmed;
RESOLVED, that, in connection with loans to be made by the Lender to the
Subsidiary, an Authorized Officer of the Corporation and/or the Subsidiary be,
and hereby is, authorized and empowered to open and maintain such bank accounts
at such bank or banks as the Lender may request, and that any resolutions
furnished by such banks for such purposes be deemed adopted as and for the
resolutions of the Board of Directors with the same force and effect as if fully
set forth herein.
RESOLVED, that the President and Senior Vice President of the Corporation
and the Subsidiary, and any person duly authorized to act in such capacity be,
and each of them hereby is, designated an "Authorized Officer" for purposes of
these resolutions, the Credit Agreement, the Notes, the lease documents and any
other documents and instruments necessary, proper or convenient to implement or
accomplish the transactions involved in, or related to, any thereof.
RESOLVED, that the Authorized Officers of the Corporation and/or the
Subsidiary be, and each of them hereby is, authorized and empowered, in the
name and on behalf of the Corporation and/or the Subsidiary, to execute and
deliver such certificates, documents, 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 necessity or appropriateness thereof.
D-3
<PAGE>
MTFCo
PAY PROCEEDS LETTER
Date: April 7, 1998
M&T Financial Corporation
Manufacturers and Traders Trust Company (M&T Bank)
One Fountain Plaza
Buffalo, New York 14203
Attention: Equipment Leasing
Re: Equipment Schedule No. 3 between CVC Products, Inc. (Lessee) and M&T
Financial Corporation as (Lessor) (the "Lease).
You are hereby authorized to disburse funds to purchase the Equipment for the
above Lease as directed below. We understand that under Uniform Commercial Code
Article 4A M&T Bank and all other banks handling funds transfers are entitled to
rely on the bank number and account number we provide without reference to names
or account titles, and that you have no duty to discover any discrepancies. We
have taken appropriate care to verify our instructions to you, and you will not
be liable for any loss that, may result from our error in these instructions. We
also agree to the provisions on the reverse.
================================================================================
1. Payee: M&T Financial Corporation Ein # _______________
Amount: $833,256.00
Ref: payoff of Schedule 1
|_| Deposit to M&T Bank
Account No. _________________________
|_| Check _________________________
|_| Funds Transfer to:
Account No. _________________________
Account Name: _________________________ Bank R/T No __________
Bank Name: _________________________ Telephone: ___________
================================================================================
2. Payee: _________________________ Ein # _______________
Amount: _________________________
Ref: _________________________
|_| Deposit to M&T Bank
Account No. _________________________
|_| Check _________________________
|_| Funds Transfer to:
Account No. _________________________
Account Name: _________________________ Bank R/T No __________
Bank Name: _________________________ Telephone: ___________
================================================================================
Agreed:
LESSEE:
CVC Products, Inc.
By: /s/ Emilio DiCataldo
--------------------------------------------
Emilio DiCataldo
Senior Vice President / Chief Financial Officer
<PAGE>
MTFCo
FUNDS TRANSFER AGREEMENT
SINGLE PAYMENT ORDER
To induce Lessor to execute the funds transfer payment order on the front of
this form, Lessee makes the following waivers and agrees to the following terms
and conditions.
1. Waiver of Lessor's Security Procedures. Lessee hereby rejects and
waives the protection of the Lessor's customary funds transfer
security procedures, and agrees that a request for personal
identification in a procedure including signature comparison shall
be deemed a commercially reasonable security procedure for purposes
of Article 4A of the Uniform Commercial Code.
2. Authorization. Lessee shall supply Lessor with all information that
Lessor requests including, but not limited to, money amounts;
beneficiary's account number, name and Lessor; value date;
supplemental instructions; and further evidence of the authority of
any of Lessee's authorized representatives to issue Payment Orders
or to do any other act contemplated under this Agreement. For
Lessee's protection, Lessor may reject any Payment Order if Lessor
is unable to obtain satisfactory verification of the Order or its
due authorization. If Lessee is an entity, the person signing this
agreement certifies that he or she is duly authorized to execute
such transaction on behalf of Lessee; and acknowledges that any
false statement will render him or her personally liable for
monetary damages as well as criminal penalties including substantial
fines and imprisonment under federal and state law.
3. Account Number Controls. Lessee ACKNOWLEDGES RECEIPT OF NOTICE THAT
M&T Lessor, ALL INTERMEDIARY LessorS AND BENEFICIARY'S Lessor ARE
ENTITLED TO RELY ON THE BENEFICIARY'S ACCOUNT NUMBER AND ANY Lessor
IDENTIFYING NUMBER AS STATED IN THE PAYMENT ORDER AS RECEIVED EVEN
IF THE NUMBER AND NAME GIVEN FOR THE BENEFICIARY REFER TO DIFFERENT
PERSONS OR LessorS. Lessee IS WARNED TO VERIFY ALL ACCOUNT NUMBERS
AND Lessor NUMBERS WITH EXTRAORDINARY CARE.
4. Risk of Clear Text. Lessee understands that all Payment Orders are
transmitted in Clear Text and Lessee assumes full responsibility for
all such Payment Orders executed by Lessor at Lessee's request.
5. Standard of Care. Lessee agrees Lessor has no responsibility beyond
executing the transaction requested with ordinary care, subject to
this Agreement. Lessor shall be conclusively deemed to have
exercised ordinary care if Lessor has followed procedures customary
in the industry or if Lessee has not followed such procedures.
6. Cancellation. Lessee shall have no right to amend a Payment Order or
to cancel it after Lessor has begun processing it. In case of Lessee
error, Lessor has no obligation but reserves the right to attempt to
assist Lessee to recover its funds.
7. Limited to Available Funds. A Payment Order is debited to Lessee's
designated account when it is executed by Lessor. Lessee agrees that
its Payment Orders shall not exceed the available balance in
Lessee's account on the execution date. If Lessee's account does not
contain sufficient available funds on that date, Lessor may reject
any or all of Lessee's Payment Orders for that date, charge any of
Lessee's other accounts with Lessor, or execute any one or more
Payment Orders on that date; and Lessor shall not be liable for any
damages (including without limitation special or consequential
damages) Lessee suffers as a result of such rejections. If Lessor
does in its discretion execute a Payment Order which results in an
overdraft in Lessee's account, Lessor shall be entitled to charge
and Lessee shall be obligated to pay interest on such overdraft.
Lessee's account will be liable for statutory overdraft charges
whether or not the overdraft Payment Order is executed.
8. Expenses. Lessee agrees to pay Lessor's customary funds transfer
fees as in effect from time to time and to reimburse Lessor for any
out-of-pocket expenses incurred by Lessor. Such fees and expenses
shall be paid in cash immediately on demand or by Lessor's debiting
Lessee's account(s) at Lessor.
9. Notice of Errors. Lessee shall promptly review the transfer
confirmation or advice mailed to Lessee by Lessor after each
transfer and notify Lessor of any discrepancy in writing as soon as
possible and in any event within 60 calendar days of the transfer.
Lessee shall also promptly review and reconcile its periodic
statements of account provided by Lessor and report any
discrepancies to Lessor in writing within 60 calendar days after the
statement date. Lessee expressly agrees that its failure to so
report any such discrepancies shall relieve Lessor of any liability
for interest on any refund to which Lessee may be entitled with
respect to such unreported discrepancies. Statements and advices
shall be deemed received 5 days after mailing.
10. Disclosure of Information. Lessee acknowledges that Lessor may be or
become required by federal regulation to report or make information
available concerning all or some classes of funds transfers.
11. Force Majeure. Lessee agrees that Lessor is not liable for any
error, interruption, delay, or failure in transmission occasioned by
any circumstances beyond Lessor's control including but not limited
to discrepancies or ambiguity in any Payment Order, funds transfer
system unavailability, weather, failure of power, other utilities or
communication media, strikes, industrial sabotage, war, governmental
interference, and error, delay, insolvency or unavailability of
other receiving, intermediary or beneficiary Lessors.
12. Indemnity. Lessee agrees to hold Lessor harmless and indemnify
Lessor for any and all claims, liabilities, demands, costs, expenses
(including but not limited to attorneys' fees and disbursements),
losses or damages of any nature whatsoever arising directly or
indirectly from any Payment Order executed pursuant to this
Agreement except for liability to Lessee caused by gross negligence
or willful misconduct of Lessor. In no event shall Lessor be liable
for any consequential or special damages.
13. Governing Law. This Agreement shall be governed by the internal laws
of New York State (including without limitation Article 4A of the
Uniform Commercial Code) and by applicable federal law and
regulations.
All notices to Lessor shall be directed to the Manager, Commercial Loan
Operations, 3rd Floor, Manufacturers and Traders Trust Company, One Fountain
Plaza, Buffalo, New York 14203; all notices to Lessee shall be directed to
Lessee at the most recent address listed in the records of Lessor.
<PAGE>
Uniform Commercial Code - FINANCING STATE - Form UCC-1
This FINANCING STATEMENT is presented to a Filing Officer for the filing
pursuant to the Uniform Commercial Code.
No. Of Additional Sheets Presented:
- ----------------------------------------------- ----------------------------
1. Debtor(s) (Last Name First) and Address(es): 4. For Filing Officer: Date,
Time, No. Filing Office
CVC Products, Inc.
525 Lee Road
Rochester, NY 14606 ----------------------------
- ----------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
M&T Financial Corporation
One Fountain Plaza
Buffalo, NY 14203
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
See Schedule A attached hereto and made a part hereof
- --------------------------------------------------------------------------------
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: |_| This statement is to be indexed in the Real
Estate Records:
No. & Street Town or City County
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. |_| This statement is filed without the debtor's signature to perfect a
security interest in collateral under a security agreement signed by
debtor authorizing secured party to file this statement.
CVC Products, Inc. M&T Financial Corporation
---------------------------------- ----------------------------------
By /s/ Emilio DiCataldo By _______________________________
-------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
================================================================================
For Bank Use Only
Borrower:
Obligor #: _________________________
Filing Jurisdiction: New York State REF #:
================================================================================
UCC-1 (1-97) File Copy-Secured Party
PLEASE RETURN COPY TO:
M&T BANK
P.O. BOX 1358
BUFFALO, NEW YORK 14240
<PAGE>
Schedule A
Equipment Description
(1) CX-8 Central Wafer Handler,
Including Robotics and Computer System
Serial number: 308527-500
(1) ICP Module Inductively Coupled Plasma Module
Serial number: 309260-100
Equipment Location: 3100 Laurel View Court, Fremont, CA 94538 (Alameda County)
Including all replacements, parts, substitutions, modifications, accessories,
additions, attachments, accessions and tools of Debtor now or hereafter
installed therein, affixed thereto or used or intended to be used in connection
therewith
<PAGE>
Uniform Commercial Code - FINANCING STATE - Form UCC-1
This FINANCING STATEMENT is presented to a Filing Officer for the filing
pursuant to the Uniform Commercial Code.
No. Of Additional Sheets Presented:
- ----------------------------------------------- ----------------------------
1. Debtor(s) (Last Name First) and Address(es): 4. For Filing Officer: Date,
Time, No. Filing Office
CVC Products, Inc.
525 Lee Road
Rochester, NY 14606 ----------------------------
- ----------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
M&T Financial Corporation
One Fountain Plaza
Buffalo, NY 14203
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
See Schedule A attached hereto and made a part hereof
- --------------------------------------------------------------------------------
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: |_| This statement is to be indexed in the Real
Estate Records:
No. & Street Town or City County
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. |_| This statement is filed without the debtor's signature to perfect a
security interest in collateral under a security agreement signed by
debtor authorizing secured party to file this statement.
CVC Products, Inc. M&T Financial Corporation
---------------------------------- ----------------------------------
By /s/ Emilio DiCataldo By _______________________________
-------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
================================================================================
For Bank Use Only
Borrower:
Obligor #: _________________________
Filing Jurisdiction: Monroe County REF #:
================================================================================
UCC-1 (1-97) File Copy-Secured Party
PLEASE RETURN COPY TO:
M&T BANK
P.O. BOX 1358
BUFFALO, NEW YORK 14240
<PAGE>
Schedule A
Equipment Description
(1) CX-8 Central Wafer Handler,
Including Robotics and Computer System
Serial number: 308527-500
(1) ICP Module Inductively Coupled Plasma Module
Serial number: 309260-100
Equipment Location: 3100 Laurel View Court, Fremont, CA 94538 (Alameda County)
Including all replacements, parts, substitutions, modifications, accessories,
additions, attachments, accessions and tools of Debtor now or hereafter
installed therein, affixed thereto or used or intended to be used in connection
therewith
<PAGE>
EQUIPMENT SCHEDULE
UNDER MASTER EQUIPMENT LEASE AGREEMENT NO. 1
Equipment Schedule Date: April 7, 1998 Equipment Schedule No. 4
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lessee's Name and Address: County: Monroe Lessor's Name and Address: County: Erie
CVC Products, Inc. M&T Financial Corporation
525 Lee Road One Fountain Plaza
Rochester, NY 14606 Buffalo, NY 14203
Att: Mark Harris Phone: (716) 458-2550 x3196 Att: Counsel's Office Phone: (716) 842-5094
- ------------------------------------------------------------------------------------------------------------
</TABLE>
LESSEE: X Corporation |_| General Partnership |_| Limited Partnership |_| dba
|_| Other ________________ X Org. in Delaware
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
QTY. EQUIPMENT DESCRIPTION COST SERIAL NO.
(Manufacturer, Model No., Item)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
See Schedule A attached hereto and made a part hereof $16,995.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Initial Equipment Location: (if different from above)
3100 Laurel View Court, Fremont, CA 94538 (Alameda County)
Vendor:
CVC Products, Inc., 525 Lee Road, Rochester, NY 14606
TERM AND RENTAL PAYMENTS
<TABLE>
<CAPTION>
Term End Date: 1/1/02
Term: 44 months Beginning: 4/7/98 Security Deposit $0 Last Payment: 12/01/01 Rent Commencement Date: 5/1/98
- -----------------------------------------------------------------------------------------------------------------------
Payment Number Sales Total Each Lease Advance Rent
Rent Payable and Amounts Tax Payment Rec'd by Lessor
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
X Monthly |_| Annually Periodic Rent 44 at $439.23 $ 0 $439.23 1 at $439.23
|_| Quarterly
|_| Semiannually Final Payment $439.23 $ 0 $439.23 to be applied to First
|_| See Schedule Payment
X Exempt
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Interim Rent: $351.38 For period Covering: 4/7/98 To 4/30/98
INSURANCE: Lessee's insurance policy covering the Equipment shall contain
minimum liability limits of $2,000,000 for each person,
$2,000,000 for each occurrence and insure against claims for
property damage in an amount not less than $2,000,000.
Lease. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
personal property described above together with all substitutions, replacements,
repairs, upgrades, additions, accessories, products and proceeds (the
"Equipment"), under the terms and conditions set forth here and in the Master
Equipment Lease referenced above and incorporated herein in its entirety. LESSEE
ACKNOWLEDGES THAT ONLY LESSOR'S ORIGINAL OF THIS EQUIPMENT SCHEDULE CONSTITUTES
CHATTEL PAPER FOR PURPOSES OF THE UNIFORM COMMERCIAL CODE, that no security
interest can be created by possession of any other counterpart, and that this
Lease can only be amended in writing. ___ (Lessee initial). THIS IS A
NON-CANCELABLE LEASE.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
By: /s/ Emilio DiCataldo By:
---------------------------- ----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / Assistant Vice President
Chief Financial Officer
<PAGE>
Schedule A
Equipment Description
(1) Metallurgical Microscope including:
1 Reconditioned Nikon Optiphot 66 Metallurgical Microscope;
1 Nikon 200X Plan APO Brightfield Lens;
1 Nomarski D.E.C. Set comprising Nosepiece, Polarizer, Analyzer and
first order Compensator and Prisms
<PAGE>
MTFCo
PURCHASE OPTION RIDER
to
EQUIPMENT SCHEDULE NO. 4 ("SCHEDULE")
Dated April 7, 1998
to
MASTER EQUIPMENT LEASE AGREEMENT
Dated as of April 7, 1998 ("LEASE")
between
M&T Financial Corporation ("LESSOR")
and
CVC Products, Inc. ("LESSEE")
The paragraph in the Lease entitled Purchase Option is hereby amended as
follows:
Subject to the satisfaction of the conditions set forth below, the Lessee
shall, on the Initial Term Expiration Date, have the option to:
(1) Purchase all, but not less than all, of the Equipment under
lease for a price equal to its Fair Market Value as determined by
the Stipulated Loss Table (the "Purchase Price").
(a) Lessee's right to exercise the Purchase Option shall be
subject to the satisfaction of the following conditions
precedent: (1) No Default or Event of Default shall have
occurred and be continuing; (2) Lessee shall have given
written notice to Lessor of Lessee's desire to exercise the
Purchase Option not less than ninety (90) days nor more than
one hundred eighty (180) days prior to the Initial Term
Expiration Date; and (3) Lessor shall have received Lessee's
payment of the Purchase Price (plus any taxes) prior to the
Initial Term Expiration Date.
(b) If Lessee exercises the Purchase Option in accordance with
the terms and conditions hereof, then at the expiration of the
Initial Term, Lessee shall tender the Purchase Price in
immediately available funds and Lessor shall deliver a bill of
sale transferring to Lessee all Lessor's right, title and
interest in the Equipment: IT BEING EXPRESSLY UNDERSTOOD THAT
SUCH TRANSFER IS "AS IS, WHERE IS", WITHOUT ANY WARRANTIES,
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING
WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND
LESSOR EXPRESSLY DISCLAIMS THE SAME.
(2) Return the equipment to the Lessor without further obligation to
a location of the Lessor's choosing in the United States.
(3) Renew the Lease at its fair market rental rate as determined by
Lessor.
<PAGE>
Except as specifically amended hereby, all of the terms and conditions set forth
in the Schedule and Lease are unaffected and remain in full force and effect.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS RIDER THIS 7th DAY OF April,
1998.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
=== SIGN
HERE
By: /s/ Emilio DiCataldo By:
---------------------------- ----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / CFO Assistant Vice President
2
<PAGE>
Stipulated Loss Schedule
Lessee: CVC Products (Schedule #4)
Percent
Per Date Amount of Cost
- ----------------------------------------------------------
1 5/1/98 17,289.23 101.73
2 6/1/98 16,992.53 99.99
3 7/1/98 16,692.75 98.22
4 8/1/98 16,390.26 96.44
5 9/1/98 16,084.66 94.64
6 10/1/98 15,775.91 92.83
7 11/1/98 15,464.43 90.99
8 12/1/98 15,149.77 89.14
9 1/1/99 14,831.92 87.27
10 2/1/99 14,511.29 85.39
11 3/1/99 14,187.44 83.48
12 4/1/99 13,860.36 81.56
13 5/1/99 13,529.87 79.61
14 6/1/99 13,196.12 77.65
15 7/1/99 12,859.08 75.66
16 8/1/99 12,518.60 73.66
17 9/1/99 12,174.79 71.64
18 10/1/99 11,827.65 69.59
19 11/1/99 11,477.00 67.53
20 12/1/99 11,122.98 65.45
21 1/1/00 10,765.57 63.35
22 2/1/00 10,404.61 61.22
23 3/1/00 10,040.22 59.08
24 4/1/00 9,672.38 56.91
25 5/1/00 9,302.86 54.74
26 6/1/00 8,929.87 52.54
27 7/1/00 8,553.39 50.33
28 8/1/00 8,175.18 48.10
29 9/1/00 7,793.46 45.86
30 10/1/00 7,408.20 43.59
31 11/1/00 7,021.17 41.31
32 12/1/00 6,630.57 39.01
33 1/1/01 6,236.40 36.70
34 2/1/01 5,840.40 34.37
35 3/1/01 5,440.79 32.01
36 4/1/01 5,037.56 29.64
37 5/1/01 4,633.62 27.26
38 6/1/01 4,226.03 24.87
39 7/1/01 3,814.76 22.45
40 8/1/01 3,402.75 20.02
41 9/1/01 2,987.04 17.58
42 10/1/01 2,567.62 15.11
43 11/1/01 2,147.41 12.64
44 12/1/01 1,723.46 10.14
45 1/1/02 1,295.76 7.62
<PAGE>
MTFCo
EARLY TERMINATION RIDER
to
EQUIPMENT SCHEDULE No. 4 ("SCHEDULE")
Dated April 7, 1998
to
MASTER EQUIPMENT LEASE AGREEMENT
Dated April 7, 1998 ("LEASE")
between
M&T Financial Corporation ("LESSOR")
and
CVC Products, Inc. ("LESSEE")
(I) During the term of the Lease the Lessee shall, provided there exists no
event(s) of default, have the right to purchase all but not less than all of the
scheduled equipment then under lease ("Early Termination Option") for a price
equal to the predetermined Fair Market Value as determined by the attached
Stipulated Loss Table ("Option Price"). Upon Lessee's exercise of the Early
Termination Option, Lessor shall convey to Lessee, all of Lessor's right, title
and interest in and to the Equipment on an "as-is, where-is" basis, without
recourse or warranty except against any liens placed on the Equipment by Lessor.
The Lessee may exercise the Early Termination Option upon written notice to
Lessor given not less than ninety (90) days nor more than one hundred eighty
(180) days prior to the Early Termination Date. Such notice shall be
irrevocable. Upon Lessee's exercise of the Early Termination Option, Lessee
shall pay to Lessor all due but unpaid rent under the Equipment Schedule
together with the Option Price.
In the event that the Early Termination Option is not exercised by the Lessee in
accordance with this Rider, all of Lessee's obligations under the Equipment
Schedule will continue unaffected.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS RIDER THIS 7th DAY OF APRIL
1998.
LESSEE: LESSOR:
CVC Products, Inc. M&T Financial Corporation
By: /s/ Emilio DiCataldo By:
---------------------------- ----------------------------
Emilio DiCataldo Jeffrey S. Mastroleo
Senior Vice President / CFO Assistant Vice President
<PAGE>
Stipulated Loss Schedule
Lessee: CVC Products (Schedule #4)
Percent
Per Date Amount of Cost
- ----------------------------------------------------------
1 5/1/98 17,289.23 101.73
2 6/1/98 16,992.53 99.99
3 7/1/98 16,692.75 98.22
4 8/1/98 16,390.26 96.44
5 9/1/98 16,084.66 94.64
6 10/1/98 15,775.91 92.83
7 11/1/98 15,464.43 90.99
8 12/1/98 15,149.77 89.14
9 1/1/99 14,831.92 87.27
10 2/1/99 14,511.29 85.39
11 3/1/99 14,187.44 83.48
12 4/1/99 13,860.36 81.56
13 5/1/99 13,529.87 79.61
14 6/1/99 13,196.12 77.65
15 7/1/99 12,859.08 75.66
16 8/1/99 12,518.60 73.66
17 9/1/99 12,174.79 71.64
18 10/1/99 11,827.65 69.59
19 11/1/99 11,477.00 67.53
20 12/1/99 11,122.98 65.45
21 1/1/00 10,765.57 63.35
22 2/1/00 10,404.61 61.22
23 3/1/00 10,040.22 59.08
24 4/1/00 9,672.38 56.91
25 5/1/00 9,302.86 54.74
26 6/1/00 8,929.87 52.54
27 7/1/00 8,553.39 50.33
28 8/1/00 8,175.18 48.10
29 9/1/00 7,793.46 45.86
30 10/1/00 7,408.20 43.59
31 11/1/00 7,021.17 41.31
32 12/1/00 6,630.57 39.01
33 1/1/01 6,236.40 36.70
34 2/1/01 5,840.40 34.37
35 3/1/01 5,440.79 32.01
36 4/1/01 5,037.56 29.64
37 5/1/01 4,633.62 27.26
38 6/1/01 4,226.03 24.87
39 7/1/01 3,814.76 22.45
40 8/1/01 3,402.75 20.02
41 9/1/01 2,987.04 17.58
42 10/1/01 2,567.62 15.11
43 11/1/01 2,147.41 12.64
44 12/1/01 1,723.46 10.14
45 1/1/02 1,295.76 7.62
<PAGE>
CERTIFICATE OF ACCEPTANCE
to
EQUIPMENT SCHEDULE NO. 4, Dated April 7, 1998,
to
MASTER EQUIPMENT LEASE AGREEMENT, Dated April 7, 1998
(the "Lease")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Leesee's Name and Address: County: Monroe Lessor's Name and Address: County: Erie
<S> <C> <C> <C>
CVC Products, Inc. M&T Financial Corporation
525 Lee Road One Fountain Plaza
Rochester, NY 14606 Buffalo, NY 14203
Attn: Mark Harris Phone: (716) 458-2550 x3196 Attn: Counsel's Office Phone: (716) 842-5094
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
QTY EQUIPMENT DESCRIPTION (Manufacturer, Model No., Serial No., Item)
- --------------------------------------------------------------------------------
See Schedule A attached hereto and made a part hereof
- --------------------------------------------------------------------------------
Initial Equipment Location (if different from Leesee's address above):
3100 Laurel View Court, Fremont, CA 94538 (Alameda County)
Vendor:
CVC Products, 525 Lee Road, Rochester, NY 14606
Lessee hereby certifies that as of this date the Equipment described above has
been delivered to and accepted by Lessee after complete inspection and testing,
is correctly described in the Lease (with the exception of serial numbers which
if omitted now may be supplied by Lessee in the future by telephone and inserted
in the description by Lessor or Assignee), is in good working order, and is
satisfactory to Lessee in all respects. Lessee reaffirms that Lessee selected
the Equipment based upon its specifications and that Lessee's obligation to pay
all amounts due and to become due and perform all other obligations under the
Lease is absolute and that any recourse Lessee might have in case of any
nonperformance, unsuitability or other failure of the Equipment shall lie with
the manufacturer or vendor and in no case with Lessor or Assignee.
Date: April 7, 1998
LESSEE:
CVC Products, Inc.
By: /s/ Emilio DiCataldo
-----------------------------------------------
Emilio DiCataldo
Senior Vice President / Chief Financial Officer
(If Corporation, President or Vice President should
sign and give official title; if Partnership,
General Partner; if LLC, Manager)
<PAGE>
Schedule A
Equipment Description
(1) Metallurgical Microscope including:
1 Reconditioned Nikon Optiphot 66 Metallurgical Microscope;
1 Nikon 200X Plan APO Brightfield Lens;
1 Nomarski D.E.C. Set comprising Nosepiece, Polarizer, Analyzer and
first order Compensator and Prisms
<PAGE>
MTFCo
CERTIFICATE OF SECRETARY
OF
LESSEE
I, Christine Whitman, President of CVC Products, Inc. (the "Company"), a
Delaware corporation, do CERTIFY in connection with Equipment Schedule No. 4
dated as of April 7, 1998 to Master Equipment Lease Agreement dated as of April
7, 1998 between M&T Financial Corporation (the "Lessor") and the Company as
lessee (the "Lease") as follows:
1. The Company's execution, delivery and performance of the Lease, the
Equipment Schedule, the Delivery and Acceptance Certificate and all
other collateral instruments and documents related to this
transaction (collectively, the "Documents") have been duly
authorized by all necessary corporate action on the part of the
Company, as evidenced by the copies of the resolution attached
hereto, and the Documents will be duly and validly executed if
executed by one of the persons whose name appears in Section 2
below;
2. The following persons are the duly elected or appointed, qualified
and acting officers of the Company holding the offices set forth
opposite their respective names below, and the signatures appearing
opposite their respective names below are the genuine signatures of
such persons:
Name Office Signature
Emilio DiCataldo Sr Vice President / CFO /s/ Emilio DiCataldo
________________________ ________________________ ______________________
________________________ ________________________ ______________________
IN WITNESS WHEREOF, I have executed this Certificate this 7th day of April
1998.
By: /s/ Christine Whitman
-------------------------------------
Christine Whitman
President / CEO
<PAGE>
MTFCo
EXHIBIT TO CERTIFICATE OF SECRETARY TO LESSEE
RESOLUTION
On motion of ____________________________________________, seconded by
_____________________________________________, the following Resolutions were
adopted by a duly constituted quorum of the Board of Directors [______________]
of CVC Products, Inc. (the "Company") present at a meeting duly called and held,
or by unanimous written consent, on _____________________, 199_.
WHEREAS, this Board has determined that in order for the Company to better
accomplish its corporate purposes, the Company needs to acquire the use of
the Equipment described on the Schedule attached hereto, and
WHEREAS, the Company has determined that the most economical and efficient
means of acquiring the use of said Equipment is pursuant to a lease
financing of the Equipment;
NOW, THEREFORE, be it
RESOLVED, that the Company is hereby authorized to enter into a Master
Equipment Lease Agreement between M&T Financial Corporation and/or M&T
Bank as Lessor and the Company as Lessee together with any appropriate
equipment schedules, all exhibits, tables, riders and amendments related
thereto, substantially in the form annexed hereto; and it is further
RESOLVED, that in furtherance of the accomplishment of the Lease, the Sr
Vice President / CFO, is hereby authorized to consult with and authorize
the appropriate officers of the Company to select and designate the
particular Equipment to be leased by the Company and the particular source
of financing the Equipment; and be it further
RESOLVED, that in furtherance of the Lease, the Sr Vice President / CFO,
is hereby authorized to execute and deliver on behalf of the Company such
agreements, indemnities, purchase orders, guarantees of performance or
payment or otherwise, leases, bills of sale, certificates or other
instruments or obligations as they or any one of them may deem necessary
or appropriate to the accomplishment of the Lease, and the execution and
delivery of any such agreement, instrument or obligation prior to the date
hereof by any such officer is in all respects hereby confirmed, ratified
and approved; and be it further
RESOLVED, that all officers of the Company are authorized and directed to
do or cause to be done all such other acts and things, to make all
payments, including rent payments, required pursuant to the Lease and
related documents, and to execute all such documents, certificates and
instruments as in his, her or their judgement may be necessary or
advisable in order to carry out the foregoing Resolutions and the
Company's obligations under the Lease, or any revised and supplemental
lease; and all actions heretofore taken by the officers of the Company in
connection with the subject of these Resolutions are hereby approved,
ratified and confirmed in all respects.
<PAGE>
EXHIBIT D
RESOLUTIONS
OF THE
BOARD OF DIRECTORS
OF
CVC, INC.
RESOLVED, that the form, terms and provisions of the proposed term loan
and credit facility agreement (the "Credit Agreement"), between CVC, Inc. (the
"Corporation"), CVC Products, Inc. (the "Subsidiary") and Manufacturers and
Traders Trust Company (the "Lender") substantially on the terms that have been
submitted to the directors of the Corporation, pursuant to which, among other
things, the Lender will make to the Subsidiary and/or the Corporation term loans
in amounts up to an aggregate of $8,000,000 and revolving loans in amounts up to
an aggregate of $10,000,000 (based on borrowing base availability), will make
available a $2 million capital equipment term loan and lease line and will
provide other credit accommodations, all upon the terms set forth therein and in
the exhibits thereto, and all transactions referred to therein, be, and the same
hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer of the Corporation and/or the
Subsidiary be, and each hereby is, authorized and empowered, in the name and on
behalf of the Corporation and/or the Subsidiary, to execute and deliver to the
Lender the Credit Agreement and each exhibit thereto of which the Corporation
and/or the Subsidiary shall be a signatory, and any and all other agreements,
certificates, or other documents which may be described in the Credit Agreement
or necessary or required by the Lender, with such change or changes therein as
the Authorized Officer or Officers executing the same may approve, the execution
thereof, with such change or changes, to be conclusive evidence of such
approval.
RESOLVED, that, in connection with the loan and accommodations to be made
by the Lender to the Subsidiary, the form, terms and provisions of the Term and
Revolving Notes (the "Notes") and the equipment lease documents, be, and, the
same hereby are, in all respects authorized and approved.
RESOLVED, that an Authorized Officer or Officers of the Corporation and/or
the Subsidiary be, and each hereby is, authorized and empowered, in the name and
on behalf of the Corporation and/or the Subsidiary, to execute and deliver to
the Lender, upon receipt of funds evidenced thereby, the Notes and the lease
documents, with such change or changes therein as the Authorized Officer or
Officers executing the same may approve, the execution thereof, with such change
or changes, to be conclusive evidence of such approval.
RESOLVED, that the Corporation and/or the Subsidiary be, and hereby are,
authorized (i) to borrow such amounts and to sell and lease back from the Lender
such
D-2
<PAGE>
equipment in such amounts as an Authorized Officer of the Corporation and/or the
Subsidiary may deem appropriate, to be evidenced by appropriate Notes and the
lease documents, (ii) to each guaranty the indebtedness of the other to the
Lender on terms acceptable to the Lender as evidenced by agreements and
guarantees requested by the Lender, (iii) to grant security interests to the
Lender in any and all assets of the Corporation and the Subsidiary, and (iv) to
pay any and all fees and associated expenses; and the same (including all
documents evidencing same) hereby are, authorized and approved.
RESOLVED, that the agreements, instruments, notes and documents heretofore
entered into by the Corporation and/or the Subsidiary with the Lender are hereby
ratified and affirmed;
RESOLVED, that, in connection with loans to be made by the Lender to the
Subsidiary, an Authorized Officer of the Corporation and/or the Subsidiary be,
and hereby is, authorized and empowered to open and maintain such bank accounts
at such bank or banks as the Lender may request, and that any resolutions
furnished by such banks for such purposes be deemed adopted as and for the
resolutions of the Board of Directors with the same force and effect as if fully
set forth herein.
RESOLVED, that the President and Senior Vice President of the Corporation
and the Subsidiary, and any person duly authorized to act in such capacity be,
and each of them hereby is, designated an "Authorized Officer" for purposes of
these resolutions, the Credit Agreement, the Notes, the lease documents and any
other documents and instruments necessary, proper or convenient to implement or
accomplish the transactions involved in, or related to, any thereof.
RESOLVED, that the Authorized Officers of the Corporation and/or the
Subsidiary be, and each of them hereby is, authorized and empowered, in the
name and on behalf of the Corporation and/or the Subsidiary, to execute and
deliver such certificates, documents, 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 necessity or appropriateness thereof.
D-3
<PAGE>
BILL OF SALE
TO
M&T FINANCIAL CORPORATION
KNOW ALL MEN BY THESE PRESENTS THAT: CVC Products, Inc., a Delaware
corporation with its chief executive office at 525 Lee Road, Rochester, NY 14606
(herein called the "Seller"), for and in consideration of the sum of One Dollar
($1) and other good and valuable consideration, receipt of which is hereby
acknowledged, does hereby grant, bargain, sell, assign, transfer, and set over
unto M&T Financial Corporation, a New York corporation (herein called the
"Buyer"), its successors and assigns, all right, title, and interest of the
Seller in and to the personal property described below (and, if any additional
page is annexed hereby as Schedule A, listed and described in said Schedule A)
together with all parts and accessories attached hereto (all such personal
property, parts, and accessories being herein collectively called the
"Equipment"), TO HAVE AND TO HOLD for its and their own use and benefit forever.
QUANTITY MANUFACTURER/MODEL DESCRIPTION SERIAL NO.
-------- ------------------ ----------- ----------
See Schedule A attached hereto and made a part hereof.
The Seller hereby represents and warrants to the Buyer, its successors and
assigns: (I) that the Seller has full legal and beneficial title to the
Equipment and the good and lawful right to sell the same; and (ii) that good and
marketable title to the Equipment is hereby duly vested in the Buyer free and
clear of all claims, liens, encumbrances, and rights of others of any nature.
The Seller hereby covenants and agrees to defend such title forever against all
claims and demands whatsoever.
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale to be executed
and delivered by its duly authorized officer this 7th day of April 1998.
SELLER:
CVC Products, Inc.
By: /s/ Emilio DiCataldo
-------------------------------------
Emilio DiCataldo
Senior Vice President / CFO
<PAGE>
Schedule A
Equipment Description
(1) Metallurgical Microscope including:
1 Reconditioned Nikon Optiphot 66 Metallurgical Microscope;
1 Nikon 200X Plan APO Brightfield Lens;
1 Nomarski D.E.C. Set comprising Nosepiece, Polarizer, Analyzer and
first order Compensator and Prisms
<PAGE>
MTFCo
PAY PROCEEDS LETTER
Date: April 7, 1998
M&T Financial Corporation
Manufacturers and Traders Trust Company (M&T Bank)
One Fountain Plaza
Buffalo, New York 14203
Attention: Equipment Leasing
Re: Equipment Schedule No. 4 between CVC Products, Inc. (Lessee) and M&T
Financial Corporation as (Lessor) (the "Lease).
You are hereby authorized to disburse funds to purchase the Equipment for the
above Lease as directed below. We understand that under Uniform Commercial Code
Article 4A M&T Bank and all other banks handling funds transfers are entitled to
rely on the bank number and account number we provide without reference to names
or account titles, and that you have no duty to discover any discrepancies. We
have taken appropriate care to verify our instructions to you, and you will not
be liable for any loss that, may result from our error in these instructions. We
also agree to the provisions on the reverse.
================================================================================
1. Payee: M&T Financial Corporation Ein # _______________
Amount: $16,995.00
Ref: payoff of Schedule 1
|_| Deposit to M&T Bank
Account No. _________________________
|_| Check _________________________
|_| Funds Transfer to:
Account No. _________________________
Account Name: _________________________ Bank R/T No __________
Bank Name: _________________________ Telephone: ___________
================================================================================
2. Payee: _________________________ Ein # _______________
Amount: _________________________
Ref: _________________________
|_| Deposit to M&T Bank
Account No. _________________________
|_| Check _________________________
|_| Funds Transfer to:
Account No. _________________________
Account Name: _________________________ Bank R/T No __________
Bank Name: _________________________ Telephone: ___________
================================================================================
Agreed:
LESSEE:
CVC Products, Inc.
By: /s/ Emilio DiCataldo
--------------------------------------------
Emilio DiCataldo
Senior Vice President / Chief Financial Officer
<PAGE>
MTFCo
FUNDS TRANSFER AGREEMENT
SINGLE PAYMENT ORDER
To induce Lessor to execute the funds transfer payment order on the front of
this form, Lessee makes the following waivers and agrees to the following terms
and conditions.
1. Waiver of Lessor's Security Procedures. Lessee hereby rejects and
waives the protection of the Lessor's customary funds transfer
security procedures, and agrees that a request for personal
identification in a procedure including signature comparison shall
be deemed a commercially reasonable security procedure for purposes
of Article 4A of the Uniform Commercial Code.
2. Authorization. Lessee shall supply Lessor with all information that
Lessor requests including, but not limited to, money amounts;
beneficiary's account number, name and Lessor; value date;
supplemental instructions; and further evidence of the authority of
any of Lessee's authorized representatives to issue Payment Orders
or to do any other act contemplated under this Agreement. For
Lessees protection, Lessor may reject any Payment Order if Lessor is
unable to obtain satisfactory verification of the Order or its due
authorization. If Lessee is an entity, the person signing this
agreement certifies that he or she is duly authorized to execute
such transaction on behalf of Lessee; and acknowledges that any
false statement will render him or her personally liable for
monetary damages as well as criminal penalties including substantial
fines and imprisonment under federal and state law.
3. Account Number Controls. Lessee ACKNOWLEDGES RECEIPT OF NOTICE THAT
M&T Lessor, ALL INTERMEDIARY LessorS AND BENEFICIARY'S Lessor ARE
ENTITLED TO RELY ON THE BENEFICIARY'S ACCOUNT NUMBER AND ANY Lessor
IDENTIFYING NUMBER AS STATED IN THE PAYMENT ORDER AS RECEIVED EVEN
IF THE NUMBER AND NAME GIVEN FOR THE BENEFICIARY REFER TO DIFFERENT
PERSONS OR LessorS. Lessee IS WARNED TO VERIFY ALL ACCOUNT NUMBERS
AND Lessor NUMBERS WITH EXTRAORDINARY CARE.
4. Risk of Clear Text. Lessee understands that all Payment Orders are
transmitted in Clear Text and Lessee assumes full responsibility for
all such Payment Orders executed by Lessor at Lessee's request.
5. Standard of Care. Lessee agrees Lessor has no responsibility beyond
executing the transaction requested with ordinary care, subject to
this Agreement. Lessor shall be conclusively deemed to have
exercised ordinary care if Lessor has followed procedures customary
in the industry or if Lessee has not followed such procedures.
6. Cancellation. Lessee shall have no right to amend a Payment Order or
to cancel it after Lessor has begun processing it. In case of Lessee
error, Lessor has no obligation but reserves the right to attempt to
assist Lessee to recover its funds.
7. Limited to Available Funds. A Payment Order is debited to Lessee's
designated account when it is executed by Lessor. Lessee agrees that
its Payment Orders shall not exceed the available balance in
Lessee's account on the execution date. If Lessee's account does not
contain sufficient available funds on that date, Lessor may reject
any or all of Lessee's Payment Orders for that date, charge any of
Lessee's other accounts with Lessor, or execute any one or more
Payment Orders on that date; and Lessor shall not be liable for any
damages (including without limitation special or consequential
damages) Lessee suffers as a result of such rejections. If Lessor
does in its discretion execute a Payment Order which results in an
overdraft in Lessee's account, Lessor shall be entitled to charge
and Lessee shall be obligated to pay interest on such overdraft.
Lessee's account will be liable for statutory overdraft charges
whether or not the overdraft Payment Order is executed.
8. Expenses. Lessee agrees to pay Lessor's customary funds transfer
fees as in effect from time to time and to reimburse Lessor for any
out-of-pocket expenses incurred by Lessor. Such fees and expenses
shall be paid in cash immediately on demand or by Lessor's debiting
Lessee's account(s) at Lessor.
9. Notice of Errors. Lessee shall promptly review the transfer
confirmation or advice mailed to Lessee by Lessor after each
transfer and notify Lessor of any discrepancy in writing as soon as
possible and in any event within 60 calendar days of the transfer.
Lessee shall also promptly review and reconcile its periodic
statements of account provided by Lessor and report any
discrepancies to Lessor in writing within 60 calendar days after the
statement date. Lessee expressly agrees that its failure to so
report any such discrepancies shall relieve Lessor of any liability
for interest on any refund to which Lessee may be entitled with
respect to such unreported discrepancies. Statements and advices
shall be deemed received 5 days after mailing.
10. Disclosure of Information. Lessee acknowledges that Lessor may be or
become required by federal regulation to report or make information
available concerning all or some classes of funds transfers.
11. Force Majeure. Lessee agrees that Lessor is not liable for any
error, interruption, delay, or failure in transmission occasioned by
any circumstances beyond Lessor's control including but not limited
to discrepancies or ambiguity in any Payment Order, funds transfer
system unavailability, weather, failure of power, other utilities or
communication media, strikes, industrial sabotage, war, governmental
interference, and error, delay, insolvency or unavailability of
other receiving, intermediary or beneficiary Lessors.
12. Indemnity. Lessee agrees to hold Lessor harmless and indemnify
Lessor for any and all claims, liabilities, demands, costs, expenses
(including but not limited to attorneys' fees and disbursements),
losses or damages of any nature whatsoever arising directly or
indirectly from any Payment Order executed pursuant to this
Agreement except for liability to Lessee caused by gross negligence
or willful misconduct of Lessor. In no event shall Lessor be liable
for any consequential or special damages.
13. Governing Law. This Agreement shall be governed by the internal laws
of New York State (including without limitation Article 4A of the
Uniform Commercial Code) and by applicable federal law and
regulations.
All notices to Lessor shall be directed to the Manager, Commercial Loan
Operations, 3rd Floor, Manufacturers and Traders Trust Company, One Fountain
Plaza, Buffalo, New York 14203; all notices to Lessee shall be directed to
Lessee at the most recent address listed in the records of Lessor.
<PAGE>
New York State Department of Taxation and Finance ST-121 (4/93)
--------------------------------
[LOGO] To Purchasers and Vendors:
Before issuing or accepting this
certificate read instructions on
the back carefully.
--------------------------------
New York State and Local Sales and Use Tax
Exempt Use Certificate
- --------------------------------------------------------------------------------
Name of vendor Name of purchaser
M&T Financial Corporation CVC Products, Inc.
- --------------------------------------------------------------------------------
Street address Street address
One Fountain Plaza 525 Lee Rd.
- --------------------------------------------------------------------------------
City State ZIP code City State ZIP code
Buffalo NY 14203 Rochester, NY 14606
- --------------------------------------------------------------------------------
1 I have been issued a New York State Certificate of Authority,
# 16-1017191 to collect
---------------------------------------------------,
(Enter your sales tax vendor identification number)
New York State and local sales and compensating use tax, and this
certificate has not expired or been suspended or revoked.
2 The purchase I am making is exempt from the state or state and local sales
and use taxes because the property or the services will be used for the
exempt purpose indicated below.
================================================================================
Part I -- Promotional Materials Single purchase certificate only
of promotional materials that will be distributed to customers or
- --- prospective customers located outside New York State for use outside the
% state. (The percentage must be filled in for this certificate to be
- --- valid.) Only these promotional materials are exempt from all state and
local sales and use taxes.
================================================================================
================================================================================
Check one: |_| Single purchase certificate |_| Blanket certificate
This form cannot be used to purchase motor fuel or diesel motor fuel exempt from
sales tax or to relieve a vendor of the liability for the lubricating oil tax or
beverage container tax.
Part II -- Manufacturing Exemptions
|_| (a) Machinery and equipment, including parts with a useful life of more
than a year when purchased for use or consumption directly and
predominantly in the production of tangible personal property, gas,
electricity, refrigeration or steam for sale, or telephone central
office equipment or station apparatus or comparable telegraph
equipment used directly and predominantly to receive or initiate and
switch telephone or telegraph communication. Paragraph (a) purchases
are exempt from all state and local sales and use taxes.
|_| (b) Parts with a useful life of one year or less, tools or supplies used
directly and predominantly in production or used directly and
predominantly in or on the telephone or telegraph equipment or
apparatus described in paragraph (a) of this part, or:
Purchases of (check one or more boxes): |_| Fuel |_| Gas
|_| Electricity |_| Refrigeration |_| Steam
for use or consumption directly and exclusively in the production of
tangible personal property, gas, electricity, refrigeration or steam
for sale.
Paragraph (b) purchases are exempt from all state and local taxes
when delivered outside New York City and subject to New York City
local sales or use tax when delivered or used in New York City.
|_| (c) Installing, repairing, maintaining or servicing of the following are
exempt from state tax, but are subject to the New York City taxes
and all other local sales and use taxes:
-- machinery or equipment used directly and predominantly in
production;
-- telephone or telegraph central office equipment or station
apparatus used directly and predominantly to receive or
initiate and switch telephone or telegraph communication;
-- parts, tools or supplies described in paragraph (b) of this
part.
Part III -- Other exemptions -- exempt from all sales and use taxes
|_| (d) Tangible personal property for use or consumption directly and
predominantly in research and development in the experimental or
laboratory sense.
|_| (e) Cartons, containers, and other wrapping and packaging materials and
supplies, for use by a vendor to package tangible personal property
for sale and actually transferred to the purchaser of the property.
|_| (f) Purchases of (check one or more boxes): |_| Gas |_| Electricity
|_| Refrigeration |_| Steam
for use or consumption directly and exclusively in research and
development in the experimental or laboratory sense.
|_| (g) Other (describe exempt use and identify the section of the Tax Law
covering this exemption.)
____________________________________________________________________
____________________________________________________________________
================================================================================
Substantial penalties will result from misuse of this certificate
(see back of this form).
- --------------------------------------------------------------------------------
Signature of owner,
partner, officer of
purchasing corporation, etc. Print name and give title Date
/s/ Emilio O. DiCataldo Emilio O. DiCataldo 5/28/98
- --------------------------------------------------------------------------------
<PAGE>
Uniform Commercial Code - FINANCING STATE - Form UCC-1
This FINANCING STATEMENT is presented to a Filing Officer for the filing
pursuant to the Uniform Commercial Code.
No. Of Additional Sheets Presented:
- ----------------------------------------------- ----------------------------
1. Debtor(s) (Last Name First) and Address(es): 4. For Filing Officer: Date,
Time, No. Filing Office
CVC Products, Inc.
525 Lee Road
Rochester, NY 14606 ----------------------------
- ----------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
M&T Financial Corporation
One Fountain Plaza
Buffalo, NY 14203
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
See Schedule A attached hereto and made a part hereof
- --------------------------------------------------------------------------------
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: |_| This statement is to be indexed in the Real
Estate Records:
No. & Street Town or City County
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. |_| This statement is filed without the debtor's signature to perfect a
security interest in collateral under a security agreement signed by
debtor authorizing secured party to file this statement.
CVC Products, Inc. M&T Financial Corporation
---------------------------------- ----------------------------------
By /s/ Emilio DiCataldo By _______________________________
-------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
================================================================================
For Bank Use Only
Borrower:
Obligor #: _________________________
Filing Jurisdiction: New York State REF #:
================================================================================
UCC-1 (1-97) File Copy-Secured Party
PLEASE RETURN COPY TO:
M&T BANK
P.O. BOX 1358
BUFFALO, NEW YORK 14240
<PAGE>
Schedule A
Equipment Description
(1) Metallurgical Microscope including:
1 Reconditioned Nikon Optiphot 66 Metallurgical Microscope;
1 Nikon 200X Plan APO Brightfield Lens;
1 Nomarski D.E.C. Set comprising Nosepiece, Polarizer, Analyzer and
first order Compensator and Prisms
Including all replacements, parts, substitutions, modifications, accessories,
additions, attachments, accessions and tools of Debtor now or hereafter
installed therein, affixed thereto or used or intended to be used in connection
therewith
<PAGE>
Uniform Commercial Code - FINANCING STATE - Form UCC-1
This FINANCING STATEMENT is presented to a Filing Officer for the filing
pursuant to the Uniform Commercial Code.
No. Of Additional Sheets Presented:
- ----------------------------------------------- ----------------------------
1. Debtor(s) (Last Name First) and Address(es): 4. For Filing Officer: Date,
Time, No. Filing Office
CVC Products, Inc.
525 Lee Road
Rochester, NY 14606 ----------------------------
- ----------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
M&T Financial Corporation
One Fountain Plaza
Buffalo, NY 14203
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
See Schedule A attached hereto and made a part hereof
- --------------------------------------------------------------------------------
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: |_| This statement is to be indexed in the Real
Estate Records:
No. & Street Town or City County
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. |_| This statement is filed without the debtors signature to perfect a
security interest in collateral under a security agreement signed by
debtor authorizing secured party to file this statement.
CVC Products, Inc. M&T Financial Corporation
---------------------------------- ----------------------------------
By /s/ Emilio DiCataldo By _______________________________
-------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
================================================================================
For Bank Use Only
Borrower:
Obligor #: _________________________
Filing Jurisdiction: New York State REF #:
================================================================================
UCC-1 (1-97) File Copy-Secured Party
PLEASE RETURN COPY TO:
M&T BANK
P.O. BOX 1358
BUFFALO, NEW YORK 14240
<PAGE>
Schedule A
Equipment Description
(1) Metallurgical Microscope including:
1 Reconditioned Nikon Optiphot 66 Metallurgical Microscope;
1 Nikon 200X Plan APO Brightfield Lens;
1 Nomarski D.E.C. Set comprising Nosepiece, Polarizer, Analyzer and
first order Compensator and Prisms
Including all replacements, parts, substitutions, modifications, accessories,
additions, attachments, accessions and tools of Debtor now or hereafter
installed therein, affixed thereto or used or intended to be used in connection
therewith
<PAGE>
EXHIBIT 10.57
NN LEASE FORM 123194
PROJECT North Point
LENDER APP. ________
Rev. 1-24-95
LEASE AGREEMENT
THIS LEASE is made as of the 1st day of February, 1995 by and between
NORTH POINT ASSOCIATES LIMITED PARTNERSHIP, a Virginia limited partnership
(hereinafter referred to as "Landlord") and COMMONWEALTH SCIENTIFIC CORPORATION,
a Virginia corporation, (hereinafter referred to as "Tenant").
WITNESSETH:
In consideration of the mutual agreement hereinafter set forth, the
parties do hereby mutually agree as follows:
1. Premises. Landlord does hereby lease to Tenant and Tenant does hereby
lease from Landlord, for the term and upon the conditions hereinafter provided,
approximately 28,000 square feet of space (hereinafter referred to as the
"Demised Premises") commonly known as 832, 834, 838 and 840 North Henry Street,
Alexandria, Virginia 22314 within the North Point office building complex (the
building and land being hereinafter referred to as the "Property"), together
with a license hereinafter described to the non-exclusive use, in common with
others, of such parking spaces and other facilities designed for common use as
may be installed by Landlord. The Demised Premises are outlined in red on the
plan attached hereto marked as Exhibit A and incorporated herein by reference,
and shall be deemed to be the total square footage described herein, regardless
of actual measurement.
2. Term. (a) The Demised Premises are leased for a term (hereinafter
referred to as the "Term") commencing on the 1st day of February, 1995 (or as
soon thereafter as Landlord shall have made the Demised Premises available for
the Tenant's use and occupancy) and ending on the 31st day of January, 1998,
unless the term shall sooner cease or expire as hereinafter provided.
(b) Omitted.
(c) The taking of possession of the Demised Premises shall be deemed
an acceptance of the same by Tenant.
(d) After the lease commencement date, upon request of either party,
Landlord and Tenant shall promptly execute; acknowledge and deliver to one
another a written instrument certifying the lease commencement date and
expiration date.
<PAGE>
(e) If Landlord is unable to deliver possession of the Demised
Premises to Tenant by reason of the holding over or retention of possession by
any tenant or occupant, the lease commencement date shall be extended for such
period of time as may be reasonably necessary to enable Landlord to evict such
tenant or occupant and to deliver possession of the Demised Premises to Tenant.
3. Rental. (a) Tenant shall pay as rent for the Demised Premises
(hereinafter referred to as "Rent") at the office of Landlord herein designated
(or at such other place as Landlord may designate in a notice to Tenant),
without prior demand therefor and without any setoff, deduction or counterclaim
whatsoever, the following sums:
(i) In the first lease year, commencing on February 1, 1995, the sum
of Two Hundred Sixty Thousand and Sixty Four and No/100 Dollars ($260,064.00),
payable in advance in equal monthly installments of Twenty One Thousand Six
Hundred Seventy Two and No/100 Dollars ($21,672.00);
(ii) In the second lease year, commencing on February 1, 1996, the
sum of Two Hundred Sixty Six Thousand Four and No/100 Dollars ($266,004.00),
payable in advance in equal monthly installments of Twenty Two Thousand One
Hundred Sixty Seven and no/l00 Dollars (22,167.00);
(iii) In the third lease year, commencing on February 1, 1997, the
sum of Two Hundred Seventy Three Thousand and No/100 Dollars ($273,000.00),
payable in advance in equal monthly installments of Twenty Two Thousand Seven
Hundred Fifty and No/1000 Dollars ($22,750.00).
(b) If the Term of this Lease begins on a date other than the first day of
a month, Rent from such other date to the first day of the following month shall
be prorated at the rate of one-thirtieth (1/30th) of the fixed monthly Rental
for each day, payable in advance.
4. Additional Rent. (a) Commencing with the calendar year beginning
January 1, 1996, and each subsequent calendar year or portion thereof for the
Term, Tenant agrees to pay Landlord as additional rent (hereinafter referred to
as "Additional Rent") and its pro rata share (as hereinafter defined) of any
increase in Taxes and Assessments above the Base Costs of Taxes and Assessments
(as hereinafter defined).
(b) For purpose of this Lease:
(i) pro rata share shall mean forty one percent (41%)
representing the ratio that the area of the Demised Premises bears to the total
rentable area in the building.
(ii) "Taxes and Assessments" shall mean all taxes and
assessments and governmental charges (including personal property and real
estate taxes), whether federal, state,
-2-
<PAGE>
county or municipal, and whether by taxing districts or authorities presently
taxing the Property or by others subsequently created, and any other taxes and
assessments (including franchise taxes) attributable to the Property or its
operation, whether or not directly paid by Landlord, excluding however, federal
and state taxes on income, unless such income taxes replace real estate taxes.
Taxes and Assessments shall be the amount due in cash for any year and shall not
be determined on an accrual or fiscal year basis. It is agreed that Tenant shall
be responsible for ad valorem taxes on its personal property.
(iii) "Base Costs of Taxes and Assessments" shall be the Costs
of Taxes and Assessments incurred in the calendar year 1995.
(c) Landlord shall endeavor to give to Tenant on or before the first
day of April of each year a statement prepared by Landlord's certified public
accountant of the increase in the Additional Rent payment by Tenant hereunder,
but failure by Landlord to give such statement by said date shall not constitute
a waiver by Landlord of his right to require an increase in Additional Rent.
Upon receipt of the statement for the first year, Tenant shall pay, in full, the
total amount of the increase due in the first year. In addition, for the then
current year, an amount equal to 110% of any such increase shall be used as an
estimate for said current year and this amount shall be divided into twelve (12)
equal monthly installments and Tenant shall pay to Landlord concurrently with
the regular monthly Rent Payment next due following the receipt of such
statement, an amount equal to one (1) monthly installment multiplied by the
number of months from January in the calendar year which said statement is
submitted to the month of such payment, both months inclusive. Subsequent
installments shall be payable concurrently with the regular monthly Rent
payments for the balance of that calendar year and shall continue until the next
year's statement is rendered. If the next or any succeeding year results in a
greater increase in Taxes and Assessments, then upon receipt of a statement from
Landlord, Tenant shall pay a lump sum equal to such total increase over the Base
Costs of Taxes and Assessments, less the total of the monthly installments of
estimated increases paid in the previous calendar year for which comparison is
then being made; and the estimated monthly installments to be paid for the next
year, following said comparison year, shall be adjusted to reflect 110% of such
increase in the manner set forth above. If in any year the Tenant's share of
direct expenses shall be less than the preceding year, then upon receipt of
Landlord's statement, any other payment made by Tenant on the monthly
installment basis provided above shall be credited toward the next monthly Rent
falling due and the estimated monthly installments of Taxes and Assessments to
be paid shall be adjusted to reflect such lower Taxes and Assessments for the
most recent comparison year but not less than the Base Costs of Taxes and
Assessments thereof. Upon termination of this Lease, any money owed by one party
to the other shall be promptly paid.
(d) Should this Lease commence or terminate at any time other than
the first day of a calendar year, the cost adjustment referred to in Paragraphs
4(a), 4(b) and 4(c) shall be calculated for the commencement or termination year
on a pro rata basis. Tenant shall only pay the cost adjustment for the calendar
days during which Tenant leases the Demised Premises.
-3-
<PAGE>
(e) Each statement provided by Landlord pursuant to this paragraph
shall be conclusive and binding upon Tenant unless fifteen (15) days after
receipt of the statement, Tenant shall notify Landlord that it disputes the
correctness of the statement, specifying the respects in which the statement is
claimed to be incorrect. Tenant shall then have the right to request that
Landlord provide, at Tenant's expense, an audit of its books and records
relating to the statement. Pending determination of the dispute, Tenant shall
pay within ten (10) days from notice any amounts due from Tenant in accordance
with the statement, but such payment shall be without prejudice to Tenant's
position.
5. Omitted.
6. Past Due Rent and Late Charges. If Tenant shall fail to pay, when the
same is due and payable, any Rent or any additional Rent, or any other amounts
or charges, such unpaid amounts shall bear interest from the due date thereof to
the date of payment as hereafter provided. In addition, Tenant shall pay to
Landlord, as a late charge, four percent (4%) of any payment required to be made
by Tenant which is more than five (5) days late.
7. Use of Demised Premises. (a) Tenant may use and occupy the Demised
Premises solely for purposes of general office, fabrication and assembly,
engineering, research and development, testing and repair, water processing,
storage of materials, and machine shop use subject to, and in accordance with
all other provisions of this Lease and all applicable zoning and other
governmental regulations. Tenant shall not abandon or substantially abandon the
Demised Premises. Tenant shall not obstruct, interfere, or conflict with, the
rights of other tenants, or conflict with the fire laws or regulations, or with
any insurance policy upon the Property or any part thereof, or with any
statutes, rules or regulations now existing or subsequently enacted or
established by local, state or federal governments, nor shall Tenant use or
permit the Demised Premises, or any part thereof, to be used for any disorderly,
unlawful or extra hazardous purposes, nor for any purpose other than hereinabove
specified.
(b) The Tenant shall not manufacture, store, install, discharge,
release, discard, incinerate, burn or otherwise use, introduce or dispose of any
of the following substances on the Property, in the Demised Premises, into or
through the sewer, drainage system, ground, or the air:
(i) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976, as amended from time to time, and
regulations promulgated thereunder;
(ii) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, and regulations promulgated thereunder;
(iii) any "hazardous waste" or "hazardous substance" as may be
defined by any applicable local, county, state, commonwealth or other federal
law, as amended from time to time, and regulations promulgated thereunder;
-4-
<PAGE>
(iv) asbestos or asbestos containing material;
(v) polychlorinated biphenyls in concentrations greater than
50 parts per million;
(vi) any other material or substance, whether solid, gaseous
or liquid, the presence of which is prohibited by any law similar to those set
forth in this Subsection or otherwise addressing environmental or health
matters.
(c) Notwithstanding subparagraph (b) above, nothing herein shall preclude
Tenant from conducting operations and using and disposing of substances and
materials in the normal course of its business in accordance with both federal
law and the hazardous waste permits issued and maintained with the City of
Alexandria, shown on Exhibit B, annexed hereto and incorporated herein, provided
that such substances and materials have been expressly approved by the Landlord,
which approval shall be granted in its sole and absolute discretion. All
substances used in or upon the Demised Premises shall be delivered, used,
removed, and disposed of in accordance with all applicable federal, state and
local laws. The Tenant shall indemnify the Landlord and any lender secured by
the Demised Premises for any damages, cost or expense, including attorney fees,
incurred as a result of the breach of the Tenant's covenant in this Paragraph 7.
8. Common Areas. All common areas and facilities not within the Demised
Premises, which Tenant may be permitted to use and occupy, are to be used and
occupied under a revocable license, and if the amount of such areas shall be
diminished, Landlord shall not be subject to any liability nor shall Tenant be
entitled to any compensation or diminution or abatement of Rent, nor shall such
diminution of such areas be deemed constructive or actual eviction.
9. Parking. Tenant shall have the right during normal business hours to
the use of its pro rata share of parking spaces on the Property. All automobile
parking areas shown on the plans for the Property shall be under the sole and
exclusive control of the Landlord. Use by all tenants, their officers, agents,
employees and visitors, shall be subject to reasonable rules for the use thereof
which may from time to time be promulgated by Landlord, including, but not
limited to, rules designating areas for employee parking, assignment of specific
spaces to any tenant, controlling of ingress and egress, locating and arranging
spaces, and generally maintaining the parking lot in the manner, in Landlord's
discretion, as is consistent with the use of the areas by all tenants. Landlord
shall have the right to grant to any tenant an exclusive revocable license to
the use of certain parking spaces, and the Tenant shall have the right to use
only those parking spaces on the Property specifically assigned to the Tenant or
designated for common use.
10. Options To Renew. Provided that the Tenant is not in default under the
terms herein, Tenant shall have the option to renew its lease of the Demised
Premises for an additional term of two (2) years commencing immediately upon the
expiration of the initial term herein, under the same terms and conditions,
except that the Rental amount shall be increased as follows:
-5-
<PAGE>
(i) In the first option year, commencing February 1, 1998, the sum
of Two Hundred Eighty Thousand and No/l00 Dollars ($280,000.00), payable in
advance in equal monthly installments of Twenty Three Thousand Three Hundred
Thirty Three and No/100 Dollars ($23,333.00).
(ii) In the second option year, commencing February 1, 1999, the sum
of Two Hundred Eighty Seven Thousand Four and No/100 Dollars ($287,004.00),
payable in advance in equal monthly installments of Twenty Three Thousand Nine
Hundred Seventeen and No/100 Dollars ($23,917.00).
In order the exercise each option, the Tenant must give the Landlord notice of
its intent to do so at least six (6) months prior to the expiration date of the
then current lease term.
11. Subletting and Assignment. Tenant shall not sublet the Demised
Premises or any part thereof or transfer possession or occupancy thereof to any
person, firm or corporation or transfer or assign this lease without the prior
written consent of the Landlord, which shall not be unreasonably withheld, and
subject to Landlord's right to sublet hereinafter described, nor shall any
subletting or assignment hereof be effected by operation of law or otherwise
than by the prior written consent of the Landlord. If Tenant is a corporation,
any transfer of a majority of Tenant's issued and outstanding capital stock
shall be deemed an assignment under this paragraph. If Tenant is a partnership,
any transfer of any interest in the partnership or other change in the
composition of the partnership which results in a change in the management of
Tenant from the person(s) managing the partnership on the date hereof shall be
deemed an assignment under this paragraph. In the event Tenant desires to assign
this Lease or sublet all or any portion of the Demised Premises, Tenant shall
give to Landlord thirty (30) days written notice of Tenant's intention so to do.
Within thirty (30) days after receipt of said notice, Landlord shall have the
right to sublet the Demised Premises from Tenant at the same Rent and Additional
Rent stipulated herein, regardless of the rental rate that Tenant may otherwise
be able to obtain upon assignment or subletting to others. In the event Landlord
has not exercised its right to sublet the Demised Premises as provided above in
this paragraph, Tenant may assign this Lease or sublet all or a portion of the
Demised Premises as set forth in the notice after first obtaining the written
consent of Landlord, which consent may be withheld for reasonable cause. If
Tenant does not so assign or sublet within sixty (60) days of the original
notice to Landlord pursuant to this paragraph, then Tenant shall again be
required to comply with the notice provisions hereof, and Landlord shall again
have the right to sublet. The consent by Landlord to any assignment, transfer or
subletting to any party shall not be construed as a waiver or release of Tenant
from the terms of any covenant or obligation under this Lease, nor shall the
collection or acceptance of Rent from any such assignee, transferee, subtenant
or occupant constitute a waiver or release of Tenant of any covenant or
obligation contained in this Lease, nor shall any such assignment or subletting
be construed to relieve Tenant from giving Landlord said thirty (30) days notice
or from obtaining the consent in writing of Landlord to any future assignment or
subletting. In the event that Tenant defaults hereunder, Tenant hereby assigns
to Landlord the rent due from any subtenant of Tenant and hereby authorizes each
such subtenant to pay said rent directly to Landlord.
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12. Upkeep of Demised Premises and Surrender. (a) Tenant shall keep the
Demised Premises and the fixtures and equipment therein in clean, safe and
sanitary condition, shall take good care thereof, and shall suffer no waste or
injury thereto. Tenant shall make all repairs to the Demised Premises caused by
any negligent act or omission of Tenant, or its employees or invitee.
(b) Tenant shall provide at its expense (i) periodic maintenance,
including the replacement of filters as often as may be necessary, to all base
building heating, ventilating and air conditioning equipment, and (ii) servicing
of such equipment by a qualified service contractor at least twice a year
(spring and fall) in accordance with manufacturer's maintenance standards.
(c) The Landlord shall have the right to install a security light
upon the exterior of the Demised Premises and to connect it to the Tenant's
electrical service. In such event Tenant at its expense shall provide electric
current to such fixture.
(d) Tenant shall maintain, replace and repair any plate glass in or
about the walls, doors or windows of the Demised Premises.
(e) Tenant shall at the expiration or other termination of the Term
of this Lease, surrender and deliver up the Demised Premises, broom clean, in
the same order and condition as the same now is or shall be in at the
commencement of the Term hereof, ordinary wear and tear excepted. Upon such
termination of this Lease, Landlord shall have the right to reenter and resume
possession of the Demised Premises.
13. Alterations. (a) Tenant shall not make any alterations, installations,
changes, replacements, additions or improvements (structural or otherwise) in or
to the Demised Premises or any part thereof without the prior written consent of
Landlord.
(b) The Tenant shall provide the Landlord in timely manner with
complete working drawings of any improvements or alterations within the Demised
Premises approved by the Tenant. Any such improvements or alterations shall be
constructed in a reasonable period of time after receipt of such working
drawings by the Landlord at the expense of Tenant, unless the Landlord expressly
waives its right to perform such construction. Any revision or modification to
the approved drawings after commencement of construction shall be grounds for a
reasonable extension of the period of construction within the Demised Premises.
In the event that the Tenant shall fail to provide drawings which it has
approved in sufficient time to permit completion of construction within the
Demised Premises prior to the lease commencement date, the lease commencement
date shall not be extended, and Tenant shall take possession of the Demised
Premises and commence rental payments as otherwise provided herein, without
abatement of any kind, even though construction may not be complete, nor an
occupancy permit issued.
(c) It is expressly understood that all alterations, installations,
or improvements, including wall-to-wall carpet, upon or within the Demised
Premises (whether with or without the Landlord's consent), shall remain upon the
Demised Premises and shall be surrendered with the
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Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate such noise and vibrations.
(b) Maintenance and repair of equipment such as separate air
conditioning equipment or any other type of special equipment, whether installed
by Tenant or by Landlord on behalf of Tenant, shall be the sole responsibility
of Tenant and Landlord shall have no obligation in connection therewith.
16. Notice of Defects. Tenant shall give Landlord prompt notice of any
defects or breakage in the structure, equipment or fixtures of the Demised
Premises or Property.
17. Liability. (a) Landlord assumes no liability or responsibility
whatsoever with respect to the conduct and operation of the business to be
conducted in the Demised Premises. Landlord shall not be liable for any accident
or injury to any person or persons or property in or about the Demised Premises
or the Property which are caused by the conduct and operation of said business
or by virtue of equipment or property of Tenant in the Demised Premises. Tenant
agrees to hold Landlord and the holders of any mortgages or deeds of trust on
the Property harmless against all such claims. Tenant shall indemnify and hold
harmless Landlord and the holders of any mortgages or deeds of trust on the
Property from and against any loss, damage or liability occasioned by or
resulting from any default hereunder or any willful or negligent act on the part
of Tenant, its agents, employees or invitee, or persons permitted in the Demised
Premises by Tenant.
(b) Landlord shall not be liable for any accident or damage caused
by electric light or wires or any accident or damage which may occur through the
operation of heating, air conditioning, lighting or plumbing apparatus, or any
accident or injury occurring in connection with the Property and its services.
All personal property of Tenant in the Demised Premises or on the Property shall
be at the sole risk of Tenant. Landlord shall not be liable for loss or damage
to property of Tenant caused by rain, snow, water or steam that may leak into or
flow from any part of the Property through any defects in the roof or plumbing
or from any other source, including but not limited to acts or omissions on the
part of other tenants of Property or persons using the Property or present
therein. It is understood and agreed that Tenant covenants to save Landlord and
the holders of any mortgages or deed of trust on the Property harmless and
indemnified from all loss, damage, liability or expense incurred by reason of
Tenant's neglect in its use of the Demised Premises or the Property or any part
thereof including the use of the water, steam, electric or other systems, and
the injury, loss or damage to any person or party upon the Demised Premises.
18. Signs. Tenant agrees that no sign, advertisement or notice shall be
inscribed, painted or affixed on any part of the outside or the inside of the
Demised Premises, or the Property, except adjacent to the doors of the offices,
and then only in such size, color and style as Landlord in its discretion shall
approve. Landlord shall have the right to prohibit any sign, advertisement, or
notice of Tenant which in the Landlord's opinion tends to impair the appearance
or reputation of the Property or its desirability as a building for general
offices, and upon written notice from Landlord Tenant shall refrain from and
discontinue such advertisement and Landlord in addition to its other
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remedies for default hereunder, shall have the right to remove the same, and
Tenant shall be liable for any and all costs and expenses incurred by said
removal.
19. Ordinances, Regulations and Rules. (a) Tenant shall at Tenant's cost,
promptly comply with and carry out all orders, requirements or conditions now or
hereafter imposed upon Tenant by the ordinances, laws, and/or regulations of
local, state or federal governments, or by any of their various departments or
agencies, whether required of Landlord or otherwise to be done or performed
during the term of this Agreement, insofar as they are occasioned by or required
in the conduct of the business of Tenant or its occupancy of the Demised
Premises. Tenant shall indemnify and save Landlord and the holders of any
mortgages or deeds of trust on the Property harmless from all penalties, claims
and demands resulting from failure or negligence in this respect.
(b) Tenant, its agents, employees and visitors, shall abide by and
observe the rules and regulations set forth below and such other reasonable
rules and regulations as may be promulgated from time to time by Landlord for
the operation and maintenance of the Property provided a copy thereof is sent to
Tenant. Nothing contained in this Lease shall be construed to impose upon
Landlord any duty or obligation to enforce such rules and regulations, or the
terms, conditions or covenants contained in any other lease, as against any
other tenant and Landlord shall not be liable to Tenant for violation of the
same by any other tenant, its employees, agents or invitee.
(i) The sidewalks, entries, receiving areas, parking lot and
other parts of the Property which are not occupied by Tenant shall not be
obstructed.
(ii) Tenant shall not install or permit the installation of
any exterior awnings, shades, and the like other than those approved by Landlord
in writing.
(iii) No additional locks shall be placed upon any doors of
the Demised Premises unless a key to any such lock is first given to the
Landlord.
(iv) Tenant shall not construct, maintain, use or operate
within the Demised Premises or elsewhere on the Property any equipment or
machinery which produces music, sound, noise or vibration which is audible or
detectable beyond the Demised Premises.
(v) Electric and telephone distribution boxes and air
conditioning equipment must remain accessible at all times.
(vi) Tenant shall locate its dumpster or trash container only
next to its loading dock in a manner which does not interfere with other
tenant's use or enjoyment of their space. All dumpsters or trash containers must
be kept closed and must be maintained in a sanitary manner.
(vii) No animals of any kind shall be brought into or kept
about the Building by any tenant.
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20. Indemnity. Except in the event of Landlord's primary negligence
directly causing the loss giving rise to the claim, Tenant shall indemnify
Landlord and its agents and employees, the landlord of any underlying lease, and
the holders of any mortgages or deeds of trust on the Property and save them
harmless from and against any and all claims, actions, damages, liabilities and
expense in connection with loss of life, personal injury and/or damage to
property arising from or out of any occurrence in, upon or at the Demised
Premises, or the occupancy or use by Tenant of the Demised Premises or any part
thereof, or occasioned wholly or in part by any act or omission of the Tenant,
its agents, contractors, employees, servants, permitted subtenants, invitee or
licensees, or resulting from any default, breach, violation or non-performance
of this Lease by Tenant. In the event that Landlord or its agents and employees
shall, without fault on their part, be made a party to any litigation commenced
by or against Tenant, then Tenant shall protect and hold Landlord, the landlord
of any underlying lease, and the holders of any mortgages or deeds of trust on
the Property harmless and shall pay all costs, expenses and reasonable
attorney's fees incurred or paid in connection with such litigation. Tenant
shall pay, satisfy and discharge any and all judgments, orders and decrees which
may be recovered against Landlord in connection with the foregoing.
21. Entry for Repairs and Inspections. (a) Tenant shall permit Landlord,
or its representatives, to enter the Demised Premises, at all reasonable times,
without diminution of the Rent and Additional Rent payable by Tenant, to
examine, inspect and protect the same, and to make such alterations and/or
repairs as in the judgment of Landlord may be deemed necessary, or to exhibit
the same to prospective tenants, mortgagees or purchasers.
(b) If Tenant refuses or neglects to repair the Demised Premises as
required hereunder to the reasonable satisfaction of Landlord as soon as is
reasonably possible, Landlord may make such repairs without liability to Tenant
for any loss or damage that may accrue to Tenant's merchandise, fixtures, or
other property or to Tenant's business by reason thereof, and upon completion
thereof, Tenant shall pay Landlord's costs for making such repairs plus twenty
percent (20%) for overhead, upon presentation of a bill therefore, as Additional
Rent.
(c) Landlord shall at all times have an easement and the right to
enter in and through the Demised Premises for installation and maintenance of
utility connections and facilities reasonably necessary to provide services to
other portions of the Property and the common areas; provided, however, to the
extent reasonably possible the exercise of such rights shall not unreasonably
interfere with the operation of the Tenant's business.
(d) Landlord's entrance upon the Demised Premises occasioned by this
paragraph shall not constitute an eviction of Tenant in whole or in part and the
Rent and Additional Rent reserved shall in no manner abate while said repairs,
alterations, improvements, or additions are being made, by reason of loss or
interruption of business of Tenant, or otherwise.
22. Services and Utilities. (a) The Tenant at its cost shall provide for
its own use the following:
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(i) all utilities in and for the Demised Premises, including
without limitation, electric, gas, sewer, water, telephone and cable utility
services;
(ii) all janitorial, cleaning and char services;
(iii) all servicing, maintenance, repair and replacement of
electric lighting, electric service, plumbing, plumbing fixtures, supplemental
heating, ventilating and air conditioning equipment, and other mechanical and
electrical equipment within the Demised Premises, including tenant improvements
and fixtures;
(iv) servicing, maintenance and repair of the base building
heating, ventilating and air conditioning equipment by a qualified service
contractor; and
(v) trash removal service from such dumpster location or
locations on the grounds of the Property as Landlord may designate.
(b) Provided that the Tenant is not in default under any provision
of this Lease, the Tenant has not been negligent in its use of any heating,
ventilating and air conditioning equipment, and Tenant has periodically
maintained such equipment as required herein, under a service contract with a
qualified service contractor, Landlord shall replace or rebuild any such
equipment which, as a result of normal usage and depreciation, fails to function
despite Tenant's maintenance and repair;
(c) Any failure by Landlord to furnish the foregoing services shall
not render Landlord liable in any respect for damages to either person or
property, nor be construed as an eviction to Tenant, nor work an abatement of
Rent, nor relieve Tenant from Tenant's obligations hereunder.
23. Insurance. (a) Tenant shall not conduct or permit to be conducted any
activity or place any equipment in or about the Demised Premises which will, in
any way, increase the rate of insurance premiums on the Property. If any
increase in the rate of insurance premiums is stated by any insurance comparty
or by the applicable Insurance Rating Bureau to be due to any activity or
equipment in or about the Demised Premises, such statement shall be conclusive
evidence that the increase in such rate is due to such activity or equipment
and, as a result thereof, Tenant shall be Liable for such increase and shall
reimburse Landlord therefor, within ten (10) days of receipt of written notice,
said sum shall be deemed to be Additional Rent.
(b) Landlord shall insure the building, of which the Demised
Premises are a part, against damage by fire, including extended coverage, in any
amount Landlord in its sole discretion shall deem adequate, and shall maintain
such insurance throughout the term hereby demised. Tenant shall insure all of
its property in the Demised Premises against damage by fire, including extended
coverage, in an amount as shall be determined by the Landlord in consultation
with Tenant, and Tenant shall maintain such insurance throughout the term hereby
demised. In addition, Tenant shall
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26. Defaults and Remedies. (a) The following events shall be a default
(hereinafter referred to as a "Default") of Tenant under this Lease:
(i) Failure of Tenant to make any payment of Rent (including
Annual Increase) when due.
(ii) Failure of Tenant to make any payment of Additional Rent
when due.
(iii) Failure of Tenant to perform or comply with any
provision of this Lease to be performed or complied with by Tenant, other than
provisions for the payment of Rent or Additional Rent, where such failure shall
continue for a period of ten (10) days after written notice thereof by Landlord
to Tenant.
(iv) The taking of this Lease or the Demised Premises, or any
part thereof, upon execution or by other process of law directed against Tenant,
or upon or subject to any attachment at the instance of any creditor of or
claimant against Tenant, which execution or attachment shall not be discharged
or disposed of within thirty (30) days after the levy thereof.
(v) If Tenant fails to take possession of the Demised Premises
within a reasonable period of time after the lease commencement of the Term of
this Lease or substantially vacates or abandons the Demised Premises prior to
the normal expiration of the term.
(vi) The circumstance of Tenant, or any guarantor of Tenant's
obligation hereunder, in financial difficulties as evidenced by (1) its
admitting in writing its inability to pay its debts generally as they become
due, or (2) its filing a petition in bankruptcy or for reorganization or the
adoption of an arrangement under the Bankruptcy Act (as now or hereafter
existing), or an answer or other pleading admitting the material allegations of
such a petition or seeking, consenting to or acquiescing in the relief provided
for under such Act, or (3) its making an assignment of all or a substantial part
of its property for the benefit of its creditors or (4) its seeking or
consenting to or acquiescing in the appointment of a receiver or trustee for all
or a substantial part of its property or of the Demised Premises, or (5) its
being adjudicated a bankrupt or insolvent, or (6) the entry of a court order
without its consent, which order shall not be vacated, set aside or stayed
within sixty (60) days from the date of entry, appointing a receiver or trustee
for all or a substantial part of its property or approving a petition filed
against it for the effecting of an arrangement in bankruptcy or for a
reorganization pursuant to the Bankruptcy Act or for any other judicial
modification or alteration of the rights of creditors.
(b) The provisions of this paragraph shall apply notwithstanding the
payment by Tenant of the security deposit and/or the continued willingness and
ability of Tenant to pay Rent and otherwise perform hereunder. The receipt by
Landlord of payments of Rent, as such, accruing subsequent to the time of
Tenant's default under this paragraph and even though Landlord may have actual
notice of the occurrence of an event of Default under this paragraph shall not
be deemed a waiver by Landlord of the provisions of this paragraph.
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(c) Upon the occurrence of a Default, Landlord shall have the right
at its election, then or at any time thereafter either:
(i) To give Tenant written notice of Landlord's intent to
terminate this Lease on the date of the notice or on any later date, specified
in the notice, and on such date Tenant's right to possession of the Demised
Premises shall cease and this Lease shall thereupon be terminated; or
(ii) to re-enter without demand or notice and to take
possession of all or any part of the Demised Premises and expel Tenant and those
claiming through Tenant, and remove the property of Tenant and any other person,
either by summary proceedings, by action at law or in equity, by force without
due process of law, or by any other means, without being deemed guilty of
trespass or liable for prosecution or damages therefor, and without prejudice to
any remedies for nonpayment or late payment of Rent or breach of covenant. If
Landlord elects to reenter under this provision, Landlord may terminate this
Lease, or, from time to time, without terminating this Lease, may relet all or
any part of the Demised Premises as agent for Tenant for such term or terms and
at such rental and upon such other terms and conditions as Landlord may deem
advisable in its sole and absolute discretion, with the right to make
alterations and repairs to the Demised Premises. No such reentry or taking of
possession of the Demised Premises by Landlord shall be construed as an election
on Landlord's part to terminate this Lease unless a written notice of such
intention is given to Tenant or unless the termination be decreed by a court of
competent jurisdiction at the instance of Landlord. Nothing herein shall be
construed to require the Landlord to mitigate damages.
(d) If Landlord terminates this Lease pursuant to the preceding
subparagraph, Tenant shall remain liable (in addition to accrued liabilities)
for (i) Rent, Additional Rent and any other sums provided for in this Lease
until the date this Lease would have expired had such termination not occurred,
and any and all expenses (including attorney's fees, disbursements and brokerage
fees) incurred by Landlord in reentering and repossessing the Demised Premises,
in making good any Default of Tenant, in painting, altering, repairing or
dividing the Demised Premises, in protecting and preserving the Demised Premises
by use of watchmen and caretakers, and in reletting the Demised Premises, and
any and all expenses which Landlord may incur during the occupancy of any new
tenant; less (ii) the net proceeds of any reletting prior to the date this Lease
would have expired if it had not been terminated. Tenant agrees to pay to
Landlord the difference between items (i) and (ii) above for each month during
the Term, at the end of each such month. Any suit brought by Landlord to enforce
collection of such difference for any one month shall not prejudice Landlord's
right to enforce the collection of any difference for any subsequent month. In
addition to the foregoing, and without regard to whether this Lease has been
terminated, Tenant shall pay to Landlord all costs incurred by Landlord,
including reasonable attorney's fees, with respect to any lawsuit or action
instituted or taken by Landlord to enforce the provisions of this Lease.
Tenant's liability shall survive the institution of summary proceedings and the
issuance of any writ of restitution thereunder.
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(e) If Landlord terminates this Lease, Landlord shall have the
right, at any time, at its option, to require Tenant to pay to Landlord on
demand, as liquidated and agreed final damages in lieu of Tenant's liability
hereunder, the Rent, Additional Rent and all other charges which would have been
payable from the date of such demand to the date when this Lease would have
expired if it had not been terminated, (minus the fair rental value negotiated
in good faith with another tenant of the Demised Premises for the same period,
if any). If the Demised Premises shall have been relet for all or part of the
remaining balance of the Term by Landlord after a Default but before
presentation of proof of such liquidated damages, the amount of rent reserved
upon such reletting shall be deemed the fair rental value of the Demised
Premises for purposes of the foregoing determination of liquidated damages. Upon
payment of such liquidated and agreed final damages, Tenant shall be released
from all further liability under this Lease with respect to the period after the
date of demand.
(f) Tenant, on its own behalf and on behalf of all persons claiming
through Tenant, including all creditors does hereby waive any and all rights and
privileges, so far as is permitted by law, which Tenant and all such persons
might otherwise have under any present or future law (i) to the service of any
notice of intention to reenter which may otherwise be required to be given, (ii)
to redeem the Demised Premises, (iii) to reenter or repossess the Demised
Premises, or (iv) to restore the operation of this Lease, with respect to any
dispossession of Tenant by judgment or warrant of any court or otherwise,
whether such dispossession, reentry, expiration or termination be by operation
of law or pursuant to the provisions of this Lease.
(g) In the event of any breach by Tenant or any person or persons
claiming through Tenant of any of the provisions contained in this Lease,
Landlord shall be entitled to enjoin such breach and shall have the right to
invoke any right or remedy allowed at law or otherwise as if reentry, summary
proceedings or other specific remedies were not provided for in this Lease.
(h) Landlord shall, to the extent permitted by law, have (in
addition to all other rights) a right of distress for Rent and Additional Rent
and a lien on all Tenant's personal property as security for all adjusted Rent,
Additional Rent and any other sums payable under this Lease.
(i) If Tenant defaults in the making of any payment to a third party
or in the doing of any act herein required to be made or done by Tenant, then
after ten (10) days notice from Landlord (except in the event of nonpayment of
Rent or Additional Rent, for which no notice is required), Landlord may, but
shall not be required to, make such payment or do such act, and the amount and
the expense thereof, if made or done by Landlord, with interest thereon at the
rate of three hundred (300) base points over the prime rate of Crestar Bank,
Richmond, Virginia, or its successor, but not to exceed the highest lawful rate,
from the date paid by Landlord, shall be paid by Tenant to Landlord and shall
constitute Additional Rent hereunder due and payable with the next monthly
installment of Rent; but the making of such payment or the doing of such act by
Landlord shall not operate to cure such Default or to estop Landlord from the
pursuit of any remedy to which Landlord would otherwise be entitled.
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(j) All rights and remedies of Landlord under this Lease shall be
cumulative and shall not be exclusive of any other rights and remedies provided
to Landlord now or hereafter under law or under this Lease.
27. Waiver. If under the provisions hereof Landlord shall institute
proceedings and a compromise or settlement thereof shall be made, the same
shall not constitute a waiver of any covenant herein contained nor of any of
Landlord's rights hereunder. No waiver by Landlord of any breach of any
covenant, condition or agreement herein contained shall operate as a waiver of
such covenant, condition or agreement itself, or of any subsequent breach
thereof. No payment by Tenant or receipt by Landlord of a lesser amount than the
monthly installments of Rent herein stipulated shall be deemed to be other than
on account of the earliest stipulated Rent, nor shall any endorsement or
statement on any check or letter accompanying a check for payment of Rent or
Additional Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such Rent or Additional Rent or to pursue any other remedy provided
in this Lease. No reentry by Landlord, and no acceptance by Landlord of keys
from Tenant, shall be considered an acceptance of a surrender of this Lease.
28. Subordination. This Lease is subject and subordinate to all ground or
underlying leases and to all mortgages and/or deeds of trust which may now or
hereafter affect such leases or the Property and to all renewals, modifications,
consolidations, replacements and extensions thereof. This clause shall be
self-operative and no further instrument of subordination shall be required by
any mortgagee or trustee. In confirmation of such subordination, Tenant shall
execute promptly any certificate that the Landlord may request. Tenant hereby
constitutes and appoints Landlord the Tenant's attorney-in-fact to execute any
such certificate or certificates for an on behalf of Tenant. Notwithstanding the
foregoing, the party secured by any such deed of trust shall have the right to
recognize this Lease and, in the event of any foreclosure sale under such deed
of trust, or deed in lieu thereof, this Lease shall continue in full force and
effect at the option of the party secured by such deed of trust or the purchaser
under any such foreclosure sale; Tenant covenants and agrees that it shall at
the written request of the party secured by any such deed of trust, execute,
acknowledge and deliver any instrument that has for its purpose and effect the
subordination of this Lease to the lien of said deed of trust and the attornment
of the Tenant to such party. At the option of any landlord under any ground or
underlying lease to which this Lease is now or may hereafter become subject or
subordinate, Tenant agrees that neither the cancellation nor termination of such
ground or underlying lease shall by operation of law or otherwise, result in
cancellation or termination of this Lease or the obligations of the Tenant
hereunder, and Tenant covenants and agrees to attorn to such landlord or to any
successor to Landlord's interest in such ground or underlying lease and in that
event, this Lease shall continue as a direct lease between Tenant herein and
such landlord or its successor; and, in any case, such landlord or successor
under such ground or underlying lease shall not be bound by any prepayment on
the part of Tenant of any Rent for more than one month in advance, so that Rent
shall be payable under this Lease in accordance with its terms, from the date of
the termination of the ground or underlying lease, as if such prepayment had not
been made. Such landlord or successor under such ground or underlying lease
shall not be bound by this Lease or any amendment or modification of this Lease
unless, prior to the termination of such ground or
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underlying lease, a copy of this Lease or amendment or modification thereof, as
the case may be, shall have been delivered to such landlord or successor.
29. Estoppel Certificates. Tenant agrees, at any time and from time to
time, upon not less than five (5) days prior notice by Landlord, to execute,
acknowledge and deliver to Landlord a statement in writing in such form as
Landlord may request, (i) certifying that this Lease is unmodified (or if
modified, stating the modifications) and in full force and effect (or if not in
full force and effect, the reasons therefor), (ii) stating the dates to which
the Rent, Additional Rent and other charges hereunder have been paid by Tenant,
(iii) stating whether or not to the best knowledge of Tenant, Landlord is in
default in the performance of any covenant, agreement or condition contained in
this Lease, and if so, specifying each such default of which Tenant may have
knowledge, and (iv) stating the address to which notices to Tenant should be
sent. Any such statement delivered pursuant hereto may be relied upon by any
owner of the Property, any prospective purchaser of the Property, any mortgagee
or prospective mortgagee of the Property, any prospective assignee of any such
mortgagee, or any lessor or prospective lessor of the land which is a part of
the Property.
30. No Recourse to Landlord. The obligations of Landlord under this Lease
do not constitute personal obligations of the individual partners, directors,
officers, or shareholders of Landlord, and Tenant shall look solely to the
Property of which the Demised Premises are a part and to no other assets of the
Landlord or the holders of any mortgages or deeds of trust on the Property for
satisfaction of any liability in respect of this Lease and shall not seek
recourse against the individual partners, directors, officers or shareholders of
Landlord or the holders of any mortgages or deeds of trust on the Property or
any of their personal assets for such satisfaction.
31. Holding Over. If Tenant shall, with the knowledge and consent of
Landlord, continue to remain in the Demised Premises after the expiration of the
Term of this Lease and any extensions thereof, then and in such event, Tenant
shall, by virtue of this agreement become a tenant by the month at a monthly
rental equal to one hundred twenty percent (120%) of the monthly installment of
Rent agreed by the Tenant to be paid as aforesaid, commencing said monthly
tenancy with the first day next after the end of the Term above demised. Tenant
shall give to Landlord at least thirty (30) days written notice of any intention
to quit the Demised Premises, and Tenant shall be entitled to thirty (30) days
written notice to quit the Demised Premises, except in the event of non-payment
of Rent or Additional Rent or of the breach of any other covenant by Tenant, in
which event Tenant shall not be entitled to any notice to quit, the usual thirty
(30) days notice to quit being hereby expressly waived; provided, however, that
in the event that Tenant shall hold over after the expiration of the Term hereby
created, and if Landlord shall desire to regain possession of the Demised
Premises promptly at the expiration of the Term aforesaid, then at any time
prior to Landlord's acceptance of Rent from Tenant as a monthly tenant
hereunder, Landlord, at it option, may forthwith reenter and take possession of
the Demised Premises without process, or by any legal process in force.
-18-
<PAGE>
32. Submission of Lease. The submission of this Lease for examination by
Tenant does not constitute a reservation of or option for the Demised Premises,
and this Lease shall become effective as a lease only upon execution and
delivery thereof by Landlord and Tenant.
33. Covenant of Landlord. Landlord covenants that it has the right to make
this Lease, and that if Tenant shall pay the Rent and Additional Rent and shall
perform all of Tenant's obligation under this Lease, Tenant shall, during the
term hereof, freely, peaceably and quietly occupy and enjoy the full possession
of the Demised Premises without molestation or hindrance by Landlord or any
party claiming through or under Landlord, subject, however, to the underlying
lease, mortgages and deeds of trust described in Paragraph 28 and except as
otherwise provided herein. The term "Landlord" as used herein shall mean solely
the owner of Landlord's interest in the Property, whoever that may be at the
relevant time, so that in the event of any sale or transfer of Landlord's
interest in the Property, any prior Landlord shall be freed and relieved of all
covenants and obligations of Landlord hereunder.
34. Force Majeure. If Landlord, as the result of any (i) strikes,
lockouts, or labor disputes; (ii) inability to obtain labor, materials, fuel,
electricity, services or reasonable substitutes therefore; (iii) acts of God,
civil commotion, fire or other casualty; (iv) governmental action of any kind;
or (v) other conditions similar to those enumerated above beyond Landlord's
reasonable control, fails punctually to provide any service or to perform any
obligation on its part to be performed hereunder, then, unless otherwise
expressly provided, such failure shall be excused and shall not be a breach
hereunder, but only to the extent occasioned by such event. In the event,
however, that any such event shall prevent Landlord's performance for a period
longer than sixty (60) consecutive days, the Tenant shall have the right to
terminate this Lease.
35. Omitted.
36. Omitted.
37. Waiver of Trial by Jury. Tenant hereby waives all right to trial by
jury in any claim, action, proceeding or counterclaim by either Landlord or
Tenant against each other on any matters arising out of or in any way connected
with this Lease, the relationship of Landlord and Tenant, and/or Tenant's use or
occupancy of the Demised Premises.
38. Attorney's Fees. If, in the event of a default by Tenant, Landlord
places the enforcement of this Lease, or any part thereof, or the collection of
any Rent or Additional Rent due, or to become due hereunder, or recovery of the
possession of the Demised Premises in the hands of an attorney, or files suit
upon the same, Tenant agrees to pay Landlord's attorney's fees.
39. Brokers. Landlord and Tenant each represent and warrant that neither
of them has employed any broker in carrying on the negotiations relating to this
Lease. Landlord shall indemnify and hold Tenant harmless, and Tenant shall
indemnify and hold Landlord harmless, from and against
-19-
<PAGE>
any claim for brokerage or other commission arising from or out of any breach of
the foregoing representation and warranty.
40. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed duly given if delivered in person or sent by
certified or registered mail, return receipt requested, first class, postage
prepaid, (i) if to Landlord, at Suite 200, 1201 E. Abingdon Drive, Alexandria,
Virginia 22314, and (ii) if to Tenant at 500 Pendleton Street, Alexandria,
Virginia 22314, unless notice of a change of address is given pursuant to the
provisions of this paragraph.
41. Miscellaneous. (a) This Lease and the Exhibits attached hereto contain
and embody the entire agreement of the parties hereto and no representations,
inducements, or agreements, oral or otherwise, between Landlord and Landlord's
agents and Tenant not contained in this Lease and Exhibits shall be of any force
or effect. This Lease may not be modified, changed or terminated in whole or in
part in any manner other than by an agreement in writing duly signed by both
parties hereto.
(b) The terms, covenants and conditions hereof shall be binding upon
and inure to the permitted successors in interest and assigns of the parties
hereto. Landlord may freely and fully assign its interest hereunder.
(c) If any provision of this Lease or the application thereof to any
person or circumstances shall to any extent be held void, unenforceable or
invalid, then the remainder of this Lease or the application of such provision
to persons or circumstances other than those as to which it is held void,
unenforceable or invalid shall not be affected thereby, and each provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.
(d) Tenant shall not record this Lease without the written consent
of Landlord, which may be given or denied in Landlord's sole discretion. If
Landlord consents to such recordation, the cost thereof shall be paid by Tenant.
(e) The captions and headings throughout this Lease are for
convenience and reference only and the words contained therein shall in no way
be held or deemed to define, limit, describe, explain, modify, amplify or add to
the interpretation, construction or meaning of any provision of or the scope of
intent of this Lease nor in any way affect this Lease.
(f) Nothing contained in this Lease shall be deemed or construed to
create a partnership or joint venture of or between Landlord and Tenant, or to
create any other relationship between the parties hereto other than that of
Landlord and Tenant.
(g) Feminine or neuter pronouns shall be substituted for those of
the masculine form, the plural shall be substituted for singular number and vice
versa in any place or places herein in which the context may require such
substitute or substitution.
-20-
<PAGE>
(h) This Lease is to be construed under the laws of the jurisdiction
in which the Property is located.
42. Tenant Improvement Allowance. The Landlord shall provide an allowance
of Forty Thousand and No/100 Dollars ($40,000.00) to the Tenant for heating and
air conditioning improvements in 840 North Henry Street, and any other tenant
improvements in that bay as the Landlord may approve, which shall be paid upon
completion of construction or installation thereof. The heating and air
conditioning improvements shall be zoned within the bay, and the Landlord shall
have the right to approve the plans therefore, which shall not be unreasonably
withheld. The cost of such improvements shall be paid upon completion of
construction or installation thereof. The Landlord reserves the right to the tax
depreciation for all such improvements.
43. Authority of Landlord and Tenant. Each individual executing this Lease
on behalf of Landlord and Tenant represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of Landlord or Tenant in
accordance with a partnership agreement or a duly adopted resolution of the
Board of Directors or in accordance with its bylaws and that this Lease is
binding upon Landlord and Tenant in accordance with its terms.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal the day and year first hereinabove written.
LANDLORD:
NORTH POINT ASSOCIATES LIMITED
PARTNERSHIP
By NORTH POINT CORPORATION
General Partner
By: /s/ [ILLEGIBLE]
--------------------------------
President
TENANT:
COMMONWEALTH SCIENTIFIC CORPORATION
By: /s/ George R. Thompson
-----------------------------------
President
-21-
<PAGE>
STATE OF VIRGINIA )
) ss:
AT LARGE )
On this ______day of _________, 19___, before the undersigned, a Notary
Public of the State and County aforesaid, personally appeared
_______________________, who acknowledged himself to be the
__________________________ of North Point Associates Limited Partnership, a
Virginia limited partnership, and that he, being authorized so to do, executed
the foregoing instrument for the purposes therein contained.
In witness whereof I hereunto set my hand and official seal.
---------------------------------------
Notary Public
My Commission Expires: ________________
STATE OF VIRGINIA )
) ss:
AT LARGE )
On this 6th day of February, 1995 before the undersigned, a Notary Public
of the State and County aforesaid, personally appeared George R. Thompson, who
acknowledged himself to be the President of Commonwealth Scientific, a
Corporation, and that he, being authorized so to do, executed the foregoing
instrument for the purposes therein contained.
In witness whereof I hereunto set my hand and official seal.
/s/ Janet C. Holler
---------------------------------------
Notary Public
My Commission Expires: August 31, 1995
-------------------
-22-
<PAGE>
Exhibit "A"
North Point Center
[GRAPHIC]
Legend
------
================================================================================
ADDRESS GROSS S.F. AVAILABILITY
- --------------------------------------------------------------------------------
800 9,750 S.F.
- --------------------------------------------------------------------------------
802 9,750 S.F.
- --------------------------------------------------------------------------------
806 4,250 S.F.
- --------------------------------------------------------------------------------
810 4,250 S.F.
- --------------------------------------------------------------------------------
814 4,250 S.F.
- --------------------------------------------------------------------------------
822 4,250 S.F.
- --------------------------------------------------------------------------------
828 4,250 S.F.
- --------------------------------------------------------------------------------
832 4,250 S.F.
- --------------------------------------------------------------------------------
834 4,250 S.F.
- --------------------------------------------------------------------------------
838 9,750 S.F.
- --------------------------------------------------------------------------------
840 9,750 S.F.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
TOTAL 68,750 S.F. % LEASED
<PAGE>
COMMONWEALTH SCIENTIFIC CORPORATION
GAS USED AT HENRY STREET
ARGON
NITROGEN
HELIUM
XENON
OXYGEN APPROVED:
NEON NORTH POINT ASSOCIATES LIMITED
PARTNERSHIP
*CHLORINE
*FREON 14 (CFu) By: NORTH POINT CORPORATION, general partner
*FREON 116 (C2F6) By: /s/ [ILLEGIBLE] Pres
------------------------
*METHYLFLOURIDE
* Used in concentration below that which requires state regulation; Permits
issues to cover proper storage and handling of the gases.
<PAGE>
[SEAL OF ALEXANDRIA] CITY OF ALEXANDRIA, VIRGINIA [SEAL]
CODE ENFORCEMENT
P.O. BOX 178
Paul E. Radauskas, CPCA ALEXANDRIA, VIRGINIA 22313 703-838-4360
Director November 21, 1994
Armando M. Lourenco Fax
Deputy Director 703-838-3880
COMMONWEALTH SCIENTIFIC CORP
500 PENDLETON ST
ALEXANDRIA,VA 22314
Dear Sir/Madam:
Our records indicate that you are the holder of a Fire Prevention Permit which
will expire on 12/30/94. This permit is required under section 4-2-12 of the
Code of the City of Alexandria, and may be renewed at City Hall, 301 King St.,
Suite 4200, Alexandria VA, Monday through Friday from 8:00 am to 4:30 pm. You
may also renew this permit by mail, by completing the enclosed application in
full, and mailing it along with the fee listed below to:
Code Enforcement Bureau
PO Box 178
Alexandria, Virginia 22313
Your check should be made payable to "City of Alexandria." If you are no longer
conducting the listed operation, please contact us at (703) 838-4360 so that we
may update our records.
Information relevant to your permit(s) is as follows:
PERMIT NO. ARTICLE DESCRIPTION FEE
88-134 2500.2 the production, use, storage or sale of $ 88.50
cryogenic liquids.
You are in violation of the Fire Prevention Code if you are operating without a
valid permit. You must renew this permit prior to its expiration date. If this
permit has expired, all operations pertaining to the provisions of this permit
should cease immediately until the necessary permit is secured.
Thank you for your prompt consideration in this matter.
Sincerely,
/s/ Thomas J. Flynn
Thomas J. Flynn
Chief Deputy Fire Marshall
<PAGE>
[SEAL OF ALEXANDRIA] CITY OF ALEXANDRIA [VIRGINIA STATE SEAL]
VIRGINIA
(703) 838-4360 INSPECTIONS
(703) 838-3880 (Fax) (703) 838-6498
CODE ENFORCEMENT BUREAU
FIRE PREVENTION CODE PERMIT
PERMIT NUMBER 88-132 DATE ISSUED: 12/30/93
TO WHOM IT MAY CONCERN:
In accordance with the provisions of the Fire Prevention Code of the City of
Alexandria, Virginia, THIS PERMIT for keeping, storage, use, manufacture,
transportation, or other disposition of flammable, combustible or explosive
materials; or for conducting processes which produce conditions hazardous to
life and property from fire or explosion; or for the installation of equipment
used in connection with such activities is HEREBY GRANTED. This PERMIT is
granted by virtue of the party listed below having made application in due form,
and as the conditions, surroundings and arrangements are, in our opinion, such
that the intent of the Regulations can be observed.
This PERMIT is issued and accepted on the condition that all Regulations now
adopted or that may hereafter be adopted, shall be complied with including such
specific conditions as may be stated on the reverse side of this PERMIT.
This PERMIT, as required by section 2800.3.2 of the Fire Prevention Code, is
issued to COMMONWEALTH SCIENTIFIC CORP
for the premises located at 500 PENDLTN/834-38 N HEN Alexandria Virginia
for: the manufacture, use, storage or transportation of
flammable and combustible liquids.
This PERMIT is valid, unless revoked for cause, from 12/30/93 until 1200 hours
(noon) on 12/30/94
Michael A. Conner, Sr., CPCA, Chief Fire Marshal
THIS PERMIT MUST BE POSTED ON THE ABOVE MENTIONED PREMISES AT ALL TIMES. This
permit does not take the place of any license required by law and is not
transferable. Any change in the use or occupancy of the premises shall require a
new permit.
<PAGE>
Exhibit 10.58
NN LEASE FORM 123194
PROJECT North Point
LENDER APP. _____
Rev. 1-24-95
Rev. 7-25-96
LEASE AGREEMENT
THIS LEASE is made as of the 14th day of August, 1996 by and between NORTH
POINT ASSOCIATES LIMITED PARTNERSHIP, a Virginia limited partnership
(hereinafter referred to as "Landlord") and COMMONWEALTH SCIENTIFIC CORPORATION,
a Virginia corporation, (hereinafter referred to as "Tenant").
WITNESSETH:
In consideration of the mutual agreement hereinafter set forth, the
parties do hereby mutually agree as follows:
1. Premises. Landlord does hereby lease to Tenant and Tenant does hereby
lease from Landlord, for the term and upon the conditions hereinafter provided,
approximately 4,250 square feet of space (hereinafter referred to as the
"Demised Premises") commonly known as 828 North Henry Street, Alexandria,
Virginia 22314 within the North Point office building complex (the building and
land being hereinafter referred to as the "Property"), together with a license
hereinafter described to the non-exclusive use, in common with others, of such
parking spaces and other facilities designed for common use as may be installed
by Landlord. The Demised Premises are outlined in red on the plan attached
hereto marked as Exhibit A and incorporated herein by reference, and shall be
deemed to be the total square footage described herein, regardless of actual
measurement.
2. Term. (a) The Demised Premises are leased for a term (hereinafter
referred to as the "Term") commencing on the 15th day of September, 1996 (or as
soon thereafter as Landlord shall have made the Demised Premises available for
the Tenant's use and occupancy) and ending on the 14th day of September, 2001,
unless the term shall sooner cease or expire as hereinafter provided.
(b) Omitted.
(c) The taking of possession of the Demised Premises shall be deemed
an acceptance of the same by Tenant.
<PAGE>
(d) After the lease commencement date, upon request of either party,
Landlord and Tenant shall promptly execute, acknowledge and deliver to one
another a written instrument certifying the lease commencement date and
expiration date.
(e) If Landlord is unable to deliver possession of the Demised
Premises to Tenant by reason of the holding over or retention of possession by
any tenant or occupant, the lease commencement date shall be extended for such
period of time as may be reasonably necessary to enable Landlord to evict such
tenant or occupant and to deliver possession of the Demised Premises to Tenant.
3. Rental. (a) Tenant shall pay as rent (hereinafter referred to as
"Rent") for the Demised Premises the sum of Forty Thousand Three Hundred Eighty
Dollars ($40,380.00.00) per annum, payable in equal monthly installments of
Three Thousand Three Hundred Sixty Five Dollars ($3,365.00), the first
installment payable on the execution of this Agreement and the remaining
installments payable in advance on the first day of each and every month
beginning October 1, 1996 at the office of Landlord herein designated (or at
such other place as Landlord may designate in a notice to Tenant), without prior
demand therefor and without any set off, deduction or counterclaim whatsoever.
4. Additional Rent. (a) Tenant shall pay Landlord as additional rent
(hereinafter referred to as "Additional Rent") its pro rata share (as
hereinafter defined) of Taxes and Assessments and Common Area Maintenance
Expenses (as hereinafter defined).
(b) For purpose of this Lease:
(i) pro rata share shall mean six and two tenths percent
(6.2%) representing the ratio that the area of the Demised Premises bears to the
total rentable area in the building.
(ii) "Taxes and Assessments" shall mean all taxes and
assessments and governmental charges (including personal property and real
estate taxes), whether federal, state, county or municipal, and whether by
taxing districts or authorities presently taxing the Property or by others
subsequently created, and any other taxes and assessments (including franchise
taxes) attributable to the Property or its operation, whether or not directly
paid by Landlord, excluding however, federal and state taxes on income, unless
such income taxes replace real estate taxes. Taxes and Assessments shall be the
amount due in cash for any year and shall not be determined on an accrual or
fiscal year basis. It is agreed that Tenant shall be responsible for ad valorem
taxes on its personal property.
(iii) "Common Area Maintenance Expenses" shall mean the cost
of maintenance and operation of the common areas of the Property, which shall
include without limitation the costs of insuring the Property for all hazard
loss and liability coverage, and the cost and upkeep of all parking and common
areas, removal of litter and debris from the common areas (excluding, however,
tenant trash dumpster service, which shall be the responsibility of each
2
<PAGE>
respective tenant), maintenance and utility expense of any common area lighting,
snow removal, landscaping and any other similar expense.
(c) Landlord shall endeavor to give to Tenant on or before the first
day of April of each year a statement prepared by Landlord's certified public
accountant of the increase in the Additional Rent payment by Tenant hereunder,
but failure by Landlord to give such statement by said date shall not constitute
a waiver by Landlord of his right to require an increase in Additional Rent.
Upon the commencement of the Lease, Tenant shall pay with its Rent in advance in
monthly installments the Additional Rent based upon the Landlord's budget for
such Costs of Taxes and Assessments and Common Area Maintenance Expenses for
that calendar year. At the commencement of the next calendar year, the Tenant
shall pay an amount equal to 110% of the Additional Rent payable each month of
the preceding calendar year, which amount shall be used as an estimate for said
current year. If the actual Costs of Taxes and Assessments and Common Area
Maintenance Expenses exceeds in any calendar year the budget estimate of the
Landlord, then upon receipt of a statement from Landlord, Tenant shall pay a
lump sum equal to its pro rata share of such total amount of the Costs of Taxes
and Assessments and Common Area Maintenance Expenses, less the total of the
monthly installments of estimated Costs of Taxes and Assessments and Common Area
Maintenance Expenses paid in previous calendar year for which comparison is then
being made; and the estimated monthly installments to be paid for the next year
following said comparison year, shall be adjusted to reflect 110% of such actual
amount in the manner set forth above. If in any year the Tenant's share of
direct expenses shall be less than the preceding year, then upon receipt of
Landlord's statement, any other payment made by Tenant on the monthly
installment basis provided above shall be credited toward the next monthly Rent
falling due and the estimated monthly installments of Taxes and Assessments and
Common Area Maintenance Expenses to be paid shall be adjusted to reflect such
lower amount for the most recent comparison year. Upon termination of this
Lease, any money owed by one party to the other shall be promptly paid
(d) Should this Lease commence or terminate at any time other than
the first day of a calendar year, the cost adjustment referred to in Paragraphs
4(a), 4(b) and 4(c) shall be calculated for the commencement or termination year
on a pro rata basis. Tenant shall only pay the cost adjustment for the calendar
days during which Tenant leases the Demised Premises.
(e) Each statement provided by Landlord pursuant to this paragraph
shall be conclusive and binding upon Tenant unless fifteen (15) days after
receipt of the statement, Tenant shall notify Landlord that it disputes the
correctness of the statement, specifying the respects in which the statement is
claimed to be incorrect. Tenant shall then have the right to request that
Landlord provide, at Tenant's expense, an audit of its books and records
relating to the statement. Pending determination of the dispute, Tenant shall
pay within ten (10) days from notice any amounts due from Tenant in accordance
with the statement, but such payment shall be without prejudice to Tenant's
position.
5. Rent Adjustment. (a) In addition to the Rent and Additional Rent
hereinabove set forth, it is understood and agreed that the basic monthly Rent
of $3,365.00______ hereinabove set forth shall be increased each subsequent
lease year following the first lease year during the Term
3
<PAGE>
of this Lease on the first day of each such lease year which is hereby
designated September 15, by an amount (hereinafter, the "Annual Increase" and
which shall be deemed to be Rent herein) measured by 30% of any increase in the
United States Bureau of Labor Statistics, Consumer Price Index for All Urban
Wage Earners, All Items for Washington, D. C. SMSA (1967 = 100) (hereinafter
referred to as the "Index"). Such Annual Increase, if any, shall be computed as
follows:
The basic monthly Rent shall be multiplied by a fraction, the
numerator of which shall be the most recently published monthly
Index preceding the first day of the lease year for which such
annual adjustment is to be made, and the denominator of which
fraction shall be the corresponding monthly Index immediately
preceding the commencement date of the term of this Lease. This will
yield an "adjusted basic monthly Rent". The basic monthly Rent shall
be subtracted and the difference multiplied by 30%; which shall be
deemed the monthly Annual Increase to be added to the basic monthly
Rent.
(b) If such Index shall be discontinued with no successor or
comparable successor Index, the parties shall attempt to agree upon a substitute
formula. If the parties are unable to agree upon a substitute formula, then the
matter shall be determined by arbitration in accordance with the rules of the
American Arbitration Association then prevailing with the understanding that it
is the intent of the parties that the Rent shall be adjusted based on the
components for the current Index to the extent possible.
6. Past Due Rent and Late Charges. If Tenant shall fail to pay, when the
same is due and payable, any Rent or any additional Rent, or any other amounts
or charges, such unpaid amounts shall bear interest from the due date thereof to
the date of payment as hereafter provided. In addition, Tenant shall pay to
Landlord, as a late charge, four percent (4%) of any payment required to be made
by Tenant which is more than five (5) days late.
7. Use of Demised Premises. (a) Tenant may use and occupy the Demised
Premises solely for purposes of general office, fabrication and assembly,
engineering, research and development, testing and repair, water processing,
storage of materials, and machine shop use subject to, and in accordance with
all other provisions of this Lease and all applicable zoning and other
governmental regulations. Tenant shall not abandon or substantially abandon the
Demised Premises. Tenant shall not obstruct, interfere, or conflict with, the
rights of other tenants, or conflict with the fire laws or regulations, or with
any insurance policy upon the Property or any part thereof, or with any
statutes, rules or regulations now existing or subsequently enacted or
established by local, state or federal governments, not shall Tenant use or
permit the Demised Premises, or any part thereof, to be used for any disorderly,
unlawful or extra hazardous purposes, nor for any purpose other than hereinabove
specified.
4
<PAGE>
(b) The Tenant shall not manufacture, store, install, discharge,
release, discard, incinerate, burn or otherwise use, introduce or dispose of any
of the following substances on the Property, in the Demised Premises, into or
through the sewer, drainage system, ground, or the air:
(i) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976, as amended from time to time, and
regulations promulgated thereunder;
(ii) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, and regulations promulgated thereunder;
(iii) any "hazardous waste" or "hazardous substance" as may be
defined by any applicable local, county, state, commonwealth or other federal
law, as amended from time to time, and regulations promulgated thereunder;
(iv) asbestos or asbestos containing material;
(v) polychlorinated biphenyls in concentrations greater than
50 parts per million;
(vi) any other material or substance, whether solid, gaseous
or liquid, the presence of which is prohibited by any law similar to those set
forth in this Subsection or otherwise addressing environmental or health
matters.
(c) Notwithstanding subparagraph (b) above, nothing herein shall
preclude Tenant from conducting operations and using and disposing of substances
and materials in the normal course of its business in accordance with both
federal law and the hazardous waste permits issued and maintained with the City
of Alexandria, shown on Exhibit B, annexed hereto and incorporated herein,
provided that such substances and materials have been expressly approved by the
Landlord, which approval shall be granted in its sole and absolute discretion.
All substances used in or upon the Demised Premises shall be delivered, used,
removed, and disposed of in accordance with all applicable federal, state and
local laws. The Tenant shall indemnify the Landlord and any lender secured by
the Demised Premises for any damages, cost or expense, including attorney fees,
incurred as a result of the breach of the Tenant's covenant in this Paragraph 7.
8. Common Areas. All common areas and facilities not within the Demised
Premises, which Tenant may be permitted to use and occupy, are to be used and
occupied under a revocable license, and if the amount of such areas shall be
diminished, Landlord shall not be subject to any liability nor shall Tenant be
entitled to any compensation or diminution or abatement of Rent, nor shall such
diminution of such areas be deemed constructive or actual eviction.
9. Parking. Tenant shall have the right during normal business hours to
the use of its pro rata share of parking spaces on the Property. All automobile
parking areas shown on the plans for the Property shall be under the sole and
exclusive control of the Landlord. Use by all
5
<PAGE>
tenants, their officers, agents, employees and visitors, shall be subject to
reasonable rules for the use thereof which may from time to time be promulgated
by Landlord, including, but not limited to, rules designating areas for employee
parking, assignment of specific spaces to any tenant, controlling of ingress and
egress, locating and arranging spaces, and generally maintaining the parking lot
in the manner, in Landlord's discretion, as is consistent with the use of the
areas by all tenants. Landlord shall have the right to grant to any tenant an
exclusive revocable license to the use of certain parking spaces, and the Tenant
shall have the right to use only those parking spaces on the Property
specifically assigned to the Tenant or designated for common use.
10. Omitted.
11. Subletting and Assignment. Tenant shall not sublet the Demised
Premises or any part thereof or transfer possession or occupancy thereof to any
person, firm or corporation or transfer or assign this lease without the prior
written consent of the Landlord, which shall not be unreasonably withheld, and
subject to Landlord's right to sublet hereinafter described, nor shall any
subletting or assignment hereof be effected by operation of law or otherwise
than by the prior written consent of the Landlord. If Tenant is a corporation,
any transfer of a majority of Tenant's issued and outstanding capital stock
shall be deemed an assignment under this paragraph. If Tenant is a partnership,
any transfer of any interest in the partnership or other change in the
composition of the partnership which results in a change in the management of
Tenant from the person(s) managing the partnership on the date hereof shall be
deemed an assignment under this paragraph. In the event Tenant desires to assign
this Lease or sublet all or any portion of the Demised Premises, Tenant shall
give to Landlord thirty (30) days written notice of Tenant's intention so to do.
Within thirty (30) days after receipt of said notice, Landlord shall have the
right to sublet the Demised Premises from Tenant at the same Rent and Additional
Rent stipulated herein, regardless of the rental rate that Tenant may otherwise
be able to obtain upon assignment or subletting to others. In the event Landlord
has not exercised its right to sublet the Demised Premises as provided above in
this paragraph, Tenant may assign this Lease or sublet all or a portion of the
Demised Premises as set forth in the notice after first obtaining the written
consent of Landlord, which consent may be withheld for reasonable cause. If
Tenant does not so assign or sublet within sixty (60) days of the original
notice to Landlord pursuant to this paragraph, then Tenant shall again be
required to comply with the notice provisions hereof, and Landlord shall again
have the right to sublet. The consent by Landlord to any assignment, transfer or
subletting to any party shall not be construed as a waiver or release of Tenant
from the terms of any covenant or obligation under this Lease, nor shall the
collection or acceptance of Rent from any such assignee, transferee, subtenant
or occupant constitute a waiver or release of Tenant of any covenant or
obligation contained in this Lease, nor shall any such assignment or subletting
be construed to relieve Tenant from giving Landlord said thirty (30) days notice
or from obtaining the consent in writing of Landlord to any future assignment or
subletting. In the event that Tenant defaults hereunder, Tenant hereby assigns
to Landlord the rent due from any subtenant of Tenant and hereby authorizes each
such subtenant to pay said rent directly to Landlord.
12. Upkeep of Demised Premises and Surrender. (a) Tenant shall keep the
Demised Premises and the fixtures and equipment therein in clean, safe and
sanitary condition, shall take good care
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thereof, and shall suffer no waste or injury thereto. Tenant shall make all
repairs to the Demised Premises caused by any negligent act or omission of
Tenant, or its employees or invitee.
(b) Tenant shall provide at its expense (i) periodic maintenance,
including the replacement of filters as often as may be necessary, to all base
building heating, ventilating and air conditioning equipment, and (ii) servicing
of such equipment by a qualified service contractor at least twice a year
(spring and fall) in accordance with manufacture's maintenance standards.
(c) The Landlord shall have the right to install a security light
upon the exterior of the Demised Premises and to connect it to the Tenant's
electrical service. In such event Tenant at its expense shall provide electric
current to such fixture.
(d) Tenant shall maintain, replace and repair any plate glass in or
about the walls, doors or windows of the Demised Premises.
(e) Tenant shall at the expiration or other termination of the Term
of this Lease, surrender and deliver up the Demised Premises, broom clean, in
the same order and condition as the same now is or shall be in at the
commencement of the Term hereof, ordinary wear and tear excepted. Upon such
termination of this Lease, Landlord shall have the right to reenter and resume
possession of the Demised Premises.
13. Alterations. (a) Tenant shall not make any alterations, installations,
changes, replacements, additions or improvements (structural or otherwise) in or
to the Demised Premises or any part thereof without the prior written consent of
Landlord.
(b) The Tenant shall provide the Landlord in timely manner with
complete working drawings of any improvements or alterations within the Demised
Premises approved by the Tenant. Any such improvements or alterations shall be
constructed in a reasonable period of time after receipt of such working
drawings by the Landlord at the expense of Tenant, unless the Landlord expressly
waives its right to perform such construction. Any revision or modification to
the approved drawings after commencement of construction shall be grounds for a
reasonable extension of the period of construction within the Demised Premises.
In the event that the Tenant shall fail to provide drawings which it has
approved in sufficient time to permit completion of construction within the
Demised Premises prior to the lease commencement date, the lease commencement
date shall not be extended, and Tenant shall take possession of the Demised
Premises and commence rental payments as otherwise provided herein, without
abatement of any kind, even though construction may not be complete, nor an
occupancy permit issued.
(c) It is expressly understood that all alterations, installations,
or improvements, including wall-to-wall carpet, upon or within the Demised
Premises (whether with or without the Landlord's consent), shall remain upon the
Demised Premises and shall be surrendered with the Demised Premises at the
expiration of the Lease without disturbance, molestation or injury, or, at the
election of the Landlord shall be removed by the Tenant at its cost prior to the
date of lease termination. Should Landlord elect that alterations,
installations, changes, replacements, additions to or improvements made by
Tenant without the Landlord's
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consent upon the Demised Premises be removed upon termination of this Lease,
Tenant hereby agrees to cause the same to be removed at Tenant's sole cost and
expense and to restore the Demised Premises to its original condition and should
Tenant fail to remove the same, then and in such event Landlord may cause same
to be removed at Tenant's expense and Tenant hereby agrees to reimburse Landlord
for the cost of such removal together with any and all damages which Landlord
may suffer and sustain by reason of the failure of the Tenant to remove the
same, which cost and damages shall be deemed to be Additional Rent.
(d) In the event Landlord shall permit the Tenant to make any
alterations, said alterations shall be performed in a good and workmanlike
manner in accordance with all applicable legal requirements.
(e) If any mechanic's lien is filed against the Demised Premises or
the Property for work or material claimed to have been done for, or furnished
to, Tenant, such mechanic's lien shall be discharged by Tenant within ten (10)
days thereafter, at Tenant's sole cost and expense by payment thereof or posting
such bond or paying such amount as will effect a release of such lien. If Tenant
shall fail to discharge or obtain the release of any such mechanic's lien,
Landlord may, at its option, discharge or release the same and treat the cost
thereof as Additional Rent payable with the monthly installment of Rent next
becoming due; and such discharge or release by Landlord shall not be deemed to
waive the default of Tenant in not discharging or releasing the same. Tenant
shall indemnify and hold Landlord and the holders of any mortgages or deeds of
trust on the Property harmless from and against any and all expenses, liens,
claims or damages to person or property which may or might arise by reason of
the making of any alterations.
14. Floor Loading. Landlord shall have the right to prescribe the weight,
method of installation and position of heavy fixtures or equipment. Tenant shall
not install in the Demised Premises any fixtures, equipment or machinery that
shall place a load upon any floor exceeding the floor load per square foot area
which said floor was designed to carry. Tenant agrees that all damage done to
the Property by taking in or removing article of Tenant's equipment, or due to
its being in the Demised Premises shall be repaired at the expense of Tenant.
Tenant agrees promptly to remove from the public area any of Tenant's property
there delivered or deposited.
15. Tenant's Equipment. (a) Tenant shall not install any equipment of any
kind or nature whatsoever which may necessitate any changes, replacements or
additions to, or in the use of the water, heating, air conditioning, plumbing or
electrical systems of the Property, without first obtaining the prior written
consent of Landlord, which may be given or withheld in Landlord's sole and
absolute discretion. Permitted machinery and equipment belonging to Tenant which
cause noise or vibrations that may be transmitted to any part of the Property to
such a degree as to be objectionable to Landlord or to any tenant of the
Property shall be installed and maintained by Tenant, at Tenant's expense, on
vibration eliminators or other devices sufficient to eliminate such noise and
vibrations.
(b) Maintenance and repair of equipment such as separate air
conditioning equipment or any other type of special equipment, whether installed
by Tenant or by Landlord on behalf of Tenant, shall be the sole responsibility
of Tenant and Landlord shall have no obligation in connection therewith.
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16. Notice of Defects. Tenant shall give Landlord prompt notice of any
defects or breakage in the structure, equipment or fixtures of the Demised
Premises or Property.
17. Liability. (a) Landlord assumes no liability or responsibility
whatsoever with respect to the conduct and operation of the business to be
conducted in the Demised Premises. Landlord shall not be liable for any accident
or injury to any person or persons or property in or about the Demised Premises
or the Property which are caused by the conduct and operation of said business
or by virtue of equipment or property of Tenant in the Demised Premises. Tenant
agrees to hold Landlord and the holders of any mortgages or deeds of trust on
the Property harmless against all such claims. Tenant shall indemnify and hold
harmless Landlord and the holders of any mortgages or deeds of trust on the
Property from and against any loss, damage or liability occasioned by or
resulting from any default hereunder or any willful or negligent act on the part
of Tenant, its agents, employees or invitee, or persons permitted in the Demised
Premises by Tenant.
(b) Landlord shall not be liable for any accident or damage caused
by electric light or wires or any accident or damage which may occur through the
operation of heating, air conditioning, lighting or plumbing apparatus, or any
accident or injury occurring in connection with the Property and its services.
All personal property of Tenant in the Demised Premises or on the Property shall
be at the sole risk of Tenant. Landlord shall not be liable for loss or damage
to property of Tenant caused by rain, snow, water or steam that may leak into or
flow from any part of the Property through any defects in the roof or plumbing
or from any other source, including but not limited to acts or omissions on the
part of other tenants of Property or persons using the Property or present
therein. It is understood and agreed that Tenant covenants to save Landlord and
the holders of any mortgages or deed of trust on the Property harmless and
indemnified from all loss, damage, liability or expense incurred by reason of
Tenant's neglect in its use of the Demised Premises or the Property or any part
thereof including the use of the water, steam, electric or other systems, and
the injury, loss or damage to any person or party upon the Demised Premises.
18. Signs. Tenant agrees that no sign, advertisement or notice shall be
inscribed, painted or affixed on any part of the outside or the inside of the
Demised Premises, or the Property, except adjacent to the doors of the offices,
and then only in such size, color and style as Landlord in its discretion shall
approve. Landlord shall have the right to prohibit any sign, advertisement, or
notice of Tenant which in the Landlord's opinion tends to impair the appearance
or reputation of the Property or its desirability as a building for general
offices, and upon written notice from Landlord Tenant shall refrain from and
discontinue such advertisement and Landlord in addition to its other remedies
for default hereunder, shall have the right to remove the same, and Tenant shall
be liable for any and all costs and expenses incurred by said removal.
19. Ordinances, Regulations and Rules. (a) Tenant shall at Tenant's cost,
promptly comply with and carry out all orders, requirements or conditions now or
hereafter imposed upon Tenant by the ordinances, laws, and/or regulations of
local, state or federal governments, or by any of their various departments or
agencies, whether required of Landlord or otherwise to be done or performed
during the term of this Agreement, insofar as they are occasioned by or required
in the conduct of the business of Tenant or its occupancy of the Demised
Premises. Tenant shall
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indemnify and save Landlord and the holders of any mortgages or deeds of trust
on the Property harmless from all penalties, claims and demands resulting from
failure or negligence in this respect.
(b) Tenant, its agents, employees and visitors, shall abide by and
observe the rules and regulations set forth below and such other reasonable
rules and regulations as may be promulgated from time to time by Landlord for
the operation and maintenance of the Property provided a copy thereof is sent to
Tenant. Nothing contained in this Lease shall be construed to impose upon
Landlord any duty or obligation to enforce such rules and regulations, or the
terms, conditions or covenants contained in any other lease, as against any
other tenant and Landlord shall not be liable to Tenant for violation of the
same by any other tenant, its employees, agents or invitee.
(i) The sidewalks, entries, receiving areas, parking lot and
other parts of the Property which are not occupied by Tenant shall not be
obstructed.
(ii) Tenant shall not install or permit the installation of
any exterior awnings, shades, and the like other than those approved by Landlord
in writing.
(iii) No additional locks shall be placed upon any doors of
the Demised Premises unless a key to any such lock is first given to the
Landlord.
(iv) Tenant shall not construct, maintain, use or operate
within the Demised Premises or elsewhere on the Property any equipment or
machinery which produces music, sound, noise or vibration which is audible or
detectable beyond the Demised Premises.
(v) Electric and telephone distribution boxes and air
conditioning equipment must remain accessible at all times.
(vi) Tenant shall locate its dumpster or trash container only
next to its loading dock in a manner which does not interfere with other
tenant's use or enjoyment of their space. All dumpsters or trash containers must
be kept closed and must be maintained in a sanitary manner.
(vii) No animals of any kind shall be brought into or kept
about the Building by any tenant.
20. Indemnity. Except in the event of Landlord's primary negligence
directly causing the loss giving rise to the claim, Tenant shall indemnify
Landlord and its agents and employees, the landlord of any underlying lease, and
the holders of any mortgages or deeds of trust on the Property and save them
harmless from and against any and all claims, actions, damages, liabilities and
expense in connection with loss of life, personal injury and/or damage to
property arising from or out of any occurrence in, upon or at the Demised
Premises, or the occupancy or use by Tenant of the Demised Premises or any part
thereof, or occasioned wholly or in part by any act or omission of the Tenant,
its agents, contractors, employees, servants, permitted subtenants, invitee
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or licensees, or resulting from any default, breach, violation or
non-performance of this Lease by Tenant. In the event that Landlord or its
agents and employees shall, without fault on their part, be made a party to any
litigation commenced by or against Tenant, then Tenant shall protect and hold
Landlord, the landlord of any underlying lease, and the holders of any mortgages
or deeds of trust on the Property harmless and shall pay all costs, expenses and
reasonable attorney's fees incurred or paid in connection with such litigation.
Tenant shall pay, satisfy and discharge any and all judgments, orders and
decrees which may be recovered against Landlord in connection with the
foregoing.
21. Entry for Repairs and Inspections. (a) Tenant shall permit Landlord,
or its representatives, to enter the Demised Premises, at all reasonable times,
without diminution of the Rent and Additional Rent payable by Tenant, to
examine, inspect and protect the same, and to make such alterations and/or
repairs as in the judgment of Landlord may be deemed necessary, or to exhibit
the same to prospective tenants, mortgagees or purchasers.
(b) If Tenant refuses or neglects to repair the Demised Premises as
required hereunder to the reasonable satisfaction of Landlord as soon as is
reasonably possible, Landlord may make such repairs without liability to Tenant
for any loss or damage that may accrue to Tenant's merchandise, fixtures, or
other property or to Tenant's business by reason thereof, and upon completion
thereof, Tenant shall pay Landlord's costs for making such repairs plus twenty
percent (20%) for overhead, upon presentation of a bill therefore, as Additional
Rent.
(c) Landlord shall at all times have an easement and the right to
enter in and through the Demised Premises for installation and maintenance of
utility connections and facilities reasonably necessary to provide services to
other portions of the Property and the common areas; provided, however, to the
extent reasonably possible the exercise of such rights shall not unreasonably
interfere with the operation of the Tenant's business.
(d) Landlord's entrance upon the Demised Premises occasioned by this
paragraph shall not constitute an eviction of Tenant in whole or in part and the
Rent and Additional Rent reserved shall in no manner abate while said repairs,
alterations, improvements, or additions are being made, by reason of loss or
interruption of business of Tenant, or otherwise.
22. Services and Utilities. (a) The Tenant at its cost shall provide for
its own use the following:
(i) all utilities in and for the Demised Premises, including
without limitation, electric, gas, sewer, water, telephone and cable utility
services;
(ii) all janitorial, cleaning and char services;
(iii) all servicing, maintenance, repair and replacement of
electric lighting, electric service, plumbing, plumbing fixtures, supplemental
heating, ventilating and air conditioning equipment, and other mechanical and
electrical equipment within the Demised Premises, including tenant improvements
and fixtures;
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(iv) servicing, maintenance and repair of the base building
heating, ventilating and air conditioning equipment by a qualified service
contractor; and
(v) trash removal service from such dumpster location or
locations on the grounds of the Property as Landlord may designate.
(b) Provided that the Tenant is not in default under any provision
of this Lease, the Tenant has not been negligent in its use of any heating,
ventilating and air conditioning equipment, and Tenant has periodically
maintained such equipment as required herein, under a service contract with a
qualified service contractor, Landlord shall replace or rebuild any such
equipment which, as a result of normal usage and depreciation, fails to function
despite Tenant's maintenance and repair;
(c) Any failure by Landlord to furnish the foregoing services shall
not render Landlord liable in any respect for damages to either person or
property, nor be construed as an eviction to Tenant, nor work an abatement of
Rent, nor relieve Tenant from Tenant's obligations hereunder.
23. Insurance. (a) Tenant shall not conduct or permit to be conducted any
activity or place any equipment in or about the Demised Premises which will, in
any way, increase the rate of insurance premiums on the Property. If any
increase in the rate of insurance premiums is stated by any insurance company or
by the applicable Insurance Rating Bureau to be due to any activity or equipment
in or about the Demised Premises, such statement shall be conclusive evidence
that the increase in such rate is due to such activity or equipment and, as a
result thereof, Tenant shall be liable for such increase and shall reimburse
Landlord therefor, within ten (10) days of receipt of written notice, said sum
shall be deemed to be Additional Rent.
(b) Landlord shall insure the building, of which the Demised
Premises are a part, against damage by fire, including extended coverage, in any
amount Landlord in its sole discretion shall deem adequate, and shall maintain
such insurance throughout the term hereby demised. Tenant shall insure all of
its property in the Demised Premises against damage by fire, including extended
coverage, in an amount as shall be determined by the Landlord in consultation
with Tenant, and Tenant shall maintain such insurance throughout the term hereby
demised. In addition, Tenant shall also maintain with respect to the Demised
Premises, comprehensive public liability insurance, with minimum limits of
$500,000/$1,000,000 per personal injury, and $100,000 for property damage.
Tenant shall maintain the insurance coverage required herein with a company or
companies acceptable to Landlord, insuring the Landlord and its managing agent
as additional named insured, as well as Tenant, against bodily injury to or
death of persons, and against property damage as herein provided. Tenant shall
deliver certificates of insurance indicating the above specified coverage to the
Landlord upon the commencement of the Term of this Lease, and continuing
evidence of such coverage annually or upon request. Such insurance policy or
policies shall be reasonably satisfactory to Landlord and shall provide that it
(they) cannot be canceled without at least thirty (30) days prior written notice
to the Landlord. Tenant agrees to cause a waiver of subrogation to be included
in its policies of fire and extended
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coverage insurance, if obtainable from its insurers. In the event Tenant shall
fail to maintain the public liability insurance coverage required by this
paragraph, Landlord may, at its option, pay the same and treat the cost of the
premiums as Additional Rent payable with the monthly installment of Rent next
becoming due.
24. Damage by Fire or Other Casualty. If the Property shall be partially
damaged by fire or other cause, other than the failure or neglect of Tenant,
Landlord shall as soon as practicable after such damage occurs (taking into
account the time necessary to effectuate a satisfactory settlement with any
insurance company) repair such damage at the expense of Landlord, and the Rent
shall be reduced in proportion to the extent the Demised Premises are rendered
untenantable until such repairs are completed; provided, however, that if the
Property is substantially damaged by fire or other cause to such extent that the
damage cannot be fully repaired within sixty (60) days from the date of such
damage, and if such loss was not caused by the Tenant's failure or neglect,
Landlord or Tenant shall have the option of terminating this Lease by giving
written notice to the other party of such decision and the term of this Lease
shall terminate ten (10) days after such notice is given. No compensation or
reduction of Rent shall be allowed or paid by Landlord by reason of
inconvenience, annoyance, or injury to business arising from the necessity of
repairing the Demised Premises or any portion of the Property.
25. Eminent Domain. If the whole or a substantial part of the Demised
Premises shall be taken or condemned by governmental authority for any public or
quasi-public use or purpose, then the term of this Lease shall cease and
terminate as of the date when title vests in such governmental authority, and
Tenant shall not have any claim against Landlord and shall not have any claim
for any portion of the amount that may be awarded as damages as a result of such
taking or condemnation or for the value of any unexpired term of the Lease;
provided, however, that Tenant may separately assert any claim that it may have
against the condemning authority for compensation for any fixtures owned by
Tenant and for any relocation expenses compensable by statute. If less than a
substantial part of the Demised Premises is taken or condemned by any
governmental authority for any public or quasi-public use or purpose, the Rent
shall be equitably adjusted on the date when title vests in such governmental
authority and the Lease shall otherwise continue in full force and effect. For
purposes hereof, a substantial part of the Demised Premises shall be considered
to have been taken if more than twenty percent (20%) of the Demised Premises are
unusable by Tenant.
26. Defaults and Remedies. (a) The following events shall be a default
(hereinafter referred to as a "Default") of Tenant under this Lease:
(i) Failure of Tenant to make any payment of Rent (including
Annual Increase) when due.
(ii) Failure of Tenant to make any payment of Additional Rent
when due.
(iii) Failure of Tenant to perform or comply with any
provision of this Lease to be performed or complied with by Tenant, other than
provisions for the payment of Rent
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or Additional Rent, where such failure shall continue for a period of ten (10)
days after written notice thereof by Landlord to Tenant.
(iv) The taking of this Lease or the Demised Premises, or any
part thereof, upon execution or by other process of law directed against Tenant,
or upon or subject to any attachment at the instance of any creditor of or
claimant against Tenant, which execution or attachment shall not be discharged
or disposed of within thirty (30) days after the levy thereof.
(v) If Tenant fails to take possession of the Demised Premises
within a reasonable period of time after the lease commencement of the Term of
this Lease or substantially vacates or abandons the Demised Premises prior to
the normal expiration of the term.
(vi) The circumstance of Tenant, or any guarantor of Tenant's
obligation hereunder, in financial difficulties as evidenced by (1) its
admitting in writing its inability to pay its debts generally as they become
due, or (2) its filing a petition in bankruptcy or for reorganization or the
adoption of an arrangement under the Bankruptcy Act (as now or hereafter
existing), or an answer or other pleading admitting the material allegations of
such a petition or seeking, consenting to or acquiescing in the relief provided
for under such Act, or (3) its making an assignment of all or a substantial part
of its property for the benefit of its creditors or (4) its seeking or
consenting to or acquiescing in the appointment of a receiver or trustee for all
or a substantial part of its property or of the Demised Premises, or (5) its
being adjudicated a bankrupt or insolvent, or (6) the entry of a court order
without its consent, which order shall not be vacated, set aside or stayed
within sixty (60) days from the date of entry, appointing a receiver or trustee
for all or a substantial part of its property or approving a petition filed
against it for the effecting of an arrangement in bankruptcy or for a
reorganization pursuant to the Bankruptcy Act or for any other judicial
modification or alteration of the rights of creditors.
(b) The provisions of this paragraph shall apply notwithstanding the
payment by Tenant of the security deposit and/or the continued willingness and
ability of Tenant to pay Rent and otherwise perform hereunder. The receipt by
Landlord of payments of Rent, as such, accruing subsequent to the time of
Tenant's default under this paragraph and even though Landlord may have actual
notice of the occurrence of an event of Default under this paragraph shall not
be deemed a waiver by Landlord of the provisions of this paragraph.
(c) Upon the occurrence of a Default, Landlord shall have the right
at its election, then or at any time thereafter either:
(i) To give Tenant written notice of Landlord's intent to
terminate this Lease on the date of the notice or on any later date, specified
in the notice, and on such date Tenant's right to possession of the Demised
Premises shall cease and this Lease shall thereupon be terminated; or
(ii) to re-enter without demand or notice and to take
possession of all or any part of the Demised Premises and expel Tenant and those
claiming through Tenant, and remove the property of Tenant and any other person,
either by summary proceedings, by action at
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law or in equity, by force without due process of law, or by any other means,
without being deemed guilty of trespass or liable for prosecution or damages
therefor, and without prejudice to any remedies for nonpayment or late payment
of Rent or breach of covenant. If Landlord elects to reenter under this
provision, Landlord may terminate this Lease, or, from time to time, without
terminating this Lease, may relet all or any part of the Demised Premises as
agent for Tenant for such term or terms and at such rental and upon such other
terms and conditions as Landlord may deem advisable in its sole and absolute
discretion, with the right to make alterations and repairs to the Demised
Premises. No such reentry or taking of possession of the Demised Premises by
Landlord shall be construed as an election on Landlord's part to terminate this
Lease unless a written notice of such intention is given to Tenant or unless the
termination be decreed by a court of competent jurisdiction at the instance of
Landlord. Nothing herein shall be construed to require the Landlord to mitigate
damages.
(d) If Landlord terminates this Lease pursuant to the preceding
subparagraph, Tenant shall remain liable (in addition to accrued liabilities)
for (i) Rent, Additional Rent and any other sums provided for in this Lease
until the date this Lease would have expired had such termination not occurred,
and any and all expenses (including attorney's fees, disbursements and brokerage
fees) incurred by Landlord in reentering and repossessing the Demised Premises,
in making good any Default of Tenant, in painting, altering, repairing or
dividing the Demised Premises, in protecting and preserving the Demised Premises
by use of watchmen and caretakers, and in reletting the Demised Premises, and
any and all expenses which Landlord may incur during the occupancy of any new
tenant; less (ii) the net proceeds of any reletting prior to the date this Lease
would have expired if it had not been terminated. Tenant agrees to pay to
Landlord the difference between items (i) and (ii) above for each month during
the Term, at the end of each such month. Any suit brought by Landlord to enforce
collection of such difference for any one month shall not prejudice Landlord's
right to enforce the collection of any difference for any subsequent month. In
addition to the foregoing, and without regard to whether this Lease has been
terminated, Tenant shall pay to Landlord all costs incurred by Landlord,
including reasonable attorney's fees, with respect to any lawsuit or action
instituted or taken by Landlord to enforce the provisions of this Lease.
Tenant's liability shall survive the institution of summary proceedings and the
issuance of any writ of restitution thereunder.
(e) If Landlord terminates this Lease, Landlord shall have the
right, at any time, at its option, to require Tenant to pay to Landlord on
demand, as liquidated and agreed final damages in lieu of Tenant's liability
hereunder, the Rent, Additional Rent and all other charges which would have been
payable from the date of such demand to the date when this Lease would have
expired if it had not been terminated, (minus the fair rental value negotiated
in good faith with another tenant of the Demised Premises for the same period,
if any). If the Demised Premises shall have been relet for all or part of the
remaining balance of the Term by Landlord after a Default but before
presentation of proof of such liquidated damages, the amount of rent reserved
upon such reletting shall be deemed the fair rental value of the Demised
Premises for purposes of the foregoing determination of liquidated damages. Upon
payment of such liquidated and agreed final damages, Tenant shall be released
from all further liability under this Lease with respect to the period after the
date of demand.
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(f) Tenant, on its own behalf and on behalf of all persons claiming
through Tenant, including all creditors does hereby waive any and all rights and
privileges, so far as is permitted by law, which Tenant and all such persons
might otherwise have under any present or future law (i) to the service of any
notice of intention to reenter which may otherwise be required to be given, (ii)
to redeem the Demised Premises, (iii) to reenter or repossess the Demised
Premises, or (iv) to restore the operation of this Lease, with respect to any
dispossession of Tenant by judgment or warrant of any court or otherwise,
whether such dispossession, reentry, expiration or termination be by operation
of law or pursuant to the provisions of this Lease.
(g) In the event of any breach by Tenant or any person or persons
claiming through Tenant of any of the provisions contained in this Lease,
Landlord shall be entitled to enjoin such breach and shall have the right to
invoke any right or remedy allowed at law or otherwise as if reentry, summary
proceedings or other specific remedies were not provided for in this Lease.
(h) Landlord shall, to the extent permitted by law, have (in
addition to all other rights) a right of distress for Rent and Additional Rent
and a lien on all Tenant's personal property as security for all adjusted Rent,
Additional Rent and any other sums payable under this Lease.
(i) If Tenant defaults in the making of any payment to a third party
or in the doing of any act herein required to be made or done by Tenant, then
after ten (10) days notice from Landlord (except in the event of nonpayment of
Rent or Additional Rent, for which no notice is required), Landlord may, but
shall not be required to, make such payment or do such act, and the amount and
the expense thereof, if made or done by Landlord, with interest thereon at the
rate of three hundred (300) base points over the prime rate of Crestar Bank,
Richmond, Virginia, or its successor, but not to exceed the highest lawful rate,
from the date paid by Landlord, shall be paid by Tenant to Landlord and shall
constitute Additional Rent hereunder due and payable with the next monthly
installment of Rent; but the making of such payment or the doing of such act by
Landlord shall not operate to cure such Default or to estop Landlord from the
pursuit of any remedy to which Landlord would otherwise be entitled.
(j) All rights and remedies of Landlord under this Lease shall be
cumulative and shall not be exclusive of any other rights and remedies provided
to Landlord now or hereafter under law or under this Lease.
27. Waiver. If under the provisions hereof Landlord shall institute
proceedings and a compromise or settlement thereof shall be made, the same shall
not constitute a waiver of any covenant herein contained nor of any of
Landlord's rights hereunder. No waiver by Landlord of any breach of any
covenant, condition or agreement herein contained shall operate as a waiver of
such covenant, condition or agreement itself, or of any subsequent breach
thereof. No payment by Tenant or receipt by Landlord of a lesser amount than the
monthly installments of Rent herein stipulated shall be deemed to be other than
on account of the earliest stipulated Rent, nor shall any endorsement or
statement on any check or letter accompanying a check for payment of Rent or
Additional Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such Rent or Additional
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Rent or to pursue any other remedy provided in this Lease. No reentry by
Landlord, and no acceptance by Landlord of keys from Tenant, shall be considered
an acceptance of a surrender of this Lease.
28. Subordination. This Lease is subject and subordinate to all ground or
underlying leases and to all mortgages and/or deeds of trust which may now or
hereafter affect such leases or the Property and to all renewals, modifications,
consolidations, replacements and extensions thereof. This clause shall be
self-operative and no further instrument of subordination shall be required by
any mortgagee or trustee. In confirmation of such subordination, Tenant shall
execute promptly any certificate that the Landlord may request. Tenant hereby
constitutes and appoints Landlord the Tenant's attorney-in-fact to execute any
such certificate or certificates for an on behalf of Tenant. Notwithstanding the
foregoing, the party secured by any such deed of trust shall have the right to
recognize this Lease and, in the event of any foreclosure sale under such deed
of trust, or deed in lieu thereof, this Lease shall continue in full force and
effect at the option of the party secured by such deed of trust or the purchaser
under any such foreclosure sale; Tenant covenants and agrees that it shall at
the written request of the party secured by any such deed of trust, execute,
acknowledge and deliver any instrument that has for its purpose and effect the
subordination of this Lease to the lien of said deed of trust and the attornment
of the Tenant to such party. At the option of any landlord under any ground or
underlying lease to which this Lease is now or may hereafter become subject or
subordinate, Tenant agrees that neither the cancellation nor termination of such
ground or underlying lease shall by operation of law or otherwise, result in
cancellation or termination of this Lease or the obligations of the Tenant
hereunder, and Tenant covenants and agrees to attorn to such landlord or to any
successor to Landlord's interest in such ground or underlying lease and in that
event, this Lease shall continue as a direct lease between Tenant herein and
such landlord or its successor; and, in any case, such landlord or successor
under such ground or underlying lease shall not be bound by any prepayment on
the part of Tenant of any Rent for more than one month in advance, so that Rent
shall be payable under this Lease in accordance with its terms, from the date of
the termination of the ground or underlying lease, as if such prepayment had not
been made. Such landlord or successor under such ground or underlying lease
shall not be bound by this Lease or any amendment or modification of this Lease
unless, prior to the termination of such ground or underlying lease, a copy of
this Lease or amendment or modification thereof, as the case may be, shall have
been delivered to such landlord or successor.
29. Estoppel Certificates. Tenant agrees, at any time and from time to
time, upon not less than five (5) days prior notice by Landlord, to execute,
acknowledge and deliver to Landlord a statement in writing in such form as
Landlord may request, (i) certifying that this Lease is unmodified (or if
modified, stating the modifications) and in full force and effect (or if not in
full force and effect, the reasons therefor), (ii) stating the dates to which
the Rent, Additional Rent and other charges hereunder have been paid by Tenant,
(iii) stating whether or not to the best knowledge of Tenant, Landlord is in
default in the performance of any covenant, agreement or condition contained in
this Lease, and if so, specifying each such default of which Tenant may have
knowledge, and (iv) stating the address to which notices to Tenant should be
sent. Any such statement delivered pursuant hereto may be relied upon by any
owner of the Property, any prospective purchaser of the Property, any mortgagee
or prospective mortgagee of the Property,
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any prospective assignee of any such mortgagee, or any lessor or prospective
lessor of the land which is a part of the Property.
30. No Recourse to Landlord. The obligations of Landlord under this Lease
do not constitute personal obligations of the individual partners, directors,
officers, or shareholders of Landlord, and Tenant shall look solely to the
Property of which the Demised Premises are a part and to no other assets of the
Landlord or the holders of any mortgages or deeds of trust on the Property for
satisfaction of any liability in respect of this Lease and shall not seek
recourse against the individual partners, directors, officers or shareholders of
Landlord or the holders of any mortgages or deeds of trust on the Property or
any of their personal assets for such satisfaction.
31. Holding Over. If Tenant shall, with the knowledge and consent of
Landlord, continue to remain in the Demised Premises after the expiration of the
Term of this Lease and any extensions thereof, then and in such event, Tenant
shall, by virtue of this agreement become a tenant by the month at a monthly
rental equal to one hundred twenty percent (120%) of the monthly installment of
Rent agreed by the Tenant to be paid as aforesaid, commencing said monthly
tenancy with the first day next after the end of the Term above demised. Tenant
shall give to Landlord at least thirty (30) days written notice of any intention
to quit the Demised Premises, and Tenant shall be entitled to thirty (30) days
written notice to quit the Demised Premises, except in the event of non-payment
of Rent or Additional Rent or of the breach of any other covenant by Tenant, in
which event Tenant shall not be entitled to any notice to quit, the usual thirty
(30) days notice to quit being hereby expressly waived; provided, however, that
in the event that Tenant shall hold over after the expiration of the Term hereby
created, and if Landlord shall desire to regain possession of the Demised
Premises promptly at the expiration of the Term aforesaid, then at any time
prior to Landlord's acceptance of Rent from Tenant as a monthly tenant
hereunder, Landlord, at it option, may forthwith reenter and take possession of
the Demised Premises without process, or by any legal process in force.
32.Submission of Lease. The submission of this Lease for examination by
Tenant does not constitute a reservation of or option for the Demised Premises,
and this Lease shall become effective as a lease only upon execution and
delivery thereof by Landlord and Tenant.
33. Covenant of Landlord. Landlord covenants that it has the right to make
this Lease, and that if Tenant shall pay the Rent and Additional Rent and shall
perform all of Tenant's obligation under this Lease, Tenant shall, during the
term hereof, freely, peaceably and quietly occupy and enjoy the full possession
of the Demised Premises without molestation or hindrance by Landlord or any
party claiming through or under Landlord, subject, however, to the underlying
lease, mortgages and deeds of trust described in Paragraph 28 and except as
otherwise provided herein. The term "Landlord" as used herein shall mean solely
the owner of Landlord's interest in the Property, whoever that may be at the
relevant time, so that in the event of any sale or transfer of Landlord's
interest in the Property, any prior Landlord shall be freed and relieved of all
covenants and obligations of Landlord hereunder.
34. Force Majeure. If Landlord, as the result of any (i) strikes,
lockouts, or labor disputes; (ii) inability to obtain labor, materials, fuel,
electricity, services or reasonable substitutes
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therefore; (iii) acts of God, civil commotion, fire or other casualty; (iv)
governmental action of any kind; or (v) other conditions similar to those
enumerated above beyond Landlord's reasonable control, fails punctually to
provide any service or to perform any obligation on its part to be performed
hereunder, then, unless otherwise expressly provided, such failure shall be
excused and shall not be a breach hereunder, but only to the extent occasioned
by such event. In the event, however, that any such event shall prevent
Landlord's performance for a period longer than sixty (60) consecutive days, the
Tenant shall have the right to terminate this Lease.
35. Omitted.
36. Omitted.
37. Waiver of Trial by Jury. Tenant hereby waives all right to trial by
jury in any claim, action, proceeding or counterclaim by either Landlord or
Tenant against each other on any matters arising out of or in any way connected
with this Lease, the relationship of Landlord and Tenant, and/or Tenant's use or
occupancy of the Demised Premises.
38. Attorney's Fees. If, in the event of a default by Tenant, Landlord
places the enforcement of this Lease, or any part thereof, or the collection of
any Rent or Additional Rent due, or to become due hereunder, or recovery of the
possession of the Demised Premises in the hands of an attorney, or files suit
upon the same, Tenant agrees to pay Landlord's attorney's fees.
39. Brokers. Landlord and Tenant each represent and warrant that neither
of them has employed any broker in carrying on the negotiations relating to this
Lease. Landlord shall indemnify and hold Tenant harmless, and Tenant shall
indemnify and hold Landlord harmless, from and against any claim for brokerage
or other commission arising from or out of any breach of the foregoing
representation and warranty.
40. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed duly given if delivered in person or sent by
certified or registered mail, return receipt requested, first class, postage
prepaid, (i) if to Landlord, at Suite 200, 1201 E. Abingdon Drive, Alexandria,
Virginia 22314, and (ii) if to Tenant at 500 Pendleton Street, Alexandria,
Virginia 22314, unless notice of a change of address is given pursuant to the
provisions of this paragraph.
41. Miscellaneous. (a) This Lease and the Exhibits attached hereto contain
and embody the entire agreement of the parties hereto and no representations,
inducements, or agreements, oral or otherwise, between Landlord and Landlord's
agents and Tenant not contained in this Lease and Exhibits shall be of any force
or effect. This Lease may not be modified, changed or terminated in whole or in
part in any manner other than by an agreement in writing duly signed by both
parties hereto.
(b) The terms, covenants and conditions hereof shall be binding upon
and inure to the permitted successors in interest and assigns of the parties
hereto. Landlord may freely and idly assign its interest hereunder.
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(c) If any provision of this Lease or the application thereof to any
person or circumstances shall to any extent be held void, unenforceable or
invalid, then the remainder of this Lease or the application of such provision
to persons or circumstances other than those as to which it is held void,
unenforceable or invalid shall not be affected thereby, and each provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.
(d) Tenant shall not record this Lease without the written consent
of Landlord, which may be given or denied in Landlord's sole discretion. If
Landlord consents to such recordation, the cost thereof shall be paid by Tenant.
(e) The captions and headings throughout this Lease are for
convenience and reference only and the words contained therein shall in no way
be held or deemed to define, limit, describe, explain, modify, amplify or add to
the interpretation, construction or meaning of any provision of or the scope of
intent of this Lease nor in any way affect this Lease.
(f) Nothing contained in this Lease shall be deemed or construed to
create a partnership or joint venture of or between Landlord and Tenant, or to
create any other relationship between the parties hereto other than that of
Landlord and Tenant.
(g) Feminine or neuter pronouns shall be substituted for those of
the masculine form, the plural shall be substituted for singular number and vice
versa in any place or places herein in which the context may require such
substitute or substitution.
(h) This Lease is to be construed under the laws of the jurisdiction
in which the Property is located.
42. Omitted.
43. Authority of Landlord and Tenant. Each individual executing this Lease
on behalf of Landlord and Tenant represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of Landlord or Tenant in
accordance with a partnership agreement or a duly adopted resolution of the
Board of Directors or in accordance with its bylaws and that this Lease is
binding upon Landlord and Tenant in accordance with its terms.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal the day and year first hereinabove written.
LANDLORD:
NORTH POINT ASSOCIATES LIMITED
PARTNERSHIP
By NORTH POINT CORPORATION
General Partner
By: /s/ [ILLEGIBLE]
----------------------------------
President
TENANT:
COMMONWEALTH SCIENTIFIC CORPORATION
By: /s/ G.R. Thompson
-------------------------------------
President
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STATE OF VIRGINIA )
) ss:
AT LARGE )
On this ___ day of_________, 19__, before the undersigned, a Notary Public
of the State and County aforesaid, personally appeared _______________________,
who acknowledged himself to be the __________________ of North Point Associates
Limited Partnership, a Virginia limited partnership, and that he, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained.
In witness whereof I hereunto set my hand and official seal.
_____________________________________
Notary Public
My Commission Expires: _______________________
STATE OF VIRGINIA )
) ss:
AT LARGE )
On this 13th day of August, 1996 before the undersigned, a Notary Public
of the State and County aforesaid, personally appeared George R. Thompson, who
acknowledged himself to be the President of Commonwealth Scientific Corporation,
a Virginia Corporation, and that he, being authorized so to do, executed the
foregoing instrument for the purposes therein contained.
In witness whereof I hereunto set my hand and official seal.
/s/ Janet C. Hollis
-------------------------------------
Notary Public
My Commission Expires: August 31, 1999
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Exhibit 21.1
Subsidiaries 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.
2. CVC Commonwealth, Inc., a wholly-owned subsidiary of CVC, Inc., is a
Virginia corporation which does business under the name of CVC
Commonwealth.
3. CVC Process Solutions, Inc., a wholly-owned subsidiary of CVC, Inc., is a
Delaware corporation which does business under the name of CVC Process
Solutions.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated October 18, 1999, except as to the stock split described in Note 1
which is effective upon the closing of an initial public offering, relating to
the financial statements of CVC, Inc. which appear in such Registration
Statement. We also consent to the references to us under the heading "Experts"
in such Registration Statement.
PRICEWATERHOUSECOOPERS LLP
Rochester, New York
October 21, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Vienna, Virginia
October 20, 1999
