<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 15, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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FWT, INC.
(Exact Name of Registrant as Specified in Its Charter)
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<C> <C> <C>
TEXAS 3663 75-1040743
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
1901 EAST LOOP 820 SOUTH
FORT WORTH, TEXAS 76112-7899
(817) 457-3060
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
ROY J. MOORE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1901 EAST LOOP 820 SOUTH
FORT WORTH, TEXAS 76112-7899
(817) 457-3060
(Name, Address, Including Zip Code, And Telephone Number,
Including Area Code Of Agent For Service)
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Copy to:
GARY M. LAWRENCE, ESQ.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
1700 PACIFIC AVENUE, SUITE 4100
DALLAS, TEXAS 75201-4675
(214) 969-2800
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the registration statement becomes effective.
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If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 7/8% Senior Subordinated
Notes Due 2007.............. $105,000,000 100% $105,000,000 $30,975
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</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
amount of the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 15, 1998
PROSPECTUS
FWT, INC.
OFFER TO EXCHANGE
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ALL THE OUTSTANDING
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
($105,000,000 PRINCIPAL AMOUNT)
---------------------
The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1998, unless extended.
---------------------
FWT, Inc., a Texas corporation (the "Company"), hereby offers (the
"Exchange Offer"), upon the terms and subject to the conditions set forth in
this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), to exchange up to an aggregate principal amount of $105,000,000
of its outstanding 9 7/8% Senior Subordinated Notes due 2007 (the "Outstanding
Notes") for an equal principal amount of its 9 7/8% Senior Subordinated Notes
due 2007 in integral multiples of $1,000 (the "Exchange Notes" and, together
with the Outstanding Notes, the "Notes"). The Exchange Notes will be general
unsecured obligations of the Company and are substantially identical (including
principal amount, interest rate, maturity and redemption rights) to the
Outstanding Notes for which they may be exchanged pursuant to this Exchange
Offer, except for certain transfer restrictions and registration rights relating
to the Outstanding Notes. The Outstanding Notes have been, and the Exchange
Notes will be, issued under an Indenture dated as of November 15, 1997 (the
"Indenture"), between the Company and Norwest Bank Minnesota, N.A., as trustee
(the "Trustee"). See "Description of Exchange Notes." There will be no proceeds
to the Company from the Exchange Offer; however, pursuant to that certain
Registration Rights Agreement dated as of November 12, 1997 (the "Registration
Rights Agreement") among the Company and the Initial Purchasers (as defined
herein) of the Outstanding Notes, the Company will bear certain offering
expenses.
(Cover text continued on next page)
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN RISKS
TO BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND IN EVALUATING AN
INVESTMENT IN THE EXCHANGE NOTES.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is , 1998.
<PAGE> 3
The Company will accept for exchange any and all validly tendered
Outstanding Notes on or prior to 5:00 p.m., New York City time, on ,
1998, unless extended (the "Expiration Date"). Tenders of Outstanding Notes may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date; otherwise such tenders are irrevocable. Norwest Bank Minnesota,
N.A. is acting as exchange agent (the "Exchange Agent") in connection with the
Exchange Offer. The minimum period of time that the Exchange Offer will remain
open is 30 days (or longer if required by applicable law) after the date notice
of the Exchange Offer is mailed to the holders of the Outstanding Notes. The
Exchange Offer is not conditioned upon any minimum principal amount of
Outstanding Notes being tendered for exchange, but is otherwise subject to
certain customary conditions.
The Exchange Notes will bear interest from the Issue Date (as defined
below) at a rate equal to 9 7/8% per annum on the same terms as the Outstanding
Notes. Interest on the Exchange Notes will be payable semi-annually in arrears
on May 15 and November 15 of each year, commencing May 15, 1998. Outstanding
Notes that are accepted for exchange will cease to accrue interest upon issuance
of the Exchange Notes.
The Outstanding Notes in an aggregate principal amount of $105.0 million
were sold by the Company on November 17, 1997 (the "Initial Offering"), to BT
Alex. Brown Incorporated, SBC Warburg Dillon Read Inc. and Smith Barney Inc.
(collectively, the "Initial Purchasers") in a transaction not registered under
the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
the exemption provided in Section 4(2) of the Securities Act. The Initial
Purchasers subsequently placed the Outstanding Notes with qualified
institutional buyers in reliance upon Rule 144A under the Securities Act.
Accordingly, the Outstanding Notes may not be re-offered, resold or otherwise
transferred in the United States unless registered or unless an applicable
exemption from the registration requirements of the Securities Act is available.
The Exchange Notes are being offered hereunder in order to satisfy the
obligations of the Company under the Registration Rights Agreement. See "The
Exchange Offer."
Under existing interpretations of the Securities and Exchange Commission
(the "Commission") contained in several no-action letters to third parties, the
Exchange Notes will be freely transferable by holders thereof (other than
affiliates of the Company) after the Exchange Offer without further registration
under the Securities Act; provided, however, that each holder that wishes to
exchange its Outstanding Notes for Exchange Notes will be required to represent
(i) that any Exchange Notes to be received by it will be acquired in the
ordinary course of its business, (ii) that at the time of the commencement of
the Exchange Offer it has no arrangement or understanding with any person to
participate in the distribution (within the meaning of Securities Act) of the
Exchange Notes in violation of the Securities Act, (iii) that it is not an
"affiliate" (as defined in Rule 405 promulgated under the Securities Act) of the
Company, (iv) if such holder is not a broker-dealer, that it is not engaged in,
and does not intend to engage in, the distribution of Exchange Notes, and (v) if
such holder is a broker-dealer (a "Participating Broker-Dealer") that will
receive Exchange Notes for its own account in exchange for Outstanding Notes
that were acquired as a result of market-making or other trading activities,
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Company will agree to make available, during the period required by
the Securities Act, a prospectus meeting the requirements of the Securities Act
for use by Participating Broker-Dealers and other persons, if any, with similar
prospectus delivery requirements for use in connection with any resale of
Exchange Notes.
The Outstanding Notes are traded on the Private Offering, Resales and
Trading through Automated linkages ("PORTAL") Market of the National Association
of Securities Dealers, Inc. The Company does not intend to list the Exchange
Notes on any national securities exchange or to seek the admission thereof to
trading on the National Association of Securities Dealers automatic quotation
system ("NASDAQ"). The Initial Purchasers have advised the Company that they
intend to make a market in the Exchange Notes; however, they are not obligated
to do so and any market-making may be discontinued at any time without notice.
Accordingly, no assurance can be given that an active public or other market
will develop for the Exchange Notes or as to the liquidity of or the trading
market for the Exchange Notes.
Any Outstanding Notes not tendered and accepted in the Exchange Offer will
remain outstanding. To the extent that any Outstanding Notes of other holders
are tendered and accepted in the Exchange Offer, a
<PAGE> 4
holder's ability to sell untendered Outstanding Notes could be adversely
affected. Following consummation of the Exchange Offer, the holders of
untendered Outstanding Notes will continue to be subject to the existing
restrictions upon transfer thereof.
The Company expects that the Exchange Notes issued pursuant to this
Exchange Offer will be issued in the form of a Global Exchange Note (as defined
herein), which will be deposited with, or on behalf of, The Depository Trust
Company ("DTC") and registered in the name of a nominee of DTC. Beneficial
interests in the Global Exchange Note representing the Exchange Notes will be
shown on, and transfers thereof to qualified institutional buyers will be
effected through, records maintained by DTC and its participants. After the
initial issuance of the Global Exchange Note, Exchange Notes in certificated
form will be issued in exchange for the Global Exchange Note on the terms set
forth in the Indenture. See "Book-Entry; Delivery and Form."
---------------------
No dealer, salesperson or other person has been authorized to give
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any security
other than the Exchange Notes offered hereby, nor does it constitute an offer to
sell or the solicitation of an offer to buy any of the Exchange Notes to any
person in any jurisdiction in which it is unlawful to make such an offer or
solicitation to such person. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create any implication that
the information contained herein is correct as of any date subsequent to the
date hereof.
MARKET DATA USED THROUGHOUT THIS PROSPECTUS WERE OBTAINED FROM INTERNAL
COMPANY SURVEYS AND INDUSTRY PUBLICATIONS. INDUSTRY PUBLICATIONS GENERALLY STATE
THAT THE INFORMATION CONTAINED THEREIN HAS BEEN OBTAINED FROM SOURCES BELIEVED
TO BE RELIABLE, BUT THE ACCURACY AND COMPLETENESS OF SUCH INFORMATION IS NOT
GUARANTEED. THE COMPANY HAS NOT INDEPENDENTLY VERIFIED ANY SUCH MARKET DATA.
SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY THE COMPANY TO BE
RELIABLE, HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT SOURCES.
THE INFORMATION CONTAINED IN THIS PROSPECTUS WAS OBTAINED FROM THE COMPANY
AND OTHER SOURCES, BUT NO ASSURANCE CAN BE GIVEN AS TO THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION. IN MAKING AN INVESTMENT DECISION, INVESTORS
MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THE CONTENTS OF THIS PROSPECTUS ARE NOT
TO BE CONSTRUED AS LEGAL, BUSINESS OR TAX ADVICE. EACH PROSPECTIVE INVESTOR
SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR AND TAX ADVISOR AS TO LEGAL,
BUSINESS OR TAX ADVICE.
<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (which term shall encompass any amendment thereto) under the Securities Act,
for the registration of the Exchange Notes offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain items of which
are contained in the financial statement schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, including the financial statement schedules and exhibits filed as a
part thereof. Statements made in this Prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved and each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement and the exhibits thereto
filed by the Company with the Commission may be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549, and at the following regional offices
of the Commission: Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can be obtained by mail from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington DC 20549, at prescribed rates. In addition the Commission
maintains a site on the World Wide Web that contains reports, proxy and
information statements and other information filed electronically by the Company
with the Commission which can be accessed over the Internet at
http://www.sec.gov.
As a result of the Exchange Offer, the Company will be subject to the
periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). As long as the Company is
subject to such periodic reporting and informational requirements, it will
furnish all reports and other information required thereby to the Commission and
pursuant to the Indenture will furnish copies of such reports and other
information to the Trustee.
The Company will deliver to the Trustee within 15 days after the filing of
the same with the Commission, copies of the quarterly and annual reports and of
the information, documents and other reports, if any, which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide (without
exhibits) the Trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of Section 314(a) of
the Trust Indenture Act of 1939.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
<PAGE> 6
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACTS
INCLUDED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, STATEMENTS UNDER
"PROSPECTUS SUMMARY," "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS," "BUSINESS" AND "INDUSTRY
OVERVIEW" REGARDING THE COMPANY'S FINANCIAL POSITION, BUSINESS STRATEGY AND
PLANS AND OBJECTIVES OF MANAGEMENT OF THE COMPANY FOR FUTURE OPERATIONS ARE
FORWARD-LOOKING STATEMENTS. WHEN USED IN THIS PROSPECTUS, THE WORDS
"ANTICIPATES," "ESTIMATES," "BELIEVES," "WILL," "CONTINUE," "EXPECTS,"
"PROJECTS," "INTENDS," "MAY" AND SIMILAR EXPRESSIONS ARE INTENDED TO BE AMONG
THE STATEMENTS THAT IDENTIFY FORWARD-LOOKING STATEMENTS. THE COMPANY CAN GIVE NO
ASSURANCE THAT THE EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING STATEMENTS WILL
PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE
DISCLOSED UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS. ALL SUBSEQUENT
WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR
PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONARY STATEMENTS.
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data, including
the financial statements and notes thereto, appearing elsewhere in this
Prospectus. Unless otherwise stated in this Prospectus, references to "FWT" or
the "Company" mean FWT, Inc. and its predecessors and successors. All references
to a fiscal year in this Prospectus refer to the Company's fiscal year ending on
April 30 (the "Fiscal Year") of the specified year. All references to market
share and demographic data in this Prospectus are based on industry and
government publications and Company data, and unless otherwise indicated,
references to years denote calendar, rather than fiscal, years. The Company's
most recent fiscal quarter for which financial and statistical data are
available ended on October 31, 1997, and all interim historical financial and
statistical data presented herein relating to the Company's financial condition
and results of operations, unless otherwise indicated, are calculated as of
October 31, 1997. All pro forma financial and statistical data presented herein
relating to the Company's financial condition and results of operations, unless
otherwise indicated, reflect the consummation of the Transactions (as defined
below) and the Initial Offering. The description of any agreement or
understanding described in this Prospectus does not purport to be complete, and
is qualified in its entirety by reference to such agreement, which will be made
available upon request to the Company.
THE COMPANY
The Company is a leading designer, manufacturer and marketer of wireless
communications infrastructure products, including antenna support structures
such as monopoles and towers. The Company's product line is used by customers in
the cellular, personal communications services ("PCS"), enhanced specialized
mobile radio ("ESMR"), paging, radio and television broadcasting and microwave
industries. The Company's customers include many of the larger communications
service providers, such as AT&T Wireless, MCI, Nextel and Sprint Spectrum.
Because all wireless service providers need infrastructure products, the Company
believes it is well-positioned to capitalize on the continued growth of the
wireless communications industry, regardless of which technologies or service
providers dominate the industry in the future.
The Company's sales have grown from $14.7 million in Fiscal Year 1993 to
$71.2 million in Fiscal Year 1997, representing a compound annual growth rate
("CAGR") of 48.4%. For the 12 months ended October 31, 1997, the Company
generated pro forma sales of $81.4 million, and pro forma earnings before
interest, taxes, depreciation and amortization ("EBITDA") of $15.9 million.
According to the Cellular Telecommunications Industry Association ("CTIA"),
the number of wireless communications cell sites in the U.S. has grown at a CAGR
of 35.3% from mid-1993 through mid-1997. During the same period, FWT outpaced
that growth with a revenue CAGR of 48.4%. The Company believes its success has
resulted from its reputation for customer service, on-time delivery, high
quality products and a position as a low cost producer. The use of a direct
sales force enables the Company to provide a high degree of customer service.
The Company's reputation for customer service has resulted in the Company
entering into master purchase agreements with key customers which, in Fiscal
Year 1997, accounted for approximately 70.0% of sales. The Company's use of
proprietary software in the product design phase has enabled it to significantly
reduce product lead time. The Company's automated design, manufacturing and job
tracking processes, as well as quality control measures, enable it to
consistently produce and ship products accurately in a timely manner.
Additionally, the Company believes its relationship with certain vendors has
significantly reduced its cost structure and investment in plant and working
capital.
The Company believes considerable growth opportunities exist. Global
communications markets are deregulating, resulting in the entry of new
communications service providers. In addition to deregulation, communications
regulators throughout the world continue to make more spectrum available for new
service providers. Many of the Company's customers are expanding their
operations throughout the world which, in turn, will provide significant growth
opportunities for the Company. The Company believes this trend will continue to
drive demand for its infrastructure products. Further, the Company believes new
product and market opportunities exist, particularly in the area of high
definition television ("HDTV"), electrical utility and wireless local loop
("WLL").
1
<PAGE> 8
INDUSTRY OVERVIEW
The monopole and tower segments of the communications infrastructure
industry have seven and five participants, respectively, who together have a
dominant market share position in their particular market segment. Builders of
wireless networks typically seek to purchase antenna support structures from
established manufacturers who can accurately produce large numbers of products
in a timely fashion. The Company believes these requirements often lead wireless
service providers to enter into master purchase agreements with a limited number
of communications infrastructure companies, including the Company.
The Company believes the following four trends are driving the growth of
the communications industry: (i) deregulation of global communications markets;
(ii) introduction of new competitors; (iii) the development of cost efficient
and capacity enhanced technology; and (iv) elasticity of demand for
communications products and services. These factors increase minutes of use
("MOU"), which is the main factor driving wireless communications infrastructure
spending because wireless service providers plan their capital spending based on
anticipated MOU. Emerging digital wireless technologies and an increase in the
number of service providers are increasing capacity and quality and lowering the
cost per minute per subscriber. This lower cost enables service providers to
lower rates which makes wireless services more affordable to a broader consumer
base. This encourages increased MOU which, in turn, drives additional
infrastructure spending.
COMPETITIVE STRENGTHS
The Company believes that its products and customer service distinguish it
as one of the leading designers and manufacturers of telecommunications
infrastructure products and that the Company's strong market position in its
product segments and continued opportunities for growth and profitability are
attributable to the following competitive strengths:
- REPUTATION FOR CUSTOMER SERVICE AND ON-TIME DELIVERY. Management
believes that one of FWT's competitive advantages is its strong tradition
of, and reputation for, customer service. The use of a direct sales force
plays a significant role in customer service. In addition, over the past
three years, the Company has invested in the implementation of a
computer-aided-design/computer-aided-manufacturing ("CAD/CAM") system
which allows the Company to respond efficiently to customers' requests
and helps the Company to ensure on-time delivery. The majority of the
Company's customers are wireless service providers that compete in an
industry where time to market is critical. FWT believes it has a
significant competitive advantage in meeting these customers' needs by
reliably meeting their often aggressive time frames.
- REPUTATION FOR HIGH QUALITY PRODUCTS. The Company's design and
production processes are highly automated resulting in consistent product
quality. Moreover, the Company maintains rigorous quality control
standards which help to ensure accurate shipments to customers.
- LOW COST STRUCTURE THROUGH STRATEGIC RELATIONSHIPS. The Company believes
it enjoys a position as a low cost producer. This position has resulted
from the formation of two key relationships which management believes
will enable it to (i) reduce purchasing and manufacturing costs as a
percentage of total sales, (ii) focus on its core competencies in product
design and finishing, quality control, customer service and sales and
marketing, and (iii) limit its plant and working capital investments. The
first of these key strategic relationships allows FWT to take delivery of
steel on a just-in-time basis. The second relationship will allow FWT to
galvanize its monopoles at a to-be-constructed facility contiguous to its
present manufacturing facility located near Fort Worth, Texas.
- SOLID MARKET POSITIONS IN GROWTH INDUSTRY. The Company believes it is
one of the leading providers in both the monopole and tower markets and,
in recent years, it has significantly increased its market share in each
of these segments. The Company believes it is currently the second
largest participant in each of the monopole and tower markets, with
market shares that it estimates to be 18.0% and 12.0%, respectively.
Given these strong market positions, the Company believes it is well
positioned to benefit from the expected growth in the wireless
communications industry.
2
<PAGE> 9
- EXPERIENCED MANAGEMENT TEAM. Substantially all of the Company's
executive officers have spent considerable portions of their careers with
FWT. The existing management team is responsible for the Company's
significant growth over the last five years. Management's expertise and
in depth knowledge of the Company's products and customers are further
complemented by the experience of the principals at Baker Communications
Fund, L.P. ("Baker"), a private equity fund that focuses specifically on
investment in telecommunications services, equipment and applications
providers.
BUSINESS AND GROWTH STRATEGY
Management believes that the Company's growth will be driven by leveraging
its competitive strengths, and in particular its excellent reputation, into a
stronger market position, by (i) capitalizing on the growth of the wireless
communications industry, (ii) broadening its base of product offerings, (iii)
pursuing certain acquisitions and alliances on a forward integrated basis, and
(iv) expanding into international markets.
- CAPITALIZE ON GROWTH IN THE WIRELESS COMMUNICATION INDUSTRY. The Company
has grown rapidly over the past five years by taking advantage of the
growing demand for wireless communications services, and by positioning
itself as a reliable, customer focused provider of infrastructure
products. The Company believes that there are several industry trends
which indicate an increase in demand for wireless communications
infrastructure products. These include: (i) the continued construction of
cellular networks which is expected to grow as providers make capacity
enhancements and transition from analog to digital; (ii) the widespread
introduction of PCS; (iii) the launch of HDTV; and (iv) the growth of WLL
systems which is expected to increase, particularly in emerging
economies.
- BROADEN PRODUCT OFFERINGS. The Company has developed relationships with
numerous electrical utility companies through the introduction of its
PowerMount(TM) product, which provides a co-location opportunity within a
standard electrical transmission structure. The Company plans to market
this product and other utility applications in the future and believes
these relationships will prove beneficial in entering these markets. In
addition, the introduction of HDTV will require towers of over one
thousand feet and are expected to sell for approximately $1.0 million
each. The Company believes it is well-positioned to take advantage of
each of these opportunities.
- PURSUE STRATEGIC ALLIANCES AND ACQUISITIONS. The Company plans to
evaluate selective opportunities that will enhance its position within
the cell site development process. The Company believes there are various
opportunities beyond providing infrastructure products used in the
construction of communication networks. These include site installation
services, tower ownership and management businesses. The Company believes
these closely related businesses could be easily integrated with its
current operations to increase the value the Company provides to its
customer base.
- EXPAND INTO INTERNATIONAL MARKETS. The Company believes there are
considerable opportunities to expand its geographical reach, particularly
into Asia and Latin America. The trend towards global deregulation of
telecommunications markets provides substantial growth opportunities for
wireless infrastructure providers. The Company believes its strong
relationships with its customers, many of whom are already building
networks internationally, provide an advantage in competing for
infrastructure business in new international markets. In addition, the
Company believes there may be strategic opportunities for joint ventures
in foreign markets, and that by allying itself with local businesses the
Company can further position itself to take advantage of growth in
international markets.
The Company's headquarters are at 1901 East Loop 820 South, Fort Worth,
Texas 76112-7899 and its telephone number is (817) 457-3060.
3
<PAGE> 10
RECAPITALIZATION AND STOCK PURCHASE
On November 12, 1997, the Company, FWT Acquisition, Inc. ("FWT
Acquisition") (a newly formed wholly-owned subsidiary of Baker), T.W. Moore,
Betty Moore, Roy J. Moore, Thomas F. Moore and Carl R. Moore (each of the
natural persons, the "Existing Shareholders") entered into, and consummated the
transactions set forth in, that certain Stock Purchase and Redemption Agreement
and related documents (collectively, the "Transaction Agreements"). The
Transaction Agreements contemplated, among other things, two primary
transactions. The first transaction contemplated by the Transaction Agreements
included (i) the incurrence by the Company of $100.0 million senior secured
indebtedness (the "Senior Credit Facility"), (ii) the redemption by the Company
from the Existing Shareholders of an aggregate of 235.86 shares of the Company's
common stock, par value $10.00 per share (the "Common Stock"), for aggregate
consideration of approximately $83.6 million, including related consulting,
legal and accounting costs of $1.2 million, (iii) the repayment of all the
outstanding funded indebtedness of the Company in an aggregate amount of
approximately $22.1 million, and (iv) the distribution of an immaterial amount
of selected assets to certain Existing Shareholders (such transactions are
collectively referred to as the "Recapitalization"). The redemption price per
share is subject to an adjustment based upon the final determination of the
Company's working capital as determined as of the closing date. The second
transaction contemplated by the Transaction Agreements included the purchase by
FWT Acquisition of an aggregate of 108.91 shares of the Common Stock from
Existing Shareholders for aggregate consideration of approximately $36.0 million
(the "Stock Purchase," and together with the Recapitalization, the
"Transactions"). As a result of the Transactions, FWT Acquisition holds
approximately 80.0% of the issued and outstanding shares of Common Stock, and
Roy J. Moore, Thomas F. Moore and Carl R. Moore (collectively, the "Roll-over
Shareholders") hold in the aggregate approximately 20.0% of the issued and
outstanding shares of the Common Stock. For financial reporting purposes, the
Recapitalization was accounted for as an acquisition of treasury stock.
The borrowings under the Senior Credit Facility, cash from the Company of
approximately $5.0 million, notes payable of approximately $2.5 million, and the
distribution of selected assets, were used to consummate the Recapitalization.
In order to repay the Senior Credit Facility, the Company issued $105.0 million
in the aggregate principal amount of Outstanding Notes in the Initial Offering.
4
<PAGE> 11
THE EXCHANGE OFFER
THE OUTSTANDING NOTES...The Outstanding Notes were sold by the Company on
November 17, 1997, in the Initial Offering, to the
Initial Purchasers pursuant to the Purchase Agreement.
The Initial Purchasers subsequently resold the
Outstanding Notes to qualified institutional buyers
pursuant to Rule 144A under the Securities Act.
REGISTRATION
REQUIREMENTS............Pursuant to the Purchase Agreement dated November 12,
1997, by and among the Company, BT Alex. Brown
Incorporated, SBC Warburg Dillon Read Inc. and Smith
Barney Inc. (the "Purchase Agreement"), the Company and
the Initial Purchasers entered into the Registration
Rights Agreement, which grants the holders of the
Outstanding Notes certain exchange and registration
rights. The Exchange Offer is intended to satisfy such
exchange and registration rights, which terminate upon
the consummation of the Exchange Offer. If applicable
law or applicable interpretations of the staff of the
Commission do not permit the Company to effect the
Exchange Offer, the Company has agreed to file a shelf
registration (the "Shelf Registration Statement")
covering resales of the Outstanding Notes. See "The
Exchange Offer -- Resale of Exchange Notes" and "The
Exchange Offer -- Shelf Registration Statement."
THE EXCHANGE OFFER......The Company is offering to exchange $1,000 principal
amount of the Exchange Notes for each $1,000 principal
amount of Outstanding Notes. As of the date hereof,
$105.0 million aggregate principal amount of Outstanding
Notes are outstanding. The Company will issue the
Exchange Notes on , 1998 (the "Exchange
Date").
Any holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of
participating, in a distribution of the Exchange Notes
could not rely on the position of the staff of the
Commission enunciated in Exxon Capital Holdings
Corporation (available April 13, 1989) or similar no
action letters and, in the absence of an exemption
therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act
in connection with the resale transaction. Failure to
comply with such requirements in such instance may
result in such holder incurring liability under the
Securities Act for which the holder is not indemnified
by the Company.
Under existing interpretations of the Commission
contained in several no-action letters to third parties,
the Exchange Notes will be freely transferable by
holders thereof (other than affiliates of the Company)
after the Exchange Offer without further registration
under the Securities Act; provided, however, that each
holder that wishes to exchange its Outstanding Notes for
Exchange Notes will be required to represent (i) that
any Exchange Notes to be received by it will be acquired
in the ordinary course of its business, (ii) that at the
time of the commencement of the Exchange Offer it has no
arrangement or understanding with any person to
participate in the distribution (within the meaning of
Securities Act) of the Exchange Notes in violation of
the Securities Act, (iii) that it is not an "affiliate"
(as defined in rule 405 promulgated under the Securities
Act) of the Company, (iv) if such holder is not a
broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of Exchange Notes,
and (v) if such holder is a Participating Broker-Dealer
that will receive Exchange Notes for its own account in
5
<PAGE> 12
exchange for Outstanding Notes that were acquired as a
result of market-making or other trading activities,
that it will deliver a prospectus in connection with any
resale of such Exchange Notes. The Company will agree to
make available, during the period required by the
Securities Act, a prospectus meeting the requirements of
the Securities Act for use by Participating
Broker-Dealers and other persons, if any, with similar
prospectus delivery requirements for use in connection
with any resale of Exchange Notes.
EXPIRATION DATE.........5:00 p.m., New York City time, on , 1998.
INTEREST ON THE
EXCHANGE NOTES........The Exchange Notes will bear interest from the Issue
Date at a rate equal to 9 7/8% per annum and will be
payable semi-annually on May 15 and November 15 of each
year commencing May 15, 1998. Interest on each Exchange
Note will accrue (A) from the later of (i) the last
interest payment date on which interest was paid on the
Outstanding Note surrendered in exchange therefor, or
(ii) if the Outstanding Note is surrendered for exchange
on a date in a period which includes the record date for
an interest payment date to occur on or after the date
of such exchange and as to which interest will be paid,
the date of such interest payment date or (B) if no
interest has been paid on the Outstanding Notes, from
the Issue Date.
PROCEDURES FOR TENDERING
OUTSTANDING NOTES.....Each holder of Outstanding Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions contained
herein and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together with
the Outstanding Notes and any other required
documentation to the Exchange Agent at the address set
forth herein. By executing the Letter of Transmittal,
each holder will represent to the Company that, among
other things, the holder or person receiving such
Exchange Notes, whether or not such person is the
holder, is acquiring the Exchange Notes in the ordinary
course of business and that neither the holder nor any
such other person has any arrangement or understanding
with any person to participate in the distribution of
such Exchange Notes. In lieu of physical delivery of the
certificates representing Outstanding Notes, tendering
holders may transfer Outstanding Notes pursuant to the
procedure for book-entry transfer as set forth under
"The Exchange Offer -- Procedures for Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS.....Any beneficial owner whose Outstanding Notes are
registered in the name of a broker-dealer, commercial
bank, trust company or other nominee and who wishes to
tender should contact such registered holder promptly
and instruct such registered holder to tender on such
beneficial owner's behalf.
If such beneficial owner wishes to tender on such
owner's own behalf, such owner must prior to completing
and executing the Letter of Transmittal and delivering
its Outstanding Notes, either make appropriate
arrangements to register ownership of the Outstanding
Notes in such owner's name or obtain a properly
completed bond power from the registered holder. The
transfer of record ownership may take considerable time.
GUARANTEED DELIVERY
PROCEDURES............Holders of Outstanding Notes who wish to tender their
Outstanding Notes and whose Outstanding Notes are not
immediately available or who cannot deliver their
Outstanding Notes, the Letter of Transmittal or any
other documents
6
<PAGE> 13
required by the Letter of Transmittal to the Exchange
Agent (or comply with the procedures for book-entry
transfer) prior to the Expiration Date must tender their
Outstanding Notes according to the guaranteed delivery
procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS.......Tenders may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date pursuant to
the procedures described under "The Exchange
Offer -- Withdrawal of Tenders."
ACCEPTANCE OF
OUTSTANDING NOTES AND
DELIVERY OF EXCHANGE
NOTES.................Subject to certain conditions, the Company will accept
for exchange any and all Outstanding Notes that are
properly tendered in the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange Offer
will be delivered on the Exchange Date. See "The
Exchange Offer -- Terms of the Exchange Offer."
FEDERAL INCOME TAX
CONSEQUENCES..........The exchange pursuant to the Exchange Offer should not
be a taxable event for federal income tax purposes. See
"Certain Federal Income Tax Consequences."
EFFECT ON HOLDERS OF
OUTSTANDING NOTES.....As a result of the making of this Exchange Offer, the
Company will have fulfilled one of its obligations under
the Registration Rights Agreement, and holders of
Outstanding Notes who do not tender their Outstanding
Notes will not have any further registration rights
under the Registration Rights Agreement or otherwise.
Such holders will continue to hold the untendered
Outstanding Notes and will be entitled to all the rights
and subject to all the limitations applicable thereto
under the Indenture, except to the extent such rights or
limitations, by their terms, terminate or cease to have
further effectiveness as a result of the Exchange Offer.
All untendered Outstanding Notes will continue to be
subject to certain restrictions on transfer.
Accordingly, if any Outstanding Notes are tendered and
accepted in the Exchange Offer, the trading market of
the untendered Outstanding Notes could be adversely
affected. See "The Exchange Offer" and "Risk
Factors -- Absence of Public Market; Restrictions on
Transfer."
EXCHANGE AGENT..........Norwest Bank Minnesota, N.A.
USE OF PROCEEDS.........There will be no cash proceeds payable to the Company
from the issuance of the Exchange Notes pursuant to the
Exchange Offer. See "Use of Proceeds."
7
<PAGE> 14
SUMMARY AND TERMS OF THE EXCHANGE NOTES
SECURITIES OFFERED......$105.0 million aggregate principal amount of 9 7/8%
Senior Subordinated Notes due 2007.
ISSUER..................FWT, Inc., a Texas corporation.
MATURITY DATE...........November 15, 2007.
INTEREST ON THE
EXCHANGE NOTES........The Exchange Notes will bear interest at a rate equal to
9 7/8% per annum and will be payable semi-annually on
May 15 and November 15 of each year commencing May 15,
1998. Interest on each Exchange Note will accrue (A)
from the later of (i) the last interest payment date on
which interest was paid on the Outstanding Note
surrendered in exchange therefor, or (ii) if the
Outstanding Note is surrendered for exchange on a date
in a period which includes the record date for an
interest payment date to occur on or after the date of
such exchange and as to which interest will be paid, the
date of such interest payment date or (B) if no interest
has been paid on the Outstanding Notes, from the Issue
Date.
INTEREST PAYMENT
DATES...................Interest will be payable semi-annually in arrears on
each May 15 and November 15, commencing May 15, 1998.
RANKING.................The Notes will be unsecured senior subordinated
obligations of the Company and will be subordinated in
right of payment to all existing and future Senior
Indebtedness (as defined herein) of the Company. The
Notes will rank pari passu with any future senior
subordinated indebtedness of the Company and will rank
senior to all other subordinated indebtedness of the
Company. As of October 31, 1997, on a pro forma basis,
the Company would have had no Senior Indebtedness and
approximately $11.4 million of availability under the
Revolving Credit Facility (as defined herein). See
"Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and
Capital Resources" and "Description of the Revolving
Credit Facility."
OPTIONAL REDEMPTION.....The Notes will be redeemable, in whole or in part, at
the option of the Company on or after November 15, 2002,
at the redemption prices set forth herein, plus accrued
and unpaid interest to the date of redemption. In
addition, at any time on or prior to November 15, 2000,
the Company may, at its option, redeem up to 35% of the
aggregate principal amount of the Notes originally
issued with the net cash proceeds of one or more public
equity offerings, at a redemption price equal to
109.875% of the aggregate principal amount of the Notes
to be redeemed plus accrued and unpaid interest to the
date of redemption; provided, however, that, after
giving effect to any such redemption, at least 65% of
the aggregate principal amount of the Notes originally
issued remain outstanding.
CHANGE OF CONTROL.......Upon a Change of Control (as defined herein), each
holder of the Notes will have the right to require that
the Company make an offer to purchase all outstanding
Notes at a price equal to 101% of the principal amount
thereof plus accrued interest to the date of purchase.
See "Description of Exchange Notes."
CERTAIN COVENANTS.......The Indenture contains certain covenants that limit the
ability of the Company and its subsidiaries to, among
other things, incur additional indebtedness, pay
dividends or make investments and certain other
restricted payments, consummate certain asset sales,
enter into certain transactions with affiliates, incur
liens, impose restrictions on the ability of a
subsidiary to pay dividends or make certain payments to
the Company and its subsidiaries, and merge or
consolidate with any other person or sell, assign,
transfer, lease, convey or otherwise
8
<PAGE> 15
dispose of all or substantially all of the assets of the
Company. In addition, the Company will be obligated to
offer to repurchase the Notes at 100% of the principal
amount thereof plus accrued and unpaid interest, if any,
to the date of repurchase in the event of certain Asset
Sales (as defined herein).
For additional information regarding the Exchange Notes, see "Description of
Exchange Notes."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating the Exchange Offer.
9
<PAGE> 16
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
The summary historical income statement data for Fiscal Year 1995, Fiscal
Year 1996 and Fiscal Year 1997 and the summary historical balance sheet data for
Fiscal Year 1996 and Fiscal Year 1997 presented below were derived from the
historical financial statements of the Company audited by Arthur Andersen LLP,
independent public accountants, whose report appears elsewhere in this
Prospectus. The summary historical financial data as of and for the six month
periods ended October 31, 1996 and 1997 were derived from the Company's
unaudited financial statements which, in the opinion of management, reflect all
adjustments (consisting of normal recurring adjustments) necessary for the fair
presentation of the financial condition and results of operations for such
period. The unaudited income statement data for the LTM period ended October 31,
1997 represent the summation of the Statement of Income for Fiscal Year 1997 and
the unaudited Statement of Income for the six month period ended October 31,
1997, less the unaudited Statement of Income for the six month period ended
October 31, 1996. The summary unaudited pro forma financial data give effect to
the Transactions and Initial Offering as if they had occurred as of the
beginning of the period presented for the income statement and other data, and
as of the last day of the period presented for the balance sheet data. The
summary unaudited pro forma income statement and other data do not (i) purport
to represent what the Company's results of operations actually would have been
if the Transactions and Initial Offering had actually occurred as of such dates
or what such results will be for any future periods or (ii) give effect to
certain non-recurring charges expected to result from the Transactions and
Initial Offering. The information contained in this table should be read in
conjunction with "Selected Historical Financial Data," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the Financial
Statements and accompanying notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
SIX MONTH PERIOD LTM PERIOD LTM PERIOD
ENDED ENDED ENDED
FISCAL YEAR ENDED APRIL 30, OCTOBER 31, OCTOBER 31, 1997 OCTOBER 31, 1997
--------------------------- ----------------- ---------------- ----------------
1995 1996 1997 1996 1997
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales.................................. $30,388 $42,701 $71,188.. $27,132 $37,350 $81,406 $ 81,406
Cost of sales.......................... 23,838 32,006 49,249 18,771 26,652 57,130 57,130
------- ------- ------- ------- ------- -------- --------
Gross profit........................... 6,550 10,695 21,939 8,361 10,698 24,276 24,276
Selling, general and administrative.... 4,139 4,244 8,353 2,942 5,389 10,800 9,750
------- ------- ------- ------- ------- -------- --------
Operating income....................... 2,411 6,451 13,586 5,419 5,309 13,476 14,526
Interest income (expense), net......... 69 123 197 102 (157) (62) (10,701)
Other income(1)........................ 3 512 571 41 281 811 357
------- ------- ------- ------- ------- -------- --------
Income before income tax provision..... 2,483 7,086 14,354 5,562 5,433 14,225 4,182
Income tax provision(2)................ 53 162 316 125 113 304 1,589
------- ------- ------- ------- ------- -------- --------
Net income(2).......................... $ 2,430 $ 6,924 $14,038 $ 5,437 $ 5,320 $13,921 $ 2,593
======= ======= ======= ======= ======= ======== ========
OTHER FINANCIAL DATA:
EBITDA(3).............................. $ 2,827 $ 7,494 $14,937 $ 5,835 $ 6,248 $15,350 $ 15,946
Depreciation........................... 299 375 508 259 412 661 661
Capital expenditures................... 1,324 1,198 4,341 1,086 664 3,919 3,919
Ratio of earnings to fixed charges..... 56.18x 215.73x 192.39x 398.29x 14.48x 31.66x 1.38x
Ratio of long term debt to EBITDA...... -- -- -- -- -- -- 6.58x
Ratio of EBITDA to pro forma interest
expense(4)........................... -- -- -- -- -- -- 1.54x
BALANCE SHEET DATA:
Working capital........................ 5,278 9,815 18,509 14,370 2,531 2,531 13,991
Total assets........................... 11,854 19,489 40,203 27,523 40,838 40,838 60,284
Long term debt, less current
maturities........................... 475 375 1,512 325 1,410 1,410 105,000
Shareholders' equity (deficit)......... 8,412 13,977 25,297 19,414 9,617 9,617 (56,365)
</TABLE>
10
<PAGE> 17
- ---------------
(1) Other income consists primarily of income related to farm operations and the
disposition of farm assets. These assets have been distributed in connection
with the Transactions.
(2) The historical financial statements do not include a provision for federal
taxes as the Company has elected to be taxed as a Subchapter S corporation.
A provision for federal taxes has been reflected in the pro forma
information to reflect the change in tax status of the Company from a
Subchapter S corporation to a Subchapter C corporation.
(3) EBITDA consists of net income before interest expense, taxes, depreciation
and amortization. EBITDA is included because it is widely used as a measure
of a company's operating performance, but should not be construed as an
alternative either (i) to net income (determined in accordance with
generally accepted accounting principles) as a measure of profitability or
(ii) to cash flows from operating activities (determined in accordance with
generally accepted accounting principles). EBITDA does not take into account
the Company's debt service requirements and other commitments and,
accordingly, is not necessarily indicative of amounts that may be available
for discretionary use.
(4) Pro forma interest expense used in the calculation of the ratio excludes
amortization of deferred financing costs as amortization is a non-cash
expense.
11
<PAGE> 18
RISK FACTORS
Prospective investors should carefully consider the following factors, in
addition to the other information set forth in this Prospectus, before making an
investment in the Exchange Notes offered hereby.
HIGH LEVEL OF INDEBTEDNESS AND ABILITY TO SERVICE DEBT
In connection with the Recapitalization and the Initial Offering, the
Company has incurred a significant amount of indebtedness. At October 31, 1997,
the Company's long-term indebtedness would have been $105.0 million and its
total shareholders' deficit would have been $56.4 million, in each case on a pro
forma basis after giving effect to the Recapitalization and the Initial Offering
as if they had occurred on such date. In addition, as of October 31, 1997 on a
pro forma basis including the effect of obtaining the Revolving Credit Facility,
the Company would have had approximately $11.4 million of availability under the
Revolving Credit Facility. Further, subject to the restrictions in the Revolving
Credit Facility and the Indenture, the Company may incur additional
indebtedness, including senior indebtedness with respect to the additional Notes
that may be issued under the Indenture from time to time to finance
acquisitions, capital expenditures, working capital or for other purposes.
The level of the Company's indebtedness could have important consequences
to holders of the Notes, including, but not limited to, the following: (i) a
substantial portion of the Company's cash flow from operations must be dedicated
to the repayment of indebtedness and will not be available for other purposes;
(ii) the Company's future ability to obtain additional debt financing for
working capital, capital expenditures, acquisitions or other purposes may be
limited; and (iii) the Company's level of indebtedness could limit its
flexibility in reacting to changes in the industry and general economic
conditions and its ability to withstand a prolonged downturn in the wireless
communications industry or the telecommunications infrastructure industry.
Certain of the Company's competitors currently operate on a less leveraged basis
and have significantly greater operating and financing flexibility than the
Company.
The Company's ability to pay interest on the Notes and to satisfy its other
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions in the telecommunications
infrastructure industry and financial, business and other factors, certain of
which are beyond its control. The Company anticipates that its operating cash
flow, together with borrowings under the Revolving Credit Facility, will be
sufficient to meet its operating expenses and to service its debt requirements
as they become due. However, if the Company is unable to generate sufficient
cash flow from operations to service its indebtedness, it will be forced to
adopt an alternative strategy that may include actions such as reducing or
delaying capital expenditures, selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all.
In addition, in the event of bankruptcy, liquidation or reorganization of the
Company, the assets of the Company will be available to pay obligations on the
Notes only after all Senior Indebtedness has been paid in full, and there may
not be sufficient assets remaining to pay amounts due on any or all of the Notes
then outstanding. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The Indenture restricts, among other things, the Company's ability to incur
additional indebtedness, incur liens, pay dividends or make certain other
restricted payments, consummate certain asset sales, enter into certain
transactions with affiliates, incur indebtedness that is subordinate in right of
payment to any indebtedness and not subordinated in right of payment to the
Notes, impose restrictions on the ability of a subsidiary to pay dividends or
make certain payments to the Company, merge or consolidate with any other
person, or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company.
In addition, the Revolving Credit Facility contains other and more
restrictive covenants and prohibits the Company from prepaying its indebtedness
(including the Notes). The Revolving Credit Facility also requires the Company
to maintain specified financial ratios and satisfy certain financial condition
tests. The Company's ability to meet those financial ratios and tests can be
affected by events beyond its control, and there can be no
12
<PAGE> 19
assurance that the Company will meet those tests. A breach of any of these
covenants could result in a default under the Revolving Credit Facility and the
Indenture. If an event of default should occur under the Revolving Credit
Facility, the lenders can elect to declare all amounts of principal outstanding
under the Revolving Credit Facility, together with all accrued interests, to be
immediately due and payable. If the Company were unable to repay those amounts,
the lenders could proceed against the collateral granted to them to secure that
indebtedness. If the Revolving Credit Facility indebtedness were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of the
Company, including the Notes. Substantially all the assets of the Company are
pledged as security under the Revolving Credit Facility. See "Description of the
Revolving Credit Facility."
DEPENDENCE ON WIRELESS COMMUNICATIONS INDUSTRY; CURRENT INDUSTRY CONDITIONS
The Company's business depends upon the capital expenditures of wireless
service providers, which, in turn, depend upon the current and anticipated
market demand for wireless communications. The wireless communications industry
may experience downturns, which may result in a decrease in the industry's
demand for capital equipment, including antenna support structures. There can be
no assurance that the wireless communications industry will not experience
severe and prolonged downturns in the future or that the wireless communications
industry will expand as quickly as forecasted. Any significant decrease in the
level of capital expenditures by the wireless communications industry could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Industry Overview."
A substantial majority of the Company's revenues are derived from the sale
of antenna support structures and related shelters for wireless communications
networks, and the future success of the Company depends to a considerable extent
upon the continued growth and increased availability of cellular and other
wireless communications services, including PCS, domestically and
internationally. There can be no assurance that either subscriber use or the
implementation of wireless communications services will continue to grow, or
that such factors will create demand for the Company's products. The Company
believes that continued growth in the use of wireless communications services
depends on significant reductions in infrastructure capital equipment cost per
subscriber, the corresponding reductions in wireless service pricing and the
ability of the wireless communications industry to obtain the permits, licenses
and zoning relief necessary for the growth of wireless communications networks.
While in the U.S., the Federal Communications Commission has adopted regulations
requiring local phone companies to reduce the rates charged to cellular carriers
for connection to their wireline networks, it is anticipated that wireless
service rates will remain higher than rates charged by traditional wireline
companies. The growth in the implementation of wireless communications services
is dependent upon both developed countries, such as the U.S., allowing continued
deployment of new networks, and less developed foreign countries deploying
wireless infrastructures. Foreign countries or local government authorities may
decline to construct wireless communications systems, place moratoriums on
building base stations or terminate or delay construction of such systems for a
variety of reasons, including environmental issues, public resistance to tower
construction, political unrest, economic downturns, the availability of
favorable pricing for other communications services, the availability and cost
of related equipment or other delays in the implementation of these systems, in
which event demand for the Company's products will be similarly reduced or
delayed, which would materially adversely affect the Company's business,
financial condition and results of operations. See "-- Risks Associated with
International Sales," "-- Dependence on Permits, Licenses and Zoning."
FLUCTUATIONS IN QUARTERLY RESULTS
The Company experiences, and expects to continue to experience, significant
fluctuations in sales and operating results from quarter to quarter, which
typically falls in the fourth and first quarters of the calendar year, which
approximately correspond to the third and fourth quarters of FWT's Fiscal Year.
Quarterly results fluctuate due to a number of factors, any of which could have
a material adverse effect on the Company's business, results of operations and
financial condition. In particular, the Company's quarterly results of
operations can vary due to, among other things, the following factors: (i) the
timing, cancellation, or rescheduling of customer orders and shipments; (ii)
variations in manufacturing capacities; (iii) efficiencies and costs; (iv) the
availability and cost of components; (v) capacity and production constraints
associated
13
<PAGE> 20
with single source component suppliers; (vi) changes in the mix of products
having differing gross margins; (vii) customer service expenses; and (viii)
changes in average sales prices. In addition, the Company's quarterly results of
operations are influenced by competitive factors, including pricing,
availability and demand for the Company's products. A large portion of the
Company's expenses are fixed and difficult to reduce in a short period of time.
If sales do not meet the Company's expectations, the Company's fixed expenses
would exacerbate the effect of such sales shortfall. Furthermore, announcements
by the Company or its competitors regarding new products and technologies could
cause customers to defer purchases of the Company's products. See
"-- Concentration of Customers; Dependence on Customer Satisfaction." Order
deferrals and cancellations by the Company's customers, declining average sales
prices, changes in the mix of products sold and longer than anticipated sales
cycles for the Company's products have in the past adversely affected the
Company's quarterly results of operations. There can be no assurance that the
Company's quarterly results of operations will not be similarly adversely
affected in the future.
Due to the foregoing factors, the Company believes that period-to-period
comparisons of its operating results are not necessarily meaningful and that
such comparisons cannot be relied upon as indicators of future performance.
There can be no assurance that the Company will maintain its current
profitability in the future or that future revenues and operating results will
not be below the expectations of management, public market analysts and
investors. In any case, the Company could be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
CONCENTRATION OF CUSTOMERS; DEPENDENCE ON CUSTOMER SATISFACTION
During Fiscal Year 1997, sales to one customer accounted for approximately
25.0% of the Company's net revenues, and sales to the Company's top five
customers in the aggregate accounted for approximately 55.0% of the Company's
net revenues. As customers seek to establish close relationships with their
suppliers, the Company expects that its customer base will continue to become
more concentrated. If, for any reason, any of the Company's key customers were
to purchase significantly less of the Company's products in the future, such
decreased level of purchases could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Customers."
The Company depends, in large part, on its ability to maintain a high level
of customer satisfaction. From time to time, however, the Company receives
customer complaints regarding the quality of its products and services. While
the Company works to resolve all such customer complaints to the satisfaction of
all parties, there can be no assurance that any customer will continue to
purchase the Company's products.
MANUFACTURING CAPACITY CONSTRAINTS
The Company's success will depend upon its ability to increase its
production volume on a timely basis while maintaining product quality and per
unit production costs. Manufacturers often encounter difficulties in increasing
production volumes, including difficulties involving delays, quality control and
shortages of qualified personnel. Any significant increase in production volume
will require that the Company increase its manufacturing capacity.
The Company has in the past experienced, and may in the future experience,
delays in its ability to fill orders for certain products on a timely basis
because of limits on its production capacity. Significant delays in filling
orders over an extended period would damage customer relations, which would
materially adversely affect the Company's business, financial condition and
results of operations. The production schedules for each of the Company's
products are based on orders for such products, and the Company has only limited
ability to modify short-term production schedules. If the Company were to
experience a significant increase in the demand for any of its products, it
would not be able, on a short-term basis, to satisfy such demand fully. The
ability of the Company to estimate demand may be less precise during periods of
rapid growth or with respect to new products. The failure of the Company to
forecast its requirements accurately could lead to inventory shortages or
surpluses that could have a material adverse effect on the results of operations
and lead to fluctuations in quarterly operating results.
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GROWTH OPPORTUNITIES
Although management believes that opportunities may exist for the Company
to grow through either acquisitions of related businesses or entering into
strategic joint ventures, there can be no assurance that the Company will be
able to identify appropriate acquisitions or joint venture opportunities on
terms acceptable to the Company. Certain provisions of the Revolving Credit
Facility or the Indenture may limit the Company's ability to effect acquisitions
or enter into joint ventures. See "-- Restrictions Imposed by Terms of the
Company's Indebtedness."
MANAGEMENT OF GROWTH
The Company has undergone a period of significant growth, and its expansion
may significantly strain the Company's management, financial and other
resources. In order to sustain this growth, the Company must attract and retain
highly qualified personnel. It may become increasingly difficult for the Company
to hire such personnel. The Company believes that improvements in management and
operational controls, and operational, financial and management information
systems are needed to manage further growth. The Company currently plans to
augment its information systems. There can be no assurance that the management
information system will produce the desired efficiencies or that other
improvements will not be needed. The failure to implement such improvements
could have a material adverse effect on the Company's business, financial
condition and results of operations.
COMPETITION
The telecommunications infrastructure industry is highly competitive. The
Company faces substantial competition in each of the markets it serves from
established competitors, some of which have greater financial, engineering,
manufacturing and marketing resources than the Company. The Company's
competitors in each product area can be expected to continue to improve the
design of their products, to introduce new products with competitive prices and
performance characteristics and to improve customer satisfaction. Although the
Company has not historically been forced to reduce its prices significantly,
there can be no assurance that competitive pressures will not necessitate price
reductions, adversely affecting operating results, in the future. Although the
Company believes that it has certain advantages over its competitors,
maintaining such advantages will require a continued high level of investment by
the Company in sales, marketing and other services. There can be no assurance
that the Company will have sufficient resources to continue to make such
investments or that the Company will be able to maintain the competitive
advantages it currently enjoys.
RISKS ASSOCIATED WITH INTERNATIONAL SALES
International sales accounted for less than 5.0% of the Company's total
revenues for Fiscal Year 1997. The Company's business plan relies on
international sales to account for a portion of its revenue in the future.
International sales are subject to certain risks, including unexpected changes
in exchange rates, regulatory requirements, currency controls, tariffs and other
market barriers, political and economic instability, potentially adverse tax
consequences, natural disasters, outbreaks of hostilities, difficulties in
accounts receivable collection, extended payment terms, difficulties in managing
foreign sales representatives and difficulties in staffing and managing foreign
branch operations. Currently the Company's international sales are denominated
in U.S. dollars, and sales to international customers may be affected by
fluctuations in the U.S. dollar, which could increase the sales price in local
currencies of the Company's products. The Company is also subject to the risks
associated with the imposition of legislation and import and export regulations.
The Company cannot predict whether tariffs, quotas, duties, taxes or other
changes or restrictions will be implemented by the U.S. or other countries upon
the import or export of the Company's products in the future. In addition, the
laws of certain countries in which the Company's products are or may be sold may
not provide the Company's products and intellectual property rights with the
same degree of protection as the laws of the U.S. There can be no assurance that
these factors will not have a material adverse effect on the Company's business,
financial condition and results of operations.
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DEPENDENCE ON SUPPLIERS
Certain of the components used in the Company's products are obtained from
a single source or a limited group of suppliers. The Company's reliance on such
suppliers involves several risks, including a potential inability to obtain an
adequate supply of required components in a timely manner, price increases and
component quality. Although the Company seeks to reduce dependence on those sole
and limited source suppliers, the partial or complete loss of certain of those
sources could have at least a temporary material adverse effect on the Company's
results of operations and damage customer relationships. Further, a significant
increase in the price of one or more of these components could materially
adversely affect the Company's results of operations.
The Company relies on Delta Steel, Inc. ("Delta Steel") as its sole source
for braking and shaping the steel for monopoles. While the Company believes that
its contract with Delta Steel is adequate to supply its foreseeable needs, there
can be no assurance that Delta Steel will adequately or fully perform its
contractual obligations or that Delta Steel will not experience a partial or
complete loss of the equipment necessary to perform its contractual obligations.
The failure of Delta Steel to adequately or fully perform its obligations would
have a material adverse effect on the Company's business, financial condition
and results of operations.
AVAILABILITY AND PRICE OF STEEL AND ZINC
The Company's principal raw materials are steel and zinc. The Company's
ability to continue to acquire steel and zinc on favorable terms may be
adversely affected by factors beyond its control. Because steel and zinc
constitute a substantial portion of the Company's cost of goods sold, any
increase in the price of such materials could have a material adverse effect on
the Company's profit margin. There can be no assurance that the Company will be
successful in passing along any of these cost increases to its customers.
RISKS ASSOCIATED WITH THREE MANUFACTURING FACILITIES
The Company produces all of its products in three manufacturing facilities
located in Texas. As a result, any prolonged disruption in the operations at any
of the Company's manufacturing facilities, whether due to labor difficulties,
destruction of or damage to a facility or other reasons, could have a material
adverse effect on the Company's financial condition or results of operations.
See "Business -- Facilities."
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree upon the continued
contributions of key management, engineering, sales and marketing, customer
support and finance and manufacturing personnel, certain of whom would be
difficult to replace. The loss of the services of certain of these executives
could have a material adverse effect on the Company. There can be no assurance
that the services of such personnel will continue to be available to the
Company. The Company has entered into employment agreements with certain members
of its senior management team. In addition, the Company believes that its
success depends on its ability to attract and retain additional qualified
employees and that the failure to recruit such other skilled personnel could
have a material adverse effect on the Company. See "Management -- Employment
Agreements" and "Certain Relationships and Related Transactions."
DEPENDENCE ON PERMITS, LICENSES AND ZONING
The Company's success will depend on the ability of the telecommunications
infrastructure industry to obtain the permits, licenses and zoning relief
necessary for the growth of the wireless communications networks. The
telecommunications infrastructure industry often encounters significant public
resistance when attempting to obtain the necessary permits, licenses and zoning
relief. There can be no assurance that the telecommunications infrastructure
industry can obtain the number of permits, licenses and zoning changes necessary
to continue the growth of the wireless communications networks. The failure of
the telecommunications infrastructure industry to obtain such permits, licenses
and zoning relief would have a material adverse effect on the Company's
business, financial condition and results of operations.
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DECREASED DEMAND FOR COMPANY'S PRODUCTS
The Company's success will depend on the continued demand for its products.
Certain factors could have the effect of significantly reducing or even
eliminating the demand for the Company's products, including technological
advancements, public resistance to infrastructure build-out, alternatives such
as co-location and non-tower or pole mounts, and the possible linkage of adverse
health consequences to wireless communication devices. Any decrease in demand
for the Company's products would have a material adverse effect on the Company's
business, financial condition and results of operations.
ENVIRONMENTAL LIABILITIES; OTHER GOVERNMENTAL REGULATIONS
The Company is subject to various federal, state, local and foreign
environmental laws and regulations relating to the discharge, storage,
treatment, handling and disposal of certain materials, substances and water used
in, or resulting from, its operations and the remediation of contamination
associated with releases of hazardous substances both at the Company's
facilities and at offsite disposal locations. The Company's operations are also
governed by laws and regulations relating to workplace safety and worker health
that, among other things, regulate employee exposure to hazardous substances in
the workplace. The nature of the Company's operations exposes it to the risk of
liabilities or claims with respect to environmental and workplace health and
safety matters, and there can be no assurance that material costs will not be
incurred in connection with such liabilities or claims.
Based on information currently available to management, the Company
believes that the cost of compliance with existing environmental and health and
safety laws and regulations (and liability for known environmental conditions)
will not have a material adverse effect on the Company's business, financial
condition or results of operations. However, management cannot predict which
environmental or health and safety legislation or regulations will be enacted in
the future or how existing or future laws or regulations will be enforced,
administered or interpreted, nor can it predict the amount of future
expenditures that may be required in order to comply with such environmental or
health and safety laws or regulations or the response to such environmental
claims.
CONTROLLING SHAREHOLDERS
As a result of the Transactions, FWT Acquisition holds approximately 80.0%
of the Company's outstanding voting stock. Therefore, Baker has the power to
control all matters submitted to shareholders of the Company, to elect a
majority of the directors of the Company and to exercise control over the
business, policies and affairs of the Company. The interests of Baker as an
equity holder may differ from the interests of holders of the Exchange Notes.
See "Certain Relationships and Related Transactions -- Transaction Agreements."
ABILITY TO PURCHASE NOTES UPON A CHANGE OF CONTROL
The source of funds for any repurchase required as a result of a Change of
Control will be the Company's available cash or cash generated from operating or
other sources, including borrowing, sales of assets, sales of equity or funds
provided by a new controlling person. Further, a Change of Control will likely
trigger an event of default under the Revolving Credit Facility, which would
permit the lenders thereto to accelerate the debt under the Revolving Credit
Facility. However, there can be no assurance that sufficient funds will be
available at the time of any Change of Control to make any required repurchases
of Notes tendered and to repay debt under the Revolving Credit Facility. Any
future credit agreements or other agreements relating to secured indebtedness to
which the Company may become a party may contain similar restrictions and
provisions. See "Description of Exchange Notes" and "Description of the
Revolving Credit Facility."
RISKS ASSOCIATED WITH FRAUDULENT CONVEYANCE LIABILITY
In connection with the Recapitalization, the Company has incurred
substantial indebtedness, including the indebtedness under the Notes and the
Revolving Credit Facility. If under relevant federal and state fraudulent
conveyance statutes in a bankruptcy, reorganization or rehabilitation case or
similar proceeding or a lawsuit by or on behalf of unpaid creditors of the
Company, a court were to find that, at the time the Notes were issued, (i) the
Company issued the Notes with the intent of hindering, delaying or defrauding
current or
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future creditors or (ii) (A) the Company received less than reasonably
equivalent value or fair consideration for issuing the Notes and (B) the
Company, (1) was insolvent or was rendered insolvent by reason of the
Transactions, (2) was engaged, or about to engage, in a business or transaction
for which its assets constituted unreasonably small capital, (3) intended to
incur, or believed that it would incur, debts beyond its ability to pay as such
debts matured (as all of the foregoing terms are defined in or interpreted under
such fraudulent conveyance statutes) or (4) was a defendant in an action for
money damages, or had a judgment for money damages docketed against it (if, in
either case, after final judgment, the judgment is unsatisfied), such court
could avoid or subordinate the Notes to presently existing and future
indebtedness of the Company and take other action detrimental to the holders of
the Notes, including, under certain circumstances, invalidating the Notes.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, the Company would be considered insolvent if, at
the time it incurs the indebtedness constituting the Notes, either (i) the fair
market value (or fair saleable value) of its assets is less than the amount
required to pay its total existing debts and liabilities (including the probable
liability on contingent liabilities) as they become absolute and mature or (ii)
it is incurring debts beyond its ability to pay as such debts mature.
The Company's Board of Directors and management believe that at the time of
its issuance of the Outstanding Notes, the Company (i)(A) was neither insolvent
nor rendered insolvent thereby, (B) had sufficient capital to operate its
business effectively and (C) was incurring debts within its ability to pay as
the same mature or become due and (ii) had sufficient resources to satisfy any
probable money judgment against it in any pending action. In reaching the
foregoing conclusions, the Company has relied upon its analysis of internal cash
flow projections and estimated values of assets and liabilities of the Company.
There can be no assurance, however, that such analysis will prove to be correct
or that a court passing on such questions would reach the same conclusions.
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
There is no existing public market for the Outstanding Notes. The Company
does not intend to apply for listing of the Exchange Notes offered hereby on any
national securities exchange or to seek approval for quotation on NASDAQ. There
can be no assurance as to the liquidity of any markets that may develop for the
Exchange Notes, the ability of holders of the Exchange Notes to sell their
Exchange Notes or the price at which holders would be able to sell their
Exchange Notes. Future trading prices of the Exchange Notes will depend on many
factors, including, among other things, prevailing interest rates, the Company's
operating results and the market for similar securities. The Initial Purchasers
have advised the Company that they currently intend to make a market in the
Exchange Notes offered hereby. However, the Initial Purchasers are not obligated
to do so and any market making may be discontinued at any time without notice.
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Registration Rights Agreement
with respect to the Outstanding Notes. The Company will not receive any cash
proceeds from the issuance of the Exchange Notes offered hereby. In
consideration for issuing the Exchange Notes contemplated in this Prospectus,
the Company will receive Outstanding Notes in like principal amount, the form
and terms of which are substantially similar to the form and terms of the
Exchange Notes except as otherwise described herein. The Outstanding Notes
surrendered in exchange for Exchange Notes will be returned to the Company and
canceled and cannot be reissued. Accordingly, the issuance of the Exchange Notes
will not result in any increase or decrease in the indebtedness of the Company.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Outstanding Notes were sold by the Company on November 17, 1997 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently placed the Outstanding Notes with qualified institutional buyers in
reliance on Rule 144A under the Securities Act. As a condition of the purchase
of the Outstanding Notes by the Initial Purchasers, the Company entered into the
Registration Rights Agreement with the Initial Purchasers, which requires, among
other things, that the Company file with the Commission a registration statement
under the Securities Act with respect to an offer by the Company to the holders
of the Outstanding Notes to issue and deliver to such holders, in exchange for
Outstanding Notes, a like principal amount of Exchange Notes. The Company is
required to use its best efforts to cause the Registration Statement relating to
the Exchange Offer to be declared effective by the Commission under the
Securities Act and commence the Exchange Offer. The Exchange Notes are to be
issued without a restrictive legend and may be reoffered and resold by the
holder without restrictions or limitations under the Securities Act (other than
any such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act). A copy of the Registration Rights Agreement has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part.
The term "Holder" with respect to the Exchange Offer means any person in
whose name the Outstanding Notes are registered on the books of the Company or
any other person who has obtained a properly completed bond power from the
registered holder.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all
Outstanding Notes validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. On the Exchange Date, the Company will
issue $1,000 principal amount of Exchange Notes in exchange for $1,000 principal
amount of Outstanding Notes accepted in the Exchange Offer. Holders may tender
some or all of their Outstanding Notes pursuant to the Exchange Offer. However,
Outstanding Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Outstanding Notes except that (i) the Exchange Notes have been registered
under the Securities Act and hence will not bear legends restricting the
transfer thereof and (ii) the holders of the Exchange Notes will not be entitled
to certain rights under the Registration Rights Agreement. The Exchange Notes
will evidence the same debt as the Outstanding Notes and will be entitled the
benefits of the Indenture.
As of the date of this Prospectus, $105,000,000 aggregate principal amount
of the Outstanding Notes was outstanding and registered in the name of Cede &
Co., as nominee for the Depository Trust Company. The Company has fixed the
close of business of , 1998, as the record date for the Exchange Offer
for purposes of determining the persons to whom this Prospectus and the Letter
of Transmittal will be mailed initially.
The Company intends to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of the
Commission thereunder, including Rule 14e-1 thereunder.
The Company shall be deemed to have accepted validly tendered Outstanding
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
Holders for the purpose of receiving the Exchange Notes from the Company.
If any tendered Outstanding Notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Outstanding Notes will be
returned, without expense, to the tendering Holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Outstanding Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to
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the exchange of Outstanding Notes pursuant to the Exchange Offer. The Company
will pay all charges and expenses, other than transfer taxes in certain
circumstances, in connection with the Exchange Offer. See "-- Fees and
Expenses."
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate equal to 9 7/8% per annum
and will be payable semi-annually on May 15 and November 15 of each year
commencing May 15, 1998. Interest on each Exchange Note will accrue (A) from the
later of (i) the last interest payment date on which interest was paid on the
Outstanding Note surrendered in exchange therefor, or (ii) if the Outstanding
Note is surrendered for exchange on a date in a period which includes the record
date for an interest payment date to occur on or after the date of such exchange
and as to which interest will be paid, the date of such interest payment date or
(B) if no interest has been paid on the Outstanding Notes, from the Issue Date.
PROCEDURES FOR TENDERING
Only a Holder of Outstanding Notes may tender such Outstanding Notes in the
Exchange Offer. To tender in the Exchange Offer, a Holder must complete, sign
and date the Letter of Transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the Letter of Transmittal and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together with
the Outstanding Notes and any other required documents, to the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date. To be tendered
effectively, the Outstanding Notes, Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth below
under "Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration
Date. Delivery of the Outstanding Notes may be made by book-entry transfer in
accordance with the procedures described below. Confirmation of such book-entry
transfer must be received by the Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each Holder will make to the
Company the representations set forth below in the second paragraph under the
heading "-- Resale of Exchange Notes."
The tender by a Holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Outstanding Notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf.
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Outstanding Notes, tendered pursuant thereto are tendered (i) by a
registered Holder who has not completed the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. In the event that signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantee must be by a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (an "Eligible Institution").
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If the Letter of Transmittal is signed by a person other than the
registered Holder of any Outstanding Notes listed therein, such Outstanding
Notes must be endorsed or accompanied by a properly completed bond power, signed
by such registered Holder as such registered Holder's name appears on such
Outstanding Notes with the signature thereon guaranteed by an Eligible
Institution.
If the Letter of Transmittal or any Outstanding Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Exchange Notes at DTC (the "Book-Entry Transfer Facility") for the purpose
of facilitating the Exchange Offer, and subject to the establishment thereof,
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Outstanding Notes by
causing such Book-Entry Transfer Facility to transfer such Outstanding Notes
into the Exchange Agent's account with respect to the Outstanding Notes in
accordance with the Book-Entry Transfer Facility's procedures for such transfer.
Although delivery of the Outstanding Notes may be effected through book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility,
an appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures; provided, however, that a
participant in DTC's book-entry system may, in accordance with DTC's Automated
Tender Offer Program procedures and in lieu of physical delivery to the Exchange
Agent of a Letter of Transmittal, electronically acknowledge its receipt of, and
agreement to be bound by, the terms of the Letter of Transmittal. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Outstanding Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Outstanding Notes not properly tendered or any Outstanding Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Outstanding Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Outstanding Notes must be cured within such time as
the Company shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of Outstanding Notes, neither
the Company, the Exchange Agent nor any other person shall incur any liability
for failure to give such notification. Tenders of Outstanding Notes will not be
deemed to have been made until such defects or irregularities have been cured or
waived. Any Outstanding Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering Holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
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GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Outstanding Notes and (i) whose
Outstanding Notes are not immediately available, (ii) who cannot deliver their
Outstanding Notes, the Letter of Transmittal or any other required documents to
the Exchange Agent or (iii) who cannot complete the procedures for book-entry
transfer, prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Outstanding Notes and the principal amount of Outstanding Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within five Nasdaq Stock Market trading days after the Expiration
Date, the Letter of Transmittal (or facsimile thereof), together with the
certificate(s) representing the Outstanding Notes (or a confirmation of
book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility) and any other documents
required by the Letter of Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Outstanding Notes in proper form for transfer (or a confirmation of
book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within five Nasdaq Stock Market trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Outstanding Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Outstanding Notes in the Exchange Offer, a written
or facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Outstanding Notes to be withdrawn (the
"Depositor"), (ii) identify the Outstanding Notes to be withdrawn (including the
certificate number(s) and principal amount of such Outstanding Notes, or, in the
case of Outstanding Notes transferred by book-entry transfer, the name and
number of the account at the Book-Entry Transfer Facility to be credited), (iii)
be signed by the Holder in the same manner as the original signature on the
Letter of Transmittal by which such Outstanding Notes were tendered (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Outstanding Notes register
the transfer of such Outstanding Notes into the name of the person withdrawing
the tender, (iv) specify the name in which any such Outstanding Notes are to be
registered, if different from that of the Depositor and (v) if applicable
because the Outstanding Notes have been tendered pursuant to book-entry
procedures, specify the name and number of the participant's account at DTC to
be credited, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Outstanding Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no Exchange Notes will
be issued with respect thereto unless the Outstanding Notes so withdrawn are
validly retendered. Any Outstanding Notes which have been tendered but which are
not accepted for exchange, will be returned to the Holder thereof without cost
to such Holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Outstanding Notes may be
retendered by following one of the procedures described above under "Procedures
for Tendering" at any time prior to the Expiration Date.
22
<PAGE> 29
EXCHANGE AGENT
Norwest Bank Minnesota, N.A. has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed
as follows:
<TABLE>
<S> <C> <C>
By Registered or Certified By Overnight Mail or Hand: By Facsimile:
Mail:
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Services Corporate Trust Services Attn: Ms. Jane Schweiger
Group Group Facsimile No. 612-667-9825
6th and Marquette, MS 0069 6th and Marquette, MS 0069 Confirm by Telephone No. 612-
Minneapolis, Minnesota Minneapolis, Minnesota 667-2344
55479-0069 55479-0069
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation is being made by mail; however,
additional solicitation may be made by telegraph, telephone, facsimile or in
person by officers and regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or others soliciting
acceptances of the Exchange Offer. The Company, however, will pay the Exchange
Agent reasonable and customary fees for its services and registration expenses,
including fees and expenses of the Trustee, filing fees, blue sky fees and
printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Outstanding Notes pursuant to the Exchange Offer. If, however,
certificates representing the Exchange Notes or the Outstanding Notes for the
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be issued in the name of, any person other than the person signing the
Letter of Transmittal, or if a transfer tax is imposed for any reason other than
the exchange of the Outstanding Notes pursuant to the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered Holder or
any other person) will be payable by the tendering Holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Outstanding Notes, which is face value, as reflected in the Company's accounting
records on the date of exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in exchange for Outstanding Notes
may be offered for resale, resold and otherwise transferred by any holder of
such Exchange Notes (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holder's business and such holder does not intend to participate
and has no arrangement or understanding with any person to participate in the
distribution of such Exchange Notes. Any holder who tenders in the Exchange
Offer with the intention to participate, or for the purpose of participating, in
a distribution of the Exchange Notes may not rely on the position of the staff
of the Commission enunciated in Exxon Capital Holdings Corporation (available
April 13, 1989) or similar no-action letters, but rather must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. In addition, any such resale transaction
should be covered by an effective registration statement containing the selling
security holders information required by Item 507 of Regulation S-K of the
Securities Act. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Outstanding Notes, where such Outstanding Notes were
acquired by such broker-dealer as a result of market-making activities or
23
<PAGE> 30
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. See "Plan of Distribution."
By tendering in the Exchange Offer, each Holder will represent to the
Company that, among other things, (i) any Exchange Notes to be received by it
will be acquired in the ordinary course of its business, (ii) at the time of the
commencement of the Exchange Offer it has no arrangement or understanding with
any person to participate in the distribution (within the meaning of Securities
Act) of the Exchange Notes in violation of the Securities Act, (iii) it is not
an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of
the Company, (iv) if such Holder is not a broker-dealer, it is not engaged in,
and does not intend to engage in, the distribution of Exchange Notes, and (v) if
such Holder is a broker-dealer (a "Participating Broker-Dealer") that will
receive Exchange Notes for its own account in exchange for Outstanding Notes
that were acquired as a result of market-making or other trading activities, it
will deliver a prospectus in connection with any resale of such Exchange Notes.
Further, by tendering in the Exchange Offer, each Holder that may be deemed an
"affiliate" (as defined under Rule 405 of the Securities Act) of the Company
will represent to the Company that such Holder understands and acknowledges that
the Exchange Notes may not be offered for resale, resold or otherwise
transferred by that Holder without registration under the Securities Act or an
exemption therefrom. The Company will agree to make available, during the period
required by the Securities Act, a prospectus meeting the requirements of the
Securities Act for use by Participating Broker-Dealers and other persons, if
any, with similar prospectus delivery requirements for use in connection with
any resale of Exchange Notes.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the Commission with respect to
resales of the Exchange Notes without compliance with the registration and
prospectus delivery requirements of the Securities Act.
SHELF REGISTRATION STATEMENT
If the Company is not permitted to consummate the Exchange Offer because
the Exchange Offer is not permitted by any applicable law or applicable
interpretation of the Commission or the staff of the Commission, the Company has
agreed to file with the Commission and use its best efforts to have declared
effective and keep continuously effective for up to three years a registration
statement that would allow resales of Outstanding Notes owned by such holders.
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Outstanding Notes are urged
to consult their financial and tax advisors in making their own decision on what
action to take.
The Company may in the future seek to acquire untendered Outstanding Notes
in open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company, however, has no present plans to acquire any
Outstanding Notes that are not tendered in the Exchange Offer or to file a
registration statement to permit resales of any untendered Outstanding Notes.
24
<PAGE> 31
THE RECAPITALIZATION AND STOCK PURCHASE
On November 12, 1997, the Company, FWT Acquisition and the Existing
Shareholders entered into, and consummated the transactions set forth in, the
Transaction Agreements. The Transaction Agreements contemplated, among other
things, two primary transactions. The first transaction contemplated by the
Transaction Agreements included (i) the incurrence by the Company of the Senior
Credit Facility, (ii) the redemption by the Company from the Existing
Shareholders of an aggregate of 235.86 shares of the Common Stock for aggregate
consideration of approximately $83.6 million, including related consulting,
legal and accounting costs of $1.2 million, (iii) the repayment of all the
outstanding funded indebtedness of the Company in an aggregate amount of
approximately $22.1 million, and (iv) the distribution of an immaterial amount
of selected assets to certain Existing Shareholders. The redemption price per
share is subject to an adjustment based upon the final determination of the
Company's working capital as determined as of the closing date. The second
transaction contemplated by the Transaction Agreements included the purchase by
FWT Acquisition of an aggregate of 108.91 shares of the Common Stock from
Existing Shareholders for aggregate consideration of approximately $36.0
million. As a result of the Transactions, FWT Acquisition holds approximately
80.0% of the issued and outstanding shares of the Common Stock, and the
Roll-over Shareholders hold in the aggregate approximately 20.0% of the issued
and outstanding shares of the Common Stock. For financial reporting purposes,
the Recapitalization was accounted for as an acquisition of treasury stock.
The borrowings under the Senior Credit Facility, cash from the Company of
approximately $5.0 million, notes payable of approximately $2.5 million, and the
distribution of selected assets, were used to consummate the Recapitalization.
In order to repay the Senior Credit Facility, the Company issued $105.0 million
in the aggregate principal amount of Outstanding Notes in the Initial Offering.
25
<PAGE> 32
CAPITALIZATION
The following table sets forth the capitalization of the Company on a
historical basis as of October 31, 1997 and on a pro forma basis after giving
effect to the Transactions and the Initial Offering as if they had occurred on
October 31, 1997. This table should be read in conjunction with the "Selected
Historical Financial Data" and "Unaudited Pro Forma Financial Statements"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
OCTOBER 31, 1997
----------------------
ACTUAL PRO FORMA
-------- ----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Notes payable............................................... $20,468(1) $ 2,494(3)
Long-term debt (including current maturities):
Revolving Credit Facility(2).............................. -- --
Senior Subordinated Notes................................. -- 105,000
Other long-term debt...................................... 1,598 --
------- --------
Total notes payable and long-term debt............ 22,066 107,494
------- --------
Shareholders' equity (deficit):
Common stock.............................................. 4 4
Treasury stock, at cost, 235.86 shares.................... -- (83,602)(4)
Additional paid-in capital................................ 1 20,001(5)
Retained earnings......................................... 9,612 7,232
------- --------
Total shareholders' equity (deficit).............. 9,617 (56,365)
------- --------
Total capitalization.............................. $31,683 $ 51,129
======= ========
</TABLE>
- ---------------
(1) Notes payable consist of amounts owing under three notes payable to Bank One
Texas, N.A. in the original aggregate principal amount of $22.8 million and
one note payable to NationsBank of Texas, N.A. in the original principal
amount equal to $0.7 million.
(2) The Revolving Credit Facility will have no more than $25.0 million available
on a revolving basis. As of October 31, 1997, approximately $11.4 million
would have been available under the Revolving Credit Facility. See
"Description of the Revolving Credit Facility."
(3) Notes payable issued to certain Existing Shareholders in connection with the
redemption.
(4) Amount represents the aggregate redemption price paid to the Existing
Shareholders, including related consulting, legal and accounting costs of
$1.2 million, in connection with the Recapitalization.
(5) Represents the recording of a $40.0 million deferred tax asset net of a
$20.0 million valuation allowance in connection with the Stock Purchase. The
parties to the Transaction Agreements elected jointly to treat the
Transactions as an asset acquisition under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended. As a result, a deferred tax asset
has been recorded related to future tax deductions for the net excess of the
tax bases of the assets and liabilities over the financial statement
carrying amounts with a corresponding credit to additional paid-in capital.
The Company anticipates future taxable income after debt service sufficient
to realize the net deferred tax asset.
26
<PAGE> 33
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements (the "Pro Forma
Financial Statements") of the Company are based on the audited and unaudited
financial statements of the Company included elsewhere in this Prospectus, as
adjusted to illustrate the estimated effects of the Transactions, which are
described in more detail below, the changing of the Company's federal tax status
from a Subchapter S corporation to a Subchapter C corporation and the Initial
Offering.
Two transactions were consummated in November 1997, the Recapitalization
and the Stock Purchase. The first transaction, the Recapitalization, included
(i) the incurrence by the Company of the Senior Credit Facility, (ii) the
redemption by the Company from the Existing Shareholders of an aggregate of
235.86 shares of the Common Stock, (iii) the issuance of notes payable to
certain Existing Shareholders in connection with the redemption, (iv) the
distribution of selected assets to certain Existing Shareholders, and (v) the
repayment of certain notes payable and all outstanding long term debt of the
Company. The second transaction, the Stock Purchase, included the purchase by
FWT Acquisition of an aggregate of 108.91 shares of the Common Stock from
Existing Shareholders. As a result of the Transactions, FWT Acquisition holds
approximately 80.0% of the issued and outstanding shares of Common Stock.
The Pro Forma Financial Statements of the Company have been prepared to
give effect to the Transactions, the changing of the Company's federal tax
status from a Subchapter S corporation to a Subchapter C corporation and the
Initial Offering (and the application of the net proceeds therefrom) as though
such transactions had occurred as of October 31, 1997, for the balance sheet
data, and as of May 1, 1996, for the results of operations data. The pro forma
adjustments are based upon available information and certain assumptions that
the Company believes are reasonable. The Pro Forma Financial Statements should
be read in conjunction with the historical financial statements of the Company
included elsewhere herein.
The Pro Forma Financial Statements do not purport to be indicative of what
the Company's financial position or results of operations would have been had
the Transactions, the changing of the Company's federal tax status from a
Subchapter S corporation to a Subchapter C corporation and the Initial Offering
been completed as of the assumed dates and for the periods presented or that may
be obtained in the future.
27
<PAGE> 34
FWT, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED APRIL 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
PRO FORMA AS PRO FORMA
ADJUSTMENTS FOR ADJUSTED FOR ADJUSTMENTS
THE TRANSACTIONS THE TRANSACTIONS FOR THE
THE AND CHANGE IN AND CHANGE IN INITIAL
COMPANY TAX STATUS TAX STATUS OFFERING TOTAL
------- ---------------- ---------------- ----------- -------
<S> <C> <C> <C> <C> <C>
Sales........................ $71,188 $ -- $ 71,188 $ -- $71,188
Cost of sales................ 49,249 -- 49,249 -- 49,249
------- -------- -------- -------- -------
Gross profit............... 21,939 -- 21,939 -- 21,939
Selling, administrative and
general expenses........... 8,353 (1,300)(1) 7,053 250(2) 7,303
------- -------- -------- -------- -------
Operating income........... 13,586 1,300 14,886 (250) 14,636
Interest income.............. 272 -- 272 -- 272
Interest expense............. (75) (11,813)(4) (11,983) (10,369)(5) (11,103)
(170)(14) (564)(3)
75(6) 11,813(7)
Other income................. 571 (446)(8) 125 -- 125
------- -------- -------- -------- -------
Income before income tax
provision............... 14,354 (11,054) 3,300 630 3,930
Income tax provision......... 316 938(9) 1,254 239(9) 1,493
------- -------- -------- -------- -------
Net income................. $14,038 $(11,992) $ 2,046 $ 391 $ 2,437
======= ======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
financial statement.
28
<PAGE> 35
FWT, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR SIX MONTH PERIOD ENDED OCTOBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
PRO FORMA AS
ADJUSTMENTS FOR ADJUSTED FOR PRO FORMA
THE TRANSACTIONS THE TRANSACTIONS ADJUSTMENTS
THE AND CHANGE IN AND CHANGE IN FOR THE
COMPANY TAX STATUS TAX STATUS INITIAL OFFERING TOTAL
------- ---------------- ---------------- ---------------- -------
<S> <C> <C> <C> <C> <C>
Sales............................. $37,350 $ -- $37,350 $ -- $37,350
Cost of sales..................... 26,652 -- 26,652 -- 26,652
------- ------- ------- ------- -------
Gross profit............ 10,698 -- 10,698 -- 10,698
Selling administrative and general
expenses........................ 5,389 -- 5,389 125(2) 5,514
------- ------- ------- ------- -------
Operating income........ 5,309 -- 5,309 (125) 5,184
Interest income................... 246 -- 246 -- 246
Interest expense.................. (403) (5,906)(4) (5,991) (5,184)(5) (5,551)
403(6) (282)(3)
(85)(14) 5,906(7)
Other income...................... 281 (4)(8) 277 -- 277
------- ------- ------- ------- -------
Income before income
taxes................. 5,433 (5,592) (159) 315 156
Income tax provision.............. 113.... (173)(9) (60) 119(9) 59
------- ------- ------- ------- -------
Net income.............. $ 5,320 $(5,419) $ (99) $ 196 $ 97
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
financial statement.
29
<PAGE> 36
FWT, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR SIX MONTH PERIOD ENDED OCTOBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
PRO FORMA AS PRO FORMA
ADJUSTMENTS FOR ADJUSTED FOR ADJUSTMENTS
THE TRANSACTIONS THE TRANSACTIONS FOR THE
THE AND CHANGE IN AND CHANGE IN INITIAL
COMPANY TAX STATUS TAX STATUS OFFERING TOTAL
------- ---------------- ---------------- ----------- -------
<S> <C> <C> <C> <C> <C>
Sales................................ $27,132 $ -- $27,132 $ -- $27,132
Cost of sales........................ 18,771 -- 18,771 -- 18,771
------- ------- ------- ------ -------
Gross profit.................... 8,361 -- 8,361 -- 8,361
Selling, administrative and general
expenses........................... 2,942 -- 2,942 125(2) 3,067
------- ------- ------- ------ -------
Operating income................ 5,419 -- 5,419 (125) 5,294
Interest income...................... 116 -- 116 -- 116
Interest expense..................... (14) (5,906)(4) (5,991) (5,184)(5) (5,551)
14(6) (282)(3)
(85)(14) 5,906(7)
Other income......................... 41 4(8) 45 -- 45
------- ------- ------- ------ -------
Income (loss) before income
taxes......................... 5,562 (5,973) (411) 315 (96)
Income tax provision (benefit)....... 125 (281)(9) (156) 119(9) (37)
------- ------- ------- ------ -------
Net income (loss)............... $ 5,437 $(5,692) $ (255) $ 196 $ (59)
======= ======= ======= ====== =======
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
financial statement.
30
<PAGE> 37
FWT, INC.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF OCTOBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THE COMPANY
PRO FORMA AS PRO FORMA
ADJUSTMENTS FOR ADJUSTED FOR ADJUSTMENTS
THE TRANSACTIONS THE TRANSACTIONS FOR THE
THE AND CHANGE IN AND CHANGE IN INITIAL
COMPANY TAX STATUS TAX STATUS OFFERING TOTAL
------- ---------------- ---------------- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... $10,284 $100,000(4) $ 4,971 $ 105,000(5) $ 4,332
(2,380)(10) (5,639)(12)
(80,358)(11) (100,000)(7)
(22,066)(6)
(509)(14)
Accounts receivable, less allowance for
doubtful accounts of $175................... 7,433 -- 7,433 -- 7,433
Inventories................................... 11,427 -- 11,427 -- 11,427
Prepaid expenses.............................. 2,341 -- 2,341 -- 2,341
Other assets.................................. 857 (625)(11) 107 -- 107
(125)(11)
------- -------- -------- --------- --------
Total current assets................... 32,342 (6,063) 26,279 (639) 25,640
------- -------- -------- --------- --------
Property, Plant, and Equipment:
Land and land improvements.................... 818 -- 818 -- 818
Buildings and building improvements........... 4,488 -- 4,488 -- 4,488
Machinery and equipment....................... 6,079 -- 6,079 -- 6,079
------- -------- -------- --------- --------
11,385 -- 11,385 -- 11,385
Less accumulated depreciation................. (2,889) -- (2,889) -- (2,889)
------- -------- -------- --------- --------
Net property, plant and equipment...... 8,496 -- 8,496 -- 8,496
Other noncurrent assets......................... -- 20,000(13) 22,889 5,639(12) 26,148
2,380(10) (2,380)(7)
509(14)
------- -------- -------- --------- --------
Total assets........................... $40,838 $ 16,826 $ 57,664 $ 2,620 $ 60,284
======= ======== ======== ========= ========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Current portion of long-term debt............. $ 188 $ (188)(6) $ -- $ -- $ --
Accounts payable.............................. 5,184 -- 5,184 -- 5,184
Accrued expenses and other liabilities........ 3,971 -- 3,971 -- 3,971
Notes payable................................. 20,468 (20,468)(6) 2,494 -- 2,494
------- -------- -------- --------- --------
2,494(11)
Total current liabilities.............. 29,811 (18,162) 11,649 -- 11,649
------- -------- -------- --------- --------
Long-term debt, less current portion............ 1,410 100,000(4) 100,000 105,000(5) 105,000
-- (1,410)(6) -- (100,000)(7) --
------- -------- -------- --------- --------
Total liabilities...................... 31,221 80,428 111,649 5,000 116,649
------- -------- -------- --------- --------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $10 par value; 1,000 shares
authorized; 372 shares issued............... 4 -- 4 -- 4
Treasury stock, at cost, 235.86 shares........ -- (83,602)(11) (83,602) -- (83,602)
Additional paid-in capital.................... 1 20,000(13) 20,001 -- 20,001
Retained earnings............................. 9,612 -- 9,612 (2,380)(7) 7,232
------- -------- -------- --------- --------
Total shareholders' equity (deficit)... 9,617 (63,602) (53,985) (2,380) (56,365)
------- -------- -------- --------- --------
Total liabilities and shareholders' equity.... $40,838 $ 16,826 $ 57,664 $ 2,620 $ 60,284
======= ======== ======== ========= ========
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
financial statement.
31
<PAGE> 38
FWT, INC.
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(1) Represents the reversal of a $1.3 million bonus paid in Fiscal Year 1997 to
certain Existing Shareholders of the Company, who transferred 100.0% of
their Common Stock in connection with the Transactions.
(2) Represents an annual financial advisory fee of $0.25 million owed to Baker
Capital, an affiliate of FWT Acquisition, under the terms of the Financial
Advisory Agreement between the Company and Baker Capital. In addition,
Baker Capital can earn an additional fee of $0.25 million if the Company
achieves established EBITDA targets. No pro forma adjustment has been
reflected related to these additional fees as the Company's EBITDA on a pro
forma basis was below the established target.
(3) Represents recurring amortization of the deferred financing costs
associated with the Initial Offering over the life of the Notes.
(4) Represents the Senior Credit Facility and the related interest expense at a
rate of the greater of the 3 month LIBOR plus 6.0% and the ten-year
treasury rate plus 5.0% (subject to certain adjustments) and matures on
November 12, 2003.
(5) Represents the Notes and the related interest expense at a rate of 9.875%.
A one-half percent change in the interest rate of the Note would increase
or decrease interest expense by $0.525 million annually.
(6) Represents the $22.1 million repayment of all outstanding notes payable, of
which $20.0 million has been outstanding since July 23, 1997, and long term
debt of the Company and the related reduction of interest expense.
(7) Represents the repayment of the Senior Credit Facility with the proceeds
from the Initial Offering, the related reduction of interest expense and
for balance sheet purposes, the write-off of all deferred financing costs
associated with the Senior Credit Facility.
(8) Represents the elimination of the income and expenses related primarily to
farm assets distributed to certain Existing Shareholders in connection with
the redemption discussed in Note 11.
(9) Represents the provision for federal and state taxes assuming an effective
tax rate of 38.0% in connection with the Company changing its federal tax
status from a Subchapter S corporation to a Subchapter C corporation and
the tax effect of the pro forma adjustments.
(10) Represents the capitalization of $2.4 million deferred financing costs
associated with the Senior Credit Facility. The deferred financing costs
associated with the Senior Credit Facility will be fully expensed at the
time of the Initial Offering. Therefore, the amortization of these costs
have not been considered in the Pro Forma Statements of Income as it
represents a non-recurring charge that will be included in the operations
of the Company within the next 12 months.
(11) Represents the redemption of an aggregate of 235.86 shares of the Common
Stock, at a total price of approximately $83.6 million including related
consulting, legal and accounting costs of $1.2 million, by the Company from
the Existing Shareholders. The total redemption price is detailed as
follows:
<TABLE>
<S> <C>
Cash to sellers............................................. $79.3
Notes payable to sellers.................................... 2.5
Assets distributed to sellers............................... .6
Consulting, legal and accounting costs...................... 1.2
-----
$83.6
=====
</TABLE>
The Company has recorded the redemption as a purchase of treasury stock.
(12) Represents the capitalization of approximately $5.6 million of deferred
financing costs associated with the Initial Offering, and includes a $1.0
million fee payable to Baker Capital in connection with the Initial
Offering.
(13) Represents the recording of a $40.0 million deferred tax asset net of a $20
million valuation allowance in connection with the Stock Purchase. The
parties to the Transaction Agreements elected jointly to treat the
Transactions as an asset acquisition under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended. As a result, a deferred tax
asset has been recorded related to future tax deductions for the net excess
of the tax bases of the assets and liabilities over the financial statement
carrying amounts with a corresponding credit to additional paid-in capital.
The Company anticipates future taxable income after debt service sufficient
to realize the net deferred tax asset. Any future change in the valuation
reserve will be reflected as a component of the Company's tax provision.
(14) Represents the capitalization of $.5 million of deferred financing costs
associated with the Revolving Credit Facility and the related amortization
of these costs over the life of the facility.
32
<PAGE> 39
SELECTED HISTORICAL FINANCIAL DATA
The selected historical income statement data for Fiscal Year 1995, Fiscal
Year 1996 and Fiscal Year 1997 and the summary historical balance sheet data for
Fiscal Year 1996 and Fiscal Year 1997 presented below were derived from the
historical financial statements of the Company audited by Arthur Andersen LLP,
independent public accountants, whose report appears elsewhere in this
Prospectus. The summary historical financial data as of and for Fiscal Year
1993, Fiscal Year 1994 and the six month periods ended October 31, 1996 and 1997
were derived from the Company's unaudited financial statements which, in the
opinion of management, reflect all adjustments (consisting of normal recurring
adjustments) necessary for the fair presentation of the financial condition and
results of operations as of and for such period. The information contained in
this table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and accompanying notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTH PERIOD
FISCAL YEAR ENDED APRIL 30, ENDED OCTOBER 31,
----------------------------------------------- -----------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................... $14,663 $20,233 $30,388 $42,701 $71,188 $27,132 $37,350
Cost of sales........... 11,552 16,041 23,838 32,006 49,249 18,771 26,652
------- ------- ------- ------- ------- ------- -------
Gross profit............ 3,111 4,192 6,550 10,695 21,939 8,361 10,698
Selling, general and
administrative....... 3,197 3,849 4,139 4,244 8,353 2,942 5,389
------- ------- ------- ------- ------- ------- -------
Operating income........ (86) 343 2,411 6,451 13,586 5,419 5,309
Interest income
(expense), net....... 63 44 69 123 197 102 (157)
Other income(1)......... 17 (50) 3 512 571 41 281
------- ------- ------- ------- ------- ------- -------
Income before income tax
provision............ (6) 337 2,483 7,086 14,354 5,562 5,433
Income tax
provision(2)......... -- -- 53 162 316 125 113
------- ------- ------- ------- ------- ------- -------
Net income(2)........... $ (6) $ 337 $ 2,430 $ 6,924 $14,038 $ 5,437 $ 5,320
======= ======= ======= ======= ======= ======= =======
OTHER FINANCIAL DATA:
EBITDA(3)............... $ 253 $ 633 $ 2,827 $ 7,494 $14,937 $ 5,835 $ 6,248
Depreciation............ 248 275 299 375 508 259 412
Capital expenditures.... 449 988 1,324 1,198 4,341 1,086 664
Ratio of earnings to
fixed charges........ .4x 17.05x 56.18x 215.73x 192.39x 398.29x 14.48x
Ratio of long term debt
to EBITDA............ -- -- -- -- -- -- --
Ratio of EBITDA to pro
forma interest
expense.............. -- -- -- -- -- -- --
BALANCE SHEET DATA:
Working capital......... 3,443 3,660 5,278 9,815 18,509 14,370 2,531
Total assets............ 6,929 8,716 11,854 19,489 40,203 27,523 40,838
Long term debt, less
current maturities... -- 575 475 375 1,512 325 1,410
Shareholders' equity.... 5,845 6,182 8,412 13,977 25,297 19,414 9,617
</TABLE>
(Footnotes continued on following page)
33
<PAGE> 40
- ---------------
(1) Other income consists primarily of income related to farm operations and the
disposition of farm assets. These assets have been distributed in connection
with the Transactions.
(2) The historical financial statements do not include a provision for federal
taxes as the Company has elected to be taxed as a Subchapter S corporation.
A provision for federal taxes has been reflected in the pro forma
information to reflect the change in tax status of the Company from a
Subchapter S corporation to a Subchapter C corporation.
(3) EBITDA consists of net income before interest expense, taxes, depreciation
and amortization. EBITDA is included because it is widely used as a measure
of a company's operating performance, but should not be construed as an
alternative either (i) to net income (determined in accordance with
generally accepted accounting principles) as a measure of profitability or
(ii) to cash flows from operating activities (determined in accordance with
generally accepted accounting principles). EBITDA does not take into account
the Company's debt service requirements and other commitments and,
accordingly, is not necessarily indicative of amounts that may be available
for discretionary use.
34
<PAGE> 41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company as of and for Fiscal Year 1995, Fiscal Year 1996 and
Fiscal Year 1997 and for the six month periods ended October 31, 1996 and
October 31, 1997. The discussion should be read in conjunction with the
Financial Statements of the Company and the notes thereto included elsewhere in
this Prospectus. This Prospectus contains, in addition to historical
information, forward-looking statements that include risks and uncertainties.
The Company's actual results may differ materially from those anticipated in
these forward-looking statements.
OVERVIEW
The Company is a leading designer, manufacturer and marketer of
communications infrastructure products, including monopoles, towers,
Cell-Sites-on-Wheels ("COWS"), shelters and PowerMount(TM), used primarily in
the construction of wireless communications networks. The Company's product line
is used by customers in the cellular, PCS, enhanced ESMR, paging, radio and
television broadcasting and microwave industries. The Company's customers
include many of the larger domestic communications service providers, such as
AT&T Wireless, MCI, Nextel and Sprint Spectrum.
The following table summarizes FWT's historical sales by product line.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTH PERIOD ENDED
---------------------- --------------------------
APRIL 30, APRIL 30, OCTOBER 31, OCTOBER 31,
1996 1997 1996 1997
--------- --------- ----------- -----------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Towers........................................... $17,862 $25,092 $10,114 $16,758
Monopoles........................................ 5,852 28,080 8,982 10,255
Other............................................ 18,987 18,016 8,036 10,337
------- ------- ------- -------
$42,701 $71,188 $27,132 $37,350
======= ======= ======= =======
</TABLE>
The Company's sales have grown from $14.7 million in Fiscal Year 1993 to
$71.2 million in Fiscal Year 1997, representing a CAGR of 48.4%. This growth has
been driven by external and internal factors. The primary external factor is the
growth of wireless communications networks in the U.S., which in turn has fueled
demand for the Company's products. In order to capitalize on this growth, the
Company has made a variety of strategic internal changes, including (i)
introducing a direct sales force; (ii) developing strategic relationships with
key suppliers; (iii) investing in automation; and (iv) increasing investment in
customer service. These internal and external trends are expected to continue to
benefit the Company in the future.
The Company's operations are characterized by a high degree of automation
and strategic outsourcing of non-core functions. Management believes that these
initiatives have led to decreases in purchasing and manufacturing costs as a
percentage of revenue and have limited investment in plant and working capital.
The Company's principal raw materials are steel and zinc. Because price
increases in materials affect all competitors equally and because most contracts
have provisions for materials price increases, any increases in the cost of
goods sold resulting from raw material price increases have historically been
passed along to the customer. Furthermore, the Company's outsourcing contracts
have reduced its inventory risk by supplying a number of components on a
just-in-time basis.
35
<PAGE> 42
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship of each statement of income item to total sales. The information
for the Fiscal Year 1995, Fiscal Year 1996 and Fiscal Year 1997 has been
audited. The information for the six month periods is unaudited, but includes
all adjustments which management considers necessary for a fair presentation
thereof. The results of operations are not necessarily indicative of results for
any future period. The following data should be read in conjunction with the
Financial Statements and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTH PERIOD ENDED
----------------------------------- --------------------------
APRIL 30, APRIL 30, APRIL 30, OCTOBER 31, OCTOBER 31,
1995 1996 1997 1996 1997
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Sales........................... 78.4 75.0 69.2 69.2 71.4
----- ----- ----- ----- -----
Gross Profit............................ 21.6 25.0 30.8 30.8 28.6
Selling, General and Administrative..... 13.6 10.0 11.7 10.8 14.4
----- ----- ----- ----- -----
Operating Income........................ 8.0 15.0 19.1 20.0 14.2
----- ----- ----- ----- -----
Earnings before State Taxes............. 8.2 16.6 20.2 20.5 14.5
Provision for State Taxes(1)............ 0.2 0.4 0.4 0.5 0.3
----- ----- ----- ----- -----
Net Income.............................. 8.0% 16.2% 19.7% 20.0% 14.2%
Other Data:
EBITDA.................................. 9.3% 17.6% 21.0% 21.5% 16.7%
</TABLE>
- ---------------
(1) As an S corporation, the Company historically has not incurred federal
income taxes. Earnings for federal tax purposes have been taxed to the
individual owners as they are earned.
SIX MONTH PERIOD ENDED OCTOBER 31, 1997 COMPARED TO SIX-MONTH PERIOD ENDED
OCTOBER 31, 1996
Sales. Sales increased by $10.2 million to $37.4 million, an increase of
37.7%. The increase in sales was driven primarily by a $1.3 million or 14.2%
increase in sales of monopoles and a $6.6 million or 65.7% increase in sales of
towers. The Company's percentage increase in sales for the six-month period of
37.7% is below the Company's CAGR from 1993 to 1997 of 48.4%. The Company's
quarterly results fluctuate due to, among other reasons, the timing of shipments
to customers. The Company's revenue recognition policy recognizes revenue upon
shipment, or upon payment by the customer under terms of specific customer
agreements. For the six-month period ended October 31, 1997, completed orders
not yet shipped and recognized as revenue increased $4.6 million over the
comparable period ended October 31, 1996. During the six-month period ended
October 31, 1997, the Company experienced an increase in manufacturing
activities to bring orders to completion, however, the timing of shipments,
which is largely outside the control of the Company, did not occur on several
completed orders due to the customer sites not being ready for delivery.
Cost of Sales. Cost of sales for the six month period ended October 31,
1997 increased $7.9 million to $26.7 million. Cost of sales as a percentage of
revenue increased to 71.4% as compared to 69.2% for the comparable period in
1996. The Company attributes the increase in cost of sales for the period to
inefficiencies, primarily resulting from the transition of previously
out-sourced monopole production to in-house production. The Company believes
this transition to in-house production will reduce its material handling cost in
future periods and provide better control over the production scheduling of
these tasks. In addition, the Company experienced pricing pressure during the
period due to increased competition in the market. The Company believes this
pricing pressure may continue in some markets and could have some deteriorating
effect on margins in future periods until full-capacity levels in the
manufacturing of monopoles and towers is reached.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the six month period ended October 31, 1997
increased by $2.5 million to $5.4 million. As a percentage of sales,
36
<PAGE> 43
selling, general and administrative expenses increased to 14.4% as compared to
10.8% for the comparable period in 1996. The increase reflects the investment
made by the Company to build the in-house direct sales force, to enhance
manufacturing information systems, and increase administrative personnel. The
Company believes the investment will enable it to gain market share, improve
customer service and response, and more closely monitor production costs with
better information reporting systems.
The Company also recognized charges of $.6 million that related to
incentive based bonus arrangements paid to certain members of management for the
six-month period, as compared to $0 for the same period in 1996.
FISCAL YEAR ENDED APRIL 30, 1997 COMPARED TO FISCAL YEAR ENDED APRIL 30, 1996
Sales. Sales increased by $28.5 million to $71.2 million, an increase of
66.7%. The increase in sales was fueled by an increase in demand for PCS and
cellular cell sites among several of the Company's key customers. The addition
of a direct sales force resulted in increased sales to key customers.
Cost of Sales. Cost of sales increased by $17.2 million to $49.2 million.
Cost of sales as a percentage of revenue decreased from 75.0% in 1996 to 69.2%
in 1997 because of price increases of the Company's products combined with
purchasing economies of scale and volume-based manufacturing efficiencies.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $4.1 million to $8.4 million. As a
percentage of sales, this represents an increase from 10.0% in 1996 to 11.7% in
1997. During this period, the Company significantly expanded its direct sales
force and increased its engineering and project management staff. Additionally,
bonuses in the amount of $1.3 million were paid to certain Existing Shareholders
in 1997.
FISCAL YEAR ENDED APRIL 30, 1996 COMPARED TO FISCAL YEAR ENDED APRIL 30, 1995
Sales. Sales increased by $12.3 million to $42.7 million, an increase of
40.5%. The sales increase was fueled by an increase in demand for cellular and
ESMR cell sites.
Cost of Sales. Cost of sales increased by $8.2 million to $32.0 million.
Cost of sales as a percentage of revenue decreased from 78.4% in 1995 to 75.0%
in 1996 due to purchasing economies of scale resulting from volume-based
contracts.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses remained relatively constant at $4.2 million compared to
$4.1 million in 1995. As a percentage of sales, however, this represented a
decrease from 13.6% to 10.0% as the Company leveraged off its master contracts
and increased volume without increasing its sales force. In addition, the
Company decreased its expenditures on advertising and trade shows in
anticipation of a shift in the Company's focus to direct sales.
SEASONALITY AND QUARTERLY RESULTS OF OPERATIONS
The Company has experienced and expects to continue to experience
significant fluctuations in its quarterly results. Management believes this
quarterly fluctuation is due to the capital budgeting cycle of many of its
customers who often purchase a disproportionately higher share of the Company's
products at the end of such customer's fiscal year to reach their annual cell
site development goals. This typically falls in the fourth and first quarters of
the calendar year, which approximately corresponds to the third and fourth
quarters of FWT's Fiscal Year. In addition, the zoning approval process adds an
element of unpredictability to the Company's results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operations through internally
generated funds and existing cash reserves. Other than the Distribution, the
Company has not historically distributed its earnings. The Company produced net
cash flow of $5.8 million for the six month period ended October 31, 1997 and
$1.4 million for the comparable period ended October 31, 1996. The net cash flow
for the six month period
37
<PAGE> 44
ended October 31, 1997 includes $7.4 million in cash provided by operations and
$0.5 million in cash used for investing activities. The net cash used in
financing activities for the six month period ended October 31, 1997 was $1.1
million. The $1.1 million primarily reflects the net of $20 million in
borrowings used to finance a $21 million distribution to T.W. Moore and Betty
Moore. The loan was repaid in November 1997 in connection with the
Recapitalization. The Company produced net cash flow of $(.1), $2.2, and $0.4
million in Fiscal Years 1995, 1996, and 1997, respectively. The Company produced
net cash from operations of $1.4, $4.8, and $5.8 million in Fiscal Years 1995,
1996, and 1997, respectively and used net cash for investing activities of $1.3,
$1.2, and $4.3 million in Fiscal Years 1995, 1996, and 1997.
In connection with the Transactions, the Company incurred indebtedness of
$100.0 million under the Senior Credit Facility and $2.5 million in notes
payable to certain Existing Shareholders. The Company has used substantially all
of the net proceeds from the Initial Offering to repay the Senior Credit
Facility. The Company will be required to repay the notes payable within the
next twelve months. In addition to the Notes, the Company entered into the
Revolving Credit Facility which, subject to borrowing base limitations and the
satisfaction of customary borrowing conditions, allows the Company to borrow up
to $25.0 million. As a result of the Transactions, the Company's principal
sources of liquidity are cash flow generated from operations and borrowings
under the Revolving Credit Facility. The Company's principal uses of liquidity
are to meet debt service requirements, finance the Company's capital
expenditures and provide for working capital needs. As of October 31, 1997, the
Company would have had approximately $11.4 million of availability under the
Revolving Credit Facility. The Revolving Credit Facility requires the Company to
maintain specified financial ratios and satisfy certain financial condition
tests.
The Company estimated on November 17, 1997 that capital expenditures in
Fiscal Year 1998 would not exceed $8.0 million and that this level represented
several expenditures, including the purchase of additional manufacturing
equipment and completion of a materials and labor tracking system, and other
information system improvements. Although the Company is still involved in the
planning stages for determining the amount of capital expenditures, there is no
indication that this estimate should be changed. The information system
improvements will require expenditures during Fiscal Years 1998 and 1999,
including significant enhancements to the current systems to insure the
Company's information systems continue to meet the Company's internal needs and
those of its customers. These enhancements will also address systems impact that
will be affected by the date change in the year 2000. Also, the Company has
leased more office space in Arlington, Texas. In addition in 1998 the Company
plans to construct a new office building, purchase and remodel an existing one
or lease more office space. Any new facility that is built or remodeled will be
owned by the Company and is expected to cost approximately $2.3 million. The
Company expects annual maintenance capital expenditures on a going forward basis
of approximately $3.0 million.
As the Company's business grows, its equipment and working capital
requirements will also continue to increase. These funding requirements will be
met through a combination of cash from operations and funds drawn under the
Revolving Credit Facility. The Company believes that these sources will be
sufficient to finance working capital and capital expenditures for the next
twelve months. There can be no assurance, however, that such resources will be
sufficient to meet the Company's anticipated requirements or that the Company
will not require additional debt or equity financing within this time frame.
INFLATION
Certain of the Company's expenses, such as compensation benefits, raw
materials and equipment repair and replacement, are subject to normal
inflationary pressures. While the Company to date has been able to offset
inflationary cost increases through increased operating efficiencies and price
increases to its customers, there can be no assurance that the Company will be
able to offset any future inflationary cost increases through these or similar
means.
38
<PAGE> 45
BUSINESS
GENERAL
The Company is a leading designer, manufacturer and marketer of wireless
communications infrastructure products, including monopoles and towers. The
Company's product line is used by customers in the cellular, PCS, ESMR, paging,
radio and television broadcasting and microwave industries. The Company's
customers include many of the larger wireless service providers, such as AT&T
Wireless, MCI, Nextel and Sprint Spectrum. Because all wireless service
providers need infrastructure products, the Company believes it is
well-positioned to capitalize on the continued growth of the wireless
communications industry, regardless of which technologies or service providers
dominate the industry in the future.
The Company's sales have grown from $14.7 million in Fiscal Year 1993 to
$71.2 million in Fiscal Year 1997, representing a CAGR of 48.4%. For the 12
months ended October 31, 1997, the Company generated pro forma sales of $81.4
million, and pro forma EBITDA of $15.9 million.
PRODUCTS
The Company has grown from a small manufacturing shop into an industry
leader with three manufacturing facilities that provide a broad array of
infrastructure products for the telecommunications industry, including:
Monopoles. Monopoles are tapered, sleeve-fit or round flange-fit antenna
structures that serve as an alternative to towers, and are generally regarded as
more aesthetically pleasing and easier to install than towers. The Company's
monopole manufacturing process is highly automated.
Towers. Lattice towers are vertical structures most frequently used by
wireless and broadcast service providers to support antennas. They can be
self-supporting, typically three-legged structures, or supported by guy wires
attached to anchors in the ground.
COWS. COWS are mobile structures that combine an antenna support
structure, power supply and radio equipment enclosure. COWS are used when
temporary coverage is needed, often before a permanent site is built, for
special high usage events or for disaster recovery.
Shelters. Shelters are small, pre-fabricated buildings which are used to
house the electronic equipment required at cell sites. Shelters generally range
from 100 to 500 square feet and are typically made with an aluminum exterior.
PowerMount(TM). The PowerMount(TM) is a patented product that allows a
wireless service provider to install a fully sectored antenna array on an
electrical utility support structure, thereby taking advantage of an existing
site.
The following chart displays sales of the Company by product category for
Fiscal Year 1997:
<TABLE>
<CAPTION>
SALES BY PRODUCT
CATEGORY
APRIL 30, 1997
----------------
($ IN THOUSANDS)
<S> <C> <C>
Towers...................................................... $25,092 35.2%
Monopoles................................................... 28,080 39.5
Other(1).................................................... 18,016 25.3
------- -----
Total Sales....................................... $71,188 100.0%
======= =====
</TABLE>
- ---------------
(1) Includes Shelters, COWS, PowerMount(TM), Generators, Freight and
Engineering.
COMPETITIVE STRENGTHS
The Company believes that its products and customer service distinguish it
as one of the leading designers and manufacturers of telecommunications
infrastructure products and that the Company's strong market position in its
product segments and continued opportunities for growth and profitability are
attributable to the following competitive strengths:
- REPUTATION FOR CUSTOMER SERVICE AND ON-TIME DELIVERY. Management
believes that one of FWT's greatest competitive advantages is its strong
tradition of, and reputation for, customer service. The use of a direct
sales force plays a significant role in customer service. In addition,
over the past three years, the Company has invested in the implementation
of a CAD/CAM system which allows the Company
39
<PAGE> 46
to respond efficiently to customers' requests and helps the Company to reduce
delivery times. The majority of the Company's customers are wireless service
providers that compete in an industry where time to market is critical. FWT
believes it has a significant competitive advantage in meeting these
customers' needs by reliably meeting their often aggressive time frames.
- REPUTATION FOR HIGH QUALITY PRODUCTS. The Company's design and
production processes are highly automated resulting in consistent product
quality. Moreover, the Company maintains rigorous quality control
standards which helps to ensure accurate shipments to customers.
- LOW COST STRUCTURE THROUGH STRATEGIC RELATIONSHIPS. The Company believes
it enjoys a position as a low cost provider. This position has resulted
from the formation of two key strategic relationships which management
believes will enable it to (i) reduce purchasing and manufacturing costs
as a percentage of total sales, (ii) focus on its core competencies in
product design and finishing, quality control, customer service and sales
and marketing, and (iii) limit its plant and working capital investments.
The first of these key strategic relationships allows FWT to take
delivery of steel on a just-in-time basis. The second relationship will
allow FWT to galvanize its monopoles at a facility contiguous to its
present manufacturing facility located near Fort Worth, Texas.
Construction has begun on such facility.
- SOLID MARKET POSITIONS IN GROWTH INDUSTRY. The Company believes it is
one of the leading providers in both the monopole and tower markets and,
in recent years, it has significantly increased its market share in each
of these segments. The Company believes it is currently the second
largest participant in each of the monopole and tower markets, with
market shares that it estimates to be 18.0% and 12.0%, respectively.
Given these strong market positions, the Company believes it is well
positioned to benefit from the expected growth in the wireless
communications industry.
- EXPERIENCED MANAGEMENT TEAM. Substantially all of the Company's
executive officers have spent considerable portions of their careers with
FWT. The existing management team is responsible for the Company's
significant growth over the last five years. Management's expertise and
in depth knowledge of the Company's products and customers are further
complemented by the experience of the principals at Baker, a private
equity fund that focuses specifically on telecommunications services,
equipment and applications.
BUSINESS AND GROWTH STRATEGY
Management believes that the Company's growth will be driven by leveraging
its competitive strengths, and in particular its excellent reputation, into a
stronger market position, by (i) capitalizing on the growth of the wireless
communications industry, (ii) broadening its base of product offerings, (iii)
pursuing certain acquisitions and alliances on a forward integrated basis, and
(iv) expanding into international markets.
- CAPITALIZE ON GROWTH IN THE WIRELESS COMMUNICATION INDUSTRY. The Company
has grown rapidly over the past five years by taking advantage of the
growing demand for wireless communications services, and by positioning
itself as a reliable, customer focused provider of infrastructure
products. The Company believes that there are several industry trends
which indicate an increase in demand for wireless communications
infrastructure products. These include: (i) the continued construction of
cellular networks which is expected to grow as providers make capacity
enhancements and transition from analog to digital; (ii) the widespread
introduction of PCS; (iii) the launch of HDTV; and (iv) the growth of WLL
systems which is expected to increase, particularly in emerging
economies.
- BROADEN PRODUCT OFFERINGS. The Company has developed relationships with
numerous electrical utility companies through the introduction of its
PowerMount(TM) product, which provides a co-location opportunity within a
standard electrical transmissions structure. The Company plans to market
this product and other utility applications in the future and believes
these relationships will prove beneficial in entering these markets. In
addition, the introduction of HDTV will require towers of over one
thousand feet and are expected to sell for approximately $1.0 million
each. The Company believes it is well-positioned to take advantage of
each of these opportunities.
- PURSUE STRATEGIC ALLIANCES AND ACQUISITIONS. The Company plans to
evaluate selective opportunities that will enhance its position within
the cell site development process. The Company believes there are various
opportunities beyond providing infrastructure products used in the
construction of communica-
40
<PAGE> 47
tion networks. These include site installation services, tower ownership
and management businesses. The Company believes these closely related
businesses could be easily integrated with its current operations to
increase the value the Company provides to its customer base.
- EXPAND INTO INTERNATIONAL MARKETS. The Company believes there are
considerable opportunities to expand its geographical reach particularly
into Asia and Latin America. The trend towards global deregulation of
telecommunications markets provides substantial growth opportunities for
wireless infrastructure providers. The Company believes its strong
relationships with its customers, many of whom are already building
networks internationally, provides an advantage in competing for
infrastructure business in new international markets. In addition, the
Company believes there may be strategic opportunities for joint ventures
in foreign markets, and that by allying with local businesses the Company
can further position itself to take advantage of growth in international
markets.
MANUFACTURING
The Company's operations are characterized by a high degree of automation
of the manufacturing process. Management believes that strategic alliances with
key suppliers have led to further decreases in manufacturing costs. The typical
delivery time for most of FWT's products is six weeks.
Monopoles. FWT performs the initial phase of monopole manufacturing
pursuant to an agreement with Delta Steel. Flat sheet steel is initially
purchased by Delta Steel and stored at its facility. Delta Steel burns or cuts
the steel to produce the proper shape, and performs the braking operation to
bend the steel into two sections. Ownership of this work-in-process inventory is
then passed to FWT, which performs the seam welding operation and joins the two
sections together to form the monopole. Finishing operations are performed to
customer specifications, including attaching footholds and connectors, cable
openings and base plate attachment. Finished steel is currently shipped to
Houston for galvanizing, but will be galvanized at a site adjacent to the
Company's Fort Worth facility which is expected to be operational in early 1998.
Towers. Each tower is designed and manufactured to customer
specifications. Factors such as weight and technology of attachments, expected
wind load, deflection parameters and icing load are used as inputs to the design
process and affect manufacturing. Tower components, including legs, braces and
cross bars are manufactured as components for each individual tower order.
Sections are welded together and sent to a local facility for galvanizing.
Management believes the Company is at approximately 50.0% of tower manufacturing
capacity.
PowerMounts(TM). Plate steel is burned to form attachment plates which are
then welded to pipe steel sections. Steel antenna platforms developed by welding
various angle and tubular components are then consolidated with pipe sections
for shipment.
Shelters and COWS. Shelters are manufactured by welding together a steel
skid frame that serves as the base of the shelter. Aluminum walls and a roof are
then attached to the skid. The interior of the shelter is then finished with
paneling, electrical wires, alarms, heating, ventilation and air conditioning
and other accessories according to the customer's specifications. COWS are
shelters which have been augmented with a trailer frame, generator and
retractable antenna support structure.
CUSTOMERS
FWT sells its products to leading wireless service providers throughout the
U.S., and to a lesser extent, Canada and Mexico. In Fiscal Year 1997, the
Company's largest five customers collectively represented approximately 55.0% of
the Company's sales, with AT&T Wireless alone representing 25.0% of the
Company's sales. Due to fluctuations in the network construction schedules of
different service providers, the Company's largest customers vary considerably
from year-to-year.
The Company provides its customers with comprehensive design assistance and
support before, during and after delivery of its products. In addition, the
Company's customer service professionals are available to respond to order
tracking, design, installation and other questions.
The Company generally warrants its products for a period of one year,
although some warranties are extended for as long as twenty years. Once the
warranty expires, the customer typically employs local contractors to modify the
structure as needed. Historically, FWT's warranty expenses have not been
material.
41
<PAGE> 48
SALES AND MARKETING
The Company sells its products through a direct sales force who have
relationships with most of the major wireless service providers. The Company
believes that its direct sales force provides a strong competitive advantage in
the market, as most of FWT's competitors either do not have a sales force or
rely on third party representatives. This enables the Company to keep abreast of
new business opportunities while being able to respond quickly to the customer's
questions and needs. The Company's sales force is paid a base salary plus a
volume-based commission. As of January 14, 1998, the Company employed nine sales
people.
The Company believes that many of its customers, or prospective customers,
have procedures by which they identify a limited number of suppliers to become
approved vendors for the construction of their infrastructure network. Customers
award master purchase agreements only to such approved vendors. The Company's
sales strategy focuses on signing agreements whereby FWT becomes a primary or
approved vendor. These agreements typically establish general terms and
conditions, as well as pricing for the Company's products. These agreements do
not generally guarantee a particular quantity of sales, but they allow Company
personnel easier access to these customers, thereby fostering relationships with
local personnel.
The Company estimates that for Fiscal Year 1997, approximately 70.0% of its
revenue came from sales under these master agreements. The Company believes
these agreements enhance the consistency and stability of the Company's revenue
stream.
FACILITIES
As of the end of Fiscal Year 1997, the Company owns the following two
manufacturing facilities: (i) the Rosedale location, with 9,802 square feet of
office space and 58,675 square feet of covered production space on approximately
13 acres and (ii) the Kennedale location, with 7,000 square feet of office space
and 142,400 square feet of covered production space on approximately 56 acres.
In addition, the Company leases 500 square feet of office space and 22,120
square feet of covered production space at Delta Steel's manufacturing facility
located in the Fort Worth area. The Company believes, in light of the capital
expenditure budget, that these facilities provide adequate capacity for the
expected growth in the future.
CONTRACT WITH DELTA STEEL
FWT entered into a five-year agreement with Delta Steel that expires March
10, 2002. This cooperative production agreement provides that Delta Steel,
subject to certain exceptions, will be the exclusive supplier of the unwelded
steel components of FWT's monopoles, and gives FWT the right to schedule its
orders first on designated Delta Steel burning and press-braking equipment. In
addition, the agreement contains incentive pricing based on the volume of steel
FWT purchases. The agreement is renewable at the end of the initial five year
period.
COMPETITION
The markets in which the Company operates are highly competitive. The
Company's ability to compete in these markets depend to a large extent on its
ability to provide high quality, competitively priced products within a
customer's delivery time schedule. In these key areas, the Company believes that
its strong tradition of customer service combined with its sophisticated and
CAD/CAM system help to differentiate FWT from its competition.
There are a number of participants that compete in the Company's markets
including Andrew, EEI, PiRod, Summit, UNR Industries and Valmont Industries.
Management believes that the Company has a significant market position in each
of its product segments.
BACKLOG
As of December 31, 1997, the Company had a sales backlog of approximately
$5.2 million, which represents approximately three weeks of sales. Although the
sales backlog consists of firm orders for which products are yet to be
completed, these orders can be modified or terminated. However, when compared to
total contract volume, the amount of modifications and terminations has
historically not been material.
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<PAGE> 49
EMPLOYEES
As of January 14, 1998, the Company had approximately 413 full-time
employees, of which 323 work in manufacturing facilities and 90 work in
corporate or administrative functions. None of the Company's employees are
unionized, and the Company believes that its relationship with employees is
good.
PATENTS AND TRADEMARKS
FWT has an approved patent for the PowerMount(TM), a product that allows a
wireless service provider to install a full sectored antenna array on an
electrical utility tower. FWT has also secured a trademark on the name
PowerMount(TM).
ENVIRONMENTAL REGULATION
The Company is subject to various federal, state and local health, safety
and environmental laws and regulations. The Company believes that it is in
material compliance with existing applicable health, safety and environmental
laws and regulations and has all necessary permits and licenses.
LEGAL PROCEEDINGS
The Company is from time to time involved in ordinary litigation incidental
to the conduct of its business. Management believes that none of the Company's
pending litigation will have a material adverse effect on the Company's
business, financial condition or results of operations.
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<PAGE> 50
INDUSTRY OVERVIEW
The monopole and tower segments of the communications infrastructure
industry have seven and five participants, respectively, who together have a
dominant market share position in their particular market segment. Builders of
wireless networks typically seek to purchase antenna support structures from
established manufacturers who can accurately produce large numbers of products
in a timely fashion. The Company believes these requirements often lead wireless
service providers to enter into master purchase agreements with a limited number
of communications infrastructure companies, including the Company.
The Company believes the following four trends are driving the
communications industry: (i) deregulation of global communications markets; (ii)
introduction of new competitors; (iii) the development of cost efficient and
capacity enhanced technology; and (iv) elasticity of demand for communications
products and services. These factors increase MOU, which is the main factor
driving wireless communications infrastructure spending because wireless service
providers plan their capital spending based on anticipated MOU. Emerging digital
wireless technologies are increasing capacity and quality and lowering the cost
per minute per subscriber. This lower cost enables service providers to lower
rates which makes wireless services more affordable to a broader consumer base.
This encourages increased MOU which, in turn, drives additional infrastructure
spending.
The demand for wireless communications services in the U.S. has grown
dramatically during the last seven years. According to the CTIA, as of June 30,
1997 there were approximately 48.7 million wireless subscribers in the U.S. In
addition, according to CTIA, the CAGR of cellular telephone subscribers was
approximately 41.1% from 1990 to 1997 and the CAGR of cell sites over this time
was 34.8%. Industry analysts expect this growth trend to continue in the future
based on (i) the widespread introduction of PCS into the market, (ii) capacity
enhancements of existing wireless communications networks, (iii) growing
acceptance of SMR/ESMR systems, (iv) increased focus on WLL systems and (v) the
introduction of HDTV.
INDUSTRY FACTORS
Co-location. One factor that will have a significant impact on the
wireless infrastructure business is the ability or inability of wireless service
providers to co-locate antenna on existing monopoles or towers. As a result of
local zoning restrictions and the cost savings realized from leasing space, PCS
and other wireless providers have a strong incentive to co-locate on existing
towers. Despite the appeal of co-location, it is not practical for all tower
sites. PCS is an inherently low power design, which means that coverage of any
given market requires more cell sites than traditional cellular. A standard PCS
cell provides coverage for a significantly smaller square mile region as
relative to a traditional cell. As a result of the differences in frequencies
and deflection requirements, PCS cells tend to require shorter antenna support
structure. In addition, structures older than two or three years often require
extensive modification or replacement in order to effect site sharing while
maintaining structural integrity. As a result, co-location does not always
account for a sufficient number of sites within a given market nor is it always
the most economical solution. Moreover, certain carriers limit their co-location
sites as a result of regulatory concerns; for example, major wireless service
providers limit their site co-location with any particular competitor to 15%.
Capacity/Coverage. In order to compete effectively, wireless service
providers constantly need to improve coverage and capacity in their respective
service areas. Improved coverage and capacity reduces blocked or dropped calls,
improves call quality and decreases the churn rates from unsatisfied
subscribers. Coverage and capacity additions, however, will differ for cellular
and PCS service providers. Existing cellular providers have established coverage
for an estimated 70.0% of the U.S. market. In contrast, as PCS service providers
build their networks for the higher frequency spectrum, they will require the
simultaneous construction of a coverage and capacity network. This deployment of
PCS networks will be further encouraged by PCS service providers' claims of
offering a better technology.
GROWTH IN DEMAND FOR WIRELESS SERVICES
Cellular. According to the U.S. Department of Commerce, as of December 31,
1996 there were 43.5 million cellular telephone subscribers in the U.S.,
representing a 29.0% growth rate over the prior year, and an
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<PAGE> 51
overall penetration of 16.3%. In the future, demand for cellular services is
expected to grow as the costs for cellular phones and services continue to
decrease in response to competition in the cellular and other competing markets.
In addition, as the cellular market reacts to the advent of PCS by making the
transition from analog to digital, costs are expected to further decrease as the
additional capacity provided by the digital systems results in lower costs which
are passed on to the consumer. The market for wireless communications services,
in this regard, has proven to be fairly price elastic in the past, and decreased
prices are expected to result in increased MOU in the future.
PCS. PCS is an emerging digital wireless technology that offers a clearer
signal, fewer dropped signals and greater privacy than typical analog, cellular
systems. PCS can carry data and images as well as voice and is suitable for
computer-to-computer communication, paging, short messaging and fax. Currently,
industry experts estimate that there are approximately 305,000 PCS subscribers
in the U.S. Industry experts estimate that a considerable number of PCS cell
sites will be needed by the year 2000. While some of these cell sites may use an
existing structure, a large number of new structures will be required in the
context of the PCS introduction.
ESMR. As a result of advances in digital technology, some wireless service
providers have begun to design or modify networks that utilize SMR and ESMR
technologies. ESMR increases the capacity of radio networks allowing more
efficient use of allocated frequencies. These efficiencies and improvements in
switching technologies allow ESMR to compete with PCS and cellular. Due to
significantly lower licensing fees in some geographic areas, ESMR enjoys a
potential cost advantage over cellular or PCS. Currently, Nextel uses ESMR to
provide wireless telephone services in several large metropolitan areas in the
U.S. and may soon be joined by other carriers.
Wireless Local Loop. WLL systems are seen as an alternative to traditional
copper and fiber-optic based fixed services with the potential to be implemented
more quickly and at lower cost than wireline services. WLL systems provide
non-mobile telecommunications services to users by transmitting voice messages
over radio waves from the public switched network to the location of the fixed
telephone. The installation of WLL systems minimizes the need to obtain
right-of-ways and excavate existing roads and infrastructure or lay copper or
fiber cables in order to install or upgrade a local telephone system serving
non-mobile telephones.
HDTV. On April 3, 1997, the FCC allocated the broadcast spectrum and
mandated that the top ten markets are to start digital TV broadcasts by April
1999, promising radical improvements in television picture quality. Digital TV
broadcasting in the top 30 markets is mandated to be in place by April 1999; a
few stations, in Seattle, Washington, Raleigh, North Carolina and Washington, DC
have already begun HDTV broadcasts on a limited basis. Meeting the mandated
targets will require significant construction of the transmission
infrastructure. HDTV antennas require towers that are significantly higher than
most current towers, often over 1,000 feet.
International. The international marketplace is growing in importance with
respect to the future of the communications industry. Developing countries
realize that in order to compete effectively in the world economy they must have
an adequate communications infrastructure. In addition to the general cellular
build-out trends in industrialized countries throughout the world, many emerging
economies are introducing wireless systems as the primary communication
infrastructure, bypassing the entire wireline-based systems. The growing
international demand for wireless services, particularly for cellular networks
and WLL solutions should result in increased demand for infrastructure products
on an international basis.
Cellular communications are gaining mass market appeal on a global basis.
In 1986, there were cellular networks in 32 countries. By 1996, there were
networks in 140 countries. According to the U.S. Department of Commerce, as of
the end of 1996, there were approximately 139.7 million cellular subscribers in
the world, 68.9% of whom were located outside of the U.S. This growth has fueled
world investment in infrastructure.
In addition, WLL systems are becoming viable primary communications systems
in many emerging economies. WLL systems provide several competitive advantages
over wire line systems, including (i) quicker time-to-market, (ii) lower per
subscriber deployment and maintenance costs, and (iii) easy adaptability to a
variety of markets. WLL systems are ideal for countries with little or no wired
infrastructure due to their time and cost advantages, such as China, India,
Brazil, Russia, and Indonesia.
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<PAGE> 52
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The executive officers, directors and key employees of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Roy J. Moore.............................. 35 Director, President and Chief
Executive Officer
Douglas A. Standley....................... 40 Chief Operations Officer and
President, Ft. Worth Division
William R. Estill......................... 49 Vice President of Finance
Carl R. Moore............................. 42 Vice President and Secretary
Thomas F. Moore........................... 48 Vice President of Manufacturing
William F. Sales.......................... 36 Vice President of Marketing and Sales
Martin L. De La Rosa, P.E................. 55 Vice President of Engineering
John C. Baker............................. 47 Director
Edward W. Scott........................... 35 Director
Lawrence A. Bettino....................... 37 Director
</TABLE>
ROY J. MOORE became a director and the Chief Executive Officer upon the
consummation of the Transactions. From the time Mr. Moore joined the Company in
1991 until the consummation of the Transactions, Mr. Moore served as Vice
President of Marketing and Sales. Prior to joining the Company, Mr. Moore was a
Manager with the MAC Group, a general management consulting firm. He worked on
projects in the computer and communications industries with companies such as
AT&T, Southwestern Bell, Bell Atlantic, Pacific Telesis, British Telecom and
Apple Computer. Mr. Moore holds a Bachelor of Administration degree in
Accounting and Finance from Texas Christian University with honors, and an MBA
from the University of Virginia, where he also graduated with honors. Mr. Moore,
Carl R. Moore and Thomas F. Moore are brothers.
DOUGLAS A. STANDLEY joined the Company in November 1997 and, since that
time, has served as Chief Operations Officer and President of the Fort Worth
Division. For approximately one and a half years prior to joining the Company,
Mr. Standley was a director of Synergetics, an international management
consulting company which specialized in consulting with manufacturing companies.
Mr. Standley has been a business consultant for the past 19 years, specializing
in turnaround environments, business integration, production planning and
management and strategic implementation. Mr. Standley holds a bachelor's degree
in business management from the University of California at Fullerton and
professional certifications from the American Production and Inventory Control
Society, the American Society of Quality Control and the Deming Institute.
WILLIAM R. ESTILL joined the Company in January 1998 and, since that time,
has served as Vice President of Finance. From May 1996 to November 1997, Mr.
Estill served as Chief Financial Officer of Bearcom, Inc., a privately-held
distributor of two-way radios. From April 1985 to May 1996, Mr. Estill served as
Vice President, Chief Financial Officer, Secretary and Treasurer of Sport Supply
Company, Inc., a New York Stock Exchange company. Mr. Estill was also a member
of the board of directors of Sport Supply Group, Inc. Mr. Estill holds a
Bachelor of Business Administration degree in Accounting from the University of
Texas at Arlington and passed the CPA exam in 1983.
CARL R. MOORE joined the Company in 1973 and, since that time, has served
as Vice President, specializing in the design, manufacturing and installation of
towers, buildings and COWS. Mr. Moore holds a Bachelor of Science degree in
Civil Engineering from the University of Texas at Arlington. Mr. Moore, Roy J.
Moore and Thomas F. Moore are brothers.
THOMAS F. MOORE joined the Company in 1968 and, since that time, has served
as Vice President of Manufacturing, having responsibility for the Company's
manufacturing and facilities. Mr. Moore is a member of the American Welding
Society and the Chamber of Commerce of Kennedale, Texas. Mr. Moore holds a
degree in Business Administration from Texas A&M at East Texas State University,
and has attended
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<PAGE> 53
numerous seminars and workshops in manufacturing and human resources. Mr. Moore,
Roy J. Moore and Carl R. Moore are brothers.
WILLIAM F. SALES joined the Company in 1995 and, since that time, has
served as Vice President of Marketing and Sales specializing in plant layout.
From March 1994 until September 1996, Mr. Sales worked as Senior Project Manager
for G.S. May Consulting Group in Chicago, a general management and engineering
consulting company. From November 1986 until March 1994, Mr. Sales was employed
as Manufacturing Manager for Howmet Corporation Engineering, a manufacturer of
high-tech investment castings. Mr. Sales is a member of the Society of
Mechanical Engineers, the Institute of Industrial Engineers and the Society of
Plastic Engineers. Mr. Sales holds a Bachelor of Science degree in Mechanical
Engineering from Purdue University and an M.B.A. from Indiana University.
MARTIN L. DE LA ROSA, P.E. joined the Company in 1995 and, since that time,
has served as Vice President of Engineering, having responsibility for designing
communications structures and foundations for monopoles, towers and the
buildings that house communications equipment. From May 1993 until June 1995,
Mr. De La Rosa was employed as Director of Engineering for LeBlanc
Communications, Inc., a manufacturer of towers for the communications industry.
From June 1972 until May 1993, Mr. De La Rosa was employed as Vice President of
Engineering and Chief Design Engineer for Falcon Steel Company, a manufacturer
of monopoles for the utility industry. Mr. De La Rosa holds a Bachelor of
Science degree in Civil Engineering from FEATI University in Manila,
Philippines.
JOHN C. BAKER became a director of the Company upon the consummation of the
Transactions. Mr. Baker is a founder of Baker Capital Corp., a private
investment management firm focused on investments in communications equipment,
services and applications companies. Previously, Mr. Baker spent fifteen years
as an investment professional with Patricof & Co. Ventures, a multinational
private equity firm. Mr. Baker currently serves on the board of directors of
FORE Systems (a communications switch manufacturer and vendor), Intermedia
Communications, Inc. (a competitive local exchange company), Xpedite Systems (a
fax messaging provider) and Resource Bancshares Mortgage Group. Mr. Baker holds
a Bachelor of Arts degree from Harvard College and received an MBA from the
Harvard Business School.
EDWARD W. SCOTT became a director of the Company upon the consummation of
the Transactions. Mr. Scott is an officer of Baker Capital Partners, LLC which
acts as the general partner of Baker. Mr. Scott is a founder of Baker Capital
Corp. Mr. Scott currently serves on the board of directors of Virtual Resources,
Inc., a private company headquartered in Atlanta. From 1991 until 1996, Mr.
Scott was employed as an investment professional by the Apollo Investment Fund,
a large leveraged buyout and private equity firm. Mr. Scott holds a Bachelor of
Arts degree from Columbia College and received an MBA from the Harvard Business
School.
LAWRENCE A. BETTINO became a director of the Company upon the consummation
of the Transactions. Mr. Bettino is an officer of Baker Capital Partners, LLC
which acts as the general partner of Baker. Mr. Bettino is a founder of Baker
Capital Corp. Mr. Bettino currently serves on the board of directors of Virtual
Resources, Inc., a private company headquartered in Atlanta. From 1989 to 1996,
Mr. Bettino was a General Partner of Dillon Read Venture Capital. Mr. Bettino
holds a Bachelor of Science degree from Renssalaer Polytechnic Institute and
received an MBA from the Harvard Business School.
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<PAGE> 54
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation for
each of the last three Fiscal Years for the President and the four other most
highly compensated executive officers of the Company. No stock options are
outstanding.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -----------------------------
---------------------------------- LONG-TERM
FISCAL OTHER ANNUAL INCENTIVE ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION PLAN PAYOUTS COMPENSATION
- ----------------- ------ -------- -------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
T. W. Moore.................... 1997 $112,800 $650,000 -- -- --
President 1996 $112,800 -- -- -- --
1995 $112,800 -- -- -- --
Betty J. Moore................. 1997 $210,000 $650,000 -- -- --
Secretary/Treasurer 1996 $210,000 -- -- -- --
1995 $210,000 -- -- -- --
Thomas F. Moore................ 1997 $200,000 -- -- -- --
Vice President 1996 $166,826 $101,471 -- -- --
of Manufacturing 1995 $150,240 $355,849 -- -- --
Carl R. Moore.................. 1997 $200,000 -- -- -- --
Vice President 1996 $166,826 $101,471 -- -- --
1995 $150,240 $355,849 -- -- --
Roy J. Moore................... 1997 $200,000 -- -- -- --
Vice President 1996 $150,154 $101,471 -- -- --
of Marketing 1995 $125,232 $356,374 -- -- --
and Sales
</TABLE>
EMPLOYMENT AGREEMENTS
In connection with the Transactions, the Company entered into an employment
agreement with each of the Roll-over Shareholders ("Employment Agreements"). The
terms of the Employment Agreements are substantially similar. The Employment
Agreements provide that each of the Roll-over Shareholders will serve as an
officer of the Company for a period that will end on the third anniversary of
the effective date of the Employment Agreements (the "Employment Period");
provided that the Employment Period will automatically terminate upon death,
disability, for Cause (as defined therein), or for Good Reason (as defined
therein). Under the Employment Agreements, each of the Roll-over Shareholders
will receive, among other things, (i) an annual base salary of $200,000, (ii) an
annual bonus based on the earnings and performance of the Company and such
person's contributions thereto, and (iii) other benefits as described in the
Employment Agreements. Each Employment Agreement provides for director or
officer indemnification and insurance.
The Company's employment agreement with Martin De La Rosa (the "De La Rosa
Agreement") will remain in effect until August 31, 2001. This agreement will
terminate before the above date upon death, disability, Just Cause (as defined
therein) or voluntary termination.
The Company has entered into employment agreements with William F. Sales
and Douglas A. Standley (the "Sales and Standley Agreements") that will remain
in effect until December 31, 2000. The Sales and Standley Agreements will
terminate before the above date upon death, disability, or Cause (as defined
therein). The De La Rosa Agreement and the Sales and Standley Agreements contain
non-competition clauses and confidentiality provisions, and provide for merit
increases to such person's salary.
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<PAGE> 55
PRINCIPAL SHAREHOLDERS
The outstanding equity securities of the Company consist of 136.14 shares
of Common Stock.
The following table sets forth certain information regarding the ownership
of the voting securities of the Company as of January 12, 1998. To the knowledge
of the Company, each of such shareholders has sole voting and investment power
as to the shares shown unless otherwise noted.
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------------------
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF CLASS
- ---------------- ---------------- -------------------
<S> <C> <C>
PRINCIPAL SHAREHOLDERS:
FWT Acquisition Inc................................ 108.91(1) 80.00%
575 Madison Avenue, 10th Floor
New York, NY 10022
Thomas F. Moore.................................... 9.08 6.67%
1901 E. Loop 820 South
Fort Worth, TX 76112
Carl R. Moore...................................... 9.08 6.67%
1901 E. Loop 820 South
Fort Worth, TX 76112
Roy J. Moore....................................... 9.08 6.67%
1901 E. Loop 820 South
Fort Worth, TX 76112
</TABLE>
- ---------------
(1) FWT Acquisition, Inc. is a wholly-owned subsidiary of Baker. The general
partner of Baker, which is treated as the beneficial owner of the shares held by
Baker, is Baker Capital Partners, LLC. The address of each of Baker and Baker
Capital Partners, LLC is 575 Madison Ave., 10th Floor, New York, New York 10022.
Each of Messrs. Baker, Scott and Bettino is a manager and an officer of Baker
Capital Partners, LLC.
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<PAGE> 56
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTION AGREEMENTS
On November 12, 1997, the Company, FWT Acquisition and the Existing
Shareholders entered into, and consummated the transactions set forth in, the
Transaction Agreements. The Transaction Agreements contemplated, among other
things, two primary transactions. The first transaction contemplated by the
Transaction Agreements included the Recapitalization. The second transaction
contemplated by the Transaction Agreements included the Stock Purchase. As a
result of the Transactions, FWT Acquisition holds approximately 80.0% of the
issued and outstanding shares of the Common Stock, and the Roll-over
Shareholders hold in the aggregate approximately 20.0% of the issued and
outstanding shares of the Common Stock. See "The Recapitalization and Stock
Purchase."
The Transaction Agreements contain customary representations and warranties
and standard covenants. Such agreements provide that the Existing Shareholders
will indemnify FWT Acquisition for losses arising from any breach of a covenant,
representation or warranty made by the Existing Shareholders in the Transaction
Agreements. The Existing Shareholders' indemnification obligations are subject
to certain dollar amount and time limitations.
FINANCIAL ADVISORY AGREEMENT
In connection with the Transactions, the Company entered into a ten-year
agreement with Baker Capital Corp. ("Baker Capital"), an affiliate of Baker,
pursuant to which Baker Capital provided financial advisory services to the
Company in connection with the Transactions. In payment for these services the
Company paid Baker Capital a fee of $1.0 million upon the closing of the
Transactions, and paid Baker Capital a fee of $1.0 million upon the closing of
the Initial Offering. In addition, Baker Capital will provide oversight and
monitoring services to the Company on an ongoing basis and will receive a base
fee of $250,000 per year commencing in 1998 with an additional $250,000 for each
year the Company meets a specified EBITDA target. The Company has agreed to
indemnify Baker Capital in respect of its services under the Financial Advisory
Agreement and to reimburse it for certain out-of-pocket expenses.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
In connection with the Transactions, the Company entered into an employment
agreement with each of Roll-over Shareholders (collectively the "Employment
Agreements"). The terms of the Employment Agreements are substantially similar.
The Employment Agreements provide that each of the Roll-over Shareholders will
serve as an officer of the Company for a period that will end on the third
anniversary of the effective date of the Employment Agreements (the "Employment
Period"); provided that the Employment Period will automatically terminate upon
death, disability, for Cause (as defined therein) or for Good Reason (as defined
therein). Under the Employment Agreements, each of the Roll-over Shareholders
will receive, among other things, (i) an annual base salary of $200,000, (ii) an
annual bonus based on the earnings and performance of the Company and such
person's contributions thereto and (iii) other benefits as described in the
Employment Agreements. Each Employment Agreement provides for director or
officer indemnification and insurance.
The Company's employment agreement with Martin De La Rosa (the "De La Rosa
Agreement") will remain in effect until August 31, 2001. This agreement will
terminate before the above date upon death, disability, Just Cause (as defined
therein) or voluntary termination.
The Company has entered into employment agreements with William F. Sales
and Douglas A. Standley (the "Sales and Standley Agreements") that will remain
in effect until December 31, 2000. The Sales and Standley Agreements will
terminate before the above date upon death, disability, or Cause (as defined
therein). The De La Rosa Agreement and the Sales and Standley Agreements contain
non-competition clauses and confidentiality provisions, and provide for merit
increases to such person's salary.
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THE DISTRIBUTION
The Company made a distribution in the amount of $21.0 million to T.W.
Moore and Betty Moore. The distribution was financed primarily by a loan from
Bank One, Texas, N.A., which was repaid in connection with the Recapitalization.
SHAREHOLDER AGREEMENT
In connection with the Transactions, the Company, FWT Acquisition, Baker
and the Roll-over Shareholders entered into a Shareholders Agreement which
provides for, among other things, agreements and restrictions regarding
issuances and transfers of Common Stock. The agreements and restrictions include
the following: (i) rights of first refusal; (ii) preemptive rights; (iii)
tag-along rights; (iv) pledge restrictions; (v) transfer restrictions; and (vi)
a carry-along provision in favor of Baker. Further, during the Initial Period
(as defined therein) any transaction between the Company and the Shareholders
(as defined therein) will require unanimous consent of the Company's board of
directors prior to consummation of such transaction.
REGISTRATION RIGHTS AGREEMENT
In connection with the Transactions, the Company, FWT Acquisition and the
Roll-over Shareholders entered into a Registration Rights Agreement. This
agreement provides for, among other things, piggy-back rights with customary
cut-backs.
STOCK APPRECIATION RIGHTS AGREEMENT
In connection with the Transactions, the Company and Roy J. Moore entered
into a stock appreciation rights agreement (the "SAR Agreement"). This SAR
Agreement provides for, among other things, a payment by the Company to Mr.
Moore upon the occurrence of a Liquidity Event (as defined therein) of an amount
based on a formula set forth in the SAR Agreement.
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<PAGE> 58
DESCRIPTION OF THE REVOLVING CREDIT FACILITY
The Company entered into a loan agreement with BT Commercial Corporation
(the "Agent"), which provides to the Company the Revolving Credit Facility.
Subject to borrowing base limitations and the satisfaction of customary
borrowing conditions, the Company expects to be able to borrow up to $25.0
million under the Revolving Credit Facility. The terms of such Revolving Credit
Facility are substantially as follows:
(i) The Revolving Bank Facility enables the Company to obtain
revolving credit loans from time to time for working capital and general
corporate purposes in an aggregate amount outstanding not to exceed the
lesser of (x) $25.0 million and (y) the sum of 85% of the Company's
eligible accounts receivable, as defined, and 60% of the Company's eligible
inventory, as defined;
(ii) The revolving credit loans bear interest at a rate based upon the
lender's prime rate or the LIBOR-based rate. The Company also paid a
commitment fee upon the closing of the Revolving Credit Facility, and a fee
based upon the amount of the average unused commitments. The Revolving
Credit Facility will terminate on the third anniversary of the date of the
consummation of the Initial Offering, unless terminated sooner upon an
Event of Default (as defined therein) and outstanding revolving credit
loans will be payable on such date or such earlier date as may be
accelerated following the occurrence of any event of default; and
(iii) The Revolving Credit Facility ranks senior to the Notes and is
secured by a lien on substantially all of the Company's personal property,
including accounts receivable and inventory. The Revolving Credit Facility
contains various restrictive covenants and events of default customary for
transactions of this type.
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<PAGE> 59
DESCRIPTION OF EXCHANGE NOTES
The Outstanding Notes were, and the Exchange Notes will be, issued under
the Indenture. The terms of the Exchange Notes are identical in all material
respects to the Outstanding Notes, except that the Exchange Notes have been
registered under the Securities Act, and therefore, will not bear legends
restricting their transfer. The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Trust Indenture Act of 1939, as amended (the
"TIA"), and to all of the provisions of the Indenture, including the definitions
of certain terms therein and those terms made a part of the Indenture by
reference to the TIA as in effect on the date of the Indenture. A copy of the
Indenture may be obtained from the Company or the Initial Purchasers. The
definitions of certain capitalized terms used in the following summary are set
forth below under "-- Certain Definitions." For purposes of this section,
references to the "Company" include only the Company and not its Subsidiaries.
The Outstanding Notes are, and the Exchange Notes will be, unsecured
obligations of the Company, ranking subordinate in right of payment to all
Senior Indebtedness of the Company, including all obligations of the Company
under the Revolving Credit Facility. As of October 31, 1997, on a pro forma
basis, the Company would have had no Senior Indebtedness outstanding and had
approximately $11.4 million of availability under the Revolving Credit Facility.
The Outstanding Notes have been, and the Exchange Notes will be, issued in
fully registered form only, without coupons, in denominations of $1,000 and
integral multiples thereof. Initially, the Trustee will act as Paying Agent and
Registrar for the Exchange Notes. The Notes may be presented for registration or
transfer and exchange at the offices of the Registrar, which initially will be
the Trustee's corporate trust office. The Company may change any Paying Agent
and Registrar without notice to holders of the Notes (the "Holders"). The
Company will pay principal (and premium, if any) on the Notes at the Trustee's
corporate office in New York, New York. At the Company's option, interest may be
paid at the Trustee's corporate trust office or by check mailed to the
registered address of Holders. Any Outstanding Notes that remain outstanding
after the completion of this Exchange Offer, together with the Exchange Notes
issued in connection with this Exchange Offer, will be treated as a single class
of securities under the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $125 million (of
which $105 million was issued in the Initial Offering) and will mature on
November 15, 2007. Additional amounts may be issued in one or more series from
time to time, subject to the limitations set forth under "-- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness." Interest on
the Notes will accrue at the rate of 9 7/8% per annum and will be payable
semi-annually in cash on each May 15 and November 15 commencing on May 15, 1998,
to the persons who are registered Holders at the close of business on May 1 and
November 1 immediately preceding the applicable interest payment date. Interest
on the Exchange Notes will accrue (A) from the later of (i) the last interest
payment date on which interest was paid on the Outstanding Note surrendered in
exchange therefor, or (ii) if the Outstanding Note is surrendered for exchange
on a date in a period which includes the record date for an interest payment
date to occur on or after the date of such exchange and as to which interest
will be paid, the date of such interest payment date or (B) if no interest has
been paid on the Outstanding Notes, from the Issue Date.
The Notes will not be entitled to the benefit of any mandatory sinking
fund.
REDEMPTION
Optional Redemption. The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on and after November
15, 2002, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
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<PAGE> 60
redeemed during the twelve-month period commencing on November 15 of the year
set forth below, plus, in each case, accrued and unpaid interest thereon, if
any, to the date of redemption (the "Redemption Date"):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002.............................................. 104.938%
2003.............................................. 103.292%
2004.............................................. 101.646%
2005 and thereafter............................... 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. At any time, or from
time to time, on or prior to November 15, 2000, the Company may, at its option,
use the net cash proceeds of one or more Public Equity Offerings (as defined
below) to redeem the Notes at a redemption price equal to 109.875% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided that at least 65% of the principal amount of
Notes originally issued remains outstanding immediately after any such
redemption. In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Exchange Notes are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate; provided, however, that
no Notes of a principal amount of $1,000 or less shall be redeemed in part;
provided, further, that if a partial redemption is made with the proceeds of a
Public Equity Offering, selection of the Notes or portions thereof for
redemption shall be made by the Trustee only on a pro rata basis or on as nearly
a pro rata basis as is practicable (subject to DTC procedures), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Indebtedness. Upon any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or marshaling of assets
of the Company or in a bankruptcy, reorganization, insolvency, receivership or
other similar proceeding relating to the Company or its property, whether
voluntary or involuntary, all Obligations due or to become due upon all Senior
Indebtedness shall first be paid in full in cash or Cash Equivalents, or such
payment duly provided for before any payment or distribution of any kind or
character (other than any payment in the form of Permitted Junior Securities) is
made on account of any Obligations on the Notes, or for the acquisition of any
of the Notes for cash or property or otherwise. If any default occurs and is
continuing in the payment when due, whether at maturity, upon any redemption, by
declaration or otherwise, of any principal of, interest on, unpaid drawings for
letters of credit issued in respect of, or regularly accruing fees with respect
to, any Senior Indebtedness, no payment of any kind or character shall be made
by or on behalf of
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<PAGE> 61
the Company or any other Person on its or their behalf with respect to any
Obligations on the Notes or to acquire any of the Notes for cash or property or
otherwise.
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Indebtedness, as such event of default is
defined in the instrument creating or evidencing such Designated Senior
Indebtedness, permitting the holders of such Designated Senior Indebtedness then
outstanding to accelerate the maturity thereof and if the Representative for the
respective issue of Designated Senior Indebtedness gives written notice of the
event of default to the Trustee (a "Default Notice"), then, unless and until all
events of default have been cured or waived or have ceased to exist or the
Trustee receives notice from the Representative for the respective issue of
Designated Senior Indebtedness terminating the Blockage Period (as defined
below), during the 180 days after the delivery of such Default Notice (the
"Blockage Period"), neither the Company nor any other Person on its behalf shall
(x) make any payment of any kind or character with respect to any Obligations on
the Notes (other than any payment in the form of Permitted Junior Securities) or
(y) acquire any of the Notes for cash or property or otherwise. Notwithstanding
anything herein to the contrary, in no event will a Blockage Period extend
beyond 180 days from the date the payment on the Notes was due and only one such
Blockage Period may be commenced within any 360 consecutive days. No event of
default which existed or was continuing on the date of the commencement of any
Blockage Period with respect to the Designated Senior Indebtedness shall be, or
be made, the basis for commencement of a second Blockage Period by the
Representative of such Designated Senior Indebtedness whether or not within a
period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provisions under which an event of default previously existed or
was continuing shall constitute a new event of default for this purpose).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Indebtedness,
including the Holders of the Notes, may recover less, ratably, than holders of
Senior Indebtedness.
As of October 31, 1997, on pro forma basis, the Company would have had no
Senior Indebtedness outstanding and had approximately $11.4 million of
availability under the Revolving Credit Facility.
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control,
each Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price (the "Change of Control Purchase
Price") equal to 101% of the principal amount thereof plus accrued and unpaid
interest to the date of purchase.
Within 30 days following the date upon which the Change of Control
occurred, the Company must send, by first class mail, a notice to each Holder,
with a copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 45 days from the date such
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date"). Holders electing to have an Note purchased pursuant to a Change
of Control Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day prior to the Change of Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. A Change of Control Offer might constitute
an event of default under the terms of Senior Indebtedness, including the
Revolving Credit Facility. In addition, any instruments governing Senior
Indebtedness may prohibit the Company from purchasing any Notes prior to their
maturity (including pursuant to a Change of Control Offer). If on the purchase
date for the Change of Control Offer the Company does not have sufficient funds
to pay the Change of Control Purchase Price or is unable to obtain the consent
of the holders of such Senior Indebtedness or to repay such Senior Indebtedness,
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<PAGE> 62
an Event of Default would occur under the Indenture. In the event the Company is
required to purchase outstanding Notes pursuant to a Change of Control Offer,
the Company expects that it would seek third party financing to the extent it
does not have available funds to meet its purchase obligations. However, there
can be no assurance that the Company would be able to obtain such financing. In
addition, one of the events that constitutes a Change of Control under the
Indenture is a sale, conveyance, transfer or lease of all or substantially all
of the assets of the Company. The Indenture is governed by New York law, and
there is no established quantitative definition under New York law of
"substantially all" of the assets of a corporation. Accordingly, if the Company
were to engage in a transaction in which it disposed of less than all of the
assets of the Company, a question or interpretation could arise as to whether
such disposition was of "substantially all" of its assets and whether the
Company was required to make a Change of Control Offer.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control.
Restrictions in the Indenture described herein on the ability of the Company and
its Restricted Subsidiaries, if any, to incur additional Indebtedness, to grant
liens on its property, to make Restricted Payments and to make Asset Sales may
also make more difficult or discourage a takeover of the Company, whether
favored or opposed by the management of the Company. Moreover, any instrument
governing Senior Indebtedness of the Company (including the Revolving Credit
Agreement) may prohibit the Company from purchasing any Notes prior to their
maturity (including pursuant to a Change of Control Offer). Consummation of any
such transaction in certain circumstances may require redemption or repurchase
of the Notes, and there can be no assurance that the Company or the acquiring
party will have sufficient financial resources to effect such redemption or
repurchase or, if the Company is unable to obtain the consent of Holders of such
Senior Indebtedness, to repay such Senior Indebtedness. Such restrictions and
the restrictions on transactions with Affiliates may, in certain circumstances,
make more difficult or discourage any leveraged buyout of the Company or any of
its Subsidiaries by the management of the Company. While such restrictions cover
a wide variety of arrangements which have traditionally been used to effect
highly leveraged transactions, the Indenture may not afford the Holders of Notes
protection in all circumstances from the adverse aspects of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
repurchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The Company will comply with the requirements of Rule 14e-1 under the Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. To the extent that the provisions of any
securities laws or regulations conflict with the "Change of Control" provisions
of the Indenture, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
the "Change of Control" provisions of the Indenture by virtue thereof.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness) provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Company and any Restricted Subsidiary
that is a Guarantor may incur Indebtedness (including, without limitation,
Acquired Indebtedness) if on the date of the incurrence of such Indebtedness,
after giving effect to the incurrence thereof, the Consolidated Fixed Charge
Coverage Ratio of the Company is greater than 2.0 to 1.0; provided that any
guarantee of Indebtedness permitted to be incurred hereunder shall not be a
separate incurrence of Indebtedness.
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<PAGE> 63
Limitation on Restricted Payments. The Company will not, and will not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than dividends
or distributions payable in Qualified Capital Stock of the Company) on or in
respect of shares of the Company's Capital Stock to holders of such Capital
Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of the Company or any warrants, rights or options to purchase or acquire
shares of any class of such Capital Stock, (c) make any principal payment on,
purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for
value, prior to any scheduled final maturity, scheduled repayment or scheduled
sinking fund payment, any Indebtedness ("Subordinated Indebtedness") of the
Company that is subordinate or junior in right of payment to the Notes or (d)
make any Investment (other than Permitted Investments) (each of the foregoing
actions set forth in clauses (a), (b) (c) and (d) being referred to as a
"Restricted Payment"), if at the time of such Restricted Payment or immediately
after giving effect thereto, (i) a Default or an Event of Default shall have
occurred and be continuing or (ii) the Company is not able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant or (iii) the aggregate amount of Restricted Payments (including such
proposed Restricted Payment) made subsequent to the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair market value
of such property as determined in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% (or 100% for the purpose of making a
Restricted Payment described in clause (d) above) of the cumulative Consolidated
Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100%
of such loss) of the Company earned subsequent to the Issue Date and on or prior
to the date the Restricted Payment occurs (the "Reference Date") (treating such
period as a single accounting period); plus (x) 100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or prior
to the Reference Date of Qualified Capital Stock of the Company or any options,
warrants or rights to purchase Qualified Capital Stock of the Company (other
than options, warrants or rights initially issued and sold together with
Disqualified Capital Stock or debt securities comprising a unit), together with
the aggregate cash received by the Company at the time of exercise of such
options, warrants or rights; plus (y) 100% of the aggregate net cash proceeds
received on or after the Issue Date by the Company from the issuance or sale
(other than to a Subsidiary of the Company) of convertible debt or convertible
Disqualified Capital Stock that has been converted into or exchanged for
Qualified Capital Stock of the Company, together with the aggregate cash
received by the Company at the time of such conversion or exchange; plus (z)
without duplication of any amounts included in clause (iii)(y) above, (1) 100%
of the aggregate net cash proceeds of any equity contribution received by the
Company from a holder of the Company's Capital Stock (excluding, in the case of
clauses (iii)(x) and (z), any net cash proceeds from a Public Equity Offering to
the extent used to redeem the Notes) and (2) to the extent not otherwise
included in the Company's Consolidated Net Income, an amount equal to the net
reduction in any investment made by the Company and its Restricted Subsidiaries
subsequent to the Issue Date in any Person resulting from (a) payments of
interest on debt, dividends, repayments of loans or advances, or other transfers
or distributions of Property, in each case to the Company or any Restricted
Subsidiary from any Person, and in an amount not to exceed the book value of
such investment previously made in such Person that were treated as Restricted
Payments, or (b) the designation of any Unrestricted Subsidiary as a Restricted
Subsidiary, in each case in an amount not to exceed the lesser of (x) the book
value of such Investment previously made in such Unrestricted Subsidiary that
were treated as Restricted Payments, and (y) the Fair Market Value of such
Unrestricted Subsidiary.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend within 60
days after the date of declaration of such dividend if the dividend would have
been permitted on the date of declaration; (2) if no Default or Event of Default
shall have occurred and be continuing, the acquisition of any shares of Capital
Stock of the Company, either (i) solely in exchange for shares of Qualified
Capital Stock of the Company or (ii) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock of the Company; (3) if no Default
or Event of Default shall have occurred and be continuing, the acquisition of
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Notes either (i) solely in exchange for shares of Qualified
Capital Stock of the Company, or
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<PAGE> 64
(ii) through the application of net proceeds of a substantially concurrent sale
for cash (other than to a Subsidiary of the Company) of (A) shares of Qualified
Capital Stock of the Company or (B) Refinancing Indebtedness; and (4) so long as
no Default or Event of Default shall have occurred and be continuing,
repurchases by the Company of Common Stock of the Company from employees of the
Company or any of its Subsidiaries or their authorized representatives upon the
death, disability or termination of employment of such employees, in an
aggregate amount not to exceed $250,000 in any calendar year; (5) payments under
Affiliated Transactions permitted by paragraph (b)(v) of the covenant described
in "Limitation on Transactions with Affiliates" that would otherwise constitute
Restricted Payments; (6) the purchase of any Subordinated Indebtedness at a
purchase price not greater than 101% or 100%, respectively, of the principal
amount thereof in the event of a "Change of Control Offer" or a "Net Proceeds
Offer," respectively, in accordance with provisions similar to those contained
in the "-- Change of Control" and "-- Limitation on Asset Sales" covenants,
provided that, prior to any such purchase of Subordinated Indebtedness, the
Company has made the Change of Control Offer or the Net Proceeds Offer, as the
case may be, in accordance with such covenants and has purchased all Notes
validly tendered pursuant to such offer and that no Default or Event of Default
is in existence prior to or as a result of such purchases, and (7) the payment
of the Transaction Fee to Baker Capital Corporation pursuant to the
Recapitalization Agreement. In determining the aggregate amount of Restricted
Payments made subsequent to the Issue Date in accordance with clause (iii) of
the immediately preceding paragraph, amounts expended pursuant to clauses (1)
(if not already taken into consideration for determining such amount upon the
declaration thereof), (2) and (4) shall be included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an officers' certificate stating that such Restricted
Payment complies with the Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations may
be based upon the Company's latest available internal quarterly financial
statements.
Limitation on Asset Sales. The Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors), (ii) at least 75% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale at the time of such disposition shall be in the form of cash or
Cash Equivalents (or the assumption of indebtedness and liabilities of the
Company or such Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability thereon) or notes or marketable
securities that are converted into cash or Cash Equivalents within 180 days
after the date of such Asset Sale; and (iii) upon the consummation of an Asset
Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the
Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof
either (A) to prepay any Senior Indebtedness and, in the case of any such
Indebtedness under any revolving credit facility, effect a permanent reduction
in the availability under such revolving credit facility, (B) to make an
investment in properties and assets that replace the properties and assets that
were the subject of such Asset Sale or in properties and assets that will be
used in the business of the Company and its Subsidiaries or in businesses
reasonably related thereto ("Replacement Assets"), or (C) a combination of
prepayment and investment permitted by the foregoing clauses (iii)(A) and
(iii)(B). Within 30 days after such 360 day period after an Asset Sale or such
earlier date, if any, as the Board of Directors of the Company or of such
Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to
such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the
next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B)
and (iii)(C) of the next preceding sentence (the "Excess Proceeds") shall be
applied by the Company or such Restricted Subsidiary to make an offer to
purchase (the "Net Proceeds Offer") Notes and Pari Passu Indebtedness, if
applicable, on a date (the "Net Proceeds Offer Payment Date") not less than 30
nor more than 45 days following the applicable Net Proceeds Offer Trigger Date,
from all Holders and from holders of Pari Passu Indebtedness, if applicable, on
a pro rata basis, that amount of Notes and Pari Passu Indebtedness, if
applicable, equal to the Excess Proceeds, with regard to the Notes, at a price
equal to 100% of the principal amount of the Notes to be purchased, plus accrued
and unpaid interest thereon, if any, to the date of purchase; provided, however,
that if at any time
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<PAGE> 65
within one year of the date of the Asset Sale any non-cash consideration
received by the Company or any Restricted Subsidiary of the Company, as the case
may be, in connection with any Asset Sale is converted into or sold or otherwise
disposed of for cash (other than interest received with respect to any such
non-cash consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this covenant. The Company may defer the Net Proceeds
Offer until there are aggregate unutilized Excess Proceeds equal to or in excess
of $10,000,000 resulting from one or more Asset Sales (at which time, the entire
unutilized Excess Proceeds, and not just the amount in excess of $10,000,000,
shall be applied as required pursuant to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "-- Merger, Consolidation
and Sale of Assets" and if the Company has not made a Change of Control Offer in
connection with any such transfer, the successor corporation shall be deemed to
have sold the properties and assets of the Company and its Restricted
Subsidiaries not so transferred for purposes of this covenant, and shall comply
with the provisions of this covenant with respect to such deemed sale as if it
were an Asset Sale. In addition, the fair market value of such properties and
assets of the Company or its Restricted Subsidiaries deemed to be sold shall be
deemed to be Net Cash Proceeds for purposes of this covenant.
Each Net Proceeds Offer will be mailed to the record Holders as shown on
the register of Holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set forth
in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may
elect to tender their Notes in whole or in part in integral multiples of $1,000
in exchange for cash. A Net Proceeds Offer shall remain open for a period of 20
business days or such longer period as may be required by law. Any amounts not
utilized to repurchase Notes shall no longer constitute Net Cash Proceeds with
respect to such Asset Sale.
When the aggregate amount of Excess Proceeds equals or exceeds $10,000,000,
the Company shall make an offer to purchase, from all Holders of the Notes and
any then outstanding Pari Passu Indebtedness required to be repurchased or
repaid on a permanent basis in connection with an Asset Sale, an aggregate
principal amount of Notes and any such Pari Passu Indebtedness equal to such
Excess Proceeds as follows:
(i) (A) The Company shall make an offer to purchase (a "Net Proceeds
Offer") from all Holders of the Notes in accordance with the procedures set
forth in the Indenture the maximum principal amount (expressed as a
multiple of $1,000) of Notes that may be purchased out of an amount (the
"Payment Amount") equal to the product of such Excess Proceeds multiplied
by a fraction, the numerator of which is the outstanding principal amount
of the Notes and the denominator of which is the sum of the outstanding
principal amount of the Notes and such Pari Passu Indebtedness, if any
(subject to proration in the event such amount is less than the aggregate
Offered Price (as defined in clause (ii) below) of all Notes tendered), and
(B) to the extent required by any such Pari Passu Indebtedness and provided
there is a permanent reduction in the principal amount of such Pari Passu
Indebtedness, the Company shall make an offer to purchase such Pari Passu
Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu
Indebtedness Amount") equal to the excess of the Excess Proceeds over the
Payment Amount.
(ii) The offer price for the Notes shall be payable in cash in an
amount equal to 100% of the principal amount of the Notes tendered pursuant
to a Net Proceeds Offer, plus accrued and unpaid interest, if any, to the
date such Net Proceeds Offer is consummated (the "Offered Price"), in
accordance with the procedures set forth in the Indenture. To the extent
that the aggregate Offered Price of the Notes tendered pursuant to a Net
Proceeds Offer is less than the Payment Amount relating thereto or the
aggregate amount of the Pari Passu Indebtedness that is purchased or repaid
pursuant to the Pari Passu Offer is less than the Pari Passu Indebtedness
Amount (such shortfall constituting a "Net Proceeds Deficiency"), the
Company may use such Net Proceeds Deficiency, or a portion thereof, for
general corporate purposes, subject to the limitations of the "Limitation
on Restricted Payments" covenant.
(iii) If the aggregate Offered Price of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Payment Amount, Notes to be
purchased will be selected on a pro rata basis. Upon
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completion of such Net Proceeds Offer and Pari Passu Offer, the amount of
Excess Proceeds shall be reset to zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indenture by virtue
thereof.
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or make
any other distributions on or in respect of its Capital Stock; (b) make loans or
advances or to pay any Indebtedness or other obligation owed to the Company or
any other Restricted Subsidiary of the Company; or (c) transfer any of its
property or assets to the Company or any other Restricted Subsidiary of the
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) the Indenture; (3) Indebtedness existing on
the Issue Date; (4) the Revolving Credit Facility; (5) restrictions imposed by
Liens permitted by the Indenture; (6) restrictions imposed by an agreement for
the sale of Capital Stock or assets of a Restricted Subsidiary, provided that
such restrictions apply to the Capital Stock or Assets being sold; (7) customary
non-assignment provisions of any contract, any license, any lease governing a
leasehold interest or similar agreement of any Restricted Subsidiary of the
Company; (8) any instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired; or (9) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement referred to in
clauses (2), (3), (4) or (8) above; provided, however, that the provisions
relating to such encumbrance or restriction contained in any such Indebtedness
are no less favorable taken as a whole to the Company in any material respect as
determined by the Board of Directors of the Company in their reasonable and good
faith judgment than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clauses (2), (3), (4) or (8).
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
not permit any of its Restricted Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Wholly Owned Restricted Subsidiary of the
Company) or permit any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company) to own any Preferred Stock of any
Restricted Subsidiary of the Company.
Limitation on Liens. The Company will not, and will not cause or permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit or suffer to exist any Liens of any kind against or upon any
property or assets of the Company or any of its Restricted Subsidiaries whether
owned on the Issue Date or acquired after the Issue Date, or any proceeds
therefrom, or assign or otherwise convey any right to receive income or profits
therefrom unless (i) in the case of Liens securing Indebtedness that is
expressly subordinate or junior in right of payment to the Notes, the Notes are
secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (ii) in all other cases, the Notes are equally and
ratably secured, except for (A) Liens existing as of the Issue Date to the
extent and in the manner such Liens are in effect on the Issue Date; (B) Liens
securing Senior Indebtedness; (C) Liens securing the Notes; (D) Liens of the
Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any
Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under the Indenture and which has been incurred in accordance with the
provisions of the Indenture; provided, however, that such Liens (A) are not
materially less favorable to the Holders and are not materially more favorable
to the lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being Refinanced and (B) do not extend to or cover any property or
assets and improvements and attachments thereto and proceeds thereof of the
Company or any of its Subsidiaries not securing the Indebtedness so Refinanced;
and (F) Permitted Liens.
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Merger, Consolidation and Sale of Assets. The Company will not, in a
single transaction or series of related transactions, consolidate or merge with
or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Restricted Subsidiary of the Company to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Company's assets (determined on a consolidated basis for the Company
and the Company's Restricted Subsidiaries) to any Person, unless: (i) either (1)
the Company shall be the surviving or continuing corporation or (2) the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of the Company
and of the Company's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity") (x) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and (y) shall expressly assume, by supplemental indenture (in form and
substance satisfactory to the Trustee), executed and delivered to the Trustee,
the due and punctual payment of the principal of, and premium, if any, and
interest on all of the Notes and the performance of every covenant of the Notes,
the Indenture and the Registration Rights Agreement on the part of the Company
to be performed or observed; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above (including
giving effect to any Indebtedness and Acquired Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, (1)
shall have a Consolidated Net Worth equal to or greater than the Consolidated
Net Worth of the Company immediately prior to such transaction and (2) shall be
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the "-- Limitation on Incurrence of Additional
Indebtedness" covenant; (iii) immediately before and immediately after giving
effect to such transaction and the assumption contemplated by clause (i)(2)(y)
above (including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be incurred and any Lien
granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing; and (iv) the Company or
the Surviving Entity shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and,
if a supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with the applicable provisions of the
Indenture and that all conditions precedent in the Indenture relating to such
transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
The Indenture provides that upon any consolidation, combination or merger
or any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, in which the Company is not the continuing
corporation, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, lease or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture and the Notes with the same effect as if such
surviving entity had been named as such, and, except in the case of a lease, the
predecessor Person shall be released from all such obligations.
Each Subsidiary Guarantor (other than any Guarantor whose Guarantee (as
defined) is to be released in accordance with the terms of the Guarantee and the
Indenture in connection with any transaction complying with the provisions of
"-- Limitation on Asset Sales") will not, and the Company will not cause or
permit any Subsidiary Guarantor to, consolidate with or merge with or into any
Person other than the Company or any other Subsidiary Guarantor unless: (i) the
entity formed by or surviving any such consolidation or merger (if other than
the Subsidiary Guarantor) or to which such sale, lease, conveyance or other
disposition shall have been made is a corporation organized and existing under
the laws of the United States or any State thereof or the District of Columbia
or the jurisdiction of incorporation of the Subsidiary Guarantor; (ii) such
entity assumes by supplemental indenture all of the obligations of the
Subsidiary Guarantor on the Guarantee;
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(iii) immediately after giving effect to such transaction, no Default or Event
of Default shall have occurred and be continuing; and (iv) immediately after
giving effect to such transaction and the use of any net proceeds therefrom on a
pro forma basis, the Company could satisfy the provisions of subclause (2) of
clause (ii) of the first paragraph of this covenant. Any merger or consolidation
of a Subsidiary Guarantor with and into the Company (with the Company being the
surviving entity) or another Subsidiary Guarantor that is a Wholly Owned
Restricted Subsidiary of the Company need only comply with clause (iv) of the
first paragraph of this covenant.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
on terms that are no less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length basis from
a Person that is not an Affiliate of the Company or such Restricted Subsidiary
(and, in the case of a transaction between the Company and a Restricted
Subsidiary that is not a Wholly Owned Restricted Subsidiary, fair to the
Company). All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan) involving aggregate
payments or other property with a fair market value in excess of $1,000,000
shall be approved by the Board of Directors of the Company or such Restricted
Subsidiary, as the case may be, such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a
series of related Affiliate Transactions related to a common plan) that involves
an aggregate fair market value of more than $5,000,000, the Company or such
Restricted Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary of the Company as determined in good faith by the Company's Board of
Directors or senior management; (ii) transactions exclusively between or among
the Company and any of its Wholly Owned Restricted Subsidiaries or exclusively
between or among such Wholly Owned Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by the Indenture; (iii) any agreement
as in effect as of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Holders in any material respect
than the original agreement as in effect on the Issue Date; (iv) Restricted
Payments permitted by the Indenture; (v) advances, loans and relocation
allowances made to officers and employees of the Company in the ordinary course
of business, not to exceed $500,000 outstanding at any one time; and (vi)
payments made pursuant to the Financial Advisory Agreement, provided, however,
no Default or Event of Default shall have occurred and be continuing at the time
any such payment is made.
Additional Subsidiary Guarantees. If the Company or any of its Restricted
Subsidiaries transfers or causes to be transferred, in one transaction or a
series of related transactions, any property with a fair market value in excess
of $500,000 to any Restricted Subsidiary that is not a Guarantor, or if the
Company or any of its Restricted Subsidiaries shall organize, acquire or
otherwise invest in another Restricted Subsidiary having total assets with a
book value in excess of $500,000, then such transferee or acquired or other
Restricted Subsidiary shall (i) execute and deliver to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiary shall unconditionally guarantee (a
"Guarantee") on a senior subordinated basis all of the Company's obligations
under the Notes and the Indenture on the terms set forth in the Indenture and
(ii) deliver to the Trustee an opinion of counsel that such supplemental
indenture has been duly authorized, executed and delivered by such Restricted
Subsidiary and constitutes a legal, valid, binding and enforceable obligation of
such Restricted Subsidiary. Thereafter,
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such Restricted Subsidiary shall be a Guarantor for all purposes of the
Indenture. The Obligations of a Guarantor under its Guarantee will be
subordinated to the prior payment in full of Guarantor Senior Indebtedness of
such Guarantor to substantially the same extent as the Notes are subordinated to
Senior Indebtedness.
Each Guarantor may consolidate with or merge into or sell its assets to the
Company or another Guarantor that is a Wholly Owned Restricted Subsidiary of the
Company without limitation, or with or into or to other Persons upon the terms
and conditions set forth in the Indenture. See "-- Merger, Consolidation and
Sale of Assets." In the event all of the Capital Stock of a Guarantor is sold by
the Company and/or by one or more of the Company's Restricted Subsidiaries or in
the event all or substantially all assets of a Guarantor are sold by the Company
and/or by one of the Company's Restricted Subsidiaries and (i) such sale
complies with the provisions set forth in "-- Limitation on Asset Sales" and
(ii) such Guarantor is released from all of its obligations under the Revolving
Credit Agreement, the Guarantor's Guarantee will be automatically and
unconditionally released. In addition, any Guarantor that is designated as an
Unrestricted Subsidiary in accordance with the terms of the Indenture will be
relieved of its obligations under its Guarantee.
Conduct of Business. The Company and its Restricted Subsidiaries will not
engage in any businesses the majority of the revenues of which are not derived
from the same or reasonably similar, ancillary or related to, or a reasonable
extension, development or expansion of, the businesses in which the Company is
engaged on the Issue Date.
Reports to Holders. The Indenture provides that the Company will deliver
to the Trustee within 15 days after the filing of the same with the Commission,
copies of the quarterly and annual reports and of the information, documents and
other reports, if any, which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further
provides that, notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide (without
exhibits) the Trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of TIA sec.314(a).
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on any Notes when the same becomes due
and payable and the default continues for a period of 30 days;
(ii) the failure to pay the principal or premium, if any, on any
Notes, when such principal becomes due and payable, at maturity, upon
redemption or otherwise (including the failure to make a payment to
purchase Notes tendered pursuant to a Change of Control Offer or a Net
Proceeds Offer);
(iii) a default in the observance or performance of any other covenant
or agreement contained in the Indenture which default continues for a
period of 30 days after the Company receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or
the Holders of at least 25% of the outstanding principal amount of the
Notes (except in the case of a default with respect to the "Merger,
Consolidation and Sale of Assets" covenant, which will constitute an Event
of Default with such notice requirement but without such passage of time
requirement);
(iv) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness, if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $3.5 million or more at any time;
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(v) one or more judgments in an aggregate amount in excess of $3.5
million (exclusive of amounts covered by insurance as to which the insurer
has acknowledged coverage) shall have been rendered against the Company or
any of its Restricted Subsidiaries and such judgments remain undischarged,
unpaid, unstayed, unvacated or unbonded for a period of 60 days after such
judgment or judgments become final and non-appealable;
(vi) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries; or
(vii) any of the Guarantees ceases to be in force and effect or any of
the Guarantees is declared to be null and void and unenforceable or any of
the Guarantees is found to be invalid or any of the Guarantors denies its
liability under its Guarantee (other than by reason of release of a
Guarantor in accordance with the terms of the Indenture).
If an Event of Default (other than an Event of Default specified in clause
(vi) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in principal amount of outstanding Notes
may declare the principal of and accrued interest on all the Notes to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration", and the
same shall become immediately due and payable. If an Event of Default specified
in clause (vi) above with respect to the Company occurs and is continuing, then
all unpaid principal of, and premium, if any, and accrued and unpaid interest on
all of the outstanding Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. If, prior to the delivery of any such "notice of acceleration" with
respect to an Event of Default specified in clause (iv) above, any such payment
default or acceleration relating to such other Indebtedness shall have been
cured or rescinded or such Indebtedness shall have been discharged, in each
count within 30 days of such default or acceleration, then such Event of Default
specified in clause (iv) shall be deemed cured for all purposes of the
Indenture.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the Holders of a majority in aggregate principal amount of the Notes may rescind
and cancel such declaration and its consequences (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (iii) to the extent the payment
of such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) of the description above
of Events of Default, the Trustee shall have received an officers' certificate
and an opinion of counsel that such Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
The Holders of a majority in aggregate principal amount of the Notes may
waive any existing Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the principal of or interest on
any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the then outstanding Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
Under the Indenture, the Company is required to provide an officers'
certificate to the Trustee promptly upon any such officer obtaining knowledge of
any Default or Event of Default (provided that such officers shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes and the Company and the Guarantors shall be
discharged from all their obligations with respect to the Notes, the Guarantees
and the Indenture, except for (i) the rights of Holders to receive payments in
respect of the principal of, premium, if any, and interest on the Notes when
such payments are due, (ii) the Company's rights of optional redemption, (iii)
the Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (iv) the rights, powers, trust,
duties and immunities of the Trustee and the Company's obligations in connection
therewith and (v) the Legal Defeasance provisions of the Indenture. In addition,
the Company may, at its option and at any time, elect to have the obligations of
the Company and the Guarantors released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in U.S. dollars, non-callable U.S. government obligations,
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be; (ii)
in the case of Legal Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under the
Indenture or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an
officers' certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; (vii) the Company shall have delivered to
the Trustee an officers' certificate and an opinion of counsel, each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; (viii) the Company shall
have delivered to the Trustee an opinion of counsel to the effect that after the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; and (ix) certain other customary
conditions precedent are satisfied.
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SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect as
to all outstanding Notes when (i) either (a) all the Notes theretofore
authenticated and delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust) have been delivered to the
Trustee for cancellation or (b) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable or will become due and
payable within one year or are to be called for redemption within one year under
irrevocable arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name and at the expense of the Company, and the
Company has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Notes to the date of deposit
together with irrevocable instructions from the Company directing the Trustee to
apply such funds to the payment thereof at maturity or redemption, as the case
may be; (ii) the Company has paid all other sums then due and payable under the
Indenture by the Company; and (iii) the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel stating that all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, the Guarantors, if any, and the Trustee,
without the consent of the Holders, may amend the Indenture for certain
specified purposes, including curing ambiguities, defects or inconsistencies so
long as any such change does not, in the opinion of the Trustee, adversely
affect the rights of any of the Holders in any material respect. In formulating
its opinion on such matters, the Trustee will be entitled to rely on such
evidence as it deems appropriate, including, without limitation, solely on an
opinion of counsel. Other modifications and amendments of the Indenture may be
made with the consent of the Holders of a majority in principal amount of the
then outstanding Notes issued under the Indenture, except that, without the
consent of each Holder affected thereby, no amendment may: (i) reduce the amount
of Notes whose Holders must consent to an amendment; (ii) reduce the rate of or
change or have the effect of changing the time for payment of interest,
including defaulted interest, on any Notes; (iii) reduce the principal of or
change or have the effect of changing the fixed maturity of any Notes, or change
the date on which any Notes may be subject to redemption or repurchase, or
reduce the redemption or repurchase price therefor; (iv) make any Notes payable
in money other than that stated in the Notes; (v) make any change in provisions
of the Indenture protecting the right of each Holder to receive payment of
principal of and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment, or permitting Holders of a majority in
principal amount of Notes to waive Defaults or Events of Default; (vi) amend,
change or modify in any material respect the obligation of the Company to make
and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate a Net Proceeds Offer with respect to any Asset Sale that has
been consummated or modify any of the provisions or definitions with respect
thereto following the consummation of such event; or (vii) release any Guarantor
from any of its obligations under its Guarantee or the Indenture otherwise than
in accordance with the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it, the Notes and the Guarantees will be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction would be required
thereby.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it by the Indenture, and use the same
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degree of care and skill in its exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to obtain
payments of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. Subject to the TIA, the
Trustee will be permitted to engage in other transactions; provided that if the
Trustee acquires any conflicting interest as described in the TIA, it must
eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with the Company or any of
its Subsidiaries or assumed in connection with the acquisition of assets from
such Person and in each case not incurred by such Person in connection with, or
in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprises any division or line of business
of such Person or any other properties or assets of such Person other than in
the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary (or a
Wholly Owned Restricted Subsidiary of a Restricted Subsidiary) of the Company of
(a) any Capital Stock of any Restricted Subsidiary of the Company other than
directors' qualifying shares; or (b) any other property or assets of the Company
or any Restricted Subsidiary of the Company other than in the ordinary course of
business; provided, however, that Asset Sales shall not include (i) a
transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration of less than $500,000,
(ii) a disposition of Cash Equivalents, (iii) any Restricted Payment that is
permitted to be made, and is made, under the first paragraph of the covenant
described above under "Limitation on Restricted Payments", and (iv) the sale,
lease, conveyance, disposition or other transfer of all or substantially all of
the assets (including cash or Cash Equivalents) of the Company as permitted
under "Merger, Consolidation and Sale of Assets" and in compliance with the
Change of Control Covenant.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
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"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000 and deposits in bank
accounts in the ordinary course of business; (v) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; (vi) investments in money market
funds which invest substantially all their assets in securities of the types
described in clauses (i) through (v) above; and (vii) investments made by
Foreign Subsidiaries in local currencies in instruments issued by or with
entities of such jurisdiction having correlative attributes to the foregoing.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group"), together with any Affiliates thereof (whether
or not otherwise in compliance with the provisions of the Indenture), other than
a Wholly-Owned Restricted Subsidiary; (ii) the approval by the holders of
Capital Stock of the Company of any plan or proposal for the liquidation or
dissolution of the Company (whether or not otherwise in compliance with the
provisions of the Indenture); (iii) any Person or Group (other than the
Permitted Holders(s)) shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding Capital Stock of
the Company; or (iv) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Company's Board of Directors
(together with any new directors whose election or appointment by such board or
whose nomination for election by the stockholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Company's Board of Directors then in office.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes of
such Person and its Restricted Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of
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business), (B) Consolidated Interest Expense and (C) Consolidated Non-cash
Charges less any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment not constituting a permanent repayment and/or
termination of a related commitment of Indebtedness in the ordinary course of
business for working capital purposes pursuant to revolving credit working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (provided that such
Consolidated EBITDA shall be included only to the extent includable pursuant to
the definition of "Consolidated Net Income") attributable to the assets which
are the subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction Date,
as if such Asset Sale or Asset Acquisition (including the incurrence, assumption
or liability for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If such Person or any of its Restricted Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of such Person had directly incurred
or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense, plus
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Capital
Stock or dividends, accrued or scheduled to be accrued on Qualified Capital
Stock), without duplication, paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated
federal, state and local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any
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amortization of debt discount and amortization or write-off deferred financing
costs, (b) the net costs under Interest Swap Obligations, (c) all capitalized
interest and (d) the interest portion of any deferred payment obligation; and
(ii) the interest component of Capitalized Lease Obligations, without
duplication, paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
from Asset Sales or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains, (c) the net income (or net loss) of any
Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Restricted Subsidiary of the referent Person or is merged or
consolidated with the referent Person or any Restricted Subsidiary of the
referent Person, (d) the net income (but not loss) of any Restricted Subsidiary
of the referent Person to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is restricted
by a contract, operation of law or otherwise, (e) the net income of any Person,
other than a Restricted Subsidiary of the referent Person, except to the extent
of cash dividends or distributions paid to the referent Person or to a Wholly
Owned Restricted Subsidiary of the referent Person by such Person, (f) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Restricted Subsidiaries reducing Consolidated Net Income of
such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Senior Indebtedness" means the Indebtedness under the Revolving
Credit Facility and any other Senior Indebtedness in an amount of more than $10
million that is designated Senior Indebtedness by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof on or prior to the final
maturity date of the Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer,
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neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value (in excess of $100,000) shall be conclusively
determined by the Board of Directors of the Company acting in good faith and
shall be evidenced by a Board Resolution of the Board of Directors of the
Company delivered to the Trustee.
"Financial Advisory Agreement" means the management agreement between the
Company and Baker Capital as in effect on the Issue Date.
"Foreign Subsidiary" means any Subsidiary of the Company (i) organized
under the laws of a jurisdiction other than the United States of America or any
State thereof or the District of Columbia and (ii) conducting substantially all
of its business outside of the United States of America.
"FWT Acquisition" means FWT Acquisition, Inc., a Delaware corporation.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States as of the date of determination; provided that
all calculations made for purposes of determining compliance with the provisions
of the Indenture shall use GAAP as in effect on the Issue Date.
"Guarantor" means each of the Company's Restricted Subsidiaries, if any,
that in the future executes a supplemental indenture in which such Restricted
Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor;
provided that any Person constituting a Guarantor as described above shall cease
to constitute a Guarantor when its respective Guarantee is released in
accordance with the terms of the Indenture.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of such Guarantor,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to such Guarantor's Guarantee. Without limiting the generality of the
foregoing, "Guarantor Senior Indebtedness" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, to the extent such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all monetary
obligations of every nature of the Guarantor. under the Revolving Credit
Facility, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior
Indebtedness" shall not include (i) any Indebtedness of the Guarantor to a
Subsidiary of the Guarantor or any Affiliate of the Company or any of such
Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of the Guarantor or any Subsidiary of
the Guarantor (including, without limitation, amounts owed for compensation),
(iii) Indebtedness to trade creditors and other amounts incurred in connection
with obtaining goods, materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal, state, local or other
taxes owed or owing by the Guarantor, (vi) Indebtedness incurred in violation of
the Indenture provisions set forth under "Limitation on Incurrence of Additional
Indebtedness," (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Guarantor and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Guarantor.
"Indebtedness" means with respect to any Person, without duplication, (i)
all Obligations of such Person for borrowed money, (ii) all Obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments (but
excluding trade account payables and other accrued liabilities excluded from
clause (iv)
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hereof), (iii) all Capitalized Lease Obligations of such Person, (iv) all
Obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all Obligations under any title
retention agreement (but excluding trade accounts payable and other accrued
liabilities arising in the ordinary course of business that are not overdue by
90 days or more or are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted), (v) all Obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (vi) guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (i) through (v) above and clause
(viii) below (exclusive of endorsements of negotiable instruments in the
ordinary course of business), (vii) all Obligations of any other Person of the
type referred to in clauses (i) through (vi) which are secured by any lien on
any property or asset of such Person, the amount of such Obligation being deemed
to be the lesser of the fair market value of such property or asset or the
amount of the Obligation so secured, (viii) all Obligations under currency
agreements and interest swap agreements of such Person and (ix) all Disqualified
Capital Stock issued by such Person with the amount of Indebtedness represented
by such Disqualified Capital Stock being equal to the greater of its voluntary
or involuntary liquidation preference and its maximum fixed repurchase price,
but excluding accrued dividends, if any. For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock, which determination shall be conclusive. The amount
of Indebtedness of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability of any guarantees at such date; provided, further, that for purposes
of calculating the amount of any non-interest bearing or other discount
security, such Indebtedness shall be deemed to be the principal amount thereof
that would be shown on the balance sheet of the issuer dated such date prepared
in accordance with GAAP but that such security shall be deemed to have been
incurred only on the date of the original issuance thereof.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Offering" means the offering and sale of the $105 million of
Outstanding Notes by the Initial Purchasers.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit (including
relating to accounts receivable) by the Company and its Restricted Subsidiaries
on commercially reasonable terms in accordance with normal trade practices of
the Company or such Restricted Subsidiary, as the case may be, prepaid expenses
and workers' compensation, utility, lease and similar deposits in the ordinary
course of business, and negotiable instruments held for collection. For the
purposes of the "Limitation on Restricted Payments" covenant, (i) "Investment"
shall include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is
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designated a Restricted Subsidiary, (ii) in determining the amount of any
Investment involving a transfer of any property or assets other than cash, such
property or assets shall be valued at the fair market value at the time of such
transfer, and (iii) the amount of any Investment shall be the original cost of
such Investment plus the cost of all additional Investments by the Company or
any of its Restricted Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of dividends or distributions, repayments or
repurchases in connection with such Investment or any other amounts received in
respect of such Investment; provided that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Common
Stock of any direct or indirect Restricted Subsidiary of the Company such that,
after giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, 100% of the outstanding Common Stock of such Restricted
Subsidiary, the Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the fair market value of the Common
Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Outstanding Notes.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of its Restricted Subsidiaries from such Asset Sale net of
(a) out-of-pocket expenses and fees relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is required to be
repaid in connection with such Asset Sale and (d) appropriate amounts to be
provided by the Company or any Restricted Subsidiary, as the case may be, as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any Restricted Subsidiary, as the case
may be, after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Pari Passu Indebtedness" means any Indebtedness of the Company or any
Guarantor ranking pari passu in right of payment with the Exchange Notes or the
Guarantee of such Guarantor, as applicable.
"Permitted Holder(s)" means FWT Acquisition, Baker Communications Fund
L.P., Baker Partners, LLC and Baker Capital Corp. (including existing
stockholders of each such entity on the Issue Date), Thomas W. Moore, Betty J.
Moore, Fred Moore, Carl R. Moore and Roy J. Moore, their successors and assigns
who are Affiliates of the Permitted Holders, members of their families and their
heirs or executors.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Outstanding Notes and the Guarantees
thereof, if any, and the Exchange Notes;
(ii) Indebtedness incurred pursuant to the Revolving Credit Facility
in an aggregate principal amount at any time outstanding not to exceed the
greater of (A) $25 million in the aggregate or (B) the sum of (x) 85% of
the Company's eligible accounts receivable, as defined, and (y) 60% of the
Company's eligible inventory, as defined, reduced by any required permanent
repayments in connection with any asset sale (which are accompanied by a
corresponding permanent commitment reduction) thereunder;
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(iii) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of any
scheduled amortization payments or mandatory prepayments, in each case when
actually paid or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering Indebtedness of
the Company or any of its Restricted Subsidiaries and Interest Swap
Obligations of any Restricted Subsidiary of the Company covering
Indebtedness of such Restricted Subsidiary; provided, however, that such
Interest Swap Obligations are entered into to protect the Company and its
Restricted Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with the Indenture to the extent the notional
principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates;
(v) Indebtedness under Currency Agreements; provided that in the case
of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and its
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary of the
Company to the Company or to a Wholly Owned Restricted Subsidiary of the
Company for so long as such Indebtedness is held by the Company or a Wholly
Owned Restricted Subsidiary of the Company, in each case subject to no Lien
held by a Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company; provided that if as of any date any Person other
than the Company or a Wholly Owned Restricted Subsidiary of the Company
owns or holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such Indebtedness shall be deemed to have been a separate
incurrence of Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary of the Company for so long as such Indebtedness is held by a
Wholly Owned Restricted Subsidiary of the Company, in each case subject to
no Lien; provided that (a) any Indebtedness of the Company to any Wholly
Owned Restricted Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under the
Indenture and the Notes and (b) if as of any date any Person other than a
Wholly Owned Restricted Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness,
such Indebtedness shall be deemed to have been a separate incurrence of
Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or such
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(x) Refinancing Indebtedness; and
(xi) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $15 million at
any one time outstanding.
"Permitted Investments" means (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Wholly Owned Restricted Subsidiary of the
Company or that will merge or consolidate into the Company or a Wholly Owned
Restricted Subsidiary of the Company, (ii) Investments in the Company by any
Restricted Subsidiary of the Company; provided that any Indebtedness evidencing
such Investment is unsecured and subordinated, pursuant to a written agreement,
to the Company's obligations under the Notes and the Indenture; (iii)
investments in cash and Cash Equivalents; (iv) loans and advances to employees
and officers of the Company and its Restricted Subsidiaries in the ordinary
course of business for bona fide business purposes not in excess of $500,000 at
any
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one time outstanding; (v) Currency Agreements and Interest Swap Obligations
entered into in the ordinary course of the Company's or its Restricted
Subsidiaries' businesses and otherwise in compliance with the Indenture; (vi)
Investments in Unrestricted Subsidiaries and less than Wholly Owned Subsidiaries
not to exceed $15 million at any one time outstanding, provided no Default or
Event of Default shall have occurred and be continuing at the time such
Investment is made; (vii) Investments in stock, obligations and securities
received in settlement of debts owing to the Company or any Restricted
Subsidiary, received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers of the Company or a Restricted Subsidiary or upon the foreclosure,
perfection or enforcement of a Lien in favor of the Company or any Restricted
Subsidiary that arose in the ordinary course of business of the Company or such
Restricted Subsidiary; and (viii) Investments made by the Company or its
Restricted Subsidiaries as a result of consideration received in connection with
an Asset Sale made in compliance with the "Limitation on Asset Sales" covenant.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations, including letters of credit issued in connection therewith
(exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(vii) purchase money Liens to finance property or assets of the
Company or any Restricted Subsidiary of the Company acquired in the
ordinary course of business; provided, however, that (A) the related
purchase money Indebtedness shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of the Company or
any Restricted Subsidiary of the Company other than the property and assets
so acquired and (B) the Lien securing such Indebtedness shall be created
within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
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(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and
set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xii) Liens securing Indebtedness under Currency Agreements; and
(xiii) Liens securing Acquired Indebtedness incurred in accordance
with the "Limitation on Incurrence of Additional Indebtedness" covenant;
provided that (A) such Liens secured such Acquired Indebtedness at the time
of and prior to the incurrence of such Acquired Indebtedness by the Company
or a Restricted Subsidiary of the Company and were not granted in
connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary of the Company and
(B) such Liens do not extend to or cover any property or assets of the
Company or of any of its Restricted Subsidiaries other than the property or
assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Company or a Restricted
Subsidiary of the Company and are not materially more favorable to the
lienholders than those securing the Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary of the Company.
"Permitted Junior Securities" means any equity securities or subordinated
debt securities of the Company or any successor obligor with respect to the
Senior Indebtedness provided for by a plan of reorganization or readjustment
that, in the case of any such subordinated debt securities, are subordinated in
right of payment to all Senior Indebtedness that may at the time be outstanding
to substantially the same degree as, or to a greater extent than, the Notes are
so subordinated as provided in the Indenture.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Recapitalization" means the transaction contemplated by the
Recapitalization Agreement.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance with
the "Limitation on Incurrence of Additional Indebtedness" covenant (other than
pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (ix) or (xi) of the
definition of Permitted Indebtedness), in each case that does not (1) result in
an increase in the aggregate principal amount of Indebtedness of such Person as
of the date of such proposed Refinancing (plus the amount of any premium
required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of fees and expenses actually incurred by the
Company in connection with such Refinancing) or (2) create Indebtedness with (A)
a Weighted Average Life to Maturity that is less than the Weighted Average Life
to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier
than the final maturity of the Indebtedness being Refinanced; provided that (x)
if such Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Notes, then
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such Refinancing Indebtedness shall be subordinate to the Notes at least to the
same extent and in the same manner as the Indebtedness being Refinanced.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the Revolving Credit Facility dated as of
November 12, 1997, between the Company, the lenders party thereto in their
capacities as lenders thereunder and BT Commercial Corporation, as agent,
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement or agreements
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder (provided
that such increase in borrowings is permitted by the "Limitation on Incurrence
of Additional Indebtedness" covenant above) or adding Restricted Subsidiaries of
the Company as additional borrowers or guarantors thereunder) all or any portion
of the Indebtedness under such agreement or agreements or any successor or
replacement agreement or agreements and whether by the same or any other agent,
lender or group of lenders.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether owned
by the Company or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.
"Senior Indebtedness" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, "Senior Indebtedness" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, to the extent such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all monetary
obligations of every nature of the Company under the Revolving Credit Facility,
including, without limitation, obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall
not include (i) any Indebtedness of the Company to a Subsidiary of the Company
or any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer
or employee of the Company or any Subsidiary of the Company (including, without
limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by the Company, (vi) Indebtedness incurred in violation of the Indenture
provisions set forth under "Limitation on Incurrence of Additional
Indebtedness," (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Company.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w)
of Regulation S-X under the Securities Act and the Exchange Act.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary
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circumstances shall at the time be owned, directly or indirectly, by such Person
or (ii) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly, owned by
such Person.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided that (x) the Company certifies to the
Trustee that such designation complies with the "Limitation on Restricted
Payments" covenant and (y) each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, the Company is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant and (y)
immediately before and immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an officers' certificate certifying that such designation
complied with the foregoing provisions.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any Restricted
Subsidiary of such Person of which all the outstanding voting securities (other
than in the case of a foreign Restricted Subsidiary, directors' qualifying
shares or an immaterial amount of shares required to be owned by other Persons
pursuant to applicable law) are owned by such Person or any Wholly Owned
Restricted Subsidiary of such Person.
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BOOK-ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Exchange Notes initially
will be represented by one or more permanent Global Exchange Notes. The Global
Exchange Notes will be deposited on the Exchange Date with, or on behalf of, The
Depository Trust Company, New York, New York ("DTC") and registered in the name
of a nominee of DTC.
Notes (i) originally purchased by or transferred to "foreign purchasers" or
(ii) held by qualified institutional buyers who elect to take physical delivery
of their certificates instead of holding their interests through a Global
Exchange Note (and which are thus ineligible to trade through DTC) (collectively
referred to herein as the "Non-Global Purchasers") will be issued in registered
form (the "Certificated Security"). Upon the transfer of any Certificated
Security initially issued to a Non-Global Purchaser, such Certificated Security
will, unless the transferee requests otherwise or the Global Exchange Notes have
previously been exchanged in whole for Certificated Securities, be exchanged for
an interest in a Global Exchange Note.
The Global Exchange Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Exchange Notes, DTC or
its custodian will credit, on its internal system, the principal amount of
Exchange Notes of the individual beneficial interests represented by such Global
Exchange Notes to the respective accounts of persons who have accounts with such
depositary and (ii) ownership of beneficial interests in the Global Exchange
Notes will be shown on, and the transfer of such ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Ownership of beneficial interests in the
Global Exchange Notes will be limited to persons who have accounts with DTC
("participants") or persons who hold interests through participants. Holders may
hold their interests in the Global Exchange Notes directly through DTC if they
are participants in such system, or indirectly through organizations which are
participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Exchange Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Global Exchange
Notes for all purposes under the Indenture. No beneficial owner of an interest
in the Global Exchange Notes will be able to transfer that interest except in
accordance with DTC's procedures, in addition to those provided for under the
Indenture with respect to the Exchange Notes.
Payments of the principal of premium (if any) or interest on, the Global
Exchange Notes will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. None of the Company, the Trustee or any paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Exchange Notes or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium (if any) and interest on the Global Exchange Notes, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Exchange
Notes as shown on the records of DTC or its nominee. The Company also expects
that payments by participants to owners of beneficial interests in the Global
Exchange Notes held through such participants will be governed by standing
instructions and customary practice, as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell Exchange Notes to
persons in states which require physical delivery of the Exchange Notes, or to
pledge such securities, such holder must transfer its interest in a Global
Exchange Note, in accordance with the normal procedures of DTC and with the
procedures set forth in the Indenture.
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DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the Global Exchange Notes are
credited and only in respect of such portion of the aggregate principal amount
of Exchange Notes as to which such participant or participants has or have given
such direction. However, if there is an Event of Default under the Indenture,
DTC will exchange the Global Exchange Notes for Certificated Securities, which
it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly ("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Exchange Note among participants of DTC, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Exchange Note and a successor depositary
is not appointed by the Company within 90 days, Certificated Securities will be
issued in exchange for the Global Exchange Notes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences resulting from the acquisition, ownership, and disposition of the
Exchange Notes which may be relevant to a holder or prospective purchaser of one
or more of such Exchange Notes. This summary does not purport to cover all the
material tax consequences of the acquisition, ownership and disposition of
Exchange Notes, and it is not intended as tax advice. IN ADDITION, PERSONS
CONSIDERING THE ACQUISITION OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS
OF ANY STATE, LOCAL, OR FOREIGN TAXING JURISDICTION, TO THEIR PARTICULAR
SITUATIONS AND THE POSSIBLE EFFECT OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
The legal conclusions expressed in this summary are based upon current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury regulations ("Regulations"), judicial authority and
administrative rulings and practice, all as in effect as of the date of this
Prospectus, and all of which are subject to change, either prospectively or
retroactively. There can be no assurance that the Internal Revenue Service (the
"Service") will not take a contrary view, and no rulings from the Service have
been or will be sought with respect to any matter involving the tax aspects of
the purchase, ownership or exchange or other disposition of the Exchange Notes.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conclusions set forth
herein. Any such changes or interpretations may or may not be retroactive and
could affect the tax consequences to holders.
This summary deals only with persons who will hold the Exchange Notes as
capital assets, and does not address tax considerations applicable to investors
who may be subject to special tax rules, such as financial institutions,
tax-exempt organizations, foreign corporations, foreign individuals, insurance
companies, dealers in securities or currencies, persons who hold notes as a
hedge or as a position in a "straddle" for tax purposes,
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and persons who have a "functional currency" other than the U.S. dollar. The
following discussion is limited to the United States federal income tax
consequences relevant to a holder of the Exchange Notes that is a citizen or
resident of the United States, or any political subdivision thereof, an estate
the income of which is subject to United States federal income tax regardless of
source or that is otherwise subject to United States federal income tax on a net
income basis in respect of the Exchange Notes, or a trust the administration of
which is subject to the primary supervision of a United States court and which
has one or more United States persons who have the authority to control all
substantial decisions of the trust. Under newly enacted legislation, the
Secretary of the Treasury has the authority to issue Regulations allowing
certain trusts in existence on August 20, 1996 (other than a grantor trust
within the meaning of subpart E of part I of subchapter J of chapter 1 of the
Internal Revenue Code of 1986) and which was treated as a United States person
before August 20, 1996, to elect to continue to be treated as a United States
person. However, such Regulations have not yet been promulgated.
In addition, the description does not consider the effect of any applicable
foreign, state, local or other tax laws or estate or gift tax considerations.
THE EXCHANGE OFFER
Pursuant to recently finalized Regulations, the exchange of Outstanding
Notes for Exchange Notes pursuant to the Exchange Offer should not constitute a
significant modification of the terms of the Outstanding Notes and, accordingly,
such exchange should be treated as a "non-event" for federal income tax
purposes. Therefore, such exchange should have no federal income tax
consequences to holders of the Outstanding Notes, the holding period of an
Exchange Note will include the holding period of the Outstanding Notes for which
it was exchanged, and each holder of Outstanding Notes would continue to be
required to include interest on the Outstanding Notes in its gross income in
accordance with its method of accounting for federal income tax purposes.
EFFECT OF CHANGE OF CONTROL
Upon a Change of Control, the Company is required to offer to redeem all
outstanding Exchange Notes for a price equal to 101% of the principal amount
thereof plus accrued interest to the date of purchase. Under the Regulations,
such Change of Control redemption requirements will not affect the yield or
maturity date of the Exchange Notes unless, based on all the facts and
circumstances as of the Issue Date, it was more likely than not that a Change of
Control giving rise to the redemption would occur. The Company will not treat
the Change of Control redemption provisions of the Exchange Notes as affecting
the calculation of the yield to maturity of any Exchange Note.
OPTIONAL REDEMPTION
The Company, at its option, may redeem part or all of the Exchange Notes at
any time on or after November 15, 2002, at the redemption prices set forth
herein, plus accrued and unpaid interest to the date of redemption. In addition,
at any time on or prior to November 15, 2000, the Company may, at its option,
redeem up to 35% of the aggregate principal amount of the Exchange Notes
originally issued with the net cash proceeds of one or more public equity
offerings, at a redemption price equal to 109.875% of the aggregate principal
amount of the Exchange Notes to be redeemed plus accrued and unpaid interest to
the date of redemption; provided, however, that, after giving effect to any such
redemption, at least 65% of the aggregate principal amount of the Exchange Notes
originally issued remain outstanding. The Regulations provide that, for purposes
of calculating yield and maturity, an issuer will be treated as exercising any
such option if its exercise would lower the yield of the debt instrument. A
redemption of Exchange Notes at the optional redemption prices, however, would
increase the effective yield of the debt instrument as calculated from the Issue
Date. The Company does not currently intend to exercise such options with
respect to the Exchange Notes and, in accordance with the Regulations, as of the
Issue Date, the optional redemption provisions will not be taken into account in
calculating the yield to maturity of the Exchange Notes.
81
<PAGE> 88
PAYMENT OF INTEREST
Interest on an Exchange Note generally will be includable in the income of
a holder as ordinary income at the time such interest is received or accrued, in
accordance with such holder's method of accounting for United States federal
income tax purposes.
MARKET DISCOUNT
If a holder purchases an Exchange Note for less than the stated redemption
price at maturity (the "Exchange Note Issue Price") (the sum of all payments on
the Exchange Note other than qualified stated interest), the difference is
considered "market discount," unless such difference is "de minimis," i.e., less
than one-fourth of one percent of the Exchange Note Issue Price multiplied by
the number of complete years to maturity (after the holder acquires the Exchange
Note). Under the market discount rules, any gain realized by the holder on a
taxable disposition of an Exchange Note having "market discount," as well as on
any partial principal payment made with respect to such Exchange Note, will be
treated as ordinary income to the extent of the then "accrued market discount"
of the Exchange Note. An overview of the rules concerning the calculation of
"accrued market discount" is set forth in the paragraph immediately below. In
addition, a holder of such Exchange Note may be required to defer the deduction
of all or a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry an Exchange Note.
Any market discount will accrue ratably from the date of acquisition to the
maturity date of the Exchange Note, unless the holder elects, irrevocably, to
accrue market discount on a constant interest rate method. The constant interest
rate method generally accrues interest at times and in amounts equivalent to the
result which would have occurred had the market discount been original issue
discount computed from the holder's acquisition of the Exchange Note through the
maturity date. The election to accrue market discount on a constant interest
rate method is irrevocable but may be made separately as to each Exchange Note
held by the holder. Accrual of market discount will not cause the accrued
amounts to be included currently in a holder's taxable income, in the absence of
a disposition of, or principal payment on the Exchange Note. However, a holder
of an Exchange Note may elect to include market discount in income currently as
it accrues on either a ratable or constant interest rate method. In such event,
interest expense relating to the acquisition of an Exchange Note which would
otherwise be deferred would be currently deductible to the extent otherwise
permitted by the Code. The election to include market discount in income
currently, once made, applies to all market discount obligations acquired by
such holder on or after the first day of the first taxable year to which the
election applies, and may not be revoked without the consent of the Service.
Accrued market discount which is included in a holder's gross income will
increase the adjusted tax basis of the Exchange Note in the hands of the holder.
AMORTIZABLE BOND PREMIUM
If a subsequent holder acquires an Exchange Note for an amount which is
greater than the amount payable at maturity, such holder will be considered to
have purchased such Exchange Note with "amortizable bond premium" equal to the
amount of such excess. The holder may elect to amortize the premium, using a
constant yield method employing six-month compounding, over the period from the
acquisition date to the maturity date of the Exchange Note. The "amount payable
at maturity" will be determined as of an earlier call date, using the call price
payable on such earlier date, if the combination of such earlier date and call
price will produce a smaller amortizable bond premium than would result from
using the scheduled maturity date and its amount payable. If an earlier call
date is used and the Exchange Note is not called, the Exchange Note will be
treated as having matured on such earlier call date and then as having been
reissued on such date for the amount so payable. Amortized amounts may be offset
only against interest payments due under the Exchange Note and will reduce the
holder's adjusted tax basis in the Exchange Note to the extent so used.
Once made, an election to amortize and offset interest on bonds, such as
the Exchange Notes, will apply to all bonds in respect of which the election was
made that were owned by the taxpayer on the first day of the taxable year to
which the election relates and to all bonds of such class or classes
subsequently acquired by such taxpayer. Such election may only be revoked with
the consent of the Service. If a holder of an Exchange
82
<PAGE> 89
Note does not elect to amortize the premium, the premium will decrease the gain
or increase the loss which would otherwise be recognized upon disposition of the
Exchange Note.
SALE, EXCHANGE, OR RETIREMENT OF NOTES
Upon the sale, exchange or retirement (including redemption) of an Exchange
Note, other than the exchange of an Outstanding Note for an Exchange Note, a
holder of an Exchange Note generally will recognize gain or loss in an amount
equal to the difference between the amount of cash and the fair market value of
any property received on the sale, exchange or retirement of the Exchange Note
(other than in respect of accrued and unpaid interest on the Exchange Note,
which such amounts are treated as ordinary interest income) and such holder's
adjusted tax basis in the Exchange Note. If a holder holds the Exchange Note as
a capital asset, such gain or loss will be capital gain or loss, except to the
extent of any accrued market discount, and will be long-term capital gain or
loss if the Exchange Note has a holding period of more than one year at the time
of sale, exchange or retirement (and may be subject to lower tax rates
applicable to capital gains depending on the holder's status and the length of
the holding period of the Exchange Note).
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to interest
payments on the Exchange Notes made to holders other than certain exempt
recipients (such as corporations) and to proceeds realized by such holders on
dispositions of Exchange Notes. A 31% backup withholding tax will apply to such
amounts only if the holder (i) fails to furnish its social security or other
taxpayer identification number ("TIN") within a reasonable time after request
therefor, (ii) furnishes an incorrect TIN, (iii) fails to report properly
interest or dividend income, or (iv) fails, under certain circumstances, to
provide a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that it is not subject to backup withholding.
Any amount withheld from a payment to a holder under the backup withholding
rules is allowable as a refund or as a credit against such holder's federal
income tax liability, provided that the required information is furnished to the
Service. Holders of Exchange Notes should consult their tax advisors as to their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
Once made, an election to amortize and offset interest on bonds, such as
the Exchange Notes, will apply to all bonds in respect of which the election was
made that were owned by the taxpayer on the first day of the taxable year to
which the election relates and to all bonds of such class or classes
subsequently acquired by such taxpayer. Such election may only be revoked with
the consent of the Service.
PLAN OF DISTRIBUTION
Each broker-dealer that received Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
Prospectus in connection with any resale of such Exchange Notes. The Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Outstanding Notes where such Outstanding Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 60 days after the date of this Prospectus, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with such resale. In addition, until , 1998, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a Prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Notes. Any broker-dealer
that resells Exchange Notes that were received by it for its own
83
<PAGE> 90
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Securities and any commission or concessions received by
any such person may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a Prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the Holders of the Outstanding Notes)
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the Exchange Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act. Any
Outstanding Notes not exchanged in the Exchange Offer for Exchange Notes will
remain subject to certain transfer restrictions.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements included in this Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and is included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
LEGAL MATTERS
Certain legal matters regarding the validity of the Exchange Notes offered
hereby will be passed upon for the Company by Akin, Gump, Strauss, Hauer & Feld,
L.L.P., Dallas, Texas.
84
<PAGE> 91
FWT, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Report of Independent Public Accountants.................... F-2
Balance Sheets.............................................. F-3
Statements of Income........................................ F-4
Statements of Shareholders' Equity.......................... F-5
Statements of Cash Flows.................................... F-6
Notes to Financial Statements............................... F-7 to F-12
</TABLE>
F-1
<PAGE> 92
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
FWT, Inc.:
We have audited the accompanying balance sheets of FWT, Inc., a Texas
corporation (the "Company"), as of April 30, 1997 and 1996, and the related
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended April 30, 1997. 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 FWT, Inc. as of April 30,
1997 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended April 30, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
October 1, 1997 (except with respect to the
matters discussed in Note 7, as to which
the date is December 30, 1997)
F-2
<PAGE> 93
FWT, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
----------------- -----------
1997 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 4,483 $ 4,048 $10,284
Accounts receivable, less allowance for doubtful accounts
of $75,
$14, and $175, respectively............................ 17,560 9,511 7,433
Inventories............................................... 8,357 963 11,427
Prepaid expenses.......................................... 984 122 2,341
Other assets.............................................. 519 308 857
------- ------- -------
Total current assets.............................. 31,903 14,952 32,342
------- ------- -------
Property, Plant, And Equipment:
Land and land improvements................................ 867 789 818
Buildings and building improvements....................... 4,467 2,327 4,488
Machinery and equipment................................... 5,463 3,800 6,079
------- ------- -------
10,797 6,916 11,385
Less accumulated depreciation............................. (2,497) (2,379) (2,889)
Net property, plant, and equipment................ 8,300 4,537 8,496
------- ------- -------
Total assets................................................ $40,203 $19,489 $40,838
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $ 188 $ 100 $ 188
Accounts payable.......................................... 10,195 3,573 5,184
Accrued expenses and other liabilities.................... 2,543 1,464 3,971
Notes payable............................................. 468 -- 20,468
------- ------- -------
Total current liabilities......................... 13,394 5,137 29,811
------- ------- -------
Long-Term Debt, less current portion........................ 1,512 375 1,410
------- ------- -------
Total liabilities................................. 14,906 5,512 31,221
------- ------- -------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $10 par value; 1,000 shares authorized; 372
shares issued and outstanding.......................... 4 4 4
Additional paid-in capital................................ 1 1 1
Retained earnings......................................... 25,292 13,972 9,612
------- ------- -------
Total shareholders' equity........................ 25,297 13,977 9,617
------- ------- -------
Total liabilities and shareholders' equity.................. $40,203 $19,489 $40,838
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 94
FWT, INC.
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH PERIOD
YEAR ENDED APRIL 30, ENDED OCTOBER 31,
----------------------------- ------------------
1997 1996 1995 1997 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales.................................... $71,188 $42,701 $30,388 $37,350 $27,132
Cost of sales............................ 49,249 32,006 23,838 26,652 18,771
------- ------- ------- ------- -------
Gross profit............................. 21,939 10,695 6,550 10,698 8,361
Selling, administrative and general
expenses............................... 8,353 4,244 4,139 5,389 2,942
------- ------- ------- ------- -------
Operating income....................... 13,586 6,451 2,411 5,309 5,419
Interest income.......................... 272 156 114 246 116
Interest expense......................... (75) (33) (45) (403) (14)
Other income............................. 571 512 3 281 41
------- ------- ------- ------- -------
Income before state tax provision...... 14,354 7,086 2,483 5,433 5,562
State tax provision...................... 316 162 53 113 125
------- ------- ------- ------- -------
Net income............................. $14,038 $ 6,924 $ 2,430 $ 5,320 $ 5,437
======= ======= ======= ======= =======
Pro Forma Information:
Pro Forma adjustment for federal tax
provision........................... 4,773 2,354 826 1,809 1,849
------- ------- ------- ------- -------
Pro Forma net income................... $ 9,265 $ 4,570 $ 1,604 $ 3,511 $ 3,588
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 95
FWT, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES ISSUED)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
SHARES COMMON PAID-IN RETAINED SHAREHOLDERS'
ISSUED STOCK CAPITAL EARNINGS EQUITY
------ ------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1994................ 372 $4 $1 $ 6,177 $ 6,182
Net income........................... -- -- -- 2,430 2,430
Distributions........................ -- -- -- (200) (200)
--- -- -- -------- --------
Balance, April 30, 1995................ 372 4 1 8,407 8,412
Net income........................... -- -- -- 6,924 6,924
Distributions........................ -- -- -- (1,359) (1,359)
--- -- -- -------- --------
Balance, April 30, 1996................ 372 4 1 13,972 13,977
Net income........................... -- -- -- 14,038 14,038
Distributions........................ -- -- -- (2,718) (2,718)
--- -- -- -------- --------
Balance, April 30, 1997................ 372 4 1 25,292 25,297
Net income (unaudited)............... -- -- -- 5,320 5,320
Distributions (unaudited)............ -- -- -- (21,000) (21,000)
--- -- -- -------- --------
Balance, October 31, 1997
(unaudited).......................... 372 $4 $1 $ 9,612 $ 9,617
=== == == ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 96
FWT, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH
PERIOD ENDED
YEAR ENDED APRIL 30, OCTOBER 31,
----------------------------- ------------------
1997 1996 1995 1997 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net income........................... $14,038 $ 6,924 $ 2,430 $ 5,320 $ 5,437
Adjustments to reconcile net earnings to
net cash provided by operating
activities
Depreciation......................... 508 375 299 412 259
Net loss (gain) on sale of property
and equipment...................... 52 (21) (20) (142) (15)
Adjustments to working capital accounts
Accounts receivable.................. (8,049) (4,205) (2,286) 10,127 (1,101)
Inventories.......................... (7,394) (311) (325) (3,070) (3,773)
Prepaid expenses..................... (862) (116) 284 (1,357) (824)
Other assets......................... (211) 31 32 (338) (82)
Accounts payable..................... 6,622 1,480 898 (5,011) 1,548
Accrued expenses and other
liabilities........................ 1,079.. 689 110 1,428 544
------- ------- ------- ------- -------
Net cash provided by operating
activities.................... 5,783 4,846 1,422 7,369 1,993
------- ------- ------- ------- -------
Cash Flows From Investing Activities:
Expenditures for property and
equipment.......................... (4,341) (1,198) (1,324) (664) (1,086)
Proceeds from sale of property and
equipment.......................... 18 16 62 198 10
------- ------- ------- ------- -------
Net cash used in investing
activities.................... (4,323) (1,182) (1,262) (466) (1,076)
------- ------- ------- ------- -------
Cash Flows From Financing Activities:
Proceeds from notes payable.......... 468 -- -- 20,000 555
Proceeds from long-term debt
issued............................. 1,325 -- -- -- --
Payments of long-term debt, including
current maturities................. (100) (100) (100) (102) (50)
Distributions paid................... (2,718) (1,359) (200) (21,000) --
------- ------- ------- ------- -------
Net cash used in financing
activities.................... (1,025) (1,459) (300) (1,102) 505
------- ------- ------- ------- -------
Net Increase (Decrease) In Cash And Cash
Equivalents............................. 435 2,205 (140) 5,801 1,422
------- ------- ------- ------- -------
Cash And Cash Equivalents, beginning of
period.................................. 4,048 1,843 1,983 4,483 4,048
------- ------- ------- ------- -------
Cash And Cash Equivalents, end of
period.................................. $ 4,483 $ 4,048 $ 1,843 $10,284 $ 5,470
======= ======= ======= ======= =======
Supplemental Cash Flow Information:
Cash paid during the period for
Interest............................. $ 73 $ 31 $ 43 $ 279 14
Taxes................................ 23 1 -- 24 --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 97
FWT, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997, 1996, AND 1995, AND OCTOBER 31, 1997 (UNAUDITED) AND OCTOBER 31,
1996 (UNAUDITED)
1. NATURE OF OPERATIONS:
FWT, Inc., formerly Fort Worth Tower Company, Inc., ("FWT" or the
"Company"), a Texas corporation, manufactures, sells and installs transmitting
towers, poles, PowerMounts(TM) and related accessories used principally to
support communications and broadcasting antennae for the telecommunications
infrastructures industry. This includes cellular telephone, personal
communications systems (PCS), commercial and amateur broadcasting, private
microwave and television. Operating results are strongly influenced by growth in
demand for telecommunications infrastructures services. The Company also
produces shelters and cabinets used to house electronic communications and
broadcasting equipment. The Company conducts its business principally through
its two plants located near Fort Worth, Texas.
The Company's products are sold directly to customers throughout the United
States and in some international markets. The Company has one customer to which
it sold towers and shelters for use in both the PCS and cellular markets that
provided approximately 25 percent of its 1997 sales. Its next largest customer
comprised approximately 12 percent of the Company's 1997 sales. Three other
customers each comprised approximately 6 percent of 1997 sales. International
sales accounted for less than five percent of sales in each of the years
presented in the accompanying statements of income.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash Equivalents
The Company considers all highly liquid short-term investments purchased
with original maturities of three months or less to be cash equivalents. The
cost of such short-term investments approximates fair value.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. Inventory costs include material,
labor and factory overhead.
Total inventories as of April 30, 1997 and 1996, included the following (in
thousands):
<TABLE>
<CAPTION>
APRIL 30,
----------------
1997 1996
------ ------
<S> <C> <C>
Finished goods.............................................. $6,408 $ 482
Work-in-process and raw materials........................... 1,949 481
------ ------
Total inventories................................. $8,357 $ 963
====== ======
</TABLE>
Property, Plant and Equipment
Property and equipment are carried at cost. Expenditures for maintenance
and repairs are charged directly against income; major renewals and betterments
are capitalized. When properties are retired or otherwise disposed of, the
original cost and accumulated depreciation are removed from the respective
accounts and the gain or loss resulting from the disposal is reflected in
income.
The Company provides for depreciation of plant and equipment over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings & Building Improvements........................... 5 to 40 years
Machinery and Equipment..................................... 3 to 10 years
Office Furniture and Equipment.............................. 5 to 10 years
Computer Equipment and Software............................. 3 to 5 years
</TABLE>
F-7
<PAGE> 98
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Depreciation is provided on the straight-line method for financial
reporting purposes. Depreciation expense was $507,622, $374,859, and $299,105
for 1997, 1996, and 1995, respectively.
Other Assets
Other assets consist primarily of farm-related assets. Farm assets as of
April 30, 1997 and 1996, were $518,947 and $162,782, respectively.
Revenue Recognition
Revenue from sales is recognized when the earnings process is complete,
which is generally at the time of product shipment or upon completion of a
product and satisfactory compliance with terms of specific customer purchase
agreements.
Other Income
Other income consists primarily of income related to farm operations and
the disposition of farm assets. Total farm-related income was $445,907,
$306,112, and $68,071 for the years ended April 30, 1997, 1996, and 1995,
respectively.
Federal Income Taxes
Effective May 1, 1987, the Company elected to be taxed as a Subchapter S
corporation. A Subchapter S corporation is not taxed on its net income but,
instead, the Company's shareholders are taxed on their proportionate share of
the Company's taxable income. Therefore, no provision for federal income tax is
included in the accompanying historical financial statements. A pro forma charge
for federal income taxes is supplementally disclosed on the statements of
income. Annual distributions are made to shareholders to fund, among other
things, federal taxes related to income of the Company.
The Company has made an election under Section 444 of the Internal Revenue
Code to retain a fiscal year which ends on April 30 of each year. As a result of
this election, the Company is required to pay an amount which will be held by
the IRS to offset timing differences in the payment of estimated taxes by the
Company's shareholders as a result of the fiscal year election. The amount of
this required payment is calculated annually and is either increased by the
Company making additional payments, or decreased by the IRS refunding amounts
previously paid. As of April 30, 1997 and 1996, the required payments were
$729,160 and $94,864 and are reflected in prepaid expenses in the accompanying
balance sheets. Should the Company discontinue its election to retain its fiscal
year, the entire amount of the required payment (if any at that time) would be
refunded.
State Income Taxes
The Company is subject to state income taxes in various states that do not
recognize Subchapter S corporations. A provision for state income taxes is
included in the accompanying statements of income.
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 the
disclosure of contingent assets and liabilities as of the date of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-8
<PAGE> 99
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Interim Period Financial Statements
The accompanying interim period financial statements as of October 31,
1997, and for the each of the six month periods ended October 31, 1997 and 1996,
are unaudited, but in the opinion of management, reflect all adjustments
necessary for a fair presentation of the results for the interim period
presented. The results for the interim period are not necessarily indicative of
the results to be obtained for the full fiscal year.
Reclassifications
Certain prior year amounts have been reclassified to conform with the
current period presentations.
3. BENEFIT PLANS:
Profit Sharing Plan
The Company has a profit sharing plan which covers substantially all
employees of the Company who have at least six months of service and are age 20
or older. The Company makes discretionary contributions at the option of the
Company's board of directors. Discretionary contributions charged to expense
related to the profit sharing plan were $314,000, $250,000 and $299,000, in
1997, 1996 and 1995, respectively. In accordance with the profit sharing plan
provisions, the Company absorbs all costs associated with the administration of
the profit sharing plan.
Pension Plan
The Company's pension plan is a non-contributory defined benefit plan. The
defined benefit plan covers all employees of the Company who have completed six
months of service and have attained the age of 20. Plan assets consist of
overnight bank repurchase agreements. These repurchase agreements are supported
by United States Government Treasury Securities. Historically, the Company has
made annual contributions to the benefit pension plan equal to the maximum
amount that can be deducted for federal income tax purposes.
Net periodic pension costs related to the defined benefit pension plan for
the years ended April 30, 1997 and 1996 (actuarial data for 1995 is not
available) consisted of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Service cost of current period.............................. $ 60,559 $ 61,305
Interest on projected benefit obligation.................... 162,688 154,485
Actual return on plan assets................................ (68,769) (72,684)
Net amortization and deferral............................... (65,820) (50,886)
-------- --------
Net periodic pension cost......................... $ 88,658 $ 92,220
======== ========
</TABLE>
F-9
<PAGE> 100
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the funded status, the assumptions used to
calculate the funded status and the amounts recognized in FWT's balance sheets.
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits........................................... $2,560,287 $2,162,968
Non-vested benefits....................................... -- 26,917
---------- ----------
Accumulated benefit obligation......................... $2,560,287 $2,189,885
========== ==========
Pension liability:
Plan assets at fair value................................. 2,342,251 2,018,973
Projected benefit obligation.............................. 2,560,287 2,278,841
---------- ----------
Projected benefit obligation in excess of plan assets..... (218,036) (259,868)
Unrecognized net actuarial loss........................... -- 14,619
Initial unrecognized net asset being recognized over 17
years.................................................. 23,434 219,666
Adjustment to recognize additional minimum liability...... -- (145,324)
---------- ----------
Pension liability included in accrued expenses and other
liabilities............................................... $ (194,602) $ (170,907)
========== ==========
Major assumptions:
Assumed discount rate..................................... 7.5% 7.5%
Rate of increase in compensation levels................... -- 4.0%
Expected long-term rate of return on plan assets.......... 7.5% 7.5%
</TABLE>
The pension plan was terminated as of April 30, 1997, resulting in a plan
curtailment. The 1997 information above reflects a loss of $330,000 as a result
of the curtailment of the plan. The Company expects to settle the plan in early
calendar 1998, either by making lump sum distributions to participants or
purchasing nonparticipating annuity contracts to cover vested benefits.
4. NOTES PAYABLE AND LONG-TERM DEBT:
Notes payable and long-term debt of the Company as of April 30, 1997 and
1996, and October 31, 1997, consisted of the following:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
-------------------- -----------
1997 1996 1997
-------- -------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
Notes Payable
Unsecured note payable to a bank, maximum borrowing of
$1,500,000, bearing interest at Adjusted LIBOR, as
defined; principal due at maturity with monthly interest
payments; matures January 1, 1998. ...................... $468,000 $ -- $ 468,000
Note payable to a bank, bearing interest at the bank's
certificate of deposit rate plus one percent; principal
due at maturity with monthly interest payments; matures
July 23, 1998; secured by certain assets of the
shareholders of the Company. The note has various
financial covenants related to debt and equity, and cash
flow ratios.............................................. -- -- 20,000,000
-------- -------- -----------
Notes payable.................................. $468,000 $ -- $20,468,000
======== ======== ===========
</TABLE>
F-10
<PAGE> 101
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In July 1997, the Company entered into a note payable for $20,000,000. The
Company subsequently distributed all proceeds related to this note payable to
certain shareholders of the Company.
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
---------------------- -----------
1997 1996 1997
---------- -------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
Long-Term Debt
Note payable to a bank, bearing interest at 6%, payable
in quarterly installments of $25,000; matures December
31, 2000; secured by all Company receivables. The note
has various financial covenants related to debt and
equity, and cash flow ratios. .......................... $ 375,000 $475,000 $ 325,000
Unsecured note payable to a bank, bearing interest at
Adjusted LIBOR, as defined; payable in monthly
installments of $7,361; matures April 1, 2000. ......... 1,325,000 -- 1,273,473
---------- -------- ----------
Less -- Current portion....................... 188,332 100,000 188,332
---------- -------- ----------
Long-term, less current portion............... $1,511,668 $375,000 $1,410,141
========== ======== ==========
</TABLE>
Principal maturities of long-term debt outstanding as of April 30, 1997,
are as follows:
<TABLE>
<CAPTION>
APRIL 30,
---------
<S> <C>
1998.......................................... $ 188,332
1999.......................................... 188,332
2000.......................................... 1,248,336
2001.......................................... 75,000
Thereafter.................................... --
----------
$1,700,000
==========
</TABLE>
The recorded notes payable and long-term debt amounts approximate fair
value. The Company has also entered into an agreement with a bank to borrow up
to $2,200,000 at an interest rate of Adjusted LIBOR, as defined, due on or
before February 1, 1998. The Company has yet to borrow under this credit
facility and does not anticipate any future borrowings under this credit
facility due to restrictive covenants of the Senior Subordinated Notes discussed
in Note 7.
5. COMMITMENTS AND CONTINGENCIES:
Leases
In February, the Company entered into a five-year renewable lease agreement
with a third party pole vendor to lease manufacturing and warehouse space. Rent
expense under this lease in 1997 was approximately $46,300. Future minimum
payments under the lease are as follows:
<TABLE>
<CAPTION>
APRIL 30,
---------
<S> <C>
1998........................................... $185,004
1999........................................... 185,004
2000........................................... 185,004
2001........................................... 185,004
2002........................................... 138,753
Thereafter..................................... --
--------
$878,769
========
</TABLE>
F-11
<PAGE> 102
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
As part of this lease agreement, the Company agreed to purchase any
remaining steel plate inventory held by the lessor for FWT's exclusive use. The
steel will be provided at cost, as defined in the lease agreement, plus $.01 per
pound.
Employment Agreements
As of April 30, 1997, the Company maintains employment agreements with
several employees. Each agreement is typically for a five-year period and
terminates at the option of the employee or for termination of employment for
just cause, as defined in the agreement. Total annual compensation under these
employment agreements is approximately $500,000.
Legal
In the normal course of business, the Company is involved in various
pending legal proceedings and claims. In the opinion of management, after
consultation with counsel, the ultimate resolution of such matters will not have
a material impact on the financial condition or the future results and
operations of the Company.
License Agreement
During fiscal year 1997, the Company signed a license agreement with a
customer which grants that customer "Most Favored Customer" status with respect
to all terms and conditions (including price) relating to one of the Company's
patented products. Under the agreement, the customer also has the right to have
the product produced by another manufacturer in exchange for a license fee to
the Company. To date no license fees have been paid or are payable to the
Company. In addition, the licensing agreement restricts the transferability of
the patent related to this product. The agreement may be terminated by the
Company in the event the licensee fails to pay the license fee or defaults under
the terms of the agreement.
6. RELATED-PARTY TRANSACTIONS:
The Company occasionally pays expenses on behalf of certain shareholders
and officers. These amounts are recorded as a receivable from the shareholder or
officer until they are repaid. Additionally, certain shareholders and officers
have advanced the Company funds in the normal course of business. These amounts
are recorded as a payable to the shareholder or officer until they are repaid.
The net receivable (payable) related to these transactions were $14,983,
($35,453), and ($28,044) for the years ended April 30, 1997, 1996, and 1995,
respectively.
Bonuses to related parties are paid on a discretionary basis and are
recorded in the accompanying statements of income as follows:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
------------------------------------ -----------
1997 1996 1995 1997
---------- -------- ---------- -----------
(UNAUDITED)
--------
<S> <C> <C> <C> <C>
Related party bonuses.............. $1,300,000 $304,414 $1,068,072 $608,829
</TABLE>
7. SUBSEQUENT EVENTS:
On September 26, 1997, the Company's majority shareholders signed a letter
of intent to sell their shares in the Company. In November 1997, the Company
used borrowings from a $105 million 9 7/8% Senior Subordinated Notes offering to
repay existing indebtedness and to effect a stock redemption. The Company also
entered into a $25 million revolving credit facility, subject to borrowing base
limitations, which is secured by substantially all of the assets of the Company.
Concurrent with this transaction, FWT Acquisition, an affiliate of Baker
Capital, purchased 80% of the remaining ownership for approximately $36 million.
For financial reporting purposes, this recapitalization will be accounted for as
an acquisition of treasury stock. No amounts were outstanding under the
revolving credit facility as of December 30, 1997.
F-12
<PAGE> 103
======================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY
OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL,
OR THE SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 12
Use of Proceeds....................... 18
The Exchange Offer.................... 19
The Recapitalization and Stock
Purchase............................ 25
Capitalization........................ 26
Unaudited Pro Forma Financial
Statements.......................... 27
Selected Historical Financial Data.... 33
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 35
Business.............................. 39
Industry Overview..................... 44
Management............................ 46
Principal Shareholders................ 49
Certain Relationships and Related
Transactions........................ 50
Description of the Revolving Credit
Facility............................ 52
Description of Exchange Notes......... 53
Book-Entry; Delivery and Form......... 79
Certain Federal Income Tax
Consequences........................ 80
Plan of Distribution.................. 83
Independent Public Accountants........ 84
Legal Matters......................... 84
Index to Financial Statements......... F-1
</TABLE>
======================================================
======================================================
---------------------------------------
PROSPECTUS
---------------------------------------
[FWT COLOR LOGO]
[FWT LOGO]
FWT, INC.
$105,000,000
9 7/8% SENIOR SUBORDINATED NOTES
DUE 2007
FOR
$105,000,000
9 7/8% SENIOR SUBORDINATED NOTES
DUE 2007
, 1998
======================================================
<PAGE> 104
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is empowered by Art. 2.02-1 of the Texas Business Corporation
Act, subject to the procedures and limitations stated therein, to indemnify any
person who was, is or is threatened to be made a named defendant or respondent
in a proceeding because the person is or was a director or officer against
judgments, penalties (including excise and similar taxes), fines, settlements
and reasonable expenses (including court costs and attorneys' fees) actually
incurred by the person in connection with the proceeding. The Company is
required by Art. 2.02-1 to indemnify a director or officer against reasonable
expenses (including court costs and attorneys' fees) incurred by him in
connection with a proceeding in which he is a named defendant or respondent
because he is or was a director or officer if he has been wholly successful, on
the merits or otherwise, in the defense of the proceeding. The statute provides
that indemnification pursuant to its provisions is not exclusive of other rights
of indemnification to which a person may be entitled under any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise. The articles and
bylaws of the Company do not provide for indemnification by the Company of its
directors and officers. The Company has obtained an insurance policy providing
for indemnification of officers and directors of the Company and certain other
persons against liabilities and expenses incurred by any of them in certain
stated proceedings and under certain stated conditions.
Section 9 of the Employment Agreements of Thomas F. Moore, Carl R. Moore,
Roy J. Moore, Douglas A. Standley and William F. Sales requires the Company to
indemnify each of them to the fullest extent permitted by applicable law and
requires the Company to maintain reasonable and customary directors' and
officers' liability insurance coverage with a reputable and creditworthy carrier
in an amount equal to at least $10 million per occurrence.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 -- Purchase Agreement dated November 12, 1997, by and among
the Company, BT Alex. Brown Incorporated, SBC Warburg
Dillon Read Inc. and Smith Barney Inc.
3.1 -- Articles of Incorporation of the Company, as amended.
3.2 -- Bylaws of the Company.
4.1 -- Indenture dated as of November 15, 1997, by and between
the Company, as Issuer, the guarantors identified
therein, and Norwest Bank Minnesota, N.A., as Trustee.
4.2 -- Registration Rights Agreement dated November 15, 1997, by
and among the Company, BT Alex. Brown Incorporated, SBC
Warburg Dillon Read Inc. and Smith Barney Inc.
4.3 -- Registration Rights Agreement dated November 12, 1997, by
and among FWT, Inc., Roy J. Moore, Thomas F. "Fred"
Moore, Carl R. Moore and FWT Acquisition, Inc.
4.4 -- Form of Exchange Note (included in Exhibit 4.1).
5.1 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.*
10.1 -- Stock Purchase and Redemption Agreement dated November
12, 1997, by and among the Company, FWT Acquisition, Inc.
and T.W. Moore, Betty Moore, Carl Moore, Fred Moore and
Roy J. Moore.
</TABLE>
II-1
<PAGE> 105
<TABLE>
<C> <S>
10.2 -- General Supply Agreement, dated as of September 1, 1997, between the Company and AT&T
Wireless Services, Inc.
10.3 -- Cooperative Production Agreement dated March 10, 1997 between the Company and Delta
Steel, Inc.
10.4 -- Transportation Contract dated March 26, 1997 between the Company and Delta Steel, Inc.
10.5 -- Lease Agreement dated February 18, 1997 between the Company and Delta Steel, Inc.
covering property located at 9217 South Freeway, Fort Worth, Texas.
10.6 -- Employment Agreement dated November 14, 1997 between the Company and Douglas A.
Standley.
10.7 -- Employment Agreement dated November 12, 1997 between the Company and Roy J. Moore.
10.8 -- Employment Agreement dated November 12, 1997 between the Company and Thomas F. Moore.
10.9 -- Employment Agreement dated November 12, 1997 between the Company and Carl R. Moore.
10.10 -- Shareholders' Agreement dated November 12, 1997 by and among the Company, Carl R.
Moore, Thomas F. Moore, Roy J. Moore, and for certain limited purposes, Baker
Communications Fund, L.P.
10.11 -- Credit Agreement dated November 12, 1997 by and among FWT, Inc., Bankers Trust Company
and BT Commercial Corporation.
10.12 -- Stock Appreciation Rights Agreement dated November 12, 1997 by FWT, Inc. to Roy Moore.
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of Arthur Andersen LLP, independent public accountants.
23.2 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in Exhibit 5.1).*
24.1 -- Powers of Attorney (included in signature page to this registration statement).
25.1 -- Statement of Eligibility of Trustee on Form T-1 of Norwest Bank Minnesota, National
Association.
99.1 -- Letter of Transmittal.
</TABLE>
- ---------------
* To be filed by amendment.
(b) Financial Statement Schedules
None. All Schedules are omitted because the required information is not
present in amounts sufficient to require submission of the Schedule or because
the information required is included in the financial statements or notes
thereto.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities 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 company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with
II-2
<PAGE> 106
the securities being registered, the Company 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 Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 107
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on this 14th day of January, 1998.
FWT, INC.
By: /s/ ROY J. MOORE
----------------------------------
Roy J. Moore,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature to the
registration statement appears below hereby appoints Roy J. Moore as his
attorney-in-fact with full power to act alone, with full power of substitution
or resubstitution, for him and in his name, place and stead, in any and all
capacities to sign on his behalf, individually and in the capacities stated
below, and to sign any and all amendments and post-effective amendments to this
registration statement, which amendment or amendments may make such changes and
additions as such attorney-in-fact may deem necessary or appropriate and to file
the same, with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or his or their substitutes, may lawfully do or cause
to be done by virtue hereof.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ ROY J. MOORE Director, President and Chief January 14, 1998
- ----------------------------------------------------- Executive Officer
Roy J. Moore
/s/ DOUGLAS A. STANDLEY Chief Operations Officer and January 14, 1998
- ----------------------------------------------------- President, Fort Worth
Douglas A. Standley Division
/s/ WILLIAM R. ESTILL Vice President of Finance January 14, 1998
- -----------------------------------------------------
William R. Estill
/s/ JOHN C. BAKER Director January 14, 1998
- -----------------------------------------------------
John C. Baker
/s/ EDWARD W. SCOTT Director January 14, 1998
- -----------------------------------------------------
Edward W. Scott
/s/ LAWRENCE A. BETTINO Director January 14, 1998
- -----------------------------------------------------
Lawrence A. Bettino
</TABLE>
II-4
<PAGE> 108
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 -- Purchase Agreement dated November 12, 1997, by and among
the Company, BT Alex. Brown Incorporated, SBC Warburg
Dillon Read Inc. and Smith Barney Inc.
3.1 -- Articles of Incorporation of the Company, as amended.
3.2 -- Bylaws of the Company.
4.1 -- Indenture dated as of November 15, 1997, by and between
the Company, as Issuer, the guarantors identified
therein, and Norwest Bank Minnesota, N.A., as Trustee.
4.2 -- Registration Rights Agreement dated November 15, 1997, by
and among the Company, BT Alex. Brown Incorporated, SBC
Warburg Dillon Read Inc. and Smith Barney Inc.
4.3 -- Registration Rights Agreement dated November 12, 1997, by
and among FWT, Inc., Roy J. Moore, Thomas F. "Fred"
Moore, Carl R. Moore and FWT Acquisition, Inc.
4.4 -- Form of Exchange Note (included in Exhibit 4.1).
5.1 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.*
10.1 -- Stock Purchase and Redemption Agreement dated November
12, 1997, by and among the Company, FWT Acquisition, Inc.
and T.W. Moore, Betty Moore, Carl Moore, Fred Moore and
Roy J. Moore.
10.2 -- General Supply Agreement, dated as of September 1, 1997,
between the Company and AT&T Wireless Services, Inc.
10.3 -- Cooperative Production Agreement dated March 10, 1997
between the Company and Delta Steel, Inc.
10.4 -- Transportation Contract dated March 26, 1997 between the
Company and Delta Steel, Inc.
10.5 -- Lease Agreement dated February 18, 1997 between the
Company and Delta Steel, Inc. covering property located
at 9217 South Freeway, Fort Worth, Texas.
10.6 -- Employment Agreement dated November 14, 1997 between the
Company and Douglas A. Standley.
10.7 -- Employment Agreement dated November 12, 1997 between the
Company and Roy J. Moore.
10.8 -- Employment Agreement dated November 12, 1997 between the
Company and Thomas F. Moore.
10.9 -- Employment Agreement dated November 12, 1997 between the
Company and Carl R. Moore.
10.10 -- Shareholders' Agreement dated November 12, 1997 by and
among the Company, Carl R. Moore, Thomas F. Moore, Roy J.
Moore, and for certain limited purposes, Baker
Communications Fund, L.P.
10.11 -- Credit Agreement dated November 12, 1997 by and among
FWT, Inc., Bankers Trust Company and BT Commercial
Corporation.
10.12 -- Stock Appreciation Rights Agreement dated November 12,
1997 by FWT, Inc. to Roy Moore.
</TABLE>
<PAGE> 109
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of Arthur Andersen LLP, independent public
accountants.
23.2 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 5.1).*
24.1 -- Powers of Attorney (included in signature page to this
registration statement).
25.1 -- Statement of Eligibility of Trustee on Form T-1 of
Norwest Bank Minnesota, National Association.
99.1 -- Letter of Transmittal.
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 1.1
FWT, INC.
$105,000,000
9 7/8% SENIOR SUBORDINATED NOTES
PURCHASE AGREEMENT
November 12, 1997
BT Alex. Brown Incorporated
SBC Warburg Dillon Read Inc.
Smith Barney Inc.
c/o BT Alex. Brown Incorporated
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
FWT, Inc., a Texas corporation (the "Company"), hereby confirms its
agreement with you (the "Initial Purchasers"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
$105,000,000 aggregate principal amount of its 9 7/8% Senior Subordinated Notes
(the "Notes"). The Notes are to be issued under an indenture (the "Indenture")
to be dated as of November 15, 1997 by and between the Company and Norwest Bank
Minnesota, N.A., as Trustee (the "Trustee").
The Notes will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Act"), in
reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated October 31, 1997 (the "Preliminary
Memorandum"), and a final offering memorandum dated November 12, 1997 (the
"Final Memorandum"; the Preliminary Memorandum and the Final Memorandum each
herein being referred to as a "Memorandum") setting forth or including a
description of the terms of the Notes, the terms of the offering of the Notes, a
description of the Company and any material developments relating to the Company
occurring after the
<PAGE> 2
-2-
date of the most recent historical financial statements included therein
(capitalized terms used herein without definition have the meanings given such
terms in the Memorandum).
The Initial Purchasers and their direct and indirect transferees of
the Notes will be entitled to the benefits of the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit A (the "Registration Rights
Agreement"), pursuant to which the Company has agreed, among other things, to
file a registration statement (the "Registration Statement") with the Securities
and Exchange Commission (the "Commission") registering the Notes or the Exchange
Notes (as defined in the Registration Rights Agreement) under the Act.
2. Representations and Warranties. The Company represents and warrants
to and agrees with each of the Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date thereof
and at all times subsequent thereto up to the Closing Date (as defined in
Section 3 below) contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
Section 2(a) do not apply to statements or omissions made in reliance upon and
in conformity with information relating to either of the Initial Purchasers
furnished to the Company in writing by the Initial Purchasers expressly for use
in the Preliminary Memorandum, the Final Memorandum or any amendment or
supplement thereto.
(b) As of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum; the
Company has no subsidiaries; all of the outstanding shares of capital stock of
the Company have been, and as of the Closing Date will be, duly authorized and
validly issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights, and were issued and sold in
compliance with all applicable Federal and state securities laws. Except as
disclosed in the Final Memorandum, the Company does not own, directly or
indirectly, any shares of capital stock or any other equity or long-term debt
securities or have any equity interest in any firm, partnership, joint venture
or other entity.
<PAGE> 3
-3-
(c) The Company is duly incorporated, validly existing and in good
standing under the laws of Texas and has all requisite corporate power and
authority to own its properties and conduct its business as now conducted and as
described in the Final Memorandum; the Company is duly qualified to do business
as a foreign corporation in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the general
affairs, management, business, condition (financial or otherwise), prospects or
results of operations of the Company(any such event, a "Material Adverse
Effect").
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Notes, when issued, will be in the form contemplated by
the Indenture. The Notes, the Exchange Notes and the Private Exchange Notes have
each been duly and validly authorized by the Company and, when executed by the
Company and authenticated by the Trustee in accordance with the provisions of
the Indenture and, in the case of the Notes, when delivered to and paid for by
the Initial Purchasers in accordance with the terms of this Agreement, will
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture, and enforceable against the Company in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
(e) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Indenture. The Indenture
meets the requirements for qualification under the Trust Indenture Act of 1939,
as amended (the "TIA"). The Indenture has been duly and validly authorized by
the Company and, when executed and delivered by the Company (assuming the due
authorization, execution and delivery by the Trustee), will constitute a valid
and legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights
<PAGE> 4
-4-
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(f) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company, will
constitute a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except that (A) the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws and
public policy considerations.
(g) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company. This Agreement has been duly
executed and delivered by the Company.
(h) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the issuance and
sale by the Company of the Notes to the Initial Purchasers or the consummation
by the Company of the other transactions contemplated hereby, except such as
have been obtained and such as may be required under state securities or "Blue
Sky" laws in connection with the purchase and resale of the Notes by the Initial
Purchasers. The Company is not (i) in violation of its articles of incorporation
or bylaws (or similar organizational document), (ii) in breach or violation of
any statute, judgment, decree, order, rule or regulation applicable to any of
them or any of their respective properties or assets, except for any such breach
or violation which would not, individually or in the aggregate, have a Material
Adverse Effect, or (iii) in breach of or default under (nor has any event
occurred which, with notice or passage of time or both, would constitute a
default under) or in violation of any of the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement
<PAGE> 5
-5-
permit, certificate, contract or other agreement or instrument to which it is a
party or to which it or its properties or assets is subject (collectively,
"Contracts"), except for any such breach, default, violation or event which
would not, individually or in the aggregate, have a Material Adverse Effect.
(i) The execution, delivery and performance by the Company of this
Agreement, the Indenture and the Registration Rights Agreement and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale of the Notes to the
Initial Purchasers) will not conflict with or constitute or result in a breach
of or a default under (or an event which with notice or passage of time or both
would constitute a default under) or violation of any of (i) the terms or
provisions of any Contract, except for any such conflict, breach, violation,
default or event which would not, individually or in the aggregate, have a
Material Adverse Effect, (ii) the articles of incorporation or bylaws (or
similar organizational document) of the Company or (iii) (assuming compliance
with all applicable state securities or "Blue Sky" laws and assuming the
accuracy of the representations and warranties of the Initial Purchasers in
Section 8 hereof) any statute, judgment, decree, order, rule or regulation
applicable to the Company or any of its properties or assets, except for any
such conflict, breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect.
(j) The audited financial statements of the Company included in the
Final Memorandum present fairly in all material respects the financial position,
results of operations and cash flows of the Company at the dates and for the
periods to which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except as
otherwise stated therein. The summary and selected financial and statistical
data in the Final Memorandum present fairly in all material respects the
information shown therein and, to the extent such information and data are
derived from the financial books and records of the Company have been prepared
and compiled on a basis consistent with the audited financial statements
included therein, except as otherwise stated therein. Arthur Andersen LLP (the
"Independent Accountants") is an independent public accounting firm within the
meaning of the Act and the rules and regulations promulgated thereunder.
(k) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information
<PAGE> 6
-6-
included in the Final Memorandum (i) comply as to form in all material respects
with the applicable requirements of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) have been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial statements, and (iii) have been properly computed on the
bases described therein; the assumptions used in the preparation of the pro
forma financial data and other pro forma financial information included in the
Final Memorandum are reasonable and the adjustments used therein are appropriate
to give effect to the transactions or circumstances referred to therein.
(l) There is not pending or, to the knowledge of the Company,
threatened any action, suit, proceeding, inquiry or investigation to which the
Company is a party, or to which the property or assets of the Company are
subject, before or brought by any court, arbitrator or governmental agency or
body which, if determined adversely to the Company would, individually or in the
aggregate, have a Material Adverse Effect or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of the
Notes to be sold hereunder or the consummation of the other transactions
described in the Final Memorandum.
(m) The Company possesses all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, presently required or necessary to own or lease, as the case may be,
and to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as set forth in the Final
Memorandum ("Permits"), except where the failure to obtain such Permits would
not, individually or in the aggregate, have a Material Adverse Effect; the
Company has fulfilled and performed all of its obligations with respect to such
Permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit; the Company has not
received any notice of any proceeding relating to revocation or modification of
any such Permit, except as described in the Final Memorandum and except where
such revocation or modification would not, individually or in the aggregate,
have a Material Adverse Effect.
<PAGE> 7
-7-
(n) Since the date of the most recent financial statements appearing
in the Final Memorandum, and except as described in the Final Memorandum, (i)
the Company has not incurred any liabilities or obligations, direct or
contingent, or entered into or agreed to enter into any transactions or
contracts (written or oral) not in the ordinary course of business which
liabilities, obligations, transactions or contracts would, individually or in
the aggregate, be material to the general affairs, management, business,
condition (financial or otherwise), prospects or results of operations of the
Company, (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock and (iii) there shall not have been any material
change in the capital stock or long-term indebtedness of the Company.
(o) The Company has filed all necessary federal, state and foreign
income and franchise tax returns, except where the failure to so file such
returns would not, individually or in the aggregate, have a Material Adverse
Effect, and has paid all taxes shown as due thereon; and other than tax
deficiencies which the Company is contesting in good faith and for which the
Company has provided adequate reserves, there is no tax deficiency that has been
asserted against the Company that would have, individually or in the aggregate,
a Material Adverse Effect.
(p) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company believes to be
reliable and accurate.
(q) None of the Company or any agent acting on its behalf has taken or
will take any action that might cause this Agreement or the sale of the Notes to
violate Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System, in each case as in effect, or as the same may hereafter be in effect, on
the Closing Date.
(r) The Company has good and indefeasible title to all real property
and good title to all personal property described in the Final Memorandum as
being owned by it and good and indefeasible title to a leasehold estate in the
real and personal property described in the Final Memorandum as being leased by
it free and clear of all liens (except Liens securing the Senior Credit Facility
and the Revolving Credit Agreement), charges, encumbrances or restrictions,
except as described in the Final Memorandum or to the extent the failure to have
such title or the existence of such liens, charges, encumbrances or
<PAGE> 8
-8-
restrictions would not, individually or in the aggregate, have a Material
Adverse Effect. All material leases, contracts and agreements to which the
Company is a party or by which it is bound are valid and enforceable against the
Company, and to the knowledge of the Company are valid and enforceable against
the other party or parties thereto and are in full force and effect with only
such exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect. The Company owns, possesses or has an interest in adequate
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights and know-how necessary to conduct the businesses now or
proposed to be operated by it as described in the Final Memorandum, and the
Company has not received any notice of infringement of or conflict with (or
knows of any such infringement of or conflict with) asserted rights of others
with respect to any patents, trademarks, service marks, trade names, copyrights
or know-how which, if such assertion of infringement or conflict were sustained,
would have a Material Adverse Effect.
(s) There are no legal or governmental proceedings involving or
affecting the Company or any of its properties or assets which would be required
to be described in a prospectus pursuant to the Act that are not described in
the Final Memorandum, nor are there any material contracts or other documents
which would be required to be described in a prospectus pursuant to the Act that
are not described in the Final Memorandum.
(t) Except as would not, individually or in the aggregate, have a
Material Adverse Effect (A) the Company is in compliance with and not subject to
liability under applicable Environmental Laws (as defined below), (B) the
Company has made all filings and provided all notices required under any
applicable Environmental Law, and has and is in compliance with all Permits
required under any applicable Environmental Laws and each of them is in full
force and effect, (C) there is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the knowledge
of the Company threatened against the Company under any Environmental Law, (D)
no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property owned,
operated, leased or controlled by the Company, (E) the Company has not received
notice that it has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") or any comparable state law and (F) no property or
<PAGE> 9
-9-
facility of the Company is (i) listed or proposed for listing on the National
Priorities List under CERCLA or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list maintained by any
state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common
law and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of hazardous materials, and (iii) underground
and above ground storage tanks and related piping, and emissions, discharges,
releases or threatened releases therefrom.
(u) There is no strike, labor dispute, slowdown or work stoppage with
the employees of the Company which is pending or, to the knowledge of the
Company, threatened.
(v) The Company carries insurance in such amounts and covering such
risks as is adequate for the conduct of its business and the value of its
properties.
(w) Except as set forth in the Final Memorandum and $140,000 of plan
funding liability, the Company has no liability for any prohibited transaction
or funding deficiency or any complete or partial withdrawal liability with
respect to any pension, profit sharing or other plan which is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to which
the Company makes or ever has made a contribution and in which any employee of
the Company has ever been a participant. With respect to such plans, the Company
is in compliance in all material respects with all applicable provisions of
ERISA.
(x) The Company maintains a system of internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) material transactions are
recorded as necessary to permit preparation of its financial statements and to
<PAGE> 10
-10-
maintain accountability for its assets and (C) access to its assets is permitted
only in accordance with management's authorization.
(y) The Company is not, and will not be immediately following the
receipt of the proceeds contemplated hereby, be an "investment company" or
"promoter" or "principal underwriter" for an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
(z) The Notes, the Indenture and the Registration Rights Agreement
will conform in all material respects to the descriptions thereof in the Final
Memorandum.
(aa) No holder of securities of the Company will be entitled to have
such securities registered under the registration statements required to be
filed by the Company pursuant to the Registration Rights Agreement other than as
expressly permitted thereby.
(bb) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of the Company will not exceed the sum of its stated liabilities
and identified contingent liabilities; the Company is not, nor will it be, after
giving effect to the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby, (a) left with
unreasonably small capital with which to carry on its business as it is proposed
to be conducted, (b) unable to pay its debts (contingent or otherwise) as they
mature or (c) otherwise insolvent.
(cc) None of the Company or any of its Affiliates (as defined in Rule
501(b) of Regulation D under the Act) has directly, or through any agent
(provided that no representation is made as to the Initial Purchasers or any
person acting on their behalf), (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any "security" (as defined in the
Act) which is or will be integrated with the sale of the Notes in a manner that
would require the registration under the Act of the Notes or (ii) engaged in any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Notes or in
any manner involving a public offering within the meaning of Section 4(2) of the
Act. Assuming the accuracy of the representations and warranties of the Initial
Purchasers
<PAGE> 11
-11-
comply with the procedures set forth in Section 8, it is not necessary in
connection with the offer, sale and delivery of the Notes to the Initial
Purchasers in the manner contemplated by this Agreement to register any of the
Notes under the Act or to qualify the Indenture under the TIA.
(dd) No securities of the Company are of the same class (within the
meaning of Rule 144A under the Act) as the Notes and listed on a national
securities exchange registered under Section 6 of the Exchange Act, or quoted in
a U.S. automated inter-dealer quotation system.
(ee) The Company has not taken, nor will it take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Notes.
(ff) None of the Company, any of its Affiliates or any person acting
on its or their behalf (other than the Initial Purchasers) has engaged in any
directed selling efforts (as that term is defined in Regulation S under the Act
("Regulation S")) with respect to the Notes; the Company, and its Affiliates and
any person acting on its or their behalf (other than the Initial Purchasers)
have complied with the offering restrictions requirement of Regulation S.
3. Purchase, Sale and Delivery of the Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers, acting
severally and not jointly, agree to purchase the Notes in the respective amounts
set forth on Schedule 1 hereto from the Company at 97% of their principal
amount. One or more certificates in definitive form for the Notes that the
Initial Purchasers have agreed to purchase hereunder, and in such denomination
or denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Company at least 36 hours prior to the Closing Date,
shall be delivered by or on behalf of the Company to the Initial Purchasers,
against payment by or on behalf of the Initial Purchasers of the purchase price
therefor by wire transfer (immediately available funds), to such account or
accounts as the Company shall specify prior to the Closing Date, or by such
means as the parties hereto shall agree prior to the Closing Date. Such delivery
of and payment for the Notes shall be made at the offices of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York at 10:00 A.M., New York time, on
November , 1997, or at such
<PAGE> 12
-12-
other place, time or date as the Initial Purchasers, on the one hand, and the
Company, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Company will
make such certificate or certificates for the Notes available for checking and
packaging by the Initial Purchasers at the offices of BT Alex. Brown
Incorporated in New York, New York, or at such other place as BT Alex. Brown
Incorporated may designate, at least 10:00 A.M. on the last Business Day prior
to the Closing Date.
4. Offering by the Initial Purchasers. The Initial Purchasers propose
to make an offering of the Notes at the price and upon the terms set forth in
the Final Memorandum, as soon as practicable after this Agreement is entered
into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Company. The Company covenants and agrees with
each of the Initial Purchasers that:
(a) The Company will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers shall not
previously have been advised and furnished a copy for a reasonable period of
time prior to the proposed amendment or supplement and as to which the Initial
Purchasers shall not have given their consent, which consent shall not be
unreasonably withheld. The Company will promptly, upon the reasonable request of
the Initial Purchasers or counsel for the Initial Purchasers, make any
amendments or supplements to the Preliminary Memorandum or the Final Memorandum
that may be necessary or advisable to comply with Section 5(c) below.
(b) The Company will cooperate with the Initial Purchasers in
arranging for the qualification of the Notes for offering and sale under the
securities or "Blue Sky" laws of which jurisdictions as the Initial Purchasers
may designate and will continue such qualifications in effect for as long as may
be necessary to complete the resale of the Notes; provided, however, that in
connection therewith, the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in excess of a nominal dollar amount
in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by the
Initial Purchasers of the Notes or the Private Exchange Notes, any event occurs
or information becomes known as a result of which the Final Memorandum as then
amended
<PAGE> 13
-13-
or supplemented would include any untrue statement of a material fact, or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if for any
other reason it is necessary at any time to amend or supplement the Final
Memorandum to comply with applicable law, the Company will promptly notify the
Initial Purchasers thereof and will prepare, at the expense of the Company, an
amendment or supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or supplement
thereto as the Initial Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale of the Notes
to repay the Senior Credit Facility, as set forth under "Use of Proceeds" in the
Final Memorandum.
(f) For so long as any of the Notes remain outstanding and the Company
is not subject to the Exchange Act, the Company will furnish to the Initial
Purchasers copies of all reports and other communications (financial or
otherwise) furnished by the Company to the Trustee or to the holders of the
Notes.
(g) Prior to the Closing Date, the Company will furnish to the Initial
Purchasers, as soon as they have been prepared, a copy of any unaudited interim
financial statements of the Company for any period subsequent to the period
covered by the most recent financial statements appearing in the Final
Memorandum.
(h) None of the Company or any of its Affiliates will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale of
the Notes in a manner which would require the registration under the Act of the
Notes.
(i) The Company will not engage in any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Notes or in any manner involving a public
offering of the Notes within the meaning of Section 4(2) of the Act.
<PAGE> 14
-14-
(j) For so long as any of the Notes remain outstanding, the Company
will make available at its expense, upon request, to any holder of such Notes
and any prospective purchasers thereof the information specified in Rule
144A(d)(4) under the Act, unless the Company has consummated the Exchange Offer
the provisions of the Registration Rights Agreement or unless the Company is
then subject to Section 13 or 15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the Notes to
be designated PORTAL securities in accordance with the rules and regulations
adopted by the NASD relating to trading in the Private Offerings, Resales and
Trading through Automated Linkages market (the "Portal Market") and (ii) permit
the Notes to be eligible for clearance and settlement through The Depository
Trust Company.
(l) In connection with Notes offered and sold in an off shore
transaction (as defined in Regulation S) the Company will not register any
transfer of such Notes not made in accordance with the provisions of Regulation
S and will not, except in accordance with the provisions of Regulation S, if
applicable, issue any such Notes in the form of definitive securities.
6. Expenses. The Company agrees to pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to (i)
the printing, word processing or other production of documents with respect to
the transactions contemplated hereby, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, and any "Blue Sky" memoranda, (ii) all arrangements relating to the
delivery to the Initial Purchasers of copies of the foregoing documents, (iii)
the fees and disbursements of the counsel, the accountants and any other experts
or advisors retained by the Company, (iv) preparation (including printing),
issuance and delivery to the Initial Purchasers of the Notes, (v) the
qualification of the Notes under state securities and "Blue Sky" laws, including
filing fees and fees and disbursements of counsel for the Initial Purchasers
relating thereto, (vi) expenses in connection with any meetings with prospective
investors in the Notes, (vii) fees and expenses of the Trustee including fees
and expenses of counsel, (viii) all expenses and listing fees incurred in
connection with the application for quotation of the Notes on the PORTAL Market
and (ix) any fees charged by investment rating agencies
<PAGE> 15
-15-
for the rating of the Notes. If the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated pursuant to paragraphs (i), (ii) or (v) of Section 11(a) hereof or
because of any failure, refusal or inability on the part of the Company to
perform all obligations and satisfy all conditions on their part to be performed
or satisfied hereunder (other than solely by reason of a default by the Initial
Purchasers of their obligations hereunder after all conditions hereunder have
been satisfied in accordance herewith), the Company agrees to promptly reimburse
the Initial Purchasers upon demand for all out-of-pocket expenses (including
fees, disbursements and charges of Cahill Gordon & Reindel, counsel for the
Initial Purchasers) that shall have been incurred by the Initial Purchasers in
connection with the proposed purchase and sale of the Notes.
7. Conditions of the Initial Purchasers' Obligations. The obligation
of the Initial Purchasers to purchase and pay for the Notes shall, in their sole
discretion, be subject to the satisfaction or waiver of the following conditions
on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the
Company, in form and substance satisfactory to counsel for the Initial
Purchasers, substantially to the effect that:
(i) The Company is duly incorporated, validly existing and in good
standing under the laws of Texas and has all requisite corporate power and
authority to own its properties and to conduct its business as described in
the Final Memorandum. The Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse
Effect.
(ii) The Company has the authorized, issued and outstanding
capitalization set forth in the Final Memorandum.
(iii) To the knowledge of such counsel, except as set forth in the
Final Memorandum (A) no options, warrants or
<PAGE> 16
-16-
other rights to purchase from the Company shares of capital stock or
ownership interests in the Company are outstanding, (B) no agreements or
other obligations of the Company to issue, or other rights to convert, any
obligation into, or exchange any securities for, shares of capital stock or
ownership interests in the Company are outstanding and (C) no holder of
securities of the Company is entitled to have such securities registered
under a registration statement filed by the Company pursuant to the
Registration Rights Agreement.
(iv) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Indenture,
the Notes, the Exchange Notes and the Private Exchange Notes; the Indenture
has been duly and validly authorized by the Company and, when duly executed
and delivered by the Company (assuming the due authorization, execution and
delivery thereof by the Trustee), will constitute the valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding (regardless of whether brought in a proceeding in equity or at
law therefor may be brought.
(v) The Notes are in the form contemplated by the Indenture. The Notes
have each been duly and validly authorized by the Company and, when duly
executed and delivered by the Company and paid for by the Initial
Purchasers in accordance with the terms of this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and
due authentication and delivery of the Notes by the Trustee in accordance
with the Indenture), will constitute the valid and legally binding
obligations of the Company, entitled to the benefits of the Indenture, and
enforceable against the Company in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding (regardless of whether brought
<PAGE> 17
-17-
in a proceeding in equity or at law) therefor may be brought.
(vi) The Exchange Notes and the Private Exchange Notes have been duly
and validly authorized by the Company, and when the Exchange Notes and the
Private Exchange Notes have been duly executed and delivered by the Company
in accordance with the terms of the Registration Rights Agreement and the
Indenture (assuming the due authorization, execution and delivery of the
Indenture by the Trustee and due authentication and delivery of the
Exchange Notes and the Private Exchange Notes by the Trustee in accordance
with the Indenture and assuming the valid tender of the Notes pursuant to
the exchange offer as provided for in the Registration Rights Agreement),
will constitute the valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture, and enforceable against the
Company in accordance with their terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding (regardless of whether brought in a proceeding in equity or at
law) therefor may be brought.
(vii) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement; the Registration Rights Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company (assuming due authorization, execution and delivery thereof by the
Initial Purchasers), will constitute the valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except that (A) the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
(regardless of whether brought in a proceeding in equity or at law)
therefor may be brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public
policy considerations.
<PAGE> 18
-18-
(viii) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; this Agreement and the
consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by the Company. This Agreement has been
duly executed and delivered by the Company.
(ix) The Indenture, the Notes and the Registration Rights Agreement
conform as to legal matters in all material respects to the descriptions
thereof contained in the Final Memorandum.
(x) To the knowledge of such counsel, no legal or governmental
proceedings are pending or threatened to which the Company is a party or to
which the property or assets of the Company is subject which, if determined
adversely to the Company would result, individually or in the aggregate, in
a Material Adverse Effect, or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the Notes to
be sold hereunder or the consummation of the other transactions described
in the Final Memorandum under the caption "Use of Proceeds."
(xi) To the knowledge of such counsel, the Company is not (i) in
violation of its articles of incorporation or bylaws (or similar
organizational document), (ii) to the knowledge such counsel, in breach or
violation of any statute, judgment, decree, order, rule or regulation
applicable to it or any of its properties or assets, except for any such
breach or violation which would not, individually or in the aggregate, have
a Material Adverse Effect, or (iii) in breach or default under (nor has any
event occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the terms or
provisions of any Contract known to such counsel and specified in such
opinion, except for any such breach, default, violation or event which
would not, individually or in the aggregate, have a Material Adverse
Effect.
(xii) The execution, delivery and performance of this Agreement, the
Indenture, the Registration Rights Agreement and the consummation of the
transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Notes to the Initial Purchasers)
<PAGE> 19
-19-
will not conflict with or constitute or result in a breach or a default
under (or an event which with notice or passage of time or both would
constitute a default under) or violation of any of (i) the terms or
provisions of any Contract set forth on a schedule to such opinion, except
for any such conflict, breach, violation, default or event which would not,
individually or in the aggregate, have a Material Adverse Effect, (ii) the
articles of incorporation or bylaws (or similar organizational document) of
the Company or (iii) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchasers in Section 8
hereof) any Applicable Laws known to such counsel to be applicable to the
Company or any of its properties or assets, except for any such conflict,
breach or violation which would not, individually or in the aggregate, have
a Material Adverse Effect. The term "Applicable Laws" means those statutes,
judgments, rules, regulations, orders or decrees of any Governmental
Authority (as hereinafter defined) of the State of New York, the State of
Texas or of the United States of America by which the Company is bound
which, in our experience, are typically applicable to offerings of the type
contemplated by this Agreement.
(xiii) No consent, approval, authorization or order of any
governmental authority is required for the issuance and sale by the Company
of the Notes to the Initial Purchasers, except such as may be required
under Blue Sky laws, as to which such counsel need express no opinion, and
those which have previously been obtained; provided, however, that the
foregoing opinion with respect to Governmental Authorities is limited to
such consents, approvals, authorizations and orders which are required
under Applicable Laws. The term "Governmental Authority" means any
governmental, legislative, judicial, administrative or regulatory body, or
of the State of New York, the State of Texas or the United States of
America.
(xiv) To the knowledge of such counsel, the Company has obtained all
permits necessary to conduct the businesses now or proposed to be conducted
by them as described in the Final Memorandum, the lack of which would,
individually or in the aggregate, have a Material Adverse Effect; the
Company has fulfilled and performed all of its obligations with respect to
such permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results
<PAGE> 20
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in any other material impairment of the rights of the holder of any such
permit.
(xv) To the knowledge of such counsel, the Company owns or possesses
adequate licenses or other rights to use all patents, trademarks, service
marks, trade names, copyrights and know-how necessary to conduct the
businesses now or proposed to be operated by them as described in the Final
Memorandum, and the Company has not received any notice of infringement of
or conflict with asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how which, if
such assertion of infringement or conflict were sustained, would have a
Material Adverse Effect.
(xvi) To the knowledge of such counsel, there are no legal or
governmental proceedings involving or affecting the Company or any of its
properties or assets which would be required to be described in a
prospectus pursuant to the Act that are not described in the Final
Memorandum, nor are there any material contracts or other documents which
would be required to be described in a prospectus pursuant to the Act that
are not described in the Final Memorandum.
(xvii) The Company is not, or immediately after the sale of the Notes
to be sold hereunder and the application of the proceeds from such sale (as
described in the Final Memorandum under the caption "Use of Proceeds") will
not be, an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
(xviii) No registration under the Act of the Notes is required in
connection with the sale of the Notes to the Initial Purchasers as
contemplated by this Agreement and the Final Memorandum or in connection
with the initial resale of the Notes by the Initial Purchasers in
accordance with Section 8 of this Agreement, and prior to the commencement
of the Exchange Offer (as defined in the Registration Rights Agreement) or
the effectiveness of the Shelf Registration Statement (as defined in the
Registration Rights Agreement), the Indenture is not required to be
qualified under the TIA, in each case assuming, without independent
investigation, (A) that the Notes are sold to the Initial Purchasers, and
initially resold by the Initial Purchasers, in accordance with the terms
of, and in the manner contemplated by, this Agreement and the Final
Memorandum, (B) the accuracy of the representations and
<PAGE> 21
-21-
warranties and covenants of the Company set forth in this Agreement, (C)
(1) that the purchasers who buy such Notes in the initial resale thereof
are qualified institutional buyers as defined in Rule 144A promulgated
under the Act ("QIBs") or (2) that the offer or sale of the Notes is made
in an offshore transaction as defined in Regulation S, (D) the accuracy of
the Initial Purchasers' representations in Section 8 and those of the
Company contained in this Agreement regarding the absence of a general
solicitation in connection with the sale of such Notes to the Initial
Purchasers and the initial resale thereof, (E) the due performance by the
Company of the covenants and agreements set forth in this Agreement and the
due performance by the Initial Purchasers of the covenants and agreements
set forth in this Agreement, (F) the Initial Purchasers' compliance with
the offering and transfer procedures and restrictions described in the
Final Memorandum, (G) the accuracy of the representations and warranties
deemed to have been made in accordance with this Agreement and the Final
Memorandum by purchasers to whom the Initial Purchasers initially resell
the Notes and (H) that each purchaser to whom the Initial Purchasers
initially resell Notes receives a copy of the Final Memorandum if requested
by such purchaser prior to such sale.
(xix) Neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the Notes
will violate Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
At the time the foregoing opinion is delivered, Akin, Gump, Strauss,
Hauer & Feld, L.L.P. shall additionally state that it has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchasers and counsel for the Initial
Purchasers, at which conferences the contents of the Final Memorandum and
related matters were discussed, and, although it has not independently verified
and is not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Final Memorandum
(except to the extent specified in subsection 7(a)(ix)), no facts have come to
its attention which lead it to believe that the Final Memorandum, on the date
thereof or at the Closing Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances
<PAGE> 22
-22-
under which they were made, not misleading (it being understood that such firm
need express no opinion with respect to the financial statements and related
notes thereto and the other financial, statistical and accounting data included
in the Final Memorandum). The opinion of Akin, Gump, Strauss, Hauer & Feld,
L.L.P. described in this Section shall be rendered to the Initial Purchasers at
the request of the Company and shall so state therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, in form and substance satisfactory to the Initial Purchasers, dated
as of the Closing Date and addressed to the Initial Purchasers, of Cahill Gordon
& Reindel, counsel for the Initial Purchasers, with respect to certain legal
matters relating to this Agreement and such other related matters as the Initial
Purchasers may reasonably require. In rendering such opinion, Cahill Gordon &
Reindel shall have received and may rely upon such certificates and other
documents and information as it may reasonably request to pass upon such
matters.
(c) The Initial Purchasers shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the Closing
Date, in form and substance satisfactory to counsel for the Initial Purchasers.
(d) The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date; the statements of the Company's officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be true and
correct on and as of the date made and on and as of the Closing Date; the
Company shall have performed all covenants and agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or prior to
the Closing Date; and, except as described in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), subsequent to the
date of the most recent financial statements in such Final Memorandum, there
shall have been no event or development, and no information shall have become
known, that, individually or in the aggregate, has
<PAGE> 23
-23-
or would be reasonably likely to have a Material Adverse Effect.
(e) The sale of the Notes hereunder shall not be enjoined (temporarily
or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto after the
date hereof), the Company shall not have sustained any loss or interference with
respect to its business or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any strike, labor
dispute, slow down or work stoppage or from any legal or governmental
proceeding, order or decree, which loss or interference, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse Effect.
(g) The Initial Purchasers shall have received a certificate of the
Company, dated the Closing Date, signed on behalf of the Company by its Chairman
of the Board, President or any Senior Vice President and the Chief Financial
Officer, to the effect that:
(i) The representations and warranties of the Company contained in
this Agreement are true and correct on and as of the date hereof and on and
as of the Closing Date, and the Company has performed all covenants and
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since the date of
the most recent financial statements in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), no event or
development has occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably likely to have
a Material Adverse Effect; and
(iii) The sale of the Notes hereunder has not been enjoined
(temporarily or permanently).
(h) On the Closing Date, the Initial Purchasers shall have received
the Registration Rights Agreement executed by the Company and such agreement
shall be in full force and effect at all times from and after the Closing Date.
<PAGE> 24
-24-
(i) The Initial Purchasers shall have received a letter dated the
Closing Date delivered by Houlihan, Lokey, Howard & Zukin Financial Advisors,
Inc. in form and substance satisfactory to the Initial Purchasers, with
appropriate attachments (and with a separate certificate of the chief financial
officer of the Company), stating that, after giving effect to the Transactions,
the fair saleable value of the assets of the Company is not less than the
probable liability on their debts, that the Company is able to pay its debts as
they mature and that the Company does not have unreasonably small capital to
conduct its business.
(j) All conditions with respect to the closing of the Revolving Credit
Facility shall have been met and such closing shall have occurred and no default
or event of default under the Revolving Credit Facility shall have occurred or
be continuing.
(k) All conditions with respect to the Stock Purchase and Redemption
Agreement shall have been met and such closing shall have occurred, including
the purchase by FWT Acquisition of 108.98 shares of Common Stock from the
Existing Shareholders for $36 million.
On or before the Closing Date, the Initial Purchasers and counsel for
the Initial Purchasers shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company as they shall have
heretofore reasonably requested from the Company.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Company shall
furnish to the Initial Purchasers such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchasers shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. (a) Each of the
Initial Purchasers represents and warrants (as to itself only) that it is a QIB.
Each of the Initial Purchasers agrees with the Company (as to itself only) that
(i) it has not and will not solicit offers for, or offer or sell, the Notes by
any form of general solicitation or general advertising (as those terms are used
in Regulation D under the Act) or
<PAGE> 25
-25-
in any manner involving a public offering within the meaning of Section 4(2) of
the Act; and (ii) it has and will solicit offers for the Notes only from, and
will offer the Notes only to (A) in the case of offers inside the United States,
persons whom the Initial Purchasers reasonably believe to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchasers that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A, and, in
each case, in transactions under Rule 144A and (B) in the case of offers outside
the United States, to persons other than U.S. persons ("foreign purchasers,"
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
in purchasing such Notes such persons are deemed to have represented and agreed
as provided under the caption "Transfer Restrictions" contained in the Final
Memorandum (or, if the Final Memorandum is not in existence, in the most recent
Memorandum).
(b) Each of the Initial Purchasers represents and warrants (as to
itself only) with respect to offers and sales outside the United States that (i)
it has and will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Notes or has in its
possession or distributes any Memorandum or any such other material, in all
cases at its own expense; (ii) the Notes have not been and will not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Regulation S under the Act or pursuant to an
exemption from the registration requirements of the Act; (iii) it has offered
the Notes and will offer and sell the Notes (A) as part of its distribution at
any time and (B) otherwise until 40 days after the later of the commencement of
the offering and the Closing Date, only in accordance with Rule 903 of
Regulation S and, accordingly, neither it nor any persons acting on its behalf
have engaged or will engage in any directed selling efforts (within the meaning
of Regulation S) with respect to the Notes, and any such persons have complied
and will comply with the offering restrictions requirement of Regulation S; and
(iv) it agrees that, at or prior to confirmation of sales of the Notes, it will
have sent to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
<PAGE> 26
-26-
"The Securities covered hereby have not been registered
under the United States Securities Act of 1933 (the
"Securities Act") and may not be offered and sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of the distribution of the Securities at
any time or (ii) otherwise until 40 days after the later of
the commencement of the offering and the closing date of the
offering, except in either case in accordance with
Regulation S (or Rule 144A if available) under the
Securities Act. Terms used above have the meaning given to
them in Regulation S."
Terms used in this Section 8 and not defined in this Agreement have
the meanings given to them in Regulation S.
9. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Initial Purchasers, and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which any Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto or
any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to qualify the
Notes under the securities or "Blue Sky" laws thereof or filed with any
securities association or securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements therein
not misleading,
<PAGE> 27
-27-
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses incurred by the Initial
Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any Memorandum
or any amendment or supplement thereto or any application in reliance upon and
in conformity with written information concerning the Initial Purchasers
furnished to the Company by the Initial Purchasers specifically for use therein;
provided, further, that the foregoing indemnity with respect to the Preliminary
Memorandum shall not inure to the benefit of any Initial Purchaser (or to the
benefit of any person controlling such Initial Purchaser) from whom the person
asserting any such losses, claims, damages or liabilities purchased Notes if
such untrue statement or omission or alleged untrue statement or omission made
in the Preliminary Memorandum is eliminated or remedied in the Final Memorandum
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto to such Initial Purchaser prior to confirmation of the
sale of such Notes to such person by such Initial Purchaser) and a copy of the
Final Memorandum as so amended or supplemented if the Company shall have
furnished any amendments or supplements thereto to such Initial Purchaser prior
to confirmation the sale of such Notes to such person by such Initial Purchaser)
and a copy of the Final Memorandum (as so amended or supplemented) shall not
have been furnished to such person at or prior to the written confirmation of
the sale of such Notes to such person, unless such failure to deliver was a
result of non-compliance by the Company with Section 5(a) or 5(c), and the
claims asserted by such person do not include allegations of other untrue
statements or omissions of material facts made in the Final Memorandum, which
allegations are upheld in a final judgment. This indemnity agreement will be in
addition to any liability that the Company may otherwise have to the indemnified
parties. The Company shall not be liable under this Section 9 for any settlement
of any claim or action effected without its prior written consent, which shall
not be unreasonably withheld.
(b) The Initial Purchasers agree to indemnify and hold harmless the
Company, its directors, its officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company
<PAGE> 28
-28-
or any such director, officer or controlling person may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Memorandum or any amendment or supplement thereto or any Application, or
(ii) the omission or the alleged omission to state therein a material fact
required to be stated in any Memorandum or any amendment or supplement thereto
or any Application, or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Initial
Purchaser, furnished to the Company by the Initial Purchasers specifically for
use therein; and subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof. This indemnity agreement will be in addition to any liability that the
Initial Purchasers may otherwise have to the indemnified parties. The Initial
Purchasers shall not be liable under this Section 9 for any settlement of any
claim or action effected without their consent, which shall not be unreasonably
withheld. The Company shall not, without the prior written consent of the
Initial Purchasers, effect any settlement or compromise of any pending or
threatened proceeding in respect of which any Initial Purchaser is or could have
been a party, or indemnity could have been sought hereunder by any Initial
Purchaser, unless such settlement (A) includes an unconditional written release
of the Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof
in writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
<PAGE> 29
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extent such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 9 or the Company in the case of paragraph (b)
of this Section 9, representing the indemnified parties under such paragraph (a)
or paragraph (b), as the case may be, who are
<PAGE> 30
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parties to such action or actions) or (ii) the indemnifying party has authorized
in writing the employment of counsel for the indemnified party at the expense of
the indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the prior written consent of the indemnifying party (which consent shall
not be unreasonably withheld), unless such indemnified party waived in writing
its rights under this Section 9, in which case the indemnified party may effect
such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Notes or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, not only such relative benefits but also
the relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Company on the one hand and any Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by such Initial Purchaser. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand, or such Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and the
Initial Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by
<PAGE> 31
-31-
any other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Initial Purchaser
shall be obligated to make contributions hereunder that in the aggregate exceed
the total discounts, commissions and other compensation received by such Initial
Purchaser under this Agreement, less the aggregate amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the omissions or alleged omissions to
state a material fact, and no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchasers, and each director of the Company, each officer of the
Company and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the Initial Purchasers set forth in this Agreement or made by or on
behalf of them pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, the Initial Purchasers or any controlling person
referred to in Section 9 hereof and (ii) delivery of and payment for the Notes.
The respective agreements, covenants, indemnities and other statements set forth
in Sections 6, 9 and 15 hereof shall remain in full force and effect, regardless
of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Company given prior to the
Closing Date in the event that the Company shall have failed, refused or been
unable to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto or, if at or prior to the
Closing Date:
(i) the Company shall have sustained any loss or interference with
respect to its businesses or properties from fire, flood, hurricane,
accident or other calamity,
<PAGE> 32
-32-
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding, which
loss or interference, in the sole judgment of the Initial Purchasers, has
had or has a Material Adverse Effect, or there shall have been, in the sole
judgment of the Initial Purchasers, any event or development that,
individually or in the aggregate, has or could be reasonably likely to have
a Material Adverse Effect (including without limitation a change in control
of the Company), except in each case as described in the Final Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or in securities generally
on the New York Stock Exchange, American Stock Exchange or the NASDAQ
National Market shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international calamity
or emergency, or (C) any material change in the financial markets of the
United States which, in the case of (A), (B) or (C) above and in the sole
judgment of the Initial Purchasers, makes it impracticable or inadvisable
to proceed with the offering or the delivery of the Notes as contemplated
by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or placed
on any "watch list" for possible downgrading by any nationally recognized
statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in Section
10 hereof.
12. Information Supplied by the Initial Purchasers. The statements set
forth in the last paragraph on the front cover page, the first paragraph of page
i, in the second and third sentences of the third paragraph and the sixth and
seventh paragraphs under the heading "Private Placement" in the
<PAGE> 33
-33-
Final Memorandum (to the extent such statements relate to the Initial
Purchasers) constitute the only information furnished by the Initial Purchasers
to the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and, if
sent to the Initial Purchasers, shall be mailed or delivered to (i) BT Alex.
Brown Incorporated, 130 Liberty Street, New York, New York 10006, Attention:
Corporate Finance Department; if sent to the Company, shall be mailed or
delivered to the Company at 1901 East Loop 820 South, Fort Worth, Texas
76112-7899, Attention: Roy J. Moore; with a copy to Akin, Gump, Strauss, Hauer &
Feld, L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas, Texas 75201-4618,
Attention: Christopher M. Gores, P.C.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; and one business day
after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 9 of this Agreement shall also be for the
benefit of any person or persons who control the Initial Purchasers within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchasers contained in Section 9 of this Agreement
shall also be for the benefit of the directors of the Company, its officers and
any person or persons who control the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act. No purchaser of Notes from the
Initial Purchasers will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE
<PAGE> 34
-34-
AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY PROVISIONS
THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE> 35
S-1
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Initial Purchasers.
Very truly yours,
FWT, INC.
By:
----------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
BT ALEX. BROWN INCORPORATED
By:
------------------------------
Name:
Title:
SBC WARBURG DILLON READ INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
SMITH BARNEY INC.
By:
------------------------------
Name:
Title:
<PAGE> 36
<TABLE>
<CAPTION>
SCHEDULE 1
Principal
Amount of
Initial Purchaser Notes
- ----------------- ----------
<S> <C>
BT Alex. Brown Incorporated.......................................... $52,500,000
SBC Warburg Dillon Read Inc.......................................... 36,750,000
Smith Barney Inc..................................................... 15,750,000
------------
Total...................................................... $105,000,000
</TABLE>
<PAGE> 37
EXHIBIT A
---------
-2-
<PAGE> 1
EXHIBIT 3.1
[SEAL]
THE STATE OF TEXAS
SECRETARY OF STATE
IT IS HEREBY CERTIFIED that the attached is/are true and correct copies of
the following described document(s) on file in this office:
FWT, INC.
FILE NO. 154118-00
ARTICLES OF INCORPORATION MARCH 19, 1959
ARTICLES OF AMENDMENT SEPTEMBER 17, 1959
CHANGE OF REGISTERED OFFICE AND/OR AGENT JANUARY 15, 1062
ARTICLES OF AMENDMENT APRIL 24, 1967
CHANGE OF REGISTERED OFFICE AND/OR AGENT APRIL 26, 1977
ASSUMED NAME CERTIFICATE APRIL 11, 1986
ARTICLES OF AMENDMENT NOVEMBER 05, 1986
ARTICLES OF AMENDMENT NOVEMBER 30, 1990
ARTICLES OF AMENDMENT JULY 16, 1997
IN TESTIMONY WHEREOF, I have hereunto
signed my name officially and caused to
be impressed hereon the Seal of State at
my office in the City of Austin, on
November 4, 1997.
[SEAL]
/s/ ANTONIO O. GARZA, JR.
--------------------------------
Antonio O. Garza, Jr. MAC
Secretary of State
<PAGE> 2
ARTICLES OF INCORPORATION
WE, THE UNDERSIGNED natural persons of the age of twenty-one (21) years
or more, at least two of whom are citizens of the State of Texas, acting as
incorporators or a Corporation under the Texas Business Corporation Act, do
hereby adopt the following Articles of Incorporation for such Corporation:
ARTICLE ONE
The name of the corporation is TOMMY MOORE, INC.
ARTICLE TWO
The period of its duration is shall be fifty (50) years.
ARTICLE THREE
The purpose or purposes for which this corporation, TOMMY MOORE, INC.,
is organized are: the sale, erection and rental of antenna towers.
ARTICLE FOUR
The aggregate number of shares which this corporation, TOMMY MOORE,
INC., shall have authority to issue one hundred (100) shares with a par value
of TEN ($10.00) DOLLARS each.
ARTICLE FIVE
The TOMMY MOORE, INC. will not commence business until it has received
for the issuance of its shares consideration of the value of ONE THOUSAND
DOLLARS($l000.00) in actual cash paid in.
ARTICLE SIX
The post office address of its initial registered office is 2621
Cravens Rd., Fort Worth 12, Texas; and the name of its initial registered agent
at such address is Tommy Moore.
n-1
<PAGE> 3
ARTICLE SEVEN
The number of directors constituting the initial board of directors is
three (3), and the names and addresses of the persons who are to serve as
directors until the first annual meeting of the shareholders or until their
successors are elected and qualified are:
<TABLE>
<S> <C>
T. W. Moore President
George Parks Vice-President
Irvin W. Shelman Secretary-Treasurer
</TABLE>
ARTICLE EIGHT
The names and addresses of the three incorporators are:
<TABLE>
<S> <C> <C>
T. W. Moore 2621 Cravens Rd. Fort Worth 12, Texas
George Parks 3413 Bilglade Rd. Fort Worth, Texas
Irvin W. Shelman 5100 Cliffview Dr. Fort Worth 12, Texas
</TABLE>
IN WITNESS WHEREOF, we have hereunto set our hands, this the 18th day
of March, 1959.
/s/ T.W. MOORE
------------------------------
T. W. Moore
/s/ GEORGE PARKS
------------------------------
George Parks
/s/ IRVIN W. SHELMAN
------------------------------
Irvin W. Shelman
THE STATE OF TEXAS
COUNTY OF TARRANT
I, Dorothy Downey, a notary public DO HEREBY CERTIFY THAT on this 18th
day of March, 1959, personally appeared before me, T. W. Moore, George Parks,
and Irvin W. Shelman, who each being by me first duly sworn, severally declared
that they are the persons who signed the foregoing document as incorporators,
and that the statements therein contained are true.
/s/ DOROTHY DOWNEY
[NOTARY SEAL] ------------------------------
Dorothy Downey Notary Public
in and for Tarrant County, Texas
n-2
<PAGE> 4
THE STATE OF TEXAS
AFFIDAVIT
COUNTY OF TARRANT
BEFORE ME, THE UNDERSIGNED AUTHORITY, on this day personally appeared
T. W. Moore, George Parks, And Irvin W. Shelman, known to me to be the persons
whose names are subscribed below, who, having first being duly sworn by me, on
oath deposed and said, each for himself:
"That they are the identical parties who executed the charter of TOMMY
MOORE, INC., which is sought to be incorporated under the laws of the State of
Texas; that 100% of the full amount of the capital stock with par value, to be
issued by said corporation, namely $1000.00 has been paid for and deposited in
the First National Bank of Handley, Fort Worth, Texas in an account titled TOMMY
MOORE, INC.; that the following are the names, residences and post office
addresses of the parties subscribing to the said capital stock as already paid
in:
<TABLE>
<S> <C> <C>
T. W. Moore 2621 Cravens Rd. Fort Worth 12, Texas
George Parks 3413 Bilglade Rd. Fort Worth, Texas
Irvin W. Shelman 5100 Cliffview Dr. Fort Worth 12, Texas
</TABLE>
That the amount subscribed by each and the amount already paid into
such proposed corporation by each is as follows:
<TABLE>
<CAPTION>
NAMES AMOUNT SUBSCRIBED AMOUNT PAID
<S> <C> <C>
T. W. Moore $ 500.00 $ 500.00
George Parks 20.00 20.00
Irvin W. Shelman 80.00 80.00
Betty Jo Moore 400.00 400.00
</TABLE>
The above described payments being made all in cash.
<PAGE> 5
/s/ T. W. MOORE
------------------------------
T. W. Moore
/s/ GEORGE PARKS
------------------------------
George Parks
/s/ IRVIN W. SHELMAN
------------------------------
Irvin W. Shelman
THE STATE OF TEXAS
COUNTY OF TARRANT
I, Dorothy Downey, a notary public DO HEREBY CERTIFY THAT on this 18th
day of March, 1959, personally appeared before me, T. W. Moore, George Parks,
and Irvin W. Shelman, who each being by me first duly sworn, severally declared
that they are the persons who signed the foregoing document as incorporators,
and that the statements therein contained are true.
/s/ DOROTHY DOWNEY
------------------------------
Dorothy Downey Notary Public
in and for Tarrant County, Texas
<PAGE> 6
ARTICLES OF AMENDMENT
1. The name of the Corporation is TOMMY MOORE, INC., charter
number 154118.
2. Article THREE is amended to read: "The purpose or purposes for
which the Corporation is organized are:
(a) To engage in a general mercantile business.
(b) To render and charge for services of every kind and
character which the Corporation may legally perform.
(c) To engage in a general manufacturing and distributing
business, and to do everything necessary, proper,
advisable or convenient for the accomplishment of the
purposes hereinabove set forth."
Article FOUR is amended to read: "The aggregate number of shares which
this Corporation, TOMMY MOORE, INC., shall have authority to issue is ONE
THOUSAND (1000) shares with a par value of TEN ($10.00) DOLLARS EACH.
3. The date of the adoption of the amendments by the stock-
holders is August 15, 1959.
4. The number of shares outstanding was ONE HUNDRED (100)
The number of shares entitled to vote on the amendment was ONE
HUNDRED (100).
5. The number of shares voting for the amendment was ONE HUNDRED
(100) and none voted against it.
TOMMY MOORE, INC.
by /s/ T.W. MOORE
------------------------------
PRESIDENT
ATTEST:
/s/ B. MOORE
- ------------------------------
Secretary
THE STATE OF TEXAS
COUNTY OF TARRANT
I, C. L. McLaughlin, a notary public DO HEREBY CERTIFY THAT on this
15th. day of September, 1959, personally appeared before me, T. W. Moore,
President, TOMMY MOORE, INC., being by me first duly sworn, severally declare
that he is the person who signed the foregoing document, and that the
statements therein contained are true.
/s/ C.L. MCLAUGHLIN
--------------------------------
C. L. McLaughlin, Notary Public
in and for Tarrant County, Texas
<PAGE> 7
Secretary of State
Austin, Texas
Gentlemen:
It is the desire of TOMMY MOORE, INC., charter number 154118 to
change the Post office address of its registered office.
The following information is hereby furnished:
1. The name of the corporation is TOMMY MOORE, INC.
2. Current address of registered office is 2621 Cravens Rd., Fort Worth,
Texas.
3. New address of registered office is to be 6404 Brentwood Dr., Fort
Worth, Texas.
4. The name of the registered agent is T. W. Moore.
5. The Post office address of the registered office and the Post office
address of the business office of the registered agent are identical.
6. The change of address of the registered office was authorized by
resolution duly adopted by the board of directors.
Enclosed please find Money Order for $1.00 to cover the cost of the
change of address.
If further information is needed, please advise.
TOMMY MOORE INC.
by /s/ T.W. MOORE
------------------------------
PRESIDENT
ATTEST:
/s/ B. MOORE
- ------------------------------
Secretary
THE STATE OF TEXAS
COUNTY OF TARRANT
I, Claudia M. Franklin, a notary public DO HEREBY CERTIFY THAT on this
l9th day of December 1961, personally appeared before me, T. W. Moore,
President, TOMMY MOORE, INC., being by me first duly sworn, severally declare
that he is the person who signed the foregoing document, and that the
statements therein contained are true.
/s/ CLAUDIA M. FRANKLIN
----------------------------------
Claudia M. Franklin Notary Public
In and for Tarrant County, Texas
<PAGE> 8
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
TOMMY MOORE, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE. The name of the corporation is TOMMY MOORE, INC.
ARTICLE TWO. The following amendments to the Articles of Incorporation
were adopted by the shareholders of the corporation on April 14, 1967:
1. "ARTICLE TWO: The period of its duration is
perpetual."
2. "ARTICLE THREE: The purposes for which this
corporation is organized are:
(a) To engage in the business of selling, erecting, and
renting antenna towers.
(b) To engage in the business of farming and ranching,
but without authority to engage in the business of operating stockyards or of
slaughtering, refrigerating, canning, curing or packing meat.
(c) To engage at wholesale or retail in the mercantile
business.
(d) To manufacture, distribute and sell articles, machines, goods,
wares or merchandise.
(e) To own, utilize, license or otherwise deal with respect to
patents, copyrights, licenses and permits.
(f) To own, improve, subdivide, sell, rent or lease real estate
to the extent, but only to the extent, that such ownership, improvement,
subdivision, selling, renting or leasing is not contrary to the laws of the
State where such real estate is located; and subject specifically to the
limitations and restrictions of Article 1302-4.05, Miscellaneous Corporation
Laws Act, Vernon's Civil Statutes of the State of Texas, Annotated."
ARTICLE THREE. The number of shares of the corporation outstanding at
the time of such adoption was 1000, and the number of shares entitled to vote
thereon was 100.
<PAGE> 9
ARTICLE FOUR. The number of shares voted for such amendments was 100,
and the number of shares voted against such amendments was none.
Dated April 19, 1967.
TOMMY MOORE, INC.
By /s/ T.W. MOORE
------------------------------
President
And /s/ B. MOORE
------------------------------
Secretary
STATE OF TEXAS )
:
COUNTY OF TARRANT )
I, Zella Mae Horton, a Notary Public, do hereby certify that on this
19th day of April, 1967, personally appeared before me T. W. Moore, who
declared he is the President of the corporation executing the foregoing
document, and being first duly sworn, acknowledged that he signed the foregoing
document in the capacity therein set forth and declared that the statements
therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ ZELLA MAE HORTON
---------------------------------------
Notary Public for Tarrant County, Texas
My Commission expires: 6/l/67
-2-
<PAGE> 10
STATEMENT OF CHANGE
OF REGISTERED OFFICE OF
TOMMY MOORE, INC.
Pursuant to the provisions of Article 2.10 of the Texas Business
Corporation Act, the undersigned corporation organized under the laws of the
State of Texas, submits the following statement for the purpose of changing its
registered office in the State of Texas:
1. The name of the corporation is TOMMY MOORE, INC.
2. The post office address of its present registered
office is 6404 Brentwood Dr., Fort Worth, Texas.
3. The post office address to which its registered
office is to be changed is 1901 East Loop 820 South, Fort Worth, Texas 76112.
4. There is no change in its present registered agent,
Tommy Moore.
5. The post office address of its registered office and
the post office address of the business office of its registered agent, as
changed, will be identical.
6. Such change was authorized by resolution duly adopted
by its Board of Directors.
Dated April 11th, 1977.
TOMMY MOORE, INC.
By /s/ T.W. MOORE
------------------------------
President
and /s/ B. MOORE
------------------------------
Secretary
SWORN TO April 11th, 1977.
/s/ ILLEGIBLE
-------------------------------
Notary Pubic in and for Tarrant
County, Texas. My Commission
Expires: July 13, 1978
<PAGE> 11
ASSUMED NAME CERTIFICATE
1. The name under which the business is or is to be conducted or rendered
is (FORT WORTH TOWER COMPANY.)
2. The name of the incorporated business as stated in its Articles of
Incorporation is Tommy Moore, Inc., and the charter number is 154118.
3. The state under the laws of which it was incorporated is Texas, and
the address of its registered or similar office in that jurisdiction
is 1901 East Loop 820 South, Fort Worth, Texas 76112.
4. The period during which the assumed name will be used is ten (10)
years.
5. The corporation is a business corporation.
6. The address of the registered office is 1901 East Loop 820 South, Fort
Worth, Texas 76112, and the name of its registered agent at such
address is Betty Moore. The address of the principal office is 1901
East Loop 820 South, Fort Worth, Texas 76112.
7. The county or counties where business or professional services are
being or are to be conducted or rendered under such assumed name are
as follows: All Counties in the State of Texas.
TOMMY MOORE, INC.
BY: /s/ B. MOORE
----------------------------------
B.MOORE, SECRETARY-TREASURER
Before me on this 9th day of April, 1986, personally appeared B. Moore,
Secretary-Treasurer of Tommy Moore, Inc., a Texas Corporation, and acknowledged
to me that she executed the foregoing certificate for the purposes therein
expressed.
/s/ SUSAN TERRELL
---------------------------------------
Notary Public, State of Texas
10/17/89
--------------------------------------
Commission Expires
Susan Terrell
--------------------------------------
Printed Name
<PAGE> 12
ARTICLES OF AMENDMENT BY THE
SHAREHOLDERS TO THE
ARTICLES OF INCORPORATION
OF TOMMY MOORE, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the, undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation which change the name of the
corporation.
ARTICLE ONE. The name of the corporation is TOMMY MOORE, INC.
ARTICLE TWO. The following amendment to the Articles of Incorporation
was adopted by the shareholders of the corporation on November 4, 1986:
Article One of the Articles of Incorporation is hereby amended
to read as follows: "The name of the corporation is FORT WORTH TOWER
COMPANY, INC."
ARTICLE THREE. The number of shares of the Corporation outstanding
at the time of such adoption was 100; and the number of shares entitled to vote
thereon was 100.
ARTICLE FOUR. The number of shares voted for such amendment was 100;
and the number of shares voted against such amendment was 0.
DATED: November 4, 1986.
TOMMY MOORE, INC.
By: /s/ TOMMY MOORE
-------------------------------------
Tommy Moore, President
By: /s/ BETTY MOORE
-------------------------------------
Betty Moore, Secretary - Treasurer
<PAGE> 13
STATE OF TEXAS Section
Section
COUNTY OF TARRANT Section
I, a Notary Public, do hereby certify that on this 4th day of
November, 1986, personally appeared before me Tommy Moore, who being by me
first duly sworn, declared that he is the president of Tommy Moore, Inc., that
he signed the foregoing document as president of said corporation and that the
statements therein are true.
/s/ SUSAN TERRELL
-------------------------------------
Notary Public, State of Texas
My Commission expires: Notary's Printed Name:
10/17/89 Susan Terrell
- -------------------------------- -------------------------------------
- 2 -
<PAGE> 14
ARTICLES OF AMENDMENT BY THE
SHAREHOLDERS TO THE
ARTICLES OF INCORPORATION
OF FORT WORTH TOWER COMPANY, INC.
Pursuant to the provisions of the Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation which change the name of the
corporation.
ARTICLE ONE. The name of the corporation is FORT WORTH TOWER COMPANY,
INC.
ARTICLE TWO. The following amendment to the Articles of Incorporation
was adopted by the shareholders of the corporation on November 19, 1990:
Article One of the articles of Incorporation is hereby amended
to read as follows: "The name of the corporation is FWT, INC."
ARTICLE THREE. The number of shares of the Corporation outstanding at
the time of such adoption was 372; and the number of shares entitled to vote
thereon was 372.
ARTICLE FOUR. The number of shares voted for such amendment was 372;
and the number of shares voted against such amendment was 0.
DATED: November 19, 1990.
FORT WORTH TOWER COMPANY, INC.
By: /s/ TOMMY MOORE
------------------------------------
Tommy Moore, President
By: /s/ BETTY MOORE
------------------------------------
Betty Moore, Secretary - Treasurer
<PAGE> 15
CORPORATION ACKNOWLEDGEMENT
THE STATE OF TEXAS, )
COUNTY OF TARRANT )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared TOMMY MOORE, PRESIDENT AND BETTY MOORE,
SECRETARY/TREASURER, known to me to be the person and office whose name is
subscribed to the foregoing instrument and acknowledged to me that the same was
the act of the said FORT WORTH TOWER COMPANY, INC. a corporation, and that they
executed the same as the act of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 19th day of November,
A.D. 1990.
/s/ BILLY J. BALLWEG
------------------------------------------------
Notary Public in and for Tarrant County, Texas
<PAGE> 16
ARTICLES OF AMENDMENT BY THE
SHAREHOLDERS TO THE
ARTICLES OF INCORPORATION
OF FWT, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation which changes the percentage of
outstanding shares of stock required to approve the sale or other disposition
of all or substantially all of the assets of the Corporation.
ARTICLE ONE. The name of the corporation is FWT, INC. (the
"Corporation").
ARTICLE TWO. The following amendment to the Articles of Incorporation
was adopted by the shareholders of the Corporation on June 27, 1997:
The following new Article Nine is an addition to the original
Articles of Incorporation and the full text of the Article added reads
as follows:
ARTICLE NINE
DISPOSITION OF SUBSTANTIALLY ALL CORPORATE ASSETS
The Corporation may sell, lease, convey, exchange, transfer or
otherwise dispose of all or substantially all of its assets if the
principal terms are approved by the Board of Directors of the
Corporation and the principal terms are approved by the vote or the
written consent of the
<PAGE> 17
holders of in excess of fifty percent (50.0%) of the outstanding
voting shares of the Corporation and not otherwise.
ARTICLE THREE. The number of shares of the Corporation outstanding at
the time of such adoption was 376; and the number of shares entitled to vote
thereon was 376.
ARTICLE FOUR. The number of shares voted for such amendment was 376
and the number of shares voted against such amendment was zero.
DATED: June 30, 1997.
FWT, INC.
By: /s/ BETTY MOORE
----------------------------------
Betty Moore, Secretary - Treasurer
STATE OF TEXAS Section
Section
COUNTY OF TARRANT Section
I, a Notary Public, do hereby certify that on this 30th day of June,
1997, personally appeared before me Betty Moore, secretary-treasurer of FWT,
Inc., that she signed the foregoing document as secretary-treasurer of said
corporation and that the statements therein are true.
[seal] DONNA L. HAYEK
MY COMMISSION EXPIRES
January 11, 1999
/s/ DONNA L. HAYEK
-----------------------------------
Notary Public, State of Texas
My Commission expires: Notary's Printed Name:
1-11-99 Donna L. Hayek
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EXHIBIT 3.2
CODE OF BY-LAWS OF
TOMMY MOORE, INC.
ADOPTED AT ORGANIZATIONAL MEETING OF THE STOCKHOLDERS AND BOARD OF DIRECTORS
NAMED IN THE ARTICLES OF INCORPORATION HELD ON THE 1ST DAY OF APRIL, 1959, IN
ACCORDANCE WITH THE CALL OF MAJORITY OF THE INCORPORATORS.
ARTICLE 1.
NAME
Section 1. The name of this corporation is TOMMY MOORE, INC.
LOCATION
Section 2. The location of its registered office and principal place
of business shall be the following address: 2621 Cravens Rd., Fort Worth, Texas.
CORPORATION SEAL
Section 3. The corporation seal of this corporation shall have
inscribed thereon TOMMY MOORE, INC., An impression of the seal is as follows:
(SEAL)
ARTICLE II.
SHARES AND SHAREHOLDERS
Section 1. A statement of the aggregate number of shares of which this
corporation shall have the authority to issue and the par value of each of such
shares is stated in Article IV of its Articles of Incorporation and reference
is made thereto for all purposes.
Section 2. The shareholders of this corporation shall be those who
appear on the books of the company as the holder of one or more shares of the
shares of stock of this corporation for the purpose of determining the owners
thereof for voting.
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Section 3. All transfers of the shares of this corporation shall be
made as required by the Uniform Stock Transfer Act. Certificates of shares
shall be surrendered and cancelled at the time of transfer. No transfer of
shares shall be made within ten days next preceding the date appointed for
paying a dividend.
Section 4. In the case of the loss or the destruction of a certificate
of share, another may be issued in its place upon proof of such loss or
destruction and the giving of a satisfactory bond of indemnity. The provisions
of the Uniform Stock Transfer Act as to court order may be required.
Section 5. All certificates of shares of the corporation, when issued,
shall be signed by the President or a Vice-President and the Secretary or
Assistant Secretary, and be sealed with the seal of the corporation or a
facsimile thereof. Each certificated representing shares shall state upon the
face thereof:
(1) The name of the person to whom issued;
(2) The par value of each share represented by such certificate;
(3) That the corporation is organized under the laws of this state.
No certificate shall be issued for any share until the consideration
therefore fixed, as provided by law, has been fully paid.
Section 6. Subscriptions for shares shall be paid at such time or in
such installments and at such times as shall be determined by the Board of
Directors. In case of default in the payment of any installment or call when
such payment is due, the corporation may proceed to collect the amount due in
the same manner as any debt due the corporation. The Board of Directors shall
have the right to provide that failure to pay installments or calls shall work
a forfeiture of subscription and all amounts paid thereon. Provided, however,
no written demand has been made therefor.
ARTICLE III.
MEETINGS OF SHAREHOLDERS
Section 1. The regular meeting of the shareholders of this corporation
shall be held at the registered office of the corporation in Fort Worth, Texas,
at 10 o'clock A.M., on the 1st. day of June each year. Provided, however, that
should said date fall upon a legal holiday or Sunday, then the regular annual
meeting for that particular year shall be held on the next succeeding business
or secular day.
Section 2. Special meetings of the shareholders may be called by the
President, the Board of Directors or the holders of not less than one-third of
all of the shares entitled to vote at the meeting.
Page two.
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Section 3. Written or printed notice stating the place, day and hour
of the meeting, and in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail,
by or at the direction of the President, the Secretary or the officer or person
calling the meeting to each shareholder of record entitled to vote at such
meeting.
Section 4. Each meeting of the shareholders shall be presided over by
the President of the corporation, if present, in his absence the Vice-President
or in the absence of both the President and Vice-President shall be organized
by the election of a chairman and the Secretary or Assistant Secretary of the
corporation shall attend each meeting of the shareholders and act as Secretary
thereof. A Majority of the shares represented in person or by proxy shall
constitute a quorum. A less number, however, may adjourn any meeting (regular
or special) from time to time until a quorum can be obtained.
Section 5. All proxies shall be executed in writing by the shareholder
or by his duly authorized attorney-in-fact. No proxy shall be valid after
eleven months from date of its execution unless otherwise provided in the
proxy. All proxies shall be filed with the Secretary of the meeting before
being voted upon.
ARTICLE IV.
BOARD OF DIRECTORS
Section 1. The Directors of this corporation shall have the general
management of the business and affairs of the corporation.
Section 2. The corporation shall have until otherwise provided in the
by-laws of the corporation, not less than three nor more than five directors.
Section 3. A majority of the Directors qualified and acting shall
constitute a quorum.
Section 4. Each Director shall serve from his election for one year or
until his successor shall have been duly elected.
Section 5. Within a reasonable time after the election of each new
Board of Directors, such newly elected directors shall convene in meeting for
the purpose of election of officers, and for the purpose of such other business
as may be desired by those present at such meeting. For the purpose of electing
each officer, each director present shall be entitled to one vote. Such meeting
of the directors present shall be a general and regular meeting of the Board of
Directors and any business of the corporation may be transacted thereat.
Page three.
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Section 6. The Board of Directors of this corporation may hold without
notice, special meetings at any time and at any place of unanimous consent. The
president of the corporation or a majority of the qualified and acting
directors may call a special meeting of the Board of Directors to be held at
any time and at any place. Notice of each of such special meetings so called
shall be given by the Secretary in either or by a combination of the following
methods, to-wit:
(a) Actual notice in person or by telephone to each director at least two
days in advance of the date set for meeting.
(b) Notice by mail or telegraph sent to each director in time in regular
course of business to each respective director at least two days prior to
the date set for such meeting. In case of written or telegraphic notices, the
same shall be sufficient if sent charges prepaid to the last address known to
the secretary as shown by the records of the corporation of each respective
director.
(c) Notice of any particular meeting may be given to a part of the
directors in one manner and to the remaining directors in a different manner.
The directors may waive notice.
Section 7. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Section 8. The president of the corporation shall act as Chairman of
all meetings of the Board of Directors and in his absence those present at any
meeting of the Board of Directors shall organize by the election of a Chairman
Pro Tem. The secretary or assistant secretary of the corporation shall attend
all meetings of the Board of Directors and act as Secretary thereof.
ARTICLE V.
OFFICERS AND THEIR DUTIES
Section 1. The officers of this corporation shall be a President,
Vice-President, a Secretary and a Treasurer. Any two or more officers may be
held by the same person except that the President and the Secretary shall not
be the same person.
Section 2. The term of office of each officer shall be one year from
his election, but each officer shall serve until his successor shall have been
duly elected.
Section 3. Each new Board of Directors, at its first meeting shall
choose and elect from its number the President. Each new Board of Directors, at
its first meeting shall choose and elect also the remaining officers of the
corporation for the ensuing year, but it shall not be necessary for any of the
latter officers to be members of the Board of Directors.
Page four.
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Section 4. Each new officer of the corporation shall have all the
rights, powers, duties and privileges usually incident to this respective
office in an ordinary private corporation for profit.
ARTICLE VI
BOOKS, RECORDS, CHECKS AND DRAFTS
Section 1. The general books, records and share certificate books of
this corporation shall be kept at its registered office.
Section 2. Any person who shall have been a shareholder of record for
at least six months immediately preceding his demand, or shares of the
corporation, upon written demand, stating the purpose thereof, shall have the
right to examine, in person or by agent or attorney, at any time or times, for
proper purpose, the corporation books, records, minutes and record of
shareholders and shall be entitled to make extracts therefrom.
Section 3. All checks, drafts, notes, bonds or other negotiable
instruments or obligations of this corporation shall be endorsed, signed or
executed by the President, or in such manner as the Board of Directors may from
time to time provide.
ARTICLE VII
AMENDMENTS
These by-laws may be amended at any time and from time to time in the
manner and as authorized by the laws of the State of Texas.
TOMMY MOORE, INC.
ATTEST:
/s/ B. MOORE BY /s/ T. W. MOORE
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SECRETARY PRESIDENT
Page five.
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UNANIMOUS WRITTEN CONSENT
OF THE
BOARD OF DIRECTORS
OF
TOMMY MOORE, INC.
The undersigned, being all of the members of the Board of Directors of
Tommy Moore, Inc., a Texas corporation (the "Corporation"), do hereby consent
to the adoption of the following resolution:
RESOLVED, that Article IV, Section 2 of the Corporation By-laws be amended
to read as follows:
"The Corporation shall have otherwise provided in the by-laws of the
Corporation, not less than two nor more than five directors."
Executed as of, but not necessarily on, the 27th day of May, 1980.
/s/ T. W. MOORE
------------------------------
T. W. Moore
/s/ BETTY JO MOORE
------------------------------
Betty Jo Moore
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EXHIBIT 4.1
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FWT, INC., as Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
===============================================================================
INDENTURE
Dated as of November 15, 1997
$125,000,000
9 7/8% Senior Subordinated Notes due 2007
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TABLE OF CONTENTS
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PARTIES.......................................................................................................1
RECITALS......................................................................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions.................................................................................1
Section 1.02 Other Definitions..........................................................................19
Section 1.03 Rules of Construction......................................................................20
Section 1.04 Form of Documents Delivered to Trustee.....................................................21
Section 1.05 Acts of Holders............................................................................22
Section 1.06 Notices, etc., to the Trustee and the Company..............................................22
Section 1.07 Notice to Holders; Waiver..................................................................23
Section 1.08 Conflict with Trust Indenture Act..........................................................23
Section 1.09 Effect of Headings and Table of Contents...................................................23
Section 1.10 Successors and Assigns.....................................................................23
Section 1.11 Separability Clause........................................................................24
Section 1.12 Benefits of Indenture......................................................................24
Section 1.13 GOVERNING LAW..............................................................................24
Section 1.14 No Recourse Against Others.................................................................24
Section 1.15 Independence of Covenants..................................................................24
Section 1.16 Exhibits and Schedules.....................................................................24
Section 1.17 Counterparts...............................................................................24
Section 1.18 Duplicate Originals........................................................................25
Section 1.19 Incorporation by Reference of TIA..........................................................25
ARTICLE TWO
SECURITY FORMS
Section 2.01 Form and Dating............................................................................25
Section 2.02 Execution and Authentication; Aggregate Principal Amount...................................26
Section 2.03 Restrictive Legends........................................................................26
Section 2.04 Book-Entry Provisions for Global Notes.....................................................28
Section 2.05 Special Transfer Provisions................................................................29
ARTICLE THREE
THE NOTES
Section 3.01 Title and Terms............................................................................31
Section 3.02 Denominations..............................................................................31
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Note: This table of contents shall not, for any purposes, be deemed to be a
part of this Indenture.
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Section 3.03 Temporary Notes............................................................................31
Section 3.04 Registration, Registration of Transfer and Exchange........................................32
Section 3.05 Mutilated, Destroyed, Lost and Stolen Notes................................................33
Section 3.06 Payment of Interest; Interest Rights Preserved.............................................33
Section 3.07 Persons Deemed Owners......................................................................34
Section 3.08 Cancellation...............................................................................34
Section 3.09 Computation of Interest....................................................................35
Section 3.10 Legal Holidays.............................................................................35
Section 3.11 CUSIP Number...............................................................................35
Section 3.12 Payment of Additional Interest Under Registration Rights Agreement.........................35
ARTICLE FOUR
LEGAL DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01 Legal Defeasance...........................................................................35
Section 4.02 Covenant Defeasance........................................................................36
Section 4.03 Conditions to Defeasance or Covenant Defeasance............................................36
Section 4.04 Deposited Money and U.S. Government Obligations To Be Held in Trust; Etc...................37
Section 4.05 Reinstatement..............................................................................38
Section 4.06 Repayment to Company.......................................................................38
ARTICLE FIVE
REMEDIES
Section 5.01 Events of Default..........................................................................38
Section 5.02 Acceleration of Maturity; Rescission and Annulment.........................................39
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee; Other Remedies............40
Section 5.04 Trustee May File Proofs of Claims..........................................................40
Section 5.05 Trustee May Enforce Claims Without Possession of Notes.....................................41
Section 5.06 Application of Money Collected.............................................................41
Section 5.07 Limitation on Suits........................................................................42
Section 5.08 Unconditional Right of Holders To Receive Principal, Premium and Interest..................42
Section 5.09 Restoration of Rights and Remedies.........................................................43
Section 5.10 Rights and Remedies Cumulative.............................................................43
Section 5.11 Delay or Omission Not Waiver...............................................................43
Section 5.12 Control by Majority........................................................................43
Section 5.13 Waiver of Past Defaults....................................................................43
Section 5.14 Undertaking for Costs......................................................................44
Section 5.15 Waiver of Stay, Extension or Usury Laws....................................................44
ARTICLE SIX
THE TRUSTEE
Section 6.01 Certain Duties and Responsibilities........................................................44
Section 6.02 Notice of Defaults.........................................................................45
Section 6.03 Certain Rights of Trustee..................................................................45
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Section 6.04 Trustee Not Responsible for Recitals, Dispositions of Notes or Application of
Proceeds Thereof........................................................................46
Section 6.05 Trustee and Agents May Hold Notes; Collections; etc........................................47
Section 6.06 Money Held in Trust........................................................................47
Section 6.07 Compensation and Indemnification of Trustee and Its Prior Claim............................47
Section 6.08 Conflicting Interests......................................................................47
Section 6.09 Corporate Trustee Required; Eligibility....................................................47
Section 6.10 Resignation and Removal; Appointment of Successor Trustee..................................48
Section 6.11 Acceptance of Appointment by Successor.....................................................49
Section 6.12 Successor Trustee by Merger, etc...........................................................49
Section 6.13 Preferential Collection of Claims Against Issuers..........................................50
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01 Preservation of Information; Company To Furnish Trustee Names and Addresses of Holders.....50
Section 7.02 Communications of Holders..................................................................51
Section 7.03 Reports by Trustee.........................................................................51
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01 When Company May Merge, etc................................................................51
Section 8.02 Successor Substituted......................................................................52
ARTICLE NINE
MODIFICATION
Section 9.01 Without Consent of Holders.................................................................52
Section 9.02 With Consent of Holders....................................................................53
Section 9.03 Compliance with Trust Indenture Act........................................................53
Section 9.04 Effect of Supplemental Indentures..........................................................54
Section 9.05 Revocation and Effect of Consents..........................................................54
Section 9.06 Notation on or Exchange of Notes...........................................................54
Section 9.07 Trustee May Sign Amendments, etc...........................................................54
ARTICLE TEN
COVENANTS
Section 10.01 Payment of Principal, Premium and Interest.................................................55
Section 10.02 Maintenance of Office or Agency............................................................55
Section 10.03 Money for Note Payments To Be Held in Trust................................................55
Section 10.04 Existence..................................................................................56
Section 10.05 Payment of Taxes and Other Claims..........................................................57
Section 10.06 Maintenance of Properties..................................................................57
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Section 10.07 Insurance..................................................................................57
Section 10.08 Compliance Certificate.....................................................................58
Section 10.09 Reports to Holders.........................................................................58
Section 10.10 Additional Subsidiary Guarantees...........................................................58
Section 10.11 Limitation on Incurrence of Additional Indebtedness........................................59
Section 10.12 Limitation on Restricted Payments..........................................................59
Section 10.13 Limitations on Transactions with Affiliates................................................61
Section 10.14 Limitation on Asset Sales..................................................................61
Section 10.15 Change of Control..........................................................................64
Section 10.16 Limitation on Liens........................................................................66
Section 10.17 Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries...66
Section 10.18 Restrictions on Preferred Stock of Restricted Subsidiaries.................................67
Section 10.19 Conduct of Business........................................................................67
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01 Optional and Special Redemption............................................................67
Section 11.02 Applicability of Article...................................................................68
Section 11.03 Election To Redeem; Notice to Trustee......................................................68
Section 11.04 Selection of Notes To Be Redeemed..........................................................68
Section 11.05 Notice of Redemption.......................................................................69
Section 11.06 Deposit of Redemption Price................................................................70
Section 11.07 Notes Payable on Redemption Date...........................................................70
Section 11.08 Notes Redeemed or Purchased in Part........................................................70
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01 Satisfaction and Discharge of Indenture....................................................71
Section 12.02 Application of Trust Money.................................................................71
ARTICLE THIRTEEN
GUARANTEE OF NOTES
Section 13.01 Guarantee..................................................................................72
Section 13.02 Execution and Delivery of Guarantee........................................................73
Section 13.03 Additional Guarantors......................................................................74
Section 13.04 Guarantee Obligations Subordinated to Guarantor Senior Indebtedness........................74
Section 13.05 Payment Over of Proceeds upon Dissolution, etc., of a Guarantor............................74
Section 13.06 Suspension of Guarantee Obligations When Guarantor Senior Indebtedness in Default..........75
Section 13.07 Release of a Guarantor.....................................................................76
Section 13.08 Waiver of Subrogation......................................................................76
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Section 13.09 Guarantee Subordination Provisions Solely To Define Relative Rights........................77
Section 13.10 Trustee To Effectuate Subordination of Guarantee Obligations...............................77
Section 13.11 No Waiver of Guarantee Subordination Provisions............................................78
Section 13.12 Guarantors To Give Notice to Trustee.......................................................78
Section 13.13 Reliance on Judicial Order or Certificate of Liquidating Agent Regarding
Dissolution, etc., of Guarantors........................................................79
Section 13.14 Rights of Trustee as a Holder of Guarantor Senior Indebtedness; Preservation
of Trustee's Rights.....................................................................79
Section 13.15 Article Thirteen Applicable to Paying Agents...............................................79
Section 13.16 No Suspension of Remedies Subject to Rights of Holders of Guarantor Senior Indebtedness....80
Section 13.17 Trustee's Relation to Guarantor Senior Indebtedness........................................80
Section 13.18 Subrogation................................................................................80
ARTICLE FOURTEEN
SUBORDINATION OF NOTES
Section 14.01 Notes Subordinate to Senior Indebtedness...................................................81
Section 14.02 Payment Over of Proceeds upon Dissolution, etc.............................................81
Section 14.03 Suspension of Payment When Designated Senior Indebtedness Is in Default....................82
Section 14.04 Trustee's Relation to Senior Indebtedness..................................................83
Section 14.05 Subrogation to Rights of Holders of Senior Indebtedness....................................83
Section 14.06 Provisions Solely To Define Relative Rights................................................83
Section 14.07 Trustee To Effectuate Subordination........................................................84
Section 14.08 No Waiver of Subordination Provisions......................................................84
Section 14.09 Notice to Trustee..........................................................................85
Section 14.10 Reliance on Judicial Order or Certificate of Liquidating Agent.............................85
Section 14.11 Rights of Trustee as a Holder of Senior Indebtedness; Preservation of Trustee's Rights.....86
Section 14.12 Article Applicable to Paying Agents........................................................86
Section 14.13 No Suspension of Remedies..................................................................86
TESTIMONIUM.................................................................................................S-1
SIGNATURES..................................................................................................S-1
Exhibit A - Form of Initial Note........................................................................A-1
Exhibit B - Form of Exchange Note.......................................................................B-1
Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB
Accredited Investors......................................................................C-1
Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S...D-1
Exhibit E - Form of Guarantee...........................................................................E-1
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INDENTURE, dated as of November 15, 1997, between FWT, INC., a
corporation incorporated under the laws of the State of Texas (the "Company"),
as issuer and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee (the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the issuance of up to
$125,000,000 aggregate principal amount of 9 7/8% Senior Subordinated Notes due
2007, of which amount $105,000,000 aggregate principal amount will be issued in
the Offering, (the "Initial Notes"), and the issuance of 9 7/8% Senior
Subordinated Notes due 2007, to be exchanged for the Initial Notes, including
the Exchange Notes and the Private Exchange Notes contemplated by the
Registration Rights Agreement (as defined herein) (the "Exchange Notes" and,
together with the Initial Notes, the "Notes");
Upon the effectiveness of the Exchange Offer Registration
Statement or the Shelf Registration Statement (each as defined in the
Registration Rights Agreement), this Indenture will be subject to, and shall be
governed by, the provisions of the Trust Indenture Act (as defined herein) that
are required to be part of and to govern indentures qualified under the Trust
Indenture Act; and
All acts and things necessary have been done to make (i) the
Notes, when duly issued and executed by the Company and authenticated and
delivered hereunder, the valid obligations of the Company and (ii) this
Indenture a valid agreement of the Company in accordance with the terms of this
Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes by the Holders (as defined herein) thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the Notes,
as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary of the Company or at the time it merges or consolidates with the
Company or any of its Subsidiaries or assumed in connection with the acquisition
of assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such acquisition, merger or
consolidation.
"Affiliate" means, with respect to any specified Person, any
other Person who directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative of the foregoing.
<PAGE> 8
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"Affiliate Transaction" has the meaning set forth in Section
10.13.
"Asset Acquisition" means (a) an Investment by the Company or
any Restricted Subsidiary of the Company in any other Person pursuant to which
such Person shall become a Restricted Subsidiary of the Company or any
Restricted Subsidiary of the Company, or shall be merged with or into the
Company or any Restricted Subsidiary of the Company, or (b) the acquisition by
the Company or any Restricted Subsidiary of the Company of the assets of any
Person (other than a Restricted Subsidiary of the Company) which constitute all
or substantially all of the assets of such Person or comprise any division or
line of business of such Person or any other properties or assets of such Person
other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by the
Company or any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Wholly Owned Restricted
Subsidiary (or a Wholly Owned Restricted Subsidiary of a Restricted Subsidiary)
of the Company of (a) any Capital Stock of any Restricted Subsidiary of the
Company other than directors' qualifying shares; or (b) any other property or
assets of the Company or any Restricted Subsidiary of the Company other than in
the ordinary course of business; provided, however, that Asset Sales shall not
include (i) a transaction or series of related transactions for which the
Company or its Restricted Subsidiaries receive aggregate consideration of less
than $500,000, (ii) a disposition of Cash Equivalents, (iii) any Restricted
Payment that is permitted to be made, and is made, under paragraph (i) of
Section 10.12(i), and (iv) the sale, lease, conveyance, disposition or other
transfer of all or substantially all of the assets (including cash or Cash
Equivalents) of the Company as permitted under Article Eight and in compliance
with Section 10.15.
"Asset Sale Offer" has the meaning set forth in Section 10.14.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code
of 1978, as amended, or any similar United States Federal or state law relating
to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization
or relief of debtors, or any amendment to, succession to or change in any such
law.
"Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The City of New
York, State of New York are authorized or obligated by law, regulation or
executive order to close.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for
<PAGE> 9
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purposes of this definition, the amount of such obligations at any date shall be
the capitalized amount of such obligations at such date, determined in
accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Ratings Group ("S&P")
or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing
no more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000 and deposits
in bank accounts in the ordinary course of business; (v) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; (vi) investments in money market
funds which invest substantially all their assets in securities of the types
described in clauses (i) through (v) above; and (vii) investments made by
Foreign Subsidiaries in local currencies in instruments issued by or with
entities of such jurisdiction having correlative attributes to the foregoing.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
thereof (whether or not otherwise in compliance with the provisions of this
Indenture), other than a Wholly-Owned Restricted Subsidiary; (ii) the approval
by the holders of Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of this Indenture); (iii) any Person or Group
(other than the Permitted Holders(s)) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing more than 50% of
the aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company; or (iv) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Company's
Board of Directors (together with any new directors whose election or
appointment by such board or whose nomination for election by the stockholders
of the Company was approved by a vote of a majority of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Company's Board of Directors then in
office.
"Change of Control Offer" has the meaning set forth in
Section 10.15.
"Commission" or "SEC" means the Securities and Exchange
Commission, as from time to time constituted, or if at any time after the
execution of this Indenture such Commission is not existing and performing the
applicable duties now assigned to it, then the body or bodies performing such
duties at such time.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common stock,
<PAGE> 10
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whether outstanding on the Issue Date or issued after the Issue Date, and
includes, without limitation, all series and classes of such common stock.
"Company" means FWT, Inc., a Texas corporation, unless and
until a successor replaces it in accordance with this Indenture, and thereafter
means such Surviving Person.
"Company Request" or "Company Order" means a written request
or order of the Company signed in the name of the Company by an officer of the
Company.
"Consolidated EBITDA" means, with respect to any Person, for
any period, the sum (without duplication) of (i) Consolidated Net Income and
(ii) to the extent Consolidated Net Income has been reduced thereby, (A) all
income taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside the ordinary course of business), (B) Consolidated
Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items
increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for such Person and its Restricted Subsidiaries in accordance
with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to any Person, the ratio of Consolidated EBITDA of such Person during the four
full fiscal quarters (the "Four Quarter Period") ending on or prior to the date
of the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment not constituting a permanent repayment and/or
termination of a related commitment of Indebtedness in the ordinary course of
business for working capital purposes pursuant to revolving credit working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (provided that such
Consolidated EBITDA shall be included only to the extent includable pursuant to
the definition of "Consolidated Net Income") attributable to the assets which
are the subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction Date,
as if such Asset Sale or Asset Acquisition (including the incurrence, assumption
or liability for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If such Person or any of its Restricted Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of such Person had directly incurred
or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per an-
<PAGE> 11
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num equal to the rate of interest on such Indebtedness in effect on the
Transaction Date; (2) if interest on any Indebtedness actually incurred on the
Transaction Date may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered rate, or
other rates, then the interest rate in effect on the Transaction Date will be
deemed to have been in effect during the Four Quarter Period; and (3)
notwithstanding clause (1) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements relating
to Interest Swap Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person
for any period, the sum, without duplication, of (i) Consolidated Interest
Expense, plus (ii) the product of (x) the amount of all dividend payments on any
series of Preferred Stock of such Person (other than dividends paid in Qualified
Capital Stock or dividends, accrued or scheduled to be accrued on Qualified
Capital Stock), without duplication, paid, accrued or scheduled to be paid or
accrued during such period times (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person, expressed as a
decimal.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the sum of, without duplication: (i) the aggregate of the
interest expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount and amortization or write-off
of deferred financing costs, (b) the net costs under Interest Swap Obligations,
(c) all capitalized interest and (d) the interest portion of any deferred
payment obligation; and (ii) the interest component of Capitalized Lease
Obligations, without duplication, paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate net income (or loss) of such Person and its
Restricted Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; provided that there shall be excluded therefrom (a)
after-tax gains from Asset Sales or reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains, (c) the net income (or
net loss) of any Person acquired in a "pooling of interests" transaction accrued
prior to the date it becomes a Restricted Subsidiary of the referent Person or
is merged or consolidated with the referent Person or any Restricted Subsidiary
of the referent Person, (d) the net income (but not loss) of any Restricted
Subsidiary of the referent Person to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income
is restricted by a contract, operation of law or otherwise, (e) the net income
of any Person, other than a Restricted Subsidiary of the referent Person, except
to the extent of cash dividends or distributions paid to the referent Person or
to a Wholly Owned Restricted Subsidiary of the referent Person by such Person,
(f) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
<PAGE> 12
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"Consolidated Non-cash Charges" means, with respect to any
Person, for any period, the aggregate depreciation, amortization and other
non-cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such charges constituting an extraordinary item or loss or any such charge
which requires an accrual of or a reserve for cash charges for any future
period).
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 6th & Marquette, MS 0069; attention: Corporate Trust Services Group,
Minneapolis, Minnesota 55479-0069.
"Covenant Defeasance" has the meaning set forth in Article
Four.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any Restricted Subsidiary of the Company against
fluctuations in currency values.
"Default" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an Event
of Default.
"Depositary" means The Depository Trust Company, or such other
depositary as the Company may appoint as a successor thereto.
"Designated Senior Indebtedness" means the Indebtedness under
the Revolving Credit Facility and any other Senior Indebtedness in an amount of
more than $10 million that is designated Senior Indebtedness by the Company.
"Disqualified Capital Stock" means that portion of any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Notes.
"Dollars" or "$" means lawful money of the United States of
America.
"Event of Default" has the meaning set forth in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, or any successor
statute or statutes thereto.
"Exchange Notes" has the meaning set forth in the preamble
hereto.
"fair market value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value (in excess of $100,000) shall be conclusively
determined by the Board of Directors of the Company acting in good faith and
shall be evidenced by a Board Resolution of the Board of Directors of the
Company delivered to the Trustee.
<PAGE> 13
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"Financial Advisory Agreement" means the management agreement
between the Company and Baker Capital Corp. as in effect on the Issue Date.
"Foreign Subsidiary" means any Subsidiary of the Company (i)
organized under the laws of a jurisdiction other than the United States of
America or any State thereof or the District of Columbia and (ii) conducting
substantially all of its business outside of the United States of America.
"FWT Acquisition" means FWT Acquisition, Inc., a Delaware
corporation.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States as of the date of determination;
provided that all calculations made for purposes of determining compliance with
the provisions of this Indenture shall use GAAP as in effect on the Issue Date.
"Guarantor" means each of the Company's Restricted
Subsidiaries, if any, that in the future executes a supplemental indenture in
which such Restricted Subsidiary agrees to be bound by the terms of this
Indenture as a Guarantor; provided that any Person constituting a Guarantor as
described above shall cease to constitute a Guarantor when its respective
Guarantee is released in accordance with the terms of this Indenture.
"Guarantor Senior Indebtedness" means, with respect to any
Guarantor, the principal of, premium, if any, and interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on any Indebtedness of such
Guarantor, whether outstanding on the Issue Date or thereafter created, incurred
or assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to such Guarantor's Guarantee. Without limiting the generality of the
foregoing, "Guarantor Senior Indebtedness" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, to the extent such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all monetary
obligations of every nature of the Guarantor under the Revolving Credit
Facility, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior
Indebtedness" shall not include (i) any Indebtedness of the Guarantor to a
Subsidiary of the Guarantor or any Affiliate of the Company or any of such
Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of the Guarantor or any Subsidiary of
the Guarantor (including, without limitation, amounts owed for compensation),
(iii) Indebtedness to trade creditors and other amounts incurred in connection
with obtaining goods, materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal, state, local or other
taxes owed or owing by the Guarantor, (vi) Indebtedness incurred in violation of
Section 10.11, (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Guarantor and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Guarantor.
"Holder" or "Noteholder" means a Person in whose name a Note
is registered in the Note Register.
<PAGE> 14
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"incur" has the meaning set forth in Section 10.11 and
"incurrence," "incurred" and "incurring" shall have the meanings correlative to
the foregoing.
"Indebtedness" means with respect to any Person, without
duplication, (i) all Obligations of such Person for borrowed money, (ii) all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments (but excluding trade account payables and other accrued
liabilities excluded from clause (iv) hereof), (iii) all Capitalized Lease
Obligations of such Person, (iv) all Obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all Obligations under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business that are not overdue by 90 days or more or are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted), (v) all Obligations for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit transaction, (vi)
guarantees and other contingent obligations in respect of Indebtedness referred
to in clauses (i) through (v) above and clause (viii) below (exclusive of
endorsements of negotiable instruments in the ordinary course of business),
(vii) all Obligations of any other Person of the type referred to in clauses (i)
through (vi) which are secured by any lien on any property or asset of such
Person, the amount of such Obligation being deemed to be the lesser of the fair
market value of such property or asset or the amount of the Obligation so
secured, (viii) all Obligations under currency agreements and interest swap
agreements of such Person and (ix) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock, which determination shall be conclusive. The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability of any
guarantees at such date; provided, further, that for purposes of calculating the
amount of any non-interest bearing or other discount security, such Indebtedness
shall be deemed to be the principal amount thereof that would be shown on the
balance sheet of the issuer dated such date prepared in accordance with GAAP but
that such security shall be deemed to have been incurred only on the date of the
original issuance thereof.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof, including for purposes of
this instrument and any supplemental indenture, the provisions of the TIA that
are deemed to be a part of and govern this instrument and any supplemental
indenture.
"Independent Financial Advisor" means a firm (i) which does
not, and whose directors, officers and employees or Affiliates do not, have a
direct or indirect financial interest in the Company and (ii) which, in the
judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"Initial Purchasers" means BT Alex. Brown Incorporated, SBC
Warburg Dillon Read Inc. and Smith Barney Inc.
<PAGE> 15
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"Insolvency or Liquidation Proceeding" means, with respect to
any Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding with
respect to such Person, whether voluntary or involuntary.
"Institutional Accredited Investor" means an entity that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means, when used with respect to any
Note, the Stated Maturity of an installment of interest on such Note, as set
forth in such Note.
"Interest Swap Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit
(including relating to accounts receivable) by the Company and its Restricted
Subsidiaries on commercially reasonable terms in accordance with normal trade
practices of the Company or such Restricted Subsidiary, as the case may be,
prepaid expenses and workers' compensation, utility, lease and similar deposits
in the ordinary course of business, and negotiable instruments held for
collection. For the purposes of Section 10.12, (i) "Investment" shall include
and be valued at the fair market value of the net assets of any Restricted
Subsidiary at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary, (ii) in determining the amount
of any Investment involving a transfer of any property or assets other than
cash, such property or assets shall be valued at the fair market value at the
time of such transfer, and (iii) the amount of any Investment shall be the
original cost of such Investment plus the cost of all additional Investments by
the Company or any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment, reduced by the payment of dividends or
distributions, repayments or repurchases in connection with such Investment or
any other amounts received in respect of such Investment; provided that no such
payment of dividends or distributions or receipt of any such other amounts shall
reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Common Stock of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, the Company no longer owns, directly or indirectly, 100% of the
outstanding Common Stock of such Restricted Subsidiary, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Common Stock of such Restricted Subsidiary
not sold or disposed of.
"Issue Date" means the date of original issuance of the Notes.
<PAGE> 16
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"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of (a) out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (b) taxes paid or payable after taking into
account any reduction in consolidated tax liability due to available tax credits
or deductions and any tax sharing arrangements, (c) repayment of Indebtedness
that is required to be repaid in connection with such Asset Sale and (d)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"Non-payment Default" means, for purposes of Article Fourteen
hereof, any default (other than a Payment Default) with respect to any
Designated Senior Indebtedness of the Company or any Guarantor pursuant to which
the maturity thereof may be accelerated.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Notes" has the meaning set forth in the preamble hereto.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering" means the offering and sale of the $105 million of
Notes by the Initial Purchasers.
"Offering Memorandum" means the offering memorandum dated as
of November 12, 1997 relating to the Offering.
"Officer" means, with respect to any Person, the Chairman,
President, Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer, any Vice President, Treasurer or Secretary, or any other officer
designated by the Board of Directors serving in a similar capacity.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or Assistant Secretary of
the Company or a Guarantor, as the case may be.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of or counsel to the Company, and who shall be reasonably
acceptable to the Trustee.
"Outstanding" means, as of the date of determination, all
Notes theretofor authenticated and delivered under this Indenture, except:
<PAGE> 17
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(i) Notes theretofor cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofor deposited
with the Trustee or any Paying Agent (other than the Company or any
Affiliate thereof) in trust for the Holders of such Notes unless,
pursuant to the provisions of Article Fourteen, the Trustee or Paying
Agent is unable to make payments on the Notes to the Holders thereof;
provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly and irrevocably given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made;
(iii) Notes with respect to which the Company has effected
Legal Defeasance or Covenant Defeasance as provided in Article Four, to
the extent provided in Sections 4.02 and 4.03; and
(iv) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture, other
than any such Notes in respect of which there shall have been presented
to the Trustee proof satisfactory to it that such Notes are held by a
bona fide purchaser in whose hands the Notes are valid, legal and
binding obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor under the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor under the Notes or any Affiliate
of the Company or such other obligor.
"Pari Passu Indebtedness" means any Indebtedness of the
Company or any Guarantor ranking pari passu in right of payment with the Notes
or the Guarantee of such Guarantor, as applicable.
"Paying Agent" means any Person authorized by the Company to
pay the principal, premium, if any, or interest on any Notes on behalf of the
Company.
"Payment Blockage Period" shall have the meaning set forth in
Section 14.03.
"Payment Default" means any default in the payment when due
(whether at Stated Maturity, upon any redemption, by acceleration or otherwise)
of principal or interest on, or of unreimbursed amounts under drawn letters of
credit or regularly accruing fees with respect to any Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable, of the Company or any Guarantor.
"Permitted Holder(s)" means FWT Acquisition, Baker
Communications Fund, L.P., Baker Capital Partners, LLC and Baker Capital Corp.
(including existing stockholders of each such entity on the Issue Date), Thomas
W. Moore, Betty J. Moore, Fred Moore, Carl R. Moore and Roy J. Moore, their
successors and assigns who are Affiliates of the Permitted Holders, members of
their families and their heirs or executors.
"Permitted Indebtedness" means, without duplication, each of
the following:
<PAGE> 18
-12-
(i) Indebtedness under the Notes initially issued hereby and
the Guarantees thereof, if any, and the Exchange Notes (as defined in
the Registration Rights Agreement);
(ii) Indebtedness incurred pursuant to the Revolving Credit
Facility in an aggregate principal amount at any time outstanding not
to exceed the greater of (A) $25 million in the aggregate or (B) the
sum of (x) 85% of the Company's accounts receivable and (y) 60% of the
Company's inventory, reduced by any required permanent repayments in
connection with any Asset Sale (which are accompanied by a
corresponding permanent commitment reduction) thereunder;
(iii) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of any
scheduled amortization payments or mandatory prepayments, in each case
when actually paid or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any of its Restricted Subsidiaries and
Interest Swap Obligations of any Restricted Subsidiary of the Company
covering Indebtedness of such Restricted Subsidiary; provided, however,
that such Interest Swap Obligations are entered into to protect the
Company and its Restricted Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with this Indenture to the
extent the notional principal amount of such Interest Swap Obligation
does not exceed the principal amount of the Indebtedness to which such
Interest Swap Obligation relates;
(v) Indebtedness under Currency Agreements; provided that in
the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of the Company and
its Restricted Subsidiaries outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary of
the Company to the Company or to a Wholly Owned Restricted Subsidiary
of the Company for so long as such Indebtedness is held by the Company
or a Wholly Owned Restricted Subsidiary of the Company, in each case
subject to no Lien held by a Person other than the Company or a Wholly
Owned Restricted Subsidiary of the Company; provided that if as of any
date any Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company owns or holds any such Indebtedness or holds
a Lien in respect of such Indebtedness, such Indebtedness shall be
deemed to have been a separate incurrence of Indebtedness by the issuer
of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary of the Company for so long as such Indebtedness is held by a
Wholly Owned Restricted Subsidiary of the Company, in each case subject
to no Lien; provided that (a) any Indebtedness of the Company to any
Wholly Owned Restricted Subsidiary of the Company is unsecured and
subordinated, pursuant to a written agreement, to the Company's
obligations under this Indenture and the Notes and (b) if as of any
date any Person other than a Wholly Owned Restricted Subsidiary of the
Company owns or holds any such Indebtedness or any Person holds a Lien
in respect of such Indebtedness, such Indebtedness shall be deemed to
have been a separate incurrence of Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within two business
days of incurrence;
<PAGE> 19
-13-
(ix) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations
in connection with self-insurance or similar requirements in the
ordinary course of business;
(x) Refinancing Indebtedness; and
(xi) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $15 million
at any one time outstanding.
"Permitted Investments" means (i) Investments by the Company
or any Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Wholly Owned Restricted Subsidiary of the
Company or that will merge or consolidate into the Company or a Wholly Owned
Restricted Subsidiary of the Company, (ii) Investments in the Company by any
Restricted Subsidiary of the Company; provided that any Indebtedness evidencing
such Investment is unsecured and subordinated, pursuant to a written agreement,
to the Company's obligations under the Notes and this Indenture; (iii)
investments in cash and Cash Equivalents; (iv) loans and advances to employees
and officers of the Company and its Restricted Subsidiaries in the ordinary
course of business for bona fide business purposes not in excess of $500,000 at
any one time outstanding; (v) Currency Agreements and Interest Swap Obligations
entered into in the ordinary course of the Company's or its Restricted
Subsidiaries' businesses and otherwise in compliance with this Indenture; (vi)
Investments in Unrestricted Subsidiaries and less than Wholly Owned Subsidiaries
not to exceed $15 million at any one time outstanding, provided no Default or
Event of Default shall have occurred and be continuing at the time such
Investment is made; (vii) Investments in stock, obligations and securities
received in settlement of debts owing to the Company or any Restricted
Subsidiary, received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers of the Company or a Restricted Subsidiary or upon the foreclosure,
perfection or enforcement of a Lien in favor of the Company or any Restricted
Subsidiary that arose in the ordinary course of business of the Company or such
Restricted Subsidiary; and (viii) Investments made by the Company or its
Restricted Subsidiaries as a result of consideration received in connection with
an Asset Sale made in compliance with Section 10.14.
"Permitted Junior Securities" means any equity securities or
subordinated debt securities of the Company or a Guarantor or any successor
obligor with respect to the Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, provided for by a plan of reorganization or
readjustment that, in the case of any such subordinated debt securities, are
subordinated in right of payment to all Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, that may at the time be outstanding to
substantially the same degree as, or to a greater extent than, the Notes or the
Guarantees are so subordinated as provided in this Indenture.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which the Company or its Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of bus-
<PAGE> 20
-14-
iness for sums not yet delinquent or being contested in good faith, if
such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, including any Lien
securing letters of credit issued in the ordinary course of business
consistent with past practice in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations, including letters of credit issued
in connection therewith (exclusive of obligations for the payment of
borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized
Lease Obligation; provided that such Liens do not extend to any
property or assets which is not leased property subject to such
Capitalized Lease Obligation;
(vii) purchase money Liens to finance property or assets of
the Company or any Restricted Subsidiary of the Company acquired in the
ordinary course of business; provided, however, that (A) the related
purchase money Indebtedness shall not exceed the cost of such property
or assets and shall not be secured by any property or assets of the
Company or any Restricted Subsidiary of the Company other than the
property and assets so acquired and (B) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Person's obligations in
respect of bankers' acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such
inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(x) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty
requirements of the Company or any of its Restricted Subsidiaries,
including rights of offset and set-off;
(xi) Liens securing Interest Swap Obligations which Interest
Swap Obligations relate to Indebtedness that is otherwise permitted
under this Indenture;
(xii) Liens securing Indebtedness under Currency Agreements;
and
<PAGE> 21
-15-
(xiii) Liens securing Acquired Indebtedness incurred in
accordance with Section 10.11; provided that (A) such Liens secured
such Acquired Indebtedness at the time of and prior to the incurrence
of such Acquired Indebtedness by the Company or a Restricted Subsidiary
of the Company and were not granted in connection with, or in
anticipation of, the incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary of the Company and (B) such Liens do
not extend to or cover any property or assets of the Company or of any
of its Restricted Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Restricted Subsidiary
of the Company and are not materially more favorable to the lienholders
than those securing the Acquired Indebtedness prior to the incurrence
of such Acquired Indebtedness by the Company or a Restricted Subsidiary
of the Company.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"Private Placement Legend" means the legend initially set
forth on the Initial Notes in the form set forth in Section 2.03.
"Public Equity Offering" has the meaning set forth in Section
11.01.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"Recapitalization" means the transaction contemplated by the
Recapitalization Agreement.
"Recapitalization Agreement" means that certain Stock Purchase
and Redemption Agreement dated as of November 12, 1997 among the Company, FWT
Acquisition and the other parties thereto and the related documents.
"Redemption Date" means, with respect to any Note or part
thereof to be redeemed, any date fixed for such redemption by or pursuant to
this Indenture and the terms of the Notes.
"Redemption Price" means, with respect to any Note or part
thereof to be redeemed, the price at which it is to be redeemed pursuant to this
Indenture and the terms of the Notes.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the
Company or any Restricted Subsidiary of the Company of Indebtedness incurred in
accordance with Section 10.11 (other than pursuant to clause (ii), (iv), (v),
(vi), (vii), (viii), (ix) or (xi) of the definition of Permitted Indebtedness),
in each case that does not (1) result in an increase in the aggregate principal
amount of Indebtedness of such Person as of the
<PAGE> 22
-16-
date of such proposed Refinancing (plus the amount of any premium required to be
paid under the terms of the instrument governing such Indebtedness and plus the
amount of fees and expenses actually incurred by the Company in connection with
such Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Notes, then
such Refinancing Indebtedness shall be subordinate to the Notes at least to the
same extent and in the same manner as the Indebtedness being Refinanced.
"Registration Rights Agreement" means the Registration Rights
Agreement dated on or about the Issue Date between the Company and the Initial
Purchasers for the benefit of themselves and the Holders as the same may be
amended from time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date specified
in the Notes.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer" means, with respect to the Trustee, the
chairman or vice chairman of the board of directors, the chairman or vice
chairman of the executive committee of the board of directors, the president,
any vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller and any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer of the Trustee to whom
any corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Restricted Payment" has the meaning set forth in Section
10.12.
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee
shall be entitled to receive, at its request, and conclusively rely on an
Opinion of Counsel with respect to whether any Note constitutes a Restricted
Security.
"Restricted Subsidiary" of any Person means any Subsidiary of
such Person which at the time of determination is not an Unrestricted
Subsidiary.
"Revolving Credit Facility" means the Revolving Credit
Facility dated as of November 12, 1997, between the Company, the lenders party
thereto in their capacities as lenders thereunder and BT Commercial Corporation,
as agent, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement or agreements extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by Section
10.11) or adding Restricted Subsidiaries of the Company as additional borrowers
or guarantors thereunder) all or any portion of the Indebtedness under such
agreement or agreements or any successor or replacement agreement or agreements
and whether by the same or any other agent, lender or group of lenders.
<PAGE> 23
-17-
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such Property.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the Commission thereunder, or any
successor statute or statutes thereto.
"Senior Indebtedness" means the principal of, premium, if any,
and interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on any Indebtedness of the Company, whether outstanding on the
Issue Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes. Without
limiting the generality of the foregoing, "Senior Indebtedness" shall also
include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, to the extent such
interest is an allowed claim under applicable law) on, and all other amounts
owing in respect of, (x) all monetary obligations of every nature of the Company
under the Revolving Credit Facility, including, without limitation, obligations
to pay principal and interest, reimbursement obligations under letters of
credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and
(z) all obligations under Currency Agreements, in each case whether outstanding
on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include (i) any Indebtedness of the Company to a
Subsidiary of the Company or any Affiliate of the Company or any of such
Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of the Company or any Subsidiary of
the Company (including, without limitation, amounts owed for compensation),
(iii) Indebtedness to trade creditors and other amounts incurred in connection
with obtaining goods, materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal, state, local or other
taxes owed or owing by the Company, (vi) Indebtedness incurred in violation of
Section 10.11, (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Company.
"Significant Subsidiary" shall have the meaning set forth in
Rule 1.02(w) of Regulation S-X under the Securities Act and the Exchange Act.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.06.
"Stated Maturity" means, with respect to any Note or any
installment of interest thereon, the dates specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness or any installment of interest is
due and payable.
<PAGE> 24
-18-
"Subsidiary", with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (ii) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly, owned by
such Person.
"Transaction Date" has the meaning set forth under the
definition of "Consolidated Fixed Charge Coverage Ratio".
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939, as amended, and as in effect from time to time.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" of any Person means (i) any
Subsidiary of such Person that at the time of determination shall be or continue
to be designated an Unrestricted Subsidiary by the Board of Directors of such
Person in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors may designate any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided that (x) the
Company certifies to the Trustee that such designation complies with Section
10.12 and (y) each Subsidiary to be so designated and each of its Subsidiaries
has not at the time of designation, and does not thereafter, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any of
the assets of the Company or any of its Restricted Subsidiaries. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if (x) immediately after giving effect to such designation, the
Company is able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 10.11 and (y) immediately
before and immediately after giving effect to such designation, no Default or
Event of Default shall have occurred and be continuing. Any such designation by
the Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the Board Resolution giving effect to such designation and
an officers' certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a Depositary receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act) as custodian with respect
to any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the Holder of such Depositary receipt; provided, however, that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the Holder of such Depositary receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such Depositary receipt.
<PAGE> 25
-19-
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a foreign Restricted Subsidiary,
directors' qualifying shares or an immaterial amount of shares required to be
owned by other Persons pursuant to applicable law) are owned by such Person or
any Wholly Owned Restricted Subsidiary of such Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ---------
<S> <C>
"Act" 1.05
"Affiliate Transaction" 10.13
"Agent Members" 2.04
"Asset Sale Offer" 10.14
"Asset Sale Offer Price" 10.14
"Asset Sale Offer Purchase Date" 10.14
"Asset Sale Offer Trigger Date" 10.14
"Authenticating Agent" 2.02
"Blockage Period" 14.03
"Change of Control Date" 10.15
"Change of Control Offer" 10.15
"Change of Control Purchase Date" 10.15
"Change of Control Purchase Price" 10.15
"Covenant Defeasance" 4.03
"Defaulted Interest" 3.06
"Defeased Guarantees" 4.01
"Defeased Notes" 4.01
"Excess Proceeds" 5.01
"Existing Indebtedness" 10.11
"Global Notes" 2.01
"Guarantee" 10.10
"Initial Notes" Recitals
"Legal Defeasance" 4.02
"Net Proceeds Deficiency" 10.14
"Net Proceeds Offer" 10.14
"Net Proceeds Offer Payment Amount" 10.14
"Net Proceeds Offer Trigger Date" 10.14
"Note Register" 3.04
"Note Registrar" 3.04
"Notice of Default" 5.01
"Offshore Global Note 2.01
</TABLE>
<PAGE> 26
-20-
<TABLE>
<CAPTION>
Defined in
Term Section
---- ---------
<S> <C>
"Offshore Physical Note" 2.01
"Optional Redemption Price" 11.01
"Other Obligations" 1.20
"Payment Amount" 10.14
"Payment Blockage Notice" 14.03
"Physical Notes" 2.01
"Refinancing Indebtedness" 10.11
"Replacement Assets" 10.14
"Representative" 14.02
"Repurchase Payments" 10.12
"Required Filing Dates" 10.09
"Restricted Payment" 10.12
"Subordinated Indebtedness" 10.12
"Surviving Entity" 8.01
"U.S. Global Note" 2.01
"U.S. Physical Notes" 2.01
</TABLE>
Section 1.03. Rules of Construction.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision;
(e) all references to "$" or "dollars" shall refer to the
lawful currency of the United States of America;
(f) the words "include," "included" and "including" as used
herein shall be deemed in each case to be followed by the phrase
"without limitation";
(g) words in the singular include the plural, and words in the
plural include the singular; and
(h) any reference to a Section or Article refers to such
Section or Article of this Indenture unless otherwise indicated.
<PAGE> 27
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Section 1.04. Form of Documents Delivered to Trustee.
Upon any request or application by the Company to the Trustee
to take any action (other than any certificate pursuant to Section 314(a) of the
TIA) under this Indenture, the Trustee may request and in such event the Company
shall furnish to the Trustee (a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent (including any covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with, (b) an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee stating
that, in the opinion of counsel, all such conditions (including any covenants
compliance with which constitutes a condition precedent), have been complied
with and (c) where applicable, a certificate or opinion by an accountant that
complies with Section 314(c) of the Trust Indenture Act.
Each Officers' Certificate and Opinion of Counsel with respect
to compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that the Person making such certificate or
Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such Officers' Certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or a certificate of public officials.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Opinions of Counsel required to be delivered to the
Trustee may have qualifications customary for opinions of the type required and
counsel delivering such Opinions of Counsel may rely on certificates of the
Company or government of other officials customary for opinions of the type
required, including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
<PAGE> 28
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Any certificate of opinion of an officer of the Company, and
Guarantor of other obligor on the Notes may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of, or representations by, an
accountant or firm of accountants in the employ of the Company, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to accounting matters
upon which his certificate or opinion may be based are erroneous. Any
certificate or opinion of any independent firm of public accountants filed with
the Trustee shall contain a statement that such firm is independent with respect
to the Company.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated,
with proper identification of each matter covered therein, and form one
instrument.
Section 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in Person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution (as provided below in
subsection (b) of this Section 1.05) of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient including, without limitation, by verification from a
notary public or signature guarantee.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind every
future Holder of the same Note or the Holder of every Note issued upon the
transfer thereof or in exchange therefor or in lieu thereof to the same extent
as the original Holder, in respect of anything done, suffered or omitted to be
done by the Trustee, any Paying Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such Note.
Section 1.06. Notices, etc., to the Trustee and the
Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any
Guarantor shall be sufficient for every purpose hereunder if made,
given, furnished or filed, in writing, to or with the Trustee at its
Corporate Trust Office or at any other address previously furnished in
writing to the Holders and the Company by the Trustee or at the office
of any drop agent specified by or on behalf of the Trustee to the
Holders and the Company from time to time; and
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(b) the Company or any Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose (except as otherwise
expressly provided herein) hereunder if in writing and mailed,
first-class postage prepaid, to the Company, addressed to it at 1101
East Loop 820 South, Fort Worth, Texas 76112-7899, with a copy to Akin,
Gump, Strauss, Hauer & Feld, L.L.P., 1700 Pacific Avenue, Suite 4100,
Dallas, Texas 75201, Attention: Christopher M. Gores, P.C., or at any
other address previously furnished in writing to the Trustee by the
Company.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise expressly
provided herein) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at the address of such Holder as it appears in
the Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice when mailed
to a Holder in the aforesaid manner shall be conclusively deemed to have been
received by such Holder whether or not actually received by such Holder. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Indenture, then any method of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act or another provision which is required
or deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such provision or requirement of the Trust Indenture Act shall
control.
If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, such
provision of the Trust Indenture Act shall be deemed to apply to this Indenture
as so modified or excluded, as the case may be, if this Indenture shall then be
qualified under the TIA.
Section 1.09. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
and Trustee shall bind their respective successors and assigns, whether so
expressed or not.
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Section 1.11. Separability Clause.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Notes issued pursuant
hereto, express or implied, shall give to any Person (other than the parties
hereto and their successors hereunder, any Paying Agent and the Holders) any
benefit or any legal or equitable right, remedy or claim under this Indenture,
except as provided in Article Thirteen and Article Fourteen.
Section 1.13. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND THE GUARANTEES, IF ANY, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE,
THE COMPANY, EACH GUARANTOR AND ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND
THE HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE NOTES.
Section 1.14. No Recourse Against Others.
No director, officer, employee or stockholder or incorporator,
past, present or future, of the Company or any Guarantor, as such, shall have
any liability for any obligations of the Company or any Guarantor under the
Notes, the Guarantees or this Indenture. Each Holder of Notes by accepting a
Note waives and releases all such liability, and such waiver and release is part
of the consideration for the issuance of the Notes.
Section 1.15. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or condition exists.
Section 1.16. Exhibits and Schedules.
All exhibits and schedules attached hereto are by this
reference made a part hereof with the same effect as if herein set forth in
full.
Section 1.17. Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
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Section 1.18. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 1.19. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in, and made a part of, this Indenture.
Any terms incorporated by reference in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them therein.
ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of
authentication relating thereto shall be substantially in the form of Exhibit A
hereto. The Exchange Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit B hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or Depositary rule or usage. The Company shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its authentication and shall show the date of its
authentication.
The additional terms and provisions contained in the forms of
Initial Notes, Exchange Notes and Guarantees, annexed hereto as Exhibits A, B
and E, respectively, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes will initially be issued in either of the following
forms:
(a) Notes offered and sold in reliance on Rule 144A issued
initially in the form of one or more global Notes in registered form,
substantially in the form set forth in Exhibit A (the "U.S. Global
Note"), deposited with the Trustee, as custodian for the Depositary,
duly executed by the Company and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in Section
2.03 hereof. The aggregate principal amount of the U.S. Global Note may
from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary.
(b) Notes offered and sold in offshore transactions in
reliance on Regulation S represented upon issuance by a temporary
global Note (the "Offshore Global Note" and, together with the U.S.
Global Note, the "Global Notes"), which will be exchangeable for
certificated Notes in registered form in substantially the form set
forth in Exhibit A (the "Offshore Physical Notes") only upon the
expiration of the "40-day restricted period" within the meaning of Rule
903(c)(3) of Regulation S.
<PAGE> 32
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Subsequent to the initial issuance of the Global Notes
provided for in paragraphs (a) and (b) above, physical certificates for notes
transferred in reliance on any exemption from registration under the Securities
Act, other than as described in the preceding two paragraphs, shall be issued in
substantially the form set forth in Exhibit A, subject to the Company's and the
Trustee's right prior to any such transfer to require the delivery of an Opinion
of Counsel, certifications and/or other information satisfactory to each of them
(the "U.S. Physical Notes"). The Offshore Physical Notes and the U.S. Physical
Notes are sometimes collectively herein referred to as the "Physical Notes."
Physical Notes may initially be registered in the name of the Depositary or a
nominee of such Depositary and be delivered to the Trustee as custodian for such
Depositary. Beneficial owners of Physical Notes, however, may request
registration of such Physical Notes in their names or the names of their
nominees.
Section 2.02. Execution and Authentication; Aggregate
Principal Amount.
The Notes shall be executed on behalf of the Company by two
Officers of the Company. The signature of any Officer on the Notes may be manual
or facsimile.
If an Officer or Assistant Secretary whose manual or facsimile
signature is on a Note was an Officer or Assistant Secretary at the time of such
execution but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
The Trustee shall authenticate (i) Initial Notes for original
issue in the aggregate principal amount not to exceed $105,000,000 and (ii)
Exchange Notes from time to time for issue only in exchange for a like principal
amount of Initial Notes, in each case upon a written order of the Company in the
form of an Officers' Certificate or Company Order. The Officers' Certificate or
Company Order shall specify the amount of Notes to be authenticated and the date
on which the Notes are to be authenticated, whether the Notes are to be Initial
Notes or Exchange Notes and whether the Notes are to be issued as Physical Notes
or Global Notes or such other information as the Trustee may reasonably request.
The aggregate principal amount of Notes outstanding at any time may not exceed
$125,000,000, except as provided in Section 3.05 hereof.
The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to authenticate
Notes. Unless otherwise provided in the appointment, an Authenticating Agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
Authenticating Agent. An Authenticating Agent has the same rights as an agent to
deal with the Company or with any Affiliate of the Company.
Section 2.03. Restrictive Legends.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the "Private Placement
Legend") on the face thereof until the third anniversary of the Issue Date,
unless otherwise agreed by the Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
<PAGE> 33
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NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY THEREOF OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR (AS DEFINED
IN RULE 501(a) (1), (2), (3), OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,
IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear a legend on the face thereof
in substantially the following form:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH
NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS
<PAGE> 34
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REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.05 OF THE INDENTURE.
Section 2.04. Book-Entry Provisions for Global Notes.
This Section 2.04 shall apply only to the Global Notes
deposited with the Depositary or its custodian.
(1) So long as the Notes are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, the Global
Notes initially shall (i) be registered in the name of the Depositary or the
nominee of such Depositary, (ii) be delivered to the Trustee as custodian for
such Depositary and (iii) bear legends as set forth in Section 2.03.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depositary, or the Trustee as its custodian, or
under the Global Notes, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of the
Global Notes for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any Agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(2) Transfers of the Global Notes shall be limited to
transfers in whole, but, subject to the immediately succeeding sentence, not in
part, to the Depositary, its successors or their respective nominees. Interests
of beneficial owners in the Global Notes may be transferred or exchanged for
Physical Notes in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.05 hereof. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in the Global Notes if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the Global Notes and a
successor depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the Note
Registrar has received a written request from the Depositary to issue Physical
Notes.
(3) In connection with any transfer or exchange of a portion
of the beneficial interest in a Global Note to beneficial owners pursuant to
paragraph (2), the Note Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.
<PAGE> 35
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(4) In connection with the transfer of the beneficial
interests in an entire Global Note to beneficial owners pursuant to paragraph
(2), the Global Note shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in the Global Note, an equal aggregate principal
amount of Physical Notes of authorized denominations.
(5) Any Physical Note constituting a Restricted Security
delivered in exchange for a beneficial interest in a Global Note pursuant to
paragraph (2) or (3) shall, except as otherwise provided by paragraphs (1)(a)(x)
and (3) of Section 2.05 hereof, bear the Private Placement Legend.
(6) The owner of a beneficial interest in a Global Note may
grant proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Notes.
If DTC is at any time unwilling or unable to continue as a
Depositary for the Global Note and a successor depositary is not appointed by
the Company within 90 days, Physical Notes will be issued in exchange for the
Global Notes, which certificates will bear the Private Placement Legend.
Section 2.05. Special Transfer Provisions.
(1) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(a) the Note Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
second anniversary of the Issue Date (or other original issue date) or
(y) (A) in the case of a transfer to an Institutional Accredited
Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Note Registrar a certificate
substantially in the form of Exhibit C hereto or (B) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has delivered to
the Note Registrar a certificate substantially in the form of Exhibit D
hereto; and
(b) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Note
Registrar of (x) the certificate, if any, required by paragraph (a)
above and (y) written instructions given in accordance with the
Depositary's and the Note Registrar's procedures,
whereupon (i) the Note Registrar shall reflect on its books and records the date
and (if the transfer does not involve a transfer of outstanding Physical Notes)
a decrease in the principal amount of the applicable Global Note in an amount
equal to the principal amount of the beneficial interest in the Global Note to
be transferred, and (ii) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Notes of like tenor and amount.
(2) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Note constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
<PAGE> 36
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(a) the Note Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Company and the Note Registrar in writing, that the sale has been made
in compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Company and the Note Registrar in writing,
that it is purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion and that it
and any such account is a QIB within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined not
to request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; and
(b) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in a Global Note, upon receipt by
the Note Registrar of written instructions given in accordance with the
Depositary's and the Note Registrar's procedures, the Note Registrar
shall reflect on its books and records the date and an increase in the
principal amount of the applicable Global Note in an amount equal to
the principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(3) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the requested transfer is after the second
anniversary of the Issue Date, or (ii) there is delivered to the Note Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(4) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Note Registrar shall retain copies of all letters, notices
and other written communications received pursuant to Section 2.04 hereof or
this Section 2.05. The Company shall have the right to inspect and make copies
of all such letters, notices or other written communications at any reasonable
time during the Note Registrar's normal business hours upon the giving of
reasonable written notice to the Note Registrar.
In connection with any transfer of the Notes, the Trustee, the
Note Registrar and the Company shall be entitled to receive, shall be under no
duty to inquire into, may conclusively presume the correctness of, and shall be
fully protected in relying upon the certificates, opinions and other information
referred to herein (or in the forms provided herein, attached hereto or to the
Notes, or otherwise) received from any Holder and any transferee of any Note
regarding the validity, legality and due authorization of any such transfer, the
eligibility of the transferee to receive such Note and any other facts and
circumstances related to such transfer.
<PAGE> 37
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ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to an aggregate
principal amount of $125,000,000 issuable in one or more series of Notes, except
for Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Section 3.03, 3.04, 3.05,
9.05, 10.12, 10.14, 10.15 or 11.08.
The Notes shall be known and designated as the "9 7/8% Senior
Subordinated Notes due 2007" of the Company. The final Stated Maturity of the
Notes shall be November 15, 2007. Interest on the Notes will accrue at the rate
of 9 7/8% per annum and will be payable semi-annually in arrears on May 15 and
November 15 in each year, commencing on May 15, 1998, to Holders of record on
the immediately preceding May 1 and November 1, respectively. Interest on the
Notes will accrue from the most recent date to which interest has been paid or
duly provided for or, if no interest has been paid, from the Issue Date.
The additional terms and provisions contained in the forms of
Initial Notes, Exchange Notes and the Guarantees, annexed hereto as Exhibits A,
B and E, respectively, shall constitute, and are hereby expressly made, a part
of this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Section 3.02. Denominations.
The Notes shall be issuable only in fully registered form
without coupons and in denominations of $1,000 and any integral multiple
thereof.
Section 3.03. Temporary Notes.
Pending the preparation and delivery of definitive Notes, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Notes. Temporary Notes may be printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the Officers executing such Notes may consider appropriate, as
conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Company designated for such purpose pursuant to Section 10.02, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Notes of
authorized denominations. Until so exchanged the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Notes.
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Section 3.04. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 being herein sometimes
referred to as the "Note Register") in which, subject to such reasonable
regulations as the Person appointed as being responsible for the keeping of the
Note Register (the "Note Registrar") may prescribe, the Company shall provide
for the registration of Notes and of transfers of Notes. The Note Register shall
be in written form or in any form capable of being converted into written form
within a reasonable period of time. The Trustee is hereby initially appointed
Note Registrar for the purpose of registering Notes and transfers of Notes as
herein provided. The Company may appoint one or more co-registrars.
Upon surrender for registration of transfer of any Note at the
office or agency of the Company designated pursuant to Section 10.02, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Notes of any
authorized denomination or denominations, of a like aggregate principal amount
and bearing such restrictive legends as may be required by Section 2.03.
At the option of the Holder, Notes in certificated form may be
exchanged for other Notes of any authorized denomination or denominations, of a
like aggregate principal amount, upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Company, evidencing the same
indebtedness, and entitled to the same benefits under this Indenture, as the
Notes surrendered upon such registration of transfer or exchange and no such
transfer or exchange shall constitute a repayment of any obligation nor create
any new obligations of the Company.
Every Note presented or surrendered for registration of
transfer, or for exchange or redemption, shall (if so required by the Company,
the Trustee, the Note Registrar or any co-registrar) be duly endorsed or be
accompanied by a written instrument of transfer in form satisfactory to the
Company, the Trustee, and the Note Registrar or any co-registrar, duly executed
by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any
registration of transfer or exchange or redemption of Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 3.03, 9.06, 10.14,
10.15 or 11.08 not involving any transfer.
None of the Company, the Trustee, the Note Registrar or any
co-registrar shall be required (a) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the mailing of a notice of redemption of the Notes selected for
redemption and ending at the close of business on the day of such mailing, (b)
to register the transfer of or exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of Notes being redeemed in part
or (c) to issue, register, transfer or exchange any Note during a Change of
Control Offer or an Asset Sale Offer, if such note is tendered pursuant to such
Change of Control Offer or Asset Sale Offer.
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When Notes are presented to the Note Registrar with a request
to register the transfer or to exchange them for an equal principal amount of
Notes of other authorized denominations, the Note Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Notes at the Note
Registrar's request.
Section 3.05. Mutilated, Destroyed, Lost and Stolen Notes.
If (a) any mutilated Note is surrendered to the Trustee, or
(b) the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Company
and the Trustee, such security or indemnity, in each case, as may be required by
them to save each of them harmless from any loss which either of them may suffer
if a Note is replaced, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser, the Company
shall execute and the Trustee shall authenticate and deliver, in exchange for
any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a
replacement Note of like tenor and principal amount, bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company may in its discretion,
instead of issuing a new Note, pay such Note.
Upon the issuance of any replacement Notes under this Section,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in lieu
of any destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.06. Payment of Interest; Interest Rights
Preserved.
Interest on any Note which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid by check or
wire transfer to the Person in whose name that Note (or one or more predecessor
Notes) is registered at the close of business on the Regular Record Date for
such interest.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date and interest
on such defaulted interest at the then applicable interest rate borne by the
Notes, to the extent lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest"), shall forthwith cease to be payable
to the Holder on the Regular Record Date and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in subsection (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
predecessor Notes) are registered at the close of business on a special
record date for the payment of such Defaulted Interest (a "Special
Record Date"), which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
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Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this subsection (a) provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company in writing of such
Special Record Date. In the name and at the expense of the Company, the
Trustee shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at its address as it appears in the
Note Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes (or
their respective predecessor Notes) are registered on such Special
Record Date and shall no longer be payable pursuant to the following
subsection (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after written notice
given by the Company to the Trustee of the proposed payment pursuant to
this subsection (b), such payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
Section 3.07. Persons Deemed Owners.
Prior to and at the time of due presentment for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered in the Note
Register as the owner of such Note for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 3.06) interest on such
Note and for all other purposes whatsoever, whether or not such Note shall be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
Section 3.08. Cancellation.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, as evidenced by a Company Order instructing the Trustee that all
Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 3.08, except as expressly permitted by this Indenture. Cancelled
Notes held by the Trustee shall be disposed of as directed by a Company Order;
provided, however, that the Trustee shall not be required to destroy such
cancelled Notes. The Trustee shall provide the Company with a list of all Notes
that have been cancelled from time to time as requested by the Company.
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Section 3.09. Computation of Interest.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
Section 3.10. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
date established for the payment of Defaulted Interest or Stated Maturity of any
Note shall not be a Business Day, then (notwithstanding any other provision of
this Indenture or of the Notes) payment of principal, premium, if any, or
interest need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date, date established for the payment of Defaulted Interest or
at the Stated Maturity, as the case may be, and no interest shall accrue with
respect to such payment for the period from and after such Interest Payment
Date, Redemption Date, date established for the payment of Defaulted Interest or
Stated Maturity, as the case may be, to the next succeeding Business Day.
Section 3.11. CUSIP Number.
The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and if so, the Trustee may use the CUSIP numbers in
notices of redemption or exchange as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes. All Initial Notes shall bear identical CUSIP numbers and
all Exchange Notes shall bear identical CUSIP numbers. The Company shall
promptly notify the Trustee in writing of any change in the CUSIP number of the
Notes.
Section 3.12. Payment of Additional Interest Under
Registration Rights Agreement.
Under certain circumstances the Company will be obligated to
pay certain additional amounts of interest to the Holders, as more particularly
set forth in Section 4 of the Registration Rights Agreement. The Company shall
be obligated to provide a copy of such Registration Rights Agreement to the
Trustee.
ARTICLE FOUR
LEGAL DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Legal Defeasance.
The Company may, at its option and at any time, elect to have
its obligations and the obligations of the Guarantors discharged with respect to
the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes and the Company and the Guarantors shall be
discharged from all their obligations with respect to the Notes, the Guarantees
and this Indenture, except for (i) the rights of Holders to receive payments in
respect of the principal of, premium, if any, and interest on the Notes when
such payments are due, (ii) the Company's rights of optional redemption, (iii)
the Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and
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the maintenance of an office or agency for payments, (iv) the rights,
powers, trust, duties and immunities of the Trustee and the Company's
obligations in connection therewith and (v) this Article Four. Subject to
compliance with this Article Four, the Company may exercise its option under
this Section 4.01 notwithstanding the prior exercise of its rights under Section
9.3 hereof.
Section 4.02. Covenant Defeasance.
In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company and the Guarantors released with
respect to the covenants ("Covenant Defeasance") contained in Sections 10.05
through 10.07, inclusive, Sections 10.09 through 10.19, inclusive, and Section
8.01(ii), and any covenant added to this Indenture subsequent to the Issue Date
pursuant to Section 9.01 hereof with respect to the outstanding Notes and (ii)
the occurrence of any event specified in Section 5.01(c) or 5.01(d) hereof, with
respect to any of Sections 10.05 through 10.07, inclusive, and Sections 10.09
through 10.19, inclusive, and Sections 8.01(ii) hereof and any covenant added to
this Indenture subsequent to the Issue Date pursuant to Section 9.01 hereof,
shall be deemed not to be or result in an Event of Default, in each case with
respect to such Notes as provided in this Section 4.02 on and after the date on
which the conditions set forth in Section 9.4 hereof are satisfied, and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes).
Section 4.03. Conditions to Defeasance or Covenant
Defeasance.
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders cash in U.S. dollars,
non-callable U.S. Government Obligations, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal
of, premium, if any, and interest on the Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may
be;
(2) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
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(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default
from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under this
Indenture or any other material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an
officers' certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders over any other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company or others;
(7) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; and
(8) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.
Opinions and certificates required to be delivered under this
Section shall be in compliance with the requirements set forth in Section 1.04
and this Section 4.03.
Section 4.04. Deposited Money and U.S. Government
Obligations To Be Held in Trust; Etc.
Subject to the provisions of the last paragraph of Section
10.03, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or such other Person that would qualify to
act as successor trustee under Article Six, collectively for purposes of this
Section 4.04, the "Trustee") pursuant to Section 4.03 in respect of the
Company's election under either Section 4.01 or 4.02, shall be held in trust and
applied by the Trustee, in accordance with provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent (other
than the Company or any Affiliate of the Company) as the Trustee may determine,
to the Holders of such Notes of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee and its agents
and hold them harmless against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
4.03 or the principal, premium, if any, and interest received in respect thereof
other than any such tax, fee or other charge which by law is for the account of
the Holders of the defeased Notes.
Anything in this Article Four to the contrary notwithstanding,
the Trustee shall deliver to the Company from time to time upon Company Request
any money or U.S. Government Obligations held by it as provided in Section 4.03
hereof which, in the opinion of a nationally-recognized firm of independent
public accountants expressed in a written certification thereof to the Trustee,
are in excess of the amount thereof which would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.
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Section 4.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 4.03, by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations of the Company
and each of the Guarantors under this Indenture, the Notes and the Guarantees
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 4.03, until such time as the Trustee or Paying Agent is permitted to
apply all such money and U.S. Government Obligations in accordance with Section
4.03; provided, however, that if the Company or the Guarantors make any payment
of principal, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company or the Guarantors, as the case may
be, shall be subrogated to the rights of the Holders of such Notes to receive
such payment from the money and U.S. Government Obligations held by the Trustee
or Paying Agent.
Section 4.06. Repayment to Company.
The Trustee shall pay to the Company (or, if appropriate, the
Guarantors) upon Company Request any money held by it for the payment of
principal or interest that remains unclaimed for two years. After payment to the
Company or the Guarantors, Noteholders entitled to money must look to the
Company and the Guarantors for payment as general creditors unless an applicable
abandoned property law designates another person and all liability of the
Trustee or Paying Agent with respect to such money shall thereupon cease.
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) the failure to pay interest on any Notes when the same
becomes due and payable and the default continues for a period of 30
days;
(b) the failure to pay the principal or premium, if any, on
any Notes, when such principal becomes due and payable, at maturity,
upon redemption or otherwise (including the failure to make a payment
to purchase Notes tendered pursuant to a Change of Control Offer or a
Net Proceeds Offer);
(c) a default in the observance or performance of any other
covenant or agreement contained in this Indenture which default
continues for a period of 30 days after the Company receives written
notice specifying the default (and demanding that such default be
remedied) from the Trustee or the Holders of at least 25% of the
outstanding principal amount of the Notes (except in the case of a
default with respect to Section 8.01, which will constitute an Event of
Default with such notice requirement but without such passage of time
requirement);
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(d) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness of the Company or any Restricted Subsidiary
of the Company, or the acceleration of the final stated maturity of any
such Indebtedness if the aggregate principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at final maturity
or which has been accelerated, aggregates $3.5 million or more at any
time;
(e) one or more judgments in an aggregate amount in excess of
$3.5 million (exclusive of amounts covered by insurance as to which the
insurer has acknowledged coverage) shall have been rendered against the
Company or any of its Restricted Subsidiaries and such judgments remain
undischarged, unpaid, unstayed, unvacated or unbonded for a period of
60 days after such judgment or judgments become final and
non-appealable;
(f) (i) the Company or any Significant Subsidiary commences a
voluntary case or proceeding under any applicable Bankruptcy Law or any
other case or proceeding to be adjudicated bankrupt or insolvent, (ii)
the Company or any Significant Subsidiary consents to the entry of a
decree or order for relief in respect of the Company or such
Significant Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, (iii) the Company or any
Significant Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law,
(iv) the Company or any Significant Subsidiary (x) consents to the
filing of such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or such Significant Subsidiary or
of any substantial part of their respective property, (y) makes an
assignment for the benefit of creditors or (z) admits in writing its
inability to pay its debts generally as they become due or (v) a court
of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (x) is for relief against the Company in an
involuntary case or proceeding, (y) appoints a custodian of the Company
or any Subsidiary of the Company for all or substantially all of its
properties, or (z) orders the liquidation of the Company or any
subsidiary of the Company (and each case the order or decree remains
unstayed and in effect for 60 days); or
(g) any of the Guarantees ceases to be in force and effect or
any of the Guarantees is declared to be null and void and unenforceable
or any of the Guarantees is found to be invalid or any of the
Guarantors denies its liability under its Guarantee (other than by
reason of release of a Guarantor in accordance with the terms of this
Indenture).
Section 5.02. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default (other than an Event of Default
specified in clause (f) of Section 5.01 with respect to the Company) shall occur
and be continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of Outstanding Notes may declare the principal of and accrued
interest on all the Notes to be due and payable by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration", and the same shall become immediately due and
payable. If an Event of Default specified in clause (f) of Section 5.01 with
respect to the Company occurs and is continuing, then all unpaid principal of,
and premium, if any, and accrued and unpaid interest on all of the outstanding
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. If, prior to
the delivery of any such "notice of acceleration" with respect to an Event of
Default specified in clause (d) above, any such payment default or acceleration
relating to such other Indebtedness shall have been cured or rescinded or such
Indebtedness shall have been discharged, in
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each case within 30 days of such default or acceleration, then such Event of
Default specified in clause (d) shall be deemed cured for all purposes of this
Indenture.
At any time after a declaration of acceleration with respect
to the Notes as described in the preceding paragraph, the Holders of a majority
in aggregate principal amount of the Outstanding Notes may rescind and cancel
such declaration and its consequences (i) if the rescission would not conflict
with any judgment or decree, (ii) if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration, (iii) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (f) of Section 5.01, the
Trustee shall have received an Officers' Certificate and an Opinion of Counsel
that such Event of Default has been cured or waived. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee; Other Remedies.
The Company covenants that if an Event of Default in payment
of principal, premium or interest specified in Section 5.01(a) or 5.01(b) hereof
occurs and is continuing, the Company will, upon demand of the Trustee, pay to
the Trustee, for the benefit of the Holders of such Notes, the whole amount then
due and payable on such Notes for principal, premium, if any, and interest, with
interest upon the overdue principal, premium, if any, and, to the extent that
payment of such interest shall be legally enforceable, upon overdue installments
of interest, at the rate then borne by the Notes; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may,
but is not obligated under this paragraph to, institute a judicial proceeding
for the collection of the sums so due and unpaid and may, but is not obligated
under this paragraph to, prosecute such proceeding to judgment or final decree,
and may, but is not obligated under this paragraph to, enforce the same against
the Company, the Guarantors or any other obligor upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Notes, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion, but is not obligated under this paragraph to, (i) proceed
to protect and enforce its rights and the rights of the Holders under this
Indenture and the Notes by such appropriate private or judicial proceedings as
the Trustee shall deem most effectual to protect and enforce such rights,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or the Notes or in aid of the exercise of any power granted
herein or therein, or (ii) proceed to protect and enforce any other proper
remedy. No recovery of any such judgment upon any property of the Company shall
affect or impair any rights, powers or remedies of the Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company, the Guaran-
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tors or any other obligor upon the Notes, or the property of the Company, the
Guarantors or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise, but is not obligated
under this paragraph
(a) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of
the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07 hereof.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding.
Section 5.05. Trustee May Enforce Claims Without
Possession of Notes.
All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Notes in respect of which such judgment
has been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium, if any, or interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
First: to the Trustee for amounts due under Section 6.07;
Second: to Holders for interest accrued on the Notes,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for interest;
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Third: to Holders for principal amounts owing under the
Notes, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal and
premium; and
Fourth: to the Company or, to the extent the Trustee collects
any amount from any Guarantor, to such Guarantor.
The Trustee, upon prior written notice to the Company, may fix
a record date and payment date for any payment to Noteholders pursuant to this
Section 5.06.
Section 5.07. Limitation on Suits.
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) the Holder or Holders of not less than 25% in aggregate
principal amount of the Outstanding Notes shall have made written
request(s) to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(b) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(c) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(d) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture or any Note to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture or any Note except in
the manner provided in this Indenture and for the equal and ratable benefit of
all the Holders.
Section 5.08. Unconditional Right of Holders To Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive cash payment, in United States dollars, of the principal of, premium, if
any, and (subject to Section 3.06 hereof) interest on such Note on the
respective Stated Maturities expressed in such Note (or, in the case of
redemption or repurchase, on the respective Redemption Dates or date fixed for
repurchase) and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the express consent of such Holder.
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Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Note and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case the
Company, the Trustee and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
Five or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
Section 5.12. Control by Majority.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee; provided, however,
that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture or any Note or expose the Trustee to
liability; and
(b) subject to the provisions of Section 315 of the TIA, the
Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Notes may on behalf of the Holders of all the Notes
waive any past Default hereunder and its consequences, except a Default:
(a) in the payment of the principal of, premium, if any, or
interest on any Note (which may only be waived with the consent of each
Holder of Notes affected); or
(b) in respect of a covenant or provision under this Indenture
which cannot be modified or amended without the consent of the Holder
of each Outstanding Note affected thereby.
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Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Note by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture or the Notes, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Notes or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of, premium, if any, or interest on any Note on or after the
respective Stated Maturities expressed in such Note (or, in the case of
redemption or repurchase, on or after the respective Redemption Dates or dates
fixed for repurchase).
Section 5.15. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury or other law wherever enacted, now or at any time hereafter in
force, which would prohibit or forgive the Company from paying all or any
portion of the principal of, premium, if any, or interest on the Notes
contemplated herein or in the Notes or which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such
<PAGE> 51
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certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee or its counsel
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that (i) this
paragraph does not limit the effect of paragraph (a) of this Section 6.01; (ii)
the Trustee shall not be liable for any error of judgment made in good faith by
an officer of the Trustee or upon advice of its counsel, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and (iii)
the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to
Section 5.12.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that repayment of such
funds is not assured to it or it does not receive an indemnity satisfactory to
it in its sole discretion against such risk, liability, loss, fee or expense
which might be incurred by it in compliance with such request or direction.
(e) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section 6.01.
Section 6.02. Notice of Defaults.
Within 90 days after the occurrence of any Default, the
Trustee shall transmit by mail to all Holders, as their names and addresses
appear in the Note Register, notice of such Default hereunder known to the
Trustee; provided, however, that, except in the case of a Default in the payment
of the principal of, premium, if any, or interest on any Note, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of Responsible Officers
or counsel of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders.
Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of ss. 315
of the TIA:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, approval, appraisal, bond, debenture, note, coupon, security,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
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(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution of the Company thereof;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate of the Company;
(d) the Trustee and its agents may consult with counsel and
any written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon in accordance with such advice or Opinion of Counsel;
(e) the Trustee and its agents shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, other evidence of indebtedness or other paper or
document but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may deem fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney during the
reasonable business hours of the Company;
(f) the Trustee and its agents may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
(other than an agent who is an employee of the Trustee) or attorney
appointed with due care by it hereunder; or
(g) the Trustee shall not be charged with knowledge of any
Default or Event of Default, as the case may be, with respect to the
Notes unless either (1) a Responsible Officer of the Trustee shall have
actual knowledge of the Default or Event of Default, as the case may
be, or (2) written notice of such Default or Event of Default, as the
case may be, shall have been given to the Trustee by the Company, any
other obligor on the Notes or by any Holder of the Notes.
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Notes or Application of Proceeds Thereof.
The recitals contained herein and in the Notes, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company and the Guarantors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or the Notes, except that the Trustee represents
that it is duly authorized to execute and deliver this Indenture, authenticate
the Notes and perform its obligations hereunder and that the statements made by
it in a Statement of Eligibility and Qualification on Form T-1 supplied to the
Company and the Guarantors in connection with the registration of any Notes and
Guarantees issued hereunder are true and accurate subject to the qualifications
set forth therein. The Trustee shall not be accountable for the use or
application by the Company of Notes or the proceeds thereof.
<PAGE> 53
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Section 6.05. Trustee and Agents May Hold Notes;
Collections; etc.
The Trustee, any Paying Agent, Note Registrar or any other
agent of the Company or the Guarantors, in its individual or any other capacity,
may become the owner or pledgee of Notes, with the same rights it would have if
it were not the Trustee, Paying Agent, Note Registrar or such other agent and,
subject to Sections 6.08 and 6.13 hereof, may otherwise deal with the Company or
the Guarantors and receive, collect, hold and retain collections from the
Company or the Guarantors with the same rights it would have if it were not the
Trustee, Paying Agent, Note Registrar or such other agent.
Section 6.06. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required herein or by law. The Trustee shall not be under any liability for
interest on any moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of Trustee
and Its Prior Claim.
The Company and the Guarantors covenant and agree: (a) to pay
to the Trustee from time to time, and the Trustee shall be entitled to,
reasonable compensation for all services rendered by it hereunder (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust); (b) to reimburse the Trustee and each predecessor
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of it in accordance with any of the provisions
of this Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other Persons not regularly
in its employ), except any such reasonable expense, disbursement or advance as
may arise from its negligence or bad faith; and (c) to indemnify the Trustee and
each predecessor Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and the exercise or performance of any of its
powers or duties hereunder, including enforcement of this Section 6.07. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The obligations of the Company and the
Guarantors under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute an additional
obligation hereunder and shall survive the satisfaction and discharge of this
Indenture.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the provisions
of ss. 310(b) of the TIA.
Section 6.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA ss.ss. 310(a)(1) and 310(a)(5) and which
shall have a combined capital, surplus and undivided profits of at least
$100,000,000, and have an office or agency at which Notes may be presented for
transfer and redemption and at which demands may be made in The City of New
York. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of United States Federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its
<PAGE> 54
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most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment of
Successor Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 6.11.
(b) The Trustee, or any trustee or trustees hereinafter
appointed, may at any time resign by giving written notice thereof to the
Company and the Guarantors at least 30 Business Days prior to the date of such
proposed resignation. Upon receiving such notice of resignation, the Company and
the Guarantors shall promptly appoint a successor trustee by written instrument,
a copy of which shall be delivered to the resigning Trustee and a copy to the
successor trustee. If an instrument of acceptance by a successor Trustee shall
not have been delivered to the Trustee within 30 Business Days after the giving
of such notice of resignation, the resigning Trustee may, or any Holder who has
been a bona fide Holder of a Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper, appoint a successor
trustee.
(c) The Trustee may be removed at any time with 60 days
written notice by an Act of the Holders of a majority in principal amount of the
Outstanding Notes, delivered to the Trustee, the Company and the Guarantors.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
ss. 310(b) of the TIA in accordance with Section 6.08 hereof after
written request therefor by the Company, the Guarantors or by any
Holder who has been a bona fide Holder of a Note for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 6.09
hereof and shall fail to resign after written request therefor by the
Company, the Guarantors or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose
or rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company or the Guarantors may remove the
Trustee, or (ii) subject to Section 5.14, the Holder of any Note who has been a
bona fide Holder of a Note for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company or the Guarantors shall promptly appoint a successor
Trustee. If, within 60 days after such resignation, removal or incapability, or
the occurrence of such
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vacancy, and the Company or the Guarantors have not appointed a successor
Trustee, a successor Trustee shall be appointed by act of the Holders of a
majority in principal amount of the Outstanding Notes delivered to the Company,
the Guarantors and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed by the Company and the
Guarantors. If no successor Trustee shall have been so appointed by the Company
or the Holders of the Notes and accepted appointment in the manner hereinafter
provided, the Holder of any Note who has been a bona fide Holder for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company and the Guarantors shall give notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Notes as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company, the Guarantors and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee as if
originally named as Trustee hereunder; but, nevertheless, on the written request
of the Company, the Guarantors or the successor Trustee, upon payment of amounts
due it pursuant to Section 6.07, such retiring Trustee shall duly assign,
transfer and deliver to the successor Trustee all moneys and property at the
time held by it hereunder and shall execute and deliver an instrument
transferring to such successor Trustee all the rights, powers, duties and
obligations of the retiring Trustee. Upon request of any such successor Trustee,
the Company and the Guarantors shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights and powers.
No successor Trustee with respect to the Notes shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor Trustee shall be eligible to act as Trustee under this
Article.
Upon acceptance of appointment by any successor Trustee as
provided in this Section 6.11, the Company and the Guarantors shall give notice
thereof to the Holders of the Notes, by mailing such notice to such Holders at
their addresses as they shall appear on the Note Register. If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 6.10(f). If the Company or the Guarantors fail to give
such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be given at the
expense of the Company.
Section 6.12. Successor Trustee by Merger, etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion, or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any fur-
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ther act on the part of any of the parties hereto, provided such corporation
shall be eligible under this Article to serve as Trustee hereunder.
In case at the time such successor to the Trustee under this
Section 6.12 shall succeed to the trusts created by this Indenture any of the
Notes shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee
and deliver such Notes so authenticated; and, in case at that time any of the
Notes shall not have been authenticated, any successor to the Trustee under this
Section 6.12 may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have been
authenticated.
Section 6.13. Preferential Collection of Claims Against
Issuers.
The Trustee shall comply with ss. 311(a) of the TIA, excluding
any creditor relationship listed in ss. 311(b) of the TIA. If the present or any
future Trustee shall resign or be removed, it shall be subject to ss. 311(a) of
the TIA to the extent provided therein.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company To
Furnish Trustee Names and Addresses of Holders.
(a) The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders; provided, however, that if and for so long as the
Trustee shall be the Note Registrar, the Note Register shall satisfy the
requirements relating to such list. Neither the Company, the Guarantors or the
Trustee shall be under any responsibility with regard to the accuracy of such
list.
(b) The Company will furnish or cause to be furnished to the
Trustee
(i) semiannually, not more than 10 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date; and
(ii) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished pursuant to this Section 7.01(b).
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Section 7.02. Communications of Holders.
Holders may communicate with other Holders with respect to
their rights under this Indenture or under the Notes pursuant to ss. 312(b) of
the TIA. The Trustee shall comply with ss. 312(b) of the TIA. The Company, the
Guarantors and the Trustee and any and all other Persons benefited by this
Indenture shall have the protection afforded by ss. 312(c) of the TIA.
Section 7.03. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the
first April 1 following the date of this Indenture, the Trustee shall mail to
all Holders, as their names and addresses appear in the Note Register, a brief
report dated as of such April 1 that complies with ss. 313(a) of the TIA;
provided, however, that if no such event as described in ss. 313(a) of the TIA
has occurred within such period then no such report need be transmitted. The
Trustee shall also comply with ss.ss. 313(b), 313(c) and 313(d) of the TIA. At
the time of its mailing to Holders, a copy of each report shall be filed with
the Company, the Guarantors, the Commission and with each national securities
exchange on which the Notes are listed. The Company shall notify the Trustee
when the Notes are listed on any stock exchange or any delisting thereof.
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When Company May Merge, etc.
The Company will not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Company's Restricted
Subsidiaries) to any Person, unless: (i) either (1) the Company shall be the
surviving or continuing corporation or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or the
Person which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the Company's
Restricted Subsidiaries substantially as an entirety (the "Surviving Entity")
(x) shall be a corporation organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia and (y) shall
expressly assume, by supplemental indenture (in form and substance satisfactory
to the Trustee), executed and delivered to the Trustee, the due and punctual
payment of the principal of, and premium, if any, and interest on all of the
Notes and the performance of every covenant of the Notes, this Indenture and the
Registration Rights Agreement on the part of the Company to be performed or
observed; (ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect to
any Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction), the Company or
such Surviving Entity, as the case may be, (1) shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction and (2) shall be able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 10.11; (iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in re-
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spect of the transaction), no Default or Event of Default shall have occurred or
be continuing; and (iv) the Company or the Surviving Entity shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance
or other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with the applicable
provisions of this Indenture and that all conditions precedent in this Indenture
relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
Each Subsidiary Guarantor (other than any Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
this Indenture in connection with any transaction complying with Section 10.14)
will not, and the Company will not cause or permit any Subsidiary Guarantor to,
consolidate with or merge with or into any Person other than the Company or any
other Subsidiary Guarantor unless: (i) the entity formed by or surviving any
such consolidation or merger (if other than the Subsidiary Guarantor) or to
which such sale, lease, conveyance or other disposition shall have been made is
a corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia or the jurisdiction of incorporation
of the Subsidiary Guarantor; (ii) such entity assumes by supplemental indenture
all of the obligations of the Subsidiary Guarantor on the Guarantee; (iii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and (iv) immediately after giving
effect to such transaction and the use of any net proceeds therefrom on a pro
forma basis, the Company could satisfy the provisions of clause (ii)(2) of
Section 8.01. Any merger or consolidation of a Subsidiary Guarantor with and
into the Company (with the Company being the surviving entity) or another
Subsidiary Guarantor that is a Wholly Owned Restricted Subsidiary of the Company
need only comply with clause (iv) of Section 8.01.
Section 8.02. Successor Substituted.
Upon any consolidation, combination or merger or any transfer
of all or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes with the same effect as if such surviving entity
had been named as such, and, except in the case of a lease, the predecessor
Person shall be released from all such obligations.
ARTICLE NINE
MODIFICATION
Section 9.01. Without Consent of Holders.
From time to time, the Company, the Guarantors, if any, and
the Trustee, without the consent of the Holders, may amend this Indenture to
cure ambiguities, defects or inconsistencies or to make any other
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addition or modification so long as any such change does not, in the opinion of
the Trustee, adversely affect the rights of any of the Holders in any material
respect. In formulating its opinion on such matters, the Trustee will be
entitled to rely on such evidence as it deems appropriate, including, without
limitation, solely on an Opinion of Counsel.
Section 9.02. With Consent of Holders.
Except as provided in Section 9.01, other modifications and
amendments of this Indenture may be made with the consent of the Holders of a
majority in principal amount of the then Outstanding Notes issued under this
Indenture, except that, without the consent of each Holder affected thereby, no
amendment may:
(i) reduce the amount of Notes whose Holders must consent
to an amendment;
(ii) reduce the rate of or change or have the effect of
changing the time for payment of interest, including defaulted
interest, on any Notes;
(iii) reduce the principal of or change or have the effect of
changing the fixed maturity of any Notes, or change the date on which
any Notes may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor;
(iv) make any Notes payable in money other than that stated in
the Notes;
(v) make any change in provisions of this Indenture
protecting the right of each Holder to receive payment of principal of
and interest on such Note on or after the due date thereof or to bring
suit to enforce such payment, or permitting Holders of a majority in
aggregate principal amount of Notes to waive Defaults or Events of
Default;
(vi) amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate a Net
Proceeds Offer with respect to any Asset Sale that has been consummated
or modify any of the provisions or definitions with respect thereto
following the consummation of such event; or
(vii) release any Guarantor from any of its obligations under
its Guarantee or this Indenture otherwise than in accordance with the
terms of this Indenture.
It shall not be necessary for any act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such act shall approve the substance thereof.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment of or supplement to this Indenture or the
Notes shall comply with the TIA as then in effect if this Indenture shall then
be qualified under the TIA.
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Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article Nine, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.05. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of that Note or portion of that Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofor revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 180 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder of Notes, unless it makes a change described in any of
clauses (i) through (ix) of Section 9.02. In that case, the amendment,
supplement or waiver shall bind each Holder of a Note who has consented to it
and every subsequent Holder of a Note or portion of a Note that evidences the
same debt as the consenting Holder's Note.
Section 9.06. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a
Note, the Trustee shall (in accordance with the specific direction of the
Company) request the Holder of the Note to deliver it to the Trustee. The
Trustee shall (in accordance with the specific direction of the Company) place
an appropriate notation on the Note about the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Note shall issue and the Trustee shall authenticate a new
Note that reflects the changed terms. Failure to make the appropriate notation
or issue a new Note shall not affect the validity and effect of such amendment,
supplement or waiver.
Section 9.07. Trustee May Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article Nine if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If such amendment, supplement or waiver does affect the rights, duties,
liabilities or immunities of the Trustee, the Trustee may, but need not, sign
it. In signing or refusing to sign such amendment, supplement or waiver, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of any amendment, supple-
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ment or waiver is authorized or permitted by this Indenture, that it is not
inconsistent herewith and that it will be valid and binding upon the Company in
accordance with its terms.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of,
premium, if any, and interest on the Notes in accordance with the terms of the
Notes and this Indenture. Principal, premium, if any, and interest shall be
considered paid on the date due if the Trustee or the Paying Agent, if other
than the Company or a Restricted Subsidiary thereof, holds in New York City as
of 10:00 a.m., New York time, on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in The City of New York, an office
or agency where Notes may be presented or surrendered for payment, where Notes
and the Guarantees may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Company or any Guarantor in respect
of the Notes, the Guarantees and this Indenture may be served. The office or
agent of the Trustee shall be such office or agency of the Company, unless the
Company shall designate and maintain some other office or agency for one or more
of such purposes. The Company will give prompt written notice to the Trustee of
any change in the location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York) where the
Notes and the Guarantees may be presented or surrendered for any or all such
purposes, and may from time to time rescind such designation; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan in
The City of New York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and any change in
the location of any such other office or agency.
Section 10.03. Money for Note Payments To Be Held in Trust.
If the Company shall at any time act as its own Paying Agent,
the Company will, on or before each due date of the principal of, premium, if
any, or interest on any of the Notes, segregate and hold in trust for the
benefit of the Holders entitled thereto a sum sufficient to pay the principal,
premium, if any, or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act.
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If the Company is not acting as Paying Agent, the Company
will, on or before each due date of the principal of, premium, if any, or
interest on any Notes, deposit with a Paying Agent a sum in same day funds
sufficient to pay the principal, premium, if any, or interest so becoming due,
such sum to be held in trust for the benefit of the Holders entitled to such
principal, premium or interest, and (unless such Paying Agent is the Trustee)
the Company will promptly notify the Trustee of such action or any failure so to
act.
If the Company is not acting as Paying Agent, the Company will
cause each Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal
of, premium, if any, or interest on Notes in trust for the benefit of
the Holders entitled thereto until such sums shall be paid to such
Holders or otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company (or
any other obligor upon the Notes) in the making of any payment of
principal of, premium, if any, or interest on the Notes;
(c) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects
with the provisions of this Indenture relating to the duties, rights
and liabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company upon receipt of a Company Request therefor, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, shall at the
expense of the Company cause to be published once, in The New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 10.04. Existence.
Subject to Article Eight, each of the Company and each
Guarantor will do or cause to be done all things necessary to and will cause
each of its Restricted Subsidiaries to preserve and keep in full force and
effect its corporate existence and the corporate existence of each of the
Restricted Subsidiaries, and the rights
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(charter and statutory), licenses and franchises of the Company and each of the
Restricted Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company, the Guarantors and their
respective Restricted Subsidiaries taken as a whole and that the loss thereof is
not disadvantageous in any material respect to the Holders; provided, further,
however, that the foregoing shall not prohibit a sale, transfer or conveyance of
a Subsidiary of the Company or any of its assets or Capital Stock in compliance
with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
The Company and each Guarantor shall pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or imposed (i) upon the
Company or any of its Restricted Subsidiaries or (ii) upon the income, profits
or property of the Company or any of its Restricted Subsidiaries and (b) all
material lawful claims for labor, materials and supplies, which, if unpaid,
might by law become a Lien upon the property of the Company or any of its
Restricted Subsidiaries; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings properly instituted and
diligently conducted.
Section 10.06. Maintenance of Properties.
The Company and each Guarantor shall, and shall cause each of
their respective Restricted Subsidiaries to, cause all material properties owned
by the Company or the Restricted Subsidiaries or used or held for use in the
conduct of its business or the business of the Restricted Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all necessary equipment and will cause to
be made all repairs, renewals, replacements, betterments and improvements
thereof, all as shall be reasonably necessary so that the business carried on in
connection therewith may be conducted at all times in the ordinary course;
provided, however, that nothing in this Section 10.06 shall prevent the Company,
any Guarantor or any of their respective Subsidiaries from discontinuing the
operation and maintenance of any of such properties if (x) such discontinuance
is, in the judgment of the Company, the Guarantor, or the Restricted Subsidiary,
desirable in the conduct of its businesses or (y) if such discontinuance or
disposal is not materially adverse to either the Company, the Guarantors and
their respective Restricted Subsidiaries taken as a whole or the ability of the
Company and the Guarantors taken as a whole to otherwise satisfy its obligations
hereunder.
Section 10.07. Insurance.
The Company shall provide or cause to be provided, for itself
and each of its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Company are adequate and appropriate for the conduct
of the business of the Company and such Restricted Subsidiaries in a prudent
manner, with reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, retentions, self-insurance amounts and co-insurance provisions, and
by such methods as shall be either (i) consistent with past practices of the
Company or the applicable Restricted Subsidiary or (ii) customary, in the
reasonable, good faith opinion of the Company, for corporations similarly
situated in the industry, unless the failure to provide such insurance (together
with all other such failures) would not have a material adverse effect on the
financial condition or results of operations of the Company and its Restricted
Subsidiaries, taken as a whole.
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Section 10.08. Compliance Certificate.
(a) The Company will deliver to the Trustee within 120 days
after the end of each of the Company's fiscal years a certificate to the Trustee
at least annually from the chief financial officer (or if the Company does not
have a chief financial officer, the Company's principal executive, financial or
accounting officer) of the Company as to his or her knowledge of the compliance
of the Company, the Guarantors and the Restricted Subsidiaries with all
conditions and covenants under this Indenture and any related documents and
whether any Default or Event of Default has occurred, such compliance to be
determined without regard to any period of grace or requirement of notice
provided herein.
(b) The Company will deliver to the Trustee promptly, and in
any event within 10 days after the Company becomes aware of the occurrence of
any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company or the applicable
Guarantor, as the case may be, is taking or proposes to take with respect
thereto.
Section 10.09. Reports to Holders.
The Company will deliver to the Trustee within 15 days after
the filing of the same with the Commission, copies of the quarterly and annual
reports and of the information, documents and other reports, if any, which the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide (without
exhibits) the Trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of Section 314(a) of
the TIA.
Section 10.10. Additional Subsidiary Guarantees.
If the Company or any of its Restricted Subsidiaries transfers
or causes to be transferred, in one transaction or a series of related
transactions, any property with a fair market value in excess of $500,000 to any
Restricted Subsidiary that is not a Guarantor, or if the Company or any of its
Restricted Subsidiaries shall organize, acquire or otherwise invest in another
Restricted Subsidiary having total assets with a book value in excess of
$500,000, then such transferee or acquired or other Restricted Subsidiary shall
(i) execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall unconditionally guarantee (a "Guarantee") on a senior
subordinated basis all of the Company's obligations under the Notes and this
Indenture on the terms set forth in this Indenture and (ii) deliver to the
Trustee an opinion of counsel that such supplemental indenture has been duly
authorized, executed and delivered by such Restricted Subsidiary and constitutes
a legal, valid, binding and enforceable obligation of such Restricted
Subsidiary. Thereafter, such Restricted Subsidiary shall be a Guarantor for all
purposes of this Indenture. The Obligations of a Guarantor under its Guarantee
will be subordinated to the prior payment in full of Guarantor Senior
Indebtedness of such Guarantor to substantially the same extent as the Notes are
subordinated to Senior Indebtedness.
Each Guarantor may consolidate with or merge into or sell its
assets to the Company or another Guarantor that is a Wholly Owned Restricted
Subsidiary of the Company without limitation, or with or into or to other
Persons upon the terms and conditions set forth in Section 8.03 hereof. In the
event all of the Capital Stock of a Guarantor is sold by the Company and/or by
one or more of the Company's Restricted Subsidiaries or in the event all or
substantially all assets of a Guarantor are sold by the Company and/or by one of
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the Company's Restricted Subsidiaries and (i) such sale complies with the
provisions set forth in Section 10.14 and (ii) such Guarantor is released from
all of its obligations under the Revolving Credit Agreement, the Guarantor's
Guarantee will be automatically and unconditionally released. In addition, any
Guarantor that is designated as an Unrestricted Subsidiary in accordance with
the terms of this Indenture will be relieved of its obligations under its
Guarantee.
Section 10.11. Limitation on Incurrence of Additional
Indebtedness.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, acquire, become liable, contingently or otherwise, with respect to,
or otherwise become responsible for payment of (collectively, "incur") any
Indebtedness (other than Permitted Indebtedness) provided, however, that if no
Default or Event of Default shall have occurred and be continuing at the time of
or as a consequence of the incurrence of any such Indebtedness, the Company and
any Restricted Subsidiary that is a Guarantor may incur Indebtedness (including,
without limitation, Acquired Indebtedness) if on the date of the incurrence of
such Indebtedness, after giving effect to the incurrence thereof, the
Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0 to
1.0; provided that any guarantee of Indebtedness permitted to be uncured
hereunder shall not be a separate incurrence of Indebtedness.
Section 10.12. Limitation on Restricted Payments.
(i) The Company will not, and will not cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock, (b) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness ("Subordinated Indebtedness") of the Company that is
subordinate or junior in right of payment to the Notes or (d) make any
Investment (other than Permitted Investments) (each of the foregoing actions set
forth in clauses (a), (b) (c) and (d) being referred to as a "Restricted
Payment"), if at the time of such Restricted Payment or immediately after giving
effect thereto, (i) a Default or an Event of Default shall have occurred and be
continuing or (ii) the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
10.11 or (iii) the aggregate amount of Restricted Payments (including such
proposed Restricted Payment) made subsequent to the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair market value
of such property as determined in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% (or 100% for the purpose of making a
Restricted Payment described in clause (d) above) of the cumulative Consolidated
Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100%
of such loss) of the Company earned subsequent to the Issue Date and on or prior
to the date the Restricted Payment occurs (the "Reference Date") (treating such
period as a single accounting period); plus (x) 100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or prior
to the Reference Date of Qualified Capital Stock of the Company or any options,
warrants or rights to purchase Qualified Capital Stock of the Company (other
than options, warrants or rights initially issued and sold together with
Disqualified Capital Stock or debt securities comprising a unit), together with
the aggregate cash received by the Company at the time of exercise of such
options, warrants or rights; plus (y) 100% of the aggregate net cash proceeds
received on or after the Issue Date by the Company from the issuance or sale
(other than to a Subsidiary of the Company) of convertible debt or convertible
Disqualified Capital Stock that has been converted into or exchanged for
Qualified Capital Stock of
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the Company, together with the aggregate cash received by the Company at the
time of such conversion or exchange; plus (z) without duplication of any amounts
included in clause (iii)(y) above, (1) 100% of the aggregate net cash proceeds
of any equity contribution received by the Company from a holder of the
Company's Capital Stock (excluding, in the case of clauses (iii)(x) and (z), any
net cash proceeds from a Public Equity Offering to the extent used to redeem the
Notes) and (2) to the extent not otherwise included in the Company's
Consolidated Net Income, an amount equal to the net reduction in any investment
made by the Company and its Restricted Subsidiaries subsequent to the Issue Date
in any Person resulting from (a) payments of interest on debt, dividends,
repayments of loans or advances, or other transfers or distributions of
Property, in each case to the Company or any Restricted Subsidiary from any
Person, and in an amount not to exceed the book value of such investment
previously made in such Person that were treated as Restricted Payments, or (b)
the designation of any Unrestricted Subsidiary as a Restricted Subsidiary, in
each case in an amount not to exceed the lesser of (x) the book value of such
Investment previously made in such Unrestricted Subsidiary that were treated as
Restricted Payments, and (y) the fair market value of such Unrestricted
Subsidiary.
(ii) Notwithstanding the foregoing, the provisions set forth
in the immediately preceding paragraph do not prohibit: (1) the payment of any
dividend within 60 days after the date of declaration of such dividend if the
dividend would have been permitted on the date of declaration; (2) if no Default
or Event of Default shall have occurred and be continuing, the acquisition of
any shares of Capital Stock of the Company, either (i) solely in exchange for
shares of Qualified Capital Stock of the Company or (ii) through the application
of net proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock of the Company;
(3) if no Default or Event of Default shall have occurred and be continuing, the
acquisition of any Indebtedness of the Company that is subordinate or junior in
right of payment to the Notes either (i) solely in exchange for shares of
Qualified Capital Stock of the Company, or (ii) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of the Company) of (A) shares of Qualified Capital Stock of the Company or (B)
Refinancing Indebtedness; (4) so long as no Default or Event of Default shall
have occurred and be continuing, repurchases by the Company of Common Stock of
the Company from employees of the Company or any of its Subsidiaries or their
authorized representatives upon the death, disability or termination of
employment of such employees, in an aggregate amount not to exceed $250,000 in
any calendar year; (5) payments under Affiliated Transactions permitted by
paragraph (b)(v) of Section 10.13 that would otherwise constitute Restricted
Payments; (6) the purchase of any Subordinated Indebtedness at a purchase price
not greater than 101% or 100%, respectively, of the principal amount thereof in
the event of a "Change of Control Offer" or a "Net Proceeds Offer,"
respectively, in accordance with provisions similar to those contained in
Sections 10.14 and 10.15, provided that, prior to any such purchase of
Subordinated Indebtedness, the Company has made the Change of Control Offer or
the Net Proceeds Offer, as the case may be, in accordance with such covenants
and has purchased all Notes validly tendered pursuant to such offer and that no
Default or Event of Default is in existence prior to or as a result of such
purchases; and (7) the payment of the Transaction Fee to Baker Capital Corp.
pursuant to the Recapitalization Agreement. In determining the aggregate amount
of Restricted Payments made subsequent to the Issue Date in accordance with
clause (iii) of the immediately preceding paragraph, amounts expended pursuant
to clauses (1) (if not already taken into consideration for determining such
amount upon the declaration thereof), (2) and (4) shall be included in such
calculation.
(iii) Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment complies with this Indenture and setting
forth in reasonable detail the basis upon which the required calculations were
computed, which calculations may be based upon the Company's latest available
internal quarterly financial statements.
<PAGE> 67
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Section 10.13. Limitations on Transactions with Affiliates.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
(each an "Affiliate Transaction"), other than (x) Affiliate Transactions
permitted under Section 10.13(b) and (y) Affiliate Transactions on terms that
are no less favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Company or such Restricted Subsidiary (and, in the
case of a transaction between the Company and a Restricted Subsidiary that is
not a Wholly Owned Restricted Subsidiary, fair to the Company). All Affiliate
Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) involving aggregate payments or other property
with a fair market value in excess of $1,000,000 shall be approved by the Board
of Directors of the Company or such Restricted Subsidiary, as the case may be,
such approval to be evidenced by a Board Resolution stating that such Board of
Directors has determined that such transaction complies with the foregoing
provisions. If the Company or any Restricted Subsidiary of the Company enters
into an Affiliate Transaction (or a series of related Affiliate Transactions
related to a common plan) that involves an aggregate fair market value of more
than $5,000,000, the Company or such Restricted Subsidiary, as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as to the
fairness of such transaction or series of related transactions to the Company or
the relevant Restricted Subsidiary, as the case may be, from a financial point
of view, from an Independent Financial Advisor and file the same with the
Trustee.
(b) The restrictions set forth in clause (a) shall not apply
to (i) reasonable fees and compensation paid to and indemnity provided on behalf
of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary of the Company as determined in good faith by the
Company's Board of Directors or senior management; (ii) transactions exclusively
between or among the Company and any of its Wholly Owned Restricted Subsidiaries
or exclusively between or among such Wholly Owned Restricted Subsidiaries,
provided such transactions are not otherwise prohibited by this Indenture; (iii)
any agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment thereto)
in any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders in any material
respect than the original agreement as in effect on the Issue Date; (iv)
Restricted Payments permitted by this Indenture; (v) advances, loans and
relocation allowances made to officers and employees of the Company in the
ordinary course of business, not to exceed $500,000 outstanding at any one time;
and (vi) payments made pursuant to the Financial Advisory Agreement, provided,
however, no Default or Event of Default shall have occurred and be continuing at
the time any such payment is made.
Section 10.14. Limitation on Asset Sales.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or
the applicable Restricted Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors), (ii) at least 75% of the consideration received
by the Company or the Restricted Subsidiary, as the case may be, from such Asset
Sale at the time of such disposition shall be in the form of cash or Cash
Equivalents (or the assumption of indebtedness and liabilities of the Company or
such Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability thereon) or notes or marketable securities that
are converted into cash or Cash Equivalents within 180 days after the date of
such Asset Sale; and (iii) upon the consummation of an Asset
<PAGE> 68
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Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the
Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof
either (A) to prepay any Senior Indebtedness and, in the case of any such
Indebtedness under any revolving credit facility, effect a permanent reduction
in the availability under such revolving credit facility, (B) to make an
investment in properties and assets that replace the properties and assets that
were the subject of such Asset Sale or in properties and assets that will be
used in the business of the Company and its Subsidiaries or in businesses
reasonably related thereto ("Replacement Assets"), or (C) a combination of
prepayment and investment permitted by the foregoing clauses (iii)(A) and
(iii)(B). Within 30 days after such 360 day period after an Asset Sale or such
earlier date, if any, as the Board of Directors of the Company or of such
Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to
such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the
next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B)
and (iii)(C) of the next preceding sentence (the "Excess Proceeds") shall be
applied by the Company or such Restricted Subsidiary to make an offer to
purchase (the "Net Proceeds Offer") Notes and Pari Passu Indebtedness, if
applicable, on a date (the "Net Proceeds Offer Payment Date") not less than 30
nor more than 45 days following the applicable Net Proceeds Offer Trigger Date,
from all Holders and from holders of Pari Passu Indebtedness, if applicable, on
a pro rata basis, that amount of Notes and Pari Passu Indebtedness, if
applicable, equal to the Excess Proceeds, with regard to the Notes, at a price
equal to 100% of the principal amount of the Notes to be purchased, plus accrued
and unpaid interest thereon, if any, to the date of purchase; provided, however,
that if at any time within one year of the date of the Asset Sale any non-cash
consideration received by the Company or any Restricted Subsidiary of the
Company, as the case may be, in connection with any Asset Sale is converted into
or sold or otherwise disposed of for cash (other than interest received with
respect to any such non-cash consideration), then such conversion or disposition
shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds
thereof shall be applied in accordance with this Section 10.14. The Company may
defer the Net Proceeds Offer until there are aggregate unutilized Excess
Proceeds equal to or in excess of $10,000,000 resulting from one or more Asset
Sales (at which time, the entire unutilized Excess Proceeds, and not just the
amount in excess of $10,000,000, shall be applied as required pursuant to this
Section).
In the event of the transfer of substantially all (but not
all) of the property and assets of the Company and its Restricted Subsidiaries
as an entirety to a Person in a transaction permitted under Section 8.01 and if
the Company has not made a Change of Control Offer in connection with any such
transfer, the successor corporation shall be deemed to have sold the properties
and assets of the Company and its Restricted Subsidiaries not so transferred for
purposes of this Section 10.14, and shall comply with the provisions of this
covenant with respect to such deemed sale as if it were an Asset Sale. In
addition, the fair market value of such properties and assets of the Company or
its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this Section 10.14.
Each Net Proceeds Offer will be mailed to the record Holders
as shown on the register of Holders within 25 days following the Net Proceeds
Offer Trigger Date, with a copy to the Trustee, and shall comply with the
procedures set forth below. Upon receiving notice of the Net Proceeds Offer,
Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. A Net Proceeds Offer shall remain open
for a period of 20 business days or such longer period as may be required by
law. Any amounts not utilized to repurchase Notes shall no longer constitute Net
Cash Proceeds with respect to such Asset Sale.
When the aggregate amount of Excess Proceeds equals or exceeds
$10,000,000, the Company shall make an offer to purchase, from all Holders of
the Notes and any then outstanding Pari Passu Indebted-
<PAGE> 69
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ness required to be repurchased or repaid on a permanent basis in connection
with an Asset Sale, an aggregate principal amount of Notes and any such Pari
Passu Indebtedness equal to such Excess Proceeds as follows:
(i) (A) The Company shall make an offer to purchase (a "Net
Proceeds Offer") from all Holders of the Notes in accordance with the
procedures set forth in this Section the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased out
of an amount (the "Payment Amount") equal to the product of such Excess
Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Notes and the denominator of which
is the sum of the outstanding principal amount of the Notes and such
Pari Passu Indebtedness, if any (subject to proration in the event such
amount is less than the aggregate Offered Price (as defined in clause
(ii) below) of all Notes tendered), and (B) to the extent required by
any such Pari Passu Indebtedness and provided there is a permanent
reduction in the principal amount of such Pari Passu Indebtedness, the
Company shall make an offer to purchase such Pari Passu Indebtedness (a
"Pari Passu Offer") in an amount (the "Pari Passu Indebtedness Amount")
equal to the excess of the Excess Proceeds over the Payment Amount.
(ii) The offer price for the Notes shall be payable in cash in
an amount equal to 100% of the principal amount of the Notes tendered
pursuant to a Net Proceeds Offer, plus accrued and unpaid interest, if
any, to the date such Net Proceeds Offer is consummated (the "Offered
Price"), in accordance with the procedures set forth in this Section.
To the extent that the aggregate Offered Price of the Notes tendered
pursuant to a Net Proceeds Offer is less than the Payment Amount
relating thereto or the aggregate amount of the Pari Passu Indebtedness
that is purchased or repaid pursuant to the Pari Passu Offer is less
than the Pari Passu Indebtedness Amount (such shortfall constituting a
"Net Proceeds Deficiency"), the Company may use such Net Proceeds
Deficiency, or a portion thereof, for general corporate purposes,
subject to the limitations of Section 10.12.
(iii) If the aggregate Offered Price of Notes validly tendered
and not withdrawn by Holders thereof exceeds the Payment Amount, Notes
to be purchased will be selected on a pro rata basis. Upon completion
of such Net Proceeds Offer and Pari Passu Offer, the amount of Excess
Proceeds shall be reset to zero.
Notice of an Asset Sale Offer shall be prepared and mailed by
the Company with a copy to the Trustee within 25 days following the Net Proceeds
Offer Trigger Date after the Company is obligated to make an Asset Sale Offer
(in accordance with the immediately preceding paragraph) to each Holder at such
Holder's registered address, stating:
(i) that the Company is offering to purchase the maximum
principal amount of Notes that may be purchased out of the Unutilized
Net Cash Proceeds to the extent to be applied to an offer to purchase
Notes (as provided in the immediately preceding paragraph), at an offer
price in cash in an amount equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of the
purchase (the "Asset Sale Offer Purchase Date"), which shall be a
Business Day, specified in such notice, that is not earlier than 20
days or later than 60 days from the date such notice is mailed;
(ii) the amount of accrued and unpaid interest, if any, as of
the Asset Sale Offer Purchase Date;
<PAGE> 70
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(iii) that any Note not validly tendered will continue to
accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment of the
purchase price for the Notes payable pursuant to the Asset Sale Offer,
any Notes accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Asset Sale Offer Purchase Date;
(v) that Holders electing to have Notes purchased pursuant to
an Asset Sale Offer will be required to surrender their Notes to the
Paying Agent at the address specified in the notice prior to 5:00 p.m.,
New York City time, on the third Business Day prior to the Asset Sale
Purchase Date with the "Option of Holder to Elect Purchase" on the
reverse thereof completed and must complete any form letter of
transmittal proposed by the Company (which letter must be completed
correctly by such Holder) and which is acceptable to the Trustee and
the Paying Agent;
(vi) that Holders of Notes will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New
York City time, on the third Business Day prior to the Asset Sale Offer
Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes the
Holder delivered for purchase, the Note certificate number (if any) and
a statement that such Holder is withdrawing its election to have such
Notes purchased;
(vii) that Holders whose Notes are purchased only in part will
be issued Notes equal in principal amount to the unpurchased portion of
the Notes surrendered;
(viii) the instructions that Holders must follow in order to
tender their Notes; and
(ix) information concerning the business of the Company, the
most recent annual and quarterly reports of the Company filed with the
Commission pursuant to the Exchange Act (or, if the Company is not then
required to file any such reports with the Commission, the comparable
reports prepared pursuant to Section 10.09).
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
10.14, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
provisions of this Section 10.14 by virtue thereof.
Section 10.15. Change of Control.
Upon the occurrence of a Change of Control, each Holder will
have the right to require that the Company purchase all or a portion of such
Holder's Notes pursuant to the offer described below (the "Change of Control
Offer"), at a purchase price (the "Change of Control Purchase Price") equal to
101% of the principal amount thereof plus accrued and unpaid interest to the
date of purchase.
Within 30 days following the date upon which the Change of
Control occurred, the Company must send, by first class mail, a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of the
Change of Control Offer. Such notice shall state:
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(a) that the Change of Control has occurred and that such
Holder has the right to require the Company to purchase all or a
portion (equal to $1,000 or an integral multiple thereof) of such
Holder's Notes at a purchase price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest,
if any, to the date of purchase, which shall be a Business Day,
specified in such notice, that is not more than 30 or less than 45 days
from the date such notice is mailed, other than as may be required by
law (the "Change of Control Purchase Date");
(b) the amount of accrued and unpaid interest, if any, as of
the Change Control Purchase Date;
(c) that any Note not validly tendered for payment will
continue to accrue interest in accordance with the terms thereof;
(d) that, unless the Company defaults in the payment of the
purchase price for the Notes payable pursuant to the Change of Control
Offer or unless the payment is prohibited pursuant to Article Fourteen,
any Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Purchase
Date;
(e) that Holders electing to have Notes purchased pursuant to
a Change of Control Offer will be required to surrender their Notes to
the Paying Agent at the address specified in the notice prior to 5:00
p.m., New York City time, on the third Business Day prior to the Change
of Control Purchase Date with the "Option of Holder to Elect Purchase"
on the reverse thereof completed and must complete any form letter of
transmittal proposed by the Company and be completed correctly by such
Holder and be acceptable to the Trustee and the Paying Agent;
(f) that Holders of Notes will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New
York City time, on the third Business Day prior to the Change of
Control Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note certificate number
(if any) and a statement that such Holder is withdrawing its election
to have such Notes purchased;
(g) that Holders whose Notes are purchased only in part will
be issued Notes equal in principal amount to the unpurchased portion of
the Notes surrendered; and
(h) the instructions that Holders must follow in order to
tender their Notes.
On the Change of Control Purchase Date, the Company will (i)
accept for payment all Notes or portions thereof validly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent an amount in
cash equal to the aggregate purchase price of all Notes or portions thereof
accepted for payment, plus any accrued and unpaid interest on such Notes as of
the Change of Control Purchase Date, and (iii) deliver or cause to be delivered
to the Trustee all Notes tendered pursuant to the Change of Control Offer. The
Paying Agent shall as promptly as practicable after the Change of Control
Purchase Date mail to each Holder of Notes or portions thereof accepted for
payment an amount in cash equal to the purchase price for such Notes, plus any
accrued and unpaid interest thereon, and the Trustee shall promptly authenticate
and mail to such Holders of Notes accepted for payment in part a new Note equal
in principal amount to any unpurchased portion of the Note surrendered. Any
Notes not so accepted in whole or in part shall be promptly returned to the
Holder thereof.
<PAGE> 72
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On and after a Change of Control Purchase Date, interest will
cease to accrue on the Notes or portions thereof accepted for payment unless the
Company defaults in the payment of the purchase price therefor. The Company will
publicly announce the results of the Change of Control Offer as soon as
practicable after the Change of Control Purchase Date.
The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section applicable to a Change of Control Offer
made by the Company and repurchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other applicable
securities laws or regulations and any applicable requirements of any securities
exchange on which the Notes are listed, in connection with the repurchase of
Notes pursuant to a Change of Control Offer, and any violation of the provisions
of this Indenture relating to such Change of Control Offer occurring as a result
of such compliance shall not be deemed a Default.
Section 10.16. Limitation on Liens.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens of any kind against or upon any property or
assets of the Company or any of its Restricted Subsidiaries whether owned on the
Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom
unless (i) in the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment to the Notes, the Notes are secured by
a Lien on such property, assets or proceeds that is senior in priority to such
Liens and (ii) in all other cases, the Notes are equally and ratably secured,
except for (A) Liens existing as of the Issue Date to the extent and in the
manner such Liens are in effect on the Issue Date; (B) Liens securing Senior
Indebtedness; (C) Liens securing the Notes or Guarantees; (D) Liens of the
Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any
Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Indenture and which has been incurred in accordance with
the provisions of this Indenture; provided, however, that such Liens (A) are not
materially less favorable to the Holders and are not materially more favorable
to the lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being Refinanced and (B) do not extend to or cover any property or
assets and improvements and attachments thereto and proceeds thereof of the
Company or any of its Subsidiaries not securing the Indebtedness so Refinanced;
and (F) Permitted Liens.
Section 10.17. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or make
any other distributions on or in respect of its Capital Stock; (b) make loans or
advances or to pay any Indebtedness or other obligation owed to the Company or
any other Restricted Subsidiary of the Company; or (c) transfer any of its
property or assets to the Company or any other Restricted Subsidiary of the
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Indenture; (3) Indebtedness existing on
the Issue Date; (4) the Revolving Credit Facility; (5) restrictions imposed by
Liens permitted by this Indenture; (6) restrictions imposed by an agreement for
the sale of Capital Stock or assets of a Restricted Subsidiary,
<PAGE> 73
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provided such restrictions apply to the Capital Stock or Assets being sold; (7)
customary non-assignment provisions of any contract, any license, any lease
governing a leasehold interest or similar agreement of any Restricted Subsidiary
of the Company; (8) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or assets of the
Person so acquired; or (9) an agreement governing Indebtedness incurred to
Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clauses (2), (3), (4) or (8) above; provided, however, that the
provisions relating to such encumbrance or restriction contained in any such
Indebtedness are no less favorable taken as a whole to the Company in any
material respect as determined by the Board of Directors of the Company in their
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clauses
(2), (3), (4) or (8).
Section 10.18. Restrictions on Preferred Stock of
Restricted Subsidiaries.
The Company will not permit any of its Restricted Subsidiaries
to issue any Preferred Stock (other than to the Company or to a Wholly Owned
Restricted Subsidiary of the Company) or permit any Person (other than the
Company or a Wholly Owned Restricted Subsidiary of the Company) to own any
Preferred Stock of any Restricted Subsidiary of the Company.
Section 10.19. Conduct of Business.
The Company and its Restricted Subsidiaries will not engage in
any businesses the majority of the revenues of which are not derived from the
same or reasonably similar, ancillary or related to, or a reasonable extension,
development or expansion of, the businesses in which the Company is engaged on
the Issue Date.
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01. Optional and Special Redemption.
(a) Optional Redemption. The Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after November 15, 2002, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
November 15 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the Redemption Date:
<PAGE> 74
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<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002.................................104.938%
2003.................................103.292%
2004.................................101.646%
2005 and thereafter..................100.000%
</TABLE>
(b) Optional Redemption upon Public Equity Offering. At any
time, or from time to time, on or prior to November 15, 2000, the Company may,
at its option, use the net cash proceeds of one or more Public Equity Offerings
(as defined below) to redeem the Notes at a redemption price equal to 109.875%
of the principal amount thereof plus accrued and unpaid interest thereon, if
any, to the Redemption Date; provided that at least 65% of the principal amount
of Notes originally issued remains outstanding immediately after any such
redemption. In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering"
means an underwritten public offering of Qualified Capital Stock of the Company
pursuant to a registration statement filed with the Commission in accordance
with the Securities Act.
Section 11.02. Applicability of Article.
Redemption of Notes at the election of the Company as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 11.03. Election To Redeem; Notice to Trustee.
The election of the Company to redeem any Notes pursuant to
Section 11.01 shall be evidenced by a Board Resolution of the Company and an
Officers' Certificate. In case of any redemption at the election of the Company,
the Company shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice period shall be satisfactory to the Trustee),
notify the Trustee in writing of such Redemption Date and of the principal
amount of Notes to be redeemed.
Section 11.04. Selection of Notes To Be Redeemed.
In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed or, if such Notes are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate; provided, however, that
no Notes of a principal amount of $1,000 or less shall be redeemed in part;
provided, further, that if a partial redemption is made with the proceeds of a
Public Equity Offering, selection of the Notes or portions thereof for
redemption shall be made by the Trustee only on a pro rata basis or on as nearly
a pro rata basis as is practicable (subject to DTC procedures), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be iss-
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ued in the name of the Holder thereof upon cancellation of the original Note. On
and after the redemption date, interest will cease to accrue on Notes or
portions thereof called for redemption as long as the Company has deposited with
the Paying Agent funds in satisfaction of the applicable redemption price
pursuant to this Indenture.
Section 11.05. Notice of Redemption.
Notice of any optional or mandatory redemption shall be mailed
by first-class mail, postage prepaid, mailed at least 30 but not more than 60
days before the Redemption Date, to each Holder of Notes to be redeemed at its
registered address.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if fewer than all outstanding Notes are to be redeemed,
the identification of the particular Notes to be redeemed;
(d) in the case of a Note to be redeemed in part, the
principal amount of such Note to be redeemed and that after the
Redemption Date upon surrender of such Note, a new Note or Notes in the
aggregate principal amount equal to the unredeemed portion thereof will
be issued;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date the Redemption Price will
become due and payable upon each such Note or portion thereof, and that
(unless the Company shall default in payment of the Redemption Price or
such redemption payment is prohibited pursuant to Article Fourteen)
interest thereon shall cease to accrue on and after said date;
(g) the place or places where such Notes are to be surrendered
for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such Notes; and
(i) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes are being redeemed.
Notice of redemption of Notes to be redeemed shall be given by
the Company or, at the Company's written request, by the Trustee in the name and
at the expense of the Company.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.
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Section 11.06. Deposit of Redemption Price.
On or prior to 10:00 a.m., New York City time, on each
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.03) an amount of money in same day funds
sufficient to pay the Redemption Price of, and accrued interest on, all the
Notes or portions thereof which are to be redeemed on that date.
Section 11.07. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price unless payment of the Notes called for redemption is prohibited
pursuant to Article Fourteen; provided, however, that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Notes, or one or more predecessor Notes, registered as such
on the relevant Regular Record Dates according to the terms and the provisions
of Section 3.06.
On and after any Redemption Date, if money sufficient to pay
the Redemption Price of and accrued interest on Notes called for redemption
shall have been made available in accordance with Section 11.06 unless payment
of the Notes called for redemption is prohibited pursuant to Article Fourteen,
the Notes called for redemption will cease to accrue interest and the only right
of the Holders of such Notes will be to receive payment of the Redemption Price
of and subject to the provision in the preceding paragraph, accrued and unpaid
interest on such Notes to the Redemption Date. If any Note called for redemption
shall not be so paid upon surrender thereof for redemption, the principal and
premium, if any, shall, until paid, bear interest from the Redemption Date at
the rate then borne by such Note.
Section 11.08. Notes Redeemed or Purchased in Part.
Any Note which is to be redeemed or purchased only in part
shall be surrendered to the Paying Agent at the office or agency maintained for
such purpose pursuant to Section 10.02 (with, if the Company, the Note Registrar
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to, the Company, the Note Registrar or the Trustee
duly executed by the Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a new Note or Notes,
of any authorized denomination as requested by such Holder in aggregate
principal amount equal to, and in exchange for, the portion of the principal of
the Note so surrendered that is not redeemed or purchased.
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ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of Indenture.
This Indenture will be discharged and will cease to be of
further effect (except as to surviving rights or registration of transfer and
the Company's right of optional redemption or exchange of the Notes, as
expressly provided for in this Indenture) as to all outstanding Notes when
(i) either (a) all the Notes theretofore authenticated and
delivered (except lost, stolen or destroyed Notes which have been
replaced or paid and Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust) have
been delivered to the Trustee for cancellation or (b) all Notes not
theretofore delivered to the Trustee for cancellation have become due
and payable or will become due and payable within one year or are to be
called for redemption within one year under irrevocable arrangements
satisfactory to the Trustee for the giving of notice of redemption by
the Trustee in the name and at the expense of the Company, and the
Company has irrevocably deposited or caused to be deposited with the
Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on the
Notes to the date of deposit together with irrevocable instructions
from the Company directing the Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be;
(ii) the Company has paid all other sums then due and payable
under this Indenture by the Company; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions
precedent under this Indenture relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 6.07 and,
if money shall have been deposited with the Trustee pursuant to subclause
(a)(ii) of this Section 12.01 the obligations of the Trustee under Section
12.02, shall survive.
Section 12.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
10.03, all money deposited with the Trustee pursuant to Section 12.01 shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal of, premium, if
any, and interest on the Notes for whose payment such money has been deposited
with the Trustee. If the Trustee or Paying Agent is unable to apply any money in
accordance with Section 12.01 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's and the
Guarantors' Obligations under this Indenture, the Notes and the Guarantees shall
be revived and reinstated as though no deposit had occurred pursuant to Section
12.01 until such time as the Trustee or Paying Agent is permitted to apply all
such
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money in accordance with the first sentence of this Section 12.02; provided,
however, that if the Company has made any payment of interest on or principal of
any Note because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the assets held by the Trustee or Paying Agent.
ARTICLE THIRTEEN
GUARANTEE OF NOTES
Section 13.01. Guarantee.
Subject to the provisions of this Article Thirteen, each
Guarantor, if any, hereby jointly and severally and fully and unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of (i) the
validity and enforceability of this Indenture, the Notes or the obligations of
the Company or any other Guarantors to the Holders or the Trustee hereunder or
thereunder or (ii) the absence of any action to enforce the same or any other
circumstances which might otherwise constitute a legal or equitable discharge or
default of a Guarantor, that: (a) the principal of, premium, if any, and
interest on the Notes will be duly and punctually paid in full when due, whether
at maturity, by acceleration or otherwise, and interest on the overdue principal
and (to the extent permitted by law) interest, if any, on the Notes and all
other obligations of the Company or the Guarantors to the Holders or the Trustee
hereunder or thereunder (including fees, expenses or other) and all other
Obligations on the Notes will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other Obligations with
respect to the Notes, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed, or failing performance of any other obligation of the
Company to the Holders, for whatever reason, each Guarantor will be obligated to
pay, or to perform or cause the performance of, the same immediately. An Event
of Default under this Indenture or the Notes shall constitute an event of
default under this Guarantee, and shall entitle the Holders to accelerate the
Obligations of the Guarantors hereunder in the same manner and to the same
extent as the Obligations of the Company.
Each of the Guarantors, if any, hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions hereof or thereof, any release of any other
Guarantor, the recovery of any judgment against the Company, any action to
enforce the same, whether or not a Guarantee is affixed to any particular Note,
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each of the Guarantors hereby waives the
benefit of diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that its Guarantee will not be discharged except by
complete performance of the Obligations contained in the Notes, this Indenture
and this Guarantee. If any Holder or the Trustee is required by any court or
otherwise to return to the Company or to any Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or such Guarantor, any amount paid by the Company or such Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofor discharged,
shall be reinstated in full force and effect. Each Guarantor further agrees
that, as between it, on the one hand, and the Holders of Notes and the Trustee,
on the other hand,
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(a) subject to this Article Thirteen, the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Five hereof for the purposes of
this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (b) in the event of any acceleration of such Obligations as provided in
Article Five hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Guarantee.
This Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Company
for liquidation or reorganization, should the Company become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Notes are,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee on the Notes, whether as a "voidable
preference," "fraudulent transfer" or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Notes shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
No stockholder, officer, director, employer or incorporator,
past, present or future, or any Guarantor, as such, shall have any personal
liability under this Guarantee by reason of his, her or its status as such
stockholder, officer, director, employer or incorporator.
The Guarantors shall have the right to seek contribution from
any non-paying Guarantor so long as the exercise of such right does not impair
the rights of the Holders under this Guarantee.
Notwithstanding any of the foregoing, each Guarantor's
liability under this Section 13.01 shall be limited to the maximum amount that
would not result in such Guarantor's Guarantee under this Section 13.01
constituting a fraudulent conveyance or fraudulent transfer under applicable
law.
Section 13.02. Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 13.01,
each Guarantor hereby agrees that a notation of such Guarantee, substantially in
the form included in Exhibit E hereto, shall be endorsed on each Note
authenticated and delivered by the Trustee after such Guarantee is executed and
executed by either manual or facsimile signature of an Officer of each
Guarantor. The validity and enforceability of any Guarantee shall not be
affected by the fact that it is not affixed to any particular Note.
Each of the Guarantors hereby agrees that its Guarantee set
forth in Section 13.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this
Indenture or a Note no longer holds that office at the time the Trustee
authenticates such Note or at any time thereafter, such Guarantor's Guarantee of
such Note shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of any Guarantee
set forth in this Indenture on behalf of the Guarantor.
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Section 13.03. Additional Guarantors.
Any person who was not a Guarantor at the time this Indenture
was executed may become a Guarantor by executing and delivering to the Trustee
(a) a supplemental indenture in form and substance satisfactory to the Trustee,
which subjects such person to the provisions of this Indenture as a Guarantor,
and (b) an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized and executed by such person and constitutes the legal,
valid, binding and enforceable obligation of such person (subject to such
customary exceptions as may be acceptable to the Trustee in its discretion).
Section 13.04. Guarantee Obligations Subordinated to
Guarantor Senior Indebtedness.
Each Guarantor covenants and agrees, and each Holder of a
Note, by its acceptance thereof, likewise covenants and agrees, that all
payments pursuant to the Guarantee made by or on behalf of such Guarantor are
hereby expressly made subordinate and subject in right of payment as provided in
this Article Thirteen to the prior payment in full in cash of all amounts
payable under all existing and future Guarantor Senior Indebtedness of such
Guarantor including such Guarantor's guarantees of the Company's Obligations
under the Revolving Credit Facility.
This Section 13.04 and the following Sections 13.05 through
13.17 of this Article Thirteen shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become Holders of, or continue to
hold Guarantor Senior Indebtedness of any Guarantor and, to the extent set forth
in Section 13.06(b), Holders of Designated Senior Indebtedness; and such
provisions are made for the benefit of the Holders of Guarantor Senior
Indebtedness of each Guarantor and, to the extent set forth in Section 13.06(b),
Holders of Designated Senior Indebtedness; and such Holders (to such extent) are
made obligees hereunder and they or each of them may enforce such provisions.
Section 13.05. Payment Over of Proceeds upon Dissolution,
etc., of a Guarantor.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to any Guarantor or to its
creditors, as such, or to its assets or (b) any liquidation, dissolution or
other winding-up of any Guarantor, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshalling of assets or liabilities of any Guarantor,
then and in any such event:
(1) the holders of all Guarantor Senior Indebtedness of such
Guarantor shall be entitled to receive payment in full in cash or Cash
Equivalents or such payment shall be duly provided for, before the
Holders of the Notes are entitled to receive, pursuant to this
Guarantee, any payment or distribution of any kind or character (other
than in the form of Permitted Junior Securities) by or on behalf of
such Guarantor on account of the Guarantor's Obligations under the
Notes; and
(2) any payment or distribution of assets of such Guarantor of
any kind or character (other than in the form of Permitted Junior
Securities), whether in cash, property or securities, by set-off or
otherwise, to which the Holders or the Trustee would be entitled but
for the subordination provisions of this Article Thirteen shall be paid
by the liquidating trustee or agent or other person making such payment
or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the Holders of Guarantor
Senior Indebtedness of such Guarantor or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidenc-
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ing any of such Guarantor Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account
of such Guarantor Senior Indebtedness held or represented by each, to
the extent necessary to make payment in full in cash or Cash
Equivalents of all such Guarantor Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the
Holders of such Guarantor Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section 13.05, the Trustee or the Holder of any Note
shall have received any payment or distribution of assets of such
Guarantor of any kind or character other than in the form of Junior
Securities, whether in cash, property or securities, by set off or
otherwise in respect of any Obligations of such Guarantor under this
Guarantee before all Guarantor Senior Indebtedness of such Guarantor is
paid in full in cash or Cash Equivalents or payment duly thereof
provided for, then and in such event such payment or distribution shall
be paid over or delivered forthwith to the Representative for
application to the payment of all such Guarantor Senior Indebtedness
remaining unpaid, to the extent necessary to pay all of such Guarantor
Senior Indebtedness in full in cash, after giving effect to any
concurrent payment or distribution to or for the Holders of such
Guarantor Senior Indebtedness. Any such payment or distribution of
assets received by the Trustee, which is required to be paid over to
the Representative, will be held in trust by the Trustee for the
benefit of the Holders of the Guarantor Senior Indebtedness.
The consolidation of the Guarantor with, or the merger of the
Guarantor with or into, another person or the liquidation or dissolution of the
Guarantor following the conveyance, transfer or lease of its properties and
assets substantially as an entirety to another person upon the terms and
conditions set forth in Article Eight hereof shall not be deemed a dissolution,
winding-up, liquidation, reorganization, assignment for the benefit of creditors
or marshalling of assets and liabilities of such Guarantor for the purposes of
this Article if the person formed by such consolidation or the surviving entity
of such merger or the person which acquires by conveyance, transfer or lease
such properties and assets substantially as an entirety, as the case may be,
shall, as a part of such consolidation, merger, conveyance, transfer or lease,
comply with the conditions set forth in such Article Eight.
Section 13.06. Suspension of Guarantee Obligations When
Guarantor Senior Indebtedness in Default.
(a) Unless Section 13.05 shall be applicable, after the
occurrence of a Payment Default with respect to any Guarantor Senior
Indebtedness no payment or distribution of any assets of such Guarantor of any
kind or character shall be made by or on behalf of such Guarantor on account of
the Guarantor's Obligations pursuant to the Notes or on account of the purchase,
redemption, defeasance or other acquisition of the Obligations pursuant to the
Notes or on account of any other Obligations of such Guarantor under this
Guarantee unless and until such Payment Default shall have been cured or waived
or shall have ceased to exist or the Guarantor Senior Indebtedness as to which
such Payment Default relates shall have been discharged or paid in full in cash
or Cash Equivalents, after which, subject to Section 13.05 (if applicable), such
Guarantor shall resume making any and all required payments in respect of its
Obligations under this Guarantee.
(b) Unless Section 13.05 shall be applicable, during any
Payment Blockage Period with respect to any Guarantor Senior Indebtedness, no
payment or distribution of any assets of a Guarantor of any kind or character
shall be made by or on behalf of a Guarantor on account of the Guarantor's
Obligations on the Notes or on account of the purchase, redemption, defeasance
or other acquisition of the Guarantor's Obligations on the Notes or on account
of any of the other Obligations of such Guarantor under this Guarantee; provided
that the foregoing prohibition shall not apply unless such Payment Blockage
Period has been instituted under
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Section 14.03(b) by a Representative acting for Holders of Designated Senior
Indebtedness which also constitutes Guarantor Senior Indebtedness. Upon the
termination of any Payment Blockage Period, subject to Section 13.05 (if
applicable), such Guarantor shall resume making any and all required payments in
respect of its Obligations under this Guarantee.
(c) In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Note shall have received any payment from a
Guarantor prohibited by the foregoing provisions of this Section 13.06, then and
in such event such payment shall be paid over and delivered forthwith to the
Representative initiating the Payment Blockage Period, in trust for distribution
to the Holders of Guarantor Senior Indebtedness or, if no amounts are then due
in respect of Guarantor Senior Indebtedness, prompt return to the Guarantor, or
as a court of competent jurisdiction shall direct.
Section 13.07. Release of a Guarantor.
(a) So long as no Event of Default shall have occurred and be
continuing upon the sale or disposition (whether by merger, stock purchase,
asset sale or otherwise) of a Guarantor (or all or substantially all of the
assets of any such Guarantor or all of the Capital Stock of any such Guarantor)
to an entity which is not a Subsidiary of the Company, which transaction is
otherwise in compliance with this Indenture, such Guarantor shall be deemed
released from all its Obligations under its Guarantee of the Notes; provided,
however, that any such termination shall occur only to the extent that all
Obligations of such Guarantor under all its Guarantees of, and under all of its
pledges of assets or other security interests which secure, any Indebtedness of
the Company shall also terminate upon such release, sale or transfer. Upon the
release of any Guarantor from its Guarantee pursuant to the provisions of this
Indenture, each other Guarantor not so released shall remain liable for the full
amount of principal of, and interest on, the Notes as and to the extent provided
in this Indenture.
(b) The Trustee shall deliver an appropriate instrument
evidencing the release of a Guarantor upon receipt of a request of the Company
accompanied by an Officers' Certificate certifying as to the compliance with
this Section 13.07. Any Guarantor not so released or the entity surviving such
Guarantor, as applicable, will remain or be liable under its Guarantee as
provided in this Article Thirteen.
The Trustee shall execute any documents reasonably requested
by the Company or a Guarantor in order to evidence the release of such Guarantor
from its obligations under its Guarantee endorsed on the Notes and under this
Article Thirteen.
Except as set forth in Articles Eight and Ten and this Section
13.07, nothing contained in this Indenture or in any of the Notes shall prevent
any consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.
Section 13.08. Waiver of Subrogation.
Each Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of such Guarantor's
obligations under this Guarantee and this Indenture, including, without
limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Notes against the Company, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including, without
limitation, the right to take or receive from the
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Company, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Notes shall not have been paid in full, such amount shall have
been deemed to have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Holders of the Notes, and shall, subject to the
subordination provisions of this Article Thirteen and to Article Fourteen,
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture. Each Guarantor acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated by this
Indenture and that the waiver set forth in this Section 13.08 is knowingly made
in contemplation of such benefits.
Section 13.09. Guarantee Subordination Provisions Solely
To Define Relative Rights.
The subordination provisions of this Article are and are
intended solely for the purpose of defining the relative rights of the Holders
of the Notes on the one hand and the holders of Guarantor Senior Indebtedness of
each Guarantor and, to the extent set forth in Section 13.06, holders of
Designated Senior Indebtedness on the other hand. Nothing contained in this
Article Thirteen (other than a release pursuant to Section 13.07) or elsewhere
in this Indenture or in the Notes is intended to or shall (a) impair, as among
each Guarantor, its creditors other than Holders of its Guarantor Senior
Indebtedness and the Holders of the Notes, the obligation of such Guarantor,
which is absolute and unconditional, to make payments to the Holders in respect
of its obligations under this Guarantee as and when the same shall become due
and payable in accordance with their terms; or (b) affect the relative rights
against such Guarantor of the Holders of the Notes and creditors of such
Guarantor other than the Holders of the Guarantor Senior Indebtedness of such
Guarantor; or (c) prevent the Trustee or the Holder of any Note from exercising
all remedies otherwise permitted by applicable law upon Default or an Event of
Default under this Indenture, subject to the rights, if any, under the
subordination provisions of this Article Thirteen of the Holders of Guarantor
Senior Indebtedness of the Guarantors hereunder and, to the extent set forth in
Section 13.06, Holders of Designated Senior Indebtedness (1) in any case,
proceeding, dissolution, liquidation or other winding-up, assignment for the
benefit of creditors or other marshaling of assets and liabilities of the
Guarantor referred to in Section 13.05, to receive, pursuant to and in
accordance with such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the conditions specified
in Section 13.06, to prevent any payment prohibited by such Section or enforce
their rights pursuant to Section 13.06(c).
The failure by any Guarantor to make a payment in respect of
its obligations under this Guarantee by reason of any provision of this Article
Thirteen shall not be construed as preventing the occurrence of a Default or an
Event of Default hereunder.
Section 13.10. Trustee To Effectuate Subordination of
Guarantee Obligations.
Each Holder of a Note by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article Thirteen
and appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the indebtedness of such Guarantor owing to such Holder in the form required
in such proceedings and the causing of such claim to be approved. If the Trustee
does not file such a claim prior to 30 days before the expiration of the time to
file such a claim, the Holders of Guarantor Senior Indebtedness, or any
representative, may file such a claim on behalf of Holders of the Notes.
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Section 13.11. No Waiver of Guarantee Subordination
Provisions.
(a) No right of any present or future holder of any Guarantor
Senior Indebtedness of any Guarantor or Designated Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or any Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any non-compliance by the Company or any Guarantor with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such Holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section 13.11, the holders of Guarantor Senior Indebtedness of any Guarantor
may, at any time and from time to time, without the consent of or notice to the
Trustee or the Holders of the Notes, without incurring responsibility to the
Holders of the Notes and without impairing or releasing the subordination
provided in this Article Thirteen or the obligations hereunder of the Holders of
the Notes to the holders of such Guarantor Senior Indebtedness, do any one or
more of the following: (1) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, such Guarantor Senior
Indebtedness or any Senior Indebtedness as to which such Guarantor Senior
Indebtedness relates or any instrument evidencing the same or any agreement
under which such Guarantor Senior Indebtedness or such Senior Indebtedness is
outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Guarantor Senior Indebtedness or
any Senior Indebtedness as to which such Guarantor Senior Indebtedness relates;
(3) release any person liable in any manner for the collection or payment of
such Guarantor Senior Indebtedness or any Senior Indebtedness as to which such
Guarantor Senior Indebtedness relates; and (4) exercise or refrain from
exercising any rights against such Guarantor and any other person; provided that
in no event shall any such actions limit the right of the Holders of the Notes
to take any action to accelerate the maturity of the Notes pursuant to Article
Five hereof or to pursue any rights or remedies hereunder or under applicable
laws if the taking of such action does not otherwise violate the terms of this
Indenture.
Section 13.12. Guarantors To Give Notice to Trustee.
(a) The Company and each Guarantor shall give prompt written
notice to the Trustee of any fact known to such Guarantor which would prohibit
the making of any payment to or by the Trustee in respect of the Notes.
Notwithstanding the subordination provisions of this Article or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Notes, unless and until the Trustee shall have
received written notice thereof at its Corporate Trust Office from the Company,
such Guarantor or a holder of its Guarantor Senior Indebtedness or from any
trustee, fiduciary or agent therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of this Section 13.12,
shall be entitled in all respects to assume that no such facts exist; provided
that if the Trustee shall not have received the notice provided for in this
Section 13.12 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose under this Indenture
(including, without limitation, the payment of the principal of or interest on
any Note), then, anything herein contained to the contrary notwithstanding but
without limiting the rights and remedies of the holders of such Guarantor Senior
Indebtedness or any trustee, fiduciary or agent thereof, the Trustee shall have
full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within two Business Days
prior to such date; nor shall the Trustee be charged with knowledge of the
curing of any such default or the elimination of the act or condition preventing
any such payment unless and until the Trustee shall have received an Officers'
Certificate from such Guarantor to such effect.
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(b) Subject to the provisions of Section 6.01, the Trustee
shall be entitled to rely on the delivery to it of a written notice to the
Trustee, by a person representing himself to be a holder of Guarantor Senior
Indebtedness of any Guarantor (or a trustee, fiduciary or agent therefor). In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a Holder of Guarantor Senior
Indebtedness of any Guarantor to participate in any payment or distribution
pursuant to this Article Thirteen, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Guarantor Senior Indebtedness of each Guarantor held by such person, the
extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person under
this Article Thirteen, and if such evidence is not furnished, the Trustee may
defer any payment to such person pending judicial determination as to the right
of such person to receive such payment.
Section 13.13. Reliance on Judicial Order or Certificate
of Liquidating Agent Regarding Dissolution, etc., of Guarantors.
Upon any payment or distribution of assets of any Guarantor
referred to in this Article Thirteen, the Trustee, subject to the provisions of
Section 6.01, and the Holders shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
Guarantor Senior Indebtedness of such Guarantor and other Indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Thirteen; provided that the foregoing shall apply only if such court has been
fully apprised of the provisions of this Article Thirteen.
Section 13.14. Rights of Trustee as a Holder of Guarantor
Senior Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article Thirteen with respect to any Guarantor
Senior Indebtedness of any Guarantor which may at any time be held by the
Trustee, to the same extent as any other holder of such Guarantor Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article Thirteen shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 6.07.
Section 13.15. Article Thirteen Applicable to Paying
Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article Thirteen shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article Thirteen in addition to or in place of
the Trustee; provided that Section 13.14 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
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Section 13.16. No Suspension of Remedies Subject to Rights
of Holders of Guarantor Senior Indebtedness.
Nothing contained in this Article Thirteen shall limit the
right of the Trustee or the Holders of Notes to take any action to accelerate
the maturity of the Notes pursuant to Article Five or to pursue any rights or
remedies hereunder or under applicable law, subject to the rights, if any, under
this Article Thirteen of the Holders, from time to time, of Guarantor Senior
Indebtedness of the Guarantors.
Section 13.17. Trustee's Relation to Guarantor Senior
Indebtedness.
With respect to the holders of Guarantor Senior Indebtedness
of any Guarantor, the Trustee undertakes to perform or to observe only such of
its covenants and obligations as are specifically set forth in this Article
Thirteen (and in Article Fourteen with respect to Senior Indebtedness), and no
implied covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness of any Guarantor shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
Holders of Guarantor Senior Indebtedness of any Guarantor and the Trustee shall
not be liable to any holder of Guarantor Senior Indebtedness of any Guarantor if
it shall mistakenly pay over or deliver to Holders, the Company or any other
person moneys or assets to which any holder of Guarantor Senior Indebtedness of
any Guarantor shall be entitled by virtue of this Article Thirteen or otherwise.
Section 13.18. Subrogation.
Upon the payment in full in cash of all amounts payable under
or in respect of Guarantor Senior Indebtedness of the Guarantors and of all
Senior Indebtedness of the Company, the Holders shall be subrogated to the
rights of the holders of such Guarantor Senior Indebtedness of the Guarantors to
receive payments or distributions of assets of any Guarantor made on such
Guarantor Senior Indebtedness of the Guarantors until all amounts due under the
Guarantee shall be paid in full; and for the purposes of such subrogation, no
payments or distributions to holders of such Guarantor Senior Indebtedness of
the Guarantors of any cash, property or securities to which Holders of the Notes
would be entitled except for the provisions of this Article Thirteen, and no
payment pursuant to the provisions of this Article Thirteen to holders of such
Guarantor Senior Indebtedness of the Guarantors by the Holders, shall, as
between each Guarantor, its creditors other than holders of such Guarantor
Senior Indebtedness of the Guarantors and the Holders, be deemed to be a payment
by such Guarantor to or on account of such Guarantor Senior Indebtedness of the
Guarantors, it being understood that the provisions of this Article Thirteen are
solely for the purpose of defining the relative rights of the holders of such
Guarantor Senior Indebtedness of the Guarantors, on the one hand, and the
Holders, on the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Thirteen
shall have been applied, pursuant to the provisions of this Article Thirteen, to
the payment of all amounts payable under the Guarantor Senior Indebtedness of
the Guarantors, then and in such case, the Holders shall be entitled to receive
from the holders of such Guarantor Senior Indebtedness of the Guarantors at the
time outstanding any payments or distributions received by such holders of
Guarantor Senior Indebtedness of the Guarantors in excess of the amount
sufficient to pay all amounts payable under or in respect of such Guarantor
Senior Indebtedness of the Guarantors in full.
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ARTICLE FOURTEEN
SUBORDINATION OF NOTES
Section 14.01. Notes Subordinate to Senior Indebtedness.
The payment of all Obligations on the Notes is subordinated in
right of payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Indebtedness. Upon any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or marshaling of assets
of the Company or in a bankruptcy, reorganization, insolvency, receivership or
other similar proceeding relating to the Company or its property, whether
voluntary or involuntary, all Obligations due or to become due upon all Senior
Indebtedness shall first be paid in full in cash or Cash Equivalents, or such
payment duly provided for before any payment or distribution of any kind or
character (other than any payment in the form of Permitted Junior Securities) is
made on account of any Obligations on the Notes, or for the acquisition of any
of the Notes for cash or property or otherwise. If any default occurs and is
continuing in the payment when due, whether at maturity, upon any redemption, by
declaration or otherwise, of any principal of, interest on, unpaid drawings for
letters of credit issued in respect of, or regularly accruing fees with respect
to, any Senior Indebtedness, no payment of any kind or character shall be made
by or on behalf of the Company or any other Person on its or their behalf with
respect to any Obligations on the Notes or to acquire any of the Notes for cash
or property or otherwise until such Payment Default shall have been cured or
waived or shall cease to exist or the Senior Indebtedness as to which such
Payment Default relates shall have been paid in cash or Cash Equivalents, after
which (subject to Section 14.02, if applicable), the Company shall resume making
any and all payments or distributions in respect of the Notes.
This Article Fourteen shall constitute a continuing offer to
all persons who, in reliance upon such provisions, become Holders of, or
continue to hold Senior Indebtedness; and such provisions are made for the
benefit of the Holders of Senior Indebtedness; and such holders are made
obligees hereunder and they or each of them individually or through their
representative may enforce such provisions.
Section 14.02. Payment Over of Proceeds upon Dissolution,
etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relating to the Company, or (b) any
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, then and
in any such event:
(1) the holders of all Senior Indebtedness shall be entitled
to receive payment in full in cash or Cash Equivalents of all
Obligations due in respect of such Senior Indebtedness before the
Holders are entitled to receive any payment or distribution of any kind
or character (other than any payment in the form of Permitted Junior
Securities) on account of the Notes; and
(2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the provisions of this Article shall be paid by the
liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or their representative or represen-
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tatives (each a "Representative") or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full in
cash or Cash Equivalents of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the
Holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section 14.02, the Trustee or the Holder of any Note
shall have received any payment or distribution of properties or assets
of the Company of any kind or character, whether in cash, property or
securities, by set off or otherwise in respect of the Notes before all
Senior Indebtedness is paid or provided for in full in cash or Cash
Equivalents, or payment thereof has been duly provided for, then and in
such event such payment or distribution shall be paid over or delivered
forthwith to the Representative or trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other person making
payment or distribution of assets of the Company for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full in cash or Cash
Equivalents, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company with or into, another person or the liquidation or dissolution of the
Company following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another person upon the terms and conditions set
forth in Article Eight hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Article if the person formed by such consolidation or the surviving entity of
such merger or the person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in such Article Eight.
Section 14.03. Suspension of Payment When Designated Senior
Indebtedness Is in Default.
If any event of default other than a Payment Default occurs
and is continuing with respect to any Designated Senior Indebtedness, as such
event of default is defined in the instrument creating or evidencing such
Designated Senior Indebtedness, permitting the holders of such Designated Senior
Indebtedness then outstanding to accelerate the maturity thereof and if the
Representative for the respective issue of Designated Senior Indebtedness gives
written notice of the event of default to the Trustee (a "Default Notice"),
then, unless and until all events of default have been cured or waived or have
ceased to exist or the Trustee receives notice from the Representative for the
respective issue of Designated Senior Indebtedness terminating the Blockage
Period (as defined below), during the 180 days after the delivery of such
Default Notice (the "Blockage Period"), neither the Company nor any other Person
on its behalf shall (x) make any payment of any kind or character with respect
to any Obligations on the Notes (other than any payment in the form of Permitted
Junior Securities) or (y) acquire any of the Notes for cash or property or
otherwise. Notwithstanding anything herein to the contrary, in no event will
a Blockage Period extend beyond 180 days from the date the payment on the Notes
was due and only one such Blockage Period may be commenced within any 360
consecutive days. No event of default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Indebtedness shall be, or be made, the basis for commencement of a second
Blockage Period by the Representative of such Designated Senior Indebtedness
whether or not within a period
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of 360 consecutive days, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days (it being acknowledged
that any subsequent action, or any breach of any financial covenants for a
period commencing after the date of commencement of such Blockage Period that,
in either case, would give rise to an event of default pursuant to any
provisions under which an event of default previously existed or was continuing
shall constitute a new event of default for this purpose).
Section 14.04. Trustee's Relation to Senior Indebtedness.
With respect to the Holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Fourteen (and in
Article Thirteen with respect to any Guarantor Senior Indebtedness of the
respective Guarantors), and no implied covenants or obligations with respect to
the Holders of Senior Indebtedness shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
Holders of Senior Indebtedness and the Trustee shall not be liable to any Holder
of Senior Indebtedness if it shall mistakenly pay over or deliver to Holders,
the Company, the Guarantors or any other person moneys or assets to which any
Holder of Senior Indebtedness shall be entitled by virtue of this Article
Fourteen or otherwise.
Section 14.05. Subrogation to Rights of Holders of Senior
Indebtedness.
Upon the payment in full in cash of all Senior Indebtedness,
the Holders shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of and
interest on the Notes shall be paid in full in cash or cash equivalents. For
purposes of such subrogation, no payments or distributions to the holders of
Senior Indebtedness of any cash, property or securities to which the Holders or
the Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders or the Trustee shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the Holders, be deemed
to be a payment or distribution by the Company to or on account of the Senior
Indebtedness.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Fourteen
shall have been applied, pursuant to the provisions of this Article Fourteen, to
the payment of all amounts payable under the Senior Indebtedness of the Company,
then and in such case the Holders shall be entitled to receive from the holders
of such Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of such Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full in cash or cash equivalents.
Section 14.06. Provisions Solely To Define Relative Rights.
The provisions of this Article Fourteen are and are intended
solely for the purpose of defining the relative rights of the Holders on the one
hand and the holders of Senior Indebtedness, and to the extent set forth in
Section 14.03, holders of Designated Senior Indebtedness, on the other hand.
Nothing contained in this Article Fourteen or elsewhere in this Indenture or in
the Notes is intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of, premium, if any, and interest on the Notes as and when
the same shall become due and payable in accordance with their terms; or (b)
affect the relative rights against the Company of the Holders and creditors of
the Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Note from exercising all reme-
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dies otherwise permitted by applicable law upon a Default or an Event of Default
under this Indenture, subject to the rights, if any, under this Article Fourteen
of the holders of Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of creditors or
other marshalling of assets and liabilities of the Company referred to in
Section 14.02, to receive, pursuant to and in accordance with such Section,
cash, property and securities otherwise payable or deliverable to the Trustee or
such Holder, or (2) under the conditions specified in Section 14.03, to prevent
any payment prohibited by such Section or enforce their rights pursuant to
Section 14.03(c).
The failure to make a payment on the Notes by reason of any
provision of this Article Fourteen shall not be construed as preventing the
occurrence of a Default or an Event of Default hereunder.
Section 14.07. Trustee To Effectuate Subordination.
Each Holder of a Note by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article Fourteen
and appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such claim to be approved. If the Trustee
does not file such a claim prior to 30 days before the expiration of the time to
file such a claim, the holders of Senior Indebtedness, or any Representative,
may file such a claim on behalf of Holders of the Notes.
Section 14.08. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such Holder may have
or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section 14.08, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Fourteen or the obligations hereunder of
the Holders to the holders of Senior Indebtedness, do any one or more of the
following: (1) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (3) release any
person liable in any manner for the collection or payment of Senior
Indebtedness; and (4) exercise or refrain from exercising any rights against the
Company and any other person; provided, however, that in no event shall any such
actions limit the right of the Holders to take any action to accelerate the
maturity of the Notes pursuant to Article Five hereof or to pursue any rights or
remedies hereunder or under applicable laws if the taking of such action does
not otherwise violate the terms of this Indenture.
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Section 14.09. Notice to Trustee.
(a) The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the making of any
payment to or by the Trustee in respect of the Notes. Notwithstanding the
provisions of this Article Fourteen or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to or by the Trustee in respect
of the Notes, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Indebtedness or from any trustee,
fiduciary or agent therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of this Section 14.09, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 14.09 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose under this Indenture
(including, without limitation, the payment of the principal of or interest on
any Note), then, anything herein contained to the contrary notwithstanding but
without limiting the rights and remedies of the holders of Senior Indebtedness
or any trustee, fiduciary or agent thereof, the Trustee shall have full power
and authority to receive such money and to apply the same to the purpose for
which such money was received and shall not be affected by any notice to the
contrary which may be received by it within two Business Days prior to such
date; nor shall the Trustee be charged with knowledge of the curing of any such
default or the elimination of the act or condition preventing any such payment
unless and until the Trustee shall have received an Officers' Certificate to
such effect.
(b) Subject to the provisions of Section 6.01, the Trustee
shall be entitled to rely on the delivery to it of a written notice to the
Trustee by a person representing himself to be a holder of Senior Indebtedness
(or a trustee, fiduciary or agent therefor) to establish that such notice has
been given by a holder of Senior Indebtedness (or a trustee, fiduciary or agent
therefor). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Fourteen, the Trustee may request such person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such person, the extent to which such person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such person under this Article Fourteen, and if such evidence is not
furnished, the Trustee may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment.
Section 14.10. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article Fourteen, the Trustee, subject to the provisions of
Section 6.01, and the Holders, shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
Senior Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article; provided, however, that the
foregoing shall apply only if such court has been fully apprised of the
provisions of this Article Fourteen.
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Section 14.11. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article Fourteen with respect to any Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Indenture shall deprive
the Trustee of any of its rights as such holder. Nothing in this Article
Fourteen shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 6.07.
Section 14.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article Fourteen in addition to or in place of the Trustee;
provided that Section 14.11 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
Section 14.13. No Suspension of Remedies.
Nothing contained in this Article Fourteen shall limit the
right of the Trustee or the Holders to take any action to accelerate the
maturity of the Notes pursuant to Article Five or to pursue any rights or
remedies hereunder or under applicable law, subject to the rights, if any, under
this Article Fourteen of the Holders, from time to time, of Senior Indebtedness.
<PAGE> 93
-87-
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
FWT, INC.
By:
----------------------------------
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:
----------------------------------
Name:
Title:
<PAGE> 94
EXHIBIT A
FWT, INC.
---------------
9 7/8% SENIOR SUBORDINATED NOTE DUE 2007
CUSIP No.
No. _________________ $
FWT, INC., a Texas corporation (the "Company," which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to or registered assigns, the principal sum of United
States Dollars on November 15, 2007, at the office or agency of the Company
referred to below, and to pay interest thereon on May 15 and November 15, in
each year, commencing on May 15, 1998 (each an "Interest Payment Date"),
accruing from the Issue Date or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate of 9 7/8% per
annum, until the principal hereof is paid or duly provided for. Interest shall
be computed on the basis of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture referred to
on the reverse hereof, be paid in arrears to the Person in whose name this Note
(or one or more predecessor Notes) is registered at the close of business on the
May 1 or November 1 (each a "Regular Record Date"), whether or not a Business
Day, as the case may be, immediately preceding such Interest Payment Date. Any
such interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the Person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice of which shall be given to Holders of Notes not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on
this Note will be made at the Corporate Trust Office or agency of the Trustee
maintained for that purpose in The City of New York, in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of interest
may be made at the option of the Company by check (which may be a check of the
Company) or wire transfer to the Person entitled thereto as reflected on the
Note Register.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
A-1
<PAGE> 95
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned Indenture.
Dated: NORWEST BANK MINNESOTA, NATIONAL ASSO-
CIATION,
as Trustee
By:
----------------------------------
Authorized Signatory
A-2
<PAGE> 96
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
FWT, INC.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
A-3
<PAGE> 97
(REVERSE OF NOTE)
9 7/8% Senior Subordinated Note due 2007
1. Indenture. This Note is one of a duly authorized issue of
Notes of the Company designated as its 9 7/8% Senior Subordinated Notes due 2007
(the "Notes"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $125,000,000, which may be issued
under an indenture (the "Indenture") dated as of November 15, 1997, by and among
the Company, as Issuer and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
trustee (the "Trustee," which term includes any successor Trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the Trustee and
the Holders, and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
No reference herein to the Indenture and no provisions of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Note at the times, place and rate, and in the coin or
currency, herein prescribed.
2. Guarantees. This Note is entitled to certain senior
subordinated Guarantees, if any, made for the benefit of the Holders. Reference
is hereby made to Article Thirteen of the Indenture for terms relating to the
Guarantees.
3. Subordination. The Indebtedness evidenced by the Notes is,
to the extent and in the manner provided in the Indenture, subordinate and
subject in right of payment to the prior payment in full in cash of all existing
and future Senior Indebtedness (including the Indebtedness under the Revolving
Credit Facility). Each Holder, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee, on behalf of
such Holder, to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Indenture and (c) appoints the
Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Note shall cease to be so subordinate
and subject in right of payment upon any defeasance of this Note referred to in
Paragraph 7 below.
4. Optional and Special Redemption.
(a) Optional Redemption. The Notes will be redeemable, at the
Company's option, in whole at any time or in part from time to time, on and
after November 15, 2002, upon not less than 30 nor more than 60 days' notice, at
the following redemption prices (expressed as percentages of the principal
amount thereof) if redeemed during the twelve-month period commencing on
November 15 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
A-4
<PAGE> 98
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002................................. 104.938%
2003................................. 103.292%
2004................................. 101.646%
2005 and thereafter.................. 100.000%
</TABLE>
(b) Optional Redemption upon Public Equity Offering. At
any time, or from time to time, on or prior to November 15, 2000, the Company
may, at its option, use the net cash proceeds of one or more Public Equity
Offerings (as defined below) to redeem the Notes at a redemption price equal to
109.875% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 65% of the
principal amount of Notes originally issued remains outstanding immediately
after any such redemption. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make such redemption
not more than 120 days after the consummation of any such Public Equity
Offering.
As used in the preceding paragraph, "Public Equity Offering"
means an underwritten public offering of Qualified Capital Stock of the Company
pursuant to a registration statement filed with the Commission in accordance
with the Securities Act.
(c) Sinking Fund. The Company will not be required to
make any mandatory sinking fund payments in respect of the Notes.
(d) Interest Payments. In the case of any redemption of the
Notes, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Notes, or one or more
predecessor Notes, of record at the close of business on the relevant Record
Date referred to on the face hereof. Notes (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
(e) Partial Redemption. In the event of redemption of the Note
in part only, a new Note or Notes for the unredeemed portion hereof shall be
issued in the name of the Holder hereof upon the cancellation hereof.
5. Offers to Purchase. Sections 10.14 and 10.15 of the
Indenture provide that following certain Asset Sales (with respect to Section
10.14) and upon the occurrence of a Change of Control (with respect to Section
10.15) and subject to further limitations contained therein, the Company shall
make an offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
6. Defaults and Remedies. If an Event of Default shall occur
and be continuing, the principal of all of the outstanding Notes, plus all
accrued and unpaid interest, if any, to the date the Notes become due and
payable, may be declared due and payable in the manner and with the effect
provided in the Indenture.
7. Defeasance. The Indenture contains provisions (which
provisions apply to this Note) for defeasance at any time of (a) the entire
indebtedness of the Company on this Note and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance by the
Company with certain conditions set forth therein.
8. Amendments and Waivers. The Company and the Trustee (if a
party thereto) may, without the consent of the Holders of any Outstanding Notes,
amend, waive or supplement the Indenture or the
<PAGE> 99
Notes for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, and making any
change that does not adversely affect the rights of any Holder. Other amendments
and modifications of the Indenture or the Notes may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Notes, subject to certain
exceptions requiring the consent of the Holders of the particular Notes to be
affected. Any such consent or waiver by or on behalf of the Holder of this Note
shall be conclusive and binding upon such Holder and upon all future Holders of
this Note and of any Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note.
9. Denominations, Transfer and Exchange. The Notes are
issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Notes are exchangeable for a like
aggregate principal amount of Notes of the authorized denomination, as requested
by the Holder surrendering the same.
The transfer of this Note is registrable on the Note Register
of the Company, upon surrender of this Note for registration of transfer at the
office or agency of the Company maintained for such purpose in the Borough of
Manhattan in The City of New York or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Note Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
10. Persons Deemed Owners. Prior to and at the time of due
presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name
this Note is registered as the owner hereof for all purposes, whether or not
this Note shall be overdue, and neither the Company, the Trustee nor any agent
shall be affected by notice to the contrary.
11. Registration Rights. Pursuant to the Registration Rights
Agreement among the Company, the Guarantors, if any, and the Initial Purchasers
for themselves and on behalf of the Holders of the Initial Notes, the Company
will be obligated to consummate an Exchange Offer (as defined in the
Registration Rights Agreement) pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's 9 7/8% Senior
Subordinated Notes due 2007, which will have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
Exchange Offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
12. No Recourse Against Others. No director, officer,
employee, stockholder or incorporator, whether past, present or future of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any Guarantor under the Notes, the Guarantees or this
Indenture. Each Holder by accepting a Note waives and releases all such
liability, and such waiver and release is part of the consideration for the
issuance of the Notes.
13. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE
TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS
AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR STATE COURT LOCATED IN THE BOROUGH
A-6
<PAGE> 100
OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE INDENTURE OR THIS NOTE.
A-7
<PAGE> 101
ASSIGNMENT FORM
If you, the Holder want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
--------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- -------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Date: Your signature:
----------------------- ------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
By:
--------------------------
NOTICE: To be executed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
A-8
<PAGE> 102
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the SEC
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) the second anniversary of the Issue Date (or other issue
date, if applicable), the undersigned confirms that it has not utilized any
general solicitation or general advertising in connection with and that such
transfer is:
[Check One]
<TABLE>
<S> <C> <C>
(1) to the Company or a subsidiary thereof; or
---
(2) pursuant to and in compliance with Rule 144A under the
---- Securities Act of 1933, as amended; or
(3) to an institutional "accredited investor" (as defined in Rule
---- 501(a)(1), (2), (3) or (7) under the Securities Act of 1933,
as amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form
of which letter can be obtained from the Trustee); or
(4) outside the United States to a "foreign person" in compliance
---- with Rule 904 of Regulation S under the Securities Act of
1933, as amended; or
(5) pursuant to another available exemption from the registration
---- requirements of the Securities Act of 1933, as amended.
</TABLE>
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof, provided, that if box (3), (4) or (5) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such written legal opinions, certifications
(including an investment letter in the case of box (3) or (4)), and other
information as the Trustee, Note Registrar or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
If none of the foregoing boxes are checked, the Trustee or
Note Registrar shall not be obligated to register this Note in the name of any
person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.05 of the Indenture
shall have been satisfied.
Date: Your signature:
----------------------- ------------------------------
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee:
---------
A-9
<PAGE> 103
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:
--------------------- ------------------------------------------------
NOTICE: To be executed by an executive officer
A-10
<PAGE> 104
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company
pursuant to Section 10.14 or 10.15 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased by the
Company pursuant to Section 10.14 or 10.15 of the Indenture, state the amount:
$
-------------
Date: Your signature:
----------------------- ------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
By:
--------------------------
NOTICE: To be executed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
A-11
<PAGE> 105
EXHIBIT B
FWT, INC.
--------------
9 7/8% SENIOR SUBORDINATED NOTE DUE 2007
CUSIP No.
No. __________________ $
FWT, INC. a Texas corporation (the "Company," which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to , or registered assigns, the principal sum of
United States Dollars on November 15, 2007, at the office or agency of the
Company referred to below, and to pay interest thereon on May 15 and November 15
in each year, commencing on May 15, 1998 (each an "Interest Payment Date"),
accruing from the Issue Date or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate of 9 7/8% per
annum, until the principal hereof is paid or duly provided for. Interest shall
be computed on the basis of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture referred to
on the reverse hereof, be paid in arrears to the Person in whose name this Note
(or one or more predecessor Notes) is registered at the close of business on the
May 1 or November 1 (each a "Regular Record Date"), whether or not a Business
Day, as the case may be, immediately preceding such Interest Payment Date. Any
such interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the Person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice of which shall be given to Holders of Notes not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on
this Note will be made at the Corporate Trust Office or agency of the Trustee
maintained for that purpose in The City of New York, in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts: provided, however, that payment of interest
may be made at the option of the Company by check (which may be a check of the
Company) or wire transfer to the address of the Person entitled thereto as
reflected on the Note Register.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
B-1
<PAGE> 106
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned
Indenture.
Dated: NORWEST BANK MINNESOTA, NATIONAL ASSO-
CIATION,
as Trustee
By:
---------------------------------
Authorized Signatory
B-2
<PAGE> 107
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
FWT, INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
B-3
<PAGE> 108
(REVERSE OF NOTE)
9 7/8% Senior Subordinated Note due 2007
1. Indenture. This Note is one of a duly authorized issue of
Notes of the Company designated as its 9 7/8% Senior Subordinated Notes due 2007
(the "Notes"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $125,000,000, which may be issued
under an indenture (the "Indenture") dated as of November 15, 1997, by and among
the Company, as Issuer and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
trustee (the "Trustee," which term includes any successor Trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the Trustee and
the Holders, and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
All capitalized terms used in this Note which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
No reference herein to the Indenture and no provisions of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Note at the times, place and rate, and in the coin or
currency, herein prescribed.
2. Guarantees. This Note is entitled to certain senior
subordinated Guarantees, if any, made for the benefit of the Holders. Reference
is hereby made to Article Thirteen of the Indenture for terms relating to the
Guarantees.
3. Subordination. The Indebtedness evidenced by the Notes is,
to the extent and in the manner provided in the Indenture, subordinate and
subject in right of payment to the prior payment in full in cash of all existing
and future Senior Indebtedness (including the Indebtedness under the Revolving
Credit Facility). Each Holder, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee, on behalf of
such Holder, to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Indenture and (c) appoints the
Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Note shall cease to be so subordinate
and subject in right of payment upon any defeasance of this Note referred to in
Paragraph 7 below.
4. Redemption.
(a) Optional Redemption. The Notes will be redeemable,
at the Company's option, in whole at any time or in part from time to time, on
and after November 15, 2002, upon not less than 30 nor more than 60 days'
notice, at the following redemption prices (expressed as percentages of the
principal amount thereof) if redeemed during the twelve-month period commencing
on November 15 of the year set forth below, plus, in each case, accrued and
unpaid interest thereon, if any, to the date of redemption:
B-4
<PAGE> 109
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002................................. 104.938%
2003................................. 103.292%
2004................................. 101.646%
2005 and thereafter.................. 100.000%
</TABLE>
(b) Optional Redemption upon Public Equity Offering. At
any time, or from time to time, on or prior to November 15, 2000, the Company
may, at its option, use the net cash proceeds of one or more Public Equity
Offerings (as defined below) to redeem the Notes at a redemption price equal to
109.875% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 65% of the
principal amount of Notes originally issued remains outstanding immediately
after any such redemption. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make such redemption
not more than 120 days after the consummation of any such Public Equity
Offering.
As used in the preceding paragraph, "Public Equity Offering"
means an underwritten public offering of Qualified Capital Stock of the Company
pursuant to a registration statement filed with the Commission in accordance
with the Securities Act.
(c) Sinking Fund. The Company will not be required to
make any mandatory sinking fund payments in respect of the Notes.
(d) Interest Payments. In the case of any redemption of
the Notes, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Notes, or one or more
predecessor Notes, of record at the close of business on the relevant Record
Date referred to on the face hereof. Notes (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
(e) Partial Redemption. In the event of redemption of
the Note in part only, a new Note or Notes for the unredeemed portion hereof
shall be issued in the name of the Holder hereof upon the cancellation hereof.
5. Offers to Purchase. Sections 10.14 and 10.15 of the
Indenture provide that following certain Asset Sales (with respect to Section
10.14) and upon the occurrence of a Change of Control (with respect to Section
10.15) and subject to further limitations contained therein, the Company shall
make an offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
6. Defaults and Remedies. If an Event of Default shall
occur and be continuing, the principal of all of the outstanding Notes, plus all
accrued and unpaid interest, if any, to the date the Notes become due and
payable, may be declared due and payable in the manner and with the effect
provided in the Indenture.
7. Defeasance. The Indenture contains provisions (which
provisions apply to this Note) for defeasance at any time of (a) the entire
indebtedness of the Company on this Note and (b) certain restrictive covenants
and related Defaults and Events of Default, in each case upon compliance by the
Company with certain conditions set forth therein.
8. Amendments and Waivers. The Company and the Trustee
(if a party thereto) may, without the consent of the Holders of any Outstanding
Notes, amend, waive or supplement the Indenture or the
B-5
<PAGE> 110
Notes for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, and making any
change that does not adversely affect the rights of any Holder. Other amendments
and modifications of the Indenture or the Notes may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Notes, subject to certain
exceptions requiring the consent of the Holders of the particular Notes to be
affected. Any such consent or waiver by or on behalf of the Holder of this Note
shall be conclusive and binding upon such Holder and upon all future Holders of
this Note and of any Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note.
9. Denominations, Transfer and Exchange. The Notes are
issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Notes are exchangeable for a like
aggregate principal amount of Notes of the authorized denomination, as requested
by the Holder surrendering the same.
The transfer of this Note is registrable on the Note Register
of the Company, upon surrender of this Note for registration of transfer at the
office or agency of the Company maintained for such purpose in the Borough of
Manhattan in The City of New York or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Note Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
10. Persons Deemed Owners. Prior to and at the time of due
presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name
this Note is registered as the owner hereof for all purposes, whether or not
this Note shall be overdue, and neither the Company, the Trustee nor any agent
shall be affected by notice to the contrary.
11. No Recourse Against Others. No director, officer,
employee, stockholder or incorporator, whether past, present or future of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any Guarantor under the Notes, the Guarantees or the
Indenture. Each Holder of Notes by accepting a Note waives and releases all such
liability, and such waiver and release is part of the consideration for the
issuance of the Notes.
12. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE
TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS
AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS
NOTE.
B-6
<PAGE> 111
ASSIGNMENT FORM
If you, the Holder, want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
--------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- -------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Date: Your signature:
----------------------- ------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
By:
--------------------------
NOTICE: To be executed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
B-7
<PAGE> 112
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company
pursuant to Section 10.14 or 10.15 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased by the
Company pursuant to Section 10.14 or 10.15 of the Indenture, state the amount:
$
---------------
Date: Your signature:
----------------------- ------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
By:
--------------------------
NOTICE: To be executed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
B-8
<PAGE> 113
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with Subsequent
Transfers to Non-QIB Accredited Investors
---------------, ----
Re: FWT, INC. (the "Company")
9 7/8% Senior Subordinated Notes due 2007 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed purchase of $___ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture dated as of November 15, 1997 relating to the Notes (the
"Indenture") and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Notes except in compliance
with, such restrictions and conditions and the Securities Act of 1933,
as amended (the "Securities Act").
2. We understand that the Notes have not been registered under
the Securities Act, and that the Notes may not be offered or sold
except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes within two years
after the original issuance of the Notes, we will do so only (A) to the
Company or any subsidiary thereof, (B) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) inside the United States
to an "institutional accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a
U.S. broker-dealer) to you a signed letter substantially in the form of
this letter, (D) outside the United States in accordance with Rule 904
of Regulation S under the Securities Act, (E) pursuant to an effective
registration statement under the Securities Act, and we further agree
to provide to any person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as
stated herein, or (F) pursuant to another available exemption from the
registration requirements of the Securities Act.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such certification,
written legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are
acting are each able to bear the economic risk of our or its
investment, as the case may be.
C-1
<PAGE> 114
5. We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
C-2
<PAGE> 115
You the Company and counsel for the Company are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
----------------------------------
Authorized Signature
C-3
<PAGE> 116
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
--------------, ----
Attention:
Re: FWT, INC. (the "Company")
9 7/8% Senior Subordinated Notes due 2007 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in
the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
D-1
<PAGE> 117
You, the Company and counsel for the Company are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferee]
By:
----------------------------------
D-2
<PAGE> 118
EXHIBIT E
SENIOR SUBORDINATED GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees to the Holder of this Note the payments of principal of, premium, if
any, and interest on this Note in the amounts and at the time when due and
interest on the overdue principal, premium, if any, and interest, if any, of
this Note, if lawful, and the payment or performance of all other obligations of
the Company under the Indenture or the Notes, to the Holder of this Note and the
Trustee, all in accordance with and subject to the terms and limitations of this
Note, Article Thirteen of the Indenture and this Guarantee. This Guarantee will
become effective in accordance with Article Thirteen of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
The obligations of the undersigned to the Holders of Notes and
to the Trustee pursuant to the Guarantee and the Indenture are expressly set
forth in Article Thirteen of the Indenture and reference is hereby made to the
Indenture for the precise terms of the Guarantee and all of the other provisions
of the Indenture to which this Guarantee relates. The Indebtedness evidenced by
this Guarantee is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full in cash
of all Guarantor Senior Indebtedness as defined in the Indenture, and this
Guarantee is issued subject to such provisions. Each Holder of a Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided that such subordination provisions shall cease
to affect amounts deposited in accordance with the defeasance provisions of the
Indenture upon the terms and conditions set forth therein.
This Guarantee is subject to release upon the terms set forth
in the Indenture.
[ ]
By:
----------------------------------
Name:
Title:
E-1
<PAGE> 1
EXHIBIT 4.2
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of November 15, 1997
Among
FWT, INC.
as Company
and
BT ALEX. BROWN INCORPORATED,
SBC WARBURG DILLON READ INC.
and
SMITH BARNEY INC.
as Initial Purchasers
9-7/8% Senior Subordinated Notes due 2007
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions..........................................................................................1
2. Exchange Offer.......................................................................................4
3. Shelf Registration...................................................................................8
4. Additional Interest..................................................................................9
5. Registration Procedures.............................................................................11
6. Registration Expenses...............................................................................20
7. Indemnification.....................................................................................21
8. Rules 144 and 144A..................................................................................24
9. Underwritten Registrations..........................................................................25
10. Miscellaneous.......................................................................................25
(a) No Inconsistent Agreements...................................................................25
(b) Adjustments Affecting Registrable Notes......................................................25
(c) Amendments and Waivers.......................................................................25
(d) Notices......................................................................................26
(e) Successors and Assigns.......................................................................26
(f) Counterparts.................................................................................26
(g) Headings.....................................................................................27
(h) Governing Law................................................................................27
(i) Severability.................................................................................27
(j) Securities Held by the Company or Its Affiliates.............................................27
(k) Third-Party Beneficiaries....................................................................27
(l) Entire Agreement.............................................................................27
(m) Subsidiary Guarantor a Party.................................................................28
</TABLE>
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of
November 15, 1997, among FWT, INC., a Texas corporation, as Company (the
"Company"), and BT ALEX. BROWN INCORPORATED, SBC WARBURG DILLON READ INC. and
SMITH BARNEY INC., as initial purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of November 12, 1997, among the Company and the Initial
Purchasers (the "Purchase Agreement"), which provides for the sale by the
Company to the Initial Purchasers of U.S. $105,000,000 aggregate principal
amount of the Company's 9-7/8% Senior Subordinated Notes due 2007 (the "Notes").
In order to induce the Initial Purchasers to enter into the Purchase Agreement,
the Company has agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchasers and any subsequent holder or
holders of the Notes. The execution and delivery of this Agreement is a
condition to the Initial Purchasers' obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4 hereof.
Advice: See the last paragraph of Section 5 hereof.
Agreement: See the introductory paragraphs hereto.
Applicable Period: See Section 2 hereof.
Effectiveness Date: The 120th day after the Issue Date; provided,
however, that with respect to any Shelf Registration, the Effectiveness Date
shall be the 60th day after the Filing Date with respect thereto.
Effectiveness Period: See Section 3 hereof.
Event Date: See Section 4 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
<PAGE> 4
-2-
Exchange Notes: See Section 2 hereof.
Exchange Offer: See Section 2 hereof.
Exchange Offer Registration Statement: See Section 2 hereof.
Filing Date: (A) If no Registration Statement has been filed by the
Company pursuant to this Agreement, the 60th day after the Issue Date; provided,
however, that if a Shelf Notice is given within 10 days of the Filing Date, then
the Filing Date with respect to the Initial Shelf Registration shall be the 15th
day after the date of the giving of such Shelf Notice; and (B) in each other
case (which may be applicable notwithstanding the consummation of the Exchange
Offer), the 30th day after the delivery of a Shelf Notice.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of November 15, 1997, by and between
the Company and Norwest Bank Minnesota, National Association, as Trustee,
pursuant to which the Notes are being issued, as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraphs hereto.
Initial Shelf Registration: See Section 3(a) hereof.
Inspectors: See Section 5(n) hereof.
Issue Date: November 17, 1997, the date of original issuance of the
Notes.
Company: See the introductory paragraphs hereto.
NASD: See Section 5(s) hereof.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2 hereof.
Person: An individual, trustee, corporation, partnership, joint stock
company, trust, unincorporated association, union, business association, firm or
other legal entity.
<PAGE> 5
-3-
Private Exchange: See Section 2 hereof.
Private Exchange Notes: See Section 2 hereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act and any term sheet filed pursuant to Rule
434 under the Securities Act), as amended or supplemented by any prospectus
supplement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs hereof.
Records: See Section 5(n) hereof.
Registrable Notes: Each Note upon its original issuance and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance and at all times subsequent thereto and
each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until (i) a Registration Statement (other than, with respect
to any Exchange Note as to which Section 2(c)(iv) hereof is applicable, the
Exchange Offer Registration Statement) covering such Note, Exchange Note or
Private Exchange Note has been declared effective by the SEC and such Note,
Exchange Note or such Private Exchange Note, as the case may be, has been
disposed of in accordance with such effective Registration Statement, (ii) such
Note has been exchanged pursuant to the Exchange Offer for an Exchange Note or
Exchange Notes that may be resold without restriction under state and federal
securities laws, (iii) such Note, Exchange Note or Private Exchange Note, as the
case may be, ceases to be outstanding for purposes of the Indenture or (iv) such
Note, Exchange Note or Private Exchange Note, as the case may be, may be resold
without restriction or has been resold pursuant to Rule 144 under the Securities
Act.
Registration Statement: Any registration statement of the Company that
covers any of the Notes, the Exchange Notes or the Private Exchange Notes filed
with the SEC under the Securities Act, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation
<PAGE> 6
-4-
hereafter adopted by the SEC providing for offers and sales of securities made
in compliance therewith resulting in offers and sales by subsequent holders that
are not affiliates of the Company of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2 hereof.
Shelf Registration: See Section 3(b) hereof.
Subsequent Shelf Registration: See Section 3(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and the trustee (if any) under
any indenture governing the Exchange Notes and Private Exchange Notes.
Underwritten registration or underwritten offering: A registration in
which securities of one or more of the Company are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) The Company shall file with the SEC, no later than the Filing Date,
a Registration Statement (the "Exchange Offer Registration Statement") on an
appropriate registration form with respect to a registered offer (the "Exchange
Offer") to exchange any and all of the Registrable Notes for a like aggregate
principal amount of notes of the Company that are identical in all material
respects to the Notes, except that the Exchange Notes shall contain no
restrictive legend thereon (the "Exchange Notes"), and which are entitled to the
benefits of the Indenture or a trust indenture which is identical in all
material respects to the Indenture (other than such changes to the Indenture or
any such identical trust indenture as are
<PAGE> 7
-5-
necessary to comply with the TIA) and which, in either case, has been qualified
under the TIA. Interest on each Exchange Note will accrue (A) from the later of
(i) the last interest payment date on which interest was paid on the Note
surrendered in exchange therefor or (ii) if the Note is surrendered for exchange
on a date in a period which includes the record date for an interest payment
date to occur on or after the date of the Exchange Offer and as to which
interest will be paid, the date of such interest payment date or (B) if no
interest has been paid on the Notes, from the Issue Date. The Exchange Offer
shall comply with all applicable tender offer rules and regulations under the
Exchange Act and other applicable law (provided, however, that the Company shall
not be obligated to file in any jurisdiction in which it is not qualified or
take any action that would subject it to general service of process or taxation
in any jurisdiction where it is not so subject). The Company shall use its best
efforts to (x) cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date; (y) keep
the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer on or prior to the 150th day
following the date on which the Exchange Offer Registration Statement is
declared effective by the SEC.
Each Holder that participates in the Exchange Offer will be required,
as a condition to its participation in the Exchange Offer, to represent to the
Company in writing (which may be contained in the applicable letter of
transmittal) that any Exchange Notes to be received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, that such Holder is not an affiliate of
the Company within the meaning of the Securities Act, that if such holder is not
a broker-dealer, that it is not engaged in, and does not intend to engage in,
the distribution of Exchange Notes, and that if such Holder is a broker-dealer
(a "Participating Broker-Dealer") that will receive Exchange Notes for its own
account in exchange for Notes that were acquired as a result of market-making or
other trading activities, that it will deliver a prospectus in connection with
any resale of such Exchange Notes.
Upon consummation of the Exchange Offer in accordance with this Section
2, the provisions of this Agreement shall continue to apply, mutatis mutandis,
solely with respect to Registrable Notes that are Private Exchange Notes,
Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange Notes
held by Participating Broker-Dealers (as defined), and the Company shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and other than in respect of any Exchange Notes as to which clause
2(c)(iv) hereof applies) pursuant to Section 3 hereof.
<PAGE> 8
-6-
No securities other than the Exchange Notes shall be included in the
Exchange Offer Registration Statement; provided, that the Company may include in
the Exchange Offer Registration Statement additional notes issued pursuant to
the Indenture.
(b) The Company shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Holders, which shall contain a summary statement of
the positions taken or policies made by the staff of the SEC with respect to the
potential "underwriter" status of any broker-dealer that is the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by
such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"),
whether such positions or policies have been publicly disseminated by the staff
of the SEC or such positions or policies represent the prevailing views of the
staff of the SEC. Such "Plan of Distribution" section shall also expressly
permit, to the extent permitted by applicable policies and regulations of the
SEC, the use of the Prospectus by all Persons subject to the prospectus delivery
requirements of the Securities Act, including, to the extent permitted by
applicable policies and regulations of the SEC, all Participating
Broker-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Notes in compliance with
the Securities Act.
The Company shall use their best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully delivered by
all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as is necessary to comply with applicable law in
connection with any resale of the Exchange Notes covered thereby; provided,
however, that such period shall not exceed 60 days after such Exchange Offer
Registration Statement is declared effective (or such longer period if extended
pursuant to the last paragraph of Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, any Holder holds any
Notes acquired by it that have, or that are reasonably likely to be determined
to have, the status of an unsold allotment in an initial distribution, or any
Holder is not entitled to participate in the Exchange Offer, the Company upon
the request of any such Holder shall simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to any such Holder, in
exchange (the "Private Exchange") for such Notes held by any such Holder, a like
principal amount of notes (the "Private Exchange Notes") of the Company that are
identical in all material respects to the Exchange Notes except for the
placement of a restrictive legend on such Private Exchange Notes. The Private
Exchange Notes shall be issued pursuant to the same indenture as the Exchange
Notes and, if possible, bear the same CUSIP number as the Exchange Notes.
<PAGE> 9
-7-
In connection with the Exchange Offer, the Company shall:
(1) mail, or cause to be mailed, to each Holder entitled to participate
in the Exchange Offer a copy of the Prospectus forming part of the Exchange
Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) keep the Exchange Offer open for not less than 30 days after the
date that notice of the Exchange Offer is mailed to Holders (or longer if
required by applicable law);
(3) utilize the services of a depositary for the Exchange Offer with an
address in the Borough of Manhattan, The City of New York;
(4) permit Holders to withdraw tendered Notes at any time prior to the
close of business, New York time, on the last business day on which the
Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all applicable laws,
rules and regulations.
As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Company shall:
(1) accept for exchange all Registrable Notes validly tendered and not
validly withdrawn pursuant to the Exchange Offer and the Private Exchange,
if any;
(2) deliver to the Trustee for cancellation all Registrable Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted for
exchange.
The Exchange Offer and the Private Exchange shall not be subject to any
conditions, other than that (i) the Exchange Offer or Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation of
the staff of the SEC, (ii) no action or proceeding shall have been instituted or
threatened in any court or by any governmental agency which might materially
impair the ability of the Company to proceed with the Exchange Offer or the
Private Exchange, and no material adverse development shall have occurred in any
existing action or proceeding with respect to the Company and (iii) all
governmental approvals shall have been obtained, which approvals the Company
deem necessary for the consummation of the Exchange Offer or Private Exchange.
<PAGE> 10
-8-
The Exchange Notes and the Private Exchange Notes shall be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture and which, in either case, has been qualified under the TIA or is
exempt from such qualification and shall provide that the Exchange Notes shall
not be subject to the transfer restrictions set forth in the Indenture. The
Indenture or such indenture shall provide that the Exchange Notes, the Private
Exchange Notes and the Notes shall vote and consent together on all matters as
one class and that none of the Exchange Notes, the Private Exchange Notes or the
Notes will have the right to vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Company is not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 150 days of
the Issue Date, (iii) any holder of Private Exchange Notes so requests in
writing to the Company within 60 days after the consummation of the Exchange
Offer, or (iv) in the case of any Holder that participates in the Exchange
Offer, such Holder does not receive Exchange Notes on the date of the exchange
that may be sold without restriction under state and federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Company within the meaning of the Securities Act), then in the case of each of
clauses (i) to and including (iv) of this sentence, the Company shall promptly
deliver to the Holders and the Trustee written notice thereof (the "Shelf
Notice") and shall file a Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
If at any time a Shelf Notice is delivered as contemplated by Section
2(c) hereof, then:
(a) Shelf Registration. The Company shall file with the SEC a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Registrable Notes not exchanged in the Exchange
Offer, Private Exchange Notes and Exchange Notes as to which Section 2(c)(iv) is
applicable (the "Initial Shelf Registration"). The Company shall use its best
efforts to file with the SEC the Initial Shelf Registration on or before the
applicable Filing Date. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable Notes for
resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Company shall not
permit any securities other than the Registrable Notes to be included in the
Initial Shelf Registration or any Subsequent Shelf Registration (as defined
below).
The Company shall use its best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date
<PAGE> 11
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which is two years from the Issue Date (the "Effectiveness Period"), or such
shorter period ending when (i) all Registrable Notes covered by the Initial
Shelf Registration have been sold in the manner set forth and as contemplated in
the Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering
all of the Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration has been declared
effective under the Securities Act; provided, however, that the Effectiveness
Period in respect of the Initial Shelf Registration shall be extended to the
extent required to permit dealers to comply with the applicable prospectus
delivery requirements of Rule 174 under the Securities Act and as otherwise
provided herein.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), the Company shall use its best efforts
to obtain the prompt withdrawal of any order suspending the effectiveness
thereof, and in any event shall within 30 days of such cessation of
effectiveness amend the Initial Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration (each, a "Subsequent
Shelf Registration"). If a Subsequent Shelf Registration is filed, the Company
shall use its best efforts to cause the Subsequent Shelf Registration to be
declared effective under the Securities Act as soon as practicable after such
filing and to keep such subsequent Shelf Registration continuously effective for
a period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registration was previously continuously effective. As used
herein the term "Shelf Registration" means the Initial Shelf Registration and
any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly supplement
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter of such Registrable
Notes.
4. Additional Interest
(a) The Company and the Initial Purchasers agree that the Holders will
suffer damages if the Company fails to fulfill its obligations under Section 2
or Section 3 hereof and that it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, the Company agrees to pay, as
liquidated damages, additional interest (the
<PAGE> 12
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"Additional Interest") in respect of the Notes under the circumstances and to
the extent set forth below (each of which shall be given independent effect):
(i) if (A) neither the Exchange Offer Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the applicable
Filing Date or (B) notwithstanding that the Company has consummated or will
consummate the Exchange Offer, the Company is required to file a Shelf
Registration and such Shelf Registration is not filed on or prior to the
Filing Date applicable thereto, then, commencing on the day after any such
Filing Date, Additional Interest shall accrue on the principal amount of
the Notes at a rate of .50% per annum for the first 90 days immediately
following each such Filing Date, and such Additional Interest rate shall
increase by an additional .50% per annum at the beginning of each
subsequent 90-day period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor the
Initial Shelf Registration is declared effective by the SEC on or prior to
the relevant Effectiveness Date or (B) notwithstanding that the Company has
consummated or will consummate the Exchange Offer, the Company is required
to file a Shelf Registration and such Shelf Registration is not declared
effective by the SEC on or prior to the Effectiveness Date in respect of
such Shelf Registration, then, commencing on the day after such
Effectiveness Date, Additional Interest shall accrue on the principal
amount of the Notes at a rate of .50% per annum for the first 90 days
immediately following the day after such Effectiveness Date, and such
Additional Interest rate shall increase by an additional .50% per annum at
the beginning of each subsequent 90-day period; or
(iii) if (A) the Company has not exchanged Exchange Notes for all Notes
validly tendered in accordance with the terms of the Exchange Offer on or
prior to the 30th day after the date on which the Exchange Offer
Registration Statement relating thereto was declared effective or (B) if
applicable, a Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the Effectiveness
Period, then Additional Interest shall accrue on the principal amount of
the Notes at a rate of .50% per annum for the first 90 days commencing on
(x) the 31st day after such effective date, in the case of (A) above, or
(y) the day such Shelf Registration ceases to be effective in the case of
(B) above, such Additional Interest rate increasing by an additional .50%
per annum at the beginning of each such subsequent 90-day period;
<PAGE> 13
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provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.50% per annum; provided, further, however,
that (1) upon the filing of the applicable Exchange Offer Registration Statement
or the applicable Shelf Registration as required hereunder (in the case of
clause (i) above of this Section 4), (2) upon the effectiveness of the Exchange
Offer Registration Statement or the applicable Shelf Registration Statement as
required hereunder (in the case of clause (ii) of this Section 4), or (3) upon
the exchange of the applicable Exchange Notes for all Notes tendered (in the
case of clause (iii)(A) of this Section 4), or upon the effectiveness of the
applicable Shelf Registration Statement which had ceased to remain effective (in
the case of (iii)(B) of this Section 4), Additional Interest on the Notes in
respect of which such events relate as a result of such clause (or the relevant
subclause thereof), as the case may be, shall cease to accrue.
(b) The Company shall notify the Trustee within three business days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash semiannually on each May 15 and November 15 (to the
holders of record on the May 1 and November 1 immediately preceding such dates),
commencing with the first such date occurring after any such Additional Interest
commences to accrue. The amount of Additional Interest will be determined by
multiplying the applicable Additional Interest rate by the principal amount of
the Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and the
denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Company hereunder the Company
shall:
(a) Prepare and file with the SEC prior to the applicable Filing Date,
a Registration Statement or Registration Statements as prescribed by Sections 2
or 3 hereof, and use its best efforts to cause each such Registration Statement
to become effective and remain effective as provided herein; provided, however,
that, if (1) such filing is pursuant to Section 3 hereof, or (2) a Prospectus
contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period relating thereto to the extent reasonably practicable, before
filing any Registration Statement
<PAGE> 14
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or Prospectus or any amendments or supplements thereto, the Company shall
furnish to and afford the Holders of the Registrable Notes covered by such
Registration Statement or each such Participating Broker-Dealer, as the case may
be, their counsel and the managing underwriters, if any, up to three business
days to review copies of all such documents (including copies of any documents
to be incorporated by reference therein and all exhibits thereto) proposed to be
filed (in each case at least five days prior to such filing, or such later date
as is reasonable under the circumstances). The Company shall not file any
Registration Statement or Prospectus or any amendments or supplements thereto if
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement, or any such Participating Broker-Dealer,
as the case may be, their counsel, or the managing underwriters, if any, shall
reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any Prospectus supplement required by applicable law, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act applicable to each of them with respect to
the disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period relating thereto from whom the Company has received
written notice that it will be a Participating Broker-Dealer in the Exchange
Offer, notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, promptly, and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act
(including in such notice a written statement that any Holder may, upon request,
obtain, at the sole expense of the Company, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a prospectus is
<PAGE> 15
-13-
required by the Securities Act to be delivered in connection with sales of the
Registrable Notes or resales of Exchange Notes by Participating Broker-Dealers
the representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by Section 5(m) hereof cease
to be true and correct in all material respects, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event, the existence of any condition or any information becoming known that
makes any statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in or
amendments or supplements to such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
Company's determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, use its reasonable best efforts to prevent the issuance
of any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in
any jurisdiction, and, if any such order is issued, to use its reasonable best
efforts to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any), the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold in
connection with an underwritten offering or any Participating Broker-Dealer, (i)
as promptly as practicable incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters (if any), such Holders, any Participating Broker-Dealer or counsel
for any of them reasonably request to be included therein, (ii) make all
required filings of such prospectus supplement or such post-effective amendment
as soon as legally required after an
<PAGE> 16
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Company has received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to their respective
counsel and each managing underwriter, if any, at the sole expense of the
Company, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, at the sole expense of the Company, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to register or qualify, and to cooperate
with the selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, the managing underwriter or underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Notes for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters reasonably request in
writing; provided, however, that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
<PAGE> 17
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underwritten offering, the Company agrees to cause its counsel to perform Blue
Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h), keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or
the Registrable Notes covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so qualified,
(B) take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction where it
is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may request.
(j) Subject to the proviso in (h) above, use its best efforts to cause
the Registrable Notes covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
reasonably necessary to enable the seller or sellers thereof or the underwriter
or underwriters, if any, to consummate the disposition of such Registrable
Notes, except as may be required solely as a consequence of the nature of such
selling Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the sole expense of the
Company, a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material
<PAGE> 18
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fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(l) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates for
the Registrable Notes in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes.
(m) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, use its best efforts to enter into an
underwriting agreement as is customary in underwritten offerings of debt
securities similar to the Notes in form and substance reasonably satisfactory to
the Company and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite or facilitate the
registration or the disposition of such Registrable Notes, provided, however,
that the Company shall have no liability for any compensation or reimbursement
of expenses due to any underwriter or other party assisting in the disposition
of such Registrable Notes or other expenses incurred by the Holder thereof in
connection with such disposition other than agreed upon expenses, and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten offering and, in such connection, (i)
to the extent possible make such representations and warranties to, and
covenants with, the underwriters with respect to the business of the Company and
the subsidiaries of the Company (including any acquired business, properties or
entity, if applicable) and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by Company to underwriters in underwritten
offerings of debt securities similar to the Notes, and confirm the same in
writing if and when reasonably requested; (ii) obtain the written opinions of
counsel to the Company and written updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters, addressed
to the underwriters covering the matters customarily covered in opinions
reasonably requested in underwritten offerings; (iii) to the extent permitted by
the professional standards governing the accounting profession at the time, use
its best efforts to obtain "cold comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent public accountants of the Company (and, if
necessary, any other independent public accountants of the Company any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included or
incorporated by reference in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes as permitted by
the Statement on Auditing Standards No. 72; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification provisions and
procedures comparable to those
<PAGE> 19
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set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing underwriter or
underwriters or agents, if any). The above shall be done at each closing under
such underwriting agreement, or as and to the extent required thereunder.
(n) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder of
such Registrable Notes being sold, or each such Participating Broker-Dealer, as
the case may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent retained
by any such selling Holder or each such Participating Broker-Dealer, as the case
may be, or underwriter (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Company and
subsidiaries of the Company (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
and any of its subsidiaries to supply all information reasonably requested by
any such Inspector in connection with such Registration Statement and
Prospectus. Each Inspector shall agree in writing that it will keep the Records
confidential and that it will not disclose any of the Records that the Company
determines, in good faith, to be confidential and notifies the Inspectors in
writing are confidential and that it will use such information obtained pursuant
to this provision only in connection with the transaction for which the
information was obtained unless (i) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction, or
(ii) the information in such Records has been made generally available to the
public; provided, however, that prior notice shall be provided as soon as
practicable to the Company of the potential disclosure of any information by
such Inspector pursuant to clause (i) of this sentence to permit the Company to
obtain a protective order (or waive the provisions of this paragraph (n)) and
that such Inspector shall take such actions as are reasonably necessary to
protect the confidentiality of such information (if practicable).
(o) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the first
Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the Holders
of the Registrable Notes, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its best efforts to cause such trustee to execute,
all documents as may be required to effect such
<PAGE> 20
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changes, and all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(p) Use its best efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earnings statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 60 days after the end of any fiscal quarter (or
120 days after the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable Notes are
sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective date of
a Registration Statement, which statements shall cover said 12-month periods.
(q) Upon consummation of the Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, that the Exchange Notes or Private Exchange Notes,
as the case may be, and the related indenture constitute legal, valid and
binding obligations of the Company, enforceable against it in accordance with
their respective terms, subject to customary exceptions and qualifications.
(r) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Company shall mark, or cause
to be marked, on such Registrable Notes that such Registrable Notes are being
canceled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.
(s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
(t) Use its best efforts to take all other steps reasonably necessary
to effect the registration of the Exchange Notes and/or Registrable Notes
covered by a Registration Statement contemplated hereby.
The Company may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Company such information
regarding such seller
<PAGE> 21
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and the distribution of such Registrable Notes as the Company may, from time to
time, reasonably request. The Company may exclude from such registration the
Registrable Notes of any seller so long as such seller fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration is being effected agrees to furnish promptly
to the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the securities covered thereby and that
such holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to such
Holder in any amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to be required.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold
by such Participating Broker-Dealer, as the case may be, that, upon actual
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event that the Company shall give any such
notice, the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Registrable Notes covered by such
Registration Statement or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y)
the Advice.
<PAGE> 22
-20-
6. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company (other than any underwriting discounts or
commissions and fees and expenses of any legal counsel for underwriters) shall
be borne by the Company whether or not the Exchange Offer Registration Statement
or any Shelf Registration is filed or becomes effective or the Exchange Offer is
consummated, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and determination
of the eligibility of the Registrable Notes or Exchange Notes for investment
under the laws of such jurisdictions (x) where the holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
by the Holders of a majority in aggregate principal amount of the Registrable
Notes included in any Registration Statement or in respect of Registrable Notes
or Exchange Notes to be sold by any Participating Broker-Dealer during the
Applicable Period, as the case may be, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company and reasonable
fees and disbursements of one special counsel satisfactory to the Company for
all of the sellers of Registrable Notes (exclusive of any counsel retained
pursuant to Section 7 hereof) (provided, that such fees shall not exceed $10,000
in the aggregate for the Exchange Offer and $10,000 in the aggregate for the
Shelf Registration Statements in the aggregate), (v) fees and disbursements of
all independent certified public accountants referred to in Section 5(m)(iii)
hereof (including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance), (vi)
Securities Act liability insurance, if the Company desires such insurance, (vii)
fees and expenses of all other Persons retained by the Company, (viii) internal
expenses of the Company (including, without limitation, all salaries and
expenses of officers and employees of the Company performing legal or accounting
duties), (ix) the expense of any annual audit, (x) any fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange, and the obtaining of a rating of the securities, in
each case, if applicable, and (xi) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, indentures and any other documents necessary in order to comply with
this Agreement. Notwithstanding anything in this Section 6 to the contrary, the
Company shall not be required
<PAGE> 23
-21-
to pay (a) the fees and expenses of any Underwriter or of legal counsel for any
Underwriter, other than a "qualified independent underwriter" (acting solely in
such capacity) or (b) any underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Registrable Notes.
7. Indemnification
(a) The Company agrees to indemnify and hold harmless each Holder of
Registrable Notes and each Participating Broker-Dealer selling Exchange Notes
during the Applicable Period, the affiliates, officers, directors,
representatives, employees and agents of each such Person, and each Person, if
any, who controls any such Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages, judgments, liabilities and
expenses (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) or Prospectus (as amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) or
any preliminary prospectus, or caused by, arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the case of the
Prospectus in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Participant furnished to the Company in writing by such Participant
expressly for use therein.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Company, its affiliates, officers, directors,
representatives, employees and agents of the Company and each Person who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent (but on a several, and not
joint, basis) as the foregoing indemnity from the Company to each Participant,
but only with reference to information relating to such Participant furnished to
the Company in writing by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such
<PAGE> 24
-22-
Person (the "Indemnified Person") shall promptly notify the Persons against whom
such indemnity may be sought (the "Indemnifying Persons") in writing, and the
Indemnifying Persons, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Persons may reasonably
designate in such proceeding and shall pay the fees and expenses actually
incurred by such counsel related to such proceeding; provided, however, that the
failure to so notify the Indemnifying Persons will not relieve it from any
liability under paragraph (a) or (b) above unless and to the extent such failure
results in the loss or compromise by the indemnifying party of substantial
rights and defenses. In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Persons and the Indemnified Person shall have mutually agreed to the contrary,
(ii) the Indemnifying Persons shall have failed within a reasonable period of
time to retain counsel reasonably satisfactory to the Indemnified Person or
(iii) the named parties in any such proceeding (including any impleaded parties)
include both any Indemnifying Person and the Indemnified Person or any affiliate
thereof and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Persons shall not, in connection with such
proceeding or separate but substantially similar related proceeding in the same
jurisdiction arising out of the same general allegations, be liable for the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Indemnified Persons, and that all such fees and expenses shall be
reimbursed as they are incurred. Any such separate firm for the Participants and
such control Persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Notes and Exchange
Notes sold by all such Participants and shall be reasonably acceptable to the
Company, and any such separate firm for the Company, its affiliates, officers,
directors, representatives, employees and agents and such control Persons of the
Company shall be designated in writing by the Company and shall be reasonably
acceptable to the Indemnified Persons.
The Indemnifying Persons shall not be liable for any settlement of any
proceeding effected without its prior written consent, but if settled with such
consent or if there be a final non-appealable judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, each of the Indemnifying Persons agrees to indemnify and hold
harmless each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for reasonable fees and expenses incurred by
counsel as contemplated by the third sentence of the preceding paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such Indemnifying Person of the
<PAGE> 25
-23-
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement; provided, however, that the Indemnifying Person shall not be liable
for any settlement effected without its consent pursuant to this sentence if the
Indemnifying Party is contesting such request for reimbursement.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Persons (which consent shall not be unreasonably withheld or
delayed), effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party, or indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement (A) includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of such Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative fault of the parties shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or such Participant or such other Indemnified Person, as the case may be, on the
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages, judgments, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any
<PAGE> 26
-24-
reasonable legal or other expenses actually incurred by such Indemnified Person
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Party to the Indemnified Party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, the Company, its directors, officers, employees or agents or any person
controlling the Company, and (ii) any termination of this Agreement.
(g) The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Company covenants and agrees that so long as any Registrable Notes
remain outstanding it will file the reports required to be filed by it (if
required) under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner in accordance with
the requirements of the Securities Act and the Exchange Act and, if at any time
the Company is not required to file such reports, the Company will, upon the
request of any Holder or beneficial owner of Registrable Notes, make available
such information necessary to permit sales pursuant to Rule 144A under the
Securities Act. The Company further covenants and agrees, for so long as any
Registrable Notes remain outstanding that it will take such further action as
any Holder of Registrable Notes may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Notes
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144(k) and Rule 144A under the Securities Act,
as such Rules may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
<PAGE> 27
-25-
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, and the Company shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements. The Company will not enter into any
agreement with respect to any of its securities which will grant to any Person
piggy-back registration rights with respect to any Registration Statement.
(b) Adjustments Affecting Registrable Notes. The Company shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (I) the Company and (II)(A) the Holders of not less than a majority
in aggregate principal amount of the then outstanding Registrable Notes and (B)
in circumstances that would adversely affect the Participating Broker-Dealers,
the Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating Broker-Dealers.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders of
<PAGE> 28
-26-
Registrable Notes whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being sold pursuant to such Registration Statement.
(d) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar under the Indenture.
(ii) if to the Company, at the address as follows:
FWT, INC.
1901 East Loop 820 South
Fort Worth, TX 76112-7899
Facsimile No.: (817) 446-7095
Attention: Roy J. Moore
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto,
the Holders and the Participating Broker-Dealers.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<PAGE> 29
-27-
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third-Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third-party beneficiaries of this
Agreement, and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Holders on the one hand
and the Company on the other, or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors
<PAGE> 30
-28-
in interest with respect to the subject matter hereof and thereof are merged
herein and replaced hereby.
(m) Subsidiary Guarantor a Party. Immediately upon any subsidiary of
the Company becoming a Guarantor (as defined in the Indenture) the Company shall
cause such subsidiary to become a party hereto as a guarantor with respect to
the obligations of the Company hereunder by executing and delivering to the
Initial Purchasers a counterpart hereof.
<PAGE> 31
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FWT, INC.
By:
----------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date first
above written.
BT ALEX. BROWN INCORPORATED,
SBC WARBURG DILLON READ INC.
SMITH BARNEY INC.
as Initial Purchasers
By: BT Alex. Brown Incorporated
By:
------------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is dated as of November 12, 1997,
and is by and between FWT, Inc., a Texas corporation (the "COMPANY"), and the
shareholders thereof listed on Exhibit A hereto (individually, a "SHAREHOLDER"
and, collectively, the "SHAREHOLDERS").
PRELIMINARY STATEMENT
This Agreement is being made in connection with that certain Stock
Purchase and Redemption Agreement of even date herewith, by and among the
Company, and the Shareholders.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good, valid and binding
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, agree as follows:
STATEMENT OF AGREEMENT
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, the terms defined in this
Article I shall have the meanings herein specified for all purposes of this
Agreement. All other capitalized terms shall have the meanings assigned to them
in the various other provisions of this Agreement.
"AFFILIATE" shall mean, as to any Person, any other Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition of "Affiliate,"
"CONTROL" of a Person shall mean the power, direct or indirect, (i) to vote or
direct the voting power of at least ten percent (10%) or more of the
outstanding shares of voting securities of a Person, or (ii) to direct or cause
the direction of the management and policies of a Person by ownership of voting
securities, general partnership interests, or otherwise.
"AGREEMENT" shall mean this Registration Rights Agreement,
including all schedules and exhibits hereto, as the Agreement may be from time
to time amended, modified or supplemented.
"COMMISSION" shall mean the Securities and Exchange
Commission or any other Federal agency at the time administering the Securities
Act or the Exchange Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
<PAGE> 2
"HOLDER" of any security shall mean the record owner of such
security.
"HOLDER OF REGISTRABLE SECURITIES" shall mean the Person at
the time of such determination, who owns Registrable Securities or a transferee
of such Registrable Securities who is entitled to registration rights hereunder
in accordance with the provisions of Section 2.6 hereof.
"PERSON" shall include all natural persons, corporations,
business trusts, associations, companies, partnerships, joint ventures and
other entities and governments and agencies and political subdivisions.
"REGISTRABLE SECURITIES" shall mean the shares of Common Stock
held by the Shareholders.
"SECURITIES ACT" shall mean the Securities Act of 1933 or any
similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
For the purposes of this Agreement, Registrable Securities
will cease to be Registrable Securities when (i) a registration statement
relating to such securities has been declared effective and such securities
have been disposed of pursuant to such effective registration statement, (ii)
such securities are distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act, or (iii) they have
been transferred other than as permitted under Section 2.6 hereof.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
REGISTRATION RIGHTS
2.1 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company
at any time proposes to register any of its equity securities under
the Securities Act, whether or not for sale for its own account other
than pursuant to a registration statement on Form S-4 or S-8 or under
a dividend reinvestment program or stockholder investment program
pursuant to a registration statement on Form S-3, or in an offering
where the principal securities offered are debt securities, it will
each such time, at least 30 days prior to filing the registration
statement, give written notice to the Holders of Registrable
Securities of its intention to do so. Upon the written request of any
such Holder made within 15 days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be
disposed of by each such Holder), the Company will, in accordance with
the limitations below, use best efforts to include in the registration
under the Securities Act of all Registrable
2
<PAGE> 3
Securities which the Company has been so requested to register by such
Holder, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered ("INCIDENTAL
REGISTRATION"), provided that if, at any time after giving written
notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with
such registration, the Company determines, based on advice of counsel
and/or its financial advisors, that registration of the Company's
securities would be imprudent at such time, the Company may, at its
election, give written notice of such determination to the Holders of
Registrable Securities and thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such
registration, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities being registered pursuant to this Section 2.1(a), for the
same period as the delay in registering such other securities.
(b) Priority in Incidental Registrations. In the event any
Incidental Registration is underwritten, if the managing underwriter
advises the Company in writing that in its opinion no securities other
than those offered by the Company can be sold, then none of the
Shareholders shall be entitled to participate in such offerings. In
the event that the managing underwriter advises the Company in writing
that in its opinion the number of Registrable Securities and other
securities requested to be included exceeds the number which can be
sold in an underwritten public offering, the Company will include in
such registration: (i) first, any securities requested to be included
by and for the account of the Company; (ii) second, any Registrable
Securities pro rata based on the number of shares owned by the holders
thereof; and (iii) third, any other securities requested to be
included by persons to whom the Company has granted registration
rights in accordance with this Agreement, pro rata based on the number
of shares owned by the holders of such other securities.
2.2 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Section
2.1 hereof, the Company will, subject to the limitations provided
herein, as expeditiously as possible:
(a) prepare and (as soon thereafter as practicable file with
the Commission), the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such
registration statement to become effective; provided that, to the
extent that a request for registration is made within 30 days before
the end of the Company's fiscal year, the Company may, after
consultations with Holders of Registrable Securities conducted in good
faith, delay such filing until the earlier of (a) 90 days after the
end of the Company's fiscal year or (b) the completion of the annual
audit of the Company's financial statements by its independent public
accountants;
3
<PAGE> 4
(b) prepare and file with the Commission such amendments and
supplements to such registration statement, and the prospectus used in
connection therewith, as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in
such registration statement; provided, however, that the Company shall
not in any event be required to keep the registration statement
effective for a period of more than 180 days after such registration
statement becomes effective;
(c) furnish to each seller of Registrable Securities covered
by such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and such other
documents as such seller may reasonably request;
(d) register or qualify all Registrable Securities and other
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller
thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement
remains in effect (provided, however, that the Company shall not in
any event be required to keep such registration or qualification in
effect for a period of more than 180 days after such registration or
qualification becomes effective), and take any other action which may
be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the securities
owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this Section 2.2 be obligated to be so qualified;
(e) furnish to each seller of Registrable Securities a copy
or, upon request, a signed counterpart of:
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
and
(ii) in the event the registration to be effected is
underwritten, a "comfort" letter (provided one can be
obtained by use of the Company's best efforts), dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
signed by the independent public accountants who have audited
the Company's financial statements included in such
registration statement,
4
<PAGE> 5
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities;
(f) notify each seller of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of any
such seller, prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made; and
(g) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on
which any shares of the Common Stock is then listed.
It shall be a condition precedent to the obligations of the
Company to take any action with respect to registering a Holder's
Registrable Securities pursuant to this Article II that such Holder of
Registrable Securities as to which any registration is being effected
furnish in writing to the Company such information regarding such
seller, the Registrable Securities and other securities of the Company
held by such seller, and the distribution of such securities and such
other information as the Company may from time to time reasonably
request in writing.
Each Holder of Registrable Securities agrees by acquisition
of such Registrable Securities that upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 2.2(f), such Holder will forthwith discontinue such Holder's
disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities.
2.3 Holdback Agreements. Each Holder of Registrable Securities agrees
not to effect any public sale or public distribution of equity securities
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 90
days after the effective date of an underwritten Incidental Registration in
which Registrable Securities are included (except as part of such
5
<PAGE> 6
underwritten registration), unless the underwriters managing the registered
public offering otherwise agree.
The Company agrees not to effect any public sale or public
distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the
seven days prior to and the 90 days after the effective date of any
underwritten Incidental Registration or during the 60-day period
beginning on the effective date of any non-underwritten Incidental
Registration (except as part of such underwritten registration or
pursuant to registrations on Forms S-4, S-8 or any successor forms),
unless the underwriters, managing the registered public offering
otherwise agree (or, with respect to a non-underwritten offering,
unless the Holder of Registrable Securities otherwise agrees) or
unless all of the Registrable Securities registered under the
registration statement for Incidental Registration, as the case may
be, have been sold.
2.4 Indemnification.
(a) Indemnification by the Company. In the event any
Registrable Securities are included in a registration statement under this
Article II, to the extent permitted by law, the Company shall, and hereby
does, indemnify and hold harmless the seller of any Registrable Securities
covered by such registration statement, its directors and officers, and each
other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such seller or any such
director or officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse such seller and each such director, officer and
controlling person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such seller expressly for use in the preparation
thereof, and provided further that the Company shall not be liable to any
Person, in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out
of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an
untrue statement or alleged untrue statement or omission or alleged omission
at
6
<PAGE> 7
or prior to the written confirmation of the sale of Registrable
Securities to such Person if such statement or omission was corrected
in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of
such seller or any such director, officer or controlling person and
shall survive the transfer of such securities by such seller.
(b) Indemnification by the Holders of Registrable Securities.
The Company may require, as a condition to including any Registrable
Securities in any registration statement filed pursuant to Section
2.1, that the Company shall have received an undertaking reasonably
satisfactory to it from the prospective seller of such securities, to
indemnify and hold harmless (in the same manner and to the same extent
as set forth in this Section 2.4(a) each underwriter, each Person who
controls such underwriter within the meaning of the Securities Act,
the Company, each director of the Company, each officer of the Company
and each other Person, if any, who controls the Company within the
meaning of the Securities Act, with respect to any statement or
alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such seller expressly
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement; provided that such prospective seller shall not be liable
to any Person who participates as an underwriter in the offering or
sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in
any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of such Person's failure to send or give a copy of the
final prospectus, as the same may be then supplemented or amended, to
the Person asserting an untrue statement or alleged untrue statement
or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of any underwriter, the Company
or any such director, officer or controlling Person and shall survive
the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding paragraphs
of this Section 2.4, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action;
provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 2.4, except
to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to
7
<PAGE> 8
assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.
(d) Indemnification Payments. The indemnification required by
this Section 2.4 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in this
Section 2.4 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as
a result of such loss, claims, damages, liabilities or expenses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the
actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties
shall be determined by reference to, among other things, whether any
action in question, including any untrue statement of material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in
Section 2.4(c), any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 2.4(e) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 2.4, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided herein without regard to the
8
<PAGE> 9
relative fault of said indemnifying party or indemnified party or
any other equitable consideration provided for in this Section 2.4(e).
2.5 Forms. All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to
include, references to all successor forms which are intended to replace,
or to apply to similar transactions as, the forms herein referenced.
2.6 Transfer of Registrable Securities. The registration rights
granted the Holders of Registrable Securities under this Agreement may not
be transferred without the prior written consent of the Company, except to
permitted transferees under the Shareholders' Agreement of even date
herewith.
2.7 Rule 144. After the date the Company has equity securities
registered pursuant to Section 12 of the Exchange Act, the Company
covenants that it will take such action including, but not limited to, the
filing of reports required to be filed by it under the Securities Act and
the Exchange Act, as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder
of Registrable Securities to sell Registrable Securities without
registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 under the Securities Act, as such Rule may
be in writing, or any similar successor rule or regulation. Further, the
Company agrees to use its best efforts to facilitate and expedite transfers
of the Registrable Securities pursuant to Rule 144 under the Securities
Act, which efforts shall include timely notice to its transfer agent to
expedite such transfers of Securities.
2.8 Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all
registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, listing fees, printing expenses,
messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all reasonable fees and disbursements of one
counsel (whether constituting one or more individuals) for the
participating Holders of Registrable Securities (selected by the
Holders of a majority of such Registrable Securities), and all
independent certified public accountants, underwriters (excluding
discounts and commissions), and other persons retained by the Company
including, without limitation, the underwriters retained for an
underwritten Incidental Registration (all such expenses being herein
referred to as "REGISTRATION EXPENSES"), will be borne by the Company.
(b) Underwriters' discounts and commissions will be borne by
all sellers of securities included in such registration in proportion
to the aggregate selling price of the securities to be so registered.
2.9 Mergers, Etc. The Company shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Company shall
not be the surviving
9
<PAGE> 10
corporation unless the proposed surviving corporation shall, prior to such
merger, consolidation or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose
references hereunder to Registrable Shares shall be deemed to be references
to the securities which the purchasers would be entitled to receive in
exchange for Registrable Securities under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 2.9
shall not apply in the event of any merger, consolidation or reorganization
in which the Company is not the surviving corporation if all shareholders
are entitled to receive in exchange for their Registrable Securities
consideration consisting solely of (i) cash, (ii) securities of the
acquiring corporation which may be immediately sold to the public without
registration under the Securities Act, or (iii) securities of the acquiring
corporation which the acquiring corporation has agreed to register within
90 days of completion of the transaction for resale to the public pursuant
to the Securities Act.
ARTICLE III
MISCELLANEOUS
3.1 Waivers and Amendments. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of each of the
parties hereto affected by such amendment, modification or supplement.
3.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by
overnight delivery service, cable, telegram, facsimile transmission or
telex to the parties at the addresses listed on Exhibit A or at such other
addresses as shall be specified by the parties by like notice. Notice so
given shall, in the case of notice so given by mail, be deemed to be given
and received on the fourth calendar day after posting, in the case of
notice so given by overnight delivery service, on the date of actual
delivery and, in the case of notice so given by cable, telegram, facsimile
transmission, telex or personal delivery, on the date of actual
transmission or, as the case may be, personal delivery.
3.3 Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent necessary to render
it legal, valid and enforceable, and if no such modification shall render
it legal, valid and enforceable, then this Agreement shall be construed as
if not containing the provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced accordingly.
3.4 Headings. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
10
<PAGE> 11
3.5 Arbitration and Choice of Law.
(a) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas,
without regard to the rules or principles of conflicts of law (rules or
principles of private international law) thereof.
(b) Rules Governing Disputes. The parties hereto shall seek
to resolve all disputes arising from or related to this Agreement amicably.
In the event the parties hereto cannot resolve such disputes, the Company,
or Shareholders may request arbitration of any dispute arising from or
related to this Agreement, by delivery or written notice to the other
parties hereto. Such disputes shall be submitted to final and binding
arbitration before a Board of Arbitration in accordance with the
International Arbitration Rules of the American Arbitration Association.
(c) Board of Arbitration. The Board of Arbitration shall
consist of three (3) arbitrators. If the First Closing does not occur, the
Purchasers shall appoint one arbitrator and the Company shall appoint one
arbitrator. If the First Closing does occur, the Purchasers shall appoint
one arbitrator and the Original Shareholders shall appoint one arbitrator.
The two (2) arbitrators thus appointed shall appoint the third (3rd)
arbitrator. If a party hereto fails to appoint its arbitrator within thirty
(30) days of the receipt of written request from a party for arbitration,
such arbitrator shall be appointed by the President of the American
Arbitration Association. If the two arbitrators thus appointed fail to
agree on the appointment of the third arbitrator within thirty (30) days of
the appointment of the other arbitrators and if the parties subject to the
dispute do not otherwise agree on the appointment of the third arbitrator,
the President of the American Arbitration Association shall appoint the
third arbitrator. The third arbitrator shall be the presiding arbitrator on
the Board of Arbitration.
(d) Procedures for Arbitration. The arbitration shall be
conducted in the English language in Dallas, Texas under the auspices of
the American Arbitration Association. The Board of Arbitration shall decide
by majority vote on points of substance, law and otherwise; provided,
however, that in the event a majority vote cannot be reached, the third
arbitrator shall make the final decision. All decisions of the Board of
Arbitration shall be rendered in the English language and shall be final
and binding on the parties and may be entered against them in a court of
competent jurisdiction. The Board of Arbitration shall determine the costs
of arbitration in its award, and such costs shall be allocated between the
parties as determined by the Board of Arbitration.
3.6 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and
shall constitute one and the same instrument.
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<PAGE> 12
3.7 Termination. This Agreement shall terminate at such time as no
Registrable Securities are outstanding.
3.8 Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGES FOLLOW
12
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
-----------------------------------
Roy J. Moore
-----------------------------------
Thomas F. "Fred" Moore
-----------------------------------
Carl R. Moore
FWT, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
FWT ACQUISITION, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 14
EXHIBIT A
SHAREHOLDERS PARTY TO THIS AGREEMENT
Roy J. Moore:
Orchid Court
Arlington, Texas 76016
Phone: (817) 561-0151
Thomas F. "Fred" Moore:
Bay Club Drive
Arlington, Texas 76013
Phone: (817) 457-1579
Carl R. Moore:
Flower Garden
Arlington, Texas 76016
Phone: (817) 483-6061
FWT, Acquisition, Inc.:
Madison Avenue
10th Floor
New York, NY 10022
Attn: Edward W. Scott
Phone: (212) 605-0577
Fax: (212) 486-6686
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AND REDEMPTION AGREEMENT
BY AND AMONG
FWT, INC.,
THE COMPANY
FWT ACQUISITION, INC.,
AS PURCHASER
AND
T.W. MOORE, BETTY MOORE,
CARL MOORE, FRED MOORE AND ROY J. MOORE,
AS SHAREHOLDERS
NOVEMBER 12, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I SIMULTANEOUS SIGNING AND CLOSING
Section 1.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-------
Section 1.2 Loan Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------------
Section 1.3 Redemption Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------------------
Section 1.4 Stock Purchase Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------------------------
Section 1.5 Related Transactions and Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------------------------------
Section 1.6 [Intentionally deleted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7 Miscellaneous Purchaser Delivered Closing Documents. . . . . . . . . . . . . . . . . . . . . 3
---------------------------------------------------
Section 1.8 Miscellaneous Shareholder and Company Delivered Documents. . . . . . . . . . . . . . . . . . 4
---------------------------------------------------------
Section 1.9 Resignations. Each . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------------
ARTICLE II AGGREGATE CONSIDERATION AND ADJUSTMENTS
Section 2.1 Aggregate Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------------------------
Section 2.2 Consolidated Escrow Amount and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------------------------------
Section 2.3 Estimated Closing Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------------------------
Section 2.4 Audited Closing Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------------------
Section 2.5 Increases to Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------------
Section 2.6 Decreases to Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------------
Section 2.7 Payment and Allocation of Upward or Downward Adjustments. . . . . . . . . . . . . . . . . . . 7
--------------------------------------------------------
Section 2.8 Excluded Asset Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------
Section 2.9 Allocation of the Final Aggregate Purchase Price. . . . . . . . . . . . . . . . . . . . . . . 8
------------------------------------------------
Section 2.10 [Intentionally deleted]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.11 Special Allocation of Certain Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------------------------
ARTICLE III CERTAIN TAX MATTERS
Section 3.1 Section 338 Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------
Section 3.2 Apportionment of Taxable Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------------------------
Section 3.3 Preparation and Filing of Income Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . 10
--------------------------------------------
Section 3.4 Payment of Income and Franchise Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------------------------------
Section 3.5 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----
Section 3.6 Cooperation on Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--------------------------
Section 3.7 Refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------
Section 3.8 Elections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Section 4.1 Capacity of Shareholder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------
Section 4.2 Organization of Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------
Section 4.3 Power and Authority of Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------------------------
Section 4.4 Execution, Delivery, and Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------------------------
Section 4.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------
Section 4.6 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 4.7 No Prohibitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------
Section 4.8 Compliance with Applicable Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------
Section 4.9 Compliance with Organizational Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------------------
Section 4.10 Corporate Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------------
Section 4.11 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------
Section 4.12 Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------
Section 4.13 Ownership of the Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------------------
Section 4.14 No Derivative Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------------
Section 4.15 No Subsidiaries or Joint Ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------------------
Section 4.16 Offices of Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------
Section 4.17 Audited Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------------------
Section 4.18 Interim Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------------------
Section 4.19 Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
----------
Section 4.20 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------------------------
Section 4.21 Management Letters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------------------
Section 4.22 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------------
Section 4.23 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------------------
Section 4.24 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------
Section 4.25 Condition of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------
Section 4.26 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------
Section 4.27 Real Property Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------------
Section 4.28 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
Section 4.29 Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------
Section 4.30 Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------
Section 4.31 Capital Expenditure Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------------
Section 4.32 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
Section 4.33 Outstanding Offers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
Section 4.34 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------
Section 4.35 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------------------
Section 4.36 Intellectual Property Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------------------------
Section 4.37 Computer Software Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------------
Section 4.38 Appraisals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------
Section 4.39 Adequacy of Company's Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------------------------
Section 4.40 Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------
Section 4.41 Related Party Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------------
Section 4.42 Litigation and Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------------------
Section 4.43 Litigation History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------
Section 4.44 Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------
Section 4.45 Audit Letter Responses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------------------
Section 4.46 Investigations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------
Section 4.47 Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------
Section 4.48 Insurance Policy Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------------------------
Section 4.49 Product Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------------
Section 4.50 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----
Section 4.51 Tax Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------
Section 4.52 Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------------------
Section 4.53 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Section 4.54 Collective Bargaining Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------------------------------
Section 4.55 Labor Relations Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------------------------
Section 4.56 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------------
Section 4.57 Employee Benefit Plan Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------------------------
Section 4.58 Distributors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------
Section 4.59 Suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------
Section 4.60 Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------
Section 4.61 Business Relationships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------------------
Section 4.62 Predecessors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------
Section 4.63 Absence of Unethical Business Practices. . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------------------------------
Section 4.64 No Broker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------
Section 4.65 Disclaimer of Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------
Section 4.66 Operation of Company Since Date of Interim Financials. . . . . . . . . . . . . . . . . . . 28
-----------------------------------------------------
Section 4.67 Related Party Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------------------
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------
Section 5.2 Power and Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------------
Section 5.3 Execution, Delivery, and Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . 30
---------------------------------------
Section 5.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------
Section 5.5 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
---------
Section 5.6 No Prohibitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
---------------
ARTICLE VI COVENANTS
Section 6.1 Non-Compete Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------------------
Section 6.2 Non-Solicitation Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-------------------------
Section 6.3 Non-Disclosure Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-----------------------
Section 6.4 Indirect Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--------------------
Section 6.5 Reasonableness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--------------
Section 6.6 Judicial Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--------------------
Section 6.7 Galaxy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
------
Section 6.8 Termination of Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
------------------------
ARTICLE VII INDEMNIFICATION AND DAMAGES
Section 7.1 Indemnification of Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------------------------
Section 7.2 Indemnification of Shareholders and the Company. . . . . . . . . . . . . . . . . . . . . . 33
-----------------------------------------------
Section 7.3 Indemnification Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-------------------------
Section 7.4 Assignment of Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--------------------
Section 7.5 Other Indemnitees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-----------------
Section 7.6 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--------
Section 7.7 Basket. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
------
Section 7.8 Maximum Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-----------------
Section 7.9 Survival of Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-----------------
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE VIII ARBITRATION AND EQUITABLE REMEDIES
Section 8.1 Settlement Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------------
Section 8.2 Arbitration Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-----------------------
Section 8.3 Place of Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--------------------
Section 8.4 Discovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------
Section 8.5 Equitable Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------------
Section 8.6 Exclusive Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------------------
Section 8.7 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------
Section 8.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------
Section 8.9 Cost of the Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------------------
Section 8.10 Exclusivity of Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------------------
ARTICLE IX GENERAL
Section 9.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------
Section 9.2 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
------------
Section 9.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------------
Section 9.4 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--------
Section 9.5 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-------------
Section 9.6 No Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-------------
Section 9.7 No Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------
Section 9.8 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------------------------
Section 9.9 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-------
Section 9.10 Representation by Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------------------------
Section 9.11 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
---------
Section 9.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
------------
Section 9.13 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------
Section 9.14 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
-------------------
Section 9.15 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------
</TABLE>
<PAGE> 6
SCHEDULES
Schedule I Shareholdings
Schedule 1.2 Funded Indebtedness
Schedule 1.9 Resignations
Schedule 2.8 Excluded Assets
Schedule 4.5 Consents
Schedule 4.11 Capitalization
Schedule 4.15 Subsidiaries / Joint Ventures
Schedule 4.16 Offices
Schedule 4.17 Audited Financial Statements
Schedule 4.18 Interim Financial Statements
Schedule 4.19 Accounting
Schedule 4.20 Absence of Certain Changes
Schedule 4.21 Management Letters
Schedule 4.22 Bank Accounts
Schedule 4.23 Accounts Receivable
Schedule 4.26 Real Property
Schedule 4.28(c) Storage Tanks
Schedule 4.29 Equipment
Schedule 4.30 Vehicles
Schedule 4.31 Capital Expenditures Budget
Schedule 4.32 Material Contracts
Schedule 4.35 Intellectual Property
Schedule 4.36(b) Registrations
Schedule 4.37 Computer Software Licenses
Schedule 4.40 Permitted Liens
Schedule 4.42 Litigation and Claims
Schedule 4.43 Litigation History
Schedule 4.46 Investigations
Schedule 4.47 Insurance Policies
Schedule 4.49 Product Warranties
Schedule 4.50 Taxes
Schedule 4.51 Tax Exceptions
Schedule 4.52 Directors and Officers
Schedule 4.53 Employees
Schedule 4.56 Employee Benefit Plans
Schedule 4.58 Distributors
Schedule 4.59 Suppliers
Schedule 4.60 Customers
Schedule 4.67 Related Party Transactions
1
<PAGE> 7
ANNEXES
Annex I Definitions
EXHIBITS
Exhibit A Form of Shareholder's Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Escrow Agreement
Exhibit D Form of Purchaser's Legal Opinion
Exhibit E Form of Shareholders Legal Opinion
Exhibit F Form of Company's Legal Opinion
Exhibit G Form of Tax Note
Exhibit H Form of Working Capital Notes
2
<PAGE> 8
STOCK PURCHASE AND REDEMPTION AGREEMENT
This Stock Purchase and Redemption Agreement (this "AGREEMENT"), dated
as of November 12, 1997, is by and among FWT Acquisition, Inc., a Delaware
corporation (the "PURCHASER"), FWT, Inc., a Texas corporation (the "COMPANY"),
T. W. Moore, Betty Moore, Carl Moore, Thomas F. "Fred" Moore, and Roy J. Moore
(such individuals are sometimes collectively referred to as "SHAREHOLDERS," and
individually referred to as a "SHAREHOLDER"). Unless otherwise provided
herein, capitalized terms used in this Agreement shall have the meanings
ascribed to them as Annex I hereto.
PRELIMINARY STATEMENTS
A. Prior to giving effect to the Closing Transactions (as herein
defined) the Shareholders owned an aggregate of three hundred seventy-two (372)
shares of Company's common stock, par value $10.00 per share ("COMMON STOCK")
as more fully described on Schedule I hereto, which constituted all of the
issued and outstanding shares of the Company's capital stock.
B. Upon the terms and conditions set forth in this Agreement, the
parties have simultaneously executed this Agreement and effected the
transactions described herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
terms and conditions of this Agreement, and other good, valuable and binding
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound hereby, now agree as follows:
ARTICLE I.
SIMULTANEOUS SIGNING AND CLOSING
Section 1.1 Closing. On the date hereof (the "CLOSING DATE"),
the parties hereto have caused each of the documents listed in this Article I
(the "CLOSING DOCUMENTS") to be executed and delivered and have consummated
each of the other transactions described in this Article I (the "CLOSING").
Section 1.2 Loan Transactions. Simultaneously with the execution
hereof and pursuant to the terms of a Senior Secured Credit Agreement with
Bankers Trust Company, as Agent, the Company obtained a loan in the principal
amount of $100,000,000 the proceeds of which were used in part to (a) repay in
full all outstanding Funded Indebtedness of the Company immediately prior to
giving effect to the Closing Transactions which Funded Indebtedness is
described on Schedule 1.2 hereto (the Shareholders hereby severally represent
and warrant that Schedule 1.2 accurately reflects the Funded Indebtedness of
the Company prior to giving effect to the Closing
3
<PAGE> 9
Transactions), and (b) redeem the Redeemed Shares (as herein defined). The
aggregate amount of the Funded Indebtedness paid by the Company on the date
hereof was $22,220,073.
Section 1.3 Redemption Transactions. The Company has redeemed an
aggregate of 235.78 shares of Common Stock (the "REDEEMED SHARES") from the
Shareholders for an aggregate consideration of $82,374,900.13 (and subject to
adjustment on a post closing basis as herein provided) (the "AGGREGATE CLOSING
DATE REDEMPTION PRICE"), $75,375,422.68 of the Aggregate Closing Date
Redemption Price was paid to the Shareholders at Closing (and, in the case of
the consideration paid in the form of the Excluded Assets (as herein defined),
paid prior to closing), and $6,998,477.45 of such amount was deposited into the
Escrow Account (as herein defined) for payment to the Shareholders or the
Purchaser upon termination of the Escrow Account as provided in the Escrow
Agreement (as herein defined). The number of shares of Common Stock redeemed
from each Shareholder and the portion of the Aggregate Closing Date Redemption
Price paid to each Shareholder and deposited into the Escrow Account with
respect to each Shareholder is as set forth in the following table:
<TABLE>
<CAPTION>
Portion of Aggregate
Closing Date
Name Shares Redeemed Redemption Price
---- --------------- ----------------
<S> <C> <C>
T.W. Moore 59.5542 $ 20,645,081.03
Betty Moore 59.5542 $ 20,645,081.03
Roy Moore 38.9166 $ 13,694,912.69
Fred Moore 38.9166 $ 13,694,912.69
Carl Moore 38.9166 $ 13,694,912.69
</TABLE>
Each Shareholder has delivered to the Company the certificates representing the
Redeemed Shares held by it, duly endorsed to the Company.
Section 1.4 Stock Purchase Transactions. Purchaser has purchased
an aggregate of 108.98 shares of Common Stock (the "PURCHASED SHARES") from the
Shareholders for an aggregate cash consideration paid at Closing of $36,000,000
(the "AGGREGATE STOCK PURCHASE PRICE"). The number of shares of Common Stock
purchased from each Shareholder and the portion of the Aggregate Stock Purchase
Price paid to each Shareholder is as set forth in the following table:
<TABLE>
<CAPTION>
Portion
Aggregate Stock
Name Shares Purchased Purchase Price
---- ---------------- --------------
<S> <C> <C>
T.W. Moore 34.3758 $11,362,493.74
Betty Moore 34.3758 $11,362,493.74
Roy Moore 13.3873 $ 4,425,004.17
Fred Moore 13.3873 $ 4,425,004.17
Carl Moore 13.4538 $ 4,425,004.17
</TABLE>
4
<PAGE> 10
Each Shareholder has delivered to Purchaser the certificates representing the
Purchased Shares held by it duly endorsed to Purchaser. After giving effect to
the redemption of the Redeemed Shares and the purchase of the Purchased Shares,
Roy Moore, Fred Moore and Carl Moore each hold 9.0761 shares of Common Stock,
representing, in the aggregate, 19.99995593% of the outstanding Common Stock of
the Company, and Purchaser holds 108.9135 shares of Common Stock representing
80.00004407% of the outstanding Common Stock of the Company.
Section 1.5 Related Transactions and Documents. Simultaneously
with the execution hereof, the parties have executed and delivered each of the
following documents to which they are a party and have delivered and/or
received the other documents and instruments listed below:
(a) Shareholders' Agreement. Each of the Company,
Purchaser, Roy Moore, Carl Moore, Fred Moore and for the limited purposes set
forth therein Baker Communications Fund, L.P. have entered into, executed and
delivered a Shareholders' Agreement in the form of Exhibit A hereto ( the
"SHAREHOLDERS' AGREEMENT").
(b) Registration Rights Agreement. Each of the Company,
Purchaser, Roy Moore, Fred Moore and Carl Moore have entered into, executed and
delivered a Registration Rights Agreement in the form of Exhibit B hereto (the
"REGISTRATION RIGHTS AGREEMENTS")
(c) Employment Agreements. The Company and each of Roy
Moore, Carl Moore and Fred Moore have entered into, executed and delivered an
Employment Agreement acceptable to each (collectively, the "EMPLOYMENT
AGREEMENTS").
(d) Escrow Agreement. Each of the Company, the
Shareholders, the Purchaser and U.S. Trust Company of Texas, N.A., as Escrow
Agent, have entered into, executed and delivered an Escrow Agreement in the
form of Exhibit C hereto (the "ESCROW AGREEMENT").
Section 1.6 [Intentionally deleted]
Section 1.7 Miscellaneous Purchaser Delivered Closing Documents.
Purchaser has delivered to the Company and to each of the Shareholders the
following:
(a) Legal Opinion. An opinion of the Purchaser's
retained legal counsel (the "PURCHASER'S LEGAL OPINION"), dated as of the
Closing Date in the form of Exhibit D hereto.
(b) Secretary's Certificate. A certificate executed by
the Secretary or an Assistant Secretary of Purchaser (the "PURCHASER'S
SECRETARY CERTIFICATE"), which certificate includes:
(i) Charter. A copy of Purchaser's
Certificate of Incorporation, certified by the Delaware Secretary of State.
(ii) Bylaws. A copy of Purchaser's Bylaws.
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(iii) Certificate of Existence and Good
Standing. A certificate from the Delaware Secretary of State, stating that
Purchaser is in existence under the laws of the State of Delaware and stating
that Purchaser has paid all Taxes owed the State of Delaware and is in good
standing under such state's laws.
(iv) Resolutions. A copy of the resolutions
pursuant to which Purchaser's Board of Directors approved this Agreement.
(v) Incumbency Certificate. An incumbency
certificate setting forth the names, offices, and signatures of Purchaser's
officers who execute any documents on behalf of Purchaser in connection with
this Agreement or the Closing Documents.
Section 1.8 Miscellaneous Shareholder and Company Delivered
Documents. Company and the Shareholders have delivered to Purchaser the
following:
(a) Legal Opinion. Opinions of each of Shareholders' and
Company's retained legal counsel (the "SHAREHOLDERS' AND COMPANY'S LEGAL
OPINIONS"), dated as of the Closing Date in the forms of Exhibits E and F
hereto.
(b) Secretary's Certificate of Company. A certificate
executed by the Secretary or an Assistant Secretary of Company (the "COMPANY'S
SECRETARY CERTIFICATE") which certificate includes,:
(i) Charter. A copy of Company's Articles of
Incorporation certified by the Texas Secretary of State.
(ii) Bylaws. A copy of Company's Bylaws.
(iii) Certificate of Existence. A long-form
certificate from the Texas Secretary of State, stating that Company is in
existence under the laws of the State of Texas and describing each document
comprising Company's Articles of Incorporation.
(iv) Good Standing Certificate. A certificate from
the Comptroller of the State of Texas, stating that Company has paid all Taxes
owed the State of Texas and is in good standing under such state's laws.
(v) Foreign Good Standing Certificates. A
certificate from the appropriate official of each jurisdiction where Company
conducts business or owns or leases property, stating Company has paid all
Taxes owed such jurisdiction and is in good standing as a foreign corporation
under the laws of such jurisdiction.
(vi) Resolutions. A copy of the resolutions in which
Company's Board of Directors approved this Agreement and the Escrow Agreement.
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(vii) Incumbency Certificate. An incumbency
certificate setting forth the names, offices, and signatures of Company's
officers who execute any documents on behalf of Company in connection with this
Agreement.
Section 1.9 Resignations. Each of the Company's employees,
officers and directors listed on Schedule 1.9 hereto has resigned from his or
her positions with the Company pursuant to a written resignation agreement
delivered to the Company (a copy of which is included on Schedule 1.9), and
Company has made all severance and other payments due to such Person in
connection with such resignation all of which payments are described on
Schedule 1.9 hereto and are reflected in the Estimated Closing Balance Sheet.
Section 1.10 Affiliate Contracts. Each Material Contract between
the Company and its Affiliates has been terminated and all payments referenced
in Section 4.67 have been made, which payments are reflected on Schedule 4.67
hereto and in the estimated Closing Balance Sheet.
ARTICLE II.
AGGREGATE CONSIDERATION AND ADJUSTMENTS
Section 2.1 Aggregate Purchase Price. While the redemption
transactions and the stock purchase transactions referenced in Sections 1.3 and
1.4 hereof are separate and distinct transactions, it is the intent of the
parties that the aggregate consideration paid and received in connection with
such transactions equal the remainder of (a) $138,299,924.58, minus (b) the
aggregate amount of the Funded Indebtedness of the Company on the Closing Date
prior to giving effect to the Closing Transactions, subject to adjustment as
provided herein. Such consideration has been and, to the extent of the
Aggregate Escrow Amount (as herein defined) and any Final Upward Adjustment (as
herein defined), will be paid, in the form of (a) cash, (b) transfer to T.W.
Moore and Betty Moore of the Excluded Assets, (c) the execution and delivery by
the Company to the Shareholders of promissory notes in the form of Exhibit G
hereto and in an aggregate principal amount of $1,582,500 (the "TAX NOTES"),
(d) the execution and delivery by the Company to the Shareholders of
promissory notes in the form of Exhibit H hereto (the "WORKING CAPITAL
ADJUSTMENT NOTES" and together with the Tax Notes, the "PROMISSORY NOTES"), and
(e) funding of the Escrow Account. Because it is impossible for the Company's
auditors to prepare and deliver on the Closing Date an audited balance sheet
dated as of the Closing Date, the Aggregate Stock Purchase Price and Aggregate
Closing Date Redemption Price have been determined using the Estimated Closing
Balance Sheet and the adjustment protocols described below and has been paid in
the forms provided below (the "ESTIMATED AGGREGATE PURCHASE PRICE"). As soon
as practicable after the Closing, but in all events within forty-five (45) days
after Closing, the Company's auditors shall deliver to the parties the Audited
Closing Balance Sheet described below and the Estimated Aggregate Purchase
Price shall be adjusted, if required hereunder, using the Audited Closing
Balance Sheet and the adjustment protocols described below. Such adjusted
aggregate purchase and redemption price shall then become the final aggregate
purchase price and shall be paid in the forms provided below (the "FINAL
AGGREGATE PURCHASE PRICE").
Section 2.2 Consolidated Escrow Amount and Procedures. In order
to fund the payment obligations of the Company to the Shareholders, and secure
each and all of the various
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obligations of the Shareholders (or of any of them) and the Company to the
Purchaser, in each case hereunder and under the Closing Documents
(collectively, the "ESCROW OBLIGATIONS"), the Company has, simultaneously with
the execution hereof, deposited into a special third party escrow account (the
"ESCROW ACCOUNT") an aggregate cash amount equal to $6,998,477.45 which is five
percent (5%) of the excess of the sum of the Estimated Aggregate Purchase Price
and the aggregate amount of the Funded Indebtedness of the Company on the
Closing Date over the value of the Excluded Assets (the "AGGREGATE ESCROW
AMOUNT") into the Escrow Account which amount has been withheld from the
Aggregate Closing Date Redemption Price for payment to the Shareholders or the
Purchaser upon termination of the Escrow Account as provided in the Escrow
Agreement.
Section 2.3 Estimated Closing Balance Sheet. Prior to the date
hereof the Company delivered to Purchaser and the Shareholders a balance sheet
prepared to reflect accurately an estimate of the financial position of Company
as of November 10, 1997 (but prior to giving effect to any of the Closing
Transactions) (the "ESTIMATED CLOSING BALANCE SHEET"). The Company represents
and warrants that the Estimated Closing Balance Sheet has been prepared in
accordance with GAAP (other than with respect to such matters necessitated by
Company's estimating its financial position) applied on a basis consistent with
immediate past practice, (ii) reflects accurately Company's good faith estimate
of the financial position of Company as of November 10, 1997 and prior to
giving effect to any of the Closing Transactions, and (iii) is certified by the
Company's chief financial officer (or functional equivalent).
Section 2.4 Audited Closing Balance Sheet. As promptly as
practicable after the Closing, but in all events within forty-five (45) days
after Closing, Arthur Andersen LLP shall audit the Estimated Closing Balance
Sheet (as so audited and adjusted to reflect the results of such audit, the
"AUDITED CLOSING BALANCE SHEET"). The Audited Closing Balance Sheet shall
reflect all adjustments necessary for a fair presentation of Company's
financial position as of November 10, 1997, including the prorated effect of
any contemplated year-end adjustments, but without giving effect to the Closing
Transactions. Arthur Anderson LLP shall not make any adjustments to any of the
accrued items reflected on the Estimated Closing Balance Sheet.
Section 2.5 Increases to Purchase Price. In calculating the
Estimated Aggregate Purchase Price, the parties have applied, and in
calculating the final Aggregate Purchase Price the parties shall apply, the
following criteria:
(a) Estimated Aggregate Purchase Price. If the (i) sum
of (A) the value of the Company's Current Assets, plus (B) $300,000, over (ii)
Current Liabilities ("WORKING CAPITAL") calculated using the Estimated Closing
Balance Sheet (the "ESTIMATED WORKING CAPITAL AMOUNT") exceeded $21,300,000,
then the Estimated Aggregate Purchase Price has been increased by the excess of
the Estimated Working Capital Amount over $21,300,000; up to an absolute
maximum increase of $10,000,000 (such excess, the "CLOSING DATE UPWARD
ADJUSTMENT"). All of such amount was allocated to the Aggregate Closing Date
Redemption Price and has been paid by the Company to the Shareholders as part
of the redemption transactions.
(b) Final Aggregate Purchase Price. In connection with
the determination of the Final Aggregate Purchase Price, the value of the
Working Capital shall be recalculated using
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the Audited Closing Balance Sheet as provided herein and any further upward
adjustments (subject to the same limitations) made (the "FINAL UPWARD
ADJUSTMENT").
Section 2.6 Decreases to Purchase Price. In calculating the
Estimated Aggregate Purchase Price, the parties have applied, and in
calculating the Final Aggregate Purchase Price the parties shall apply, the
following criteria:
(a) Estimated Aggregate Purchase Price. If the
Estimated Working Capital Amount was less than $21,300,000, then the Estimated
Aggregate Purchase Price has been decreased by the amount of such shortfall
(the "CLOSING DATE DOWNWARD ADJUSTMENT").
(b) Final Aggregate Purchase Price. In connection with
the determination of the Final Aggregate Purchase Price, the value of the
Working Capital shall be recalculated using the Audited Closing Balance Sheet
as provided herein and any further downward adjustments made (the "FINAL
DOWNWARD ADJUSTMENT").
Section 2.7 Payment and Allocation of Upward or Downward
Adjustments. To the extent that the calculation of the Estimated Aggregate
Purchase Price has, or in the case of the Final Aggregate Purchase Price shall,
result in a Closing Date Upward Adjustment and/or a Final Upward Adjustment, as
the case may be or a Closing Date Downward Adjustment and/or a Final Downward
Adjustment, as the case may be, such amount shall be paid and allocated as
follows:
(a) Upward Adjustments. Any such upward adjustment to
the Estimated Aggregate Purchase Price has been, or to the Final Aggregate
Purchase Price shall be, paid by the Company to each Shareholder in immediately
available funds to the extent of an amount equal to such Shareholder's
Proportionate Amount of (x) the lesser of: (A) the amount of the required
upward adjustment and (B) the excess of the amount of cash and cash equivalents
shown on the Estimated Closing Balance Sheet or the Final Closing Balance
Sheet, as the case may be, over $10.0 million. The balance of any such upward
adjustment to the Estimated Aggregate Purchase Price has been, or to the Final
Aggregate Purchase Price shall be, paid by delivery of a Working Capital Note
in an amount equal to its Proportionate Share of such balance. Any Closing Date
Upward Adjustment has been allocated solely to the redemption price for the
Redeemed Shares and has been taken into account in the calculation of the
Aggregate Closing Date Redemption Price. Any Final Upward Adjustment shall
also be allocated to the redemption price for the Redeemed Shares. The amount
of any Final Upward Adjustment shall be paid promptly (and in all events within
5 days) following the calculation thereof.
(b) Downward Adjustments. Any such downward adjustment
to the Estimated Aggregate Purchase Price has been, and to the Final Aggregate
Purchase Price shall be, paid to the Company by reduction of the Estimated
Aggregate Purchase Price or Final Aggregate Purchase Price as so calculated,
such reduction in the Final Aggregate Purchase Price to be applied first to
reduce Promissory Notes, then in immediately available funds. Any Final
Downward Adjustment shall be payable by each Shareholder in accordance with
their Proportionate Amount. Any Closing Date Downward Adjustment has been
allocated solely to the redemption price for the Redeemed Shares and has been
taken into account in the calculation of the Aggregate Closing Date
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Redemption Price. Any Final Downward Adjustment shall also be allocated solely
to the redemption price for the Redeemed Shares. The amount of any Final
Downward Adjustment shall be paid promptly (and in all events within 5 days)
following the calculation thereof.
(c) Time Value Factor. Any Final Upward Adjustment or
Final Downward Adjustment shall bear interest at the Prime Rate from the
Closing Date through the date of payment, whether such payment is in cash or
through an adjustment to the principal amount of a Promissory Note.
Section 2.8 Excluded Assets. The Estimated Aggregate Purchase
Price has been determined, and the Final Aggregate Purchase Price shall be
determined, taking into account the value of the assets described on Schedule
2.8 (the "Excluded Assets") which were transferred by the Company to certain of
the Shareholders prior to the Closing Date.
Section 2.9 Allocation of the Final Aggregate Purchase Price.
A. As soon as practicable, and in no event later than sixty days
after the Closing Date, the Company, at its own expense, shall cause Arthur
Andersen LLP to prepare and deliver to the Purchaser and Shareholders an
allocation schedule ("Allocation Schedule") setting forth the allocation of the
"aggregate deemed sales price" (as defined in the applicable United States
Department of Treasury Regulations under the Internal Revenue Code of 1986, as
amended (the "CODE")), to the assets of the Company. The Allocation Schedule
shall be prepared in accordance with the Treasury Regulations under Section 338
of the Code.
B. If the Purchaser or the Shareholders disagree with the
allocations set forth in the Allocation Schedule, they may within ten days
after the delivery of the Allocation Schedule deliver a notice to the Company
and the other party (the "Disagreement Notice"), setting forth the proposed
allocations as to which they disagree and the reasons for such disagreement.
If no Disagreement Notice is delivered within such ten-day period, the
allocations set forth in the Allocation Schedule shall become final, conclusive
and binding on the parties hereto for all purposes. If either party delivers a
Disagreement Notice to the other party, the Purchaser and the Shareholders
shall use their reasonable best efforts to reach agreement on the disputed
items or amounts in order to determine the Allocation Schedule. If the
Purchaser and the Shareholders do not resolve all disputed items or amounts
within fifteen days after delivery of a Disagreement Notice, the disputed
allocations will be submitted to a nationally recognized independent accounting
firm other than Arthur Andersen LLP ("Independent Accountants") selected by the
Purchaser and the Shareholders for resolution of such disputed items and
amounts. If the Purchaser and the Shareholders cannot agree on an Independent
Accountant, an Independent Accountant shall be selected by Arthur Anderson LLP.
The written report of the Independent Accountant (the "Report") shall be
delivered to each of the Purchaser and the Shareholders promptly, but no event
later than thirty days after such disputed items are submitted to the
Independent Accountant, and shall be final, conclusive, and binding upon each
of the Purchaser and the Shareholders. These procedures for resolution of
disputes concerning the allocation of the aggregate deemed sales price shall be
final and binding on all of the parties hereto, and shall not be subject to
appeal of any kind. The fees and expenses of the Independent Accountant shall
be borne by the Company.
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C. Each of the Company, the Shareholders, and the Purchaser agree
to execute a reasonably acceptable engagement letter, if requested to do so by
the Independent Accountant, and shall provide reasonable access to the books
and records of the Company and its employees who are responsible for financial
matters. The Company, Purchaser, and the Shareholders shall file all Tax
returns and information reports, and otherwise act in accordance with, the
allocations contained in the Allocation Schedule.
Section 2.10 [Intentionally deleted].
Section 2.11 Special Allocation of Certain Expenses. The Parties
acknowledge that (a) the Company shall be solely responsible for and shall pay
(i) the fees and expenses of Arthur Anderson LLP in connection with Arthur
Anderson LLP's audit of the Audited Financial Statements and review of the
Interim Financial Statements and other services rendered by Arthur Anderson in
connection with the Closing Transactions (the Company acknowledges receipt of
the capital contribution from Purchaser (for a portion of such fees referenced
in Section 2.10)), and (ii) the fees and expenses of Haynes & Boone, L.L.P. and
Gardere & Wynne, L.L.P. to the extent they were incurred in connection with the
debt financing obtained by the Company with respect to the Closing
Transactions, including the anticipated issuance in the future of certain debt
securities by the Company, (b) the Shareholders shall be solely responsible for
and shall pay the fees of Banc One Capital Corporation and the balance of the
fees and expenses of Gardere & Wynne, L.L.P. and Haynes & Boone, L.L.P., and
(c) all out of pocket fees and expenses of Purchaser shall be paid by the
Company as contemplated by Section 9.4.
ARTICLE III.
CERTAIN TAX MATTERS
Section 3.1 Section 338 Election. The Parties shall elect to
treat the purchase of the Shares as a purchase of assets for federal Income Tax
purposes pursuant to Section 338(h)(10) of the Code and any similar provisions
under state and other Income Tax laws (collectively, the "SECTION 338
ELECTION"). For purposes of the Section 338 Election, the Parties shall
allocate the aggregate of the Purchase Price, and Company's liabilities to
Company's assets and the Non-Compete Covenant as listed in the Purchase Price
Allocation Schedule.
Section 3.2 Apportionment of Taxable Income. The Parties shall
elect to treat the Closing Date as the last day of a taxable period of Company
(a "PRE-CLOSING TAX PERIOD"). For taxable periods that end on the Closing
Date, all items of income, gain, loss, deduction, and credits other than any
such items resulting from the Section 338(h)(10) election or other Closing
Transactions shall be allocated to the periods before and after the Closing
Date by closing the books of the Company as of the Closing Date. In the case
of taxes that are payable with respect to a taxable period that begins before
the Closing Date and ends after the Closing Date, the portion of any such tax
that is allocable to the portion of the period ending on the Closing Date shall
be:
(i) in the case of taxes that are either (x) based
upon or related to income or receipts, or (y) imposed in connection with any
sale or other transfer or assignment of
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property (real or personal, tangible or intangible), deemed equal to the amount
which would be payable if the taxable year ended with the Closing Date; and
(ii) in the case of taxes imposed on a periodic basis
with respect to the assets of the Companies, or otherwise measured by the level
of any item, deemed to be the amount of such taxes for the entire period (or,
in the case of such taxes determined on an arrears basis, the amount of such
taxes for the immediately preceding period) multiplied by a fraction, the
numerator of which is the number of calendar days in the period ending on the
Closing Date and the denominator of which is the number of calendar days in the
entire period.
Shareholders shall be responsible for preparing and filing all Income
Tax reports and returns covering Company for Tax periods beginning before the
Closing Date, even if such reports and returns are not required to be filed
until after the Closing Date.
Section 3.3 Preparation and Filing of Income Tax Returns.
Shareholders shall prepare, or cause to be prepared, and file or cause to be
filed, all Income Tax reports and returns for any Pre-Closing Tax Period. When
preparing the Income Tax reports and returns of the Company for any Pre-Closing
Tax Period, Shareholders shall prepare such reports and returns in a manner
consistent with prior years and determine the income, gain, expenses, losses,
deductions, and credits of Company consistently with prior practices. With
respect to any such Income Tax report or return, Company shall provide to
Shareholders the information necessary to prepare such reports and returns no
later than 60 days after the Closing Date. Shareholders shall submit such
reports and returns to Purchaser a reasonable period before filing them with
the respective Taxing Authorities and Shareholders shall permit Purchaser to
review and comment upon such reports and returns and shall make such revisions
to such returns as are reasonably requested by Purchaser.
Section 3.4 Payment of Income and Franchise Taxes. Any taxable
income or loss of Company for Federal income tax purposes for any Pre-Closing
Tax Period (including income recognized as a result of the Section 338(h)(10)
election) shall be included in all Federal Income Tax reports and returns that
Shareholders file after the Closing Date. Shareholders shall pay the Taxes
owed with respect to such reports and returns when due. Notwithstanding any
provision of this Agreement to the contrary, Shareholders shall indemnify and
hold the Company and the Purchasers harmless for any increase in the Texas
franchise taxes payable by the Company on or before May 15, 1997 for all
privilege periods beginning on or before January 1, 1997; Company shall pay any
Texas franchise taxes payable by the Company on or after May 15, 1998 for all
periods beginning after January 1, 1997.
Section 3.5 Audit. If after the Closing any Party receives a
notice of deficiency or a proposed adjustment in connection with any audit or
other proceeding concerning any Income Tax report or return covering the
operations of company for a Pre-Closing Tax Period, such Party receiving such
item shall notify the other Parties of its receipt. So long as all liability
therefore is born by the Shareholders, the Shareholders shall have the sole and
exclusive right to settle or contest any such notice of deficiency or proposed
adjustment and to represent Company in connection with any audit or other
proceeding relating to any Income Tax reports or returns including the
operations of Company for any Pre- Closing Tax Periods. Shareholders however,
shall not settle any issue
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without the prior consent of Purchaser if such settlement would materially
adversely affect any future Income Taxes of Purchaser or Company. Purchaser
shall have the sole and exclusive right to settle or contest any notice of
deficiency or proposed adjustment, and to represent Company in connection with
any audit or other proceeding relating to any Income Tax report or return
including the operations of Company, for any Tax period ending after the
Closing Date, provided that if such report or return includes the operations of
company for a period before the Closing Date. Shareholders shall have the
right at its expense to participate in and control the conduct of such audit or
proceeding to the extent that such audit or proceeding relates to a potential
adjustment for which Shareholders would have liability; Purchaser also may
participate (but not control), at Purchaser's expense, in any such audit or
proceeding and, if Shareholders do not assume the defense of any such audit or
proceeding, Purchaser may defend the same in such manner as it may deem
appropriate, including, without limitation, settling such audit or proceeding
after giving five day's prior written notice to Shareholders setting forth the
terms and conditions of the settlement.
Section 3.6 Cooperation on Tax Matters. Purchaser, Company and
Shareholders shall cooperate fully, as and to the extent reasonably requested
by the other party, in connection with the filing of Tax returns and reports
relating to a Pre-Closing Tax Period and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include (x) making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, and (y)
providing such powers of attorney as are reasonably requested by the other
party. During the period beginning on the Closing Date and ending on the day
immediately preceding the seventh anniversary of the Closing Date, Shareholders
and Purchaser shall provide each other with reasonable access during normal
business hours to the books and records of Shareholders and Company,
respectively, to the extent that such books and records relate to the condition
or operation of Company prior to the closing and Shareholders or Purchaser
requires such books and records to prepare Income Tax reports or returns or
respond to third party Claims, including any audits or proceedings with respect
to such reports or returns. Shareholders and Purchaser shall have the right to
make copies of such books and records at its own expense. Prior to providing
access to such books and records, Shareholders or Purchaser may redact such
information that it considers appropriate. Company agrees to give Shareholders
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if Shareholders so request, Company shall allow
Shareholders to take possession of such books and records. Any information
provided to Shareholders shall be subject to Shareholders Non-disclosure
Covenant. Shareholder shall indemnify Purchaser and Company for any Claims
arising in connection with any such access provided to Shareholders and
Purchaser shall indemnify Shareholders for any claims arising in connection
with any such access provided to Purchaser.
Section 3.7 Refunds. After the Closing, Shareholders may require
Company to apply for any Tax refunds applicable to Company for any Pre-Closing
Tax Period, provided that Shareholders reimburse Company for the cost of
applying for any such refund. Company shall immediately forward to Shareholder
any Tax refund received allocable or applicable to Company attributable to any
Pre-Closing Tax Period.
Section 3.8 Elections. From and after the date of this
Agreement, neither Purchaser nor Company shall, without the prior written
consent of Shareholders (which may, in their
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sole and absolute discretion, withhold such consent), make, or cause or permit
to be made, any tax election that would affect the Company for any Pre-Closing
Tax Period.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder, severally but not jointly both as to the individual
shareholder in question and the Company hereby represents and warrants to
Purchaser that the statements made in this Article IV were true, correct, and
complete, immediately prior to the consummation of the Closing Transactions:
Section 4.1 Capacity of Shareholder. Each Shareholder is an
individual which possesses the requisite legal capacity and the right to
execute, deliver, and perform this Agreement and the Closing Documents to which
such Shareholder is a party, without obtaining any approval or giving any
notice.
Section 4.2 Organization of Company. Company is a corporation
duly incorporated, validly existing, and in good standing under the laws of the
State of Texas, and is qualified to transact business as a foreign corporation
in each jurisdiction where such qualification is required. Company has
previously delivered to Purchaser correct and complete copies of Company's
Articles of Incorporation and Bylaws.
Section 4.3 Power and Authority of Company. Company possesses
the corporate power and authority to execute, deliver, and perform this
Agreement and the Closing Documents to which Company is a party, without
obtaining any approval or giving any notice, other than the approval of its
Board of Directors, shareholder consents and the Consents, which it has
properly obtained. Company possesses the corporate power and authority to own
or lease its assets, carry on its business as presently conducted, and perform
its obligations under the Material Contracts.
Section 4.4 Execution, Delivery, and Enforceability. Each of the
Shareholders and the Company has duly executed and delivered this Agreement and
each of the Closing Documents to which it is a party, and each such agreement
constitutes a valid, legal, and binding obligation of each, enforceable against
it in accordance with its terms, subject to any Law Affecting Creditors'
Rights.
Section 4.5 Consents. Except for the approvals, consents,
filings, and notices listed in Schedule 4.5 (the "CONSENTS"), each
Shareholder's and the Company's execution, delivery, and performance of this
Agreement and the Closing Documents to which it is a party does not require
such Shareholder or Company to obtain any approval or consent from, make any
filing with, or give any notice to any Person.
Section 4.6 Conflicts. Subject to obtaining the Consents, each
Shareholder's and the Company's execution, delivery, and performance of this
Agreement and the Closing Documents to which it is a party does not directly or
indirectly (as applicable):
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(a) Documents. Breach or violate: (i) any provision of
the Articles of Incorporation or the Bylaws of Company, (ii) any resolution of
the Board of Directors, any committee of the Board of Directors, or the
shareholders of Company, (iii) any material contract to which any Shareholder
is a party or any Material Contract of the Company, or (iv) any applicable
Order; or
(b) Lien. Result in a Lien against any of the assets of
Company (or give rise to an event that with notice or lapse of time would
result in such a Lien).
Section 4.7 No Prohibitions. Each Shareholder's and the Company's
execution, delivery, and performance of this Agreement and of each of the
Closing Documents to which it is a party does not violate any material
Applicable Law, and no Lawsuit before any court or other Governmental Authority
is pending or to its knowledge threatened that could prohibit any Shareholder
or Company from consummating any of the transactions contemplated by this
Agreement or the Closing Documents to which it is a party.
Section 4.8 Compliance with Applicable Laws. Company is in
compliance with all Applicable Laws except to the extent a failure to be in
compliance could not reasonably be expected to result in a Material Adverse
Change. Within the last three years no Shareholder nor Company has received
any notice from any Governmental Authority asserting that any Shareholder or
Company has violated any material Applicable Law.
Section 4.9 Compliance with Organizational Documents. Company is
in compliance with all provisions of its Articles of Incorporation and Bylaws.
Section 4.10 Corporate Records. The minute books of Company
accurately reflect all material actions taken by Company's Board of Directors,
committees of its Board of Directors, and shareholders in their capacity as
shareholders of the Company. With respect to all transfers of Company's
capital stock prior to the date hereof, all applicable stock transfer Taxes
payable have been paid and all required stock transfer stamps have been affixed
to the transferred certificates. Company possesses its minute books and stock
transfer books, and has previously delivered to Company correct and complete
copies of them.
Section 4.11 Capitalization. Company is authorized to issue 1,000
shares of Common Stock, of which 372 shares are issued and outstanding.
Schedule 4.11 lists each Person owning (of record and to the Company's and each
Shareholder's knowledge, beneficially) any shares of Common Stock and the
number of shares of Common Stock owned by such Person. Company does not hold
any shares of its capital stock as treasury shares. There are no contractual
redemption rights with respect to any shares of capital stock of Company.
Section 4.12 Shares. All issued and outstanding shares of Common
Stock have been validly authorized and issued, are fully paid and
nonassessable, and were not issued in breach or violation of any Applicable
Law, Contract, or contractual or statutory preemptive rights. No restrictions
exist upon the transfer of the Redeemed Shares and the certificates
representing the
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<PAGE> 21
Redeemed Shares do not contain any legends indicating the existence of any such
restrictions, other than restrictions under applicable securities laws.
Section 4.13 Ownership of the Shares. Company does not have any
outstanding securities (including any options, subscriptions, warrants, calls,
rights, commitments, or other agreements obligating Company to issue or sell
any shares of Common Stock or any securities convertible into or exercisable
for shares of Common Stock), other than as listed on Schedule 4.11. All shares
of Common Stock transferred to the Company or Purchaser pursuant hereto have
been transferred free and clear of any Lien arising by, through or under the
Shareholders other than restrictions on transfer arising under the
Shareholders' Agreement and applicable securities laws.
Section 4.14 No Derivative Securities. Company does not have:
(a) any outstanding Derivative Securities, or (b) any voting trust,
arrangement, or Contract concerning Company's securities to which any
Shareholder or Company is a party or bound. Neither Company nor any
Shareholder is aware of any voting trust, or other Contract concerning
Company's securities to which any other Person is a party or bound.
Section 4.15 No Subsidiaries or Joint Ventures. Other than as set
forth on Schedule 4.15, Company does not own or hold, directly or indirectly,
any interest in any Person, including any equity securities or partnership
interests. Other than as set forth on Schedule 4.15, Company is not under any
obligation to make any advance, contribution, investment, or loan to any
Person.
Section 4.16 Offices of Company. Schedule 4.16 lists the location
of the chief executive office and each other office, place of business, or
facility of Company.
Section 4.17 Audited Financial Statements. Attached as Schedule
4.17 is the balance sheet of Company as of April 30, 1997 (the "MOST RECENT
AUDITED BALANCE SHEET"), the balance sheets of Company as of April 30, 1996,
and April 30, 1995, the related statements of operations, cash flows, and
shareholder's equity for each of the fiscal years ended on such dates and the
notes to such financial statements (collectively with the Most Recent Audited
Balance Sheet, the "AUDITED FINANCIAL STATEMENTS") The Audited Financial
Statements have been audited by Arthur Andersen LLP, whose report is attached
to such financial statements. The Audited Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis, except for any
changes disclosed in such financial statements. The balance sheets contained
in the Audited Financial Statements present fairly, in all material respects,
the financial condition of Company as of their dates. The statements of
operations and cash flows contained in the Audited Financial Statements present
fairly, in all material respects, the results of operations and cash flows of
Company for the periods presented.
Section 4.18 Interim Financial Statements. Attached as Schedule
4.18 is the balance sheet of Company as of August 31, 1997 (the "INTERIM
BALANCE SHEET"), the related statements of operations, cash flows, and
shareholder's equity for the 4 month period ended August 31, 1997
(collectively, the "INTERIM FINANCIAL STATEMENTS"). The Interim Financial
Statements have been reviewed by Arthur Andersen LLP. The Interim Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis, except for any changes
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<PAGE> 22
disclosed in such financial statements and the absence of notes to such
statements. The Interim Balance Sheet presents fairly, in all materials
respects, the financial condition of Company as of its date. The statements of
operations and cash flows contained in the Interim Financial Statements present
fairly, in all material respects, the results of operations and cash flows of
Company for the period presented. The Interim Financial Statements reflect all
adjustments necessary for a fair presentation, which adjustments consist only
of normal recurring adjustments and include estimated provisions for year-end
adjustments, other than the failure to reflect a pension termination liability
of approximately $140,000 which under FASB #87 and FASB #88 is not required to
be recorded at present (the "UNREFLECTED PENSION TERMINATION LIABILITY").
Section 4.19 Accounting. Other than as set forth on Schedule
4.19, Company has not changed any of its accounting or Tax reporting
principles, policies, or procedures during the five fiscal years immediately
preceding the Closing Date. Company has prepared the Audited Financial
Statements and the Interim Financial Statements (collectively, the "FINANCIAL
STATEMENTS") from its books and records.
Section 4.20 Absence of Certain Changes. Other than as set forth
on Schedule 4.20, since the date of the Interim Balance Sheet, Company has not:
(a) engaged in any transaction outside Company's ordinary course of business
consistent with past practices except for the transfer of Excluded Assets, (b)
suffered any Material Adverse Change, or (c) suffered any material damage to
any of its significant assets which will not be covered by insurance.
Section 4.21 Management Letters. Schedule 4.21 lists each
management letter or other report concerning Company that its accountants have
issued during the three fiscal years immediately preceding the date hereof and
any response to any such letter or report from Company or its Representatives.
Section 4.22 Bank Accounts. Schedule 4.22 lists each bank, money
market, mutual fund, or similar account that Company maintains at any financial
institution or otherwise, including any lock box arrangements or safe deposit
boxes. Such schedule also lists all individuals authorized to draw upon such
accounts or have access to such safe deposit boxes.
Section 4.23 Accounts Receivable. With the exception of the
receivables attributable to the AA Fees, the accounts and notes receivable
reflected on Interim Balance Sheet and all accounts and notes receivable of
Company arising after the date of such balance sheet, other than accounts and
notes receivable collected since then in the ordinary course of Company's
business consistent with its past practices, arose from bona fide transactions
in the ordinary course of Company's business consistent with past practices.
Except as disclosed on Schedule 4.23, no debtor with respect to the Company's
accounts or notes receivable has asserted any defense, counter claim or right
of setoff that has not been reflected on the Estimated Closing Balance Sheet.
Section 4.24 Inventory. Company owns all of the inventory
reflected on the Interim Balance Sheet and all inventory that it has acquired
or created after the date of such balance sheet, other than inventory disposed
of since the date of the Interim Balance Sheet in the ordinary course of
Company's business consistent with past practices. Company's inventory
reflected on the Estimated
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<PAGE> 23
Closing Balance Sheet is adequate for the conduct of Company's business and
contains no obsolete, sub-standard, or unsalable items. The inventory level of
Company is not in excess of the normal operating requirements of Company's
business. Company does not hold any other Person's inventory on consignment or
permit any other Person to hold any of Company's inventory on consignment.
Section 4.25 Condition of Assets. All equipment which is
reasonably necessary for the conduct of the Company's business is in good
operating condition subject to personal wear and tear. Company's assets and
facilities are sufficient to operate Company at its historic capacity.
Section 4.26 Real Property. Schedule 4.26 lists each parcel of
real property that Company owns or leases (the "REAL PROPERTY"). Such schedule
also sets forth the legal description of each parcel of Real Property owned by
the Company.
Section 4.27 Real Property Exceptions.
(a) Good and Indefeasible Title. Company has good and
indefeasible title in fee simple to the Real Property reflected as being owned
by it on Schedule 4.26 subject to the covenants, easements, encroachments,
restrictive covenants, rights-of-way, servitudes, or other interests or rights
which burden such Real Property which do not materially effect the current use
of such Real Property.
(b) No Condemnation. No condemnation, eminent domain, or
similar proceeding is pending or to the knowledge of any Shareholder threatened
with respect to any Real Property.
(c) Public Improvements. To each Shareholder's
knowledge, no public improvements are proposed, in progress, or completed for
which Company could be assessed after the date hereof.
(d) Utilities. Each parcel of Real Property other than
the Real Property in Kennedale is connected to electric, gas, sewage, storm
drain, telephone, and water facilities. Such connections are adequate for the
current use of such parcel.
(e) Roads. Each parcel of Real Property has adequate
access to and from public highways, streets, and roads. To each Shareholder's
knowledge, no proceeding is pending or threatened that could limit or terminate
such access.
(f) Parties in Possession. To each Shareholder's
knowledge, there are no Persons in possession of any portion of any Real
Property as lessees, tenants at sufferance, or trespassers. To each
Shareholder's knowledge, no Person claims any right in any portion of any Real
Property by adverse possession.
(g) Surveys. Company has previously delivered to Company
copies of each survey or plat in its possession relating to any of the Real
Property.
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<PAGE> 24
(h) Environmentally Sensitive Areas. To each
Shareholder's knowledge, no Real Property is located within any conservation,
preservation, or similar type area.
(i) No Encroachments. To each Shareholder's knowledge,
no building, fixture, or other improvement on any parcel of Real Property
encroaches on any adjacent property. To each Shareholder's knowledge, no
building, fixture, or other improvement on any adjacent property encroaches on
any parcel of Real Property.
Section 4.28 Environmental Matters.
(a) Compliance with Environmental Laws. Except as
reflected in the Environmental Report, the Company is in compliance in all
material respects with all applicable Environmental Laws. No litigation,
arbitration or other proceeding by or before any Governmental Authority is
pending, or to any Shareholder's knowledge, threatened against the Company,
alleging that the Company is in violation in any material respect of any
applicable Environmental Law, or which seeks to impose any liability or
obligation on the Company for any release or discharge of Hazardous Materials
into the environment including any remediation or redemption obligation.
(b) No Hazardous Materials on the Real Property. Except
as reflected in the Environmental Report, Company has not engaged in or
permitted any activity upon the Real Property involving the discharge,
disposal, dumping, emission, escape, generation, handling, leaching, leaking,
manufacture, refining, release, spilling, treatment of any material quantities
of any Hazardous Materials on, under, in, or about the Real Property or
transported any Hazardous Materials to, from, or across the Real Property
except in material compliance with all applicable environmental laws. No
Hazardous Materials currently are constructed, deposited, produced, stored, or
otherwise located on, under, in, or about the Real Property except in material
compliance with all applicable Environmental Laws.
(c) No Storage Tanks. Except as reflected in the
Environmental Report, and except as disclosed on Schedule 4.28(c) to the
knowledge of each Shareholder, no underground improvement, including any
storage, sump, or treatment tank or any gas, oil, or water well is or ever has
been located on the Real Property.
(d) Previously Owned Real Property. To the knowledge of
Shareholders and the Company, representations and warranties concerning the
Real Property set forth in this section are also correct and complete with
respect to all real property that Company previously owned or leased, through
the time of the Company's ownership or lease.
Section 4.29 Equipment. Schedule 4.29 lists each significant
piece of equipment and machinery that Company owns, leases, or otherwise uses
in its business, other than the Vehicles.
Section 4.30 Vehicles. Schedule 4.30 lists each automobile,
trailer, truck, and other vehicle that Company owns or leases (the "VEHICLES").
Such listing include any applicable vehicle identification numbers. Except as
reflected on Schedule 4.30, Company owns each Vehicle and
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<PAGE> 25
holds the certificate of title to it (with the exception of certain vehicles
that are not subject to the Certificate of Title Act).
Section 4.31 Capital Expenditure Budget. Attached as Schedule
4.31 is Company's proposed capital expenditure budget for the year ending April
30, 1998. Such budget reflects all capital expenditures proposed by the
Shareholders for Company during such year.
Section 4.32 Material Contracts.
(a) Each Material Contract is described on Schedule 4.32.
(b) Descriptions. No Material Contract has been amended
or supplemented in any way except as described on Schedule 4.32.
(c) Valid and Binding. Each Material Contract is valid,
binding obligation of Company, and in full force and effect.
(d) No Assignment. The Company has not assigned its
rights under any Material Contract, and to each Shareholder's knowledge, no
other party to any Material Contract has assigned any of its rights or
delegated any of its duties under such Material Contract.
(e) No Breach. No material breach by Company or to any
Shareholder's knowledge, by any other party exists under any Material Contract
with the exception of breaches giving rise to the Pending Contract Disputes.
As used herein, the Pending Contract Disputes mean the following matters which
have been disclosed to Purchaser:
(i) [Intentionally deleted].
(ii) As more fully discussed in a letter from Fred
Moore to Haynes & Boone, L.L.P., dated October 29, 1997, Ronsome Company has
failed to timely fulfill a purchase order for certain equipment to be provided
to the Company, and the Company is withholding certain payments to Ronsome
Company pending resolution of these issues; and
(iii) pursuant to a letter dated October 28, 1997
from Bill D'Agostino, Jr. of PrimeCo Personal Communications to Roy Moore, a
copy of which has been provided to Purchaser, PrimeCo has asserted certain
actual or potential deficiencies related to the Company's products and
services.
No party to any Material Contract has notified any Shareholder that such party
intends to breach or terminate such Contract or believes that Company has
breached such Contract.
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<PAGE> 26
(f) No Renegotiations. Except for (i) the General Supply
Contract dated November 1, 1996 by and between AT&T Wireless Services, Inc. and
the Company (the "AT&T CONTRACT"), and (ii) an Agreement between the Company
and Cox Communications PCS, L.P. (the "Cox Contract"), each of which are
currently being renegotiated, no renegotiation of any Material Contract is
pending.
Section 4.33 Outstanding Offers. Except with respect to offers
made in connection with the renegotiation of the AT&T Contract and the Cox
Contract, no outstanding contractual offer by or to Company exists that would
result in a Material Contract that Company or any Shareholder would be required
to disclose in the schedules to this Agreement if accepted on the date hereof.
Section 4.34 Permits. The Company holds all Permits required for
the operation of its business as currently conducted to the extent a failure to
hold such Permits could reasonably be expected to cause a Material Adverse
Change. The Company is in compliance with all material terms of such Permits.
Section 4.35 Intellectual Property. Schedule 4.35 lists each
registered Copyright, Patent, registered Trademark, and any application for
registration with respect to any such item owned or used by Company other than
the Computer Software Licenses (collectively, the "INTELLECTUAL PROPERTY").
With respect to each item of Intellectual Property, such schedule specifies any
Material Contract concerning such item, including any Material Contract which
is a license agreement under which Company is a licensor or licensee.
Section 4.36 Intellectual Property Exceptions.
(a) Intellectual Property Owned. Company owns all right,
title, and interest in and to the Intellectual Property or a valid license to
use such Intellectual Property, free and clear of any Lien. With the exception
of payments owed to PAL Cellular Group, Inc. under that certain Palm Tree
Monopole Antenna Structure Project Letter of Understanding and Agreement for a
Joint Development Marketing Arrangement dated as of February 23/24, 1994, by
and between the Company and PAL Cellular Group, Inc. the Company has no
obligation to make any license, royalty, or other payment with respect to its
ownership, licensing and use of such Intellectual Property.
(b) Registrations. Company has registered the Copyrights
reflected as on Schedule 4.36(b) with the United States Copyright Office and
all of the Patents and Trademarks reflected as being registered or issued on
Schedule 4.36(b) with the United States Patent and Trademark Office or the
appropriate foreign governmental authorities.
(c) Valid and Enforceable. Each item of Intellectual
Property is valid, enforceable, and not subject to any maintenance fees or
other assessments, fees, or Taxes due within one year after the date hereof.
No registration of any item of Intellectual Property is set to expire within
one year after the date hereof other than foreign patents.
(d) No Conflicts. To the knowledge of each Shareholder:
(i) with the exception of patent application 08/202,444 filed February 28, 1994
with respect to "Tree Styled
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Monopole Tower," Company has the exclusive right to use the Intellectual
Property, (ii) such use does not violate or infringe upon the proprietary
rights of any other Person, and (iii) Company has not infringed upon any such
proprietary rights. Company has never been involved in an interference,
opposition, reissue, or reexamination proceeding with respect to any of its
Patents except patent application 08/202,444 filed February 28, 1994 styled
"TREE STYLED MONOPOLE TOWER". The Patent Office Examiner has suggested that an
interference be initiated with respect to Patent No. 5,611,176.
(e) No Claims. To each Shareholder's knowledge, no
litigation or arbitration proceeding is pending or threatened by or before any
Governmental Authority involving any Intellectual Property, including any claim
by Company that another Person's Patent interferes with a Patent of Company
except Patent Application 08/202,444. The Patent Office Examiner has suggested
that an interference be initiated with respect to Patent No. 5,611,176.
(f) Public Domain. To Shareholder's knowledge no part of
any Intellectual Property is in the public domain or has reverted to the public
domain.
(g) Licenses. Any license to use any Intellectual
Property under which Company is the licensee is a perpetual license.
Section 4.37 Computer Software Licenses. Schedule 4.37 lists each
computer software program that Company has licensed other than those that are
generally available on a retail non-exclusive basis (the "COMPUTER SOFTWARE
LICENSES"). Such licenses are perpetual, unrestricted, and not subject to any
future payment or royalty.
Section 4.38 Appraisals. To each Shareholder's knowledge, no
appraisals have been made with respect to any real or personal property of
Company during the three fiscal years immediately preceding the date hereof
other than Tax appraisals.
Section 4.39 Adequacy of Company's Assets. Subject to the
Permitted Liens, Company owns all the real and personal property used in
Company's business or possesses a valid leasehold interest in, or license to
use such property, including the Assets reflected on the Interim Balance Sheet,
except for the Excluded Assets and assets that Company has disposed of since
the date of that balance sheet in the ordinary course of its business
consistent with past practices.
Section 4.40 Permitted Liens. Schedule 4.40 lists each Lien on
Company's assets (the PERMITTED LIENS ").
Section 4.41 Related Party Transactions. Since the date of the
Interim Balance Sheet, Company has not engaged in any transaction with any of
its Affiliates, Representatives, or shareholders, accrued any receivable or
received any payment from any of them, or accrued any payable or made any
payment to any of them, except (a) pursuant to Material Contracts, (b) for the
payment of directors' fees, expense reimbursements, salaries, and wages and
other benefits in the ordinary course of business or consistent with past
practices, and (c) the transfer of the Excluded Assets. None of Company's
Affiliates, or shareholders directly or indirectly compete against Company;
provided, that, Purchaser acknowledges the relationship of Roy Moore to Galaxy
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<PAGE> 28
Holdings, L.L.C. Contracts between Company and its Affiliates are designated
as "Related Party Contracts" on Schedule 4.32 hereto.
Section 4.42 Litigation and Claims. Schedule 4.42 lists (a) each
litigation or arbitration proceeding that is pending or to each Shareholder's
knowledge, threatened against the Company, (b) to each Shareholder's
knowledge, each litigation or arbitration proceeding that is pending or
threatened concerning (i) any current or former Representative of Company with
respect to such Representative's service to Company, (ii) any Material
Contract, or (iii) the execution, delivery, or performance of this Agreement
(collectively, the "CURRENT LAWSUITS").
Section 4.43 Litigation History. Schedule 4.43 lists and
describes each litigation or arbitration proceeding actually filed against
Company, or to each Shareholder's knowledge, against any current or former
Representative of Company with respect to such Representative's service to
Company during the three fiscal years immediately preceding the date hereof
other than the Current Lawsuits.
Section 4.44 Orders. Company and, to each Shareholder's
knowledge, each Representative of the Company is in compliance in all material
respects with each Order specifically naming the Company and expressly binding
on the Company or any of its assets.
Section 4.45 Audit Letter Responses. Schedule 4.45 lists each
lawyer response to Company's auditors' request for information concerning legal
proceedings that such auditors received in connection with their audit of the
most recently completed year in the Audited Financial Statements.
Section 4.46 Investigations. Schedule 4.46 lists and describes
each pending or to each Shareholder's knowledge threatened investigation by any
Governmental Authority, including any investigation concerning antitrust,
environmental, securities, and other regulatory matters.
Section 4.47 Insurance Policies. Schedule 4.47 lists each
insurance policy (excluding title insurance policies) held by the Company as a
named insured or loss payee).
Section 4.48 Insurance Policy Exceptions.
(a) Applications. To each Shareholder's knowledge no
material inaccuracy exists in any application with respect to any Insurance
Policy.
(b) Discontinuance of Coverage. During the three fiscal
years immediately preceding the date hereof, Company has not received any
notice from any insurance carrier of any intention to discontinue any insurance
policy, discontinue or decrease the insurance coverage under any insurance
policy, or require any alterations or improvements to any of Company's
facilities or properties.
Section 4.49 Product Warranties. Except with respect to warranty
obligations contained in certain customer agreements disclosed on Schedule 4.32
hereto ("Negotiated Warranties"), the Company has not provided an express
warranty with a term of more than one year.
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<PAGE> 29
Schedule 4.49 sets forth the form of each express warranty (other than
Negotiated Warranties) with respect to the Company's products and any other
products for which Company is responsible issued by the Company during the one
year period ending on the Closing Date.
Section 4.50 Taxes. Schedule 4.50 lists each Federal and material
State Tax report and return in connection with Company's assets, business, and
employees that Company filed during the three fiscal years immediately
preceding the date hereof or such earlier period for which the statute of
limitations has not yet expired. Such schedule lists each Income Tax report or
return that shows a net operating loss ("NOL") that Company may still carry
forward.
Section 4.51 Tax Representations. Except as set forth in Schedule
4.51:
(a) Consolidated Income Tax Returns. Company is not, and
never has been, included in a combined, consolidated, and unitary Income Tax
report and return.
(b) Tax Returns and Payments. Except certain state Tax
returns or reports relating to Taxes which are not material in amount, Company
has timely filed all Tax reports and returns in connection with Company's
assets, business, and employees, and Company has timely paid and discharged all
Tax obligations shown on such reports and returns, including in all material
respects any withholding obligations. Such Tax reports and returns are
accurate and complete in all material respects and correctly compute in all
material respects the Tax obligation to which each such report or return
pertains.
(c) No Notices. Company has not received any
determination letter, revenue agent report, or other notice of any proposed or
outstanding Tax deficiency against or allocable to Company for which the
applicable statute of limitations has not expired. Neither any Shareholder,
the Company, nor any other Person has executed any extension agreement or
waiver of any statute of limitations with respect to the assessment or
collection of any Tax against Company.
(d) No Audits. Neither the Internal Revenue Service
("IRS") nor any other taxing authority (collectively with the IRS, the "TAXING
AUTHORITIES") has contacted Company in writing concerning a future audit or
examination of any Tax reports and returns that include Company except with
respect to the fiscal year ended April 30, 1995. No such audit or examination
is in process or has occurred with respect to any period for which the statute
of limitations has not expired except with respect to the fiscal year ended
April 30, 1995.
(e) No Tax Liens. No Tax liens exist with respect to any
assets of Company, other than statutory Tax liens, including liens for taxes
not yet due and payable.
(f) No Agreements. No Tax ruling specifically applicable
to Company from any Taxing Authority or closing agreement with any Taxing
Authority has a continuing effect upon Company. No such Tax ruling or closing
agreement is pending.
(g) NOL Carry forwards. Company has no NOL carry
forwards.
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<PAGE> 30
(h) No Golden Parachutes. Company does not have any
Contract that could require Company to make any "excess parachute payment" as
defined under Section 280G of the Code.
(i) No Partnerships. Company is not a member of any
joint venture, partnership, or other arrangement or Contract that is treated as
a partnership for Income Tax purposes.
(j) No Property Treated as Owned by Another Person. No
property of Company is property that Company is required to treat as owned by
another Person pursuant to Section 168(f)(8) of the Code or any other
Applicable Law.
(k) No Tax Exempt Use Property. No property of Company
is tax exempt use property" as defined under Section 168(h)(1) of the Code.
(l) No Tax Exempt Bond Financed Property. No property of
Company is "TAX EXEMPT BOND FINANCED PROPERTY" under Section 168(g) of the
Code.
(m) No Foreign Shareholder. No Shareholder is a foreign
person" under Sections 1445 and 7701 of the Code.
(n) Subchapter S Election. The Company timely filed on
December 23, 1986, a valid election to be treated as an S corporation in
accordance with the provisions of Section 1362(a) of the Code as in effect on
such filing date, effective for the Company's taxable year beginning May 1,
1987 and has qualified and continues to qualify as an S corporation for all
years and periods thereafter up to the Closing Date.
(o) Certain Transactions. For purposes of Section
1374(d)(8) of the Code, the Company has not during the ten-year period ending
with the Closing Date, acquired assets in a transaction in which the Company's
Tax basis for the acquired assets was determined, in whole or in part, by
reference to the Tax basis of the acquired assets (or any other property) in
the hands of a corporation taxed as a C corporation under the Code.
Section 4.52 Directors and Officers. Schedule 4.52 lists each
director, officer, and Key Employee of Company on the date hereof. No such
individual other than Bill Sales, Allen Swofford, Dean Barkman and Martin De La
Rosa and no other employees other than Bob Kramm and Dodie Denton have an
employment agreement with Company. Each such officer and Key Employee is an
employee at will other than Bill Sales, Allen Swofford, Dean Barkman and Martin
De La Rosa.
Section 4.53 Employees. Schedule 4.53 lists for each Key Employee
of Company on the date hereof, such employee's job title, current aggregate
annual compensation along with the components of such compensation, and other
material benefits, including severance benefits payable
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<PAGE> 31
upon termination other than benefits provided to all full time employees of the
Company and benefits provided by Material Contracts.
Section 4.54 Collective Bargaining Agreements. There is no
collective bargaining agreement or other labor union Contract binding on the
Company applicable to any employee of Company (the "COLLECTIVE BARGAINING
AGREEMENTS").
Section 4.55 Labor Relations Exceptions.
(a) No Other Agreements. No collective bargaining
agreement or other labor union Contract has been requested by any employee or
group of employees of Company. No discussions or negotiations with the
principal executive officers of the Company with respect to any such agreement
or Contract have occurred.
(b) Labor Unions. To the knowledge of the Shareholders,
no labor associations, organizations, or unions have been certified to
represent any employee of Company.
(c) No Organizing Activities. To the knowledge of the
Shareholders, there have not been any union organizing activities, petitions,
or proceedings with respect to any labor association, organization, or union
becoming the exclusive bargaining agent for any group of employees of Company.
To the knowledge of the Shareholders, no proceeding is pending or threatened
before the National Labor Relations Board or other Governmental Authority
concerning any labor association, organization, or union seeking to represent
any employees of Company.
(d) No Strikes. No lockouts, pickets, sickouts, strikes,
work slowdowns, or work stoppages are pending or to the knowledge of the
Shareholders threatened with respect to any employees of Company. No such
matters have occurred during the five fiscal years immediately preceding the
date hereof.
(e) WARN Act. Company has not taken any action that has
resulted or may result in a plant closing" or "mass layoff" within the meaning
of the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN
ACT").
Section 4.56 Employee Benefit Plans. Schedule 4.56 lists each
Plan of the Company covering employees of the Company or contributed to by the
Company, or with respect to which Company has any liability (the "EMPLOYEE
BENEFIT PLANS"). Except for the Employee Benefit Plans, to the knowledge of
each Shareholder, the employees of Company have no expectation or right with
respect to any Plan under any Applicable Law, arrangement, Contract, past
custom, or otherwise, including any past participation in any Plans of the
Company except under employment contracts.
Section 4.57 Employee Benefit Plan Exceptions.
(a) Delivery of Documents. Company has delivered to
Company correct and complete copies of: (i) each Employee Benefit Plan,
including all amendments to such Plan,
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<PAGE> 32
(ii) each trust agreement, annuity or insurance Contract, or other funding
instrument pertaining to each Employee Benefit Plan, (iii) the most recent
determination and/or opinion letter issued by the IRS with respect to each
Employee Benefit Plan that is intended to be tax-qualified and a copy of any
pending applications for such determination and/or opinion letters, (iv) the
five most recent actuarial valuation reports for each Employee Benefit Plan for
which an actuarial valuation report exists, and (v) the five most recent annual
reports (IRS Form 5500 Series) for each Employee Benefit Plan, including all
schedules to such reports, and plan audits filed with respect to such reports.
(b) Amendments. Company can amend or terminate each
Employee Benefit Plan at any time without the approval of any Person, without
advance notice except as required by Applicable Law, including any notice
required under ERISA Section 204(h), and without any Material liability other
than with respect to the benefits accrued prior to such amendment or
termination or as required by Applicable Law.
(c) Joint and Several Liability. With respect to each
Employee Benefit Plan, no event has occurred and, to the knowledge of each
Shareholder, no condition exists that after the Closing could subject Company
or Purchaser, directly or indirectly, to any Material liability under Code
Sections 412, 4971, 4975, or 4980B or ERISA Sections 409 or 502 or Parts 6 or 7
of Title I of ERISA, including liability under any indemnification agreement or
commitment.
(d) Claims for Benefits. All benefits due under each
Employee Benefit Plan have been timely paid (except for amounts due former
participants whose whereabouts are unknown to the Company) and there is no
Claim or Lawsuit pending or, to the knowledge of each Shareholder threatened
against any Employee Benefit Plan or the fiduciaries of any such Plan, other
than routine uncontested Claims for benefits.
(e) Compliance with Plan and Applicable Law. Each
Employee Benefit Plan has been administered and documented in compliance in all
material respects with such Plan's terms and Applicable Law. Each Employee
Benefit Plan and any related trust agreement, annuity or insurance Contract, or
other funding instrument has complied in both form and substance in all
material respects with such Plan's terms and Applicable Law, including the Code
and ERISA. The FWT, Inc. Defined Benefit Pension Plan and Trust has been
terminated effective April 30, 1997 in a standard termination under ERISA and
all filings and notices required in connection with such termination have been
timely and properly made.
(f) Contributions. All contributions and payments to or
with respect to each Employee Benefit Plan have been timely made and Company
has recorded adequate reserves (other than an amount equal to the Unreflected
Pension Plan Termination Liability) to satisfy contributions and payments that
have not been made because they are not yet due under the terms of such
Employee Benefit Plan and Applicable Law. All contributions made or accrued
with respect to each Employee Benefit Plan are deductible for Income Tax
purposes.
(g) No Funding Deficiency. No ERISA Pension Plan has
incurred any "ACCUMULATED FUNDING DEFICIENCY" or "WAIVED FUNDING DEFICIENCY"
within the meaning of Section 302 of ERISA or Section 412 of the Code and
Company has never sought to obtain any variance
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from the minimum funding standards under Section 412(d) of the Code. The
funding method used in connection with each ERISA Pension Plan meets the
requirements of ERISA and the Code. The actuarial assumptions used in
connection with each ERISA Pension Plan are reasonable given the experience of
such Plan. The FWT, Inc. Defined Benefit Pension Plan and Trust are not
underfunded by more than $140,000 on a plan termination basis for purposes of
Title IV of ERISA. Aside from any such underfunding, the Company has no other
material liability under Title IV of ERISA or under Section 302 of ERISA.
(h) No Change in Control Triggers. No Employee Benefit
Plan provides for any accelerated payments, deemed satisfaction of goals or
conditions, new or increased benefits, or vesting upon a change in control of
Company or any of its Affiliates or any plant closing.
(i) No Benefits Increases. No obligation of Company
exists to increase any benefits under any Employee Benefit Plan or to adopt any
new Plan.
(j) No Multi-Employer. Company does not participate in
any "multiemployer plan" as defined in Section 3(37) of ERISA. Company has not
had any contribution obligation with respect to any such plan during the six
fiscal years immediately preceding the date hereof.
(k) No Audits or Prohibited Transactions. No audit or
investigation by any Governmental Authority is pending or, to Shareholder's
knowledge, threatened regarding any Employee Benefit Plan. To Shareholder's
knowledge, no Person has breached any fiduciary duty or engaged in any
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code with respect to any Employee Benefit Plan.
(l) No Unfunded Benefits. No Employee Benefit Plan has
any unfunded benefits that are not fully reflected in the Most Recent Audited
Balance Sheet other than the Unreflected Pension Termination Liability.
(m) No Investment in Company Assets. No assets of any
Employee Benefit Plan have been invested in any securities of Company.
(n) Tax-Qualified Plans. Each Employee Benefit Plan that
is intended to be tax-qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended, has received one or more up to date IRS determination
letters (covering, inter alia, the amendments required by the Tax Reform Act of
1986) stating that it is a tax-qualified Plan and to the knowledge of each
Shareholder on the date hereof no facts exist that could reasonably be expected
to adversely affect the tax-qualified status of any such plan. To the
knowledge of each Shareholder, no assets or earnings of any such Plan are
subject to Tax on unrelated business taxable income.
Section 4.58 Distributors. Schedule 4.58 lists all of Company's
Distributors on the date hereof and all distributorship agreements between
Company and such distributors as of the date hereof. No such Distributor
accounts for sales of Company's products and services in an amount in excess of
5% of Company's aggregate revenue during the most recently completed year
reflected
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in the Audited Financial Statements. No such Distributor has indicated to
Company that such Distributor intends to terminate its arrangement with Company
or distribute Company's products and services at a level below such
Distributor's past level of distribution.
Section 4.59 Suppliers. Schedule 4.59 lists Company's ten largest
suppliers during the most recently completed year reflected in the Audited
Financial Statements and the estimated percentage of Company's aggregate
product costs during such year that Company purchased from each such supplier.
Section 4.60 Customers. Schedule 4.60 lists Company's ten largest
customers for the most recently completed year reflected in the Audited
Financial Statements. Schedule 4.60 also lists the estimated percentage of
Company's aggregate revenue during such year derived from sales to each such
customer.
Section 4.61 Business Relationships. No Shareholder has any
reason to believe that the transaction contemplated by this Agreement will
adversely affect Company's relationships with its customers, Distributors,
Representatives, suppliers, or other Persons having business relationships with
Company.
Section 4.62 Predecessors. There are no predecessors of Company.
Section 4.63 Absence of Unethical Business Practices. During the
period three (3) years, neither Company nor any of its Affiliates has directly
or indirectly given or agreed to give any thing of value to any government
employee or other Person who was or is in a possible position to help or hinder
Company that could reasonably be expected to subject any Person to damages or
penalties in a civil or criminal proceeding.
Section 4.64 No Broker. Neither any Shareholder nor Company has
any obligation or liability to any broker, finder, or other Person for any
broker or similar services with respect to the transactions contemplated hereby
other than Banc One Capital Corporation.
Section 4.65 Disclaimer of Warranties. Except for the
representation and warranties contained in this Article IV and contained in the
other Closing Documents, neither the Company nor the Shareholders have made,
and each hereby expressly disclaims any representations or warranties, express
or implied, of any type under any of the Closing Documents or in connection
with the Closing Transactions regarding any Shareholder or the Company, its
assets, financial condition, operations, prospects or business.
Section 4.66 Operation of Company Since Date of Interim
Financials. Since the date of the Interim Financials, the Company has:
(i) not taken any action or intentionally failed
to take any action that could reasonably be expected to materially and
adversely affect the Company's business and the goodwill of its customers,
distributors, outside representatives, representatives, subcontractors,
suppliers, and any other person having business relations with it;
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(ii) paid all liabilities and obligations owed by
Company consistent with its prior practices;
(iii) filed all required tax reports and returns
and timely pay all taxes owed with respect to such reports and returns;
(iv) not amended Company's Articles of
Incorporation or Bylaws;
(v) not merged, reorganized, restructured, sold
substantially all of its assets, entered into any Contract involving any other
form of business combination or share exchange, dissolved, liquidated, or wound
up;
(vi) not issued, purchased, redeemed, or otherwise
effected any transactions with respect to any securities of Company, or any
right to acquire any securities of Company except for the transfer of the
Excluded Assets;
(vii) not declared, issued, made, or paid any
dividend or other distribution of assets, or combined, distributed,
reclassified, or split any shares of Company's capital stock except for the
transfer of the Excluded Assets;
(viii) not leased, purchased, sold, transferred, or
otherwise acquired or disposed of any assets, other than in the ordinary course
of business consistent with past practices except for the transfer of the
Excluded Assets;
(ix) not made or obligated Company to make capital
expenditures except in the ordinary course of business;
(x) not compromised, released, or waived any
claims or rights of value of Company except in the ordinary course of business
of the Company consistent with past practice or permit any such claim or right
to expire or lapse;
(xi) not assumed, created, guaranteed, or incurred
any indebtedness, whether absolute or contingent, other than indebtedness
incurred in the ordinary course of Company's business consistent with past
practices;
(xii) not accelerated or delayed the collection of
Company's accounts receivable, the payment of its accounts payable, the
purchase or receipt of its supplies, or the delivery or sale of its products or
services outside the ordinary course of Company's business consistent with past
practices;
(xiii) not increased or decreased the prices that
Company charges for its products and services, grant credit to any customer or
distributor on terms more favorable than the terms on which Company has
previously extended credit to such customer or distributor in the past, or
entered into a distribution or similar arrangement with any new distributor;
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(xiv) not filed any lawsuit or settled any material
lawsuit to which Company is a party;
(xv) not increased the compensation or benefits
payable to any person under any arrangement, contract, employee benefit plan,
or other plan, or pay any bonus except in the ordinary course of business and
consistent with past practices;
(xvi) not taken any action intended to create any
expectation on the part of Company's Representatives with respect to increased
compensation, increased benefits under the employee benefit plans, or new
plans; or
(xvii) not made, changed, or forgiven any loans
between Company and any of its Affiliates, representatives, or shareholders,
except as reflected in Section 4.67.
Section 4.67 Related Party Accounts. Company has paid to each
Shareholder, all amounts that Company owes to such Shareholder except payments
of salary and benefits payable in accordance with ordinary payroll practices of
the Company. Each Shareholder has paid to Company any amounts that such
Shareholder owes to Company. Any such payments made since the date of the
Interim Financial Statements are reflected on Schedule 4.67.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Company and the
Shareholders that the statements made in this Article IV are true, correct, and
complete, as of the date hereof:
Section 5.1 Organization. Purchaser is a corporation duly
incorporated, validly existing, and in good standing under the laws of the
State of Delaware and is qualified to transact business as a foreign
corporation in each jurisdiction where such qualification is required.
Purchaser has previously delivered to Company correct and complete copies of
Purchaser's Certificate of Incorporation and Bylaws.
Section 5.2 Power and Authority. Purchaser possesses the
corporate power and authority to execute, deliver, and perform this Agreement,
without obtaining any approval or giving any notice, other than the approval of
its Board of Directors, which it has properly obtained.
Section 5.3 Execution, Delivery, and Enforceability. Purchaser
has duly authorized, executed, and delivered this Agreement, and this Agreement
constitutes a valid, legal, and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, subject to any Law Affecting
Creditors' Rights.
Section 5.4 Consents. Purchaser's execution, delivery, and
performance of this Agreement does not require Purchaser to obtain any approval
or consent from any person, make any filing with any person, or give any notice
to any person.
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Section 5.5 Conflicts. Purchaser's execution, delivery, and
performance of this Agreement will not directly or indirectly:
(a) Documents. Breach or violate: (i) any provision of
the Certificate of Incorporation or the Bylaws of Purchaser, (ii) any
resolution of the Board of Directors, any committee of the Board of Directors,
or the shareholders of Purchaser, (iii) any material contract of Purchaser, or
(iv) any applicable Order to which Purchaser or any of its assets is subject or
bound; or
(b) Lien. Result in a Lien against any of the assets of
Purchaser (or give rise to an event that with notice or lapse of time would
result in such a Lien), other than any liens or encumbrances granted by
Purchaser in connection with the transactions contemplated hereby.
Section 5.6 No Prohibitions. Purchaser's execution, delivery,
and performance of this Agreement will not violate any material Applicable Law
and no lawsuit before any court or other governmental authority is pending or,
to Purchaser's knowledge, threatened that could prohibit Purchaser from
consummating the transactions contemplated by this Agreement or the Closing
Documents to which it is a party.
ARTICLE VI.
COVENANTS
Section 6.1 Non-Compete Covenant. During the period from the
Closing Date through and including the third anniversary thereof (the
"NON-COMPETE PERIOD"), each Shareholder shall not directly or indirectly
compete in the Business within the United States of America (the "NON-COMPETE
COVENANT"). Within the parameters of the Non-Compete Covenant, such covenant
shall prohibit each Shareholder from making any statement or performing any act
intended to advance an interest of any existing competitor of Company (a
"COMPETITOR"), or encouraging any other person to make any such statement or to
perform any such act, including making any statement or performing any act
intended to cause any existing customer of Company to use the services or
purchase the products of any competitor. The Non-Compete Covenant shall
prohibit each Shareholder from disparaging Company, Purchaser, or any of their
respective Affiliates, or taking any other action intended to harm any
relationship of Company with any customer, distributor, supplier, or other
person.
Section 6.2 Non-Solicitation Covenant. During the Non-Compete
Period, each Shareholder shall not encourage or solicit any Key Employee of
Company to resign or employ or engage any such Key Employee, whether or not
such Shareholder encouraged or solicited such employee to resign (the
"NON-SOLICITATION COVENANT"). Each Shareholder's placement during the
Non-Compete Period of general employment advertisements in trade journals,
newspapers and periodicals of general circulation, and other public media in
which such advertisements are customarily placed shall not constitute a breach
of this section if a Key Employee of Company responds to such advertisement,
provided that such Shareholder does not employ or engage such employee.
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Section 6.3 Non-Disclosure Covenant. Each Shareholder shall not
disclose any confidential information at any time to any Person other than the
Company, the Purchaser, Baker Communications Fund, L.P. and their respective
designated Representatives (the "NON-DISCLOSURE COVENANT"), provided that the
following disclosures and uses (the "CONFIDENTIALITY EXCEPTIONS") by any
Shareholder shall not violate this section:
(a) Advisors. Disclosing information to its accountants,
investment bankers, lawyers, and other professional advisors who have been
advised of its confidentiality and agreed to preserve such confidentiality;
(b) Public Information. Disclosing or using information
generally available to the public other than by breach of this section;
(c) Required by Law. Disclosing information required by
law or court order after promptly notifying the other Party of the requirement
to disclose such information and cooperating with such other Party in
attempting to obtain an injunction preventing such disclosure;
(d) Dispute Resolution. Disclosing information required
to prosecute or defend any Claim for damages or indemnification under this
Agreement or a request for equitable relief in connection with this Agreement
pursuant to an arbitration or judicial proceeding contemplated under Article
VIII, provided that it uses its best efforts to preserve the confidentiality of
such information in such proceeding;
(e) Tax Returns. Disclosing information required in any
Tax report or return.
Section 6.4 Indirect Competition. The Non-Compete Covenant, the
Non-Solicitation Covenant, and the Non- Disclosure Covenant (collectively, the
"RESTRICTIVE COVENANTS") require that each Shareholder not engage in any such
activities indirectly through its Outside Representatives. The Non-Compete
Covenant shall preclude each Shareholder from owning any equity interest in any
Person participating in the Business within the Non-Compete Area, loaning money
to any such Person; provided that this prohibition shall not prohibit the
ownership of up to five percent (5%) of the stock of a publicly traded company
that engages in the Business within the Non-Compete Area.
Section 6.5 Reasonableness. Each Shareholder acknowledges that
the Restrictive Covenants are reasonable in all respects and necessary to
permit Purchaser to realize the benefits of the transactions contemplated by
this Agreement.
Section 6.6 Judicial Enforcement. Monetary damages alone will be
inadequate to remedy any breach of the Restrictive Covenants. Accordingly, any
breach or threatened breach of the Restrictive Covenants shall entitle
Purchaser or Company to an injunction restraining each Shareholder from
breaching such covenants. When seeking such an injunction, Purchaser or
Company shall not be obligated to post any bond or other security. Such right
to an injunction shall
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be in addition to any other remedies to which Purchaser or Company may be
entitled because of such breach. If a court of competent jurisdiction
determines that a Restrictive Covenant is partially or wholly inoperative,
invalid, or unenforceable in a particular case because of its duration,
geographical scope, restricted activity, or any other parameter, such court may
reform such duration, geographical scope, restricted activity, or other
parameter with respect to such case to permit enforcement of such Restrictive
Covenant to the greatest extent allowable.
Section 6.7 Galaxy. Purchaser and the Company acknowledge and
agree that notwithstanding anything to the contrary herein contained Roy Moore
may continue to hold a minority equity position (consisting of approximately
8%) in Galaxy Holdings, L.L.C. and may serve on the board of directors of
Galaxy Holdings, L.L.C. Galaxy Holdings, L.L.C. is a Georgia limited liability
company which, through its subsidiary, Galaxy Site Services, is engaged in the
tower and monopole erection and installation business; provided, further that
to the extent the Company and Galaxy Holdings, L.L.C.'s businesses are ever
competitive with one another, Roy Moore shall resign as a director of Galaxy
Holdings, L.L.C.
Section 6.8 Termination of Covenants. In the event any
Shareholder who is an employee of the Company is terminated for "Cause" or
terminates its employment with the Company for "Good Reason" (as each such term
is defined in the relevant Employment Agreement) and such employee ceases to be
paid Base Salary or Bonus under the relevant Employment Agreement, such
Shareholder shall be released from the restrictions contained in this Article
VI other than the Non Disclosure Covenants and the Non Solicitation Covenants.
ARTICLE VII.
INDEMNIFICATION AND DAMAGES
Section 7.1 Indemnification of Purchaser. Each Shareholder
severally, but not jointly, shall indemnify, defend and hold Purchaser harmless
from any and all Claims related or arising with respect to:
(a) Breaches of Representations and Warranties. Any
inaccuracy in any representation or warranty of Company or any Shareholder
under this Agreement or in any Closing Document;
(b) Breaches of Covenants. Any failure to perform or
observe any covenant or agreement to be performed by any Shareholder set forth
in this Agreement or in any Closing Document or any document delivered to
Purchaser pursuant to this Agreement.
(c) Excluded Assets. Any Excluded Assets or liabilities
related to such assets.
Section 7.2 Indemnification of Shareholders and the Company.
Purchaser shall indemnify, defend, and hold Shareholders and the Company
harmless from any and all Claims related or arising with respect to:
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(a) Breaches of Representations and Warranties. Any
inaccuracy in any representation or warranty of company under this Agreement;
or
(b) Breaches of Covenants. Any failure to perform or
observe any covenant or agreement to be performed by Company or Purchaser set
forth in this Agreement or any document delivered to any Shareholder pursuant
to this Agreement.
Section 7.3 Indemnification Procedure. Except as otherwise
provided in Article III, the indemnification obligations under this Agreement
shall be subject to the following procedures:
(a) Defense of Claim. Within five days after a Party
entitled to indemnification (an "INDEMNITEE")receives a notice of any Claim
that may give rise to an indemnification obligation under this Agreement, the
Indemnitee shall give the Party responsible for providing indemnification with
respect to such Claim (the "INDEMNITOR") notice of such Claim, together with a
copy of all documents relating to such Claim that the Indemnitee possesses.
The Indemnitor shall then immediately undertake the defense of such Claim by
representatives of its own choosing. The Indemnitor shall notify the
Indemnitee of the Indemnitor's undertaking of the defense of a Claim promptly
after receiving the notice of the Claim. Similarly, the Indemnitee shall
notify the Indemnitor of the Indemnitee's election of its right to control such
defense under the circumstances specified above. The failure to give notice of
a Claim within the period specified above shall not affect the Indemnitee's
rights to indemnification under this Agreement unless such delay prejudices the
Indemnitor.
(b) Participation of the Indemnitee. If ten days after
delivering notice of a Claim to the Indemnitor or such shorter period necessary
to prevent judgment by default in favor of the Person asserting the Claim, the
Indemnitor has not begun to defend against such Claim, the Indemnitee shall
have the right to defend or settle such Claim on behalf of the Indemnitor.
Notwithstanding whether the Indemnitor commences at any time to defend against
a Claim, the Indemnitee shall have the right to participate in such defense by
representatives of its own choosing. The Indemnitee shall bear any expense of
such participation if the Indemnitor is defending against the Claim. The
Indemnitor shall reimburse the Indemnitee for the Indemnitee's reasonable
attorneys' fees and expenses incurred during the period after notice was given
to Indemnitor with respect to such Claim when the Indemnitor had not assumed
the defense of such Claim. The Indemnitor shall make such reimbursement
payments to the Indemnitee upon the Indemnitee's submission of periodic
invoices describing such fees and expenses in reasonable detail.
(c) Settlement of Claims. The Indemnitor may settle any
Claim at its own expense, provided that the Indemnitor shall not settle any
Claim or consent to the entry of any judgment without the consent of the
Indemnitee if such settlement or judgment: (i) includes any admission of
wrongdoing by the Indemnitee or any of the Indemnitee's Representatives or
Outside Representatives, (ii) includes any consent to any type of injunctive
relief affecting the Indemnitee or any of the Indemnitee's Representatives or
Outside Representatives, (iii) excludes an unconditional release by the Person
asserting the Claim of the Indemnitee and the Indemnitee's Representatives and
Outside Representatives from all liability with respect to such Claim, or (iv)
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requires the Indemnitee or any of the Indemnitee's Representatives or Outside
Representatives to make any payment.
(d) Reimbursement. If an Indemnitor undertakes the
defense of any Claim or settles any Claim and such Claim was not within the
scope of the Indemnitor's indemnification obligations under this Agreement, the
Indemnitee shall promptly reimburse the Indemnitor for all reasonable expenses
with respect to such defense or settlement, including the Indemnitor's
reasonable attorneys' fees and expenses.
(e) Cooperation. In connection with any indemnity
obligation, the Indemnitee shall cooperate with all reasonable requests of the
Indemnitor.
Section 7.4 Assignment of Claims. If any amounts for which the
Indemnitor is responsible are recoverable from a third party, the Indemnitee
shall assign any rights that it may have to recover such amounts to the
Indemnitor.
Section 7.5 Other Indemnitees. Upon Purchaser's request, each
Shareholder shall severally indemnify any of Purchaser's Representatives or
Outside Representatives to the same extent as Purchaser. Conversely, upon each
Shareholder's request Purchaser shall indemnify each Shareholder's
Representatives or Outside Representatives to the same extent as such
Shareholder. No Representative or Outside Representative of any Party,
however, shall be a third party beneficiary of the indemnification provisions
contained in this Agreement. A Party may release or waive any Claim to which
such Party previously requested the other Party to indemnify such Party's
Representatives or Outside Representatives, and such Representatives or Outside
Representatives shall have no recourse against the Party releasing or waiving
such Claim. To the extent that a Party requests the other Party to indemnify
such Party's Representatives or Outside Representatives, such Party shall cause
its Representatives or Outside Representatives to comply with the
indemnification provisions and abide by the indemnification limitations set
forth in this Agreement, including the arbitration provisions in connection
with disputed Claims. In any such arbitration proceedings, a Party's
Representative or Outside Representative shall possess the rights and
obligations of such Party.
Section 7.6 Payments. The Parties shall make any damage or
indemnification payment as follows:
(a) Tax Treatment. The Parties shall treat any payment
of damages received pursuant to this Article VII as an adjustment to the Final
Aggregate Purchase Price on their Income Tax reports and returns except for the
interest component of any such payment, which the Parties shall treat as
interest income or expense, as the case may be.
(b) Net of Insurance Proceeds. The amount of damages
payable pursuant to this Article VII shall be net of any insurance proceeds
received by the Indemnitee in connection with the circumstances giving rise to
the indemnification right. The calculation of any net insurance proceeds shall
give effect to all costs incurred by the Indemnitee for such insurance
recovery,
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including all costs associated with retrospective premium adjustment,
experience-based premium adjustments, and indemnification obligations.
(c) Payment for Escrow Amount. Any damages payable to
Purchaser pursuant to this Article VII shall be satisfied first, to the extent
available, from the Escrow Amount held pursuant to the terms of the Escrow
Agreement.
(d) Uncontested Damage Payments. With respect to any
uncontested Claim for damages concerning a breach of this Agreement, the Party
owing such damages shall pay them to the Party asserting the Claim for such
damages within 30 days after the claiming Party makes its Claim.
(e) Uncontested Indemnification Payments. With respect
to any uncontested Claim for indemnification concerning an out-of-pocket
expenditure that an Indemnitee has paid or an obligation that an Indemnitee has
incurred, the Indemnitor shall reimburse the Indemnitee for such payment or
satisfy such obligation within 30 days after the Indemnitee presents its Claim
for indemnification to the Indemnitor. With respect to any uncontested Claim
for indemnification concerning a potential obligation that an Indemnitee may
incur, the Indemnitor shall satisfy such obligation within 30 days after the
Indemnitee incurs such obligation.
(f) Contested Claims. With respect to any contested
Claims for damages concerning a breach of this Agreement or indemnification
pursuant to this Agreement that the Party responsible for making such payment
contests, such Party shall make the required damage or indemnification payment
within 30 days after a final decision of the Arbitrators appointed pursuant to
Article VIII hereof, that such Party is responsible for such payment, provided
that the Party shall not be required to make any indemnification payment for
which the Indemnitee has not made an out-of- pocket expenditure or incurred an
obligation until such Indemnitee would be required to make such expenditure or
incur such obligation.
Section 7.7 Basket. No Party shall be liable for any Claim for
damages or indemnification (other than for Claims based on willful misconduct
or fraud) under this Agreement until the aggregate amount of such Claims for
damages and indemnification for which such Party would otherwise be responsible
exceeds $1,000,000 (the "BASKET"). If the aggregate amount of such Claims for
which a Party is responsible exceeds the Basket, such Party shall then only be
responsible for the amount of such excess.
Section 7.8 Maximum Liability. The Shareholders shall not be
liable for any Claim for damages or indemnification under this Agreement to the
extent that the aggregate amount of such Claims exceeds $75,000,000; provided,
however, that with respect to any Claim for damages or indemnification under
this Agreement related to willful misconduct or fraud, or any violation or
breach of any representation or warranty contained in Sections 4.55, 4.56 and
4.57 hereof, the Shareholders shall not be liable for any Claim for damages or
indemnification to the extent that the aggregate amount of Claims together with
all other Claims for which such Shareholders are responsible hereunder exceeds
the Final Aggregate Purchase Price (such amounts with respect to Company and
the Shareholders are referred to as such Party's "MAXIMUM LIABILITY"). If the
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aggregate amount of such Claims for which a Party would otherwise be
responsible exceeds the Maximum Liability, such Party's responsibility for such
Claims shall be applied proportionately against all such Claims. Any Claims
for which a Party is not held responsible because of the application of such
Party's Basket shall not be counted toward determining such Party's Maximum
Liability.
Section 7.9 Survival of Terms. The agreements, covenants,
indemnity obligations, representations and warranties, and other terms of this
Agreement and any other documents contemplated under this Agreement shall
survive the Closing and any investigation or notice by any Party, provided that
the representations and warranties of each Party under this Agreement shall
expire at 5:00 p.m. Dallas time on the day immediately preceding the eighteenth
month anniversary of the Closing Date. Notwithstanding the general expiration
of each Party's representations and warranties specified above: (a) the
Shareholders' representations and warranties contained in Sections 4.11, 4.13,
4.27(a) and 4.39, shall survive forever, subject to all defenses available
under applicable Law, including the expiration of any applicable statute of
limitations, and (b) the Shareholders' representations and warranties contained
in Sections 4.50 and 4.51 shall not expire until 30 days after the expiration
of the applicable statute of limitations, as such statutory period may be
extended from time to time. A Party shall not be responsible with respect to
any Claim for damages or indemnification with respect to any inaccuracy in any
of such Party's representations or warranties unless such Party receives
written notice of the Claim specifying in reasonable detail inaccuracy before
such representation and warranty expires. With respect to any such Claim
received before the expiration of a particular representation or warranty, the
Party responsible for such representation or warranty shall remain responsible,
to the extent provided herein, for any damage or indemnification amounts
claimed notwithstanding the subsequent expiration of such representation or
warranty.
ARTICLE VIII.
ARBITRATION AND EQUITABLE REMEDIES
Section 8.1 Settlement Meeting. The Parties shall attempt in
good faith to resolve promptly through negotiations any Claim or dispute under
this Agreement. If any such Claim or dispute should arise, the Parties shall
meet at least once to attempt to resolve the matter (the "SETTLEMENT MEETING").
Any Party may request the other Parties to attend a Settlement Meeting at a
mutually agreed time and place within ten days after delivery of a notice of a
Claim or dispute. The occurrence of a Settlement Meeting with respect to a
Claim or dispute shall be a condition precedent to seeking any arbitration or
judicial remedy, provided that if a Party refuses to attend a Settlement
Meeting the other Parties may proceed to seek such remedy.
Section 8.2 Arbitration Proceedings. If the Parties have not
resolved a monetary Claim or dispute at the Settlement Meeting any Party may
submit the matter to arbitration. A panel of three arbitrators shall conduct
the arbitration proceedings in accordance with the provisions of the Federal
Arbitration Act (99 U.S.C. Section 1 et seq.) and the Commercial Arbitration
Rules of the American Arbitration Association (the "ARBITRATION RULES"). The
decision of a majority of the panel shall be the decision of the arbitrators.
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(a) Arbitration Notice. To submit a monetary Claim or
dispute to arbitration, a Party shall furnish the other Parties and the
American Arbitration Association with a notice (the "ARBITRATION NOTICE")
containing: (i) the name and address of such Parties, (ii) the nature of the
monetary Claim or dispute in reasonable detail, (iii) the Party's intent to
commence arbitration proceedings under this Agreement, and (iv) the other
information required under the Federal Arbitration Act and the Arbitration
Rules.
(b) Selection of Arbitrators. Within ten days after
delivery of the Arbitration Notice, Purchaser and Shareholders shall each
select one arbitrator from the list of the American Arbitration Association's
National Panel of Commercial Arbitrators. Within ten days after the selection
of the last of those two arbitrators, those two arbitrators shall select the
third arbitrator from such list. If the first two arbitrators cannot select a
third arbitrator within such ten day period, the American Arbitration
Association shall select such third arbitrator from the list. Each arbitrator
shall be an individual not subject to disqualification under Rule No. 19 of
the Arbitration Rules with experience in settling complex litigation involving
mergers and acquisitions.
(c) Arbitration Final. The arbitration of the matters in
controversy and the determination of any amount of damages or indemnification
shall be final and binding upon the Parties to the maximum extent permitted by
Applicable Law, provided that any Party may seek any equitable remedy available
under Applicable Law as provided in this Agreement. This agreement to
arbitrate is irrevocable.
Section 8.3 Place of Arbitration. Any arbitration proceedings
shall be conducted in Fort Worth, Texas or at such other location as the
Parties may agree. The arbitrators shall hold the arbitration proceedings
within 60 days after the selection of the third arbitrator.
Section 8.4 Discovery. During the period beginning with the
selection of the third arbitrator and ending upon the conclusion of the
arbitration proceedings, the arbitrators shall have the authority to permit the
Parties to conduct such discovery as the arbitrators consider appropriate.
Section 8.5 Equitable Remedies. Notwithstanding anything else in
this Agreement to the contrary, after the Settlement Meeting a Party shall be
entitled to seek any equitable remedies available under Applicable Law,
including an injunction prohibiting a breach of the Restrictive Covenants or an
Order requiring any Shareholder to perform this Agreement. Any such equitable
remedies shall be in addition to any damages or indemnification rights that
such Party may assert in an arbitration proceeding.
Section 8.6 Exclusive Jurisdiction. The Parties agree that any
claim for equitable relief relating to this Agreement shall be instituted in a
federal or state court sitting in the Northern District of Texas, which courts
and their respective appellate courts shall be the exclusive venue for any such
claim. Each Party waives any objection that it may have to the laying of such
venue, and irrevocably submits to the jurisdiction of any such court with
respect to any such claim. Any service of process and other notice in any such
case shall be effective against a Party when transmitted in accordance with
Section 9.9, provided that a Party also may serve process in any manner
permitted by Applicable Law.
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Section 8.7 Judgments. Any arbitration award under this
Agreement shall be final and binding. Any court having jurisdiction may enter
judgment on such arbitration award upon application of a Party.
Section 8.8 Expenses. If any Party commences arbitration
proceedings or court proceedings seeking equitable relief with respect to this
Agreement, the prevailing Party in such arbitration proceedings or case may
receive as part of any award or judgment reimbursement of such Party's
reasonable attorneys' fees and expenses to the extent that the arbitrators or
court considers appropriate.
Section 8.9 Cost of the Arbitration. The arbitrators shall
assess the costs of the arbitration proceedings, including their fees, to the
Parties in such proportions as the arbitrators consider reasonable under the
circumstances.
Section 8.10 Exclusivity of Remedies. To the extent permitted by
Applicable Law, the arbitration and judicial remedies contained in this Article
VIII shall be the exclusive remedies available to the Parties with respect to
any dispute under this Agreement or Claim for damages or indemnification under
this Agreement.
ARTICLE IX.
GENERAL
Section 9.1 Amendment. No amendment of this Agreement shall be
effective unless in a writing signed by the Parties.
Section 9.2 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
agreement, but all of which shall constitute one and the same agreement. Any
Party may execute and deliver this Agreement by an executed signature page
transmitted by a facsimile machine. If a Party transmits its signature page by
a facsimile machine, such Party shall promptly thereafter deliver an originally
executed signature page to the other Parties, provided that any failure to
deliver such an originally executed signature page shall not affect the
validity, legality, or enforceability of this Agreement.
Section 9.3 Entire Agreement. This Agreement together with the
related Closing Documents constitutes the entire agreement and understanding
among the Parties and supersedes all prior agreements and understandings, both
written and oral, with respect to the subject matter of this Agreement.
Section 9.4 Expenses. Shareholders shall bear their own expenses
with respect to the negotiation and preparation of this Agreement and the
Closing, including any fees and expenses of their Outside Representatives. All
reasonable out of pocket expenses incurred by Purchaser in connection with the
Closing Transactions and all amounts to be paid by the Company at Closing
pursuant to the Financial Advisory Services Agreement with Baker Communications
Fund, L.P. shall be paid by the Company at Closing.
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SECTION 9.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF TEXAS, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER THE CONFLICTS OF LAWS PRINCIPLES OF THE STATE OF TEXAS.
Section 9.6 No Assignment. No Party may assign its benefits or
delegate its duties under this Agreement without the prior consent of the other
Parties. Any attempted assignment or delegation without such prior consent
shall be void. Notwithstanding this prohibition against assignment and
delegation, Purchaser may assign its rights and delegate its duties under this
Agreement to a wholly-owned subsidiary of Purchaser without Shareholders'
consent. Upon Purchaser's assignment of its benefits and delegation of its
duties under this Agreement to such a wholly-owned subsidiary, Purchaser shall
be released from any obligations under this Agreement.
Section 9.7 No Set-Off. A Party may not set-off any amounts that
any other Party owes to it against any amounts that it owes any other Party.
Section 9.8 No Third Party Beneficiaries. This Agreement is
solely for the benefit of the Parties and no other Person shall have any right,
interest, or claim under this Agreement. Nothing in this Agreement shall
require: (a) Company to continue the employment of any of its employees other
than pursuant to the Employment Agreements and the Material Contracts, (b)
Company or Purchaser to continue any Employee Benefit Plan, (c) Purchaser to
request Shareholders to indemnify any of Purchaser's Representatives or Outside
Representatives, or (d) Shareholders to request Purchaser to indemnify any of
Shareholders' Representatives or Outside Representatives.
Section 9.9 Notices. All claims, consents, designations,
notices, waivers, and other communications in connection with this Agreement
shall be in writing. Such claims, consents, designations, notices, waivers,
and other communications shall be considered received only on the day of actual
receipt unless mailed by certified or registered mail, postage prepaid, return
receipt requested, addressed to a Party at its address set forth below (or to
such other address to which such Party has notified the other Parties in
accordance with this section to send such claims, consents, designations,
notices, waivers, and other communications), in which case such claims,
consents, designations, notices, waivers, or other communications shall be
deemed to have been received three Business Days after the date of posting:
Purchaser: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, NY 10022
Attn: Edward Scott and Larry Bettino
Telephone No.: 212-605-0577
Facsimile No.: 212-486-6686
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With copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, TX 75201-4675
Attn: Gary M. Lawrence
Telephone No.: 214-969-2800
Facsimile No.: 214-969-4343
Shareholders: T. W. and Betty Moore
5901 Bay Club Drive
Arlington, Texas 76103
Telephone No.: 817-
Facsimile No.: 817-
With copy to: William D. Ratliff, III
Haynes & Boone, L.L.P.
201 Main Street, Suite 2200
Ft. Worth, Texas 76102
Telephone No.: (817) 347-6608
Facsimile No. (817) 347-6650
Shareholders: Roy J. Moore
3508 Orchid Court
Arlington, Texas 76016
Telephone No.: (817) 561-0151
Facsimile No.: (817) 446-7095
With copy to: William D. Ratliff, III
Haynes & Boone, L.L.P.
201 Main Street, Suite 2200
Ft. Worth, Texas 76102
Telephone No.: (817) 347-6608
Facsimile No. (817) 347-6650
Shareholders: Carl R. Moore
4104 Flower Garden
Arlington, Texas 76016
Telephone No. (817) 483-6061
With copy to: William D. Ratliff, III
Haynes & Boone, L.L.P.
201 Main Street, Suite 2200
Ft. Worth, Texas 76102
Telephone No.: (817) 347-6608
Facsimile No. (817) 347-6650
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Shareholders: Thomas F. "Fred" Moore
5820 Bay Club Drive
Arlington, Texas 76013
Telephone No.: (817) 457-1579
Facsimile No.: (817)
With copy to: William D. Ratliff, III
Haynes & Boone, L.L.P.
201 Main Street, Suite 2200
Ft. Worth, Texas 76102
Telephone No.: (817) 347-6608
Facsimile No. (817) 347-6650
Section 9.10 Representation by Legal Counsel. Each Party is a
sophisticated Person that was advised by experienced legal counsel and other
advisors in the negotiation and preparation of this Agreement.
Section 9.11 Schedules. All references in this Agreement to
schedules shall mean the schedules identified in this Agreement, which are
incorporated into this Agreement and shall be deemed a part of this Agreement
for all purposes. Each section of this Agreement that refers to a schedule
shall have a separate schedule. Any disclosure under a particular section's
schedule shall be made under the heading of any relevant subsection of such
section. Shareholders and the Company have delivered to Purchaser a correct
and complete copy of each document listed on each schedule to this Agreement.
Section 9.12 Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions of this Agreement or affect the validity or enforceability
of such provision in any other jurisdiction. Any such prohibited or
unenforceable provision shall be given effect to the extent possible in the
jurisdiction where such provision is prohibited or unenforceable.
Section 9.13 Successors. This Agreement shall be binding upon and
shall inure to the benefit of each Party and its heirs, legal representatives,
permitted assigns, and successors, provided that this section shall not permit
the assignment or other transfer of this Agreement, whether by operation of law
or otherwise, if such assignment of other transfer is not otherwise permitted
under this Agreement.
Section 9.14 Time of the Essence. Time is of the essence in the
performance of this Agreement and all dates and periods specified in this
Agreement.
Section 9.15 Waiver. No provision of this Agreement shall be
considered waived unless such waiver is in writing and signed by the Party that
benefits from the enforcement of such provision. No waiver of any provision in
this Agreement, however, shall be deemed a waiver of a subsequent breach of
such provision or a waiver of a similar provision. Except as provided in
Section 7.10, a waiver of any breach or a failure to enforce any term or
condition of this Agreement
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shall not in any way affect, limit, or waive a Party's rights under this
Agreement at any time to enforce strict compliance thereafter with every term
and condition of this Agreement.
[SIGNATURES ON THE NEXT PAGE]
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[Signature Page to Stock Purchase and Redemption Agreement]
IN WITNESS WHEREOF, each Party has executed and delivered this
Agreement on the date set forth below its name with the intent that this
Agreement be effective as of the date first written above.
PURCHASER: FWT ACQUISITION, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
SHAREHOLDERS:
------------------------------------
T. W. Moore
------------------------------------
Betty Moore
------------------------------------
Carl R. Moore
------------------------------------
Thomas F. "Fred" Moore
------------------------------------
Roy J. Moore
COMPANY: FWT, Inc.
By:
---------------------------------
T.W. Moore
President
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SCHEDULE I
SHAREHOLDINGS
Name Shares
---- ------
T. W. Moore 93.93
Betty Moore 93.93
Carl R. Moore 61.38
Thomas F. "Fred" Moore 61.38
Roy J. Moore 61.38
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ANNEX I
DEFINITIONS
Terms with initial capitalized letters that are not otherwise defined
in this Agreement shall have the meanings set forth below:
Affiliate. The term "AFFILIATE" with respect to a Person means any
other Person that directly or indirectly controls, is controlled by, or is
under common control with such Person. For the purposes of this definition,
control means the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
Contract, or otherwise. Control shall be presumed by an individual that is a
director or executive officer of a Person, or a Person that beneficially owns
more than 10% of any class of securities of such Person having general voting
rights. During the period before the Closing and at the Closing, Company shall
be considered an Affiliate of each Shareholder. During the period after the
Closing, Purchaser and Baker Communications Fund, L.P. shall be considered an
Affiliate of Company for so long as Purchaser controls Company.
Applicable Law. The term "APPLICABLE LAW" means any applicable code,
common law, law, Order, ordinance, regulation, rule, or statute of any
Governmental Authority.
Business. The term "BUSINESS" means the following businesses related
to towers and monopoles for the telecommunications and utility industries:
fabrication, erection, build to suits, site acquisition and zoning.
Business Day. The term "BUSINESS DAY" means a day that is not a
Sunday, Saturday, or holiday when banks in the State of Texas are required or
permitted to be closed.
Claim. The term "CLAIM" means any arbitration award, assessment,
charge, citation, claim, damage, demand, expense, fine, joint or several
liability or penalty, and any reasonable attorneys' fees and expenses.
Closing Transactions. The term "CLOSING TRANSACTIONS" means the
transactions effected on the Closing Date pursuant to the Closing Documents and
the incurrence of fees and expenses related thereto, including, without
limitation, all fees and expenses of Arthur Anderson & Co. in connection with
its audit of the Audited Financial Statements and its review of the Interim
Financial Statements.
Confidential Information. The term "CONFIDENTIAL INFORMATION" means
any confidential or proprietary information concerning a Company's assets,
business, cash flows, financial condition, liabilities, operations, prospects,
or relationships, including Company's proprietary databases and software
programs and Company's Trade Secrets. Confidential Information may exist in
oral or written form or in any other medium.
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Contract. The term "CONTRACT" with respect to a Person means any oral
or written agreement, commitment, contract, deed of trust, franchise,
indenture, instrument, lease, license, mortgage which such Person is a party,
under which such Person possesses any rights or owes any obligations, or by
which any of such Person's assets are bound, or under which another Person
possesses any rights against such Person. The Contracts of a Person shall
include such Person's Articles of Incorporation, Bylaws, and other
organizational documents.
Copyright. The term "COPYRIGHT" means registered or unregistered
copyrights in published and unpublished works in the United States or any
foreign jurisdiction, and all applications, registrations, and recordings
relating to such works filed in the United States Copyright Office or any other
government agency or office in the United States or any foreign jurisdiction.
Current Assets. The term "CURRENT ASSETS" means current assets which
would be reflected on a balance sheet in accordance with GAAP.
Current Liabilities. The term "CURRENT LIABILITIES" means current
liabilities which would be reflected on a balance sheet in accordance with GAAP
but excluding the current portion of any Funded Indebtedness.
Distributors. The term "DISTRIBUTORS" with respect to a Person means
such Person's dealers and distributors which are not employees.
Environmental Law. The term "ENVIRONMENTAL LAW" means: (a) the Clean
Air Act (42 U.S.C. Section 7401 et seq.), (b) the Clean Water Act (33 U.S.C.
Section 1251 et seq.), (c) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S.C. Section 9601 et seq.), (d) the
Hazardous Materials Transportation Act (49 U.S.C. Section 5101 et seq.), (e)
the National Environmental Policy Act (42 U.S.C. Section 4321 et seq.), (f) the
Oil Pollution Act of 1990 (33 U.S.C. Section 2701 et seq.), (g) the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments of 1984 (42 U.S.C. Section 6901 et seq.), (i) the Safe Drinking
Water Act (42 U.S.C. Section 300f et seq.), (j) the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), (k) any state, local, or foreign law,
ordinance, regulation, or statute analogous to any of the foregoing statutes,
or (l) any other federal, state, local, or foreign law, ordinance, regulation,
or statute prohibiting, regulating, or restricting the disposal, generation,
handling, placement, recycling, release, storage, or treatment of any
contaminant, liquid, mass, material, matter, pollutant, solid, substance, or
waste classified or considered to be hazardous or toxic to human health or the
environment.
Environmental Report. The term "ENVIRONMENTAL REPORT" means that
certain Environmental Assessment Report prepared for Baker Capital Corporation
by Entrix, Inc. dated October, 1997.
ERISA. The term "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
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ERISA Pension Plan. The term "ERISA PENSION PLAN" means an "employee
pension benefit plan" as defined in Section 3(2) of ERISA.
ERISA Welfare Plan. The term "ERISA WELFARE PLAN" means an "employee
welfare benefit plan" as defined in Section 3(1) of ERISA.
Funded Indebtedness. The term "FUNDED INDEBTEDNESS" means an amount
equal to all amounts owing in respect of borrowed money, other than (i)
short-term trade payables incurred in the ordinary course of business and (ii)
capitalized leases, but including all costs and expenses associated with
retiring such debt, including any prepayment penalties and filing fees
associated with terminating any Liens.
GAAP. The term "GAAP" means generally accepted accounting principles
in effect in the United States.
Governmental Authority. The term "GOVERNMENTAL AUTHORITY" means any
federal, state, local, tribal, or foreign government and any agency, board,
body, branch, bureau, commission, court, department, instrumentality,
subdivision, or tribunal of any such government.
Hazardous Material. The term "HAZARDOUS MATERIAL" means: (a) any
contaminant, liquid, mass, material, matter, pollutant, solid, substance, or
waste for which any Environmental Law limits, prohibits, or regulates its
disposal, generation, handling, placement, recycling, release, storage, or
treatment, (b) any carcinogenic, corrosive, explosive, flammable, infectious,
mutagenic, radioactive, or toxic substance, (c) any diesel fuel, gasoline, or
other petroleum product in an unconfined manner, (d) any substance that
contains polychlorinated biphenyls, (e) any substance that contains asbestos,
(f) any substance that contains urea formaldehyde foam installation, (g) any
substance that constitutes a nuisance upon any property, or (h) any substance
that imposes a hazard to the health or safety of any individual.
Income Tax. The term "INCOME TAX" means any Tax based upon or
measured by net income, including any alternative minimum tax, along with any
interest, penalties, or additions to such Tax.
Key Employee. The term "KEY EMPLOYEE" means any salaried employee of
the Company other than the Shareholders who earned cash compensation and bonus
in the most recent fiscal year included in the Audited Financial Statements
greater than $75,000.
Law Affecting Creditors' Rights. The term "LAW AFFECTING CREDITORS'
RIGHTS" means any bankruptcy, fraudulent conveyance or transfer, insolvency,
moratorium, reorganization, or other law affecting the enforcement of
creditors' rights generally, and any general principles of equity.
Lien. The term "LIEN" means any deed of trust, judgment lien,
mortgage, security interest or similar encumbrances securing payment or
performance of an obligation, monetary or otherwise.
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Material Adverse Change. The term "MATERIAL ADVERSE CHANGE" with
respect to a Person means that an event has occurred or a circumstance has
arisen that has had, or could reasonably be expected to have a material
adverse effect on such Person's assets, business, cash flows, financial
condition, liabilities, operations, or prospects.
Material Contract. The term "MATERIAL CONTRACT" means each contract or
agreement to which the Company is a party and pursuant to which the Company has
any outstanding right, liability or obligation as of the date hereof which
either (a) was entered into outside of the ordinary course of business, (b)
involves the payment by the Company of more than $100,000 annually or the
provision by the Company of goods and services with a value of more than
$100,000 annually, (c) was entered into with an Affiliate of the Company, (d)
relates to the employment or severance of any existing or former Key Employee
(other than Employee Benefit Plans), (e) evidences or governs any of the
Existing Indebtedness, (f) constitutes a lease of real or personal property
which requires annual rental payments or other lease expense in an amount
greater than $25,000 annually, (g) restricts the ability of the Company to
compete or restricts any Person from competing against the Company, (h)
restricts the ability of the Company to employ or engage any Person or
restricts any Person from employing or engaging any Person that the Company has
employed or engaged, or (i) is material to the Company's business, financial
condition, liabilities, operations or prospects. "Material Contracts" shall
not include employment at will arrangements or purchase orders issued or
accepted in the ordinary course of business.
Non-Compete Area. The term "NON-COMPETE AREA" means the geographic
region encompassing the entire United States of America.
Non-Compete Period. The term "NON-COMPETE PERIOD" means the period
beginning on the Closing Date and ending on the day immediately preceding the
third anniversary of the Closing Date.
Order. The term "ORDER" means any consent decree, decree,
determination, injunction, judgment, order, or writ of any arbitrator or
Governmental Authority.
Outside Representatives. The term "OUTSIDE REPRESENTATIVES" with
respect to a Person means such Person's accountants, Affiliates, agents,
consultants, investment bankers, lawyers, lenders, representatives, and
shareholders.
Parties. The term "PARTIES" means Company, Purchaser, and
Shareholders.
Patent. The term "PATENT" means: (a) Letters Patent of the United
States or any similar rights under the laws of any foreign jurisdiction and any
divisions, extensions, or reissues of such Letters Patent, including any design
patent, plant patent, or utility patent, and (b) applications for Letters
Patent of the United States or any similar rights under the laws of any foreign
jurisdiction and all continuations, continuations-in-part, or divisions of such
applications.
Permit. The term "PERMIT" means any approval, authorization,
certificate, certificate of occupancy, exemption, franchise, license, permit,
registration, right, variance, or waiver issuable by any Governmental
Authority.
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Person. The term "PERSON" means any association, bank, business
trust, corporation, estate, general partnership, Governmental Authority,
individual, joint stock company, joint venture, labor union, limited liability
company, limited partnership, non-profit corporation, professional association,
professional corporation, trust, or any other organization or entity.
Plan. The term "PLAN" means any: (a) accident, dental, disability,
health, life, medical, or vision plan or insurance policy, (b) bonus plan, (c)
change in control plan, (d) deferred compensation plan, (e) ERISA Pension Plan,
(f) ERISA Welfare Plan, (g) executive compensation plan, (h) fringe benefits
and perquisites, such as automobile allowances, country club memberships, diner
club memberships, and health club memberships, (i) holiday, sick pay, leave,
vacation, or other similar policy, (j) incentive plan, (k) life insurance plan
or policy, (l) loan agreement with any Representative, (m) moving expense
reimbursement policy, (n) multi-employer or multiple employer plan, (o) pension
plan, (p) phantom stock plan, (q) profit sharing plan, (r) retirement plan, (s)
severance plan, (t) stock appreciation plan, (u) stock purchase plan, (v) stock
option plan, (w) tuition reimbursement policy, or (x) other employee
arrangement, benefit plan, Contract, commitment, compensation plan, custom,
policy, or practice. A Plan may apply to only one individual, such as an
employment or severance agreement.
Prime Rate. The term "PRIME RATE" means the publicly announced prime
commercial lending rate per annum of Bank One, Texas, N.A. in effect from time
to time, provided that such rate shall not exceed the maximum interest rate
permitted under Applicable Law. The Prime Rate shall change as such publicly
announced prime commercial lending rate changes.
Proportionate Amount. The term "PROPORTIONATE AMOUNT," as applied to
a particular Shareholder, means a fraction the numerator of which equals the
number of Redeemed Shares owned by such particular Shareholder and the
denominator of which equals the aggregate number of Redeemed Shares.
Representatives. The term "REPRESENTATIVES" with respect to a Person
means such Person's directors, employees, and officers.
Tax. The term "TAX" means any federal, state, local, tribal, foreign,
or other assessment, charge, duty, fee, impost, levy, tariff, or tax of any
kind whatsoever, including all ad valorem, alternative minimum, capital gains,
customs, documentary, employment, estate, excise, franchise, gift, gross
income, gross receipts, income, lease, license, net income, payroll, premium,
profits, property, occupation, sales, service, service use, stamp, severance,
transaction privilege, transfer, use, valve-added, windfall profit, or
withholding taxes or charges imposed by any Governmental Authority or payable
pursuant to any tax sharing Contract, together with any related interest,
penalties, and additions to tax.
Trademark. The term "TRADEMARK" means registered or unregistered
brand marks, brand names, logos, names, service marks, service names, trade
dress, trademarks, tradenames, trade styles, and other business or source
identifiers, and combinations, contractions, derivatives, expansions,
modifications, and variations of such items, along with all goodwill associated
with them.
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Trade Secret. The term "TRADE SECRET" means concepts, designs,
devices, formulae, ideas, inventions, know-how, plans, processes, proprietary
materials, research and development, technical data, and other information
treated as trade secrets under applicable trade secret law, including customer
and supplier lists.
Working Capital. The term "WORKING CAPITAL" means an amount equal to
the excess of Current Assets over Current Liabilities.
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EXHIBIT 10.2
GENERAL SUPPLY AGREEMENT
This agreement is made as of September 1, 1997, between AT&T Wireless Services,
Inc. ("AWS"), whose principal office is located in Kirkland, Washington, on
behalf of its operating companies and affiliates, and FWT Inc., ("FWT") whose
principal office is located in Ft. Worth, Texas.
WHEREAS, AWS is interested in obtaining monopoles, antenna structures, and
platforms on an as needed basis, with committed monopole shipment lead times to
meet its anticipated needs, and other products and services on an as needed
basis as offered by FWT, and
WHEREAS, FWT has sufficient experience and expertise in manufacturing and
supplying such products and related products to meet company needs, and has the
ability to commit in advance to ship such products within six to eight weeks of
receipt of AWS's order.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
conditions herein contained, AWS and FWT agree as follows:
1. AWS'S TERMS AND CONDITIONS.
Except as expressly provided herein, all transactions between AWS and FWT will
be in accordance with the provisions of Attachment A, entitled "AT&T Wireless
Services General Terms and Conditions", which is hereby incorporated by
reference.
2. PERIOD OF AGREEMENT.
This Agreement shall remain in effect for a period of three (3) years
commencing from the effective date of Agreement unless terminated by either
party. This Agreement may be extended beyond its original term for any
specified period of time mutually agreed upon by both parties.
3. TERMINATION.
AWS shall have the right, at any time, to terminate this Agreement for
convenience upon one hundred eighty (180) days advance written notice to FWT.
In the event that a quarterly price adjustment is indicated by changes in the
pricing indices, pursuant to Attachment B, Section 3.5.4, but AWS and FWT are
unable to reach agreement on such adjustment, FWT shall have the right to
terminate this Agreement upon one hundred and twenty (120) days advance written
notice to AWS. Either party shall have the right to terminate this Agreement
in the event of a material breach of this Agreement by the other party,
provided that the breaching party does not or can not cure the breach within
thirty (30) days following receipt of notice of the breach.
4. PRODUCTS AND SERVICES COVERED.
FWT agrees to sell to AWS certain products ("Products") and services
("Services"), including but not limited to those specified in Attachment B and
Attachment C.
5. INSTALLATION AND TRAINING.
Installation Assistance
If applicable to the order placed by AWS and if requested in advance
by AWS, FWT shall make available at the installation site, a field
engineer to render installation and assistance as required by AWS.
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Training.
If applicable to the order placed by AWS and if requested by AWS, FWT
will:
a. provide instructors and the necessary instructional material
of FWT's standard format to train instructors or other personnel in
the safety, installation, planning and practices, operation,
maintenance and repair of Products furnished hereunder. These classes
shall be conducted at reasonable intervals at locations agreed upon by
both parties.
Or, at the option of AWS,
b. provide to AWS FWT's training modules or manuals and any
necessary assistance, covering those areas of interest outlined in (a)
of this section, sufficient in detail, format and quantity to allow
AWS to develop and conduct a training program.
6. PRIMARY SUPPLIER.
AWS recognizes FWT as its primary supplier for Products offered under this
Agreement, and warrants that it shall endeavor in good faith to use FWT as its
primary supplier for seventy percent (70%) of the Products it purchases during
the term of this Agreement. This seventy percent (70%) goal is a good faith
estimate by AWS, but actual purchases by AWS may vary from this amount. AWS
will actively support FWT's Primary Supplier status and will make all
reasonable efforts to ensure FWT is and remains AWS's Primary Supplier during
the term of this Agreement. AWS and FWT agree to fully cooperate in the design
and development of the Products to meet AWS's future needs and to share
information and resources necessary to ensure such product availability to AWS.
The foregoing notwithstanding, it is expressly understood and agreed that this
Agreement does not grant FWT an exclusive privilege to sell to AWS any or all
products which AWS may require; and AWS may contract with other manufacturers
and suppliers for the procurement of comparable products.
7. PREFERENCES AND RIGHTS OF THIRD PARTIES.
Instead of buying Products directly, AWS may arrange for third parties to buy
the Products. Except in cases where the third party manufacturers its own
Product or is able to offer AWS a better overall bargain, AWS agrees to direct
such third parties to purchase the Product from FWT, provided that FWT Products
meet the specifications set forth by the third party. At AWS's written request,
FWT agrees to extend all rights and privileges under this Agreement to such
third parties. The third party will be bound by the terms and conditions
contained herein and AWS shall be released from any obligations with respect to
those orders; provided, however, that AWS may agree to guarantee payment to FWT
for such orders. AWS acknowledges that FWT reserves the right to require the
third party to enter a separate agreement which is consistent with this
Agreement, and AWS agrees to cooperate fully in the establishment of any such
agreement.
8. DISASTER RESPONSE FWT.
AWS and FWT recognize the urgent nature of disaster response and recovery and
the importance of FWT's Products to AWS in such response. Both parties agree to
develop and execute a specific plan to deal with disaster response and
recovery. In the event of a disaster, and in the absence of such a plan, FWT
agrees to render any reasonable assistance deemed necessary by AWS to aid in
its disaster response and recovery efforts and such assistance shall be given
FWT's highest priority.
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9. PRICING AND PRICE CHANGES.
Prices for Products purchased under this Agreement shall be in accordance with
Attachment B and C. Such pricing shall be subject to change not more than once
quarterly and only if mutually agreed upon between AWS and FWT.
10. TITLE AND RISK OF LOSS.
Title to Products purchased by AWS hereunder shall vest in AWS and risk of loss
pass to AWS when the Products have been shipped by FWT to the location(s)
specified by AWS using the carrier designated by AWS unless additional Services
after delivery are specified in a AWS Purchase Order, in which case title shall
not vest nor shall risk of loss pass until such Services have been performed by
FWT and been accepted by AWS.
AWS shall assume risk of loss or damage to all Products during transportation.
FWT shall not be responsible for any loss or damage to Products ordered
hereunder, after such Products have been shipped to the premises designated by
AWS, and AWS agrees to hold FWT harmless from such loss or damage.
11. DAMAGED SHIPMENTS.
Claims for transportation damage shall be filed and processed by AWS or AWS's
agent.
12. INCOMPLETE SHIPMENTS.
Incomplete shipments and backordered Products shall be expedited at FWT expense
and AWS's order shall be treated as FWT's highest priority until such time as
such order has been completed.
13. WARRANTIES
FWT warrants that all items to be furnished will be new, unless otherwise
specified, and that all Products will be of highest quality, free from fault or
defect and will conform with the requirements as set forth in FWT's standard
warranty.
The warranty as stated shall not limit the application of any other warranty
which may be applicable under any law or laws to which this Agreement between
the parties is subject. FWT warrants that all Products and Services covered by
this Agreement shall be provided in a professional manner and shall not result
in defects in workmanship, and shall be in accordance with any specifications
given, in writing, by AWS to FWT for a period of five (5) years from the date
of final invoice. If any such defects appear within that time, FWT shall repair
such work affected by defects at no cost to AWS. The representation by FWT of
the quality of all Products and Services shall be an essential condition of
this Agreement, and any non-compliance therewith shall give AWS, in addition to
any other rights AWS may have, the right to reject any of the Products and
Services ordered hereunder.
14. INVOICING AND PAYMENT.
FWT shall render an invoice in accordance with AWS's purchase order. Due dates
for the payment of the invoice shall be computed from the date of receipt of
the invoice by AWS, such invoice to be issued by FWT upon completion of
manufacturing of the Product or the Target Shipment Date (as defined in
Attachment B), whichever is later.
15. LAWS, RULES AND REGULATIONS.
FWT agrees that it and its subcontractors shall give access to the authorized
representatives of the Secretary of Labor for the purpose of inspecting or
carrying out any of the Secretary's duties under the Occupational Safety and
Health Act of 1970, as amended. FWT shall be responsible for any violation by
it of said Act, of any regulation issued thereunder, shall immediately remedy
any conditions giving rise
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to such a violation, and shall defend, indemnify, and hold AWS harmless from
any fine, penalty or liability in connection therewith.
16. EXECUTIVE ORDER COMPLIANCE.
FWT expressly agrees not to discriminate against any employee or applicant for
employment because of race, color, religion, sex, national origin or handicap,
and shall during the performance of this Agreement comply with all applicable
Executive Orders and federal regulations.
17. BANKRUPTCY.
Either party may terminate this Agreement by notice in writing in the event
that the other makes an assignment for the benefit of creditors, or admits in
writing inability to pay debts as then mature; or a trustee or receiver of the
other, or any substantial part of the other's assets, is appointed by any
court.
18. TAXES.
Federal Sellers' and Retailer's Excise, State or Local Sales and Use Taxes,
when applicable, shall be billed as separate items on FWT's invoices, and are
not included in FWT's prices.
19. NOTICES.
Notice or other advice required to be given hereunder shall be deemed given
when deposited, postage prepaid, in the United States Mail.
AWS: Legal department
AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, WA 98033
FWT: Mr. Roy Moore
FWT Inc.
1901 East Loop 820 South
Ft. Worth, TX 76112-7899
If either party changes its address during the term thereof, it shall so advise
the other party in writing, and all notices and advice thereafter required to
be given shall be sent to such new address.
20. INDEMNIFICATION.
FWT shall defend, indemnify, and save harmless, AWS and it's operating units
and affiliates from and against all losses, costs, damage, expense, claims or
demands arising out of or caused in any manner by FWT's performance under this
Agreement, including all suits or actions of every kind or description brought
against AWS, and/or its operating units and affiliates either individually or
jointly with FWT for or on account or occasioned or caused by any act,
omission, or fault of FWT, FWT's employees, or agents, or others under FWT's
control. This indemnification shall not apply to the extent such losses, costs,
damages, expenses, claims or demands are attributable to the negligence or
willful misconduct of AWS and its operating units, affiliates and/or
subcontractors.
21. INFRINGEMENT.
The following terms apply to any infringement or claim of infringement of any
patent, trademark, copyright, trade secret or other proprietary interest based
on the manufacture, normal use or sale of any material furnished to AWS and its
operating units and affiliates hereunder or in contemplation hereof. FWT shall
indemnify AWS and its operating units and affiliates for any loss, damage,
expense, or
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liability that may result by reason of any such infringement or claim, except
where such infringement or claim arises solely from FWT's adherence to AWS's
and/or its operating units or affiliates written instructions or directions
which involve the use of merchandise or items other than (1) commercial
merchandise which is available on the open market or is the same as such
merchandise, or (2) items of FWT's origin, design or selection; and AWS and its
operating units and affiliates, as the case may be, shall so indemnify FWT for
sales to AWS and its operating units and affiliates in such excepted cases.
Each party shall defend or settle, at its own expense, any action or suit
against the other for which it is responsible hereunder. Each party shall
notify the other promptly of any claim of infringement for which the other is
responsible, and shall cooperate with the other in every reasonable way to
facilitate the defense of any such claim.
22. USE OF INFORMATION.
Any disclosure of confidential information between the parties to this
Agreement shall be subject the terms and conditions of the Nondisclosure
Agreement between AT&T Wireless Services, Inc. and FWT, Inc. dated August 1,
1996, which is hereby incorporated by reference.
23. ASSIGNMENT.
FWT may not assign this Agreement, in whole or in part, without AWS's prior
written consent, which consent will not be unreasonably withheld or delayed.
AWS may assign its rights hereunder to (a) any corporation resulting from any
merger, consolidation or other reorganization to which AWS is a party, (b) any
corporation, partnership, association or other person to which AWS may transfer
all or substantially all of the assets and business of AWS existing at such
time. AWS may assign its rights hereunder to any subsidiary of the AT&T
Corporation, provided that AWS obtains FWT's prior written consent, which will
not be unreasonably conditioned, withheld or delayed. All the terms and
provisions of this Agreement will be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns.
24. RELATIONSHIP.
(See Attachment B)
25. PUBLICITY.
FWT agrees to submit to AWS all advertising, sales promotion, press releases
and other publicity matters relating to the Products furnished or to Services
performed by FWT under this Agreement wherein AWS's name, marks or the name or
mark of any AWS operating unit or affiliate is mentioned or language from which
the connection of said names or marks therewith may be inferred or implied; and
FWT further agrees not to publish or use such advertising, sales promotion,
press releases, or publicity matters without AWS's prior written approval.
26. CHOICE OF LAW.
The construction, interpretation, and performance of this Agreement shall be
governed by the laws of the State of Washington.
27. ENFORCEMENT.
AWS's failure at any time to enforce any of the provisions of this Agreement or
any right with respect thereto, or to exercise any option herein provided, will
in no way be construed to be a waiver of such provisions, rights, or options or
in any way to affect the validity of this contract. The exercise by AWS of any
right or options under the terms or covenants herein shall not preclude or
prejudice the exercising thereafter of the same or any other right hereunder.
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28. SEVERABILITY.
In the event that any one or more of the provisions contained herein shall for
any reason be held to be unenforceable in any respect under the laws of the
jurisdiction governing the entire Agreement, such unenforceability shall then
be construed as if such unenforceable provision or provisions had never been
contained herein.
29. INSURANCE.
FWT shall maintain, during the term hereof all insurance and/or bonds required
by law, including but not limited to; (1) Workmen's Compensation insurance as
prescribed by the law of the state in which the work is performed; (2)
employer's liability insurance with limits of at least $1,000,000 each
occurrence, and (3) comprehensive general liability insurance (including
product liability insurance), with total liability limits of at least
$2,000,000, and, if the use of automobiles is required, comprehensive
automobile liability insurance, each with limits of at least $1,000,000 for
bodily injury, including death, to any one person, and $1,000,000 on account of
any one occurrence, and $1,000,000 for each occurrence of property damage. AWS
shall be named as an additional insured party under such comprehensive general
liability insurance policy.
Certificates of such insurance shall be submitted to AWS upon AWS's request.
Certificates of insurance, with copies of the policies or other proof of
insurance shall be sent to AWS. No insurance required to be maintained pursuant
to this Agreement shall be canceled by FWT without giving at least ten days
prior written notification to AWS.
FWT shall also require FWT's subcontractors, if any, who may enter upon AWS's
premises to maintain similar insurance and to agree to furnish AWS, if
requested, certificates or adequate proof of such insurance. Certificates
furnished by FWT shall contain a clause stating that AWS is to be notified in
writing at least ten days prior to cancellation of, or any material change in,
the policy.
30. CONFLICTING PROVISIONS.
AWS shall not be bound by additional provisions or provisions at variance with
this Agreement which may appear in FWT's quotation, acknowledgment, invoice or
in any other communication from FWT to AWS, without AWS's prior written
consent.
31. NON-DISCRIMINATION AGREEMENT.
FWT shall maintain a non-discrimination compliance agreement and provide a copy
of such agreement to AWS upon request.
32. ORDER OF PRECEDENCE.
In the event of a conflict between the terms of this Agreement and its
Attachments, the order of precedence of the terms shall be as follows:
A. Agreement
B. Attachments B and C.
C. Attachment A.
D. Purchase Orders (except for prices)
33. ENTIRE AGREEMENT; CANCELLATION AND PRIOR AGREEMENTS.
This Agreement and its Attachments constitute the entire Agreement between AWS
and FWT with respect to the subject matter hereof and all prior oral or written
communications, understandings or agreements between the parties with respect
to such subject matter, including that certain agreement
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between the parties dated November 1, 1996, are hereby canceled and superseded
in their entirety. The parties acknowledge and agree that all claims arising
under such prior understandings and agreements shall survive, except that the
parties release and discharge one another for any claims arising from the
following:
1) Tonnage commitment shortfalls by AWS
2) Late delivery penalties owed by FWT to AWS-Central Region
3) Claims which became known prior to August 1, 1997, which have not yet
been disclosed to the other party
34. AMENDMENT.
This agreement shall not be amended or modified without specific written
provision to that effect, signed by both parties. No oral statement of any
person whomsoever shall, in any matter or degree, modify or otherwise affect
the terms and provisions of this Agreement.
IN WITNESS WHEREOF, AWS and FWT have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first stated
above.
AT&T WIRELESS-SERVICES, INC. FWT INC.
By: /s/ JONI P. NELSON By: /s/ ROY J. MOORE
---------------------------- --------------------------------
Joni P. Nelson, C.P.M. Roy J. Moore
Regional Supply Manager Vice President - Marketing and Sales
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ATTACHMENT A
AT&T WIRELESS SERVICES
GENERAL TERMS AND CONDITIONS
By signature of General Supply Agreement #ATTWS/FWT/1096, these GENERAL TERMS
AND CONDITIONS are agreed to this August __, 1997, by FWT Inc. ("FWT") and AT&T
Wireless Services, Inc. ("AWS"). FWT hereby acknowledges and agrees that these
General Terms and Conditions shall apply and are hereby incorporated into each
and every purchase order, sales order, request for service, or other agreement
between FWT and AWS under which FWT agrees to provide goods or services. Each
such order, request and agreement shall be referred to herein as a "Purchase
Order".
1. Independent Contractor. FWT acknowledges that its status
vis-a-vis AWS is that of an independent contractor, not an employee. FWT shall
be solely responsible for the operation of its business and the supervision and
compensation of its employees (including without limitation the payment of all
business, payroll, unemployment, property, and income taxes and workers
compensation payments). AWS shall not (a) have any right or obligation to
control or direct the results of or the means by which FWT performs its
services, (b) provide FWT with any employees, transportation, facilities,
equipment or supplies, or (c) reimburse FWT for any of its expenses.
2. Compliance with Laws. FWT shall comply with all applicable
federal, state and local laws, government orders and regulations in performing
any and all Purchase Orders, including compliance with all requirements of
Section 6, 7 and 12 of the Fair Labor Standards Act of 1938, as amended from
time to time and with all regulations and orders of the administrator of the
Wage and Hour Division issued under Section 14 as amended from time to time. On
request FWT shall furnish AWS certificates of compliance with all such laws,
orders and regulations. The parties agree that the contract provisions set
forth in: (1) Section 202 of the Executive Order 11246, dated September 24,
1965, pertaining to equal opportunity, nondiscriminatory employment practices,
(2) Section 60-2504 of the Affirmative Action Regulations for Veterans,
codified as 41 CFR 60-250, and adopted pursuant to the Veterans Readjustment
Act of 1974, and (3) Section 60-7414 of the Affirmative Action Regulations on
Handicapped Workers, codified as 41 CFR 60-741, relating to Section 503 of the
1973 Rehabilitation Act, are incorporated herein by reference, except to the
extent that the terms of said Regulations and Order are inapplicable to or
otherwise do not govern a particular Purchase Order or to the extent that a
particular Purchase Order may be exempt from the provisions of said Regulations
and Order by rules and regulations issued thereunder.
3. Acceptance. Commencement of performance pursuant to any
Purchase Order constitutes acceptance hereof by FWT.
4. Prices, Terms and Invoices. The prices for the equipment
and/or services ordered hereunder are those specified on the face of the
particular Purchase Order. No charges shall be made for shipping, unless
specified on the particular Purchase Order. Taxes shall be applied to all
orders, however, the tax amount will not be included on the Purchase Order.
Payment is contingent upon approval of the equipment and/or services by AWS.
Time and material invoices are payable only after audit by AWS. Terms of
payment for invoices submitted by FWT against PO's issued pursuant to this
agreement shall be Net 30. Due dates for the payment of invoices shall be
computed from the date of receipt of the invoice by Buyer.
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5. Packing, Marking and Shipping
a. Delivery shall be f.o.b. origin.
b. A packing slip shall accompany each shipment, enclosed in a
package marked "Packing Slip Inside." The Packing Slip and other shipping
documents shall bear the applicable Purchase Order number and shipping
destination.
6. Inspection. All equipment and services provided under any Purchase
Order shall be subject to inspection and testing by AWS to the extent
practicable at times and places including the period and place of manufacture;
if any such inspection or test is made on FWT's premises, FWT shall furnish
without additional charge reasonable facilities and assistance for the safety
and convenience of the persons conducting the test. If any equipment or
services are defective in material or workmanship, or otherwise not in
conformity with the requirements of any Purchase Order, AWS shall have the
right to reject such equipment or services, retain and correct them at FWT's
expense, or require their correction by FWT. Rejected equipment shall be
returned to FWT at FWT's risk and FWT shall pay AWS for all packing, handling
and transportation expenses incurred in connection with the rejected equipment.
Records of all inspection work by FWT shall be kept complete and available to
AWS during the performance of any and all Purchase Orders and for such longer
period as may be required by law.
7. Liens. All equipment to be delivered under any and all Purchase Orders
and all property to be returned to AWS shall be free and clear of any and all
liens and encumbrances whatsoever.
8. Use. The equipment and services contracted for in any Purchase Order
are to be for the use of AWS, its affiliated companies and/or its or their
suppliers. All equipment contracted for may be subjected to further processes
of manufacture, combined with any articles, or put to any use whatsoever, by
AWS, its affiliated companies or its or their suppliers, as it or they may
elect, and in no event shall any claim for royalty or other additional
compensation be made by FWT, by reason of such manufacture, combination or use.
9. AWS's Property. All property, if any, used by FWT but owned,
furnished, charged to, paid for, or provided by AWS, including but not limited
to materials, tools, dies, plates, jigs, patterns, fixtures, equipment and any
replacements thereof, shall be the property of AWS subject to removal and
inspection by AWS at any time without cost or expense to AWS. All such property
shall be used by FWT only for performance under any Purchase Orders and shall
be adequately insured for AWS's protection. FWT shall assume all liability for
and maintain and repair such property and return the same to AWS in good
condition, reasonable wear and tear excepted.
10. Excusable Delays.
a. Neither AWS nor FWT shall be liable for a failure to perform
hereunder arising from (1) acts of God or a public enemy, (2) acts of
the Government of the United States or any state or political
subdivision or any department or regulatory agency thereof or entity
created thereby, (3) acts of any person engaged in subversive
activity or sabotage, (4) fires, floods, explosions, or other
catastrophes, (5) epidemics and quarantine restrictions, (6) strikes,
slowdowns, lockouts or labor stoppages or disputes of any kind, (7)
freight embargoes, (8) unusually severe weather, (9) delays of a
supplier due to any of the above causes or events, or (10) causes or
events beyond the control and without the fault or negligence of AWS
or FWT in failing, to perform hereunder.
b. In the event of a failure by FWT to perform arising from any
of the causes or events set forth in subparagraph (a) of this
paragraph, AWS shall be entitled to obtain equipment or services
covered by all applicable Purchase Orders elsewhere for the duration
of such failure and to reduce, pro tanto the quantity or amount of
equipment or services ordered from FWT under all such Purchase Orders.
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11. Termination at Option of AWS.
a. Performance under any and all Purchase Orders may be terminated by
AWS at its option, in whole or in part at any time with written notice
to FWT, notwithstanding the existence with respect to FWT of any of
the causes or events specified in Paragraph 10 above.
b. After receipt of a notice of termination FWT shall, unless
otherwise directed by AWS, immediately terminate the performance of
all services and the manufacture and/or shipment of all equipment
under all outstanding Purchase Orders, and shall, unless otherwise
directed by AWS, (1) terminate all orders and subcontracts relating to
the performance of the work and settle all claims arising out of such
termination, subject to the approval or ratification of AWS; (2)
transfer title and deliver to AWS (i) all completed equipment which
conforms, in quality, to the requirements of all outstanding Purchase
Orders and does not exceed, in quantity, the amount authorized for
production by AWS, and (ii) all reasonable quantities (but not in
excess of amounts authorized by AWS) of work in process and materials
produced or acquired to perform hereunder which are of a type and
quality suitable for producing equipment which conforms, in quality,
to the requirements of the outstanding Purchase Orders and which
cannot reasonably be used by FWT in producing equipment for itself or
for its other customers; (3) take all action necessary to protect
property in FWT's possession in which AWS has or may acquire an
interest; and (4) submit to AWS promptly, but not later than three (3)
months from the effective date of termination, its termination claim,
in the form and with the certification prescribed by AWS; provided,
however, that in the event of failure of FWT to submit its termination
claim within such period, AWS may determine notwithstanding the
provisions of subparagraph (c) hereof, on the basis of information
available to it, the amount, if any, due FWT with respect to the
termination and such determination shall be final.
c. If the parties cannot by negotiation agree within a reasonable time
upon the amount of fair compensation due FWT for such termination,
AWS, in addition to making prompt payment of amounts due for equipment
delivered or services rendered prior to the effective date of
termination, will pay to FWT (without duplication) the actual costs
incurred by FWT which are properly allocable or apportionable under
recognized commercial accounting practices to the terminated portion
of this order, including the cost of discharging liabilities which are
so allocable or apportionable. Such costs shall exclude the cost of
discharging liabilities for parts, materials and services not received
by FWT before the effective date of termination. Payments made under
this subparagraph (c) shall not exceed the aggregate price specified
in Purchase Orders, less payments otherwise made or to be made.
d. With the consent of AWS, FWT may retain at an agreed price or sell
at an approved price any completed equipment, or any equipment,
materials, work in process or other things the cost of which is
allocable or apportionable to a Purchase Order under subparagraph (c)
above, and will credit or pay the amount so agreed or received as AWS
directs.
e. The provisions of this paragraph 11 shall not apply if this
Purchase Order is terminated by AWS for the default of FWT pursuant to
paragraph 12 hereof.
12. Termination for Default of FWT. Subject to paragraph 11 above,
whenever FWT (1) refuses or fails to make deliveries of the equipment or
perform services called for in any Purchase Order within the time specified in
the Purchase Order or in written instructions issued to FWT, or (2) otherwise
defaults in the performance of any Purchase Order, AWS may terminate such
Purchase Order, in whole or in part, effective ten (10) days after mailing of
notice of default, unless FWT shall, within such period, cure such default.
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13. Effect of Invalidity. The invalidity in whole or in part of any
condition of any Purchase Order shall not affect the validity of other
conditions.
14. Remedies. The remedies herein shall be cumulative, and in addition to
any other remedies available in law or equity. No waiver of a breach of any
provision of any Purchase Order shall constitute a waiver of any other breach
or of such provision.
15. Notice of Labor Disputes.
a. Whenever FWT has knowledge that any actual or potential labor
dispute is delaying, or threatens to delay the timely performance of any
Purchase Order, FWT shall immediately give notice thereof and all relevant
information to AWS.
b. FWT agrees to insert the substance of this clause, including
this paragraph (b), in any subcontract (including, any purchase order)
hereunder as to which a labor dispute may delay the timely performance of this
Purchase Order, except that each such subcontract shall provide that in the
event any actual or potential labor dispute is delaying or threatens to delay
timely performance, the subcontractor shall immediately notify its next higher
tier subcontractor, or FWT, as the case may be, of all relevant information.
16. Assignment. FWT hereby agrees that AWS may assign all or any portion
of its rights under these General Terms and Conditions to its local cellular,
PCS or paging affiliates, which affiliates shall be the purchasers of equipment
and/or services from FWT.
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ATTACHMENT B
1. BACKGROUND
The demand for monopoles has increased dramatically since May 1996. The
combination of an increased cellular build program and the aggressive network
development efforts of the A & B PCS licensees has resulted in monopole
shipment lead times of over twenty weeks. Moreover, the C through F licensees
have not begun their network development efforts in earnest; however, once
begun, they are certain to increase the demand and shipment lead times even
farther. The increased demand coupled with the long lead time required to build
additional monopole fabrication capacity means that there is not a quick
solution to bringing down shipment lead times. While FWT anticipated the change
in demand and began developing a new monopole production facility in February
1996, the market demand increased more quickly than anticipated; however, by
establishing a General Supply Agreement between AWS and FWT, both companies can
still meet their objectives.
2. OBJECTIVES
2.1 AWS
o Secure shorter lead times, ideally six to eight weeks.
o Secure monopole manufacturing capacity and associated steel supplies
to assure adequate monopole supply for AWS market areas.
o Develop a system that allows for a variety of structural designs.
o Provide the capability to deliver custom pole designs with very short
lead times from Black Inventory.
o Maintain competitive pricing
2.2 FWT
o Develop an alliance for a significant fabrication volume.
o Provide superior customer support and service as an incentive to
continue the alliance once the market demand ebbs.
o Form a relationship that provides global opportunities whereby the US
plant can serve other regions or the alliance agreement can be
replicated in other parts of the world.
3. APPROACH
Considering the objectives outlined above, the following approach to the
problem and opportunities was developed.
3.1 PRODUCT DESCRIPTION
This agreement specifically addresses FWT's provision of tapered, sleeve-fit,
galvanized or metalized, communications monopoles designed according to EIA-222
or applicable local building codes.
3.2 FWT AWS SUPPORT TEAM (FAST)
FWT will assemble an FWT AWS Support Team (FAST) to insure that FWT performance
targets are met. Specifically, FWT will dedicate: one engineer, one to two
draftspersons, one proposal developer, and one to two project managers. While
this team will be devoted exclusively to AWS monopole projects, the balance of
FWT's resources are available to shave off peak-demand loads. For example, FWT
has seven structural engineers on staff and a firm on retainer if the volume
requires additional engineering resources. Also, a significant software
development effort is under way to automate the engineering and fabrication
detailing steps.
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3.3 BLACK INVENTORY
AWS has the option of instituting a Black Pole inventory program. Upon request
from AWS, FWT shall fabricate Standard Designs (as described in the following
section) for Black Poles. Unless specifically requested by AWS, Standard
Designs will not be galvanized and wall penetrations will not be made (e.g.,
for line entrances or exists). Once in inventory, a maximum of three (3) Black
Inventory poles can be modified each day.
3.3.1 STANDARD DESIGNS
Standard Designs are those that have been identified by AWS as a Standard
Design at least six weeks prior to fabrication or a pole that has been
previously fabricated under this agreement (hereafter defined as an Archive
Design).
3.3.2 ARCHIVE DESIGNS
Once a design is fabricated by FWT it becomes an Archive Design for a period of
twelve months. If the design is not re-used within twelve months, it is no
longer considered an Archive Design. Archive Designs will be maintained on a
database by FWT. Design searches on the Archive Database shall be by AWS
region, structure height, design number, wind/ice load, and last fabrication
date.
3.3.3 BLACK POLE DESIGN
Upon request from AWS, Black Poles will be fabricated from Standard Designs or
Archive Designs.
3.3.4 STORAGE
Black Inventory will be held for a period of one year without charges. After
one year, AWS will be charged $100 per month per section.
3.4 DELIVERY COMMITMENT
The following are FWT's service commitments:
3.4.1 P.E. SEALED DESIGN DRAWINGS SHIPMENT
FWT shall ship P.E.-sealed structural drawings four to seven full business days
after the later of an order is received or FWT has full information associated
with the structure (e.g., antennas and antenna support structures are clearly
identified).
FWT shall ship P.E.-sealed foundation drawings four to seven full business days
after the later of an order is received or the soil report is received.
3.4.2 ANCHOR BOLTS SHIPMENT
Unless AWS requests a delay in shipping, anchor bolts and templates will be
shipped five to ten fall business days after the later of receiving an order or
receiving anchor bolt shipment information.
3.4.3 STRUCTURE SHIPMENT
Unless a delay in shipping is requested by AWS, the monopole structure will be
shipped no more than eight (8) weeks after the later of receiving the order or
complete design information, except for structures whose shaft diameter exceeds
seventy-two (72) inches, for which a specific Target Shipment Date will be
quoted at the time of the order. One additional week shall be allowed for
painted monopoles. The date established for shipment shall be known as the
Target Shipment Date. In the event that the structure is not available for
shipment on the Target Shipment Date, then AWS, in its sole discretion, may
impose a penalty on FWT of one hundred dollars ($100.00) per day for each day
that the structure is unavailable for shipment, except as provided in
Attachment A, Section 12.
13
<PAGE> 14
3.5 PRICING
3.5.1 PRICING PHILOSOPHY
FWT will continue to provide AWS with competitive prices. While AWS has deemed
FWT as their Primary Supplier, FWT must still strive to earn the orders with
competitive pricing, and service. The prices charged to AWS for comparable
structures, time frames, and volumes will, in all cases, be less than those
charged to other customers.
3.5.2 UNIT-BASED PRICING
FWT shall provide monopoles based on a pricing schedule that utilizes a
price-per-pound for the structure weight plus various attachments and services.
Structure Weight shall be defined as the galvanized weight of the shaft, top
plate, and base plate. Considering this definition the algorithm for
calculating the cost of the monopole is a maximum of $1.00/pound. The price
will include the galvanized monopole structure, anchor bolt templates, and
anchors. In addition to the structure cost, an additional charge shall apply
for items such as engineering, penetrations (e.g., exit ports), antenna
mounts/platforms, safety climb, step bolts, obstruction marking, and waveguide
bridges. In cases where the shaft diameter exceeds 72", the section or a
portion thereof shall be flame-spray metalized at an additional cost per pound
for the metalized section. See the Attachment C for a listing of the options
and option pricing.
3.5.3 BLACK INVENTORY POLE PRICING
FWT will invoice AWS for Black Inventory poles at the time the Black Inventory
pole structure is complete and placed in storage. The invoice price for the
Black Inventory pole will be based on a pricing schedule that utilizes a
price-per-pound for the ungalvanized weight of the shaft and base plate. The
algorithm for calculating the cost of the black inventory pole is a maximum of
$.80/pound. For Black Inventory modifications, a handling fee of $250 per
section shall apply for sections that are modified and a handling fee of $100
per section shall apply for unmodified sections. Also, the price for cutting
off the end of a section (hereafter referred to as Cutting Fee) shall be $3.00
per inch of circumference. The circumference is calculated as the diameter at
the cut line multiplied by 3.1416. The minimum fee is $125.
The price of the finished pole shall be calculated as follows: (the galvanized
finished weight of the structure multiplied by the price per pound plus the
base amount) less (the previously invoiced amount for the black structure).
For example, if the finished weight is 20,000 pounds and the previously
invoiced amount, based on the black weight, was $16,000, the amount due for the
structure would be $4,000 (calculated as follows: [(20,000 x $1.00) - $16,000].
Handling Fees, Cutting Fees, and Options would be added to the invoice as well.
3.5.4 PRICE CHANGES
3.5.4.1 PERIOD
Prices will, be reviewed once per quarter. If an adjustment is warranted, based
on changes in the price index (as described below), FWT and AWS agree to
negotiate a revision to the pricing algorithm and the newly established prices
shall become effective immediately on quotes prepared thereafter.
3.5.4.2 BASIS
The following indices shall serve as a baseline for negotiating price changes.
Both the index and the relative weighting are shown:
o 10% Primary Fabricated Structural Metals, 3441-P as shown in the
Producer Price Index
o 25% Zinc cash price as shown in the Wall Street Journal for high grade
zinc on the London Metal Exchange.
o 65% Carbon Plates, 3312-412 as shown in the Producer Price Index
14
<PAGE> 15
3.6 QUOTE/ORDER/INVOICE PROCESS
3.6.1 QUOTING
3.6.1.1 REQUEST FOR QUOTE (RFQ)
AWS will forward a quote request to FAST. The request will be on a mutually
acceptable form developed by FWT which identifies all of the items required to
provide a complete quote (e.g., antenna height, wind/ice load, etc.). This
request will be made by AWS, in most cases, via e-mail. A facsimile shall serve
as a back-up in the event the e-mail system is not operational.
3.6.1.2 QUOTE TURNAROUND TIME
Quotations shall be returned within two business days of receipt of a complete
RFQ.
3.6.1.3 QUOTE DISTRIBUTION
A copy of the quotation shall be forwarded to the Regional Supply Manager and
the AAC. AWS agrees to treat quotes as confidential information per the FWT/AWS
confidentiality agreement.
3.6.2 ORDERING
3.6.2.1 PURCHASE ORDER
The purchase order shall be issued by AWS or AWS's agent or contractor and
reflect the following information: date issued, items purchased, item pricing,
payment terms, title transfer point, and shipment information.
3.6.2.1.1 DATE ISSUED
This shall serve as the date by which FWT's performance shall be measured. This
assumes that the date issued is also the date that FWT receives the purchase
order. To the extent possible in the future, FWT and AWS shall work to develop
an EDI system to better track purchase order origination and FWT performance.
3.6.2.1.2 ITEMS PURCHASED
The purchase order shall identify the items purchased by referencing the FWT
quote/design number and itemizing all optionally priced items as separate line
items.
3.6.2.1.3 TITLE TRANSFER POINT
In all cases, title is transferred ex-works, FWT Plant, Ft. Worth, Texas or
Houston, Texas.
3.6.2.1.4 INVOICE PRICE
The invoice price shall be consistent with the Purchase Order.
3.6.2.1.5 INVOICING
FWT will issue an invoice when the structure is shipped, a structure is
completed for Black Inventory, a Black Inventory Pole is modified and shipped,
or an order modification results in charges for items not used (e.g., design
drawings). While there may be other instances in which an invoice is issued,
these are the primary events that will generate an invoice.
15
<PAGE> 16
3.6.2.1.5.1 FREIGHT
FWT will ship loads with an AWS designated carrier. The charges will be either
direct-billed to AWS by the carrier or FWT will bill AWS for the direct-charges
plus fifteen percent (15%). An additional blocking and loading fee of $500/open
top container will apply to overseas shipments. Billing instructions for
freight will accompany the purchase order.
3.6.2.1.5.2 TAXES
AWS is not exempt from Texas Sales Tax. FWT will add sales taxes as an
additional line item on each invoice.
3.6.2.1.6 PAYMENT TERMS
Net 30 from the later of completing manufacture or the Target Shipment Date.
This shall include Black Inventory that will be invoiced after completing
fabrication. Payments can be made via check or wire transfer (which is FWT's
preference).
3.6.2.1.7 SHIPMENT INFORMATION
The purchase order should include shipping instructions for P.E.-sealed
drawings, anchor bolts, and structure. Instructions should include a physical
address and the desired shipping time frame. If the preferred shipment time
frame is according to this agreement, the instructions should show "Per
Agreement."
3.6.2.2 ORDER MODIFICATION AND CANCELLATION
Orders may be modified or canceled up to six weeks prior to the Target Shipment
Date. If an order is canceled or modified, AWS will be invoiced for items
designed, fabricated and/or shipped prior to the order modification or
cancellation, but in no case will the amount charged exceed the cost of the
drawings, anchor bolts, templates and applicable freight.
3.6.3 COMMUNICATIONS
3.6.3.1 ELECTRONIC INFORMATION TRANSFER AND STORAGE
Whenever possible under this agreement, both AWS and FWT will make every effort
to communicate electronically. E-mail will serve as the primary communications
medium for FAST and the Regional Supply Managers. This helps in tracking
service performance as well as allowing FAST to better meet AWS's needs. The
phone and fax will serve as back-up systems.
3.6.4 FWT
3.6.4.1 PRODUCT DESCRIPTIONS
FWT shall provide complete product description information on monopoles and
each of the options. The information will be in the form of CAD drawings which
outline key dimensional information (e.g., point-to-point separation of
antennas on platforms)
3.6.4.2 TRAINING/PLANT TOURS
FWT, at its expense, will train each of the five Regional Supply Managers on
the purchase of monopoles under this agreement. A review of the various reports
and their usage will be covered. Based on the Regional Supply Manager's
availability, the training would include a plant tour so that they can have a
mental picture of the fabrication process. This mental picture will facilitate
the FWT/AWS working relationship in particular when order modifications are
required.
FWT will provide plant tours and training, regarding FWT products to other AWS
employees on an as needed basis.
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<PAGE> 17
3.6.5 REPORTING
3.6.5.1 ORDERS IN PROCESS
FWT will provide a report that details the orders currently logged for
fabrication. This report will provide information on the order date, AWS P.O.
number, FWT job number, date of shipment of the P.E.-sealed design drawings and
anchor bolts, and Target Shipment Date. Each Regional Supply Manager will have
password protected access to this report for monopoles ordered by their region.
The AAC will have access to a report that includes all regions.
3.6.5.2 BLACK INVENTORY REPORT
FWT will provide a report that identifies the structures held in Black
Inventory. The report will identify the available AWS designs and will be
accessible by the Regional Supply Managers and ACC.
17
<PAGE> 18
ATTACHMENT C
OPTION PRICING
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
P.E. Sealed Monopole and Foundation Design (with or without Foundation Design) $1,100.00
P.E. Sealed Foundation Re-design for FWT Monopole $450.00
Flame-Spray Metalizing for Shafts greater than 72 inches (additional price per/pound) $.10/lb.
Penetrations:
Line exit ports (10" x 24") $500.00
Line entrance ports (5' x 7"), without cover plate $200.00
Hand-holes (5" x 7"), with cover plate $225.00
Kellums Hooks $12.00
Anchor Materials:
Anchor bolt, 18J x 7', with two nuts (top and bottom) $150.00
Additional anchor bolt nut $35.00
Anchor bolt template (top and bottom) $750.00
Cable-type safety climb (minimum $250.00) $4.00/ft.
Step bolts (bolt-in) $8.25/ft.
Waveguide bridge (2'W x 10'L x 10'H) with two posts & three trapeze $755.00
Waveguide bridge (2'W x 10'L x 10'H) with four posts & three trapeze $955.00
Antenna Platforms and Mounts:
Weld-on platform with service grating and handrails:
10' platform $2,600.00
12' platform $2,700.00
14' platform $2,800.00
16' platform $2,900.00
Weld-on Low-Profile platform with service grating and NO handrails:
10' platform $2,400.00
12' platform $2,500.00
14' platform $2,600.00
16' platform $2,700.00
Band-on Low-Profile platform with service grating and NO handrails:
10' platform $3,100.00
12' platform $3,200.00
14' platform $3,400.00
16' platform $3,600.00
Top-mounted Rotatable platform with service grating and handrails:
10' platform $3,200.00
12' platform $3,300.00
14' platform $3,400.00
16' platform $3,600.00
Top-mounted Rotatable Low-Profile platform with service grating and NO handrails:
10' platform $3,000.00
12' platform $3,100.00
14' platform $3,300.00
16' platform $3,500.00
6' Luminaire arms - Weld-on arm $375.00
6' Luminaire arms - Band-on arm $885.00
6' Sidearm - Weld-on arm $325.00
6' Sidearm - Band-on arm $885.00
4 1/2' OD dish mount - Weld-on $600.00
4 1/2' OD dish mount - Weld-on $875.00
</TABLE>
18
<PAGE> 1
EXHIBIT 10.3
COOPERATIVE PRODUCTION AGREEMENT
This agreement is effective as of the 10th day of March, 1997, by and between
Delta Steel, Inc., a Texas Corporation herein referred to as "Delta" or
"party", and FWT, Inc., a Texas corporation herein referred to as "FWT" or
"party". By this Agreement, the parties hereby adopt the terms and conditions
of the Memorandum of Understanding dated June 26, 1996 and attached as Addendum
A to this Agreement, except that the terms and conditions relating to the lease
are excluded and replaced by the Lease Agreement dated March 10, 1997 between
the parties.
Both parties understand the character of the services to be provided under this
Agreement and represents itself as competent to perform such services. Each
party also represents itself as having the authority and licenses to do
business and perform the services in the area and state in which the work is to
be performed.
TERM
1.1 This Agreement shall be for an initial term of five years and shall be
automatically renewable at the end of the initial five year period.
Terms and conditions for the renewal period will be negotiated at the
end of the third year of the initial period.
CONFIDENTIALITY
2.1 The terms of this Agreement and the aforementioned Lease Agreement
shall be maintained in confidence by the parties. A Confidentiality
Agreement dated March 10, 1997 is attached as Addendum B to this
Agreement.
INSURANCE
3.1 To the extent that work is done by Delta or FWT personnel under the
supervision or direction of an employee of the other company, for
purposes of liability and indemnification, that work will be deemed to
have been performed solely by the company responsible for performing
such work.
3.2 Each party, at its sole expense, shall provide, at all times during
the performance of this Agreement, the following minimum insurance
coverage.
A. WORKER'S COMPENSATION INSURANCE providing statutory benefits
under the law in the state where the work is to be performed.
EMPLOYER'S LIABILITY INSURANCE with limits of
1,000,000/$1,000,000/$1,000,000.
Each party's policy shall include an alternate employer
endorsement naming the other party as an alternate employer.
Each party shall file workers' compensation claims, for
workers on its payroll, under its respective insurance
policy.
B. COMMERCIAL GENERAL LIABILITY INSURANCE providing coverage for
premises - operations, and products/completed operations; to
include contractual liability coverage, personal injury, x, c,
and u, broad form property damage and independent contractors
working for the parties. Limits of liability shall not be
less than the following:
$1,000,000 each occurrence
$1,000,000 aggregate-products/completed operations
$1,000,000 aggregate-general
$1,000,000 personal injury/advertising injury liability
$1,000,000 legal liability
FWT's CGL policy shall contain a legal liability form
endorsement which shall include fire, explosion, smoke and
water damage.
- --------------------------------------------------------------------------------
Page 1
<PAGE> 2
COOPERATIVE PRODUCTION AGREEMENT
C. BUSINESS-AUTOMOBILE LIABILITY AND PROPERTY DAMAGE INSURANCE
providing coverage for all owned, non-owned and hired
vehicles. Combined single limits of liability for bodily
injury/property damage of $1,000,000 each accident.
D. UMBRELLA INSURANCE providing excess liability over General
Liability, Auto Liability and Employer's Liability with
minimum limits of $10 million each occurrence and $10 million
aggregate.
3.3 UNDERWRITERS SHALL HAVE NO RIGHT OF RECOVERY OR SUBROGATION AGAINST
THE OTHER PARTY, as the parties to this Agreement intend that the
insurance each has in force shall protect both parties and be liable
for all losses covered. All of the above policies must include a
waiver of subrogation in favor of the other party. Policies specified
in 3.2.B, C and D must name the other party as an additional insured.
3.4 CERTIFICATES AND ACKNOWLEDGMENT - Each party must provide current
certificates of insurance and proof of acknowledgement by the
respective insurance carrier prior to beginning any work. Insurers
must give 30 days notice of any cancellations of policies identified
in the certificates of insurance.
INDEMNIFICATION
4.1 Each party agrees to protect, indemnify, defend and hold the other
party free and harmless from all losses, costs and expenses -
including the amount of judgments, penalties, interest, court costs
and legal fees - of legal liabilities (claims, demands, and causes of
action, etc.) imposed in favor of or asserted by governmental agencies
or third parties (including employees of the other party or of its
contractors or subcontractors) caused by or associated with its (or
its contractors or subcontractors) failure to pay any tax, wage, debt
or other sum incurred by the indemnifying party (or its contractors or
subcontractors).
4.2 It is the intention of each party to maintain the insurance coverage
and limits specified in paragraph 3.2 above and indemnify the other
for claims or other liabilities caused by its actions or inactions.
For liability and indemnification purposes, each party shall be
responsible for the operations and products from its normal work
activities under the Agreement. This includes work performed under
the supervision or direction of managers or foremen who supervise the
work of both parties.
Each party agrees to indemnify and hold the other party harmless from
all losses, costs and expenses - including the amount of judgments,
penalties, interest, court costs and legal fees - of alleged or actual
legal liabilities (including settlements) for personal injuries,
illnesses, deaths or property damage founded upon occurrences in the
course of, or incident to, services performed or products or equipment
provided under the Agreement due to its negligence or gross
negligence. This indemnification obligation includes, but is not
limited to, claims made by its employees or employees of its
contractors or subcontractors, if the injury, illness or death is
sustained while the employee is in, on, or about the premises of
Delta, or is otherwise associated with services performed for, or
products or equipment provided to, the other party.
4.3 DEFENSE - Each party to the Agreement agrees to investigate, handle,
respond to, provide defense of, and defend any claim or other
potential legal liability for which it is responsible under this
Agreement's indemnification provisions at its sole expense, and agrees
to bear all other related costs and expenses, even if such claim, etc.
is groundless, false or fraudulent. The indemnification provisions
are intended to survive the termination of this Agreement.
4.4 ENFORCEMENT OF INDEMNITY OBLIGATIONS - All indemnity obligations
assumed by the parties are in no way limited by the insurance
provisions of this Agreement, as the parties intend that each be fully
responsible for liabilities assumed under this Agreement. All
indemnity obligations in this Agreement shall be enforced in the
courts of Tarrant County, Texas, with all costs of enforcement and
attorneys' fees of the prevailing party to be paid by the other party.
Each party to this Agreement hereby waives all defenses to such
enforcement which do not turn on factual issues affecting the
applicability of indemnity obligations.
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Page 2
<PAGE> 3
COOPERATIVE PRODUCTION AGREEMENT
DISPUTE RESOLUTION
5.1 Both parties agree to work together to resolve any issues or disputes
that arise under the Agreement. If a dispute cannot be resolved
between the parties within thirty (30) days of written notice to the
other party, then the dispute will be submitted to mediation through
the procedures then in effect by a dispute resolution organization
selected by mutual agreement of both parties. Both parties agree that
the mediation will be scheduled to begin no later than sixty (60) days
after the initial written notice of a dispute. If mediation is not
successful, both parties agree that the dispute will be submitted to
binding arbitration through an organization selected by mutual
agreement of both parties and the arbitration is to begin no later
than 30 days after the mediation is concluded.
GENERAL TERMS AND GOVERNING LAWS
6.1 The Agreement shall bind the parties, their respective successors,
heirs and assigns; but this Agreement shall not be assignable without
the prior written consent of the other party.
6.2 In the case of a change in ownership, management or corporate
organization of FWT, the successor owner(s), et. al. shall continue
operations under this Agreement, for the remainder of the then-term of
the Agreement, with a minimum monthly purchase volume from Delta equal
to the previous 12 months average. All other terms and conditions of
the Agreement shall remain in force.
6.3 "Party" means Delta or FWT, as applicable. Reference in this
Agreement to Delta, FWT or party includes any subsidiary, affiliated
or parent companies, and employees, officers, directors, agents,
representatives and contractors of the respective companies provided,
however, that the use of the term 'party' shall not impose any
personal liability on any such employees, officers, directors, agents,
representatives or contractors of the parties.
6.4 Obligations of the parties are subject to all valid applicable
federal, state, and local laws, rules and regulations. Venue for any
dispute or controversy relating to or arising out of this Agreement
shall lie in Tarrant County, Texas.
6.5 No conduct by a party, including waiver of any single performance of
obligations of the other party, shall affect required subsequent
performance of the other party's obligations under this Agreement.
6.6 The Agreement and referenced addenda comprise the entire agreement of
the parties; no changes shall be effective unless made in writing and
executed by both parties. The terms of the Agreement and addenda
shall govern in case of conflict with any previous or subsequent
writing, except any subsequent addenda executed by both the parties.
6.7 This Agreement is not intended to and shall not create a joint venture
or partnership between Delta and FWT.
NOTICES
7.1 Every notice, request, statement or bill provided for in the Agreement
shall be in writing and mailed or delivered to the following
addresses):
ADDRESSES:
<TABLE>
<S> <C> <C>
FWT, Inc.: DELTA STEEL, INC: (Corporate Office) FORT WORTH DIVISION:
Delta Steel, Inc. Delta Steel Inc.
P.O. Box 8597 P.O. Box 2289 9217 South Freeway
Fort Worth, TX 76124 Houston, TX 77252 Fort Worth, TX 76140
</TABLE>
Executed in duplicate original on the 24th day of March, 1997.
FWT, Inc.: DELTA STEEL, INC.
By: /s/ T. W. MOORE By: /s/ R. A. EMBRY
--------------------------- ---------------------------
Title: President Title: President
------------------------ ------------------------
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Page 3
<PAGE> 1
EXHIBIT 10.4
TRANSPORTATION CONTRACT
This Contract is made and entered into effective the 26th day of March,
1997, by and between Delta Steel, Inc., hereinafter called "Carrier", and, FWT,
Inc., hereinafter called "Shipper".
Carrier agrees to offer transportation services under this Contract as
provided in 49 U.S.C.S. 14101(b) of the U.S. Code, and Shipper agrees to use
Carrier's services subject to terms and conditions as follows:
1. TRANSPORTATION SERVICES: Shipper agrees to tender and Carrier agrees to
transport commodities in interstate, intrastate and/or international commerce
in such quantities as the parties may mutually agree and to/from such
destination/origination points with reasonable dispatch.
1. RATES: Rates shall be as set forth in a letter from the Carrier to the
Shipper (Exhibit A) and shall be effective on all shipments. Rates may be
changed thereafter by letter to the Shipper with fifteen (15) days notice.
Special rates may be used from time to time; such special rates shall be set
out in a letter or fax.
3. SHIPPING AND PICKUP TICKETS: A shipping or pickup ticket shall be issued
for each shipment with the commodity description or part number.
4. INSURANCE: Carrier shall carry and maintain transit insurance which names
Shipper as a loss payee and general liability insurance which names Shipper as
an additional insured. Prior to transporting any commodities, products or
materials on behalf of Shipper, Carrier shall furnish Shipper with a
certificate of transit insurance reflecting Shipper as a loss payee and general
liability insurance reflecting Shipper as an additional insured.
5. INDEMNITY, RISK OF LOSS: Carrier shall be responsible for all claims,
causes of action, losses and damages resulting from or in any manner relating
to the transporting by Carrier of commodities, products and materials. Carrier
shall bear the risk of loss to commodities, products and materials transported
by Carrier to the point of delivery specified by Shipper and shall pay and be
responsible for any losses and damages resulting from the delivery by Carrier
or unloading by Carrier of commodities, products and materials at such point of
delivery. Carrier unconditionally agrees to defend, indemnify and hold harmless
Shipper from any and all demands, claims, causes of action, liabilities,
losses, costs and expenses resulting from or in any manner arising out of any
actions or omissions for which Carrier has agreed to be responsible herein.
This provision shall survive the termination of the Contract.
6. ENTIRE CONTRACT: This Contract with any attachments or modifications
constitutes the entire agreement between the parties for transportation
services. No change or modification of the Contract shall be effective unless in
writing and signed by both parties, and no tariff, bill of lading or any other
document, other than rate letters, will have any legal effect with regard to
transportation services between the parties.
7. SUITS: Any suit between Carrier and Shipper arising out of the provisions
of this Contract shall be brought in Tarrant County, Texas and be governed by
Texas law. The prevailing party to any suit shall be entitled to reasonable
attorney's fees and its related costs.
8. TERM OF CONTRACT: This Contract shall be effective for twelve (12) months
beginning March 26, 1997 and will continue in effect thereafter until and
unless canceled by either party with thirty (30) days written notice to the
other at its address below.
IN WITNESS WHEREOF, the parties have executed this Contract in duplicate.
ADDRESSES:
FWT, Inc. Delta Steel, Inc.
Shipper Carrier
P.O. Box 8597 P.O. Box 2289
Fort Worth, Tx. 78124 Houston, Tx. 77252
By: By: R.A. EMBRY
____________________________ ________________________________
Title: Title: President
__________________________ _____________________________
<PAGE> 1
EXHIBIT 10.5
LEASE AGREEMENT
THE STATE OF TEXAS *
*
*
COUNTY OF HARRIS *
THIS AGREEMENT, hereinafter referred to as "Lease", made and entered into this
10th day of March, 1997, but effective as of February 18, 1997, by and between
Delta Steel, Inc. hereinafter referred to as "Delta", and FWT, Inc. hereinafter
referred to as "FWT", WITNESSETH:
THAT WHEREAS, Delta desires to lease to FWT a portion of the building and
improvements, machinery and equipment, being situated in Tarrant County, Fort
Worth, Texas; and
WHEREAS, FWT desires to accept a lease of such building and improvements,
machinery and equipment, all to be subject to the terms and conditions
hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
set forth, Delta hereby leases to FWT, the portion of the warehouse building
and improvements, machinery and equipment, located at 9217 South Freeway, Fort
Worth, Texas 76140, as per the attached Exhibit A. Said building and
improvements, machinery and equipment, hereinafter referred to as the "Leased
Premises", all to be subject to the following terms and conditions:
1. TERM The Lease shall be for a term of five (5) years commencing the
18th day of February, 1997, and ending on the 17th day of February, 2002,
hereafter called the "Initial Lease Period". If the Leased Premises, and
Delta's burning table, press-brake and cranes, are not available and fully
operational on the above lease commencement date, the lease term and lease
payments will begin on the date the Leased Premises and Delta's aforementioned
equipment are available and fully operational, and the ending date shall be
extended accordingly.
2. RENT FWT agrees to pay Delta rent at Delta's office at 5599 San Felipe,
Suite 600, Houston, Texas 77056 in Harris County for the Leased Premises. The
rent is payable in monthly installments, in advance, as calculated pursuant to
section 3 below, beginning April 1, 1997 and on the same day of each succeeding
month during the term of this Lease. Rent for the period February 18 through
March 31, 1997 shall be payable in March 1997.
3. RENT CALCULATION The monthly rent shall be calculated on the following
basis:
o The total construction cost of the Leased Premises attributable to
FWT will be amortized over sixty (60) months, plus interest at an
annual rate of 8%. This amount will be included in the rent
calculation. The construction cost of FWT's Leased Premises includes,
but is not limited to, the building, drive, cranes, new gate,
warehouse and manager's office, but excludes the press-brake
foundation costs and fencing. The construction cost is based on the
contractor's final invoice to Delta and will include such costs as
contractor's overhead, permit costs, etc. Plus
o FWT's portion of the annual property taxes as provided for under the
section entitled TAXES below, in section 5. Plus
o Property insurance on the Leased Premises as provided for under the
section entitled INSURANCE below, in section 7.
o The cost of capital additions made during the Lease term which both
Delta and FWT agree are for the direct benefit of FWT, such as
additional cranes, equipment or warehouse space, will be
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<PAGE> 2
LEASE AGREEMENT
amortized over the remainder of the Lease term with interest at 8%.
This amount will be added to the monthly rent.
4. REPAIRS, MAINTENANCE AND ALTERATIONS FWT agrees to maintain the Leased
Premises in good condition at its own expense and cost. FWT will be responsible
for the maintenance and repairs to the crane and other machinery and equipment
associated with normal wear and for any damage due to misuse or abuse. FWT
shall follow Delta inspection and maintenance procedures. Delta has the right,
in the event FWT does not maintain the Leased Premises as required herein and
after giving FWT written notice and ten (10) days to cure such default, to
order such repairs or maintenance as may be deemed necessary by Delta, and to
charge the cost thereof to FWT, said cost to be an additional amount due from
FWT on the first day of the month following notice to FWT that such work has
been performed.
The Leased Premises shall remain the property of Delta and, at the end of this
Lease, FWT shall deliver all of the Leased Premises in good order or condition,
normal wear and tear, natural deterioration and the elements excepted. No
improvements or alterations may be made in or to the Leased Premises without
the prior written consent of Delta, which consent shall not be unreasonably
withheld, conditioned or delayed.
5. TAXES FWT agrees to pay all real estate and personal property taxes
assessed against the Leased Premises during the Lease period. An amount equal to
1/12 of the prior year's actual annual property taxes will be included in the
monthly rent. This will be adjusted to the actual tax amount once the final
assessment is received. FWT shall have 30 days to pay any such adjustments. The
property taxes applicable to the Leased Premises shall be calculated by a
property tax consultant selected by mutual agreement of the parties.
6. UTILITY CHARGES FWT shall pay all service charges for meters and for
water, gas and power charges that may accrue by reason of the occupancy and/or
use of the premises by FWT. Electric bills will be split between the parties
based on a study by a consultant selected by mutual agreement of the parties.
7. INSURANCE Delta shall carry and keep in force owners property coverage on
the Leased Premises. FWT will reimburse Delta for the cost of this insurance in
the amount of $125 per month. FWT will maintain insurance coverage on its
contents in the Leased Premises. The insurance and liability provisions of the
Cooperative Production Agreement between the parties dated March 10, 1997, shall
control, subject to the terms of this paragraph.
8. DAMAGE TO PREMISES In case the Leased Premises are partially damaged or
destroyed by fire, windstorm, tornado or other casualty, FWT shall immediately
give notice to Delta, who shall, at its own expense, repair the damage and
restore the Leased Premises to substantially the same condition as existed
immediately prior to the damage. If the Leased Premises can not be repaired or
restored in 120 days, FWT shall have the right to terminate the Lease. Should
the damage be of such a nature as to render it impractical for FWT to conduct
normal business activities in the Leased Premises, then the rent shall be abated
in proportion to the inability of FWT to conduct such normal business activities
and for the period such inability exists. If the Premises are totally destroyed
or deemed by Delta to be unfit for restoration or reconstruction, or if Delta
should elect not to repair the damage and restore the premises, then this Lease
shall terminate and neither party shall have any further right, duty or
obligation hereunder and the rent due shall be paid to the time-of such damage
or casualty.
9. USE FWT agrees to use the Leased Premises for the sole and only purpose of
seam-welding and prepping poles and further agrees not to use the Leased
Premises for the purpose of conducting an illegal or unlawful business.
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LEASE AGREEMENT
10. ASSIGNMENT, SUBLETTING FWT shall not assign this Lease or sublease the
Leased Premises or any part thereof without the written consent of Delta. No
subletting or assignment will release FWT from any obligations under this
Lease.
11. LAWS AND GOVERNMENTAL REGULATIONS FWT shall promptly comply with all of
the ordinances and laws applicable to the Leased Premises and the business being
conducted thereon and all orders and requirements imposed by the Board of
Health, Sanitation and Police Departments for the correction, prevention and
abatement of nuisances in or upon or connected with said premises during the
term of this Lease, all at FWT's expense.
12. SIGNS Delta agrees to place a FWT logo on a sign (approximately 4' by
8') near the entrance to FWT's leased facility as well as paint a FWT logo
(approximately 15' by 25') on the top, northwest corner of the FWT-leased
building.
13. PARKING Delta shall provide parking for eight (8) to ten (10) FWT
employees at no charge.
14. DEFAULT In case of default in any of the covenants herein and the
continuance thereof for a period of at least thirty (30) days after receipt by
FWT of written notice of such default from Delta, then Delta may enforce the
performance of this Lease in any mode provided by law. This Lease may be
forfeited at Delta's discretion if a default continues for a period of thirty
(30) days after written notice by Delta to FWT of such default and its intention
to declare the lease forfeited. Unless FWT completely removes or cures said
default, this Lease shall cease and come to an end as if that were the day
originally fixed herein for the expiration of this Lease. Delta shall have alien
right as security for the rent aforesaid upon all the goods, wares, chattels,
implements, fixtures, furniture, tools and other personal property which are or
may be put on the Leased Premises.
15. BANKRUPTCY In the event that the FWT shall become bankrupt or shall make a
voluntary assignment for the benefit of creditors, or in the event that a
receiver of FWT shall be appointed, then, at the option of Delta and upon twenty
(20) days notice to FWT of the exercise of such option, this Lease shall
terminate.
16. CONDEMNATION If, during the term of this Lease, there is a taking of all
the Leased Premises, or so large a part thereof that the remainder is rendered
unsuitable for continued operation of FWT's business or cannot be practicably
and economically restored to operating condition, then this Lease shall
terminate.
If a lesser part of the Leased Premises than described in the preceding
paragraph should be so taken, then the rental hereunder shall be reduced in the
same proportion that the Leased Premises are taken. This provision shall be
also applicable to any conveyance in lieu of condemnation proceeding.
17. INSPECTION OF PREMISES Delta shall have the right to enter upon the Leased
Premises at all reasonable hours for the purpose of inspecting same.
18. HOLDING OVER In the event FWT remains in possession of the Leased Premises
after the expiration or termination of this Lease and without the execution of a
new lease, FWT shall be deemed to be occupying said premises as a tenant from
month-to-month at a rate equal to 150% of the last monthly rental amount paid
hereunder. All other provisions of this Lease shall remain in effect.
19. MORTGAGES Delta reserves the right to subordinate this Lease at all times to
the lien of any mortgage or mortgages upon Delta's interest in the premises, and
upon the lands of which the premises are a part, or upon any building hereafter
placed upon the lands of which the premises form a part. Upon demand by Delta,
FWT shall execute and deliver such further instruments subordinating this Lease
in the event of conveyance in lieu of foreclosure, as long as FWT shall not be
in default under the terms of this Lease.
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LEASE AGREEMENT
20. RECORDING OF LEASE This Lease shall not be filed for record. If
recording of the pertinent provisions is desired by either party, the parties
will execute a memorandum of lease for such purposes which in no event shall
exceed one page (8 1/2 inches by 14 inches), including acknowledgments.
21. LIEN FOR RENT Notwithstanding any provision herein to the contrary, Delta
shall have at all times the right to distrain for rent due and shall have a
valid first lien right upon all personal property of FWT placed in or upon the
Leased Premises, whether such personal property is exempt by law or not, as
security for the payment of the rent herein reserved.
22. WAIVER OF BREACH Any assent or waiver expressed or implied by Delta to any
breach by FWT or any condition herein contained, shall operate as assent or
waiver only in that specific instance and shall not be construed as an assent or
waiver of any such covenant or condition generally or of any subsequent breach
of the covenants and conditions hereof.
23. RENEWAL Terms and conditions for the renewal period will be negotiated
at the end of the third year of the Initial Lease Period. If at the end of the
Initial Lease Period, FWT is not in default of any of the terms and conditions
of this Lease, the Lease shall be renewed with the previously negotiated terms
for the renewal period. Delta and FWT will execute a lease extension for this
renewal period.
After the Initial Lease Term, the lease rate will be set at a mutually
agreeable market rate for comparable space, equipment and terms but in no case
shall the new lease rate exceed 80% of the current lease rate unless capital
improvements are made or more equipment is added at the request of FWT. Any new
capital improvements will be amortized over the new lease period.
24. HEIRS AND ASSIGNS The agreements, covenants, terms and conditions
contained in this Lease shall be binding on the heirs, devises, successors and
assigns of all parties hereto.
25. PLACE OF NOTICE Any notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered, whether actually received
or not, when deposited in the United States mail, postage prepaid, certified
mail, return receipt requested, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
heretofore specified by written notice delivered in accordance herewith.
DELTA STEEL, INC. FWT, Inc.
5599 San Felipe, Suite 600 P.O. Box 8597
Houston, TX 77056 Fort Worth, TX 76124
ATTN: V. Thomas Rudd
EXECUTED on the day and year first above written.
TENANT
DELTA STEEL, INC. FWT, Inc.
BY: /s/ R. A. EMBRY BY: /s/ T. W. MOORE
---------------------------- ----------------------
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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made this 14th day of
November, 1997, by and between FWT, Inc. (the "Company"), and Douglas A.
Standley (the "Executive").
PRELIMINARY STATEMENTS
A. On and subject to the terms and conditions herein provided,
the Company desires to retain the services of the Executive in the capacities
and with the responsibilities and the titles set forth herein in order to
ensure the attention and dedication to the Company of the Executive as the
Company's Chief Operations Officer and President-Tower and Monopole Division,
all of which the Company's Board of Directors (the "Board") believes will be in
the best interests of the Company and its stockholders.
B. The Executive desires to commit himself to so serve the
Company.
C. In order to effect the foregoing, the Company and the
Executive wish to enter into an employment agreement on the terms and
conditions set forth herein.
Accordingly, in consideration of these preliminary statements and the
respective covenants and agreements of the parties herein contained, and for
other good, valid and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
STATEMENT OF AGREEMENT
1. Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment on the terms and
conditions set forth herein.
2. Term. The employment of the Executive by the Company shall
commence on the date hereof and end on December 31, 2000 (the "Term") unless
earlier terminated as provided herein.
3. Positions and Duties. The Executive shall serve as the Chief
Operations Officer and President-Tower and Monopole Division of the Company and
shall have such additional positions, if any, from time to time as may be
assigned to the Executive by the Board. The Executive shall report and be
responsible to the Board of the Company. The Executive shall devote
substantially all his working time and efforts to the business and affairs of
the Company.
4. Place of Performance. The Company maintains its principal
office in Fort Worth, Texas, where Executive shall fulfill his responsibilities
hereunder except for required travel in the course of the Company's business.
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<PAGE> 2
5. Compensation and Related Matters.
(a) Salary. During the term of this Agreement, the Company shall pay
to the Executive an annual base salary of Two Hundred Fifty Thousand
Dollars ($250,000) ("Base Salary"), such Base Salary to be payable in
accordance with the Company's ordinary payroll practices.
(b) Bonus. In addition to his Base Salary, the Executive shall be
entitled to receive a bonus ("Bonus") computed and payable with respect to
each fiscal year ending December 31 (a "Calculation Period") commencing
with the Calculation Period ending December 31, 1998, based on the ratio of
the Company's actual EBITDA (as defined below) for such Calculation Period
to the Targeted EBITDA (as defined below) for such Calculation Period in
accordance with the following:
(i) if Company's actual EBITDA is greater than or equal to
seventy-five percent (75%), but less than one hundred percent
(100%) of Targeted EBITDA for any Calculation Period, the
Executive's Bonus for such Calculation Period shall be a
percentage of Executive's Base Salary determined in accordance
with the following formula:
A=50+(2x(B-75%))
(ii) if Company's actual EBITDA is greater than or equal to one
hundred percent (100%), but less than one hundred ten percent
(110%) of Targeted EBITDA for any Calculation Period, the
Executive's Bonus for such Calculation Period shall be a
percentage of Executive's Base Salary determined in accordance
with the following formula:
A=100+(B-100%)
(iii) if Company's actual EBITDA is greater than or equal to one
hundred ten percent (110%), but less than one hundred twenty
five percent (125%) of Targeted EBITDA for any Calculation
Period, the Executive's Bonus for such Calculation Period shall
be a percentage of Executive's Base Salary determined in
accordance with the following formula:
A=110+(1.8333x(B-110%))
(iv) if Company's actual EBITDA is greater than one hundred twenty
five percent (125%) of Targeted EBITDA for any calculation
period, the Bonus shall be a percentage of Executive's Base
Salary determined in accordance with the following formula:
A=137.5+(B-125%)
As used in each formula set forth in clauses (i) through (iv) above,
"A" equals the percentage of the Executive's Base Salary which is the
amount of the
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<PAGE> 3
Bonus and "B" equals the percentage of Targeted EBITDA actually
achieved by the Company for such Calculation Period.
The Bonus shall be due and payable as soon as practicable following
delivery of the Company's financial statements for the Calculation Period
for which the Bonus is payable, but in no event later than sixty (60) days
following the end of the Calculation Period for which the Bonus is payable.
Any Bonus to which Executive is entitled under this Agreement shall be
payable on the date specified in this paragraph even though the Term of
Executive's employment with the Company may terminate prior to the date
such Bonus is payable hereunder.
As used in this Section 6(b), Targeted EBITDA shall mean with respect to
each Calculation Period, an amount determined by a majority vote of the
Compensation Committee of the Board of Directors of the Company which will
consist of Lorenzo Bettino, Edward W. Scott and Roy J. Moore; provided,
however, in no event shall the Targeted EBITDA for any Calculation Period
exceed the EBITDA target for the same Calculation Period established
pursuant to the terms of the Financial Advisory Agreement between the
Company and Baker Capital Corp. As used in this Section 5, EBITDA shall
mean the consolidated net income for such Calculation Period which would be
reflected on a consolidated income statement of the Company for such
Calculation Period prepared in accordance with generally accepted
accounting principles, (A) plus, the sum of, but without duplication and
only to the extent deducted in determining consolidated net income for such
period, (1) all income tax expense, (2) all interest expense (including
imputed interest with respect to capital leases), (3) all amortization
expense, (4) all depreciation expense, (5) all financial advisory fees,
management fees, consulting fees, bonuses and similar fees and amounts paid
or payable by the Company and its Subsidiaries with respect to such
Calculation Period (including without limitation all of the foregoing
payable to Baker Communications Fund, L.P.), (6) other noncash items
reducing consolidated net income and (7) any items of extraordinary loss,
and (B) minus any items of extraordinary gain.
(c) Vehicle Allowance. During the term of Executive's
employment hereunder, Executive shall receive from the Company an
automobile allowance in the amount of $500.00 per month.
(d) Expenses. During the term of the Executive's employment
hereunder, the Company shall upon submission of reasonable
documentation of such expense incurrence in accordance with the
standard policies and procedures established by the Company,
reimburse the Executive for all reasonable expenses incurred by the
Executive on the Company's behalf.
(e) Other Benefits. During the term of the Executive's
employment hereunder, the Executive shall be entitled to participate in
all of the Executive benefit plans available to the most senior
executive officers of the Company (including, without limitation, the
Company's health insurance, life insurance, dental insurance, long-term
disability insurance, 401(k) and cafeteria plans, if any.
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<PAGE> 4
(f) Vacations. The Executive shall be entitled to three (3) weeks of
vacation in each calendar year. In addition, the Executive shall also be
entitled to all paid holidays given by the Company to its senior
executives.
(g) Services Furnished. The Company shall furnish the Executive with
office space, secretarial and support staff assistance and such other
facilities, equipment, services and resources as shall be reasonably
required for the optimal performance of his duties hereunder.
(h) SARS. Concurrent with the execution of this Agreement, the
Company will enter into a Stock Appreciation Rights Agreement with the
Executive, in substantially the form of Exhibit A hereto.
(i) Relocation Costs. The Company shall pay the reasonable relocation
costs of Executive.
6. Termination. Prior to the expiration of the Term, the Executive's
employment hereunder may be terminated under the following circumstances:
(a) Death. The Executive's death.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness which incapacity cannot be reasonably
accommodated, the Executive shall have been absent from his duties
hereunder on a full-time basis for an entire period of six (6) consecutive
months, and within thirty (30) days after written notice of termination is
given (which notice may be given before or after the end of such six-month
period) Executive shall not have returned to the performance of his duties
hereunder on a full time basis.
(c) Cause. The occurrence of any act constituting "Cause." For
purposes of this Agreement, "Cause" means (i) commission by Executive of a
felony, (ii) embezzlement or fraudulent conduct by Executive, willful or
wanton, and gross negligence of Executive in the performance of his duties
to the Company, (iv) failure or refusal by Executive to comply in all
material respects with a lawful and reasonable directive of the Board, or
(v) failure of Executive to perform his duties in a manner reasonably
satisfactory to the Board.
(d) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive shall be communicated by
written Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated.
(e) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if the
Executive's employment is terminated pursuant to subsection (b) hereof
(relating to disability), thirty (30) days
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<PAGE> 5
after Notice of Termination is given (provided that the Executive
shall not have returned to the performance of his duties on a
full-time basis during such thirty (30)-day period), (iii) if the
Executive's employment is terminated pursuant to subsection (c) hereof
(relating to Cause), the date specified in the Notice of Termination,
and (iv) if the Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given.
7. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness,
which incapacity cannot be reasonably accommodated, the Executive shall
continue to receive all compensation and benefits provided for herein for
such period until his employment is terminated pursuant to Section 6(b)
hereof, and shall receive the Prorated Bonus (as herein defined) for the
portion of the Calculation Period during which his employment is terminated
occurring prior to termination. As used herein "Prorated Bonus" means for
any portion of a Calculation Period, the Bonus for such Calculation Period
multiplied by a fraction, the numerator of which is the number of days in
such portion of such Calculation Period and the denominator of which is
365.
(b) If the Executive's employment is terminated pursuant to Section
6(a) or 6(c) hereof then he shall receive no further compensation hereunder
after the Date of Termination, provided that Executive shall receive the
Prorated Bonus for the portion of the Calculation Period during which his
employment is terminated with respect to the portion of such Calculation
Period occurring prior to termination.
(c) If the Executive's employment is terminated for any other reason,
then he shall receive all compensation and benefits set forth in Section 5
hereof payable as provided herein for the remainder of the Term, including,
without limitation, all Bonus.
8. Non-competition, Non-disclosure.
(a) The Executive agrees that he will not engage in any Competitive
Activity (as defined below) during any period with respect to which he is
receiving payments or benefits of any kind or character from the Company
and for a period of two (2) years thereafter. For purposes of this Section,
"Competitive Activity" shall mean activity, without the written consent of
the Board, consisting of the Executive's participation in the management of
or as an executive of or advisor to any other business operation if such
operation (a "Competitive Operation") is then in material competition with
a principal business operation of the Company.
(b) While in the Company's employ, during any period with respect to
which Executive is receiving payments or benefits of any kind or character
from the Company and for a period of two (2) years after the termination of
any such payments or benefits, Executive agrees not to disclose to any
person not employed on a full-time basis by the Company or its affiliates,
or not engaged to render services to the Company or its affiliates, except
with the prior written consent of an officer authorized
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<PAGE> 6
to act in the matter by the Board, any proprietary and confidential
information obtained by him while in the employ of the Company, provided,
however, that this provision shall not preclude the Executive from the use
or disclosure of (i) information known generally to the public, (ii)
information which was rightfully in the Executive's possession prior to
the date hereof, (iii) information rightfully acquired from a third party
able to convey it lawfully, (iv) information not generally considered
confidential by persons engaged in the business conducted by the Company
or (v) information required by law or court order to be disclosed.
9. Director and Officer Indemnification and Insurance. At all times
during the term hereof, the Company shall indemnify the Executive to the
fullest extent permitted by applicable law and shall maintain reasonable and
customary directors and officers liability insurance coverage with a reputable
and creditworthy carrier in an amount equal to at least $10 million per
occurrence.
10. Notices. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
<TABLE>
<S> <C>
If to the Executive: Douglas A. Standley
11448 East Mission Lane
Scottsdale, Arizona 85259
If to the Company: FWT, Inc.
P.O. Box 8597
Forth Worth, Texas 76124
Attn: Roy J. Moore
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, NY 10022
Attn: Edward W. Scott
</TABLE>
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Prohibition on Assignment. Neither the Company nor Executive shall
assign, transfer or convey its rights or delegate its duties under this
Agreement. Any attempted assignment or delegation shall be void.
12. Modification and Amendments. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company's duly authorized
executive officer.
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<PAGE> 7
13. No Waiver. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
14. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
15. Validity. The invalidity or unenforceability of any provision or
provisions of this agreement shall not affect the validity or enforceability of
any other provision of this Agreement which shall remain in full force and
effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of any subject matter contained herein and
supersedes all prior severance or other agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, Executive or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
FWT, INC.
By: /s/ ROY J. MOORE
--------------------------------
Roy J. Moore, President
EXECUTIVE:
/s/ DOUGLAS A. STANDLEY
-----------------------------------
Douglas A. Standley
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<PAGE> 1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "AGREEMENT") is made this 12th day of
November, 1997, by and between FWT, Inc. (the "COMPANY"), and Roy J. Moore (the
"EXECUTIVE").
PRELIMINARY STATEMENTS
A. On and subject to the terms and conditions herein provided, the
Company desires to retain the services of the Executive in the capacities and
with the responsibilities and the titles set forth herein in order to ensure the
attention and dedication to the Company of the Executive as the Company's
President and Chief Executive Officer, all of which the Company's Board of
Directors (the "BOARD") believes will be in the best interests of the Company
and its stockholders.
B. The Executive desires to commit himself to so serve the Company.
C. In order to effect the foregoing, the Company and the Executive wish
to enter into an employment agreement on the terms and conditions set forth
herein.
Accordingly, in consideration of these preliminary statements and the
respective covenants and agreements of the parties herein contained, and for
other good, valid and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
STATEMENT OF AGREEMENT
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment on the terms and conditions set
forth herein.
2. Term. The employment of the Executive by the Company shall commence
on the date hereof and end on December 31, 2000 (the "TERM"), unless earlier
terminated as provided herein.
3. Positions and Duties. The Executive shall serve as the President and
Chief Executive Officer of the Company and shall have such additional positions,
if any, from time to time as may be assigned to the Executive by the Board. The
Executive shall report and be responsible to the Board of the Company. The
Executive shall devote substantially all his working time and efforts to the
business and affairs of the Company. At all times that Executive is employed as
the Chief
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<PAGE> 2
Executive Officer of the Company under this Agreement, Executive shall also hold
a seat on the Board, and the Company hereby agrees to use its best efforts to
cause its shareholders to vote all shares of voting capital stock of the Company
entitled to vote for directors of the Company to cause Executive to, at all such
times, hold such seat on the Board.
4. Place of Performance. The Company maintains its principal office in
Fort Worth, Texas where Executive shall fulfill his responsibilities hereunder
except for required travel in the course of the Company's business.
5. Compensation and Related Matters.
(a) Salary. During the term of this Agreement, the Company shall pay
to the Executive an annual base salary of Two Hundred Thousand Dollars
($200,000) ("BASE SALARY"), such Base Salary to be payable in
accordance with the Company's ordinary payroll practices.
(b) Bonus. In addition to his Base Salary, the Executive shall be
entitled to receive a bonus ("Bonus") computed and payable with
respect to each fiscal year ending April 30 (a "Calculation Period")
commencing with the Calculation Period ending April 30, 1998, based on
the ratio of the Company's actual EBITDA (as defined below) for such
Calculation Period to the Targeted EBITDA (as defined below) for such
Calculation Period in accordance with the following:
(i) if Company's actual EBITDA is greater than or equal to
seventy-five percent (75%), but less than one hundred percent
(100%) of Targeted EBITDA for any Calculation Period, the
Executive's Bonus for such Calculation Period shall be a
percentage of Executive's Base Salary determined in
accordance with the following formula:
A=50 + (2 x (B-75%)
(ii) if Company's actual EBITDA is greater than or equal to one
hundred percent (100%), but less than one ten hundred percent
(110%) of Targeted EBITDA for any Calculation Period, the
Executive's Bonus for such Calculation Period shall be a
percentage of Executive's Base Salary determined in
accordance with the following formula:
A=100 + (B-100%)
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<PAGE> 3
(iii) if Company's actual EBITDA is greater than or equal to one
hundred ten percent (110%), but less than one hundred twenty
five percent (125%) of Targeted EBITDA for any Calculation
Period, the Executive's Bonus for such Calculation Period
shall be a percentage of Executive's Base Salary determined
in accordance with the following formula:
A=110+(1.8333 x (B-110%)
(iv) if Company's actual EBITDA is greater than one hundred twenty
five percent (125%) of Targeted EBITDA for any calculation
period, the Bonus shall be a percentage of Executive's Base
Salary determined in accordance with the following formula:
A=137.5 + (B-125%)
As used in each formula set forth in clauses (i) through (iv)
above, "A" equals the percentage of the Executive's Base Salary
which is the amount of the Bonus and "B" equals the percentage of
Targeted EBITDA actually achieved by the Company for such
Calculation Period.
The Bonus shall be due and payable as soon as practicable following
delivery of the Company's financial statements for the Calculation
Period for which the Bonus is payable, but in no event later than sixty
(60) days following the end of the Calculation Period for which the
Bonus is payable. Any Bonus to which Executive is entitled under this
Agreement shall be payable on the date specified in this paragraph even
through the Term or Executive's employment with the Company may
terminate prior to the date such Bonus is payable hereunder.
As used in this Section 6(b), Targeted EBITDA shall mean (i) with
respect to the Calculation Period ending April 30, 1998, $21,700,000,
and (ii) with respect to each Calculation Period ending thereafter, an
amount determined by a majority vote of the Compensation Committee of
the Board of Directors of the Company which will consist of Lorenzo
Bettino, Edward W. Scott and Roy J. Moore; provided, however, in no
event shall the Targeted EBITDA for any Calculation Period exceed the
EBITDA target for the same Calculation Period established pursuant to
the terms of the Financial Advisory Agreement between the Company and
Baker Capital Corp. As used in this Section 5, EBITDA shall mean the
consolidated net income for such Calculation Period which would be
reflected on a consolidated income statement of the Company for such
Calculation Period prepared in accordance with generally accepted
accounting principles, (A) plus, the sum of, but without duplication
and only to the extent deducted in determining consolidated net income
for such period, (1) all income tax expense, (2) all interest expense
(including imputed interest with respect to capital leases), (3) all
amortization expense, (4) all depreciation expense, (5) all financial
advisory fees, management fees, consulting fees, bonuses and similar
fees and amounts paid or payable by
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the Company and its Subsidiaries with respect to such Calculation
Period (including without limitation all of the foregoing payable to
Baker Communications Fund, L.P.), (6) other non-cash items reducing
consolidated net income and (7) any items of extraordinary loss, and
(B) minus, any items of extraordinary gain.
(c) Vehicle Allowance. During the term of Executive's
employment hereunder, Executive shall receive from the Company an
automobile allowance in the amount of $700.00 per month.
(d) Expenses. During the term of the Executive's employment
hereunder, the Company shall, upon submission of reasonable
documentation of such expense incurrence in accordance with the
standard policies and procedures established by the Company, reimburse
the Executive for all reasonable expenses incurred by the Executive on
the Company's behalf.
(e) Other Benefits. During the term of the Executive's
employment hereunder, the Executive shall be entitled to participate in
all of the Executive benefit plans and arrangements available to the
most senior executive officers of the Company (including, without
limitation, the Company's health insurance, life insurance, dental
insurance, long-term disability insurance, 401(k) and cafeteria plans,
if any, payment of all country club dues at Woodhaven Country Club (or
such other country club selected by Executive). All of such benefits
shall be provided in accordance with the past practices and policies of
the Company in effect with respect to Executive prior to the date of
this Agreement. All such benefits which are not provided to other
executive officers of the Company generally consist of payment of
country club dues, payment of certain life insurance premiums with
respect to policies owned by the Executive or his family members and
certain health and long term disability insurance benefits.
(f) Vacations. The Executive shall be entitled to four weeks
of vacation in each calendar year. In addition the Executive shall also
be entitled to all paid holidays given by the Company to its senior
executives.
(g) Services Furnished. The Company shall furnish the
Executive with office space, secretarial and support staff assistance
and such other facilities, equipment, services and resources as shall
be reasonably required for the optimal performance of his duties
hereunder.
(h) SARS. Concurrent with the execution of this Agreement, the
Company will enter into a Stock Appreciation Rights Agreement with the
Employee, in substantially the form of Exhibit A hereto.
6. Termination. Prior to the expiration of the Term, the Executive's
employment hereunder may be terminated under the following circumstances:
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(a) Death. The Executive's death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness which incapacity cannot be reasonably
accommodated, the Executive shall have been absent from his duties
hereunder on a full-time basis for an entire period of six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given (which notice may be given before or after the end
of such six-month period) Executive shall not have returned to the
performance of his duties hereunder on a full time basis.
(c) Cause. The occurrence of any act constituting "CAUSE." For
purposes of this Agreement, "CAUSE" means (i) commission by Executive
of a felony, (ii) embezzlement or fraudulent conduct by Executive,
(iii) willful or wanton, and gross negligence of Executive in the
performance of his duties to the Company, or (iv) failure or refusal by
Executive to comply in all material respects, within a period of 30
days after notice to Executive, with a lawful and reasonable directive
of the Board.
(d) Termination by the Executive.
(i) The Executive may terminate his employment
hereunder (A) for Good Reason (as defined below) or (B) if his
health should become impaired to an extent that makes his
continued performance of his duties hereunder hazardous to his
physical or mental health despite reasonable accommodation
therefor, provided that the Executive shall have furnished the
Company with a written statement from a qualified physician to
such effect and, provided further that, at the Company's
request, the Executive shall submit to an examination by a
physician or other health professional selected by the Company
and such physician or other health professional shall have
concurred in the conclusion of the Executive's physician.
(ii) For purposes of this Agreement, "GOOD REASON"
shall mean, without the Executive's consent, of any of the
following:
(A) a change in Executive's title;
(B) a material reduction in the nature or status
of the Executive's responsibilities;
(C) the relocation of the Company's principal
executive offices to any place other than
Tarrant County, Texas, or the Company's
requiring the Executive to perform his
duties other than in compliance with Section
4 hereof;
(D) (i) FWT Acquisition, Inc. ceases, for any reason,
to hold at least seventy percent (70%) of the
issued and outstanding capital stock of
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the Company of every class on a fully diluted
basis, (ii) the sale, assignment, transfer or
other disposition by the Company and its
subsidiaries of substantially all of their assets
considered as a whole, (iii) a merger or
consolidation involving the Company in which the
Company is not the surviving entity, (iv) Baker
Communications Fund, L.P. or any affiliate of
Baker Communications Fund, L.P. shall cease, for
any reason to hold at least seventy percent (70%)
of the outstanding capital stock of FWT
Acquisition, Inc. of every class on a fully
diluted basis, or (v) a merger or consolidation
involving FWT Acquisition, Inc. in any
transaction in which FWT Acquisition, Inc. is not
the surviving entity.
(E) any failure by the Company to comply with any
material provision of this Agreement.
(e) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a written notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(f) "DATE OF TERMINATION" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if
the Executive's employment is terminated pursuant to subsection (b)
hereof (relating to disability), thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during
such thirty (30)-day period), (iii) if the Executive's employment is
terminated pursuant to subsection (c) hereof (relating to Cause), the
date specified in the Notice of Termination, and (iv) if the
Executive's employment is terminated for any other reason, the date on
which a Notice of Termination is given.
7. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, which incapacity cannot be
reasonably accommodated, the Executive shall continue to
receive all compensation and benefits provided for herein for
such period until his employment is terminated pursuant to
Section 6(b) hereof, and shall receive the Prorated Bonus (as
herein defined) for the portion of the Calculation Period
during which his employment is terminated occurring prior to
termination. As used herein "PRORATED BONUS" means for any
portion of a Calculation Period, the Bonus for such
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Calculation Period multiplied by a fraction, the numerator of
which is the number of days in such portion of such
Calculation Period and the denominator of which is 365.
(b) If the Executive's employment is terminated
pursuant to Section 6(a) or 6(c) hereof then he shall receive
no further compensation hereunder after the Date of
Termination; provided, that Executive shall receive the
Prorated Bonus for the portion of the Calculation Period
during which his employment is terminated with respect to the
portion of such Calculation Period occurring prior to
termination.
(c) If the Executive's employment is terminated for
any other reason (or such other country club selected by
Executive), then he shall receive all compensation and
benefits set forth in Section 5 hereof payable as provided
herein for the remainder of the Term, including, without
limitation, all Bonus.
(d) If the Executive's employment is terminated
hereunder for any reason or if the Executive terminates his
employment for Good Reason, the Company will cause, at the
Company's sole expense, a corporate membership to Woodhaven
Country Club to be issued in the name of the Executive.
8. Noncompetition; Nondisclosure.
(a) The Executive agrees that he will not engage in
any Competitive Activity (as defined below) during any period
with respect to which he is receiving payments or benefits of
any kind or character from the Company. For purposes of this
Section, "COMPETITIVE ACTIVITY" shall mean activity, without
the written consent of the Board, consisting of the
Executive's participation in the management of or as an
Executive of or advisor to any other business operation if
such operation (a "COMPETITIVE OPERATION") is then in material
competition with a principal business operation of the
Company.
(b) The Executive agrees not to disclose, while in
the Company's employ or during any period with respect to
which he is receiving payments or benefits of any kind or
character from the Company to any person not employed on a
full-time basis by the Company or its affiliates, or not
engaged to render services to the Company or its affiliates,
except with the prior written consent of an officer authorized
to act in the matter by the Board, any proprietary and
confidential information obtained by him while in the employ
of the Company, provided, however, that this provision shall
not preclude the Executive from the use or disclosure of (i)
information known generally to the public, (ii) information
which was rightfully in the Executive's possession prior to
the date hereof, (iii) information rightfully acquired from a
third party able to convey it lawfully, (iv) information not
generally considered confidential by persons engaged in the
business conducted by the Company or (v) information required
by law or court order to be disclosed.
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(c) In the event Executive is terminated without
Cause or terminates his employment for Good Reason, Executive
may, from and after such date of Termination, elect to no
longer receive payment of compensation or benefits under this
Agreement, in which event Executive shall be released from his
obligations under this Section 8.
9. Director and Officer Indemnification and Insurance. At all
times during the term hereof, the Company shall indemnify the Executive to the
fullest extent permitted by applicable law and shall maintain reasonable and
customary directors and officers liability insurance coverage with a reputable
and creditworthy carrier in an amount equal to at least $10 million per
occurrence.
10. Notices. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Roy J. Moore
3508 Orchid Court
Arlington, Texas 76016
If to the Company: FWT, Inc.
P.O. Box 8597
Ft. Worth, Texas 76124
Attn: Roy J. Moore and Edward W. Scott
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, NY 10022
Attn: Edward W. Scott
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Prohibition on Assignment. Neither the Company nor Executive shall
assign, transfer or convey its rights or delegate its duties under this
Agreement. Any attempted assignment or delegation shall be void.
12. Modification and Amendments. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company's duly authorized
executive officer.
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13. No Waiver. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
14. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
15. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of any subject matter contained herein and
supersedes all prior severance or other agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, Executive or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and cancelled.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EXECUTIVE:
-------------------------------------------
Roy J. Moore
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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "AGREEMENT") is made this 12th day of
November, 1997, by and between FWT, Inc. (the "COMPANY"), and Thomas F. "Fred"
Moore (the "EXECUTIVE").
PRELIMINARY STATEMENTS
A. On and subject to the terms and conditions herein provided, the
Company desires to retain the services of the Executive in the capacities and
with the responsibilities and the titles set forth herein in order to ensure the
attention and dedication to the Company of the Executive as the Company's Vice
President, all of which the Company's Board of Directors (the "BOARD") believes
will be in the best interests of the Company and its stockholders.
B. The Executive desires to commit himself to so serve the Company.
C. In order to effect the foregoing, the Company and the Executive wish
to enter into an employment agreement on the terms and conditions set forth
herein.
Accordingly, in consideration of these preliminary statements and the
respective covenants and agreements of the parties herein contained, and for
other good, valid and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
STATEMENT OF AGREEMENT
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment on the terms and conditions set
forth herein.
2. Term. The employment of the Executive by the Company shall commence
on the date hereof and end on December 31, 2000 (the "TERM"), unless earlier
terminated as provided herein.
3. Positions and Duties. The Executive shall serve as the Vice
President of the Company and shall have such additional positions, if any, from
time to time as may be assigned to the Executive by the Board. The Executive
shall report and be responsible to the Board of the Company. The Executive shall
devote substantially all his working time and efforts to the business and
affairs of the Company.
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4. Place of Performance. The Company maintains its principal office in
Fort Worth, Texas where Executive shall fulfill his responsibilities hereunder
except for required travel in the course of the Company's business.
5. Compensation and Related Matters.
(a) Salary. During the term of this Agreement, the Company shall pay
to the Executive an annual base salary of Two Hundred Thousand Dollars
($200,000) ("BASE SALARY"), such Base Salary to be payable in
accordance with the Company's ordinary payroll practices.
(b) Bonus. In addition to his Base Salary, the Executive shall
be entitled to receive a bonus ("Bonus") computed and payable with
respect to each fiscal year ending April 30 (a "Calculation Period")
commencing with the Calculation Period ending April 30, 1998, based on
the ratio of the Company's actual EBITDA (as defined below) for such
Calculation Period to the Targeted EBITDA (as defined below) for such
Calculation Period in accordance with the following:
(i) if Company's actual EBITDA is greater than or equal to
seventy-five percent (75%), but less than one hundred percent
(100%) of Targeted EBITDA for any Calculation Period, the
Executive's Bonus for such Calculation Period shall be a
percentage of Executive's Base Salary determined in
accordance with the following formula:
A=50 + (2 x (B-75%)
(ii) if Company's actual EBITDA is greater than or equal to one
hundred percent (100%), but less than one ten hundred percent
(110%) of Targeted EBITDA for any Calculation Period, the
Executive's Bonus for such Calculation Period shall be a
percentage of Executive's Base Salary determined in
accordance with the following formula:
A=100+ (B-100%)
(iii) if Company's actual EBITDA is greater than or equal to one
hundred ten percent (110%), but less than one hundred twenty
five percent (125%) of Targeted EBITDA for any Calculation
Period, the Executive's Bonus for such Calculation Period
shall be a percentage of Executive's Base Salary determined
in accordance with the following formula:
A=110+(1.8333 x (B-110%)
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(iv) if Company's actual EBITDA is greater than one hundred twenty
five percent (125%) of Targeted EBITDA for any calculation
period, the Bonus shall be a percentage of Executive's Base
Salary determined in accordance with the following formula:
A=137.5 + (B-125%)
As used in each formula set forth in clauses (i) through (iv) above,
"A" equals the percentage of the Executive's Base Salary which is
the amount of the Bonus and "B" equals the percentage of Targeted
EBITDA actually achieved by the Company for such Calculation Period.
The Bonus shall be due and payable as soon as practicable following
delivery of the Company's financial statements for the Calculation
Period for which the Bonus is payable, but in no event later than sixty
(60) days following the end of the Calculation Period for which the
Bonus is payable. Any Bonus to which Executive is entitled under this
Agreement shall be payable on the date specified in this paragraph even
through the Term or Executive's employment with the Company may
terminate prior to the date such Bonus is payable hereunder.
As used in this Section 6(b), Targeted EBITDA shall mean (i) with
respect to the Calculation Period ending April 30, 1998, $21,700,000,
and (ii) with respect to each Calculation Period ending thereafter, an
amount determined by a majority vote of the Compensation Committee of
the Board of Directors of the Company which will consist of Lorenzo
Bettino, Edward W. Scott and Roy J. Moore; provided, however, in no
event shall the Targeted EBITDA for any Calculation Period exceed the
EBITDA target for the same Calculation Period established pursuant to
the terms of the Financial Advisory Agreement between the Company and
Baker Capital Corp. As used in this Section 5, EBITDA shall mean the
consolidated net income for such Calculation Period which would be
reflected on a consolidated income statement of the Company for such
Calculation Period prepared in accordance with generally accepted
accounting principles, (A) plus, the sum of, but without duplication
and only to the extent deducted in determining consolidated net income
for such period, (1) all income tax expense, (2) all interest expense
(including imputed interest with respect to capital leases), (3) all
amortization expense, (4) all depreciation expense, (5) all financial
advisory fees, management fees, consulting fees, bonuses and similar
fees and amounts paid or payable by the Company and its Subsidiaries
with respect to such Calculation Period (including without limitation
all of the foregoing payable to Baker Communications Fund, L.P.), (6)
other non-cash items reducing consolidated net income and (7) any items
of extraordinary loss, and (B) minus, any items of extraordinary gain.
(c) Vehicle Allowance. During the term of Executive's employment
hereunder, Executive shall receive from the Company an automobile
allowance in the amount of $700.00 per month.
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(d) Expenses. During the term of the Executive's employment
hereunder, the Company shall, upon submission of reasonable
documentation of such expense incurrence in accordance with the
standard policies and procedures established by the Company, reimburse
the Executive for all reasonable expenses incurred by the Executive on
the Company's behalf.
(e) Other Benefits. During the term of the Executive's employment
hereunder, the Executive shall be entitled to participate in all of the
Executive benefit plans and arrangements available to the most senior
executive officers of the Company (including, without limitation, the
Company's health insurance, life insurance, dental insurance, long-term
disability insurance, 401(k) and cafeteria plans, if any, payment of
all country club dues at Woodhaven Country Club (or such other country
club selected by Executive). All of such benefits shall be provided in
accordance with the practices and policies of the Company in effect
with respect to Executive prior to the date of this Agreement. All such
benefits which are not provided to other executive officers of the
Company generally consist of payment of country club dues, payment of
certain life insurance premiums with respect to policies owned by the
Executive or his family members and certain health and long-term
disability insurance benefits.
(f) Vacations. The Executive shall be entitled to four weeks
of vacation in each calendar year. In addition the Executive shall also
be entitled to all paid holidays given by the Company to its senior
executives.
(g) Services Furnished. The Company shall furnish the Executive with
office space, secretarial and support staff assistance and such other
facilities, equipment, services and resources as shall be reasonably
required for the optimal performance of his duties hereunder.
6. Termination. Prior to the expiration of the Term, the Executive's
employment hereunder may be terminated under the following circumstances:
(a) Death. The Executive's death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness which incapacity cannot be reasonably
accommodated, the Executive shall have been absent from his duties
hereunder on a full-time basis for an entire period of six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given (which notice may be given before or after the end
of such six-month period) Executive shall not have returned to the
performance of his duties hereunder on a full time basis.
(c) Cause. The occurrence of any act constituting "CAUSE." For
purposes of this Agreement, "CAUSE" means (i) commission by Executive
of a felony, (ii) embezzlement or fraudulent conduct by Executive,
(iii) willful or wanton, and gross negligence of Executive in the
performance of his duties to the Company, or (iv) failure or refusal by
Executive to
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comply in all material respects, within a period of 30 days after
notice to Executive, with a lawful and reasonable directive of the
Board.
(d) Termination by the Executive.
(i) The Executive may terminate his employment
hereunder (A) for Good Reason (as defined below) or (B) if his
health should become impaired to an extent that makes his
continued performance of his duties hereunder hazardous to his
physical or mental health despite reasonable accommodation
therefor, provided that the Executive shall have furnished the
Company with a written statement from a qualified physician to
such effect and, provided further that, at the Company's
request, the Executive shall submit to an examination by a
physician or other health professional selected by the Company
and such physician or other health professional shall have
concurred in the conclusion of the Executive's physician.
(ii) For purposes of this Agreement, "GOOD REASON"
shall mean, without the Executive's consent, of any of the
following:
(A) a change in Executive's title;
(B) a material reduction in the nature or status
of the Executive's responsibilities;
(C) the relocation of the Company's principal
executive offices to any place other than
Tarrant County, Texas, or the Company's
requiring the Executive to perform his
duties other than in compliance with Section
4 hereof;
(D) (i) FWT Acquisition, Inc. ceases, for any
reason, to hold at least seventy percent
(70%) of the issued and outstanding capital
stock of the Company of every class on a
fully diluted basis, (ii) the sale,
assignment, transfer or other disposition by
the Company and its subsidiaries of
substantially all of their assets considered
as a whole, (iii) a merger or consolidation
involving the Company in which the Company
is not the surviving entity, (iv) Baker
Communications Fund, L.P. or any affiliate
of Baker Communications Fund, L.P. shall
cease, for any reason to hold at least
seventy percent (70%) of the outstanding
capital stock of FWT Acquisition, Inc. of
every class on a fully diluted basis, or (v)
a merger or consolidation involving FWT
Acquisition, Inc. in any transaction in
which FWT Acquisition, Inc. is not the
surviving entity.
(E) any failure by the Company to comply with
any material provision of this Agreement.
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(e) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a written notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(f) "DATE OF TERMINATION" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if
the Executive's employment is terminated pursuant to subsection (b)
hereof (relating to disability), thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during
such thirty (30)-day period), (iii) if the Executive's employment is
terminated pursuant to subsection (c) hereof (relating to Cause), the
date specified in the Notice of Termination, and (iv) if the
Executive's employment is terminated for any other reason, the date on
which a Notice of Termination is given.
7. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, which incapacity cannot be
reasonably accommodated, the Executive shall continue to
receive all compensation and benefits provided for herein for
such period until his employment is terminated pursuant to
Section 6(b) hereof, and shall receive the Prorated Bonus (as
herein defined) for the portion of the Calculation Period
during which his employment is terminated occurring prior to
termination. As used herein "PRORATED BONUS" means for any
portion of a Calculation Period, the Bonus for such
Calculation Period multiplied by a fraction, the numerator of
which is the number of days in such portion of such
Calculation Period and the denominator of which is 365.
(b) If the Executive's employment is terminated
pursuant to Section 6(a) or 6(c) hereof then he shall receive
no further compensation hereunder after the Date of
Termination; provided, that Executive shall receive the
Prorated Bonus for the portion of the Calculation Period
during which his employment is terminated with respect to the
portion of such Calculation Period occurring prior to
termination.
(c) If the Executive's employment is terminated for
any other reason or if the Executive terminates his employment
for Good Reason, then he shall receive all compensation and
benefits set forth in Section 5 hereof payable as provided
herein for the remainder of the Term, including, without
limitation, all Bonus.
(d) If the Executive's employment is terminated
hereunder for any reason or the Company will cause, at the
Company's sole expense, a corporate membership to Woodhaven
Country Club (or such other country club selected by
Executive) to be issued in the name of the Executive.
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8. Noncompetition; Nondisclosure.
(a) The Executive agrees that he will not engage in
any Competitive Activity (as defined below) during any period
with respect to which he is receiving payments or benefits of
any kind or character from the Company. For purposes of this
Section, "COMPETITIVE ACTIVITY" shall mean activity, without
the written consent of the Board, consisting of the
Executive's participation in the management of or as an
Executive of or advisor to any other business operation if
such operation (a "COMPETITIVE OPERATION") is then in material
competition with a principal business operation of the
Company.
(b) The Executive agrees not to disclose, while in
the Company's employ or during any period with respect to
which he is receiving payments or benefits of any kind or
character from the Company to any person not employed on a
full-time basis by the Company or its affiliates, or not
engaged to render services to the Company or its affiliates,
except with the prior written consent of an officer authorized
to act in the matter by the Board, any proprietary and
confidential information obtained by him while in the employ
of the Company, provided, however, that this provision shall
not preclude the Executive from the use or disclosure of (i)
information known generally to the public, (ii) information
which was rightfully in the Executive's possession prior to
the date hereof, (iii) information rightfully acquired from a
third party able to convey it lawfully, (iv) information not
generally considered confidential by persons engaged in the
business conducted by the Company or (v) information required
by law or court order to be disclosed.
(c) In the event Executive is terminated without
Cause or terminates his employment for Good Reason, Executive
may, from and after such date of Termination, elect to no
longer receive payment of compensation or benefits under this
Agreement, in which event Executive shall be released from his
obligations under this Section 8.
9. Director and Officer Indemnification and Insurance. At all
times during the term hereof, the Company shall indemnify the Executive to the
fullest extent permitted by applicable law and shall maintain reasonable and
customary directors and officers liability insurance coverage with a reputable
and creditworthy carrier in an amount equal to at least $10 million per
occurrence.
10. Notices. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Thomas F. "Fred" Moore
5820 Bay Club Drive
Arlington, Texas 76013
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<PAGE> 8
If to the Company: FWT, Inc.
P.O. Box 8597
Ft. Worth, Texas 76124
Attn: Roy J. Moore and Edward W. Scott
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, NY 10022
Attn: Edward W. Scott
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Prohibition on Assignment. Neither the Company nor Executive shall
assign, transfer or convey its rights or delegate its duties under this
Agreement. Any attempted assignment or delegation shall be void.
12. Modification and Amendments. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company's duly authorized
executive officer.
13. No Waiver. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
14. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
15. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of any subject matter contained herein and
supersedes all prior severance or other agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, Executive or representative of any party hereto; and
any
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<PAGE> 9
prior agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By:
-------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
EXECUTIVE:
-----------------------------------------------
Thomas F. "Fred" Moore
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<PAGE> 1
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "AGREEMENT") is made this 12th day of
November, 1997, by and between FWT, Inc. (the "COMPANY"), and Carl R. Moore (the
"EXECUTIVE").
PRELIMINARY STATEMENTS
A. On and subject to the terms and conditions herein provided, the
Company desires to retain the services of the Executive in the capacities and
with the responsibilities and the titles set forth herein in order to ensure the
attention and dedication to the Company of the Executive as the Company's Vice
President, all of which the Company's Board of Directors (the "BOARD") believes
will be in the best interests of the Company and its stockholders.
B. The Executive desires to commit himself to so serve the Company.
C. In order to effect the foregoing, the Company and the Executive wish
to enter into an employment agreement on the terms and conditions set forth
herein.
Accordingly, in consideration of these preliminary statements and the
respective covenants and agreements of the parties herein contained, and for
other good, valid and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
STATEMENT OF AGREEMENT
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment on the terms and conditions set
forth herein.
2. Term. The employment of the Executive by the Company shall commence
on the date hereof and end on December 31, 2000 (the "TERM"), unless earlier
terminated as provided herein.
3. Positions and Duties. The Executive shall serve as the Vice
President of the Company and shall have such additional positions, if any, from
time to time as may be assigned to the Executive by the Board. The Executive
shall report and be responsible to the Board of the Company. The Executive shall
devote substantially all his working time and efforts to the business and
affairs of the Company.
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4. Place of Performance. The Company maintains its principal
office in Fort Worth, Texas where Executive shall fulfill his responsibilities
hereunder except for required travel in the course of the Company's business.
5. Compensation and Related Matters.
(a) Salary. During the term of this Agreement, the Company
shall pay to the Executive an annual base salary of Two Hundred
Thousand Dollars ($200,000) ("BASE SALARY"), such Base Salary to be
payable in accordance with the Company's ordinary payroll practices.
(b) Bonus. In addition to his Base Salary, the Executive shall
be entitled to receive a bonus ("Bonus") computed and payable with
respect to each fiscal year ending April 30 (a "Calculation Period")
commencing with the Calculation Period ending April 30, 1998, based on
the ratio of the Company's actual EBITDA (as defined below) for such
Calculation Period to the Targeted EBITDA (as defined below) for such
Calculation Period in accordance with the following:
(i) if Company's actual EBITDA is greater than or equal
to seventy-five percent (75%), but less than one
hundred percent (100%) of Targeted EBITDA for any
Calculation Period, the Executive's Bonus for such
Calculation Period shall be a percentage of
Executive's Base Salary determined in accordance with
the following formula:
A=50 + (2 x (B-75%)
(ii) if Company's actual EBITDA is greater than or equal
to one hundred percent (100%), but less than one ten
hundred percent (110%) of Targeted EBITDA for any
Calculation Period, the Executive's Bonus for such
Calculation Period shall be a percentage of
Executive's Base Salary determined in accordance with
the following formula:
A=100+(B-100%)
(iii) if Company's actual EBITDA is greater than or equal
to one hundred ten percent (110%), but less than one
hundred twenty five percent (125%) of Targeted EBITDA
for any Calculation Period, the Executive's Bonus for
such Calculation Period shall be a percentage of
Executive's Base Salary determined in accordance with
the following formula:
A=110+(1.8333 x (B-110%)
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<PAGE> 3
(iv) if Company's actual EBITDA is greater than one
hundred twenty five percent (125%) of Targeted EBITDA
for any calculation period, the Bonus shall be a
percentage of Executive's Base Salary determined in
accordance with the following formula:
A=137.5 + (B-125%)
As used in each formula set forth in clauses (i) through (iv)
above, "A" equals the percentage of the Executive's Base
Salary which is the amount of the Bonus and "B" equals the
percentage of Targeted EBITDA actually achieved by the Company
for such Calculation Period.
The Bonus shall be due and payable as soon as practicable following
delivery of the Company's financial statements for the Calculation
Period for which the Bonus is payable, but in no event later than sixty
(60) days following the end of the Calculation Period for which the
Bonus is payable. Any Bonus to which Executive is entitled under this
Agreement shall be payable on the date specified in this paragraph even
through the Term or Executive's employment with the Company may
terminate prior to the date such Bonus is payable hereunder.
As used in this Section 6(b), Targeted EBITDA shall mean (i) with
respect to the Calculation Period ending April 30, 1998, $21,700,000,
and (ii) with respect to each Calculation Period ending thereafter, an
amount determined by a majority vote of the Compensation Committee of
the Board of Directors of the Company which will consist of Lorenzo
Bettino, Edward W. Scott and Roy J. Moore; provided, however, in no
event shall the Targeted EBITDA for any Calculation Period exceed the
EBITDA target for the same Calculation Period established pursuant to
the terms of the Financial Advisory Agreement between the Company and
Baker Capital Corp. As used in this Section 5, EBITDA shall mean the
consolidated net income for such Calculation Period which would be
reflected on a consolidated income statement of the Company for such
Calculation Period prepared in accordance with generally accepted
accounting principles, (A) plus, the sum of, but without duplication
and only to the extent deducted in determining consolidated net income
for such period, (1) all income tax expense, (2) all interest expense
(including imputed interest with respect to capital leases), (3) all
amortization expense, (4) all depreciation expense, (5) all financial
advisory fees, management fees, consulting fees, bonuses and similar
fees and amounts paid or payable by the Company and its Subsidiaries
with respect to such Calculation Period (including without limitation
all of the foregoing payable to Baker Communications Fund, L.P.), (6)
other non-cash items reducing consolidated net income and (7) any items
of extraordinary loss, and (B) minus, any items of extraordinary gain.
(c) Vehicle Allowance. During the term of Executive's
employment hereunder, Executive shall receive from the Company an
automobile allowance in the amount of $700.00 per month.
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<PAGE> 4
(d) Expenses. During the term of the Executive's employment
hereunder, the Company shall, upon submission of reasonable
documentation of such expense incurrence in accordance with the
standard policies and procedures established by the Company, reimburse
the Executive for all reasonable expenses incurred by the Executive on
the Company's behalf.
(e) Other Benefits. During the term of the Executive's
employment hereunder, the Executive shall be entitled to participate in
all of the Executive benefit plans and arrangements available to the
most senior executive officers of the Company (including, without
limitation, the Company's health insurance, life insurance, dental
insurance, long-term disability insurance, 401(k) and cafeteria plans,
if any, payment of all country club dues at Woodhaven Country Club (or
such other country club selected by Executive). All of such benefits
shall be provided in accordance with the practices and policies of the
Company in effect with respect to Executive prior to the date of this
Agreement. All such benefits which are not provided to other executive
officers of the Company generally consist of payment of country club
dues, payment of certain life insurance premiums with respect to
policies owned by the Executive or his family members and certain
health and long term disability insurance benefits.
(f) Vacations. The Executive shall be entitled to four weeks
of vacation in each calendar year. In addition the Executive shall also
be entitled to all paid holidays given by the Company to its senior
executives.
(g) Services Furnished. The Company shall furnish the
Executive with office space, secretarial and support staff assistance
and such other facilities, equipment, services and resources as shall
be reasonably required for the optimal performance of his duties
hereunder.
6. Termination. Prior to the expiration of the Term, the
Executive's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Executive's death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness which incapacity cannot be reasonably
accommodated, the Executive shall have been absent from his duties
hereunder on a full-time basis for an entire period of six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given (which notice may be given before or after the end
of such six-month period) Executive shall not have returned to the
performance of his duties hereunder on a full time basis.
(c) Cause. The occurrence of any act constituting "CAUSE." For
purposes of this Agreement, "CAUSE" means (i) commission by Executive
of a felony, (ii) embezzlement or fraudulent conduct by Executive,
(iii) willful or wanton, and gross negligence of Executive in the
performance of his duties to the Company, or (iv) failure or refusal by
Executive to
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<PAGE> 5
comply in all material respects, within a period of 30 days after
notice to Executive, with a lawful and reasonable directive of the
Board.
(d) Termination by the Executive.
(i) The Executive may terminate his employment
hereunder (A) for Good Reason (as defined below) or (B) if his
health should become impaired to an extent that makes his
continued performance of his duties hereunder hazardous to his
physical or mental health despite reasonable accommodation
therefor, provided that the Executive shall have furnished the
Company with a written statement from a qualified physician to
such effect and, provided further that, at the Company's
request, the Executive shall submit to an examination by a
physician or other health professional selected by the Company
and such physician or other health professional shall have
concurred in the conclusion of the Executive's physician.
(ii) For purposes of this Agreement, "GOOD REASON"
shall mean, without the Executive's consent, of any of the
following:
(A) a change in Executive's title;
(B) a material reduction in the nature or status
of the Executive's responsibilities;
(C) the relocation of the Company's principal
executive offices to any place other than
Tarrant County, Texas, or the Company's
requiring the Executive to perform his
duties other than in compliance with Section
4 hereof;
(D) (i) FWT Acquisition, Inc. ceases, for any
reason, to hold at least seventy percent
(70%) of the issued and outstanding capital
stock of the Company of every class on a
fully diluted basis, (ii) the sale,
assignment, transfer or other disposition by
the Company and its subsidiaries of
substantially all of their assets considered
as a whole, (iii) a merger or consolidation
involving the Company in which the Company
is not the surviving entity, (iv) Baker
Communications Fund, L.P. or any affiliate
of Baker Communications Fund, L.P. shall
cease, for any reason to hold at least
seventy percent (70%) of the outstanding
capital stock of FWT Acquisition, Inc. of
every class on a fully diluted basis, or (v)
a merger or consolidation involving FWT
Acquisition, Inc. in any transaction in
which FWT Acquisition, Inc. is not the
surviving entity.
(E) any failure by the Company to comply with
any material provision of this Agreement.
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<PAGE> 6
(e) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a written notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(f) "DATE OF TERMINATION" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if
the Executive's employment is terminated pursuant to subsection (b)
hereof (relating to disability), thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during
such thirty (30)-day period), (iii) if the Executive's employment is
terminated pursuant to subsection (c) hereof (relating to Cause), the
date specified in the Notice of Termination, and (iv) if the
Executive's employment is terminated for any other reason, the date on
which a Notice of Termination is given.
7. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, which incapacity cannot be
reasonably accommodated, the Executive shall continue to
receive all compensation and benefits provided for herein for
such period until his employment is terminated pursuant to
Section 6(b) hereof, and shall receive the Prorated Bonus (as
herein defined) for the portion of the Calculation Period
during which his employment is terminated occurring prior to
termination. As used herein "PRORATED BONUS" means for any
portion of a Calculation Period, the Bonus for such
Calculation Period multiplied by a fraction, the numerator of
which is the number of days in such portion of such
Calculation Period and the denominator of which is 365.
(b) If the Executive's employment is terminated
pursuant to Section 6(a) or 6(c) hereof then he shall receive
no further compensation hereunder after the Date of
Termination; provided, that Executive shall receive the
Prorated Bonus for the portion of the Calculation Period
during which his employment is terminated with respect to the
portion of such Calculation Period occurring prior to
termination.
(c) If the Executive's employment is terminated for
any other reason or if the Executive terminates his employment
for Good Reason, then he shall receive all compensation and
benefits set forth in Section 5 hereof payable as provided
herein for the remainder of the Term, including, without
limitation, all Bonus.
(d) If the Executive's employment is terminated
hereunder for any reason, the Company will cause, at the
Company's sole expense, a corporate membership to Woodhaven
Country Club (or such other country club selected by
Executive) to be issued in the name of the Executive.
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8. Noncompetition; Nondisclosure.
(a) The Executive agrees that he will not engage in
any Competitive Activity (as defined below) during any period
with respect to which he is receiving payments or benefits of
any kind or character from the Company. For purposes of this
Section, "COMPETITIVE ACTIVITY" shall mean activity, without
the written consent of the Board, consisting of the
Executive's participation in the management of or as an
Executive of or advisor to any other business operation if
such operation (a "COMPETITIVE OPERATION") is then in material
competition with a principal business operation of the
Company.
(b) The Executive agrees not to disclose, while in
the Company's employ or during any period with respect to
which he is receiving payments or benefits of any kind or
character from the Company to any person not employed on a
full-time basis by the Company or its affiliates, or not
engaged to render services to the Company or its affiliates,
except with the prior written consent of an officer authorized
to act in the matter by the Board, any proprietary and
confidential information obtained by him while in the employ
of the Company, provided, however, that this provision shall
not preclude the Executive from the use or disclosure of (i)
information known generally to the public, (ii) information
which was rightfully in the Executive's possession prior to
the date hereof, (iii) information rightfully acquired from a
third party able to convey it lawfully, (iv) information not
generally considered confidential by persons engaged in the
business conducted by the Company or (v) information required
by law or court order to be disclosed.
(c) In the event Executive is terminated without
Cause or terminates his employment for Good Reason, Executive
may, from and after such date of Termination, elect to no
longer receive payment of compensation or benefits under this
Agreement, in which event Executive shall be released from his
obligations under this Section 8.
9. Director and Officer Indemnification and Insurance. At all
times during the term hereof, the Company shall indemnify the Executive to the
fullest extent permitted by applicable law and shall maintain reasonable and
customary directors and officers liability insurance coverage with a reputable
and creditworthy carrier in an amount equal to at least $10 million per
occurrence.
10. Notices. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Carl R. Moore
4104 Flower Garden
Arlington, Texas 76016
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If to the Company: FWT, Inc.
P.O. Box 8597
Ft. Worth, Texas 76124
Attn: Roy J. Moore and Edward W. Scott
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, NY 10022
Attn: Edward W. Scott
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Prohibition on Assignment. Neither the Company nor Executive shall
assign, transfer or convey its rights or delegate its duties under this
Agreement. Any attempted assignment or delegation shall be void.
12. Modification and Amendments. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company's duly authorized
executive officer.
13. No Waiver. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
14. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
15. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of any subject matter contained herein and
supersedes all prior severance or other agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, Executive or representative of any party hereto; and
any
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prior agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By:
---------------------------------
Name:
------------------------------
Title:
------------------------------
EXECUTIVE:
------------------------------------
Carl R. Moore
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<PAGE> 1
EXHIBIT 10.10
SHAREHOLDERS' AGREEMENT
THIS AGREEMENT (the "AGREEMENT") is made as of the 12th day of November,
1997 by and among Roy J. Moore of Arlington, Texas ("ROY"); Thomas F. "Fred"
Moore of Arlington, Texas ("FRED"); Carl J. Moore of Arlington, Texas ("CARL")
(collectively, the "MOORES") and FWT Acquisition, Inc., a Delaware corporation
("PURCHASER"), for the purposes of Articles V and VI and Sections 2.1 and 2.2
only, Baker Communications Fund, L.P., a Delaware limited partnership,
("BAKER"), FWT, Inc., a Texas corporation (the "COMPANY"). The Moores and
Purchaser are sometimes referred to collectively herein as the "SHAREHOLDERS".
PRELIMINARY STATEMENTS
The parties desire to enter into this Agreement to govern certain
aspects of their relationship in respect of the matters set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement and for other good, valuable and binding
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties, the parties hereto intending to be legally bound hereby,
now agree as follows:
STATEMENT OF AGREEMENT
ARTICLE I.
SHAREHOLDINGS AND GOVERNANCE
1.1. Shareholdings. As of the date hereof and after giving effect to
certain redemption and repurchase transactions regarding the Company's
outstanding capital stock completed on the date hereof, the issued and
outstanding shares of capital stock of the Company (collectively, the "SHARES"
and individually, the "SHARE") are as set forth in Schedule 1.1 attached
hereto.
1.2. Board of Directors of the Company. The board of directors of the Company
(the "BOARD") shall be those individuals elected in accordance with applicable
law. The initial Board shall be as follows:
<PAGE> 2
John C. Baker
Edward W. Scott
Lorenzo Bettino
Roy J. Moore
For so long as either (i) Roy is Chief Executive Officer of the Company or (ii)
the Moores collectively own not less than five percent (5%) of the Shares (the
"INITIAL PERIOD"), Purchaser agrees to vote its shares in favor of the election
of Roy to the Board and to cause Roy to be appointed to the Board's
compensation committee. Notwithstanding the foregoing, in the event that Roy's
employment with the Company is terminated for "cause" under the employment
agreement of even date herewith, Purchaser shall no longer be required to vote
its shares in favor of the election of Roy to the Board or to cause his
appointment to the compensation committee.
1.3. Officers of the Company. The officers of the Company shall be those
individuals designated by the board of directors from time to time subject to
the terms of certain Employment Agreements between the Company and those
individuals designated below. The initial senior executive officers of the
Company shall include:
Roy J. Moore President and Chief Executive Officer
Carl J. Moore Vice President
Thomas F. "Fred" Moore Vice President
1.4. Supermajority Vote of Directors. During the Initial Period, the Company
shall not enter into any contract, agreement or arrangement with any
Shareholder or any Affiliate of any Shareholder, whether in the ordinary course
of business or otherwise (a "RELATED PARTY TRANSACTION"), without the unanimous
consent of the Board, which consent shall not be unreasonably withheld or
delayed provided that the proposed Related Party Transaction is no less
favorable to the Company than could be obtained from a comparable unrelated
third party. In the event that any Board member fails to vote in favor of any
Related Party Transaction presented to the Board, the reasons for such "no
vote" or abstention shall be stated for the meeting record in reasonable detail
and shall be duly recorded in the minutes of such meeting. Notwithstanding any
other provision of this Agreement, in no event shall any of the following (or
any amendment or restatement or substitution arrangement relating to any of the
following) be deemed a Related Party Transaction: (i) the payment by the
Company of any fees or expenses to be paid by the Company pursuant to the
express terms of a Stock Purchase and Redemption Agreement; (ii) reasonable
fees and compensation paid to and indemnity provided on behalf of officers,
directors, employees or consultants of the Company as determined in good faith
by the Board; (iii) the two million dollar ($2,000,000) financial advisory
services fee payable to Baker Capital Corp. ("Baker Capital") or its
Affiliates; (iv) the ongoing oversight and monitoring fees payable to Baker
Capital or its Affiliates contemplated by the Financial Advisory Services
Agreement of even date herewith; and (v) any indemnity or expense reimbursement
of Baker Capital and/or its Affiliates pursuant to any such agreement or
arrangement. For purposes hereof the term "AFFILIATE" with respect to a Person
means
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any other Person that directly or indirectly controls, is controlled by, or is
under common control with such Person. For the purposes of this definition,
control means the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
Contract, or otherwise. Control shall be presumed by an individual that is a
director or executive officer, a Person, or a Person that beneficially owns
more than 10% of any class of securities of such Person having general voting
rights. For greater certainty, during the period after the Closing and prior
to the expiration of the Initial Period, Purchaser and Baker Communications
Fund, L.P. shall be considered Affiliates of Company for so long as Purchaser
controls Company.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Shareholders and Baker. Each
Shareholder and Baker, severally but not jointly, hereby represents and
warrants to each other and to the Company that the following are true, correct
and complete, as of the date hereof:
(a) Capacity of Individual Shareholder. Each Shareholder that is an
individual possesses the requisite legal capacity and the right to execute,
deliver, and perform this Agreement and the relevant documents pertaining
hereto, to which such Shareholder is a party, without obtaining any approval or
giving any notice.
(b) Capacity of Corporate Shareholder. Purchaser is a corporation
duly incorporated, validly existing, and in good standing under the laws of the
State of Delaware, and is qualified to transact business as a foreign
corporation in each jurisdiction where such qualification is required.
(c) Capacity of Baker. Baker is a limited partnership duly organized,
validly existing under the laws of the State of Delaware, and is qualified to
transact business in each jurisdiction where such qualification is required.
(d) Power and Authority. Each Shareholder and Baker possesses the
power and authority to execute, deliver, and perform this Agreement, without
obtaining any approval or giving any notice, other than any approvals and other
consents which it has properly obtained prior to the execution hereof.
(e) Execution, Delivery, and Enforceability. Each of the
Shareholders and Baker has duly executed and delivered this Agreement and this
Agreement constitutes a valid, legal, and binding obligation of each,
enforceable against it in accordance with its terms, subject to any Law
Affecting Creditors' Rights, as defined in the Stock Purchase and Redemption
Agreement of even date herewith among the Shareholders and the Company (the
"Purchase and Redemption Agreement").
2.2. Company's Representations and Warranties. Company hereby represents and
warrants to the Shareholders that the following are true, correct, and
complete, as of the date hereof:
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<PAGE> 4
(a) Organization. Company is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Texas and
is qualified to transact business as a foreign corporation in each jurisdiction
where such qualification is required.
(b) Power and Authority. Company possesses the corporate power and
authority to execute, deliver, and perform this Agreement, without obtaining
any approval or giving any notice, other than the approval of the Board, which
it has properly obtained.
(c) Execution, Delivery, and Enforceability. Company has duly
authorized, executed, and delivered this Agreement, and this Agreement
constitutes a valid, legal, and binding obligation of Company, enforceable
against Company in accordance with its terms, subject to any Law Affecting
Creditors' Rights, as defined in the Purchase and Redemption Agreement.
(d) Consents. Company's execution, delivery, and performance of this
Agreement does not require Purchaser to obtain any approval or consent from any
person, make any filing with any person, or give any notice to any person,
other than any approvals and other consents which it has properly obtained
prior to the execution hereof.
ARTICLE III.
GENERAL MATTERS RELATING TO THE
HOLDING OF SHARES AND PERMITTED TRANSFERS
3.1. Restrictions on Pledges and Transfers. During the term of this
Agreement, none of the Shareholders shall sell, exchange, or otherwise
transfer, or in the case of the Moores, pledge (other than any pledge required
in connection with the consummation of the transactions contemplated by the
Purchase and Redemption Agreement) (collectively, a "TRANSFER") any Shares now
or hereafter held by such Shareholder except in accordance with this Agreement.
A purported Transfer of any Shares in violation of this Agreement shall not be
valid and the Company shall not register any such Transfer on the securities
register of the Company, nor shall any voting rights attaching to or relating
to such Shares be exercised, nor shall any purported exercise of such voting
rights be valid or effective, nor shall any dividend or distribution be paid or
made on such Shares.
3.2. Transfers by a Shareholder to a Related Party. A Shareholder (the
"TRANSFERRING SHAREHOLDER") may Transfer all or any of the Shares held by such
Shareholder to an Affiliate of such Shareholder (the "RELATED PARTY") provided
that:
(i) the Related Party is controlled by the Transferring Shareholder
or by the same person who controls the Transferring Shareholder;
and
(ii) the Related Party signs this Agreement and agrees to be bound by
the terms hereof, as if the Related Party were an original
signatory hereto.
3.3 Transfers to Members of Family Group. Any of the Moores may transfer all
or any of the Shares held by such Person to such Person's spouse and
descendants (whether natural or adopted) and to any trust created solely for
the benefit of such Person and/or such Person's spouse and/or
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<PAGE> 5
descendants (such Person's spouse and descendants and any such trust is
hereinafter referred to as such Person's "FAMILY GROUP"); provided that the
Family Group member to whom such Transfer is made signs this Agreement and
agrees to be bound by the terms hereof, as if such Family Group member were an
original signatory hereto. Any Family Group member to whom any such Transfer
is made shall be entitled to all rights and benefits under this Agreement that
were available to the transferring Shareholder.
3.4. Pledge of Shares by Moores. Any of Roy, Carl or Fred may mortgage,
hypothecate, pledge or grant a security interest in his Shares as security for
a bona fide loan from a financial institution reasonably acceptable by
unanimous vote to the Board (a "PERMITTED LENDER"); provided that, the
Permitted Lender agrees to be bound by the terms of this Agreement as fully as
if the Permitted Lender were an original signatory hereto.
3.5. Notation on Share Certificates. All share certificates representing
Shares shall have the following statement conspicuously noted thereon:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 or under any State
securities laws (the "Acts") and the securities may not be sold,
transferred or otherwise disposed of without registration under
the applicable Acts unless an exemption from registration is
available. By its acquisition of the securities represented
hereby, the holder agrees that it is acquiring such securities
for investment and not with a view to, or for sale in connection
with, the public distribution thereof. In addition, such shares
are subject to a Shareholders' Agreement dated the 12th of
November, 1997 between the parties thereto, as the same may be
amended from time to time, and such shares may not be dealt with
except in accordance with the provisions thereof.
Any certificates that may be issued in the future representing securities
issued by the Company which may be convertible into Shares or evidencing a
right to acquire Shares shall contain a statement substantially to the same
effect.
3.6. Rights of First Refusal. The Shareholders shall have the following
rights of first refusal:
(a) Moores to Give First Refusal Notice. If at any time any of the
Moores (a "SELLING SHAREHOLDER") has received and wishes to accept a bona fide
offer (the "OFFER") from a third party (the "OFFEROR") for all or part of its
Shares, it shall give notice thereof (the "FIRST REFUSAL NOTICE") to each of
the other Shareholders and the Company. The First Refusal Notice shall state
the number of Shares that the Selling Shareholder wishes to sell (the "OPTIONED
SHARES"), all material terms of the Offer, the name of the Offeror, and
certification from the Selling Shareholder affirming that the Offer is bona
fide and that the description thereof is true and correct, and that the Offeror
has stated that it will purchase the Optioned Shares if the rights of first
refusal herein described are not exercised.
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<PAGE> 6
(b) Moores May Give Notice of Acceptance. Each of the Moores other
than the Selling Shareholder (the "NON-SELLING MOORES") shall have the right
exercisable by notice (a "MOORE ACCEPTANCE NOTICE") given to the Selling
Shareholder, the Company and the Purchaser within twenty (20) days after
receipt of the First Refusal Notice, to agree that it will purchase its ratable
portion of the Optioned Shares, or such greater amount in the event that the
other Non-Selling Moore does not elect to purchase its full ratable portion. If
a Non-Selling Moore does not submit a Moore Acceptance Notice within the twenty
(20) day period set forth in this Section, such Non-Selling Moore shall be
deemed to have rejected the offer to purchase any portion of the Optioned
Shares.
(c) Purchaser May Next Give Notice of Acceptance. In the event that
the Non-Selling Moores, or either of them, do not elect to purchase all of the
Optioned Shares, then Purchaser shall have the right, exercisable by notice
(the "PURCHASER ACCEPTANCE NOTICE") given to the Selling Shareholder, the
Company and the Non-Selling Moores within ten (10) days after receipt or lapse
of the Moore Acceptance Notice, to agree that it will purchase all but not less
than all of the remaining Optioned Shares. If no Purchaser Acceptance Notice
is submitted within the ten (10) day period set forth in this Section,
Purchaser shall be deemed to have rejected the offer to purchase any Optioned
Shares.
(d) Failure to Elect to Purchase All Optioned Shares. If all of the
Optioned Shares have not been accepted by the Non-Selling Moores and/or the
Purchaser prior to delivery or lapse of the last notice of acceptance
contemplated hereby, then any Moore Acceptance Notice or Purchaser Acceptance
Notice shall be void and of no effect, and the Selling Shareholder shall be
entitled to complete the proposed sale at any time in the ninety (90) day
period commencing on the date of the First Refusal Notice, but only upon the
terms which are substantially identical to, and in any event are no less
favorable in any material respect to, the Selling Shareholder than those set
forth in the First Refusal Notice. If no such sale is completed in such ninety
(90) day period, the provisions hereof shall apply again to any proposed sale
of the Optioned Shares.
(e) Closing of Right of First Refusal Purchase. If any Non-Selling
Moore and/or Purchaser exercises the right to purchase Optioned Shares as
provided herein, the purchase of such Optioned Shares shall be completed within
the ninety (90) day period commencing on the date of delivery of the First
Refusal Notice.
3.7. Procedure for Disclosing Confidential Information to Prospective
Purchaser of Shares. Prior to a public offering of securities of the Company (a
"PUBLIC OFFERING"), if any Shareholder wishes to make a permitted Transfer of
any of its Shares, the Selling Shareholder may only provide information related
to the Company to the prospective Purchaser if the prospective purchaser has
executed, entered into and delivered to the Company a confidentiality agreement
reasonably acceptable to the Board (excluding the Selling Shareholder, if
applicable).
3.8. Governmental Approvals. Notwithstanding any other provision of this
Agreement, if the approval of any governmental authority is required with
respect to the transfer of Shares pursuant to the provisions of this Agreement,
then the parties to the transaction, and the Company whether or not it is a
party, shall reasonably collaborate in the diligent prosecution of any
requisite application.
6
<PAGE> 7
The Selling Shareholder shall be responsible for the costs of any such
application arising from the transfer of Shares.
ARTICLE IV.
PREEMPTIVE RIGHTS, TAGALONG RIGHTS, CARRY ALONG OBLIGATIONS AND
REGISTRATION RIGHTS
4.1. Preemptive Rights. In the event that during the Rights Period (as
defined in Section 4.2 hereof) the Company proposes to issue (an "ISSUANCE")
additional shares of its capital stock other than pursuant to a duly authorized
option plan, each of the Shareholders shall have the preemptive right (upon the
same conditions applicable in the Issuance) to acquire additional shares of
such securities so as to prevent dilution of its percentage ownership interest
immediately prior to such Issuance. The parties acknowledge that
notwithstanding the foregoing, in no event shall the Company, without the
written consent of Purchaser, issue additional shares of its capital stock if
the result thereof would be to reduce the ownership interest of Purchaser in
the Company to less than eighty percent (80%).
4.2. Tagalong Rights. Except as otherwise expressly provided herein and for
so long as the Moores collectively own not less than five percent (5%) of the
issued and outstanding shares of the Company (the "RIGHTS PERIOD"):
(a) Other than pursuant to a public offering of its securities by
Purchaser, Purchaser shall not transfer to any party that is not a Related
Party of the Purchaser (the "TAG ALONG TRANSFEREE"), any of its Shares, unless
the terms and conditions of such Transfer to the Tag Along Transferee shall
also include an offer to purchase from each of the Moores a ratable portion of
their Shares at the same price per Share and on the same terms as the offer
made by the Tag Along Transferee to the Purchaser (the "TAG ALONG RIGHT").
(b) Each of the Moores shall be entitled to sell to the Tag Along
Transferee the number of Shares held by such person equaling the number derived
as follows:
(X) times (A divided by B)
where X equals the number of Shares then owned by such person, A equals the
total number of Shares to be transferred by Purchaser to the Tag Along
Transferee and B equals the total number of Shares then owned by Purchaser.
(c) Purchaser shall notify the Moores not less than twenty (20) days
prior to the date of any proposed Transfer of Shares subject to the Tag Along
Right. Such notice (the "TAG ALONG NOTICE") shall set forth: (i) the name and
address of the Tag Along Transferee, (ii) the number of Shares proposed to be
transferred thereto, (iii) the date on which such Transfer is proposed to be
effected, and (iv) the proposed amount and form of consideration and all terms
and conditions of payment offered by such Tag Along Transferee ("TAG ALONG
TERMS"). The Tag Along Notice shall also contain a certification from an
officer of Purchaser that the description of the terms of such
7
<PAGE> 8
transfer set forth in such Tag Along Notice is accurate, that such Transfer is
bona fide and that Purchaser has informed the applicable Tag Along Transferee
of the Tag Along Right.
(d) In order to exercise its Tag Along Right, any of Roy, Fred or
Carl must send written notice to Purchaser and the Company (the "EXERCISE
NOTICE"), within fifteen (15) days following the receipt of the Tag Along
Notice. The Exercise Notice shall state the number of Shares that such person
wishes to transfer to the Tag Along Transferee subject to the maximum number of
Shares calculated pursuant hereto.
(e) Upon delivery of its Exercise Notice, such person shall be
obligated to sell to the Tag Along Transferee on the Tag Along Terms the number
of Shares set forth in the Exercise Notice; provided, however, that Purchaser
shall not consummate the sale of any of its Shares to the Tag Along Transferee
if the Tag Along Transferee does not purchase all of the Shares referenced in
the Tag Along Notice and in the Exercise Notices applicable thereto. If after
the expiration of the ten (10) day period referred to above none of the Moores
shall have sent an Exercise Notice, then Purchaser shall have the right for a
ninety (90) day period from the date of the Tag Along Notice to transfer the
number of Shares referenced in the Tag Along Notice to the Tag Along Transferee
on the Tag Along Terms without further notice to the Moores.
4.3. Carry-Along Obligations. If at any time during the Rights Period,
Shareholders holding, in the aggregate, at least 80% of the outstanding Shares
of the Company approve a proposed sale of all of the Shares of the Company, and
the Company has, or such Shareholders have, obtained a fairness opinion from a
reasonably acceptable independent investment banking firm or valuation firm of
national standing as to the value of the Company (the "FAIR VALUE"), and the
proposed sale is within the range of Fair Value as set forth in such fairness
opinion, then all of the Shareholders of the Company shall agree to sell and
shall sell their Shares pursuant to any offer to purchase all, but not less
than all, of the Shares of the Company during a period not more than ninety
(90) days after the date of such fairness opinion for an amount on a per Share
basis not less than the Fair Value of such Shares as determined by such firm.
4.4. Participation by Shareholders in Public Offering by the Company. Each of
the Moores and the Purchaser shall have the registration rights set forth in
the Registration Rights Agreement by and among the Moores, Purchaser and the
Company of even date herewith, as the same may be amended from time to time.
4.5 Demand Right. At any time after the effective date of Purchaser's first
registration statement under the Securities Act of 1933 registering the
issuance or sale of its Common Stock, upon the written request of any Moore,
the Company will, at its sole expense, effect the registration of all of such
Moore's Shares under the Securities Act of 1933 and all applicable state 'blue
sky' laws. A registration requested pursuant to this Section 4.5 shall not be
deemed to have been effected (i) unless a registration statement with respect
thereto has become effective (unless a substantial cause of the failure of such
registration statement to become effective shall be attributable to a Moore
whose Shares were to have been included in such registration statement), (ii)
if after it has become effective, such registration is interfered with by any
stop order, injunction or other order or requirement of the Securities Exchange
Commission or other governmental agency or court for any reason, result in a
failure to consummate the offering of Shares offered
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<PAGE> 9
thereby, (iii) if after a registration statement with respect thereto has
become effective, the offering of Shares offered thereby is not consummated due
to factors beyond the control of the Moores, including, without limitation in
the context of a proposed firm commitment underwriting, the fact that the
underwriters have advised the holders of such Shares that such Shares cannot
be sold at a net price equal to or above the net price anticipated at the time
of filing of the preliminary prospectus or (iv) if the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied (unless a substantial cause
of such conditions to closing not being satisfied shall be attributable to a
Moore whose Shares were included in such registration statement).
ARTICLE V.
CERTAIN TRANSACTIONS INVOLVING SECURITIES OF PURCHASER
5.1 Certain Purchaser Transactions. Purchaser and Baker hereby agree that
the following provisions shall be applicable during the Rights Period:
(a) Upstream Trigger. Purchaser and Baker hereby agree that each of
the following shall constitute an "Upstream Trigger": any sale, assignment,
transfer, conveyance or other disposition through merger, consolidation,
reorganization or otherwise (other than pursuant to a pledge to an unrelated
third party financial institution) by Baker of any of the Common Stock (herein
defined) of Purchaser held by it if, after giving effect to such transaction,
Baker ceases to own, directly or indirectly, at least seventy percent (70%) of
the sum of (a) number of shares of Common Stock owned by Baker on the date
hereof, plus (b) the number of shares of Common Stock issued to Baker (directly
or indirectly after the date hereof) (in each case as adjusted to give effect
to any stock dividends, stock splits and any contribution of outstanding Common
Stock into a smaller number of shares) (the "Base Number"). For purposes of
this Agreement, Common Stock of Purchaser shall mean its Common Stock, par
value $.01 per share, and any and all options, warrants, subscription rights
and other rights to purchase shares of such common stock as if exercised and
all securities convertible to such common stock as if converted.
(b) Trigger Notice. Baker hereby agrees to give the Moores not less
than twenty (20) days prior written notice of the proposed closing date (the
"Closing Date") of any transaction which would constitute an Upstream Trigger
(a "Trigger Notice") which Trigger Notice shall set forth in reasonable detail
the terms of the proposed transaction and shall include a certificate from a
duly authorized officer of the general partner of Baker stating that the
description of the proposed transaction contained therein is accurate and
complete in all material respects and that such transaction is a bona fide
transaction. Upon receipt of each Trigger Notice, each Moore shall have ten
(10) days in which to advise Baker in writing that it wishes to participate in
the Upstream Trigger transaction as proved herein ( a "Participation Notice").
If a Moore does not deliver to Baker a Participation Notice within such time
period he shall be deemed to have elected not to participate in such
transaction, but shall not have waived his right to participate in any future
transaction.
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<PAGE> 10
(c) Required Purchase. To the extent Baker receives from any Moore a
Participation Notice, Baker shall be required to purchase from such Moore that
number of Shares held by such Moore determined in accordance with the following
formula:
A=(B-C)xD
For purposes of this Formula:
A= the number of Shares to be purchased from the Moore which
delivered the Exercise Notice.
B= 100 in the case of the first Upstream Trigger to occur
after the date of this Agreement. For each Upstream Trigger thereafter,
"B" shall equal the percentage of the Base Number of the shares of
Common Stock held, directly or indirectly, by Baker immediately prior to
such Upstream Trigger.
C= The percentage of the Base number of Shares of Common
Stock which will be held, directly or indirectly, by Baker immediately
after such Upstream Trigger.
D= The number of Shares held by such Moore on the date hereof
plus the number of Shares acquired by such Moore after the date hereof,
in each case adjusted to give effect to any stock dividends, stock
splits and contributions of outstanding Shares into a smaller number of
Shares.
Each purchase of shares of Common Stock shall be (a) for cash payable at
closing, (b) completed simultaneously with or prior to the consummation of the
transaction constituting the Upward Trigger, and (c) for a purchase price (i)
which is mutual acceptable to Baker and the exercising Moore, or (ii) in the
event Baker and the exercising Moore are unable to agree on such purchase price
within ten (10) days following delivery of the Participation Notice, such
purchase price shall be the fair market value of the Shares to be purchased
determined pursuant to the Appraisal set forth in this Agreement. The Closing
Date shall be extended until the fair market value has been finally determined
pursuant to the Appraisal Procedure.
(d) Definitions. As used in this Section 5.1 "Baker" shall be
deemed to include any Related Person with respect to Baker.
As used in this Section 5.1, "Appraisal Procedure" shall mean the following
procedure for determining fair market value of Shares: (a) upon the occurrence
of any Appraisal Event, Baker and the exercising Moore shall attempt to agree
on a mutually acceptable Qualified Appraiser to value the Shares, and if such
parties agree on a Qualified Appraiser with ten (10) days following delivery of
a Participation Notice such Qualified Appraiser shall, on or before twenty (20)
days following delivery of a Participation Notice, determine the Appraised
Value of the Shares, and such determination shall be binding upon Baker and the
exercising Moore: (b) in the event Baker and the exercising Moore are unable to
agree on a mutually acceptable Qualified Appraiser within ten (10) day period,
Baker and the exercising Moore shall each appoint a Qualified Appraiser to
value the Shares. Within a twenty (20) days following the date they are
appointed, the Qualified Appraisers
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<PAGE> 11
appointed by Baker and the exercising Moore shall determine the Appraised Value
of the Shares. In the event the Appraised Value determined by Baker's
Qualified Appraiser is more than 95% of the Appraised Value determined by the
exercising Moore's Qualified Appraiser, the Appraised Value for purposes of
this Agreement shall be the average of the values determined by such appraisers
and such determination shall be binding upon Baker and the exercising Moore.
In the event the Appraised Value determined by Baker's Qualified Appraiser is
equal to or less than 95% of the value determined by the exercising Moore's
Qualified Appraiser, such appraisers shall in turn promptly appoint a third
Qualified Appraiser who shall, twenty (20) days following the date it is
appointed, determine the Appraised Value of the Shares. The value which is
neither the lowest not the highest of the values determined by the three
Qualified Appraisers shall be the Appraised Value of the Shares for purposes of
this Agreement and shall be binding upon Baker and the exercising Moore. In
the event either Baker or the exercising Moore fails to timely appoint a
Qualified Appraiser, such failing party will be; deemed to have waived its
rights to appoint a Qualified Appraiser, and the Qualified Appraiser appointed
by the other party shall determine the Appraised Value for purposes of this
Agreement which determination shall be binding upon Baker and the exercising
Moore. The costs of each Qualified Appraiser referred to herein shall be paid
by Baker.
ARTICLE VI.
GENERAL PROVISIONS
6.1. Term. This Agreement shall come into force and effect as of the date set
out on the first page of this Agreement and shall continue in force until the
earliest of:
(a) the date on which the Moores no longer hold any Shares of the
Company;
(b) the date of closing of a public offering or private placement of
equity securities of the Company, the proceeds of which to the Company are not
less than $20 million;
(c) the date on which this Agreement is terminated by written
agreement of all the Shareholders; and
(d) the date on which the Company ceases to exist.
6.2. Headings. The inclusion of headings in this Agreement is for
convenience of reference only and shall not affect the construction or
interpretation hereof.
6.3. Gender and Number. In this Agreement, unless the context otherwise
requires, words importing the singular include the plural and vice versa and
words importing gender include all genders.
6.4. Invalidity of Provisions. Each of the provisions contained in this
Agreement is distinct and severable and a declaration of invalidity or
unenforceability of any such provision by a court of competent jurisdiction
shall not affect the validity or enforceability of any other provision hereof.
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<PAGE> 12
6.5. Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter of this Agreement. There
are no warranties, representations or agreements between the parties in
connection with such subject matter except as specifically set forth or
referred to in this Agreement.
6.6. Waiver, Amendment. This Agreement may be amended only by an instrument
in writing executed by each of the parties hereto. Except as expressly provided
in this Agreement, no waiver of this Agreement shall be binding unless executed
in writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision nor shall any waiver
of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
6.7. Governing Law. This agreement and the obligations of the Shareholders,
will be governed by and construed in accordance with the laws of the State of
Texas, without regard to any conflicts-of-laws provision thereof that would
otherwise require the application of the law of any other jurisdiction.
6.8. Termination Not to Affect Rights or Obligations. A termination of this
Agreement shall not affect or prejudice any rights or obligations which have
accrued or arisen under this Agreement prior to the time of termination and
such rights and obligations shall survive the termination of this Agreement.
6.9. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be given by facsimile or other
means of electronic communication or by delivery as hereafter provided. Any
such notice or other communication, if sent by facsimile or other means of
electronic communication, shall be deemed to have been received on the business
day following the sending, or if delivered by hand, shall be deemed to have
been received at the time it is delivered to the applicable address noted below
either to the individual designated below or to an individual at such address
having apparent authority to accept deliveries on behalf of the addressee.
Notice of change of address shall also be governed by this Section. Notices and
other communications shall be addressed as follows:
(a) if Roy J. Moore:
3508 Orchid Court
Arlington, Texas 76016
Phone: (817) 561-0151
with a copy to:
Haynes & Boone, L.L.P.
201 Main Street
Fort Worth, Texas 76102
Attn: William D. Ratliff, III
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<PAGE> 13
(b) if to Thomas F. "Fred" Moore:
5820 Bay Club Drive
Arlington, Texas 76013
Phone: (817) 457-1579
with a copy to:
Haynes & Boone, L.L.P.
201 Main Street
Fort Worth, Texas 76102
Attn: William D. Ratliff, III
(c) if to Carl R Moore:
4104 Flower Garden
Arlington, Texas 76016
Phone: (817) 483-6061
with a copy to:
Haynes & Boone, L.L.P.
201 Main Street
Fort Worth, Texas 76102
Attn: William D. Ratliff, III
(d) if to FWT, Inc.:
1901 East Loop 820 South
Fort Worth, Texas 761127899
Phone: (817) 457-3060
Fax: (817) 446-7095
Attn: Roy J. Moore and Edward W. Scott
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201
Attn: Gary M. Lawrence
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<PAGE> 14
(e) if to FWT Acquisition, Inc.:
575 Madison Avenue
10th Floor
New York, NY 10022
Attn: Edward W. Scott
Phone: (212) 605-0577
Fax: (212) 486-6686
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201
Attn: Gary M. Lawrence
Any Shareholder may change the address to which such communications are to be
directed to it by giving notice to the board of directors in the manner
provided in this Section. All notices by telecopier shall be confirmed by the
sender promptly after transmission in writing by mail or personal delivery.
6.10. Assignment. Except as otherwise expressly provided in this Agreement,
this Agreement shall not be assignable by any of the parties hereto without the
prior written consent of the other parties.
6.11. Further Assurances. Each of the Shareholders shall vote and act at all
times as a Shareholder of the Company and in all other respects use reasonable
efforts (other than through expenditure of money) to take all such steps,
execute all such documents and do all such acts and things as may be reasonably
within its power to implement to their full extent the provisions of this
Agreement and to cause the Company to act in the manner contemplated by this
Agreement.
6.12. Counterparts. This Agreement may be signed in counterparts and each of
such counterparts shall constitute an original document and such counterparts,
taken together, shall constitute one and the same instrument, and any person
may execute and deliver this Agreement by an executed signature page
transmitted by facsimile machine.
6.13. Inurement. Subject to the provisions hereof, this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and legal personal representatives.
6.14. Schedules and Exhibits. Any schedules and exhibits referred to in this
Agreement are hereby incorporated herein for all purposes.
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<PAGE> 15
IN WITNESS WHEREOF the parties have executed this Agreement.
---------------------------------------------
Roy J. Moore
---------------------------------------------
Thomas F. "Fred" Moore
---------------------------------------------
Carl R. Moore
FWT, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
FWT ACQUISITION, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
For the limited purposes set forth herein
and for no others,
BAKER COMMUNICATIONS FUND I, L.P.
By:
------------------------------------------
General Partner
By:
-----------------------------------
Its:
----------------------------------
<PAGE> 16
SCHEDULE 1.1
Number of
Shareholder Shares Owned
----------- ------------
FWT ACQUISITION INC. 108.9135
ROY J. MOORE 9.0761
THOMAS F. "FRED" MOORE 9.0761
CARL J. MOORE 9.0761
<PAGE> 1
EXHIBIT 10.11
===============================================================================
$25,000,000
CREDIT AGREEMENT
DATED AS OF NOVEMBER 12, 1997
AMONG
FWT, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
and
BT COMMERCIAL CORPORATION,
as Agent
===============================================================================
<PAGE> 2
FWT, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement . . . . 32
1.3 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.1 Commitments; Making of Loans; the Register; Notes . . . . . . . . . . . . . . . . . . . . . 33
2.2 Interest on the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.4 Prepayments of Revolving Loans; General Provisions Regarding Payments; Termination of
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.6 Special Provisions Governing Eurodollar Rate Loans . . . . . . . . . . . . . . . . . . . . 49
2.7 Increased Costs; Taxes; Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.8 Obligation of Lenders and Issuing Lenders to Mitigate . . . . . . . . . . . . . . . . . . . 56
2.9 Collection, Deposit and Transfer of Payments in Respect of Accounts . . . . . . . . . . . . 57
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein . . . . . . . 59
3.2 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit. . . . . . . . . . . . 63
3.4 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
3.5 Indemnification; Nature of Issuing Lenders' Duties . . . . . . . . . . . . . . . . . . . . 67
3.6 Increased Costs and Taxes Relating to Letters of Credit . . . . . . . . . . . . . . . . . . 68
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.1 Conditions to Initial Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.2 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4.3 Conditions to Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries . . . . . . . 78
5.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.3 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
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5.4 No Material Adverse Change; No Restricted Junior Payments . . . . . . . . . . . . . . . . . 81
5.5 Title to Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
5.6 Litigation; Adverse Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts . . . . . . . 82
5.9 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.10 Securities Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.12 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5.13 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5.14 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.16 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.17 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
6.1 Financial Statements and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 87
6.2 Corporate Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
6.3 Payment of Taxes and Claims; Tax Consolidation . . . . . . . . . . . . . . . . . . . . . . 94
6.4 Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
6.5 Inspection; Lender Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
6.6 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
6.7 Environmental Disclosure and Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 97
6.8 Company's Remedial Action Regarding Hazardous Materials . . . . . . . . . . . . . . . . . . 99
6.9 Refinancing of Bridge Notes; Conversion to Term Loans under the Bridge Note Agreement . . . 99
6.10 Execution of Guaranties and Collateral Documents by Future Subsidiaries . . . . . . . . . . 100
SECTION 7. COMPANY'S NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
7.2 Liens and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
7.3 Investments; Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
7.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
7.5 Restricted Junior Payments; Certain Other Payments . . . . . . . . . . . . . . . . . . . . 105
7.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions . . . . . . . . . . . . . 106
7.8 Consolidated Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
7.9 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
7.10 Sales and Lease-Backs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
7.11 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
7.12 Transactions with Shareholders and Affiliates . . . . . . . . . . . . . . . . . . . . . . . 108
7.13 Disposal of Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
7.14 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
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7.15 Amendments of Certain Documents; Designation of Designated Senior Debt . . . . . . . . . . 109
7.16 Deposit Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
8.1 Failure to Make Payments When Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
8.2 Default in Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
8.3 Breach of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
8.4 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
8.5 Other Defaults Under Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . . . . . . . . . . . 112
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . . . . . . . . . . . . 112
8.8 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
8.9 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
8.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
8.11 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
8.12 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
8.13 Invalidity of Any Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
8.14 Failure of Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
8.15 Action Relating to Certain Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 115
8.16 Failure to Consummate Recapitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . 115
SECTION 9. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.2 Powers and Duties; General Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness . . . . 118
9.4 Right to Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
9.5 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
9.6 Collateral Documents and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
10.1 Assignments and Participations in Loans and Letters of Credit . . . . . . . . . . . . . . . 120
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
10.3 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
10.4 Set-Off; Security Interest in Deposit Accounts . . . . . . . . . . . . . . . . . . . . . . 125
10.5 Ratable Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
10.6 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
10.7 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
10.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
10.9 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . 128
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . 128
10.11 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
10.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
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10.13 Obligations Several; Independent Nature of Lenders' Rights . . . . . . . . . . . . . . . . . . . . . 129
10.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
10.15 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
10.16 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
10.17 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
10.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
10.19 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
10.20 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Signature pages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
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EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT
IV FORM OF REVOLVING NOTE
V FORM OF COMPLIANCE CERTIFICATE
VI FORM OF FINANCIAL CONDITION CERTIFICATE
VII FORM OF BORROWING BASE CERTIFICATE
VIII FORM OF OPINION OF AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
IX FORM OF OPINION OF O'MELVENY & MYERS
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF AUDITOR'S LETTER
XII FORM OF CERTIFICATE RE NON-BANK STATUS
XIII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIV FORM OF BLOCKED ACCOUNT AGREEMENT
XV FORM OF COLLATERAL ACCESS AGREEMENT
XVI FORM OF LOCK BOX AGREEMENT
XVII FORM OF COMPANY SECURITY AGREEMENT
XVIII FORM OF COMPANY PLEDGE AGREEMENT
XIX FORM OF COMPANY TRADEMARK SECURITY AGREEMENT
XX FORM OF COMPANY PATENT SECURITY AGREEMENT
XXI FORM OF SUBSIDIARY GUARANTY
XXII FORM OF SUBSIDIARY SECURITY AGREEMENT
XXIII FORM OF SUBSIDIARY PLEDGE AGREEMENT
XXIV FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXV FORM OF SUBSIDIARY PATENT SECURITY AGREEMENT
XXVI FORM OF INTERCREDITOR AGREEMENT
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SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CAPITAL AND OWNERSHIP STRUCTURE
5.1 SUBSIDIARIES OF COMPANY
5.5 REAL PROPERTY ASSETS
5.6 LITIGATION
5.12 CERTAIN FEES
5.13 ENVIRONMENTAL MATTERS
7.3 CERTAIN EXISTING INVESTMENTS
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CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of November 12, 1997 and
entered into by and among FWT, INC., a Texas corporation ("Company"), THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (EACH INDIVIDUALLY
REFERRED TO HEREIN AS A "LENDER" and collectively as "LENDERS"), and BT
COMMERCIAL CORPORATION ("BTCC"), as agent for Lenders (in such capacity,
"AGENT").
R E C I T A L S
WHEREAS, in connection with the consummation of the
capitalization the Company will repay all of its existing indebtedness in the
approximate aggregate principal amount of $22,000,000;
WHEREAS, in order to finance the consummation of the
recapitalization and related transactions, the Company will issue not less than
$100,000,000 of Bridge Notes and will use approximately $8,000,000 of cash on
hand to pay approximately $8,000,000 of fees and expenses incurred in
connection with the Recapitalization and related transactions;
WHEREAS, Company desires that Lenders extend certain credit
facilities to Company to provide financing for working capital and other
General corporate purposes of Company and its Subsidiaries; and
WHEREAS, Company has agreed to secure its Obligations by
fledging to Agent for the benefit of Lenders all of the capital stock of its
subsidiaries and by granting to Agent for
<PAGE> 9
the benefit of Lenders a security interest in substantially all of its other
personal property;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders and
Agent agree as follows:
SECTION 1. DEFINITIONS
1 .1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the
following meanings:
"ACCOUNT" means, with respect to any Person, all present and
future rights of such Person to payment for goods sold or leased or for
services rendered (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, the rate per annum obtained by dividing (i) the offered quotation
rounded upward to the nearest 1/16 of one percent) to first class banks in the
Interbank Eurodollar market by BTCo for U.S. dollar deposits of amounts in same
day funds comparable to the principal amount of the Eurodollar Rate Loan of
BTCC for which the Adjusted Eurodollar Rate is then being determined with
maturities comparable to such Interest Period as of approximately 12:00 noon
New York time) on such Interest Rate Determination Date by (ii) a percentage
equal to 100% minus the stated maximum rate of all reserve requirements
including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable on such Interest Rate Determination Date to any
member bank of the Federal Reserve System in respect of "Eurocurrency
liabilities" as defined in Regulation D (or any successor category of
liabilities under Regulation D).
"ADJUSTED PRO RATA SHARE" means, with respect to any Lender,
the percentage obtained by dividing (i) the Revolving Loan Exposure of that
lender by (ii) the aggregate Revolving Loan Exposure of all Lenders other than
Daily Funding Lender.
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including,
with correlative meanings, the
2
<PAGE> 10
terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
person, whether through the ownership of voting securities or by contract or
otherwise.
"AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor Agent
appointed pursuant to subsection 9.5.
"AGREEMENT" means this Credit Agreement dated as of November
12, 1997, as it may be amended, supplemented or otherwise modified from time to
time.
"ASSET SALE" means the sale by Company or any of its
subsidiaries to any Person other than Company or any of its wholly-owned
subsidiaries of (i) any of the stock of any of Company's Subsidiaries, (ii)
substantially all of the assets of any division or line of business of Company
or any of its Subsidiaries, or (iii) any other assets (whether tangible or
intangible) of Company or any of its Subsidiaries (other than (a) inventory
sold in the ordinary course of business and (b) any such other assets to the
extent that the aggregate value of such assets sold in any single transaction
or related series of transactions is equal to $50,000 or less).
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in
substantially the form of Exhibit X annexed hereto.
"AUDITOR'S LETTER" means a letter, substantially in the form
of Exhibit XI annexed hereto, executed by Arthur Andersen LLP and delivered to
agent pursuant to subsection 4.1 or 6.1(iii).
"BAKER" means Baker Communications Fund, L.P.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
Statute.
"BASE RATE" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds
effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
"BLOCKED ACCOUNT AGREEMENT" means the Blocked Account
Agreement executed and delivered by a Concentration Bank, Agent and the
applicable Loan Party, substantially in the form of Exhibit XIV annexed hereto,
as such Blocked Account Agreement may be amended, supplemented or otherwise
modified from time to time,
3
<PAGE> 11
and "BLOCKED ACCOUNT AGREEMENTS" means all such Blocked Account Agreements,
collectively.
"BORROWING BASE" means, as at any date of determination, an
aggregate amount equal to:
(i) eighty-five percent (85%) of Eligible Accounts
Receivable plus
(ii) sixty percent (60%) of Eligible Inventory minus
(iii) the aggregate amount of reserves, if any, established
by Agent in the exercise of its Permitted Discretion against Eligible
Accounts Receivable and Eligible Inventory;
provided that Agent, in the exercise of its Permitted Discretion, may (a)
increase or decrease reserves against Eligible Accounts Receivable and Eligible
inventory and (b) reduce the advance rates provided in this definition, or
restore such advance rates to any level equal to or below the advance rates in
effect as of the Closing Date.
"BORROWING BASE CERTIFICATE" means a certificate substantially
in the form of Exhibit VII annexed hereto delivered to Lenders by Company
pursuant to subsection 4.1 or subsection 6.1(xix).
"BRIDGE NOTE AGREEMENT" means that certain Senior Secured
Credit Agreement dated as of November 12, 1997 among Company, the lenders named
therein, and BTCo, as administrative agent, pursuant to which the initial loans
under the Bridge Notes are made, as in effect on the date of execution of this
agreement and as such agreement may be amended from time to time thereafter to
the extent permitted under subsection 7.15.
"BRIDGE NOTES" means the senior secured notes issued by
company on the Closing Date, in the form of Exhibit I to the Bridge Note
agreement, evidencing loans of up to $100,000,000 in aggregate principal amount
pursuant to the Bridge Note Agreement, which notes shall accrue interest prior
to default at a rate no greater than 18% per annum (of which no greater than
15% per annum may be payable in cash), in each case as such notes may be
amended from time to time to the extent permitted under subsection 7.15.
"BTCC" has the meaning assigned to that term in the
introduction to this Agreement.
"BTCC ACCOUNT" means an account maintained by Agent at BTCo
into which the applicable Concentration Banks are instructed to transfer funds
in deposit in the applicable Concentration
4
<PAGE> 12
Accounts pursuant to the terms of the applicable Blocked Account Agreement, if
any.
"BTCO" means Bankers Trust Company.
"BT CONCENTRATION ACCOUNT" means an account under the
exclusive dominion and control of Agent that is maintained by any Loan Party
with BTCo into which the applicable Lock Box Banks are instructed to transfer
funds on deposit in the Lock Box Accounts pursuant to the terms of the Lock Box
Agreements.
"BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the States of New York or
Texas or is a day on which banking institutions located in either such state
are authorized or required by law or other governmental action to close.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (a)
marketable securities (1) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (2) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (b) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after
such date and having, at the time of the acquisition thereof, the highest
rating obtainable from either Standard & Poor's Ratings Services ("S&P") or
Moody's Investors Service, Inc. ("MOODY'S"); (c) commercial paper maturing no
more than one year from the date of creation thereof and having, at the time of
the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (d) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (1) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (2) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (e) shares of any money market mutual fund that (1)
was at least 95% of its assets invested continuously in the types of
investments referred to in clauses (a) and (b) above, (2) has net
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<PAGE> 13
assets of not less than $500,000,000, and (3) has the highest rating obtainable
from either S&P or Moody's.
"CERTIFICATE RE NON-BANK STATUS" means a certificate
substantially in the form of Exhibit XII annexed hereto delivered by a Lender
to Agent pursuant to subsection 2.7B(iii).
"CLOSING DATE" means the date on or before November 30, 1997,
on which the conditions set forth in subsection 4.1 have been satisfied by
Company or have been waived in writing by Agent.
"COLLATERAL" means, collectively, all of the personal property
(including capital stock) in which Liens are purported to be granted by the
Collateral Documents.
"COLLATERAL ACCESS AGREEMENT" means any landlord waiver,
mortgagee waiver, bailee letter or any similar acknowledgement agreement of any
landlord or mortgagee in respect of any Real Property Asset where any Inventory
is located or any warehouseman or processor in possession of Inventory,
substantially in the form of Exhibit XV annexed hereto, with such changes
thereto as may be agreed to by Agent.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in
the Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account
Agreement executed and delivered by Company and Agent on the Closing Date,
substantially in the form of Exhibit XIII annexed hereto, as such Collateral
Account Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"COLLATERAL DOCUMENTS" means the Collateral Account Agreement,
the Company Security Agreement, the Company Pledge Agreement, the Company
Trademark Security Agreement, the Company Patent Security Agreement, the
Subsidiary Security Agreements, the Subsidiary Pledge Agreements, the
Subsidiary Trademark Security Agreements, the Subsidiary Patent Security
Agreements, the Blocked Account Agreements and the Lock Box Agreements.
"COMMITMENTS" means the Revolving Loan Commitments.
"COMPANY" has the meaning assigned to that term in the
introduction to this Agreement.
"COMPANY COMMON STOCK" means the common stock of Company, par
value $10.00 per share.
"COMPANY PATENT SECURITY AGREEMENT" means the Company Patent
Collateral Assignment and Security Agreement executed and delivered by Company
on the Closing Date, substantially in the
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<PAGE> 14
form of Exhibit XX annexed hereto, as such Company Patent Collateral Assignment
and Security Agreement may be amended, supplemented or otherwise modified from
time to time.
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement
executed and delivered by Company on the Closing Date, substantially in the
form of Exhibit XVIII annexed hereto, as such Company Pledge Agreement may be
amended, supplemented or otherwise modified from time to time.
"COMPANY SECURITY AGREEMENT" means the Company Security
Agreement executed and delivered by Company on the Closing Date, substantially
in the form of Exhibit XVII annexed hereto, as such Company Security Agreement
may be amended or supplemented or otherwise modified from time to time.
"COMPANY TRADEMARK SECURITY AGREEMENT" means the Company
Trademark Collateral Security Agreement and Conditional Assignment executed and
delivered by Company on the Closing Date, substantially in the form of Exhibit
XIX annexed hereto, as such Company Trademark Collateral Security Agreement and
Conditional Assignment may be amended, supplemented or otherwise modified from
time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit V annexed hereto delivered to Agent and Lenders by Company
pursuant to subsection 6.1(iv).
"CONCENTRATION ACCOUNTS" means, collectively, the BT
Concentration Accounts and the Other Bank Concentration Accounts.
"CONCENTRATION BANK" means BTCo or any commercial bank
satisfactory to Agent at which any Loan Party maintains a Concentration
Account.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
sum of (i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and
its Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries plus (ii) to the extent not covered by
clause (i) of this definition, the aggregate of all expenditures by Company and
its Subsidiaries during that period to acquire (by purchase or otherwise) the
business, property or fixed assets of any Person, or the stock or other
evidence of beneficial ownership of any Person that, as a result of such
acquisition, becomes a Subsidiary of Company.
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<PAGE> 15
"CONSOLIDATED EBITDA" means, for any period, the sum, without
duplication, of the amounts for such period of (i) Consolidated Net Income,
(ii) Consolidated Interest Expense, (iii) provisions for taxes based on income,
(iv) total depreciation expense, (v) total amortization expense, and (vi) other
non-cash items reducing Consolidated Net Income less other non-cash items
increasing Consolidated Net Income, all of the foregoing as determined on a
consolidated basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total
interest expense (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of Company and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to Agent
and Lenders on or before the Closing Date.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
Company or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary of Company or is merged into or consolidated with Company or any of
its Subsidiaries or that Person's assets are acquired by Company or any of its
Subsidiaries, (iii) the income of any Subsidiary of Company to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary, (iv)
any after-tax gains or losses attributable to Asset Sales or returned surplus
assets of any Pension Plan, and (v) (to the extent not included in clauses (i)
through (iv) above) any net extraordinary gains or net non-cash extraordinary
losses.
"CONSOLIDATED TOTAL DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
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<PAGE> 16
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Interest Rate Agreements and Currency Agreements.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to
make take-or-pay or similar payments if required regardless of non-performance
by any other party or parties to an agreement, and (c) any liability of such
Person for the obligation of another through any agreement (contingent or
otherwise) (X) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (Y) to maintain the solvency or any balance
sheet item, level of income or financial condition of another if, in the case
of any agreement described under subclauses (X) or (Y) of this sentence, the
primary purpose or intent thereof is as described in the preceding sentence.
The amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if less, the amount to
which such Contingent Obligation is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument
to which that Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
"CONVERSION DATE" has the meaning assigned to such term in the
Bridge Note Agreement.
"CONVERSION NOTES" means the senior secured notes, if any,
issued by Company on the Conversion Date and evidencing term loans, the
aggregate principal amount of which shall have been converted from, and shall
not exceed the then outstanding principal amount of, the Bridge Notes, in the
form of Exhibit II to the Bridge Note Agreement as in effect on the Closing
Date, which notes (i) shall have no required principal payments prior
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<PAGE> 17
to the sixth anniversary of the Closing Date and (ii) shall accrue interest
prior to default at a rate no greater than 18% per annum (of which no greater
than 15% per annum may be payable in cash), in each case as such notes may be
amended from time to time to the extent permitted under subsection 7.15.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement.
"DAILY FUNDING LENDER" means Agent, in its individual capacity
as a Lender hereunder.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DOMESTIC SUBSIDIARY" means a direct or indirect Subsidiary of
Company that is incorporated or organized under the laws of a state of the
United States of America.
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"ELIGIBLE ACCOUNTS RECEIVABLE" means, with respect to Company
and Company's Subsidiaries which are Loan Parties, Accounts of such Loan Party
deemed by Agent in the exercise of its Permitted Discretion to be eligible for
inclusion in the calculation of the Borrowing Base. In determining the amount
to be so included, the face amount of such Accounts shall be reduced by the
amount of all returns, discounts, deductions, claims, credits, charges, or
other allowances. Unless otherwise approved in writing by Agent, an Account
shall not be an Eligible Account Receivable if:
(a) it arises out of a sale made by such Loan Party to an
Affiliate; or
(b) its payment terms are longer than 30 days from date
of invoice; or
(c) it remains unpaid for more than 60 days after the
original payment due date (or, for the first nine months following the
Closing Date with respect to Accounts as to which there are no
disputes or unissued credits, it remains unpaid for more than 90 days
after the original payment due date); or
(d) it is from the same account debtor or its Affiliate
and fifty percent (50%) or more of all Accounts
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from that acount debtor (and its Affiliates) are ineligible under (c)
above; or
(e) when aggregated with all other Accounts of an account
debtor, such Account exceeds twenty-five percent (25%) or, in the case
of Accounts in which AT&T Wireless Services, Inc., is the account
debtor, thirty percent (30%), in face value of all Accounts of the
Loan Parties then outstanding, but only to the extent of such excess,
unless such excess is supported by an irrevocable letter of credit
satisfactory to Agent (as to form, substance and issuer) and assigned
to and directly drawable by Agent; or
(f) the account debtor for such Account is a creditor of
such Loan Party, has or has asserted a right of setoff against such
Loan Party, or has disputed its liability or otherwise has made any
claim with respect to such Account or any other Account which has not
been resolved, in each case to the extent of the amount owed by such
Loan Party to such account debtor, the amount of such actual or
asserted right of setoff, or the amount of such dispute or claim, as
the case may be; or
(g) the account debtor is (or its assets are) the subject
of an Insolvency Event; or
(h) such Account is not payable in Dollars or the account
debtor for such Account is located outside the continental United
States, unless such Account is supported by an irrevocable letter of
credit satisfactory to Agent (as to form, substance and issuer) and
assigned to and directly drawable by Agent; or
(i) the sale to the account debtor is on a bill-and-hold,
guarantied sale, sale-and-return, sale on approval or consignment
basis or made pursuant to any other written agreement providing for
repurchase or return; provided that no Account will be excluded
pursuant to this clause (i) if such bill-and-hold or similar
arrangement is pursuant to a written agreement delivered to, and
approved in writing by, Agent; or
(j) Agent determines by its own reasonable credit analysis
that collection of such Account is uncertain or that such Account may
not be paid; or
(k) the account debtor is the United States of America or
any department, agency or instrumentality thereof, unless such Loan
Party duly assigns its rights to payment of such Account to Agent
pursuant to the Assignment of Claims Act of 1940, as amended (31
U.S.C. Sections 3727 et seq.); or
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(l) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor, the
services giving rise to such Account have not been performed and
accepted, or such Account otherwise does not represent a final sale;
provided that no Account will be excluded pursuant to this clause (l)
if such goods have not been shipped pursuant to a written
bill-and-hold arrangement delivered to, and approved in writing by,
Agent; or
(m) such Account does not comply in any material respect
with all Requirements of Law, including without limitation the Federal
Consumer Credit Protection Act, the Federal Truth in Lending Act and
Regulation Z of the Board of Governors of the Federal Reserve System;
or
(n) such Account is subject to any adverse security
deposit, progress payment or other similar advance made by or for the
benefit of the applicable account debtor; or
(o) it is not subject to a valid and perfected first
priority Lien in favor of Agent or does not otherwise conform to the
representations and warranties contained in the Loan Documents;
provided that Agent, in the exercise of its Permitted Discretion, may impose
additional restrictions (or eliminate the same) to the standards of eligibility
set forth in this definition.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank
is acting through a branch or agency located in the United States or (y) such
bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans in the ordinary course of its businesses including, but
not limited to, insurance companies, mutual funds and lease financing
companies; and (B) any Lender and any Affiliate of any Lender; provided that no
Affiliate of Company shall be an Eligible Assignee.
"ELIGIBLE INVENTORY" means, with respect to Company and
Company's Subsidiaries which are Loan Parties, the aggregate amount of
Inventory of such Loan Party deemed by Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the Borrowing
Base. In determining the amount to be so included, Inventory shall be valued
at the lower of cost or market on a basis consistent with such Loan Party's
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current and historical accounting practice. Unless otherwise approved in
writing by Agent, an item of Inventory shall not be included in Eligible
Inventory if:
(a) it is not owned solely by such Loan Party or such
Loan Party does not have good, valid and marketable title thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned or leased by a
Loan Party or in a contract warehouse, in each case subject to a
Collateral Access Agreement executed by any applicable mortgagee,
lessor or contract warehouseman, as the case may be, and segregated or
otherwise separately identifiable from goods of others, if any, stored
on the premises; or
(d) it is not subject to a valid and perfected first
priority Lien in favor of Agent except, with respect to Inventory
stored at sites described in clause (c) above, for Liens for unpaid
rent or normal and customary warehousing charges; or
(e) it consists of goods returned or rejected by such
Loan Party's customers or goods in transit to third parties (other
than to warehouse sites covered by a Collateral Access Agreement); or
(f) it is not first-quality goods, is obsolete or slow
moving, or does not otherwise conform to the representations and
warranties contained in the Loan Documents;
provided that Agent, in the exercise of its Permitted Discretion, may impose
additional restrictions (or eliminate the same) to the standards of eligibility
set forth in this definition. It is understood and agreed that an item of
Inventory which is subject to a bill-and-hold or other similar arrangement
which renders the related Account ineligible under clause (i) of the definition
of "Eligible Accounts Receivable" if otherwise eligible as Eligible Inventory
under this definition may be included in the Borrowing Base as Eligible
Inventory.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is, or was at any time, maintained or
contributed to by Company or any of its ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any accusation, allegation, notice
of violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
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indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Company, any of
its Subsidiaries, any of their respective Affiliates or any Facility.
"ENVIRONMENTAL LAWS" means all statutes, ordinances, orders,
rules, regulations, plans, policies or decrees and requirements having the
force of law relating to (i) environmental matters, including, without
limitation, those relating to fines, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries resulting from the
Release or threatened Release of Hazardous Materials, (ii) the generation, use,
storage, transportation or disposal of Hazardous Materials, or (iii)
occupational safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare from environmental hazards, in any
manner applicable to Company or any of its Subsidiaries or any of their
respective properties, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section
9601 et seq.) ("CERCLA"), the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Federal Water Pollution Control Act ( 33 U.S.C.
Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.),
the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) and the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 et
seq.), each as amended or supplemented, and any analogous future or present
local, state and federal statutes and regulations promulgated pursuant thereto,
each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means (i) any
corporation which is, or was at any time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is a member; (ii) any trade or business (whether or not
incorporated) which is a member of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Internal Revenue Code of
which that Person is a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which that Person, any corporation described in clause (i) above or any
trade or business described in clause (ii) above is a member. Any former ERISA
Affiliate of a Person
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shall continue to be considered an ERISA Affiliate within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of the
Person and with respect to liabilities arising after such period for which the
Person could be liable under the Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate
such plan in a distress termination described in Section 4041(c) of ERISA; (iv)
the withdrawal by Company or any of its ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on Company or any of its ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal by Company or any
of its ERISA Affiliates in a complete or partial withdrawal (within the meaning
of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any
potential liability therefor, or the receipt by Company or any of its ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on
Company or any of its ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against Company or any of its ERISA Affiliates in connection with
any such Employee Benefit Plan; (x) receipt from the Internal Revenue Service
of notice of the failure of any Pension Plan (or any other Employee Benefit
Plan intended to be qualified under Section 401(a) of the Internal Revenue
Code) to qualify under Section 401(a) of the Internal Revenue Code, or the
failure of
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<PAGE> 23
any trust forming part of any Pension Plan to qualify for exemption from
taxation under Section 501(a) of the Internal Revenue Code; or (xi) the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in
Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXCHANGE NOTE INDENTURE" means the senior indenture, if any,
executed by Company and a trustee named thereunder pursuant to which the
Exchange Notes are issued, in the form of Exhibit V to the Bridge Note
Agreement, as such indenture may be amended from time to time to the extent
permitted under subsection 7.15.
"EXCHANGE NOTES" means the senior secured notes, if any,
issued by Company from time to time in exchange for the Conversion Notes
pursuant to the Exchange Note Indenture in the same principal amount as the
Conversion Notes being so exchanged, in the form of Exhibit A to the Exchange
Note Indenture, which notes shall accrue interest prior to default at a rate no
greater than 18% per annum (of which no greater than 15% per annum may be
payable in cash) plus up to 1.50% per annum payable as additional interest as a
result of any failure to comply with registration requirements with respect to
such notes as required by the customary registration rights accompanying such
notes, in each case as such notes may be amended from time to time to the
extent permitted under subsection 7.15. "EXCHANGE NOTES" shall also refer to
the registered Securities, if any, having the same terms and conditions as the
notes described above which are issued by Company in exchange for such notes
upon exercise of the customary registration rights accompanying such notes.
"EXISTING CREDIT ARRANGEMENTS" means (i) Company's promissory
note dated July 23, 1997, payable to Bank One, Texas, N.A., in the principal
amount of $20,000,000; (ii) Company's promissory note dated December 15, 1993,
payable to NationsBank of Texas, N.A., in the outstanding principal amount of
$350,000; (iii) a Loan Agreement dated as of October 1, 1996 between Company
and Bank One, Texas, N.A., providing for borrowings of up to $5,200,000 under
which there is approximately $1,800,000 principal amount outstanding; and (iv)
a Loan Agreement dated as of April 25, 1997 between Company and Bank One,
Texas, N.A., providing for borrowings of up to $2,200,000 under which there are
no outstandings.
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"EXISTING SHAREHOLDERS" means T.W. Moore, Betty Moore, Roy
Moore, Fred Moore and Carl Moore.
"FACILITIES" means all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) and
related facilities now, hereafter or heretofore owned, leased, operated or used
by Company or any of its Subsidiaries or any of their respective predecessors
or Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by Agent from three Federal funds
brokers of recognized standing selected by Agent.
"FEE PROPERTY" means a Real Property Asset consisting of a fee
interest in real property.
"FINANCIAL PLAN" has the meaning assigned to that term in
subsection 6.1(xiii).
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its
Subsidiaries ending on April 30 of each calendar year.
"FOREIGN SUBSIDIARY" means a direct or indirect Subsidiary of
Company which is incorporated or organized under the laws of any government or
sovereignty other than any state of the United States of America.
"FUNDING AND PAYMENT OFFICE" means (i) the office of Agent
located at 14 Wall Street, New York, New York 10005 or (ii) such other office
of Agent as may from time to time hereafter be designated as such in a written
notice delivered by Agent to Company and each Lender.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in
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such other statements by such other entity as may be approved by a significant
segment of the accounting profession, in each case as the same are applicable
to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
"GUARANTIES" means the Subsidiary Guaranty.
"GUARANTOR" means, at any time, any of Company's Subsidiaries
that is then a party to any of the Guaranties.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "restricted hazardous waste", "infectious waste", "toxic substances" or
any other formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar meaning and regulatory effect import under any
applicable Environmental Laws; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iv) any flammable substances
or explosives; (v) any radioactive materials; (vi) asbestos in any form; (vii)
urea formaldehyde foam insulation; (viii) electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million; (ix) pesticides; and (x) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority or which may or could pose a hazard to the health
and safety of the owners, occupants or any Persons in the vicinity of the
Facilities.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money, (iv) any obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such obligations incurred under
ERISA), which purchase price is (a) due more than six months from the date of
incurrence of the obligation in respect thereof or (b) evidenced by a note or
similar written instrument, and (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person
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regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person. Obligations
under Interest Rate Agreements and Currency Agreements constitute Contingent
Obligations and not Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in
subsection 10.3.
"INSOLVENCY EVENT" means, with respect to any Person, the
occurrence of any of the events described in subsection 8.6 or 8.7; provided
that, solely for purposes of this definition, any references to Company or any
of its Subsidiaries in subsection 8.6 or 8.7 shall be deemed to be a reference
to such Person.
"INSOLVENCY LAWS" means the Bankruptcy Code or any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect in
the United States of America or any state thereof.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or necessary
for the conduct of the business of Company and its Subsidiaries as currently
conducted that are material to the condition (financial or otherwise), business
or operations of Company and its Subsidiaries, taken as a whole.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement
among Company, BTCC, as Agent under this Agreement, BTCo as Agent under the
Bridge Note Agreement, and BTCo, as Collateral Agent under the Intercreditor
Agreement.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate Loan, the first Business Day of each calendar month, commencing on the
first such date to occur after the Closing Date, and (ii) with respect to any
Eurodollar Rate Loan, the last day of each Interest Period applicable to such
Loan; provided that in the case of each Interest Period of six months "Interest
Payment Date" shall also include the date that is three months after the
commencement of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such
Interest Period.
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"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.
"INVENTORY" means, with respect to any Person, all goods,
merchandise and other personal property which are held by such Person for sale
or lease, including those held for display or demonstration and including
work-in- progress.
"INVESTMENT" means (i) any direct or indirect purchase or
other acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than a Person that prior
to such purchase or acquisition was a wholly-owned Subsidiary of Company and a
party to the Subsidiary Guaranty), (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary of
Company from any Person other than Company or any of its Subsidiaries, of any
equity Securities of such Subsidiary, or (iii) any direct or indirect loan,
advance (other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by Company or any of its Subsidiaries to any
other Person other than a wholly-owned Subsidiary of Company which is a party
to the Subsidiary Guaranty, including all indebtedness and accounts receivable
from that other Person that are not current assets or did not arise from sales
to that other Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.
"IP COLLATERAL" means, collectively, the Collateral under the
IP Collateral Documents.
"IP COLLATERAL DOCUMENTS" means, collectively, the Company
Trademark Security Agreement, the Company Patent Security Agreement, the
Subsidiary Trademark Security Agreements and the Subsidiary Patent Security
Agreements.
"ISSUING LENDER" means, with respect to any Letter of Credit,
BTCo or any other Lender which agrees or is otherwise obligated to issue such
Letter of Credit, determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
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"LENDER" and "LENDERS" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1, and the
term "Lenders" shall include BTCo as an Issuing Lender unless the context
otherwise requires; provided that the term "Lenders", when used in the context
of a particular Commitment, shall mean Lenders having that Commitment.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Standby
Letters of Credit issued or to be issued by Issuing Lenders for the account of
Company pursuant to subsection 3.1.
"LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Letters of Credit
then outstanding plus (ii) the aggregate amount of all drawings under Letters
of Credit honored by Issuing Lenders and not theretofore reimbursed by Company.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LOAN" or "LOANS" means one or more of the Revolving Loans.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters
of Credit (and any applications for, or reimbursement agreements or other
documents or certificates executed by Company in favor of an Issuing Lender
relating to, the Letters of Credit), the Guaranties, the Intercreditor
Agreement and the Collateral Documents and, solely for purposes of the use of
the term "Loan Documents" in the definition of Obligations, the Currency
Agreements to which any Lender or any of its Affiliates is a party.
"LOAN PARTIES" means any of the Company or any Subsidiary of
the Company executing the Subsidiary Guaranty.
"LOCK BOX" means a lockbox maintained by any Loan Party
pursuant to arrangements satisfactory to Agent.
"LOCK BOX ACCOUNT" means a Deposit Account under the exclusive
dominion and control of Agent that is maintained by any Loan Party with a Lock
Box Bank pursuant to a Lock Box Agreement.
"LOCK BOX AGREEMENT" means a Lock Box Agreement executed and
delivered by a Lock Box Bank, Agent and the applicable Loan Party,
substantially in the form of Exhibit XVI annexed hereto, as such Lock Box
Agreement may be amended,
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supplemented or otherwise modified from time to time, and "LOCK BOX AGREEMENTS"
means all such Lock Box Agreements, collectively.
"LOCK BOX BANK" means any commercial bank satisfactory to
Agent at which any Loan Party maintains a Lock Box Account.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company and its Subsidiaries, taken as a whole, (ii)
the impairment in any material respect of the ability of any Loan Party to
perform, or of Agent or Lenders to enforce, the Obligations, or (iii) a
material adverse effect on the value of the Collateral or the amount which
Agent or Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of the
Collateral.
"MATERIAL CONTRACT" means any contract or other arrangement to
which Company or any of its Subsidiaries is a party (other than the Loan
Documents) for which breach, nonperformance, cancellation or failure to renew
could have a Material Adverse Effect.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined
in Section 3(37) of ERISA, to which Company or any of its ERISA Affiliates is
contributing, or ever has contributed, or to which Company or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"NEWCO" means FWT Acquisition, Inc., a Delaware corporation.
"NOTES" means one or more of the Revolving Notes.
"NOTICE OF BORROWING" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice
substantially in the form of Exhibit II annexed hereto delivered by Company to
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"REQUEST FOR ISSUANCE OF LETTER OF CREDIT" means a notice
substantially in the form of Exhibit III annexed hereto
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delivered by Company to Agent pursuant to subsection 3.1B(i) with respect to
the proposed issuance of a Letter of Credit.
"OBLIGATIONS" means all obligations of every nature of each
Loan Party from time to time owed to Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest (including interest accruing on
or after the occurrence of an Insolvency Event), reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or its president or one of its vice presidents and by its
chief financial officer, its chief operating officer or controller; provided
that every Officers' Certificate with respect to the compliance with a
condition precedent to the making of any Loans hereunder shall include (i) a
statement that the officer or officers making or giving such Officers'
Certificate have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers, such
condition has been complied with; and provided further that with respect to any
certificate required to be delivered pursuant to subsection 4.1, such
certificate may be executed by any one such officer approved by Agent.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"OTHER BANK CONCENTRATION ACCOUNT" means an account under the
exclusive dominion and control of Agent that is maintained by any Loan Party
with a Bank (other than BTCo) that is satisfactory to Agent pursuant to a
Blocked Account Agreement into which the applicable Lock Box Banks are
instructed to transfer funds on deposit in the Lock Box Accounts pursuant to
the terms of the Lock Box Agreements.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
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"PERMITTED DISCRETION" means Agent's good faith and reasonable
judgment based upon any factor which it believes: (i) will or could adversely
affect the value of any Collateral, the enforceability or priority of Agent's
Liens thereon or the amount which Agent and Lenders would be likely to receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of such Collateral; (ii) suggests that any collateral report or
financial information delivered to Agent by any Person on behalf of any Loan
Party is incomplete, inaccurate or misleading in any material respect; (iii)
materially increases the likelihood of a bankruptcy, reorganization or other
insolvency proceeding involving Company or any of its Subsidiaries or any of
the Collateral; or (iv) creates or reasonably could be expected to create a
Potential Event of Default or Event of Default. In exercising such judgment,
Agent may consider such factors already included in or tested by the definition
of Eligible Accounts Receivable or Eligible Inventory, as well as any of the
following: (i) the financial and business climate of any Loan Party's industry
and general macroeconomic conditions, (ii) changes in collection history and
dilution with respect to Loan Parties' Accounts, (iii) changes in demand for,
and pricing of, Loan Parties' Inventory, (iv) changes in any concentration of
risk with respect to such Accounts or Inventory, and (v) any other factors that
change the credit risk of lending to Company on the security of such Accounts
or Inventory. The burden of establishing lack of good faith shall be on the
Company.
"PERMITTED ENCUMBRANCES" means the following types of Liens
(other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of
the Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges
or claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have
been made therefor;
(iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
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(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 8.8;
(v) leases or subleases granted to others not interfering
in any material respect with the ordinary conduct of the business of
Company or any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions,
encroachments, minor defects or irregularities in title, and other
similar charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of Company or any of
its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor
under any lease permitted by subsection 7.9, (b) restriction or
encumbrance that the interest or title of such lessor or sublessor may
be subject to, or (c) subordination of the interest of the lessee or
sublessee under such lease to any restriction or encumbrance referred
to in the preceding clause (b);
(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; and
(x) licenses of patents, trademarks and other
intellectual property rights granted by Company or any of its
Subsidiaries in the ordinary course of business and not interfering in
any material respect with the ordinary conduct of the business of
Company or such Subsidiary.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies,
limited liability partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of Default.
"PRIME RATE" means the rate that BTCo announces from time to
time as its prime lending rate in the United States for Dollar denominated
loans, as in effect from time to time. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. BTCC
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or any other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"PRO RATA SHARE" means with respect to all payments,
computations and other matters relating to the Revolving Loan Commitment or the
Revolving Loans of any Lender or any Letters of Credit issued or participations
therein purchased by any Lender, the percentage obtained by dividing (x) the
Revolving Loan Exposure of that Lender by (y) the aggregate Revolving Loan
Exposure of all Lenders, as the applicable percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share
of each Lender for purposes of the preceding sentence is set forth opposite the
name of that Lender in Schedule 2.1 annexed hereto.
"PURCHASE PRICE ADJUSTMENT NOTES" means the promissory notes
delivered by Company to the Existing Shareholders pursuant to Section 2.7 of
the Recapitalization Agreement with respect to increases in the purchase price
payable to such Existing Shareholders or pursuant to Article III of the
Recapitalization Agreement with respect to payments to be made as a result of
liabilities under Section 338(h)(10) of the Internal Revenue Code as such notes
may be amended from time to time after their issue date to the extent permitted
under subsection 7.15.
"REAL PROPERTY ASSETS" means all real property from time to
time owned in fee by any Loan Party and all rights, title and interest in and
to any and all leases of real property as to which any Loan Party has a
leasehold interest, including without limitation any such fee or leasehold
interests acquired by any Loan Party after the date hereof.
"RECAPITALIZATION" means the transactions contemplated by the
Recapitalization Agreement.
"RECAPITALIZATION AGREEMENT" means that certain
Recapitalization Agreement dated as of November 12, 1997, by and among Company,
Newco and the Existing Shareholders, in the form delivered to Agent and Lenders
prior to their execution of this Agreement and as such agreement may be amended
from time to time thereafter to the extent permitted under subsection 7.15.
"REGISTER" has the meaning assigned to that term in subsection
2.1E.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
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"RELATED AGREEMENTS" means, collectively, the Recapitalization
Agreement, Stockholders Agreement, the Bridge Note Agreement, the Bridge Notes,
any guaranties relating thereto and, if and when executed, the Exchange Note
Indenture, the Takeout Securities Indenture, the Conversion Notes, the Exchange
Notes, the Takeout Securities and any guaranties relating to any of the
foregoing, and the Purchase Price Adjustment Notes, and all other agreements or
instruments delivered pursuant to or in connection with any of the foregoing
including any purchase agreement or registration rights agreement.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or
outdoor environment (including, without limitation, the abandonment or disposal
of any barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"REQUIREMENT OF LAW" means (a) the certificates or articles of
incorporation, by-laws and other organizational or governing documents of a
Person, (b) any law, treaty, rule, regulation or determination of an
arbitrator, court or other governmental authority, or (c) any franchise,
license, lease, permit, certificate, authorization, qualification, easement,
right of way, right or approval binding on a Person or any of its property.
"REQUISITE LENDERS" means Lenders having or holding 51% or
more of the sum of the aggregate Revolving Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Company now or hereafter outstanding, except a dividend payable solely
in shares of that class of stock to the holders of that class, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock
of Company now or hereafter outstanding, (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights
to acquire shares of any class of stock of Company now or hereafter
outstanding, and (iv) any payment or prepayment of principal of, premium, if
any, or interest on, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to, any Subordinated Indebtedness.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender
to make Revolving Loans to Company pursuant to subsection
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2.1A, and "REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders in
the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means November
30, 2000.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as
of any date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
the event that Lender is an Issuing Lender, the aggregate Letter of Credit
Usage in respect of all Letters of Credit issued by that Lender (in each case
net of any participations purchased by other Lenders in such Letters of Credit
or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit.
"REVOLVING LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A.
"REVOLVING NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1F on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit IV
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"SOLVENT" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the property
of such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person's then
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existing debts as they become absolute and matured considering all financing
alternatives and potential asset sales reasonably available to such Person;
(ii) such Person's capital is not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and (iii) such Person
does not intend to incur, or believe (nor should it reasonably believe) that it
will incur, debts beyond its ability to pay such debts as they become due; and
(B) such Person is "solvent" within the meaning given that term and similar
terms under applicable laws relating to fraudulent transfers and conveyances.
For purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries,
and (v) performance, payment, deposit or surety obligations of Company or any
of its Subsidiaries, in any case if required by law or governmental rule or
regulation or in accordance with custom and practice in the industry; provided
that Standby Letters of Credit may not be issued for the purpose of supporting
(a) trade payables or (b) any Indebtedness constituting "antecedent debt" (as
that term is used in Section 547 of the Bankruptcy Code).
"STOCKHOLDERS AGREEMENT" means that certain Stockholders
Agreement dated as of the Closing Date entered into by and among Baker, the
Existing Shareholders and the other individuals parties thereto, as such
agreement may be amended, supplemented or otherwise modified from time to time
to the extent permitted under subsection 7.15.
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of
Company evidenced by the Takeout Securities if the Takeout Securities are
subordinated to the Credit Agreement, and (ii) any other Indebtedness of
Company (other than Indebtedness to any of its Subsidiaries) that is
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to Agent and Requisite Lenders.
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"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, limited liability company, association, joint venture
or other business entity of which more than 50% of the total voting power of
shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty executed
and delivered by Company's Subsidiaries on the Closing Date and to be executed
and delivered by Company's Subsidiaries from time to time thereafter in
accordance with subsection 6.10, substantially in the form of Exhibit XXI
annexed hereto, as such Subsidiary Guaranty may be amended, supplemented or
otherwise modified from time to time.
"SUBSIDIARY PATENT SECURITY AGREEMENT" means each Subsidiary
Patent Collateral Security Agreement and Conditional Assignment executed and
delivered by Company's Subsidiaries on the Closing Date or to be executed and
delivered by Company's Subsidiaries from time to time thereafter in accordance
with subsection 6.10, in each case substantially in the form of Exhibit XXV
annexed hereto, as such Subsidiary Patent Collateral Security Agreement and
Conditional Assignment may be amended, supplemented or otherwise modified from
time to time, and "SUBSIDIARY PATENT SECURITY AGREEMENTS" means all such
Subsidiary Patent Collateral Security Agreement and Conditional Assignments,
collectively.
"SUBSIDIARY PLEDGE AGREEMENT" means each Subsidiary Pledge
Agreement executed and delivered by Company's Subsidiaries on the Closing Date
or to be executed and delivered by Company's Subsidiaries from time to time
thereafter in accordance with subsection 6.10, in each case substantially in
the form of Exhibit XXIII annexed hereto, as such Subsidiary Pledge Agreement
may be amended, supplemented or otherwise modified from time to time, and
"SUBSIDIARY PLEDGE AGREEMENTS" means all such Subsidiary Pledge Agreements,
collectively.
"SUBSIDIARY SECURITY AGREEMENT" means each Subsidiary Security
Agreement executed and delivered by Company's Subsidiaries on the Closing Date
or to be executed and delivered by Company's Subsidiaries from time to time
thereafter in accordance with subsection 6.10, in each case substantially in
the form of Exhibit XXII annexed hereto, as such Subsidiary Security Agreement
may be amended, supplemented or otherwise modified from time to time, and
"SUBSIDIARY SECURITY AGREEMENTS" means all such Subsidiary Security Agreements,
collectively.
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"SUBSIDIARY TRADEMARK SECURITY AGREEMENT" means each
Subsidiary Trademark Collateral Security Agreement and Conditional Assignment
executed and delivered by Company's Subsidiaries on the Closing Date or to be
executed and delivered by Company's Subsidiaries from time to time thereafter
in accordance with subsection 6.10, in each case substantially in the form of
Exhibit XXIV annexed hereto, as such Subsidiary Trademark Collateral Security
Agreement and Conditional Assignment may be amended, supplemented or otherwise
modified from time to time, and "SUBSIDIARY TRADEMARK SECURITY AGREEMENTS"
means all such Subsidiary Trademark Collateral Security Agreement and
Conditional Assignments, collectively.
"TAKEOUT SECURITIES" means either (a) the senior subordinated
unsecured notes, if any, issued by Company pursuant to the Takeout Securities
Indenture, having the terms and conditions substantially as described in the
"Description of Notes" section of that certain Preliminary Offering Memorandum
of Company dated October 31, 1997, or (b) any other securities issued by the
Company to refinance the Bridge Notes, the Conversion Notes or the Exchange
Notes, which Takeout Securities shall, in each case, be in form and substance
satisfactory to Agent and Requisite Lenders, as such Takeout Securities may be
amended from time to time to the extent permitted under subsection 7.15, in
each case all of the proceeds of which are used to refinance all or a part of
the outstanding obligations under the Bridge Notes, the Conversion Notes or the
Exchange Notes; provided that (i) no principal amount of such notes shall have
a scheduled maturity date prior to the tenth anniversary of the Closing Date
and (ii) such notes shall not have an effective yield (without giving effect to
default interest rates or to any other Securities issued by Company to the
holders of such notes concurrently with the issuance of such notes) in excess
of 15% per annum plus up to 1.50% per annum payable as additional interest as a
result of any failure to comply with registration requirements with respect to
such notes as required by the customary registration rights accompanying such
notes. "TAKEOUT SECURITIES" shall also refer to the registered Securities, if
any, having the same terms and conditions as the notes described above which
are issued by Company in exchange for such notes upon exercise of the customary
registration rights accompanying such notes.
"TAKEOUT SECURITIES INDENTURE" means the indenture, if any,
executed by Company and a trustee named therein pursuant to which the Takeout
Securities are issued, (a) having the terms and conditions substantially as
described in the "Description of Notes" section of that certain Preliminary
Offering Memorandum of Company dated October 31, 1997, or (b) having such other
terms and conditions describing the securities issued by the Company to
refinance the Bridge Notes, the Conversion Notes or the Exchange Notes, which
indenture shall be, in each case, in form and
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substance satisfactory to Agent, as such indenture may be amended from time to
time to the extent permitted under subsection 7.15.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person
shall be construed as a reference to a tax imposed by the jurisdiction in which
that Person's principal office (and/or, in the case of a Lender, its lending
office) is located or in which that Person is deemed to be doing business on
all or part of the net income, profits or gains of that Person (whether
worldwide, or only insofar as such income, profits or gains are considered to
arise in or to relate to a particular jurisdiction, or otherwise).
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans made to Company plus (ii) the Letter of Credit
Usage with respect to all Letters of Credit issued for the account of Company.
"TRANSACTION COSTS" means the fees, costs and expenses payable
by any Loan Party on or before the Closing Date in connection with the
transactions contemplated hereby or by the Recapitalization Agreement.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural,
depending on the reference. An Event of Default shall "continue" or be
"continuing" until
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such Event of Default has been waived in accordance with subsection 10.6
hereof.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company
herein set forth, each Lender hereby severally agrees, subject to the
limitations set forth below with respect to the maximum amount of Revolving
Loans permitted to be outstanding from time to time, to lend to Company from
time to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date an aggregate amount not exceeding
its Pro Rata Share of the aggregate amount of the Revolving Loan Commitments to
be used for the purposes identified in subsection 2.5. The original amount of
each Lender's Revolving Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate original amount of the Revolving
Loan Commitments is $25,000,000; provided that the Revolving Loan Commitments
of Lenders shall be adjusted to give effect to any assignments of the Revolving
Loan Commitments pursuant to subsection 10.1B. Each Lender's Revolving Loan
Commitment shall expire on the Revolving Loan Commitment Termination Date and
all Revolving Loans and all other amounts owed hereunder with respect to the
Revolving Loans and the Revolving Loan Commitments shall be paid in full no
later than that date. Amounts borrowed under this subsection 2.1A may be
repaid and reborrowed to, but excluding the Revolving Loan Commitment
Termination Date, at any time and from time to time without premium or penalty
except as provided in subsection 2.6D.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan
Commitments shall be subject to the following limitations in the
amounts indicated:
(a) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the Revolving
Loan Commitments then in effect; and
(b) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the Borrowing
Base then in effect.
B. BORROWING MECHANICS. Revolving Loans made on any Funding Date
as Base Rate Loans shall not be subject to any minimum amounts. Revolving
Loans made on any Funding Date as Eurodollar Rate Loans shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in
excess of that amount. Whenever Company desires that Lenders make Revolving
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Loans it shall deliver to Agent a Notice of Borrowing no later than 1:00 P.M.
(New York time) at least three Business Days in advance of the proposed Funding
Date (in the case of a Eurodollar Rate Loan) or no later than 1:00 P.M. (New
York time) on the proposed Funding Date (in the case of a Base Rate Loan). The
Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be
a Business Day), (ii) the amount and type of Loans requested, (iii) in the case
of Loans made on the Closing Date, that such Loans shall be Base Rate Loans,
(iv) in the case of Revolving Loans not made on the Closing Date, whether such
Loans shall be Base Rate Loans or Eurodollar Rate Loans, (v) in the case of any
Loans requested to be made as Eurodollar Rate Loans, the initial Interest
Period requested therefor and (vi) in the case of Revolving Loans, that, after
giving effect to the requested Loans, the Total Utilization of Revolving Loan
Commitments will not exceed the Revolving Loan Commitments and the Borrowing
Base then in effect. Revolving Loans may be continued as or converted into
Base Rate Loans and Eurodollar Rate Loans in the manner provided in subsection
2.2D. In lieu of delivering the above-described Notice of Borrowing, Company
may give Agent telephonic notice by the required time of any proposed borrowing
under this subsection 2.1B; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Borrowing to Agent on or before
the applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Company or for otherwise acting in
good faith under this subsection 2.1B, and upon funding of Loans by Daily
Funding Lender and/or Lenders in accordance with this Agreement pursuant to any
such telephonic notice Company shall have effected Loans hereunder.
The Company shall notify Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds
of any Loans shall constitute a re-certification by Company, as of the
applicable Funding Date, as to the matters to which Company is required to
certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and the Company shall be bound to either (i) make a
borrowing in accordance therewith or (ii) pay all amounts due under subsection
2.6D.
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C. DISBURSEMENT OF FUNDS.
(i) Subject to this subsection 2.1C and subsection 2.1D,
all Loans under this Agreement shall be made by Lenders simultaneously
and proportionately to their respective Pro Rata Shares, it being
understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender to make the
particular type of Loan requested be increased or decreased as a
result of a default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder.
(ii) Upon receipt by Agent of a Notice of Borrowing
pursuant to subsection 2.1B (or telephonic notice in lieu thereof) for
Revolving Loans that consist of Base Rate Loans and upon satisfaction
or waiver of the conditions precedent specified in subsection 4.1 (in
the case of Loans made on the Closing Date) and, subject to the
provisions set forth in the immediately succeeding paragraph,
subsection 4.2 (in the case of all Loans), Daily Funding Lender shall,
without prior notice to the other Lenders, make such Revolving Loans
for its own account on the applicable Funding Date (subject to
settlement with the other Lenders in accordance with subsection 2.1D)
by making the proceeds of such Revolving Loans available to the
Company on such Funding Date by causing an amount of same day funds
equal to the proceeds of such Revolving Loans to be credited to the
account of Company at the Funding and Payment Office. Such Revolving
Loans shall constitute Revolving Loans by Daily Funding Lender for all
purposes under the Loan Documents, subject to settlement with the
other Lenders pursuant to subsection 2.1D. All interest accrued on
any such Revolving Loans from the date made by Daily Funding Lender to
the Settlement Date with respect thereto shall be for Daily Funding
Lender's own account. Daily Funding Lender shall make Revolving Loans
for its own account pursuant to this subsection 2.1C(ii)
notwithstanding the fact that the principal amount of such Revolving
Loans, when added to the aggregate principal amount of Daily Funding
Lender's Revolving Loans then outstanding, may exceed Daily Funding
Lender's Revolving Loan Commitment then in effect; provided that such
Revolving Loans shall at all times be Obligations owed to Daily
Funding Lender under this Agreement; and provided, further that in no
event shall the aggregate principal amount of all Revolving Loans,
including such Revolving Loans, outstanding at any time exceed the
aggregate Revolving Loan Commitments then in effect minus the Letter
of Credit Usage as of such time.
Notwithstanding anything in this Agreement to the
contrary, if the conditions precedent specified in
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subsection 4.2 cannot be fulfilled with respect to any proposed
Revolving Loans that consist of Base Rate Loans, the Company shall, in
its Notice of Borrowing or otherwise, give immediate written notice
thereof (specifying the circumstances which prevent the conditions
precedent from being fulfilled) to Agent, with a copy to each Lender,
and Daily Funding Lender may (and each Lender hereby authorizes Daily
Funding Lender to), but is not obligated to, continue to make
Revolving Loans that are Base Rate Loans for 20 Business Days from the
date Agent first receives such notice, or until sooner instructed by
Requisite Lenders to cease making such Revolving Loans (the "DAILY
FUNDING LENDER DISCRETIONARY PERIOD"). Once notice is given by the
Company that circumstances exist which prevent the conditions
precedent to borrowing from being fulfilled, no additional notice with
respect to the same circumstances will be effective to commence a new
Daily Funding Lender Discretionary Period.
(iii) Promptly after receipt by Agent of a Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu
thereof) for any Loans (other than for Revolving Loans that consist of
Base Rate Loans), Agent shall notify each Lender of the proposed
borrowing. Each Lender shall make the amount of its Loan available to
Agent, in same day funds in Dollars, at the Funding and Payment
Office, not later than 1:00 P.M. (New York time) on the applicable
Funding Date. Except as provided in subsection 3.3B with respect to
Revolving Loans used to reimburse any Issuing Lender for the amount of
a drawing under a Letter of Credit issued by it, upon satisfaction or
waiver of the conditions precedent specified in subsections 4.1 (in
the case of Loans made on the Closing Date) and, subject to the
provisions set forth in the immediately preceding paragraph, 4.2 (in
the case of all Loans), Agent shall make the proceeds of such Loans
available to the Company on the applicable Funding Date by causing an
amount of same day funds in Dollars equal to the proceeds of all such
Loans received by Agent, from Lenders to be credited to the account of
the Company at the Funding and Payment Office.
Unless Agent shall have been notified by any Lender prior to
the Funding Date for any Loans pursuant to this subsection 2.1C(ii)
that such Lender does not intend to make available to Agent the amount
of such Lender's Loan requested on such Funding Date, Agent may assume
that such Lender has made such amount available to Agent on such
Funding Date and Agent may, in its sole discretion, but shall not be
obligated to, make available to the Company a corresponding amount on
such Funding Date. If such corresponding amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover
such corresponding amount on demand from such Lender together
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with interest thereon, for each day from such Funding Date until the
date such amount is paid to Agent, at the customary rate set by Agent
for the correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon Agent's demand therefor, Agent
shall promptly notify the Company and the Company shall immediately
pay such corresponding amount to Agent together with interest thereon,
for each day from such Funding Date until the date such amount is paid
to Agent, at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Company may have against any Lender as a
result of any default by such Lender hereunder.
D. SETTLEMENT PROCEDURES.
(i) Daily Funding Lender will from time to time notify
the other Lenders, not later than 12:00 Noon (New York time) (a) on at
least one Business Day during each seven calendar-day period, (b) on
each date on which payment of interest on any Revolving Loans is
required to be made pursuant to subsection 2.2C, (c) on the Revolving
Loan Commitment Termination Date, and (d) at such other times as Daily
Funding Lender in its discretion may determine (each such notice by
Daily Funding Lender being a "SETTLEMENT NOTICE" and the date of each
Settlement Notice being a "SETTLEMENT DATE") of the aggregate
principal amount of outstanding Revolving Loans made by Daily Funding
Lender and each other Lender as of the close of business on the
Business Day immediately preceding the applicable Settlement Date.
(ii) If a Settlement Notice indicates that the aggregate
principal amount of outstanding Revolving Loans made by Daily Funding
Lender (including Revolving Loans made for its own account pursuant to
subsection 2.1C(ii)) is in excess of Daily Funding Lender's Pro Rata
Share of the aggregate principal amount of outstanding Revolving Loans
made by all Lenders (the amount of such excess being the "EXCESS
FUNDED AMOUNT"), each other Lender will, not later than 1:00 P.M. (New
York time) on the applicable Settlement Date, pay to Daily Funding
Lender, by depositing same day funds in the account specified by Daily
Funding Lender at the Funding and Payment Office, an amount equal to
such Lender's Adjusted Pro Rata Share of the Excess Funded Amount,
upon which payment Daily Funding Lender shall be deemed to have sold,
and such Lender shall be deemed to have purchased, as of the
applicable Settlement Date, a portion of the outstanding Revolving
Loans made by Daily Funding Lender for its own account pursuant to
subsection 2.1C(ii) on or after the immediately preceding Settlement
Date equal
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to such Lender's Adjusted Pro Rata Share of the Excess Funded Amount.
The obligation of each Lender to purchase a portion of any Revolving
Loan made by Daily Funding Lender as provided in this subsection
2.1D(ii) is subject to the condition that at the time such Revolving
Loan was made by Daily Funding Lender (a) the duly authorized officer
of Daily Funding Lender responsible for the administration of Daily
Funding Lender's credit relationship with Company believed in good
faith that either (X) no Event of Default had occurred and was
continuing or (Y) any Event of Default that had occurred and was
continuing had been waived by Requisite Lenders at the time such
Revolving Loan was made or (b) a Daily Funding Lender Discretionary
Period was in effect.
(iii) If a Settlement Notice indicates that the aggregate
principal amount of outstanding Revolving Loans made by Daily Funding
Lender is less than Daily Funding Lender's Pro Rata Share of the
aggregate principal amount of outstanding Revolving Loans made by all
Lenders (the amount of such difference being the "EXCESS PAYDOWN
AMOUNT"), Daily Funding Lender will, no later than 1:00 P.M. (New York
time) on the applicable Settlement Date, unconditionally pay to each
other Lender, by depositing same day funds in the account specified by
such Lender to Daily Funding Lender, an amount equal to such Lender's
Adjusted Pro Rata Share of the Excess Paydown Amount, upon which
payment such Lender shall be deemed to have sold, and Daily Funding
Lender shall be deemed to have purchased, as of the applicable
Settlement Date, a portion of the outstanding Revolving Loans of such
Lender equal to such Lender's Adjusted Pro Rata Share of the Excess
Paydown Amount.
(iv) Except as provided in subsection 2.1D(ii), the
obligations of Daily Funding Lender and each other Lender pursuant to
subsections 2.1D(ii) and 2.1D(iii) shall be absolute and unconditional
and shall not be affected by any circumstance, including, without
limitation, (a) any set-off, counterclaim, recoupment, defense or
other right which Agent or any Lender may have against Agent, any
other Lender, any Loan Party or any other Person for any reason
whatsoever; (b) the occurrence or continuance of an Event of Default
or a Potential Event of Default; (c) any adverse change in the
condition (financial or otherwise) of any Loan Party; (d) any breach
of this Agreement by Company, Agent or any Lender; or (e) any other
circumstance, happening, or event whatsoever, whether or not similar
to any of the foregoing. In the event that any Person (the "PAYOR")
obligated to make a payment to any other Person (the "PAYEE") pursuant
to this subsection 2.1D fails to make available to the Payee the
amount of such payment required to be made by the Payor, the Payee
shall be entitled to recover such amount on demand from the Payor
together with
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interest at the customary rate set by BTCC for the correction of
errors among Lenders for three Business Days and thereafter at the sum
of the Base Rate plus 1.50% per annum.
(v) In the event that all or any portion of any repayment
of principal of the Revolving Loans is thereafter recovered by or on
behalf of Company from Daily Funding Lender (including any such
recovery in a proceeding under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect) in an amount that is
proportionately greater (based on the respective Pro Rata Shares of
Lenders) than any such recovery from the other Lenders, the loss of
the amount so recovered shall be ratably shared among all Lenders in
the manner contemplated by subsection 10.5.
E. THE REGISTER.
(i) Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "REGISTER"). The Register shall be available for
inspection by Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) Agent shall record in the Register the Revolving Loan
Commitment and Revolving Loans from time to time of each Lender and
each repayment or prepayment in respect of the principal amount of the
Revolving Loans of each Lender. Any such recordation shall be
conclusive and binding on Company and each Lender, absent manifest
error; provided that failure to make any such recordation, or any
error in such recordation, shall not affect Company's Obligations in
respect of the applicable Loans.
(iii) Each Lender shall record on its internal records
(including, without limitation, the Notes held by such Lender) the
amount of each Loan made by it and each payment in respect thereof.
Any such recordation shall be conclusive and binding on Company,
absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect
Company's Obligations in respect of the applicable Loans; and
provided, further that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register
shall govern.
(iv) Company, Agent and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all
purposes hereof, and no assignment or
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transfer of any such Commitment or Loan shall be effective, in each
case unless and until an Assignment Agreement effecting the assignment
or transfer thereof shall have been accepted by Agent and recorded in
the Register as provided in subsection 10.1B(ii). Prior to such
recordation, all amounts owed with respect to the applicable
Commitment or Loan shall be owed to the Lender listed in the Register
as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such
authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Commitments or Loans.
(v) Company hereby designates BTCC to serve as Company's
agent solely for purposes of maintaining the Register as provided in
this subsection 2.1E, and Company hereby agrees that, to the extent
BTCC serves in such capacity, BTCC and its officers, directors,
employees, agents and affiliates shall constitute Indemnitees for all
purposes under subsection 10.3.
F. NOTES. Company shall execute and deliver to each Lender (or
to Agent for that Lender) on the Closing Date a Revolving Note substantially in
the form of Exhibit IV annexed hereto to evidence that Lender's Revolving
Loans, in the principal amount of that Lender's Revolving Loan Commitment and
with other appropriate insertions.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections
2.2G, 2.6 and 2.7, each Loan shall bear interest on the unpaid principal amount
thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to, in the case of Loans, the Base
Rate or the Adjusted Eurodollar Rate. The applicable basis for determining the
rate of interest with respect to any Loan shall be selected by the Company
initially at the time a Notice of Borrowing is given with respect to such Loan
pursuant to subsection 2.1B, and the basis for determining the interest rate
with respect to any Loan may be changed from time to time pursuant to
subsection 2.2D. If on any day a Loan is outstanding with respect to which
notice has not been delivered to Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Loan shall bear interest determined by reference to the
Base Rate.
(i) Subject to the provisions of subsections 2.2E and
2.7, the Loans shall bear interest through maturity as follows:
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(a) if a Base Rate Loan, then at the sum of the
Base Rate plus 1.00% per annum; or
(b) if a Eurodollar Rate Loan, then at the sum of
the Adjusted Eurodollar Rate plus 2.25% per annum.
B. INTEREST PERIODS. In connection with each Eurodollar Rate
Loan, Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any such Loan shall
commence on the Funding Date in respect of such Loan, in the case of a
Loan initially made as a Eurodollar Rate Loan, or on the date
specified in the applicable Notice of Conversion/Continuation, in the
case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest
Periods applicable to a Eurodollar Rate Loan continued as such
pursuant to a Notice of Conversion/Continuation, each successive
Interest Period shall commence on the day on which the next preceding
Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding
Business Day;
(iv) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period shall extend beyond the Revolving
Loan Commitment Termination Date;
(vi) there shall be no more than three Interest Periods
outstanding at any time; and
(vii) in the event Company fails to specify an Interest
Period for any Eurodollar Rate Loan, in the applicable Notice of
Borrowing or Notice of Conversion/Continuation, Company shall be
deemed to have selected an Interest Period of one month.
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C. INTEREST PAYMENTS. Subject to the provisions of subsection
2.2E, interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Revolving Loans that are Base Rate
Loans are prepaid pursuant to subsection 2.4A(i), interest accrued on such
Revolving Loans through the date of such prepayment shall be payable on the
next succeeding Interest Payment Date applicable to Base Rate Loans (or, if
earlier, at final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of
subsection 2.6, Company shall have the option (i) from and after the earlier to
occur of (a) the date which is 90 days after the Closing Date and (b) the date
on which Agent notifies Company that the primary syndication of the Commitments
and the Loans has been completed, to convert at any time all or any part of its
outstanding Revolving Loans equal to $1,000,000 and integral multiples of
$100,000 in excess of that amount from Base Rate Loans to Eurodollar Rate
Loans, or (ii) upon the expiration of any Interest Period applicable to a
Eurodollar Rate Loan, to continue all or any portion of such Loan equal to
$1,000,000 and integral multiples of $100,000 in excess of that amount as a
Eurodollar Rate Loan; or (iii) subject to the payment of all amounts due under
subsection 2.6D, to convert a Eurodollar Rate Loan into a Base Rate Loan at any
time.
The Company shall deliver a Notice of Conversion/ Continuation
to Agent no later than 1:00 P.M. (New York time) of the proposed conversion
date (in the case of a conversion to a Base Rate Loan) or at least three
Business Days in advance of the proposed conversion/continuation date (in the
case of a conversion to, or a continuation of, a Eurodollar Rate Loan. A
Notice of Conversion/Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
and type of the Loan to be converted/continued, (iii) the nature of the
proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v)
in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan,
that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above- described Notice of
Conversion/Continuation, the Company may give Agent telephonic notice by the
required time of any proposed conversion/continuation under this subsection
2.2D; provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Conversion/Continuation to Agent on or before the
proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly
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authorized officer or other person authorized to act on behalf of Company or
for otherwise acting in good faith under this subsection 2.2D, and upon
conversion or continuation of the applicable basis for determining the interest
rate with respect to any Loans in accordance with this Agreement pursuant to
any such telephonic notice Company shall have effected a conversion or
continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Conversion/Continuation for conversion to, or continuation
of, a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and the
Company shall be bound to effect a conversion or continuation in accordance
therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation
of any Event of Default, the outstanding principal amount of all Loans and, to
the extent permitted by applicable law, any interest payments thereon not paid
when due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post- petition interest in any proceeding
under the Bankruptcy Code or other applicable Insolvency Laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to Base Rate Loans. Payment or
acceptance of the increased rates of interest provided for in this subsection
2.2E is not a permitted alternative to timely payment and shall not constitute
a waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be
computed on the basis of a 360-day year, in each case for the actual number of
days elapsed in the period during which it accrues. In computing interest on
any Loan, (i) the date of the making of such Loan or the first day of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan shall be included, and (ii) the
date of payment of such Loan or the expiration date of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted to
a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such
Eurodollar Rate Loan shall be excluded; provided that if a Loan is repaid on
the same day on which it is made, one day's interest shall be paid on that
Loan.
G. LIMITATION ON INTEREST. It is the intention of the parties
hereto to comply with all applicable usury laws, whether now existing or
hereafter enacted. Accordingly, notwithstanding any provision to the contrary
in this Agreement, the Notes, the other Loan Documents or any other document
evidencing, securing, guaranteeing or otherwise pertaining to the Obligations
of the
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Company to the Lenders, in no contingency or event whatsoever, whether by
acceleration of the maturity of indebtedness of the Company to the Lenders or
otherwise, shall the interest contracted for, charged or received by the
Lenders exceed the maximum amount permissible under applicable law. If from
any circumstances whatsoever fulfillment of any provisions of this Agreement,
the Notes, the other Loan Documents or of any other document evidencing,
securing, guaranteeing or otherwise pertaining to the Obligations of the
Company to the Lenders, at the time performance of such provision shall be due,
shall involve transcending the limit of validity prescribed by law, then, ipso
facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lenders shall ever receive
anything of value as interest or deemed interest by applicable law under this
Agreement, the Notes, the other Loan Documents or any other document
evidencing, securing, guaranteeing or otherwise pertaining to the Obligations
of the Company to the Lenders or otherwise an amount that would exceed the
highest lawful amount (the "Maximum Rate"), such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing in
connection with this Agreement or on account of any other indebtedness of the
Company to the Lenders, and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal owing in connection
with this Agreement and such other indebtedness, such excess shall be refunded
to the Company. In determining whether or not the interest paid or payable
with respect to indebtedness of Company to the Lenders, under any specific
contingency, exceeds the maximum nonusurious rate permitted under applicable
law, the Lenders may, at their option, (a) characterize any non- principal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, (c) amortize, prorate, allocate
and spread the total amount of interest throughout the full term of such
indebtedness so that the actual rate of interest on account of such
indebtedness does not exceed the maximum amount permitted by applicable law,
and/or (d) allocate interest between portions of the Obligations, to the end
that no such portion shall bear interest at a rate greater than that permitted
by law. Notwithstanding the foregoing, if for any period of time interest on
any Obligations is calculated at the Maximum Rate rather than the applicable
rate under this Agreement, and thereafter such applicable rate becomes less
than the Maximum Rate, the rate of interest payable on such Obligations shall
remain at the Maximum Rate until each Lender shall have received the amount of
interest which such Lender would have received during such period on such
Obligations had the rate of interest not been limited to the Maximum Rate
during such period.
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2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average
of the daily excess of the Revolving Loan Commitments over the Total
Utilization of Revolving Loan Commitments multiplied by 1/2 of 1% per annum,
such commitment fees to be calculated on the basis of a 360-day year and the
actual number of days elapsed and to be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, commencing on the first
such date to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date.
B. OTHER FEES. Company agrees to pay to Agent such other fees in
the amounts and at the times separately agreed upon between Company and Agent.
2.4 PREPAYMENTS OF REVOLVING LOANS; GENERAL PROVISIONS REGARDING PAYMENTS;
TERMINATION OF COMMITMENTS.
A. PREPAYMENTS OF REVOLVING LOANS.
(i) Mandatory Prepayments of Revolving Loans.
(a) Prepayments Due to Reductions or Restrictions
of Revolving Loan Commitments or Due to Insufficient Borrowing
Base. Company shall from time to time prepay the Revolving
Loans to the extent necessary so that (1) the Total
Utilization of Revolving Loan Commitments shall not at any
time exceed the Revolving Loan Commitments then in effect and
(2) the Total Utilization of Revolving Loan Commitments shall
not exceed at any time the Borrowing Base then in effect. Any
such mandatory prepayments shall be applied as specified in
subsection 2.4A(ii).
(b) Prepayments of Revolving Loans from Amounts
Transferred to BTCC Account. If any amounts are transferred
to the BTCC Account on any Business Day pursuant to the terms
of any Blocked Account Agreement, if any, then on such
Business Day, if such amounts are transferred to the BTCC
Account prior to 12:00 Noon (New York time) on such Business
Day, or on the next succeeding Business Day, if such amounts
are transferred to the BTCC Account on or after 12:00 Noon
(New York time) on such Business Day, Company shall prepay
Company's Revolving Loans in an amount equal to the amount
transferred to the BTCC Account pursuant to the terms of the
applicable Blocked Account Agreement on such Business Day (to
the extent such amount relates
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to payments received in respect of Accounts of Company or any of its
Subsidiaries) until all of Company's Revolving Loans shall have been
paid in full. Any such mandatory prepayments shall be applied as
specified in subsection 2.4A(ii).
(ii) Application of Prepayments. Any prepayments pursuant
to subsection 2.4A(i) shall be applied as specified by the Company in
the applicable notice of prepayment; provided that in the event
Company fails to specify the Loans to which any such prepayment shall
be applied, such prepayment shall be applied first to Base Rate Loans
to the full extent thereof before application to Eurodollar Rate
Loans, in each case in a manner which minimizes the amount of any
payments required to be made by Company pursuant to subsection 2.6D.
B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company
of principal, interest, fees and other Obligations hereunder and under
the Notes shall be made in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and
delivered to Agent not later than 1:00 P.M. (New York time) on the
date due at the Funding and Payment Office for the account of Lenders.
Funds received by Agent after that time on such due date shall be
deemed to have been paid by the Company on the next succeeding
Business Day. In order to effect timely payment of any interest,
fees, commissions or other amounts due hereunder, Company hereby
authorizes Agent to request Daily Funding Lender to make Revolving
Loans for its own account (subject to settlement pursuant to
subsection 2.1D) in a principal amount equal to such interest, fees,
commissions or other amounts; provided that Agent shall not have the
right to request such Revolving Loans if, after giving effect to such
Revolving Loans, (a) the aggregate outstanding principal amount of
Revolving Loans would exceed the Revolving Loan Commitments then in
effect minus the Letter of Credit Usage, or (b) the Total Utilization
of Revolving Loan Commitments would exceed the Borrowing Base then in
effect. Daily Funding Lender shall make the amount of such Revolving
Loans (which shall be made as Base Rate Loans) available to Agent, in
same day funds, at the Funding and Payment Office, not later than 1:00
P.M. (New York time) on the date requested by Agent, and Company and
Lenders hereby authorize Agent, whether or not the conditions
specified in subsection 4.2 have been satisfied or waived, to apply
the proceeds of such Revolving Loans directly to the payment of such
unpaid interest, fees, commissions or other amounts. Company hereby
agrees that, upon the funding of any such Revolving Loans by Daily
Funding Lender in accordance with the provisions of this subsection
2.4B(i),
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Company shall have effected Revolving Loans hereunder, which Revolving
Loans shall for all purposes of this Agreement be deemed to have been
made by Daily Funding Lender pursuant to and in accordance with the
provisions of subsection 2.1C(ii). Agent shall deliver prompt notice
to Company of the amount of Revolving Loans made pursuant to this
subsection 2.4B together with copies of all invoices or other
statements evidencing the fees, commissions or other amounts due
hereunder (other than interest) paid with the proceeds of such
Revolving Loans; provided that Agent shall give notice to Company five
Business Days in advance of the making of any such Revolving Loans for
the payment of any amounts owed under subsection 10.2 together with
copies of all invoices or other statements evidencing such amounts.
In addition, Company hereby authorizes Agent to charge its accounts
with Agent in order to cause timely payment to be made to Agent of all
principal, interest, fees and expenses due hereunder (subject to
sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest.
Except as provided in subsection 2.2C, all payments in respect of the
principal amount of any Loan shall include payment of accrued interest
on the principal amount being repaid or prepaid, and all such payments
(and, in any event, any payments in respect of any Loan on a date when
interest is due and payable with respect to such Loan) shall be
applied to the payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned among all outstanding Loans to
which such payments relate, in each case proportionately to Lenders'
respective Pro Rata Shares of such Loans; provided that (i) payments
of principal in respect of the Revolving Loans pursuant to subsection
2.4A(i)(b) shall be applied to reduce the outstanding Revolving Loans
of Daily Funding Lender (subject to settlement pursuant to subsection
2.1D) prior to application to the outstanding Revolving Loans of any
other Lender and (ii) payments of interest in respect of Revolving
Loans which are Base Rate Loans shall be apportioned ratably among
Lenders in proportion to the average daily amount of such Base Rate
Loans of each Lender outstanding during the period in which such
interest shall have accrued. Agent shall promptly distribute to each
Lender, at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such
Lender may request, its Pro Rata Share of all such payments received
by Agent in respect of Loans and the commitment fees of such Lender
when received by Agent pursuant to subsection 2.3. Notwithstanding
the foregoing provisions of this subsection 2.4B(iii), if, pursuant to
the provisions of subsection
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2.6C, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in
lieu of its Pro Rata Share of any Eurodollar Rate Loans, Agent shall
give effect thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to
be made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), Lender will make a notation thereon
of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which interest thereon has
been paid; provided that the failure to make (or any error in the
making of) a notation of any Loan made under such Note shall not limit
or otherwise affect the obligations of Company hereunder or under such
Note with respect to any Loan or any payments of principal or interest
on such Note.
C. TERMINATION OF COMMITMENTS. Company may, upon not less than
three Business Days' prior written notice confirmed in writing to Agent (which
original written or telephonic notice Agent will promptly transmit by facsimile
or telephone to each Lender), at any time terminate in whole, without premium
or penalty, the Revolving Loan Commitments; provided that Company upon the
effectiveness of such termination repays in full all outstanding Loans and
fully cash collaterizes all outstanding Letters of Credit or makes such other
arrangements as are satisfactory in form and substance to Agent for the
termination of such Letters of Credit.
2.5 USE OF PROCEEDS.
A. REVOLVING LOANS. The proceeds of any Revolving Loans shall be
applied by Company for working capital and general corporate purposes.
B. MARGIN REGULATIONS. No portion of the proceeds of any
borrowing under this Agreement shall be used by Company or any of its
Subsidiaries in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board or to violate the Exchange Act, in each case as in
effect on the date or dates of such borrowing and such use of proceeds.
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2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as
practicable after 12:00 noon (New York time) on each Interest Rate
Determination Date, Agent shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the Eurodollar Rate Loans for which an interest rate
is then being determined for the applicable Interest Period and shall promptly
give notice thereof (in writing or by telephone confirmed in writing) to the
Company and each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event
that Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Agent shall
on such date give notice (by telefacsimile or by telephone confirmed in
writing) to the Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Agent notifies Company and such Lenders that the circumstances giving rise to
such notice no longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by
Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In
the event that on any date any Lender shall have determined (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with Company and Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not
be unlawful) or (ii) has become impracticable, or would cause such Lender
material hardship, as a result of contingencies occurring after the date of
this Agreement which materially and adversely affect the interbank Eurodollar
market or the position of such Lender in that market, then, and in any such
event, such Lender shall be an "AFFECTED LENDER" and it shall on that day give
notice (by telefacsimile or by telephone confirmed in writing) to Company
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and Agent of such determination (which notice Agent shall promptly transmit to
each other Lender). Thereafter (a) the obligation of the Affected Lender to
make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended
until such notice shall be withdrawn by the Affected Lender, (b) to the extent
such determination by the Affected Lender relates to a Eurodollar Rate Loan
then being requested by Company pursuant to a Notice of Borrowing or a Notice
of Conversion/Continuation, the Affected Lender shall make such Loan as (or
convert such Loan to, as the case may be) a Base Rate Loan (c) the Affected
Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the
"AFFECTED LOANS"), shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation,
Company shall have the option, subject to the provisions of subsection 2.6D, to
rescind such Notice of Borrowing or Notice of Conversion/Continuation as to all
Lenders by giving notice (by telefacsimile or by telephone confirmed in
writing) to Agent of such rescission on the date on which the Affected Lender
gives notice of its determination as described above (which notice of
rescission Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST
PERIODS. The Company shall compensate each Lender, upon written request by
that Lender (which request shall set forth the basis for requesting such
amounts), for all reasonable losses, expenses and liabilities (including,
without limitation, any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense
or liability sustained by that Lender in connection with the liquidation or
re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Eurodollar Rate
Loan does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic request for conversion or continuation,
(ii) if any prepayment or other principal payment or any conversion of any of
its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by the Company, or
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(iv) as a consequence of any other default by Company in the repayment of its
Eurodollar Rate Loans when required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry
or transfer Eurodollar Rate Loans at, to, or for the account of any of its
branch offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had actually funded
each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; provided, however, that each Lender may fund each of its Eurodollar
Rate Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this
subsection 2.6 and under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of
and during the continuation of a Potential Event of Default or an Event of
Default, (i) Company may not elect to have a Loan be made or maintained as, or
converted to, a Eurodollar Rate Loan after the expiration of any Interest
Period then in effect for that Loan and (ii) subject to the provisions of
subsection 2.6D, any Notice of Borrowing or Notice of Conversion/Continuation
given by Company with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after
the date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force
of law):
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(i) subjects such Lender (or its applicable lending
office) to any additional Tax (other than any franchise Tax levied on
such Lender or any Tax measured with respect to the overall net income
or capital of such Lender ("Excluded Taxes")) with respect to this
Agreement or any of its obligations hereunder or any payments to such
Lender (or its applicable lending office) of principal, interest, fees
or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by,
any office of such Lender (other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected
in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect
to a Tax matter) on or affecting such Lender (or its applicable
lending office) or its obligations hereunder or the interbank
Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender
of agreeing to make, making or maintaining Loans hereunder or to reduce any
amount received or receivable by such Lender (or its applicable lending office)
with respect thereto; then, in any such case, Company shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder; provided that a Lender shall not be entitled to avail itself of the
benefit of this subsection 2.7A to the extent that any such increased cost or
reduction in amounts was incurred more than twenty-four months prior to the
time it gives notice to Company (as provided in the next sentence) of the
relevant circumstance, unless such circumstance arose or became applicable
retrospectively, in which case such Lender shall not be limited to such
twenty-four month period so long as such Lender has given such notice to
Company no later than twenty-four months from the time circumstance became
applicable to such Lender. Such Lender shall deliver to the Company (with a
copy to Agent) a written statement, setting forth in reasonable detail the
basis for calculating the additional amounts owed to such Lender under this
subsection 2.7A, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
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B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by
Company under this Agreement and the other Loan Documents shall
(except to the extent required by law) be paid free and clear of, and
without any deduction or withholding on account of, any Tax (other
than Excluded Taxes) imposed, levied, collected, withheld or assessed
by or within the United States of America or any political subdivision
in or of the United States of America or any other jurisdiction from
or to which a payment is made by or on behalf of Company or by any
federation or organization of which the United States of America or
any such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other
Person is required by law to make any deduction or withholding on
account of any such Tax (other than an Excluded Tax) from any sum paid
or payable by Company to Agent or any Lender under any of the Loan
Documents:
(a) Company shall notify Agent of any such
requirement or any change in any such requirement as soon as
Company becomes aware of it;
(b) Company shall pay any such Tax before the
date on which penalties attach thereto, such payment to be
made (if the liability to pay is imposed on Company) for its
own account or (if that liability is imposed on Agent or such
Lender, as the case may be) on behalf of and in the name of
Agent or such Lender;
(c) the sum payable by Company in respect of
which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to ensure
that, after the making of that deduction, withholding or
payment, Agent or such Lender, as the case may be, receives on
the due date a net sum equal to what it would have received
had no such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any sum from
which it is required by law to make any deduction or
withholding, and within 30 days after the due date of payment
of any Tax which it is required by clause (b) above to pay,
Company shall deliver to Agent evidence satisfactory to the
other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing
or other authority;
provided that no such additional amount shall be required to be paid
to any Lender under clause (c) above except to the extent that any
change after the date hereof (in the case of
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each Lender listed on the signature pages hereof) or after the date of
the Assignment Agreement pursuant to which such Lender became a Lender
(in the case of each other Lender) in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result
in an increase in the rate of such deduction, withholding or payment
from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments
to such Lender.
(iii) Evidence of Exemption from Withholding Taxes.
(a) Each Lender that is organized under the laws
of any jurisdiction other than the United States or any state
or other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "NON-US LENDER") shall deliver to
Agent for transmission to Company, on or prior to the Closing
Date (in the case of each Lender listed on the signature pages
hereof) or on or prior to the date of the Assignment Agreement
pursuant to which it becomes a Lender (in the case of each
other Lender), and at such other times as may be necessary in
the determination of Company or Agent (each in the reasonable
exercise of its discretion), (X) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any successor
forms), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required under the Internal Revenue Code or the regulations
issued thereunder to establish that such Lender is not subject
to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (Y) if such Lender is not a "bank" or other
Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form
1001 or 4224 pursuant to clause (X) above, a Certificate re
Non-Bank Status together with two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect
to any payments to such Lender of interest payable under any
of the Loan Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to
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time after the initial delivery by such Lender of such forms,
certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or
other evidence obsolete or inaccurate in any material respect,
that such Lender shall (1) promptly deliver to Agent for
transmission to Company, two new original copies of Internal
Revenue Service Form 1001 or 4224, or a Certificate re Non-Bank
Status and two original copies of Internal Revenue Service Form
W-8, as the case may be, properly completed and duly executed
by such Lender, together with any other certificate or
statement of exemption required in order to confirm or
establish that such Lender is not subject to deduction or
withholding of United States (as applicable) federal income tax
with respect to payments to such Lender under the Loan
Documents or (2) notify Agent and Company of its inability to
deliver any such forms, certificates or other evidence.
(c) The Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to
satisfy the requirements of clause (a) or (b) of this
subsection 2.7B(iii); provided that if such Lender shall have
satisfied the requirements of subsection 2.7B(iii)(a) on the
Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment
Agreement pursuant to which it became a Lender (in the case of
each other Lender), nothing in this subsection 2.7B(iii)(c)
shall relieve the Company of its obligation to pay any
additional amounts pursuant to clause (c) of subsection
2.7B(ii) in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation or
order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not
subject to withholding as described in subsection
2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability after
the date hereof of any law, rule or regulation (or any provision thereof)
regarding capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its applicable lending office) with any guideline,
request or directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
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capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans, Commitments or
Letters of Credit or participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit, in the case of any Lender to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Company from such Lender of
the statement referred to in the next sentence, Company shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Agent) a written statement, setting
forth in reasonable detail the basis of the calculation of such additional
amounts, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
Each Lender and Issuing Lender agrees that, as promptly as
practicable after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Lender,
as the case may be, becomes aware of the occurrence of an event or the
existence of a condition that would cause such Lender to become an Affected
Lender or that would entitle such Lender or Issuing Lender to receive payments
under subsection 2.7 or subsection 3.6, it will, to the extent not inconsistent
with the internal policies of such Lender or Issuing Lender and any applicable
legal or regulatory restrictions, use reasonable efforts (i) to make, issue,
fund or maintain the Commitments of such Lender or the affected Loans or
Letters of Credit of such Lender or Issuing Lender through another lending or
letter of credit office of such Lender or Issuing Lender, or (ii) take such
other measures as such Lender or Issuing Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an
Affected Lender would cease to exist or the additional amounts which would
otherwise be required to be paid to such Lender or Issuing Lender pursuant to
subsection 2.7 or subsection 3.6 would be materially reduced and if, as
determined by such Lender or Issuing Lender in its sole discretion, the making,
issuing, funding or maintaining of such Commitments or Loans or Letters of
Credit through such other lending or letter of credit office or in accordance
with such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or Letters of Credit or the
interests of such Lender or Issuing Lender; provided that such Lender or
Issuing Lender will not be obligated to utilize such other lending or letter of
credit office pursuant to this subsection 2.8 unless Company agree to pay all
incremental expenses incurred by such Lender or Issuing Lender as
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a result of utilizing such other lending or letter of credit office as
described in clause (i) above. A certificate as to the amount of any such
expenses payable by Company pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such
Lender or Issuing Lender to Company (with a copy to Agent) shall be conclusive
absent manifest error.
2.9 COLLECTION, DEPOSIT AND TRANSFER OF PAYMENTS IN RESPECT OF ACCOUNTS.
Company shall, and shall cause each of its Subsidiaries to,
maintain in effect at all times a system of accounts and procedures reasonably
satisfactory to Agent for the collection and deposit of payments in respect of
such Person's Accounts and the transfer of amounts so deposited to the
applicable Concentration Account and BTCC Account. Without limiting the
generality of the foregoing:
A. MAINTENANCE OF LOCK BOXES, LOCK BOX ACCOUNTS AND
CONCENTRATION ACCOUNTS.
(i) Except as permitted under subsection 2.9A(ii),
Company shall, and shall cause each of its Subsidiaries to, at all
times maintain any Lock Boxes, Lock Box Accounts and Concentration
Accounts established pursuant to the terms of this Agreement, the Lock
Box Agreements and the Blocked Account Agreements, if any.
(ii) Company shall not, and shall not permit any of its
Subsidiaries to, close any Lock Box Account or Concentration Account
or open a new Lock Box Account or Concentration Account unless it
shall have (a) notified Agent in writing at least 30 days (or such
lesser number of days as may be agreed to by Agent) prior to the
proposed closing or opening, (b) in the case of a new Lock Box
Account, entered into a Lock Box Agreement with the applicable Lock
Box Bank and (c) in the case of a new Other Bank Concentration
Account, entered into a Blocked Account Agreement with the applicable
Concentration Bank.
B. COLLECTION AND DEPOSIT OF PAYMENTS IN RESPECT OF
ACCOUNTS.
(i) Company shall, and shall cause each of its
Subsidiaries to, deliver such notices to account debtors and take all
such other actions as may reasonably be necessary to cause all
payments in respect of such Person's Accounts to be made directly to a
Lock Box.
(ii) Company shall, or shall cause each of its
Subsidiaries to, direct its authorized representative, at least once
on each Business Day, to retrieve all checks and
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other instruments delivered to a Lock Box and, as promptly as possible
on the same Business Day so retrieved, to endorse for payment and
deposit each such check or other instrument in the Lock Box Account
related to such Lock Box. Notwithstanding the foregoing, from and
after such time as Agent shall have notified Company of its election
to exercise its rights under this subsection 2.9B(ii), Company shall
not, and shall not permit its Subsidiaries to, retrieve any items from
any Lock Box unless accompanied by a representative of Agent, and
Company hereby appoint Agent or any of its designees as Company's
attorneys-in-fact with powers, upon notification by Agent as
aforesaid, to (a) access all Lock Boxes and (b) endorse for payment
any checks or other instruments representing payment in respect of any
Accounts of such Persons that are delivered to any Lock Box. All acts
of said attorneys or designees are hereby ratified and approved, and
said attorneys or designees shall not be liable for any acts of
omission or commission, nor for any error of judgment or mistake of
fact or law (other than any such acts, omissions, errors or mistakes
constituting gross negligence or wilful misconduct as determined in a
final order by a court of competent jurisdiction). The power of
attorney set forth in this subsection 2.9B(ii) is irrevocable until
all Obligations shall have been paid in full and the Commitments shall
have terminated.
(iii) In the event that Company or any of its Subsidiaries
receives any check, cash, note or other instrument representing
payment of an Account (other than any item delivered to a Lock Box),
Company shall, or shall cause such Subsidiary to, hold such item in
trust for Agent and shall, as soon as practicable (and in any event
within one Business Day) after receipt thereof, cause such item to be
deposited into a Lock Box Account with any necessary endorsements.
(iv) Company hereby agrees, from and after such time, if
any, as Agent shall have notified Company in writing that the
provisions of this subsection 2.9B(iv) are to become effective until
such later time, if any, as Agent shall have notified Company in
writing that such provisions are no longer to be effective, not to
deposit any monies into the Lock Box Accounts or to Concentration
Accounts or to otherwise permit any monies to be deposited into any of
such accounts, except payments received in respect of Company's
Accounts.
C. TRANSFER OF AMOUNTS DEPOSITED IN THE LOCK BOX
ACCOUNTS TO THE CONCENTRATION ACCOUNTS. Company shall cause all amounts
deposited in each Lock Box Account to be transferred on each Business Day to
the applicable Concentration Account in accordance with the terms of the
applicable Lock Box Agreement.
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D. TRANSFER OF AMOUNTS DEPOSITED IN THE CONCENTRATION
ACCOUNTS TO THE BTCC ACCOUNT. Company shall cause all amounts deposited in
each Concentration Account to be transferred on each Business Day to the BTCC
Account. Any amounts so transferred to the BTCC Account first shall be applied
as provided in subsection 2.4A(i)(b) to the extent therein provided and
thereafter, so long as no Event of Default or Potential Event of Default shall
have occurred and be continuing, shall be available for disbursement to the
applicable Loan Parties for working capital and other general corporate
purposes.
E. TREATMENT OF ACCOUNTS. Company shall not, without
Agent's prior written consent, grant any extension of the time of payment of
any Account, compromise or settle any Account for less than the full amount
thereof, release, in whole or in part, any person or property liable for the
payment thereof, or allow any credit or discount whatsoever thereon, except,
when no Event of Default has occurred and is then continuing, in accordance
with its usual and customary business practices.
F. COMPANY TO PROVIDE INFORMATION. Company shall, at
such intervals as Agent may reasonably request, furnish such statements,
schedules and/or information as Agent may request relating to Company's and its
Subsidiaries' Accounts and the collection, deposit and transfer of payments in
respect thereof, including, without limitation, all invoices evidencing such
Accounts.
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. In addition to Company requesting that
Lenders make Revolving Loans pursuant to subsection 2.1A, Company may request,
in accordance with the provisions of this subsection 3.1, from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date, that one or more Lenders issue Standby Letters of
Credit for the account of Company for the purposes specified in the definitions
of Standby Letters of Credit. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company
herein set forth, any one or more Lenders may, but (except as provided in
subsection 3.1B(ii)) shall not be obligated to, issue such Letters of Credit in
accordance with the provisions of this subsection 3.1; provided that neither
Company shall request that any Lender issue (and no Lender shall issue):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan
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Commitments would exceed the Revolving Loan Commitments then in
effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $1,000,000;
(iii) any Letter of Credit for the account of Company if,
after giving effect to such issuance, the Total Utilization of
Revolving Loan Commitments would exceed the Borrowing Base then in
effect;
(iv) any Letter of Credit having an expiration date later
than the earlier of (a) five Business Days prior to the Revolving Loan
Commitment Termination Date and (b) the date which is one year from
the date of issuance of such Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent any Issuing Lender
from agreeing that a Letter of Credit will automatically be extended
for one or more successive periods not to exceed one year each unless
such Issuing Lender elects not to extend for any such additional
period; and provided, further that such Issuing Lender shall elect not
to extend such Letter of Credit if it has knowledge that an Event of
Default has occurred and is continuing (and has not been waived in
accordance with subsection 10.6) at the time such Issuing Lender must
elect whether or not to allow such extension; or
(v) any Letter of Credit denominated in a currency other
than Dollars.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the
issuance of a Letter of Credit, it shall deliver to Agent a Request
for Issuance of Letter of Credit substantially in the form of Exhibit
III annexed hereto no later than 12:00 Noon (New York time) at least
three Business Days, or such shorter period as may be agreed to by the
Issuing Lender in any particular instance, in advance of the proposed
date of issuance. The Request for Issuance of Letter of Credit shall
specify (a) the proposed date of issuance (which shall be a Business
Day), (b) the face amount of the Letter of Credit, (c) the expiration
date of the Letter of Credit, (d) the name and address of the
beneficiary, (e) that, after giving effect to the requested Letter of
Credit, the Total Utilization of Revolving Loan Commitments will not
exceed the Revolving Loan Commitments then in effect and the Total
Utilization of Revolving Loan Commitments will not exceed the
Borrowing Base then in effect and (f) either the verbatim text of the
proposed Letter of Credit or the proposed terms and conditions
thereof, including a precise
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description of any documents to be presented by the beneficiary which,
if presented by the beneficiary prior to the expiration date of the
Letter of Credit, would require the Issuing Lender to make payment
under the Letter of Credit; provided that the Issuing Lender, in its
reasonable discretion, may require changes in the text of the proposed
Letter of Credit or any such documents; and provided, further that no
Letter of Credit shall require payment against a conforming draft to
be made thereunder on the same business day (under the laws of the
jurisdiction in which the office of the Issuing Lender to which such
draft is required to be presented is located) that such draft is
presented if such presentation is made after 10:00 A.M. (in the time
zone of such office of the Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender (and Agent,
if Agent is not such Issuing Lender) prior to the issuance of any Letter of
Credit in the event that any of the matters to which it is required to certify
in the applicable Request for Issuance of Letter of Credit is no longer true
and correct as of the proposed date of issuance of such Letter of Credit, and
upon the issuance of any Letter of Credit it shall be deemed to have re-
certified, as of the date of such issuance, as to the matters to which it is
required to certify in the applicable Request for Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by
Agent of a Request for Issuance of Letter of Credit pursuant to
subsection 3.1B(i) requesting the issuance of a Letter of Credit, in
the event Agent elects to issue such Letter of Credit, Agent shall
promptly so notify the Company, and Agent shall be the Issuing Lender
with respect thereto. In the event that Agent, in its sole
discretion, elects not to issue such Letter of Credit, Agent shall
promptly so notify the Company, whereupon Company may request any
other Lender to issue such Letter of Credit by delivering to such
Lender a copy of the applicable Request for Issuance of Letter of
Credit. Any Lender so requested to issue such Letter of Credit shall
promptly notify Company and Agent whether or not, in its sole
discretion, it has elected to issue such Letter of Credit, and any
such Lender which so elects to issue such Letter of Credit shall be
the Issuing Lender with respect thereto. In the event that all other
Lenders shall have declined to issue such Letter of Credit,
notwithstanding the prior election of Agent not to issue such Letter
of Credit, Agent shall be obligated to issue such Letter of Credit and
shall be the Issuing Lender with respect thereto, notwithstanding the
fact that the Letter of Credit Usage with respect to such Letter of
Credit and with respect to all other Letters of Credit issued by
Agent, when aggregated with Agent's outstanding Revolving Loans, may
exceed Agent's Revolving Loan Commitment then in effect.
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(iii) Issuance of Letter of Credit. Upon satisfaction or
waiver (in accordance with subsection 10.6) of the conditions set
forth in subsection 4.3, the Issuing Lender shall issue the requested
Letter of Credit in accordance with the Issuing Lender's standard
operating procedures.
(iv) Notification to Lenders. Upon the issuance of any
Letter of Credit the applicable Issuing Lender shall promptly notify
Agent and each other Lender of such issuance, which notice shall be
accompanied by a copy of such Letter of Credit. Promptly after
receipt of such notice (or, if Agent is the Issuing Lender, together
with such notice), Agent shall notify each Lender of the amount of
such Lender's respective participation in such Letter of Credit,
determined in accordance with subsection 3.1C.
(v) Reports to Lenders. Within 15 days after the end of
each calendar quarter ending after the Closing Date, so long as any
Letter of Credit shall have been outstanding during such calendar
quarter, each Issuing Lender shall deliver to each other Lender a
report setting forth for such calendar quarter the daily maximum
amount available to be drawn under the Letters of Credit issued by
such Issuing Lender that were outstanding during such calendar
quarter.
C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and drawings thereunder in an
amount equal to such Lender's Pro Rata Share of the maximum amount which is or
at any time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
Company agrees to pay the following amounts to each Issuing
Lender with respect to Letters of Credit issued by such Issuing Lender at its
request:
(i) with respect to each Letter of Credit, (a) a fronting
fee equal to the greater of (X) $500 and (Y) 0.25% per annum of the
daily maximum amount available to be drawn under such Letter of Credit
and (b) a letter of credit fee equal to 2.25% per annum multiplied by
the daily maximum amount available to be drawn under such Letter of
Credit, in each case payable in arrears on and to (but excluding) each
March 31, June 30, September 30 and December 31 of each year and
computed on the basis of a 360-day year for the actual number of days
elapsed; and
(ii) with respect to the issuance, amendment or transfer
of each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees
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payable under clause (i) above), documentary and processing charges in
accordance with such Issuing Lender's standard schedule for such
charges in effect at the time of such issuance, amendment, transfer or
payment, as the case may be.
Promptly upon receipt by such Issuing Lender of any amount described in clause
(i)(b) of this subsection 3.2, such Issuing Lender shall distribute to each
other Lender its Pro Rata Share of such amount.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to exercise
reasonable care to determine that the documents required to be delivered under
such Letter of Credit have been delivered and that they comply on their face
with the requirements of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS DRAWN UNDER LETTERS OF
CREDIT. In the event an Issuing Lender has determined to honor a drawing under
a Letter of Credit issued by it, such Issuing Lender shall immediately notify
the Company and Agent, and the Company shall reimburse such Issuing Lender on
or before the Business Day immediately following the date on which such drawing
is honored (the "REIMBURSEMENT DATE") in an amount in Dollars and in same day
funds equal to the amount of such drawing; provided that, anything contained in
this Agreement to the contrary notwithstanding, (i) unless the Company shall
have notified Agent and such Issuing Lender prior to 12:00 Noon (New York time)
on the date such drawing is honored that Company intends to reimburse such
Issuing Lender for the amount of such drawing with funds other than the
proceeds of Revolving Loans, Company shall be deemed to have given a timely
Notice of Borrowing to Agent requesting Lenders to make Revolving Loans that
are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to
the amount of such drawing and (ii) subject to satisfaction or waiver of the
conditions specified in subsection 4.2B, Lenders shall, on the Reimbursement
Date, make Revolving Loans that are Base Rate Loans in the amount of such
drawing, the proceeds of which shall be applied directly by Agent to reimburse
such Issuing Lender for the amount of such drawing; and provided, further that
if for any reason proceeds of Revolving Loans are not received by such Issuing
Lender on the Reimbursement Date in an amount equal to the amount of such
drawing, Company shall reimburse such Issuing Lender, on demand, in an amount
in same day funds equal to the excess of the amount of such drawing over the
aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to
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make Revolving Loans on the terms and conditions set forth in this Agreement,
and Company shall retain any and all rights it may have against any Lender
resulting from the failure of such Lender to make such Revolving Loans under
this subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED DRAWINGS UNDER LETTERS OF
CREDIT.
(i) Payment by Lenders. In the event that the Company
shall fail for any reason to reimburse any Issuing Lender as provided
in subsection 3.3B in an amount equal to the amount of any drawing
honored by such Issuing Lender under a Letter of Credit issued by it,
such Issuing Lender shall promptly notify each other Lender of the
unreimbursed amount of such drawing and of such other Lender's
respective participation therein based on such Lender's Pro Rata
Share. Each Lender shall make available to such Issuing Lender an
amount equal to its respective participation, in Dollars and in same
day funds, at the office of such Issuing Lender specified in such
notice, not later than 12:00 Noon (New York time) on the first
business day (under the laws of the jurisdiction in which such office
of such Issuing Lender is located) after the date notified by such
Issuing Lender. In the event that any Lender fails to make available
to such Issuing Lender on such business day the amount of such
Lender's participation in such Letter of Credit as provided in this
subsection 3.3C, such Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest thereon at
the rate customarily used by such Issuing Lender for the correction of
errors among banks for three Business Days and thereafter at the Base
Rate. Nothing in this subsection 3.3C shall be deemed to prejudice
the right of any Lender to recover from any Issuing Lender any amounts
made available by such Lender to such Issuing Lender pursuant to this
subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of
which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received
From Company. In the event any Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or
any portion of any drawing honored by such Issuing Lender under a
Letter of Credit issued by it, such Issuing Lender shall distribute to
each other Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such drawing such other Lender's
Pro Rata Share of all payments subsequently received by such Issuing
Lender from Company in reimbursement of such drawing when such
payments are received. Any such distribution shall be made to a
Lender at its primary address set forth
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below its name on the appropriate signature page hereof or at such
other address as such Lender may request.
D. INTEREST ON AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to
pay to each Issuing Lender, with respect to drawings made under any
Letters of Credit issued by such Issuing Lender at its request,
interest on the amount paid by such Issuing Lender in respect of each
such drawing from the date of such drawing to but excluding the date
such amount is reimbursed by the Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date
of such drawing to but excluding the Reimbursement Date, the rate then
in effect under this Agreement with respect to Revolving Loans that
are Base Rate Loans and (b) thereafter, a rate which is 2% per annum
in excess of the rate of interest otherwise payable under this
Agreement with respect to Revolving Loans that are Base Rate Loans.
Interest payable pursuant to this subsection 3.3D(i) shall be computed
on the basis of a 360-day year for the actual number of days elapsed
in the period during which it accrues and shall be payable on demand
or, if no demand is made, on the date on which the related drawing
under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing under a
Letter of Credit issued by it, (a) such Issuing Lender shall
distribute to each other Lender, out of the interest received by such
Issuing Lender in respect of the period from the date of such drawing
to but excluding the date on which such Issuing Lender is reimbursed
for the amount of such drawing (including any such reimbursement out
of the proceeds of Revolving Loans pursuant to subsection 3.3B), the
amount that such other Lender would have been entitled to receive in
respect of the letter of credit fee that would have been payable in
respect of such Letter of Credit for such period pursuant to
subsection 3.2 if no drawing had been made under such Letter of
Credit, and (b) in the event such Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or
any portion of such drawing, such Issuing Lender shall distribute to
each other Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such drawing such other Lender's
Pro Rata Share of any interest received by such Issuing Lender in
respect of that portion of such drawing so reimbursed by other Lenders
for the period from the date on which such Issuing Lender was so
reimbursed by other Lenders to but excluding the date on which such
portion of such drawing is reimbursed
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by the Company. Any such distribution shall be made to a Lender at
its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Lender may
request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of the Company to reimburse each Issuing Lender
for drawings made under the Letters of Credit issued by it and to repay any
Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations
of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), any Issuing Lender or
other Lender or any other Person or, in the case of a Lender, against
Company, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between Company or one of its Subsidiaries and
the beneficiary for which any Letter of Credit was procured);
(iii) any draft or document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by the applicable Issuing Lender under any
Letter of Credit against presentation of a draft or document which
does not comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto;
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential
Event of Default shall have occurred and be continuing;
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provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
A. INDEMNIFICATION. In addition to amounts payable as provided
in subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful
misconduct of such Issuing Lender as determined by a final judgment of a court
of competent jurisdiction or (b) subject to the following clause (ii), the
wrongful dishonor by such Issuing Lender of a proper demand for payment made
under any Letter of Credit issued by it or (ii) the failure of such Issuing
Lender to honor a drawing under any such Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or governmental authority (all such acts or omissions
herein called "GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company on the
one hand and any Issuing Lender on the other hand, Company assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit issued by such
Issuing Lender by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, such Issuing Lender shall
not be responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any such Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the beneficiary of any
such Letter of Credit to comply fully with any conditions required in order to
draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission
or otherwise of any document required in order to make a drawing
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under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of such Issuing Lender, including without
limitation any Governmental Acts, and none of the above shall affect or impair,
or prevent the vesting of, any of such Issuing Lender's rights or powers
hereunder.
In furtherance and extension and not in limitation of the
specific provisions set forth in the first paragraph of this subsection 3.5B,
any action taken or omitted by any Issuing Lender under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted without gross negligence or willful misconduct,
shall not put such Issuing Lender under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against any
Issuing Lender for any liability arising out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
In the event that any Issuing Lender or Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after
the date hereof, or compliance by any Issuing Lender or Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) subjects such Issuing Lender or Lender (or its
applicable lending or letter of credit office) to any additional Tax
(other than any Excluded Tax) with respect to the issuing or
maintaining of any Letters of Credit or the purchasing or maintaining
of any participations therein or any other obligations under this
Section 3, whether directly or by such being imposed on or suffered by
any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit,
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compulsory loan, FDIC insurance or similar requirement in respect of
any Letters of Credit issued by any Issuing Lender or participations
therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect
to a Tax matter) on or affecting such Issuing Lender or Lender (or its
applicable lending or letter of credit office) regarding this Section
3 or any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender
or Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender
or Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received
or receivable hereunder; provided that an Issuing Lender or Lender shall not be
entitled to avail itself of the benefit of this subsection 3.6 to the extent
that any such increased cost or reduction in amounts was incurred more than
twenty-four months prior to the time it gives notice to Company (as provided in
the next sentence) of the relevant circumstances, unless such circumstance
arose or became applicable retrospectively, in which case such Issuing Lender
or Lender shall not be limited to such twenty-four month period so long as such
Issuing Lender or Lender has given such notice to Company no later than
twenty-four months from the time such circumstance became applicable to such
Issuing Lender or Lender. Such Issuing Lender or Lender shall deliver to the
Company a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Issuing Lender or Lender under
this subsection 3.6, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of
Letters of Credit hereunder are subject to the satisfaction of the following
conditions.
4.1 CONDITIONS TO INITIAL REVOLVING LOANS.
The obligations of Lenders to make the initial Revolving Loans
are, in addition to the conditions precedent specified in subsection 4.2,
subject to prior or concurrent satisfaction of the following conditions:
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A. COMPANY DOCUMENTS. On or before the Closing Date, Company
shall deliver or cause to be delivered to Lenders (or to Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated the Closing
Date:
(i) Certified copies of its Certificate of Incorporation,
together with a good standing certificate from the Secretary of State
of its jurisdiction of incorporation and except where failure to be in
good standing, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect, each other state
in which it is qualified as a foreign corporation to do business and,
to the extent generally available, a certificate or other evidence of
good standing as to payment of any applicable franchise or similar
taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing
Date by its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement
and the other Loan Documents and Related Agreements to which it is a
party, certified as of the Closing Date by its corporate secretary or
an assistant secretary as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents to which it is a
party;
(v) Executed originals of this Agreement, the Notes (duly
executed in accordance with subsection 2.1F, drawn to the order of
each applicable Lender and with appropriate insertions), the
Intercreditor Agreement and the other Loan Documents to which it is a
party; and
(vi) Such other documents as Agent may reasonably request.
B. USE OF PROCEEDS. On or before the Closing Date, (i) Company
shall have applied cash proceeds of not greater than $78,000,000 from the
Bridge Note issuance to redeem approximately 63% of Company's outstanding
common stock from the Existing Shareholders, (ii) Newco shall have applied cash
proceeds of not less than $36,000,000 in common equity contributions to
purchase approximately 80% of Company's then outstanding common stock from the
Existing Shareholders, and (iii) the Existing Shareholders shall have retained
approximately 20% of Company's outstanding
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common stock, representing a retained investment of not less than $9,000,000.
C. CAPITALIZATION, ETC. The capital and ownership structure of
Company and its Subsidiaries, both before and after giving effect to the
Recapitalization, shall be as set forth on Schedule 4.1C annexed hereto, and
Agent shall have received copies of, and shall be satisfied with the form and
substance of any and all employment contracts with senior management of Company
and its Subsidiaries.
D. BRIDGE NOTES. On or prior to the Closing Date (i) the Bridge
Note Agreement, the Bridge Notes and any guaranties relating thereto shall be
in full force and effect and shall not have been amended, supplemented, waived
or otherwise modified without the consent of Agent, and executed or conformed
copies thereof (including all exhibits and schedules thereto) and any
amendments thereto and all documents executed in connection therewith shall
have been delivered to Agent, (ii) all conditions precedent to the funding of
the loans under the Bridge Note Agreement shall have been satisfied or waived
with the consent of Agent, (iii) Company shall have borrowed under the Bridge
Note Agreement an aggregate principal amount of $100,000,000, and (iv) Company
shall have provided evidence satisfactory to Agent that the proceeds of the
Bridge Notes shall have been applied to the redemption of outstanding shares of
Company's common stock from the Existing Shareholders and to the payment in
full of Company's Existing Credit Arrangements. On or prior to the Closing
Date, BTCo as Agent for the lenders under the Bridge Note Agreement and BTCo as
Collateral Agent shall have executed and delivered the Intercreditor Agreement
to BTCC, as Agent for the lenders under this Agreement.
E. TERMINATION AND REPAYMENT OF EXISTING INDEBTEDNESS. On the
Closing Date, the aggregate amount of outstanding existing Indebtedness of
Company and its Subsidiaries under the Existing Credit Arrangements shall have
repaid in full from the proceeds of the Bridge Notes and Company shall have
terminated any commitments to lend or make other extensions of credit
thereunder and all liens securing any such Indebtedness shall be terminated and
all collateral released. Agent shall have received an Officers' Certificate
of Company stating that after giving effect to the actions described in this
subsection 4.1E, there shall be no Indebtedness of the Loan Parties (other than
Indebtedness under the Loan Documents, the Bridge Note Agreement and the
Purchase Price Adjustment Notes. A certified copy of the Purchase Price
Adjustment Notes shall be delivered to Agent and such Purchase Price Adjustment
Notes shall be satisfactory in form and substance to Agent.
F. NECESSARY CONSENTS. Company shall have obtained all consents
necessary or advisable in connection with the Recapitalization, the
transactions contemplated by the Loan
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Documents and the continued operation of the business conducted by Company and
its Subsidiaries in substantially the same manner as conducted prior to the
consummation of the Recapitalization, and each of the foregoing shall be in
full force and effect, other than those the failure to obtain, which either
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect. All applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose adverse conditions on the
Recapitalization or the financing thereof, and no action, request for stay,
petition for review or rehearing, reconsideration or appeal shall be pending
and any time for agency action to set aside its consent on its own motion has
expired.
G. RECAPITALIZATION.
(i) the aggregate cash consideration paid to the Existing
Shareholders in respect of such holders' equity interests in Company
shall not exceed $114,000,000;
(ii) Transaction Costs shall not exceed $8,000,000 and
Agent shall have received evidence to its satisfaction to such effect;
(iii) the Recapitalization Agreement shall be in full force
and effect and shall not have been amended, supplemented, waived or
otherwise modified without the consent of Agent, and executed or
conformed copies thereof (including all exhibits and schedules
thereto) and any amendments thereto and all documents executed in
connection therewith shall have been delivered to Agent;
(iv) all conditions to the Recapitalization set forth in
the Recapitalization Agreement shall have been satisfied or the
fulfillment of any such conditions shall have been waived with the
consent of Agent;
(v) the Recapitalization shall have become effective in
accordance with the terms of the Recapitalization Agreement; and
(vi) Agent shall have received an Officers' Certificate of
Company to the effect set forth in clauses (i) - (v).
H. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before
the Closing Date, Lenders shall have received from Company (i) audited
financial statements of Company and its Subsidiaries for Fiscal Year ending
April 30, 1997, consisting of balance sheets and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows for
such Fiscal Year, (ii) unaudited financial statements of Company and its
Subsidiaries as at August 31, 1997, consisting of a balance sheet
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and the related consolidated and consolidating statements of income,
stockholders' equity and cash flows for the three- month period ending on such
date, and (iii) unaudited financial statements of Company and its Subsidiaries
as at September 30, 1997, consisting of a balance sheet and the related
consolidated and consolidating statements of income, stockholders' equity and
cash flows for the one-month period ending on such date, all in reasonable
detail and certified by the chief financial officer (or other officer
reasonably acceptable to Agent, of Company that they fairly present the
financial condition of Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments and, in the case of (ii) and (iii), the absence of footnotes, and
(iv) pro forma consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the Closing Date, prepared in accordance with GAAP and
reflecting the consummation of the Recapitalization and the financings and
other transactions contemplated hereby, which pro forma financial statements
shall be in form and substance satisfactory to Lenders.
I. NO MATERIAL ADVERSE EFFECT. Since April 30, 1997, no Material
Adverse Effect (in the sole good faith opinion of Agent) shall have occurred.
J. SOLVENCY ASSURANCES. On the Closing Date, Agent and Lenders
shall have received (i) a letter from Houlihan, Lokey, Howard & Zukin Financial
Advisors, Inc., dated the Closing Date and addressed to Agent and Lenders, in
form and substance satisfactory to Agent and with appropriate attachments, and
(ii) a Financial Condition Certificate dated the Closing Date, substantially in
the form annexed hereto as Exhibit VI and with appropriate attachments, in each
case demonstrating that, after giving effect to the consummation of the
Recapitalization and the financing transactions contemplated hereby, Company
and its Subsidiaries, taken as a whole, will be Solvent.
K. SECURITY INTERESTS IN PERSONAL PROPERTY. Company and
Company's Subsidiaries shall have taken or caused to be taken (and Agent shall
have received satisfactory evidence thereof) such actions (other than the
filing or recording of items described in clauses (ii), (iii) and (iv) below)
in such a manner so that Agent has a valid and perfected first priority
security interest as of such date in the entire personal property Collateral.
Such actions shall include, without limitation, the following:
(i) delivery to Agent of certificates (which certificates
shall be registered in the name of Agent or properly endorsed in blank
for transfer or accompanied by irrevocable undated stock powers duly
endorsed in blank, all in form and substance satisfactory to Agent)
representing
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the capital stock pledged pursuant to the Company Pledge Agreement and
the Subsidiary Pledge Agreements and delivery to Agent of all other
instruments (duly endorsed where appropriate) evidencing the
Collateral;
(ii) delivery to Agent of the IP Collateral Documents,
together with accurate and complete schedules thereto and any cover
sheets required for filing with the United States Patent and Trademark
Office (the "PTO");
(iii) delivery to Agent of a Lock Box Agreement or a
Blocked Account Agreement executed by each Person that is a party
thereto with respect to each Deposit Account listed on Schedule I
annexed to the Company Security Agreement and the Subsidiary Security
Agreements (other than the BT Concentration Account);
(iv) delivery to Agent of Uniform Commercial Code
financing statements as to the Collateral for all jurisdictions as may
be necessary or desirable to perfect the security interests in the
Collateral;
(v) delivery to Agent of certificates of title with
respect to all rolling stock of Loan Parties and the taking of all
actions necessary to cause Agent to be noted as lienholder thereon or
otherwise necessary to perfect the first priority Lien granted to
Agent on behalf of Lenders in such rolling stock;
(vi) delivery to Agent of opinions of counsel under the
law of Texas and New York with respect to the creation and perfection
of the security interests in favor of Agent in any personal property
Collateral;
(vii) delivery to Agent of such other documents and
instruments that Agent reasonably deems necessary or advisable to
establish, preserve and perfect the first priority Liens granted to
Agent on behalf of Lenders under the Collateral Documents; and
(viii) evidence reasonably satisfactory to Agent that all
other filings, terminations, recordings and other actions Agent deems
necessary or advisable to establish, preserve and perfect the first
priority Liens granted to Agent in personal property shall have been
made.
L. COLLATERAL AUDIT; BORROWING BASE CERTIFICATE. On or before
the Closing Date, Company shall have provided such cooperation and assistance
as Agent may request in order to permit Agent (or an independent auditor
satisfactory to Agent) to complete audits of the Inventory and Accounts of
Company and its Subsidiaries and shall have delivered to Agent and Lenders a
Borrowing Base Certificate substantially in the form of
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Exhibit VII annexed hereto, prepared as of a recent date prior to the Closing
Date.
M. OPINIONS OF COMPANY'S COUNSEL. Lenders shall have received
originally executed copies of one or more favorable written opinions of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., counsel for Company, in form and substance
reasonably satisfactory to Agent and its counsel, dated as of the Closing Date
and setting forth substantially the matters in the opinions designated in
Exhibit VIII annexed hereto and as to such other matters as Agent acting on
behalf of Lenders may reasonably request.
N. OPINIONS OF O'MELVENY & MYERS. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Myers, dated as of the Closing Date, substantially in the form of
Exhibit IX annexed hereto and as to such other matters as Agent acting on
behalf of Lenders may reasonably request.
O. OPINIONS OF COUNSEL IN RECAPITALIZATION. Agent and its
counsel shall have received copies of each of the opinions of counsel delivered
to the parties under the Recapitalization Agreement together with a letter from
each such counsel authorizing Lenders to rely upon such opinion to the same
extent as though it were addressed to Lenders.
P. AUDITOR'S LETTER. Agent shall have received an executed
Auditor's Letter.
Q. EVIDENCE OF INSURANCE. Company shall deliver to Agent
certificates of insurance naming Agent on behalf of Lenders as loss payee under
all casualty insurance policies maintained by Company and its Subsidiaries, and
as an additional insured under all liability and business interruption
insurance policies maintained by Company and its Subsidiaries, all as required
pursuant to subsection 6.4 or pursuant to the Collateral Documents. All such
certificates of insurance shall contain such endorsements as are reasonably
required by Agent.
R. FEES. Company shall have paid to Agent, for distribution (as
appropriate) to Agent and Lenders, the fees payable on the Closing Date
referred to in subsection 2.3.
S. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS.
Company shall have delivered to Agent an Officers' Certificate, in form and
substance satisfactory to Agent, to the effect that the representations and
warranties in Section 5 hereof are true, correct and complete in all material
respects on and as of the Closing Date to the same extent as though made on and
as of that date (or, to the extent such representations and warranties
specifically relate to an earlier date, that such representations and
warranties were true, correct and complete in
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all material respects on and as of such earlier date) and that Company shall
have performed in all material respects all agreements and satisfied all
conditions which this Agreement provides shall be performed or satisfied by it
on or before the Closing Date except as otherwise disclosed to and agreed to in
writing by Agent.
T. COMPLETION OF PROCEEDINGS. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to Agent and such counsel, and Agent and
such counsel shall have received all such counterpart originals or certified
copies of such documents as Agent may reasonably request.
4.2 CONDITIONS TO ALL LOANS.
The obligations of Lenders to make Loans on each Funding Date
are subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed
Notice of Borrowing, in each case signed by the chief executive officer, the
chief financial officer or the treasurer of the Company or by any executive
officer of Company designated by any of the above- described officers on behalf
of the Company in a writing delivered to Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein
and in the other Loan Documents shall be true, correct and complete in
all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except to the extent
such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have
been true, correct and complete in all material respects on and as of
such earlier date;
(ii) No event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
such Notice of Borrowing that would constitute an Event of Default or
a Potential Event of Default;
(iii) Company shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before that
Funding Date;
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(iv) No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain any
Lender from making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding
Date shall not violate any law including, without limitation,
Regulation G, Regulation T, Regulation U or Regulation X of the Board
of Governors of the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Company or any of
its Subsidiaries or any property of Company or any of its Subsidiaries
that has not been disclosed by Company in writing pursuant to
subsection 5.6 or 6.1(x) prior to the making of the last preceding
Loans (or, in the case of the initial Loans, prior to the execution of
this Agreement), and there shall have occurred no development not so
disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, that, in either event, in
the opinion of Agent or of Requisite Lenders, would be expected to
have a Material Adverse Effect; and no injunction or other restraining
order shall have been issued and no hearing to cause an injunction or
other restraining order to be issued shall be pending or noticed with
respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, the transactions contemplated by this
Agreement or the making of Loans hereunder.
4.3 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder (whether or not
the applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, the conditions set forth in subsection 4.1
shall have been satisfied.
B. On or before the date of issuance of such Letter of Credit,
Agent shall have received, in accordance with the provisions of subsection
3.1B(i), an originally executed Request for Issuance of Letter of Credit, in
each case signed by the chief executive officer, the chief financial officer or
the treasurer of Company or by any executive officer of Company designated by
any of the above-described officers on behalf of Company in a writing delivered
to Agent, together with all other information specified in subsection 3.1B(i)
and such other
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documents or information as the applicable Issuing Lender may reasonably
require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be satisfied to the
same extent as if the issuance of such Letter of Credit were the making of a
Loan and the date of issuance of such Letter of Credit were a Funding Date.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans, to induce Issuing Lenders to issue Letters of Credit and to
induce other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date
and on the date of issuance of each Letter of Credit, that the following
statements are true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Loan Party has all requisite corporate
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents and the Related Agreements to which it is a party and to carry out
the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified
to do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, except
in jurisdictions where the failure to be so qualified or in good standing has
not had and will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged
only in the businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Company are
identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xvii). The capital stock of Company and of each of the Subsidiaries of
Company identified in Schedule 5.1 annexed hereto (as so supplemented) is duly
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each of the Subsidiaries of Company
identified in Schedule 5.1 annexed hereto (as so
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supplemented) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and
authority has not had and will not have a Material Adverse Effect. Schedule
5.1 annexed hereto (as so supplemented) correctly sets forth, the ownership
interest of Company and each of its Subsidiaries in each of the Subsidiaries of
Company identified therein. The capital and ownership structure of Company and
its Subsidiaries, both before and after giving effect to the Recapitalization
and the related transactions contemplated in connection therewith, are as set
forth on Schedule 4.1C annexed hereto.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and
performance of the Loan Documents and the Related Agreements have been duly
authorized by all necessary corporate action on the part of each Loan Party
that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by any
Loan Party of the Loan Documents and the Related Agreements to which it is a
party and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to any
Loan Party, the Certificate or Articles of Incorporation or Bylaws of any Loan
Party or any order, judgment or decree of any court or other agency of
government binding on any Loan Party, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any Loan Party, except for such conflicts, breaches
or defaults which could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of any
Loan Party (other than any Liens created under any of the Loan Documents in
favor of Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of any Loan Party, except for such approvals or consents which will
be obtained on or before the Closing Date.
C. GOVERNMENTAL CONSENTS. The execution, delivery and
performance by any Loan Party of the Loan Documents and the Related Agreements
to which it is a party and the consummation of the transactions contemplated by
the Loan Documents and such
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Related Agreements do not and will not require any registration with, consent
or approval of, or notice to, or other action to, with or by, any federal,
state or other governmental authority or regulatory body, except for (i)
filings required by federal or state securities laws and (ii) such other
registrations, consents, approvals, notices or other actions which have been
made, obtained, given or taken on or before the Closing Date or such later date
as may be required by the applicable governmental authority or regulatory body.
D. BINDING OBLIGATION. Each of the Loan Documents and the
Related Agreements has been duly executed and delivered by each Loan Party that
is a party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
E. VALID ISSUANCE OF COMPANY COMMON STOCK, THE BRIDGE NOTES, THE
CONVERSION NOTES, THE EXCHANGE NOTES AND THE TAKEOUT SECURITIES.
(i) Company Common Stock. The Company Common Stock
outstanding on the Closing Date is duly and validly issued, fully paid
and nonassessable. Other than as set forth in the Stockholder's
Agreement, no stockholder of Company has or will have any preemptive
rights to subscribe for any additional equity Securities of Company.
(ii) The Bridge Notes, the Conversion Notes, the Exchange
Notes and the Takeout Securities. Company has the corporate power and
authority to issue the Bridge Notes, the Conversion Notes, the
Exchange Notes and the Takeout Securities. Each of the Bridge Notes,
the Conversion Notes, the Exchange Notes and the Takeout Securities,
when issued and paid for, will be the legally valid and binding
obligations of Company, enforceable against Company in accordance with
their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles
relating to enforceability. The subordination provisions of the
Takeout Securities, if and when issued, are and/or will be enforceable
against the holders thereof in accordance with their terms and the
Loans, Letter of Credit and all other monetary Obligations hereunder
are and/or will be within the definitions of "Senior Indebtedness" and
"Designated Senior Indebtedness" included in such provisions. Each of
the Bridge Notes, the Conversion Notes, the Exchange Notes and the
Takeout Securities, when issued and sold, will either (a) have been
registered or qualified
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under applicable federal and state securities laws or (b) be exempt
therefrom.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders'
request, the financial statements and information described in subsection 4.1.
All such statements were prepared in conformity with GAAP and fairly present,
in all material respects, the financial position (on a consolidated and, where
applicable, consolidating basis) of the entities described in such financial
statements as at the respective dates thereof and the results of operations and
cash flows (on a consolidated and, where applicable, consolidating basis) of
the entities described therein for each of the periods then ended, subject, in
the case of any such unaudited financial statements, to the changes resulting
from audit and normal year-end adjustments and absence of footnotes. None of
the Loan Parties has (and none of the Loan Parties will have following the
funding of the initial Loans) any Contingent Obligation, contingent liability
or liability for taxes, long-term lease or unusual forward or long-term
commitment that is required by GAAP to be, but is not, or to the extent not
required by GAAP which is known to or reasonably should be known to the
Company, but is not, reflected in the foregoing financial statements or the
most recent financial statements delivered pursuant to subsection 6.1 or the
notes thereto and which in any such case is material in relation to the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries, taken as a whole.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since April 30, 1997, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Since April 30, 1997, neither Company nor any of its Subsidiaries has
directly or indirectly declared, ordered, paid or made, or set apart any sum or
property for, any Restricted Junior Payment or agreed to do so except as
permitted by subsection 7.5 or as may be disclosed in the Recapitalization
Agreement or the Preliminary Offering Memorandum of the Company dated October
31, 1997.
5.5 TITLE TO PROPERTIES; LIENS.
Company and Company's Subsidiaries have (i) good and
indefeasible title to (in the case of fee interests in real property), (ii)
valid leasehold interests in (in the case of leasehold interests in real or
personal property), or (iii) good title to (in the case of all other personal
property), all of their respective properties and assets reflected in the
financial statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in each case except
for assets disposed of since the date of such
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financial statements in the ordinary course of business or as otherwise
permitted under subsection 7.7. Except as permitted by this Agreement, all
such properties and assets are free and clear of Liens. Schedule 5.5 annexed
hereto sets forth all of the Real Property Assets of Company and its
Subsidiaries as of the Closing Date.
5.6 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 5.6 annexed hereto, there are
no actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of Company's
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of Company,
threatened against or affecting Company or any of Company's Subsidiaries or any
property of Company or any of Company's Subsidiaries that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect. Neither Company nor any of Company's Subsidiaries is (i) in violation
of any applicable laws that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect or (ii) subject to or in
default with respect to any final judgments, writs, injunctions, decrees, rules
or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all tax
returns and reports of Company and Company's Subsidiaries required to be filed
by any of them have been timely filed, and all taxes, assessments, fees and
other governmental charges upon Company and Company's Subsidiaries and upon
their respective properties, assets, income, businesses and franchises which
are due and payable have been paid when due and payable. Company does not know
of any proposed material tax assessment against Company or any of Company's
Subsidiaries which is not being actively contested by Company or such
Subsidiary in good faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
CONTRACTS.
A. Neither Company nor any of Company's Subsidiaries is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any of its
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Contractual Obligations, and no condition exists that, with the giving of
notice or the lapse of time or both, would constitute such a default, except
where the consequences, direct or indirect, of such default or defaults, if
any, would not have a Material Adverse Effect.
B. Neither Company nor any of Company's Subsidiaries is a party
to or is otherwise subject to any agreements or instruments or any charter or
other internal restrictions which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
C. All Material Contracts of Company and Company's Subsidiaries
are in full force and effect and no defaults currently exist thereunder, except
where the consequences, direct or indirect, of such default or defaults, if
any, would not have a Material Adverse Effect.
5.9 GOVERNMENTAL REGULATION.
Neither Company nor any of Company's Subsidiaries is subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
A. Neither Company nor any of Company's Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more
than 25% of the value of the assets (either of Company only or of Company and
its Subsidiaries on a consolidated basis) subject to the provisions of
subsection 7.2 or 7.7 or subject to any restriction contained in any agreement
or instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. Company and each of its ERISA Affiliates are in compliance in
all material respects with all applicable provisions and requirements of ERISA
and the regulations and published interpretations thereunder and the terms of
each Employee Benefit Plan, and have performed all their material obligations
under each Employee Benefit Plan.
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B. No ERISA Event has occurred or is reasonably expected to occur
which could result in any material liability to Company or any of its ERISA
Affiliates.
C. Except to the extent required under Section 4980B of the
Internal Revenue Code, no Employee Benefit Plan provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired or
former employees of Company or any of its ERISA Affiliates.
D. In accordance with the most recent actuarial valuation for any
Pension Plan, the amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities), does not exceed $200,000 prior to
March 31, 1998, or $100,000 at any time thereafter.
5.12 CERTAIN FEES.
Except as set forth in Schedule 5.12 annexed hereto, no
broker's or finder's fee or commission will be payable with respect to this
Agreement or any of the transactions contemplated hereby, and Company hereby
indemnifies Lenders against, and agrees that it will hold Lenders harmless
from, any claim, demand or liability for any such broker's or finder's fees
alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 5.13 annexed hereto:
(i) the operations of Company and each of its
Subsidiaries (including, without limitation, all operations and
conditions at or in the Facilities) comply with all Environmental Laws
except for any such noncompliance which would not reasonably be
expected to have a Material Adverse Effect;
(ii) Company and each of its Subsidiaries have obtained
all Governmental Authorizations under Environmental Laws necessary to
their respective operations, and all such Governmental Authorizations
are being maintained in good standing, and Company and each of its
Subsidiaries are in compliance with such Governmental Authorizations
except for any such failure to obtain, maintain or comply which would
not reasonably be expected to have a Material Adverse Effect;
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(iii) neither Company nor any of its Subsidiaries has
received (a) any notice or claim to the effect that it is or may be
liable to any Person as a result of or in connection with any
Hazardous Materials or (b) any letter or request for information under
Section 104 of the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. Section 9604) or comparable state laws,
and, to the best of the Company' knowledge, none of the operations of
Company or any of its Subsidiaries is the subject of any federal or
state investigation relating to or in connection with any Hazardous
Materials at any Facility or at any other location except for such of
the foregoing which would not reasonably be expected to have a
Material Adverse Effect;
(iv) none of the operations of Company or any of its
Subsidiaries is subject to any judicial or administrative proceeding
alleging the violation of or liability under any Environmental Laws
which if adversely determined could reasonably be expected to have a
Material Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor any
of their respective Facilities or operations are subject to any
outstanding written order or agreement with any governmental authority
or private party relating to (a) any actual or potential violation of
or liability under Environmental Laws or (b) any Environmental Claims
except for such of the foregoing which would not reasonably be
expected to have a Material Adverse Effect;
(vi) neither Company nor any of its Subsidiaries has any
contingent liability in connection with any Release of any Hazardous
Materials by Company or any of its Subsidiaries except for such of the
foregoing which would not reasonably be expected to have a Material
Adverse Effect;
(vii) neither Company nor any of its Subsidiaries nor, to
the best knowledge of the Company, any predecessor of Company or any
of its Subsidiaries has filed any notice under any Environmental Law
indicating past or present treatment, storage or disposal of hazardous
waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent;
(viii) no Hazardous Materials exist on, under or about any
Facility in a manner that would reasonably be expected to give rise to
an Environmental Claim having a Material Adverse Effect, and neither
Company nor any of its Subsidiaries has filed any notice or report of
a Release of any Hazardous Materials that would reasonably be expected
to give rise to an Environmental Claim having a Material Adverse
Effect;
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(ix) neither Company nor any of its Subsidiaries nor, to
the best knowledge of Company, any of their respective predecessors
has disposed of any Hazardous Materials in a manner that would
reasonably be expected to give rise to an Environmental Claim having a
Material Adverse Effect;
(x) to the best knowledge of Company, no underground
storage tanks or surface impoundments are on or at any Facility; and
(xi) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been
attached to any Facility except for any such Lien which would not
reasonably be expected to have a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 SOLVENCY.
Company and each of its Subsidiaries is and, upon the
incurrence of any Obligations by Company on any date on which this
representation is made, will be, Solvent.
5.16 DISCLOSURE.
No representation or warranty of Company or any of its
Subsidiaries contained in any Loan Document or Related Agreement or in any
other document, certificate or written statement furnished to Lenders by or on
behalf of Company or any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact (known to Company, in the case
of any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by the Company to be reasonable at the time made, it being recognized
by Lenders that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results and that such projections are
subject to significant uncertainties and contingencies, many of which are
beyond Company's control, and that no assurance can be given that such
projections will be realized. There are no facts known (or which should upon
the reasonable exercise of diligence be known) to the Company (other than
matters of a general economic nature) that,
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individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect and that have not been disclosed herein or in such
other documents, certificates and statements furnished to Lenders for use in
connection with the transactions contemplated hereby.
5.17 RELATED AGREEMENTS.
A. Company has delivered to Lenders complete and correct copies
of the Related Agreements and of all exhibits and schedules thereto.
B. Except to the extent otherwise set forth herein or in the
schedules hereto, each of the representations and warranties in the
Recapitalization Agreement is true and correct in all material respects as of
the Closing Date, subject to the qualifications set forth in the schedules to
the Recapitalization Agreement.
C. Notwithstanding anything in the Recapitalization Agreement to
the contrary, the representations and warranties of Company set forth in
subsection 5.17B shall, solely for purposes of this Agreement, survive the
Closing Date for the benefit of Lenders.
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all
of the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance
with sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Agent and Lenders:
(i) Monthly Financials: as soon as available and in any
event within 40 days after the end of each of the first three months
ending after the Closing Date and within 30 days after the end of each
month thereafter, (a) the consolidated and consolidating balance
sheets of Company and its Subsidiaries as at the end of such month and
the related consolidated and consolidating statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries
for such month and for the period from the
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beginning of the then current Fiscal Year to the end of such month,
setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and
the corresponding figures from the Financial Plan for the current
Fiscal Year, to the extent prepared on a monthly basis, all in
reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustments and the absence of footnotes, and (b) a
narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior
management for such month and for the period from the beginning of the
then current Fiscal Year to the end of such month;
(ii) Quarterly Financials: as soon as available and in
any event within 45 days after the end of each of the first three
Fiscal Quarters, and within 90 days of the end of the fourth Fiscal
Quarter, (a) the consolidated and consolidating balance sheets of
Company and its Subsidiaries as at the end of such Fiscal Quarter and
the related consolidated and consolidating statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries
for such Fiscal Quarter and for the period from the beginning of the
then current Fiscal Year to the end of such Fiscal Quarter, setting
forth in each case in comparative form the corresponding figures for
the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plan for the current Fiscal
Year, all in reasonable detail and certified by the chief financial
officer of Company that they fairly present, in all material respects,
the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash
flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments and the absence of footnotes,
and (b) a narrative report describing the operations of Company and
its Subsidiaries in the form prepared for presentation to senior
management for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter;
(iii) Year-End Financials: as soon as available and in any
event within 90 days after the end of each Fiscal Year, (a) the
consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the end of such Fiscal Year and the related
consolidated and consolidating statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries for such Fiscal
Year, setting forth in each case in comparative form the corresponding
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figures for the previous Fiscal Year and the corresponding figures
from the Financial Plan for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as
at the dates indicated and the results of their operations and their
cash flows for the periods indicated, (b) a narrative report
describing the operations of Company and its Subsidiaries in the form
prepared for presentation to senior management for such Fiscal Year,
and (c) in the case of such consolidated financial statements, (1) a
report thereon of a nationally recognized independent accounting firm,
which report shall be unqualified as to scope of audit, shall express
no doubts about the ability of Company and its Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in
such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing standards
and (2) a letter from such accounting firm, substantially in the form
of Exhibit XI annexed hereto but acknowledging that such accountants
were advised that Lenders would receive such consolidated financial
statements as audited by such accountants and that Lenders will use
such financial statements and report in their credit analyses of
Company and its Subsidiaries and with such other changes as are
approved by Agent;
(iv) Officers' and Compliance Certificates: together with
each delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (i), (ii) and (iii) above, (a) an Officers'
Certificate of Company stating that the signers have reviewed the
terms of this Agreement and have made, or caused to be made under
their supervision, a review in reasonable detail of the transactions
and condition of Company and its Subsidiaries during the accounting
period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting
period, and that the signers do not have knowledge of the existence as
at the date of such Officers' Certificate, of any condition or event
that constitutes an Event of Default or Potential Event of Default,
or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action Company have
taken, are taking and propose to take with respect thereto; and (b) a
Compliance
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Certificate demonstrating in reasonable detail compliance during and
at the end of the applicable accounting periods with the restrictions
contained in Section 7;
(v) Reconciliation Statements: if, as a result of any
change in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the consolidated financial statements of Company and
its Subsidiaries delivered pursuant to subdivisions (i), (ii), (iii)
or (xiii) of this subsection 6.1 will differ in any material respect
from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in
accounting principles and policies been made, then (a) together with
the first delivery of financial statements pursuant to subdivision
(i), (ii), (iii) or (xiii) of this subsection 6.1 following such
change, consolidated financial statements of Company and its
Subsidiaries for (y) the current Fiscal Year to the effective date of
such change and (z) the two full Fiscal Years immediately preceding
the Fiscal Year in which such change is made, in each case prepared on
a pro forma basis as if such change had been in effect during such
periods, and (b) together with each delivery of financial statements
pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection
6.1 following such change, a written statement of the chief accounting
officer or chief financial officer of Company setting forth the
differences (including without limitation any differences that would
affect any calculations relating to the financial covenants set forth
in subsection 7.6) which would have resulted if such financial
statements had been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each
delivery of consolidated financial statements of Company and its
Subsidiaries pursuant to subdivision (iii) above, a written statement
by the independent certified public accountants giving the report
thereon (a) stating that their audit examination has included a review
of the terms of this Agreement and the other Loan Documents as they
relate to accounting matters, (b) stating whether, in connection with
their audit examination, any condition or event that constitutes an
Event of Default or Potential Event of Default with respect to the
covenants set forth in Section 7, has come to their attention and, if
such a condition or event has come to their attention, specifying the
nature and period of existence thereof; provided that such accountants
shall not be liable by reason of any failure to obtain knowledge of
any such Event of Default or Potential Event of Default that would not
be disclosed in the course of their audit examination, and (c) stating
that based on their audit examination nothing has come to their
attention that causes them to believe either or both that the
information
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contained in the certificates delivered therewith pursuant to
subdivision (iv) above is not correct or that the matters set forth in
the Compliance Certificates delivered therewith pursuant to clause (b)
of subdivision (iv) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of
all reports submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit
of the financial statements of Company and its Subsidiaries made by
such accountants, including, without limitation, any comment letter
submitted by such accountants to management in connection with their
annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Company to its security holders or by any Subsidiary of Company to its
security holders other than Company or another Subsidiary of Company,
(b) all regular and periodic reports and all registration statements
(other than on Form S-8 or a similar form) and prospectuses, if any,
filed by Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Company or
any of its Subsidiaries to the public concerning material developments
in the business of Company or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer
of Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Agent) or taken any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person has given
any notice to Company or any of its Subsidiaries or taken any other
action with respect to a claimed default or event or condition of the
type referred to in subsection 8.2, (c) of any condition or event that
would be required to be disclosed in a current report filed by Company
with the Securities and Exchange Commission on Form 8-K (Items 1, 2,
4, 5 and 6 of such Form as in effect on the date hereof) if Company
were required to file such reports under the Exchange Act, or (d) of
the occurrence of any event or change that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect, an
Officers' Certificate specifying the nature and period of existence of
such condition, event or change, or specifying the notice
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given or action taken by any such Person and the nature of such
claimed Event of Default, Potential Event of Default, default, event
or condition, and what action Company have taken, are taking and
propose to take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon
any officer of Company obtaining knowledge of (X) the institution of,
or non-frivolous threat of, any non-frivolous action, suit, proceeding
(whether administrative, judicial or otherwise), governmental
investigation or arbitration against or affecting Company or any of
its Subsidiaries or any property of Company or any of its Subsidiaries
(collectively, "PROCEEDINGS") not previously disclosed in writing by
Company to Lenders or (Y) any material development in any Proceeding
that, in any case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of
each Fiscal Quarter, a schedule of all Proceedings involving an
alleged liability of, or claims against or affecting, Company or any
of its Subsidiaries equal to or greater than $500,000, and promptly
after request by Agent such other information as may be reasonably
requested by Agent to enable Agent and its counsel to evaluate any of
such Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Company or any of
its ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of
(a) each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) filed by Company or any of its ERISA Affiliates with the
Internal Revenue Service with respect to each Pension Plan; (b) all
material notices received by Company or any of its ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (c)
such other documents or governmental reports or filings
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relating to any Employee Benefit Plan as Agent shall reasonably
request;
(xiii) Financial Plans: as soon as practicable and in any
event no later than 30 days prior to the beginning of each Fiscal
Year, a consolidated and consolidating plan and financial forecast for
such Fiscal Year (the "FINANCIAL PLAN" for such Fiscal Year),
including without limitation (a) a forecasted consolidated and
consolidating balance sheet and forecasted consolidated and
consolidating statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Year, together with a pro forma
Compliance Certificate for such Fiscal Year and an explanation of the
assumptions on which such forecasts are based, and (b) forecasted
consolidated and consolidating statements of income and cash flows of
Company and its Subsidiaries for each month of such Fiscal Year,
together with an explanation of the assumptions on which such
forecasts are based;
(xiv) Insurance: as soon as practicable and in any event
by the last day of each Fiscal Year, a report in form and substance
satisfactory to Agent outlining all material insurance coverage
maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately
succeeding Fiscal Year and confirming the status of Agent as loss
payee under all such insurance to the extent required by subsection
6.4;
(xv) Environmental Audits and Reports: as soon as
practicable following receipt thereof, copies of all environmental
audits and reports, whether prepared by personnel of Company or any of
its Subsidiaries or by independent consultants, with respect to
significant environmental matters at any Facility or which relate to
an Environmental Claim in either case which could reasonably be
expected to result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness,
written notice of any change in the Board of Directors of Company;
(xvii) New Subsidiaries: promptly upon any Person becoming
a Subsidiary of Company, a written notice setting forth with respect
to such Person (a) the date on which such Person became a Subsidiary
of Company and (b) all of the data required to be set forth in
Schedule 5.1 annexed hereto with respect to all Subsidiaries of
Company (it being understood that such written notice shall be deemed
to supplement Schedule 5.1 annexed hereto for all purposes of this
Agreement;
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(xviii) Material Contracts: promptly, and in any event
within 10 Business Days after any Material Contract of Company or any
of its Subsidiaries is terminated or amended in a manner that is
materially adverse to Company or such Subsidiary, as the case may be,
or any new Material Contract is entered into, a written statement
describing such event with copies of such material amendments or new
contracts, and an explanation of any actions being taken with respect
thereto; and
(xix) Borrowing Base Certificates: as soon as available
and in any event within five (5) Business Days or, in the case of
months which are the last month of a Fiscal Quarter, within ten (10)
Business Days, after the last Business Day of each month ending after
the Closing Date, a Borrowing Base Certificate dated as of the last
Business Day of such month, together with any additional schedules and
other information as Agent may reasonably request, which Borrowing
Base Certificate with respect to Inventory for the months ended on
April 30, July 31, October 31, and January 31, shall be based on an
actual physical count of such Inventory and for all other months may
be based on Company's estimated gross profit margin for such monthly
period; Company, in addition to such monthly Borrowing Base
Certificates, may from time to time deliver to Agent and Lenders on
any Business Day after the Closing Date a Borrowing Base Certificate
dated as of such Business Day, together with any additional schedules
and other information as Agent may reasonably request), and the most
recent Borrowing Base Certificate described in this clause (xix) that
is delivered to Agent shall be used in calculating the Borrowing Base
as of any date of determination; and
(xx) Other Information: with reasonable promptness, such
other information and data with respect to Company or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, Company will, and
will cause each of its Subsidiaries to, at all times preserve and keep in full
force and effect its corporate existence and all rights and franchises material
to its business.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its income, businesses or
franchises before any material penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
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supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
material penalty or fine shall be incurred with respect thereto; provided that
no such charge or claim need be paid if (i) being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor or (ii) failure to pay,
individually or in the aggregate for all such failures, could not reasonably be
expected to result in a Material Adverse Effect. Notwithstanding anything to
the contrary contained in the foregoing sentence, within 30 days of the Closing
Date, Company will pay in full any delinquent franchise taxes.
B. The Company will not, and will not permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person (other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Company will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear excepted, all of their respective material properties
used or useful in the business of Company and its Subsidiaries (including,
without limitation, Intellectual Property) and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof.
Company will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and businesses of its Subsidiaries against loss or damage of the
kinds customarily carried or maintained under similar circumstances by
corporations of established reputation engaged in similar businesses. Without
limiting the generality of the foregoing, Company will maintain or cause to be
maintained public liability insurance, third party property damage insurance
and replacement value insurance on the Collateral (other than growing crops)
under such policies of insurance, with such insurance companies, in such
amounts and covering such risks as are at all times satisfactory to Agent in
its commercially reasonable judgment. Each such policy of insurance that
insures against loss or damage with respect to any Collateral or against losses
due to business interruption shall name Agent for the benefit of Lenders as the
loss payee thereunder for any covered loss in excess of $500,000 and shall have
attached thereto a loss payable clause acceptable to Agent that shall (i)
contain an agreement by the insurer that any loss thereunder shall be payable
to Agent notwithstanding any action, inaction or breach of representation or
warranty by Company, (ii) provide that there shall be no recourse against Agent
for payment of premiums or other amounts with respect thereto, and (iii)
provide that at
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least 30 days (15 days in the event of nonpayment of premium) prior written
notice of cancellation, material amendment, reduction in scope or limits of
coverage or of lapse shall be given to Agent by the insurer. Upon receipt by
Agent of any insurance proceeds as loss payee (i) in respect of any such
business interruption insurance, (a) Agent shall, so long as no Event of
Default or Potential Event of Default shall have occurred and be continuing,
deliver such insurance proceeds to Company, and (b) if an Event of Default or
Potential Event of Default shall have occurred and be continuing, Agent shall,
and Company hereby authorizes Agent to, apply such insurance proceeds to prepay
the Loans, and (ii) in respect of any such insurance against loss or damage
with respect to any Collateral, (a) to the extent that Company or any of its
Subsidiaries intends to use any such insurance proceeds to repair, restore or
replace the assets of Company or Subsidiary in respect of which such insurance
proceeds were received, Agent shall, so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing, (A) in the
event the aggregate amount of such insurance proceeds in respect of any covered
loss does not exceed $1,000,000, deliver such insurance proceeds to Company,
and Company shall, or shall cause such Subsidiary to, use such insurance
proceeds to effect such repair, restoration or replacement, and (B) in the
event the aggregate amount of such insurance proceeds exceeds $1,000,000, hold
such proceeds in a cash collateral account and so long as Company or any of its
Subsidiaries proceeds to repair, restore or replace the assets of Company or
such Subsidiary in respect of which such insurance proceeds were received,
Agent shall from time to time disburse to Company or such Subsidiary amounts
necessary to pay the cost of such repair, restoration or replacement after the
receipt by Agent of invoices or other documentation reasonably satisfactory to
Agent describing the amount of costs so incurred; provided however that if in
the reasonable good faith belief of Agent, Company or such Subsidiary is not
proceeding diligently with the repair, restoration or replacement, Agent shall,
and Company hereby authorize Agent to, apply such insurance proceeds to prepay
the Loans and (b) if an Event of Default or Potential Event of Default shall
have occurred and be continuing or to the extent that neither Company nor any
of its Subsidiaries intends to use any such insurance proceeds to repair,
restore or replace assets of Company or any of its Subsidiaries as described
above, Agent shall, and Company hereby authorize Agent to, apply such insurance
proceeds to prepay the Loans.
6.5 INSPECTION; LENDER MEETING.
Company shall, and shall cause each of its Subsidiaries to,
permit (i) any authorized representatives designated by any Lender to visit and
inspect any of the properties of Company or any of its Subsidiaries, including
its and their financial and accounting records, and to make copies and take
extracts therefrom, and to discuss its and their affairs, finances and
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accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), and (ii) any authorized representatives designated by
Agent to conduct four audits of all Inventory and Accounts of Loan Parties
during each twelve-month period after the Closing Date, and such additional
audits as Agent may deem necessary or advisable at any time after the
occurrence and during the continuance of an Event of Default, all upon
reasonable notice and at such reasonable times during normal business hours as
may be reasonably requested. Without in any way limiting the foregoing,
Company will, upon the request of Agent or Requisite Lenders, participate in a
meeting of Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or such other location as may be agreed to by
Company and Agent) at such time as may be agreed to by Company and Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Company shall, and shall cause each of its Subsidiaries to,
comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, noncompliance with which could reasonably
be expected to cause, individually or in the aggregate at any time, a Material
Adverse Effect.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
A. Company shall, and shall cause each of its Subsidiaries to,
exercise all due diligence in order to comply in all material respects and
cause (i) all tenants under any leases or occupancy agreements affecting any
portion of the Facilities and (ii) all other Persons on or occupying such
property, to comply in all material respects with all Environmental Laws,
except where failure to comply, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
B. Company agrees that Agent may, from time to time and in its
reasonable discretion and upon a reasonable belief that Company has breached
any covenant or representation with respect to environmental matters or that
there has been a material violation of Environmental Laws at any Facility or by
Company, retain, at Company's expense, an independent professional consultant
to review any report relating to Hazardous Materials prepared by or for Company
and to conduct its own reasonable investigation of such matter at any Facility
currently owned, leased, operated or used by Company or any of its
Subsidiaries, and Company agrees to use its commercially reasonable efforts to
obtain permission for Agent's professional consultant to conduct its own
investigation of any such matter at any Facility previously owned, leased,
operated or used by Company or any of its Subsidiaries. Company hereby grants
to Agent and its agents, employees, consultants and contractors the right to
enter into or
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on to the Facilities currently owned, leased, operated or used by Company or
any of its Subsidiaries upon reasonable notice to Company to perform such
assessments on such property as are reasonably necessary to conduct such a
review and/or investigation. Any such investigation of any Facility shall be
conducted, unless otherwise agreed to by Company and Agent, during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at any such Facility or to
cause any damage or loss to any property at such Facility. Company and Agent
hereby acknowledge and agree that any report of any investigation conducted at
the request of Agent pursuant to this subsection 6.7B will be obtained and
shall be used by Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents. Agent agrees to deliver a
copy of any such report to Company with the understanding that Company
acknowledges and agrees that (i) it will indemnify and hold harmless Agent and
each Lender from any costs, losses or liabilities relating to Company's use of
or reliance on such report, (ii) neither Agent nor any Lender makes any
representation or warranty with respect to such report, and (iii) by delivering
such report to Company, neither Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations contained
in such report.
C. Company shall promptly advise Lenders in writing and in
reasonable detail of (i) any material Release of any Hazardous Materials
required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims that have a
reasonable possibility of giving rise to a Material Adverse Effect or with
respect to any material Release of Hazardous Materials required to be reported
to any federal, state or local governmental or regulatory agency, (iii) any
remedial action taken by Company or any other Person in response to (x) any
Hazardous Materials on, under or about any Facility, the existence of which has
a reasonable possibility of resulting in an Environmental Claim having a
Material Adverse Effect, or (y) any Environmental Claim that could have a
Material Adverse Effect, (iv) Company's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any Facility
that could reasonably be expected to cause such Facility or any part thereof to
be subject to any material restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws, and (v) any
request for information from any governmental agency that suggests such agency
is investigating whether Company or any of its Subsidiaries may be potentially
responsible for a Release of Hazardous Materials.
D. Company shall promptly notify Lenders of (i) any proposed
acquisition of stock, assets, or property by Company or
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any of its Subsidiaries that could reasonably be expected to expose Company or
any of its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have a Material Adverse Effect or that could
reasonably be expected to have a material adverse effect on any Governmental
Authorization then held by Company or any of its Subsidiaries and (ii) any
proposed action to be taken by Company or any of its Subsidiaries to commence
manufacturing, industrial or other operations that could reasonably be expected
to subject Company or any of its Subsidiaries to material additional
obligations or requirements under Environmental Laws.
E. Company shall, at its own expense, provide copies of such
documents or information as Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 6.7.
6.8 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
Company shall promptly take, and shall cause each of its
Subsidiaries promptly to take, any and all remedial action in connection with
the presence, storage, use, disposal, transportation or Release of any
Hazardous Materials on, under or about any Facility in order to comply with all
applicable Environmental Laws and Governmental Authorizations except where
failure to comply, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. In the event Company or any
of its Subsidiaries undertakes any remedial action with respect to any
Hazardous Materials on, under or about any Facility, Company or such Subsidiary
shall conduct and complete such remedial action in compliance with all
applicable Environmental Laws, except where failure to comply, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, and in accordance with the policies, orders and directives of
all federal, state and local governmental authorities except when, and only to
the extent that, Company's or such Subsidiary's liability for such presence,
storage, use, disposal, transportation or discharge of any Hazardous Materials
is being contested in good faith by Company or such Subsidiary.
6.9 REFINANCING OF BRIDGE NOTES; CONVERSION TO TERM LOANS UNDER THE BRIDGE
NOTE AGREEMENT.
If not earlier refinanced through the issuance of Takeout
Securities pursuant to the Takeout Securities Indenture as permitted under
Section 7.1(vi), Company shall, on the Conversion Date, convert the entire
aggregate principal amount outstanding under the Bridge Notes to a term loan
pursuant to the terms of the Bridge Note Agreement, such term loan to be
evidenced by the Conversion Notes.
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6.10 EXECUTION OF GUARANTIES AND COLLATERAL DOCUMENTS BY FUTURE
SUBSIDIARIES.
A. EXECUTION OF SUBSIDIARY GUARANTY AND COLLATERAL
DOCUMENTS. In the event that any Person becomes a Domestic Subsidiary of
Company after the date hereof, Company will promptly notify Agent of that fact
and cause such Domestic Subsidiary to execute and deliver to Agent a
counterpart of the Subsidiary Guaranty and a Subsidiary Pledge Agreement, a
Subsidiary Security Agreement, a Subsidiary Trademark Security Agreement, a
Subsidiary Patent Security Agreement and to take all such further action and
execute all such further documents and instruments as may be reasonably
required to grant and perfect in favor of Agent, for the benefit of Lenders, a
first-priority security interest in all of the personal property assets of such
Domestic Subsidiary described in the applicable Collateral Documents. With
respect to any such Domestic Subsidiary, Company shall also deliver to Agent a
pledge amendment to the Company Pledge Agreement or the applicable Subsidiary
Pledge Agreement, as appropriate, granting to Agent on behalf of Lenders a
first priority security interest in one hundred percent (100%) of the capital
stock of such Domestic Subsidiary. With respect to any such Foreign
Subsidiary, Company shall deliver to Agent a pledge amendment to the Company
Pledge Agreement or shall execute a Company Pledge Agreement under the laws of
the jurisdiction of organization or incorporation of such Foreign Subsidiary,
in each case granting to Agent on behalf of Lenders a first priority security
interest in 65% of the capital stock of such Foreign Subsidiary, and, in each
case, Company shall take, or cause to be taken, all such other actions as Agent
shall deem necessary or desirable to perfect such security interest.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC.
Company shall deliver to Agent, together with the applicable Guaranty and such
Collateral Documents, (i) certified copies of such Subsidiary's Articles or
Certificate of Incorporation, together with a good standing certificate from
the Secretary of State of the jurisdiction of its incorporation, each to be
dated a recent date prior to their delivery to Agent, (ii) a copy of such
Subsidiary's Bylaws, certified by its corporate secretary or an assistant
corporate secretary as of a recent date prior to their delivery to Agent, (iii)
a certificate executed by the secretary or an assistant secretary of such
Subsidiary as to (a) the incumbency and signatures of the officers of such
Subsidiary executing such Guaranty and the Collateral Documents to which such
Subsidiary is a party and (b) the fact that the attached resolutions of the
Board of Directors of such Subsidiary authorizing the execution, delivery and
performance of such Guaranty and such Collateral Documents are in full force
and effect and have not been modified or rescinded, and (iv) a favorable
opinion of counsel to such Subsidiary, in form and substance satisfactory to
Agent and its counsel, as to (a) the due organization and good standing of such
Subsidiary, (b) the
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due authorization, execution and delivery by such Subsidiary of such Guaranty
and such Collateral Documents, (c) the enforceability of such Guaranty and such
Collateral Documents against such Subsidiary, and (d) such other matters as
Agent may reasonably request, all of the foregoing to be satisfactory in form
and substance to Agent and its counsel.
SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all
of the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Company may become and remain liable with respect to
the Obligations;
(ii) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection
7.4 and, upon any matured obligations actually arising pursuant
thereto, the Indebtedness corresponding to the Contingent Obligations
so extinguished;
(iii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases or
purchase money Indebtedness; provided that the aggregate amount of
such Indebtedness does not exceed $100,000 at any time outstanding;
(iv) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any
wholly-owned Subsidiary of Company may become and remain liable with
respect to Indebtedness to Company or any other wholly-owned
Subsidiary of Company; provided that (a) all such intercompany
Indebtedness shall be evidenced by promissory notes that are pledged
to Agent pursuant to the terms of the applicable Collateral Document,
(b) all such intercompany Indebtedness owed by Company to any of its
Subsidiaries shall be subordinated in right of payment to the payment
in full of the Obligations pursuant to the terms of the applicable
promissory notes or an intercompany subordination agreement, and (c)
any payment by any
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Subsidiary of Company under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or to any of its
Subsidiaries for whose benefit such payment is made;
(v) Company may become and remain liable with respect to
up to $100,000,000 in aggregate principal amount of Indebtedness
evidenced by the Bridge Notes (as well as any payment-in-kind Bridge
Notes issued in lieu of cash interest thereon) and (a) Indebtedness
evidenced by the Conversion Notes, to the extent such Indebtedness has
been converted from Indebtedness under the Bridge Notes in accordance
with the terms of the Bridge Note Agreement (as well as any
payment-in-kind Bridge Notes issued in lieu of cash interest thereon),
(b) Indebtedness evidenced by the Takeout Securities issued pursuant
to the Takeout Securities Indenture, so long as all of the net
proceeds thereof are used to refinance in whole or in part an equal
principal amount of the Bridge Notes, the Conversion Notes, or the
Exchange Notes, and (c) Indebtedness evidenced by the Exchange Notes
issued pursuant to the Exchange Note Indenture to the extent such
Indebtedness has been exchanged for an equal principal amount of the
Conversion Notes(as well as any payment-in-kind Bridge Notes issued in
lieu of cash interest thereon);
(vi) the Purchase Price Adjustment Notes in the maximum
aggregate principal amount of $10,000,000; and
(vii) Company and its Subsidiaries may become and remain
liable with respect to other Indebtedness in an aggregate principal
amount not to exceed $250,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
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(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens on the Real Property Assets of Company and its
Subsidiaries and Liens on the personal property of Company and its
Subsidiaries other than Accounts, Inventory and intangibles (including
without limitation all Intellectual Property) securing the Bridge
Notes, the Conversion Notes or the Exchange Notes;
(iv) Liens securing Contingent Obligations of Company
under Currency Agreements with any Lender or any Affiliate of any
Lender that are permitted under subsection 7.4(vi); and
(v) Other Liens securing Indebtedness in an aggregate
amount not to exceed $100,000 at any time outstanding.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale, none of the
Company or any of its Subsidiaries shall enter into any agreement (other than
the Bridge Note Agreement, the Exchange Note Indenture and the Takeout
Securities Indenture) prohibiting the creation or assumption of any Lien upon
any of its properties or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR
OTHER SUBSIDIARIES. Except as provided herein, as may be provided for in any
Indebtedness permitted pursuant to subsection 7.1(v) or as may be imposed in
connection with an Asset Sale permitted pursuant to subsection 7.7, Company
will not, and will not permit any of its Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such Subsidiary's capital
stock owned by Company or any other Subsidiary of Company, (ii) repay or prepay
any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of
Company,
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(iii) make loans or advances to Company or any other Subsidiary of Company, or
(iv) transfer any of its property or assets to Company or any other Subsidiary
of Company.
7.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries
of Company;
(iii) Company and its Subsidiaries may make intercompany
loans to the extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.8;
(v) Company and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed hereto;
and
(vi) Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time
$1,000,000.
7.4 CONTINGENT OBLIGATIONS.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of Letters of
Credit;
(ii) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations arising under their
respective Guaranties;
(iii) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets;
(iv) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of
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any Indebtedness of Company or any of its Subsidiaries permitted by
subsection 7.1;
(v) Company's Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of guaranties made
under the Bridge Note Agreement, and Subsidiaries of Company may
become and remain liable with respect to Contingent Obligations under
guaranties made under the Exchange Note Indenture or under guaranties
made under the Takeout Securities Indenture;
(vi) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations under Currency
Agreements entered into in the ordinary course of business with a
Lender or an Affiliate of a Lender in a notional amount not to exceed
$1,000,000 for all such Currency Agreements; and
(vii) Company and its Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided that the
maximum aggregate liability, contingent or otherwise, of Company and
its Subsidiaries in respect of all such Contingent Obligations shall
at no time exceed $100,000.
7.5 RESTRICTED JUNIOR PAYMENTS; CERTAIN OTHER PAYMENTS.
A. Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that Company may make
payments of regularly scheduled interest in respect of the Takeout Securities
in accordance with the terms of and to the extent required by (and subject to
the subordination provisions, if any, contained in) the Takeout Securities
Indenture.
B. Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for payment on the Bridge Notes, the Conversion Notes or the Exchange
Notes; provided that (i) Company may make payments of regularly scheduled
interest in respect of the Bridge Notes, the Conversion Notes and the Exchange
Notes, in each case in accordance with the terms of and to the extent required
by the Bridge Note Agreement or the Exchange Note Indenture and (ii) Company
may (a) refinance the Bridge Notes, Conversion Notes or Exchange Notes with the
proceeds of the Takeout Securities, (b) convert the Bridge Notes into the
Conversion Notes, or (c) exchange the Conversion Notes for the Exchange Notes.
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7.6 FINANCIAL COVENANTS.
A. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense for any
four-Fiscal Quarter period ending during any of the periods set forth below to
be less than the correlative ratio indicated:
<TABLE>
<CAPTION>
MINIMUM
PERIOD INTEREST COVERAGE RATIO
------------------------ -----------------------
<S> <C>
Closing Date to October 30, 1998 1.50:1.00
November 1, 1998 to October 30, 1999 1.60:1.00
November 1, 1999 to October 30, 2000 1.80:1.00
November 1, 2000 to October 30, 2001 1.90:1.00
</TABLE>
B. MAXIMUM LEVERAGE RATIO. Company shall not permit the ratio of
(i) Consolidated Total Debt as of the last day of any Fiscal Quarter occurring
during any of the periods set forth below to (ii) Consolidated EBITDA for the
four-Fiscal Quarter period ending on such last day to exceed the correlative
ratio indicated:
<TABLE>
<CAPTION>
PERIOD MAXIMUM LEVERAGE RATIO
------------------------- ----------------------
<S> <C>
Closing Date to October 30, 1998 6.75:1.00
November 1, 1998 to October 30, 1999 6.25:1.00
November 1, 1999 to October 30, 2000 5.75:1.00
November 1, 2000 to October 30, 2001 5.25:1.00
</TABLE>
C. MINIMUM CONSOLIDATED EBITDA. Company shall not permit
Consolidated EBITDA for any four-Fiscal Quarter period ending as of the last
day of any Fiscal Quarter occurring during any of the periods set forth below
to be less than the correlative amount indicated:
<TABLE>
<CAPTION>
MINIMUM CONSOLIDATED
PERIOD EBITDA
---------------------------- --------------------
<S> <C>
Closing Date to October 30, 1998 $16,300,000
November 1, 1998 to October 30, 1999 $18,200,000
November 1, 1999 to October 30, 2000 $19,800,000
November 1, 2000 to October 30, 2001 $20,200,000
</TABLE>
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Company shall not, and shall not permit any of its
Subsidiaries to, alter the corporate, capital or legal structure of Company or
any of its Subsidiaries, or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or
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convey, sell, lease or sub-lease (as lessor or sub-lessor), transfer or
otherwise dispose of, in one transaction or a series of transactions, all or
any part of its business, property or fixed assets, whether now owned or
hereafter acquired, or acquire by purchase or otherwise all or substantially
all the business, property or fixed assets of, or stock or other evidence of
beneficial ownership of, any Person or any division or line of business of any
Person, except:
(i) any Subsidiary of Company may be merged with or into
Company or any wholly-owned Subsidiary of Company, or may be
liquidated, wound up or dissolved, or all or any part of its business,
property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions,
to Company or any wholly-owned Subsidiary of Company; provided that,
in the case of such a merger described in the foregoing clause (a) or
(b), Company or such wholly-owned Subsidiary shall be the continuing
or surviving corporation;
(ii) Company and its Subsidiaries may make Consolidated
Capital Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales;
provided that the consideration received for such assets shall be in
an amount at least equal to the fair market value thereof (as
reasonably determined by the Board of Directors of Company); and
(iv) subject to subsection 7.13, Company and its
Subsidiaries may make Asset Sales of assets having a fair market value
not in excess of $250,000 per Fiscal Year; provided that (x) the
consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (as reasonably determined by
the Board of Directors of Company); and (y) at least seventy five
percent (75%) of the consideration received shall be cash or Cash
Equivalents.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
Company shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures, in any period indicated below,
in an aggregate amount in excess of the corresponding amount set forth below
opposite such period:
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<TABLE>
<CAPTION>
MAXIMUM CONSOLIDATED
PERIOD CAPITAL EXPENDITURES
----------------------- ----------------------
<S> <C>
Closing Date to October 30, 1998 $9,500,000
November 1, 1998 to October 30, 1999 $4,800,000
November 1, 1999 to October 30, 2000 $4,800,000
November 1, 2000 to October 30, 2001 $4,800,000
</TABLE>
7.9 FISCAL YEAR.
Company shall not change its Fiscal Year-end from April 30.
7.10 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, become or remain liable as lessee or
as a guarantor or other surety with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) which Company or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than Company or any of its Subsidiaries) or (ii) which Company or
any of its Subsidiaries intends to use for substantially the same purpose as
any other property which has been or is to be sold or transferred by Company or
any of its Subsidiaries to any Person (other than Company or any of its
Subsidiaries) in connection with such lease; provided that Company and its
Subsidiaries may become and remain liable as lessee, guarantor or other surety
with respect to any such lease if and to the extent that (i) such Lease, if a
Capital Lease, is permitted pursuant to subsection 7.1(iii) and (ii) the
consideration received is at least equal to the fair market value of the
property sold as determined in good faith by Company's Board of Directors.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, sell with recourse, or discount or
otherwise sell for less than the face value thereof, any of its notes or
accounts receivable other than sales for collection of defaulted receivables
over 120 days past due.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any holder of 5%
or more of any class of equity Securities of Company or with any Affiliate of
Company or of any such holder, on terms that are less favorable
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to Company or that Subsidiary, as the case may be, than those that might be
obtained at the time from Persons who are not such a holder or Affiliate;
provided that the foregoing restriction shall not apply to (i) any transaction
between Company and any of its wholly-owned Subsidiaries and Guarantors; or
between any of its wholly-owned Subsidiaries and Guarantors; (ii) reasonable
and customary fees paid to members of the Boards of Directors of Company and
its Subsidiaries; (iii) fees payable to Baker Capital Corp. and disclosed in
the Preliminary Offering Memorandum of Company dated October 31, 1997; (iv)
compensation payable to the Existing Shareholders pursuant to employment
agreements between Company and such Existing Shareholders and disclosed in such
Preliminary Offering Memorandum; and (v) reimbursement payments to Newco with
respect to Newco's expenses incurred in connection with the Recapitalization
and related transactions.
7.13 DISPOSAL OF SUBSIDIARY STOCK.
Except pursuant to the Collateral Documents and except for any
sale of 100% of the capital stock or other equity Securities of any of its
Subsidiaries in compliance with the provisions of subsection 7.7(iv), Company
shall not:
(i) directly or indirectly sell, assign, pledge or
otherwise encumber or dispose of any shares of capital stock or other
equity Securities of any of its Subsidiaries, except to qualify
directors if required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly
to sell, assign, pledge or otherwise encumber or dispose of any shares
of capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company, another Subsidiary of
Company, or to qualify directors if required by applicable law.
7.14 CONDUCT OF BUSINESS.
From and after the Closing Date, Company shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than (i)
the businesses engaged in by Company and its Subsidiaries on the Closing Date
and similar or related businesses and (ii) such other lines of business as may
be consented to by Requisite Lenders.
7.15 AMENDMENTS OF CERTAIN DOCUMENTS; DESIGNATION OF DESIGNATED SENIOR
DEBT.
A. Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of the Bridge Note
Agreement, the Exchange Note Indenture or the Takeout Securities Indenture or
any of the exhibits to any of the
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foregoing or of any Subordinated Indebtedness or any agreement related thereto
or any guaranty entered into by any Loan Party in connection therewith
(collectively, the "RESTRICTED AGREEMENTS"), or make any payment consistent
with an amendment thereof or change thereto, if the effect of such amendment or
change is to increase the interest rate on such Indebtedness or any such
Restricted Agreement, change any dates upon which payments of principal or
interest are due thereon, change any of the covenants with respect thereto in a
manner which is more restrictive to Company or any of its Subsidiaries, change
any event of default or condition to an event of default with respect thereto,
change the redemption, prepayment or defeasance provisions thereof, change any
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect
of such amendment or change, together with all other amendments or changes
made, is to increase the obligations of the obligor thereunder or to confer any
additional rights on the holders of such Indebtedness or any such Restricted
Agreement (or a trustee or other representative on their behalf) which would be
adverse to any Loan Party or Lenders.
B. Company shall not, and shall not permit any of its
Subsidiaries to, agree to any material amendment to, or waive any of its
material rights under, or otherwise change any material terms of any of the
Related Agreements (other than the Related Agreements subject to subsection
7.15A) without the prior written consent of Requisite Lenders.
C. Company shall not, and shall not permit any of its
Subsidiaries to, designate any Indebtedness as "Designated Senior Debt" (as
defined in the Takeout Securities Indenture) for purposes of the Takeout
Securities Indenture without the prior written consent of Requisite Lenders.
7.16 DEPOSIT ACCOUNTS.
Company shall not, and shall not permit any of its
Subsidiaries to, maintain any Deposit Account which is not a Lock Box Account
or a Concentration Account or a disbursement account under the exclusive
dominion and control of Agent.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of
Default") shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of or
interest on any Loan when due, whether at stated maturity, by acceleration, by
notice of voluntary prepayment, by mandatory
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prepayment or otherwise; failure by Company to pay when due any amount payable
to an Issuing Lender in reimbursement of any drawing under a Letter of Credit;
or failure by Company to pay any fee or any other amount due under this
Agreement within five days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Subsidiaries to pay
when due any principal of or interest on one or more items of
Indebtedness (other than Indebtedness referred to in subsection 8.1)
or Contingent Obligations in an individual principal amount of
$100,000 or more or with an aggregate principal amount of $250,000 or
more, in each case beyond the end of any grace period provided
therefor; or (ii) breach or default by Company or any of its
Subsidiaries with respect to any other material term of (a) one or
more items of Indebtedness or Contingent Obligations in the individual
or aggregate principal amounts referred to in clause (i) above or (b)
any loan agreement, mortgage, indenture or other agreement relating to
such item(s) of Indebtedness or Contingent Obligation(s), if the
effect of such breach or default is to cause, or to permit the holder
or holders of that Indebtedness or Contingent Obligation(s) (or a
trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared due
and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or
receiving of notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or
condition contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement
made by Company or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Company or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date as of which made;
or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Company or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in this Agreement or any
of the other Loan Documents, other than any such term referred to in any other
subsection of this Section 8, and such default shall not have been remedied or
waived within 15
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days after the earlier of (i) an officer of Company becoming aware of such
default or (ii) receipt by Company of notice from Agent or any Lender of such
default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of Company or any of its
Subsidiaries in an involuntary case under the Bankruptcy Code or under
any other Insolvency Laws which decree or order is not stayed; or any
other similar relief shall be granted under any applicable Insolvency
Laws; or (ii) an involuntary case shall be commenced against Company
or any of its Subsidiaries under the Bankruptcy Code or under any
other Insolvency Laws; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Company or any of its Subsidiaries, or over all or
a substantial part of its property, shall have been entered; or there
shall have occurred the involuntary appointment of an interim
receiver, trustee or other custodian of Company or any of its
Subsidiaries for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been
issued against any substantial part of the property of Company or any
of its Subsidiaries, and any such event described in this clause (ii)
shall continue for 60 days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Subsidiaries shall have an
order for relief entered with respect to it or commence a voluntary
case under the Bankruptcy Code or under any other Insolvency Laws, or
shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case,
under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its
Subsidiaries shall make any assignment for the benefit of creditors;
or (ii) Company or any of its Subsidiaries shall be unable, or shall
fail generally, or shall admit in writing its inability, to pay its
debts as such debts become due; or the Board of Directors of Company
or any of its Subsidiaries (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
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8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar
process involving (i) in any individual case an amount in excess of $100,000 or
(ii) in the aggregate at any time an amount in excess of $250,000 (in either
case not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days
(or in any event later than five days prior to the date of any proposed sale
thereunder); or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company
or any of its Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually
or in the aggregate results in or might reasonably be expected to result in
liability of Company or any of its ERISA Affiliates in excess of $100,000
during the term of this Agreement; or there shall exist an amount of unfunded
benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually
or in the aggregate for all Pension Plans (excluding for purposes of such
computation any Pension Plans with respect to which assets exceed benefit
liabilities), which exceeds $200,000 at any time prior to March 31, 1998, or
$100,000 at any time thereafter; or
8.11 MATERIAL ADVERSE EFFECT.
Any event or change shall occur that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect; or
8.12 CHANGE IN CONTROL.
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company to any Person or group
of related Persons for purposes of Section 13(d) of the Exchange Act
(a "Group"), together with any Affiliates thereof (whether or not
otherwise in compliance with the provisions of this Agreement), other
than a wholly owned Guarantor;
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(ii) the approval by the holders of capital stock of the
Company of any plan or proposal for the liquidation or dissolution of
the Company (whether or not otherwise in compliance with the
provisions of this Agreement);
(iii) any Person or Group (other than Baker, the Existing
Shareholders, their successors and assigns who are Affiliates, members
of their families and their heirs and executors) shall become the
owner, directly or indirectly, beneficially or of record of shares
representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Company
on a fully diluted basis; or
(iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Company's Board of Directors (together with any new directors whose
election or appointment by such board or whose nomination for election
by the stockholders of the Company was approved by a vote of a
majority of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Company's Board of Directors
then in office; or
(v) any "Change of Control" (as defined in any of the
Bridge Note Agreement, the Exchange Note Indenture or the Takeout
Securities Indenture) shall occur; or
(vi) Baker shall no longer, directly or indirectly,
beneficially own or control, shares representing at least 51% of the
aggregate ordinary voting power represented by the issued and
outstanding capital stock of Company on a fully diluted basis.
8.13 INVALIDITY OF ANY GUARANTY.
Any Guaranty for any reason, other than the satisfaction in
full of all Obligations, ceases to be in full force and effect (other than in
accordance with its terms) or is declared to be null and void, or any Loan
Party denies that it has any further liability, including without limitation
with respect to future advances by Lenders, under any Loan Document to which it
is a party, or gives notice to such effect; or
8.14 FAILURE OF SECURITY.
Any Collateral Document shall, at any time, cease to be in
full force and effect (other than by reason of a release of Collateral in
accordance with the terms thereof) or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any Loan Party, or
Agent shall not have or
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cease to have a valid and perfected first priority security interest in the
Collateral; or
8.15 ACTION RELATING TO CERTAIN INDEBTEDNESS.
Any event shall occur which, under the terms of the Bridge
Note Agreement, the Exchange Note Indenture or the Takeout Securities
Indenture, as the case may be, shall require Company or any of its Subsidiaries
to purchase, redeem or otherwise acquire or offer to purchase, redeem or
otherwise acquire all or any portion of any such Indebtedness; or Company or
any of its Subsidiaries shall for any other reason purchase, redeem or
otherwise acquire or offer to purchase, redeem or otherwise acquire, or make
any other payments in respect of, all or any portion of any such Indebtedness,
except to the extent expressly permitted by subsection 7.5; or
8.16 FAILURE TO CONSUMMATE RECAPITALIZATION.
The Recapitalization shall not be consummated in accordance
with this Agreement on or prior to the Closing Date, or the Recapitalization
shall be unwound, reversed or otherwise rescinded in whole or in part for any
reason; or
THEN (i) upon the occurrence of any Event of Default described
in subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and
accrued interest on the Loans, (b) an amount equal to the maximum amount that
may at any time be drawn under all Letters of Credit then outstanding (whether
or not any beneficiary under any such Letter of Credit shall have presented, or
shall be entitled at such time to present, the drafts or other documents or
certificates required to draw under such Letter of Credit), and (c) all other
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which
are hereby expressly waived by Company, and the obligation of each Lender to
make any Loan, the obligation of Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) upon the occurrence and during the continuation of any
other Event of Default, Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Agent to issue
any Letter of Credit and the right of any Lender to issue any Letter of Credit
hereunder shall thereupon terminate; provided that the foregoing shall not
affect in any way the obligations of Lenders under subsection 3.3C(i).
Any amounts described in clause (b) above, when received by
Agent, shall be held by Agent pursuant to the terms
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of the Collateral Account Agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding
paragraph, if at any time within 60 days after an acceleration of the Loans
pursuant to such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as
a result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this
Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of the principal of and accrued interest on the Loans, in each
case which is due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to subsection 10.6, then Requisite Lenders, by
written notice to Company, may at their option rescind and annul such
acceleration and its consequences; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right
consequent thereon. The provisions of this paragraph are intended merely to
bind Lenders to a decision which may be made at the election of Requisite
Lenders and are not intended to benefit Company and do not grant Company the
right to require Lenders to rescind or annul any acceleration hereunder, even
if the conditions set forth herein are met.
SECTION 9. AGENT
9.1 APPOINTMENT.
BTCC is hereby appointed Agent hereunder and under the other
Loan Documents and each Lender hereby authorizes Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents.
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Agent and Lenders and Company shall have no rights as
a third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, Agent shall act solely as an agent
of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for Company or
any of its Subsidiaries.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto.
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Agent shall have only those duties and responsibilities that are expressly
specified in this Agreement and the other Loan Documents. Agent may exercise
such powers, rights and remedies and perform such duties by or through its
agents or employees. Agent shall not have, by reason of this Agreement or any
of the other Loan Documents, a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or
any other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Agent to Lenders or by or on behalf of
Company to Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Loan Documents or as to the use
of the proceeds of the Loans or the use of the Letters of Credit or as to the
existence or possible existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the contrary notwithstanding,
Agent shall not have any liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the component amounts
thereof.
C. EXCULPATORY PROVISIONS. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Agent under or in connection with any of the Loan
Documents except to the extent caused by Agent's gross negligence or willful
misconduct. If Agent shall request instructions from Lenders with respect to
any act or action (including the failure to take an action) in connection with
this Agreement or any of the other Loan Documents, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from Requisite Lenders. Without prejudice to the
generality of the foregoing, (i) Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for
Company and its Subsidiaries), accountants, experts and other
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professional advisors selected by it; and (ii) no Lender shall have any right
of action whatsoever against Agent as a result of Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of Requisite Lenders. Agent
shall be entitled to refrain from exercising any power, discretion or authority
vested in it under this Agreement or any of the other Loan Documents unless and
until it has obtained the instructions of Requisite Lenders.
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and the Letters of
Credit, Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term "Lender" or "Lenders" or
any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity. Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Company or any of its Affiliates as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Company for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of
Lenders or to provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the making of the
Loans or at any time or times thereafter, and Agent shall not have any
responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify Agent, to the extent that Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without
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limitation, counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Loan Documents or otherwise in its capacity as
Agent in any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross negligence
or willful misconduct. If any indemnity furnished to Agent for any purpose
shall, in the opinion of Agent, be insufficient or become impaired, Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.
9.5 SUCCESSOR AGENT.
Agent may resign at any time by giving 30 days' prior written
notice thereof to Lenders and Company, and Agent may be removed at any time
with or without cause by an instrument or concurrent instruments in writing
delivered to Company and Agent and signed by Requisite Lenders. Upon any such
notice of resignation or any such removal, Requisite Lenders shall have the
right, upon five Business Days' notice to Company, to appoint a successor
Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Agent and the retiring or removed Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
Each Lender hereby further authorizes Agent to enter into each
Collateral Document as secured party on behalf of and for the benefit of
Lenders and agrees to be bound by the terms of each Collateral Document;
provided that, subject to any provision of subsection 10.6 requiring the
consent of any additional Lenders, Agent shall not enter into or consent to any
amendment, modification, termination or waiver of any provision contained in
any Collateral Document or any Guaranty without the prior consent of Requisite
Lenders, but Agent may (i) release any Lien covering any items of Collateral
that are the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have consented and (ii) release any
Guarantor from its Guaranty if all of the capital stock of such Guarantor is
sold to a Person that is not any Affiliate of Company pursuant to a sale or
other disposition permitted hereunder or to which
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Requisite Lenders have consented. Anything contained in any of the Loan
Documents to the contrary notwithstanding, each Lender agrees that no Lender
shall have any right individually to realize upon any of the Collateral under
any Collateral Document or to enforce any of the Guaranties, it being
understood and agreed that all rights and remedies under the Collateral
Documents and the Guaranties may be exercised solely by Agent for the benefit
of Lenders in accordance with the terms thereof.
SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have
the right at any time to (i) sell, assign or transfer to any Eligible Assignee,
or (ii) sell participations to any Person in, all or any part of its
Commitments or any Loan or Loans made by it or its Letters of Credit or
participations therein or any other interest herein or in any other Obligations
owed to it; provided that no such sale, assignment, transfer or participation
shall, without the consent of Company, require Company to file a registration
statement with the Securities and Exchange Commission or apply to qualify such
sale, assignment, transfer or participation under the securities laws of any
state; provided, further that no such sale, assignment or transfer described in
clause (i) above shall be effective unless and until an Assignment Agreement
effecting such sale, assignment or transfer shall have been accepted by Agent
and recorded in the Register as provided in subsection 10.1B(ii); and provided,
further that no such sale, assignment, transfer or participation of any Letter
of Credit or any participation therein may be made separately from a sale,
assignment, transfer or participation of a corresponding interest in the
Revolving Loan Commitment and the Revolving Loans of the Lender effecting such
sale, assignment, transfer or participation. Except as otherwise provided in
this subsection 10.1, no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment or transfer of, or any granting of participations in, all or any
part of its Commitments or the Loans, the Letters of Credit or participations
therein, or the other Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment,
Loan, Letter of Credit or participation therein, or other Obligation
may (a) be assigned in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender, with the giving
of notice to Company and Agent or (b) be assigned in an aggregate
amount of not less than $5,000,000 (or such lesser amount as shall
constitute
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the aggregate amount of the Commitments, Loans, Letters of Credit and
participations therein, and other Obligations of the assigning Lender)
to any other Eligible Assignee with the consent of Agent. To the
extent of any such assignment in accordance with either clause (a) or
(b) above, the assigning Lender shall be relieved of its obligations
with respect to its Commitments, Loans, Letters of Credit or
participations therein, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the Register, an
Assignment Agreement, together with a processing and recordation fee
of $3,500 and such forms, certificates or other evidence, if any, with
respect to United States federal income tax withholding matters as the
assignee under such Assignment Agreement may be required to deliver to
Agent pursuant to subsection 2.7B(iii)(a). Upon such execution,
delivery, acceptance and recordation, from and after the effective
date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such
Assignment Agreement, shall have the rights and obligations of a
Lender hereunder and (z) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, relinquish its rights and be
released from its obligations under this Agreement, subject to
subsection 10.9B (and, in the case of an Assignment Agreement covering
all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a
party hereto; provided that, anything contained in any of the Loan
Documents to the contrary notwithstanding, if such Lender is the
Issuing Lender with respect to any outstanding Letters of Credit such
Lender shall continue to have all rights and obligations of an Issuing
Lender with respect to such Letters of Credit until the cancellation
or expiration of such Letters of Credit and the reimbursement of any
amounts drawn thereunder). The Commitments hereunder shall be
modified to reflect the Commitment of such assignee and any remaining
Commitment of such assigning Lender and, if any such assignment occurs
after the issuance of the Notes hereunder, the assigning Lender shall,
upon the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Notes to Agent for cancellation,
and thereupon new Notes shall be issued to the assignee and/or to the
assigning Lender, substantially in the form of Exhibit IV annexed
hereto, as the case may be, with appropriate insertions, to reflect
the new Commitments, of the assignee and/or the assigning Lender.
(ii) Acceptance by Agent; Recordation in Register. Upon
its receipt of an Assignment Agreement executed by an
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assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the processing and recordation fee referred to
in subsection 10.1B(i) and any forms, certificates or other evidence
with respect to United States federal income tax withholding matters
that such assignee may be required to deliver to Agent pursuant to
subsection 2.7B(iii)(a), Agent shall, if Agent and Company have
consented to the assignment evidenced thereby (in each case to the
extent such consent is required pursuant to subsection 10.1B(i)), (a)
accept such Assignment Agreement by executing a counterpart thereof as
provided therein (which acceptance shall evidence any required consent
of Agent to such assignment), (b) record the information contained
therein in the Register, and (c) give prompt notice thereof to
Company. Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection
10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than
an Affiliate of the Lender granting such participation, shall not be entitled
to require such Lender to take or omit to take any action hereunder except
action directly affecting (i) the extension of the scheduled final maturity
date of any Loan allocated to such participation or (ii) a reduction of the
principal amount of or the rate of interest payable on any Loan allocated to
such participation, and all amounts payable by Company hereunder (including
without limitation amounts payable to such Lender pursuant to subsections 2.6D,
2.7 and 3.6) shall be determined as if such Lender had not sold such
participation. Company and each Lender hereby acknowledges and agrees that,
solely for purposes of subsections 10.4 and 10.5, (a) any participation will
give rise to a direct obligation of Company to the participant and (b) the
participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 10.1, any Lender may assign and pledge all or any portion of its
Loans, the other Obligations owed to such Lender, and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating circular issued by
such Federal Reserve Bank; provided that (i) no Lender shall, as between
Company and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such
Federal Reserve Bank be considered to be a "Lender" or be entitled to require
the assigning Lender to take or omit to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information
concerning Company and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including
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prospective assignees and participants), subject to subsection 10.19.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including without limitation
any opinions requested by Lenders as to any legal matters arising hereunder)
and of Company's performance of and compliance with all agreements and
conditions on its part to be performed or complied with under this Agreement
and the other Loan Documents including, without limitation, with respect to
confirming compliance with environmental and insurance requirements; (iii) the
reasonable fees, expenses and disbursements of counsel to Agent (including
allocated costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Company; (iv) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Agent on
behalf of Lenders pursuant to the Loan Documents, including without limitation
costs of conducting record searches, examining Collateral, opening bank
accounts and lockboxes, depositing checks, receiving and transferring funds
(including charges for checks for which there are insufficient funds), and fees
and taxes in connection with the filing of financing statements, costs of
preparing and recording Loan Documents, fees and expenses of counsel for
providing such opinions as Agent or Requisite Lenders may reasonably request,
and fees and expenses of legal counsel to Agent; (v) all other actual and
reasonable costs and expenses incurred by Agent in connection with the
syndication of the Commitments and the negotiation, preparation and execution
of the Loan Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (vi) after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Agent and Lenders in enforcing any Obligations
of or in collecting any payments due from any Loan Party hereunder or under the
other Loan Documents by reason of such Event of Default or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings.
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10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection
10.2, whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Agent and Lenders,
and the officers, directors, employees, agents and affiliates of Agent and
Lenders (collectively called the "INDEMNITEES") from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a party or a
potential party thereto), whether direct, indirect or consequential and whether
based on any federal, state or foreign laws, statutes, rules or regulations
(including without limitation securities and commercial laws, statutes, rules
or regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of this Agreement
or the other Loan Documents or the Related Agreements or the transactions
contemplated hereby or thereby (including without limitation Lenders' agreement
to make the Loans hereunder or the use or intended use of the proceeds of any
of the Loans or the issuance of Letters of Credit hereunder or the use or
intended use of any of the Letters of Credit) or the statements contained in
the commitment letter delivered by any Lender to Company with respect thereto
(collectively called the "INDEMNIFIED LIABILITIES"); provided that Company
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise from
the gross negligence or willful misconduct of that Indemnitee as determined by
a final judgment of a court of competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Company shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
Without limiting the generality of the foregoing, Company
further agrees to fully and promptly pay, perform, discharge, defend (subject
to Indemnitee's selection of counsel), indemnify and hold harmless each
Indemnitee from and against any Indemnified Environmental Liabilities; provided
that Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Environmental Liabilities to the extent such
Indemnified Environmental Liabilities arise from the gross negligence or
willful misconduct of that Indemnitee as
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determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Company shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Environmental Liabilities incurred by the
Indemnitees or any of them. As used herein, "INDEMNIFIED ENVIRONMENTAL
LIABILITIES" means any liabilities, obligations, losses, damages (including,
without limitation, natural resource damages), penalties, actions, judgments,
suits, claims (including Environmental Claims), costs (including, without
limitation, the costs of any investigation, study, sampling, testing,
abatement, cleanup, removal, remediation, or other response action necessary to
remove, remediate, clean up, or abate any Hazardous Materials or any activity
relating to Hazardous Materials that is in violation of any Environmental Laws
or that presents a material risk of giving rise to an Environmental Claim),
expenses and disbursements of any kind or nature whatsoever, whether direct,
indirect or consequential and whether based on any federal, state or foreign
laws, statutes, rules or regulations (including without limitation securities
and commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner
relating to or arising out of: (i) any Release, threatened Release or disposal
of any Hazardous Materials at any of the Facilities; (ii) the Release,
threatened Release, or disposal at any location of any Hazardous Materials
generated at or originating from any of the Facilities by or at the direction
of Company or any of its Subsidiaries; (iii) any Environmental Claim in
connection with any of the Facilities; or (iv) the operation of or violation of
any Environmental Law at any of the Facilities.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default and after
consultation with Agent each Lender is hereby authorized by Company at any time
or from time to time, without prior notice to Company or to any other Person,
any such prior notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender to or for the credit or
the account of Company against and on account of the obligations and
liabilities of Company to that Lender under this Agreement, the Letters of
Credit and participations therein and the other Loan
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Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Company hereby further grants to
Agent and each Lender a security interest in all deposits and accounts
maintained with Agent or such Lender as security for the Obligations.
10.5 RATABLE SHARING.
AMOUNTS OWED BY COMPANY. Lenders hereby agree among
themselves that if any of them shall, whether by voluntary payment, by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code or under any other
Insolvency Laws, receive payment or reduction of a proportion of the aggregate
amount of principal, interest, amounts payable in respect of Letters of Credit,
fees and other amounts then due and owing to that Lender from Company hereunder
or under the other Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE
FROM COMPANY" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due From Company to such
other Lender, then the Lender receiving such proportionately greater payment
shall (i) notify Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the
Aggregate Amounts Due From Company to the other Lenders so that all such
recoveries of Aggregate Amounts Due From Company shall be shared by all Lenders
in proportion to the Aggregate Amounts Due From Company to them; provided that
if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered from such Lender upon the bankruptcy
or reorganization of Company or otherwise, those purchases shall be rescinded
and the purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without interest.
Company expressly consents to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by Company to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
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10.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any
provision of this Agreement or of the Notes, and no consent to any departure by
Company therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: increases the amount of the
Commitments or reduces the principal amount of any of the Loans or reduces any
Letter of Credit reimbursement obligations; changes in any manner the
definition of "Pro Rata Share" or the definition of "Requisite Lenders";
changes in any manner the provisions contained in the second paragraph of
subsection 2.1C(ii); changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; postpones the scheduled final maturity date (but not the date of any
scheduled installment of principal) of any of the Loans or postpones any date
faxed for any payment in respect of Letter of Credit reimbursement obligations;
postpones the date on which any interest or any fees are payable; decreases the
interest rate borne by any of the Loans (other than any waiver of any increase
in the interest rate applicable to any of the Loans pursuant to subsection
2.2E) or the amount of any fees payable hereunder (other than fees which are
exclusively for the account of the Agent or Issuing Lender); increases the
advance rate with respect to Revolving Loans (except for the restoration by the
Agent of an advance rate in whole or in part to its original level after the
prior reduction thereof by the Agent); except as otherwise expressly provided
in this Agreement, and other than in connection with the financing,
refinancing, sale or other disposition of any asset of the Company or any of
its Subsidiaries permitted under this Agreement, releases any Liens in favor of
the Lenders on any of the Collateral; or changes in any manner the provisions
contained in subsection 8.1 or this subsection 10.6 shall be effective only if
evidenced by a writing signed by or on behalf of all Lenders. In addition, (i)
no amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the Lender which is the
holder of that Note and (ii) no amendment, modification, termination or waiver
of any provision of Section 9 or of any other provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of Agent
shall be effective without the written concurrence of Agent. Agent may, but
shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of that Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on Company in
any case shall entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this subsection 10.6 shall be
binding
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<PAGE> 135
upon each Lender at the time outstanding, each future Lender and, if signed by
Company, on Company.
10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in
writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of telefacsimile
or telex, or three Business Days after depositing it in the United States mail
with postage prepaid and properly addressed; provided that notices to Agent
shall not be effective until received. For the purposes hereof, the address of
each party hereto shall be as set forth under such party's name on the
signature pages hereof or (i) as to Company and Agent, such other address as
shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein
shall survive the execution and delivery of this Agreement and the making of
the Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law
to the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
subsections 9.2C, 9.4, 10.5, and 10.19 shall survive the payment of the Loans,
the cancellation or expiration of the Letters of Credit and the reimbursement
of any amounts drawn thereunder, and the termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or
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<PAGE> 136
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement and
the other Loan Documents are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Agent nor any Lender shall be under any obligation to
marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Agent or Lenders (or to Agent for the benefit of
Lenders), or Agent or Lenders enforce any security interests or exercise their
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or
the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender
shall be responsible for the obligations or Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no
action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not
be necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
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<PAGE> 137
10.14 HEADINGS.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the permitted successors and permitted assigns of Lenders
(it being understood that Lenders' rights of assignment are subject to
subsection 10.1). None of Company's rights or obligations hereunder nor any
interest therein may be assigned or delegated by Company without the prior
written consent of all Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER
LOAN DOCUMENT OR SUCH OBLIGATION. Company hereby agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to Company at its address provided in
subsection 10.8, such service being hereby acknowledged by Company to be
sufficient for personal jurisdiction in any action against Company in any such
court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Lender to bring proceedings
against Company in the courts of any other jurisdiction.
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<PAGE> 138
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. Each party
hereto acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this Agreement, and that each will continue to rely on this waiver in
their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained
pursuant to the requirements of this Agreement in accordance with such Lender's
customary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices, it being understood and
agreed by Company that in any event a Lender may after the proposed recipient
of such information has agreed to be bound by this subsection 10.19, make
disclosures to Affiliates of such Lender or disclosures reasonably required by
any bona fide assignee, transferee or participant in connection with the
contemplated assignment or transfer by such Lender of any Loans or any
participations therein or disclosures required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided that,
unless specifically prohibited by applicable law or court order, each Lender
shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure
of such information; and
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<PAGE> 139
provided, further that in no event shall any Lender be obligated or required to
return any materials furnished by Company or any of its Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
Company and Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
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<PAGE> 140
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY:
FWT, INC.
By:
---------------------------------
Title:
------------------------------
Notice Address:
1901 East Loop 820 South
Fort Worth, TX 76112
Attention: Chief Executive Officer
Telephone No.: 817-457-3060
Telecopy No.: 817-446-7095
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LENDERS:
BT COMMERCIAL CORPORATION,
as a Lender and as Agent
By:
---------------------------------
Title:
------------------------------
Notice Address:
NOTICE:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Attention: Bhartai Baliga
Telecopy No.: 212-618-6428
DOMESTIC LENDING OFFICE:
14 Wall Street, 3rd Floor
New York, New York 10005
Attention: Bharti Baliga
Telecopy No.: 212-618-2428
EURODOLLAR LENDING OFFICE:
14 Wall Street, 3rd Floor
New York, New York 10005
Attention: Bharti Baliga
Telecopy No.: 212-618-2428
S-2
<PAGE> 142
BANKERS TRUST COMPANY,
as an Issuing Lender
By:
---------------------------------
Title:
-------------------------------
Notice Address:
130 Liberty Street, 31st Floor
New York, New York 10006
Attention:
--------------------------
Telecopy No.: (212) 669-0021
S-3
<PAGE> 143
EXHIBIT I
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of November
12, 1997, as amended, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, supplemented or otherwise modified,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among FWT, Inc., a
Texas corporation ("COMPANY"), the financial institutions listed therein as
Lenders ("LENDERS"), and BT Commercial Corporation, as Agent ("AGENT"), this
represents Company's request to borrow from Lenders as follows:
1. Requested Funding Date: ___________________, _________
2. Amount of borrowing: $___________________
3. Type of Loans: Revolving Loans
4. Interest rate option: [ ] a. Base Rate Loan(s)
[ ] b. Eurodollar Rate Loans with an
initial Interest Period of
____________ month(s)
The proceeds of such Loans are to be credited to the account of the Company at
the Funding and Payment Office.
The undersigned hereby, to the best of his or her knowledge,
certifies that:
(i) The representations and warranties contained in the
Credit Agreement and the other Loan Documents are true, correct and
complete in all material respects on and as of the date hereof to the
same extent as though made on and as of the date hereof, except to the
extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties were
true, correct and complete in all material respects on and as of such
earlier date;
(ii) No event has occurred and is continuing or would
result from the consummation of the borrowing contemplated hereby that
would constitute an Event of Default or a Potential Event of Default;
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<PAGE> 144
(iii) Company has performed in all material respects all
agreements and satisfied all conditions which the Credit Agreement
provides shall be performed or satisfied by it on or before the date
hereof; and
(iv) After giving effect to the requested Loans, the Total
Utilization of Revolving Loan Commitments will not exceed the Revolving
Loan Commitments then in effect and the Borrowing Base then in effect.
DATED: FWT, INC.
----------------------
By:
--------------------------
Title:
-----------------------
I-2
<PAGE> 145
EXHIBIT II
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of November
12, 1997, as amended, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, supplemented or otherwise modified,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among FWT, Inc., a
Texas corporation ("COMPANY"), the financial institutions listed therein as
Lenders ("LENDERS"), and BT Commercial Corporation, as Agent ("AGENT"), this
represents Company's request to convert or continue Loans as follows:
1. Date of conversion/continuation: __________________, _______
2. Amount of Loans being converted/continued: $___________________
3. Type of Loans being Revolving Loans
converted/continued:
4. Nature of conversion/continuation:
[ ] a. Conversion of Base Rate Loans to Eurodollar Rate
Loans
[ ] b. Conversion of Eurodollar Rate Loans to Base
Rate Loans
[ ] c. Continuation of Eurodollar Rate Loans as such
5. If Loans are being continued as or converted to Eurodollar Rate
Loans, the duration of the new Interest Period that commences
on the conversion/ continuation date: _______________
month(s)
In the case of a conversion to or continuation of Eurodollar
Rate Loans, the undersigned hereby, to the best of his or her knowledge,
certifies that no Event of Default or Potential Event of Default has occurred
and is continuing under the Credit Agreement.
DATED: FWT, INC.
---------------------
By:
--------------------------
Title:
-----------------------
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<PAGE> 146
EXHIBIT III
[FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT]
REQUEST FOR ISSUANCE OF LETTER OF CREDIT
Pursuant to that certain Credit Agreement dated as of November
12, 1997, as amended, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, supplemented or otherwise modified,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among FWT, Inc., a
Texas corporation ("COMPANY"), the financial institutions listed therein as
Lenders ("LENDERS"), and BT Commercial Corporation, as Agent ("AGENT"), this
represents Company's request for the issuance of a Letter of Credit by BTCo as
follows:
1. Date of issuance of Letter of Credit: ________________, ______
2. Face amount of Letter of Credit: $________________________
3. Expiration date of Letter of Credit: ________________, ________
4. Name and address of beneficiary:
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
5. Attached hereto is:
[ ] a. the verbatim text of such proposed Letter of Credit
[ ] b. the proposed terms and conditions of such Letter of
Credit, including a precise description of any
documents to be presented by the beneficiary which, if
presented by the beneficiary prior to the expiration
date of such Letter of Credit, would require the
Issuing Lender to make payment under such Letter of
Credit.
The undersigned hereby, to the best of his or her knowledge,
certifies that:
(i) The representations and warranties contained in the
Credit Agreement and the other Loan Documents are true, correct and
complete in all material respects on and as of the date hereof to the
same extent as though made on and as of the date hereof, except to the
extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties were
true, correct and complete in all material respects on and as of such
earlier date;
III-1
<PAGE> 147
(ii) No event has occurred and is continuing or would
result from the issuance of the Letter of Credit contemplated hereby
that would constitute an Event of Default or a Potential Event of
Default;
(iii) The Company has performed in all material respects all
agreements and satisfied all conditions which the Credit Agreement
provides shall be performed or satisfied by it on or before the date
hereof; and
(iv) After giving effect to the requested Letter of Credit,
the Total Utilization of Revolving Loan Commitments will not exceed the
Revolving Loan Commitments then in effect and the Borrowing Base then
in effect.
DATED: FWT, INC.
----------------------
By:
--------------------------
Title:
-----------------------
III-2
<PAGE> 148
EXHIBIT IV
[FORM OF REVOLVING NOTE]
FWT, INC.
PROMISSORY NOTE DUE NOVEMBER 30, 2000
$[1] [2]
November 12, 1997
FOR VALUE RECEIVED, FWT, INC., a Texas corporation ("COMPANY"),
promises to pay to [3] ("PAYEE") or its registered assigns, on or before
November 30, 2000, the lesser of (x) [4] ($[1]) and (y) the unpaid principal
amount of all advances made by Payee to Company as Revolving Loans under the
Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of November 12, 1997 by and among FWT, Inc.,
a Texas corporation, the financial institutions listed therein as Lenders, and
BT Commercial Corporation, as Agent (said Credit Agreement, as it may be
amended, supplemented or otherwise modified from time to time, being the
"CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined).
This Note is one of Company's "Revolving Notes" in the
aggregate principal amount of $25,000,000 and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Revolving Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement. Unless and until an Assignment Agreement
- ------------------------------
[1] Insert amount of Lender's Revolving Loan Commitment in numbers.
[2] Insert place of delivery of Note.
[3] Insert Lender's name in capital letters.
[4] Insert amount of Lender's Revolving Loan Commitment in words.
IV-1
<PAGE> 149
effecting the assignment or transfer of this Note shall have been accepted by
Agent and recorded in the Register as provided in subsection 10.1B(ii) of the
Credit Agreement, Company and Agent shall be entitled to deem and treat Payee
as the owner and holder of this Note and the Loans evidenced hereby. Payee
hereby agrees, by its acceptance hereof, that before disposing of this Note or
any part hereof it will make a notation hereon of all principal payments
previously made hereunder and of the date to which interest hereon has been
paid; provided, however, that the failure to make a notation of any payment
made on this Note shall not limit or otherwise affect the obligations of
Company hereunder with respect to payments of principal of or interest on this
Note.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to prepayment as provided in subsection
2.4A of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligations of the
Company which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, to the extent provided in subsection 10.2 of the
Credit Agreement, incurred in the collection and enforcement of this Note.
Company and any endorsers of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without
IV-2
<PAGE> 150
notice, and hereby waive diligence, presentment, protest, demand and notice of
every kind and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
FWT, INC.
By:
----------------------------------------
Title:
-------------------------------------
IV-3
<PAGE> 151
TRANSACTIONS
ON
REVOLVING NOTE
<TABLE>
<CAPTION>
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- ----------- ------------- --------------- --------------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
IV-4
<PAGE> 152
EXHIBIT V
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected [Title] and [Title] of FWT,
Inc., a Texas corporation ("COMPANY");
(2) We have reviewed the terms of that certain Credit
Agreement dated as of November 12, 1997, as amended, supplemented or
otherwise modified to the date hereof (said Credit Agreement, as so
amended, supplemented or otherwise modified, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined in this
Certificate (including Attachment No. 1 annexed hereto and made a part
hereof) being used in this Certificate as therein defined), by and
among Company, the financial institutions listed therein as Lenders,
and BT Commercial Corporation, as Agent, and the terms of the other
Loan Documents, and we have made, or have caused to be made under our
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by the attached financial statements; and
(3) The examination described in paragraph (2) above did
not disclose, and we have no knowledge of, the existence of any
condition or event which constitutes an Event of Default or Potential
Event of Default during or at the end of the accounting period covered
by the attached financial statements or as of the date of this
Certificate[, except as set forth below].
[Set forth [below] [in a separate attachment to this
Certificate] are all exceptions to paragraph (3) above listing, in detail, the
nature of the condition or event, the period during which it has existed and
the action which Company has taken, is taking, or proposes to take with respect
to each such condition or event:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------]
V-1
<PAGE> 153
The foregoing certifications, together with the computations
set forth in Attachment No. 1 annexed hereto and made a part hereof and the
financial statements delivered with this Certificate in support hereof, are
made and delivered this __________ day of _____________, ______ pursuant to
subsection 6.1(iv) of the Credit Agreement.
FWT, INC.
By:
-----------------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Title:
--------------------------------------
V-2
<PAGE> 154
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a
Compliance Certificate dated as of ____________, _____ and pertains to the
period from ____________, 199_ to ____________, _____. Subsection references
herein relate to subsections of the Credit Agreement.
<TABLE>
<S> <C> <C>
A. INDEBTEDNESS
1. Indebtedness in respect of Capital Leases
or purchase money Indebtedness: $_____________
2. Maximum Indebtedness in respect of Capital
Leases and purchase money Indebtedness
permitted under subsection 7.1(iii): $_____________
3. Aggregate outstanding amount of Purchase
Price Adjustment Notes: $_____________
4. Maximum permitted amount of Purchase
Price Adjustment Notes: $10,000,000
5. Other Indebtedness outstanding under
subsection 7.1(vi): $_____________
6. Maximum other Indebtedness permitted under
subsection 7.1(vi): $250,000
B. LIENS
1. Indebtedness secured by Liens under
subsection 7.2A(v): $_____________
2. Maximum permitted under subsection 7.2A(v): $100,000
C. INVESTMENTS
1. Investments under subsection 7.3(vi): $_____________
2. Maximum permitted under subsection 7.3(vi): $1,000,000
</TABLE>
V-3
<PAGE> 155
<TABLE>
<S> <C> <C>
D. CONTINGENT OBLIGATIONS
1. Currency Agreements outstanding under
subsection 7.4(vi): $_____________
2. Maximum permitted amount of Currency
Agreements permitted under subsection 7.4(vi): $1,000,000
3. Contingent Obligations under subsection 7.4(vii): $_____________
4. Maximum permitted under subsection 7.4(vii): $100,000
E. MINIMUM INTEREST COVERAGE RATIO (for the four-Fiscal Quarter
period ending _____________, _____)
1. Consolidated Net Income: $_____________
2. Consolidated Interest Expense: $_____________
3. Provisions for taxes based on income: $_____________
4. Total depreciation expense: $_____________
5. Total amortization expense: $_____________
6. Other non-cash items reducing Consolidated
Net Income: $_____________
7. Other non-cash items increasing Consolidated
Net Income: $_____________
8. Consolidated EBITDA (1+2+3+4+5+6-7): $_____________
9. Interest Coverage Ratio (8):(2): ____:1.00
10. Minimum ratio required under subsection 7.6A: ____:1.00
F. MAXIMUM LEVERAGE RATIO (as of _____________, _____)
1. Consolidated Total Debt: $_____________
2. Consolidated EBITDA (E.8 above): $_____________
3. Leverage Ratio (1):(2): ____:1.00
</TABLE>
V-4
<PAGE> 156
<TABLE>
<S> <C> <C>
4. Maximum ratio permitted under subsection 7.6B: ____:1.00
G. MINIMUM CONSOLIDATED EBITDA (for the four-Fiscal Quarter
period ending ____________, _____)
1. Consolidated EBITDA (E.8 above): $_____________
2. Minimum required under subsection 7.6C: $_____________
H. FUNDAMENTAL CHANGES
1. Aggregate fair market value of assets sold in
Asset Sale during Fiscal Year under subsection
7.7(iv): $_____________
2. Maximum permitted under subsection 7.7(iv): $250,000
I. CONSOLIDATED CAPITAL EXPENDITURES
1. Consolidated Capital Expenditures for Fiscal
Year-to-date: $_____________
2. Maximum Consolidated Capital Expenditures
permitted under subsection 7.8: $_____________
</TABLE>
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EXHIBIT VI
[FORM OF FINANCIAL CONDITION CERTIFICATE]
FINANCIAL CONDITION CERTIFICATE
This FINANCIAL CONDITION CERTIFICATE (this "CERTIFICATE") is
delivered in connection with that certain Credit Agreement dated as of November
12, 1997 (the "CREDIT AGREEMENT") by and among FWT, Inc., a Texas corporation
("COMPANY"), the financial institutions referred to therein as Lenders
("LENDERS") and BT Commercial Corporation, as Agent ("AGENT"). Capitalized
terms used herein without definition have the same meanings as in the Credit
Agreement.
A. I am, and at all pertinent times mentioned herein have
been, the duly qualified and acting chief executive officer of Company. In
such capacity I am a senior officer of Company and I have participated actively
in the management of its financial affairs and am familiar with its financial
statements and those of its Subsidiaries. I have, together with other officers
of Company, acted on behalf of Company in connection with the negotiation of
the Credit Agreement and I am familiar with the terms and conditions thereof.
B. I have carefully reviewed the contents of this
Certificate, and I have conferred with counsel for Company for the purpose of
discussing the meaning of its contents.
C. In connection with preparing for the consummation of
the transactions and financings contemplated by the Credit Agreement (the
"PROPOSED TRANSACTIONS"), I have participated in the preparation of, and I have
reviewed, pro forma projections of net income and cash flows for Company and
its Subsidiaries for the fiscal years of Company ending April 30, 1998 through
April 30, 2002, inclusive (the "PROJECTED FINANCIAL STATEMENTS"). The
Projected Financial Statements give effect to the consummation of the Proposed
Transactions and assume that the debt obligations of Company will be paid from
the cash flow generated by the operations of Company and other cash resources.
The Projected Financial Statements were prepared on the basis of information
available at July 31, 1997. I know of no facts that have occurred since such
date that would lead me to believe that the Projected Financial Statements are
inaccurate in any material respect. The Projected Financial Statements do not
reflect (i) any potential changes in interest rates from those assumed in the
Projected Financial Statements, (ii) any potential material, adverse changes in
general business conditions, or (iii) any potential changes in income tax laws.
D. I have also participated in the preparation of, and I
have reviewed, a pro forma summary balance sheet of Company and its
Subsidiaries (the "FAIR VALUE SUMMARY BALANCE SHEET") as of November 12, 1997,
the expected Closing Date, giving
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effect to the Proposed Transactions. The Fair Value Summary Balance Sheet has
been prepared as described in paragraphs F and G below and not in accordance
with GAAP.
E. In connection with the preparation of the Projected
Financial Statements, I have made such investigations and inquiries as I have
deemed necessary and prudent therefor and, specifically, have relied on
historical information with respect to revenues, expenses and other relevant
items supplied by the supervisory personnel of Company directly responsible for
the various operations involved. The assumptions upon which the Projected
Financial Statements are based are stated therein. Although any assumptions
and any projections by necessity involve uncertainties and approximations, I
believe, based on my discussions with other members of management, that the
assumptions on which the Projected Financial Statements are based are
reasonable. Based thereon, I believe that the projections for Company, taken
as a whole, reflected in the Projected Financial Statements provide reasonable
estimations of future performance, subject, as stated above, to the
uncertainties and approximations inherent in any projections.
F. The Fair Value Summary Balance Sheet has been prepared
in a manner which I believe reflects a conservative estimate of the fair value
of the assets of Company and the probable liability on all of its debts,
contingent or otherwise. For purposes of this Certificate, I understand "fair
value" of any assets to mean the amount which may be realized within a
reasonable time, either through collection of such assets or through sale of
such assets at the regular market value thereof, conceiving of the latter as
the amount which could be obtained for the property in question within such
period by a capable and diligent businessman from an interested buyer who is
willing to purchase under ordinary selling conditions. The specific
methodology used by management for valuing Company is set forth in paragraph G
below.
G. For purposes of constructing the Fair Value Summary
Balance Sheet, I have utilized the following procedures:
With respect to the asset values reflected in the Fair Value
Summary Balance Sheet, I have relied on the analysis of Houlihan Lokey Howard &
Zukin as set forth in its letter of November 12, 1997, a copy of which is
attached hereto as Exhibit C.
With respect to liabilities reflected in the Fair Value Summary
Balance Sheet, I have included long-term liabilities reported by Company in its
September 30, 1997 financial statements and debts to be incurred or assumed by
Company under the Credit Agreement and the Proposed Transactions. In addition,
with respect to contingent liabilities (such as litigation, guaranties and
pension plan liabilities), I have consulted with legal, financial and other
personnel of Company and have reflected as liabilities our best judgment as to
the maximum exposure that can reasonably be expected to result therefrom in
light of all the facts and circumstances existing at this time, recognizing
that any such estimation is inherently subject to uncertainties.
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Based on the foregoing, I have reached the following
conclusions:
1. Company is not now, nor will the incurrence of the
Obligations under the Credit Agreement and the incurrence of the other
obligations contemplated by the Proposed Transactions render Company
"insolvent" as defined in this paragraph 1. The recipients of this
Certificate and I have agreed that, in this context, "insolvent" means
that the present fair value of assets is less than the amount that will
be required to pay the probable liability on existing debts as they
become absolute and matured. We have also agreed that the term "debts"
includes any legal liability, whether matured or unmatured, liquidated
or unliquidated, absolute, fixed or contingent. My conclusion
expressed above is supported by the Fair Value Summary Balance Sheet.
Valuation of Company on the basis thereof would reflect the net value
of Company as being at least $20,000,000.
2. By the incurrence of the Obligations under the Credit
Agreement and the incurrence of the other obligations contemplated by
the Proposed Transactions, Company will not incur debts beyond its
ability to pay as such debts mature. I have based my conclusion in
part on the Projected Financial Statements, which demonstrate that
Company will have positive cash flow after paying all of its scheduled
anticipated indebtedness (including any scheduled payments under the
Credit Agreement, the other obligations contemplated by the Proposed
Transactions and other permitted indebtedness). I have concluded that
the realization of current assets in the ordinary course of business
will be sufficient to pay recurring current debt and short-term and
long-term debt service as such debts mature, and that the cash flow
(including earnings plus non-cash charges to earnings) will be
sufficient to provide cash necessary to repay the Loans and other
Obligations under the Credit Agreement, the other obligations
contemplated by the Proposed Transactions and other long-term
indebtedness as such debt matures.
3. The incurrence of the Obligations under the Credit
Agreement and the incurrence of the other obligations contemplated by
the Proposed Transactions will not leave Company with property
remaining in its hands constituting "unreasonably small capital." In
reaching this conclusion, I understand that "unreasonably small
capital" depends upon the nature of the particular business or
businesses conducted or to be conducted, and I have reached my
conclusion based on the needs and anticipated needs for capital of the
businesses conducted or anticipated to be conducted by Company and its
Subsidiaries in light of the Projected Financial Statements and
available credit capacity.
4. To the best of my knowledge, Company has not executed
the Credit Agreement or any documents mentioned therein, or made any
transfer or incurred any obligations thereunder, with actual intent to
hinder, delay or defraud either present or future creditors.
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I understand that Agent and Lenders are relying on the truth
and accuracy of the foregoing in connection with the extension of credit to
Company pursuant to the Credit Agreement.
I represent the foregoing information to be, to the best of my
knowledge and belief, true and correct and execute this Certificate this 12th
day of November, 1997.
FWT, INC.
By:
----------------------------------
Name: Roy Moore
Title: Chief Executive Officer
VI-4
<PAGE> 161
EXHIBIT VII
[FORM OF BORROWING BASE CERTIFICATE]
BORROWING BASE CERTIFICATE
[DATE]
Reference is made to the Credit Agreement dated as of November
12, 1997 (as it may be amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT") by and among FWT, INC., a Texas corporation
("COMPANY"), the Lenders listed on the signature pages thereof, and BT
COMMERCIAL CORPORATION, as Agent. Terms defined in the Credit Agreement and
undefined herein are used herein as defined therein.
Pursuant to subsection [4.1L][6.1(xix)] of the Credit
Agreement, the undersigned Chief Financial Officer of Company, hereby certifies
that attached hereto as Annex 1 is a true and accurate calculation of the
Borrowing Base as of __________, _____ determined in accordance with the
requirements of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has caused this certificate
to be duly executed as of ____________, ____.
FWT, INC.
By:
-------------------------------------
Name:
---------------------------
Title:
--------------------------
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ANNEX 1 TO
FWT, INC.
BORROWING BASE CERTIFICATE
(000'S)
<TABLE>
<S> <C>
Borrowing Base Certificate #: _______________ As of Date: _______________
Total
-----------------
I. RECEIVABLES
A. Total Accounts Receivable (Note: parenthetical references are to
-----------------
clauses in the definition of "Eligible Accounts Receivable")
Less:
Sales to Affiliate(a)
-----------------
Pymt. Terms more than 30 days(b)
-----------------
Unpaid more than 60 days (or 90 days first 9 mos.)(c)
-----------------
50% or more of Account Debtor Past Due(d)
-----------------
Accounts exceed 25% of A/R of Loan Parties(e)
-----------------
Subject to a claim or setoff(f)
-----------------
Insolvency Event Accounts(g)
-----------------
Non-US Dollar/Foreign Accounts(h)
-----------------
Bill/Hold; Sale/Return; Consignment(i)
-----------------
Uncertain Collection(j)
-----------------
Account Debtor is U.S. Government(k)
-----------------
Goods not Shipped, Delivered, Accepted (valid sale)(l)
-----------------
Account not comply legal requirements(m)
-----------------
Account subject to Security Deposit(n)
-----------------
Account not subject to first priority Lien for Agent(o)
-----------------
Other Ineligibility Imposed by Agent
-----------------
B. Total Ineligible Accounts
-----------------
C. Gross Eligible Accounts (I.A. - I.B.)
-----------------
D. Less:
Returns, discounts, deductions, claims, credits, etc.
-----------------
E. Net Eligible Accounts (I.C. - I.D.)
-----------------
II. INVENTORY
A. Total Inventory (Note: parenthetical references are to clauses in
-----------------
the definition of "Eligible Inventory")
Less:
Inventory not owned solely by Loan Party(a)
-----------------
Inventory not located in the U.S.(b)
-----------------
</TABLE>
Annex 1
1
<PAGE> 163
<TABLE>
<S> <C>
Inventory not located on property of Loan Party(c)
-----------------
Inventory not subject to first priority Lien for Agent(d)
-----------------
Inventory returned by third party or in transit(e)
-----------------
Inventory not first-quality goods(f)
-----------------
Other Ineligibility imposed by Agent
-----------------
B. Total Ineligible Inventory
-----------------
C. Eligible Inventory (II.A. - II.B.)
-----------------
III. BORROWING BASE
A.1. Net Eligible Accounts (I.E.)
-----------------
2. Multiplied by Advance Rate of 85% 0.85
3. Total Accounts Availability (III.A.1. x .085)
-----------------
B.1. Eligible Inventory (II.C)
-----------------
2. Multiplied by Advance Rate of 60% 0.60
3. Total Inventory Availability
-----------------
C. Total Borrowing Base Availability (III.A.3. + III.B.3.)
-----------------
1. Less:
Reserve Established by Agent
-----------------
D. Net Borrowing Base (III.C. - III.C.1.)
-----------------
E. Loans outstanding
-----------------
F. Letter of Credit Obligations
-----------------
G. TOTAL UTILIZATION (III.E. + III.F.)
-----------------
H. NET AVAILABILITY FOR COMPANY
-----------------
(III.D minus III.G)
-----
</TABLE>
Annex 1
2
<PAGE> 164
EXHIBIT VIII
[FORM OF OPINION OF AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.]
November ___, 1997
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Attention: Bhartai Baliga
and
The Lenders Listed on
Schedule A Hereto
Re: Credit Agreement dated as of November __, 1997 among
FWT, Inc., the financial institutions listed therein
as Lenders, and BT Commercial Corporation, as Agent
Ladies and Gentlemen:
We have acted as counsel to FWT, Inc., a Texas corporation
("Company"), in connection with that certain Credit Agreement dated as of
November __, 1997 among Company, the financial institutions listed therein as
Lenders ("Lenders"), and BT Commercial Corporation, as Agent ("Agent"). This
opinion is rendered to you in compliance with subsection 4.1M of the Credit
Agreement. Capitalized terms used herein without definition have the same
meanings as in the Credit Agreement.
In our capacity as such counsel, we have examined originals, or
copies identified to our satisfaction as being true copies, of such records,
documents or other instruments as in our judgment are necessary or appropriate
to enable us to render the opinions expressed below. These records, documents
and instruments included the following:
(a) The Certificate of Incorporation of Company, as
amended to date;
(b) The Bylaws of Company, as amended to date;
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(c) All records of proceedings and actions of the Board of
Directors of Company relating to the Credit Agreement, the other Loan
Documents and the Related Agreements (as hereinafter defined) and the
transactions contemplated thereby;
(d) The Credit Agreement;
(e) Revolving Notes delivered today (the "Notes");
(f) the Company Pledge Agreement;
(g) the Company Security Agreement;
(h) the Company Trademark Security Agreement;
(i) the Company Patent Security Agreement;
(j) the Collateral Account Agreement;
(k) the Blocked Account Agreement and the Lock Box
Agreement (collectively, the "Controlled Account
Agreements");
(l) the Collateral Access Agreement;
(m) the Intercreditor Agreement;
(n) the UCC-1 financing statement naming Company as debtor
and Agent as secured party, together with all
schedules and exhibits thereto, to be filed in the
office of the Secretary of State of the State of Texas
(the "Financing Statement") [confirm no county
filings];
(o) the Recapitalization Agreement;
(p) the Stockholders Agreement;
(q) the Bridge Note Agreement and the Bridge Notes; and
(r) the instruments and other agreements that have been
identified to us by the Company as material to the
Company after giving effect to the transactions to be
consummated on the Closing Date (the "MATERIAL
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The Lenders Listed on Scheduled A Hereto - November ___, 1997
AGREEMENTS"), and the orders, writs, judgments,
injunctions and decrees of any court or governmental
authority which are binding on the Company or its
properties as identified to us by the Company (the
"JUDICIAL ORDERS"), in each case as set forth on
Exhibit I hereto.
The documents referred to in paragraphs (d) through (n) above
are collectively referred to herein as the "LOAN DOCUMENTS." The documents
referred to items (o) through (q) are collectively referred to herein as the
"RELATED AGREEMENTS." As used in this opinion, the "UCC" shall mean the
Uniform Commercial Code as now in effect in the specified jurisdiction.
We have been furnished with, and with Lenders' consent have
relied upon, certificates of officers of Company with respect to certain
factual matters, copies of which have been delivered to Lenders. In addition,
we have obtained and relied upon such certificates and assurances from public
officials as we have deemed necessary, copies of which have been delivered to
Lenders. In all such examinations, we have assumed the genuineness of all
signatures other than those of officers of Company on original and certified
documents, and the conformity to original or certified documents of all
documents submitted to us as conformed or photostatic copies.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are opining herein as
to the effect on the subject transactions of only United States Federal law and
the laws of the States of New York and Texas.
On the basis of the foregoing, and in reliance thereon, and
subject to the limitations, qualifications and exceptions set forth below, we
are of the opinion that:
1. Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted. Company
is duly qualified to do business as a foreign corporation, and is in good
standing, in [LIST JURISDICTIONS].
2. Company has all requisite corporate power and
authority to execute, deliver and perform each of the Loan Documents and each
of the Related Agreements to which it is a party and to consummate the
transactions contemplated thereby.
3. The execution, delivery and performance of each of the
Loan Documents and each of the Related Agreements to which it is a party, the
issuance and
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The Lenders Listed on Scheduled A Hereto - November ___, 1997
payment of the Notes and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part
of Company. Each of the Loan Documents and each of the Related Agreements to
which it is a party have been duly executed and delivered by Company and
constitute the legally valid and binding obligations of Company, enforceable
against Company in accordance with their respective terms.
4. Neither the execution and delivery of the Loan
Documents and the Related Agreements nor the issuance and payment of the Notes
by Company nor the consummation of the transactions contemplated by the Loan
Documents and the Related Agreements nor the compliance with the terms and
conditions thereof by Company (A) conflicts with, results in a breach or
violation of, or constitutes a default under, any of the terms, conditions or
provisions of (x) the Certificate of Incorporation or Bylaws of Company, (y)
any term of any Material Agreement or Judicial Order, or (z) any present
federal, Texas, New York statute, rule or regulation binding on Company or its
property or assets, or (B) results in the creation of any Lien upon any of the
properties or assets of Company under any agreement or order referred to in
clause (y) above (other than Liens created pursuant to the Loan Documents or
the Bridge Note Agreement).
5. No consents or approvals of, authorizations by, or
registrations, declarations or filings with, any federal, Texas or New York
governmental authority are required in connection with (i) the execution,
delivery and performance by Company of any Loan Document or any Related
Agreement to which it is a party, (ii) the extensions of credit under the
Credit Agreement, (iii) the granting of Liens by Company under the Loan
Documents, (iv) the issuance and payment by Company of the Notes, or (v) the
consummation of any of the other transactions contemplated by the Loan
Documents or by the Related Agreements except filings or recordings necessary
or perfect (or continue the perfection of) the Liens granted under the Loan
Documents and the Bridge Note Agreement.
6. To the best of our knowledge after due inquiry, there
are no actions, suits or proceedings pending or threatened against Company
which have a significant likelihood of materially and adversely affecting
either the ability of Company to perform its obligations under any Loan
Document or the financial condition or operations of Company or that seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge any of the
Loan Documents or any of the Related Agreements.
7. The provisions of the Company Security Agreement, the
Company Patent Security Agreement and the Company Trademark Security Agreement
are sufficient to create a security interest, as security for the payment of
all Secured Obligations (as defined in the Company Security Agreement, Company
Patent Security Agreement and Company Trademark Security Agreement), in favor
of the Secured Party (as defined in the Company
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The Lenders Listed on Scheduled A Hereto - November ___, 1997
Security Agreement, Company Patent Security Agreement and Company Trademark
Security Agreement) in the collateral described in the Company Security
Agreement, the Company Patent Security Agreement and the Company Trademark
Security Agreement (the "COLLATERAL"), as the case may be, that is of a type in
which a security interest can be created under the Texas UCC or the New York
UCC.
8. The Financing Statement is in appropriate form to
perfect the security interests described in paragraph 7 to the extent security
interests in the various types of Collateral can be perfected by filing under
the provisions of the New York UCC or the Texas UCC, and the proper place to
file the Financing Statement is in the office of the Secretary of State of the
State of Texas and no filing in any other place is necessary under the New York
UCC or the Texas UCC to perfect a security interest in any such Collateral.
Upon the filing of such Financing Statements in the office of the Secretary of
State of the State of Texas, and the payment of applicable filing fees, the
security interests in favor of the Secured Party in the Collateral will be
perfected to the extent security interests in the various types of Collateral
can be perfected by filing under the provisions of the New York UCC or the
Texas UCC.
9. Upon the filing of the Financing Statement relating to
the Collateral (as defined in the Company Patent Security Agreement and the
Company Trademark Security Agreement) in the office of the Texas Secretary of
State and the recording of the Company Patent Security Agreement and the
Company Trademark Security Agreement in the United States Patent and Trademark
Office, the security interest in favor of the Secured Party in such Collateral
will be a perfected security interest under the Texas UCC, the New York UCC and
the applicable federal law.
10. The making of the Loans and the application of the
proceeds thereof as provided in the Credit Agreement do not violate Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System.
11. It is not necessary in connection with the execution
and delivery of the Notes by Company to register the Notes or the Loans under
the Securities Act of 1933, as amended, or to qualify any indenture in respect
thereof under the Trust Indenture Act of 1939, as amended.
12. Company is not an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
VIII-5
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13. The Loans and the other monetary obligations of the
Company owing under the Loan Documents are within the definition of "Senior
Debt" under the Takeout Securities Indenture and, upon due execution and
delivery of the Takeout Securities Indenture and the Takeout Securities, will
be senior to the Company's obligations under the Takeout Securities Indenture
and the Takeout Securities to the extent set forth therein.
14. We call to your attention on the fact that the Loan
Documents select the internal laws of the State of New York as the governing
law (except with respect to the Collateral Documents where the laws of another
jurisdiction may govern the perfection of security interests in the
Collateral). It is our opinion that a federal or state court sitting in Texas
will honor the parties' choice of the internal laws of the State of New York as
the law applicable to the Loan Documents and to the determination of whether
the obligations created by the Loan Documents are usurious.
Our opinion in paragraph 3 above as to the validity, binding
effect and enforceability of the Credit Agreement, the other Loan Documents and
the Related Agreements, is subject to all applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally. In addition, we advise you that the enforceability of the Credit
Agreement, the other Loan Documents and the Related Agreements, is subject to
the effect of general principles of equity including concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in
a proceeding in equity or at law.
Our opinions in paragraphs 4 and 5 above as to compliance with
certain statutes, rules and regulations and as to the lack of any required
consents or approvals of, authorizations by, or registrations, declarations or
filings with certain governmental authorities are based upon a review of those
statutes, rules and regulations which, in our experience, are normally
applicable to transactions of the type contemplated by the Credit Agreement.
For purposes of our opinion expressed in paragraph 11, we have
assumed, with your consent, that each Lender is taking the Notes payable to it
and making its Loans for its own account in the ordinary course of its
commercial banking business and not with a view to or for sale in connection
with any distribution of the Notes.
To the extent that the obligations of Company may be dependent
upon such matters, we have assumed for purposes of this opinion, other than
with respect to Company, that each additional party to the agreements and
contracts referred to herein is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of
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incorporation; that each such other party has the requisite corporate or other
organizational power and authority to perform its obligations under such
agreements and contracts, as applicable; and that such agreements and contracts
have been duly authorized, executed and delivered by, and each of them
constitutes the legally valid and binding obligation of, such other parties, as
applicable, enforceable against such other parties in accordance with their
respective terms. Except as expressly covered in this opinion, we are not
expressing any opinion as to the effect of compliance by any Lender with any
state or federal laws or regulations applicable to the transactions because of
the nature of any of its businesses.
This opinion is rendered only to Agent and Lenders and is
solely for their benefit in connection with the above transactions. This
opinion may not be relied upon by Agent or Lenders for any other purpose, or
quoted to or relied upon by any other person, firm or corporation for any
purpose without our prior written consent.
Very truly yours,
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SCHEDULE A
[INSERT NAMES OF LENDERS]
VIII-8
<PAGE> 172
EXHIBIT IX
[FORM OF OPINION OF O'MELVENY & MYERS]
[O'M&M Letterhead]
November
12th
1 9 9 7
038,623-004
LA1-765560
BT Commercial Corporation, as Agent
14 Wall Street, 3rd Floor
New York, New York 10005
and
The Lenders Party to the Credit
Agreement Referenced Below
Re: Loans to FWT, Inc.
Ladies and Gentlemen:
We have acted as counsel to BT Commercial Corporation, as Agent
(in such capacity, "Agent"), in connection with the preparation and delivery of
a Credit Agreement dated as of November 12, 1997 (the "Credit Agreement") among
FWT, Inc., a Texas corporation ("Company"), the financial institutions listed
therein as Lenders, and Agent and in connection with the preparation and
delivery of certain related documents.
We have participated in various conferences with
representatives of Company and Agent and conferences and telephone calls with
Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to Company, and with your
representatives, during which the Credit Agreement and related matters have
been discussed, and we have also participated in the meeting held on the date
hereof (the "Closing") incident to the funding of the initial loans made under
the Credit Agreement. We have reviewed the forms of the Credit Agreement and
the exhibits thereto, including the form of the promissory note annexed thereto
(the "Notes"), and the opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(the "Opinion") and the officers' certificates and other documents delivered at
the Closing. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as
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originals or copies and the due authority of all persons executing the same,
and we have relied as to factual matters on the documents that we have
reviewed.
Although we have not independently considered all of the
matters covered by the Opinion to the extent necessary to enable us to express
the conclusions therein stated, we believe that the Credit Agreement and the
exhibits thereto are in substantially acceptable legal form and that the
Opinion and the officers' certificates and other documents delivered in
connection with the execution and delivery of, and as conditions to the making
of the initial loans under, the Credit Agreement and the Notes are
substantially responsive to the requirements of the Credit Agreement.
Respectfully submitted,
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<PAGE> 174
EXHIBIT X
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "AGREEMENT") is entered into by
and between the parties designated as Assignor ("ASSIGNOR") and Assignee
("ASSIGNEE") above the signatures of such parties on the Schedule of Terms
attached hereto and hereby made an integral part hereof (the "SCHEDULE OF
TERMS") and relates to that certain Credit Agreement described in the Schedule
of Terms (said Credit Agreement, as amended, supplemented or otherwise modified
to the date hereof and as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined herein being used herein as therein
defined).
IN CONSIDERATION of the agreements, provisions and covenants
herein contained, the parties hereto hereby agree as follows:
SECTION 1. ASSIGNMENT AND ASSUMPTION.
(a) Effective upon the Assignment Settlement Date
specified in Item 4 of the Schedule of Terms (the "ASSIGNMENT SETTLEMENT
DATE"), Assignor hereby sells and assigns to Assignee, without recourse,
representation or warranty (except as expressly set forth herein), and Assignee
hereby purchases and assumes from Assignor, that percentage interest in all of
Assignor's rights and obligations as a Lender arising under the Credit
Agreement and the other Loan Documents with respect to Assignor's Commitments
and outstanding Loans, if any, which represents, as of the Assignment
Settlement Date, the percentage interest specified in Item 3 of the Schedule of
Terms of all rights and obligations of Lenders arising under the Credit
Agreement and the other Loan Documents with respect to the Commitments and any
outstanding Loans (the "ASSIGNED SHARE"). Without limiting the generality of
the foregoing, the parties hereto hereby expressly acknowledge and agree that
any assignment of all or any portion of Assignor's rights and obligations
relating to Assignor's Revolving Loan Commitment shall include (i) in the event
Assignor is an Issuing Lender with respect to any outstanding Letters of Credit
(any such Letters of Credit being "ASSIGNOR LETTERS OF CREDIT"), the sale to
Assignee of a participation in the Assignor Letters of Credit and any drawings
thereunder as contemplated by subsection 3.1C of the Credit Agreement and (ii)
the sale to Assignee of a ratable portion of any participations previously
purchased by Assignor pursuant to said subsection 3.1C with respect to any
Letters of Credit other than the Assignor Letters of Credit.
(b) In consideration of the assignment described above,
Assignee hereby agrees to pay to Assignor, on the Assignment Settlement Date,
the principal amount of
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any outstanding Loans included within the Assigned Share, such payment to be
made by wire transfer of immediately available funds in accordance with the
applicable payment instructions set forth in Item 5 of the Schedule of Terms.
(c) Assignor hereby represents and warrants that Item 3 of
the Schedule of Terms correctly sets forth the amount of the Commitments and
the Pro Rata Share of Assignee after giving effect to the assignment and
assumption described above.
(d) Assignor and Assignee hereby agree that, upon giving
effect to the assignment and assumption described above, (i) Assignee shall be
a party to the Credit Agreement and shall have all of the rights and
obligations under the Loan Documents (including, but not limited to, subsection
10.19 of the Credit Agreement), and shall be deemed to have made all of the
covenants and agreements contained in the Loan Documents, arising out of or
otherwise related to the Assigned Share, and (ii) subject to subsection 10.9B
of the Credit Agreement, Assignor shall be absolutely released from any of such
obligations, covenants and agreements assumed or made by Assignee in respect of
the Assigned Share. Assignee hereby acknowledges and agrees that the agreement
set forth in this Section 1(d) is expressly made for the benefit of Company,
Agent, Assignor and the other Lenders and their respective successors and
permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm
their understanding and intent that (i) this Agreement shall effect the
assignment by Assignor and the assumption by Assignee of Assignor's rights and
obligations with respect to the Assigned Share, (ii) any other assignments by
Assignor of a portion of its rights and obligations with respect to the
Commitments and any outstanding Loans shall have no effect on the Commitments
and the Pro Rata Share of Assignee set forth in Item 3 of the Schedule of Terms
or on the interest of Assignee in any outstanding Revolving Loans corresponding
thereto, and (iii) from and after the Assignment Settlement Date, Agent shall
make all payments under the Credit Agreement in respect of the Assigned Share
(including without limitation all payments of principal and accrued but unpaid
interest, commitment fees and letter of credit fees with respect thereto) (A)
in the case of any such interest and fees that shall have accrued prior to the
Assignment Settlement Date, to Assignor, and (B) in all other cases, to
Assignee; provided that Assignor and Assignee shall make payments directly to
each other to the extent necessary to effect any appropriate adjustments in any
amounts distributed to Assignor and/or Assignee by Agent under the Loan
Documents in respect of the Assigned Share in the event that, for any reason
whatsoever, the payment of consideration contemplated by Section 1(b) occurs on
a date other than the Assignment Settlement Date.
SECTION 2. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Assignor represents and warrants that it is the legal
and beneficial owner of the Assigned Share, free and clear of any adverse
claim.
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(b) Assignor shall not be responsible to Assignee for the
execution, effectiveness, genuineness, validity, enforceability, collectibility
or sufficiency of any of the Loan Documents or for any representations,
warranties, recitals or statements made therein or made in any written or oral
statements or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by Assignor to Assignee
or by or on behalf of Company or any of its Subsidiaries to Assignor or
Assignee in connection with the Loan Documents and the transactions
contemplated thereby or for the financial condition or business affairs of
Company or any other Person liable for the payment of any Obligations, nor
shall Assignor be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained in any of the Loan Documents or as to the use of the proceeds of the
Loans or the use of the Letters of Credit or as to the existence or possible
existence of any Event of Default or Potential Event of Default.
(c) Assignee represents and warrants that it is an
Eligible Assignee; that it has experience and expertise in the making of loans
such as the Loans; that it has acquired the Assigned Share for its own account
and not with any present intention of selling all or any portion of such
interest; and that it has received, reviewed and approved a copy of the Credit
Agreement (including all Exhibits and Schedules thereto).
(d) Assignee represents and warrants that it has received
from Assignor such financial information regarding Company and its Subsidiaries
as is available to Assignor and as Assignee has requested, that it has made its
own independent investigation of the financial condition and affairs of Company
and its Subsidiaries in connection with the assignment evidenced by this
Agreement, and that it has made and shall continue to make its own appraisal of
the creditworthiness of Company and its Subsidiaries. Assignor shall have no
duty or responsibility, either initially or on a continuing basis, to make any
such investigation or any such appraisal on behalf of Assignee or to provide
Assignee with any other credit or other information with respect thereto,
whether coming into its possession before the making of the initial Loans or at
any time or times thereafter, and Assignor shall not have any responsibility
with respect to the accuracy of or the completeness of any information provided
to Assignee.
(e) Each party to this Agreement represents and warrants
to the other party hereto that it has full power and authority to enter into
this Agreement and to perform its obligations hereunder in accordance with the
provisions hereof, that this Agreement has been duly authorized, executed and
delivered by such party and that this Agreement constitutes a legal, valid and
binding obligation of such party, enforceable against such party in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity.
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SECTION 3. MISCELLANEOUS.
(a) Each of Assignor and Assignee hereby agrees from time
to time, upon request of the other such party hereto, to take such additional
actions and to execute and deliver such additional documents and instruments as
such other party may reasonably request to effect the transactions contemplated
by, and to carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated, except by an instrument in writing
signed by the party (including, if applicable, any party required to evidence
its consent to or acceptance of this Agreement) against whom enforcement of
such change, waiver, discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of telefacsimile
or telex, or three Business Days after depositing it in the United States mail
with postage prepaid and properly addressed. For the purposes hereof, the
notice address of each of Assignor and Assignee shall be as set forth on the
Schedule of Terms or, as to either such party, such other address as shall be
designated by such party in a written notice delivered to the other such party.
In addition, the notice address of Assignee set forth on the Schedule of Terms
shall serve as the initial notice address of Assignee for purposes of
subsection 10.8 of the Credit Agreement.
(d) In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their respective successors and
assigns.
(g) This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate
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counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
(h) This Agreement shall become effective upon the date
(the "EFFECTIVE DATE") upon which all of the following conditions are
satisfied: (i) the execution of a counterpart hereof by each of Assignor and
Assignee, (ii) the execution of a counterpart hereof by Company as evidence of
its consent hereto to the extent required under subsection 10.1B(i) of the
Credit Agreement, (iii) the receipt by Agent of the processing and recordation
fee referred to in subsection 10.1B(i) of the Credit Agreement, (iv) in the
event Assignee is a Non-US Lender (as defined in subsection 2.7B(iii)(a) of the
Credit Agreement), the delivery by Assignee to Agent of such forms,
certificates or other evidence with respect to United States federal income tax
withholding matters as Assignee may be required to deliver to Agent pursuant to
said subsection 2.7B(iii)(a), (v) the execution of a counterpart hereof by
Agent as evidence of its acceptance hereof in accordance with subsection
10.1B(ii) of the Credit Agreement, (vi) the receipt by Agent of originals or
telefacsimiles of the counterparts described above and authorization of
delivery thereof, and (vii) the recordation by Agent in the Register of the
pertinent information regarding the assignment effected hereby in accordance
with subsection 10.1B(ii) of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, such execution being made as of the Effective Date
in the applicable spaces provided on the Schedule of Terms.
[Remainder of page intentionally left blank]
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SCHEDULE OF TERMS
<TABLE>
<S> <C>
1. Company: FWT, Inc.
2. Name and Date of Credit Agreement: Credit Agreement dated as of November 12, 1997 by and among FWT, Inc., a
Texas corporation, the financial institutions listed therein as Lenders, and BT Commercial Corporation, as
Agent.
3. Amounts:
(a) Aggregate Commitments of all Lenders: $________
(b) Assigned Share/Pro Rata Share: _____%
(c) Amount of Assigned Share of Commitments: $________
4. Assignment Settlement Date: ____________, _____
5. Payment Instructions:
ASSIGNOR: ASSIGNEE:
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
Attention: Attention:
----------------- -----------------
Reference: Reference:
----------------- -----------------
6. Notice Addresses:
ASSIGNOR: ASSIGNEE:
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
7. Signatures:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By: By:
------------------------------------- -------------------------------------------------------
Title: Title:
----------------------------------- ----------------------------------------------------
Accepted in accordance with subsection
10.1B(ii) of the Credit Agreement
BT COMMERCIAL CORPORATION, as Agent
By:
-------------------------------------------------------
Title:
----------------------------------------------------
</TABLE>
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EXHIBIT XI
[FORM OF AUDITOR'S LETTER]
[Letterhead of BT Commercial Corporation]
November 12, 1997
Arthur Andersen LLP
- --------------------------
- --------------------------
Attention:
--------------
Re: FWT, Inc.
Ladies and Gentlemen:
This letter (this "LETTER OF UNDERSTANDING") is being sent to Arthur
Andersen LLP ("CPA") with respect to credit accommodations that certain
financial institutions (collectively, "LENDERS") may grant to FWT, Inc., a
Texas corporation ("COMPANY"), pursuant to that certain Credit Agreement dated
as of November 12, 1997 (the "CREDIT AGREEMENT") by and among Company, Lenders
and BT Commercial Corporation, as Agent ("AGENT").
We wish to confirm that Lenders may use CPA's audit report dated
____________, 1997 on the financial statements of Company as of April 30, 1997
(the "CURRENT AUDIT REPORT") in connection with Lenders' decision whether or
not to extend the following new credit to Company, pursuant to the Credit
Agreement, substantially on the following terms:
The Credit Agreement provides a secured revolving credit and letter of
credit facility in the maximum principal amount of $25,000,000 which has a
final maturity date of November __, 2000 (collectively, the "PROPOSED CREDIT").
Lenders may also use CPA's subsequent audit reports on future financial
statements of Company (the "SUBSEQUENT AUDIT REPORTS"; together with the
Current Audit Report, the "AUDIT REPORTS") in connection with Lenders'
provision of credit to Company so long as there has been no substantial change
to the terms of the Proposed Credit as outlined above. CPA may communicate in
writing to Agent that Lenders should no longer use the Audit Reports, in which
case Lenders shall no longer have the benefit of this Letter of Understanding
with respect to subsequent credit decisions relating to Company.
Lenders' consideration of the Audit Reports may or may not have an
impact on Lenders' decision whether or not to extend the Proposed Credit and no
Audit Report is a
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Arthur Andersen LLP
November 12, 1997
Page 2
representation of creditworthiness. Lenders' credit decisions will not be
based solely on the Audit Reports or the accompanying financial statements, but
will also be based on the exercise of reasonable due diligence with respect to
other potentially relevant factors bearing on Company's creditworthiness as
each individual Lender believes appropriate.
Consideration by Lenders of the Audit Reports shall not (a) change
CPA's duties to Company with respect to the conduct of any audit of Company's
financial statements, (b) change the limitations of the audits as set forth in
the Audit Reports, (c) affect the timeliness of the information contained in
the Audit Reports and the accompanying financial statements, or (d) alter the
responsibility of management of Company for the financial statements
accompanying the Audit Reports.
Events may occur after the period covered by any Audit Report which may
have an effect on the financial condition of Company, and CPA is not
responsible under this Letter of Understanding for knowledge or disclosure of
such events.
This Letter of Understanding does not authorize Lenders to use any
Audit Report in connection with any transaction other than the granting of the
Proposed Credit under the Credit Agreement. This Letter of Understanding shall
no longer be binding on CPA if the Credit Agreement is not executed within 90
days of the date of this Letter of Understanding. Agent and Lenders agree to
keep the Audit Reports confidential and, except as required by law or
regulation, not to disclose any Audit Report to any other party not involved in
the Proposed Credit unless such Audit Report becomes generally available to the
public.
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Arthur Andersen LLP
November 12, 1997
Page 3
Kindly confirm your acknowledgement and agreement to this Letter of
Understanding by signing the enclosed copy of this Letter of Understanding and
returning it promptly to Agent.
BT COMMERCIAL CORPORATION, as Agent
By:
-------------------------------
Title:
--------------------
ACKNOWLEDGED AND AGREED:
FWT, INC.
By:
---------------------------------------------
Title:
---------------------------------
ARTHUR ANDERSEN LLP
By:
---------------------------------------------
Title:
---------------------------------
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EXHIBIT XII
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Credit Agreement dated
as of November 12, 1997 (said Credit Agreement, as amended, supplemented or
otherwise modified to the date hereof, being the "CREDIT AGREEMENT") by and
among FWT, Inc., a Texas corporation, the financial institutions listed therein
as Lenders, and BT Commercial Corporation, as Agent. Pursuant to subsection
2.7B(iii) of the Credit Agreement, the undersigned hereby certifies that it is
not a "bank" or other Person described in Section 881(c)(3) of the Internal
Revenue Code of 1986, as amended.
[NAME OF LENDER]
By:
---------------------------
Title:
-------------------------
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<PAGE> 184
EXHIBIT XIII
[FORM OF COLLATERAL ACCOUNT AGREEMENT]
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "AGREEMENT") is dated
as of November 12, 1997 and entered into by and between FWT, INC., a Texas
corporation ("PLEDGOR"), and BT COMMERCIAL CORPORATION, as agent for and
representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit
Agreement dated as of November 12, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Pledgor pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
B. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Pledgor shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. CERTAIN DEFINITIONS. The following terms used in
this Agreement shall have the following meanings:
"COLLATERAL" means (i) the Collateral Account, (ii) all amounts
on deposit from time to time in the Collateral Account, (iii) all interest,
cash, instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Collateral, and (iv) to the extent not covered by clauses (i) through
(iii) above, all proceeds of any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" means the restricted deposit account
established and maintained by Secured Party pursuant to Section 2(a).
"SECURED OBLIGATIONS" means all obligations and liabilities of
every nature of Pledgor now or hereafter existing under or arising out of or in
connection with the
XIII-1
<PAGE> 185
Credit Agreement and the other Loan Documents and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to Pledgor,
would accrue on such obligations), reimbursement of amounts drawn under Letters
of Credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of
Pledgor now or hereafter existing under this Agreement.
SECTION 2. ESTABLISHMENT AND OPERATION OF COLLATERAL ACCOUNT.
(a) Secured Party is hereby authorized to establish and
maintain at its office at 14 Wall Street, New York, New York 10005, as a
blocked account in the name of Secured Party and under the sole dominion and
control of Secured Party, a restricted deposit account designated as "FWT, Inc.
Collateral Account".
(b) The Collateral Account shall be operated in accordance
with the terms of this Agreement.
(c) All amounts at any time held in the Collateral Account
shall be beneficially owned by Pledgor but shall be held in the name of Secured
Party hereunder, for the benefit of Lenders, as collateral security for the
Secured Obligations upon the terms and conditions set forth herein. Pledgor
shall have no right to withdraw, transfer or, except as expressly set forth
herein, otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary
notwithstanding, the Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other appropriate banking or governmental authority,
as may now or hereafter be in effect.
SECTION 3. DEPOSITS OF CASH COLLATERAL.
(a) All deposits of funds in the Collateral Account shall
be made by wire transfer (or, if applicable, by intra-bank transfer from
another account of Pledgor) of immediately available funds to such Collateral
Account. Pledgor shall, promptly after initiating a transfer of funds to the
Collateral Account, give notice to Secured Party by telefacsimile of the date,
amount and method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing
and, in accordance with Section 8 of the Credit Agreement, Pledgor is required
to pay to Secured Party an amount (the "AGGREGATE AVAILABLE AMOUNT") equal to
the maximum amount that may at any time be drawn under all Letters of Credit
then outstanding under the Credit Agreement, Pledgor shall deliver funds in
such an amount for deposit in the Collateral Account in accordance with Section
3(a). If for any reason the aggregate amount delivered by Pledgor for deposit
in the Collateral Account as aforesaid is less than
XIII-2
<PAGE> 186
the Aggregate Available Amount, the aggregate amount so delivered by Pledgor
shall be apportioned among all outstanding Letters of Credit issued for the
account of Pledgor for purposes of this Section 3(b) in accordance with the
ratio of the maximum amount available for drawing under each such Letter of
Credit (as to such Letter of Credit, the "MAXIMUM AVAILABLE AMOUNT") to the
Aggregate Available Amount. Upon any drawing under any outstanding Letter of
Credit issued for the account of Pledgor in respect of which Pledgor has
deposited in the Collateral Account any amounts described above, Secured Party
shall apply such amounts to reimburse the Issuing Lender for the amount of such
drawing. In the event of cancellation or expiration of any Letter of Credit
issued for the account of Pledgor in respect of which Pledgor has deposited in
the Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, Secured
Party shall apply the amount then on deposit in the Collateral Account in
respect of such Letter of Credit (less, in the case of such a reduction, the
Maximum Available Amount under such Letter of Credit immediately after such
reduction) first, to the payment of any amounts payable to Secured Party
pursuant to Section 13, second, to the extent of any excess, to the cash
collateralization pursuant to the terms of this Agreement of any outstanding
Letters of Credit issued for the account of Pledgor in respect of which Pledgor
has failed to pay all or a portion of the amounts described above (such cash
collateralization to be apportioned among all such Letters of Credit in the
manner described above), third, to the extent of any further excess, to the
payment of any other outstanding Secured Obligations in such order as Secured
Party shall elect, and fourth, to the extent of any further excess, to the
payment to whomsoever shall be lawfully entitled to receive such funds.
SECTION 4. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS.
Pledgor hereby pledges and assigns to Secured Party, and hereby grants to
Secured Party a security interest in, all of Pledgor's right, title and
interest in and to the Collateral as collateral security for the prompt payment
or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)),
of all Secured Obligations.
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE COLLATERAL ACCOUNT;
INTEREST ON AMOUNTS IN THE COLLATERAL ACCOUNT.
(a) Cash held by Secured Party in the Collateral Account
shall not be invested by Secured Party but instead shall be maintained as a
cash deposit in the Collateral Account pending application thereof as elsewhere
provided in this Agreement.
(b) To the extent permitted under Regulation Q of the
Board of Governors of the Federal Reserve System, any cash held in the
Collateral Account shall bear interest at the standard rate paid by Secured
Party to its customers for deposits of like amounts and terms.
(c) Subject to Secured Party's rights under Section 12,
any interest earned on deposits of cash in the Collateral Account in accordance
with Section 5(b) shall be deposited directly in, and held in the Collateral
Account.
XIII-3
<PAGE> 187
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents
and warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time
of transfer thereof to Secured Party will be) the legal and beneficial owner of
the Collateral from time to time transferred by Pledgor to Secured Party, free
and clear of any Lien except for the security interest created by this
Agreement.
(b) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the grant by Pledgor of
the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Pledgor, or (iii) the perfection of or the
exercise by Secured Party of its rights and remedies hereunder (except as may
have been taken by or at the direction of Pledgor).
(c) Perfection. The pledge and assignment of the
Collateral pursuant to this Agreement creates a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Secured Obligations.
(d) Other Information. All information heretofore, herein
or hereafter supplied to Secured Party by or on behalf of Pledgor with respect
to the Collateral is accurate and complete in all respects.
SECTION 7. FURTHER ASSURANCES. Pledgor agrees that from time
to time, at the expense of Pledgor, Pledgor will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or desirable, or that Secured Party may request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, Pledgor will: (a) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby and (b) at Secured Party's request, appear in and defend any
action or proceeding that may affect Pledgor's beneficial title to or Secured
Party's security interest in all or any part of the Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. Except to the extent
permitted under the Credit Agreement, Pledgor agrees that it will not (a) sell,
assign (by operation of law or otherwise) or otherwise dispose of any of the
Collateral or (b) create or suffer to exist any Lien upon or with respect to
any of the Collateral, except for the security interest under this Agreement.
SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation to file one or more financing
XIII-4
<PAGE> 188
or continuation statements, or amendments thereto, relative to all or any part
of the Collateral without the signature of Pledgor.
SECTION 10. SECURED PARTY MAY PERFORM. If Pledgor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Pledgor under Section 13.
SECTION 11. STANDARD OF CARE. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Collateral, it being understood that Secured Party
shall have no responsibility for (a) taking any necessary steps (other than
steps taken in accordance with the standard of care set forth above to maintain
possession of the Collateral) to preserve rights against any parties with
respect to any Collateral or (b) taking any necessary steps to collect or
realize upon the Secured Obligations or any guarantee therefor, or any part
thereof, or any of the Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property of like kind.
SECTION 12. REMEDIES. Subject to the provisions of Section
3(b), Secured Party may exercise in respect of the Collateral, in addition to
all other rights and remedies otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial Code as in
effect in any relevant jurisdiction (the "CODE") (whether or not the Code
applies to the affected Collateral).
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Pledgor to perform or observe any of the provisions hereof.
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the Collateral
and shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all
XIII-5
<PAGE> 189
outstanding Letters of Credit, (b) be binding upon Pledgor, its permitted
successors and assigns, and (c) inure, together with the rights and remedies of
Secured Party hereunder, to the benefit of Secured Party and its successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), but subject to the provisions of subsection 10.1 of the Credit
Agreement, any Lender may assign or otherwise transfer any Loans held by it to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to Lenders herein or otherwise. Upon
the payment in full of all Secured Obligations, the cancellation or termination
of the Commitments and the cancellation or expiration of all outstanding
Letters of Credit, the security interest granted hereby shall terminate
automatically and all rights to the Collateral shall revert to Pledgor. Upon
any such termination Secured Party shall, at Pledgor's expense, execute and
deliver to Pledgor such documents as Pledgor shall reasonably request to
evidence such termination and Pledgor shall be entitled to the return, upon its
request and at its expense, against receipt and without recourse to Secured
Party, of such of the Collateral as shall not have been otherwise applied
pursuant to the terms hereof.
SECTION 15. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums held by Secured Party hereunder (which shall
be deposited in a new Collateral Account established and maintained by such
successor Secured Party), together with all records and other documents
necessary or appropriate in connection with the performance of the duties of
the successor Secured Party under this Agreement, and (ii) execute and deliver
to such successor Secured Party such amendments to financing statements, and
take such other actions, as may be necessary or appropriate in connection with
the assignment to such successor Secured Party of the security interests
created hereunder, whereupon such retiring or removed Secured Party shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Agent's resignation or removal hereunder as Secured Party,
the provisions of this Agreement shall inure to its benefit as
XIII-6
<PAGE> 190
to any actions taken or omitted to be taken by it under this Agreement while it
was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor herefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 17. NOTICES. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or, as to either party, such
other address as shall be designated by such party in a written notice
delivered to the other party hereto.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 19. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
XIII-7
<PAGE> 191
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of
the Uniform Commercial Code in the State of New York are used herein as therein
defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Pledgor hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to Pledgor at its address provided in Section 17, such service being
hereby acknowledged by Pledgor to be sufficient for personal jurisdiction in
any action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Secured Party to bring proceedings against Pledgor in the courts of any other
jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
XIII-8
<PAGE> 192
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The
scope of this waiver is intended to be all- encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter
of this transaction, including without limitation contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. Pledgor
and Secured Party each acknowledge that this waiver is a material inducement
for Pledgor and Secured Party to enter into a business relationship, that
Pledgor and Secured Party have already relied on this waiver in entering into
this Agreement and that each will continue to rely on this waiver in their
related future dealings. Pledgor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 23 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 24. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
XIII-9
<PAGE> 193
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT, INC.
By:
----------------------------------
Title:
---------------------------
Notice Address:
BT COMMERCIAL CORPORATION, as Secured Party
By:
----------------------------------
Title:
---------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Attention: Bhartai Baliga
S-1
<PAGE> 194
EXHIBIT XIV
[FORM OF BLOCKED ACCOUNT AGREEMENT]
BLOCKED ACCOUNT AGREEMENT
This BLOCKED ACCOUNT AGREEMENT ("Agreement") is entered into as
of November 12, 1997 and entered into by and between FWT, INC., a Texas
corporation ("PLEDGOR"), and BT COMMERCIAL CORPORATION, as agent for and
representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement (as
hereinafter defined), and _______________, as the account bank ("BANK").
PRELIMINARY STATEMENTS
A. Agent and certain financial institutions acting as
Lenders ("LENDERS") have entered into that certain Credit Agreement, dated as
of November 12, 1997 (said Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT") with Pledgor, wherein Pledgor has granted the Lenders a security
interest in its present and future accounts receivable, and all proceeds
thereof and Pledgor has agreed that all collections and proceeds of such
accounts receivable shall be remitted in kind to the Agent;
B. Pledgor has granted to Agent a security interest in
the Account (as defined below) and in the funds deposited in the Account;
C. Pledgor has agreed to maintain deposit account number
_______________ in its name (the "ACCOUNT") in which Pledgor shall deposit
cash, checks, drafts or other orders for payment of money.
D. Pledgor, Agent and Bank are entering into this
Agreement to provide for the disposition of net proceeds of cash, checks,
drafts and other orders for the payment of money deposited by Pledgor into the
Account.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, Pledgor, Agent and Bank agree
as follows:
1. Pledgor hereby authorizes Bank and Bank hereby agrees:
(a) to charge the Account for all returned checks
associated with this Agreement and to charge the Account for service charges
and other fees and charges associated with this Agreement;
(b) to follow its usual procedures in the event
the Account or any check, draft or other order for payment of money should be
or become the subject of any writ, levy, order or other similar judicial or
regulatory order or process;
XIV-1
<PAGE> 195
(c) to supply any necessary endorsements and to
deposit any and all monies and instruments received by Bank in the Account when
received, whether in the form of checks, wire transfers or otherwise; and
(d) to transfer pursuant to Agent's instructions
any collected and available balances in the Account each Business Day by wire
transfer to the following account:
Bank Name: _____________________________________
Location: _____________________________________
[ABA Routing No.: _____________________________________]
Credit Account No.: _____________________________________
Agent will give Bank sufficient advance written notice of any
change in the instructions for Bank to act upon such changes. Funds are not
available if, in the reasonable determination of Bank, they are subject to a
hold, dispute or legal process preventing their withdrawal. "Business Day"
means each Monday through Friday, excluding Bank holidays.
2. (a) If the balances in the Account are not
sufficient to pay Bank for any returned check, draft or other order for the
payment of money, Bank can make a demand for such deficiency upon Agent in
writing, no longer than 30 days from the date of the returned item and Agent,
on behalf of itself and Lenders, agrees to promptly reimburse Bank for the
amount of the deficiency. If Agent makes any payments pursuant to this Section
2(a), Pledgor will promptly reimburse Agent for such payment.
(b) Pledgor agrees to pay Bank on demand (i) the
amount for any fees or charges due Bank under this Agreement, and (ii) all
expenses for the maintenance of the Account, and Bank agrees that such fees,
charges or expenses under this Section 2(b) are the responsibility of Pledgor
and will not deduct such amounts from funds in the Account or seek payment from
Agent.
(c) Pledgor hereby authorizes Bank, without prior
notice, from time to time to debit any other account Pledgor may have with Bank
for the amount or amounts due Bank under subsection 2(a) or 2(b).
(d) Bank agrees it shall not offset against the
Account, except as permitted under this Agreement, until it has been advised in
writing by Pledgor and Agent that all of Pledgor's obligations, which are
secured by the Account and all funds deposited in the Account, are paid in
full. Agent shall notify Bank promptly in writing upon payment in full of
Pledgor's obligations and this Agreement shall automatically terminate upon
receipt of such notice. Bank further agrees that the Account and the funds
deposited in such Account shall not be subject to any banker's lien, deductions
or any other right in favor of any person (including Bank) other than Agent,
except as expressly provided for herein with respect to Bank.
XIV-2
<PAGE> 196
3. Termination of this Agreement shall be as follows:
(a) Bank may terminate this Agreement upon 60
days' prior written notice to Pledgor and Agent. Agent may terminate this
Agreement at any time which termination shall be effective upon receipt of
written notice by the Bank and by Pledgor. Pledgor may not terminate this
Agreement except with the written consent of Agent and upon 60 days' prior
written notice to Bank and Agent.
(b) Notwithstanding subsection 3(a), Bank may
terminate this Agreement at any time by written notice to Pledgor and Agent if
(i) either Pledgor or Agent breaches any of the terms of this Agreement, any
other agreement with Bank or any agreement involving the borrowing of money or
the extension of credit; (ii) either Pledgor or Agent terminates its business,
fails generally or admits in writing its inability to pay its debts as they
become due; any bankruptcy, reorganization, arrangement, insolvency,
dissolution or similar proceeding is instituted with respect to either Pledgor
or Agent; either Pledgor or Agent makes any assignment for the benefit of
creditors or enters into any composition with creditors or takes any action in
furtherance of any of the foregoing; or (iii) any material adverse change
occurs in either Pledgor's or Agent's financial condition, results of
operations or ability to perform its obligations under this Agreement. Pledgor
and Agent shall each promptly give written notice to Bank of the occurrence of
any of the foregoing events as it applies to it.
4. (a) Bank will not be liable to Pledgor or Agent
for any expense, claim, loss, damage or cost ("DAMAGES") arising out of or
relating to its performance under this Agreement other than those Damages which
result directly from its acts or omissions constituting negligence, subject to
the limits in the next succeeding sentence. Bank's liability is limited to
direct money Damages actually incurred in an amount not exceeding the
compensation for the service during the month in which such acts or omissions
occurred.
(b) In no event will Bank be liable for any
special, indirect, exemplary or consequential damages, including but not
limited to lost profits.
(c) Bank will be excused from failing to act or
delay in acting, and no such failure or delay shall constitute a breach of this
Agreement or otherwise give rise to any liability of Bank, if (i) such failure
or delay is caused by circumstances beyond Bank's reasonable control, including
but not limited to legal constraint, emergency conditions, action or inaction
of governmental, civil or military authority, fire, strike, lockout or other
labor dispute, war, riot, theft, flood, earthquake or other natural disaster,
breakdown of public or private or common carrier communications or transmission
facilities, equipment failure, or act, negligence or default of Pledgor or
Agent or (ii) such failure or delay resulted from Bank's reasonable belief that
the action would have violated any guideline, rule or regulation of any
governmental authority.
5. Pledgor hereby agrees to indemnify Bank against, and
hold it harmless from, any and all liabilities, claims, costs, expenses and
damages of any nature (including but not limited to allocated costs of staff
counsel, other reasonable attorneys' fees and any fees and expenses incurred in
enforcing this Agreement) in any way arising out of or relating to disputes or
legal actions concerning this Agreement or the Account.
XIV-3
<PAGE> 197
This section does not apply to any cost or damage attributable to the gross
negligence or intentional misconduct of Bank. Pledgor's obligations under this
section shall survive termination of this Agreement.
6. (a) Pledgor and Agent each represent and warrant
to Bank that (i) this Agreement constitutes its duly authorized, legal, valid,
binding and enforceable obligation; (ii) the performance of its obligations
under this Agreement and the consummation of the transactions contemplated
hereunder will not (A) constitute or result in a breach of its certificate or
articles of incorporation, by-laws or partnership agreement, as applicable, or
the provisions of any material contract to which it is a party or by which it
is bound or (B) result in the violation of any law, regulation, judgment,
decree or governmental order applicable to it; and (iii) all approvals and
authorizations required to permit the execution, delivery, performance and
consummation of this Agreement and the transactions contemplated hereunder have
been obtained.
(b) Pledgor and Agent each agrees that it shall be
deemed to make and renew each representation and warranty in subsection 6(a) on
and as of each day on which it uses the service.
7. Pledgor represents and warrants that it has not
assigned or granted a security interest in the Account or any funds now or
hereafter deposited in the Account, except to Agent.
8. Pledgor agrees that:
(a) Agent shall have exclusive interest in and
control of the Account, and all items and funds received by, and held in the
Account shall be the sole and exclusive property of Agent for the benefit of
itself and the Lenders;
(b) It cannot, and will not, withdraw any monies
from the Account until such time as Agent advises Bank in writing that Agent no
longer claims any interest in the Account and the monies deposited and to be
deposited in the Account; and
(c) Except to the extent permitted under the
Credit Agreement, it will not permit the Account to become subject to any other
pledge, assignment, lien, charge or encumbrance of any kind, nature or
description, other than Agent's security interest referred to herein.
9. Agent acknowledges and agrees that Bank has the right
to charge the Account from time to time, as set forth in this Agreement and the
Account agreement, as said agreements are amended from time to time, and that
Agent has no right to the sums so withdrawn by Bank.
10. In addition to the original statement which will be
provided to Pledgor, Bank will provide Agent with a duplicate statement and
such other account information reasonably requested by Agent. Pledgor
authorizes Bank to provide any account information requested by Agent.
XIV-4
<PAGE> 198
11. Pledgor agrees to pay to Bank, upon receipt of Bank's
invoice, all reasonable costs, expenses and attorneys' fees (including
reasonable allocated costs for in-house legal services) incurred by Bank in
connection with the preparation of this Agreement, the administration
(including any amendments), and enforcement of this Agreement and any
instrument or agreement required hereunder, including but not limited to any
such reasonable costs, expenses and fees arising out of the resolution of any
conflict, dispute, motion regarding entitlement to rights or rights of action,
or other action to enforce Bank's rights hereunder in a case arising under
Title 11, United States Code.
12. Notwithstanding any of the other provisions in this
Agreement, in the event of the commencement of a case pursuant to Title 11,
United States Code filed by or against Pledgor, or in the event of the
commencement of any similar case under then applicable federal or state law
providing for the relief of debtors or the protection of creditors by or
against Pledgor, Bank may act as Bank deems necessary to comply with all
applicable provisions of governing statutes and neither Pledgor nor Agent shall
assert any claim against Bank for so doing.
13. This Agreement may be amended only by a writing signed
by Pledgor, Agent and Bank; except that Bank's charges are subject to change by
Bank upon 60 days' prior written notice to Pledgor and Agent.
14. This Agreement may be executed in counterparts; all
such counterparts shall constitute but one and the same agreement.
15. Any written notice or other written communication to
be given to each party under this Agreement shall be addressed to the person at
the address set forth on the signature page of this Agreement or to such other
person or address as a party may specify in writing. Except as otherwise
expressly provided herein, any such notice shall be effective upon receipt.
16. This Agreement supersedes all prior understandings,
writings, proposals, representations and communications, oral or written, of
any party relating to the subject matter hereof.
17. Neither Pledgor nor Agent may assign any of its rights
under this Agreement without the prior written consent of Bank.
18. This Agreement shall be interpreted in accordance with
the laws of _______________, without giving effect to the conflicts of law
principles thereof.
[Remainder of page intentionally left blank]
XIV-5
<PAGE> 199
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers as of the day and year first above
written.
FWT, INC.
Address for notices:
By:
------------------------------- -------------------------------
Name:
------------------------------- -------------------------------
Title:
------------------------------- -------------------------------
BT COMMERCIAL CORPORATION
Address for notices:
By: BT Commercial Corporation
------------------------------- 14 Wall Street, 3rd Floor
Name: Mail Stop #4032
------------------------------- New York, NY 90071
Title:
------------------------------- Attention: Bhartai Baliga
[BANK]
Address for notices:
By:
------------------------------- -------------------------------
Name:
------------------------------- -------------------------------
Title:
------------------------------- -------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
S-1
<PAGE> 200
EXHIBIT XV
[FORM OF COLLATERAL ACCESS AGREEMENT]
<TABLE>
<S> <C>
RECORDING REQUESTED BY:
O'Melveny & Myers LLP
AND WHEN RECORDED MAIL TO:
O'Melveny & Myers LLP
400 South Hope St., 15th Floor
Los Angeles, CA 90071
Attn: Jonathan Blinderman
Re: FWT, INC.
- ---------------------------------------------------------------------------------------------------------------
Space above this line for recorder's use only
</TABLE>
REAL PROPERTY HOLDER'S WAIVER AND CONSENT AGREEMENT
This REAL PROPERTY HOLDER'S WAIVER AND CONSENT AGREEMENT (this
"AGREEMENT") is dated as of November 12, 1997 and entered into by Delta Steel,
Inc., a Texas corporation ("REAL PROPERTY HOLDER"), to and for the benefit of
BT COMMERCIAL CORPORATION, located at 300 S. Grand Avenue, 41st Floor, Los
Angeles, California 90071, as agent (the "AGENT") for the financial
institutions ("LENDERS") which are or may hereafter become parties to the
Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. FWT, INC., a Texas corporation ("BORROWER"), has
possession of and occupies all or a portion of the property described on
Exhibit A annexed hereto (the "PREMISES").
B. Borrower's interest in the Premises arises under the
lease agreement (the "LEASE") more particularly described on Exhibit B annexed
hereto, pursuant to which Real Property Holder has rights, upon the terms and
conditions set forth therein, to take possession of, and otherwise assert
control over, the Premises.
C. Agent, Lenders and certain other parties have entered
into that certain Credit Agreement dated as of November 12, 1997 (said Credit
Agreement, as amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT") with Borrower, and Borrower has executed a
security agreement and other collateral documents in relation to the Credit
Agreement.
XV-1
<PAGE> 201
D. The extensions of credit made by Lenders to Borrower
under the Credit Agreement will be secured, in part, by all raw materials,
work-in-process, spare parts and finished goods inventory of Borrower
(including all inventory of Borrower now or hereafter located on the Premises
(the "INVENTORY")) and all equipment, machinery and other goods used in
Borrower's business (including all equipment of Borrower now or hereafter
located on the Premises (the "EQUIPMENT" and, together with the Inventory, the
"COLLATERAL")).
E. Agent has requested that Real Property Holder execute
this Agreement as a condition to the extension of credit to Borrower under the
Credit Agreement.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Real Property Holder hereby represents and warrants to,
and covenants and agrees with, Agent as follows:
1. Real Property Holder hereby (a) waives and releases
unto Agent and its successors and assigns any and all rights granted by or
under any present or future laws to levy or distraint for rent or any other
charges which may be due to Real Property Holder against the Collateral, and
any and all other claims, liens and demands of every kind which it now has or
may hereafter have against the Collateral, and (b) agrees that any rights it
may have in or to the Collateral, no matter how arising (to the extent not
effectively waived pursuant to clause (a) of this paragraph 1), shall be second
and subordinate to the rights of Agent in respect thereof. Real Property
Holder acknowledges that the Collateral is and will remain personal property
and not fixtures even though it may be affixed to or placed on the Premises.
2. Real Property Holder certifies that (a) Real Property
Holder is the landlord under the Lease, (b) the Lease is in full force and
effect and has not been amended, modified, or supplemented except as set forth
on Exhibit B annexed hereto, (c) there is no defense, offset, claim or
counterclaim by or in favor of Real Property Holder against Borrower under the
Lease or against the obligations of Real Property Holder under the Lease, (d)
no notice of default has been given under or in connection with the Lease which
has not been cured, and Real Property Holder has no knowledge of the occurrence
of any other default under or in connection with the Lease, and (e) except as
disclosed to Agent, no portion of the Premises is encumbered in any way by any
deed of trust or mortgage lien or ground or superior lease.
3. Real Property Holder consents to the installation or
placement of the Collateral on the Premises, and Real Property Holder grants to
Agent a license to enter upon and into the Premises to do any or all of the
following with respect to the Collateral: assemble, have appraised, display,
remove, maintain, prepare for sale or lease, repair, transfer, or sell (at
public or private sale). In entering upon or into the Premises, Agent hereby
agrees to indemnify, defend and hold Real Property Holder harmless from and
against any and all claims, judgments, liabilities, costs and expenses incurred
by Real Property Holder caused solely by Agent's entering upon or into the
Premises and taking any of the foregoing actions with respect to the
Collateral. Such costs shall include any
XV-2
<PAGE> 202
damage to the Premises made by Agent in severing and/or removing the Collateral
therefrom.
4. Real Property Holder agrees that it will not prevent
Agent or its designee from entering upon the Premises at all reasonable times
to inspect or remove the Collateral. In the event that Real Property Holder
has the right to, and desires to, obtain possession of the Premises (either
through expiration of the Lease or termination thereof due to the default of
Borrower thereunder), Real Property Holder will deliver notice (the "REAL
PROPERTY HOLDER'S NOTICE") to Agent to that effect. Within the 45 day period
after Agent receives the Real Property Holder's Notice, Agent shall have the
right, but not the obligation, to cause the Collateral to be removed from the
Premises. During such 45 day period, Real Property Holder will not remove the
Collateral from the Premises nor interfere with Agent's actions in removing the
Collateral from the Premises or Agent's actions in otherwise enforcing its
security interest in the Collateral. Notwithstanding anything to the contrary
in this paragraph, Agent shall at no time have any obligation to remove the
Collateral from the Premises.
5. Real Property Holder shall send to Agent a copy of any
notice of default under the Lease sent by Real Property Holder to Borrower. In
addition, Real Property Holder shall send to Agent a copy of any notice
received by Real Property Holder of a breach or default under any other lease,
mortgage, deed of trust, security agreement or other instrument to which Real
Property Holder is a party which may affect Borrower's rights in, or possession
of, the Premises.
6. All notices to Agent under this Agreement shall be in
writing and sent to Agent at its address set forth on the signature page hereof
by telefacsimile, by mail, or by overnight delivery service.
7. The provisions of this Agreement shall continue in
effect until Real Property Holder shall have received Agent's written
certification that all amounts advanced under the Credit Agreement have been
paid in full.
8. This Agreement and the rights and obligations of the
parties hereunder shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of ___________________, without regard to
conflicts of laws principles.
[Remainder of page intentionally left blank]
XV-3
<PAGE> 203
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed and delivered as of the day and year first set forth above.
DELTA STEEL, INC.
By:
----------------------------
Name:
Title:
By its acceptance hereof, as of the day and year first set
forth above, Agent agrees to be bound by the provisions hereof.
BT COMMERCIAL CORPORATION,
as Agent
By:
----------------------------
Name:
-----------------
Title:
-----------------
S-1
<PAGE> 204
EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
Exhibit A-1
<PAGE> 205
EXHIBIT B
DESCRIPTION OF LEASE
Exhibit B-1
<PAGE> 206
EXHIBIT XVI
[FORM OF LOCK BOX AGREEMENT]
LOCK BOX AGREEMENT
This LOCK BOX AGREEMENT (this "AGREEMENT"), dated as of
November 12, 1997, is entered into by and among FWT, INC., a Texas corporation
("COMPANY"), BT COMMERCIAL CORPORATION, as agent ("AGENT"), and [Lockbox Bank]
("BANK").
PRELIMINARY STATEMENTS
A. Agent and certain financial institutions acting as
Lenders ("LENDERS") have entered into that certain Credit Agreement, dated as
of November 12, 1997 (said Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT") with Company, wherein the Company has granted the Lenders a
security interest in its present and future accounts receivable, and all
proceeds thereof and Company has agreed that all collections and proceeds of
such accounts receivable shall be remitted in kind to the Agent; and
B. In order to provide for a more efficient and faster
collection and deposit of said collection and proceeds the Agent and Company
desire to use the lock box service of Bank; and
C. Bank is willing to provide said service for Company
and the Agent commencing as of _____________________; and
WHEREAS, Schedule I to that certain Security Agreement, dated
as of November 12, 1997, by and between Company and Agent, sets forth all of
the Company's deposit accounts.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Post Office Box. The Bank will rent P.O. Box
______________________ (the "LOCK BOX") of the post office located at
___________________________________________ in the name of Company. Customers
of Company have been, or will be, instructed to mail their remittances to the
Lock Box.
2. Access to Mail. The Bank will have exclusive and
unrestricted access to the Lock Box and will have complete and exclusive
authority to receive, pick up and open all regular, registered, certified or
insured mail addressed to the Lock Box. On written demand of the Agent, Bank
shall cease its processing of said mail, and shall release some, in kind, to
the Agent, without the prior consent of Company, and the Agent
XVI-1
<PAGE> 207
shall thereafter process said mail promptly in accordance with this Agreement.
Bank shall not inquire into the Agent's right to make such a demand under any
agreement among the Agent, the Lenders and Company, and shall be forever
released of all obligations with respect to said remittances upon release to
the Agent. Company shall have no control whatsoever over any mail, checks,
money orders, collections or other forms of remittances received in the Lock
Box. Appropriate instructions have been, or will be, given by the Bank to the
post office where the Lock Box is maintained, and such instructions shall not
be revoked without the prior written consent of the Agent. Any instruction
given to the Bank by Company without the prior or concurrent written agreement
of the Agent shall be void and of no force or effect. All mail addressed to
the Lock Box will be picked up by the Bank according to its regular collection
schedule.
3. Remittance Collection. On the day received the Bank
will open all mail addressed to the Lock Box and remove and inspect the
enclosures. All checks, money orders and other forms or orders for the payment
of money and other collection remittances (hereinafter collectively referred to
as "checks") shall be processed by the Bank as follows:
(1) Missing Date. All undated checks will be
dated by the Bank as of the postmark date and processed as hereafter provided.
(2) Postdated. Checks postdated up to three days
from the date of receipt shall be processed on the date indicated on the check.
Bank shall not deposit checks postdated more than three days, but shall notify
the Agent by telephone of such checks and follow the Agent's instructions for
disposition of such checks.
(3) Stale Date. Checks dated six months or more
prior to the date of collection will not be deposited and shall be sent to
Company, with a copy to the Agent.
(4) Different Amount. Where written and numeric
amounts differ, a check will be processed by the Bank only if the correct
amount can be determined from the accompanying documents, otherwise the check
will not be deposited and shall be sent to Company, with a copy to the Agent.
(5) Signature Missing. Checks which do not bear
the drawer's signature and do not indicate the drawer's identity will not be
deposited but shall be sent to Company, with a copy to the Agent. If, as
determined by the Bank, the drawer can be identified from the face of the
check, the Bank will deposit and process the check by affixing a stamped
impression requesting the drawer bank to contact the drawer for authority to
pay.
(6) Alterations and Restrictions. Checks with
alterations and checks bearing restrictive notations such as "Payment in Full"
will not be deposited, and the Bank shall notify the Agent of such checks by
telephone on the day of receipt and will deposit, hold or forward such checks
to Company, with a copy to the Agent, with accompanying written matter, if any,
as requested by the Agent.
XVI-2
<PAGE> 208
(7) Foreign Banks and Currency. Checks drawn in
foreign currency will be processed in accordance with the Bank's normal
procedure for such checks and the Agent will be notified by advice of any such
checks on the date received by the Bank.
(8) Other Items. Any items which the Agent has
specifically instructed the Bank in writing not to process will not be
deposited and shall be sent to the Company, with a copy to the Agent.
Notwithstanding anything to the contrary contained in
this Agreement, Bank shall have no obligation to perform services on a basis
any different than it performs lockbox services in the normal course of
business, except with respect to receiving instructions from the Agent rather
than Company.
4. Processing Acceptable Checks. All checks, except
those not acceptable for deposit under the terms of this Agreement, shall be
deposited on the day of receipt by the Bank to Account No. ____________________
(the "LENDER ACCOUNT"), which is an account owned and controlled exclusively by
the Agent, and all such checks shall be endorsed as follows:
credited to account number ________________; absence
of endorsement hereby supplied and guarantied by
[Lockbox Bank];
Until a Notice of Redirection substantially in the
form of Exhibit A hereto (a "NOTICE") is delivered by Agent to Bank, all
available balances in the Lender Account will be transferred on a daily basis
via the automated clearing house system or wire transfer with the following
instructions:
----------------
----------------
[ABA No. ]
----------------
Account No.
----------------
Account Name: as Agent for
---------------- --------------
Ref.:
---------------
Attn:
---------------
Upon the delivery of a Notice by Agent to Bank, Bank shall transfer such funds
only as provided in such Notice.
All remittance advices, envelopes, and written matter (except as expressly
provided herein) received in the Lock Box together with photocopies of all
checks shall be sent to Company and, if requested by the Agent, copies of same
shall be sent to the Agent. Bank shall mail both a deposit advice for all
deposits to the Lender Account, on a daily basis, and a statement of account,
on a monthly basis, to both the Agent and Company and, if no deposit is made on
a bank business day, a deposit advice, correctly dated, will be sent to the
Agent and Company with the notation "No Deposit' appearing thereon. In
addition, Bank shall indicate by telephone to the Agent on each Bank business
day by 2:30 P.M. New York City time the amount of each day's deposit total.
XVI-3
<PAGE> 209
5. Returned Checks. Checks deposited in the Lender
Account which are returned unpaid because of "Insufficient Funds," "Uncollected
Funds," etc. will be redeposited by the Bank only once, except that if a
returned check exceeds, $1,000 the Bank shall not redeposit such check but
shall telephone the Agent for further instructions on the day such check is
received. If redeposit is not warranted for reasons such as "account closed"
or "payment stopped" or if a check is returned a second time, the Bank will
charge the Lender Account and send a debit advice with the item to Company with
copies of same to Agent.
6. Remittance Received by Company. Remittances which are
sent directly to or received by Company shall be forwarded to the Lock Box on
the day received.
7. Record Maintenance. All deposit checks will be
microfilmed (on front and back) by the Bank and retained for five years by the
bank prior to destruction. Photocopies of filmed items will be provided to
the Agent or Company on request, within the five-year period.
8. Bank Charges. All charges of Bank for services
rendered pursuant to this agreement shall be billed to and paid directly by
Company. Said charges shall not be charged against remittances nor shall they
be debited to the Lender Account.
9. No Offset. Bank hereby agrees that it will treat all
remittances received in the Lock Box in accordance with the terms of this
agreement and it will not offset or assert any claim against the Lock Box or
the Lender Account or divert such remittances on account of any obligations
owed to the Bank by Company or by the party making the remittance, except as
provided in paragraph 5 hereof.
10. Bank Liability. In acting under this agreement Bank
shall not be liable to the Agent, the Lenders or Company for any error of
judgment, or for any act done or step taken or omitted by it in good faith,
except for gross negligence or willful misconduct.
11. Term. This agreement shall continue in full force and
effect until termination by the Bank on 60 days' prior written notice to all
other parties. The Agent may terminate this Agreement at any time which
termination shall be effective on receipt of written notice by Bank and in the
event of such termination, the Agent shall at its option, have the sole right
to remove mail from the Lock Box. Company shall have no right to unilaterally
terminate this Agreement.
12. Modification. This agreement may only be modified by
a writing signed by all of the parties hereto.
13. Addresses.
(1) All notices, including phone notice, daily
deposit advices, monthly statements of account and copies of all checks and the
documents which are to be given or sent to the Agent shall be sent to the
following address, and, where applicable, given at the following phone number:
XVI-4
<PAGE> 210
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Attn: Bhartai Baliga
Fax: (212) 618-2324
(2) All notices to Bank shall be sent to:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Attn:
--------------------------------------------
Fax:
---------------------------------------------
(3) All notices and items which are to be sent to
Company shall be sent to:
FWT, Inc.
-------------------------------------------------------
-------------------------------------------------------
Attn:
--------------------------------------------
Fax:
---------------------------------------------
14. Agent Agreement. The Agent agrees that it will
indemnify and hold Bank harmless from any and all loss, liability, expense or
damage that Bank may incur in processing lockbox items in accordance with this
Agreement, including, without limitation, any loss that Bank experiences as a
result of returned items to the extent the balances in the Lender Account
referenced in paragraph 5 are insufficient to cover such losses or in the event
the balances in such Lender Account are insufficient to cover Bank charges
referenced in paragraph 8.
15. Limitation on Liability. The Agent and Company
acknowledge that the Bank undertakes to perform only such duties as are
expressly set forth in this Agreement and those which are normally undertaken
by Bank in connection with lockbox processing. Notwithstanding any other
provision of this Agreement, it is agreed by the parties that Bank shall not be
liable for any action taken by Bank or any of its directors, officers, agents
or employees in accordance with this Agreement, except for Bank's or such
natural person's gross negligence or wilful misconduct. In no event shall Bank
be liable for losses or delays resulting from force majeure, computer
malfunction, interruption of communication facilities, labor difficulties or
other causes beyond its reasonable control or for any indirect, special or
consequential damages.
16. Governing Law. This Agreement shall be governed in
accordance with the laws of ______________________, without giving effect to
the conflict of law principles thereof.
XVI-5
<PAGE> 211
17. Effectiveness. This Agreement shall become effective
upon its receipt by the Agent, properly executed by all of the parties hereto.
[Remainder of page intentionally left blank]
XVI-6
<PAGE> 212
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers as of the day and year first above
written.
BT COMMERCIAL CORPORATION, as Agent
By:
-----------------------------------
Title:
---------------------------------
[LOCKBOX BANK]
By:
-----------------------------------
Title:
---------------------------------
FWT, INC., as Company
By:
-----------------------------------
Title:
---------------------------------
S-1
<PAGE> 213
EXHIBIT A
[Bank]
- -----------------------------------------
- -----------------------------------------
- -----------------------------------------
Attn:
Re: Account for
------------- -----------------
Account No.
---------------------------
Ladies and Gentlemen:
Reference is made to that certain Lock Box Agreement, dated as
of November 12, 1997 (the "AGREEMENT") among you, us, as Agent, and
________________________________ pursuant to which we, for our benefit and for
the benefit of the Lenders (as defined in the Agreement), were given exclusive
interest and control of the Account. This notice is given in accordance with
the terms of the Agreement.
Effective immediately and continuing until we shall authorize
you in writing to do otherwise, we hereby direct you to transfer on a daily
basis all funds deposited into the Account with the instructions attached
hereto.
Very truly yours,
BT COMMERCIAL CORPORATION, as Agent
By:
-----------------------------------
Title:
--------------------------------
Exhibit A-1
<PAGE> 214
EXHIBIT XVII
[FORM OF COMPANY SECURITY AGREEMENT]
COMPANY SECURITY AGREEMENT
This COMPANY SECURITY AGREEMENT (this "AGREEMENT") is dated as
of November 12, 1997 and entered into by and between FWT, INC., a Texas
corporation ("GRANTOR"), and BT COMMERCIAL CORPORATION, as agent for and
representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit
Agreement dated as of November 12, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Grantor, pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Grantor.
B. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Grantor shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor hereby agrees with Secured
Party as follows:
SECTION 1. GRANT OF SECURITY. Grantor hereby assigns for
security purposes to Secured Party, and hereby grants to Secured Party a
security interest in, all of Grantor's right, title and interest in and to the
following, in each case whether now or hereafter existing or in which Grantor
now has or hereafter acquires an interest and wherever the same may be located
(the "COLLATERAL"):
(a) all equipment in all of its forms (including, but not
limited to, all computers, office furniture, and other office equipment), all
parts thereof and all accessions thereto (any and all such equipment, parts and
accessions being the "EQUIPMENT");
XVII-1
<PAGE> 215
(b) all inventory in all of its forms (including, but not
limited to, (i) all goods held by Grantor for sale or lease or to be furnished
under contracts of service or so leased or furnished, (ii) all raw materials,
work in process, finished goods, and materials used or consumed in the
manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in Grantor's
business, (iii) all goods in which Grantor has an interest in mass or a joint
or other interest or right of any kind, and (iv) all goods which are returned
to or repossessed by Grantor, and (v) any inventory specifically listed in
Schedule I annexed hereto) and all accessions thereto and products thereof (all
such inventory, accessions and products being the "INVENTORY") and all
negotiable documents of title (including without limitation warehouse receipts,
dock receipts and bills of lading) issued by any Person covering any Inventory
(any such negotiable document of title being a "NEGOTIABLE DOCUMENT OF TITLE");
(c) all accounts, contract rights, chattel paper,
documents, instruments, general intangibles and other rights and obligations of
any kind arising out of or in connection with the sale or lease of goods or the
rendering of services and all rights in, to and under all security agreements,
leases and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, documents, instruments, investment property,
general intangibles or other obligations (any and all such accounts, contract
rights, chattel paper, documents, instruments, general intangibles and other
obligations being the "ACCOUNTS", and any and all such security agreements,
leases and other contracts being the "RELATED CONTRACTS");
(d) any agreements, if any, specifically listed in
Schedule I annexed hereto, as each such agreement may be amended, supplemented
or otherwise modified from time to time (said agreements, as so amended,
supplemented or otherwise modified, being referred to herein individually as an
"ASSIGNED AGREEMENT" and collectively as the "ASSIGNED AGREEMENTS"), including
without limitation (i) all rights of Grantor to receive moneys due or to become
due under or pursuant to the Assigned Agreements, (ii) all rights of Grantor to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect
to the Assigned Agreements, (iii) all claims of Grantor for damages arising out
of any breach of or default under the Assigned Agreements, and (iv) all rights
of Grantor to terminate, amend, supplement, modify or exercise rights or
options under the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(e) all deposit accounts, including without limitation
any deposit accounts specifically listed in Schedule I annexed hereto, and all
deposit accounts maintained with Secured Party;
(f) all trademarks, tradenames, tradesecrets, business
names, patents, patent applications, licenses, copyrights, registrations and
franchise rights (including, but not limited to, any trademarks, copyrights or
patents listed in Schedule I hereto) (collectively, "INTELLECTUAL PROPERTY")
and all goodwill associated with any of the
XVII-2
<PAGE> 216
foregoing and all renewals, reissues and extensions of, all applications for
any such trademarks, tradenames, patents, licenses, copyrights and
registrations;
(g) to the extent not included in any other paragraph of
this Section 1, all investment property and all other general intangibles
(including without limitation all production techniques, quality control
procedures and product specifications relating to the products and services
sold or delivered by Grantor and all tax refunds, rights to payment or
performance, choses in action and judgments taken on any rights or claims
included in the Collateral);
(h) all plant fixtures, business fixtures and other
fixtures and storage and office facilities, and all accessions thereto and
products thereof;
(i) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon; and
(j) all proceeds, products, rents and profits of or from
any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "PROCEEDS" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
Notwithstanding the foregoing, Collateral shall exclude any
intellectual property right, contracts and agreements to the extent, and only
to the extent, that such intellectual property right, contract or agreement
contains a provision enforceable at law and in equity that would be breached by
(or would result in the termination of such intellectual property, contract or
agreement upon) the grant of the security interest created herein pursuant to
the terms of this Agreement; provided, however, that if and when any
prohibition on the assignment, pledge or grant of a security interest in such
intellectual property right, contract or agreement is removed, the Secured
Party will be deemed to have been granted a security interest in such
intellectual property right, contract or agreement as of the date hereof, and
the Collateral will be deemed to include such intellectual property right,
contract or agreement.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of
all obligations and liabilities of every nature of Grantor now or hereafter
existing under
XVII-3
<PAGE> 217
or arising out of or in connection with the Credit Agreement and the other Loan
Documents and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Grantor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from Secured
Party or any Lender as a preference, fraudulent transfer or otherwise (all such
obligations and liabilities being the "UNDERLYING DEBT"), and all obligations
of every nature of Grantor now or hereafter existing under this Agreement (all
such obligations of Grantor, together with the Underlying Debt, being the
"SECURED OBLIGATIONS").
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein
to the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor
represents and warrants as follows:
(a) Ownership of Collateral. Except for Liens permitted
under the Credit Agreement and the security interest created by any Collateral
Document, Grantor owns the Collateral free and clear of any Lien. Except for
any financing statements listed in Schedule III annexed hereto and such
financing statements as may have been filed in favor of Secured Party relating
to this Agreement, no effective financing statement or other instrument similar
in effect covering all or any part of the Collateral is on file in any filing
or recording office as of the date hereof.
(b) Location of Equipment and Inventory. All of the
Equipment and Inventory is, as of the date hereof, located at the places
specified in Schedule II annexed hereto.
(c) Negotiable Documents of Title. No Negotiable
Documents of Title are outstanding as of the date hereof with respect to any of
the Inventory (other than in respect of (i) Inventory with an aggregate value
not in excess of $50,000 or (ii) Inventory
XVII-4
<PAGE> 218
which, in the ordinary course of business, is in transit either (A) from a
supplier to Grantor, (B) between the locations specified in Schedule II hereto,
or (C) to customers of Grantor).
(d) Office Locations; Other Names. The chief place of
business, the chief executive office and the office where Grantor keeps its
records regarding the Accounts and all originals of all chattel paper that
evidence Accounts is, and has been for the four month period preceding the date
hereof, located at the locations identified as such on Schedule II hereto.
Grantor has not in the past done, and does not now do, business under any other
name (including any trade-name or fictitious business name) except as set forth
on Schedule II hereto.
(e) Delivery of Certain Collateral. All notes and other
instruments (excluding checks) comprising any and all items of Collateral have
been delivered to Secured Party duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
(f) Patents, Trademarks and Copyrights. Schedule I
hereto includes all registered trademarks, patents and copyrights owned as of
the date hereof by Grantor in its own name. Each trademark, patent and
copyright listed on Schedule I hereto is valid, subsisting, unexpired,
enforceable and has not been abandoned (except where Grantor has determined
that they have immaterial value). No action or proceeding is pending which, if
adversely determined, could be reasonably expected to have a material adverse
effect on the value of any material trademark, patent or copyright listed on
Schedule I.
(g) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the grant by Grantor of
the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Grantor, or (iii) the perfection of or the
exercise by Secured Party of its rights and remedies hereunder (except for
filings of UCC financing statements, filings with the United States Patent and
Trademark Office, and any state trademark filing as identified by Grantor to
Secured Party, and as may have been taken by or at the direction of Grantor).
(h) Perfection. This Agreement, together with (i) the
filing of financing statements in the jurisdictions listed in Schedule II
hereto, (ii) the recording of the Company Patent Security Agreement in the
United States Trademark Office ("PTO"), (iii) the recording of the Company
Trademark Security Agreement in the PTO, and (iv) delivery to, and possession
by, the Secured Party, of notes and instruments constituting Collateral,
creates a valid, perfected and, except as may be permitted under the
Intercreditor Agreement with respect to machinery and equipment, first priority
security interest in the Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly made or taken.
XVII-5
<PAGE> 219
(i) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Grantor with respect to
the Collateral is accurate and complete in all respects.
SECTION 5. FURTHER ASSURANCES.
(a) Grantor agrees that from time to time, at the expense
of Grantor, Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
Grantor will: (i) mark conspicuously each item of chattel paper included in
the Accounts, each Related Contract and, at the request of Secured Party, each
of its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to Secured Party, indicating that such Collateral is
subject to the security interest granted hereby, (ii) if any Account shall be
evidenced by a promissory note or other instrument (excluding checks), deliver
and pledge to Secured Party hereunder such note or instrument, duly endorsed
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to Secured Party, and at the request of Secured
Party, deliver and pledge to Secured Party hereunder all original counterparts
of chattel paper constituting Collateral, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Secured Party, (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby, (iv) promptly after the acquisition by Grantor of any item of
Equipment which is covered by a certificate of title under a statute of any
jurisdiction under the law of which indication of a security interest on such
certificate is required as a condition of perfection thereof, at the request of
Secured Party, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, (v) within 30 days after the end of
each calendar quarter, deliver to Agent copies of all such applications or
other documents filed during such calendar quarter and copies of all such
certificates of title issued during such calendar quarter indicating the
security interest created hereunder in the items of Equipment covered thereby,
(vi) at any reasonable time, upon request by Secured Party, exhibit the
Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, and (vii) at Secured Party's request,
appear in and defend any action or proceeding that may affect Grantor's title
to or Secured Party's security interest in all or any part of the Collateral.
(b) If Grantor shall obtain rights to any new trademarks
or patents, the provisions of this Agreement shall automatically apply thereto.
Grantor shall promptly
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notify the Secured Party in writing of any rights to any new trademark
registrations or issued patent registrations acquired by Grantor after the date
hereof and of any applications therefor made after the date hereof.
Concurrently with such acquisition or with the filing of any such application
or registration, Grantor shall execute, deliver and record in all places where
the Secured Party deems necessary or desirable to perfect or protect its
interest in such Collateral an appropriate conditional assignment or other
agreement or instrument, in form and substance satisfactory to the Secured
Party, pursuant to which Grantor shall grant a security interest and
conditional assignment to the extent of its interest in such patent or
trademark as provided herein to the Secured Party, unless so doing would, in
the reasonable judgment of Grantor, after due inquiry, result in the grant of a
patent or registration of trademark in the name of the Secured Party, in which
event Grantor shall give written notice to the Secured Party as soon as
reasonably practicable and the filing shall instead by undertaken as soon as
practicable but in no case later than immediately following the grant or the
registration of the patent or trademark.
(c) Grantor hereby authorizes Secured Party to file (to
the extent permitted by law) one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Collateral without
the signature of Grantor. Grantor agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement signed by Grantor
shall be sufficient as a financing statement and may be filed as a financing
statement in any and all jurisdictions.
(d) Grantor will furnish to Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral;
(b) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days after such change;
(c) give Secured Party at least 30 days' prior written
notice of any change in Grantor's chief place of business, chief executive
office or residence or the office where Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes;
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(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that Grantor shall in any event pay such taxes, assessments, charges,
levies or claims not later than five days prior to the date of any proposed
sale under any judgement, writ or warrant of attachment entered or filed
against Grantor or any of the Collateral as a result of the failure to make
such payment; and
(f) shall use commercially reasonable efforts not to
permit the inclusion of any prohibitions on assignments, pledges or grants of
security interests in any licenses of Intellectual Property, contracts or
agreements entered into by Grantor after the date hereof.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND
INVENTORY. Grantor shall:
(a) keep the Equipment and Inventory at the places
therefor specified on Schedule II annexed hereto or, upon at least 30 days'
prior written notice to Secured Party, at such other places in jurisdictions
where all action that may be necessary or desirable, or that Secured Party may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Secured Party to exercise and
enforce its rights and remedies hereunder, with respect to such Equipment and
Inventory shall have been taken;
(b) cause the Equipment to be maintained and preserved in
accordance with Grantor's past practices in good condition, ordinary wear and
tear excepted, and shall forthwith, or, in the case of any loss or damage to
any of the Equipment (other than obsolete or surplus Equipment) when subsection
(c) of Section 8 is not applicable, as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements and
other improvements in connection therewith that are necessary or desirable to
such end. Grantor shall promptly furnish to Secured Party a statement
respecting any loss or damage to any of the Equipment that is material;
(c) keep correct and accurate records of the Inventory,
itemizing and describing the kind, type and quantity thereof, Grantor's cost
therefor and (where applicable) the current list prices therefor; and
(d) if any Inventory is in possession or control of any
of Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $100,000, and in any event upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for the
account of Secured Party and subject to the instructions of Secured Party; and
(e) promptly upon the issuance and delivery to Grantor of
any Negotiable Document of Title (other than any one or more Negotiable
Documents of Title
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covering (i) Inventory with an aggregate value not in excess of $100,000 or
(ii) Inventory which, in the ordinary course of business, is in transit either
(A) from a supplier to Grantor, (B) between the locations specified in Schedule
II hereto, or (C) to customers of Grantor), deliver such Negotiable Document of
Title to Secured Party.
SECTION 8. INSURANCE.
(a) Grantor shall, at its own expense, maintain insurance
with respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement, in such amounts, against such risks, in such form and with
such insurers as shall be required under the Credit Agreement from time to
time. Grantor shall, if so requested by Secured Party, deliver to Secured
Party original or duplicate policies of such insurance and, as often as Secured
Party may reasonably request, a report of a reputable insurance broker with
respect to such insurance. Further, Grantor shall, at the request of Secured
Party, duly execute and deliver instruments of assignment of such insurance
policies to comply with the requirements of Section 5(a) and cause the
respective insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance
maintained by Grantor pursuant to this Section 8 may be paid directly to the
Person who shall have incurred liability covered by such insurance. In case of
any loss involving damage to Equipment or Inventory when subsection (c) of this
Section 8 is not applicable, Grantor shall make or cause to be made the
necessary repairs to or replacements of such Equipment or Inventory, and any
proceeds of insurance maintained by Grantor pursuant to this Section 8 shall be
paid to Grantor as reimbursement for the costs of such repairs or replacements.
(c) All insurance payments in respect of such Equipment
or Inventory shall be paid to and applied by Secured Party as specified in
subsection 6.4 of the Credit Agreement.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND
RELATED CONTRACTS.
(a) Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the location therefor specified in Section 4 or, upon at
least 30 days' prior written notice to Secured Party, at such other location in
a jurisdiction where all action that may be necessary or desirable, or that
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Grantor
will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and Grantor
agrees to render to Secured Party, at Grantor's cost and
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expense, such clerical and other assistance as may be reasonably requested with
regard thereto. Promptly upon the request of Secured Party, Grantor shall
deliver to Secured Party complete and correct copies of each Related Contract.
(b) Grantor shall, for not less than three years from the
date on which such Account arose, maintain (i) complete records of each
Account, including records of all payments received, credits granted and
merchandise returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c),
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to Grantor under the Accounts and Related Contracts. In connection
with such collections, Grantor may take (and, at Secured Party's direction,
shall take) such action as Grantor or Secured Party may deem necessary or
advisable to enforce collection of amounts due or to become due under the
Accounts; provided, however, that Secured Party shall have the right at any
time, upon the occurrence and during the continuation of an Event of Default or
a Potential Event of Default and upon written notice to Grantor of its
intention to do so, to notify the account debtors or obligors under any
Accounts of the assignment of such Accounts to Secured Party and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to Grantor thereunder directly to Secured Party, to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Secured Party and, upon such notification and at the expense of Grantor, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Grantor
might have done. After receipt by Grantor of the notice from Secured Party
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by Grantor in
respect of the Accounts and the Related Contracts shall be received in trust
for the benefit of Secured Party hereunder, shall be segregated from other
funds of Grantor and shall be forthwith paid over or delivered to Secured Party
in the same form as so received (with any necessary endorsement) to be held as
cash Collateral and either (A) be released to Grantor so long as no Event of
Default shall have occurred and be continuing or (B) if any Event of Default
shall have occurred and be continuing, be applied as provided by Section 18,
and (ii) Grantor shall not adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any account debtor or obligor
thereof, or allow any credit or discount thereon.
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SECTION 10. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED
AGREEMENTS.
(a) Grantor shall at its expense:
(i) perform and observe all terms and provisions
of the Assigned Agreements to be performed or observed by it, maintain
the Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to
such end as may be from time to time reasonably requested by Secured
Party; and
(ii) from time to time (A) furnish to Secured
Party such information and reports regarding the Assigned Agreements
as Secured Party may reasonably request and (B) upon request of
Secured Party make such demands and requests for information and
reports or for action as Grantor is entitled to make under the
Assigned Agreements.
(b) Grantor shall not during the continuance of any Event
of Default:
(i) cancel or terminate any of the Assigned
Agreements or consent to or accept any cancellation or termination
thereof;
(ii) amend or otherwise modify the Assigned
Agreements or give any consent, waiver or approval thereunder;
(iii) waive any default under or breach of the
Assigned Agreements; or
(iv) take any other action in connection with the
Assigned Agreements that would impair the value of the interest or
rights of Grantor thereunder or that would impair the interest or
rights of Secured Party.
SECTION 11. DEPOSIT ACCOUNTS. Upon the occurrence and during
the continuation of an Event of Default, Secured Party may exercise dominion
and control over, and refuse to permit further withdrawals (whether of money,
securities, instruments or other property) from any deposit accounts maintained
with Secured Party constituting part of the Collateral.
SECTION 12. LICENSE OF PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
Grantor hereby grants to Secured Party, effective upon the occurrence and
during the continuation of any Event of Default, the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes owned or used by Grantor that relate to the Collateral and any other
collateral granted by Grantor as security for the Secured Obligations, together
with any goodwill associated therewith, all to the extent necessary to enable
Secured Party to use, possess and realize on the
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Collateral and to enable any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all
successors, assigns and transferees of Secured Party and its successors,
assigns and transferees, whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.
Such right and license is granted free of charge, without requirement that any
monetary payment whatsoever be made to Grantor.
SECTION 13. TRANSFERS AND OTHER LIENS. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(b) except for any Liens, if any, permitted under the
Credit Agreement and the security interest created by this Agreement, create or
suffer to exist any Lien upon or with respect to any of the Collateral to
secure the indebtedness or other obligations of any Person.
SECTION 14. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Grantor hereby irrevocably appoints Secured Party as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable, consistent with the provisions
of the Agreement, to accomplish the purposes of this Agreement, including
without limitation:
(a) to obtain and adjust insurance required to be
maintained by Grantor or paid to Secured Party pursuant to Section 8;
(b) during the continuation of any Event of Default, to
ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a) and (b)
above;
(d) during the continuation of any Event of Default, to
file any claims or take any action or institute any proceedings that Secured
Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon
or threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in
its sole discretion, any such payments made
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by Secured Party to become obligations of Grantor to Secured Party, due and
payable immediately without demand;
(f) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) upon the occurrence and during the continuation of an
Event of Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all purposes, and
to do, at Secured Party's option and Grantor's expense, at any time or from
time to time, all acts and things that Secured Party deems necessary to
protect, preserve or realize upon the Collateral and Secured Party's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as Grantor might do.
SECTION 15. SECURED PARTY MAY PERFORM. If Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Grantor under Section 19.
SECTION 16. STANDARD OF CARE. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property.
SECTION 17. REMEDIES. If any Event of Default shall have
occurred and be continuing, Secured Party may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Collateral), and also may (a) require Grantor to, and Grantor hereby agrees
that it will at its expense and upon request of Secured Party forthwith,
assemble all or part of the Collateral as directed by Secured Party and make it
available to Secured Party at a place to be designated by Secured Party that is
reasonably convenient to both parties, (b) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (c) prior to the disposition of the Collateral, store, process, repair
or recondition the Collateral or otherwise prepare the Collateral for
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disposition in any manner to the extent Secured Party deems appropriate, (d)
take possession of Grantor's premises or place custodians in exclusive control
thereof, remain on such premises and use the same and any of Grantor's
equipment for the purpose of completing any work in process, taking any actions
described in the preceding clause (c) and collecting any Secured Obligation,
and (e) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any of
Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable. Secured Party or any
Lender may be the purchaser of any or all of the Collateral at any such sale
and Secured Party, as agent for and representative of Lenders (but not any
Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Secured Party at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free from any claim or
right on the part of Grantor, and Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to Grantor
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. Secured Party
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which
it was so adjourned. Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, Grantor shall be liable for the deficiency and
the fees of any attorneys employed by Secured Party to collect such deficiency.
SECTION 18. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Secured Party, be held by
Secured Party as Collateral for, and/or then, or at any other time thereafter,
applied in full or in part by Secured Party against, the Secured Obligations in
the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or
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incurred by Secured Party in connection therewith, and all amounts for
which Secured Party is entitled to indemnification hereunder and all
advances made by Secured Party hereunder for the account of Grantor,
and to the payment of all costs and expenses paid or incurred by
Secured Party in connection with the exercise of any right or remedy
hereunder, all in accordance with Section 19;
SECOND: To the payment of all other Secured Obligations in
such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 19. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
from Secured Party's or such Lender's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Grantor to perform or observe any of the provisions hereof.
SECTION 20. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the Collateral
and shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Grantor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its permitted successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such termination Secured Party will, at Grantor's
expense, execute and deliver
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to Grantor such documents as Grantor shall reasonably request to evidence such
termination.
SECTION 21. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Secured Party
hereunder.
SECTION 22. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Grantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Grantor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 23. NOTICES. Any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served,
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telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or four Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be
as set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 24. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 25. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 26. HEADINGS. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 27. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 28. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF
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NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT GRANTOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Grantor hereby agrees that
service of all process in any such proceeding in any such court may be made by
registered or certified mail, return receipt requested, to Grantor at its
address provided in Section 23, such service being hereby acknowledged by
Grantor to be sufficient for personal jurisdiction in any action against
Grantor in any such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Secured Party to
bring proceedings against Grantor in the courts of any other jurisdiction.
SECTION 29. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
LAW, GRANTOR AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Grantor and Secured Party each acknowledge that this waiver is a material
inducement for Grantor and Secured Party to enter into a business relationship,
that Grantor and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 30. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT, INC.
By:
-----------------------------------------
Title:
-----------------------------
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas 76112
Attention: Chief Executive Officer
BT COMMERCIAL CORPORATION
By:
-----------------------------------------
Title:
-----------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop # 4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1
<PAGE> 233
SCHEDULE I
TO SECURITY AGREEMENT
Supplemental Descriptions of Collateral
Assigned Agreements:
Deposit Accounts:
Trademark Registrations:
Copyright Registrations:
Patent Registrations:
<PAGE> 234
SCHEDULE II
TO SECURITY AGREEMENT
Tradenames:
Locations of Equipment:
Locations of Inventory:
Filing Jurisdictions:
<PAGE> 235
SCHEDULE III
TO SECURITY AGREEMENT
EXISTING FINANCING STATEMENTS
<PAGE> 236
EXHIBIT XVIII
[FORM OF COMPANY PLEDGE AGREEMENT]
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "AGREEMENT") is dated as
of November 12, 1997 and entered into by and between FWT, INC., a Texas
corporation ("PLEDGOR"), and BT COMMERCIAL CORPORATION, as agent for and
representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of (i) the
shares of stock (the "PLEDGED SHARES") described in Part A of Schedule I
annexed hereto and issued by the corporations named therein and (ii) the
indebtedness (the "PLEDGED DEBT") described in Part B of said Schedule I and
issued by the obligors named therein.
B. Secured Party and Lenders have entered into a Credit
Agreement dated as of November 12, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Pledgor pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
C. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Pledgor shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. PLEDGE OF SECURITY. Pledgor hereby pledges to
Secured Party, and hereby grants to Secured Party a security interest in, all
of Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Shares and the certificates representing
the Pledged Shares and any interest of Pledgor in the entries on the books of
any financial
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intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing the
Pledged Debt, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities
convertible into and warrants, options and other rights to purchase or
otherwise acquire, stock of any issuer of the Pledged Shares from time to time
acquired by Pledgor in any manner (which shares shall be deemed to be part of
the Pledged Shares), the certificates or other instruments representing such
additional shares, securities, warrants, options or other rights and any
interest of Pledgor in the entries on the books of any financial intermediary
pertaining to such additional shares, and all dividends, cash, warrants,
rights, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such additional shares, securities, warrants, options or other rights;
(d) all additional indebtedness from time to time owed to
Pledgor by any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into
and warrants, options and other rights to purchase or otherwise acquire, stock
of any Person that, after the date of this Agreement, becomes, as a result of
any occurrence, a direct Subsidiary of Pledgor (which shares shall be deemed to
be part of the Pledged Shares), the certificates or other instruments
representing such shares, securities, warrants, options or other rights and any
interest of Pledgor in the entries on the books of any financial intermediary
pertaining to such shares, and all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares, securities, warrants, options or other rights;
(f) all indebtedness from time to time owed to Pledgor by
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct or indirect Subsidiary of Pledgor, and all interest, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f)
above, all proceeds of any or all of the foregoing Pledged Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when
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Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and
includes, without limitation, proceeds of any indemnity or guaranty payable to
Pledgor or Secured Party from time to time with respect to any of the Pledged
Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of
all obligations and liabilities of every nature of Pledgor now or hereafter
existing under or arising out of or in connection with the Credit Agreement
and the other Loan Documents and all extensions or renewals thereof, whether
for principal, interest (including without limitation interest that, but for
the filing of a petition in bankruptcy with respect to Pledgor, would accrue on
such obligations), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the extent all or
any part of such payment is avoided or recovered directly or indirectly from
Secured Party or any Lender as a preference, fraudulent transfer or otherwise
(all such obligations and liabilities being the "UNDERLYING DEBT"), and all
obligations of every nature of Pledgor now or hereafter existing under this
Agreement (all such obligations of Pledgor, together with the Underlying Debt,
being the "SECURED OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates
or instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of Secured Party pursuant hereto and
shall be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by Pledgor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party. Secured Party shall have the right, at any time
in its discretion and without notice to Pledgor, to transfer to or to register
in the name of Secured Party or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 7(a). In
addition, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor
represents and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All
of the Pledged Shares have been duly authorized and validly issued and are
fully paid and non-assessable. All of the Pledged Debt has been duly
authorized, authenticated or issued, and delivered
XVIII-3
<PAGE> 239
and is the legal, valid and binding obligation of the issuers thereof (subject
to bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally and equitable principles relating to
enforceability) and is not in default.
(b) Description of Pledged Collateral. The Pledged
Shares constitute the percentage of the issued and outstanding shares of stock
of each of the direct Subsidiaries of Pledgor set forth on Schedule I hereto,
and there are no outstanding warrants, options or other rights to purchase, or
other agreements outstanding with respect to, or property that is now or
hereafter convertible into, or that requires the issuance or sale of, any
Pledged Shares. The Pledged Debt constitutes all of the issued and outstanding
intercompany indebtedness evidenced by a promissory note of the respective
issuers thereof owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the
legal, record and beneficial owner of the Pledged Collateral free and clear of
any Lien except for the security interest created by this Agreement, except for
Permitted Encumbrances.
(d) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the pledge by Pledgor
of the Pledged Collateral pursuant to this Agreement and the grant by Pledgor
of the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Pledgor, or (iii) the exercise by Secured
Party of the voting or other rights, or the remedies in respect of the Pledged
Collateral, provided for in this Agreement (except for any UCC financing
statements and as may be required in connection with the pledging of and a
disposition of Pledged Collateral by laws affecting the offering and sale of
securities generally).
(e) Perfection. Assuming Secured Party's continued
possession of the certificates representing the Pledged Shares and notes
representing Pledged Debt, the pledge of the Pledged shares and notes
representing Pledged Debt pursuant to this Agreement creates a valid and
perfected first priority security interest in the Pledged Shares and notes
representing Pledged Debt, securing the payment of the Secured Obligations.
(f) Margin Regulations. The pledge of the Pledged
Collateral pursuant to this Agreement does not violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED
COLLATERAL; ETC. Pledgor shall:
(a) not, except to the extent permitted by the Credit
Agreement, (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
(ii) create or suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this
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<PAGE> 240
Agreement, or (iii) permit any issuer of Pledged Shares to merge or consolidate
unless all the outstanding capital stock of the surviving or resulting
corporation is, upon such merger or consolidation, pledged hereunder and no
cash, securities or other property is distributed in respect of the outstanding
shares of any other constituent corporation; provided that in the event Pledgor
makes an Asset Sale permitted by the Credit Agreement and the assets subject to
such Asset Sale are Pledged Shares, Secured Party shall release the Pledged
Shares that are the subject of such Asset Sale to Pledgor free and clear of the
Lien under this Agreement concurrently with the consummation of such Asset
Sale; provided, further that, as a condition precedent to such release, Secured
Party shall have received evidence satisfactory to it that arrangements
satisfactory to it have been made for delivery to Secured Party of the net cash
proceeds of such Asset Sale to the extent contemplated in the Credit Agreement;
(b) (i) cause each issuer of Pledged Shares that is a
Subsidiary of Pledgor not to issue any stock or other securities in addition to
or in substitution for the Pledged Shares issued by such issuer, except to
Pledgor, (ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other securities
of each issuer of Pledged Shares, and (iii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all shares of stock
issued to or otherwise acquired by Pledgor of any Person that, after the date
of this Agreement, becomes, as a result of any occurrence, a direct Subsidiary
of Pledgor;
(c) (i) pledge hereunder, immediately upon their
issuance, any and all instruments or other evidences of additional indebtedness
from time to time owed to Pledgor by any obligor on the Pledged Debt, and (ii)
pledge hereunder, immediately upon their issuance, any and all instruments or
other evidences of indebtedness from time to time owed to Pledgor by any Person
that after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of Pledgor;
(d) promptly deliver to Secured Party all written notices
received by it as holder of the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the
Pledged Collateral, except to the extent the validity thereof is being
contested in good faith; provided that Pledgor shall in any event pay such
taxes, assessments, charges, levies or claims not later than five days prior to
the date of any proposed sale under any judgement, writ or warrant of
attachment entered or filed against Pledgor or any of the Pledged Collateral as
a result of the failure to make such payment.
XVIII-5
<PAGE> 241
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Pledgor agrees that from time to time, at the expense
of Pledgor, Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, Pledgor
will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Secured Party may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
and (ii) at Secured Party's request, appear in and defend any action or
proceeding that may affect Pledgor's title to or Secured Party's security
interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining
any additional shares of stock or other securities required to be pledged
hereunder as provided in Section 5(b) or (c), promptly (and in any event within
five Business Days) deliver to Secured Party a Pledge Amendment, duly executed
by Pledgor, in substantially the form of Schedule II annexed hereto (a "PLEDGE
AMENDMENT"), in respect of the additional Pledged Shares or Pledged Debt to be
pledged pursuant to this Agreement. Pledgor hereby authorizes Secured Party to
attach each Pledge Amendment to this Agreement and agrees that all Pledged
Shares or Pledged Debt listed on any Pledge Amendment delivered to Secured
Party shall for all purposes hereunder be considered Pledged Collateral;
provided that the failure of Pledgor to execute a Pledge Amendment with respect
to any additional Pledged Shares or Pledged Debt pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Credit Agreement; provided,
however, that Pledgor shall not exercise or refrain from exercising
any such right if Secured Party shall have notified Pledgor that, in
Secured Party's judgment, such action would have a material adverse
effect on the value of the Pledged Collateral or any part thereof; and
provided, further, that Pledgor shall give Secured Party at least five
Business Days' prior written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such
right. It is understood, however, that neither (A) the voting by
Pledgor of any Pledged Shares for or Pledgor's consent to the election
of directors at a regularly scheduled annual or other meeting of
stockholders (or by
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<PAGE> 242
written consent) or with respect to incidental matters at any such
meeting nor (B) Pledgor's consent to or approval of any action
otherwise permitted under this Agreement and the Credit Agreement
shall be deemed inconsistent with the terms of this Agreement or the
Credit Agreement within the meaning of this Section 7(a)(i), and no
notice of any such voting or consent need be given to Secured Party;
(ii) Pledgor shall be entitled to receive and retain, and
to utilize free and clear of the lien of this Agreement (but subject
to the provisions of the Credit Agreement), any and all dividends,
principal and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
(A) dividends, principal and interest paid or
payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed
in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus
or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed
in redemption of or in exchange for any Pledged Shares,
shall be, and shall forthwith be delivered to Secured Party to hold
as, Pledged Collateral and shall, if received by Pledgor, be received
in trust for the benefit of Secured Party, be segregated from the
other property or funds of Pledgor and be forthwith delivered to
Secured Party as Pledged Collateral in the same form as so received
(with all necessary indorsements); and
(iii) Secured Party shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies,
dividend payment orders and other instruments as Pledgor may from time
to time reasonably request for the purpose of enabling Pledgor to
exercise the voting and other consensual rights which it is entitled
to exercise pursuant to paragraph (i) above and to receive the
dividends, principal or interest payments which it is authorized to
receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an
Event of Default:
(i) upon written notice from Secured Party to Pledgor,
all rights of Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to
Section 7(a)(i) shall be suspended, and
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<PAGE> 243
all such rights shall thereupon become vested in Secured Party who
shall thereupon have the sole right to exercise such voting and other
consensual rights;
(ii) all rights of Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to receive
and retain pursuant to Section 7(a)(ii) shall be suspended, and all
such rights shall become vested in Secured Party who shall have the
sole right to receive and hold as Pledged Collateral such dividends
and interest payments; and
(iii) all dividends, principal and interest payments which
are received by Pledgor contrary to the provisions of paragraph (ii)
of this Section 7(b) shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Pledgor and
shall forthwith be paid over to Secured Party as Pledged Collateral in
the same form as so received (with any necessary indorsements).
(c) In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to exercise
pursuant to Section 7(b)(i) and to receive all dividends and other
distributions which it may be entitled to receive under Section 7(a)(ii) or
Section 7(b)(ii), (i) Pledgor shall promptly execute and deliver (or cause to
be executed and delivered) to Secured Party all such proxies, dividend payment
orders and other instruments as Secured Party may from time to time reasonably
request and (ii) without limiting the effect of the immediately preceding
clause (i), Pledgor hereby grants to Secured Party an irrevocable proxy to vote
the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares would be entitled (including,
without limitation, giving or withholding written consents of shareholders,
calling special meetings of shareholders and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record books of the issuer
thereof) by any other Person (including the issuer of the Pledged Shares or any
officer or agent thereof), during the existence of an Event of Default.
SECTION 8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to file one or more financing or continuation
statements, or amendments thereto, relative to all or any part of the Pledged
Collateral without the signature of Pledgor (to the extent permitted by
applicable law);
(b) during the continuance of any Event of Default, to
ask, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Pledged Collateral;
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<PAGE> 244
(c) during the continuance of any Event of Default, to
receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) during the continuance of any Event of Default, to
file any claims or take any action or institute any proceedings that Secured
Party may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Pledged Collateral.
SECTION 9. SECURED PARTY MAY PERFORM. If Pledgor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Pledgor under Section
13(b).
SECTION 10. STANDARD OF CARE. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Pledged
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the custody of any Pledged
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Secured Party shall have no duty as to any Pledged Collateral, it
being understood that Secured Party shall have no responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral,
whether or not Secured Party has or is deemed to have knowledge of such
matters, (b) taking any necessary steps (other than steps taken in accordance
with the standard of care set forth above to maintain possession of the Pledged
Collateral) to preserve rights against any parties with respect to any Pledged
Collateral, (c) taking any necessary steps to collect or realize upon the
Secured Obligations or any guarantee therefor, or any part thereof, or any of
the Pledged Collateral, or (d) initiating any action to protect the Pledged
Collateral against the possibility of a decline in market value. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of Pledged Collateral in its possession if such Pledged Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Pledged Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "CODE") (whether or not the Code applies to the affected Pledged
Collateral), and Secured Party may also in its sole discretion, without notice
except as specified below, sell the Pledged Collateral or any part thereof in
one or more parcels at public or private sale, at any exchange or broker's
board or at any of Secured Party's offices or elsewhere, for cash, on credit or
for future delivery, at such time or
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<PAGE> 245
times and at such price or prices and upon such other terms as Secured Party
may deem commercially reasonable, irrespective of the impact of any such sales
on the market price of the Pledged Collateral. Secured Party or any Lender may
be the purchaser of any or all of the Pledged Collateral at any such sale and
Secured Party, as agent for and representative of Lenders (but not any Lender
or Lenders in its or their respective individual capacities unless Requisite
Lenders shall otherwise agree in writing), shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or
any portion of the Pledged Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Pledged Collateral payable by Secured Party at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from
any claim or right on the part of Pledgor, and Pledgor hereby waives (to the
extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten days' notice
to Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Pledgor hereby waives any claims against
Secured Party arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Secured Party accepts
the first offer received and does not offer such Pledged Collateral to more
than one offeree. If the proceeds of any sale or other disposition of the
Pledged Collateral are insufficient to pay all the Secured Obligations, Pledgor
shall be liable for the deficiency and the fees of any attorneys employed by
Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as from time to time
amended (the "SECURITIES ACT"), and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of
such Pledged Collateral under the Securities Act and/or such state securities
laws, to limit purchasers to those who will agree, among other things, to
acquire the Pledged Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges that
any such private sales may be at prices and on terms less favorable than those
obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under
the Securities Act) and Pledgor agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to engage in public sales and no obligation to
delay the sale of any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities
XVIII-10
<PAGE> 246
Act or under applicable state securities laws, even if such issuer would, or
should, agree to so register it (and Pledgor has no obligation to cause any
such registration).
(c) If Secured Party determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request, Pledgor shall
and shall cause each issuer (which is a Subsidiary of Pledgor) of any Pledged
Shares to be sold hereunder from time to time to furnish to Secured Party all
such information as Secured Party may request in order to determine the number
of shares and other instruments included in the Pledged Collateral which may be
sold by Secured Party in exempt transactions under the Securities Act and the
rules and regulations of the Securities and Exchange Commission thereunder, as
the same are from time to time in effect.
SECTION 12. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral may, in the discretion of Secured Party, be held
by Secured Party as Pledged Collateral for, and/or then, or at any time
thereafter, applied in full or in part by Secured Party against, the Secured
Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Pledgor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection
with the exercise of any right or remedy hereunder, all in accordance
with Section 13;
SECOND: To the payment of all other Secured Obligations in
such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
from Secured Party's or such Lender's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
XVIII-11
<PAGE> 247
(b) Pledgor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Pledgor to perform or observe any of the provisions hereof.
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the payment in
full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its permitted successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to the
provisions of subsection 10.1 of the Credit Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination Secured Party
will, at Pledgor's expense, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination and Pledgor shall
be entitled to the return, upon its request and at its expense, against receipt
and without recourse to Secured Party, of such of the Pledged Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 15. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Pledged
Collateral), solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement.
XVIII-12
<PAGE> 248
Upon the acceptance of any appointment as Agent under subsection 9.5 of the
Credit Agreement by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Secured Party
hereunder.
SECTION 16. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 17. NOTICES. Any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or four Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed. For the purposes hereof, the address of each party hereto
shall be as set forth under such party's name on the signature pages hereof or,
as to either party, such other address as shall be designated by such party in
a written notice delivered to the other party hereto.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 19. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity,
XVIII-13
<PAGE> 249
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Pledgor hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to Pledgor at its address provided in Section 17, such service being
hereby acknowledged by Pledgor to be sufficient for personal jurisdiction in
any action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Secured Party to bring proceedings against Pledgor in the courts of any other
jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
LAW, PLEDGOR AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The
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<PAGE> 250
scope of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims, breach
of duty claims, and all other common law and statutory claims. Pledgor and
Secured Party each acknowledge that this waiver is a material inducement for
Pledgor and Secured Party to enter into a business relationship, that Pledgor
and Secured Party have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver in their related
future dealings. Pledgor and Secured Party further warrant and represent that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the
event of litigation, this Agreement may be filed as a written consent to a
trial by the court.
SECTION 24. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
XVIII-15
<PAGE> 251
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT, INC.
By:
------------------------------
Title:
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas 76112
Attention: Chief Executive Officer
BT COMMERCIAL CORPORATION
By:
------------------------------
Title:
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1
<PAGE> 252
SCHEDULE I
Attached to and forming a part of the Company Pledge Agreement
dated as of November 12, 1997 between FWT, Inc., as Pledgor, and BT Commercial
Corporation, as Secured Party.
Part A
<TABLE>
<CAPTION>
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- ------------ -------- ------------ ----- ---------
<S> <C> <C> <C> <C>
</TABLE>
Part B
<TABLE>
<CAPTION>
Debt Issuer Amount of Indebtedness
- ----------- ----------------------
<S> <C>
</TABLE>
I-1
<PAGE> 253
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__, is delivered
pursuant to Section 6(b) of the Company Pledge Agreement referred to below.
The undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated November 12, 1997, as amended and supplemented to date
hereof, between the undersigned and BT Commercial Corporation, as Secured Party
(the "PLEDGE AGREEMENT," capitalized terms defined therein being used herein as
therein defined), and that the [Pledged Shares] [Pledged Debt] listed on this
Pledge Amendment shall be deemed to be part of the [Pledged Shares] [Pledged
Debt] and shall become part of the Pledged Collateral and shall secure all
Secured Obligations.
FWT, INC.
By:
------------------------------
Title:
<TABLE>
<CAPTION>
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- ------------ -------- ------------ ----- ---------
<S> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Debt Issuer Amount of Indebtedness
- ----------- ----------------------
<S> <C>
</TABLE>
II-1
<PAGE> 254
EXHIBIT XIX
[FORM OF COMPANY TRADEMARK SECURITY AGREEMENT]
COMPANY TRADEMARK COLLATERAL SECURITY AGREEMENT
This COMPANY TRADEMARK COLLATERAL SECURITY AGREEMENT (this
"AGREEMENT") is dated as of November 12, 1997 and entered into by and between
FWT, INC., a Texas corporation ("GRANTOR"), and BT COMMERCIAL CORPORATION, as
agent for and representative of (in such capacity herein called "SECURED
PARTY") the financial institutions ("LENDERS") party to the Credit Agreement
(as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit
Agreement dated as of November 12, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Grantor pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Grantor.
B. Grantor owns and uses in its business, and will in
the future adopt and so use, various intangible assets, including trademarks,
service marks, designs, logos, indicia, tradenames, corporate names, company
names, business names, fictitious business names, trade styles and/or other
source and/or business identifiers and applications pertaining thereto
(collectively, the "TRADEMARKS").
C. Secured Party desires Grantor to assign and grant to
it a lien on and security interest in all of Grantor's existing and future
Trademarks, all registrations that have been or may hereafter be issued or
applied for thereon in the United States and any state thereof and in foreign
countries (the "REGISTRATIONS"), all common law and other rights in and to the
Trademarks in the United States and any state thereof and in foreign countries
(the "TRADEMARK RIGHTS"), all goodwill of Grantor's business symbolized by the
Trademarks and associated therewith, including without limitation the documents
and things described in Section 1(b) (the "ASSOCIATED GOODWILL"), and all
proceeds of the Trademarks, the Registrations, the Trademark Rights and the
Associated Goodwill, and Grantor agrees to assign and grant to Secured Party a
secured and protected interest in the Trademarks, the Registrations, the
Trademark Rights, the Associated Goodwill and all the proceeds thereof as
provided herein.
D. Grantor has executed and delivered the Company
Security Agreement dated as of November 12, 1997 (the "COMPANY SECURITY
AGREEMENT") between Grantor and Secured Party for the benefit of Lenders,
pursuant to which Grantor has granted Secured
XIX-1
<PAGE> 255
Party a security interest in all of its personal property, including, without
limitation, the Collateral, as defined below, which Company Security Agreement
is to be supplemented by this Agreement.
E. Pursuant to the Security Agreement, Grantor has
assigned and granted to Secured Party a lien on and security interest in, among
other assets, all of Grantor's equipment, inventory, accounts and general
intangibles relating to the products and services sold or delivered under or in
connection with the Trademarks such that, upon the occurrence and during the
continuation of an Event of Default, Secured Party would be able to exercise
its remedies consistent with the Security Agreement, this Agreement and
applicable law to foreclose upon Grantor's business and use the Trademarks, the
Registrations and the Trademark Rights in conjunction with the continued
operation of such business, maintaining substantially the same product and
service specifications and quality as maintained by Grantor, and benefit from
the Associated Goodwill.
F. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Grantor shall have
assigned and granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor hereby agrees with Secured
Party as follows:
SECTION 1. GRANT OF SECURITY INTEREST. Grantor hereby grants
to Secured Party a security interest in, all of Grantor's right, title and
interest in and to the following, in each case whether now or hereafter
existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located (the "COLLATERAL"):
(a) each of the Trademarks and rights and interests in
Trademarks that are presently, or in the future may be, owned, held (whether
pursuant to a license or otherwise) or used by Grantor, in whole or in part
(including, without limitation, the Trademarks specifically identified in
Schedule A annexed hereto, as the same may be amended pursuant hereto from time
to time), and including all Trademark Rights with respect thereto and all
federal, state and foreign Registrations therefor heretofore or hereafter
granted or applied for, the right (but not the obligation) to register claims
under any state or federal trademark law or regulation or any trademark law or
regulation of any foreign country and to apply for, renew and extend the
Trademarks, Registrations and Trademark Rights, the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of Grantor or in the name of Secured Party or otherwise for past, present and
future infringements of the Trademarks, Registrations or Trademark Rights and
all rights (but not obligations) corresponding thereto in the United States and
any foreign country, and the Associated Goodwill; it being understood that the
rights and interests included herein shall include, without limitation, all
rights and interests pursuant to licensing or other contracts in favor of
Grantor pertaining to any Trademarks, Registrations or Trademark Rights
presently or in the
XIX-2
<PAGE> 256
future owned, held or used by third parties but, in the case of third parties
which are not Affiliates of Grantor, only to the extent permitted by such
licensing or other contracts or otherwise permitted by applicable law and, if
not so permitted under any such contracts and applicable law, only with the
consent of such third parties;
(b) the following documents and things in Grantor's
possession, or subject to Grantor's right to possession, related to (Y) the
production, sale and delivery by Grantor, or by any Affiliate, licensee or
subcontractor of Grantor, of products or services sold or delivered by or under
the authority of Grantor in connection with the Trademarks, Registrations or
Trademark Rights (which products and services shall, for purposes of this
Agreement, be deemed to include, without limitation, products and services sold
or delivered pursuant to merchandising operations utilizing any Trademarks,
Registrations or Trademark Rights); or (Z) any retail or other merchandising
operations conducted under the name of or in connection with the Trademarks,
Registrations or Trademark Rights by Grantor or any Affiliate, licensee or
subcontractor of Grantor:
(i) all lists and ancillary documents that
identify and describe any of Grantor's customers, or those of its
Affiliates, licensees or subcontractors, for products sold and
services delivered under or in connection with the Trademarks or
Trademark Rights, including without limitation any lists and ancillary
documents that contain a customer's name and address, the name and
address of any of its warehouses, branches or other places of
business, the identity of the Person or Persons having the principal
responsibility on a customer's behalf for ordering products or
services of the kind supplied by Grantor, or the credit, payment,
discount, delivery or other sale terms applicable to such customer,
together with information setting forth the total purchases, by brand,
product, service, style, size or other criteria, and the patterns of
such purchases;
(ii) all product and service specification
documents and production and quality control manuals used in the
manufacture or delivery of products and services sold or delivered
under or in connection with the Trademarks or Trademark Rights;
(iii) all documents which reveal the name and
address of any source of supply, and any terms of purchase and
delivery, for any and all materials, components and services used in
the production of products and services sold or delivered under or in
connection with the Trademarks or Trademark Rights; and
(iv) all documents constituting or concerning the
then current or proposed advertising and promotion by Grantor or its
Affiliates, licensees or subcontractors of products and services sold
or delivered under or in connection with the Trademarks or Trademark
Rights including, without limitation, all documents which reveal the
media used or to be used and the cost for all such advertising
conducted within the described period or planned for such products and
services;
XIX-3
<PAGE> 257
(c) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon;
(d) to the extent not included in the foregoing clauses
(a) - (c), all general intangibles relating to the Collateral; and
(e) all proceeds, products, rents and profits (including
without limitation license royalties and proceeds of infringement suits) of or
from any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "PROCEEDS" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
Notwithstanding the foregoing, Collateral shall exclude any
intellectual property right, contracts and agreements to the extent, and only
to the extent, that such intellectual property right, contract or agreement
contains a provision enforceable at law and in equity that would be breached by
(or would result in the termination of such intellectual property right,
contract, or agreement upon) the grant of the security interest created herein
pursuant to the terms of this Agreement; provided, however, that if and when
any prohibition on the assignment, pledge or grant of a security interest in
such intellectual property right, contract or agreement is removed, the Secured
Party will be deemed to have been granted a security interest in such
intellectual property right, contract or agreement as of the date hereof, and
the Collateral will be deemed to include such intellectual property right,
contract or agreement.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of
all obligations and liabilities of every nature of Grantor now or hereafter
existing under or arising out of or in connection with the Credit Agreement and
the other Loan Documents and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Grantor, would accrue on
such obligations), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the extent all or
any part of such payment is avoided or recovered directly or indirectly from
Secured Party or any Lender as a preference, fraudulent transfer or otherwise
(all such obligations
XIX-4
<PAGE> 258
and liabilities being the "UNDERLYING DEBT"), and all obligations of every
nature of Grantor now or hereafter existing under this Agreement (all such
obligations of Grantor, together with the Underlying Debt, being the "SECURED
OBLIGATIONS").
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein
to the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor
represents and warrants as follows:
(a) Description of Collateral. A true and complete list
of all Trademarks, Registrations and Trademark Rights owned, held (whether
pursuant to a license or otherwise) or used by Grantor, in whole or in part, as
of the date of this Agreement is set forth in Schedule A annexed hereto. Each
Trademark, Registration or Trademark Right designated on Schedule A annexed
hereto as a Material Trademark Property, and each other Trademark, Registration
or Trademark Right hereafter arising or otherwise owned, held or used by
Grantor that is subsequently so designated, is referred to herein as a
"MATERIAL TRADEMARK PROPERTY".
(b) Validity and Enforceability of Collateral. Each
Material Trademark Property is valid, subsisting and enforceable. As of the
Closing Date, Grantor is not aware of any pending or threatened claim by any
third party that any Material Trademark Property is invalid or unenforceable or
that the use of any Material Trademark Property violates the rights of any
third person or of any basis for any such claim, and there is no such pending
or threatened claim, whether arising prior to or after the Closing Date, that
could reasonably be expected to have a Material Adverse Effect.
(c) Ownership of Collateral. Except for the interests
disclosed in Schedule B annexed hereto and the security interest assigned and
created by this Agreement, Grantor is the sole legal and beneficial owner of
the entire right, title and interest in and to each Material Trademark
Property, free and clear of any Lien other than Permitted Encumbrances and the
interests disclosed in Schedule B annexed hereto and Liens of mechanics,
materialmen, attorneys and other similar liens imposed by law in the ordinary
course of business in connection with the establishment, creation or
application for Registration of any Trademarks, Registrations or Trademark
Rights for sums not yet delinquent or being contested in good faith (such Liens
being referred to herein as "PERMITTED TRADEMARK LIENS"). Except with respect
to Permitted Encumbrances and the
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interests disclosed in Schedule B annexed hereto and such as may have been
filed in favor of Secured Party relating to this Agreement, no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office, including
the United States Patent and Trademark Office.
(d) Office Locations; Other Names. The chief place of
business, the chief executive office and the office where Grantor keeps its
records regarding the Collateral is, and has been for the four month period
preceding the date hereof, located at 1901 East Loop 820 South, Forth Worth,
Texas 76112. Grantor has not in the past done, and does not now do, business
under any other name (including any trade-name or fictitious business name).
(e) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body, except for UCC-1 filings, filings with the United
States Patent and Trademark Office or any state trademark office as identified
by Grantor to Secured Party is required for either (i) the assignment and grant
by Grantor of the security interest created hereby, (ii) the execution,
delivery or performance of this Agreement by Grantor, or (iii) the perfection
or exercise by Secured Party of its rights and remedies hereunder (except as
may have been taken by or at the direction of Grantor).
(f) Perfection. This Agreement, together with the filing
of a financing statement describing the Collateral with the Secretary of State
of the State of Texas and the recording of this Agreement with the United
States Patent and Trademark Office, assigns and creates a valid, perfected and,
except for the interests disclosed in Schedule B annexed hereto, first priority
security interest in the Collateral (subject only to Permitted Trademark
Liens), securing the payment of the Secured Obligations, and all filings and
other actions necessary or desirable to perfect and protect such security
interest have been duly made or taken.
(g) Other Information. All information heretofore,
herein or hereafter supplied to Secured Party by or on behalf of Grantor with
respect to the Collateral is accurate and complete in all respects.
SECTION 5. FURTHER ASSURANCES; NEW TRADEMARKS, REGISTRATIONS
AND TRADEMARK RIGHTS; CERTAIN INSPECTION RIGHTS.
(a) Grantor agrees that from time to time, at the expense
of Grantor, Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest assigned or granted or purported to be assigned or granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, Grantor will: (i) at the request of Secured Party, mark
conspicuously each of its records pertaining to the Collateral with a legend,
in form and substance satisfactory to Secured Party, indicating that such
Collateral is subject to the security interest granted hereby, (ii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted
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hereby, (iii) use commercially reasonable efforts to obtain any necessary
consents of third parties to the assignment and perfection of a security
interest to Secured Party with respect to any Collateral, (iv) at any
reasonable time, upon request by Secured Party, exhibit the Collateral to and
allow inspection of the Collateral by Secured Party, or persons designated by
Secured Party, and (v) at Secured Party's request, appear in and defend any
action or proceeding that may affect Grantor's title to or Secured Party's
security interest in all or any part of the Collateral.
(b) Grantor hereby authorizes Secured Party to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of Grantor. Grantor
agrees that a carbon, photographic or other reproduction of this Agreement or
of a financing statement signed by Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Grantor hereby authorizes Secured Party to modify
this Agreement without obtaining Grantor's approval of or signature to such
modification by amending Schedule A annexed hereto to include reference to any
right, title or interest in any existing Trademark, Registration or Trademark
Right or any Trademark, Registration or Trademark Right acquired or developed
by Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Trademark, Registration or Trademark Right in which
Grantor no longer has or claims any right, title or interest.
(d) Grantor will furnish to Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(e) If Grantor shall obtain rights to any new Trademarks,
Registrations or Trademark Rights, the provisions of this Agreement shall
automatically apply thereto. Grantor shall promptly notify Secured Party in
writing of any rights to any new Trademarks or Trademark Rights acquired by
Grantor after the date hereof and of any Registrations issued or applications
for Registration made after the date hereof, which notice shall state whether
such Trademark, Registration or Trademark Right constitutes a Material
Trademark Property. Concurrently with the filing of an application for
Registration for any Trademark, Grantor shall execute, deliver and record in
all places where this Agreement is recorded an appropriate Trademark Security
Agreement, substantially in the form hereof, with appropriate insertions, or an
amendment to this Agreement, in form and substance satisfactory to Secured
Party, pursuant to which Grantor shall assign and grant a security interest to
the extent of its interest in such Registration as provided herein to Secured
Party unless so doing would, in the reasonable judgment of Grantor, after due
inquiry, result in the grant of a Registration in the name of Secured Party, in
which event Grantor shall give written notice to Secured
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Party as soon as reasonably practicable and the filing shall instead be
undertaken as soon as practicable but in no case later than immediately
following the grant of the Registration.
(f) Grantor hereby grants to Secured Party and its
employees, representatives and agents the right to visit Grantor's and any of
its Affiliate's or subcontractor's plants, facilities and other places of
business that are utilized in connection with the manufacture, production,
inspection, storage or sale of products and services sold or delivered under
any of the Trademarks, Registrations or Trademark Rights (or which were so
utilized during the prior six month period), and to inspect the quality control
and all other records relating thereto upon reasonable notice to Grantor and as
often as may be reasonably requested.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral;
(b) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of
any change in Grantor's chief place of business or chief executive office or
the office where Grantor keeps its records regarding the Collateral;
(d) to the extent required under the Credit Agreement,
pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including claims
for labor, materials and supplies) against, the Collateral, except to the
extent the validity thereof is being contested in good faith; provided that
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under
any judgement, writ or warrant of attachment entered or filed against Grantor
or any of the Collateral as a result of the failure to make such payment;
(e) not sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral except as permitted by the Credit
Agreement;
(f) except for the interests disclosed in Schedule B
annexed hereto, Permitted Trademark Liens, Permitted Encumbrances and the
security interest assigned and created by this Agreement, not create or suffer
to exist any Lien upon or with respect to any of the Collateral to secure the
indebtedness or other obligations of any Person;
(g) diligently keep reasonable records respecting the
Collateral and at all times keep at least one complete set of its records
concerning substantially all of the
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Trademarks, Registrations and Trademark Rights at its chief executive office or
principal place of business;
(h) not permit the inclusion in any contract to which it
becomes a party of any provision that could or might in any way conflict with
this Agreement or impair or prevent the assignment and creation of a security
interest in Grantor's rights and interests in any property included within the
definitions of any Trademarks, Registrations, Trademark Rights and Associated
Goodwill;
(i) take all reasonable steps necessary to protect the
secrecy of all trade secrets relating to the products and services sold or
delivered under or in connection with the Trademarks and Trademark Rights,
including without limitation entering into confidentiality agreements with
employees and labeling and restricting access to secret information and
documents;
(j) use proper statutory notice in connection with its
use of each Material Trademark Property to the extent reasonably necessary for
the protection of such Material Trademark Property;
(k) use consistent standards of high quality (which may
be consistent with Grantor's past practices) in the manufacture, sale and
delivery of products and services sold or delivered under or in connection with
the Trademarks, Registrations and Trademark Rights, including, to the extent
applicable, in the operation and maintenance of its merchandising operations;
and
(l) upon any officer of Grantor obtaining knowledge
thereof, promptly notify Secured Party in writing of any event that may
materially and adversely affect the value of the Collateral or any portion
thereof, the ability of Grantor or Secured Party to dispose of the Collateral
or any portion thereof, or the rights and remedies of Secured Party in relation
thereto, including without limitation the levy of any legal process against the
Collateral or any portion thereof.
SECTION 7. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL.
Except as otherwise provided in this Section 7, Grantor shall continue to
collect, at its own expense, all amounts due or to become due to Grantor in
respect of the Collateral or any portion thereof. In connection with such
collections, Grantor may take (and, at Secured Party's direction, shall take)
such action as Grantor or Secured Party may deem necessary or advisable to
enforce collection of such amounts; provided, however, that Secured Party shall
have the right at any time, upon the occurrence and during the continuation of
an Event of Default or a Potential Event of Default and upon written notice to
Grantor of its intention to do so, to notify the obligors with respect to any
such amounts of the existence of the security interest assigned and created
hereby, and to direct such obligors to make payment of all such amounts
directly to Secured Party, and, upon such notification and at the expense of
Grantor, to enforce collection of any such amounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as Grantor might have done.
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After receipt by Grantor of the notice from Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by Grantor in respect of amounts due to
Grantor in respect of the Collateral or any portion thereof shall be received
in trust for the benefit of Secured Party hereunder, shall be segregated from
other funds of Grantor and shall be forthwith paid over or delivered to Secured
Party in the same form as so received (with any necessary endorsement) to be
held as cash Collateral and applied as provided by Section 14, and (ii) Grantor
shall not adjust, settle or compromise the amount or payment of any such amount
or release wholly or partly any obligor with respect thereto or allow any
credit or discount thereon.
SECTION 8. TRADEMARK APPLICATIONS AND LITIGATION.
(a) Grantor shall have the duty diligently, through
counsel reasonably acceptable to Secured Party, to prosecute any trademark
application relating to any Material Trademark Property that is pending as of
the date of this Agreement, to make federal application on any existing or
future registerable but unregistered Material Trademark Property (whenever it
is commercially reasonable in the reasonable judgment of Grantor to do so), and
to file and prosecute opposition and cancellation proceedings, renew
Registrations and do any and all acts which are necessary or desirable to
preserve and maintain all rights in all Material Trademark Properties. Any
expenses incurred in connection therewith shall be borne solely by Grantor.
Grantor shall not abandon any Material Trademark Property.
(b) Except as provided in Section 8(d), Grantor shall
have the right to commence and prosecute in its own name, as real party in
interest, for its own benefit and at its own expense, such suits, proceedings
or other actions for infringement, unfair competition, dilution or other damage
as are in its reasonable business judgment necessary to protect the Collateral.
Secured Party shall provide, at Grantor's expense, all reasonable and necessary
cooperation in connection with any such suit, proceeding or action including,
without limitation, joining as a necessary party.
(c) Grantor shall promptly, following its becoming aware
thereof, notify Secured Party of the institution of, or of any adverse
determination in, any proceeding (whether in the United States Patent and
Trademark Office or any federal, state, local or foreign court) described in
Section 8(a) or 8(b) or regarding Grantor's claim of ownership in or right to
use any of the Trademarks, Registrations or Trademark Rights, its right to
register the same, or its right to keep and maintain such Registration.
Grantor shall provide to Secured Party any information with respect thereto
requested by Secured Party.
(d) Anything contained herein to the contrary
notwithstanding, upon the occurrence and during the continuation of an Event of
Default, Secured Party shall have the right (but not the obligation) to bring
suit, in the name of Grantor, Secured Party or otherwise, to enforce any
Trademark, Registration, Trademark Right, Associated Goodwill and any license
thereunder, in which event Grantor shall, at the request of Secured Party, do
any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and Grantor shall promptly, upon demand,
reimburse and indemnify
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Secured Party as provided in Section 15 in connection with the exercise of its
rights under this Section 8. To the extent that Secured Party shall elect not
to bring suit to enforce any Trademark, Registration, Trademark Right,
Associated Goodwill or any license thereunder as provided in this Section 8(d),
Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement of any of the Trademarks,
Registrations, Trademark Rights or Associated Goodwill by others and for that
purpose agrees to diligently maintain any action, suit or proceeding against
any Person so infringing necessary to prevent such infringement.
SECTION 9. NON-DISTURBANCE AGREEMENTS, ETC. If and to the
extent that Grantor is permitted to license the Collateral, Secured Party shall
enter into a non-disturbance agreement or other similar arrangement, at
Grantor's request and expense, with Grantor and any licensee of any Collateral
permitted hereunder in form and substance satisfactory to Secured Party
pursuant to which (a) Secured Party shall agree not to disturb or interfere
with such licensee's rights under its license agreement with Grantor so long as
such licensee is not in default thereunder and (b) such licensee shall
acknowledge and agree that the Collateral licensed to it is subject to the
security interest assigned and created in favor of Secured Party and the other
terms of this Agreement.
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Grantor hereby irrevocably appoints Secured Party as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of
this Agreement, including without limitation:
(a) to endorse Grantor's name on all applications,
documents, papers and instruments necessary for Secured Party in the use or
maintenance of the Collateral;
(b) during the continuation of any Event of Default to
ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above;
(d) during the continuance of any Event of Default to
file any claims or take any action or institute any proceedings that Secured
Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon
or threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in
its sole discretion, any such payments made by Secured
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Party to become obligations of Grantor to Secured Party, due and payable
immediately without demand; and
(f) upon the occurrence and during the continuation of an
Event of Default, (i) to execute and deliver any of the assignments or
documents requested by Secured Party pursuant to Section 13(b), (ii) to grant
or issue an exclusive or non-exclusive license to the Collateral or any portion
thereof to any Person, and (iii) otherwise generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Secured Party were the absolute owner thereof
for all purposes, and to do, at Secured Party's option and Grantor's expense,
at any time or from time to time, all acts and things that Secured Party deems
necessary to protect, preserve or realize upon the Collateral and Secured
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as Grantor might do.
SECTION 11. SECURED PARTY MAY PERFORM. If Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Grantor under Section 15.
SECTION 12. STANDARD OF CARE. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property.
SECTION 13. REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) Secured Party may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Collateral), and also may (i) require Grantor to, and Grantor hereby agrees
that it will at its expense and upon request of Secured Party forthwith,
assemble all or part of the Collateral as directed by Secured Party and make it
available to Secured Party at a place to be designated by Secured Party that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store the Collateral
or otherwise prepare the Collateral for disposition in any manner to the extent
Secured Party deems appropriate, (iv) take possession of Grantor's premises or
place custodians in exclusive control thereof, remain on such premises and use
the same for the purpose of taking any
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actions described in the preceding clause (iii) and collecting any Secured
Obligation, (v) exercise any and all rights and remedies of Grantor under or in
connection with the contracts related to the Collateral or otherwise in respect
of the Collateral, including without limitation any and all rights of Grantor
to demand or otherwise require payment of any amount under, or performance of
any provision of, such contracts, and (vi) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Secured Party may deem commercially
reasonable. Secured Party or any Lender may be the purchaser of any or all of
the Collateral at any such sale and Secured Party, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by Secured Party at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Grantor, and Grantor hereby waives (to the extent permitted by applicable law)
all rights of redemption, stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to Grantor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Grantor hereby waives any claims against Secured Party arising by reason of the
fact that the price at which any Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if Secured Party accepts the first offer received and does not offer
such Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
(b) Upon written demand from Secured Party, Grantor shall
execute and deliver to Secured Party an assignment or assignments of the
Trademarks, Registrations, Trademark Rights and the Associated Goodwill and
such other documents as are requested by Secured Party. Grantor agrees that
such an assignment and/or recording shall be applied to reduce the Secured
Obligations outstanding only to the extent that Secured Party (or any Lender)
receives cash proceeds in respect of the sale of, or other realization upon,
the Collateral.
(c) Within five Business Days after written notice from
Secured Party, Grantor shall make available to Secured Party, to the extent
within Grantor's power and authority, such personnel in Grantor's employ on the
date of such Event of Default as
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Secured Party may reasonably designate, by name, title or job responsibility,
to permit Grantor to continue, directly or indirectly, to produce, advertise
and sell the products and services sold or delivered by Grantor under or in
connection with the Trademarks, Registrations and Trademark Rights, such
persons to be available to perform their prior functions on Secured Party's
behalf and to be compensated by Secured Party at Grantor's expense on a per
diem, pro-rata basis consistent with the salary and benefit structure
applicable to each as of the date of such Event of Default.
SECTION 14. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Secured Party, be held by
Secured Party as Collateral for, and/or then, or at any other time thereafter,
applied in full or in part by Secured Party against, the Secured Obligations in
the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection
with the exercise of any right or remedy hereunder, all in accordance
with Section 15;
SECOND: To the payment of all other Secured Obligations in
such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 15. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
from Secured Party's or such Lender's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any
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of the rights of Secured Party hereunder, or (iv) the failure by Grantor to
perform or observe any of the provisions hereof.
SECTION 16. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall assign and create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its permitted successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to the
provisions of subsection 10.1 of the Credit Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest assigned and granted hereby shall terminate and all rights to the
Collateral shall revert to Grantor. Upon any such termination Secured Party
will, at Grantor's expense, execute and deliver to Grantor such documents as
Grantor shall reasonably request to evidence such termination.
SECTION 17. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such
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retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Agent's
resignation or removal hereunder as Secured Party, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Secured Party hereunder.
SECTION 18. AMENDMENTS; ETC. Subject to Section 5(c), no
amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by Grantor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Grantor. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
SECTION 19. NOTICES. Any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage
prepaid and properly addressed. For the purposes hereof, the address of each
party hereto shall be as set forth under such party's name on the signature
pages hereof or, as to either party, such other address as shall be designated
by such party in a written notice delivered to the other party hereto.
SECTION 20. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 21. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 22. HEADINGS. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 23. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
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OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, GRANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO GRANTOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 19;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER GRANTOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 24
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
SECTION 25. WAIVER OF JURY TRIAL. GRANTOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
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TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Grantor and Secured Party each acknowledge that this waiver is a material
inducement for Grantor and Secured Party to enter into a business relationship,
that Grantor and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 25 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 26. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT, INC.
By:
-----------------------------------
Title:
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas 76112
Attention: Chief Executive Officer
BT COMMERCIAL CORPORATION
By:
-----------------------------------
Title:
Notice Address: BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
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<PAGE> 273
SCHEDULE A
TO
COMPANY TRADEMARK COLLATERAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
UNITED STATES
REGISTERED TRADEMARK REGISTRATION REGISTRATION
OWNER DESCRIPTION NUMBER DATE
- ---------- ------------- ------------ ------------
<S> <C> <C> <C>
</TABLE>
A-1
<PAGE> 274
SCHEDULE B
TO
COMPANY TRADEMARK COLLATERAL SECURITY AGREEMENT
B-1
<PAGE> 275
EXHIBIT XX
[FORM OF COMPANY PATENT SECURITY AGREEMENT]
COMPANY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
This COMPANY PATENT COLLATERAL ASSIGNMENT AND SECURITY
AGREEMENT (this "AGREEMENT") is dated as of November 12, 1997 and entered into
by and between FWT, INC., a Texas corporation ("ASSIGNOR"), and BT COMMERCIAL
CORPORATION, as agent for and representative of (in such capacity herein called
"ASSIGNEE") the financial institutions ("LENDERS") party to the Credit
Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Assignee and Lenders have entered into a Credit
Agreement dated as of November 12, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Assignor, pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Assignor.
B. Assignor has and may in the future have rights, title
and interests in and to various Patents and other related Collateral (as such
terms are hereinafter defined).
C. Assignor is willing to grant to Assignee (i) a
security interest in all such Collateral for the purpose of securing the
complete and timely satisfaction of all of the Secured Obligations (as
hereinafter defined) and (ii) effective upon the occurrence and during the
continuation of an Event of Default, an assignment of Assignor's entire right,
title and interest in and to all such Collateral.
D. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Assignor shall have
granted the security interests and made the conditional assignment and
undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Assignor hereby agrees with Assignee
as follows:
SECTION 1. GRANT OF SECURITY. Assignor hereby grants to
Assignee a security interest in all of Assignor's right, title and interest in
and to the following, in
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each case whether now or hereafter existing or in which Assignor now has or
hereafter acquires an interest and wherever the same may be located (the
"COLLATERAL"):
(a) all patents and patent applications and rights and
interests in patents and patent applications under any domestic law that are
presently, or in the future may be, owned by Assignor and all patents and
patent applications and rights and interests in patents and patent applications
under any domestic law that are presently, or in the future may be, held or
used by Assignor in whole or in part (including, without limitation, the
patents and patent applications listed in Schedule A annexed hereto, as the
same may be amended pursuant hereto from time to time), all rights (but not
obligations) corresponding thereto (including without limitation the right (but
not the obligation) to sue for past, present and future infringements in the
name of Assignor or in the name of Assignee or Lenders), and all re-issues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof (all of the foregoing being collectively referred to as the "PATENTS");
it being understood that the rights and interest assigned hereby shall include,
without limitation, all rights and interests pursuant to licensing or other
contracts in favor of Assignor pertaining to patent applications and patents
presently or in the future owned or used by third parties but, in the case of
third parties which are not Affiliates of Assignor, only to the extent
permitted by such licensing or other contracts and, if not so permitted, only
with the consent of such third parties;
(b) All general intangibles relating to the Patents;
(c) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon; and
(d) all proceeds, products, rents and profits (including
without limitation license royalties and proceeds of infringement suits) of or
from any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Assignee is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing Collateral.
For purposes of this Agreement, the term "PROCEEDS" includes whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.
Notwithstanding the foregoing, Collateral shall exclude any
intellectual property right, contracts and agreements to the extent, and only
to the extent, that such intellectual property right, contract or agreement
contains a provision enforceable at law and in equity that would be breached by
(or would result in the termination of such intellectual property contract or
agreement upon) the grant of the security interest created herein pursuant to
the terms of this Agreement; provided, however, that if and when any
prohibition on the assignment, pledge or grant of a security interest in such
intellectual property right, contract or agreement is removed, the Secured
Party will be deemed to
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have been granted a security interest in such intellectual property right,
contract or agreement as of the date hereof, and the Collateral will be deemed
to include such intellectual property right, contract or agreement.
SECTION 2. CONDITIONAL ASSIGNMENT. In addition to, and not
by way of limitation of, the granting of a security interest in the Collateral
pursuant to Section 1, Assignor hereby, effective only upon the occurrence and
during the continuance of an Event of Default and upon written notice from
Assignee and subject to the terms of this Agreement, grants, sells, conveys,
transfers, assigns and sets over to Assignee, for its benefit and the ratable
benefit of Lenders, all of Assignor's right, title and interest in and to the
Collateral, including without limitation Assignor's right, title and interest
in and to the Patents identified in Schedule A annexed hereto.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a), of
all obligations and liabilities of every nature of Assignor now or hereafter
existing under or arising out of or in connection with the Credit Agreement and
the other Loan Documents and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Assignor, would accrue on
such obligations), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the extent all or
any part of such payment is avoided or recovered directly or indirectly from
Assignee or any Lender as a preference, fraudulent transfer or otherwise (all
such obligations and liabilities being the "UNDERLYING DEBT"), and all
obligations of every nature of Assignor now or hereafter existing under this
Agreement (all such obligations of Assignor, together with the Underlying Debt,
being the "SECURED OBLIGATIONS").
SECTION 4. ASSIGNOR REMAINS LIABLE. Anything contained
herein to the contrary notwithstanding, (a) Assignor shall remain liable under
any contracts and agreements included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by
Assignee of any of its rights hereunder shall not release Assignor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) Assignee shall not have any obligation or liability under
any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Assignee be obligated to perform any of the obligations or
duties of Assignor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
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SECTION 5. REPRESENTATIONS AND WARRANTIES. Assignor
represents and warrants as follows:
(a) Description of Collateral. A true and complete list
of all Patents owned, held (whether pursuant to a license or otherwise) or used
by Assignor, in whole or in part, as of the date of this Agreement is set forth
in Schedule A annexed hereto.
(b) Validity and Enforceability of Collateral. Each of
the Patents that is material to Assignor's business is valid, subsisting and
enforceable and Assignor is not aware of any pending or, to Assignor's
knowledge, threatened claim by any third party that any such material Patent is
invalid or unenforceable or that the use of any such material Patents violates
the rights of any third person or of any basis for any such claim.
(c) Ownership of Collateral. Except for any interests
disclosed in Schedule B annexed hereto, if any, Permitted Encumbrances and the
security interest and conditional assignment created by this Agreement,
Assignor owns the Collateral free and clear of any Lien. Except with respect
to any interests disclosed in Schedule B annexed hereto and such as may have
been filed in favor of Assignee relating to this Agreement, (i) no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the Collateral is on file in the
United States Patent and Trademark Office.
SECTION 6. NEW PATENTS AND PATENT APPLICATIONS.
(a) Assignor hereby authorizes Assignee to modify this
Agreement without obtaining Assignor's approval of or signature to such
modification by amending Schedule A annexed hereto to include reference to any
right, title or interest in any existing Patent or any Patent acquired or
developed by Assignor after the execution hereof or to delete any reference to
any right, title or interest in any Patent in which Assignor no longer has or
claims any right, title or interest.
(b) If Assignor shall hereafter obtain rights to any
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 Patent or any improvement on any
Patent, the provisions of this Agreement shall automatically apply thereto.
Assignor shall promptly notify Assignee in writing of any Patents acquired by
Assignor after the date hereof. Concurrently with the filing of an application
for any Patent, Assignor shall execute, deliver and record in all places where
this Agreement is recorded an appropriate Patent Collateral Assignment and
Security Agreement, substantially in the form hereof, with appropriate
insertions, or an amendment to this Agreement, in form and substance
satisfactory to Assignee, pursuant to which Assignor shall grant a security
interest and conditional assignment to the extent of its interest in such
Patent as provided herein to Assignee unless so doing would, in the reasonable
judgment of Assignor, after due inquiry, result in the grant of a patent in the
name of
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Assignee, in which event Assignor shall give written notice to Assignee as soon
as reasonably practicable and the filing shall instead be undertaken as soon as
practicable but in no case later than immediately following the grant of the
Patent.
SECTION 7. CERTAIN COVENANTS OF ASSIGNOR. Assignor shall:
(a) diligently keep reasonable records respecting the
Collateral and at all times keep at least one complete set of its records
concerning substantially all of the Patents at its chief executive office or
principal place of business;
(b) use commercially reasonable efforts not to permit the
inclusion in any contract to which it becomes a party after the date hereof of
any provision that could or might in any way impair or prevent the creation of
a security interest in, or the assignment of, Assignor's rights and interests
in any property included within the definition of any Patents acquired under
such contracts;
(c) take all steps reasonably necessary to protect the
secrecy of all trade secrets relating to the products and services sold or
delivered under or in connection with the Patents, including without limitation
entering into confidentiality agreements with employees and labeling and
restricting access to secret information and documents;
(d) use proper statutory notice in connection with its
use of each of the Patents; and
(e) use consistent standards of high quality (which may
be consistent with Assignor's past practices) in the manufacture, sale and
delivery of products and services sold or delivered under or in connection with
the Patents, including, to the extent applicable, in the operation and
maintenance of its retail stores and other merchandising operations.
SECTION 8. CERTAIN INSPECTION RIGHTS. Assignor hereby grants
to Assignee and its employees, representatives and agents the right to visit,
during Assignor's normal business hours, Assignor's plants, facilities and
other places of business that are utilized in connection with the manufacture,
production, inspection, storage or sale of products and services sold or
delivered under any of the Patents (or which were so utilized during the prior
six month period), and to inspect the quality control and all other records
relating thereto upon reasonable notice to Assignor and as often as may be
reasonably requested (but in no event more than two (2) times in any calendar
year), provided, however, that Assignee shall have the right to an unlimited
number of visits during an Event of Default.
SECTION 9. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL.
Except as otherwise provided in this Section 9, Assignor shall continue to
collect, at its own expense, all amounts due or to become due to Assignor in
respect of the Collateral or any portion thereof. In connection with such
collections, Assignor may take (and, at
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Assignee's direction, shall take) such action as Assignor or Assignee may deem
necessary or advisable to enforce collection of such amounts; provided,
however, that Assignee shall have the right at any time, upon the occurrence
and during the continuation of an Event of Default and upon written notice to
Assignor of its intention to do so, to notify the obligors with respect to any
such amounts of the existence of the security interest created, and the
conditional assignment effected hereby, and to direct such obligors to make
payment of all such amounts directly to Assignee, and, upon such notification
and at the expense of Assignor, to enforce collection of any such amounts and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as Assignor might have done. After receipt by
Assignor of the notice from Assignee referred to in the proviso to the
preceding sentence, (i) all amounts and proceeds (including checks and other
instruments) received by Assignor in respect of amounts due to Assignor in
respect of the Collateral or any portion thereof shall be received in trust for
the benefit of Assignee hereunder, shall be segregated from other funds of
Assignor and shall be forthwith paid over or delivered to Assignee in the same
form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 17, and (ii) Assignor shall not
adjust, settle or compromise the amount or payment of any such amount or
release wholly or partly any obligor with respect thereto or allow any credit
or discount thereon.
SECTION 10. PATENT APPLICATIONS AND LITIGATION.
(a) Assignor shall have the duty diligently (subject to
Assignor's reasonable business judgment), through counsel reasonably acceptable
to Assignee, to prosecute any patent application relating to any of the Patents
specifically identified in Schedule A annexed hereto that is pending as of the
date of this Agreement, to make application on any existing or future
unpatented but patentable invention that is material to Assignor, and to do any
and all acts which are necessary or desirable to preserve and maintain all
rights in all Patents. Any expenses incurred in connection therewith shall be
borne solely by Assignor. Subject to the foregoing and Assignor's reasonable
judgment, Assignor shall not abandon any right to file a patent application or
any pending patent application or any Patent without the prior written consent
of Assignee.
(b) Except as provided in Section 10(d) and notwithstanding
Section 2, Assignor shall have the right to commence and prosecute in its own
name, as real party in interest, for its own benefit and at its own expense,
such suits, proceedings or other actions for infringement, unfair competition,
or other damage or reexamination or reissue proceedings as are in its
reasonable business judgment necessary to protect the Collateral. Assignee
shall provide, at Assignor's expense, all reasonable and necessary cooperation
in connection with any such suit, proceeding or action including, without
limitation, joining as a necessary party.
(c) Assignor shall promptly, following its becoming aware
thereof, notify Assignee of the institution of, or of any adverse determination
in, any proceeding (whether in the United States Patent and Trademark Office or
any federal, state, local or
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foreign court) described in Section 10(a) or 10(b) or regarding Assignor's
interests in any material Collateral. Assignor shall provide to Assignee any
information with respect thereto reasonably requested by Assignee.
(d) Anything contained herein to the contrary
notwithstanding, upon the occurrence and during the continuation of an Event of
Default, Assignee shall have the right (but not the obligation) to bring suit,
in the name of Assignor, Assignee or otherwise, to enforce any Patent and any
license thereunder, in which event Assignor shall, at the request of Assignee,
do any and all lawful acts and execute any and all documents required by
Assignee in aid of such enforcement and Assignor shall promptly, upon demand,
reimburse and indemnify Assignee as provided in Section 18 in connection with
the exercise of its rights under this Section 10. To the extent that Assignee
elects not to bring suit to enforce any Patent or any license thereunder as
provided in this Section 10(d), Assignor agrees to use all reasonable measures,
whether by action, suit, proceeding or otherwise, to prevent the infringement
of any of the Patents by others and for that purpose agrees to diligently
maintain any action, suit or proceeding against any Person so infringing
necessary to prevent such infringement.
SECTION 11. NON-DISTURBANCE AGREEMENTS, ETC. If and to the
extent that Assignor is permitted to license the Collateral, Assignee shall
enter into a non-disturbance agreement or other similar arrangement, at
Assignor's request and expense, with Assignor and any licensee of any
Collateral permitted hereunder in form and substance satisfactory to Assignee
pursuant to which (a) Assignee shall agree not to disturb or interfere with
such licensee's rights under its license agreement with Assignor so long as
such licensee is not in default thereunder and (b) such licensee shall
acknowledge and agree that the Collateral licensed to it is subject to the
security interest and conditional assignment created in favor of Assignee and
the other terms of this Agreement.
SECTION 12. REASSIGNMENT OF COLLATERAL. If (a) an Event of
Default shall have occurred and, by reason of cure, waiver, modification,
amendment or otherwise, no longer be continuing, (b) no other Event of Default
shall have occurred and be continuing, (c) an assignment to Assignee of any
rights, title and interests in and to the Collateral shall have been previously
made and shall have become absolute and effective pursuant to Section 2,
Section 13(f) or Section 16(b), and (d) the Secured Obligations shall not have
become immediately due and payable, upon the written request of Assignor and
the written consent of Assignee; then Assignee shall promptly execute and
deliver to Assignor such assignments as may be necessary to reassign to
Assignor any such rights, title and interests as may have been assigned to
Assignee as aforesaid, subject to any disposition thereof that may have been
made by Assignee pursuant hereto; provided that, after giving effect to such
reassignment, Assignee's security interest and conditional assignment granted
pursuant to Section 1 and Section 2, as well as all other rights and remedies
of Assignee granted hereunder, shall continue to be in full force and effect;
and provided, further that the rights, title and interests so reassigned shall
be free and clear of
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all Liens other than Liens (if any) encumbering such rights, title and interest
at the time of their assignment to Assignee and Permitted Encumbrances.
SECTION 13. ASSIGNEE APPOINTED ATTORNEY-IN-FACT. Assignor
hereby irrevocably appoints Assignee as Assignor's attorney-in-fact, with full
authority in the place and stead of Assignor and in the name of Assignor,
Assignee or otherwise, from time to time in Assignee's discretion to take any
action and to execute any instrument that Assignee may deem necessary or
advisable, consistent with the terms of this Agreement, to accomplish the
purposes of this Agreement, including without limitation:
(a) to endorse Assignor's name on all applications,
documents, papers and instruments necessary for Assignee in the use or
maintenance of the Collateral;
(b) during the continuance of an Event of Default, to ask
for, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above;
(d) during the continuance of an Event of Default, to
file any claims or take any action or institute any proceedings that Assignee
may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Assignee with respect to any of the
Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon
or threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Assignee in its
sole discretion, any such payments made by Assignee to become obligations of
Assignor to Assignee, due and payable immediately without demand; and
(f) upon the occurrence and during the continuation of an
Event of Default, (i) to execute and deliver any of the assignments or
documents requested by Assignee pursuant to Section 16(b), (ii) to grant or
issue an exclusive or non-exclusive license to the Collateral or any portion
thereof to any Person, and (iii) otherwise generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Assignee were the absolute owner thereof for
all purposes, and to do, at Assignee's option and Assignor's expense, at any
time or from time to time, all acts and things that Assignee deems necessary to
protect, preserve or realize upon the Collateral and Assignee's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as Assignor might do.
SECTION 14. ASSIGNEE MAY PERFORM. If Assignor fails to
perform any agreement contained herein, Assignee may itself perform, or cause
performance of, such
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agreement, and the expenses of Assignee incurred in connection therewith shall
be payable by Assignor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on
Assignee hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, Assignee shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Assignee shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which Assignee accords its own
property.
SECTION 16. REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) Assignee may exercise in respect of the Collateral,
in addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "CODE") (whether or not the Code applies to the affected Collateral), and
also may (i) require Assignor to, and Assignor hereby agrees that it will at
its expense and upon request of Assignee forthwith, assemble all or part of the
Collateral as directed by Assignee and make it available to Assignee at a place
to be designated by Assignee that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Assignee deems
appropriate, (iv) take possession of Assignor's premises or place custodians in
exclusive control thereof, remain on such premises and use the same for the
purpose of taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation, (v) exercise any and all rights and remedies
of Assignor under or in connection with the contracts related to the Collateral
or otherwise in respect of the Collateral, including without limitation any and
all rights of Assignor to demand or otherwise require payment of any amount
under, or performance of any provision of, such contracts, and (vi) without
notice except as specified below, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of Assignee's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as Assignee may deem
commercially reasonable. Assignee or any Lender may be the purchaser of any or
all of the Collateral at any such sale and Assignee, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by Assignee at such sale. Each
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purchaser at any such sale shall hold the property sold absolutely free from
any claim or right on the part of Assignor, and Assignor hereby waives (to the
extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Assignor agrees that, to
the extent notice of sale shall be required by law, at least ten days' notice
to Assignor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.
Assignee shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Assignee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned. Assignor hereby waives any claims against Assignee
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Assignee accepts the first offer received
and does not offer such Collateral to more than one offeree. If the proceeds
of any sale or other disposition of the Collateral are insufficient to pay all
the Secured Obligations, Assignor shall be liable for the deficiency and the
fees of any attorneys employed by Assignee to collect such deficiency.
(b) Upon written demand from Assignee, Assignor shall
execute and deliver to Assignee an assignment or assignments of the Patents and
such other documents as are necessary or appropriate to carry out the intent
and purposes of this Agreement; provided that the failure of Assignor to comply
with such demand will not impair or affect the validity of the conditional
assignment effected by Section 2 or its effectiveness upon notice by Assignee
as specified in Section 2. Assignor agrees that such an assignment (including
without limitation the conditional assignment effected by Section 2) and/or
recording shall be applied to reduce the Secured Obligations outstanding only
to the extent that Assignee (or any Lender) receives cash proceeds in respect
of the sale of, or other realization upon, the Collateral.
SECTION 17. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Assignee in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Assignee, be held by Assignee
as Collateral for, and/or then, or at any other time thereafter, applied in
full or in part by Assignee against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Assignee and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Assignee in connection
therewith, and all amounts for which Assignee is entitled to
indemnification hereunder and all advances made by Assignee hereunder
for the account of Assignor, and to the payment of all costs and
expenses paid or incurred by Assignee in connection with the exercise
of any right or remedy hereunder, all in accordance with Section 18;
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SECOND: To the payment of all other Secured Obligations in
such order as Assignee shall elect; and
THIRD: To the payment to or upon the order of Assignor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 18. INDEMNITY AND EXPENSES.
(a) Assignor agrees to indemnify Assignee and each Lender
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Assignee's or such Lender's gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction.
(b) Assignor shall pay to Assignee upon demand the amount
of any and all costs and expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, that Assignee may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Assignee hereunder, or (iv) the failure by Assignor to
perform or observe any of the provisions hereof.
SECTION 19. CONTINUING ASSIGNMENT AND SECURITY INTEREST;
TRANSFER OF LOANS. This Agreement shall create a continuing security interest
in, and conditional assignment of, the Collateral and shall (a) remain in full
force and effect until the payment in full of the Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, (b) be binding upon Assignor,
its permitted successors and assigns, and (c) inure, together with the rights
and remedies of Assignee hereunder, to the benefit of Assignee and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), but subject to the provisions of subsection 10.1 of the
Credit Agreement, any Lender may assign or otherwise transfer any Loans held by
it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or
otherwise. Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, the security interest and
conditional assignment granted hereby shall terminate and all rights to the
Collateral shall revert to Assignor. Upon any such termination Assignee will,
at Assignor's expense, execute and deliver to Assignor such documents as
Assignor shall reasonably request to evidence such termination.
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SECTION 20. ASSIGNEE AS AGENT.
(a) Assignee has been appointed to act as Assignee
hereunder by Lenders. Assignee shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Assignee shall at all times be the same Person that
is Agent under the Credit Agreement. Written notice of resignation by Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Assignee under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as
Assignee under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Assignee under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a
successor Agent, that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Assignee under this Agreement, and the retiring or removed Assignee
under this Agreement shall promptly (i) transfer to such successor Assignee all
sums, securities and other items of Collateral held hereunder, together with
all records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Assignee under this Agreement, and
(ii) execute and deliver to such successor Assignee such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Assignee of the
security interests created hereunder, whereupon such retiring or removed
Assignee shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Assignee, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Assignee hereunder.
SECTION 21. AMENDMENTS; ETC. Subject to Section 6(a), no
amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by Assignor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Assignee
and, in the case of any such amendment or modification, by Assignor. Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 22. NOTICES. Any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or four Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed. For the purposes hereof, the address of each party hereto
shall be as set forth under such party's name on the signature pages
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hereof or, as to either party, such other address as shall be designated by
such party in a written notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Assignee in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 24. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ASSIGNOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT ASSIGNOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND
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BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Assignor
hereby agrees that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return receipt requested, to
Assignor at its address provided in Section 22, such service being hereby
acknowledged by Assignor to be sufficient for personal jurisdiction in any
action against Assignor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Assignee to bring proceedings against Assignor in the courts of any other
jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
LAW, ASSIGNOR AND ASSIGNEE HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Assignor and Assignee each acknowledge that this waiver is a material
inducement for Assignor and Assignee to enter into a business relationship,
that Assignor and Assignee have already relied on this waiver in entering into
this Agreement and that each will continue to rely on this waiver in their
related future dealings. Assignor and Assignee further warrant and represent
that each has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Assignor and Assignee have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT, INC.
By:
-----------------------------------
Title:
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas 76112
Attention: Chief Executive Officer
BT COMMERCIAL CORPORATION
Notice Address:
By:
-----------------------------------
Title:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1
<PAGE> 290
SCHEDULE A
TO COMPANY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
PATENTS ISSUED
Patent No. Issue Date Invention Inventor
- ---------- ---------- --------- --------
<S> <C> <C> <C>
</TABLE>
PATENTS PENDING
<TABLE>
<CAPTION>
Applicant's Date Application
Name Filed No. Invention Inventor
- ----------- ----- ----------- --------- --------
<S> <C> <C> <C> <C>
</TABLE>
A-1
<PAGE> 291
SCHEDULE B
TO COMPANY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
B-1
<PAGE> 292
EXHIBIT XXI
[FORM OF SUBSIDIARY GUARANTY]
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY is entered into as of _______________
__, ____ by the undersigned (each a "GUARANTOR" and collectively, "GUARANTORS")
in favor of and for the benefit of BT COMMERCIAL CORPORATION, as agent for and
representative of (in such capacity herein called "AGENT") the financial
institutions ("LENDERS") party to the Credit Agreement (as hereinafter
defined).
RECITALS
A. FWT, Inc., a Texas corporation ("COMPANY" or
"BORROWER"), has entered into that certain Credit Agreement dated as of
November 12, 1997 with Agent and Lenders (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT"; capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined).
B. Guarantors are Subsidiaries of Company, and because a
portion of the proceeds of the Loans may be advanced to Guarantors, the
Guarantied Obligations (as hereinafter defined) are being incurred for and will
inure to the benefit of Guarantors (which benefits are hereby acknowledged).
C. It is a condition precedent to the extensions of
Credit under the Credit Agreement that Borrower's obligations thereunder be
guarantied by Guarantors.
D. Guarantors are willing irrevocably and
unconditionally to guaranty such obligations of Borrower.
NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Lenders and Agent to enter into the Credit
Agreement and to make the Loans thereunder, Guarantors hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Guaranty, the
following terms shall have the following meanings unless the context otherwise
requires:
"GUARANTIED OBLIGATIONS" has the meaning assigned to that term
in subsection 2.1.
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"GUARANTY" means this Guaranty dated as of ___________, ____,
as it may be amended, supplemented or otherwise modified from time to
time.
"PAYMENT IN FULL", "PAID IN FULL" or any similar term means
payment in full of the Guarantied Obligations including, without
limitation, all principal, interest, costs, fees and expenses
(including, without limitation, legal fees and expenses) of Lenders
and Agent as required under the Loan Documents.
1.2 INTERPRETATION.
(a) References to "Sections" and "subsections" shall be
to Sections and subsections, respectively, of this Guaranty unless
otherwise specifically provided.
(b) In the event of any conflict or inconsistency between
the terms, conditions and provisions of this Guaranty and the terms,
conditions and provisions of the Credit Agreement, the terms,
conditions and provisions of this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 GUARANTY OF THE GUARANTIED OBLIGATIONS. Subject to the
provisions of subsection 2.2(a), Guarantors jointly and severally hereby
irrevocably and unconditionally guaranty, as primary obligors and not merely as
sureties, the due and punctual payment in full of all Guarantied Obligations
when the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)). The term
"GUARANTIED OBLIGATIONS" means:
(a) any and all Obligations of the Borrower now or
hereafter made, incurred or created, whether absolute or contingent,
liquidated or unliquidated, whether due or not due, and however
arising under or in connection with the Credit Agreement and the other
Loan Documents, including those arising under successive borrowing
transactions under the Credit Agreement which shall either continue
the Obligations of the Borrower or from time to time renew them after
they have been satisfied; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 LIMITATION ON AMOUNT GUARANTIED; CONTRIBUTION BY GUARANTORS.
(a) Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would
not render its obligations hereunder subject to avoidance as a
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fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any applicable provisions of comparable state law (collectively,
the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect to all other
liabilities of such Guarantor, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however, any liabilities
of such Guarantor (x) in respect of intercompany indebtedness to the Borrower
or other affiliates of the Borrower to the extent that such indebtedness would
be discharged in an amount equal to the amount paid by such Guarantor hereunder
and (y) under any guaranty of Subordinated Indebtedness which guaranty contains
a limitation as to maximum amount similar to that set forth in this subsection
2.2(a), pursuant to which the liability of such Guarantor hereunder is included
in the liabilities taken into account in determining such maximum amount) and
after giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms of any agreement (including without
limitation any such right of contribution under subsection 2.2(b) or under a
Related Guaranty (as hereinafter defined) as contemplated by subsection
2.2(b)).
(b) Guarantors under this Guaranty, and each guarantor under other
guaranties relating to the Credit Agreement (the "RELATED GUARANTIES") which
contain a contribution provision similar to that set forth in this subsection
2.2(b), together desire to allocate among themselves (collectively, the
"CONTRIBUTING GUARANTORS"), in a fair and equitable manner, their obligations
arising under this Guaranty and the Related Guaranties. Accordingly, in the
event any payment or distribution is made on any date by any Guarantor under
this Guaranty or a guarantor under a Related Guaranty (a "FUNDING GUARANTOR")
that exceeds its Fair Share (as defined below) as of such date, that Funding
Guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the amount of such other Contributing Guarantor's
Fair Share Shortfall (as defined below) as of such date, with the result that
all such contributions will cause each Contributing Guarantor's Aggregate
Payments (as defined below) to equal its Fair Share as of such date. "FAIR
SHARE" means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Contributing Guarantor to (y)
the aggregate of the Adjusted Maximum Amounts with respect to all Contributing
Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or
before such date by all Funding Guarantors under this Guaranty and the Related
Guaranties in respect of the obligations guarantied. "FAIR SHARE SHORTFALL"
means, with respect to a Contributing Guarantor as of any date of
determination, the excess, if any, of the Fair Share of such Contributing
Guarantor over the Aggregate Payments of such Contributing Guarantor.
"ADJUSTED MAXIMUM AMOUNT" means, with respect to a Contributing Guarantor as of
any date of determination, the maximum aggregate amount of the obligations of
such Contributing Guarantor under this Guaranty and the Related Guaranties,
determined as of such date in accordance with subsection 2.2(a) or, if
applicable, a similar provision contained in a Related Guaranty; provided that,
solely for purposes of calculating the "Adjusted Maximum Amount" with respect
to any Contributing Guarantor for purposes of
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<PAGE> 295
this subsection 2.2(b), any assets or liabilities of such Contributing
Guarantor arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder or
under any similar provision contained in a Related Guaranty shall not be
considered as assets or liabilities of such Contributing Guarantor. "AGGREGATE
PAYMENTS" means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (i) the aggregate amount of all payments and
distributions made on or before such date by such Contributing Guarantor in
respect of this Guaranty and the Related Guaranties (including, without
limitation, in respect of this subsection 2.2(b) or any similar provision
contained in a Related Guaranty) minus (ii) the aggregate amount of all
payments received on or before such date by such Contributing Guarantor from
the other Contributing Guarantors as contributions under this subsection 2.2(b)
or any similar provision contained in a Related Guaranty. The amounts payable
as contributions hereunder and under similar provisions in the Related
Guaranties shall be determined as of the date on which the related payment or
distribution is made by the applicable Funding Guarantor. The allocation among
Contributing Guarantors of their obligations as set forth in this subsection
2.2(b) or any similar provision contained in a Related Guaranty shall not be
construed in any way to limit the liability of any Contributing Guarantor
hereunder or under a Related Guaranty. Each Contributing Guarantor under a
Related Guaranty is a third party beneficiary to the contribution agreement set
forth in this subsection 2.2(b).
2.3 PAYMENT BY GUARANTORS; APPLICATION OF PAYMENTS. Subject to
the provisions of subsection 2.2(a), Guarantors hereby jointly and severally
agree, in furtherance of the foregoing and not in limitation of any other right
which Agent or any other Person may have at law or in equity against any
Guarantor by virtue hereof, that upon the failure of the Borrower to pay any of
the Guarantied Obligations when and as the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
362(a)), Guarantors will upon demand by Requisite Lenders or Agent (acting on
behalf of Requisite Lenders) pay, or cause to be paid, in cash, to Agent for
the ratable benefit of Lenders, an amount equal to the sum of the unpaid
principal amount of all Guarantied Obligations then due as aforesaid, accrued
and unpaid interest on such Guarantied Obligations (including, without
limitation, interest which, but for the filing of a petition in bankruptcy with
respect to the Borrower, would have accrued on such Guarantied Obligations,
whether or not a claim is allowed against the Borrower for such interest in any
such bankruptcy proceeding) and all other Guarantied Obligations then owed to
Agent and/or Lenders as aforesaid. All such payments shall be applied promptly
from time to time by Agent:
First, to the payment of the costs and expenses of any
collection or other realization under this Guaranty, including
reasonable compensation to Agent and its agents and counsel, and all
expenses, liabilities and advances made or incurred by Agent in
connection therewith;
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Second, to the payment of all other Guarantied Obligations in
such order as Agent shall elect; and
Third, after payment in full of all Guarantied Obligations, to
the payment to Guarantors, or their respective successors or assigns,
or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any surplus then
remaining from such payments.
2.4 LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor agrees that
its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which constitutes a
legal or equitable discharge of a guarantor or surety other than payment in
full of the Guarantied Obligations. In furtherance of the foregoing and
without limiting the generality thereof, each Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and
not of collectibility.
(b) Agent may enforce this Guaranty upon the occurrence
and during the continuation of an Event of Default under the Credit
Agreement notwithstanding the existence of any dispute between Lenders
and the Borrower with respect to the existence of such Event of
Default.
(c) The obligations of each Guarantor hereunder are
independent of the obligations of the Borrower under the Loan
Documents and the obligations of any other guarantor (including any
other Guarantor) of the obligations of the Borrower under the Loan
Documents, and a separate action or actions may be brought and
prosecuted against such Guarantor whether or not any action is brought
against the Borrower or any of such other guarantors and whether or
not the Borrower is joined in any such action or actions.
(d) Payment by any Guarantor of a portion, but not all,
of the Guarantied Obligations shall in no way limit, affect, modify or
abridge any Guarantor's liability for any portion of the Guarantied
Obligations which has not been paid. Without limiting the generality
of the foregoing, if Agent is awarded a judgment in any suit brought
to enforce any Guarantor's covenant to pay a portion of the Guarantied
Obligations, such judgment shall not be deemed to release such
Guarantor from its covenant to pay the portion of the Guarantied
Obligations that is not the subject of such suit, and such judgment
shall not, except to the extent satisfied by such Guarantor, limit,
affect, modify or abridge any other Guarantor's liability hereunder in
respect of the Guarantied Obligations.
(e) Agent or any Lender, upon such terms as it deems
appropriate, without notice or demand and without affecting the
validity or enforceability of this Guaranty or giving rise to any
reduction, limitation, impairment, discharge or
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termination of any Guarantor's liability hereunder, from time to time
may (i) renew, extend, accelerate, increase the rate of interest on,
or otherwise change the time, place, manner or terms of payment of the
Guarantied Obligations; (ii) settle, compromise, release or discharge,
or accept or refuse any offer of performance with respect to, or
substitutions for, the Guarantied Obligations or any agreement
relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other
guaranties of the Guarantied Obligations and take and hold security
for the payment of this Guaranty or the Guarantied Obligations; (iv)
release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration,
any security for payment of the Guarantied Obligations, any other
guaranties of the Guarantied Obligations, or any other obligation of
any Person (including any other Guarantor) with respect to the
Guarantied Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of Agent or any Lender in respect
of this Guaranty or the Guarantied Obligations and direct the order or
manner of sale thereof, or exercise any other right or remedy that
Agent or Lenders, or any of them, may have against any such security,
as Agent in its discretion may determine consistent with the Credit
Agreement and any applicable security agreement, including foreclosure
on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially
reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of any Guarantor against the Borrower or any security for the
Guarantied Obligations; and (vi) exercise any other rights available
to it under the Loan Documents.
(f) This Guaranty and the obligations of Guarantors
hereunder shall be valid and enforceable and shall not be subject to
any reduction, limitation, impairment, discharge or termination for
any reason (other than payment in full of the Guarantied Obligations),
including without limitation the occurrence of any of the following,
whether or not any Guarantor shall have had notice or knowledge of any
of them: (i) any failure or omission to assert or enforce or agreement
or election not to assert or enforce, or the stay or enjoining, by
order of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Loan Documents, at law, in equity or
otherwise) with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security
for the payment of the Guarantied Obligations; (ii) any rescission,
waiver, amendment or modification of, or any consent to departure
from, any of the terms or provisions (including without limitation
provisions relating to events of default) of the Credit Agreement, any
of the other Loan Documents or any agreement or instrument executed
pursuant thereto, or of any other guaranty or security for the
Guarantied Obligations, in each case whether or not in accordance with
the terms of the Credit Agreement or such Loan Document or any
agreement relating to such other guaranty or security; (iii) the
Guarantied
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Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect; (iv) the
application of payments received from any source (other than payments
received pursuant to the other Loan Documents or from the proceeds of
any security for the Guarantied Obligations, except to the extent such
security also serves as collateral for indebtedness other than the
Guarantied Obligations) to the payment of indebtedness other than the
Guarantied Obligations, even though Agent or Lenders, or any of them,
might have elected to apply such payment to any part or all of the
Guarantied Obligations; (v) any Lender's or Agent's consent to the
change, reorganization or termination of the corporate structure or
existence of the Borrower or any of its Subsidiaries and to any
corresponding restructuring of the Guarantied Obligations; (vi) any
failure to perfect or continue perfection of a security interest in
any collateral which secures any of the Guarantied Obligations; (vii)
any defenses, set-offs or counterclaims which the Borrower may allege
or assert against Agent or any Lender in respect of the Guarantied
Obligations, including but not limited to failure of consideration,
breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury; and (viii) any other
act or thing or omission, or delay to do any other act or thing, which
may or might in any manner or to any extent vary the risk of any
Guarantor as an obligor in respect of the Guarantied Obligations.
2.5 WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the
benefit of Lenders and Agent:
(a) any right to require Agent or Lenders, as a condition
of payment or performance by such Guarantor, to (i) proceed against
the Borrower, any other guarantor (including any other Guarantor) of
the Guarantied Obligations or any other Person, (ii) proceed against
or exhaust any security held from the Borrower, any other guarantor
(including any other Guarantor) of the Guarantied Obligations or any
other Person, (iii) proceed against or have resort to any balance of
any deposit account or credit on the books of Agent or any Lender in
favor of the Borrower or any other Person, or (iv) pursue any other
remedy in the power of Agent or any Lender whatsoever;
(b) any defense arising by reason of the incapacity, lack
of authority or any disability or other defense of the Borrower
including, without limitation, any defense based on or arising out of
the lack of validity or the unenforceability of the Guarantied
Obligations or any agreement or instrument relating thereto or by
reason of the cessation of the liability of the Borrower from any
cause other than payment in full of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger
in amount nor in other respects more burdensome than that of the
principal;
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(d) any defense based upon Agent's or any Lender's errors
or omissions in the administration of the Guarantied Obligations,
except behavior which amounts to bad faith or gross negligence;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of such Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations
affecting such Guarantor's liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims,
and (iv) promptness, diligence and any requirement that Agent or any
Lender protect, secure, perfect or insure any security interest or
lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the
Credit Agreement or any agreement or instrument related thereto,
notices of any renewal, extension or modification of the Guarantied
Obligations or any agreement related thereto, notices of any extension
of credit to the Borrower and notices of any of the matters referred
to in subsection 2.4 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors
or sureties, or which may conflict with the terms of this Guaranty.
2.6 GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Each
Guarantor hereby waives any claim, right or remedy, direct or indirect, that
such Guarantor now has or may hereafter have against the Borrower or the
Borrower's assets in connection with this Guaranty or the performance by such
Guarantor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute, under common law or
otherwise and including without limitation (i) any right of subrogation,
reimbursement or indemnification that such Guarantor now has or may hereafter
have against the Borrower, (ii) any right to enforce, or to participate in, any
claim, right or remedy that Agent or any Lender now has or may hereafter have
against the Borrower, and (iii) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by Agent or any Lender.
In addition, until the Guarantied Obligations shall have been paid in full, the
Commitments shall have been terminated and all Letters of Credit shall have
expired or been cancelled, each Guarantor shall withhold exercise of any right
of contribution such Guarantor may have against any other guarantor (including
any other Guarantor) of any of the Guarantied Obligations (including without
limitation any such right of contribution under subsection 2.2(b) or under a
Related Guaranty as contemplated by subsection 2.2(b)). Each Guarantor further
agrees that, to the extent the waiver or agreement to withhold the exercise of
its rights of subrogation,
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reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against the Borrower or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights Agent or Lenders may have against the
Borrower, to all right, title and interest Agent or Lenders may have in any
such collateral or security, and to any right Agent or Lenders may have against
such other guarantor. If any amount shall be paid to any Guarantor on account
of any such subrogation, reimbursement or indemnification rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Agent on behalf of Lenders and shall forthwith be
paid over to Agent for the benefit of Lenders to be credited and applied
against the Guarantied Obligations, whether matured or unmatured, in accordance
with the terms hereof.
2.7 SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of the
Borrower now or hereafter held by any Guarantor is hereby subordinated in right
of payment to the Guarantied Obligations, and any such indebtedness of the
Borrower to such Guarantor collected or received by such Guarantor after an
Event of Default has occurred and while it is continuing shall be held in trust
for Agent on behalf of Lenders and shall forthwith be paid over to Agent for
the benefit of Lenders to be credited and applied against the Guarantied
Obligations but without affecting, impairing or limiting in any manner the
liability of such Guarantor under any other provision of this Guaranty.
2.8 EXPENSES. Guarantors jointly and severally agree to pay, or
cause to be paid, on demand, and to save Agent and Lenders harmless against
liability for, any and all costs and expenses (including reasonable fees and
disbursements of counsel and reasonable allocated costs of internal counsel)
incurred or expended by Agent or any Lender in connection with the enforcement
of or preservation of any rights under this Guaranty.
2.9 CONTINUING GUARANTY. This Guaranty is a continuing guaranty
and shall remain in effect until all of the Guarantied Obligations shall have
been paid in full, the Commitments shall have terminated and all Letters of
Credit shall have expired or been cancelled. Each Guarantor hereby irrevocably
waives any right to revoke this Guaranty as to future transactions giving rise
to any Guarantied Obligations.
2.10 AUTHORITY OF GUARANTORS OR BORROWER. It is not necessary for
Lenders or Agent to inquire into the capacity or powers of any Guarantor or the
Borrower or the officers, directors or any agents acting or purporting to act
on behalf of any of them.
2.11 FINANCIAL CONDITION OF BORROWER. Any Loans may be granted to
the Borrower or continued from time to time without notice to or authorization
from any Guarantor regardless of the financial or other condition of the
Borrower at the time of any such grant or continuation. Lenders and Agent
shall have no obligation to disclose or discuss with any Guarantor their
assessment, or any Guarantor's assessment, of the financial condition of the
Borrower. Each Guarantor has adequate means to obtain information from the
Borrower on a continuing basis concerning the financial condition of
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such Borrower and its ability to perform its obligations under the Loan
Documents, and each Guarantor assumes the responsibility for being and keeping
informed of the financial condition of the Borrower and of all circumstances
bearing upon the risk of nonpayment of the Guarantied Obligations. Each
Guarantor hereby waives and relinquishes any duty on the part of Agent or any
Lender to disclose any matter, fact or thing relating to the business,
operations or conditions of the Borrower now known or hereafter known by Agent
or any Lender.
2.12 RIGHTS CUMULATIVE. The rights, powers and remedies given to
Lenders and Agent by this Guaranty are cumulative and shall be in addition to
and independent of all rights, powers and remedies given to Lenders and Agent
by virtue of any statute or rule of law or in any of the other Loan Documents
or any agreement between any Guarantor and Lenders and/or Agent or between the
Borrower and Lenders and/or Agent. Any forbearance or failure to exercise, and
any delay by any Lender or Agent in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to
be a waiver thereof, nor shall it preclude the further exercise of any such
right, power or remedy.
2.13 BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF GUARANTY.
(a) So long as any Guarantied Obligations remain outstanding, no Guarantor
shall, without the prior written consent of Agent in accordance with the terms
of the Credit Agreement, commence or join with any other Person in commencing
any bankruptcy, reorganization or insolvency proceedings of or against the
Borrower. The obligations of Guarantors under this Guaranty shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by
any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of the Borrower or by
any defense which the Borrower may have by reason of the order, decree or
decision of any court or administrative body resulting from any such
proceeding.
(b) Each Guarantor acknowledges and agrees that any
interest on any portion of the Guarantied Obligations which accrues after the
commencement of any proceeding referred to in clause (a) above (or, if interest
on any portion of the Guarantied Obligations ceases to accrue by operation of
law by reason of the commencement of said proceeding, such interest as would
have accrued on such portion of the Guarantied Obligations if said proceedings
had not been commenced) shall be included in the Guarantied Obligations because
it is the intention of Guarantors and Agent that the Guarantied Obligations
which are guarantied by Guarantors pursuant to this Guaranty should be
determined without regard to any rule of law or order which may relieve the
Borrower of any portion of such Guarantied Obligations. Guarantors will permit
any trustee in bankruptcy, receiver, debtor in possession, assignee for the
benefit of creditors or similar person to pay Agent, or allow the claim of
Agent in respect of, any such interest accruing after the date on which such
proceeding referred to in clause (a) above is commenced.
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(c) In the event that all or any portion of the
Guarantied Obligations are paid by the Borrower, the obligations of Guarantors
hereunder shall continue and remain in full force and effect or be reinstated,
as the case may be, in the event that all or any part of such payment(s) are
rescinded or recovered directly or indirectly from Agent or any Lender as a
preference, fraudulent transfer or otherwise, and any such payments which are
so rescinded or recovered shall constitute Guarantied Obligations for all
purposes under this Guaranty.
2.14 NOTICE OF EVENTS. As soon as any executive officer of any
Guarantor obtains knowledge thereof, such Guarantor shall give Agent written
notice of any condition or event which has resulted in (a) a material adverse
change in the financial condition of Guarantors and Borrower, taken as a whole,
or (b) a breach of or noncompliance with any term, condition or covenant
contained herein or in the Credit Agreement, any other Loan Document or any
other document delivered pursuant hereto or thereto.
2.15 SET OFF. In addition to any other rights any Lender or Agent
may have under law or in equity, if any amount shall at any time during an
Event of Default be due and owing by any Guarantor to any Lender or Agent under
this Guaranty, such Lender or Agent is authorized at any time or from time to
time, without notice (any such notice being hereby expressly waived), to set
off and to appropriate and to apply any and all deposits (general or special,
including but not limited to indebtedness evidenced by certificates of deposit,
whether matured or unmatured) and any other indebtedness of any Lender or Agent
owing to such Guarantor and any other property of such Guarantor held by any
Lender or Agent to or for the credit or the account of such Guarantor against
and on account of the Guarantied Obligations and liabilities of such Guarantor
to any Lender or Agent under this Guaranty.
2.16 DISCHARGE OF GUARANTY UPON SALE OF GUARANTOR. If all of the
stock of any Guarantor or any of its successors in interest under this Guaranty
shall be sold or otherwise disposed of (including by merger or consolidation)
in an Asset Sale not prohibited by subsection 7.7 of the Credit Agreement or
otherwise consented to by Requisite Lenders, the Guaranty of such Guarantor or
such successor in interest, as the case may be, hereunder shall automatically
be discharged and released without any further action by Agent or any Lender or
any other Person effective as of the time of such Asset Sale; provided that, as
a condition precedent to such discharge and release, Agent shall have received
evidence satisfactory to it that arrangements satisfactory to it have been made
for delivery to Agent of the net cash proceeds of such Asset Sale to the extent
required by the Credit Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders and Agent to accept this Guaranty
and to enter into the Credit Agreement and to make the Loans thereunder, each
Guarantor hereby represents and warrants to Lenders that the following
statements are true and correct:
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3.1 CORPORATE EXISTENCE. Such Guarantor is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, has the corporate power to own its assets and to transact the
business in which it is now engaged and is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except for failures to be so qualified, authorized or licensed
that would not in the aggregate have a material adverse effect on the business,
operations, assets or financial condition of such Guarantor and its
Subsidiaries, taken as a whole.
3.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Such
Guarantor has the corporate power, authority and legal right to execute,
deliver and perform this Guaranty and all obligations required hereunder and
has taken all necessary corporate action to authorize its Guaranty hereunder on
the terms and conditions hereof and its execution, delivery and performance of
this Guaranty and all obligations required hereunder. No consent of any other
Person including, without limitation, stockholders and creditors of such
Guarantor, and no license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required by such Guarantor in connection with this
Guaranty or the execution, delivery, performance, validity or enforceability of
this Guaranty and all obligations required hereunder. This Guaranty has been,
and each instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of such Guarantor, and this Guaranty
constitutes, and each instrument or document required hereunder when executed
and delivered by such Guarantor hereunder will constitute, the legally valid
and binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
equitable principles relating to or limiting creditors' rights generally.
3.3 NO LEGAL BAR TO THIS GUARANTY. The execution, delivery and
performance of this Guaranty and the documents or instruments required
hereunder, and the use of the proceeds of the borrowings under the Credit
Agreement, will not violate any provision of any existing law or regulation
binding on such Guarantor, or any order, judgment, award or decree of any
court, arbitrator or governmental authority binding on such Guarantor, or the
certificate of incorporation or bylaws of such Guarantor or any securities
issued by such Guarantor, or any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which such Guarantor is a party or by
which such Guarantor or any of its assets may be bound, the violation of which
would have a material adverse effect on the business, operations, assets or
financial condition of such Guarantor and its Subsidiaries, taken as a whole,
and will not result in, or require, the creation or imposition of any Lien on
any of its property, assets or revenues pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.
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SECTION 4. MISCELLANEOUS
4.1 SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Guaranty and the other Loan Documents and any increase in the Commitments under
the Credit Agreement.
4.2 NOTICES. Any communications between Agent and any Guarantor
and any notices or requests provided herein to be given may be given by mailing
the same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at its address set forth in the Credit Agreement, on the signature
pages hereof or to such other addresses as each such party may in writing
hereafter indicate. Any notice, request or demand to or upon Agent or Lenders
or any Guarantor shall not be effective until received.
4.3 SEVERABILITY. In case any provision in or obligation under
this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
4.4 AMENDMENTS AND WAIVERS. No amendment, modification,
termination or waiver of any provision of this Guaranty, and no consent to any
departure by any Guarantor therefrom, shall in any event be effective without
the written concurrence of Requisite Lenders under the Credit Agreement and, in
the case of any such amendment or modification, each Guarantor against whom
enforcement of such amendment or modification is sought. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
4.5 HEADINGS. Section and subsection headings in this Guaranty
are included herein for convenience of reference only and shall not constitute
a part of this Guaranty for any other purpose or be given any substantive
effect.
4.6 APPLICABLE LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS
OF GUARANTORS, AGENT AND LENDERS HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
4.7 SUCCESSORS AND ASSIGNS. This Guaranty is a continuing
guaranty and shall be binding upon each Guarantor and its respective successors
and assigns. This Guaranty shall inure to the benefit of Lenders, Agent and
their respective permitted successors and assigns. No Guarantor shall assign
this Guaranty or any of the rights or obligations of such Guarantor hereunder
without the prior written consent of all Lenders. Any Lender may, without
notice or consent, assign its interest in this Guaranty in whole or in part.
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The terms and provisions of this Guaranty shall inure to the benefit of any
permitted transferee or assignee of any Loan, and in the event of such
permitted transfer or assignment the rights and privileges herein conferred
upon Lenders and Agent shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof.
4.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY EACH
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY. Each
Guarantor hereby agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
requested, to such Guarantor at its address provided in subsection 4.2, such
service being hereby acknowledged by such Guarantor to be sufficient for
personal jurisdiction in any action against such Guarantor in any such court
and to be otherwise effective and binding service in every respect. Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of Agent or any Lender to bring proceedings
against any Guarantor in the courts of any other jurisdiction.
4.9 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY LAW, EACH
GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, AGENT EACH HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver is
intended to be all encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each Guarantor and, by its acceptance
of the benefits hereof, Agent, each (i) acknowledges that this waiver is a
material inducement for such Guarantor and Agent to enter into a business
relationship, that such Guarantor and Agent have already relied on this waiver
in entering into this Guaranty or accepting the benefits thereof, as the case
may be, and that each will continue to rely on this waiver in their related
future dealings and (ii) further warrants and represents that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In
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the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.
4.10 NO OTHER WRITING. This writing is intended by Guarantors and
Agent as the final expression of this Guaranty and is also intended as a
complete and exclusive statement of the terms of their agreement with respect
to the matters covered hereby. No course of dealing, course of performance or
trade usage, and no parol evidence of any nature, shall be used to supplement
or modify any terms of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
4.11 FURTHER ASSURANCES. At any time or from time to time, upon
the request of Agent or Requisite Lenders, Guarantors shall execute and deliver
such further documents and do such other acts and things as Agent or Requisite
Lenders may reasonably request in order to effect fully the purposes of this
Guaranty.
4.12 ADDITIONAL GUARANTORS. The initial Guarantors hereunder shall
be such of the Subsidiaries of Company as are signatories hereto on the date
hereof. From time to time subsequent to the date hereof, additional
Subsidiaries of Company may become parties hereto, as additional Guarantors
(each an "ADDITIONAL GUARANTOR"), by executing a counterpart of this Guaranty.
Upon delivery of any such counterpart to Agent, notice of which is hereby
waived by Guarantors, each such Additional Guarantor shall be a Guarantor and
shall be as fully a party hereto as if such Additional Guarantor were an
original signatory hereof. Each Guarantor expressly agrees that its
obligations arising hereunder shall not be affected or diminished or novated by
the addition or release of any other Guarantor hereunder, nor by any election
of Agent not to cause any Subsidiary of Company to become an Additional
Guarantor hereunder. This Guaranty shall be fully effective as to any
Guarantor that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Guarantor hereunder.
4.13 COUNTERPARTS; EFFECTIVENESS. This Guaranty may be executed in
any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become
effective as to each Guarantor upon the execution of a counterpart hereof by
such Guarantor (whether or not a counterpart hereof shall have been executed by
any other Guarantor) and receipt by Agent of written or telephonic notification
of such execution and authorization of delivery thereof.
4.14 LIMITATION ON INTEREST. Interest on the indebtedness evidenced
by this Guaranty is expressly limited so that in no contingency or event
whatsoever, whether by acceleration of the maturity of the indebtedness
evidenced by this Guaranty or otherwise, shall the interest contracted for,
charged or received by the Lenders exceed the maximum amount permissible under
applicable law. If from any circumstances whatsoever fulfillment of any
provisions of this Guaranty, the other Loan documents or of any other document
evidencing, securing, guaranteeing or otherwise pertaining to the indebtedness
evidenced hereby, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if from any such circumstances the Lenders shall ever receive anything of
value as interest or deemed interest by applicable law under this Guaranty, the
other Loan Documents or any other document evidencing, securing, guaranteeing
or otherwise pertaining to the indebtedness
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evidenced hereby or otherwise in an amount that would exceed the highest lawful
amount (the "Maximum Rate"), such amount that would be excessive interest shall
be applied to the reduction of the principal amount owing on the indebtedness
evidenced by this Guaranty or on account of any other indebtedness of the
Guarantor to the Lenders, and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal of the indebtedness
evidenced by this Guaranty and such other indebtedness, such excess shall be
refunded to the Guarantor. In determining whether or not the interest paid or
payable with respect to any indebtedness of the Guarantor to the Lenders, under
any specific contingency, exceeds the highest lawful rate, the Lenders may, at
their option, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness does not exceed the maximum amount
permitted by applicable law, and/or (d) allocate interest between portions of
such indebtedness so that the actual rate of interest on account of such
indebtedness does not exceed the maximum amount permitted by applicable law,
and/or (d) allocate interest between portions of such indebtedness, to the end
that no such portion shall bear interest at a rate greater than that permitted
by law. Notwithstanding the foregoing, if for any period of time interest on
any such indebtedness evidenced by this Guaranty is calculated at the Maximum
Rate rather than the applicable rate under the Loan Documents, and thereafter
such applicable rate become less than the Maximum Rate, the rate of interest
payable on such indebtedness shall remain at the Maximum Rate until each Lender
shall have received the amount of interest which such Lender would have
received during such period on such indebtedness had the rate of interest not
been limited to the Maximum Rate during such period. The terms and provisions
of this paragraph shall control and supersede every other conflicting provision
of this Guaranty.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each of the undersigned Guarantors has
caused this Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of the date first written above.
[NAME OF GUARANTOR]
-------------------------------------------
By:
----------------------------------------
Title:
--------------------------------
Address:
S-1
<PAGE> 309
IN WITNESS WHEREOF, the undersigned Additional Guarantor has
caused this Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of ______________, ____.
------------------------------------------
(Name of Additional Guarantor)
By:
---------------------------------------
Title:
-------------------------------
S-2
<PAGE> 310
EXHIBIT XXII
[FORM OF SUBSIDIARY SECURITY AGREEMENT]
SUBSIDIARY SECURITY AGREEMENT
This SUBSIDIARY SECURITY AGREEMENT (this "AGREEMENT") is dated
as of ___________, ____ and entered into by and between [NAME OF SUBSIDIARY], a
_______________corporation ("GRANTOR"), and BT COMMERCIAL CORPORATION, as agent
for and representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit
Agreement dated as of November 12, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with FWT, Inc., a Texas
corporation ("COMPANY" or "BORROWER"), pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the
Credit Agreement, to extend certain credit facilities to Borrower.
B. Grantor has executed and delivered the Subsidiary
Guaranty dated as of ___________, ____ (said Subsidiary Guaranty, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "GUARANTY") in favor of Secured Party for the benefit of Lenders,
pursuant to which Grantor has guarantied the prompt payment and performance
when due of all Obligations of the Borrower under the Credit Agreement.
C. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Grantor shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor hereby agrees with Secured
Party as follows:
SECTION 1. GRANT OF SECURITY. Grantor hereby assigns for
security purposes to Secured Party, and hereby grants to Secured Party a
security interest in, all of Grantor's right, title and interest in and to the
following, in each case whether now or
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hereafter existing or in which Grantor now has or hereafter acquires an
interest and wherever the same may be located (the "COLLATERAL"):
(a) all machinery and equipment in all of its forms
(including, but not limited to, all computers, office furniture, other office
equipment and rolling stock), all parts thereof and all accessions thereto (any
and all such equipment, parts and accessions being the "EQUIPMENT");
(b) all inventory in all of its forms (including, but not
limited to, (i) all goods held by Grantor for sale or lease or to be furnished
under contracts of service or so leased or furnished, (ii) all raw materials,
work in process, finished goods, and materials used or consumed in the
manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in Grantor's
business, (iii) all goods in which Grantor has an interest in mass or a joint
or other interest or right of any kind, and (iv) all goods which are returned
to or repossessed by Grantor, and (v) any inventory specifically listed in
Schedule I annexed hereto) and all accessions thereto and products thereof (all
such inventory, accessions and products being the "INVENTORY") and all
negotiable documents of title (including without limitation warehouse receipts,
dock receipts and bills of lading) issued by any Person covering any Inventory
(any such negotiable document of title being a "NEGOTIABLE DOCUMENT OF TITLE");
(c) all accounts, contract rights, chattel paper,
documents, instruments, general intangibles and other rights and obligations of
any kind arising out of or in connection with the sale or lease of goods or the
rendering of services and all rights in, to and under all security agreements,
leases and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, documents, instruments, investment property,
general intangibles or other obligations (any and all such accounts, contract
rights, chattel paper, documents, instruments, general intangibles and other
obligations being the "ACCOUNTS", and any and all such security agreements,
leases and other contracts being the "RELATED CONTRACTS");
(d) any agreements, if any, specifically listed in
Schedule I annexed hereto, as each such agreement may be amended, supplemented
or otherwise modified from time to time (said agreements, as so amended,
supplemented or otherwise modified, being referred to herein individually as an
"ASSIGNED AGREEMENT" and collectively as the "ASSIGNED AGREEMENTS"), including
without limitation (i) all rights of Grantor to receive moneys due or to become
due under or pursuant to the Assigned Agreements, (ii) all rights of Grantor to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect
to the Assigned Agreements, (iii) all claims of Grantor for damages arising out
of any breach of or default under the Assigned Agreements, and (iv) all rights
of Grantor to terminate, amend, supplement, modify or exercise rights or
options under the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
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(e) all deposit accounts, including without limitation
any deposit accounts specifically listed in Schedule I annexed hereto, and all
deposit accounts maintained with Secured Party;
(f) all trademarks, tradenames, tradesecrets, business
names, patents, patent applications, licenses, copyrights, registrations and
franchise rights (including, but not limited to, any trademarks, copyrights or
patents listed in Schedule I hereto) (collectively, "INTELLECTUAL PROPERTY")
and all goodwill associated with any of the foregoing and all renewals,
reissues and extensions of, all applications for any such trademarks,
tradenames, patents, licenses, copyrights and registrations;
(g) to the extent not included in any other paragraph of
this Section 1, all investment property and all other general intangibles
(including without limitation all production techniques, quality control
procedures and product specifications relating to the products and services
sold or delivered by Grantor and all tax refunds, rights to payment or
performance, choses in action and judgments taken on any rights or claims
included in the Collateral);
(h) all plant fixtures, business fixtures and other
fixtures and storage and office facilities, and all accessions thereto and
products thereof;
(i) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon; and
(j) all proceeds, products, rents and profits of or from
any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "PROCEEDS" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
Notwithstanding the foregoing, Collateral shall exclude any
intellectual property right contracts and agreements to the extent, and only to
the extent, that such Intellectual Property, contract or agreement contains a
provision enforceable at law and in equity that would be breached by (or would
result in the termination of such intellectual property, contract, or agreement
upon) the grant of the security interest created herein pursuant to the terms
of this Agreement; provided, however, that if and when any prohibition on the
assignment, pledge or grant of a security interest in such intellectual
property right, contract or agreement is removed, the Secured Party will be
deemed to have been granted a security interest in such intellectual property
right, contract or
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agreement as of the date hereof, and the Collateral will be deemed to include
such intellectual property right, contract or agreement.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of
all obligations and liabilities of every nature of Grantor now or hereafter
existing under or arising out of or in connection with the Credit Agreement,
the Guaranty and the other Loan Documents and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to Grantor,
would accrue on such obligations), reimbursement of amounts drawn under Letters
of Credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a preference,
fraudulent transfer or otherwise (all such obligations and liabilities being
the "UNDERLYING DEBT"), and all obligations of every nature of Grantor now or
hereafter existing under this Agreement (all such obligations of Grantor,
together with the Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein
to the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor
represents and warrants as follows:
(a) Ownership of Collateral. Except for Liens permitted
under the Credit Agreement and the security interest created by any Collateral
Document, Grantor owns the Collateral free and clear of any Lien. Except for
any financing statements listed in Schedule III annexed hereto and such
financing statements as may have been filed in favor of Secured Party relating
to this Agreement, no effective financing statement or
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other instrument similar in effect covering all or any part of the Collateral
is on file in any filing or recording office as of the date hereof.
(b) Location of Equipment and Inventory. All of the
Equipment and Inventory is, as of the date hereof, located at the places
specified in Schedule II annexed hereto.
(c) Negotiable Documents of Title. No Negotiable
Documents of Title are outstanding as of the date hereof with respect to any of
the Inventory (other than in respect of (i) Inventory with an aggregate value
not in excess of $50,000 or (ii) Inventory which, in the ordinary course of
business, is in transit either (A) from a supplier to Grantor, (B) between the
locations specified in Schedule II hereto, or (C) to customers of Grantor).
(d) Office Locations; Other Names. The chief place of
business, the chief executive office and the office where Grantor keeps its
records regarding the Accounts and all originals of all chattel paper that
evidence Accounts is, and has been for the four month period preceding the date
hereof, located at the locations identified as such on Schedule II hereto.
Grantor has not in the past done, and does not now do, business under any other
name (including any trade-name or fictitious business name) except as set forth
on Schedule II hereto.
(e) Delivery of Certain Collateral. All notes and other
instruments (excluding checks) comprising any and all items of Collateral have
been delivered to Secured Party duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
(f) Patents, Trademarks and Copyrights. Schedule I
hereto includes all registered trademarks, patents and copyrights owned as of
the date hereof by Grantor in its own name. Each trademark, patent and
copyright listed on Schedule I hereto is valid, subsisting, unexpired,
enforceable and has not been abandoned (except where Grantor has determined
that they have immaterial value). No action or proceeding is pending which, if
adversely determined, could be reasonably expected to have a material adverse
effect on the value of any material trademark, patent or copyright listed on
Schedule I.
(g) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the grant by Grantor of
the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Grantor, or (iii) the perfection of or the
exercise by Secured Party of its rights and remedies hereunder (except for
filings of UCC financing statements, filings with the United States Patent and
Trademark Office, and any state trademark filing as identified by Grantor to
Secured Party, and as may have been taken by or at the direction of Grantor).
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(h) Perfection. This Agreement, together with (i) the
filing of financing statements in the jurisdictions listed in Schedule II
hereto, (ii) the recording of the Subsidiary Patent Security Agreement to which
Grantor is a party in the United States Trademark Office ("PTO"), (iii) the
recording of the Subsidiary Trademark Security Agreement to which Grantor is a
party in the PTO, and (iv) delivery to, and possession by, the Secured Party,
of notes and instruments constituting Collateral, creates a valid, perfected
and, except as may be permitted under the Intercreditor Agreement with respect
to machinery and equipment, first priority security interest in the Collateral,
securing the payment of the Secured Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly made or taken.
(i) Other Information. All information heretofore,
herein or hereafter supplied to Secured Party by or on behalf of Grantor with
respect to the Collateral is accurate and complete in all respects.
SECTION 5. FURTHER ASSURANCES.
(a) Grantor agrees that from time to time, at the expense
of Grantor, Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
Grantor will: (i) mark conspicuously each item of chattel paper included in
the Accounts, each Related Contract and, at the request of Secured Party, each
of its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to Secured Party, indicating that such Collateral is
subject to the security interest granted hereby, (ii) if any Account shall be
evidenced by a promissory note or other instrument (excluding checks), deliver
and pledge to Secured Party hereunder such note or instrument, duly endorsed
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to Secured Party, and at the request of Secured
Party, deliver and pledge to Secured Party hereunder all original counterparts
of chattel paper constituting Collateral, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Secured Party, (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby, (iv) promptly after the acquisition by Grantor of any item of
Equipment which is covered by a certificate of title under a statute of any
jurisdiction under the law of which indication of a security interest on such
certificate is required as a condition of perfection thereof, at the request of
Secured Party, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, (v) within 30 days after the end of
each calendar quarter, deliver to Agent copies of
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all such applications or other documents filed during such calendar quarter and
copies of all such certificates of title issued during such calendar quarter
indicating the security interest created hereunder in the items of Equipment
covered thereby, (vi) at any reasonable time, upon request by Secured Party,
exhibit the Collateral to and allow inspection of the Collateral by Secured
Party, or persons designated by Secured Party, and (vii) at Secured Party's
request, appear in and defend any action or proceeding that may affect
Grantor's title to or Secured Party's security interest in all or any part of
the Collateral.
(b) If Grantor shall obtain rights to any new trademarks
or patents, the provisions of this Agreement shall automatically apply thereto.
Grantor shall promptly notify the Secured Party in writing of any rights to any
new trademark registrations, or issued patent registrations acquired by Grantor
after the date hereof and of any applications therefor made after the date
hereof. Concurrently with such acquisition or with the filing of any such
application or registration, Grantor shall execute, deliver and record in all
places where the Secured Party deems necessary or desirable to perfect or
protect its interest in such Collateral an appropriate conditional assignment
or other agreement or instrument, in form and substance satisfactory to the
Secured Party, pursuant to which Grantor shall grant a security interest and
conditional assignment to the extent of its interest in such patent or
trademark as provided herein to the Secured Party, unless so doing would, in
the reasonable judgment of Grantor, after due inquiry, result in the grant of a
patent or registration of trademark in the name of the Secured Party, in which
event Grantor shall give written notice to the Secured Party as soon as
reasonably practicable and the filing shall instead by undertaken as soon as
practicable but in no case later than immediately following the grant or the
registration of the patent or trademark.
(c) Grantor hereby authorizes Secured Party to file (to
the extent permitted by law) one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Collateral without
the signature of Grantor. Grantor agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement signed by Grantor
shall be sufficient as a financing statement and may be filed as a financing
statement in any and all jurisdictions.
(d) Grantor will furnish to Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral;
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(b) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days after such change;
(c) give Secured Party at least 30 days' prior written
notice of any change in Grantor's chief place of business, chief executive
office or residence or the office where Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes;
(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that Grantor shall in any event pay such taxes, assessments, charges,
levies or claims not later than five days prior to the date of any proposed
sale under any judgement, writ or warrant of attachment entered or filed
against Grantor or any of the Collateral as a result of the failure to make
such payment; and
(f) shall use commercially reasonable efforts not to
permit the inclusion of any prohibitions on assignments, pledges or grants of
security interests in any licenses of Intellectual Property, contracts or
agreements entered into by Grantor after the date hereof.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND
INVENTORY. Grantor shall:
(a) keep the Equipment and Inventory at the places
therefor specified on Schedule II annexed hereto or, upon at least 30 days'
prior written notice to Secured Party, at such other places in jurisdictions
where all action that may be necessary or desirable, or that Secured Party may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Secured Party to exercise and
enforce its rights and remedies hereunder, with respect to such Equipment and
Inventory shall have been taken;
(b) cause the Equipment to be maintained and preserved in
accordance with Grantor's past practices in good condition, ordinary wear and
tear excepted, and shall forthwith, or, in the case of any loss or damage to
any of the Equipment (other than obsolete or surplus Equipment) when subsection
(c) of Section 8 is not applicable, as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements and
other improvements in connection therewith that are necessary or desirable to
such end. Grantor shall promptly furnish to Secured Party a statement
respecting any loss or damage to any of the Equipment that is material;
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(c) keep correct and accurate records of the Inventory,
itemizing and describing the kind, type and quantity thereof, Grantor's cost
therefor and (where applicable) the current list prices therefor; and
(d) if any Inventory is in possession or control of any
of Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $100,000, and in any event upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for the
account of Secured Party and subject to the instructions of Secured Party; and
(e) promptly upon the issuance and delivery to Grantor of
any Negotiable Document of Title (other than any one or more Negotiable
Documents of Title covering (i) Inventory with an aggregate value not in excess
of $100,000 or (ii) Inventory which, in the ordinary course of business, is in
transit either (A) from a supplier to Grantor, (B) between the locations
specified in Schedule II hereto, or (C) to customers of Grantor), deliver such
Negotiable Document of Title to Secured Party.
SECTION 8. INSURANCE.
(a) Grantor shall, at its own expense, maintain insurance
with respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement, in such amounts, against such risks, in such form and with
such insurers as shall be required under the Credit Agreement from time to
time. Grantor shall, if so requested by Secured Party, deliver to Secured
Party original or duplicate policies of such insurance and, as often as Secured
Party may reasonably request, a report of a reputable insurance broker with
respect to such insurance. Further, Grantor shall, at the request of Secured
Party, duly execute and deliver instruments of assignment of such insurance
policies to comply with the requirements of Section 5(a) and cause the
respective insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance
maintained by Grantor pursuant to this Section 8 may be paid directly to the
Person who shall have incurred liability covered by such insurance. In case of
any loss involving damage to Equipment or Inventory when subsection (c) of this
Section 8 is not applicable, Grantor shall make or cause to be made the
necessary repairs to or replacements of such Equipment or Inventory, and any
proceeds of insurance maintained by Grantor pursuant to this Section 8 shall be
paid to Grantor as reimbursement for the costs of such repairs or replacements.
(c) All insurance payments in respect of such Equipment
or Inventory shall be paid to and applied by Secured Party as specified in
subsection 6.4 of the Credit Agreement.
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SECTION 9. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND
RELATED CONTRACTS.
(a) Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the location therefor specified in Section 4 or, upon at
least 30 days' prior written notice to Secured Party, at such other location in
a jurisdiction where all action that may be necessary or desirable, or that
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Grantor
will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and Grantor
agrees to render to Secured Party, at Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.
Promptly upon the request of Secured Party, Grantor shall deliver to Secured
Party complete and correct copies of each Related Contract.
(b) Grantor shall, for not less than three years from the
date on which such Account arose, maintain (i) complete records of each
Account, including records of all payments received, credits granted and
merchandise returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c),
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to Grantor under the Accounts and Related Contracts. In connection
with such collections, Grantor may take (and, at Secured Party's direction,
shall take) such action as Grantor or Secured Party may deem necessary or
advisable to enforce collection of amounts due or to become due under the
Accounts; provided, however, that Secured Party shall have the right at any
time, upon the occurrence and during the continuation of an Event of Default or
a Potential Event of Default and upon written notice to Grantor of its
intention to do so, to notify the account debtors or obligors under any
Accounts of the assignment of such Accounts to Secured Party and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to Grantor thereunder directly to Secured Party, to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Secured Party and, upon such notification and at the expense of Grantor, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as Grantor
might have done. After receipt by Grantor of the notice from Secured Party
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by Grantor in
respect of the Accounts and the Related Contracts shall be received in trust
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for the benefit of Secured Party hereunder, shall be segregated from other
funds of Grantor and shall be forthwith paid over or delivered to Secured Party
in the same form as so received (with any necessary endorsement) to be held as
cash Collateral and either (A) be released to Grantor so long as no Event of
Default shall have occurred and be continuing or (B) if any Event of Default
shall have occurred and be continuing, be applied as provided by Section 18,
and (ii) Grantor shall not adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any account debtor or obligor
thereof, or allow any credit or discount thereon.
SECTION 10. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED
AGREEMENTS.
(a) Grantor shall at its expense:
(i) perform and observe all terms and provisions
of the Assigned Agreements to be performed or observed by it, maintain
the Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to
such end as may be from time to time reasonably requested by Secured
Party; and
(ii) from time to time (A) furnish to Secured
Party such information and reports regarding the Assigned Agreements
as Secured Party may reasonably request and (B) upon request of
Secured Party make such demands and requests for information and
reports or for action as Grantor is entitled to make under the
Assigned Agreements.
(b) Grantor shall not during the continuance of any Event
of Default:
(i) cancel or terminate any of the Assigned
Agreements or consent to or accept any cancellation or termination
thereof;
(ii) amend or otherwise modify the Assigned
Agreements or give any consent, waiver or approval thereunder;
(iii) waive any default under or breach of the
Assigned Agreements; or
(iv) take any other action in connection with the
Assigned Agreements that would impair the value of the interest or
rights of Grantor thereunder or that would impair the interest or
rights of Secured Party.
SECTION 11. DEPOSIT ACCOUNTS. Upon the occurrence and during
the continuation of an Event of Default, Secured Party may exercise dominion
and control over, and refuse to permit further withdrawals (whether of money,
securities, instruments
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or other property) from any deposit accounts maintained with Secured Party
constituting part of the Collateral.
SECTION 12. LICENSE OF PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
Grantor hereby grants to Secured Party, effective upon the occurrence and
during the continuation of any Event of Default, the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes owned or used by Grantor that relate to the Collateral and any other
collateral granted by Grantor as security for the Secured Obligations, together
with any goodwill associated therewith, all to the extent necessary to enable
Secured Party to use, possess and realize on the Collateral and to enable any
successor or assign to enjoy the benefits of the Collateral. This right and
license shall inure to the benefit of all successors, assigns and transferees
of Secured Party and its successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed
in lieu of foreclosure or otherwise. Such right and license is granted free of
charge, without requirement that any monetary payment whatsoever be made to
Grantor.
SECTION 13. TRANSFERS AND OTHER LIENS. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(b) except for any Liens, if any, permitted under the
Credit Agreement and the security interest created by this Agreement, create or
suffer to exist any Lien upon or with respect to any of the Collateral to
secure the indebtedness or other obligations of any Person.
SECTION 14. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Grantor hereby irrevocably appoints Secured Party as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable, consistent with the provisions
of the Agreement, to accomplish the purposes of this Agreement, including
without limitation:
(a) to obtain and adjust insurance required to be
maintained by Grantor or paid to Secured Party pursuant to Section 8;
(b) during the continuation of any Event of Default, to
ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a) and (b)
above;
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(d) during the continuation of any Event of Default, to
file any claims or take any action or institute any proceedings that Secured
Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon
or threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in
its sole discretion, any such payments made by Secured Party to become
obligations of Grantor to Secured Party, due and payable immediately without
demand;
(f) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) upon the occurrence and during the continuation of an
Event of Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all purposes, and
to do, at Secured Party's option and Grantor's expense, at any time or from
time to time, all acts and things that Secured Party deems necessary to
protect, preserve or realize upon the Collateral and Secured Party's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as Grantor might do.
SECTION 15. SECURED PARTY MAY PERFORM. If Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Grantor under Section 19.
SECTION 16. STANDARD OF CARE. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property.
SECTION 17. REMEDIES. If any Event of Default shall have
occurred and be continuing, Secured Party may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights
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and remedies of a secured party on default under the Uniform Commercial Code as
in effect in any relevant jurisdiction (the "CODE") (whether or not the Code
applies to the affected Collateral), and also may (a) require Grantor to, and
Grantor hereby agrees that it will at its expense and upon request of Secured
Party forthwith, assemble all or part of the Collateral as directed by Secured
Party and make it available to Secured Party at a place to be designated by
Secured Party that is reasonably convenient to both parties, (b) enter onto the
property where any Collateral is located and take possession thereof with or
without judicial process, (c) prior to the disposition of the Collateral,
store, process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Secured Party deems
appropriate, (d) take possession of Grantor's premises or place custodians in
exclusive control thereof, remain on such premises and use the same and any of
Grantor's equipment for the purpose of completing any work in process, taking
any actions described in the preceding clause (c) and collecting any Secured
Obligation, and (e) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of Secured Party's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Secured Party may deem commercially reasonable. Secured
Party or any Lender may be the purchaser of any or all of the Collateral at any
such sale and Secured Party, as agent for and representative of Lenders (but
not any Lender or Lenders in its or their respective individual capacities
unless Requisite Lenders shall otherwise agree in writing), shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Secured Obligations as a credit on account of the
purchase price for any Collateral payable by Secured Party at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from
any claim or right on the part of Grantor, and Grantor hereby waives (to the
extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten days' notice
to Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Grantor hereby waives any claims against
Secured Party arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Secured Party accepts
the first offer received and does not offer such Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantor shall be liable
for the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency.
XXII-14
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SECTION 18. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Secured Party, be held by
Secured Party as Collateral for, and/or then, or at any other time thereafter,
applied in full or in part by Secured Party against, the Secured Obligations in
the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection
with the exercise of any right or remedy hereunder, all in accordance
with Section 19;
SECOND: To the payment of all other Secured Obligations in
such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 19. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
from Secured Party's or such Lender's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Grantor to perform or observe any of the provisions hereof.
SECTION 20. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the Collateral
and shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Grantor, its successors and assigns, and
XXII-15
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(c) inure, together with the rights and remedies of Secured Party hereunder, to
the benefit of Secured Party and its permitted successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any
Lender may assign or otherwise transfer any Loans held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
payment in full of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters
of Credit, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to Grantor. Upon any such termination Secured
Party will, at Grantor's expense, execute and deliver to Grantor such documents
as Grantor shall reasonably request to evidence such termination.
SECTION 21. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Secured Party
hereunder.
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SECTION 22. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Grantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Grantor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 23. NOTICES. Any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or four Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed. For the purposes hereof, the address of each party hereto
shall be as set forth under such party's name on the signature pages hereof or,
as to either party, such other address as shall be designated by such party in
a written notice delivered to the other party hereto.
SECTION 24. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 25. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 26. HEADINGS. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 27. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
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PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 28. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Grantor hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to Grantor at its address provided in Section 23, such service being
hereby acknowledged by Grantor to be sufficient for personal jurisdiction in
any action against Grantor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Secured Party to bring proceedings against Grantor in the courts of any other
jurisdiction.
SECTION 29. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
LAW, GRANTOR AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Grantor and Secured Party each acknowledge that this waiver is a material
inducement for Grantor and Secured Party to enter into a business relationship,
that Grantor and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
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SECTION 30. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF GRANTOR]
By:
----------------------------------
Title:
----------------------
Notice Address:
BT COMMERCIAL CORPORATION
By:
----------------------------------
Title:
----------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1
<PAGE> 330
SCHEDULE I
TO SECURITY AGREEMENT
Supplemental Descriptions of Collateral
Specific Inventory Included in Collateral:
Assigned Agreements:
Deposit Accounts:
Trademark Registrations:
Copyright Registrations:
Patent Registrations:
<PAGE> 331
SCHEDULE II
TO SECURITY AGREEMENT
Tradenames:
Locations of Equipment:
Locations of Inventory:
Filing Jurisdictions:
<PAGE> 332
SCHEDULE III
TO SECURITY AGREEMENT
EXISTING FINANCING STATEMENTS
<PAGE> 333
EXHIBIT XXIII
[FORM OF SUBSIDIARY PLEDGE AGREEMENT]
SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (this "AGREEMENT") is dated
as of November __, 1997 and entered into by and between [INSERT NAME OF PLEDGOR
IN CAPS], a ____________ corporation ("PLEDGOR"), and BT COMMERCIAL
CORPORATION, as agent for and representative of (in such capacity herein called
"SECURED PARTY") the financial institutions ("LENDERS") party to the Credit
Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of (i) the
shares of stock (the "PLEDGED SHARES") described in Part A of Schedule I
annexed hereto and issued by the corporations named therein and (ii) the
indebtedness (the "PLEDGED DEBT") described in Part B of said Schedule I and
issued by the obligors named therein.
B. Secured Party and Lenders have entered into a Credit
Agreement dated as of November __, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with FWT, Inc., a Texas
corporation ("COMPANY"), pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
C. Pledgor, together with the other Subsidiaries of
Company, have executed and delivered the Subsidiary Guaranty dated as of
November __, 1997 (said Subsidiary Guaranty, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "GUARANTY") in
favor of Secured Party for the benefit of Lenders, pursuant to which Pledgor
has guarantied the prompt payment and performance when due of all obligations
of Company under the Credit Agreement.
D. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Pledgor shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement
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and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Pledgor hereby agrees with Secured Party as
follows:
SECTION 1. PLEDGE OF SECURITY. Pledgor hereby pledges to
Secured Party, and hereby grants to Secured Party a security interest in, all
of Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Shares and the certificates representing
the Pledged Shares and any interest of Pledgor in the entries on the books of
any financial intermediary pertaining to the Pledged Shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing the
Pledged Debt, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities
convertible into and warrants, options and other rights to purchase or
otherwise acquire, stock of any issuer of the Pledged Shares from time to time
acquired by Pledgor in any manner (which shares shall be deemed to be part of
the Pledged Shares), the certificates or other instruments representing such
additional shares, securities, warrants, options or other rights and any
interest of Pledgor in the entries on the books of any financial intermediary
pertaining to such additional shares, and all dividends, cash, warrants,
rights, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such additional shares, securities, warrants, options or other rights;
(d) all additional indebtedness from time to time owed to
Pledgor by any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into
and warrants, options and other rights to purchase or otherwise acquire, stock
of any Person that, after the date of this Agreement, becomes, as a result of
any occurrence, a direct Subsidiary of Pledgor (which shares shall be deemed to
be part of the Pledged Shares), the certificates or other instruments
representing such shares, securities, warrants, options or other rights and any
interest of Pledgor in the entries on the books of any financial intermediary
pertaining to such shares, and all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares, securities, warrants, options or other rights;
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(f) all indebtedness from time to time owed to Pledgor by
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct or indirect Subsidiary of Pledgor, and all interest, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f)
above, all proceeds of any or all of the foregoing Pledged Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Pledged Collateral or proceeds are sold, exchanged, collected
or otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, proceeds of any indemnity or guaranty payable
to Pledgor or Secured Party from time to time with respect to any of the
Pledged Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of
all obligations and liabilities of every nature of Pledgor now or hereafter
existing under or arising out of or in connection with the Credit Agreement,
the Guaranty and the other Loan Documents, and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to Pledgor,
would accrue on such obligations), reimbursement of amounts drawn under Letters
of Credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a preference,
fraudulent transfer or otherwise (all such obligations and liabilities being
the "UNDERLYING DEBT"), and all obligations of every nature of Pledgor now or
hereafter existing under this Agreement (all such obligations of Pledgor,
together with the Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates
or instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of Secured Party pursuant hereto and
shall be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by Pledgor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party. Secured Party shall have the right, at any time
in its discretion and without notice to Pledgor, to transfer to or to register
in the name of Secured Party or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 7(a). In
addition, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing
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Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor
represents and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All
of the Pledged Shares have been duly authorized and validly issued and are
fully paid and non-assessable. All of the Pledged Debt has been duly
authorized, authenticated or issued, and delivered and is the legal, valid and
binding obligation of the issuers thereof (subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally and equitable principles relating to enforceability) and is
not in default.
(b) Description of Pledged Collateral. The Pledged
Shares constitute 100 percent of the issued and outstanding shares of stock of
each of the direct Subsidiaries of Pledgor, and there are no outstanding
warrants, options or other rights to purchase, or other agreements outstanding
with respect to, or property that is now or hereafter convertible into, or that
requires the issuance or sale of, any Pledged Shares. The Pledged Debt
constitutes all of the issued and outstanding intercompany indebtedness
evidenced by a promissory note of the respective issuers thereof owing to
Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the
legal, record and beneficial owner of the Pledged Collateral free and clear of
any Lien except for the security interest created by this Agreement.
(d) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the pledge by Pledgor
of the Pledged Collateral pursuant to this Agreement and the grant by Pledgor
of the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Pledgor, or (iii) the exercise by Secured
Party of the voting or other rights, or the remedies in respect of the Pledged
Collateral, provided for in this Agreement (except as may be required in
connection with a disposition of Pledged Collateral by laws affecting the
offering and sale of securities generally).
(e) Perfection. Assuming Secured Party's continued
possession of the certificates representing the Pledged Shares, the pledge of
the Pledged Collateral pursuant to this Agreement creates a valid and perfected
first priority security interest in the Pledged Collateral, securing the
payment of the Secured Obligations.
(f) Margin Regulations. The pledge of the Pledged
Collateral pursuant to this Agreement does not violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System.
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SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED
COLLATERAL; ETC. Pledgor shall:
(a) not, except as expressly permitted by the Credit
Agreement, (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
(ii) create or suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement, or
(iii) permit any issuer of Pledged Shares to merge or consolidate unless all
the outstanding capital stock of the surviving or resulting corporation is,
upon such merger or consolidation, pledged hereunder and no cash, securities or
other property is distributed in respect of the outstanding shares of any other
constituent corporation; provided that in the event Pledgor makes an Asset Sale
permitted by the Credit Agreement and the assets subject to such Asset Sale are
Pledged Shares, Secured Party shall release the Pledged Shares that are the
subject of such Asset Sale to Pledgor free and clear of the lien and security
interest under this Agreement concurrently with the consummation of such Asset
Sale; provided, further that, as a condition precedent to such release, Secured
Party shall have received evidence satisfactory to it that arrangements
satisfactory to it have been made for delivery to Secured Party of the Net Cash
Proceeds of such Asset Sale to the extent contemplated in the Credit Agreement;
(b) (i) cause each issuer of Pledged Shares that is a
Subsidiary of Pledgor not to issue any stock or other securities in addition to
or in substitution for the Pledged Shares issued by such issuer, except to
Pledgor, (ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other securities
of each issuer of Pledged Shares, and (iii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all shares of stock
issued to or otherwise acquired by Pledgor of any Person that, after the date
of this Agreement, becomes, as a result of any occurrence, a direct Subsidiary
of Pledgor;
(c) (i) pledge hereunder, immediately upon their
issuance, any and all instruments or other evidences of additional indebtedness
from time to time owed to Pledgor by any obligor on the Pledged Debt, and (ii)
pledge hereunder, immediately upon their issuance, any and all instruments or
other evidences of indebtedness from time to time owed to Pledgor by any Person
that after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of Pledgor;
(d) promptly deliver to Secured Party all written notices
received by it as holder of the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the
Pledged Collateral, except to the extent the validity thereof is being
contested in good faith; provided that Pledgor shall in any event pay such
taxes, assessments, charges, levies or claims not later than five days prior to
the date of any proposed sale under any judgement, writ or warrant of
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attachment entered or filed against Pledgor or any of the Pledged Collateral as
a result of the failure to make such payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Pledgor agrees that from time to time, at the expense
of Pledgor, Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the foregoing, Pledgor
will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Secured Party may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
and (ii) at Secured Party's request, appear in and defend any action or
proceeding that may affect Pledgor's title to or Secured Party's security
interest in all or any part of the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining
any additional shares of stock or other securities required to be pledged
hereunder as provided in Section 5(b) or (c), promptly (and in any event within
five Business Days) deliver to Secured Party a Pledge Amendment, duly executed
by Pledgor, in substantially the form of Schedule II annexed hereto (a "PLEDGE
AMENDMENT"), in respect of the additional Pledged Shares or Pledged Debt to be
pledged pursuant to this Agreement. Pledgor hereby authorizes Secured Party to
attach each Pledge Amendment to this Agreement and agrees that all Pledged
Shares or Pledged Debt listed on any Pledge Amendment delivered to Secured
Party shall for all purposes hereunder be considered Pledged Collateral;
provided that the failure of Pledgor to execute a Pledge Amendment with respect
to any additional Pledged Shares or Pledged Debt pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred
and be continuing:
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Credit Agreement; provided,
however, that Pledgor shall not exercise or refrain from exercising
any such right if Secured Party shall have notified Pledgor that, in
Secured Party's judgment, such action would have a material adverse
effect on the value of the Pledged Collateral or any part thereof; and
provided, further, that Pledgor shall give Secured Party at least five
Business Days' prior written notice
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of the manner in which it intends to exercise, or the reasons for
refraining from exercising, any such right. It is understood,
however, that neither (A) the voting by Pledgor of any Pledged Shares
for or Pledgor's consent to the election of directors at a regularly
scheduled annual or other meeting of stockholders (or by written
consent) or with respect to incidental matters at any such meeting nor
(B) Pledgor's consent to or approval of any action otherwise permitted
under this Agreement and the Credit Agreement shall be deemed
inconsistent with the terms of this Agreement or the Credit Agreement
within the meaning of this Section 7(a)(i), and no notice of any such
voting or consent need be given to Secured Party;
(ii) Pledgor shall be entitled to receive and retain, and
to utilize free and clear of the lien of this Agreement (but subject
to the provisions of the Credit Agreement), any and all dividends,
principal and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
(A) dividends, principal and interest paid or
payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed
in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus
or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed
in redemption of or in exchange for any Pledged Shares,
shall be, and shall forthwith be delivered to Secured Party to hold
as, Pledged Collateral and shall, if received by Pledgor, be received
in trust for the benefit of Secured Party, be segregated from the
other property or funds of Pledgor and be forthwith delivered to
Secured Party as Pledged Collateral in the same form as so received
(with all necessary indorsements); and
(iii) Secured Party shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies,
dividend payment orders and other instruments as Pledgor may from time
to time reasonably request for the purpose of enabling Pledgor to
exercise the voting and other consensual rights which it is entitled
to exercise pursuant to paragraph (i) above and to receive the
dividends, principal or interest payments which it is authorized to
receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an
Event of Default:
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(i) upon written notice from Secured Party to Pledgor,
all rights of Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to
Section 7(a)(i) shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have the sole right
to exercise such voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to receive
and retain pursuant to Section 7(a)(ii) shall cease, and all such
rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to receive and hold as Pledged
Collateral such dividends and interest payments; and
(iii) all dividends, principal and interest payments which
are received by Pledgor contrary to the provisions of paragraph (ii)
of this Section 7(b) shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Pledgor and
shall forthwith be paid over to Secured Party as Pledged Collateral in
the same form as so received (with any necessary indorsements).
(c) In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to exercise
pursuant to Section 7(b)(i) and to receive all dividends and other
distributions which it may be entitled to receive under Section 7(a)(ii) or
Section 7(b)(ii), (i) Pledgor shall promptly execute and deliver (or cause to
be executed and delivered) to Secured Party all such proxies, dividend payment
orders and other instruments as Secured Party may from time to time reasonably
request and (ii) without limiting the effect of the immediately preceding
clause (i), Pledgor hereby grants to Secured Party an irrevocable proxy to vote
the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares would be entitled (including,
without limitation, giving or withholding written consents of shareholders,
calling special meetings of shareholders and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record books of the issuer
thereof) by any other Person (including the issuer of the Pledged Shares or any
officer or agent thereof), upon the occurrence of an Event of Default and which
proxy shall only terminate upon the payment in full of the Secured Obligations.
SECTION 8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to file one or more financing or continuation
statements, or amendments thereto, relative to all or any part of the Pledged
Collateral without the signature of Pledgor (to the extent permitted by
applicable law);
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(b) during the continuance of any Event of Default, to
ask, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Pledged Collateral;
(c) during the continuance of any Event of Default, to
receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) during the continuance of any Event of Default, to
file any claims or take any action or institute any proceedings that Secured
Party may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Pledged Collateral.
SECTION 9. SECURED PARTY MAY PERFORM. If Pledgor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Pledgor under Section
13(b).
SECTION 10. STANDARD OF CARE. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Pledged
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the custody of any Pledged
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Secured Party shall have no duty as to any Pledged Collateral, it
being understood that Secured Party shall have no responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral,
whether or not Secured Party has or is deemed to have knowledge of such
matters, (b) taking any necessary steps (other than steps taken in accordance
with the standard of care set forth above to maintain possession of the Pledged
Collateral) to preserve rights against any parties with respect to any Pledged
Collateral, (c) taking any necessary steps to collect or realize upon the
Secured Obligations or any guarantee therefor, or any part thereof, or any of
the Pledged Collateral, or (d) initiating any action to protect the Pledged
Collateral against the possibility of a decline in market value. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of Pledged Collateral in its possession if such Pledged Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Pledged Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "CODE") (whether or not the Code applies to the affected
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Pledged Collateral), and Secured Party may also in its sole discretion, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or at any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Secured Party may deem commercially
reasonable, irrespective of the impact of any such sales on the market price of
the Pledged Collateral. Secured Party or any Lender may be the purchaser of
any or all of the Pledged Collateral at any such sale and Secured Party, as
agent for and representative of Lenders (but not any Lender or Lenders in its
or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing), shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of
the Pledged Collateral sold at any such public sale, to use and apply any of
the Secured Obligations as a credit on account of the purchase price for any
Pledged Collateral payable by Secured Party at such sale. Each purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of Pledgor, and Pledgor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to Pledgor
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. Secured Party
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Pledgor hereby waives any claims against
Secured Party arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Secured Party accepts
the first offer received and does not offer such Pledged Collateral to more
than one offeree. If the proceeds of any sale or other disposition of the
Pledged Collateral are insufficient to pay all the Secured Obligations, Pledgor
shall be liable for the deficiency and the fees of any attorneys employed by
Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as from time to time
amended (the "SECURITIES ACT"), and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of
such Pledged Collateral under the Securities Act and/or such state securities
laws, to limit purchasers to those who will agree, among other things, to
acquire the Pledged Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges that
any such private sales may be at prices and on terms less favorable than those
obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under
the Securities Act) and Pledgor agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that
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Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Collateral for the period of time
necessary to permit the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request, Pledgor shall
and shall cause each issuer (which is a Subsidiary of Pledgor) of any Pledged
Shares to be sold hereunder from time to time to furnish to Secured Party all
such information as Secured Party may request in order to determine the number
of shares and other instruments included in the Pledged Collateral which may be
sold by Secured Party in exempt transactions under the Securities Act and the
rules and regulations of the Securities and Exchange Commission thereunder, as
the same are from time to time in effect.
SECTION 12. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral may, in the discretion of Secured Party, be held
by Secured Party as Pledged Collateral for, and/or then, or at any time
thereafter, applied in full or in part by Secured Party against, the Secured
Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Pledgor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection
with the exercise of any right or remedy hereunder, all in accordance
with Section 13;
SECOND: To the payment of all other Secured Obligations in
such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims,
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losses or liabilities result from Secured Party's or such Lender's gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Pledgor to perform or observe any of the provisions hereof.
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the payment in
full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), but subject to the
provisions of subsection 10.1 of the Credit Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination Secured Party
will, at Pledgor's expense, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination and Pledgor shall
be entitled to the return, upon its request and at its expense, against receipt
and without recourse to Secured Party, of such of the Pledged Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 15. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Pledged
Collateral), solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement;
XXIII-12
<PAGE> 345
and appointment of a successor Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute appointment of a successor Secured Party under
this Agreement. Upon the acceptance of any appointment as Agent under
subsection 9.5 of the Credit Agreement by a successor Agent, that successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Secured Party under this
Agreement, and the retiring or removed Secured Party under this Agreement shall
promptly (i) transfer to such successor Secured Party all sums, securities and
other items of Collateral held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Secured Party under this Agreement, and (ii) execute
and deliver to such successor Secured Party such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Secured Party of the security
interests created hereunder, whereupon such retiring or removed Secured Party
shall be discharged from its duties and obligations under this Agreement.
After any retiring or removed Agent's resignation or removal hereunder as
Secured Party, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 17. NOTICES. Any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or four Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed. For the purposes hereof, the address of each party hereto
shall be as set forth under such party's name on the signature pages hereof or,
as to either party, such other address as shall be designated by such party in
a written notice delivered to the other party hereto.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
XXIII-13
<PAGE> 346
SECTION 19. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Pledgor hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to Pledgor at its address provided in Section 17, such service being
hereby acknowledged by Pledgor to be sufficient for personal jurisdiction in
any action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Secured Party to bring proceedings against Pledgor in the courts of any other
jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, PLEDGOR AND SECURED PARTY HEREBY AGREE
XXIII-14
<PAGE> 347
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Secured Party each
acknowledge that this waiver is a material inducement for Pledgor and Secured
Party to enter into a business relationship, that Pledgor and Secured Party
have already relied on this waiver in entering into this Agreement and that
each will continue to rely on this waiver in their related future dealings.
Pledgor and Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
SECTION 24. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
XXIII-15
<PAGE> 348
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF PLEDGOR]
By:
----------------------------------
Title:
----------------------------
Notice Address:
----------------------
----------------------
----------------------
BT COMMERCIAL CORPORATION
By:
----------------------------------
Title:
----------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2324
Attention: Bhartai Baliga
S-1
<PAGE> 349
SCHEDULE I
Attached to and forming a part of the Subsidiary Pledge
Agreement dated as of November __, 1997 between _______________, as Pledgor,
and BT Commercial Corporation, as Secured Party.
Part A
<TABLE>
<CAPTION>
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- ------------ -------- ------------ ----- ---------
<S> <C> <C> <C> <C>
</TABLE>
Part B
<TABLE>
<CAPTION>
Debt Issuer Amount of Indebtedness
- ----------- ----------------------
<S> <C>
</TABLE>
I-1
<PAGE> 350
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Subsidiary Pledge Agreement dated November __, 1997, between the undersigned
and BT Commercial Corporation, as Secured Party (the "PLEDGE AGREEMENT,"
capitalized terms defined therein being used herein as therein defined), and
that the [Pledged Shares] [Pledged Debt] listed on this Pledge Amendment shall
be deemed to be part of the [Pledged Shares] [Pledged Debt] and shall become
part of the Pledged Collateral and shall secure all Secured Obligations.
[NAME OF PLEDGOR]
By:
--------------------------------
Title:
--------------------------
<TABLE>
<CAPTION>
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
- ------------ -------- ------------ ----- ---------
<S> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Debt Issuer Amount of Indebtedness
- ----------- ----------------------
<S> <C>
</TABLE>
II-1
<PAGE> 351
EXHIBIT XXIV
[FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT]
SUBSIDIARY TRADEMARK COLLATERAL SECURITY AGREEMENT
This SUBSIDIARY TRADEMARK COLLATERAL SECURITY AGREEMENT (this
"AGREEMENT") is dated as of November ___, 1997 and entered into by and between
[NAME OF ASSIGNOR], a ______________ corporation ("GRANTOR"), and BT COMMERCIAL
CORPORATION, as agent for and representative of (in such capacity herein called
"SECURED PARTY") the financial institutions ("LENDERS") party to the Credit
Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit
Agreement dated as of November ___, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with FWT, INC., a Texas
corporation ("COMPANY") pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
B. Grantor owns and uses in its business, and will in
the future adopt and so use, various intangible assets, including trademarks,
service marks, designs, logos, indicia, tradenames, corporate names, company
names, business names, fictitious business names, trade styles and/or other
source and/or business identifiers and applications pertaining thereto
(collectively, the "TRADEMARKS").
C. Secured Party desires Grantor to assign and grant to
it a lien on and security interest in all of Grantor's existing and future
Trademarks, all registrations that have been or may hereafter be issued or
applied for thereon in the United States and any state thereof and in foreign
countries (the "REGISTRATIONS"), all common law and other rights in and to the
Trademarks in the United States and any state thereof and in foreign countries
(the "TRADEMARK RIGHTS"), all goodwill of Grantor's business symbolized by the
Trademarks and associated therewith, including without limitation the documents
and things described in Section 1(b) (the "ASSOCIATED GOODWILL"), and all
proceeds of the Trademarks, the Registrations, the Trademark Rights and the
Associated Goodwill, and Grantor agrees to assign and grant to Secured Party a
secured and protected interest in the Trademarks, the Registrations, the
Trademark Rights, the Associated Goodwill and all the proceeds thereof as
provided herein.
D. Grantor has executed and delivered (i) the Subsidiary
Guaranty dated as of ______________ ___, _____ (said Subsidiary Guaranty, as it
may hereafter be
XXIV-1
<PAGE> 352
amended, supplemented or otherwise modified from time to time, being the
"GUARANTY") in favor of Secured Party for the benefit of Lenders, pursuant to
which Grantor has guaranteed the prompt payment and performance when due of all
Obligations of the Company under the Credit Agreement and (ii) the Subsidiary
Security Agreement dated as of _______________ __, 1997 (the "SUBSIDIARY
SECURITY AGREEMENT") between Grantor and Secured Party for the benefit of
Lenders, pursuant to which Grantor has granted Secured Party a security
interest in all of its personal property, including, without limitation, the
Collateral, as defined below, which Subsidiary Security Agreement is to be
supplemented by this Agreement.
E. Pursuant to the Subsidiary Security Agreement,
Grantor has assigned and granted to Secured Party a lien on and security
interest in, among other assets, all of Grantor's equipment, inventory,
accounts and general intangibles relating to the products and services sold or
delivered under or in connection with the Trademarks such that, upon the
occurrence and during the continuation of an Event of Default, Secured Party
would be able to exercise its remedies consistent with the Subsidiary Security
Agreement, this Agreement and applicable law to foreclose upon Grantor's
business and use the Trademarks, the Registrations and the Trademark Rights in
conjunction with the continued operation of such business, maintaining
substantially the same product and service specifications and quality as
maintained by Grantor, and benefit from the Associated Goodwill.
F. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Grantor shall have
assigned and granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor hereby agrees with Secured
Party as follows:
SECTION 1. ASSIGNMENT AND GRANT OF SECURITY. Grantor hereby
assigns to Secured Party, and hereby grants to Secured Party a security
interest in, all of Grantor's right, title and interest in and to the
following, in each case whether now or hereafter existing or in which Grantor
now has or hereafter acquires an interest and wherever the same may be located
(the "COLLATERAL"):
(a) each of the Trademarks and rights and interests in
Trademarks that are presently, or in the future may be, owned, held (whether
pursuant to a license or otherwise) or used by Grantor, in whole or in part
(including, without limitation, the Trademarks specifically identified in
Schedule A annexed hereto, as the same may be amended pursuant hereto from time
to time), and including all Trademark Rights with respect thereto and all
federal, state and foreign Registrations therefor heretofore or hereafter
granted or applied for, the right (but not the obligation) to register claims
under any state or federal trademark law or regulation or any trademark law or
regulation of any foreign country and to apply for, renew and extend the
Trademarks, Registrations and Trademark Rights, the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of Grantor or
XXIV-2
<PAGE> 353
in the name of Secured Party or otherwise for past, present and future
infringements of the Trademarks, Registrations or Trademark Rights and all
rights (but not obligations) corresponding thereto in the United States and any
foreign country, and the Associated Goodwill; it being understood that the
rights and interests included herein shall include, without limitation, all
rights and interests pursuant to licensing or other contracts in favor of
Grantor pertaining to any Trademarks, Registrations or Trademark Rights
presently or in the future owned, held or used by third parties but, in the
case of third parties which are not Affiliates of Grantor, only to the extent
permitted by such licensing or other contracts or otherwise permitted by
applicable law and, if not so permitted under any such contracts and applicable
law, only with the consent of such third parties;
(b) the following documents and things in Grantor's
possession, or subject to Grantor's right to possession, related to (Y) the
production, sale and delivery by Grantor, or by any Affiliate, licensee or
subcontractor of Grantor, of products or services sold or delivered by or under
the authority of Grantor in connection with the Trademarks, Registrations or
Trademark Rights (which products and services shall, for purposes of this
Agreement, be deemed to include, without limitation, products and services sold
or delivered pursuant to merchandising operations utilizing any Trademarks,
Registrations or Trademark Rights); or (Z) any retail or other merchandising
operations conducted under the name of or in connection with the Trademarks,
Registrations or Trademark Rights by Grantor or any Affiliate, licensee or
subcontractor of Grantor:
(i) all lists and ancillary documents that
identify and describe any of Grantor's customers, or those of its
Affiliates, licensees or subcontractors, for products sold and
services delivered under or in connection with the Trademarks or
Trademark Rights, including without limitation any lists and ancillary
documents that contain a customer's name and address, the name and
address of any of its warehouses, branches or other places of
business, the identity of the Person or Persons having the principal
responsibility on a customer's behalf for ordering products or
services of the kind supplied by Grantor, or the credit, payment,
discount, delivery or other sale terms applicable to such customer,
together with information setting forth the total purchases, by brand,
product, service, style, size or other criteria, and the patterns of
such purchases;
(ii) all product and service specification
documents and production and quality control manuals used in the
manufacture or delivery of products and services sold or delivered
under or in connection with the Trademarks or Trademark Rights;
(iii) all documents which reveal the name and
address of any source of supply, and any terms of purchase and
delivery, for any and all materials, components and services used in
the production of products and services sold or delivered under or in
connection with the Trademarks or Trademark Rights; and
XXIV-3
<PAGE> 354
(iv) all documents constituting or concerning the
then current or proposed advertising and promotion by Grantor or its
Affiliates, licensees or subcontractors of products and services sold
or delivered under or in connection with the Trademarks or Trademark
Rights including, without limitation, all documents which reveal the
media used or to be used and the cost for all such advertising
conducted within the described period or planned for such products and
services;
(c) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon;
(d) to the extent not included in the foregoing clauses
(a) - (c), all general intangibles relating to the Collateral; and
(e) all proceeds, products, rents and profits (including
without limitation license royalties and proceeds of infringement suits) of or
from any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "PROCEEDS" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of
all obligations and liabilities of every nature of Grantor now or hereafter
existing under or arising out of or in connection with the Credit Agreement,
the Guaranty and the other Loan Documents and all extensions or renewals
thereof, whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to Grantor,
would accrue on such obligations), reimbursement of amounts drawn under Letters
of Credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a preference,
fraudulent transfer or otherwise (all such obligations and liabilities being
the "UNDERLYING DEBT"), and all obligations of every nature of Grantor now or
hereafter existing under this Agreement (all such obligations of Grantor,
together with the Underlying Debt, being the "SECURED OBLIGATIONS").
XXIV-4
<PAGE> 355
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein
to the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor
represents and warrants as follows:
(a) Description of Collateral. A true and complete list
of all Trademarks, Registrations and Trademark Rights owned, held (whether
pursuant to a license or otherwise) or used by Grantor, in whole or in part, as
of the date of this Agreement is set forth in Schedule A annexed hereto. Each
Trademark, Registration or Trademark Right designated on Schedule A annexed
hereto as a Material Trademark Property, and each other Trademark, Registration
or Trademark Right hereafter arising or otherwise owned, held or used by
Grantor that is subsequently so designated, is referred to herein as a
"MATERIAL TRADEMARK PROPERTY".
(b) Validity and Enforceability of Collateral. Each
Material Trademark Property is valid, subsisting and enforceable. As of the
Closing Date, Grantor is not aware of any pending or threatened claim by any
third party that any Material Trademark Property is invalid or unenforceable or
that the use of any Material Trademark Property violates the rights of any
third person or of any basis for any such claim, and there is no such pending
or threatened claim, whether arising prior to or after the Closing Date, that
could reasonably be expected to have a Material Adverse Effect.
(c) Ownership of Collateral. Except for the interests
disclosed in Schedule B annexed hereto and the security interest assigned and
created by this Agreement, Grantor is the sole legal and beneficial owner of
the entire right, title and interest in and to each Material Trademark
Property, free and clear of any Lien other than the interests disclosed in
Schedule B annexed hereto and Liens of mechanics, materialmen, attorneys and
other similar liens imposed by law in the ordinary course of business in
connection with the establishment, creation or application for Registration of
any Trademarks, Registrations or Trademark Rights for sums not yet delinquent
or being contested in good faith (such Liens being referred to herein as
"PERMITTED TRADEMARK LIENS"). Except with respect to the interests disclosed
in Schedule B annexed hereto and such as may have been filed in favor of
Secured Party relating to this Agreement, no effective financing statement or
other instrument similar in effect covering all or any part of the Collateral
is on file in any filing or recording office, including the United States
Patent and Trademark Office.
XXIV-5
<PAGE> 356
(d) Office Locations; Other Names. The chief place of
business, the chief executive office and the office where Grantor keeps its
records regarding the Collateral is, and has been for the four month period
preceding the date hereof, located at ___________________________________.
Grantor has not in the past done, and does not now do, business under any other
name (including any trade-name or fictitious business name).
(e) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the assignment and
grant by Grantor of the security interest created hereby, (ii) the execution,
delivery or performance of this Agreement by Grantor, or (iii) the perfection
or exercise by Secured Party of its rights and remedies hereunder (except as
may have been taken by or at the direction of Grantor).
(f) Perfection. This Agreement, together with the filing
of a financing statement describing the Collateral with the Secretary of State
of the State of Texas and the recording of this Agreement with the United
States Patent and Trademark Office, assigns and creates a valid, perfected and,
except for the interests disclosed in Schedule B annexed hereto, first priority
security interest in the Collateral (subject only to Permitted Trademark
Liens), securing the payment of the Secured Obligations, and all filings and
other actions necessary or desirable to perfect and protect such security
interest have been duly made or taken.
(g) Other Information. All information heretofore,
herein or hereafter supplied to Secured Party by or on behalf of Grantor with
respect to the Collateral is accurate and complete in all respects.
SECTION 5. FURTHER ASSURANCES; NEW TRADEMARKS, REGISTRATIONS
AND TRADEMARK RIGHTS; CERTAIN INSPECTION RIGHTS.
(a) Grantor agrees that from time to time, at the expense
of Grantor, Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest assigned or granted or purported to be assigned or granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, Grantor will: (i) at the request of Secured Party, mark
conspicuously each of its records pertaining to the Collateral with a legend,
in form and substance satisfactory to Secured Party, indicating that such
Collateral is subject to the security interest granted hereby, (ii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby, (iii) use its best efforts to obtain
any necessary consents of third parties to the assignment and perfection of a
security interest to Secured Party with respect to any Collateral, (iv) at any
reasonable time, upon request by Secured Party, exhibit
XXIV-6
<PAGE> 357
the Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, and (v) at Secured Party's request, appear
in and defend any action or proceeding that may affect Grantor's title to or
Secured Party's security interest in all or any part of the Collateral.
(b) Grantor hereby authorizes Secured Party to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of Grantor. Grantor
agrees that a carbon, photographic or other reproduction of this Agreement or
of a financing statement signed by Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Grantor hereby authorizes Secured Party to modify
this Agreement without obtaining Grantor's approval of or signature to such
modification by amending Schedule A annexed hereto to include reference to any
right, title or interest in any existing Trademark, Registration or Trademark
Right or any Trademark, Registration or Trademark Right acquired or developed
by Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Trademark, Registration or Trademark Right in which
Grantor no longer has or claims any right, title or interest.
(d) Grantor will furnish to Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(e) If Grantor shall obtain rights to any new Trademarks,
Registrations or Trademark Rights, the provisions of this Agreement shall
automatically apply thereto. Grantor shall promptly notify Secured Party in
writing of any rights to any new Trademarks or Trademark Rights acquired by
Grantor after the date hereof and of any Registrations issued or applications
for Registration made after the date hereof, which notice shall state whether
such Trademark, Registration or Trademark Right constitutes a Material
Trademark Property. Concurrently with the filing of an application for
Registration for any Trademark, Grantor shall execute, deliver and record in
all places where this Agreement is recorded an appropriate Trademark Security
Agreement, substantially in the form hereof, with appropriate insertions, or an
amendment to this Agreement, in form and substance satisfactory to Secured
Party, pursuant to which Grantor shall assign and grant a security interest to
the extent of its interest in such Registration as provided herein to Secured
Party unless so doing would, in the reasonable judgment of Grantor, after due
inquiry, result in the grant of a Registration in the name of Secured Party, in
which event Grantor shall give written notice to Secured Party as soon as
reasonably practicable and the filing shall instead be undertaken as soon as
practicable but in no case later than immediately following the grant of the
Registration.
(f) Grantor hereby grants to Secured Party and its
employees, representatives and agents the right to visit Grantor's and any of
its Affiliate's or subcontractor's plants, facilities and other places of
business that are utilized in connection
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with the manufacture, production, inspection, storage or sale of products and
services sold or delivered under any of the Trademarks, Registrations or
Trademark Rights (or which were so utilized during the prior six month period),
and to inspect the quality control and all other records relating thereto upon
reasonable notice to Grantor and as often as may be reasonably requested.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral;
(b) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of
any change in Grantor's chief place of business or chief executive office or
the office where Grantor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Collateral,
except to the extent the validity thereof is being contested in good faith;
provided that Grantor shall in any event pay such taxes, assessments, charges,
levies or claims not later than five days prior to the date of any proposed
sale under any judgement, writ or warrant of attachment entered or filed
against Grantor or any of the Collateral as a result of the failure to make
such payment;
(e) not sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral except as permitted by the Credit
Agreement;
(f) except for the interests disclosed in Schedule B
annexed hereto, Permitted Trademark Liens and the security interest assigned
and created by this Agreement, not create or suffer to exist any Lien upon or
with respect to any of the Collateral to secure the indebtedness or other
obligations of any Person;
(g) diligently keep reasonable records respecting the
Collateral and at all times keep at least one complete set of its records
concerning substantially all of the Trademarks, Registrations and Trademark
Rights at its chief executive office or principal place of business;
(h) not permit the inclusion in any contract to which it
becomes a party of any provision that could or might in any way conflict with
this Agreement or impair or prevent the assignment and creation of a security
interest in Grantor's rights and interests in any property included within the
definitions of any Trademarks, Registrations, Trademark Rights and Associated
Goodwill;
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(i) take all steps necessary to protect the secrecy of
all trade secrets relating to the products and services sold or delivered under
or in connection with the Trademarks and Trademark Rights, including without
limitation entering into confidentiality agreements with employees and labeling
and restricting access to secret information and documents;
(j) use proper statutory notice in connection with its
use of each Material Trademark Property to the extent reasonably necessary for
the protection of such Material Trademark Property;
(k) use consistent standards of high quality (which may
be consistent with Grantor's past practices) in the manufacture, sale and
delivery of products and services sold or delivered under or in connection with
the Trademarks, Registrations and Trademark Rights, including, to the extent
applicable, in the operation and maintenance of its merchandising operations;
and
(l) upon any officer of Grantor obtaining knowledge
thereof, promptly notify Secured Party in writing of any event that may
materially and adversely affect the value of the Collateral or any portion
thereof, the ability of Grantor or Secured Party to dispose of the Collateral
or any portion thereof, or the rights and remedies of Secured Party in relation
thereto, including without limitation the levy of any legal process against the
Collateral or any portion thereof.
SECTION 7. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL.
Except as otherwise provided in this Section 7, Grantor shall continue to
collect, at its own expense, all amounts due or to become due to Grantor in
respect of the Collateral or any portion thereof. In connection with such
collections, Grantor may take (and, at Secured Party's direction, shall take)
such action as Grantor or Secured Party may deem necessary or advisable to
enforce collection of such amounts; provided, however, that Secured Party shall
have the right at any time, upon the occurrence and during the continuation of
an Event of Default or a Potential Event of Default and upon written notice to
Grantor of its intention to do so, to notify the obligors with respect to any
such amounts of the existence of the security interest assigned and created
hereby, and to direct such obligors to make payment of all such amounts
directly to Secured Party, and, upon such notification and at the expense of
Grantor, to enforce collection of any such amounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as Grantor might have done. After receipt by Grantor of the notice from
Secured Party referred to in the proviso to the preceding sentence, (i) all
amounts and proceeds (including checks and other instruments) received by
Grantor in respect of amounts due to Grantor in respect of the Collateral or
any portion thereof shall be received in trust for the benefit of Secured Party
hereunder, shall be segregated from other funds of Grantor and shall be
forthwith paid over or delivered to Secured Party in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 14, and (ii) Grantor shall not adjust, settle or
compromise the amount or payment of any such amount or release wholly or partly
any obligor with respect thereto or allow any credit or discount thereon.
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SECTION 8. TRADEMARK APPLICATIONS AND LITIGATION.
(a) Grantor shall have the duty diligently, through
counsel reasonably acceptable to Secured Party, to prosecute any trademark
application relating to any Material Trademark Property that is pending as of
the date of this Agreement, to make federal application on any existing or
future registerable but unregistered Material Trademark Property (whenever it
is commercially reasonable in the reasonable judgment of Grantor to do so), and
to file and prosecute opposition and cancellation proceedings, renew
Registrations and do any and all acts which are necessary or desirable to
preserve and maintain all rights in all Material Trademark Properties. Any
expenses incurred in connection therewith shall be borne solely by Grantor.
Grantor shall not abandon any Material Trademark Property.
(b) Except as provided in Section 8(d), Grantor shall
have the right to commence and prosecute in its own name, as real party in
interest, for its own benefit and at its own expense, such suits, proceedings
or other actions for infringement, unfair competition, dilution or other damage
as are in its reasonable business judgment necessary to protect the Collateral.
Secured Party shall provide, at Grantor's expense, all reasonable and necessary
cooperation in connection with any such suit, proceeding or action including,
without limitation, joining as a necessary party.
(c) Grantor shall promptly, following its becoming aware
thereof, notify Secured Party of the institution of, or of any adverse
determination in, any proceeding (whether in the United States Patent and
Trademark Office or any federal, state, local or foreign court) described in
Section 8(a) or 8(b) or regarding Grantor's claim of ownership in or right to
use any of the Trademarks, Registrations or Trademark Rights, its right to
register the same, or its right to keep and maintain such Registration.
Grantor shall provide to Secured Party any information with respect thereto
requested by Secured Party.
(d) Anything contained herein to the contrary
notwithstanding, upon the occurrence and during the continuation of an Event of
Default, Secured Party shall have the right (but not the obligation) to bring
suit, in the name of Grantor, Secured Party or otherwise, to enforce any
Trademark, Registration, Trademark Right, Associated Goodwill and any license
thereunder, in which event Grantor shall, at the request of Secured Party, do
any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in Section 15 in connection
with the exercise of its rights under this Section 8. To the extent that
Secured Party shall elect not to bring suit to enforce any Trademark,
Registration, Trademark Right, Associated Goodwill or any license thereunder as
provided in this Section 8(d), Grantor agrees to use all reasonable measures,
whether by action, suit, proceeding or otherwise, to prevent the infringement
of any of the Trademarks, Registrations, Trademark Rights or Associated
Goodwill by others and for that purpose agrees to diligently maintain any
action, suit or proceeding against any Person so infringing necessary to
prevent such infringement.
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SECTION 9. NON-DISTURBANCE AGREEMENTS, ETC. If and to the
extent that Grantor is permitted to license the Collateral, Secured Party shall
enter into a non-disturbance agreement or other similar arrangement, at
Grantor's request and expense, with Grantor and any licensee of any Collateral
permitted hereunder in form and substance satisfactory to Secured Party
pursuant to which (a) Secured Party shall agree not to disturb or interfere
with such licensee's rights under its license agreement with Grantor so long as
such licensee is not in default thereunder and (b) such licensee shall
acknowledge and agree that the Collateral licensed to it is subject to the
security interest assigned and created in favor of Secured Party and the other
terms of this Agreement.
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Grantor hereby irrevocably appoints Secured Party as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of
this Agreement, including without limitation:
(a) to endorse Grantor's name on all applications,
documents, papers and instruments necessary for Secured Party in the use or
maintenance of the Collateral;
(b) to ask for, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above;
(d) to file any claims or take any action or institute
any proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon
or threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in
its sole discretion, any such payments made by Secured Party to become
obligations of Grantor to Secured Party, due and payable immediately without
demand; and
(f) upon the occurrence and during the continuation of an
Event of Default, (i) to execute and deliver any of the assignments or
documents requested by Secured Party pursuant to Section 13(b), (ii) to grant
or issue an exclusive or non-exclusive license to the Collateral or any portion
thereof to any Person, and (iii) otherwise generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Secured Party were the absolute owner thereof
for all purposes, and to do, at Secured Party's option and Grantor's expense,
at any time or from
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time to time, all acts and things that Secured Party deems necessary to
protect, preserve or realize upon the Collateral and Secured Party's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as Grantor might do.
SECTION 11. SECURED PARTY MAY PERFORM. If Grantor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Grantor under Section 15.
SECTION 12. STANDARD OF CARE. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property.
SECTION 13. REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) Secured Party may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Collateral), and also may (i) require Grantor to, and Grantor hereby agrees
that it will at its expense and upon request of Secured Party forthwith,
assemble all or part of the Collateral as directed by Secured Party and make it
available to Secured Party at a place to be designated by Secured Party that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store the Collateral
or otherwise prepare the Collateral for disposition in any manner to the extent
Secured Party deems appropriate, (iv) take possession of Grantor's premises or
place custodians in exclusive control thereof, remain on such premises and use
the same for the purpose of taking any actions described in the preceding
clause (iii) and collecting any Secured Obligation, (v) exercise any and all
rights and remedies of Grantor under or in connection with the contracts
related to the Collateral or otherwise in respect of the Collateral, including
without limitation any and all rights of Grantor to demand or otherwise require
payment of any amount under, or performance of any provision of, such
contracts, and (vi) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of Secured Party's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Secured Party may deem commercially reasonable. Secured
Party or any Lender may be the purchaser of any or all of the Collateral at any
such sale and Secured Party, as agent for and
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representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by Secured Party at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Grantor, and Grantor hereby waives (to the extent permitted by applicable law)
all rights of redemption, stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to Grantor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Grantor hereby waives any claims against Secured Party arising by reason of the
fact that the price at which any Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if Secured Party accepts the first offer received and does not offer
such Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
(b) Upon written demand from Secured Party, Grantor shall
execute and deliver to Secured Party an assignment or assignments of the
Trademarks, Registrations, Trademark Rights and the Associated Goodwill and
such other documents as are requested by Secured Party. Grantor agrees that
such an assignment and/or recording shall be applied to reduce the Secured
Obligations outstanding only to the extent that Secured Party (or any Lender)
receives cash proceeds in respect of the sale of, or other realization upon,
the Collateral.
(c) Within five Business Days after written notice from
Secured Party, Grantor shall make available to Secured Party, to the extent
within Grantor's power and authority, such personnel in Grantor's employ on the
date of such Event of Default as Secured Party may reasonably designate, by
name, title or job responsibility, to permit Grantor to continue, directly or
indirectly, to produce, advertise and sell the products and services sold or
delivered by Grantor under or in connection with the Trademarks, Registrations
and Trademark Rights, such persons to be available to perform their prior
functions on Secured Party's behalf and to be compensated by Secured Party at
Grantor's expense on a per diem, pro-rata basis consistent with the salary and
benefit structure applicable to each as of the date of such Event of Default.
SECTION 14. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale
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of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of Secured Party, be held by Secured Party as
Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following
order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Grantor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection
with the exercise of any right or remedy hereunder, all in accordance
with Section 15.
SECOND: To the payment of all other Secured Obligations in
such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 15. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
from Secured Party's or such Lender's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Grantor to perform or observe any of the provisions hereof.
SECTION 16. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall assign and create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and assigns. Without
limiting the generality
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of the foregoing clause (c), but subject to the provisions of subsection 10.1
of the Credit Agreement, any Lender may assign or otherwise transfer any Loans
held by it to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to Lenders herein or
otherwise. Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, the security interest assigned
and granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such termination Secured Party will, at Grantor's
expense, execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.
SECTION 17. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Secured Party
hereunder.
SECTION 18. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Grantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Grantor. Any
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such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
SECTION 19. NOTICES. Any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage
prepaid and properly addressed. For the purposes hereof, the address of each
party hereto shall be as set forth under such party's name on the signature
pages hereof or, as to either party, such other address as shall be designated
by such party in a written notice delivered to the other party hereto.
SECTION 20. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 21. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 22. HEADINGS. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 23. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
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SECTION 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, GRANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO GRANTOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 19;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER GRANTOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 24
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
SECTION 25. WAIVER OF JURY TRIAL. GRANTOR AND SECURED PARTY
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Grantor and Secured
Party each acknowledge that this waiver is a material inducement for Grantor
and Secured Party to enter into a business relationship, that Grantor and
Secured Party have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver in their related
future dealings. Grantor and Secured Party further warrant and represent that
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each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 25 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
SECTION 26. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
XXIV-18
<PAGE> 369
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF GRANTOR]
By:
-------------------------------------
Title:
Notice Address:
------------------------
------------------------
------------------------
BT COMMERCIAL CORPORATION
By:
-------------------------------------
Title:
Notice Address: BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2324
Attention: Bhartai Baliga
S-1
<PAGE> 370
SCHEDULE A
TO
SUBSIDIARY TRADEMARK COLLATERAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
UNITED STATES
REGISTERED TRADEMARK REGISTRATION REGISTRATION
OWNER DESCRIPTION NUMBER DATE
- ---------- ------------- ------------ ------------
<S> <C> <C> <C>
</TABLE>
A-1
<PAGE> 371
SCHEDULE B
TO
SUBSIDIARY TRADEMARK COLLATERAL SECURITY AGREEMENT
B-1
<PAGE> 372
EXHIBIT XXV
[FORM OF SUBSIDIARY PATENT SECURITY AGREEMENT]
SUBSIDIARY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
This SUBSIDIARY PATENT COLLATERAL ASSIGNMENT AND SECURITY
AGREEMENT (this "AGREEMENT") is dated as of ___________, ____ and entered into
by and between [NAME OF ASSIGNOR], a _____________ corporation ("ASSIGNOR"),
and BT COMMERCIAL CORPORATION, as agent for and representative of (in such
capacity herein called "ASSIGNEE") the financial institutions ("LENDERS") party
to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Assignee and Lenders have entered into a Credit
Agreement dated as of November 12, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with FWT, Inc., a Texas
corporation ("COMPANY"), pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
B. Assignor has and may in the future have rights, title
and interests in and to various Patents and other related Collateral (as such
terms are hereinafter defined).
C. Assignor is willing to grant to Assignee (i) a
security interest in all such Collateral for the purpose of securing the
complete and timely satisfaction of all of the Secured Obligations (as
hereinafter defined) and (ii) effective upon the occurrence and during the
continuation of an Event of Default, an assignment of Assignor's entire right,
title and interest in and to all such Collateral.
D. Assignor has executed and delivered (i) the
Subsidiary Guaranty dated as of ___________, ____ (said Subsidiary Guaranty, as
it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "GUARANTY") in favor of Assignee for the benefit of Lenders,
pursuant to which Assignor has guarantied the prompt payment and performance
when due of all Obligations of the Company under the Credit Agreement and (ii)
the Subsidiary Security Agreement dated as of ___________, ____ (the
"SUBSIDIARY SECURITY AGREEMENT") between Assignor and Assignee for the benefit
of Lenders, pursuant to which Assignor has granted Assignee a security interest
in all of its personal property, including without limitation, the Collateral,
as defined herein, which Subsidiary Security Agreement is to be supplemented by
this Agreement.
XXV-1
<PAGE> 373
E. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Assignor shall have
granted the security interests and made the conditional assignment and
undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Assignor hereby agrees with Assignee
as follows:
SECTION 1. GRANT OF SECURITY. Assignor hereby grants to
Assignee a security interest in all of Assignor's right, title and interest in
and to the following, in each case whether now or hereafter existing or in
which Assignor now has or hereafter acquires an interest and wherever the same
may be located (the "COLLATERAL"):
(a) all patents and patent applications and rights and
interests in patents and patent applications under any domestic law that are
presently, or in the future may be, owned by Assignor and all patents and
patent applications and rights and interests in patents and patent applications
under any domestic law that are presently, or in the future may be, held or
used by Assignor in whole or in part (including, without limitation, the
patents and patent applications listed in Schedule A annexed hereto, as the
same may be amended pursuant hereto from time to time), all rights (but not
obligations) corresponding thereto (including without limitation the right (but
not the obligation) to sue for past, present and future infringements in the
name of Assignor or in the name of Assignee or Lenders), and all re-issues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof (all of the foregoing being collectively referred to as the "PATENTS");
it being understood that the rights and interest assigned hereby shall include,
without limitation, all rights and interests pursuant to licensing or other
contracts in favor of Assignor pertaining to patent applications and patents
presently or in the future owned or used by third parties but, in the case of
third parties which are not Affiliates of Assignor, only to the extent
permitted by such licensing or other contracts and, if not so permitted, only
with the consent of such third parties;
(b) All general intangibles relating to the Patents;
(c) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon; and
(d) all proceeds, products, rents and profits (including
without limitation license royalties and proceeds of infringement suits) of or
from any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Assignee is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of
XXV-2
<PAGE> 374
the foregoing Collateral. For purposes of this Agreement, the term "PROCEEDS"
includes whatever is receivable or received when Collateral or proceeds are
sold, exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.
Notwithstanding the foregoing, Collateral shall exclude any
intellectual property right, contracts and agreements to the extent, and only
to the extent, that such intellectual property right, contract or agreement
contains a provision enforceable at law and in equity that would be breached by
(or would result in the termination of such intellectual property contract or
agreement upon) the grant of the security interest created herein pursuant to
the terms of this Agreement; provided, however, that if and when any
prohibition on the assignment, pledge or grant of a security interest in such
intellectual property right, contract or agreement is removed, the Secured
Party will be deemed to have been granted a security interest in such
intellectual property right, contract or agreement as of the date hereof, and
the Collateral will be deemed to include such intellectual property right,
contract or agreement.
SECTION 2. CONDITIONAL ASSIGNMENT. In addition to, and not
by way of limitation of, the granting of a security interest in the Collateral
pursuant to Section 1, Assignor hereby, effective only upon the occurrence and
during the continuance of an Event of Default and upon written notice from
Assignee and subject to the terms of this Agreement, grants, sells, conveys,
transfers, assigns and sets over to Assignee, for its benefit and the ratable
benefit of Lenders, all of Assignor's right, title and interest in and to the
Collateral, including without limitation Assignor's right, title and interest
in and to the Patents identified in Schedule A annexed hereto.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of
all obligations and liabilities of every nature of Assignor now or hereafter
existing under or arising out of or in connection with the Credit Agreement,
Guaranty and the other Loan Documents and all extensions or renewals thereof,
whether for principal, interest (including without limitation interest that,
but for the filing of a petition in bankruptcy with respect to Assignor, would
accrue on such obligations), reimbursement of amounts drawn under Letters of
Credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Assignee or any Lender as a preference, fraudulent
transfer or otherwise (all such obligations and liabilities being the
"UNDERLYING DEBT"), and all obligations of every nature of Assignor now or
hereafter existing under this Agreement (all such obligations of Assignor,
together with the Underlying Debt, being the "SECURED OBLIGATIONS").
XXV-3
<PAGE> 375
SECTION 4. ASSIGNOR REMAINS LIABLE. Anything contained
herein to the contrary notwithstanding, (a) Assignor shall remain liable under
any contracts and agreements included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by
Assignee of any of its rights hereunder shall not release Assignor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) Assignee shall not have any obligation or liability under
any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Assignee be obligated to perform any of the obligations or
duties of Assignor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Assignor
represents and warrants as follows:
(a) Description of Collateral. A true and complete list
of all Patents owned, held (whether pursuant to a license or otherwise) or used
by Assignor, in whole or in part, as of the date of this Agreement is set forth
in Schedule A annexed hereto.
(b) Validity and Enforceability of Collateral. Each of
the Patents that is material to the business of Assignor is valid, subsisting
and enforceable and Assignor is not aware of any pending or, to Assignor's
knowledge, threatened claim by any third party that any such material Patent is
invalid or unenforceable or that the use of any such material Patents violates
the rights of any third person or of any basis for any such claim.
(c) Ownership of Collateral. Except for any interests
disclosed in Schedule B annexed hereto, if any, Permitted Encumbrances and the
security interest and conditional assignment created by this Agreement,
Assignor owns the Collateral free and clear of any Lien. Except with respect
to any interests disclosed in Schedule B annexed hereto and such as may have
been filed in favor of Assignee relating to this Agreement, (i) no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the Collateral is on file in the
United States Patent and Trademark Office.
SECTION 6. NEW PATENTS AND PATENT APPLICATIONS.
(a) Assignor hereby authorizes Assignee to modify this Agreement without
obtaining Assignor's approval of or signature to such modification by amending
Schedule A annexed hereto to include reference to any right, title or interest
in any existing Patent or any Patent acquired or developed by Assignor after
the execution hereof or to delete any reference to any right, title or interest
in any Patent in which Assignor no longer has or claims any right, title or
interest.
(b) If Assignor shall hereafter obtain rights to any
patentable inventions, or become entitled to the benefit of any patent
application or patent or any reissue,
XXV-4
<PAGE> 376
division, continuation, renewal, extension, or continuation-in-part of any
Patent or any improvement on any Patent, the provisions of this Agreement shall
automatically apply thereto. Assignor shall promptly notify Assignee in writing
of any Patents acquired by Assignor after the date hereof. Concurrently with
the filing of an application for any Patent, Assignor shall execute, deliver
and record in all places where this Agreement is recorded an appropriate Patent
Collateral Assignment and Security Agreement, substantially in the form hereof,
with appropriate insertions, or an amendment to this Agreement, in form and
substance satisfactory to Assignee, pursuant to which Assignor shall grant a
security interest and conditional assignment to the extent of its interest in
such Patent as provided herein to Assignee unless so doing would, in the
reasonable judgment of Assignor, after due inquiry, result in the grant of a
patent in the name of Assignee, in which event Assignor shall give written
notice to Assignee as soon as reasonably practicable and the filing shall
instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the Patent.
SECTION 7. CERTAIN COVENANTS OF ASSIGNOR. Assignor shall:
(a) diligently keep reasonable records respecting the
Collateral and at all times keep at least one complete set of its records
concerning substantially all of the Patents at its chief executive office or
principal place of business;
(b) use commercially reasonable efforts not to permit the
inclusion in any contract to which it becomes a party after the date hereof of
any provision that could or might in any way impair or prevent the creation of
a security interest in, or the assignment of, Assignor's rights and interests
in any property included within the definition of any Patents acquired under
such contracts;
(c) take all steps reasonably necessary to protect the
secrecy of all trade secrets relating to the products and services sold or
delivered under or in connection with the Patents, including without limitation
entering into confidentiality agreements with employees and labeling and
restricting access to secret information and documents;
(d) use proper statutory notice in connection with its
use of each of the Patents; and
(e) use consistent standards of high quality (which may
be consistent with Assignor's past practices) in the manufacture, sale and
delivery of products and services sold or delivered under or in connection with
the Patents, including, to the extent applicable, in the operation and
maintenance of its retail stores and other merchandising operations.
SECTION 8. CERTAIN INSPECTION RIGHTS. Assignor hereby grants
to Assignee and its employees, representatives and agents the right to visit,
during Assignor's normal business hours, Assignor's plants, facilities and
other places of business that are utilized in connection with the manufacture,
production, inspection,
XXV-5
<PAGE> 377
storage or sale of products and services sold or delivered under any of the
Patents (or which were so utilized during the prior six month period), and to
inspect the quality control and all other records relating thereto upon
reasonable notice to Assignor and as often as may be reasonably requested (but
in no event more than two (2) times in any calendar year), provided, however,
that Assignee shall have the right to an unlimited number of visits during an
Event of Default.
SECTION 9. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL.
Except as otherwise provided in this Section 9, Assignor shall continue to
collect, at its own expense, all amounts due or to become due to Assignor in
respect of the Collateral or any portion thereof. In connection with such
collections, Assignor may take (and, at Assignee's direction, shall take) such
action as Assignor or Assignee may deem necessary or advisable to enforce
collection of such amounts; provided, however, that Assignee shall have the
right at any time, upon the occurrence and during the continuation of an Event
of Default and upon written notice to Assignor of its intention to do so, to
notify the obligors with respect to any such amounts of the existence of the
security interest created, and the conditional assignment effected hereby, and
to direct such obligors to make payment of all such amounts directly to
Assignee, and, upon such notification and at the expense of Assignor, to
enforce collection of any such amounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as
Assignor might have done. After receipt by Assignor of the notice from
Assignee referred to in the proviso to the preceding sentence, (i) all amounts
and proceeds (including checks and other instruments) received by Assignor in
respect of amounts due to Assignor in respect of the Collateral or any portion
thereof shall be received in trust for the benefit of Assignee hereunder, shall
be segregated from other funds of Assignor and shall be forthwith paid over or
delivered to Assignee in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section
17, and (ii) Assignor shall not adjust, settle or compromise the amount or
payment of any such amount or release wholly or partly any obligor with respect
thereto or allow any credit or discount thereon.
SECTION 10. PATENT APPLICATIONS AND LITIGATION.
(a) Assignor shall have the duty diligently (subject to
Assignor's reasonable business judgment), through counsel reasonably acceptable
to Assignee, to prosecute any patent application relating to any of the Patents
specifically identified in Schedule A annexed hereto that is pending as of the
date of this Agreement, to make application on any existing or future
unpatented but patentable invention that is material to Assignor, and to do any
and all acts which are necessary or desirable to preserve and maintain all
rights in all Patents. Any expenses incurred in connection therewith shall be
borne solely by Assignor. Subject to the foregoing and Assignor's reasonable
judgment, Assignor shall not abandon any right to file a patent application or
any pending patent application or any Patent without the prior written consent
of Assignee.
XXV-6
<PAGE> 378
(b) Except as provided in Section 10(d) and
notwithstanding Section 2, Assignor shall have the right to commence and
prosecute in its own name, as real party in interest, for its own benefit and
at its own expense, such suits, proceedings or other actions for infringement,
unfair competition, or other damage or reexamination or reissue proceedings as
are in its reasonable business judgment necessary to protect the Collateral.
Assignee shall provide, at Assignor's expense, all reasonable and necessary
cooperation in connection with any such suit, proceeding or action including,
without limitation, joining as a necessary party.
(c) Assignor shall promptly, following its becoming aware
thereof, notify Assignee of the institution of, or of any adverse determination
in, any proceeding (whether in the United States Patent and Trademark Office or
any federal, state, local or foreign court) described in Section 10(a) or 10(b)
or regarding Assignor's interests in any material Collateral. Assignor shall
provide to Assignee any information with respect thereto reasonably requested
by Assignee.
(d) Anything contained herein to the contrary
notwithstanding, upon the occurrence and during the continuation of an Event of
Default, Assignee shall have the right (but not the obligation) to bring suit,
in the name of Assignor, Assignee or otherwise, to enforce any Patent and any
license thereunder, in which event Assignor shall, at the request of Assignee,
do any and all lawful acts and execute any and all documents required by
Assignee in aid of such enforcement and Assignor shall promptly, upon demand,
reimburse and indemnify Assignee as provided in Section 18 in connection with
the exercise of its rights under this Section 10. To the extent that Assignee
elects not to bring suit to enforce any Patent or any license thereunder as
provided in this Section 10(d), Assignor agrees to use all reasonable measures,
whether by action, suit, proceeding or otherwise, to prevent the infringement
of any of the Patents by others and for that purpose agrees to diligently
maintain any action, suit or proceeding against any Person so infringing
necessary to prevent such infringement.
SECTION 11. NON-DISTURBANCE AGREEMENTS, ETC. If and to the
extent that Assignor is permitted to license the Collateral, Assignee shall
enter into a non-disturbance agreement or other similar arrangement, at
Assignor's request and expense, with Assignor and any licensee of any
Collateral permitted hereunder in form and substance satisfactory to Assignee
pursuant to which (a) Assignee shall agree not to disturb or interfere with
such licensee's rights under its license agreement with Assignor so long as
such licensee is not in default thereunder and (b) such licensee shall
acknowledge and agree that the Collateral licensed to it is subject to the
security interest and conditional assignment created in favor of Assignee and
the other terms of this Agreement.
SECTION 12. REASSIGNMENT OF COLLATERAL. If (a) an Event of
Default shall have occurred and, by reason of cure, waiver, modification,
amendment or otherwise, no longer be continuing, (b) no other Event of Default
shall have occurred and be continuing, (c) an assignment to Assignee of any
rights, title and interests in and to the
XXV-7
<PAGE> 379
Collateral shall have been previously made and shall have become absolute and
effective pursuant to Section 2, Section 13(f) or Section 16(b), and (d) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of Assignor and the written consent of Assignee; then Assignee
shall promptly execute and deliver to Assignor such assignments as may be
necessary to reassign to Assignor any such rights, title and interests as may
have been assigned to Assignee as aforesaid, subject to any disposition thereof
that may have been made by Assignee pursuant hereto; provided that, after
giving effect to such reassignment, Assignee's security interest and
conditional assignment granted pursuant to Section 1 and Section 2, as well as
all other rights and remedies of Assignee granted hereunder, shall continue to
be in full force and effect; and provided, further that the rights, title and
interests so reassigned shall be free and clear of all Liens other than Liens
(if any) encumbering such rights, title and interest at the time of their
assignment to Assignee and Permitted Encumbrances.
SECTION 13. ASSIGNEE APPOINTED ATTORNEY-IN-FACT. Assignor
hereby irrevocably appoints Assignee as Assignor's attorney-in-fact, with full
authority in the place and stead of Assignor and in the name of Assignor,
Assignee or otherwise, from time to time in Assignee's discretion to take any
action and to execute any instrument that Assignee may deem necessary or
advisable, consistent with the terms of this Agreement, to accomplish the
purposes of this Agreement, including without limitation:
(a) to endorse Assignor's name on all applications,
documents, papers and instruments necessary for Assignee in the use or
maintenance of the Collateral;
(b) during the continuance of an Event of Default, to ask
for, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above;
(d) during the continuance of an Event of Default, to
file any claims or take any action or institute any proceedings that Assignee
may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Assignee with respect to any of the
Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed upon
or threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Assignee in its
sole discretion, any such payments made by Assignee to become obligations of
Assignor to Assignee, due and payable immediately without demand; and
(f) upon the occurrence and during the continuation of an
Event of Default, (i) to execute and deliver any of the assignments or
documents requested by
XXV-8
<PAGE> 380
Assignee pursuant to Section 16(b), (ii) to grant or issue an exclusive or
non-exclusive license to the Collateral or any portion thereof to any Person,
and (iii) otherwise generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Assignee were the absolute owner thereof for all purposes,
and to do, at Assignee's option and Assignor's expense, at any time or from
time to time, all acts and things that Assignee deems necessary to protect,
preserve or realize upon the Collateral and Assignee's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as Assignor might do.
SECTION 14. ASSIGNEE MAY PERFORM. If Assignor fails to
perform any agreement contained herein, Assignee may itself perform, or cause
performance of, such agreement, and the expenses of Assignee incurred in
connection therewith shall be payable by Assignor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on
Assignee hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, Assignee shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Assignee shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which Assignee accords its own
property.
SECTION 16. REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) Assignee may exercise in respect of the Collateral,
in addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "CODE") (whether or not the Code applies to the affected Collateral), and
also may (i) require Assignor to, and Assignor hereby agrees that it will at
its expense and upon request of Assignee forthwith, assemble all or part of the
Collateral as directed by Assignee and make it available to Assignee at a place
to be designated by Assignee that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Assignee deems
appropriate, (iv) take possession of Assignor's premises or place custodians in
exclusive control thereof, remain on such premises and use the same for the
purpose of taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation, (v) exercise any and all rights and remedies
of Assignor under or in connection with the contracts related to the Collateral
or otherwise in respect of the Collateral, including without limitation any and
all rights of Assignor to demand or otherwise require payment of any amount
under, or performance of any provision of,
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<PAGE> 381
such contracts, and (vi) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of Assignee's offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and upon
such other terms as Assignee may deem commercially reasonable. Assignee or any
Lender may be the purchaser of any or all of the Collateral at any such sale
and Assignee, as agent for and representative of Lenders (but not any Lender or
Lenders in its or their respective individual capacities unless Requisite
Lenders shall otherwise agree in writing), shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or
any portion of the Collateral sold at any such public sale, to use and apply
any of the Secured Obligations as a credit on account of the purchase price for
any Collateral payable by Assignee at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on
the part of Assignor, and Assignor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Assignor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to Assignor of the
time and place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. Assignee shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Assignee may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Assignor hereby waives any claims against Assignee arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if Assignee accepts the first offer received and does not
offer such Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Collateral are insufficient to pay all the Secured
Obligations, Assignor shall be liable for the deficiency and the fees of any
attorneys employed by Assignee to collect such deficiency.
(b) Upon written demand from Assignee, Assignor shall
execute and deliver to Assignee an assignment or assignments of the Patents and
such other documents as are necessary or appropriate to carry out the intent
and purposes of this Agreement; provided that the failure of Assignor to comply
with such demand will not impair or affect the validity of the conditional
assignment effected by Section 2 or its effectiveness upon notice by Assignee
as specified in Section 2. Assignor agrees that such an assignment (including
without limitation the conditional assignment effected by Section 2) and/or
recording shall be applied to reduce the Secured Obligations outstanding only
to the extent that Assignee (or any Lender) receives cash proceeds in respect
of the sale of, or other realization upon, the Collateral.
SECTION 17. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Assignee in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Assignee, be held by Assignee
as Collateral for, and/or then, or at any other
XXV-10
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time thereafter, applied in full or in part by Assignee against, the Secured
Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Assignee and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Assignee in connection
therewith, and all amounts for which Assignee is entitled to
indemnification hereunder and all advances made by Assignee hereunder
for the account of Assignor, and to the payment of all costs and
expenses paid or incurred by Assignee in connection with the exercise
of any right or remedy hereunder, all in accordance with Section 18;
SECOND: To the payment of all other Secured Obligations in
such order as Assignee shall elect; and
THIRD: To the payment to or upon the order of Assignor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 18. INDEMNITY AND EXPENSES.
(a) Assignor agrees to indemnify Assignee and each Lender
from and against any and all claims, losses and liabilities in any way relating
to, growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Assignee's or such Lender's gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction.
(b) Assignor shall pay to Assignee upon demand the amount
of any and all costs and expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, that Assignee may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Assignee hereunder, or (iv) the failure by Assignor to
perform or observe any of the provisions hereof.
SECTION 19. CONTINUING ASSIGNMENT AND SECURITY INTEREST;
TRANSFER OF LOANS. This Agreement shall create a continuing security interest
in, and conditional assignment of, the Collateral and shall (a) remain in full
force and effect until the payment in full of the Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, (b) be binding upon Assignor,
its permitted successors and assigns, and (c) inure, together with the rights
and remedies of Assignee hereunder, to the benefit of Assignee and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), but subject to the provisions of subsection 10.1 of the
Credit Agreement, any
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Lender may assign or otherwise transfer any Loans held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
payment in full of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters
of Credit, the security interest and conditional assignment granted hereby
shall terminate and all rights to the Collateral shall revert to Assignor.
Upon any such termination Assignee will, at Assignor's expense, execute and
deliver to Assignor such documents as Assignor shall reasonably request to
evidence such termination.
SECTION 20. ASSIGNEE AS AGENT.
(a) Assignee has been appointed to act as Assignee
hereunder by Lenders. Assignee shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Assignee shall at all times be the same Person that
is Agent under the Credit Agreement. Written notice of resignation by Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Assignee under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as
Assignee under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Assignee under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a
successor Agent, that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Assignee under this Agreement, and the retiring or removed Assignee
under this Agreement shall promptly (i) transfer to such successor Assignee all
sums, securities and other items of Collateral held hereunder, together with
all records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Assignee under this Agreement, and
(ii) execute and deliver to such successor Assignee such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Assignee of the
security interests created hereunder, whereupon such retiring or removed
Assignee shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Assignee, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Assignee hereunder.
SECTION 21. AMENDMENTS; ETC. Subject to Section 6(a), no
amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by Assignor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Assignee
and, in the case of any such
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amendment or modification, by Assignor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 22. NOTICES. Any notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or four Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed. For the purposes hereof, the address of each party hereto
shall be as set forth under such party's name on the signature pages hereof or,
as to either party, such other address as shall be designated by such party in
a written notice delivered to the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Assignee in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 24. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
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<PAGE> 385
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ASSIGNOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT ASSIGNOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Assignor hereby agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
requested, to Assignor at its address provided in Section 22, such service
being hereby acknowledged by Assignor to be sufficient for personal
jurisdiction in any action against Assignor in any such court and to be
otherwise effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Assignee to bring proceedings against Assignor in the courts
of any other jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
LAW, ASSIGNOR AND ASSIGNEE HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Assignor and Assignee each acknowledge that this waiver is a material
inducement for Assignor and Assignee to enter into a business relationship,
that Assignor and Assignee have already relied on this waiver in entering into
this Agreement and that each will continue to rely on this waiver in their
related future dealings. Assignor and Assignee further warrant and represent
that each has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
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[Remainder of page intentionally left blank]
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<PAGE> 387
IN WITNESS WHEREOF, Assignor and Assignee have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF ASSIGNOR]
By:
-----------------------------------
Title:
--------------------------
Notice Address:
BT COMMERCIAL CORPORATION
By:
-----------------------------------
Title:
--------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1
<PAGE> 388
SCHEDULE A
TO SUBSIDIARY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
PATENTS ISSUED
<TABLE>
<CAPTION>
Patent No. Issue Date Invention Inventor
- ---------- ---------- --------- --------
<S> <C> <C> <C>
</TABLE>
PATENTS PENDING
<TABLE>
<CAPTION>
Applicant's Date Application
Name Filed No. Invention Inventor
- ----------- ----- ----------- --------- --------
<S> <C> <C> <C> <C>
</TABLE>
A-1
<PAGE> 389
SCHEDULE B
TO SUBSIDIARY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
B-1
<PAGE> 390
EXHIBIT XXVI
[FORM OF INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT]
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
This INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT (this
"Agreement") is dated as of November 12, 1997, and entered into by BT
COMMERCIAL CORPORATION, as administrative agent (in such capacity, the
"Revolving Agent") for the lenders under the Credit Agreement referred to
below, BANKERS TRUST COMPANY, as administrative agent (in such capacity, the
"Bridge Agent") for the lenders under the Senior Secured Credit Agreement
referred to below, BANKERS TRUST COMPANY, as collateral agent (in such
capacity, the "Collateral Agent") under the Pledge Agreements referred below,
and FWT, INC., a Texas corporation (the "Borrower").
PRELIMINARY STATEMENTS
A. The Borrower, the several lenders from time to time
parties thereto (the "Revolving Lenders") and the Revolving Agent, have entered
into a Credit Agreement dated as of the date hereof, pursuant to which the
Revolving Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to the Borrower.
B. The Borrower, the several lenders from time to time
parties thereto (the "Bridge Lenders; the Bridge Lenders, the Revolving
Lenders, the Bridge Agent, the Revolving Agent and the Collateral Agent are
sometimes hereinafter collectively referred to as the "Secured Parties") and
the Bridge Agent, have entered into a Senior Secured Credit Agreement dated as
of the date hereof, pursuant to which the Bridge Lenders have made certain
commitments, subject to the terms and conditions set forth in the Senior
Secured Credit Agreement, to extend certain credit facilities to the Borrower.
C. As required by the Credit Agreement, the Borrower has
executed and delivered in favor of the Revolving Agent for the benefit of the
Revolving Lenders that certain Company Security Agreement dated as of the date
hereof (said agreement, as it may hereafter be amended, restated or otherwise
modified from time to time, being the "Revolving Borrower Security Agreement")
granting to Revolving Agent a security interest in all the personal property of
Borrower (the "Revolving Borrower Personal Property Collateral").
D. As required by the Senior Secured Credit Agreement,
the Borrower has executed and delivered in favor of the Bridge Agent for the
benefit of the Bridge Lenders that certain Company Security Agreement dated as
of the date hereof (said agreement, as it may
<PAGE> 391
hereafter be amended, restated or otherwise modified from time to time, being
the "Bridge Borrower Security Agreement") granting to Bridge Agent a security
interest in all the personal property of Borrower other than the inventory, the
accounts receivable and the general intangibles (including without limitation,
intellectual property) of Borrower (the "Bridge Borrower Personal Property
Collateral").
E. The Credit Agreement requires that each future
Subsidiary of the Borrower that is a Guarantor execute and deliver in favor of
the Revolving Agent for the benefit of the Revolving Lenders a security
agreement in the form required by such Credit Agreement (said agreement, as it
may be amended, restated or otherwise modified from time to time, being a
"Revolving Subsidiary Security Agreement") granting to Revolving Agent a
security interest in all the personal property of such Subsidiary (the
"Revolving Subsidiary Personal Property Collateral"; the Revolving Borrower
Security Agreement and the Revolving Subsidiary Security Agreement being herein
collectively referred to as the "Revolving Security Agreements" and the
Revolving Borrower Personal Property Collateral and the Revolving Subsidiary
Personal Property Collateral being herein collectively referred to as the
"Revolving Personal Property Collateral").
F. The Senior Secured Credit Agreement requires that each
future Subsidiary of the Borrower that is a Guarantor execute and deliver in
favor of the Bridge Agent for the benefit of the Bridge Lenders a security
agreement in the form required by such Senior Secured Credit Agreement (said
agreement, as it may be amended, restated or otherwise modified from time to
time, being a "Bridge Subsidiary Security Agreement") granting to Bridge Agent
a security interest in all the personal property of such Subsidiary other than
the inventory, the accounts receivable and the general intangibles (including
without limitation, the intellectual property) of such Subsidiary (the "Bridge
Subsidiary Personal Property Collateral"; the Bridge Borrower Security
Agreement and the Bridge Subsidiary Security Agreement being herein
collectively referred to as the "Bridge Security Agreements" and the Bridge
Borrower Personal Property Collateral and the Bridge Subsidiary Personal
Property Collateral being herein collectively referred to as the "Bridge
Personal Property Collateral").
G. Each of the Credit Agreement and the Senior Secured
Credit Agreement requires that upon acquisition of the stock of a Subsidiary,
the Borrower execute and deliver in favor of the Collateral Agent for the
benefit of the Secured Parties a pledge agreement in the form required by such
Credit Agreement and such Senior Secured Credit Agreement (said agreement, as
it may be amended, restated or otherwise modified from time to time, being a
"Borrower Pledge Agreement") granting to Collateral Agent a security interest
in all of the shares of stock of Borrower's Subsidiaries held by Borrower (the
"Borrower Stock Collateral").
H. Each of the Credit Agreement and the Senior Secured
Credit Agreement requires that each future Subsidiary of the Borrower that is a
Guarantor execute and deliver in
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<PAGE> 392
favor of the Collateral Agent for the benefit of the Secured Parties a pledge
agreement in the form required by such Credit Agreement and such Senior Secured
Credit Agreement (such agreement, as it may be amended, restated or otherwise
modified from time to time, being a "Subsidiary Pledge Agreement") granting to
Collateral Agent a security interest in all of the shares of stock of
Borrower's indirect Subsidiaries held by such Subsidiary (the "Subsidiary Stock
Collateral"; the Borrower Pledge Agreement and the Subsidiary Pledge Agreement
being herein collectively referred to as the "Pledge Agreements"; the Borrower
Stock Collateral and the Subsidiary Stock Collateral being herein collectively
referred to as the "Stock Collateral"; the Pledge Agreements, the Revolving
Security Agreements and the Bridge Security Agreements being herein
collectively referred to as the "Collateral Documents"; and the Stock
Collateral, the Revolving Personal Property Collateral and the Bridge Personal
Property Collateral being herein collectively referred to as the "Collateral").
I. The Revolving Agent, the Bridge Agent and the
Collateral Agent desire to set forth their agreement as to the relative
priority of their respective security interests in the Collateral, as to the
manner of sharing amounts received from exercise of their rights with respect
to the Collateral and as to the exercise of remedies under the Collateral
Documents.
J. The parties hereto desire to set forth certain
provisions regarding the appointment, duties and responsibilities of the
Collateral Agent.
NOW, THEREFORE, the parties party hereto agree as follows:
Section 1. Intercreditor Arrangements.
A. Priority. Irrespective of any statement contained in
the Collateral Documents and irrespective of the time, order or method of
attachment or perfection of the security interests granted thereby, the
security interests in the Collateral created by the Collateral Documents in
favor of the Bridge Agent and the Bridge Lenders shall have priority to the
extent set forth herein over the security interests in the Collateral created
by the Collateral Documents in favor of the Revolving Agent and the Revolving
Lenders.
B. Extent of Priority. The proceeds in respect of any
Collateral, whether in the form of cash, securities, insurance proceeds, in
kind or otherwise, shall first be distributed to or set aside for the Bridge
Agent for the benefit of the Bridge Lenders in an amount equal to the aggregate
amount owed to the Bridge Agent and the Bridge Lenders under the Senior Secured
Credit Agreement. Any proceeds in excess of such amount shall then be
distributed to or set aside for the Revolving Agent for the benefit of the
Revolving Lenders in an amount equal to the aggregate amount owed to the
Revolving Lenders and the Revolving Agent under the Credit Agreement.
C. Enforcement of Remedies. Bridge Agent and Revolving
Agent agree to give notice to the other and to the Collateral Agent of the
acceleration or demand for payment of any amounts due under the Credit
Agreement, the Senior Secured Credit Agreement and the Collateral Documents, as
the case may be. With respect to the Bridge Security Agreements
XXVI-3
<PAGE> 393
and the Revolving Security Agreements, each of the Bridge Agent and Revolving
Agent may, without the consent of the other or of the Collateral Agent, proceed
to enforce against the Borrower, the Borrower's Subsidiaries or the Collateral
any right or remedy which is available to it under such Collateral Documents;
provided, however, that it shall give five Business Days prior written notice
of such action to the other unless it determines in good faith that immediate
action is necessary to protect the Collateral, in which case such notice may be
given contemporaneously with the taking of such action. With respect to the
Pledge Agreements, the Collateral Agent may, without the consent of the other
Secured Parties, proceed to enforce against the Borrower, the Borrower's
Subsidiaries or the Collateral any right or remedy which is available to it
under such Collateral Documents upon the direction of a majority of the
Revolving Lenders (the "Requisite Revolving Lenders") or a majority of the
Bridge Lenders (the "Requisite Bridge Lenders"), as the case may be; provided,
however, that it shall give five Business Days prior written notice of such
action to the other Secured Parties unless it determines in good faith that
immediate action is necessary to protect the Collateral, in which case such
notice may be given contemporaneously with the taking of such action.
D. If any Secured Party acquires custody, control or
possession of any Collateral or proceeds therefrom, such Secured Party shall
promptly cause such Collateral, proceeds or payments to be delivered or
distributed in accordance with the provisions of Section 2 of this Agreement.
Until such time as the provisions of the immediately preceding sentence have
been complied with, such Secured Party shall be deemed to hold all such
Collateral, proceeds and payments in trust for the Secured Parties entitled
thereto hereunder. Nothing in this Section shall prevent a Secured Party from
receiving and retaining payments (a) for the provision of services to Borrower
or its Subsidiaries, or (b) in connection with any extension of credit or other
financial accommodation to Borrower or its Subsidiaries, or (c) as security for
any such extension of credit or other financial accommodation if the
obligations of Borrower or its Subsidiaries incurred in connection with such
services, extension of credit or other financial accommodation do not
constitute obligations secured by the Collateral Documents, and if such
obligations are not incurred and such security is not given in breach of the
Credit Agreement or the Senior Secured Credit Agreement.
E. This Agreement shall only apply to the Secured
Parties' rights with respect to the Collateral and the Collateral Documents.
Nothing in this Agreement is intended to affect the rights and remedies of any
of the Secured Parties with respect to any other security interests, liens,
mortgages, pledges or charges of any kind whatsoever which such Secured Parties
may now have or may hereafter obtain with respect to any of the Borrower, its
Subsidiaries or any of the property or assets of the Borrower or its
Subsidiaries other than the Collateral.
Section 2. Application of Collateral or Proceeds of
Collateral. All Collateral or proceeds therefrom shall be applied in the
following order of priority:
First, to the extent not theretofore paid by or on behalf of
Borrower, to pay the fees, costs, expenses of the Revolving Agent, the
Bridge Agent or the Collateral Agent incurred in connection with the
performance of its duties under the Collateral
XXVI-4
<PAGE> 394
Documents, including reasonable attorneys' fees and expenses, and any
other amounts payable to the Revolving Agent, the Bridge Agent or the
Collateral Agent hereunder or under any of the Collateral Documents in
respect of any indemnities or other obligations of the Borrower or its
Subsidiaries;
Second, to the Bridge Agent for the benefit of the Bridge
Lenders in the aggregate amount owed to the Bridge Lenders and the
Bridge Agent under the Senior Secured Credit Agreement;
Third, to the Revolving Agent for the benefit of the Revolving
Lenders in the aggregate amount owed to Revolving Lenders and the
Revolving Agent under the Credit Agreement; and
Fourth, after the payment in full of all obligations under the
Collateral Documents, the balance, if any, to such Person or Persons as
are entitled thereto.
Section 3. Appointment of Collateral Agent.
A. The Revolving Agent on behalf of the Revolving Lenders
and the Bridge Agent on behalf of the Bridge Lenders hereby severally appoint
Bankers Trust Company as Collateral Agent, and authorize the Collateral Agent
to serve as the agent and representative of the Revolving Lenders and the
Bridge Lenders for the purposes of executing and delivering on their behalf the
Pledge Agreements to be executed and delivered by the Borrower and its
Subsidiaries party thereto and, subject to the provisions of this Agreement,
enforcing the Revolving Lenders' and the Bridge Lenders' rights in respect of
the Stock Collateral and the obligations of the Borrower and its Subsidiaries
under the Pledge Agreements. Bankers Trust Company hereby accepts such
appointment and agrees to act as Collateral Agent hereunder and to enter into
and act as Collateral Agent under the Pledge Agreements in accordance with the
terms thereof and of this Agreement.
B. Each party executing this Agreement which is entitled
to give directions to the Collateral Agent agrees that the Collateral Agent may
act as Requisite Revolving Lenders or Requisite Bridge Lenders may request
(regardless of whether any individual Revolving Lender or Bridge Lender agrees,
disagrees or abstains with respect to such request) and that the Collateral
Agent shall have no liability for acting in accordance with such request
(provided such action does not conflict with the express terms of this
Agreement).
C. The Collateral Agent may at any time request
directions from the Requisite Revolving Lenders or Requisite Bridge Lenders as
to any course of action or other matter relating hereto or to the Pledge
Agreements. Except as otherwise may be provided in the Pledge Agreements,
directions given by Requisite Revolving Lenders or Requisite Bridge Lenders to
the Collateral Agent hereunder shall be binding on all Revolving Lenders or all
Bridge Lenders, as the case may be.
XXVI-5
<PAGE> 395
D. Each of the Revolving Agent, the Bridge Agent, the
Revolving Lenders and the Bridge Lenders agrees not to take any action
whatsoever to enforce any term or provision of the Pledge Agreements or to
enforce any of its rights in respect of the Stock Collateral except through the
Collateral Agent in accordance with this Agreement.
Section 4. Disclaimers, Indemnity, Etc.
A. The Collateral Agent shall have no duties or
responsibilities to the Secured Parties except those expressly set forth in
this Agreement and the Collateral Documents and the Collateral Agent shall not
by reason of this Agreement or the Collateral Documents be a trustee for any
Secured Party or have any other fiduciary obligation to any Secured Party
(including any obligation under the Trust Indenture Act of 1939, as amended).
The Collateral Agent shall not be responsible to any Secured Party for any
recitals, statements, representations or warranties contained in this
Agreement, the Credit Agreement or the Senior Secured Credit Agreement or any
related loan documents (collectively, the "Financing Agreements") or in any
certificate or other document referred to or provided for in, or received by
any of them under, any of the Financing Agreements, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any of the
Financing Agreements or any other document referred to or provided for therein
or any lien under the Collateral Documents or the perfection or priority of any
such lien or the value or condition of the Collateral or the title of the
Borrower or its Subsidiaries to the Collateral or for any failure by Borrower
or its Subsidiaries to perform any of its obligations under any of the
Financing Agreements. The Collateral Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care.
Neither the Collateral Agent nor any of its directors, officers, employees or
agents shall be liable or responsible for any action taken or omitted to be
taken by it or them hereunder or in connection herewith, except to the extent
of its or their own gross negligence or willful misconduct.
B. The Collateral Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telex, telecopy, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel to
the Borrower or any Subsidiary of the Borrower), independent accountants and
other experts selected by the Collateral Agent.
C. Notwithstanding anything to the contrary contained
herein, the Collateral Agent shall not be required to take any action that is
in its opinion contrary to law or to the terms of this Agreement or any or all
of the Collateral Documents or which would in its opinion subject it or any of
its officers, employees or directors to liability, and the Collateral Agent
shall not be required to take any action under this Agreement or any or all of
the Collateral Documents unless and until the Collateral Agent shall be
indemnified to its satisfaction by the Secured Parties against any and all
loss, cost, expense or liability in connection therewith.
XXVI-6
<PAGE> 396
D. Except as expressly provided herein or in the
Collateral Documents, the Collateral Agent shall have no duty to take any
affirmative steps with respect to the collection of amounts payable in respect
of the Collateral. The Collateral Agent shall incur no liability as a result
of any sale of any Collateral at any private sale, except to the extent that
such liability arises or results from its gross negligence or willful
misconduct.
E. (i) The Collateral Agent may resign at any time by
giving at least 30 days notice thereof to the Secured Parties (such resignation
to take effect as hereinafter provided). In the event of any such resignation
of the Collateral Agent, the Revolving Lenders and the Bridge Lenders shall
thereupon have the right to appoint a successor Collateral Agent. If no
successor Collateral Agent shall have been so appointed and shall have accepted
such appointment within 30 days after the notice of the intent of the
Collateral Agent to resign, then the retiring Collateral Agent may, on behalf
of the other Secured Parties, appoint a successor Collateral Agent. Any
successor Collateral Agent appointed pursuant to this clause (i) shall be a
bank party to the Credit Agreement or the Senior Secured Credit Agreement or a
commercial bank organized under the laws of the United States of America or any
state thereof and having a combined capital and surplus of at least
$250,000,000.
(ii) Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Collateral
Agent, and the retiring or removed Collateral Agent shall thereupon be
discharged from its duties and obligations hereunder. After any retiring or
removed Collateral Agent's resignation or removal hereunder as Collateral
Agent, the provisions of this Section shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was
acting as the Collateral Agent.
F. The Borrower agrees (i) to reimburse the Collateral
Agent, on demand, for any expenses incurred by the Collateral Agent, including
counsel fees and compensation of agents, arising out of, in any way connected
with, or as a result of, the execution or delivery of this Agreement, any
Collateral Document or any agreement or instrument contemplated hereby or
thereby or the performance by the parties hereto or thereto of their respective
obligations hereunder or thereunder or in connection with the enforcement or
protection of the rights of the Collateral Agent and the Secured Parties under
this Agreement and any Collateral Documents and (ii) to indemnify and hold
harmless the Collateral Agent and its directors, officers, employees and
agents, on demand, from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Collateral Agent in its capacity as the
Collateral Agent or any of them in any way relating to or arising out of this
Agreement or any Collateral Document, or any action taken or omitted by them
under this Agreement or any Collateral Document; provided that the Borrower
shall not be liable to the Collateral Agent for any portion of such claims,
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent resulting from the gross
negligence or willful misconduct of the Collateral Agent or any of its
directors, officers, employees or agents. In addition, in the event that any
successor Collateral
XXVI-7
<PAGE> 397
Agent shall be appointed, the Borrower agrees to pay the reasonable fees and
expenses of such successor Collateral Agent for the performance of its duties
hereunder and under the Collateral Documents.
Section 5. Miscellaneous.
A. All notices and other communications provided for
herein shall be in writing and may be personally served, telecopied, or sent by
courier delivery or United States mail and shall be deemed to have been given
when delivered in person, or upon receipt of such telecopy, courier delivery or
mail. For the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this Section 5(A)) shall
be as set forth under each party's name on the signature pages hereof.
B. This Agreement and the Collateral Documents may be
modified or waived only by an instrument or instruments in writing signed by
the Revolving Agent, the Bridge Agent and the Collateral Agent and the Borrower
and its Subsidiaries signatory hereto or to any such Collateral Document.
C. This Agreement shall be binding upon and inure to the
benefit of the Revolving Agent, the Bridge Agent and the Collateral Agent, each
other Person party hereto and each Secured Party and their respective
successors and assigns.
D. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
E. Upon the earlier to occur of: (I) the payment in full
of the Borrower's obligations under the Senior Secured Credit Agreement through
the proceeds of the issuance of the Takeout Securities (as defined in the
Credit Agreement) or (II) the termination of all commitments to extend credit
which would constitute obligations secured by the Collateral Documents and the
indefeasible payment in full of all such obligations and expiration or
cancellation of all letters of credit secured by the Collateral Documents, this
Agreement shall terminate.
F. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK) WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
G. By countersigning or otherwise accepting the terms of
this Agreement, the Borrower and each Subsidiary party hereto acknowledge and
consent to and agree to perform and be bound by each of the provisions hereof
stated to be applicable to them.
XXVI-8
<PAGE> 398
H. All judicial proceedings brought against any party
hereto arising out of or relating to this Agreement may be brought in any state
or federal court of competent jurisdiction located in the Borough of Manhattan
in the State of New York and by execution and delivery of this Agreement, each
party hereto accepts for itself and in connection with its properties,
generally and unconditionally, the nonexclusive jurisdiction of the aforesaid
courts and waives any defense of forum non conveniens and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this Agreement.
I. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The
scope of this waiver is intended to be all encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims, breach
of duty claims, and all other common law and statutory claims. Each party
hereto acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Each party hereto further warrants and represents
that it has reviewed this waiver with its legal counsel, and that it knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the
event of litigation, this Agreement may be filed as a written consent to a
trial by the court.
J. Nothing contained in this Agreement and no action
taken by the Bridge Agent, the Revolving Agent or the Collateral Agent
hereunder shall be deemed to constitute the Bridge Agent, the Revolving Agent
or the Collateral Agent a partnership, association, joint venture or other
entity.
XXVI-9
<PAGE> 399
IN WITNESS HEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
BANKERS TRUST COMPANY, as Bridge Agent
By:
-----------------------------------------
Title:
--------------------------------------
Notice Address:
130 Liberty Street, 31st Floor
New York, NY 10006
Attention:
---------------------------
Telecopy No.: (212) 669-0021
BT COMMERCIAL CORPORATION,
as Revolving Agent
By:
-----------------------------------------
Title:
--------------------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Attention: Bhartai Baliga
Telecopy: 212-618-2428
S-1
<PAGE> 400
Each Loan Party, by its execution of this Agreement in the
space provided below, hereby accepts and agrees to be bound by the foregoing
provisions of this Agreement.
FWT, INC.
By:
-----------------------------------------
Title:
--------------------------------------
S-2
<PAGE> 1
EXHIBIT 10.12
STOCK APPRECIATION RIGHTS
AGREEMENT
THIS STOCK APPRECIATION RIGHTS AGREEMENT, effective the 12th day of
November, 1997, is made by FWT, Inc. (the "Company") to Roy Moore (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive is Chief Executive Officer and President of the
Company upon whose effort the continual successful and profitable operation of
the Company is dependent; and
WHEREAS, the Company wants to assure the continued availability of the
services of the Executive to the Company; and
WHEREAS, the Executive and the Company desire to grant to Executive
the right to participate in an increase in the value of the Company's Common
Stock, par value $10.00 per share (the "Common Stock").
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the Company hereby agrees with Executive as follows:
1. Defined Terms. As used herein, each of the following terms
shall have the following definitions:
"Affiliate" means any other Person that directly or indirectly
controls, is controlled by, or is under common control with such Person. For
the purposes of this definition, control means the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by Contract, or otherwise. Control shall be
presumed by an individual that is a director or executive officer of a Person,
or a Person that beneficially owns more than 10% of any class of securities of
such Person having general voting rights. During the period before the Closing
and at the Closing, Company shall be considered an Affiliate of each
Shareholder. During the period after the Closing, Purchaser and Baker
Communications Fund, L.P. shall be considered an Affiliate of Company for so
long as Purchaser controls Company.
"Appraisal Event" means a Dilution Adjustment Event or delivery of a
Payment Notice to the extent that, in either such case, Fair Market Value is to
be determined pursuant to clause (c) of the definition of Fair Market Value.
"Appraisal Procedure" shall mean the following procedure for
determining the Appraised Value of one share of Common Stock: (a) upon the
occurrence of any Appraisal Event, the Company and the Executive shall attempt
to agree on a mutually acceptable Qualified Appraiser to value the Common
Stock, and if such parties agree on a Qualified Appraiser within ten (10) days
following the occurrence of any Appraisal Event such Qualified Appraiser shall,
on or before twenty (20) days
1
<PAGE> 2
following the date it is appointed, determine the Appraised Value of the Common
Stock, and such determination shall be binding upon the Company and the
Executive: (b) in the event the Company and the Executive are unable to agree
on a mutually acceptable Qualified Appraiser within ten (10) days following the
occurrence of any Appraisal Event, on the expiration of such ten (10) day
period, the Company and the Executive shall each appoint a Qualified Appraiser
to value the Common Stock. Within twenty (20) days following the date they are
appointed, the Qualified Appraisers appointed by the Company and the Executive
shall determine the Appraised Value of the Common Stock. In the event the
Appraised Value determined by the Company's Qualified Appraiser is more than
95% of the Appraised Value determined by the Executive's Qualified Appraiser,
the Appraised Value for purposes of this Agreement shall be the average of the
values determined by such appraisers and such determination shall be binding
upon the Company and the Executive. In the event the Appraised Value
determined by the Company's Qualified Appraiser is equal to or less than 95%
of the value determined by the Executive's Qualified Appraiser, such appraisers
shall in turn promptly appoint a third Qualified Appraiser who shall, within
twenty (20) days following the date it is appointed, determine the Appraised
Value of the Common Stock. The value which is neither the lowest nor the
highest of the values determined by the three Qualified Appraisers shall be the
Appraised Value of the Common Stock for purposes of this Agreement and shall be
binding upon the Company and the Executive. In the event either the Company or
the Executive fails to timely appoint a Qualified Appraiser, such failing party
will be deemed to have waived its rights to appoint a Qualified Appraiser, and
the Qualified Appraiser appointed by the other party shall determine the
Appraised Value for purposes of this Agreement which determination shall be
binding upon the Executive and the Company. The costs of each Qualified
Appraiser referred to herein shall be paid by the Company.
"Appraised Value" has the meaning set forth in the definition of "Fair
Market Value."
"Base Numerator" initially means 6.8071; provided, that such amount is
subject to adjustment as provided in Section 3 hereof.
"Base Value" means $45,000,000.
"Current Market Value" means, with respect to a share of Common Stock,
the average of the daily closing prices for a share of Common Stock for the ten
(10) consecutive trading days before such date, excluding any trades which are
not bona fide arm's length transactions. The closing price for each day shall
be:
(i) if Common Stock is listed or admitted for trading on any
national securities exchange, the last sale price of such security, regular
way, or the mean of the closing bid and asked prices therefor if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which Common Stock is listed; or
(ii) if so quoted, the mean between the closing high bid and low
asked quotations of the Common Stock in the over-the-counter market as shown by
the National Association of Securities
2
<PAGE> 3
Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use in the
United States, as reported by any member firm of the New York Stock Exchange
selected by the Company; or
(iii) if not quoted as described in clauses (i) or (ii) above, the
mean between the high bid and low asked quotations for any such security as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, as reported by any member firm of the New York Stock
Exchange selected by the Company.
(iv) "Dilution Adjustment Event" has the meaning set forth in
Section 3(b) hereof.
"Fair Market Value" means, on any date of determination, (a) if the
Common Stock is listed or admitted for trading on any securities exchange or
subject to quotations in any quotation system described in the definition of
"Current Market Value," and has been so listed or subject to such quotations
for the preceding ten (10) consecutive trading days, the Current Market Value,
(b) if clause (a) preceding is not applicable, and Fair Market Value is being
determined in connection with any Liquidity Event or Dilution Adjustment Event
in which shares of Common Stock are being (or were) issued, sold, assigned,
transferred or otherwise disposed of (including any merger or consolidation)
for consideration consisting solely of cash in a transaction with a Person who
is not an Affiliate with respect to the Company, Purchaser or Baker
Communications Fund, L.P., the highest price per share at which a share of
Common Stock is being or was issued or disposed of in such Liquidity Event, and
(c) if neither clause (a) nor clause (b) preceding is applicable, the fair
market value of one share of Common Stock (determined without giving effect to
any minority discount and without giving effect to any restrictions imposed
pursuant to any shareholders agreement, voting agreements or similar
agreements) as determined pursuant to the Appraisal Procedure (the "Appraised
Value"). In the event Fair Market Value is being determined in connection with
a Liquidity Event or Dilution Adjustment Event under circumstances in which
clause (b) of this definition is applicable, Fair Market Value shall be
determined based on the cash consideration received in the most recent
Liquidity Event or Dilution Adjustment Event as of the date of such
determination of Fair Market Value.
"Liquidity Event" means the occurrence of any of the following events
(a) the completion by the Company of an initial public offering of Common Stock
pursuant to a registration statement under the Securities Act of 1933, (b)
Purchaser ceases, for any reason, to hold more than fifty percent (50%) of the
outstanding Common Stock of the Company on a fully diluted basis, (c) the sale,
assignment, transfer or other disposition by the Company and its subsidiaries
of substantially all of their assets considered as a whole, (d) a merger or
consolidation involving the Company in which the Company is not the surviving
entity, (e) Baker Communications Fund, L.P. or any Affiliate of Baker
Communications Fund, L.P. shall cease, for any reason to hold more than fifty
percent (50%) of the outstanding common stock of Purchaser on a fully diluted
basis, (f) a merger or consolidation involving Purchaser in any transaction in
which Purchaser is not the surviving entity, or (g) Purchaser issues any of its
capital stock in an initial public offering pursuant to a registration
statement under the Securities Act of 1933.
3
<PAGE> 4
"Multiplier Fraction" means a fraction, the numerator of which is the
Base Numerator, and the denominator of which is the number of shares of Common
Stock of the Company calculated on a fully diluted basis at the time the
Multiplier Fraction is being determined.
"Payment Amount" means, as of any date, an amount equal to the
remainder of (a) the Total Common Equity Value on such date multiplied times
the Multiplier Fraction, minus (b) the Base Value.
"Payment Notice" has the meaning set forth in Section 2 hereof.
"Purchaser" means FWT Acquisition, Inc., a Delaware corporation.
"Qualified Appraiser" means an investment banking firm of national
recognition.
"Total Common Equity Value" means, on any date of determination, the
product of the Fair Market Value determined as of such date multiplied times
the total number of shares of Common Stock of the Company calculated on a fully
diluted basis.
2. Payment Obligation. Upon the occurrence of a Liquidity Event
or at any time thereafter, Executive, at its option, may deliver written notice
to the Company (the "Payment Notice") requiring the Company to pay to Executive
in cash the Payment Amount. The Payment Amount shall be determined as of the
date of delivery of the Payment Notice, and the Company shall pay to Executive
the Payment Amount (a) within ten (10) days following delivery of such Payment
Notice if the Payment Amount is based on Fair Market Value determined pursuant
to clauses (a) or (b) of the definition of "Fair Market Value," and (b) within
ten (10) days following final determination of Appraised Value pursuant to the
Appraisal Procedure if Fair Market Value is being determined pursuant to clause
(c) of the definition of "Fair Market Value."
3. Adjustment of Base Numerator. The Base Numerator is subject
to adjustment from time to time upon the occurrence of any of the events
enumerated in this Section 3.
(a) In the event that the Company shall at any time after
the date of this Agreement (i) declare a dividend on the Common Stock in shares
of its capital stock (whether in shares of such Common Stock or in capital
stock of any other class of the Company), (ii) split or subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, the Base Numerator after the time of the record date
for such dividend or of the effective date of such split, subdivision or
combination shall be adjusted to equal the number of shares of Common Stock
which a shareholder having a number of shares of Common Stock equal to the Base
Numerator immediately prior to such record date or effective date, as the case
may be, would own or be entitled to receive after such record date or effective
date.
(b) In the event that the Company shall at any time after
the date of this Agreement (i) issue any shares of Common Stock without
consideration or at a price per share less
4
<PAGE> 5
than Fair Market Value, or (ii) issue options, rights or warrants to subscribe
for or purchase such Common Stock (or securities convertible into such Common
Stock) without consideration or at a price per share (or having a conversion
price per share, if a security convertible into such Common Stock) less than
Fair Market Value (a "Dilution Adjustment Event"), the Base Numerator shall be
adjusted to equal the product obtained by multiplying the Base Numerator
immediately prior to such Dilution Adjustment Event by a fraction, the
numerator shall be the number of shares of Common Stock outstanding immediately
after such Dilution Adjustment Event, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
Dilution Adjustment Event plus the number of shares of such Common Stock which
the aggregate offering price of the total number of shares of such Common Stock
so to be issued or to be offered for subscription or purchase (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at Fair Market Value immediately prior to such issuance. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined by a Qualified Appraiser mutually acceptable to the Executive of the
Company (the cost of the engagement of said Qualified Appraiser to be borne by
the Company). Shares of such Common Stock owned by or held for the account of
the Company or any Subsidiary thereof shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever the date of such issuance is fixed (which date of issuance shall be
the record date for such issuance if a record date therefor is fixed); and, in
the event that such shares or options, rights or warrants are not so issued,
the Base Numerator shall again be adjusted to be such number which would be in
effect if the date of such issuance had not been fixed.
(c) In case the Company shall make a distribution to all
holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the surviving
corporation) of evidences of its indebtedness or assets (whether a liquidating
dividend or distribution or otherwise), the Base Numerator after such date of
distribution shall be adjusted to equal the product obtained by multiplying the
Base Numerator immediately prior to such date by a fraction, the numerator of
which shall be the Fair Market Value immediately prior to such distribution,
and the denominator of which shall be the Fair Market Value immediately prior
to such distribution less the fair market value as determined by a Qualified
Appraiser mutually acceptable to the Executive and the Company (the cost of the
engagement of said Qualified Appraiser to be borne by the Company) of the
portion of the assets or evidences of indebtedness so to be distributed
applicable to one share of Common Stock. Such adjustment shall be made
successively whenever a date for such distribution is fixed (which date of
distribution shall be the record date for such issuance if a record date
therefor is fixed); and, if such distribution is not so made, the Base
Numerator shall again be adjusted to be such number which would then be in
effect if the date of such distribution had not been fixed.
(d) The Company shall not effect any consolidation,
merger or sale of the properties and assets of the Company as an entirety or
substantially as an entirety to any other person or entity, unless prior to or
simultaneously with the consummation thereof, the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation
5
<PAGE> 6
purchasing such assets or the appropriate corporation or entity shall assume,
by written instrument, the obligations of the Company under this Agreement.
(e) If any question shall at any time arise with respect
to the adjusted Base Numerator, such question shall be determined by an
independent firm of certified public accountants of recognized national
standing mutually acceptable to the Company and Executive.
(f) Upon any adjustment of the Base Numerator pursuant to
this Section 3, the Company shall promptly, but in all events within thirty
(30) days thereafter, cause to be given to Executive a certificate signed by
the Company's Chief Financial Officer setting forth the Base Numerator as so
adjusted and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. Where appropriate, such
certificate may be given in advance and included as part of the notice required
to be mailed under the other provisions of this Section 3(f).
In the event:
(i) that the Company shall authorize the issuance to all
holders of its Common Stock of rights or warrants to subscribe for or purchase
capital stock of the Company or of any other subscription rights or warrants;
or
(ii) that the Company shall authorize the distribution to
holders of its Common Stock of evidences of its indebtedness or assets; or
(iii) of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and assets of the
Company substantially as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination); or
(iv) of the voluntary dissolution, liquidation or winding
up of the Company; or
(v) that the Company proposes to take any other action
which would require an adjustment of the Base Numerator pursuant to this
Section 3;
then the Company shall deliver to Executive, at least twenty (20) days prior
notice stating (i) the date as of which the holders of record of Common Stock
to be entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that the holders of
record of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up.
6
<PAGE> 7
4. Limited Interest. The award of stock appreciation rights
pursuant to this Agreement shall not be construed as giving the Executive any
rights relating to the stock of the Company. Neither shall this Agreement be
construed as giving the Executive any interest in the Company other than as
provided pursuant to the terms of this Agreement. Further, this Agreement
shall not give the Executive any right to continue as an officer or Executive
of the Company or any subsidiary of the Company or affect the right of the
Company to dismiss the Executive to the extent permitted pursuant to the terms
of the Employment Agreement with the Company.
5. Notices. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: Roy J. Moore
3508 Orchid Court
Arlington, Texas 76112
If to the Company: FWT, Inc.
P.O. Box 8597
Ft. Worth, Texas 76124
Attn: Roy J. Moore and Edward W. Scott
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, New York 10022
Attn: Edward W. Scott
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
6. Assignment. The Company shall not assign, transfer or convey
its rights or delegate its duties under this Agreement. Any attempted
assignment or delegation shall be void. Executive shall not be permitted to
assign or otherwise transfer its rights under this Agreement.
7. Modification and Amendments. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and the Company's
duly authorized executive officer.
8. No Waiver. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed
7
<PAGE> 8
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
10. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of any subject matter contained
herein and supersedes all prior severance or other agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, Executive or representative of any party
hereto; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.
[Remainder of page intentionally left blank]
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By: /s/ LAWRENCE A. BETTINO
-----------------------------------
Name: Lawrence A. Bettino
---------------------------------
Title: Vice President
--------------------------------
ROY J. MOORE
/s/ ROY J. MOORE
--------------------------------------
Roy J. Moore
9
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PRO FORMA
FISCAL YEAR ENDED APRIL 30, OCTOBER 31, LTM LTM
----------------------------------------------- ----------------- OCTOBER 31, OCTOBER 31,
1993 1994 1995 1996 1997 1996 1997 1997 1997
----- ------ ------ ------- ------- ------- ------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed charges
Interest expense... $ 10 $ 21 $ 45 $ 33 $ 75 $ 14 $ 403 $ 464 $10,369
Amortization of
capitalized
expenses related
to
indebtedness..... -- -- -- -- -- -- -- -- 734
----- ------ ------ ------- ------- ------- ------ ------- -------
TOTAL FIXED
CHARGES............ $ 10 $ 21 $ 45 $ 33 $ 75 $ 14 403 $ 464 $11,103
===== ====== ====== ======= ======= ======= ====== ======= =======
Income from
continuing
operations before
taxes.............. (6) 337 2,483 7,086 14,354 5,562 5,433 14,225 4,182
Fixed charges........ 10 21 45 33 75 14 403 464 11,103
----- ------ ------ ------- ------- ------- ------ ------- -------
TOTAL EARNINGS....... $ 4 $ 358 $2,528 $ 7,119 $14,429 $ 5,576 $5,836 $14,689 $15,285
===== ====== ====== ======= ======= ======= ====== ======= =======
RATIO OF EARNINGS TO
FIXED CHARGES...... 0.40 17.05 56.18 215.73 192.39 398.29 14.48 31.66 1.38
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated October 31, 1997, (except with respect to the matters discussed in
Note 7, as to which the date is December 30, 1997) and to all references to our
Firm, included in or made a part of this registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas,
January 14, 1998
<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------
[ ] CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
A. U.S. NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization
if not a U.S. national bank) Identification No.)
SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
</TABLE>
STANLEY S. STROUP, GENERAL COUNSEL
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
SIXTH STREET AND MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA 55479
(612) 667-1234
(AGENT FOR SERVICE)
---------------------
FWT, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
TEXAS 75-104073
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 EAST LOOP 820 SOUTH
FT. WORTH, TX 76112-7899
(Address of principal executive offices) (Zip code)
</TABLE>
---------------------
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the obligor
is not in default as provided under Item 13.
ITEM 15. FOREIGN TRUSTEE.
Not applicable.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this Statement of Eligibility.
Norwest Bank incorporates by reference into this Form T-1 the exhibits attached
hereto.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.a -- A copy of the Articles of Association of the trustee now
in effect.*
2.a -- A copy of the certificate of authority of the trustee to
commence business issued June 28, 1872, by the
Comptroller of the Currency to The Northwestern National
Bank of Minneapolis.*
2.b -- A copy of the certificate of the Comptroller of the
Currency dated January 2, 1934, approving the
consolidation of The Northwestern National Bank of
Minneapolis and The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity being titled
Northwestern National Bank and Trust Company of
Minneapolis.*
2.c -- A copy of the certificate of the Acting Comptroller of
the Currency dated January 12, 1943, as to change of
corporate title of Northwestern National Bank and Trust
Company of Minneapolis to Northwestern National Bank of
Minneapolis.*
2.d -- A copy of the letter dated May 12, 1983 from the Regional
Counsel, Comptroller of the Currency, acknowledging
receipt of notice of name change effective May 1, 1983
from Northwestern National Bank of Minneapolis to Norwest
Bank Minneapolis, National Association.*
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2.e -- A copy of the letter dated January 4, 1988 from the
Administrator of National Banks for the Comptroller of
the Currency certifying approval of consolidation and
merger effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with various other
banks under the title of "Norwest Bank Minnesota,
National Association."*
3. -- A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the
Federal Reserve Board.*
4. -- Copy of By-laws of the trustee as now in effect.*
5. -- Not applicable.
6. -- The consent of the trustee required by Section 321(b) of
the Act.
7. -- A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.**
8. -- Not applicable.
9. -- Not applicable.
</TABLE>
- ---------------
* Incorporated by reference to exhibit number 25 filed with registration
statement number 33-66026.
** Incorporated by reference to exhibit number 25 filed with registration
statement number 333-43005.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Norwest Bank Minnesota, National Association, a national
banking association organized and existing under the laws of the United States
of America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 9th day of January, 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ JANE Y. SCHWEIGER
------------------------------------
Jane Y. Schweiger
Corporate Trust Officer
<PAGE> 5
EXHIBIT 6
January 9, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ JANE Y. SCHWEIGER
------------------------------------
Jane Y. Schweiger
Corporate Trust Officer
<PAGE> 1
EXHIBIT 99.1
FORM OF
LETTER OF TRANSMITTAL
FWT, INC.
OFFER TO EXCHANGE ITS 9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OF ITS OUTSTANDING
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
---------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1998,
UNLESS THE OFFER IS EXTENDED
---------------------
Deliver to Norwest Bank Minnesota, N.A.
(the "Exchange Agent")
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Mail or Hand:
6th and Marquette, MS 0069 6th and Marquette, MS 0069
Attention: Ms. Jane Schweiger Attention: Ms. Jane Schweiger
Minneapolis, Minnesota 55479-0069 Minneapolis, Minnesota 55479-0069
</TABLE>
By Facsimile Transmission
(For Eligible Institutions Only):
Ms. Jane Schweiger
(612) 667-9825
Confirm: (612) 667-2344
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1998 (the "Prospectus") of FWT, Inc. (the "Company") and this
Letter of Transmittal, which together constitute the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 9 7/8% Senior
Subordinated Notes due 2007 (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement of which the Prospectus is a part, for each $1000
principal amount of its outstanding 9 7/8% Senior Subordinated Notes due 2007
(the "Outstanding Notes"). The terms "Expiration Date" shall mean 5:00 p.m., New
York City time, on , 1997, unless the Company, in its sole
discretion, extends the Exchange Offer, in which case the term shall mean the
latest date and time to which the Exchange Offer is extended.
Capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS RELATING TO THE PROCEDURE FOR TENDERING AND REQUESTS FOR ADDITIONAL
COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE
EXCHANGE AGENT. QUESTIONS RELATING TO THE EXCHANGE OFFER AND REQUESTS FOR
ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF
TRANSMITTAL MAY BE DIRECTED TO THE COMPANY.
<PAGE> 2
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space indicated below is inadequate, the certificate numbers and
principal amounts should be listed on a separately signed schedule affixed
hereto.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREBY
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) REGISTRATION AMOUNT PRINCIPAL
EXACTLY AS NAME(S) APPEAR(S) ON OUTSTANDING NOTES NUMBER(S)* REPRESENTED BY AMOUNT
(PLEASE FILL IN) AND SERIES OUTSTANDING NOTES TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
======================================================
------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Outstanding Notes. All
tenders must be in integral multiples of $1,000.
This Letter of Transmittal is to be used (i) if certificates of Outstanding
Notes are to be forwarded herewith, (ii) if delivery of Outstanding Notes is to
be made by book-entry transfer to an account maintained by the Exchange Agent at
The Depository Trust Company ("DTC"), pursuant to the procedures set forth in
"The Exchange Offer-Procedures for Tendering" in the Prospectus or (iii) tender
of the Outstanding Notes is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2. Delivery of
documents to a book-entry transfer facility does not constitute delivery to the
Exchange Agent. It is understood that participants in DTC's book-entry system
will, in accordance with DTC's Automated Tender Offer Program procedures and in
lieu of physical delivery to the Exchange Agent of a Letter of Transmittal,
electronically acknowledge receipt of, and agreement to be bound by, the terms
of this Letter of Transmittal.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Outstanding Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Outstanding
Notes must complete this letter in its entirety.
<PAGE> 3
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
[ ] The Depository Trust Company
Account Number
Transaction Code Number
Holders whose Outstanding Notes are not immediately available or who cannot
deliver their Outstanding Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Outstanding
Notes according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 2.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
Date of Execution of Notice of Guaranteed Delivery
Name of Eligible Institution that Guaranteed Delivery
If delivered by book-entry transfer:
Account Number
Transaction Code Number
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name
Address
<PAGE> 4
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the
Outstanding Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of such Outstanding Notes tendered hereby, the
undersigned hereby exchanges, assigns and transfers to, or upon the order of,
the Company all right, title and interest in and to such Outstanding Notes as
are being tendered hereby, including all rights to accrued and unpaid interest
thereon as of the Expiration Date. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Exchange
Agent acts as the agent of the Company in connection with the Exchange Offer) to
cause the Outstanding Notes to be assigned, transferred and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the Outstanding Notes and to acquire
Exchange Notes issuable upon the exchange of such tendered Outstanding Notes,
and that when the same are accepted for exchange, the Company will acquire good
and unencumbered title to the tendered Outstanding Notes, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim.
The undersigned represents to the Company that (i) the Exchange Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned, and (ii) neither the undersigned nor any such
other person has an arrangement or understanding with any person to participate
in the distribution of such Exchange Notes. If the undersigned or the person
receiving the Exchange Notes covered hereby is a broker-dealer that is receiving
the Exchange Notes for its own account in exchange for Outstanding Notes that
were acquired as a result of market-making activities or other trading
activities, the undersigned acknowledges that it or such other person will
deliver a prospectus in connection with any resale of such Exchange Notes. The
undersigned and any such other person acknowledge that, if they are
participating in the Exchange Offer for the purpose of distributing the Exchange
Notes, (i) they cannot rely on the position of the staff of the Securities and
Exchange Commission enunciated in Exxon Capital Holdings Corporation (available
April 13, 1989) or similar no-action letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with the resale transaction and
(ii) failure to comply with such requirements in such instance could result in
the undersigned or any such other person incurring liability under the
Securities Act for which such persons are not indemnified by the Company. If the
undersigned or the person receiving the Exchange Notes covered by this letter is
an affiliate (as defined under Rule 405 of the Securities Act) of the Company,
the undersigned represents to the Company that the undersigned understands and
acknowledges that such Exchange Notes may not be offered for resale, resold or
otherwise transferred by the undersigned or such other person without
registration under the Securities Act or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered Outstanding Notes or transfer ownership of such Outstanding Notes on
the account books maintained by a Book-Entry Transfer Facility. The undersigned
further agrees that acceptance of any tendered Outstanding Notes by the Company
and the issuance of Exchange Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement and that the Company shall have no further obligations or
liabilities thereunder for the registration of the Outstanding Notes or the
Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Outstanding Notes
tendered hereby and, in such event, the Outstanding Notes not exchanged will be
returned to the undersigned at the address shown below the signature of the
undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Outstanding Notes may be withdrawn at
any time prior to the Expiration Date.
<PAGE> 5
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all Exchange Notes delivered in exchange for
tendered Outstanding Notes, and any Outstanding Notes delivered herewith but not
exchanged, will be registered in the name of the undersigned and shall be
delivered to the undersigned at the address shown below the signature of the
undersigned. If an Exchange Note is to be issued to a person other than the
person(s) signing this Letter of Transmittal, or if the Exchange Note is to be
mailed to someone other than the person(s) signing this Letter of Transmittal or
to the person(s) signing this Letter of Transmittal at an address different than
the address shown on this Letter of Transmittal, the appropriate boxes of this
Letter of Transmittal should be completed. IF OUTSTANDING NOTES ARE SURRENDERED
BY HOLDER(S) THAT HAVE COMPLETED EITHER THE BOX ENTITLED "SPECIAL REGISTRATION
INSTRUCTIONS" OR THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" IN THIS LETTER
OF TRANSMITTAL, SIGNATURE(S) ON THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY
AN ELIGIBLE INSTITUTION (SEE INSTRUCTION 4).
SPECIAL REGISTRATION INSTRUCTIONS
(SEE INSTRUCTION 5)
To be completed ONLY if the Exchange Notes are to be issued in the name of
someone other than the undersigned.
Issue Exchange Note to:
Name:
- -------------------------------------------------
Address:
- -----------------------------------------------
- ---------------------------------------------------------
(Please print or type)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 5)
To be completed ONLY if the Exchange Notes are to be sent to someone other
than the undersigned, or to the undersigned at an address other than that shown
under "Description of Outstanding Notes Tendered Hereby."
Mail Exchange Note to:
Name:
Address:
- ---------------------------------------------------------
(Please print or type)
<PAGE> 6
REGISTERED HOLDER (S) OF OUTSTANDING NOTES SIGN HERE
(IN ADDITION COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
(Signature(s) of Registered Holder(s))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Outstanding Notes or on a security position listing as the owner of the
Outstanding Notes or by person(s) authorized to become registered holder(s) by
properly completed bond powers transmitted herewith. If signature is by
attorney-in-fact trustee executor, administrator, guardian, officer of a
corporation or other person acting in a fiduciary capacity, please provide the
following information (Please print or type):
Name and Capacity (full title):
Address: (including zip):
Area Code and Telephone Number:
Dated: ____________________________
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTION 4)
Authorized Signature:
(Signature of Representative of Signature Guarantor)
Name and Title:
Name of Firm:
Area Code and Telephone Number:
(Please print or type)
Dated: ____________________________
<PAGE> 7
PAYOR'S NAME: [ ]
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security number or other taxpayer identification
number on the following Substitute Form W-9 and certify therein that you are not
subject to backup withholding.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
SUBSTITUTE
PART L -- Please provide your TIN in the box at
FORM W-9 right and certify by signing and dating below.
DEPARTMENT OF THE PART 2 -- Check the box if you are not subject to
TREASURY backup withholding under the provisions of section -------------------------
INTERNAL REVENUE SERVICE 3406(a)(l)(C) of the Internal Revenue Code because Social Security Number or
(l) you have not been notified that you are Employer Identification
PAYOR'S REQUEST FOR subject to backup withholding as a result of Number
TAXPAYER IDENTIFICATION failure to report all interest or dividends or (2) [ ]
NO. ("TIN") the Internal Revenue Service has notified you that
you are no longer subject to backup withholding. Part 3
AWAITING TIN [ ]
Certification Under the penalties of perjury I
certify that the information provided on this form
is true correct and complete.
SIGNATURE DATE _____________
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
<TABLE>
<S> <C>
- ---------------------------------------------- ----------------------------------------------
Signature Date
</TABLE>
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Outstanding Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at a Book-Entry Transfer
Facility of Outstanding Notes tendered by book-entry transfer, as well as a
properly completed and duly executed copy of this Letter of Transmittal or
facsimile thereof, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at any of its addresses set
forth herein on or prior to the Expiration Date (as defined in the Prospectus).
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OUTSTANDING NOTES AND
ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND
EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS
SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
BE USED.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Outstanding Notes for exchange.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH HEREIN, OR INSTRUCTIONS VIA
A FACSIMILE NUMBER OTHER THAN THE ONES SET FORTH HEREIN, WILL NOT CONSTITUTE A
VALID DELIVERY.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Outstanding Notes, but whose Outstanding
Notes are not immediately available and thus cannot deliver their Outstanding
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent (or comply with the procedures for book-entry transfer) prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent
in the United States or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the registration
number(s) and series of such Outstanding Notes and the principal amount of
Outstanding Notes tendered, stating that the tender is being made thereby
and guaranteeing that, within five New York Stock Exchange trading days
after the Expiration Date, the Letter of Transmittal (or facsimile
thereof), together with the Outstanding Notes (or a confirmation of
book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility) and any other documents
required by the Letter of Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Outstanding Notes in proper
form for transfer (or a confirmation of book-entry transfer of such
Outstanding Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility) and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Outstanding Notes according to the
guaranteed delivery procedures set forth above. Any Holder who wishes to tender
Outstanding Notes pursuant to the guaranteed delivery procedures described above
must ensure that the Exchange
<PAGE> 9
Agent receives the Notice of Guaranteed Delivery relating to such Outstanding
Notes prior to the Expiration Date. Failure to complete the guaranteed delivery
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed by
a Holder who attempted to use the guaranteed delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Outstanding Notes evidenced by
a submitted certificate is tendered, the tendering Holder should fill in the
principal amount tendered in the column entitled "Principal Amount Tendered" of
the box entitled "Description of Outstanding Notes Tendered Hereby." A newly
issued Outstanding Note for the principal amount of Notes submitted but not
tendered will be sent to such Holder as soon as practicable after the Expiration
Date. All Outstanding Notes delivered to the Exchange Agent will be deemed to
have been tendered in full unless otherwise indicated. Tenders of Outstanding
Notes will be accepted only in integral multiples of $1,000.
Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date, after which tenders of Outstanding
Notes are irrevocable. To be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Exchange Agent.
Any such notice of withdrawal must (i) specify the name of the person having
deposited the Outstanding Notes to be withdrawn (the "Depositor"), (ii) identify
the Outstanding Notes to be withdrawn (including the registration number(s),
series and principal amount of such Outstanding Notes, or, in the case of
Outstanding Notes transferred by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited), (iii) be signed by
the Holder in the same manner as the original signature on this Letter of
Transmittal (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
Outstanding Notes register the transfer of such Outstanding Notes into the name
of the person withdrawing the tender and (iv) specify the name in which any such
Outstanding Notes are to be registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, whose determination
shall be final and binding on all parties. Any Outstanding Notes so withdrawn
will be deemed not to have been validly tendered for purposes of the Exchange
Offer and no Exchange Notes will be issued with respect thereto unless the
Outstanding Notes so withdrawn are validly retendered. Any Outstanding Notes
that have been tendered but not accepted for exchange, will be returned to the
Holder thereof without cost to such Holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of the Outstanding Notes tendered hereby, the signature
must correspond with the name(s) as written on the face of the certificates
without alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Book-Entry Transfer Facility, the
signature must correspond with the name as it appears on the security position
listing as the holder of the Outstanding Notes.
If any of the Outstanding Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Outstanding Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Outstanding Notes.
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the
Outstanding Notes tendered hereby are tendered (i) by a registered Holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Outstanding Notes (which term, for the purposes described herein, shall
include a participant in the Book-Entry Transfer Facility whose name appears on
a security listing as the holder of the Outstanding Notes) listed and tendered
hereby, no endorsements of the tendered Outstanding Notes or separate written
instruments of transfer or exchange are required. In any other case, the
registered
<PAGE> 10
Holder (or acting Holder) must either properly endorse the Outstanding Notes or
transmit properly completed bond powers with this Letter of Transmittal (in
either case, executed exactly as the name(s) of the registered Holder(s)
appear(s) on the Outstanding Notes, and, with respect to a participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Outstanding Notes, exactly as the name of the participant
appears on such security position listing), with the signature on the
Outstanding Notes or bond power guaranteed by an Eligible Institution (except
where the Outstanding Notes are tendered for the account of an Eligible
Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the name and
address (or account at the Book-Entry Transfer Facility) in which the Exchange
Notes or substitute Outstanding Notes for principal amounts not tendered or not
accepted for exchange are to be issued (or deposited), if different from the
names and addresses or accounts of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification number or social security number of the person named must also be
indicated and the tendering Holder should complete the applicable box.
If no instructions are given, the Exchange Notes (and any Outstanding Notes
not tendered or not accepted) will be issued in the name of and sent to the
acting Holder of the Outstanding Notes or deposited at such Holder's account at
the Book-Entry Transfer Facility.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the
transfer and exchange of Outstanding Notes to it or its order pursuant to the
Exchange Offer. If a transfer tax is imposed for any other reason other than the
transfer and exchange of Outstanding Notes to the Company or its order pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exception therefrom
is not submitted herewith, the amount of such transfer taxes will be billed
directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Outstanding Notes listed in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive, in whole or in part, any
of the conditions to the Exchange Offer set forth in the Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any holder whose Outstanding Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number(s) set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to the Company at 1901 East Loop 820 South, Fort
Worth, Texas 76112, Attention: Secretary (telephone: (817) 457-3060).
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10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Outstanding Notes and withdrawal of tendered
Outstanding Notes will be determined by the Company in its sole discretion,
which determination will be final and binding. The Company reserves the absolute
right to reject any and all Outstanding Notes not properly tendered or any
Outstanding Notes the Company's acceptance of which would, in the opinion of
counsel for the Company, be unlawful. The Company also reserves the right to
waive any defects, irregularities or conditions of tender as to particular
Outstanding Notes. The Company's interpretation of the terms and conditions of
the Exchange Offer (including the instructions in this Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Outstanding Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify Holders of defects or irregularities with respect to tenders of
Outstanding Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Outstanding Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Outstanding Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders as soon as practicable following the Expiration
Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Outstanding Notes is
required to provide the Exchange Agent with such holder's correct TIN on
Substitute Form W-9 below. If such Holder is an individual, the TIN is the
Holder's social security number. The Certificate of Awaiting Taxpayer
Identification Number should be completed if the tendering Holder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future. If the Exchange Agent is not provided with the correct TIN, the
Holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, payments that are made to such Holder with respect to tendered
Outstanding Notes may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign individuals and foreign entities) are not subject to these backup
withholding and reporting requirements. In order for such a Holder to qualify as
an exempt recipient, that Holder must submit to the Exchange Agent a properly
completed Internal Revenue Service Form W-8, signed under penalties of perjury,
attesting to that Holder's exempt status. Such forms can be obtained from the
Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to Outstanding Notes tendered for exchange, the Holder is required to
notify the Exchange Agent of his or her correct TIN by completing the form
herein certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (i) such Holder has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the Internal Revenue Service has notified such Holder that he or she is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the
Outstanding Notes. If Outstanding Notes are in more than one name or are not in
the name of the actual Holder, consult the instructions on Internal Revenue
Service Form W-9, which may be obtained from the Exchange Agent, for additional
guidance on which number to report.
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CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied For"
in the space for the TIN on Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH OUTSTANDING NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
