<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
WILSON GREATBATCH TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 3692 16-1531026
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Identification Number)
Organization) Classification Code Number)
</TABLE>
------------------------------
10,000 WEHRLE DRIVE
CLARENCE, NEW YORK 14031
(716) 759-6901
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------------
EDWARD F. VOBORIL
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
WILSON GREATBATCH TECHNOLOGIES, INC.
10,000 WEHRLE DRIVE
CLARENCE, NEW YORK 14031
(716) 759-6901
(Name, Address Including Zip Code, and Telephone Number, Including Area Code, of
Agent for Service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
STEVEN D. RUBIN, ESQ. EDWARD D. SOPHER, ESQ.
WEIL, GOTSHAL & MANGES LLP STEPHEN E. OLDER, ESQ.
700 LOUISIANA, SUITE 1600 AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
HOUSTON, TEXAS 77002 590 MADISON AVENUE
(713) 546-5000 NEW YORK, NEW YORK 10022
(212) 872-1000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- ------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ------------
If delivery of this prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS TO BE OFFERING PRICE PER AGGREGATE
OF SECURITIES TO BE REGISTERED REGISTERED (1) SHARE (2) OFFERING PRICE (2)
<S> <C> <C> <C>
Common stock, par value $.001 per share shares $ $115,000,000
<CAPTION>
TITLE OF EACH CLASS AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Common stock, par value $.001 per share $30,360.00
</TABLE>
(1) Includes shares of common stock that the underwriters may purchase
solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o).
------------------------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION--MAY 22, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY U.S. FEDERAL SECURITIES LAWS TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
DOCUMENTATION FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE>
PROSPECTUS
, 2000
[LOGO]
WILSON GREATBATCH TECHNOLOGIES
SHARES OF COMMON STOCK
- ----------------------------------------------------------------------------
WILSON GREATBATCH TECHNOLOGIES, INC.:
- We are the leading developer and manufacturer of power sources and certain
components used in implantable medical devices.
- 10,000 Wehrle Drive
Clarence, New York 14031
(716) 759-6901
PROPOSED TRADING SYMBOL AND MARKET:
- GB / New York Stock Exchange
THE OFFERING:
- We are offering shares of our common stock.
- The underwriters have an option to purchase an additional shares
of common stock from us to cover over-allotments.
- This is our initial public offering and no public market currently
exists for our shares.
- We anticipate that the initial public offering price for our shares
will be between $ and $ per share.
- We plan to use the net proceeds of this offering to repay
indebtedness.
- Closing: , 2000.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Per Share Total
- --------------------------------------------------------------------------------
<S> <C> <C>
Public offering price: $ $
Underwriting fees:
Proceeds to Wilson Greatbatch Technologies,
Inc.:
- --------------------------------------------------------------------------------
</TABLE>
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6.
- --------------------------------------------------------------------------------
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
JOINT BOOK-RUNNING MANAGERS
DONALDSON, LUFKIN & JENRETTE MERRILL LYNCH & CO.
----------------
BANC OF AMERICA SECURITIES LLC
U.S. BANCORP PIPER JAFFRAY
DLJDIRECT INC.
<PAGE>
[GRAPHICS-PHOTOGRAPHS OF PRODUCTS]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary..................... 1
Risk Factors........................... 6
Forward Looking Statements............. 15
Use of Proceeds........................ 16
Dividend Policy........................ 16
Capitalization......................... 17
Dilution............................... 18
Selected Consolidated Financial Data... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 21
Business............................... 30
</TABLE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Management............................. 43
Related Party Transactions............. 50
Principal Stockholders................. 54
Description of Capital Stock........... 55
Shares Eligible for Future Sale........ 57
Underwriting........................... 59
Legal Matters.......................... 61
Experts................................ 62
Where You Can Find More Information.... 62
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
i
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THIS SUMMARY TOGETHER WITH THE MORE DETAILED INFORMATION
REGARDING US AND THE COMMON STOCK BEING SOLD IN THIS OFFERING AND OUR HISTORICAL
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE HISTORICAL CONSOLIDATED
FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.
WILSON GREATBATCH TECHNOLOGIES, INC.
OUR BUSINESS
We are the leading developer and manufacturer of power sources and certain
components used in implantable medical devices. Over 90% of the pacemakers and
implantable cardioverter defibrillators, or ICDs, manufactured worldwide in 1999
used power sources either manufactured by us or produced by third parties under
agreements with us to use our patented technology. We believe that we are a
preferred supplier of power sources and components because we offer the most
advanced, most reliable and longest lasting products commercially available for
implantable medical devices. Through continuous technological innovation and
improvements, we have enabled our customers to continually develop and introduce
implantable medical devices that are progressively smaller, longer lasting, more
efficient and more functional. Our customers include leading implantable medical
device manufacturers such as Guidant, St. Jude Medical and Medtronic. We
leverage our core competencies in technology and manufacturing to develop and
produce power sources for commercial applications that demand high performance
and reliability, including aerospace, oil and gas exploration and oceanographic
equipment.
Our history, market leadership and reputation for quality and technological
innovation in the implantable medical device industry began with Mr. Wilson
Greatbatch, who patented the implantable pacemaker in 1962 and founded our
company in 1970. We continue to develop pioneering technology used in
implantable medical devices and other demanding commercial applications. As of
May 1, 2000, we employed 135 scientists, engineers and technicians. To remain a
leader in developing new technology, we also maintain close relationships with a
number of research organizations, clinicians and other industry professionals.
Since 1970, our company has received 321 patents worldwide, and as of May 1,
2000, we held 137 active patents.
We work closely with our customers to enable them to develop innovative
medical devices that utilize our specially designed, proprietary power sources
and components. We believe that our proprietary technology, close customer
relationships, market leadership and dedication to quality provide us with
significant competitive advantages over our competitors and create a barrier to
entry for potential market entrants.
STRATEGY
Our objective is to enhance our position as the leading developer and
manufacturer of power sources and certain components for implantable medical
devices. We intend to:
- expand our proprietary technology portfolio through continuous
technological innovation and continue to focus our research, development
and engineering efforts on pioneering power sources and advanced
components for implantable medical devices;
- enhance our position as an integrated component supplier to the
implantable medical device industry by broadening our product line to
include a more comprehensive range of power sources and components;
- continue to collaborate with our customers to jointly develop new
technologies that enable them to develop and market increasingly more
effective and technologically innovative products; and
- enter into strategic alliances and make selective acquisitions that
complement our core competencies in technology and manufacturing for both
implantable medical devices and other demanding commercial applications.
1
<PAGE>
IMPLANTABLE MEDICAL DEVICE INDUSTRY
An implantable medical device is an instrument that is surgically inserted
into the body to provide diagnosis or therapy. The market for our implantable
power sources and components benefits directly from the growth of the
implantable medical device industry. The largest and fastest growing segment of
the implantable medical device market is cardiac rhythm management, or CRM,
which includes devices such as pacemakers and ICDs. Pacemakers treat
bradycardia, a condition that occurs when a patient has an abnormally slow
heartbeat, by stimulating the heart with regular electrical pulses. ICDs treat
tachycardia, a condition that occurs when a patient has a rapid and irregular
heartbeat, by delivering concentrated and timed electrical energy to the heart
to restore a normal heart rate.
The use of implantable medical devices has grown as advances in technology
have enabled the treatment of a wider range of conditions. As the size of
implantable medical devices has become smaller, implantation has become less
invasive, making the use of these devices more attractive to patients and
surgeons. Emerging applications, such as the treatment of congestive heart
failure and atrial fibrillation, a condition associated with an unsynchronized
motion of the atrium that produces an irregular heartbeat, increased ease of
implantation and the general aging of the population are expected to drive the
growth of the implantable medical device industry. Medical Data International,
an independent industry publisher, estimates that revenues from pacemakers sold
worldwide will increase from $2.6 billion in 1999 to $3.6 billion in 2004,
representing a compound annual growth rate of 6.7%. Medical Data International
also estimates that revenues from ICDs sold worldwide will increase from $1.5
billion in 1999 to $5.5 billion in 2004, representing a compound annual growth
rate of 29.7%. The faster growth predicted for the ICD market is predicated on
anticipated new applications for, and greater acceptance of, ICDs.
As the leading developer and manufacturer of power sources and certain
components for implantable medical devices, we believe that our company will
continue to be well positioned to meet the requirements of manufacturers of
these products.
PRODUCTS
We currently manufacture and market 26 models of pacemaker batteries and 15
models of ICD batteries as well as numerous other components for our customers
in the implantable medical device industry. Our commercial power sources are
used in aerospace, oil and gas exploration and oceanographic equipment. The
following table provides information about our principal products:
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION USED IN
------- ----------- -------
<S> <C> <C>
MEDICAL:
Implantable power sources Batteries for implantable medical Pacemakers, ICDs, left ventricular
devices assist devices, neurostimulators, drug
pumps and hearing assist devices
Capacitors Store energy generated by a ICDs
battery before delivery to the
heart
Medical components:
Feedthroughs Allow electrical signals to be Pacemakers, ICDs, left ventricular
brought from inside an implantable assist devices, neurostimulators, drug
medical device to an electrode pumps and hearing assist devices
Electrodes Deliver electrical signal from the Pacemakers and ICDs
feedthrough to a body part
undergoing stimulation
Precision components Machined and molded parts for Pacemakers, ICDs and drug pumps
implantable medical devices
COMMERCIAL:
Commercial power sources Batteries for demanding commercial Aerospace, oil and gas exploration and
applications oceanographic equipment
</TABLE>
2
<PAGE>
THE OFFERING
<TABLE>
<S> <C> <C>
Common stock offered....... shares
Common stock to be
outstanding after this
offering................. shares
Use of proceeds............ Repayment of indebtedness, including all of our 13% senior
subordinated notes and a portion of our Term A and Term B loans
Proposed NYSE symbol....... GB
</TABLE>
------------------------
The outstanding share information is based on our shares outstanding as of
May 1, 2000. This information excludes 967,028 shares of common stock issuable
upon exercise of outstanding stock options at a weighted average exercise price
of $5.34 per share and an aggregate of 1,818,592 shares of common stock that
were available for future issuance under our stock option plans as of May 1,
2000. Unless otherwise indicated, the information in this prospectus assumes no
exercise of the underwriters' over-allotment option to purchase additional
shares of our common stock and all common stock figures reflect a one-for-three
reverse stock split that occurred in May 2000.
------------------------
Our facilities are located in greater Buffalo, New York and Columbia,
Maryland. Our principal executive offices are located at 10,000 Wehrle Drive,
Clarence, New York 14031. Our telephone number at that location is
(716) 759-6901. Our Internet address is WWW.GREATBATCH.COM.
3
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table provides summary consolidated financial data of our
company for the periods indicated. You should read the summary consolidated
financial data set forth below in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and with our
consolidated financial statements and related notes appearing elsewhere in this
prospectus.
The unaudited pro forma consolidated statement of operations data and cash
flow data for the year ended December 31, 1999 and for the three months ended
March 31, 2000 give effect to this offering and the application of the net
proceeds of this offering to repay a portion of our indebtedness as if this
offering and the repayment of indebtedness had occurred on January 2, 1999. The
as adjusted consolidated balance sheet data is adjusted as if this offering and
the repayment of indebtedness had occurred on March 31, 2000.
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED PRO FORMA THREE MONTHS ENDED THREE MONTHS
------------------------- YEAR ENDED ------------------------- ENDED
JANUARY 1, DECEMBER 31, DECEMBER 31, APRIL 2, MARCH 31, MARCH 31,
1999(1) 1999 1999 1999 2000 2000
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Total revenues........................... $ 75,268 $76,590 $ $19,886 $22,526 $
Cost of goods sold....................... 36,454 41,057 10,024 12,936
-------- ------- -------- ------- ------- --------
Gross profit............................. 38,814 35,533 9,862 9,590
Costs and expenses:
Selling, general and administrative.... 9,391 7,235 2,144 1,974
Research, development and
engineering.......................... 12,190 9,339 2,772 2,520
Other expenses:
Interest expense....................... 10,572 13,420 3,298 3,985
Intangible amortization................ 5,197 6,510 1,638 1,627
Other.................................. 364 1,343 74 61
-------- ------- -------- ------- ------- --------
Income (loss) before income taxes........ 1,100 (2,314) (64) (577)
Income tax expense (benefit)............. 410 (605) (17) (184)
Cumulative effect of accounting change... -- (563) (563) --
-------- ------- -------- ------- ------- --------
Net income (loss)........................ $ 690 $(2,272) $ $ (610) $ (393) $
======== ======= ======== ======= ======= ========
Net earnings (loss) per share (2):
Basic.................................. $ 0.04 $ (0.11) $ $ (0.03) $ (0.02) $
Diluted................................ $ 0.04 $ (0.11) $ $ (0.03) $ (0.02) $
Weighted average shares outstanding (2):
Basic.................................. 17,436 20,818 20,665 21,027
Diluted................................ 18,173 20,818 20,665 21,027
CONSOLIDATED CASH FLOW DATA:
EBITDA (3)............................... $ 20,543 $22,152 $ 6,107 $ 6,429
Cash provided by operating activities.... 9,751 7,492 881 4,646
Cash used in investing activities........ (83,375) (8,847) (1,723) (2,185)
Cash provided by (used in) financing
activities............................. 75,445 1,078 (1,063) (3,850)
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 2000
-----------------------
ACTUAL AS ADJUSTED
-------- ------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 2,474 $
Total assets................................................ 187,782
Total debt.................................................. 128,932
Total stockholders' equity.................................. 45,980
</TABLE>
4
<PAGE>
(1) In August 1998, we acquired the assets and liabilities of Hittman Materials
and Medical Components, Inc., or Hittman. These figures include the results
of operations of Hittman from August 8, 1998 to January 1, 1999.
(2) We calculate basic earnings per share by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the
period. We calculate diluted earnings (loss) per share by adjusting for
common stock equivalents, which consist of stock options. During the year
ended December 31, 1999, the three months ended April 2, 1999 and March 31,
2000 and the pro forma three months ended March 31, 2000, there were options
to purchase 848, 829, 909 and 909 shares of common stock, respectively, that
have not been included in the computation of diluted earnings per share
because to do so would be antidilutive for those periods. Diluted earnings
per share for the year ended January 1, 1999 includes the potentially
dilutive effect of stock options.
(3) When we refer to EBITDA, we mean net earnings or loss before interest
expense, income taxes, depreciation and amortization. We have included
EBITDA because our management and industry analysts generally consider it to
be a measurement of the financial performance of our company that provides a
relevant basis for comparison among companies. EBITDA is not a measurement
of financial performance under accounting principles generally accepted in
the United States and should not be considered a substitute for net income
or loss as a measure of performance, or to cash flow as a measure of
liquidity. Investors should note that this calculation of EBITDA might
differ from similarly titled measures for other companies.
5
<PAGE>
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD UNDERSTAND THE HIGH DEGREE
OF RISK INVOLVED. YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING RISKS AND OTHER
INFORMATION IN THIS PROSPECTUS, INCLUDING OUR HISTORICAL CONSOLIDATED FINANCIAL
STATEMENTS AND RELATED NOTES, BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON
STOCK. THE FOLLOWING RISKS AND UNCERTAINTIES ARE NOT THE ONLY ONES WE FACE.
HOWEVER, THESE ARE THE RISKS OUR MANAGEMENT BELIEVES ARE MATERIAL. IF ANY OF THE
FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION AND OPERATING
RESULTS COULD BE ADVERSELY AFFECTED. AS A RESULT, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE AND YOU COULD LOSE PART OR ALL OF YOUR INVESTMENT.
RISKS RELATED TO OUR BUSINESS
WE DEPEND HEAVILY ON A LIMITED NUMBER OF CUSTOMERS, AND IF WE LOSE ANY OF
THEM, OUR REVENUES COULD DECLINE.
A substantial portion of our business in 1999 was conducted with a limited
number of customers, including Guidant, St. Jude Medical, Medtronic, Biotronik
and Sulzer Intermedics, which was acquired by Guidant in 1999. Guidant accounted
for approximately 34% of our revenues and St. Jude Medical accounted for
approximately 32% of our revenues in 1999. As a result, we depend heavily on
revenues from Guidant and St. Jude Medical. Certain of our supply agreements
with our large customers might not be renewed in the future after they expire,
including our agreements with Guidant and St. Jude Medical, each of which
expires in 2001. The loss of any large customer for any reason could harm our
business, financial condition and results of operations.
CHANGES IN TECHNOLOGY MAY MAKE OUR PRODUCTS OBSOLETE OR MAY RESULT IN
REDUCED SALES, WHICH WOULD NEGATIVELY AFFECT OUR REVENUES.
We sell our products to customers in several industries that are
characterized by rapid technological changes, frequent new product introductions
and evolving industry standards. For example, in 1998, an industry-wide design
change in ICDs occurred, resulting in new ICDs using one battery instead of two.
Primarily as a result of this design change, our implantable power source
revenues decreased 22% in 1999 compared to 1998. Without the timely introduction
of new products and enhancements, our products and services will likely become
technologically obsolete over time. In addition, other new products introduced
by our customers may require fewer of our power sources or components. If this
occurs, our revenues and operating results would suffer.
WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO SUCCESSFULLY MARKET OUR CURRENT
OR FUTURE PRODUCTS.
The market for our power sources, components and other products has been
growing in recent years. If the market for our products does not grow as rapidly
as forecasted by industry experts, our revenues could be less than expected. In
addition, it is difficult to predict the rate at which the market for our
products will grow or at which new and increased competition will result in
market saturation. Slower growth in the pacemaker and ICD markets in particular
would negatively impact our revenues. In addition, we face the risk that our
products will lose widespread market acceptance. We cannot assure you that our
customers will continue to utilize the products we offer or that a market will
develop for our future products. It may not be technically or economically
feasible for us to manufacture certain future products and we may not be
successful in developing or marketing them. Additionally, new technologies that
we develop may not be rapidly accepted because of industry-specific factors,
including the need for regulatory clearance, entrenched patterns of clinical
practice and uncertainty over third party reimbursement. If this occurs, our
business will be harmed.
6
<PAGE>
WE NEED TO SATISFY EVOLVING CUSTOMER REQUIREMENTS, WHICH IS A CHALLENGE WE
MAY NOT BE ABLE TO MEET EFFECTIVELY.
Our future success depends in part on continuous, timely development and the
introduction of new products that address evolving customer requirements and
expectations. Our customers rely on us to design and manufacture products that
are more advanced, more reliable and longer lasting and count on us to invent
new technologies to enable them to create devices that are more functional. We
dedicate a significant amount of resources to the development of our products
and technologies and we would be harmed if we did not meet customer requirements
and expectations. Our inability, for technological or other reasons, to
successfully develop and introduce new and innovative products could cause our
business to suffer.
WE ARE SUBJECT TO PRICING PRESSURES FROM CUSTOMERS, WHICH COULD HARM OUR
OPERATING RESULTS.
We have made price concessions to some of our large customers in recent
years and we expect customer pressure for pricing concessions will continue.
Further, price concessions or reductions may cause our operating results to
suffer. In addition, any delay or failure by a large customer to make payments
due to us also could harm our operating results or financial condition.
QUALITY PROBLEMS WITH OUR PRODUCTS COULD HARM OUR REPUTATION FOR PRODUCING
HIGH QUALITY PRODUCTS AND ERODE OUR COMPETITIVE ADVANTAGE.
Our products are held to high quality standards. In the event our products
fail to meet these standards, our reputation for producing high quality products
could be harmed, which would damage our competitive advantage.
OUR OPERATING RESULTS MAY FLUCTUATE, WHICH MAY MAKE IT DIFFICULT TO FORECAST
OUR FUTURE PERFORMANCE AND MAY RESULT IN VOLATILITY IN OUR STOCK PRICE.
Our operating results have fluctuated in the past and are likely to
fluctuate significantly from quarter to quarter due to a variety of factors,
including:
- the fixed nature of a substantial percentage of our costs, which results
in our operations being particularly sensitive to fluctuations in revenue;
- adverse changes in the implantable medical device industry;
- our competitors' announcements of new products or technological
innovations;
- changes in the relative portion of our revenue represented by our various
products and customers;
- timing of orders placed by our principal customers who account for a
significant portion of our revenues;
- demand for and market acceptance of our products;
- unanticipated delays or problems in the introduction of new products;
- competitive pressures resulting in lower selling prices;
- increased costs of raw materials or supplies; and
- adverse changes in the level of economic activity in the United States and
other countries in which we do business.
It is possible that in some future quarter or quarters our operating results
will be below the expectations of public market analysts or investors. If this
happens, the market price of our common stock may decline significantly.
7
<PAGE>
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY AND PROPRIETARY
RIGHTS, OUR BUSINESS COULD BE ADVERSELY AFFECTED.
Patents and other proprietary rights, trade secrets and know-how are
important to our business. We rely on a combination of patents, licenses, trade
secrets and know-how to establish and protect our proprietary rights to our
technologies and products. We cannot guarantee that the steps we have taken or
will take to protect our proprietary rights will be adequate to deter
misappropriation of our intellectual property. In addition to seeking formal
patent protection whenever possible, we attempt to protect our proprietary
rights and trade secrets by entering into confidentiality agreements with
employees, consultants and third parties with which we do business. However,
these agreements can be breached and, if they are, there may not be an adequate
remedy available to us and we may be unable to prevent the unauthorized
disclosure or use of our technical knowledge, practices or procedures. If our
trade secrets become known, we may lose our competitive advantages.
In addition, we may not be able to detect unauthorized use of our
intellectual property and take appropriate steps to enforce our rights. If third
parties infringe or misappropriate our patents or other proprietary rights, our
business could be seriously harmed. We may be required to spend significant
resources to monitor our intellectual property rights, we may not be able to
detect infringement of these rights and may lose our competitive advantages
associated with our intellectual property rights before we do so. In addition,
competitors may design around our technology or develop competing technologies
that do not infringe on our proprietary rights. In addition, protection of
intellectual property in many foreign countries is weaker and less reliable than
in the United States and Europe, and we face increased risks in protecting our
intellectual property in foreign countries.
WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY CLAIMS, WHICH COULD BE COSTLY AND
TIME CONSUMING AND COULD DIVERT OUR MANAGEMENT AND KEY PERSONNEL FROM OUR
BUSINESS OPERATIONS.
Third parties may claim that we are infringing their intellectual property
rights, and we may be found to have infringed those intellectual property
rights. While we do not believe that any of our products infringe the
intellectual property rights of third parties, we may be unaware of intellectual
property rights of others that may be used in our technology and products. In
addition, third parties may claim that our patents have been improperly granted
and may seek to invalidate our existing or future patents. Although we do not
believe that any of our active patents should be subject to invalidation, if any
claim for invalidation prevailed, the result could be greatly expanded
opportunities for third parties to manufacture and sell products which compete
with our products. We also typically do not receive significant indemnification
from parties which license technology to us against third party claims of
intellectual property infringement. Any litigation or other challenges regarding
our patents or other intellectual property could be costly and time consuming
and could divert our management and key personnel from our business operations.
The complexity of the technology involved and the uncertainty of intellectual
property litigation increase these risks. Claims of intellectual property
infringement might also require us to enter into costly royalty or license
agreements. However, we may not be able to obtain royalty or license agreements
on terms acceptable to us, or at all. We also may be subject to significant
damages or injunctions against development and sale of certain of our products.
Infringement claims, even if not substantiated, could result in significant
legal and other costs and may be a distraction to management.
POTENTIAL PRODUCT LIABILITY CLAIMS COULD AFFECT OUR EARNINGS AND FINANCIAL
CONDITION.
The manufacture and sale of our products expose us to potential product
liability claims and product recalls, including those which may arise from
misuse or malfunction of, or design flaws in, our products or use of our
products with components or systems not manufactured or sold by us. Provisions
contained in our agreements with key customers attempting to limit our damages,
including provisions to limit damages to liability for gross negligence, may not
be enforceable in all instances or may otherwise fail to protect us from
liability for damages. Product liability claims or product recalls,
8
<PAGE>
regardless of their ultimate outcome, could require us to spend significant time
and money in litigation or otherwise or require us to pay significant damages.
The occurrence of product liability claims or product recalls could cause our
earnings and financial condition to suffer.
We carry product liability insurance coverage which is limited in scope and
amount. We cannot assure you that we will be able to maintain this insurance or
to do so at reasonable cost and on reasonable terms. We also cannot assure you
that this insurance will be adequate to protect us against a product liability
claim that arises in the future.
WE ARE DEPENDENT UPON OUR KEY PERSONNEL.
Our future performance depends to a significant degree upon the continued
contributions of our senior management team and key technical personnel. Our
products are highly technical in nature. In general, only highly qualified and
trained scientists have the necessary skills to develop our products. The loss
or unavailability to us of any member of our senior management team or a key
technical employee could significantly harm us. We face intense competition for
these professionals from our competitors, our customers and other companies
operating in our industry. To the extent that the services of members of our
senior management team and key technical personnel would be unavailable to us
for any reason, we would be required to hire other personnel to manage and
operate our company and to develop our products and technology. We cannot assure
you that we would be able to locate or employ such qualified personnel on
acceptable terms.
WE MAY NOT BE ABLE TO ATTRACT, TRAIN AND RETAIN A SUFFICIENT NUMBER OF
QUALIFIED PROFESSIONALS TO MAINTAIN AND GROW OUR BUSINESS.
Our success will depend in large part upon our ability to attract, train,
retain and motivate highly-skilled employees and management. There is currently
aggressive competition for employees who have experience in technology and
engineering. We compete intensely with other companies to recruit and hire from
this limited pool. The industries in which we compete for employees are
characterized by high levels of employee attrition. Although we believe we offer
competitive salaries and benefits, we may have to increase spending in order to
retain personnel. In 1999, we temporarily reduced salaries company-wide by 10%.
In addition, if we cannot attract, train, retain and motivate qualified
personnel, we may be unable to compete for new customers or retain existing
customers. If a number of our employees resign from our company to join or
form a competitor, the loss of these employees and any resulting loss of
existing or potential clients to a competitor could harm our business, financial
condition and results of operations. Any inability to attract, train, retain and
motivate employees and management would cause our business, financial condition
and results of operations to suffer.
WE RELY ON THIRD PARTY SUPPLIERS FOR CERTAIN RAW MATERIALS, KEY PRODUCTS AND
SUBCOMPONENTS AND IF WE ARE UNABLE TO OBTAIN THESE MATERIALS, PRODUCTS AND
SUBCOMPONENTS ON A TIMELY BASIS OR ON TERMS ACCEPTABLE TO US, OUR ABILITY TO
MANUFACTURE PRODUCTS WILL SUFFER.
Our business depends on a continuous supply of certain raw materials. The
principal raw materials used in our business include lithium, iodine, plastics,
cases, lids, glass, screens, tantalum, ruthenium, tantalum pellets and vanadium
pentoxide. Raw materials needed for our business are susceptible to fluctuations
due to transportation, government regulations, price controls, economic climate
or other unforeseen circumstances. In addition, there are a limited number of
worldwide suppliers of certain raw materials needed to manufacture our products.
We cannot assure you that we will be able to continue to procure raw materials
critical to our business.
We rely on third party manufacturers to supply many of our raw materials.
For example, we rely on FMC to supply us with lithium for our power sources and
HC Starks to supply us with tantalum powder and wire for capacitors.
Manufacturing problems may occur with these and other outside sources, as a
supplier may fail to develop and supply products and subcomponents to us on a
timely basis, or may supply us with products and subcomponents that do not meet
our quality, quantity and
9
<PAGE>
cost requirements. If any of these problems occur, we may be unable to obtain
substitute sources of these products and subcomponents on a timely basis or on
terms acceptable to us, which could harm our ability to manufacture our own
products and components profitably or on time. In addition, to the extent the
processes that our suppliers use to manufacture products and subcomponents are
proprietary, we may be unable to obtain comparable subcomponents from
alternative suppliers.
WE MAY FACE COMPETITION THAT COULD HARM OUR BUSINESS AND WE MAY BE UNABLE TO
COMPETE SUCCESSFULLY AGAINST NEW ENTRANTS AND ESTABLISHED COMPANIES WITH GREATER
RESOURCES.
Competition in connection with the manufacturing of power sources for the
implantable medical device industry may intensify in the future. One or more of
our customers that manufactures implantable medical devices may undertake
additional vertical integration initiatives and begin to manufacture some or all
of their power source needs. Although Medtronic manufactures its own lithium ion
batteries for its pacemakers and ICDs, to date, to our knowledge, Medtronic has
not sold batteries to third parties. If Medtronic were to begin selling power
sources for implantable medical devices to third parties, our revenues could be
harmed. As the implantable medical device industry continues to consolidate,
this risk will intensify. In addition, new competitors may emerge, and our
product lines may be threatened by new technologies or market trends that reduce
the value of our product lines. Many of our potential implantable power source
and component competitors, which include some of our customers, have greater
name recognition, longer operating histories, larger customer bases, longer
customer relationships and greater financial, technical, personnel and marketing
resources than our company.
The market for commercial power sources is competitive, fragmented and
subject to rapid technological change. Many other commercial power source
suppliers are larger and have greater financial, operational, personnel, sales,
technical and marketing resources than our company. These and other companies
may develop products that are superior to ours, which could cause our results of
operations to suffer.
ACCIDENTS AT ONE OF OUR FACILITIES COULD DELAY PRODUCTION AND ADVERSELY
AFFECT OUR OPERATIONS.
Our business involves complex manufacturing processes and hazardous
materials that can be dangerous to our employees. Although we employ safety
procedures in the design and operation of our facilities, there is a risk that
an accident or death could occur in one of our facilities. Any accident, such as
a chemical spill, could result in significant manufacturing delays or claims for
damages resulting from injuries, which would harm our operations and financial
condition. The potential liability resulting from any such accident or death, to
the extent not covered by insurance, could cause our business to suffer. Any
disruption of operations at any of our facilities could harm our business.
IF WE ARE NOT SUCCESSFUL IN MAKING ACQUISITIONS TO EXPAND AND DEVELOP OUR
BUSINESS, OUR FINANCIAL RESULTS MAY SUFFER.
A component of our strategy is to make selective acquisitions that
complement our core competencies in technology and manufacturing to enable us to
manufacture and sell additional products to our existing customers and to expand
our business into related markets. Our continued growth will depend on our
ability to identify and acquire companies that complement or enhance our
business on acceptable terms. We may not be able to identify or complete future
acquisitions. Some of the risks that we may encounter include expenses
associated with, and difficulties in identifying, potential targets, the costs
associated with incomplete acquisitions and higher prices for acquired companies
because of competition for attractive acquisition targets. Our failure to
acquire additional companies could cause our financial results to suffer.
10
<PAGE>
WE MAY MAKE ACQUISITIONS THAT COULD SUBJECT US TO A NUMBER OF OPERATIONAL
RISKS AND WE MAY NOT BE SUCCESSFUL IN INTEGRATING COMPANIES WE ACQUIRE INTO OUR
EXISTING OPERATIONS.
We expect to make selective acquisitions that complement our core
competencies in technology and manufacturing to enable us to manufacture and
sell additional products to our existing customers and to expand our business
into related markets. However, implementation of our acquisition strategy
entails a number of risks, including:
- inaccurate assessments of undisclosed liabilities;
- entry into markets in which we may have limited or no experience;
- diversion of our management's attention from our core businesses;
- potential loss of key employees or customers of the acquired businesses;
- difficulties in integrating the operations and products of an acquired
business or in realizing projected efficiencies and cost savings; and
- increases in our indebtedness and a limitation in our ability to access
additional capital when needed.
WE INTEND TO EXPAND INTO NEW MARKETS AND OUR PROPOSED EXPANSION PLANS MAY
NOT BE SUCCESSFUL.
We intend to expand into new markets through the development of new product
applications based on our existing component technologies. These efforts have
required, and will continue to require, us to make substantial investments,
including significant research, development and engineering expenditures and
capital expenditures for new, expanded or improved manufacturing facilities. We
cannot assure you that we will be able to successfully manage expansion into new
markets and products or that these efforts will not have an adverse impact on
our business.
OUR FAILURE TO OBTAIN LICENSES FROM THIRD PARTIES FOR NEW TECHNOLOGIES OR
THE LOSS OF THESE LICENSES COULD IMPAIR OUR ABILITY TO DESIGN AND MANUFACTURE
NEW PRODUCTS.
We occasionally license technologies from third parties rather than
depending exclusively on our own proprietary technology and developments. For
example, we license wet tantalum technology from the Evans Capacitor Company to
produce our capacitors. Our ability to license new technologies from third
parties is and will continue to be critical to our ability to offer new and
improved products. We cannot assure you that we will be able to continue to
identify new technologies developed by others and even if we are able to
identify new technologies, we may not be able to negotiate licenses on favorable
terms, or at all. Additionally, we could lose rights granted under licenses for
reasons beyond our control. For example, the licensor could lose patent
protection for a number of reasons, including invalidity of the licensed patent.
11
<PAGE>
RISKS RELATED TO OUR INDUSTRY
WE AND OUR CUSTOMERS ARE SUBJECT TO VARIOUS POLITICAL, ECONOMIC AND
REGULATORY CHANGES IN THE HEALTHCARE INDUSTRY WHICH COULD FORCE US TO MAKE
MODIFICATIONS TO HOW WE DEVELOP AND PRICE OUR PRODUCTS.
The healthcare industry is highly regulated and is influenced by changing
political, economic and regulatory factors. Several of our product lines are
subject to international, federal, state and local health and safety, packaging
and product content regulations. In addition, implantable medical device
products produced by our healthcare customers are subject to regulation by the
United States Food and Drug Administration, or FDA, and similar international
agencies. These regulations govern a wide variety of product activities from
design and development to labeling, manufacturing, promotion, sales and
distribution. Compliance with these regulations may be time consuming,
burdensome and expensive and could negatively affect our customers' abilities to
sell their products, which in turn would adversely affect our ability to sell
our products. This may result in higher than anticipated costs or lower than
anticipated revenues.
These regulations are also complex, change frequently and have tended to
become more stringent over time. Federal and state legislatures have
periodically considered programs to reform or amend the U.S. healthcare system
at both the federal and state levels. In addition, these regulations may contain
proposals to increase governmental involvement in healthcare, lower
reimbursement rates or otherwise change the environment in which healthcare
industry participants operate. We may be required to incur significant expenses
to comply with these regulations or remedy past violations of these regulations.
Any failure by our company to comply with applicable government regulations
could also result in cessation of portions or all of our operations, impositions
of fines and restrictions on our ability to carry on or expand our operations.
In addition, because many of our products are sold into regulated industries, we
must comply with additional regulations in marketing our products.
OUR BUSINESS IS SUBJECT TO ENVIRONMENTAL REGULATIONS AND RELATED
LIABILITIES.
Federal, state and local regulations impose various environmental controls
on the manufacturing, transportation, storage, use and disposal of batteries and
certain chemicals and other materials used in the manufacturing of batteries. We
cannot assure you that conditions relating to our historical operations which
may require expenditures for clean-up will not arise in the future or that
changes in environmental laws and regulations will not impose costly compliance
requirements on us or otherwise subject us to future liabilities. We cannot
assure you that additional or modified regulations relating to the manufacture,
transportation, storage, use and disposal of materials used to manufacture our
batteries or restricting disposal of batteries will not be imposed. In addition,
we cannot predict the effect that additional or modified regulations may have on
us or our customers.
CONSOLIDATION IN THE HEALTHCARE INDUSTRY COULD HAVE AN ADVERSE EFFECT ON OUR
REVENUES AND RESULTS OF OPERATIONS.
Many healthcare industry companies are consolidating to create new companies
with greater market power. As the healthcare industry consolidates, competition
to provide products and services to industry participants will become more
intense. These industry participants may try to use their market power to
negotiate price concessions or reductions for our products. If we are forced to
reduce our prices because of consolidation in the healthcare industry, our
revenues would decrease and our results of operations would suffer.
OUR BUSINESS IS INDIRECTLY SUBJECT TO HEALTHCARE INDUSTRY COST CONTAINMENT
MEASURES.
Our healthcare customers rely on third party payors, such as government
programs and private health insurance plans, to reimburse some or all of the
cost of the procedures in which our products are used. The continuing efforts of
government, insurance companies and other payors of healthcare
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<PAGE>
costs to contain or reduce those costs could lead to patients being unable to
obtain approval for payment from these third party payors. If that occurred,
sales of implantable medical devices may decline significantly, and our
customers may reduce or eliminate purchases of our products. The cost
containment measures that healthcare providers are instituting, both in the
United States and internationally, could harm our ability to operate profitably.
OUR COMMERCIAL POWER SOURCE REVENUES ARE DEPENDENT ON CONDITIONS IN THE OIL
AND NATURAL GAS INDUSTRY, WHICH HISTORICALLY HAS BEEN VOLATILE.
Sales of our commercial power sources depend to a great extent upon the
condition of the oil and gas industry and, specifically, the exploration and
production expenditures of oil and gas companies. In the past, oil and natural
gas prices have been volatile and the oil and gas exploration and production
industry has been cyclical, and it is likely that oil and natural gas prices
will continue to fluctuate in the future. The current and anticipated prices of
oil and natural gas influence the oil and gas exploration and production
business and are affected by a variety of political and economic factors beyond
our control, including worldwide demand for oil and natural gas, worldwide and
domestic supplies of oil and natural gas, the ability of the Organization of
Petroleum Exporting Countries, or OPEC, to set and maintain production levels
and pricing, the level of production of non-OPEC countries, the price and
availability of alternative fuels, political stability in oil producing regions
and the policies of the various governments regarding exploration and
development of their oil and natural gas reserves. An adverse change in the oil
and gas exploration and production industry or a reduction in the exploration
and production expenditures of oil and gas companies could cause our revenues
from commercial power sources to suffer.
RISKS RELATED TO THIS OFFERING
AN ACTIVE PUBLIC TRADING MARKET FOR OUR COMMON STOCK MAY NOT DEVELOP.
Prior to this offering, you could not buy or sell our common stock publicly.
Although we intend to apply to have our common stock listed on The New York
Stock Exchange, an active public market for our common stock might not develop
or be sustained after this offering. Moreover, even if an active market does
develop, the market price of our common stock may decline below the initial
public offering price in response to any of the following factors, some of which
are beyond our control:
- changes in financial estimates or investment recommendations by securities
analysts relating to our stock;
- changes in market valuations of comparable businesses;
- announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
- loss of significant customers;
- additions or departures of key personnel; and
- fluctuations in the stock market price and volume of traded shares
generally, especially fluctuations in the traditionally volatile
technology sector.
THE POSSIBLE VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR
SHAREHOLDERS.
Securities markets worldwide have recently experienced significant price and
volume fluctuations, and the market prices of the securities of technology
companies have been especially volatile. This market volatility, as well as
general economic, market or political conditions, could reduce the market price
of our common stock in spite of our operating performance. In addition, our
operating results could be below the expectations of public market analysts and
investors, and in response, the market price of our common stock could decrease
significantly. Investors may be unable to resell their shares
13
<PAGE>
of our common stock at or above the initial public offering price. In the past,
companies that have experienced volatility in the market price of their stock
have been the object of securities class action litigation. If we were to become
the object of securities class action litigation, we may face substantial costs
and our management's attention and resources may be diverted, which could harm
our business.
CERTAIN SIGNIFICANT STOCKHOLDERS REPRESENTED ON OUR BOARD OF DIRECTORS CAN
EXERT SIGNIFICANT INFLUENCE OVER US AND MAY HAVE INTERESTS THAT CONFLICT WITH
THOSE OF OTHER STOCKHOLDERS, INCLUDING PURCHASERS IN THIS OFFERING.
DLJ Merchant Banking Partners II, L.P. and its affiliates have substantial
control over our company and may have different interests than those of other
holders of our common stock. Prior to this offering, DLJ Merchant Banking
Partners II, L.P. and affiliated funds, which we refer to as DLJMB, hold 81.1%
of our outstanding common stock and after this offering, these entities will
beneficially own approximately % of our outstanding common stock. As a result
of its stock ownership and related contractual rights, DLJMB has significant
control over our business policies and affairs, including the power to:
- elect our directors;
- appoint new management; and
- approve any action requiring the approval of the holders of common stock,
including the adoption of amendments to our restated certificate of
incorporation and approval of mergers or sales of all substantially all of
our assets.
The directors elected by DLJMB have the ability to control decisions
affecting the business and management of our company including our capital
structure. This includes the issuance of additional capital stock, the
implementation of stock repurchase programs and the declaration of dividends.
The general partners of each of the entities comprising DLJMB are affiliates
or employees of Donaldson, Lufkin & Jenrette Securities Corporation, one of the
joint book-running managers of this offering.
FUTURE SALES OF OUR COMMON STOCK COULD ADVERSELY AFFECT OUR STOCK PRICE.
Sales of a substantial number of shares of common stock after this offering,
or the perception that these sales could occur, could adversely affect the
market price of our common stock and could impair our ability to raise capital
through the sale of additional equity securities. Immediately after this
offering, affiliates and holders of "restricted securities," as defined in
Rule 144 under the Securities Act, will own 21,021,597 shares, representing
approximately % of the outstanding shares of common stock. A decision by
these persons to sell shares of common stock could adversely affect the trading
price of our common stock.
WE HAVE VARIOUS MECHANISMS IN PLACE TO DISCOURAGE TAKEOVER ATTEMPTS, WHICH
MAY REDUCE OR ELIMINATE YOUR ABILITY TO SELL YOUR SHARES FOR A PREMIUM IN A
CHANGE OF CONTROL TRANSACTION.
Various provisions of our restated certificate of incorporation and bylaws
and in Delaware corporate law may discourage, delay or prevent a change in
control or takeover attempt of our company by a third party which is opposed to
by our management and Board of Directors. Public stockholders who might desire
to participate in such a transaction may not have the opportunity to do so.
These anti-takeover provisions could substantially impede the ability of public
stockholders to benefit from a change of control or change in our management and
Board of Directors. These provisions include:
- authorizing the issuance of "blank check" preferred stock that could be
issued by our Board of Directors to increase the number of outstanding
shares and thwart a takeover attempt;
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<PAGE>
- limiting who may call special meetings of our stockholders; and
- establishing advance notice requirements for nominations of candidates for
election to our Board of Directors or for proposing matters that can be
acted upon by our stockholders at stockholder meetings.
YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.
The initial public offering price of our common stock will be substantially
higher than the book value per share of our outstanding common stock. If you
purchase common stock in this offering, you will incur immediate and substantial
dilution in the net tangible book value per share of the common stock from the
price you paid.
ABSENCE OF DIVIDENDS COULD REDUCE OUR ATTRACTIVENESS TO INVESTORS.
Some investors favor companies that pay dividends, particularly in market
downturns. We currently intend to retain any future earnings for funding growth
and, therefore we do not currently anticipate paying cash dividends on our
common stock in the foreseeable future. Because we may not pay dividends, your
return on this investment likely depends on your ability to sell our stock for a
profit.
FORWARD LOOKING STATEMENTS
Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus constitute
forward-looking statements. We have based these forward-looking statements on
our current expectations, which are subject to known and unknown risks,
uncertainties and assumptions. They include statements relating to:
- future revenues, expenses and profitability;
- the future development and expected growth of our business and the
implantable medical device industry;
- our ability to successfully execute our business model and our business
strategy;
- our ability to identify trends within the industries for implantable
medical devices and other certain demanding applications and to offer
products and services that meet the changing needs of the market;
- projected capital expenditures; and
- trends in government regulation.
You can identify forward-looking statements by terminology such as "may,"
"will," "should," "could," "expects," "intends," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of these terms or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially from those suggested
by these forward-looking statements. In evaluating these statements, you should
carefully consider the risks outlined under "Risk Factors."
We are under no duty to update any of the forward-looking statements after
the date of this prospectus to conform such statements to actual results and do
not intend to do so.
In this prospectus, we rely on and refer to information and statistics
regarding the implantable medical device industry and our market share in the
sectors in which we compete. We obtained this information and statistics from
various third party sources, discussions with our customers and/or our own
internal estimates. We believe that these sources and estimates are reliable,
but we have not independently verified them.
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<PAGE>
USE OF PROCEEDS
We estimate that the proceeds of this offering, assuming an initial public
offering price of $ per share, which is the midpoint of the anticipated
offering price range, and after deducting underwriting discounts and commissions
and estimated offering expenses of $ payable by us, will be approximately
$ million, or $ million if the underwriters exercise their
over-allotment option in full.
We plan to use the net proceeds of this offering to repay indebtedness as
follows:
- $25.0 million principal amount of senior subordinated notes which bear an
annual interest rate of 13% and are due and payable on July 10, 2007, plus
a redemption premium of approximately $ million;
- $ million of our Term A loans which bear an annual interest rate, at our
option, of prime plus 2.25% or LIBOR plus 3.50% and are due and payable on
September 30, 2004. As of May 1, 2000, the interest rate for our Term A
loans was 9.63%; and
- $ million of our Term B loans which bear an annual interest rate, at our
option, of prime plus 2.50% or LIBOR plus 3.75% and are due and payable on
September 30, 2006. As of May 1, 2000, the interest rate for our Term B
loans was 9.97%.
DIVIDEND POLICY
We do not intend to pay cash dividends in the foreseeable future. We
currently intend to retain any earnings to further develop and grow our business
and to reduce our indebtedness. We are a holding company and are dependent on
distributions from our subsidiaries to meet our cash requirements. The terms of
the credit agreement governing our credit facility restrict the ability of our
subsidiaries to make distributions to us and, consequently, restrict our ability
to pay dividends on our common stock.
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CAPITALIZATION
The following table sets forth our cash and capitalization as of March 31,
2000 on an unaudited actual basis and on an unaudited as adjusted basis. Our
capitalization as adjusted gives effect to the sale by us of shares
of common stock offered by this prospectus at an assumed initial public offering
price of $ per share and after deducting underwriting discounts and
commissions and estimated offering expenses of $ payable by us and
application of the net proceeds of this offering to repay a portion of our
indebtedness as if this offering and the repayment of indebtedness had occurred
on March 31, 2000. This table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our financial statements and accompanying notes included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
----------------------
(UNAUDITED)
ACTUAL AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 2,474 $
======== =========
Long-term debt:
Credit facility:
Term loans (1).......................................... $104,100 $
Revolving credit facility (2)........................... 2,150
Senior subordinated notes (3)............................. 22,682
-------- ---------
Total long-term debt...................................... 128,932
Stockholders' equity:
Common stock $.001 par value; 100,000,000 shares
authorized, 21,041,547 shares issued and 21,025,494
shares outstanding (actual); 100,000,000 shares
authorized, shares issued and outstanding (as
adjusted)............................................... 20
Capital in excess of par value............................ 63,480
Retained deficit.......................................... (17,376)
Treasury stock, at cost (16,053 shares, actual and as
adjusted)............................................... (144)
-------- ---------
Total stockholders' equity.............................. 45,980
-------- ---------
Total capitalization........................................ $174,912 $
======== =========
</TABLE>
- ------------------------
(1) Term loans on an actual basis include outstanding Term A loans of
$45.0 million and Term B loans of $59.1 million. Term loans on an as
adjusted basis includes outstanding Term A loans of $ million and Term B
loans of $ million.
(2) At March 31, 2000, we had a maximum principal amount of $13.0 million, of
which $10.8 million was available, under our revolving credit facility,
subject to customary borrowing conditions. If we meet certain leverage
targets, after December 31, 2000, the maximum availability under our
revolving credit facility will increase to $20.0 million.
(3) $25.0 million of proceeds from the senior subordinated notes was initially
allocated between $21.8 million of senior subordinated notes and
$3.2 million of common stock issued to the holders of the senior
subordinated notes. The difference between the principal amount of the notes
and the amount allocated is being amortized using the effective yield method
and is charged to interest expense over the term of the senior subordinated
notes. The balance on an actual basis as of March 31, 2000 of $22.7 million
includes $0.9 million of amortization of the discount on the notes.
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DILUTION
The pro forma net tangible book value of our common stock as of March 31,
2000 was $ million, or $ per share. Pro forma net tangible book value
per share represents the amount of our total tangible assets, less the amount of
our total liabilities, and then divided by the total number of shares of common
stock outstanding. Dilution in pro forma net tangible book value per share
represents the difference between the amount paid per share by purchasers of
shares of common stock in this offering and the pro forma net tangible book
value per share of common stock immediately after the completion of this
offering. After giving effect to the sale of the shares of common stock
offered by us at an assumed initial public offering price of $ per share,
and after deducting underwriting discounts and commissions and estimated
offering expenses payable by us, our pro forma net tangible book value at
March 31, 2000 would have been $ million or $ per share of common
stock. This represents an immediate increase in pro forma net tangible book
value of $ per share to existing stockholders and an immediate dilution of
$ per share to new investors purchasing shares at the initial public
offering price. The following table illustrates this dilution on a per share
basis:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share as of March
31, 2000................................................ $
Increase per share attributable to new investors..........
--------
Pro forma net tangible book value per share after the
offering..................................................
--------
Dilution per share to new investors......................... $
========
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 2000,
the differences between the existing stockholders and new investors with respect
to the number of shares of common stock purchased from us, the total
consideration paid to us and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- -------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... % $ % $
New investors..................
--- ---- -------- ----
Total........................ 100% $ 100%
==== ======== ====
</TABLE>
The foregoing table excludes 967,028 shares of common stock to be issued
upon the exercise of options outstanding under our stock option plans as of
March 31, 2000 at a weighted average price of $5.34 per share. If these
outstanding options are exercised, new investors will be further diluted.
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SELECTED CONSOLIDATED FINANCIAL DATA
The following table provides selected financial data of our company for the
periods indicated. You should read the selected consolidated financial data set
forth below in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and with our consolidated
financial statements and related notes appearing elsewhere in this prospectus.
The consolidated statement of operations data for the period from January 1,
1997 to July 10, 1997, the period from July 11, 1997 to January 2, 1998 and for
the years ended January 1, 1999 and December 31, 1999, and the consolidated
balance sheet data at January 1, 1999 and December 31, 1999 have been derived
from our financial statements and related notes appearing elsewhere in this
prospectus which have been audited by Deloitte & Touche LLP, independent
auditors. The statement of operations data for the years ended December 31, 1995
and December 31, 1996 and the balance sheet data at December 31, 1995, December
31, 1996 and January 2, 1998 have been derived from our audited financial
statements and related notes not included in this prospectus which have been
audited by Deloitte & Touche LLP, independent auditors. The consolidated
statement of operations data and cash flow data for the three months ended April
2, 1999 and March 31, 2000 and the consolidated balance sheet data at March 31,
2000 are unaudited but, in the opinion of management, include all adjustments,
consisting of normal, recurring adjustments, necessary for a fair presentation
of our results for these interim periods. The results of operations for the
three months ended March 31, 2000 are not necessarily indicative of results to
be expected for the entire year or for any period.
<TABLE>
<CAPTION>
WILSON GREATBATCH LTD. (1)
-----------------------------------------
YEAR ENDED DECEMBER 31, JANUARY 1, 1997
----------------------- TO
1995 1996 JULY 10, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Total revenues.............................. $53,409 $49,644 $29,620
Cost of goods sold.......................... 28,437 26,070 14,922
------- ------- -------
Gross profit................................ 24,972 23,574 14,698
Costs and expenses:
Selling, general and administrative....... 8,924 8,610 5,881
Research, development and engineering..... 7,033 7,951 4,400
Other expenses:
Interest expense.......................... 506 388 252
Intangible amortization................... -- -- --
Transaction related expenses.............. -- -- 11,097
Write-off of purchased in-process
research, development and engineering... -- -- --
Other..................................... (196) (124) (117)
------- ------- -------
Income (loss) before income taxes........... 8,705 6,749 (6,815)
Income tax expense (benefit) (3)............ 194 157 1,053
Cumulative effect of accounting change...... -- -- --
------- ------- -------
Net income (loss)........................... $ 8,511 $ 6,592 $(7,868)
======= ======= =======
Net earnings (loss) per share (4):
Basic.....................................
Diluted...................................
Weighted average shares outstanding (4):
Basic.....................................
Diluted...................................
CONSOLIDATED CASH FLOW DATA:
EBITDA (5)(6)...............................
Cash provided by operating
activities................................
Cash used in investing activities...........
Cash provided by (used in) financing
activities................................
<CAPTION>
WILSON GREATBATCH TECHNOLOGIES, INC.
-------------------------------------------------------------------
YEAR ENDED THREE MONTHS ENDED
JULY 11, 1997 ------------------------- ---------------------
TO JANUARY 1, DECEMBER 31, APRIL 2, MARCH 31,
JANUARY 2, 1998 1999 (2) 1999 1999 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Total revenues.............................. $ 26,282 $ 75,268 $ 76,590 $ 19,886 $ 22,526
Cost of goods sold.......................... 12,241 36,454 41,057 10,024 12,936
-------- -------- -------- -------- --------
Gross profit................................ 14,041 38,814 35,533 9,862 9,590
Costs and expenses:
Selling, general and administrative....... 4,501 9,391 7,235 2,144 1,974
Research, development and engineering..... 4,619 12,190 9,339 2,772 2,520
Other expenses:
Interest expense.......................... 4,128 10,572 13,420 3,298 3,985
Intangible amortization................... 1,810 5,197 6,510 1,638 1,627
Transaction related expenses.............. -- -- -- -- --
Write-off of purchased in-process
research, development and engineering... 23,779 -- -- -- --
Other..................................... 74 364 1,343 74 61
-------- -------- -------- -------- --------
Income (loss) before income taxes........... (24,870) 1,100 (2,314) (64) (577)
Income tax expense (benefit) (3)............ (9,468) 410 (605) (17) (184)
Cumulative effect of accounting change...... -- -- (563) (563) --
-------- -------- -------- -------- --------
Net income (loss)........................... $(15,402) $ 690 $ (2,272) $ (610) $ (393)
======== ======== ======== ======== ========
Net earnings (loss) per share (4):
Basic..................................... $ (1.04) $ 0.04 $ (0.11) $ (0.03) $ (0.02)
Diluted................................... $ (1.04) $ 0.04 $ (0.11) $ (0.03) $ (0.02)
Weighted average shares outstanding (4):
Basic..................................... 14,758 17,436 20,818 20,665 21,027
Diluted................................... 14,758 18,173 20,818 20,665 21,027
CONSOLIDATED CASH FLOW DATA:
EBITDA (5)(6)............................... $(17,345) $ 20,543 $ 22,152 $ 6,107 $ 6,429
Cash provided by operating
activities................................ 3,830 9,751 7,492 881 4,646
Cash used in investing activities........... (3,653) (83,375) (8,847) (1,723) (2,185)
Cash provided by (used in) financing
activities................................ 232 75,445 1,078 (1,063) (3,850)
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
WILSON GREATBATCH
LTD. (1) WILSON GREATBATCH TECHNOLOGIES, INC.
------------------- ---------------------------------------------------
DECEMBER 31,
------------------- JANUARY 2, JANUARY 1, DECEMBER 31, MARCH 31,
1995 1996 1998 1999 1999 2000
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 42 $ 54 $ 2,319 $ 4,140 $ 3,863 $ 2,474
Total assets......................................... 32,300 32,462 $111,709 194,390 189,779 187,782
Total debt........................................... 4,521 6,131 71,363 131,233 132,902 128,932
Total stockholders' equity........................... 16,316 16,914 28,239 45,595 46,407 45,980
</TABLE>
- ------------------------------
(1) The financial data for periods prior to July 11, 1997 relate to Wilson
Greatbatch Ltd., our predecessor.
(2) In August 1998, we acquired the assets and liabilities of Hittman. These
figures include the results of operatons of Hittman from August 8, 1998 to
January 1, 1999.
(3) Wilson Greatbatch Ltd., our predecessor, incurred minimal state taxes as a
former subchapter S corporation. The federal and state taxes for the period
from January 1, 1997 to July 10, 1997 are directly attributable to our
acquisition of our predecessor in July 1997.
(4) We calculate basic earnings per share by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the
period. We calculate diluted earnings (loss) per share by adjusting for
common stock equivalents, which consist of stock options. During the period
from July 11, 1997 to January 2, 1998, the year ended December 31, 1999 and
the three months ended April 2, 1999 and March 31, 2000, there were options
to purchase 441, 848, 829 and 909 shares of common stock, respectively, that
have not been included in the computation of diluted earnings per share
because to do so would be antidilutive for those periods. Diluted earnings
per share for the year ended January 1, 1999 includes the potentially
dilutive effect of stock options.
(5) When we refer to EBITDA, we mean net earnings or loss before interest
expense, income taxes, depreciation and amortization. We have included
EBITDA because our management and industry analysts generally consider it to
be a measurement of the financial performance of our company that provides a
relevant basis for comparison among companies. EBITDA is not a measurement
of financial performance under accounting principles generally accepted in
the United States and should not be considered a substitute for net income
or loss as a measure of performance, or to cash flow as a measure of
liquidity. Investors should note that this calculation of EBITDA might
differ from similarly titled measures for other companies.
(6) EBITDA for the period July 11, 1997 to January 2, 1998 would have been
$7.8 million if we had excluded the $23.8 million write-off of purchased
in-process research, development and engineering related to the July 1997
LBO and $1.4 million of other transaction expenses.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS
AND RELATED NOTES INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION AND
ANALYSIS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS, UNCERTAINTIES
AND ASSUMPTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED
IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF FACTORS,
INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER "RISK FACTORS" AND
ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
We are the leading developer and manufacturer of power sources and certain
components used in implantable medical devices. Over 90% of the pacemakers and
ICDs manufactured worldwide in 1999 used power sources either manufactured by us
or produced by third parties under agreements with us to use our patented
technology. We leverage our core competencies in technology and manufacturing to
develop and produce power sources for commercial applications that demand high
performance and reliability. These applications include aerospace, oil and gas
exploration and oceanographic equipment.
In July 1997, DLJMB acquired approximately 82% of the outstanding capital
stock of our predecessor company, Wilson Greatbatch Ltd., from relatives of our
founder, Mr. Wilson Greatbatch. DLJMB acquired its interest through a leveraged
buy-out, or LBO transaction. In connection with the LBO, we issued
$25.0 million principal amount of 13% senior subordinated notes, entered into a
$10.0 million revolving line of credit and incurred $50.0 million of senior
Term A and Term B loans. Affiliates of DLJMB purchased $17.5 million of the
principal amount of the notes and led a syndicate of financial institutions in
extending us the line of credit and term loans. The LBO generated $82.9 million
in intangible assets, of which approximately $6.1 million was allocated to
goodwill. In connection with the LBO, we recorded a one time write-off of
$23.8 million of purchased in-process research, development and engineering
costs.
In August 1998, we acquired Hittman, a medical components manufacturer, for
$71.8 million. At the time of the of acquisition, we paid $69.0 million. A
portion of the consideration was contingent upon Hittman achieving certain
financial targets after the acquisition. Some of these targets were achieved in
1998 and we subsequently paid $2.8 million to the former owner of Hittman. In
connection with our acquisition of Hittman, we borrowed an additional
$60.0 million of Term A and Term B loans and increased our revolving line of
credit up to a maximum of $20.0 million. We recorded the Hittman acquisition
using the purchase method of accounting. The excess of the purchase price over
the fair value of the net assets that we acquired was $67.7 million, of which
$17.4 million was allocated to identifiable intangible assets and $50.3 million
was allocated to goodwill. Sales by Hittman of $8.8 million are reflected in our
1998 results.
In 1997, we entered into an agreement with one of our customers to develop
custom capacitors that use wet tantalum technology for use in their ICDs. Wet
tantalum is a relatively new technology that provides a number of performance
advantages over existing technologies. In 1999 and the first three months of
2000, we incurred start-up costs related to our capacitor operations of
$5.7 million. We believe that this amount will represent substantially all of
our start-up costs. We began selling our new wet tantalum capacitors
commercially in the fourth quarter of 1999. In the second quarter of 2000, we
entered into a development contract with another principal customer to create
another line of custom wet tantalum capacitors. We believe that our revenues in
2000 and 2001 from capacitor sales will grow at a higher rate than sales of our
other medical products and that our capacitor program will become profitable in
2001.
Our fiscal year ends on the closest Friday to December 31. Accordingly, our
fiscal year will periodically contain more or less than 365 days. For example,
fiscal 1997 ended on January 2, 1998 and
21
<PAGE>
fiscal 1998 ended on January 1, 1999. Our fiscal quarters are three-month
periods that end on the Friday closest to the end of the applicable calendar
quarter.
REVENUE AND EXPENSE COMPONENTS
REVENUES
We derive revenues from the sale of medical and commercial products. Our
medical revenues consist of sales of implantable power sources, capacitors and
components. Our commercial revenues consist of sales of commercial power
sources. A substantial part of our business is conducted with a limited number
of customers. Guidant accounted for approximately 34% of our revenues and St.
Jude Medical accounted for approximately 32% of our revenues in 1999. We have
entered into long term supply agreements ranging from two to ten years with most
of our large customers.
Our implantable power source revenues are derived from sales of batteries
for pacemakers, ICDs and other implantable medical devices. The majority of our
implantable power source customers contract with us to develop custom batteries
to fit their product specifications. We are the sole provider of these products
to many of our customers.
Our capacitor revenues are derived from sales of our wet tantalum
capacitors, which we developed for use in ICDs. We expect to enter into long
term agreements of more than one year with our capacitor customers and add new
customers in an effort to increase our capacitor revenues.
Our components revenues are derived from sales of feedthroughs, electrodes
and other precision components principally used in pacemakers and ICDs. We also
sell our components for use in other implantable medical devices, such as left
ventricular assist devices, or LVADs, hearing assist devices, drug pumps,
neurostimulators and other medical applications.
Our commercial power source revenues are primarily derived from sales of
batteries for use in oil and gas exploration, including recovery equipment,
pipeline inspection gauges, down-hole pressure measurement systems and seismic
surveying equipment. We also supply batteries to NASA for its space shuttle
program and other demanding commercial applications.
For each of our products, we recognize revenue when the products are
shipped. We do not give warranties to our customers for our products and to
date, returns have been immaterial. We have two other sources of cash flow,
royalties and cost reimbursements for certain research, development and
engineering. We record royalties as an offset to selling, general and
administrative expenses and cost reimbursements as an offset to research,
development and engineering costs. Currently, Medtronic is our sole source of
royalty fees. Royalties are recognized based on the reported number of units
sold. We recognize cost reimbursements from some of our customers upon achieving
certain milestones related to designing batteries and capacitors for their
products. The cost reimbursement charged to customers represents actual costs
incurred by us in the design and testing of prototypes built to customer
specifications. This cost reimbursement does not include a mark-up.
EXPENSES
Cost of goods sold includes materials, labor and other manufacturing costs
associated with the products we sell. We have included start-up costs associated
with the production of our capacitors in cost of goods sold. As a result, costs
associated with capacitors prior to the fourth quarter of 1999, when we began to
commercially offer these products, were substantially in excess of revenue
generated from capacitor sales.
Selling, general and administrative expenses include salaries, facility
costs and patent-related expenses. We record royalties as an offset to selling,
general and administrative expenses.
22
<PAGE>
Research, development and engineering expenses include costs associated with
the design, development, testing, deployment and enhancement of our products. We
record design fees as an offset to research, development and engineering
expenses.
Other expenses primarily include amortization of intangible assets and
interest expense. Amortization of intangible assets is primarily related to the
LBO and our acquisition of Hittman. Interest expense is primarily related to
indebtedness we assumed in connection with these transactions. We expect to use
the proceeds of this offering to repay all of our outstanding $25.0 million
principal amount of senior subordinated notes plus a redemption premium in the
amount of $ million. We expect to use the remainder of the proceeds to repay
a portion of our outstanding Term A and Term B loans.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
which certain amounts bear to total revenues:
<TABLE>
<CAPTION>
FIRST THREE
FISCAL YEAR MONTHS OF
-------------------------------- -------------------
PRO FORMA
1997 (1) 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C>
Revenues:
Implantable power sources................................. 68.8% 64.1% 49.4% 55.2% 43.8%
Capacitors................................................ 0.0 0.2 3.0 1.5 14.6
Medical components........................................ 10.2 18.6 34.5 30.1 31.3
-------- ------- ------- ------- -------
Total medical revenues.................................. 79.0 82.8 86.9 86.9 89.7
Commercial power sources.................................. 21.0 17.2 13.1 13.1 10.3
-------- ------- ------- ------- -------
Total revenues.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
======== ======= ======= ======= =======
Income statement data as a percentage of revenues:
Gross profit.............................................. 51.4% 51.6% 46.4% 49.6% 42.6%
Net income (loss)......................................... (2.8) 0.9 (3.0) (3.1) (1.7)
EBITDA(2)................................................. 29.0 27.3 28.9 30.7 28.5
</TABLE>
- ------------------------------
(1) The unaudited pro forma data for fiscal 1997 gives effect to the July 1997
LBO as if it had occurred on January 1, 1997.
(2) When we refer to EBITDA, we mean net earnings or loss before interest
expense, income taxes, depreciation and amortization. We have included
EBITDA because our management and industry analysts generally consider it to
be a measurement of the financial performance of our company that provides a
relevant basis for comparison among companies. EBITDA is not a measurement
of financial performance under accounting principles generally accepted in
the United States and should not be considered a substitute for net income
or loss as a measure of performance, or to cash flow as a measure of
liquidity. Investors should note that this calculation of EBITDA might
differ from similarly titled measures for other companies.
23
<PAGE>
FIRST THREE MONTHS OF 2000 COMPARED TO FIRST THREE MONTHS OF 1999
REVENUES
Total revenues for the first three months of 2000 were $22.5 million, a
$2.6 million, or 13%, increase from $19.9 million for the first three months of
1999. Implantable power source revenues for the first three months of 2000 were
$9.9 million, a $1.1 million, or 10%, decrease from $11.0 million for the first
three months of 1999. This decrease was primarily due to reduced battery sales
as a result of an industry-wide design change in ICDs that reduced the number of
batteries from two to one. Capacitor revenues for the first three months of 2000
were $3.3 million, a $3.0 million, or 973%, increase from $0.3 million for the
first three months of 1999. Medical components revenues for the first three
months of 2000 were $7.0 million, a $1.0 million, or 18%, increase from
$6.0 million for the first three months of 1999. This increase was primarily due
to higher sales of implantable medical devices by our customers, as well as our
sales of a broader range of components. Commercial power source revenues for the
first three months of 2000 were $2.3 million, a $0.3 million, or 11%, decrease
from $2.6 million for the first three months of 1999. This decrease was
primarily due to continued weakness in the oil and gas industry.
GROSS PROFIT
Gross profit for the first three months of 2000 was $9.6 million, a
$0.3 million, or 3%, decrease from $9.9 million for the first three months of
1999. As a percentage of total revenues, gross profit for the first three months
of 2000 declined to 43% from 50% for the first three months of 1999. The
decrease in gross profit was primarily related to the 10% decrease in our
implantable power source revenues as well as an increase in capacitor costs
incurred to meet production level volumes.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first three months of
2000 were $2.0 million, a $0.2 million, or 8%, decrease from $2.1 million for
the first three months of 1999. As a percentage of total revenues, selling,
general and administrative expenses for the first three months of 2000 declined
to 9% from 11% for the first three months of 1999. This decrease was primarily
due to several one-time actions that we took to streamline expenses during 1999,
including a reduction in the number of our employees and a temporary reduction
in salaries. We took these actions in response to a decline in our revenues for
certain of our products in 1999.
RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSES
Research, development and engineering expenses for the first three months of
2000 were $2.5 million, a $0.3 million, or 9%, decrease from $2.8 million for
the first three months of 1999. As a percentage of total revenues, research,
development and engineering expenses for the first three months of 2000 declined
to 11% from 14% for the first three months of 1999. This decrease was primarily
due to the reductions in the number of our employees and salary expenses
described above. Our funding of programs that we believed to be important to our
future growth was not affected by these reductions.
OTHER EXPENSES
Other expenses for the first three months of 2000 were $5.7 million, a
$0.7 million, or 14%, increase from $5.0 million for the first three months of
1999. This increase was primarily due to an increase in interest rates. As a
percentage of total revenues, other expenses were 25% for both periods.
PROVISION FOR INCOME TAXES
Our effective tax rate increased to 32% for the first three months of 2000
from 27% for the first three months of 1999. This increase resulted primarily
from the recapture of federal alternative
24
<PAGE>
minimum tax credits at a 20% tax rate, resulting in a rate differential of 15%
from the federal statutory rate as well as state tax benefits derived from
certain state tax credits.
NET LOSS
As a result of reasons described above, as well as the nonrecurring
cumulative effect of an accounting change which resulted in a charge of $0.6
million, net of taxes, net loss for the first three months of 2000 was
$0.4 million, a $0.2 million decrease from net loss of $0.6 million for the
first three months of 1999.
FISCAL 1999 COMPARED TO FISCAL 1998
REVENUES
Total revenues for 1999 were $76.6 million, a $1.3 million, or 2%, increase
from $75.3 million for 1998. Implantable power source revenues for 1999 were
$37.8 million, a $10.4 million, or 22%, decrease from $48.2 million for 1998.
This decrease was primarily due to a 1999 industry-wide design change in ICDs
that reduced the number of batteries from two to one and the loss of market
share by our ICD battery customers as a result of the introduction of a new ICD
by Medtronic. Medtronic manufactured its own power sources for this ICD. This
decrease was also due to a reduction in demand resulting from Guidant's
acquisition and subsequent closure of certain operations of Sulzer Intermedics.
This decrease was partially offset by the successful launch of a new pacemaker
by one of our customers and increased demand and orders from one of our
customers that secured a government contract for pacemakers. Capacitor revenues
for 1999 were $2.3 million, a $2.2 million increase from $0.1 million for 1998.
We began selling our new wet tantalum capacitors commercially in the fourth
quarter of 1999. Medical components revenues for 1999 were $26.4 million, a
$12.4 million, or 88%, increase from $14.0 million for 1998. This increase was
primarily due to the inclusion of a full year of operations from our Hittman
acquisition. Commercial power source revenues for 1999 were $10.0 million, a
$2.9 million, or 23%, decrease from $12.9 million for 1998. This decrease was
primarily due to continued weakness in the oil and gas industry.
GROSS PROFIT
Gross profit for 1999 was $35.5 million, a $3.3 million, or 8%, decrease
from $38.8 million for 1998. As a percentage of revenues, gross profit for 1999
declined to 46% from 52% in 1998. These decreases were primarily due to a
reduction in sales of implantable power sources, start-up costs for our
capacitor operations and lower proportionate sales of higher margin implantable
power sources.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for 1999 were $7.2 million, a
$2.2 million, or 23%, decrease from $9.4 million for 1998. As a percentage of
revenues, selling, general and administrative expenses for 1999 declined to 9%
from 13% in 1998. These decreases were primarily due to a reduction in the
number of our employees and a temporary reduction in salaries.
RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSES
Research, development and engineering expenses for 1999 were $9.3 million, a
$2.9 million, or 23%, decrease from $12.2 million for 1998. As a percentage of
total revenues, research, development and engineering expenses in 1999 declined
to 12% from 16% in 1998. Beginning in 1999, as we anticipated achieving
production volumes of our capacitors, we allocated costs associated with our
capacitor program as cost of goods sold, selling, general and administrative
expenses and research, development and engineering expenses. In prior years,
these costs were recognized only as research, development and engineering
expenses. In addition, in 1999, we had no research, development and engineering
expenses for Greatbatch Scientific, one of our product lines, which we sold in
1998. Greatbatch Scientific was a developer of battery-powered surgical tools
that were magnetic resonance imaging, or MRI, compatible.
25
<PAGE>
OTHER EXPENSES
Other expenses for 1999 were $21.3 million, a $5.2 million, or 32%, increase
from $16.1 million for 1998. As a percentage of total revenues, other expenses
for 1999 increased to 28% from 21% in 1998. This increase was primarily due to
incurring a full year of interest expense and amortization of intangible assets
related to the Hittman acquisition. In addition, we also wrote down $0.9 million
of our $2.4 million investment in an unaffiliated company, which we acquired in
conjunction with our sale of Greatbatch Scientific.
PROVISION FOR INCOME TAXES
Our effective tax rate declined to 26% in 1999 from 37% in 1998. This
decrease resulted primarily from the recapture of federal alternative minimum
tax credits at a 20% tax rate, resulting in a rate differential of 15% from the
federal statutory rate as well as state tax benefits derived from certain state
tax credits.
NET INCOME (LOSS)
Net loss was $2.3 million for 1999, a $3.0 million decrease from net income
of $0.7 million for 1998. This decrease was primarily due to an increase in cost
of goods sold and higher other expenses, as described above, as well as the
nonrecurring cumulative effect of an accounting change which resulted in a
charge of $0.6 million, net of taxes.
FISCAL 1998 COMPARED TO PRO FORMA FISCAL 1997
To present a more meaningful comparison, the following table summarizes our
unaudited pro forma consolidated statement of operations data for fiscal 1997 as
if the July 1997 LBO had occurred on January 1, 1997. As a result, pro forma
1997 data excludes a $23.8 million write-off of in-process research, development
and engineering expense and $11.1 million of transaction related expenses
associated with the LBO. In addition, pro forma 1997 data reflects interest and
amortization incurred in connection with the LBO.
<TABLE>
<CAPTION>
PRO FORMA
FISCAL 1997 FISCAL 1998
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Total revenues.............................................. $55,902 $75,268
Cost of goods sold.......................................... 27,163 36,454
------- -------
Gross profit................................................ 28,739 38,814
Costs and expenses:
Selling, general and administrative expenses.............. 10,382 9,391
Research, development and engineering expenses............ 9,019 12,190
Other expenses:
Interest expense.......................................... 8,256 10,572
Intangible amortization................................... 3,620 5,197
Other..................................................... -- 364
------- -------
Income (loss) before income taxes........................... (2,538) 1,100
Income tax expense (benefit)................................ (964) 410
------- -------
Net income (loss)........................................... $(1,574) $ 690
======= =======
EBITDA(1)................................................... $16,224 $20,543
======= =======
</TABLE>
- ------------------------
(1) When we refer to EBITDA, we mean net earnings or loss before interest
expense, income taxes, depreciation and amortization. We have included
EBITDA because our management and industry analysts generally consider it to
be a measurement of the financial performance of our company
26
<PAGE>
that provides a relevant basis for comparison among companies. EBITDA is not
a measurement of financial performance under accounting principles generally
accepted in the United States and should not be considered a substitute for
net income or loss as a measure of performance, or to cash flow as a measure
of liquidity. Investors should note that this calculation of EBITDA might
differ from similarly titled measures for other companies.
REVENUES
Total revenues for 1998 were $75.3 million, a $19.4 million, or 35%,
increase from $55.9 million for 1997. Implantable power source revenues for 1998
were $48.2 million, a $9.8 million, or 26%, increase from $38.4 million for
1997. This increase was primarily due to increased sales of implantable power
sources due to the introduction of a new generation of ICDs by our customers.
Medical components revenues for 1998 were $14.1 million, an $8.3 million, or
145%, increase from $5.7 million for 1997. This increase was primarily due to
the inclusion of results of operations from our Hittman acquisition beginning in
August 1998. Commercial power source revenues for 1998 were $12.9 million, a
$1.1 million, or 10%, increase from $11.8 million for 1997. This increase was
primarily due to increased demand for our products for pipeline inspection
gauges and measurement while drilling equipment.
GROSS PROFIT
Gross profit for 1998 was $38.8 million, a $10.1 million, or 35%, increase
from $28.7 million for 1997. As a percentage of total revenues, gross profit in
1998 increased to 52% from 51% in 1997. This increase in gross profit was
primarily related to an increase in our implantable power source revenues, as
well as a shift in the sales mix toward higher margin ICD products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for 1998 were $9.4 million, a
$1.0 million, or 10%, decrease from $10.4 million for 1997. As a percentage of
total revenues, selling, general and administrative expenses in 1998 decreased
to 13% from 19% in 1997. These decreases were primarily due to a reduction in
corporate office costs and the inclusion of a partial year of Greatbatch
Scientific's selling, general and administrative expenses compared to a full
year of those expenses in 1997.
RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSES
Research, development and engineering expenses for 1998 were $12.2 million,
a $3.2 million, or 35%, increase from $9.0 million for 1997. This increase was
primarily due to start-up expenses incurred in establishing our line of
capacitor products. As a percentage of total revenues, research, development and
engineering expenses were 16% for both periods.
OTHER EXPENSES
Other expenses for 1998 were $16.1 million, a $4.3 million, or 36%, increase
from $11.9 million for 1997. This increase was primarily due to interest expense
and amortization of intangible assets related to our Hittman acquisition. In
addition, the acquisition of Hittman increased our outstanding debt causing an
increase in interest expense in 1998.
PROVISION FOR INCOME TAXES
Our effective tax rate decreased from 38% in 1997 to 37% in 1998. Our
effective tax rate for both years approximated the combined federal and state
statutory tax rate.
NET INCOME (LOSS)
Net income was $0.7 million for 1998, a $2.3 million increase over a net
loss of $1.6 million for 1997. This increase in net income in 1998 was primarily
attributable to increased gross profit and a reduction in selling, general and
administrative expenses and research, development and engineering expenses.
27
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have funded our operations primarily from cash generated
by our operations. We have financed our acquisitions, including the July 1997
LBO, through a combination of borrowings and private sales of our common stock.
Net proceeds from financing activities from January 1, 1997 through March 31,
2000 included:
- In connection with the LBO, in July 1997 we issued $25.0 million principal
amount of 13% senior subordinated notes, entered into a $10.0 million
revolving line of credit and incurred $50.0 million of senior Term A and
Term B loans. Net proceeds from these borrowings totaled $71.8 million. We
also received a $45.3 million equity investment from DLJMB, various
members of our senior management and other investors.
- In connection with our August 1998 acquisition of Hittman, we borrowed an
additional $60.0 million of Term A and Term B loans and increased our
revolving line of credit up to a maximum of $20.0 million. We also
received a $16.5 million equity investment from DLJMB, various members of
our senior management and other investors.
As of May 1, 2000, there was $25.0 million principal amount outstanding
under our 13% senior subordinated notes, $45.0 million outstanding under the
Term A loan facility and $59.1 million outstanding under the Term B loan
facility. As of May 1, 2000, the interest rate for our Term A loans was 9.63%
and the interest rate for our Term B loans was 9.97%.
Our revolving line of credit is with the same lending syndicate that
provided financing for the Hittman transaction and allows us to borrow up to
$13.0 million. If we meet certain leverage targets, the maximum availability
will increase after December 31, 2000 to $20.0 million. The line of credit bears
interest at prime plus 2.25% or LIBOR plus 3.5%, at our option, and expires on
September 30, 2004. As of May 1, 2000, $1.8 million was outstanding under this
line of credit and the effective rate was 11.25%. The line of credit is secured
by our accounts receivable and inventories and requires us to comply with
various quarterly financial covenants, including covenants related to EBITDA and
ratios of leverage, interest and certain fixed charges as they relate to EBITDA.
We have failed to comply with some of the financial covenants required by our
line of credit. In November 1999, we entered into a waiver and amendment with
our lenders which, among other things, waived compliance with certain financial
covenants contained in the credit agreement. In February 2000, our credit
agreement was again amended to change certain provisions including the
applicable interest rates and certain financial covenants. At May 1, 2000, we
were in compliance with all of the financial covenants under the line of credit.
In August 1998, we sold the assets of one of our product lines, Greatbatch
Scientific, to a third party in exchange for stock of that company valued at
$2.4 million. Our 1998 results reflect revenues of $0.1 million and an operating
loss of $1.3 million from Greatbatch Scientific's operations. In 1997, when we
accounted for Greatbatch Scientific as a business development program, our total
costs were $3.2 million.
As of March 31, 2000, we had cash and cash equivalents of $2.5 million. Cash
provided by operating activities was $7.5 million in 1999 and $9.8 million in
1998. Cash used in operating activities was $0.1 million in 1997. The decrease
of $2.3 million in cash provided by operating activities in 1999 compared to
1998 was primarily the result of an increase in cost of goods sold in 1999
compared to net income of $0.7 million in 1998. In addition, in 1999, increases
in cash flow for depreciation, amortization and certain non-cash charges were
offset by increases in accrued liabilities and income taxes. The increase in
cash provided by operating activities of $9.8 million in 1998 compared to 1997
was due to net income of $0.7 million in 1998 compared to a net loss of
$23.3 million in 1997.
Cash used in investing activities was $8.8 million, $83.4 million and
$5.6 million in 1999, 1998 and 1997, respectively. The large increase in 1998
was attributable to our acquisition of Hittman. Capital expenditures were
$8.5 million, $6.2 million and $4.6 million in 1999, 1998 and 1997,
respectively.
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<PAGE>
Cash provided by financing activities was $1.1 million, $75.4 million and
$6.5 million in 1999, 1998 and 1997, respectively. The increases and decreases
in net cash provided by financing activities during these periods were
attributable to our acquisition of Hittman.
We expect to incur capital expenditures of approximately $6.6 million in
2000, $2.0 million of which we anticipate will be used for continued development
of our capacitor product line and $4.6 million of which we anticipate will be
used for routine recurring capital expense obligations. As of May 1, 2000, we
had incurred $2.6 million of capital expenditures in 2000. We intend to use the
proceeds of this offering to repay certain outstanding indebtedness, including
all of our 13% senior subordinated notes and a portion of our Term A and Term B
loans. Although it is difficult for us to predict future liquidity requirements,
we believe that our existing cash balances and cash equivalents and cash from
operations will be sufficient to finance our operations and planned capital
expenditures for the next two years. Thereafter, we may require additional funds
to support our working capital requirements or for other purposes and may seek
additional funds through public or private equity or debt financing or from
other sources. There can be no assurance that additional financing will be
available to us or, if available, that it can be obtained on a timely basis or
on terms acceptable to us.
INFLATION
We do not believe that inflation has had a significant effect on our
operations to date.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our major market risk exposure is to changing interest rates. Our policy is
to manage interest rates through a combination of variable rate debt and through
use of interest rate cap agreements to manage our exposure to fluctuations in
interest rates. As of May 1, 2000, substantially all of our long-term debt
consisted of variable rate instruments that accrue interest at floating rates.
As of May 1, 2000, through interest rate cap agreements, we had capped our
interest rate exposure at 7.0% on $24.1 million of floating rate debt through
December 2000 and at 6.0% on $55.0 million of floating rate debt through
January 2002. We do not use foreign currency forward contracts and do not have
any material foreign currency exposure. In order to minimize our foreign
exchange risk, all of our sales are made in U.S. dollars. We do not hedge
against price fluctuation in the commodities used in the manufacturing of our
products. We will reevaluate this policy as needed commensurate with the risks
inherent in our business.
NEW ACCOUNTING PRONOUNCEMENTS
In 1999, we adopted AICPA Statement of Position 98-5, "Reporting the Costs
of Start-Up Activities," an accounting standard which required that organization
and other start-up costs that we capitalized prior to January 2, 1999 be written
off and any future start-up costs be expensed as incurred. In accordance with
this statement, in 1999 we wrote off $0.6 million, net of tax, of start-up costs
that had been deferred in conjunction with the July 1997 LBO and our acquisition
of Hittman's assets and liabilities in August 1998.
In 2001, we plan to adopt Statement of Financial Accounting Standards
No. 133, "Accounting for Derivatives Instruments and Hedging Activities." This
standard will require us to recognize all derivative financial instruments on
our balance sheet at fair value with changes in fair value recorded to the
statement of operations or comprehensive income, depending on the nature of the
investment. Because our interest rate cap agreements are our only derivative
financial instruments, we do not expect the adoption of the standard to have a
material effect on our financial statements.
29
<PAGE>
BUSINESS
OVERVIEW
We are the leading developer and manufacturer of power sources and certain
components used in implantable medical devices. Over 90% of the pacemakers and
ICDs manufactured worldwide in 1999 used power sources either manufactured by us
or produced by third parties under agreements with us to use our patented
technology. We believe that we are a preferred supplier of power sources and
components because we offer the most advanced, most reliable and longest lasting
products commercially available for implantable medical devices. Through
continuous technological innovation and improvements, we have enabled our
customers to continually develop and introduce implantable medical devices that
are progressively smaller, longer lasting, more efficient and more functional.
Our customers include leading implantable medical device manufacturers such as
Guidant, St. Jude Medical and Medtronic. We leverage our core competencies in
technology and manufacturing to develop and produce power sources for commercial
applications that demand high performance and reliability, including aerospace,
oil and gas exploration and oceanographic equipment.
Our history, market leadership and reputation for quality and technological
innovation in the implantable medical device industry began with Mr. Wilson
Greatbatch, who patented the implantable pacemaker in 1962 and founded our
company in 1970. We continue to develop pioneering technology used in
implantable medical devices and other demanding commercial applications. As of
May 1, 2000, we employed 135 scientists, engineers and technicians. To remain a
leader in developing new technology, we also maintain close relationships with a
number of research organizations, clinicians and other industry professionals.
Since 1970, our company has received 321 patents worldwide and as of May 1,
2000, we held 137 active patents.
We work closely with our customers to enable them to develop innovative
medical devices that utilize our specially designed, proprietary power sources
and components. We believe that our proprietary technology, close customer
relationships, market leadership and dedication to quality provide us with
significant competitive advantages over our competitors and create a barrier to
entry for potential market entrants.
IMPLANTABLE MEDICAL DEVICE INDUSTRY
OVERVIEW
An implantable medical device is an instrument that is surgically inserted
into the body to provide diagnosis or therapy. The following table sets forth
the main categories of battery-powered implantable medical devices and the
principal illness or symptom treated by each device:
<TABLE>
<CAPTION>
DEVICE PRINCIPAL ILLNESS OR SYMPTOM
- ------ ----------------------------
<S> <C>
Pacemakers.............................. Abnormally slow heartbeat
ICDs.................................... Rapid and irregular heartbeat
Left ventricular assist devices......... Heart failure
Hearing assist devices.................. Hearing loss
Neurostimulators........................ Tremors or chronic pain
Drug pumps.............................. Diabetes or chronic pain
</TABLE>
The implantable medical device industry is expected to grow primarily as a
result of:
- advances in medical technology that will allow physicians to use
implantable medical devices as a substitute for, or in conjunction
with, prescription drugs, to treat a wider range of heart diseases,
such as atrial fibrillation and congestive heart failure;
30
<PAGE>
- increased use of recently developed implantable medical devices,
including left ventricular assist devices, hearing assist devices,
neurostimulators and drug pumps;
- expansion of indications, or uses, for implantable medical devices;
- the aging population, which is expected to require an increasing number
of pacemakers, ICDs and other implantable medical devices;
- a combination of smaller, lighter, more efficient and more functional
devices and longer-lasting power sources which will be easier for
physicians to implant and will be less intrusive to recipients; and
- increased market penetration beyond the United States and other
developed countries.
The largest and fastest growing segment of the implantable medical device
market is cardiac rhythm management, or CRM, which includes devices such as
pacemakers and ICDs. Medical Data International, an independent industry
publisher, estimates that revenues from pacemakers sold worldwide will increase
from $2.6 billion in 1999 to $3.6 billion in 2004, representing a compound
annual growth rate of 6.7%. Medical Data International also estimates that
revenues from ICDs sold worldwide will increase from $1.5 billion in 1999 to
$5.5 billion in 2004, representing a compound annual growth rate of 29.7%. The
faster growth predicted for the ICD market is predicated on anticipated new
applications for, and greater acceptance of, ICDs and an increased penetration
of the ICD market.
MARKET OPPORTUNITY
The market for our power sources and components benefits directly from the
growth of the implantable medical device industry. Manufacturers are dependent
on advances in power sources and component technology to make their devices
smaller, longer lasting, more efficient and more functional. In addition,
manufacturers of implantable medical devices must be approved by the FDA, and
have significant exposure to product liability claims and damages. To minimize
risk and facilitate the FDA approval process, which can be lengthy,
manufacturers of implantable medical devices generally require the highest
quality, most reliable power sources and components available from proven
suppliers. As a result, manufacturers generally enter into long term contracts
with their suppliers and often collaborate with them on power source and
component development. We believe that our proprietary technology, close
customer relationships, market leadership and dedication to quality provide us
with significant competitive advantages over our competitors and create a
barrier to entry for potential market entrants.
STRATEGY
Our objective is to enhance our position as the leading developer and
manufacturer of power sources and certain components for implantable medical
devices. We intend to:
- EXPAND OUR PROPRIETARY TECHNOLOGY PORTFOLIO THROUGH CONTINUOUS
TECHNOLOGICAL INNOVATION AND CONTINUE TO FOCUS OUR RESEARCH, DEVELOPMENT
AND ENGINEERING EFFORTS ON PIONEERING POWER SOURCES AND ADVANCED
COMPONENTS FOR IMPLANTABLE MEDICAL DEVICES. We commit substantial
resources to research, development and engineering and believe that this
commitment has enabled us to be at the forefront of the new technologies
that are expected to drive the growth of the implantable medical device
market in the foreseeable future. In 1999, we introduced a line of
capacitors utilizing proprietary wet tantalum technology. Our innovative
use of this technology enables us to produce capacitors that are
significantly smaller than those currently used and offer improved
electrical performance. We believe that our focus on technology has led to
strong relationships with our customers and provides us significant
advantages in maintaining our continued leadership within our markets.
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<PAGE>
- ENHANCE OUR POSITION AS AN INTEGRATED COMPONENT SUPPLIER TO THE
IMPLANTABLE MEDICAL DEVICE INDUSTRY BY BROADENING OUR PRODUCT LINE TO
INCLUDE A MORE COMPREHENSIVE RANGE OF POWER SOURCES AND COMPONENTS. We
believe that there is a significant opportunity to provide our customers
with substantially all of the key components for their products, other
than microelectronics. Our position as the leading manufacturer of certain
of these components allows us to provide a broader range of product
components than any of our competitors. As a result of our 1998
acquisition of Hittman and the internal expansion of our components
business, we are able to provide a major implantable medical device
manufacturer with most of the components used in its pacemakers. We intend
to continue to expand our product line. We believe that our customers
value the benefits of a stable, reliable, quality-driven supplier which is
able to provide a broad range of components to meet their product
requirements.
- CONTINUE TO COLLABORATE WITH OUR CUSTOMERS TO JOINTLY DEVELOP NEW
TECHNOLOGIES THAT ENABLE THEM TO DEVELOP AND MARKET INCREASINGLY MORE
EFFECTIVE AND TECHNOLOGICALLY INNOVATIVE PRODUCTS. Our close relationships
with our customers gives us significant advantages in anticipating and
meeting their requirements and needs. We intend to continue to work
closely with our customers to develop innovative medical devices that
utilize our specially designed, proprietary power sources and components.
We are currently collaborating with two leading manufacturers of ICDs to
incorporate customized configurations of our new capacitors into their
most advanced product programs. We believe that by integrating our
development efforts with those of our customers, we can continue to create
innovative and technologically superior products and strengthen our
position as a single source supplier.
- ENTER INTO STRATEGIC ALLIANCES AND MAKE SELECTIVE ACQUISITIONS THAT
COMPLEMENT OUR CORE COMPETENCIES IN TECHNOLOGY AND MANUFACTURING FOR BOTH
IMPLANTABLE MEDICAL DEVICES AND OTHER DEMANDING COMMERCIAL
APPLICATIONS. We regularly review strategic opportunities to acquire or
license technologies. Through our 1998 acquisition of Hittman, we added
two key component technologies, feedthroughs and electrodes, to our
product offerings. We are currently working with strategic partners to
develop rechargeable battery systems and technology for automatic external
defibrillators, or AEDs. We believe that strategic alliances and selective
acquisitions will enable us to accelerate the development of new
technologies and grow our leading market share position.
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<PAGE>
PRODUCTS
We design and manufacture a variety of power sources, capacitors and
components, such as feedthroughs, electrodes and precision components for
implantable medical devices. Our technology is also used in a number of
demanding commercial applications, including aerospace, oil and gas exploration
and oceanographic equipment. The following table provides information about our
principal products:
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION USED IN PRINCIPAL PRODUCT ATTRIBUTES
- ------------------------------ ------------------------------ ------------------- ------------------------------
<S> <C> <C> <C>
MEDICAL:
Implantable power sources Batteries for implantable Pacemakers - High reliability and
medical devices ICDs predictability
LVADs - Long service life
Neurostimulators - Customized configuration
Drug pumps - Light weight
Hearing assist - Compact and less intrusive
devices
Capacitors Store energy generated by a ICDs - Stores more energy per unit
battery before delivery to the volume (energy density) than
heart other existing technologies
- Customized configuration
Medical components:
Feedthroughs Allow electrical signals to be Pacemakers - Ceramic to metal seal is
brought from inside an ICDs substantially more durable
implantable medical device to LVADs than traditional seals
an electrode Neurostimulators - Multifunctional
Drug pumps
Hearing assist
devices
Electrodes Deliver electrical signal from Pacemakers - High quality coated surface
the feedthrough to a body part ICDs - Flexible in utilizing any
undergoing stimulation combination of biocompatible
coating surfaces
- Customized offering of
surfaces and tips
Precision components Machined and molded parts for Pacemakers - High-level of manufacturing
implantable medical devices ICDs precision
Drug pumps - Broad manufacturing
flexibility
COMMERCIAL:
Commercial power sources Batteries for demanding Aerospace, oil and - Long-life dependability
commercial applications gas exploration and - Highest energy density and
oceanographic highest quality power
equipment sources commercially
available
</TABLE>
IMPLANTABLE POWER SOURCES
Over 90% of the pacemakers and ICDs manufactured worldwide in 1999 used
power sources either manufactured by us or produced by third parties under
agreements with us to use our patented technology. The power sources that we
produce are batteries.
A battery is an electrochemical device that stores energy and releases it in
the form of electricity. To generate an electrical current, electrons are first
released from one part of the battery, called the anode or negative electrode.
This flow of electrons, known as a current, travels to a load or device outside
the battery. After powering the device, the electron flow reenters another part
of the battery, called the cathode or positive electrode. As electrons flow from
the anode to the device being powered by the battery, ions released from the
anode cross through an electrolyte, which consists of one or more chemical
compounds that facilitate the flow of ions to the cathode. The ions react with
the cathode in order to complete the circuit. Separators are typically used
inside the battery as electrical insulators to divide the anode and the cathode
to prevent mechanical contact between them, which would result in the rapid
depletion of the battery cell.
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<PAGE>
The following diagram illustrates the battery process described in the
paragraph above:
[BATTERY PROCESS DIAGRAM]
From the late 1950s to the early 1970s, implantable medical devices, such as
pacemakers, were powered by zinc/mercuric oxide batteries. These batteries
typically lasted two to three years, often failed without warning, were large
and bulky and generated hydrogen gas, making it impossible to seal the battery.
In the early 1970s, we introduced lithium/iodine batteries as power sources for
pacemakers. Our lithium batteries are now the principal power source for
pacemakers. Pacemaker batteries utilizing our technology last approximately six
years and provide high reliability and predictability. In the mid 1980s, we
introduced lithium/silver vanadium batteries for powering ICDs. These batteries
provide the higher power levels required by an ICD with a high degree of
reliability and at least a five year battery life. Our lithium/silver vanadium
oxide batteries have become the principal power source of ICDs.
We currently manufacture 26 models of pacemaker batteries, including four
that are proprietary to specific customers. In 1996, we introduced a lighter
weight titanium-encased lithium/carbon monofluoride battery as the next
generation pacemaker battery. These batteries offer improved pacemaker
performance in several areas, including:
- pacemaker weight reduction of up to 25%;
- improved electrical performance, which is more suitable for use with the
latest pacemaker microelectronics; and
- 10-15% longer battery life than comparable products.
We currently manufacture 15 models of ICD batteries, all of which are
proprietary to specific customers. In 1996, we introduced a new process for
cathode manufacturing that enabled the production of significantly thinner
cathodes than previously possible. As a result of this new cathode manufacturing
process and other design improvements, our newest generation of ICD batteries is
the
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<PAGE>
thinnest commercially available and is up to 50% thinner than many existing
models. Over the past few years, the decrease in battery size has contributed
significantly to decreases in the size of ICDs, making these devices easier to
implant.
CAPACITORS
Capacitors, which are used in ICDs, perform the critical function of storing
electrical pulses before delivery to the heart. An ICD typically has two
capacitors. Historically, ICDs utilized aluminum-based capacitors. In the fourth
quarter of 1999, we introduced wet tantalum hybrid capacitors commercially for
use in ICDs, which provide a number of advantages over aluminum-based
capacitors. Our wet tantalum hybrid capacitors, which combine liquid
electrolytes and ruthenium oxide cathode material with a tantalum anode
component, provide a unique combination of high voltage and high energy storage
capacity. This combination enables energy density not achievable with competing
technologies. Our capacitors can be manufactured in many sizes and shapes to
meet the specific needs of our customers.
To produce our capacitors, we have licensed wet tantalum technology from the
Evans Capacitor Company. We are the exclusive licensee for implantable medical
applications of this technology. We have also developed our own portfolio of
patents and patent applications covering improvements that we have made to
Evans' capacitor technology. In 1997, we entered into an agreement with a major
ICD manufacturer to use our capacitor technology in their next generation of
ICDs. We currently supply all of the capacitors used in the new generation of
ICDs manufactured by this customer. In addition, a second major manufacturer has
signed a development agreement with us for the design of a proprietary ICD
capacitor.
MEDICAL COMPONENTS
We manufacture feedthroughs, electrodes and other precision components that
are utilized in implantable medical devices. Feedthroughs and electrodes are
critical components of these devices that deliver electrical energy to the
heart.
FEEDTHROUGHS. Feedthroughs are components that transmit electrical signals
from inside an implantable medical device to the electrodes that transmit the
signals to the body. Feedthroughs consist of an outer metallic structure called
a flange, an electrical insulator made of ceramic or glass material, and wire
connectors called poles that carry electrical signals from within the device.
Our feedthroughs use a ceramic to metal seal that is substantially more durable
than a traditional glass to metal seal. We also manufacture a feedthrough that
includes a filtering capacitor that can filter out electromagnetic interference,
such as signals from other implantable medical devices or cellular phones.
We design and manufacture 35 types of feedthroughs. Each of our feedthroughs
is designed specifically for a particular customer device. We are often the sole
source of feedthroughs for our customers. In 1999, approximately 95% of our
feedthroughs were used in pacemakers and ICDs, with the balance used primarily
in left ventricular assist devices, hearing assist devices, drug pumps and
neurostimulators. We are currently working with a number of medical device
manufacturers to develop hermetic feedthroughs for the next generation of
implantable medical devices and applications, including neurostimulators, middle
ear devices, oxygen sensors and muscle stimulation devices.
ELECTRODES. Electrodes are components used in pacemakers and ICDs that
deliver the electrical signal from the feedthrough to the heart to restore its
normal rhythm. By coating the electrode with certain chemical compounds, we can
enhance its electrical properties and therefore better deliver energy to the
heart. Some electrode tips are designed to contain medication, such as steroids,
to prevent scarring of the heart tissue following electrode implantation.
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<PAGE>
We design and manufacture a variety of coated electrodes, some of which have
tips that can contain medication. We believe that our experience with physical
deposition processes, such as sputtering and powder metallurgic techniques, has
enabled us to produce high quality coated surfaces utilizing almost any
combination of biocompatible coating surfaces. We believe that our coating
technology can also be applied to future generation cardiovascular and
non-cardiovascular implantable medical products, such as vascular stents, which
are cynlindrical scaffolds used in cardiology procedures to help keep arteries
open.
PRECISION COMPONENTS. We design and manufacture miniature precision
components and subassemblies primarily for pacemaker and ICD manufacturers. Our
precision components are machined or molded to adhere to tolerances up to one
ten-thousandth of an inch. To manufacture precision components, we typically use
various alloys of stainless steel, platinum, titanium, aluminum and brass, as
well as plastics and composites. We also are the exclusive supplier of a
critical drug pump subassembly for a manufacturer of implantable drug pumps.
Although our primary focus is to develop and manufacture precision components
for implantable medical devices, we also serve the general medical equipment
market and the aerospace, oil and gas exploration and oceanographic industries.
COMMERCIAL POWER SOURCES
We design and manufacture commercial power sources that are utilized in
aerospace, oil and gas exploration and oceanographic equipment that requires
high performance and reliability in extreme environments. We have developed
specialized power source technologies that are functional in high temperatures
or under high shock and vibration. The majority of the commercial power sources
that we sell are used in oil and gas exploration, including recovery equipment,
pipeline inspection gauges, down-hole pressure measurement systems and seismic
surveying equipment. We also supply power sources to NASA for its space shuttle
program. In addition, our commercial power sources have been used for emergency
position locating beacons and locator transmitters, classified governmental
uses, electronic circuit breakers for industrial applications, weather balloon
instrumentation, electricity transmission cable lighting detectors, wear
monitors for train cables and scientific equipment used in Antarctica.
PRODUCT LINES UNDER DEVELOPMENT
RECHARGEABLE LITHIUM ION BATTERIES. We are currently developing a line of
rechargeable lithium ion batteries that is expected to broaden and complement
our current lines of lithium batteries. A number of new medical devices require
rechargeable batteries, including:
- LVADS that are being developed to treat heart failure use external and
internal batteries as power sources, both of which must be rechargeable.
We are developing lithium ion rechargeable technology to produce lighter
batteries with increased power and longer life.
- IMPLANTABLE HEARING ASSIST DEVICES that are used to treat patients who
cannot use conventional hearing aids. These batteries are compact and are
capable of providing low levels of current with infrequent recharging.
- NEUROSTIMULATORS AND DRUG PUMPS that are used for indications such as
tremors, diabetes and chronic pain. Since these devices are sometimes
implanted in young patients, the use of our rechargeable battery
technology with extended device life should reduce the number of
replacement implants needed throughout the life of the patient.
IMPLANTABLE PUMP TECHNOLOGY. We have developed proprietary technology that
has applications in implantable devices that are designed to deliver small
quantities of drugs or other fluids to a patient. Several of our technologies
are critical to these devices, including the power source, the feedthroughs
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<PAGE>
and the pumping mechanism that moves the fluid. Currently, one of our customers
is seeking regulatory approval in Europe for a device that utilizes our
implantable pump technology.
RESEARCH, DEVELOPMENT AND ENGINEERING
Our position as the leading developer and manufacturer of power sources and
certain components for implantable medical devices is largely the result of our
long history of technological innovation. We invest substantial resources in
research, development and engineering. As of May 1, 2000, we employed 135
scientists, engineers and technicians. These employees focus on improving
existing products, expanding the use of our products and developing new
products. In addition to our internal technology and product development
efforts, we maintain close relationships with leading research organizations,
including Alfred University, Clarkson University, the Jet Propulsion Laboratory,
the applied physics department of Johns Hopkins University, NASA,
Sandia-National Laboratories, the State University of New York at Buffalo and
Villanova University. Our research, development and engineering team is
responsible for a number of pioneering developments in the implantable medical
device industry including:
<TABLE>
<CAPTION>
YEAR COMMERCIAL INTRODUCTION INDUSTRY IMPACT
- ---- ------------------------------------- ------------------------------------
<C> <S> <C>
1972 First lithium anode battery Industry standard for pacemakers
1974 First ceramic-to-metal seal for Industry standard for sealing of
implantable devices devices
1980 First oxyhalide/interhalogen Enabled commercial batteries to
batteries perform at lower temperatures with
very high energy density
1981 First implantable pump capable of Enabled implantable drug delivery
passing bubbles system
1987 First implantable lithium/silver Enabled commercial viability of ICDs
vanadium oxide battery
1996 First titanium-encased lithium/carbon Enabled weight reduction and
monofluoride pacemaker batteries improved electrical performance for
advanced microelectronics
1999 First wet tantalum capacitors Enabled smaller sizes of ICDs and
increased design flexibility
</TABLE>
PATENTS AND PROPRIETARY TECHNOLOGY
We rely on a combination of patents, licenses, trade secrets and know-how to
establish and protect our proprietary rights to our technologies and products.
To date, we have been granted 125 U.S. patents and 196 foreign patents. We also
have 132 U.S. and 125 foreign pending patent applications at various stages of
approval. During the past three years, we have received 39 new U.S. patents, of
which 13 were received in 1999. Corresponding foreign patents have been issued
or are expected to be issued in the near future. Often, a single product is
protected by several patents covering various aspects of the design. We believe
this provides broad protection of the concepts employed.
37
<PAGE>
The following table provides a breakdown of our patents by product type:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
PRODUCT PATENTS GRANTED ACTIVE PATENTS
- ------- --------------- --------------
<S> <C> <C>
Batteries--Pacemakers............................. 164 24
Batteries--ICDs................................... 78 68
Capacitors........................................ 3 3
Feedthroughs...................................... 2 2
Pumps............................................. 8 8
Batteries--Commercial............................. 11 11
Batteries--Rechargeable........................... 2 2
Batteries--Lithium/carbon monofluoride............ 5 5
Other products.................................... 48 14
--- ---
Total......................................... 321 137
=== ===
</TABLE>
In addition, we are also a party to several license agreements with third
parties pursuant to which we have obtained, on varying terms, the exclusive or
non-exclusive rights to certain patents held by third parties. We have also
granted rights in our own patents to others under license agreements.
It is our policy to require certain of our employees, consultants and other
parties to execute confidentiality agreements. These agreements prohibit
disclosure of confidential information to third parties except in specified
circumstances. In the case of employees and consultants, the agreements
generally provide that all confidential information relating to our business is
the exclusive property of our company.
MANUFACTURING AND QUALITY CONTROL
Our principal manufacturing facilities are in Clarence, New York,
Cheektowaga, New York and Columbia, Maryland. Our three New York manufacturing
facilities produce implantable power sources, capacitors, commercial power
sources and components. Our Columbia, Maryland facility produces feedthroughs,
electrodes and other components. We test our implantable power sources at our
Wheatfield, New York facility.
During the past two years, we have modernized our facilities and a number of
our manufacturing lines, processes and equipment. These manufacturing
improvements have enabled us to increase the quality and service life of our
power sources and other components and increase our manufacturing capacity. Key
resources that allow us to manufacture subassemblies include a full model shop,
a precious metals machining area, injection molding equipment and a
Class 10,000 clean room.
We primarily manufacture small lot sizes, as most customer orders range from
a few hundred to thousands of units. As a result, our ability to remain flexible
is an important factor in maintaining high levels of productivity. Each of our
production teams receives assistance from a manufacturing support team, which
typically consists of representatives from our quality control, engineering,
manufacturing, materials and procurement departments.
Our quality system is based upon an ISO documentation system and is driven
by a master validation plan that requires rigorous testing and validation of all
new processes or process changes that directly impact our products. Our New York
facilities are ISO-9001 certified, which requires compliance with regulations
regarding quality systems of product design, supplier control, manufacturing
processes and management review. This certification can only be achieved after
completion of an audit conducted by an independent authority. Our New York
facilities are audited by the British Standards Institute, or BSI, and are also
certified by BSI to the more rigorous EN-46001 standard that is usually reserved
for manufacturers of medical devices. Our Columbia, Maryland facility is
ISO-9002 certified and is audited
38
<PAGE>
by TUV Rheinland of North America, an independent auditing firm that specializes
in evaluating ISO quality standards. To maintain certification, all facilities
must be reexamined every six months by their respective certifying bodies.
SALES AND MARKETING
We utilize a combination of direct and indirect sales methods, depending on
the particular product. In 1999, approximately 73% of our products were sold in
the United States.
We market and sell our implantable power sources and capacitors directly to
manufacturers of implantable medical devices. The majority of our implantable
power source customers contract with us to develop custom batteries or
capacitors to fit their specific product specifications. As a result, we have
established close working relationships between our internal program managers
and our customers. We market our power source products and technologies at
industry meetings and trade shows, including CardioStim and North American
Society of Pacing and Electrophysiology or NASPE.
We sell feedthroughs, electrodes and other precision components directly to
manufacturers. Two internal sales managers support all activity, and involve
engineers and materials professionals in the sales process to appropriately
address customer requests. As in the implantable power source and capacitor
sales process, we have established relationships directly with leading
manufacturers of implantable medical devices. We market our precision
components, feedthroughs and electrodes by participating in the annual Medical
Design and Manufacturing trade show and by producing printed and electronic
marketing materials for distribution to prospective customers.
We sell our commercial power sources either directly to the end user,
directly to manufacturers that incorporate our products into other devices for
resale, or to distributors who sell our products to manufacturers and end users.
Our sales managers are trained to assist our customers in selecting appropriate
battery chemistries and configurations. We market our commercial power sources
at various technical trade meetings, including the annual Petroleum Offshore
Technology Conference and Offshore Europe. We also place print advertisements in
relevant trade publications.
CUSTOMERS
Our products are designed to provide reliable, long lasting solutions that
meet the evolving requirements and needs of our customers and the end users of
their products. Our medical products customers include leading implantable
medical device manufacturers such as Guidant, St. Jude Medical and Medtronic. In
1999, Guidant accounted for approximately 34% of our revenues and St. Jude
Medical accounted for approximately 32% of our revenues. Our commercial products
customers are primarily companies involved in the aerospace, oil and gas
exploration and oceanographic industries.
In February 1999, we entered into a supply agreement with Guidant. Pursuant
to the agreement, Guidant purchases batteries and components from us for use in
its implantable medical devices. Our supply agreement with Guidant expires on
December 31, 2001 and can be renewed for additional one year periods upon mutual
agreement.
In April 1997, we entered into a supply agreement with St. Jude Medical. In
accordance with this agreement, we are the primary supplier of many components
used in their pacemakers and ICDs, except for microprocessors and capacitors. We
will also be the exclusive supplier of batteries to St. Jude Medical through the
expiration of the supply agreement on December 31, 2001.
In March 1976, we entered into a technology transfer agreement and license
agreement with Medtronic. Our license agreement provides Medtronic with the
nonexclusive right to use our proprietary technology to manufacture its own
batteries. The license agreement allows Medtronic to manufacture lithium/iodine
or lithium/halide batteries, but does not permit Medtronic to manufacture
batteries using our new titanium lithium/carbon monofluoride technology.
In accordance with the
39
<PAGE>
license agreement, Medtronic pays us a royalty for each battery used in each
medical device that it sells. At the time we entered into the license agreement
with Medtronic, there were a number of competing battery technologies. Our
management believed that licensing our proprietary technology to Medtronic,
which was the industry leader at that time, would help make our technology the
industry standard. Our license agreement does not terminate so long as Medtronic
uses any of our patented technology. However, we do not expect to receive
royalties from Medtronic after 2003, which is the year that the last patent
licensed to Medtronic expires.
In July 1991, we entered into a defibrillator supply agreement with
Medtronic. In accordance with the agreement, we provide Medtronic with
lithium/silver vanadium oxide batteries for their ICDs. Our supply agreement
with Medtronic expires on July 31, 2001.
SUPPLIERS AND RAW MATERIALS
Lithium, iodine and metal cases are the most significant raw materials that
we use to manufacture our batteries. In the past, we have not experienced any
significant interruptions or delays in obtaining raw materials. We seek to
minimize inventory levels, which provides us with a reduced risk of
obsolescence. Minimizing our inventory levels also enables us to stock materials
based on firm order requirements, rather than forecasts and anticipated sales.
However, we maintain minimum safety stock levels of critical raw materials. We
seek to improve our supply purchase pricing by using bulk purchases, precious
metal pool buys and blanket orders and by entering into long term contracts.
We have long standing relationships with most of our significant suppliers
and have conducted business with them for an average of 13 years. Our supply
agreements typically have three year terms. Our significant suppliers of raw
materials and components accounted for approximately 31% of our purchases in
1999. We believe that there are alternative suppliers or substitute products
available for each of the materials we purchase, at competitive prices.
COMPETITION
We currently supply implantable power sources, capacitors, feedthroughs,
electrodes and precision components to the implantable medical device market.
Our existing or potential competitors include:
- leading implantable medical device manufacturers, such as Guidant, St.
Jude Medical and Medtronic, which have vertically integrated operations or
may become vertically integrated in the future; and
- smaller companies that concentrate on niche markets.
Medtronic produces power sources for use in implantable medical devices that
it manufactures. However, to our knowledge Medtronic does not sell power sources
to third parties. Our company and Medtronic are the two major manufacturers of
power sources for implantable medical devices. We also compete in the intensely
competitive commercial power source market. Our principal competitors in this
market are Eagle-Picher Industries, ECO-Tracer and Battery Engineering. While we
believe that the industry perceives our products to be of the highest quality,
there are suppliers whose products are perceived to be of comparable quality.
Moreover, the commercial power source market is subject to volatility in oil and
gas exploration activity. When oil and gas exploration activity has slowed, a
number of our competitors have historically reduced battery prices to maintain
or gain market share.
GOVERNMENT REGULATION
Our business is not subject to direct governmental regulation other than the
laws and regulations generally applicable to businesses in the jurisdictions in
which we operate, including those federal, state and local environmental laws
and regulations governing the emission, discharge, use, storage and disposal of
hazardous materials and the remediation of contamination associated with the
release of
40
<PAGE>
these materials at our facilities and at off-site disposal locations. Our
research, development and engineering activities involve the controlled use of,
and our products contain, small amounts of hazardous materials. Liabilities
associated with hazardous material releases arise principally under the
Comprehensive Environmental Response, Compensation and Liability Act and
analogous state laws which impose strict, joint and several liability on owners
and operators of contaminated facilities and parties that arrange for the
off-site disposal of hazardous materials. We are not aware of any material
noncompliance with the environmental laws currently applicable to our business
and we are not subject to any material claim for liability with respect to
contamination at any company facility or any off-site location. We cannot assure
you, however, that we will not be subject to such environmental liabilities in
the future as a result of historic or current operations.
As a component manufacturer, we produce products that are not subject to FDA
approval. However, the FDA and certain state and foreign governmental agencies
regulate many of our customers' products as medical devices. The FDA must
approve those products prior to commercialization.
RECRUITING AND TRAINING
We dedicate significant resources to our recruiting efforts. Our internal
recruiting efforts primarily focus on supplying quality personnel to our
business. We also seek to meet our hiring needs through outside sources. We
believe that a strong human resources and recruiting effort is necessary to
expand our current employee base and maintain our high employee retention rates.
We have established a number of programs that are designed to challenge and
motivate our employees and we encourage our employees to be proactive in
contributing ideas and regularly survey them to collect feedback on ways that
our business and operations can be improved.
We provide an intensive training program to our new employees which is
designed to educate them on safety, quality, our business strategy and the
methodologies and technical competencies that are required for our business and
our corporate culture. Our safety training programs focus on such areas as basic
industrial safety practices and emergency response procedures to deal with fires
or chemical spills. All of our employees are required to participate in a
specialized training program that is designed to provide an understanding of our
quality objectives. We also have formal, mandatory training for all of our
employees in their core competencies on an annual basis. We offer our employees
a tuition reimbursement program and encourage them to continue their education
at local colleges. Many of our professionals attend seminars on topics that are
related to our corporate objectives and strategies. We believe that
comprehensive training is necessary to ensure that our employees work in a
uniform and consistent manner and that best practices are effectively utilized.
EMPLOYEES
As of May 1, 2000, we had 750 employees, including 135 research, development
and engineering personnel, 448 manufacturing personnel and 167 support
personnel. We also employ a number of temporary employees to assist us with
various projects and service functions. Our employees are not represented by any
union and, except for certain executive officers of our company and our
subsidiaries, are retained on an at-will basis. We believe that we have a good
relationship with our employees.
PROPERTIES
Our executive offices are located in Clarence, New York. The building that
houses our executive offices also contains warehouse operations, a variety of
support services and capacity for light manufacturing or laboratory space.
41
<PAGE>
The following table sets forth information about all of our principal
manufacturing or testing facilities:
<TABLE>
<CAPTION>
LOCATION SQ. FT. OWN/LEASE USE
- -------- -------- --------- ------------------------------------
<S> <C> <C> <C>
Clarence, NY........................ 70,400 Own Battery manufacturing, development
Clarence, NY(1)..................... 20,800 Own Machining and assembly of components
Clarence, NY(1)..................... 18,550 Lease Machining and assembly of components
Clarence, NY........................ 45,305 Lease Offices and warehouse
Wheatfield, NY...................... 2,600 Lease Battery testing
Cheektowaga, NY..................... 19,900 Lease Capacitor manufacturing
Columbia, MD........................ 30,000 Lease Feedthroughs, electrodes and
components manufacturing
</TABLE>
- ------------------------
(1) We own and rent space in part of the same facility.
We believe these facilities are adequate for our current and foreseeable
purposes and that additional space will be available when needed.
LEGAL PROCEEDINGS
We are involved in various lawsuits and claims incidental to our business.
In the opinion of our management, the ultimate liabilities, if any, resulting
from these lawsuits and claims will not materially affect our financial position
or results of operations.
42
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND CERTAIN KEY EMPLOYEES
Our directors, executive officers and certain key employees, and their
respective ages and positions as of May 1, 2000, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Edward F. Voboril......................... 57 President, Chief Executive Officer and Chairman of
the Board
Larry T. DeAngelo......................... 53 Vice President, Administration and Secretary
Curtis F. Holmes, Ph.D.................... 57 President, Greatbatch-Hittman, Inc.
Arthur J. Lalonde......................... 45 Vice President, Finance and Treasurer
Richard W. Mott........................... 41 Group Vice President
Susan M. Bratton.......................... 43 General Manager, Electrochem Battery
Robert C. Rusin........................... 42 Vice President, Corporate Quality
Esther S. Takeuchi, Ph.D.................. 46 Vice President, Research and Development
David L. Jaffe............................ 41 Director
Robert E. Rich, Jr........................ 59 Director
Douglas E. Rogers......................... 45 Director
Henry Wendt............................... 66 Director
David M. Wittels.......................... 35 Director
</TABLE>
EDWARD F. VOBORIL has served as President and Chief Executive Officer of our
company and our predecessor since December 1990. Mr. Voboril became Chairman of
our Board of Directors in July 1997. Mr. Voboril's career spans over 25 years in
the medical device industry. Prior to joining our predecessor in 1990,
Mr. Voboril was Vice President and General Manager of the Biomedical Division of
PPG Industries. He was previously Vice President and General Manager of the
Medical Electronics Division of Honeywell, which was acquired by PPG in 1986.
Mr. Voboril currently serves on the board of directors of Analogic Corporation,
an electronics company. Mr. Voboril served as President of the Health Care
Industries Association of Western New York from July 1995 to July 1998 and
currently serves as a member of the board of directors of the Health Industries
Manufacturers Association, where he is a member of the executive committee and
chairs the small company council.
LARRY T. DEANGELO has served as Vice President, Administration of our
company and our predecessor since November 1991 and has served as our Secretary
since July 1997. Prior to joining our predecessor, Mr. DeAngelo was the Director
of International Human Resources of Rockwell International Corporation.
Mr. DeAngelo is currently a member of the Payment and Health Care Delivery
Committee of the Health Industry Manufacturers Association and chairman of the
operating board for the Buffalo Hearing and Speech Center.
CURTIS F. HOLMES, PH.D. has served as President of our subsidiary,
Greatbatch-Hittman, Inc., since January 2000. Dr. Holmes served as Senior Vice
President and Chief Operating Officer of Greatbatch-Hittman, Inc. from July 1999
to December 1999 and as our Senior Vice President from January 1999 to July
1999. From November 1980 to January 1999, Dr. Holmes served as our Vice
President, Technology.
ARTHUR J. LALONDE has served as our Vice President, Finance and Treasurer
since July 1997 and previously served as the Controller of our predecessor from
August 1988 to July 1997. Mr. Lalonde is a
43
<PAGE>
Certified Public Accountant and a member of the New York State Society of
Certified Public Accountants and the American Institute of Certified Public
Accountants.
RICHARD W. MOTT has served as our Group Vice President since August 1998.
Mr. Mott served as our Vice President, Batteries from July 1997 to August 1998
and previously served as the Vice President, Batteries of our predecessor from
September 1993 to December 1996 and from November 1997 to July 1997. Mr. Mott
also served as Vice President and General Manager of Greatbatch Scientific from
December 1996 to August 1998.
SUSAN M. BRATTON has served as the General Manager, Electrochem Battery
since July 1998 and previously served as the Director of Procurement for our
company and our predecessor from June 1991 to July 1998. Ms. Bratton has held
various positions with us since 1976.
ROBERT C. RUSIN has served as our Vice President, Corporate Quality since
July 1999. From August 1998 to July 1999, Mr. Rusin served as President and
Chief Operating Officer of BioVector, Inc. From January 1997 to August 1998,
Mr. Rusin served as Director, Sales and Distribution, of Greatbatch Scientific
and previously served as Director, Greatbatch Surgical Products for our
predecessor from January 1995 to January 1997.
ESTHER S. TAKEUCHI, PH.D. has served as our Vice President, Research and
Development since May 1999. Dr. Takeuchi served as our Director of
Electrochemical Research from July 1997 to May 1999 and previously served as
Director of Electrochemical Research of our predecessor from August 1991 to
July 1997. The Electrochemical Society Inc. conferred the Battery Division
Technology Award upon Dr. Takeuchi in 1995 and in 1998, the Western New York
Section of the American Chemical Society presented Dr. Takeuchi with the 68th
Jacob F. Schoellkopf Medal. Dr. Takeuchi was elected a Fellow of the American
Institute for Medical and Biological Engineering in 1999.
DAVID L. JAFFE has served as a director since December 1999. Mr. Jaffe is a
Managing Director of DLJ Merchant Banking, Inc. Mr. Jaffe joined DLJ Merchant
Banking, Inc. in 1984 and became a Managing Director in 1995. Mr. Jaffe serves
on the boards of directors of Brand Scaffold Services, Inc., Duane Reade Inc.,
Shoppers Drug Mart, Inc. and Target Media Partners.
ROBERT E. RICH, JR. has served as a director since July 1997. Mr. Rich has
served as President of Rich Products Corporation, a frozen foods manufacturer,
since 1978. Mr. Rich is a member of the board of directors of the Uniform Code
Council and Grocery Manufacturers of America, Inc.
DOUGLAS E. ROGERS has served as a director since July 1997. Since January
1997, Mr. Rogers has served as Managing Director of Global Health Care Partners,
a unit of DLJ Merchant Banking specializing in private equity investment in
health care businesses worldwide. Mr. Rogers previously served as head of U.S.
Investment Banking at Baring Brothers and as a Senior Vice President at Lehman
Brothers. Mr. Rogers serves on the board of directors of Charles River
Laboratories Corp. and Computerized Medical Systems, Inc.
HENRY WENDT has served as a director since July 1997. Since January 1997,
Mr. Wendt has served as Chairman of Global Health Care Partners, a unit of DLJ
Merchant Banking specializing in private equity investment in healthcare
businesses worldwide. Mr. Wendt retired as Chairman of SmithKline Beecham p.l.c.
in 1994 after completing a career of nearly 40 years in the pharmaceutical,
healthcare products and services industries. Mr. Wendt is Chairman of the Board
of Computerized Medical Systems, Inc., and serves on the board of directors of
Charles River Laboratories Corp., The Egypt Investment Company and West
Marine, Inc., and also is a Trustee of the Trilateral Commission and Trustee
Emeritus of the American Enterprise Institute.
DAVID M. WITTELS has served as a director since July 1997. Mr. Wittels has
been a Principal of DLJ Merchant Banking, Inc. since January 1997. For the past
five years, Mr. Wittels has held various
44
<PAGE>
positions with DLJ Merchant Banking, Inc. He serves on the boards of AKI Holding
Corp., AKI Inc., Mueller Holdings (N.A.), Inc. and Ziff Davis Holdings, Inc.
BOARD COMMITTEES
Our Board of Directors has established a Compensation Committee, which
consists of Messrs. Voboril, Wendt and Wittels. The Compensation Committee makes
recommendations to the Board of Directors with respect to our general and
specific compensation policies and administers our 1997 and 1998 stock option
plans.
The Board of Directors has established an Audit Committee, which consists of
Messrs. Rogers, Rich and Jaffe. The Board of Directors intends to name two
additional independent directors to the Audit Committee after consummation of
this offering. The Audit Committee reviews and reports to the Board of Directors
on the scope and results of audits by our independent auditors and recommends a
firm of certified independent public accountants to serve as our independent
auditors, subject to nomination by the Board of Directors and approval by the
stockholders. The Audit Committee also authorizes all audit and other
professional services rendered by our independent auditors and periodically
reviews the independence of the auditors. Membership on the Audit Committee is
restricted to directors who are independent of management and free from any
relationship that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a committee member.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, our Compensation Committee consisted of Messrs. Voboril, Wendt
and Wittels and Lawrence A. Maciariello, a former director. Mr. Voboril served
as our President, Chief Executive Officer and Chairman of the Board during 1999.
In November 1997, we issued a loan to Mr. Voboril in the amount of $570,000,
which matures on November 1, 2007, in connection with his purchase of shares of
our common stock. Mr. Wittels is a Principal of DLJ Merchant Banking, Inc. and
from June 1997 to July 1997, prior to our acquisition of Wilson Greatbatch Ltd.,
he served as our President.
COMPENSATION OF DIRECTORS
Directors do not receive compensation for service as directors but are
reimbursed for travel expenses and other out-of-pocket costs incurred in
connection with their attendance at meetings.
45
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation for
the year ended December 31, 1999 earned by our President, Chief Executive
Officer and Chairman, and our four other most highly compensated executive
officers as of December 31, 1999. In this prospectus, we refer to these
individuals as our named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------ ------------- ----------
OTHER SECURITIES
ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS(1) COMPENSATION(2) OPTIONS PAYOUTS(1) COMPENSATION(3)
- --------------------------- ----------------- --------- ---------------- ------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Edward F. Voboril.............. $ 271,500 $253,078 $ -- 68,233 $ -- $ 23,297
President, Chief Executive
Officer and Chairman
Larry T. DeAngelo.............. 128,571 36,924 -- 10,811 179,410 18,435
Vice President,
Administration and
Secretary
Curtis F. Holmes, Ph.D......... 147,166 38,373 37,967 14,892 184,050 185,655
President,
Greatbatch-Hittman, Inc.
Richard W. Mott................ 138,332 39,740 -- 14,759 179,410 18,652
Group Vice President
Fred Hittman................... 193,569 -- -- 2,111 -- 3,370
Former President, Greatbatch-Hittman,
Inc. (4)
</TABLE>
- ------------------------------
(1) Represents payments we made in fiscal 1999 for bonuses earned in prior
years.
(2) Includes reimbursement of $31,397 of relocation expenses for Dr. Holmes. No
other annual compensation is reported for Mr. Voboril, Mr. DeAngelo,
Mr. Mott or Mr. Hittman because perquisites and personal benefits did not
exceed the lesser of $50,000 and 10% of the total annual salary and bonus
reported for these named executive officers.
(3) Represents payments of term life insurance premiums of $3,497 for
Mr. Voboril, $1,134 for Mr. DeAngelo and $1,761 for Dr. Holmes; our matching
contributions to the 401(k) plan of $3,360 for Mr. Voboril, $2,744 for
Mr. DeAngelo, $3,360 for Dr. Holmes, $2,923 for Mr. Mott and $3,370 for
Mr. Hittman; our contributions under the ESOP plan of $8,440 for
Mr. Voboril, $7,847 for Mr. DeAngelo, $8,147 for Dr. Holmes and $8,479 for
Mr. Mott; our contributions under our defined contribution pension plan of
$8,000 for Mr. Voboril, $6,710 for Mr. DeAngelo, $6,965 for Dr. Holmes and
$7,250 for Mr. Mott; and a payout of $165,422 to Dr. Holmes made in fiscal
1999 in respect of stock appreciation rights granted in prior years.
(4) Mr. Hittman served as the President of Greatbatch-Hittman, Inc. until his
retirement on December 31, 1999.
STOCK OPTION GRANTS
The following table sets forth the stock options we granted during the
fiscal year ended December 31, 1999 to each of the named executive officers,
including the potential realizable value over the 10 year term of the options,
based on assumed rates of stock appreciation of 5% and 10%, compounded annually.
These assumed rates of appreciation are mandated by the rules of the Securities
and Exchange Commission and do not represent our estimate of future stock price
performance. Actual gains, if any, on stock option exercises will be dependent
on the future performance of our common stock.
46
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED IN EXERCISE
NAME OPTIONS GRANTED FISCAL 1999 PRICE ($/SHARE)
- ---- ------------------------- ---------------------- -----------------------
<S> <C> <C> <C>
Edward F. Voboril.... 3,167 1.3% $ 9.00
Edward F. Voboril.... 30,000 13.0 9.00
Edward F. Voboril.... 35,067 15.1 9.00
Larry T. DeAngelo.... 1,511 0.6 9.00
Larry T. DeAngelo.... 9,300 4.0 9.00
Curtis F.
Holmes, Ph.D....... 1,759 0.7 9.00
Curtis F.
Holmes, Ph.D....... 13,133 5.7 9.00
Richard W. Mott...... 1,626 0.7 9.00
Richard W. Mott...... 13,133 5.7 9.00
Fred Hittman......... 2,111 0.8 9.00
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------ RATES OF STOCK
PRICE APPRECIATION
FOR OPTIONS TERM(1)
----------------------------------------
NAME EXPIRATION DATE 5% 10%
- ---- ------------------------------------ ------------------- ------------------
<S> <C> <C> <C>
Edward F. Voboril.... September 23, 2009 $ 46,705 $ 75,618
Edward F. Voboril.... March 10, 2009 442,422 716,310
Edward F. Voboril.... December 31, 2009 517,147 837,577
Larry T. DeAngelo.... September 23, 2009 22,283 36,078
Larry T. DeAngelo.... December 31, 2009 137,337 222,056
Curtis F.
Holmes, Ph.D....... September 23, 2009 25,940 41,999
Curtis F.
Holmes, Ph.D....... December 31, 2009 193,677 313,576
Richard W. Mott...... September 23, 2009 23,979 38,824
Richard W. Mott...... December 31, 2009 193,677 313,576
Fred Hittman......... December 31, 2000 2,216 2,322
</TABLE>
- ------------------------------
(1) Computed using the fair market value on the date of grant of $9.00, as
determined by our Board of Directors.
FISCAL YEAR END OPTION VALUES
The table below provides information about the number and value of options
held by the named executive officers at December 31, 1999. In the absence of a
regular, active public market for our common stock, and based in part on an
independent valuation of our common stock as of December 31, 1998 and
consideration of comparable companies, the Compensation Committee estimated the
fair value of the stock options granted in fiscal 1999 to have been $9.00 per
share. The values of in-the-money options have been calculated on the basis of a
$9.00 per share fair market value of our common stock as of that date, less the
applicable exercise price.
YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999
--------------------------- -----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Edward F. Voboril.............................. 51,053 202,414 $239,116 $689,684
Larry T. DeAngelo.............................. 21,158 67,386 107,392 309,408
Curtis F. Holmes, Ph.D......................... 22,080 73,946 112,426 324,774
Richard W. Mott................................ 23,133 76,013 112,426 324,774
Fred Hittman................................... 2,111 -- -- --
</TABLE>
EMPLOYMENT AGREEMENT
On July 9, 1997, we entered into an employment agreement with Mr. Voboril,
our President, Chief Executive Officer and Chairman. The agreement currently
expires on June 30, 2001 and automatically extends for additional one year
periods until we or Mr. Voboril gives notice to terminate not less than
12 months prior to the proposed termination date. We currently pay Mr. Voboril
$320,000 per year and our Compensation Committee, along with our Board of
Directors, has the right to increase
47
<PAGE>
Mr. Voboril's salary. Under the agreement, Mr. Voboril is entitled to a bonus
equal to 75% of his current base salary if our company achieves certain
financial targets reflected in our annual budget.
If we terminate Mr. Voboril's employment without cause or if Mr. Voboril
terminates his employment for good reason, we have agreed to pay to Mr. Voboril
the greater of $285,000 or his current annual base salary and a bonus for the
year of termination equal to a percentage of his base salary. If we terminate
his employment without cause within six months before, or twelve months after, a
change in control of our company, we will pay Mr. Voboril an amount equal to his
current annual salary and a bonus equal to 75% of his current base salary. In
addition, all performance stock options held by Mr. Voboril will automatically
vest and he will have the right to exercise all unexercised options.
If we terminate Mr. Voboril's employment for cause or if Mr. Voboril
terminates his employment without good reason, we will pay him his accrued base
salary and other compensation that has accrued as of the termination date.
However, we will not pay Mr. Voboril an annual bonus if we terminate his
employment with cause, and any stock options granted to Mr. Voboril that have
not vested will be forfeited and canceled. If we terminate Mr. Voboril for
cause, we may, at our election, purchase all of his shares and vested stock
options at the lesser of the shares' cost or fair market value.
So long as Mr. Voboril is not terminated without cause, he has agreed not to
compete, directly or indirectly, against us during his employment and for two
years after his employment ends. In addition, Mr. Voboril has agreed not to
solicit any of our employees for two years after his employment ends.
We have not entered into employment agreements with our other named
executive officers.
STOCK PLANS
We have two stock option plans that provide for the issuance of nonqualified
and incentive stock options to certain of our key employees and key employees of
our subsidiaries. The terms of our 1997 stock option plan and 1998 stock option
plan are substantially the same and both plans are administered by our
Compensation Committee. Our 1997 stock option plan authorizes the issuance of
options to acquire up to 800,000 shares of our common stock and our 1998 stock
option plan authorizes the issuance of options to acquire up to 2,033,333 shares
of our common stock. Options granted under our 1997 and 1998 stock option plans
generally vest over a three to five year period and the vesting period can be
accelerated depending upon the achievement by our company of certain performance
standards, including earnings targets. Options expire 10 years from the date of
the grant, except that certain incentive stock options granted to key employees
expire five years from the date of grant. Options are granted with exercise
prices equal to the fair market value of our common stock on the date of the
grant. Options generally are non-transferable, other than by will or the laws of
descent and distribution and are exercisable only by the grantee while the
grantee is alive. Both of our stock option plans contain a change in control
provision. If a change in control of our company occurs, at the discretion of
our Compensation Committee, each option granted under our stock option plans may
be terminated. If this occurs, we are to pay each optionholder an amount equal
to the difference between the fair market value of each share and the exercise
price per share. This amount would be payable upon the closing of a transaction
that results in a change in control.
As of May 1, 2000, 967,028 shares of our common stock were issuable upon
exercise of outstanding stock options and 1,818,592 options were available for
future grants under our 1997 and 1998 stock option plans. The weighted average
remaining contractual life of granted options is seven years. The average
weighted exercise price per share of the options outstanding as of May 1, 2000
was $5.34.
48
<PAGE>
INCENTIVE COMPENSATION PLANS
We sponsor various incentive compensation programs, which provide for the
payment of cash to key employees based upon achievement of specific earnings
goals before incentive compensation expense. The scheduled aggregate payment
amounts relating to our deferred compensation plans as of March 31, 2000 were as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------
<S> <C>
2000........................................................ $ 680
2001........................................................ 660
2002........................................................ 14
------
1,354
Less current maturities of deferred compensation (included
in accrued liabilities)................................... (680)
------
Long-term portion of deferred compensation.................. $ 674
======
</TABLE>
EMPLOYEE STOCK OWNERSHIP PLAN
We sponsor an employee stock ownership plan, or ESOP, and related trust as a
long-term benefit for substantially all of our employees. There are two
components to contributions under the ESOP. The first component is a defined
contribution pension plan whose annual contribution equals 5% of each employee's
compensation. Contributions to the ESOP are in the form of our common stock. The
second component is a discretionary profit sharing contribution determined by
the Board of Directors. This profit sharing contribution is also contributed to
the ESOP in the form of shares of our common stock. The ESOP is subject to
certain limitations and vesting requirements.
49
<PAGE>
RELATED PARTY TRANSACTIONS
DIRECTOR AND OFFICER LOANS
On November 1, 1997, we issued loans to a number of our executive officers
and key employees in connection with their purchases of shares of our common
stock. Each loan bears interest at an annual rate of 6.42%, is secured by a
pledge of the shares purchased with the proceeds of the loan and matures on
November 1, 2007. We issued a loan to one former executive officer who later
resigned, at which time he forfeited the shares purchased with the proceeds of
the loan and the loan was cancelled. The following table sets forth, with
respect to our current and former executive officers and directors, the amount
of indebtedness owed to us by each individual as of May 1, 2000 and the largest
aggregate amount of indebtedness outstanding during the year ended December 31,
1999:
<TABLE>
<CAPTION>
INDEBTEDNESS
------------
<S> <C>
Edward F. Voboril........................................... $ 570,000
Larry T. DeAngelo........................................... 256,000
Curtis F. Holmes, Ph.D...................................... 268,000
Arthur J. Lalonde........................................... 180,000
Richard W. Mott............................................. 268,000
Susan M. Bratton............................................ 142,000
----------
Total................................................. $1,684,000
==========
</TABLE>
SECURITIES PURCHASE AGREEMENT
In July 1997, we and WGL Acquisition Corp., a company formed by DLJMB to
acquire all of the shares of our predecessor, which later merged into our
predecessor, entered into a securities purchase agreement with DLJ Investment
Partners, L.P., DLJ Investment Funding, Inc., DLJ First ESC L.L.C., The
Northwestern Mutual Life Insurance Company and Donaldson, Lufkin & Jenrette
Securities Corporation. In accordance with the agreement, we issued and sold
1,062,771 shares which at the time of issuance represented approximately 7% of
our common stock. At the same time as the share issuance, WGL Acquisition Corp.
issued 13% senior subordinated notes in the aggregate principal amount of
$25.0 million, which have since become obligations of our company. Our senior
subordinated notes mature on July 1, 2007. Affiliates of DLJMB purchased
$17.5 million of the principal amount of the notes.
REGISTRATION AND ANTI-DILUTION AGREEMENT
We entered into a registration and anti-dilution agreement with DLJ
Investment Partners, L.P., DLJ Investment Funding, Inc., DLJ First ESC L.L.C.,
The Northwestern Mutual Life Insurance Company and Donaldson, Lufkin & Jenrette
Securities Corporation in July 1997. The agreement provides for adjustments to
the numbers of shares held by the purchasers to prevent dilution in certain
instances, including our issuance of shares for less than fair market price. If
we propose to register any of our common stock under the Securities Act, either
for our own account or for the account of other securityholders, the purchasing
parties are entitled to include their shares in the registration. In addition,
parties holding more than 25% of the securities entitled to registration may
require us to prepare and file a registration statement under the Securities Act
at any time after this offering. We are not obligated to effect more than two of
these demand registrations. The managing underwriter of the offering has the
right to limit the number of shares in any registration relating to the
agreement if the underwriter believes that the success of the offering would be
materially and adversely affected because of its size or kind. If more than half
of the securities entitled to registration are excluded by the managing
underwriter, the holders of the registration rights are to be given an
additional demand registration.
50
<PAGE>
NOTE REGISTRATION RIGHTS AGREEMENT
We entered into a registration and anti-dilution agreement with DLJ
Investment Partners, L.P., DLJ Investment Funding, Inc., DLJ First ESC L.L.C.,
The Northwestern Mutual Life Insurance Company and Donaldson, Lufkin & Jenrette
Securities Corporation in July 1997. The agreement provides that the parties
will receive sufficient shares to prevent dilution in certain instances, if we
issue shares for less than the current market price, and grants the parties
certain registration rights with respect to the 13% senior subordinated notes.
We intend to use the net proceeds of this offering to repay all of the 13%
senior subordinated notes.
AMENDED AND RESTATED CREDIT AGREEMENT
We entered into a credit agreement with a syndicate of financial
institutions led by DLJ Capital Funding, Inc. on July 10, 1997. DLJ Capital
Funding, Inc. is an affiliate of DLJMB. The parties to the credit agreement
amended and restated it on August 7, 1998. On November 15, 1999, the parties to
the credit agreement entered into a waiver and amendment which, among other
things, waived compliance with certain financial covenants contained in the
credit agreement. On February 10, 2000, the parties to the credit agreement
again amended certain provisions of the credit agreement, including the
applicable interest margins and certain financial covenants. The credit
agreement includes the following commitments:
- a Term A loan commitment, under which:
- there is a maximum principal amount of $50.0 million;
- loan amounts bear interest, at our option, at prime plus 2.25% or LIBOR
plus 3.50%;
- we had $45.0 million outstanding as of May 1, 2000; and
- loans mature on September 30, 2004.
- a Term B loan commitment, under which:
- there is a maximum principal amount of $60.0 million;
- loan amounts bear interest, at our option, at prime plus 2.50% or LIBOR
plus 3.75%;
- we had $59.1 million outstanding as of May 1, 2000; and
- loans mature on September 30, 2006.
- a revolving line of credit commitment, under which:
- there is a maximum principal amount of $13.0 million, which may increase
to $20.0 million after December 31, 2000, in each case if we meet
certain leverage targets;
- we had $1.8 million outstanding and $11.2 million available, subject to
customary borrowing conditions, as of May 1, 2000;
- loan amounts bear interest at prime plus 2.25% or LIBOR plus 3.50%;
- we pay a commitment fee equal to 0.50% per year, calculated on the
unused portion on the revolving loan commitment; and
- loans mature on September 30, 2004.
The credit agreement also includes a letter of credit commitment in the
maximum aggregate stated amount of $10.0 million and a swing line loan
commitment in a maximum aggregate outstanding principal amount of $2.0 million.
51
<PAGE>
The credit agreement is subject to certain conditions precedent, financial
covenants, representations and warranties, as well as affirmative and negative
covenants. Borrowings under the credit agreement are secured by certain of our
shares and shares of one of our affiliates, certain balances, credits and
deposits and monies held by the lenders and substantially all of our assets.
The credit agreement provides that a change in control of our company
constitutes an event of default. The failure of DLJMB to own in excess of 50% of
the capital stock of our company and the failure of DLJMB to have the right to
elect a majority of our Board of Directors constitute change in control events.
The credit agreement, in connection with the pledge agreements we entered
into, entitles the holders of shares pledged under those agreements to require
us to register the shares under the Securities Act if the administrative agent
determines to exercise his right to sell the pledged shares upon the occurrence
of an event of default under the credit agreement. In the event that we fail to
register the pledged shares pursuant to the credit agreement, we will pay, as
liquidated damages, an amount equal to the pledged shares' value as of the date
that the administrative agent demanded registration.
STOCKHOLDERS AGREEMENTS
In July 1997, we entered into three separate stockholders agreements with
DLJMB and other parties, including certain members of our management who are
stockholders of our company. The terms of the three stockholders agreements are
substantially the same. In the agreements, we agreed to certain matters in
connection with our management and operations and the sale, transfer and other
disposition of our stock by the parties. The stockholders agreements will
survive the closing of this offering. The agreements provide that the parties to
the agreements and our company will take all action required to cause our Board
of Directors to consist of eight directors, one of whom shall be our Chief
Executive Officer. So long as they collectively beneficially own at least 3% of
the fully-diluted shares of our common stock, certain members of the Greatbatch
family, who are the former controlling stockholders of our company, have the
right to nominate one director to our Board of Directors. DLJMB has the right to
nominate all other members of our Board of Directors. The parties to the
stockholders agreements have agreed to vote in favor of nominees selected by
DLJMB and, if applicable, the Greatbatch family nominee.
Subject to certain exceptions, if we propose to file a registration
statement relating to an offering of any of our equity securities, the parties
to the agreements have the right to have certain of their shares of our common
stock registered and sold as part of the offering.
DLJ FINANCIAL ADVISORY AGREEMENT
On July 10, 1997, we appointed Donaldson, Lufkin & Jenrette Securities
Corporation, or DLJ, to act as our exclusive financial advisor with respect to
reviewing and analyzing financial alternatives for our company. The agreement
expires on July 10, 2002. In accordance with this agreement, we pay DLJ $100,000
annually and as further compensation, DLJ has the right to act as our exclusive
financial advisor and sole managing underwriter for any underwritten public
offering of our stock and certain other transactions consummated by our company
during the engagement period. DLJ is an affiliate of DLJMB and is one of the
joint book-running managers for this offering.
HITTMAN AGREEMENTS
In August 1998, we purchased all of the outstanding capital stock of Hittman
from Fred Hittman, the sole shareholder, for $71.8 million. Fred Hittman
subsequently served as the President of Greatbatch-Hittman, Inc. until his
retirement on December 31, 1999. We paid $69.0 million of the
52
<PAGE>
purchase price at the time of the acquisition and an additional $2.8 million
after Hittman achieved certain financial targets in 1998.
We lease our Columbia, Maryland facility from Mr. Hittman under an agreement
that expires in 2006. In accordance with the agreement, we made payments to
Mr. Hittman of $83,655 for the period from August 8, 1998 to the end of fiscal
1998 and $211,000 in 1999.
GREATBATCH LEASE AGREEMENT
We lease approximately 18,550 square feet at one of our Clarence, New York
facilities from Warren Greatbatch, as trustee under an irrevocable trust
agreement for the benefit of Ericka Dee Greatbatch, who is the niece of Lawrence
A. Maciariello, a former director. Warren Greatbatch is the brother-in-law of
Mr. Maciariello. In accordance with the lease agreement, which has expired but
continues in effect on a month-to-month basis, we made payments to the trust of
$86,400 per year in each of fiscal 1997, 1998 and 1999.
53
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding beneficial ownership of
our common stock as of May 1, 2000, and as adjusted to reflect the sale of
shares of our common stock in this offering, by:
- each person who owns more than 5% of our outstanding shares of common
stock;
- each of our named executive officers;
- each of our directors; and
- all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
COMMON STOCK
OUTSTANDING
NUMBER OF SHARES -------------------
BENEFICIALLY BEFORE AFTER
NAME OF BENEFICIAL OWNER OWNED OFFERING OFFERING
- ------------------------ --------------------------- -------- --------
<S> <C> <C> <C>
Entities affiliated with DLJ Merchant
Banking Partners II, L.P. (1)(2)............................ 17,047,025 81.1% %
277 Park Avenue
New York, New York 10172
Edward F. Voboril (2)(3).................................... 437,422 2.1% %
Larry T. DeAngelo (2)(4).................................... 194,685 * *
Curtis F. Holmes, Ph.D. (2)(5).............................. 203,741 * *
Richard W. Mott (2)(6)...................................... 161,441 * *
Fred Hittman................................................ 83,333 * *
David L. Jaffe (7).......................................... 17,047,025 81.1% %
Robert E. Rich, Jr.......................................... 33,333 * *
Douglas E. Rogers (7)....................................... 17,047,025 81.1% %
Henry Wendt (7)............................................. 17,047,025 81.1% %
David M. Wittels (7)........................................ 17,047,025 81.1% %
All directors and executive officers as a
group (10 persons) (2)(3)(4)(5)(6)(7)....................... 18,216,338 86.7% %
</TABLE>
- --------------------------
* Less than 1%.
(1) Consists of shares held directly by DLJ Merchant Banking Partners II, L.P.
and the following related investors: DLJ Merchant Banking Partners II-A,
L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ
Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium
Partners-A, L.P., DLJMB Funding II, Inc., DLJ Investment Partners, L.P., DLJ
Investment Funding, Inc., UK Investment Plan 1997 Partners, DLJ EAB
Partners, L.P., DLJ First ESC, L.P. and DLJ ESC II, L.P.
(2) Voting power with respect to the shares reported is shared, pursuant to the
stockholders agreements entered into in July 1997 with the other parties to
the stockholders agreements.
(3) Includes 51,053 shares Mr. Voboril has the right to acquire pursuant to
options exercisable within 60 days after May 1, 2000.
(4) Includes 21,158 shares Mr. DeAngelo has the right to acquire pursuant to
options exercisable within 60 days after May 1, 2000.
(5) Includes 22,080 shares Mr. Holmes has the right to acquire pursuant to
options exercisable within 60 days after May 1, 2000.
(6) Includes 1,443 shares held by Mr. Mott as trustee of the Sarah E. Mott
Trust, 1,443 shares held by Mr. Mott as trustee of the Lindsay Mott Trust,
1,443 shares held by Mr. Mott as trustee of the Rachel Mott Trust and 23,113
shares Mr. Mott has the right to acquire pursuant to options exercisable
within 60 days after May 1, 2000.
(7) Consists of shares held by entities affiliated with DLJ Merchant Banking
Partners II, L.P., all of which are funds managed by DLJ Merchant Banking.
Messrs. Jaffe, Rogers, Wendt and Wittels disclaim beneficial ownership of
such shares.
54
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Immediately following the consummation of this offering, the authorized
capital stock of our company will consist of 100,000,000 shares of common stock,
par value $.001 per share, and 100,000,000 shares of preferred stock, par value
$.001 per share, the rights and preferences of which may be established from
time to time by our Board of Directors. As of May 1, 2000, there were 21,021,597
shares of common stock outstanding that were held of record by more than 100
stockholders. Upon completion of this offering, there will be
outstanding shares of common stock, no outstanding shares of
preferred stock and options to purchase shares of common stock.
The following discussion summarizes the material provisions of our capital
stock and the anti-takeover provisions that will be contained in our certificate
of incorporation and bylaws upon consummation of this offering. This summary is
qualified by our restated certificate of incorporation and bylaws, copies of
which have been filed as exhibits to the registration statement of which this
prospectus is a part, and by Delaware law.
Our restated certificate of incorporation and bylaws contain provisions that
are intended to enhance the likelihood of continuity and stability in the
composition of our Board of Directors and which may have the effect of delaying,
deferring or preventing a future takeover or change in control of our company,
unless such takeover or change in control is approved by our Board of Directors.
COMMON STOCK
Holders of our common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Because holders of common stock do
not have cumulative voting rights, the holders of a majority of the shares of
common stock can elect all of the members of our Board of Directors. Subject to
preferences of any preferred stock that may be issued in the future, the holders
of common stock are entitled to receive dividends as may be declared by our
Board of Directors. The common stock is entitled to receive pro rata all of the
assets of our company available for distribution to our stockholders. There are
no redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and non-assessable.
PREFERRED STOCK
Our Board of Directors will be authorized, without further action by our
stockholders, to issue shares of preferred stock in one or more series. The
Board will have discretion to determine the rights, preferences, privileges and
limitations of each series, including voting rights, dividend rights, conversion
rights, redemption privileges and liquidation preferences. Satisfaction of any
dividend preference of outstanding shares of preferred stock would reduce the
amount of funds available for the payment of dividends on shares of common
stock. In some circumstances, the issuance of shares of preferred stock may
render more difficult or tend to discourage a merger, tender offer or proxy
contest, the assumption of control by a holder of a large block of our
securities or the removal of incumbent management. We have no current intention
to issue any shares of preferred stock.
OPTIONS
As of May 1, 2000, options to purchase a total of 967,028 shares of our
common stock were outstanding, and options to acquire up to 1,818,592 shares of
common stock may be available for future issuance under our existing stock
option plans. The average weighted exercise price per share of the options
outstanding as of May 1, 2000 was $5.34.
55
<PAGE>
REGISTRATION RIGHTS
After this offering, the holders of 21,021,597 shares of our common stock
will be entitled to registration rights. If we propose to register any of our
securities under the Securities Act, either for our own account or for the
account of other security holders exercising registration rights, these holders
are entitled to notice of registration and are entitled to include shares of
common stock, subject to certain exceptions. Additionally, some of our
stockholders have demand registration rights pursuant to which they may require
us on up to two occasions, to file a registration statement under the Securities
Act at our expense. The registration rights are subject to the right of the
underwriters of an offering to limit the number of shares included in the
registration and our right not to effect a required registration within
180 days following an offering of our securities pursuant to a registration
statement in connection with an underwritten public offering, including this
offering. If more than half of the securities entitled to demand registration
are excluded by the underwriters, the holders of demand registration rights are
to be given an additional demand registration right. These registration rights
are also subject to our right not to effect a requested registration, for no
more than one 120 day period during any calendar year, if our Board of Directors
determines in good faith to delay the filing to allow our company to include
financial statements in the registration statement or if our Board of Directors
reasonably determines that effectiveness of the registration statement or an
offering would materially adversely affect a pending or proposed acquisition,
merger or other significant corporate transaction.
LIMITATION OF LIABILITY OF OFFICERS AND DIRECTORS
Our restated certificate of incorporation limits the liability of directors
to the fullest extent permitted by Delaware law. The effect of these provisions
is to eliminate the rights of our company and our stockholders, through
stockholders' derivative suits on behalf of our company, to recover monetary
damages against a director for breach of fiduciary duty as a director, including
breaches resulting from grossly negligent behavior. However, our directors will
be personally liable to us and our stockholders for monetary damages if they
acted in bad faith, knowingly or intentionally violated the law, authorized
illegal dividends or redemptions or derived an improper benefit from their
actions as directors. In addition, our restated certificate of incorporation
provides that we will indemnify our directors and officers to the fullest extent
permitted by Delaware law. We expect to enter into indemnification agreements
with our current directors and executive officers prior to the completion of
this offering. We also maintain directors and officers insurance.
DELAWARE ANTI-TAKEOVER LAW
We are subject to Section 203 of the Delaware General Corporation law which
regulates corporate acquisitions. This law provides that specified persons who,
together with affiliates and associates, own, or within three years did own, 15%
or more of the outstanding voting stock of a corporation may not engage in
certain business combinations with the corporation for a period of three years
after the date on which the person became an interested stockholder. The law
does not include interested stockholders prior to the time our common stock is
listed on The New York Stock Exchange. The law defines the term "business
combination" to include mergers, asset sales and other transactions in which the
interested stockholder receives or could receive a financial benefit on other
than a pro rata basis with other stockholders. This provision has an
anti-takeover effect with respect to transactions not approved in advance by our
Board of Directors, including discouraging takeover attempts that might result
in a premium over the market price for the shares of our common stock. With
approval of our stockholders, we could amend our certificate of incorporation in
the future to avoid the restrictions imposed by this anti-takeover law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, L.L.C.
56
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have outstanding
shares of common stock and outstanding options to purchase shares of
our common stock, assuming no exercise of the underwriters' over-allotment
option and no additional option grants or exercises after , 2000. Of
the shares to be sold in this offering, shares will be
subject to the lock-up agreements described below, assuming that we sell all
shares reserved under our directed share program to the entities or persons for
whom these shares have been reserved. We expect that the remaining shares,
plus any shares issued upon exercise of the underwriters' over-allotment option,
will be freely tradable without restriction under the Securities Act, unless
purchased by our "affiliates," as that term is defined in Rule 144 under the
Securities Act. The remaining shares outstanding and
shares subject to outstanding options are "restricted securities"
within the meaning of Rule 144 under the Securities Act. Restricted securities
may be sold in the public market only if the sale is registered or if it
qualifies for an exemption from registration, such as under Rule 144,
Rule 144(k) or Rule 701 promulgated under the Securities Act, which are
summarized below.
LOCK-UP AGREEMENTS
We, our executive officers and directors and substantially all of our
stockholders, including DLJMB, have agreed, for a period of 180 days after the
date of this prospectus, not to, without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of our common stock or any securities convertible
into or exercisable or exchangeable for our common stock; or
- enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any common
stock, regardless of whether any of the transactions described in these
clauses are to be settled by the delivery of common stock, or such other
securities, in cash or otherwise.
RULE 144
In general, under Rule 144 as currently in effect, beginning 180 days after
the date of this prospectus, a person who has beneficially owned restricted
securities for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:
- 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this offering; and
- the average weekly trading volume of our common stock on The New York
Stock Exchange during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale.
Sales under Rule 144 are also subject to requirements with respect to manner
of sale, notice and the availability of current public information about us.
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been our affiliate at
any time during the three months preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years, may sell these
shares without complying with the manner of sale, public information, volume
limitation or notice requirements of Rule 144.
57
<PAGE>
RULE 701
Rule 701, as currently in effect, permits our employees, officers, directors
or consultants who purchased shares pursuant to a written compensatory plan or
contract to resell these shares in reliance upon Rule 144, but without
compliance with certain restrictions. Rule 701 provides that affiliates may sell
their Rule 701 shares under Rule 144, 90 days after the effective date of this
offering without complying with the holding period requirement contained in
Rule 144 and that non-affiliates may sell such shares in reliance on Rule 144
90 days after the effective date of this offering without complying with the
holding period, public information, volume limitation or notice requirements of
Rule 144.
REGISTRATION RIGHTS
After this offering, the holders of approximately 21,021,597 shares of
common stock will be entitled to rights with respect to registration of these
shares under the Securities Act. Registration of these shares under the
Securities Act would result in these shares, except for shares purchased by
affiliates of our company, becoming freely tradable without restriction under
the Securities Act immediately on the effective date of this offering.
STOCK OPTIONS
Following expiration of the 180 day lock-up period described above, we
intend to file a registration statement on Form S-8 under the Securities Act to
register all shares of common stock subject to outstanding stock options and
common stock issued or issuable under our stock option plans. Shares of common
stock registered under any registration statement will, subject to Rule 144
volume limitations applicable to affiliates, be available for sale in the open
market.
58
<PAGE>
UNDERWRITING
Subject to the terms and conditions of an underwriting agreement dated
, 2000, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Banc of America Securities LLC, U.S. Bancorp Piper
Jaffray Inc. and DLJDIRECT Inc., have severally agreed to purchase from us the
number of shares of common stock set forth opposite their names below.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Banc of America Securities LLC..............................
U.S. Bancorp Piper Jaffray Inc..............................
DLJDIRECT Inc...............................................
---
Total...................................................
===
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares of our common stock
offered by this prospectus are subject to the approval by their counsel of legal
matters and other conditions. The underwriters must purchase and accept delivery
of all the shares of our common stock offered by this prospectus, other than
those shares covered by the over-allotment option described below, if any are
purchased.
The underwriters propose initially to offer some of the shares of our common
stock directly to the public at the public offering price on the cover page of
this prospectus and some of the shares of our common stock to dealers, including
the underwriters, at the public offering price less a concession not in excess
of $ per share. The underwriters may allow, and these dealers may re-allow,
a concession not in excess of $ per share on sales to other dealers. After
the initial offering of our shares to the public, the representatives of the
underwriters may change the public offering price and other selling terms.
We have granted to the underwriters an option, exercisable within 30 days
after the date of the underwriting agreement, to purchase up to
additional shares of our common stock at the initial public offering
price less underwriting discounts and commissions. The underwriters may exercise
this option solely to cover over-allotments, if any, made in connection with
this offering. To the extent that the underwriters exercise this option, each
underwriter will become obligated, subject to certain conditions, to purchase a
number of additional shares approximately proportionate to their initial
purchase commitment.
The following table shows the underwriting fees to be paid by us in this
offering. These amounts are shown assuming both no exercise and full exercise of
the underwriters' option to purchase additional shares of our common stock.
<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share............................................ $ $
Total................................................ $ $
</TABLE>
We will pay the offering expenses, estimated to be $ .
We have agreed to indemnify the underwriters against specified civil
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the underwriters may be required to make because of those
liabilities.
59
<PAGE>
We, our executive officers and directors and substantially all of our
stockholders have agreed, for a period of 180 days after the date of this
prospectus, not to, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of our common stock or any securities convertible
into or exercisable or exchangeable for our common stock; or
- enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any common
stock, regardless of whether any of the transactions described in these
clauses are to be settled by the delivery of common stock, or such other
securities, in cash or otherwise.
The underwriting agreement contains limited exceptions to these lock-up
agreements.
In addition, during this 180 day period, we have agreed not to file any
registration statement with respect to, and each of our executive officers and
directors and a substantially all of our stockholders have agreed not to make
any demand for, or exercise any right with respect to, the registration of any
shares of common stock or any securities convertible into or exercisable or
exchangeable for common stock without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation.
Prior to this offering, there was no established trading market for our
common stock. The initial public offering price for our common stock will be
determined by negotiation among us and the representatives of the underwriters.
The factors to be considered in determining the initial public offering price
include:
- the history of and the prospects for the industry in which we compete;
- the ability of our management;
- our past and present operations;
- our prospects for future earnings;
- the general condition of the securities markets at the time of this
offering; and
- the recent market prices of securities of generally comparable companies.
Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the shares of our common
stock offered in this prospectus in any jurisdiction where action for that
purpose is required. The shares of our common stock offered in this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or
any other offering material or advertisements in connection with the offer and
sale of any shares of our common stock be distributed or published in any
jurisdiction, except under circumstances that will result in compliance with the
applicable rules and regulations of the jurisdiction. Persons who receive this
prospectus are advised to inform themselves about and to observe any
restrictions relating to the offering of our common stock and the distribution
of this prospectus. This prospectus is not an offer to sell or a solicitation of
an offer to buy any shares of our common stock included in this offering in any
jurisdiction where that would not be permitted or legal.
In connection with this offering, some underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of our
common stock. Specifically, the underwriters may over-allot this offering,
creating a syndicate short position. In addition, the underwriters may bid for
and purchase shares of our common stock in the open market to cover syndicate
short positions or to stabilize the price of our common stock. In addition, the
underwriting syndicate may reclaim selling concessions from syndicate members
and selected dealers if they repurchase previously distributed
60
<PAGE>
shares of our common stock in syndicate covering transactions, stabilizing
transactions or otherwise. These activities may stabilize or maintain the market
price of our common stock above independent market levels. The underwriters are
not required to engage in these activities and may end any of these activities
at any time.
At our request, certain of the underwriters have reserved up to 5% of the
shares offered by this prospectus for sale at the initial public offering price
to our employees, officers, directors and other individuals associated with us
and members of their families. The number of shares of common stock available
for sale to the general public will be reduced to the extent any reserved shares
are purchased. Any reserved shares not so purchased will be offered by the
underwriters on the same basis as the other shares of our common stock.
We have applied to have our common stock listed on The New York Stock
Exchange under the symbol "GB."
An electronic prospectus is available on the web sites maintained by Merrill
Lynch and DLJDIRECT Inc., an affiliate of Donaldson, Lufkin & Jenrette
Securities Corporation, respectively. Other than the prospectus in electronic
format, the information on the Merrill Lynch and DLJDIRECT Inc. web sites
relating to this offering is not a part of this prospectus.
DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A,
L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ
Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium
Partners-A, L.P., DLJMB Funding II, Inc., DLJ Investment Partners, L.P., DLJ
Investment Funding, Inc., UK Investment Plan 1997 Partners, DLJ EAB Partners,
L.P., DLJ First ESC, L.P. and DLJ ESC II, L.P., each of which is an affiliate of
Donaldson, Lufkin & Jenrette Securities Corporation, are stockholders of our
company.
In addition, DLJ Merchant Banking Partners II, L.P and its affiliates have
the right to appoint a majority of the members of our Board of Directors. DLJ
Capital Funding, Inc. acted as syndication agent and is a lender under our bank
credit facility. In addition, affiliates of some of the underwriters are lenders
under our bank credit facility and will receive proceeds from this offering upon
repayment of this indebtedness. Prior to this offering, Donaldson, Lufkin &
Jenrette Securities Corporation and its affiliates and employees owned an
aggregate of approximately 81% of the issued and outstanding shares of our
common stock.
The offering is being conducted in accordance with Rule 2720 of the Conduct
Rules of the NASD, which provides that, among other things, when an NASD member
distributes securities of a company in which it owns 10% or more of the
company's outstanding voting securities, the initial public offering price can
be no higher than that recommended by a "qualified independent underwriter"
meeting specified standards. In accordance with this requirement, Merrill Lynch,
Pierce, Fenner & Smith Incorporated will serve in this role and will recommend a
price in compliance with the requirements of Rule 2720. In connection with this
offering, Merrill Lynch, Pierce, Fenner & Smith Incorporated, in its role as
qualified independent underwriter, has exercised its usual standards of "due
diligence" and has reviewed and participated in the preparation of this
prospectus and the registration statement of which this prospectus forms a part
and will recommend the maximum price at which our common stock may be offered
hereby. As compensation for serving as the qualified independent underwriter, we
have agreed to pay Merrill Lynch, Pierce, Fenner & Smith Incorporated $5,000.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by this
prospectus will be passed on for us by Weil, Gotshal & Manges LLP, Houston,
Texas. Certain legal matters relating to the common stock offered by this
prospectus will be passed on for the underwriters by Akin, Gump, Strauss,
Hauer & Feld, L.L.P., New York, New York.
61
<PAGE>
EXPERTS
The consolidated balance sheets of Wilson Greatbatch Technologies, Inc. and
subsidiary as of January 1, 1999 and December 31, 1999 and the consolidated
statements of operations, stockholders' equity and cash flows for the period
from July 11, 1997 to January 2, 1998 and for each of the two years in the
period ended December 31, 1999 and the statements of operations, stockholders'
equity and cash flows of Wilson Greatbatch Ltd. for the period from January 1,
1997 to July 10, 1997 included in this prospectus and the related financial
statement schedule included elsewhere in the registration statement of which
this prospectus is a part have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
The financial statements of Hittman Materials and Medical Components, Inc.
at August 7, 1998 and December 31, 1997 and for the period from January 1, 1998
through August 7, 1998 and for the year ended December 31, 1997 have been
included herein in reliance upon the report of Grant Thornton LLP, independent
public accountants, appearing elsewhere herein and given on the authority of
said firm as experts in auditing and accounting in giving said report.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act relating to the common stock
being sold in this offering. This prospectus constitutes a part of that
registration statement. This prospectus does not contain all of the information
set forth in the registration statement and the exhibits and schedules to the
registration statement because some parts have been omitted in accordance with
the rules and regulations of the Commission. For further information about us
and the common stock being sold in this offering, you should refer to the
registration statement and the exhibits and schedules filed as a part of the
registration statement. Statements contained in this prospectus regarding the
contents of any agreement, contract or other document referred to are not
necessarily complete. Reference is made in each instance to the copy of the
contract or document filed as an exhibit to the registration statement. Each
statement is qualified by reference to the exhibit. The registration statement,
including related exhibits and schedules, may be inspected without charge at the
Commission's principal office in Washington, D.C. Copies of all or any part of
the registration statement may be obtained after payment of fees prescribed by
the Commission from:
- the Commission's Public Reference Room at the Commission's principal
office, 450 Fifth Street, N.W., Washington, D.C. 20549; or
- the Commission's regional offices in:
- New York, located at 7 World Trade Center, Suite 1300, New York, New
York 10048; or
- Chicago, located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
You may obtain information regarding the operation of the Public Reference
Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants, including us, that file electronically with
the Commission. The address of the web site is WWW.SEC.GOV.
We intend to furnish holders of our common stock with annual reports
containing audited financial statements certified by an independent public
accounting firm and quarterly reports containing unaudited condensed financial
information for the first three quarters of each fiscal year. We intend to
furnish other reports as we may determine or as may be required by law.
62
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY AND
WILSON GREATBATCH LTD.:
Independent Auditors' Report.............................. F-2
Consolidated Balance Sheets as of January 1, 1999 and
December 31, 1999....................................... F-3
Statement of Operations for the period from January 1,
1997 to July 10, 1997 and Consolidated Statements of
Operations for the period from July 11, 1997 to January
2, 1998 and the years ended January 1, 1999 and December
31, 1999................................................ F-4
Statement of Stockholders' Equity for the period from
January 1, 1997 to July 10, 1997 and Consolidated
Statements of Stockholders' Equity for the period from
July 11, 1997 to January 2, 1998 and for the years ended
January 1, 1999 and December 31, 1999................... F-5
Statement of Cash Flows for the period from January 1,
1997 to July 10, 1997 and Consolidated Statements of
Cash Flows for the period from July 11, 1997 to January
2, 1998 and for the years ended January 1, 1999 and
December 31, 1999....................................... F-6
Notes to Financial Statements for the period from January
1, 1997 to July 10, 1997 and Consolidated Financial
Statements for the period from July 11, 1997 to January
2, 1998 and for the years ended January 1, 1999 and
December 31, 1999....................................... F-7
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.:
Report of Independent Certified Public Accountants........ F-25
Balance Sheets as of August 7, 1998 and December 31,
1997.................................................... F-26
Statements of Operations for the period from January 1,
1998 through August 7, 1998 and for the year ended
December 31, 1997....................................... F-27
Statements of Stockholder's Equity for the period from
January 1, 1998 through August 7, 1998 and for the year
ended December 31, 1997................................. F-28
Statements of Cash Flows for the period from January 1,
1998 through August 7, 1998 and for the year ended
December 31, 1997....................................... F-29
Notes to Financial Statements for the period from January
1, 1998 through August 7, 1998 and for the year ended
December 31, 1997....................................... F-30
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Wilson Greatbatch Technologies, Inc.
Clarence, New York
We have audited the accompanying consolidated balance sheets of Wilson
Greatbatch Technologies, Inc. and subsidiary (the "Company") as of December 31,
1999 and January 1, 1999, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the period from July 11, 1997 (date of
organization) to January 2, 1998 and for each of the two years in the period
ended December 31, 1999. We have also audited the statements of operations,
stockholders' equity and cash flows of Wilson Greatbatch Ltd. (the
"Predecessor") for the period from January 1, 1997 to July 10, 1997. Our audits
also included the financial statement schedule listed in the Index at
Item 16(B) of the registration statement. These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Wilson Greatbatch
Technologies, Inc. and subsidiary as of December 31, 1999 and January 1, 1999,
and the results of their operations and their cash flows for the period from
July 11, 1997 to January 2, 1998 and for each of the two years in the period
ended December 31, 1999 and the results of operations and cash flows of Wilson
Greatbatch Ltd. for the period from January 1, 1997 to July 10, 1997 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, in 1999,
the Company changed its method of accounting for the costs of start-up
activities.
DELOITTE & TOUCHE LLP
Buffalo, New York
January 21, 2000
(March 14, 2000 as to Note 18 and May 18, 2000 as to the effects
of the reverse stock split described in Note 1)
F-2
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, MARCH 31,
1999 1999 2000
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................ $ 4,140 $ 3,863 $ 2,474
Accounts receivable, net of allowance for doubtful
accounts of $197 and $219 as of January 1, 1999 and
December 31, 1999, respectively........................ 11,963 11,016 10,460
Inventories.............................................. 13,291 13,583 14,717
Prepaid expenses and other assets........................ 227 868 1,322
Refundable income taxes.................................. 698 2,520 2,210
Deferred tax asset....................................... 1,669 1,520 1,520
-------- -------- --------
Total current assets................................... 31,988 33,370 32,703
PROPERTY, PLANT AND EQUIPMENT, NET......................... 29,495 33,557 34,199
INTANGIBLE ASSETS, NET..................................... 120,900 112,902 111,194
DEFERRED TAX ASSET......................................... 8,988 7,828 7,828
OTHER ASSETS............................................... 3,019 2,122 1,858
-------- -------- --------
TOTAL ASSETS............................................... $194,390 $189,779 $187,782
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable......................................... $ 2,134 $ 2,385 $ 2,638
Accrued liabilities...................................... 14,148 7,139 9,247
Current maturities of long-term obligations.............. 2,950 6,225 6,850
-------- -------- --------
Total current liabilities.............................. 19,232 15,749 18,735
LONG-TERM OBLIGATIONS...................................... 128,336 126,988 122,393
DEFERRED COMPENSATION...................................... 1,227 635 674
-------- -------- --------
Total liabilities...................................... 148,795 143,372 141,802
-------- -------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 13)
STOCKHOLDERS' EQUITY:
Common stock............................................. 20 20 20
Subscribed common stock.................................. 1,684 1,684 1,684
Capital in excess of par value........................... 60,287 63,480 63,480
Retained deficit......................................... (14,712) (16,984) (17,376)
-------- -------- --------
Subtotal............................................... 47,279 48,200 47,808
Less treasury stock, at cost............................. -- (109) (144)
Less subscribed common stock receivable.................. (1,684) (1,684) (1,684)
-------- -------- --------
Total stockholders' equity............................. 45,595 46,407 45,980
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY................................................. $194,390 $189,779 $187,782
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WILSON
GREATBATCH LTD.
(PREDECESSOR)
(NOTE 1) WILSON GREATBATCH TECHNOLOGIES, INC.
--------------- -----------------------------------------------------------------------
THREE MONTHS
JANUARY 1, YEAR ENDED ENDED
1997 JULY 11, 1997 ------------------------- -------------------------
TO TO JANUARY 1, DECEMBER 31, APRIL 2, MARCH 31,
JULY 10, 1997 JANUARY 2, 1998 1999 1999 1999 2000
--------------- --------------- ---------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
REVENUES............................. $29,620 $ 26,282 $75,268 $76,590 $19,886 $22,526
COST OF GOODS SOLD................... 14,922 12,241 36,454 41,057 10,024 12,936
------- -------- ------- ------- ------- -------
GROSS PROFIT......................... 14,698 14,041 38,814 35,533 9,862 9,590
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................... 5,881 4,501 9,391 7,235 2,144 1,974
RESEARCH, DEVELOPMENT AND ENGINEERING
COSTS, NET......................... 4,400 4,619 12,190 9,339 2,772 2,520
OTHER EXPENSES (INCOME):
Interest expense................... 252 4,128 10,572 13,420 3,298 3,985
Intangible amortization............ -- 1,810 5,197 6,510 1,638 1,627
Transaction related expenses....... 11,097 -- -- -- -- --
Write-off of purchased in-process
research, development and
engineering...................... -- 23,779 -- -- -- --
Other.............................. (117) 74 364 1,343 74 61
------- -------- ------- ------- ------- -------
Total other expenses........... 11,232 29,791 16,133 21,273 5,010 5,673
------- -------- ------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE............................. (6,815) (24,870) 1,100 (2,314) (64) (577)
INCOME TAX EXPENSE (BENEFIT)......... 1,053 (9,468) 410 (605) (17) (184)
------- -------- ------- ------- ------- -------
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE........ (7,868) (15,402) 690 (1,709) (47) (393)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE, NET OF TAX (Note 2)........ -- -- -- (563) (563) --
------- -------- ------- ------- ------- -------
NET INCOME (LOSS).................... $(7,868) $(15,402) $ 690 $(2,272) $ (610) $ (393)
======= ======== ======= ======= ======= =======
BASIC EARNINGS (LOSS) PER SHARE
Before cumulative effect of
accounting change................ $ (1.04) $ 0.04 $ (0.08) $ (0.00) $ (0.02)
Basic earnings (loss) per share.... $ (1.04) $ 0.04 $ (0.11) $ (0.03) $ (0.02)
DILUTED EARNINGS (LOSS) PER SHARE
Before cumulative effect of
accounting change................ $ (1.04) $ 0.04 $ (0.08) $ (0.00) $ (0.02)
Diluted earnings (loss) per
share............................ $ (1.04) $ 0.04 $ (0.11) $ (0.03) $ (0.02)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic.............................. 14,758 17,436 20,818 20,665 21,027
Diluted............................ 14,758 18,173 20,818 20,665 21,027
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS EXCEPT SHARES)
<TABLE>
<CAPTION>
SUBSCRIBED CAPITAL TREASURY SUBSCRIBED
COMMON STOCK COMMON STOCK IN EXCESS RETAINED STOCK COMMON
------------------ --------------- OF PAR EARNINGS -------------- STOCK
SHARES AMOUNT SHARES AMOUNT VALUE (DEFICIT) SHARES AMOUNT RECEIVABLE
---------- ------ ------- ------ --------- --------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wilson Greatbatch Ltd.
(Predecessor) (Note 1):
BALANCE, JANUARY 1, 1997........... 8,839 $ 9 -- $ -- $ -- $ 12,235 -- $ -- $ --
Net loss......................... -- -- -- -- -- (7,868) -- -- --
Dividends declared............... -- -- -- -- -- (1,130) -- -- --
Cash distributions to
shareholders................... -- -- -- -- -- (1,119) -- -- --
Other distribution to
shareholders................... -- -- -- -- -- (2,182) -- -- --
---------- ---- ------- ------ ------- -------- ------ ---- ------
BALANCE, JULY 10, 1997............. 8,839 $ 9 -- $ -- $ -- $ (64) -- $ -- $ --
========== ==== ======= ====== ======= ======== ====== ==== ======
- --------------------------------------------------------------------------------------------------------------------------
Wilson Greatbatch Technologies, Inc.:
BEGINNING BALANCE, JULY 10,
1997............................. -- $ -- -- $ -- $ -- $ -- -- $ -- $ --
Capitalization of the Company.... 14,324,437 14 -- -- 42,959 -- -- -- --
Common stock issued.............. 222,667 -- -- -- 668 -- -- -- --
Subscribed common stock.......... -- -- 561,333 1,684 -- -- -- -- 1,684
Net loss......................... -- -- -- -- -- (15,402) -- -- --
---------- ---- ------- ------ ------- -------- ------ ---- ------
BALANCE, JANUARY 2, 1998........... 14,547,104 14 561,333 1,684 43,627 (15,402) -- -- 1,684
Shares issued in connection with
the financing of Greatbatch-
Hittman........................ 5,500,000 6 -- -- 16,494 -- -- -- --
Shares issued under Employee
Stock Ownership Plan............. 42,051 -- -- -- 126 -- -- -- --
Exercise of stock options........ 13,267 -- -- -- 40 -- -- -- --
Net income....................... -- -- -- -- -- 690 -- -- --
---------- ---- ------- ------ ------- -------- ------ ---- ------
BALANCE, JANUARY 1, 1999........... 20,102,422 20 561,333 1,684 60,287 (14,712) -- -- 1,684
Common stock issued.............. 110,895 -- -- -- 998 -- -- -- --
Shares issued under Employee
Stock Ownership Plan........... 232,451 -- -- -- 2,092 -- -- -- --
Exercise of stock options........ 34,446 -- -- -- 103 -- -- -- --
Purchase of common stock from the
Employee Stock Ownership
Plan........................... -- -- -- -- -- -- 12,142 109 --
Net loss......................... -- -- -- -- -- (2,272) -- -- --
---------- ---- ------- ------ ------- -------- ------ ---- ------
BALANCE, DECEMBER 31, 1999......... 20,480,214 $ 20 561,333 $1,684 $63,480 $(16,984) 12,142 $109 $1,684
========== ==== ======= ====== ======= ======== ====== ==== ======
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
WILSON
GREATBATCH LTD.
(PREDECESSOR)(NOTE 1) WILSON GREATBATCH TECHNOLOGIES, INC.
--------------------- ---------------------------------------------------------------------------
PERIOD FROM PERIOD FROM YEAR YEAR THREE MONTHS THREE MONTHS
JANUARY 1, 1997 JULY 11, 1997 ENDED ENDED ENDED ENDED
TO TO JANUARY 1, DECEMBER 31, APRIL 2, MARCH 31,
JULY 10, 1997 JANUARY 2, 1998 1999 1999 1999 2000
--------------------- --------------- ---------- ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)........... $(7,868) $ (15,402) $ 690 $(2,272) $ (610) $ (393)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Purchased in-process
research and
development............. -- 23,779 -- -- -- --
Depreciation and
amortization............ 1,456 3,548 9,190 11,363 2,958 3,115
Deferred financing
costs................... -- 248 699 972 227 232
Deferred income taxes..... -- (9,750) (907) 1,685 17 --
Loss on disposal of
assets.................. 530 6 194 146 -- --
Valuation loss on
investment held at
cost.................... -- -- -- 859 -- --
Cumulative effect of
accounting change....... -- -- -- 563 563 --
Reserve for disposal of
property................ -- -- 300 -- -- --
Changes in operating assets
and liabilities:
Accounts receivable....... (1,132) 1,766 (4,223) 947 564 556
Inventories............... 1,082 (1,871) (629) (292) 268 (1,134)
Prepaid expenses and other
assets.................. 202 119 (57) (663) (892) (454)
Accounts payable.......... 688 68 (103) 251 (481) 253
Accrued liabilities....... 1,073 1,097 5,507 (4,241) (1,717) 2,351
Income taxes.............. -- 222 (910) (1,826) (16) 120
------- --------- ------- ------- ------- -------
Net cash (used in)
provided by operating
activities............ (3,969) 3,830 9,751 7,492 881 4,646
------- --------- ------- ------- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of property,
plant and equipment..... (1,934) (2,656) (6,207) (8,452) (1,438) (1,918)
Proceeds from sale of
property, plant and
equipment............... -- -- 80 5 -- --
Increase in intangible
assets.................. -- (850) (1,741) (570) (285) (267)
Decrease (increase) in
other long term
assets.................. -- (147) (2,569) 170 -- --
Acquisition of subsidiary,
net of cash acquired.... -- -- (72,938) -- -- --
------- --------- ------- ------- ------- -------
Net cash used in
investing
activities............ (1,934) (3,653) (83,375) (8,847) (1,723) (2,185)
------- --------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings (repayments)
under line of credit,
net..................... 11,677 200 (700) 4,300 -- (2,150)
Proceeds from long-term
debt.................... (488) (1,800) 61,853 -- -- --
Proceeds from debt and
equity financing
(Note 1)................ -- 115,285 -- -- -- --
Payments to acquire
Predecessor (Note 1).... -- (115,285) -- -- -- --
Equity investment in
Company................. -- 668 -- -- -- --
Scheduled payments of
long-term debt.......... -- -- (775) -- (775) (1,650)
Prepayments of long-term
debt.................... -- -- (775) (2,950) -- --
Acquisition earnout
payment................. -- -- -- (2,764) -- --
Deferred compensation..... (1,616) 1,164 (824) (592) (288) (15)
Cash dividends paid....... (920) -- -- --
Cash distributions to
shareholders............ (2,419) -- -- -- -- --
Purchase of treasury
stock................... -- -- -- (109) -- (35)
Issuance of capital
stock................... -- -- 16,666 3,193 -- --
------- --------- ------- ------- ------- -------
Net cash provided by
(used in) financing
activities............ 6,234 232 75,445 1,078 (1,063) (3,850)
------- --------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS............... 331 409 1,821 (277) (1,905) (1,389)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD....... 54 1,910 2,319 4,140 4,140 3,863
------- --------- ------- ------- ------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD............. $ 385 $ 2,319 $ 4,140 $ 3,863 $ 2,235 $ 2,474
======= ========= ======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
1. DESCRIPTION OF BUSINESS
THE ENTITY--The consolidated financial statements include the accounts of
Wilson Greatbatch Technologies, Inc., a holding company, and its wholly-owned
subsidiary Wilson Greatbatch Ltd. (collectively, the "Company"). The Company is
comprised of its operating companies, Wilson Greatbatch Ltd. and its
wholly-owned subsidiary, Greatbatch-Hittman, Inc. ("Hittman"). All significant
intercompany balances and transactions have been eliminated.
On July 10, 1997, the Company acquired all of the outstanding shares of
Wilson Greatbatch Ltd. (the "Predecessor") in a leveraged buyout. Equity
financing was provided by entities affiliated with DLJ Merchant Banking Partners
II, L.P., an affiliate of Donaldson, Lufkin and Jenrette Securities Corporation
("DLJ"). Debt financing was provided by a variety of lenders, including DLJ
Capital Funding, Inc., also an affiliate of DLJ.
The statements of operations, stockholders' equity and cash flows and the
notes to the financial statements include activity separately identified for the
period from January 1, 1997 to July 10, 1997 that pertain to the Predecessor.
NATURE OF OPERATIONS--The Company operates in two reportable
segments--medical and commercial power sources. The medical segment designs and
manufactures power sources, capacitors and components used in implantable
medical devices. The commercial power sources segment designs and manufactures
non-medical power sources for use in aerospace, oil and gas exploration and
oceanographic equipment.
On May 18, 2000, the Board of Directors authorized a one for three reverse
stock split to holders of record on May 19, 2000. All share and per share data,
including stock option information for the Company, has been restated to reflect
the reverse stock split.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL STATEMENTS--The accompanying consolidated balance sheet as
of March 31, 2000, statements of operations and cash flows for the three months
ended April 2, 1999 and March 31, 2000 are unaudited but, in the opinion of
management, include all adjustments (consisting of normal, recurring
adjustments) necessary for a fair presentation for results of these interim
periods. The results of operations for the three months ended March 31, 2000 are
not necessarily indicative of results to be expected for the entire year or for
any other period.
ACCOUNTING CHANGE--In April 1998, the AICPA issued Statement of Position
("SOP") 98-5, "Reporting the Costs of Start-Up Activities." This statement
requires that start-up costs, including organization costs, capitalized by the
Company prior to January 2, 1999, be written off and any future start-up costs
be expensed as incurred. The Company adopted this SOP in 1999. The total amount
of deferred start-up costs reported as a cumulative effect of change in
accounting principle was $939,000, net of tax benefits of $376,000.
CASH AND CASH EQUIVALENTS--Cash and cash equivalents consist of cash and
highly liquid, short-term investments with maturities of three months or less.
INVENTORIES--Inventories include raw materials, work-in-process and finished
goods and are stated at the lower of cost (as determined by the first-in,
first-out method) or market.
F-7
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment is carried at
cost. Depreciation is computed primarily by the straight-line method over the
estimated useful lives of the assets, which are as follows: buildings and
building improvements 7-40 years; machinery and equipment 3-10 years; office
equipment 3-10 years; and leasehold improvements over the remaining lives of the
improvements or the lease term, if less.
The cost of repairs and maintenance is charged to expense as incurred.
Renewals and betterments are capitalized. Upon retirement or sale of an asset,
its cost and related accumulated depreciation or amortization are removed from
the accounts and any gain or loss is recorded in income or expense. The Company
continually reviews plant and equipment to determine that the carrying values
have not been impaired.
INTANGIBLE ASSETS--Intangible assets include goodwill and other identifiable
intangible assets, which were derived in connection with the Company's
acquisition of the Predecessor and Hittman. Goodwill represents the excess of
the purchase price over the fair value of the net assets acquired. Goodwill is
being amortized on a straight-line basis over 40 years. Other identifiable
intangible assets are being amortized on a straight-line basis over their
estimated useful lives ranging from 6 to 40 years, except for deferred financing
costs which are being amortized using the effective yield method over the life
of the underlying debt. The Company continually reviews these intangible assets
based on fair values whenever significant events or changes occur which might
impair recovery of recorded costs.
FAIR VALUE OF FINANCIAL INSTRUMENTS--The fair value of financial instruments
is determined by reference to various market data and other valuation
techniques, as appropriate. Unless otherwise disclosed, the fair value of cash
and cash equivalents approximates their recorded values due to the nature of the
instruments. The floating rate debt carrying value approximates the fair value
based using the floating interest rate resetting on a regular basis. The fixed
rate long-term debt carrying value approximates fair value.
The fair value of the interest rate cap agreements are estimated by
obtaining quotes from brokers and represents the cash requirement if the
existing contract has been settled at year end. The notional amount, fair value
and carrying amount of the Company's interest rate cap agreements were
approximately $54.1 million and $79.1 million; $196,000 and $515,300; and
$254,500 and $229,100, as of January 1, 1999 and December 31, 1999,
respectively.
CONCENTRATION OF CREDIT RISK--Financial instruments which potentially
subject the Company to concentration of credit risk consist principally of trade
receivables. A significant portion of the Company's sales are to customers in
the medical industry, and, as such, the Company is directly affected by the
condition of that industry. However, the credit risk associated with trade
receivables is minimal due to the Company's stable customer base and ongoing
control procedures, which monitor the creditworthiness of customers.
The credit risk associated with the Company's interest rate cap agreements
is not considered significant due to the creditworthiness of the counterparties.
DERIVATIVE FINANCIAL INSTRUMENTS--The Company has only limited involvement
with derivative financial instruments and does not enter into financial
instruments for trading purposes. Interest rate
F-8
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
cap agreements are used to reduce the potential impact of increases in interest
rates on floating-rate long-term debt. Premiums paid for purchased interest rate
cap agreements are amortized over the terms of the caps and recognized as
interest expense. Unamortized premiums are included in other assets in the
consolidated balance sheets. Amounts receivable under interest rate cap
agreements are accrued as a reduction of interest expense. At December 31, 1999,
the Company was a party to three interest rate cap agreements (see Note 8).
STOCK OPTION PLAN--The Company accounts for stock-based compensation in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation." As permitted in that standard, the
Company has chosen to account for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board No. 25, "Accounting for
Stock Issued to Employees," and related interpretations. In the absence of a
"regular, active public market," the fair market value of the common stock has
been determined by the Board of Directors. The most recent independent valuation
of the Company stock was performed in May 1999 as of December 31, 1998.
INCOME TAXES--The Company provides for income taxes using the liability
method whereby deferred tax liabilities and assets are recognized based on
temporary differences between the financial reporting and tax basis of assets
and liabilities using the anticipated tax rate when taxes are expected to be
paid or reversed.
REVENUE RECOGNITION--Revenues are recognized when the products are shipped
to customers.
RESEARCH, DEVELOPMENT AND ENGINEERING COSTS--Research, development and
engineering costs are expensed as incurred. The Company recognizes cost
reimbursements from certain of its customers upon achieving certain milestones
related to designing batteries and capacitors for their products. The cost
reimbursements charged to customers represent actual costs incurred by the
Company in the design and testing of prototypes built to customer
specifications. This cost reimbursement includes no mark-up and is recorded as
an offset to research, development and engineering costs.
Net research, development and engineering costs for the periods from
January 1, 1997 to July 10, 1997 and July 11, 1997 to January 2, 1998 and the
years ended January 1, 1999 and December 31, 1999 are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
PREDECESSOR
---------------
JANUARY 1, 1997 JULY 11, 1997
TO TO
JULY 10, 1997 JANUARY 2, 1998 1998 1999
--------------- --------------- -------- --------
<S> <C> <C> <C> <C>
Gross research, development and engineering
costs........................................... $5,980 $5,765 $15,580 $11,885
Less cost reimbursements.......................... (1,580) (1,146) (3,390) (2,546)
------ ------ ------- -------
Research, development and engineering costs,
net............................................. $4,400 $4,619 $12,190 $ 9,339
====== ====== ======= =======
</TABLE>
EARNINGS (LOSS) PER SHARE ("EPS")--Basic earnings per share is calculated by
dividing net income (loss) by the average number of shares outstanding during
the period. Diluted earnings per share is calculated by adjusting for common
stock equivalents, which consist of stock options. During the period
F-9
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
from July 11, 1997 to January 2, 1998, the year ended December 31, 1999, there
were 441,000 and 848,000 stock options, respectively, that have not been
included in the computation of diluted EPS because to do so would be
antidilutive for such periods. Diluted earnings per share for the year ended
January 1, 1999 includes the potentiality dilutive effect of stock options. For
the period from January 1, 1997 to July 10, 1997, the Predecessor was a
subchapter S corporation and therefore EPS has not been included.
COMPREHENSIVE INCOME--Comprehensive income includes all changes in
stockholders' equity during a period except those resulting from investments by
owners and distribution to owners. For all periods presented, the Company's only
component of comprehensive income is its net income (loss) for those periods.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS--The Company adopted SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information," in 1999.
SFAS No. 131 establishes standards for reporting information about operating and
related disclosures about products and services, geographical areas and major
customers. The adoption of SFAS No. 131 did not effect the Company's financial
position, results of operations or cash flows, but did affect the disclosure of
segment information.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activity," which, as amended,
is required to be adopted by the Company in 2001. The Statement will require the
Company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges of underlying transactions must be adjusted to
fair value through income. If the derivative is a hedge, depending on the nature
of the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
Management has not yet determined the effect SFAS No. 133 will have, if any, on
the Company's consolidated financial position, results of operations or cash
flows.
SUPPLEMENTAL CASH FLOW INFORMATION--Cash paid for interest from January 1,
1997 to July 10, 1997, from July 11, 1997 to January 2, 1998, in 1998 and 1999
was approximately $275,000, $1,992,000, $9,150,000 and $13,790,000,
respectively. Cash paid for income taxes from January 1, 1997 to July 10, 1997,
from July 11, 1997 to January 2, 1998, in 1998 and 1999 was approximately
$17,000, $-0-, $1,482,000 and $186,000, respectively.
FINANCIAL STATEMENT YEAR END--The Company's year end is the closest Friday
to December 31. Fiscal 1999 and 1998 included 52 weeks.
F-10
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
3. ACQUISITION
On August 7, 1998, Wilson Greatbatch Ltd. acquired all of the issued and
outstanding shares of Hittman, formerly Hittman Materials and Medical
Components, Inc., for a total purchase price of $71.8 million. Of the total
purchase price, $69.0 million was paid in cash at the date of acquisition. The
remaining purchase price was contingent upon Hittman achieving certain financial
targets in 1998 and 1999. Approximately $2.8 million of the contingent
consideration was incurred in fiscal 1998, paid in 1999, and allocated to the
purchase price. There is no additional contingent consideration to be incurred.
The acquisition was recorded under the purchase method of accounting and
accordingly, the results of the operations of Hittman have been included in the
consolidated financial statements from the date of acquisition. The purchase
price has been allocated to assets acquired and liabilities assumed based on the
fair value at the date of acquisition. The excess of the purchase price over
fair value of the net assets acquired was approximately $67.7 million, of which
$17.4 million was allocated to identifiable intangible assets and $50.3 million
was allocated to goodwill.
4. INVENTORIES
Inventories consisted of the following (dollars in thousands):
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, MARCH 31,
1999 1999 2000
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw material............................... $ 6,033 $ 7,099 $ 7,309
Work-in-process............................ 6,016 5,089 5,306
Finished goods............................. 1,242 1,395 2,102
------- ------- -------
Total...................................... $13,291 $13,583 $14,717
======= ======= =======
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant, and equipment consisted of the following (dollars in
thousands):
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1999 1999
---------- ------------
<S> <C> <C>
Land and land improvements............................ $ 2,227 $ 2,227
Buildings and building improvements................... 4,974 5,226
Leasehold improvements................................ 1,348 2,243
Machinery and equipment............................... 20,630 26,153
Furniture and fixtures................................ 1,552 1,628
Computers and information technology.................. 1,893 2,259
Other................................................. 1,749 2,863
------- -------
34,373 42,599
Less accumulated depreciation......................... (4,878) (9,042)
------- -------
Total................................................. $29,495 $33,557
======= =======
</TABLE>
F-11
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
5. PROPERTY, PLANT AND EQUIPMENT, NET (CONTINUED)
Depreciation expense for the period from January 1, 1997 to July 11, 1997,
from July 11, 1997 to January 2, 1998 in 1998 and 1999 was approximately
$1,441,000, $1,586,000, $3,532,000 and $4,240,000, respectively.
6. INTANGIBLE ASSETS, NET
Intangible assets consisted of the following (dollars in thousands):
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1999 1999
---------- ------------
<S> <C> <C>
Goodwill, net of accumulated amortization of $2,229 and
$824...................................................... $ 55,028 $ 53,944
Trademark and names, net of accumulated amortization of
$1,685 and $944........................................... 28,817 27,975
Patented technology, net of accumulated amortization of
$2,824 and $1,696......................................... 11,734 10,606
License agreement, net of accumulated amortization of $2,579
and $1,548................................................ 4,642 3,611
Assembled workforce, net of accumulated amortization of
$1,468 and $833........................................... 6,548 5,912
Noncompete/employment agreement, net of accumulated
amortization of $1,400 and $467........................... 5,133 4,200
Unpatented proprietary technology, net of accumulated
amortization of $976 and $340............................. 3,060 2,224
Patent licenses, net of accumulated amortization of $312 and
$142...................................................... 198 295
Deferred financing costs, net of accumulated amortization of
$1,746 and $922........................................... 4,730 3,906
Organizational costs, net of accumulated amortization of
$286 at January 1, 1999 (Note 2).......................... 939 --
Interest rate cap agreements................................ 71 229
-------- --------
Total....................................................... $120,900 $112,902
======== ========
</TABLE>
7. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (dollars in thousands):
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1999 1999
---------- ------------
<S> <C> <C>
Profit sharing...................................... $ 2,749 $ 1,105
Interest............................................ 2,350 931
Salaries and benefits............................... 4,688 3,832
Contingent consideration for Hittman acquisition
(Note 3).......................................... 2,764 --
Other............................................... 1,597 1,271
-------- --------
Total............................................... $ 14,148 $ 7,139
======== ========
</TABLE>
F-12
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
8. LONG-TERM OBLIGATIONS
Long-term obligations consisted of the following:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1999 1999
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Term A Facility, $50.0 million, due September 30, 2004.
Quarterly principal installments due of $1.25 million
through September 2000, $1.875 million through September
2002, $3.125 million through September 2003, and $3.75
million through September 2004. Interest payments are due
quarterly and charged, at the Company's option, based on
either prime plus 1.50% or LIBOR plus 2.75% as per the
credit agreement (prime was 8.50% and LIBOR was 7.69% at
January 1, 2000). Interest rate requirements varied from
the above through the Waiver Period, as discussed
below..................................................... $ 48,750 $ 46,250
Term B Facility, $60.0 million, due September 30, 2006.
Quarterly principal installments due of $150,000 through
September 2005 and $1.395 million through September 2006.
Interest payments are due quarterly and charged, at the
Company's option, based on either prime plus 1.75% or
LIBOR plus 3.00% as per the credit agreement. Interest
rate requirements varied from the above through the Waiver
Period, as discussed below................................ 59,700 59,250
Revolving Facility, up to $20.0 million, due September 30,
2004. Borrowing limited to $8 million through waiver
period. Interest payments are due quarterly on any
outstanding loans and charged, at the Company's option,
based on either prime plus 1.50% or LIBOR plus 2.75% as
per the credit agreement. Interest rate requirements
varied from the above through the Waiver Period, as
discussed below........................................... -- 4,300
Senior Subordinated Notes, principal amount of Notes of
$25.0 million due July 1, 2007. Semi-annual interest
installments are due to note holders on January 1 and July
1 of each year............................................ 22,283 22,602
Other long-term obligations................................. 553 811
-------- --------
131,286 133,213
Less current maturities of long-term obligations............ (2,950) (6,225)
-------- --------
Long-term obligations....................................... $128,336 $126,988
======== ========
</TABLE>
In July 1997, the Company entered into a Credit Agreement with various
financial institutions providing a maximum of $60.0 million in senior,
first-secured financing. In August 1998, this agreement was amended and restated
to facilitate the Greatbatch-Hittman acquisition, and the maximum senior, first
secured financing was increased to $130.0 million (the "Agreement"). The
Agreement provides for two term facilities ("Term A Facility" and "Term B
Facility") and a revolving credit facility ("Revolving Facility"). No gain or
loss was recorded as a result of the amended and restated Agreement.
Also, in July 1997, the Company issued $25.0 million, 13% Senior
Subordinated Notes (the "Senior Subordinated Notes") to various affiliates of
DLJ and third parties and received $25.0 million related to the issuance. At
maturity, July 1, 2007, the entire principal amount of the Senior Subordinated
F-13
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
8. LONG-TERM OBLIGATIONS (CONTINUED)
Notes, $25.0 million, will be payable to the holders of the Senior Subordinated
Notes. At the date of inception, the Company recorded $21,811,688 as its
obligation due to lenders and $3,188,312 for shares issued to the lenders. The
difference between the face amount of the Senior Subordinated Notes and the
recorded book value is amortized under the effective yield method and will be
charged to interest expense over the term of the Senior Subordinated Notes. The
effect of this transaction resulted in an effective interest rate of 14.3% for
the period from July 11, 1997 to January 2, 1998, 1998 and 1999. Payments are
subordinated to amounts due under the Agreement.
The Revolving Facility includes the availability to the Company of up to
$20.0 million in the form of either revolving loans, swing-line loans, or
letters of credit. The swing-line loans and letters of credit may not exceed
$2.0 million and $5.0 million, respectively. The Revolving Facility is due
September 30, 2004. There was $4.3 million outstanding at December 31, 1999 and
no balance outstanding at January 1, 1999.
Interest is payable quarterly on any outstanding loans and charged, at the
Company's option, based on either prime or LIBOR plus an interest rate add-on
("Applicable Margin"). For the Term A Facility and the Revolving Facility, the
Applicable Margin is 1.50% for prime rate loans and 2.75% for LIBOR rate loans.
For the Term B Facility, the Applicable Margin is 1.75% and 3.00% for prime rate
and LIBOR rate loans, respectively (see Note 18).
The Applicable Margin with respect to the Term A Facility and the Revolving
Facility may be reduced, depending upon the Company's degree of leverage, as
defined. The Applicable Margin is reduced in accordance with a matrix setting
forth certain leverage ratios and corresponding Applicable Margins.
The Agreement for the Term A Facility, Term B Facility and the Revolving
Facility contains, among other covenants, quarterly and annual financial
covenants pertaining to minimum earnings, interest coverage, leverage and other
ratios. In November 1999, the Agreement was amended to change certain covenants
and waive compliance with certain others. The Company was not in compliance at
December 31, 1999 with the financial covenants relating to the Leverage Ratio
and Interest Coverage Ratio contained in Section 7.2.4 (b) and Section 7.2.4
(c), respectively, of the Agreement. The Company has obtained waivers from the
lending institutions for the aforementioned financial covenants for the period
from November 15, 1999 to February 15, 2000 (the "Waiver Period"). In addition,
during the Waiver Period, the Applicable Margins referred to above were all
increased prospectively by 75 basis points and the Revolving Facility was
limited to a maximum outstanding of $8.0 million. During the Waiver Period, the
Company was prohibited from making certain loans, investments and capital stock
redemptions (see Note 18).
The Company has three outstanding interest rate cap agreements with three
financial institutions. The Credit Agreement requires the Company to provide
interest rate protection on at least 50% of the related senior credit facility.
To meet this requirement, in December 1997, December 1998, and January 1999, the
Company hedged $24.1 million, $30.0 million, and $25.0 million respectively of
the outstanding Term A Facility and Term B Facility. The 1997 agreement caps
LIBOR for a portion of the Term A Facility and the Term B Facility at 7% through
December 2000. The 1998 and 1999 agreements cap LIBOR for a portion of the Term
A Facility and the Term B Facility at 6% through January 2002.
F-14
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
8. LONG-TERM OBLIGATIONS (CONTINUED)
Maturities of long-term obligations subsequent to December 31, 1999 are as
follows (dollars in thousands):
<TABLE>
<S> <C>
2000........................................................ $ 6,225
2001........................................................ 8,600
2002........................................................ 9,350
2003........................................................ 13,725
2004........................................................ 16,150
Thereafter.................................................. 81,561
--------
Total of long-term maturities............................... 135,611
Amount to be amortized to debt on the Senior Subordinated
Notes..................................................... (2,398)
--------
Total....................................................... $133,213
========
</TABLE>
9. INCENTIVE COMPENSATION AND EMPLOYEE BENEFIT PLANS
INCENTIVE COMPENSATION PLANS--The Company sponsors various incentive
compensation programs, which provide for the payment of cash to key employees
based upon achievement of specific earnings goals before incentive compensation
expense.
The scheduled payment terms of the deferred compensation plans subsequent to
December 31, 1999 are as follows (dollars in thousands):
<TABLE>
<S> <C>
2000........................................................ $ 680
2001........................................................ 621
2002........................................................ 14
------
1,315
Less current maturities of deferred compensation (included
in accrued liabilities)................................... (680)
------
Long-term portion of deferred compensation.................. $ 635
======
</TABLE>
EMPLOYEE STOCK OWNERSHIP PLAN--The Company sponsors an Employee Stock
Ownership Plan ("ESOP") and related trust as a long-term benefit for
substantially all of its employees as defined in the plan documents. Under the
ESOP, there are two components to ESOP contributions. The first component is a
defined contribution pension plan whose annual contribution equals five percent
of each employee's compensation. Contributions to the ESOP are in the form of
Company stock.
The second component is a discretionary profit sharing contribution as
determined by the Board of Directors. This profit sharing contribution is to be
contributed to the ESOP in the form of Company stock. The ESOP is subject to
certain limitations and vesting requirements as defined in the plan.
SAVINGS PLAN--The Company sponsors a defined contribution 401(k) plan, which
covers substantially all of its employees. The plan provides for the deferral of
employee compensation under Section 401(k) and a Company match. Net pension
costs related to this defined contribution pension
F-15
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
9. INCENTIVE COMPENSATION AND EMPLOYEE BENEFIT PLANS (CONTINUED)
plan were approximately $57,000, $51,000, $477,500 and $429,000 from January 1,
1997 to July 10, 1997, from July 11, 1997 to January 2, 1998, in 1998 and 1999,
respectively.
Total costs to the Company for all of the above plans were approximately
$1,908,000, $1,384,000, $4,118,000 and $1,946,000 from January 1, 1997 to
July 10, 1997, from July 11, 1997 to January 2, 1998, in 1998 and 1999,
respectively.
10. STOCK OPTION PLANS
The Company has two stock option plans, which provide for the issuance of
nonqualified and incentive stock options to employees of the Company. The
Company's 1997 Stock Option Plan ("1997 Plan") authorizes the issuance of
options to purchase up to 800,000 shares of common stock of the Company. The
stock options generally vest over a five year period and may vary depending upon
the achievement of certain earnings targets. The stock options expire 10 years
from the date of the grant. Stock options are granted at exercise prices equal
to the fair market value of the Company's common stock at the date of the grant.
The Company's 1998 Stock Option Plan ("1998 Plan") authorizes the issuance
of nonqualified and incentive stock options to purchase up to 2,033,333 shares
of common stock of the Company, subject to the terms of the plan. The stock
options vest over a three to five year period and may vary depending upon the
achievement of certain earnings targets. The stock options expire 10 years from
the date of the grant. Stock options are granted at exercise prices equal to the
fair value of the Company's common stock at the date of the grant.
As of December 31, 1999, options for 1,935,192 shares were available for
future grants under the two plans. The weighted average remaining contractual
life is seven years.
The Compensation Committee of the Board of Directors has determined the fair
value of the stock options granted in 1999 and 1998. In the absence of a
"regular, active public market," and based in part on an independent valuation
of the Company's stock as of December 31, 1998 and consideration of comparable
companies, the fair value of the common stock underlying stock options granted
in fiscal 1999 was estimated to be $9.00 per share. The fair value of the common
stock underlying stock options granted in fiscal 1998 was estimated to be $3.00
per share.
F-16
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
10. STOCK OPTION PLANS (CONTINUED)
A summary of the transactions under the 1997 Plan and 1998 Plan for the
period from July 11, 1997 to January 2, 1998 and the years ended January 1, 1999
and December 31, 1999 follows (there were no options prior to July 11, 1997):
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTIONS EXERCISE
OUTSTANDING PRICE
----------- --------
<S> <C> <C>
Balance at July 11, 1997.................................... -- $ --
Options granted........................................... 706,000 3.00
Options exercised......................................... -- --
Options forfeited......................................... -- --
-------- -----
Balance at January 2, 1998.................................. 706,000 3.00
Options granted........................................... 95,512 3.00
Options exercised......................................... (13,267) 3.00
Options forfeited......................................... (28,400) 3.00
-------- -----
Balance at January 1, 1999.................................. 759,846 3.00
Options granted........................................... 230,762 9.00
Options exercised......................................... (34,447) 3.00
Options forfeited......................................... (105,733) 3.45
-------- -----
Balance at December 31, 1999................................ 850,428 $4.56
======== =====
Options exercisable at:
January 1, 1999........................................... 229,019 $3.00
December 31, 1999......................................... 222,208 $4.23
</TABLE>
Of the options outstanding as of December 31, 1999, 725,399 options were
outstanding at a range of exercise prices of $3.00 to $3.45, which approximated
their weighted average exercise price.
No compensation cost has been recognized in the financial statements because
the option exercise price was equal to the estimated fair market value of the
underlying stock on the date of grant. The weighted average fair value on the
grant date of options granted approximated the weighted average exercise price
of options for all periods presented.
The Company has determined the pro forma information as if the Company had
accounted for stock options granted under the fair value method of SFAS 123. The
binomial option pricing model was used with the following weighted average
assumptions for fiscal 1999: risk free interest rate of 6.55%; no dividend
yield; expected common stock market price volatility factor of effectively zero;
and a weighted average expected life of the options of 7 years. As prescribed by
SFAS 123, pro forma net income (loss), basic and diluted earnings (loss) per
share would have been $(15,480,000), $(1.05), $(1.05); $600,000, $0.03, $0.03;
and $(2,975,000), $(0.14), $(0.14) for the period from July 11, 1997 to
January 2, 1998 and for 1998 and 1999, respectively. As such, the impact is not
necessarily indicative of the effects on reported net income of future years.
F-17
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
11. INCOME TAXES
The components of income tax expense (benefit) attributable to continuing
operations for the periods from January 1, 1997 to July 10, 1997 and July 11,
1997 to January 2, 1998 and the years ended January 1, 1999 and December 31,
1999, consisted of the following (dollars in thousands):
<TABLE>
<CAPTION>
PREDECESSOR
---------------
JANUARY 1, 1997 JULY 11, 1997
TO TO
JULY 10, 1997 JANUARY 2, 1998 1998 1999
--------------- --------------- -------- --------
<S> <C> <C> <C> <C>
Federal:
Current........................ $ 412 $ 222 $ 580 $ (702)
Deferred....................... -- (8,514) (129) 685
------ ------- ----- -------
412 (8,292) 451 (17)
------ ------- ----- -------
State:
Current........................ 641 60 142 (1,588)
Deferred....................... -- (1,236) (183) 1,000
------ ------- ----- -------
641 (1,176) (41) (588)
------ ------- ----- -------
Income tax expense (benefit)..... $1,053 $(9,468) $ 410 $ (605)
====== ======= ===== =======
</TABLE>
The Federal and state taxes associated with the Predecessor (a former S
corporation) are directly attributable to the sale of its assets to the Company
(see Note 1).
The net deferred tax asset includes the following (dollars in thousands):
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1999 1999
---------- ------------
<S> <C> <C>
Deferred tax asset--current........................... $ 1,669 $1,520
Deferred tax asset--non current....................... 8,988 7,828
------- ------
Net deferred tax asset................................ $10,657 $9,348
======= ======
</TABLE>
F-18
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
11. INCOME TAXES (CONTINUED)
The tax effect of major temporary differences that give rise to the
Company's net deferred tax asset are as follows (dollars in thousands):
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1999 1999
---------- ------------
<S> <C> <C>
Allowance for obsolete inventory and Uniform
Capitalization...................................... $ 677 $ 687
Accrued liabilities and deferred compensation......... 859 751
Amortization of intangible assets..................... 7,775 7,249
Depreciation.......................................... (731) (1,507)
Restructuring reserves................................ 230 153
Tax credits........................................... 1,761 559
Net operating loss carryforward....................... -- 1,430
Other................................................. 86 26
------- -------
Net deferred tax asset................................ $10,657 $ 9,348
======= =======
</TABLE>
The net deferred tax asset of $7,775,000 at January 1, 1999 and $7,249,000
at December 31, 1999 ascribed to the amortization of intangible assets is
primarily attributable to the July 11, 1997 to January 2, 1998 expensing of
purchased in-process research, development and engineering costs.
The provision for income taxes differs in each of the periods and years from
the federal statutory rate due to the following:
<TABLE>
<CAPTION>
JULY 11, 1997
TO
JANUARY 2,
1998 1998 1999
------------- -------- --------
<S> <C> <C> <C>
Statutory rate....................................... 35% 35% 35%
State taxes.......................................... 3 15 (30)
Federal and state tax credits........................ -- (14) 20
Other................................................ -- 1 1
--- --- ---
Effective tax rate................................... 38% 37% 26%
=== === ===
</TABLE>
12. CAPITAL STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of common stock, $.001 par value per share. Dividends are not permitted until
certain conditions under the senior secured debt agreement are satisfied,
including payment in full of such senior debt obligations. Holders of common
stock have one vote per share.
Subscribed common stock receivable consists of promissory notes, bearing
interest at 6.4% (the "Applicable Federal Rate" at the time the notes were
issued) extended by the Company to certain management stockholders to facilitate
the purchase of 561,333 shares of common stock. The amounts under this
arrangement are due November 2007.
F-19
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
12. CAPITAL STOCK (CONTINUED)
On the date of the acquisition of Hittman (See Note 3), certain existing
stockholders purchased 5,500,000 additional shares of common stock at $3.00 per
share.
13. COMMITMENTS AND CONTINGENCIES
The Company is a party to various legal actions arising in the normal course
of business. The Company does not believe that any such pending activities
should have a material adverse effect on its results of operations or financial
position.
The Company is a party to various license agreements through 2003 to
manufacture and sell components for use in medical implants and various
commercial applications.
OPERATING LEASES--The Company is a party to various operating lease
agreements for office and manufacturing space. The Company incurred operating
lease expense of $53,000, $53,000, $621,000 and $807,000 the period January 1,
1997 to July 10, 1997 and July 11, 1997 to January 2, 1998 and in 1998 and 1999,
respectively. Included in this amount is $43,000, $43,000, $83,655 and $211,000
paid in the period January 1, 1997 to July 10, 1997 and July 11, 1997 to
January 2, 1998 and in 1998 and 1999, respectively to a related party under a
non-cancelable operating lease which expires in 2006.
If all lease extension options are exercised as expected by Company
management, minimum future annual operating lease payments over the next five
years for the Company are $724,000 in 2000; $704,000 in 2001; $702,000 in 2002;
$477,000 in 2003; and $405,000 in 2004.
14. BUSINESS SEGMENT INFORMATION
The Company operates its business in two reportable segments: medical and
commercial power sources. The medical segment designs and manufactures power
sources, capacitors and components used in implantable medical devices, which
are instruments that are surgically inserted into the body to provide diagnosis
or therapy. The commercial power sources segment designs and manufactures non-
medical power sources for use in aerospace, oil and gas exploration and
oceanographic equipment.
The Company's medical segment includes three product lines that have been
aggregated because they share similar economic characteristics and similarities
in the areas of products, production processes, types of customers, methods of
distribution and regulatory environment. The three product lines are implantable
power sources, capacitors and medical components.
The reportable segments are separately managed, and their performance is
evaluated based on income from operations. Management defines segment income
from operations as gross profit less costs and expenses attributable to segment
specific selling, general and administrative and research, development and
engineering. Non-segment specific selling, general and administrative, research,
development and engineering, interest expense, intangible amortization and
non-recurring items are not allocated to reportable segments. Revenues from
transactions between the two segments are not
F-20
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
14. BUSINESS SEGMENT INFORMATION (CONTINUED)
significant. The accounting policies of the segments are the same as those
described in Note 2. All dollars are in thousands.
<TABLE>
<CAPTION>
WILSON
GREATBATCH LTD.
(PREDECESSOR) WILSON GREATBATCH TECHNOLOGIES, INC.
--------------- -----------------------------------------------------------------------
PERIOD FROM PERIOD FROM
JANUARY 1, JULY 11,
1997 1997 YEAR YEAR THREE MONTHS THREE MONTHS
TO TO ENDED ENDED ENDED ENDED
JULY 10, JANUARY 2, JANUARY 1, DECEMBER 31, APRIL 2, MARCH 31,
1997 1998 1999 1999 1999 2000
--------------- ----------- ---------- ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Medical.......................... $24,243 $ 19,908 $ 62,356 $ 66,579 $ 17,281 $ 20,196
Commercial power sources......... 5,377 6,374 12,912 10,011 2,605 2,330
------- -------- -------- -------- -------- --------
Total revenues................... $29,620 $ 26,282 $ 75,268 $ 76,590 $ 19,886 $ 22,526
======= ======== ======== ======== ======== ========
Segment income from operations:
Medical.......................... $11,213 $ 10,213 $ 26,834 $ 26,359 $ 7,379 $ 6,849
Commercial power sources......... 1,560 2,590 4,303 2,711 707 604
------- -------- -------- -------- -------- --------
Total segment income from
operations..................... 12,773 12,803 31,137 29,070 8,086 7,453
Unallocated...................... (19,588) (37,673) (30,037) (31,384) (8,150) (8,030)
------- -------- -------- -------- -------- --------
Income (loss) before income
taxes............................ $(6,815) $(24,870) $ 1,100 $ (2,314) $ (64) $ (577)
======= ======== ======== ======== ======== ========
Expenditures for tangible
long-lived assets:
Medical.......................... $ 1,112 $ 994 $ 2,129 $ 6,700 $ 1,085 $ 1,875
Commercial power sources......... 24 79 136 72 10 3
------- -------- -------- -------- -------- --------
Total reportable segments........ 1,136 1,073 2,265 6,772 1,095 1,878
Unallocated long-lived tangible
assets......................... 798 1,583 3,942 1,680 343 40
------- -------- -------- -------- -------- --------
Consolidated expenditures........ $ 1,934 $ 2,656 $ 6,207 $ 8,452 $ 1,438 $ 1,918
======= ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, APRIL 2, MARCH 31,
1999 1999 1999 2000
---------- ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Identifiable assets, net:
Medical.......................... $ 34,481 $ 42,236 $ 34,024 $ 44,938
Commercial power sources......... 5,959 5,068 6,162 4,113
-------- -------- -------- --------
Total reportable segments........ 40,440 47,304 40,186 49,051
Unallocated assets............... 153,950 142,475 151,748 138,731
-------- -------- -------- --------
Consolidated total assets........ $194,390 $189,779 $191,934 $187,782
======== ======== ======== ========
</TABLE>
F-21
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
14. BUSINESS SEGMENT INFORMATION (CONTINUED)
Net revenues by geographic area are presented by attributing revenues from
external customers on the basis of where the products are sold. All dollars are
in thousands.
<TABLE>
<CAPTION>
WILSON
GREATBATCH LTD.
(PREDECESSOR) WILSON GREATBATCH TECHNOLOGIES, INC.
--------------- ---------------------------------------------------------------------
PERIOD FROM PERIOD FROM
JANUARY 1, JULY 11,
1997 1997 YEAR YEAR THREE MONTHS THREE MONTHS
TO TO ENDED ENDED ENDED ENDED
JULY 10, JANUARY 2, JANUARY 1, DECEMBER 31, APRIL 2, MARCH 31,
1997 1998 1999 1999 1999 2000
--------------- ----------- ---------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues by geographic area:
United States............. $23,006 $20,035 $ 58,824 $ 55,999 $ 14,504 $ 15,697
Foreign countries......... 6,614 6,247 16,444 20,591 5,382 6,829
------- ------- -------- -------- -------- --------
Consolidated net
revenues................ $29,620 $26,282 $ 75,268 $ 76,590 $ 19,886 $ 22,526
======= ======= ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, APRIL 2, MARCH 31,
1999 1999 1999 2000
---------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Long-lived assets:
United States............. $162,402 $156,409 $162,562 $155,079
Foreign countries......... -- -- -- --
-------- -------- -------- --------
Consolidated long-lived
assets.................... $162,402 $156,409 $162,562 $155,079
======== ======== ======== ========
</TABLE>
Two customers accounted for approximately 28%, 46%, 38% and 66% of sales for
the period from January 1, 1997 to July 10, 1997, the period from July 11, 1997
to January 2, 1998 and the years ended January 1, 1999 and December 31, 1999,
respectively.
15. SALE OF ASSETS
In August 1998, the Company sold the assets of a product line,
Greatbatch-Scientific, to a third party in exchange for shares of stock of the
third party. Greatbatch-Scientific sales were not significant to the
consolidated financial statements. As a result of this transaction, the Company
recorded the shares of stock acquired as an investment carried at cost, which
approximated $2.4 million. Cost of the assets sold approximated fair value and
accordingly, no gain or loss was recorded in the accompanying consolidated
financial statements as of the date of sale. The investment is included in other
assets on the consolidated balance sheet. The cost method is used to account for
the Company's investment because the Company does not have the ability to
exercise significant influence over the investee's operating and financial
policies. Management intends for this investment to be long-term. As of
December 31, 1999, a $859,000 impairment of this investment was recorded in
fiscal 1999. The write-down of the investment represents an other than temporary
decline and was based upon certain publicly available information.
F-22
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
16. RESTRUCTURING
In October 1998, management of the Company initiated a plan to restructure
Engineered Components ("EC"), a product line of the Company's medical segment.
EC ceased the production of non-medical products to concentrate on its core
customer base. The restructuring is not expected to significantly impact future
operations. A total of $825,000 in restructuring costs were charged to
operations in fiscal 1998. These restructuring costs included reserves for
estimated unsaleable inventory, losses from the planned disposal of machinery
and equipment, fees to be paid for canceling operating leases on equipment,
severance pay and benefits to employees, and other costs of the restructuring.
Approximately $585,000 of restructuring costs are included in other accrued
liabilities at January 1, 1999.
17. RELATED PARTY TRANSACTIONS
The Company had amounts due from related parties totaling $1,684,000 at
January 1, 1999 and December 31, 1999, respectively. Amounts due from related
parties is composed of notes receivable from certain executive officers and key
employees in connection with their purchase in 1997 of shares of the Company's
common stock. The notes receivable are due in November 2007 and bear interest at
6.42% per annum. Payments of interest commenced on May 1, 1998 and are due on
each May 1 thereafter until the maturity date. The notes are collateralized by
the 561,333 shares of common stock they purchased with the proceeds of the
loans. The notes receivable is shown on the consolidated balance sheets as a
reduction in stockholders' equity (see Note 12).
On July 10, 1997, the Company acquired all of the outstanding shares of
Predecessor. Equity financing was provided by entities affiliated with DLJ
Merchant Banking Partners II, L.P., an affiliate of DLJ. DLJ Capital
Funding, Inc., an affiliate of DLJ, received a customary funding fee of
approximately $1.5 million related to the issuance of the 1997 Credit Agreement.
DLJ received a customary funding fee of approximately $1.9 million related to
the issuance of the Senior Subordinated Notes and reimbursement for reasonable
out-of-pocket expenses. In August 1998, the Credit Agreement was amended and
restated to facilitate the Hittman acquisition (see Note 3). DLJ received a fee
of approximately $2.8 million related to acting as a financial advisor to the
Company in connection with the acquisition, for its underwriting fee and a bond
consent fee.
The Company may from time to time enter into other investment banking
relationships with DLJ or one of its affiliates pursuant to which DLJ or its
affiliates will receive customary fees and will be entitled to reimbursement of
reasonable disbursements and out-of-pocket expenses incurred in connection
therewith. The Company expects that any such arrangement will include provisions
for the indemnification of DLJ against certain liability, including liabilities
under the federal securities laws.
The Company is a party to an operating lease to a related party under a
non-cancelable operating lease which expires in 2006 (see Note 13).
18. SUBSEQUENT EVENTS
In February 2000, the Agreement referred to in Note 8 was amended to change
certain financial covenants. The Company believes that it will be in compliance
with the new covenants in fiscal 2000. The 75 basis point increase in Applicable
Margin (as defined in Note 8) was made permanent. The
F-23
<PAGE>
WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIODS FROM JANUARY 1, 1997 TO JULY 10, 1997 AND JULY 11, 1997
TO JANUARY 2, 1998 AND YEARS ENDED JANUARY 1, 1999 AND DECEMBER 31, 1999
18. SUBSEQUENT EVENTS (CONTINUED)
Revolving Facility was set to a maximum of $13.0 million through December 31,
2000. After that time, if the leverage targets are met, the Revolving Facility
will increase to $20.0 million.
On March 14, 2000, the Company signed a letter of intent to acquire the
stock of a battery manufacturer. Closing of the transaction, along with final
determination of a purchase price, is anticipated during the second quarter of
2000 and is subject to due diligence and the execution of a definitive purchase
agreement.
* * * * * *
F-24
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Hittman Materials and Medical Components, Inc.
We have audited the accompanying balance sheets of Hittman Materials and
Medical Components, Inc. (the "Company") as of August 7, 1998 and December 31,
1997 and the related statements of operations, stockholder's equity and cash
flows for the period from January 1, 1998 through August 7, 1998 and year ended
December 31, 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 Hittman Materials and
Medical Components, Inc. as of August 7, 1998 and December 31,1997, and the
results of its operations and its cash flows for the period and year then ended
in conformity with generally accepted accounting principles.
/S/ GRANT THORNTON LLP
Baltimore, Maryland
September 22, 1998
F-25
<PAGE>
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.
BALANCE SHEETS
AUGUST 7, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
AUGUST 7, DECEMBER 31
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 839,272 $ 800,392
Accounts receivable....................................... 2,023,195 1,709,351
Inventories............................................... 1,986,096 2,339,210
Prepaid expenses.......................................... 44,245 27,340
----------- ----------
Total current assets.................................. 4,892,808 4,876,293
PROPERTY AND EQUIPMENT--AT COST
Furniture, fixtures and equipment......................... 2,115,414 1,856,253
Equipment under capital lease............................. -- 574,117
----------- ----------
2,115,414 2,430,370
Less accumulated depreciation and amortization............ 1,558,736 1,748,887
----------- ----------
556,678 681,483
OTHER ASSETS................................................ 52,382 52,382
----------- ----------
$ 5,501,868 $5,610,158
=========== ==========
LIABILITIES
CURRENT LIABILITIES
Current maturities of capital lease obligation............ $ -- $ 45,938
Accounts payable.......................................... 402,640 278,746
Accrued compensation and employee benefits................ 536,234 874,572
Accrued expenses.......................................... 94,995 161,429
----------- ----------
Total current liabilities............................. 1,033,869 1,360,685
CAPITAL LEASE OBLIGATION, less current maturities........... -- 306,154
COMMITMENTS................................................. -- --
STOCKHOLDER'S EQUITY
Common stock--par value, $.10 per share; authorized, 1,000
shares;
issued and outstanding, 500 shares...................... 50 50
Additional paid-in capital................................ 5,858,834 299,950
Retained (deficit) earnings............................... (1,390,885) 3,643,319
----------- ----------
4,467,999 3,943,319
----------- ----------
$ 5,501,868 $5,610,158
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE>
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.
STATEMENTS OF OPERATIONS
PERIOD FROM JANUARY 1, 1998 THROUGH AUGUST 7, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
AUGUST 7, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
NET SALES................................................... $11,394,951 $18,507,437
COST OF SALES............................................... 5,072,595 7,769,408
----------- -----------
Gross profit.......................................... 6,322,356 10,738,029
SELLING AND ADMINISTRATIVE EXPENSES......................... 2,202,100 2,829,658
----------- -----------
Operating profit...................................... 4,120,256 7,908,371
OTHER INCOME (EXPENSE)
Share value plan termination costs........................ (4,907,802) --
Gain on termination of capital lease...................... 93,940 --
Interest income........................................... 25,448 27,477
Interest expense.......................................... (20,524) (37,496)
Other..................................................... 16,777 29,258
----------- -----------
(4,792,161) 19,239
----------- -----------
NET (LOSS) EARNINGS................................... $ (671,905) $ 7,927,610
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE>
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
PERIOD FROM JANUARY 1, 1998 THROUGH AUGUST 7, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON PAID-IN EARNINGS
STOCK CAPITAL (DEFICIT) TOTAL
-------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1997..................... $50 $ 299,950 $ 2,665,709 $ 2,965,709
Net earnings................................. -- -- 7,927,610 7,927,610
Dividends to stockholder..................... -- -- (6,950,000) (6,950,000)
--- ---------- ----------- -----------
BALANCE AT DECEMBER 31, 1997................... 50 299,950 3,643,319 3,943,319
Net loss..................................... -- -- (671,905) (671,905)
Contributions from stockholder............... -- 5,558,884 -- 5,558,884
Dividends to stockholder..................... -- -- (4,362,299) (4,362,299)
--- ---------- ----------- -----------
BALANCE AT AUGUST 7, 1998...................... $50 $5,858,834 $(1,390,885) $ 4,467,999
=== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE>
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.
STATEMENTS OF CASH FLOWS
PERIOD FROM JANUARY 1, 1998 THROUGH AUGUST 7, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Increase (decrease) in cash and cash equivalents
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) earnings....................................... $ (671,905) $ 7,927,610
Adjustments to reconcile net (loss) earnings to net cash
(used in) provided by operating activities
Gain on lease termination............................. (93,940) --
Depreciation and amortization......................... 152,958 323,541
Changes in assets and liabilities
Accounts receivable................................. (313,844) (177,286)
Inventories......................................... 353,114 (758,891)
Prepaid expenses.................................... (16,905) (13,340)
Accounts payable and accrued expenses............... (280,877) (56,390)
----------- -----------
(199,494) (682,366)
----------- -----------
Net cash (used in) provided by operating
activities...................................... (871,399) 7,245,244
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures...................................... (28,154) (133,964)
Other..................................................... -- (10,277)
----------- -----------
Net cash used in investing activities............. (28,154) (144,241)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of capital lease obligation..................... (27,144) (41,584)
Stockholder contributions................................. 5,327,876 --
Dividends paid............................................ (4,362,299) (6,950,000)
----------- -----------
Net cash provided by (used in) financing
activities...................................... 938,433 (6,991,584)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS......... 38,880 109,419
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 800,392 690,973
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR............. $ 839,272 $ 800,392
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for interest.................... $ 20,524 $ 37,496
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equipment contributed by stockholder...................... 231,008 --
Capital lease obligation retired.......................... 324,948 --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-29
<PAGE>
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 7, 1998 AND DECEMBER 31, 1997
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Hittman Materials and Medical Components, Inc. (the Company) is principally
engaged in the manufacturing of components for medical devices, primarily
implantables, such as pacemakers and defibrillators. Components are sold
worldwide.
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows.
1. RECEIVABLES
The Company charges off doubtful receivables as bad debts in the year they
are deemed to be uncollectible. Management believes that substantially all
remaining receivables will be collected in the ordinary course of business and,
accordingly, has not provided an allowance for doubtful accounts.
2. INVENTORIES
Inventories are valued at the lower of cost or market. Raw material costs
are determined using the first-in, first-out method. Work-in-process and
finished goods costs are determined based on accumulated average costs.
3. PROPERTY AND EQUIPMENT
Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to operations over the estimated service lives of the assets,
principally using an accelerated method.
Equipment under a capitalized lease is depreciated over the lease term,
which approximates the service lives of the equipment, using the straight-line
method.
4. REVENUE RECOGNITION
Revenues are recognized at the time finished products are shipped.
5. RESEARCH AND DEVELOPMENT
Research and development expenditures are expensed as incurred and amounted
to approximately $328,587 and $553,277 for the period ended August 7, 1998 and
year ended December 31,1997, respectively.
6. INCOME TAXES
The Company has elected to be treated as an S Corporation under the Internal
Revenue Code. As a result, income taxes on net earnings are payable personally
by the Company's stockholder and the Company is not taxed as a Corporation.
Accordingly, no provision has been made for income taxes. Had income taxes been
payable by the Company, the income tax benefit would have been approximately
$262,000 for the period ended August 7, 1998 and income tax expense of
approximately $3,092,000 for the year ended December 31, 1997.
F-30
<PAGE>
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 7, 1998 AND DECEMBER 31, 1997
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
7. STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the Company considers all
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
8. USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
9. RECLASSIFICATIONS
Certain reclassifications have been made to 1997 amounts to conform with
1998 presentation.
NOTE B--INVENTORIES
Inventories at August 7, 1998 and December 31, 1997 are comprised as
follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Raw materials........................................ $1,102,283 $1,475,330
Work-in-process...................................... 767,248 342,033
Finished goods....................................... 116,565 521,847
---------- ----------
$1,986,096 $2,339,210
========== ==========
</TABLE>
NOTE C--OTHER ASSETS
In 1993, the Company purchased a split dollar, joint life insurance policy
with a last to die provision, on the lives of the Company's sole stockholder and
his wife. The Company is the beneficiary to the extent of premiums paid.
NOTE D--CAPITAL LEASE OBLIGATION
The Company leased certain equipment from a related party under an agreement
classified as a capital lease, which expired in 2003. The related asset and
obligation were recorded using a 10% imputed interest rate. The lease was
terminated as of August 7, 1998
F-31
<PAGE>
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 7, 1998 AND DECEMBER 31, 1997
NOTE D--CAPITAL LEASE OBLIGATION (CONTINUED)
The following is a schedule of equipment under capital lease.
<TABLE>
<CAPTION>
AUGUST 7, DECEMBER 31,
1998 1997
--------- ------------
<S> <C> <C>
Equipment under capital lease.......................... $ -- $574,117
Less accumulated depreciation.......................... -- 316,501
---- --------
$ -- $257,616
==== ========
</TABLE>
NOTE E--COMMITMENTS
The Company leases its facility from a related party under a non-cancelable
operating lease agreement which expires in 2006. The Company is responsible for
the payment of property taxes, insurance, maintenance and all other expenses
associated with the operation of the facility. Rent expense of $79,277 and
$131,520 was charged to operations for the period ended August 7, 1998 and the
year ended December 31, 1997, respectively.
The Company also leases equipment under operating lease agreements which
expire at various times over the next two to five years. Rent expense of $10,958
and $16,351 was charged to operations for the period ended August 7, 1998 and
the year ended December 31, 1997, respectively.
At August 7, 1998, future minimum annual operating lease payments are as
follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ---------
<S> <C>
1998........................................................ $ 91,482
1999........................................................ 220,974
2000........................................................ 215,916
2001........................................................ 215,916
2002........................................................ 212,372
2003........................................................ 210,600
Thereafter.................................................. 1,739,405
</TABLE>
NOTE F--RETIREMENT PLAN
The Hittman Retirement Plan covers substantially all employees who have
reached the age of eighteen and completed six months of service. Eligible
employees may execute a written agreement with the Company whereby the employee
agrees to accept a salary reduction of not less than 1% nor more than 10% in
exchange for the Company's contribution to the plan. The Company must contribute
an amount based on the employee's percentage salary reduction. Additional
employer contributions are allowed within certain limitations. The Company's
contribution was approximately $112,000 in 1998 and $154,000 in 1997.
NOTE G--SHARE VALUE PLAN
In 1989, the Company instituted a share value plan wherein certain employees
can receive compensation based on the earnings of the Company and under certain
circumstances acquire shares of
F-32
<PAGE>
HITTMAN MATERIALS AND MEDICAL COMPONENTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 7, 1998 AND DECEMBER 31, 1997
NOTE G--SHARE VALUE PLAN (CONTINUED)
the Company's common stock. Compensation expense of $5,241,428 and $500,000 was
charged to operations for the period ended August 7, 1998 and the year ended
December 31, 1997, respectively, pursuant to the plan. The plan was terminated
as of August 7, 1998.
NOTE H--CONCENTRATIONS
MAJOR CUSTOMERS
During the period ended August 7, 1998, approximately 59% of sales were
derived from four major customers and in 1997, approximately 80% of sales were
derived from six major customers.
CASH BALANCES
The Company maintains its cash balances in several financial institutions
located in Maryland, which at times may exceed federally insured limits. The
Company has not experienced any losses and believes it is not exposed to any
significant credit risk on cash and cash equivalents.
NOTE I--STOCK SALE
Effective with the close of business on August 7, 1998, all of the Company's
outstanding stock was sold to Wilson Greatbatch Ltd.
F-33
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 2000
[LOGO]
WILSON GREATBATCH TECHNOLOGIES
SHARES OF COMMON STOCK
---------------------
PROSPECTUS
---------------------
JOINT BOOK-RUNNING MANAGERS
DONALDSON, LUFKIN & JENRETTE MERRILL LYNCH & CO.
----------------
BANC OF AMERICA SECURITIES LLC
U.S. BANCORP PIPER JAFFRAY
DLJDIRECT INC.
- ------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE YOU
WRITTEN INFORMATION OTHER THAN THIS PROSPECTUS OR TO MAKE REPRESENTATIONS AS TO
MATTERS NOT STATED IN THIS PROSPECTUS. YOU MUST NOT RELY ON UNAUTHORIZED
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES OR OUR
SOLICITATION OF YOUR OFFER TO BUY THE SECURITIES IN ANY JURISDICTION WHERE THAT
WOULD NOT BE PERMITTED OR LEGAL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALES MADE HEREUNDER AFTER THE DATE OF THIS PROSPECTUS SHALL CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THE AFFAIRS OF WILSON
GREATBATCH TECHNOLOGIES HAVE NOT CHANGED SINCE THE DATE HEREOF.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND REGARDING THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fees.
<TABLE>
<S> <C>
SEC registration fee........................................ $30,360
NASD filing fee............................................. 12,000
New York Stock Exchange listing fee.........................
Printing and engraving......................................
Legal fees and expenses.....................................
Accounting fees and expenses................................
Transfer agent fees.........................................
Miscellaneous expenses...................................... $
Total..................................................... $
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, or the DGCL, provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise), against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.
Our restated certificate of incorporation provides that indemnification
shall be to the fullest extent permitted by the DGCL for all current or former
directors or officers of our company.
As permitted by the DGCL, the certificate of incorporation provides that
directors of our company shall have no personal liability to our company or our
stockholders for monetary damages for breach of fiduciary duty as a director,
except (1) for any breach of the director's duty of loyalty to our company
II-1
<PAGE>
or our stockholders, (2) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violation of law, (3) under
Section 174 of the DGCL or (4) for any transaction from which a director derived
an improper personal benefit.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
We have not sold any securities, registered or otherwise, within the past
three years, except as set forth below.
In July 1997, we issued 14,547,104 shares of our common stock for an
aggregate purchase price of $43,641,312. The securities were issued in a private
placement in reliance on Section 4(2) of the Securities Act. We issued
13,910,606 shares to DLJ Merchant Banking and its affiliates, 317,667 shares to
certain members of our management and other key personnel and 318,831 shares to
The Northwestern Mutual Life Insurance Company.
In November 1997, we issued 561,333 shares of our common stock, for an
aggregate purchase price of $1,684,000, to certain members of our management and
other key personnel. The securities were issued in a private placement in
reliance on Section 4(2) of the Securities Act.
In March 1998, we issued 42,051 shares of our common stock to the Trustees
of the Wilson Greatbatch Ltd. Equity Plus Plan Stock Bonus Plan as a bonus to
the plan members. The securities were issued in a transaction exempt from
Section 5 of the Securities Act pursuant to Rule 701 under the Securities Act.
In April 1998, we issued 200 shares of our common stock to John T. Fordyce
upon his exercise of a stock option. The securities were issued in a transaction
exempt from Section 5 of the Securities Act pursuant to Rule 701 under the
Securities Act.
In July 1998, we issued 3,200 shares of our common stock to Stuart Scott
Ferguson upon his exercise of a stock option. The securities were issued in a
transaction exempt from Section 5 of the Securities Act pursuant to Rule 701
under the Securities Act.
In September 1998, we issued 800 shares of our common stock upon the
exercise of stock options. The securities were issued in a transaction exempt
from Section 5 of the Securities Act pursuant to Rule 701 under the Securities
Act. We issued 400 shares to Jack Belstadt and 400 shares to Charles Mozeko.
In September 1998, we issued 5,385,024 shares of our common stock for an
aggregate purchase price of $16,619,616. We issued 4,748,973 shares to DLJ
Merchant Banking and its affiliates. We issued 166,667 shares to East Hill
Foundation and 336,051 shares to certain members of our management and other key
personnel and their affiliates. We issued 133,333 shares to certain former
shareholders of Wilson Greatbatch Ltd. and their affiliates. The securities were
issued in a private placement in reliance on Section 4(2) of the Securities Act.
In September 1998, we issued 3,467 shares of our common stock upon the
exercise of stock options. The securities were issued in a transaction exempt
from Section 5 of the Securities Act pursuant to Rule 701 under the Securities
Act. We issued 400 shares to Robert W. Siegler, 400 shares to Richard M.
Garlapow and 2,667 shares to Gary Sfeir.
In November 1998, we issued 5,600 shares of our common stock to Robert C.
Rusin upon his exercise of a stock option. The securities were issued in a
transaction exempt from Section 5 of the Securities Act pursuant to Rule 701
under the Securities Act.
In January 1999, we issued 114,975 shares of our common stock for an
aggregate purchase price of $344,925 to The Northwestern Mutual Life Insurance
Company. The securities were issued in a private placement in reliance on
Section 4(2) of the Securities Act.
II-2
<PAGE>
In March 1999, we issued 17,935 shares of our common stock upon the exercise
of stock options. The securities were issued in a transaction exempt from
Section 5 of the Securities Act pursuant to Rule 701 under the Securities Act.
We issued 2,413 shares to Gary Whitcher and 15,522 shares to Tim H. Belstadt.
In April 1999, we issued 7,272 shares of our common stock upon the exercise
of stock options. The securities were issued in a transaction exempt from
Section 5 of the Securities Act pursuant to Rule 701 under the Securities Act.
We issued 419 shares to Gayle Fairchild, 419 shares to William Bruns and 6,434
shares to Robert W. Hammell.
In May 1999, we issued 5,594 shares of our common stock to Robert C. Jackson
upon his exercise of stock options. The securities were issued in a transaction
exempt from Section 5 of the Securities Act pursuant to Rule 701 under the
Securities Act.
In August 1999, we issued 232,450 shares of our common stock to the Trustees
of the Wilson Greatbatch Ltd. Equity Plus Plan Stock Bonus Plan upon the
exercise of stock options. The securities were issued in a transaction exempt
from Section 5 of the Securities Act pursuant to Rule 701 under the Securities
Act.
In September 1999, we issued 83,334 shares of our common stock to Fred
Hittman for an aggregate purchase price of $750,000. The securities were issued
in a private placement in reliance on Section 4(2) of the Securities Act.
In September 1999, we issued 3,647 shares of our common stock to Christine
A. Fryz upon her exercise of stock options. The securities were issued in a
transaction exempt from Section 5 of the Securities Act pursuant to Rule 701
under the Securities Act.
In December 1999, we issued 32,631 shares of our common stock for an
aggregate purchase price of $293,679 to certain members of our management and
other key personnel. The securities were issued in a private placement in
reliance on Section 4(2) of the Securities Act.
No underwriters were involved in connection with any transaction set forth
above. As noted above, the issuances of the securities described above were
deemed to be exempt from registration pursuant to Section 4(2) of the Securities
Act and Regulation D promulgated thereunder as a transaction by an issuer not
involving a public offering. In all of these transactions, the recipients of
securities represented their intention to acquire the securities for investment
purposes only and not with a view to, or for sale in connection with, any
distribution thereof and appropriate legends were affixed to the securities
issued.
II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated Bylaws
5.1* Opinion of Weil, Gotshal & Manges LLP
10.1 1997 Stock Option Plan (including form of "standard" option
agreement and form of "special" option agreement)
10.2 1998 Stock Option Plan (including form of "standard" option
agreement, form of "special" option agreement and form of
"non-standard" option agreement)
10.3 Wilson Greatbatch Ltd. Equity Plus Plan Money Purchase Plan
10.4 Wilson Greatbatch Ltd. Equity Plus Plan Stock Bonus Plan
10.5 Employment Agreement, dated as of July 9, 1997, between
Wilson Greatbatch Ltd. and Edward F. Voboril
10.6 Securities Purchase Agreement, dated as of July 10, 1997,
among WGL Acquisition Corp., Wilson Greatbatch Technologies,
Inc., DLJ Investment Partners, L.P., DLJ Investment Funding,
Inc., DLJ First ESC L.L.C., The Northwestern Mutual Life
Insurance Company and Donaldson, Lufkin & Jenrette
Securities Corporation
10.7 Registration and Anti-Dilution Agreement, dated as of July
10, 1997, among Wilson Greatbatch Technologies, Inc., DLJ
Investment Partners, L.P., DLJ Investment Funding, Inc., DLJ
First ESC L.L.C., The Northwestern Mutual Life Insurance
Company and Donaldson, Lufkin & Jenrette Securities
Corporation
10.8 Note Registration Rights Agreement, dated as of July 10,
1997, among Wilson Greatbatch Ltd., DLJ Investment Partners,
L.P., DLJ Investment Funding, Inc., DLJ First ESC L.L.C.,
DLJ LBO Plans Management Corporation, The Northwestern
Mutual Life Insurance Company and Donaldson, Lufkin &
Jenrette Securities Corporation
10.9 Amended and Restated Credit Agreement, dated as of August 7,
1998, among Wilson Greatbatch Ltd., DLJ Capital Funding,
Inc., as Syndication Agent, Heller Financial, Inc., as
Documentation Agent, Fleet National Bank, as Administrative
Agent, and various financial institutions party thereto as
Lenders
10.10 Waiver and Amendment No. 1 to Credit Agreement, dated as of
November 15, 1999, among Wilson Greatbatch Ltd., the
Consenting Obligors party thereto, DLJ Capital Funding,
Inc., as Syndication Agent, Heller Financial, Inc., as
Documentation Agent, Fleet National Bank, as Administrative
Agent, and various financial institutions party thereto as
Lenders
10.11 Amendment No. 2 to Credit Agreement, dated as of February
10, 2000, among Wilson Greatbatch Ltd., the Consenting
Obligors party thereto, DLJ Capital Funding, Inc., as
Syndication Agent, Heller Financial, Inc., as Documentation
Agent, Fleet National Bank, as Administrative Agent, and
various financial institutions party thereto as Lenders
10.12 Stockholders Agreement, dated as of July 16, 1997, among
Wilson Greatbatch Technologies, Inc., DLJ Merchant Banking
Partners II, L.P., DLJMB Funding II, Inc., DLJ Merchant
Banking Partners II-A, L.P., DLJ Diversified Partners, L.P.,
DLJ Diversified Partners-A, L.P., DLJ Millennium Partners,
L.P., DLJ First ESC L.L.C., DLJ Offshore Partners II, C.V.,
DLJ EAB Partners, L.P., U.K. Investment Plan 1997 Partners,
and the other holders of common stock of Wilson Greatbatch
Technologies Inc. party thereto
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------
<C> <S>
10.13 Amendment No. 1 to Stockholders Agreement, dated as of
October 31, 1997, among Wilson Greatbatch Technologies,
Inc., DLJ Merchant Banking Partners II, L.P., DLJMB Funding
II, Inc., DLJ Merchant Banking Partners II-A, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A,
L.P., DLJ Millennium Partners, L.P., DLJ First ESC L.L.C.,
DLJ Offshore Partners II, C.V., DLJ EAB Partners, L.P., U.K.
Investment Plan 1997 Partners, and the other holders of
common stock of Wilson Greatbatch Technologies, Inc. party
thereto
10.14 Management Stockholders Agreement, dated as of July 10,
1997, among Wilson Greatbatch Technologies, Inc., DLJ
Merchant Banking Partners II, L.P., DLJMB Funding II, Inc.,
DLJ Merchant Banking Partners II-A, L.P., DLJ Diversified
Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ
Millennium Partners, L.P., DLJ First ESC L.L.C., DLJ
Offshore Partners II, C.V., DLJ EAB Partners, L.P., U.K.
Investment Plan 1997 Partners, and the other holders of
common stock of Wilson Greatbatch Technologies, Inc. party
thereto
10.15 Subordinated Note Holders Stockholders Agreement, dated as
of July 10, 1997, among Wilson Greatbatch Technologies,
Inc., DLJ Merchant Banking Partners II, L.P., DLJMB Funding
II, Inc., DLJ Merchant Banking Partners II-A, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A,
L.P., DLJ Millennium Partners, L.P., DLJ First ESC L.L.C.,
DLJ Offshore Partners II, C.V., DLJ EAB Partners, L.P., U.K.
Investment Plan 1997 Partners, DLJ Investment Partners,
L.P., DLJ Investment Funding, Inc., The Northwestern Mutual
Life Insurance Company and Donaldson, Lufkin & Jenrette
Securities Corporation
10.16+ Supply Agreement (SVO Batteries), dated as of July 31, 1991,
between Wilson Greatbatch Ltd. and Medtronic Inc.
10.17+ Amendment No. 1 to the Supply Agreement (SVO Batteries),
dated as of June 3, 1996, between Wilson Greatbatch Ltd. and
Medtronic Inc.
10.18+ Amendment No. 2 to the Supply Agreement (SVO Batteries),
dated as of March 24, 1997, between Wilson Greatbatch Ltd.
And Medtronic Inc.
10.19+ Amendment No. 3 to the Supply Agreement (SVO Batteries),
dated as of July 22, 1999, between Wilson Greatbatch Ltd.
and Medtronic Inc.
10.20+ Capacitor Development Agreement, dated as of April 12, 2000,
between Wilson Greatbatch Ltd. and Medtronic Inc.
10.21+ Supply Agreement, dated as of February 1, 1999, among Wilson
Greatbatch Ltd. and Guidant/CRM
10.22+ Agreement, dated as of April 16, 1997, between Wilson
Greatbatch Ltd. and Pacesetter, Inc., a St. Jude Medical
Company
10.23+ License Agreement, dated August 8, 1996, between Wilson
Greatbatch Ltd. and Evans Capacitor Company
21.1 List of Subsidiaries
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Grant Thornton LLP
23.3* Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1)
24.1 Power of Attorney (included on page II-7)
27.1 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
+ Portions of the exhibit have been omitted pursuant to a request for
confidential treatment.
II-5
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
NUMBER DESCRIPTION
------ ------------------------------------------------------------
<C> <S>
S-1 Schedule II--Valuation and Qualifying Accounts
</TABLE>
All other schedules are omitted because the information required to be set
forth therein is not applicable or is shown in the financial statements or the
notes thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes:
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described in Item 14, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(b) To provide to the underwriter(s) at the closing specified in the
underwriting agreements, certificates in such denominations and registered in
such names as required by the underwriter(s) to permit prompt delivery to each
purchaser.
(c) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Clarence, New York, on
May 22, 2000.
<TABLE>
<S> <C> <C>
WILSON GREATBATCH TECHNOLOGIES, INC.
By: /s/ EDWARD F. VOBORIL
-----------------------------------------
Edward F. Voboril
President, Chief Executive Officer
and Chairman of the Board
</TABLE>
POWER OF ATTORNEY
The undersigned directors and officers of Wilson Greatbatch
Technologies, Inc. ("WGL") do hereby constitute and appoint Edward F. Voboril,
Larry T. DeAngelo and Arthur J. Lalonde, and each of them, with full power of
substitution, our true and lawful attorneys-in-fact and agents to do any and all
acts and things in our name and behalf in our capacities as directors and
officers, and to execute any and all instruments for us and in our names in the
capacities indicated below which such person may deem necessary or advisable to
enable WGL to comply with the Securities Act of 1933, as amended and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this registration statement, including specifically, but not
limited to, power and authority to sign for us, or any of us, in the capacities
indicated below and any and all amendments (including pre-effective and
post-effective amendments or any other registration statement filed pursuant to
the provision of Rule 462(b) under the Act) hereto; and we do hereby ratify and
confirm all that such person or persons shall do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ EDWARD F. VOBORIL President, Chief Executive Officer and
------------------------------- Chairman of the Board (principal executive May 22, 2000
Edward F. Voboril officer)
/s/ ARTHUR J. LALONDE Vice President, Finance and Treasurer
------------------------------- (principal financial and accounting May 22, 2000
Arthur J. Lalonde officer)
/s/ DAVID L. JAFFE Director
------------------------------- May 22, 2000
David L. Jaffe
/s/ ROBERT E. RICH Director
------------------------------- May 22, 2000
Robert E. Rich
/s/ DOUGLAS E. ROGERS Director
------------------------------- May 22, 2000
Douglas E. Rogers
/s/ HENRY WENDT Director
------------------------------- May 22, 2000
Henry Wendt
/s/ DAVID M. WITTELS Director
------------------------------- May 22, 2000
David M. Wittels
</TABLE>
II-7
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. C
ADDITIONS
----------------------
COL. B CHARGED
BALANCE AT CHARGED TO OTHER COL. D COL. E
COL. A BEGINNING TO COSTS ACCOUNTS- DEDUCTIONS- BALANCE AT
DESCRIPTION OF PERIOD & EXPENSES DESCRIBE DESCRIBE(1) END OF PERIOD
----------- ---------- ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
January 1, 1997 to July 10, 1997:
Allowance for doubtful accounts...... $ 118 $ 63 $ -- $ (53) $ 128
Valuation for LIFO inventory......... 1,173 -- -- (90) 1,083
July 11, 1997 to January 2, 1998:
Allowance for doubtful accounts...... 128 4 -- (9) 123
Valuation for LIFO inventory......... 1,083 -- -- (1,083)(2) --
Fiscal 1998:
Allowance for doubtful accounts...... 123 111 -- (37) 197
Fiscal 1999:
Allowance for doubtful accounts...... 197 179 -- (157) 219
</TABLE>
- ------------------------
(1) Accounts written off, net of collections on accounts receivable.
(2) Represents the LIFO inventory valuation applicable to Predecessor adjusted
in accordance with the purchase method of accounting.
S-1
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated Bylaws
5.1* Opinion of Weil, Gotshal & Manges LLP
10.1 1997 Stock Option Plan (including form of "standard" option
agreement and form of "special" option agreement)
10.2 1998 Stock Option Plan (including form of "standard" option
agreement, form of "special" option agreement and form of
"non-standard" option agreement)
10.3 Wilson Greatbatch Ltd. Equity Plus Plan Money Purchase Plan
10.4 Wilson Greatbatch Ltd. Equity Plus Plan Stock Bonus Plan
10.5 Employment Agreement, dated as of July 9, 1997, between
Wilson Greatbatch Ltd. and Edward F. Voboril
10.6 Securities Purchase Agreement, dated as of July 10, 1997,
among WGL Acquisition Corp., Wilson Greatbatch Technologies,
Inc., DLJ Investment Partners, L.P., DLJ Investment Funding,
Inc., DLJ First ESC L.L.C., The Northwestern Mutual Life
Insurance Company and Donaldson, Lufkin & Jenrette
Securities Corporation
10.7 Registration and Anti-Dilution Agreement, dated as of July
10, 1997, among Wilson Greatbatch Technologies, Inc., DLJ
Investment Partners, L.P., DLJ Investment Funding, Inc., DLJ
First ESC L.L.C., The Northwestern Mutual Life Insurance
Company and Donaldson, Lufkin & Jenrette Securities
Corporation
10.8 Note Registration Rights Agreement, dated as of July 10,
1997, among Wilson Greatbatch Ltd., DLJ Investment Partners,
L.P., DLJ Investment Funding, Inc., DLJ First ESC L.L.C.,
DLJ LBO Plans Management Corporation, The Northwestern
Mutual Life Insurance Company and Donaldson, Lufkin &
Jenrette Securities Corporation
10.9 Amended and Restated Credit Agreement, dated as of August 7,
1998, among Wilson Greatbatch Ltd., DLJ Capital Funding,
Inc., as Syndication Agent, Heller Financial, Inc., as
Documentation Agent, Fleet National Bank, as Administrative
Agent, and various financial institutions party thereto as
Lenders
10.10 Waiver and Amendment No. 1 to Credit Agreement, dated as of
November 15, 1999, among Wilson Greatbatch Ltd., the
Consenting Obligors party thereto, DLJ Capital Funding,
Inc., as Syndication Agent, Heller Financial, Inc., as
Documentation Agent, Fleet National Bank, as Administrative
Agent, and various financial institutions party thereto as
Lenders
10.11 Amendment No. 2 to Credit Agreement, dated as of February
10, 2000, among Wilson Greatbatch Ltd., the Consenting
Obligors party thereto, DLJ Capital Funding, Inc., as
Syndication Agent, Heller Financial, Inc., as Documentation
Agent, Fleet National Bank, as Administrative Agent, and
various financial institutions party thereto as Lenders
10.12 Stockholders Agreement, dated as of July 16, 1997, among
Wilson Greatbatch Technologies, Inc., DLJ Merchant Banking
Partners II, L.P., DLJMB Funding II, Inc., DLJ Merchant
Banking Partners II-A, L.P., DLJ Diversified Partners, L.P.,
DLJ Diversified Partners-A, L.P., DLJ Millennium Partners,
L.P., DLJ First ESC L.L.C., DLJ Offshore Partners II, C.V.,
DLJ EAB Partners, L.P., U.K. Investment Plan 1997 Partners,
and the other holders of common stock of Wilson Greatbatch
Technologies, Inc. party thereto
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<C> <S>
10.13 Amendment No. 1 to Stockholders Agreement, dated as of
October 31, 1997, among Wilson Greatbatch Technologies,
Inc., DLJ Merchant Banking Partners II, L.P., DLJMB Funding
II, Inc., DLJ Merchant Banking Partners II-A, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A,
L.P., DLJ Millennium Partners, L.P., DLJ First ESC L.L.C.,
DLJ Offshore Partners II, C.V., DLJ EAB Partners, L.P., U.K.
Investment Plan 1997 Partners, and the other holders of
common stock of Wilson Greatbatch Technologies, Inc. party
thereto
10.14 Management Stockholders Agreement, dated as of July 10,
1997, among Wilson Greatbatch Technologies, Inc., DLJ
Merchant Banking Partners II, L.P., DLJMB Funding II, Inc.,
DLJ Merchant Banking Partners II-A, L.P., DLJ Diversified
Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ
Millennium Partners, L.P., DLJ First ESC L.L.C., DLJ
Offshore Partners II, C.V., DLJ EAB Partners, L.P., U.K.
Investment Plan 1997 Partners, and the other holders of
common stock of Wilson Greatbatch Technologies, Inc. party
thereto
10.15 Subordinated Note Holders Stockholders Agreement, dated as
of July 10, 1997, among Wilson Greatbatch Technologies,
Inc., DLJ Merchant Banking Partners II, L.P., DLJMB Funding
II, Inc., DLJ Merchant Banking Partners II-A, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A,
L.P., DLJ Millennium Partners, L.P., DLJ First ESC L.L.C.,
DLJ Offshore Partners II, C.V., DLJ EAB Partners, L.P., U.K.
Investment Plan 1997 Partners, DLJ Investment Partners,
L.P., DLJ Investment Funding, Inc., The Northwestern Mutual
Life Insurance Company and Donaldson, Lufkin & Jenrette
Securities Corporation
10.16+ Supply Agreement (SVO Batteries), dated as of July 31, 1991,
between Wilson Greatbatch Ltd. and Medtronic Inc.
10.17+ Amendment No. 1 to the Supply Agreement (SVO Batteries),
dated as of June 3, 1996, between Wilson Greatbatch Ltd. and
Medtronic Inc.
10.18+ Amendment No. 2 to the Supply Agreement (SVO Batteries),
dated as of March 24, 1997, between Wilson Greatbatch Ltd.
and Medtronic Inc.
10.19+ Amendment No. 3 to the Supply Agreement (SVO Batteries),
dated as of July 22, 1999, between Wilson Greatbatch Ltd.
and Medtronic Inc.
10.20+ Capacitor Development Agreement, dated as of April 12, 2000,
between Wilson Greatbatch Ltd. and Medtronic Inc.
10.21+ Supply Agreement, dated as of February 1, 1999, among Wilson
Greatbatch Ltd. and Guidant/ CRM
10.22+ Agreement, dated as of April 16, 1997, between Wilson
Greatbatch Ltd. and Pacesetter, Inc., a St. Jude Medical
Company
10.23+ License Agreement, dated August 8, 1996, between Wilson
Greatbatch Ltd. and Evans Capacitor Company
21.1 List of Subsidiaries
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Grant Thornton LLP
23.3* Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1)
24.1 Power of Attorney (included on page II-7)
27.1 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
+ Portions of the exhibit have been omitted pursuant to a request for
confidential treatment.
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WGL HOLDINGS, INC.
WGL HOLDINGS, INC., a corporation duly incorporated by the
filing of its original Certificate of Incorporation with the Secretary of State
of the State of Delaware on June 13, 1997 (the "Corporation"), desiring to
integrate into a single instrument all the provisions of said Certificate of
Incorporation now in effect and operative, and desiring further to amend said
Certificate of Incorporation, such restated Certificate of Incorporation having
been duly adopted in accordance with Section 245 of the General Corporation Law
of the State of Delaware, hereby certifies as follows:
1. Said Certificate of Incorporation is hereby restated,
integrated and further amended to read in its entirety as follows:
FIRST: The name of the Corporation is "WILSON GREATBATCH
TECHNOLOGIES, INC." (the "Corporation").
SECOND: The registered office of the Corporation in the State
of Delaware is located at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, County of New Castle. The registered agent for the
Corporation at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the
Delaware General Corporation Law, as amended from time to time (the "DGCL").
FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is 200,000,000 shares,
consisting of
(i) 100,000,000 shares of Preferred Stock, $.001 par
value per share, and
(ii) 100,000,000 shares of Common Stock, $.001 par value
per share.
Except as otherwise provided by law, the shares of capital
stock of the Corporation, regardless of class, may be issued by the Corporation
from time to time in such amounts, for such lawful consideration and for such
corporate purpose(s) as the Board of Directors may from time to time determine.
Shares of Preferred Stock may be issued from time to time in
one or more series of any number of shares as may be determined from time to
time by the Board of
<PAGE>
Directors; provided that the aggregate number of shares issued and not canceled
of any and all such series shall not exceed the total number of shares of
Preferred Stock authorized by this paragraph FOURTH. Each series of Preferred
Stock shall be distinctly designated. The Board of Directors is hereby expressly
granted authority to fix, in the resolution or resolutions providing for the
issuance of a particular series of Preferred Stock, the voting powers, if any,
of each such series, and the designations, preferences and relative,
participating, optional and other special rights of each such series, and the
qualifications, limitations and restrictions thereof to the fullest extent now
or hereafter permitted by this Restated Certificate of Incorporation and the
laws of the State of Delaware.
Subject to the provisions of applicable law or of the
Corporation's By-Laws with respect to the closing of the transfer books or the
fixing of a record date for the determination of stockholders entitled to vote,
and except as otherwise provided by law, by this Restated Certificate of
Incorporation or by the resolution or resolutions of the Board of Directors
providing for the issuance of any series of Preferred Stock as aforesaid, the
holders of outstanding shares of Common Stock shall exclusively possess the
voting power for the election of directors of the Corporation and for all other
purposes as prescribed by applicable law, with each holder of record of shares
of Common Stock having voting power being entitled to one vote for each share of
Common Stock registered in his or its name on the books, registers and/or
accounts of the Corporation.
FIFTH: A director of the Corporation shall not be personally
liable either to the Corporation or to any stockholder for monetary damages for
breach of fiduciary duty as a director, except (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, or (ii) for
acts or omissions which are not taken or omitted to be taken in good faith or
which involve intentional misconduct or knowing violation of the law, or (iii)
for any matter in respect of which such director shall be liable under Section
174 of Title 8 of the DGCL or any amendment or successor provision thereto, or
(iv) for any transaction from which the director shall have derived an improper
personal benefit. Neither the amendment nor the repeal of this paragraph FIFTH
nor the adoption of any provision of this Restated Certificate of Incorporation
inconsistent with this paragraph FIFTH shall eliminate or reduce the effect of
this paragraph FIFTH in respect of any matter occurring, or any cause of action,
suit or claim that, but for this paragraph FIFTH, would accrue or arise prior to
such amendment, repeal or adoption of an inconsistent provision.
The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to, or testifies in, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative in nature, by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding to
the fullest extent and
2
<PAGE>
in the manner set forth in and permitted by the DGCL and any other applicable
law, as from time to time in effect, and the Corporation may adopt bylaws or
enter into agreements with any such person for the purpose of providing for such
indemnification. Such right of indemnification shall not be deemed exclusive of
any other rights to which such director, officer, employee or agent may be
entitled apart from the foregoing provisions.
SIXTH: The Board of Directors is expressly authorized to
amend, alter, change, adopt or repeal any or all of the By-Laws of the
Corporation.
* * * *
2. Upon the filing of this Restated Certification of
Incorporation with the Secretary of State of the State of Delaware (the
"Effective Time"), each share of the Common Stock, par value $.001 per share, of
the Corporation issued and outstanding immediately prior to the Effective Time
shall, automatically by operation of law and without any further action on the
part of the Corporation or any holders of shares of capital stock of the
Corporation, be converted into and become one-third (1/3) validly issued, fully
paid and non-assessable share of the Common Stock, par value $.001 per share, of
the Corporation authorized for issuance pursuant to this Restated Certificate of
Incorporation.
3. This Restated Certificate of Incorporation has been duly
adopted in accordance with the provisions of sections 242 and 245 of the DGCL,
and has been duly adopted by written consent of stockholders of the Corporation
in accordance with the provisions of Section 228(a) of the DGCL.
3
<PAGE>
IN WITNESS WHEREOF, WGL HOLDINGS, INC. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by
Edward F. Voboril, its President and Chief Executive Officer, and attested to by
Larry T. DeAngelo, its Vice President, Administration and Secretary, on this
19th day of May, 2000.
WGL HOLDINGS, INC.
By: /s/ Edward F. Voboril
-----------------------------------------
Edward F. Voboril
President and Chief Executive Officer
Attest:
[CORPORATE SEAL]
/s/ Larry T. DeAngelo
- ----------------------------
Larry T. DeAngelo
Vice President, Administration and
Secretary
4
<PAGE>
Exhibit 3.2
AMENDED & RESTATED
BY-LAWS
OF
WILSON GREATBATCH TECHNOLOGIES, INC.
(A DELAWARE CORPORATION)
Article 1
STOCKHOLDERS
Section 1.1 ANNUAL MEETINGS. The annual meeting (the "Annual
Meeting of Stockholders") of the holders of such classes or series of capital
stock as are entitled to notice thereof and to vote thereat pursuant to the
provisions of the Restated Certificate of Incorporation (the "Certificate of
Incorporation") of Wilson Greatbatch Technologies, Inc. (the "Corporation") for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on such date as may be designated
by resolution of the Board of Directors or, in the event that no such date is so
designated, on the fourth Thursday in May of each year, at such hour (within
ordinary business hours) as shall be stated in the notice of the meeting. If the
day so designated shall be a legal holiday, then such meeting shall be held on
the next succeeding business day. Each Annual Meeting of Stockholders shall be
held at such place, within or without the State of Delaware, as shall be
determined by the Board of Directors.
The Annual Meeting of Stockholders may be adjourned by the
presiding officer of the meeting for any reason (including, if the presiding
officer determines that it would be in the best interests of the Corporation, to
extend the period of time for the solicitation of proxies) from time to time and
place to place until such presiding officer shall determine that the business to
be conducted at the meeting is completed, which determination shall be
conclusive.
At the Annual Meeting of Stockholders, the only business which
shall be conducted thereat shall be that which shall have been properly brought
before the meeting. To be properly brought before an annual meeting, business
must be (a) specified in the notice of meeting (or any supplement or addendum
thereto) given by or at the direction of the Board of Directors, (b) brought
before the meeting by or at the direction of the Board of Directors or (c)
otherwise brought before the meeting by a stockholder in the manner prescribed
immediately below. For business to be properly brought before an annual meeting
by a stockholder, the stockholder must have delivered timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received by the Secretary at the
principal executive offices of the Corporation, not less than 90 calendar days
in advance of the anniversary date of the previous year's annual meeting of
stockholders (or if there was no such prior annual meeting, not less than 90
calendar days prior to the date which represents the fourth Thursday in May of
the current year); PROVIDED, HOWEVER, that in the
<PAGE>
event that the date of the annual meeting is advanced by more than 20 days, or
delayed by more than 60 days, from such anniversary date, then, to be considered
timely, notice by the stockholder must be received not later than the close of
business on the later of (x) the 90th day prior to such annual meeting or (y)
the seventh day following the date on which notice of the date of the annual
meeting was mailed to stockholders or public disclosure thereof was otherwise
made.
A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the business desired to be transacted, (b) the name and
address, as they appear on the Corporation's most recent stockholder lists, of
the stockholder proposing such proposal, (c) the class and number of shares of
capital stock of the Corporation that are beneficially owned by the stockholder,
and (d) any material interest of the stockholder in such business. Any
stockholder who desires to propose any matter at an annual meeting shall, in
addition to the aforementioned requirements described in clauses (a) through
(d), comply in all material respects with the content and procedural
requirements of Rule 14a-8 of Regulation 14A under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), irrespective of whether the
Corporation is then subject to such Rule or said Exchange Act. In addition, if
the stockholder's ownership of shares of the Corporation, as set forth in the
notice, is solely beneficial (and not of record) documentary evidence
satisfactory to the Corporation of such ownership must accompany the notice in
order for such notice to be considered validly and timely received.
Notwithstanding anything in these By-laws to the contrary, no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section 1.1. The presiding officer at an annual
meeting shall, if the facts warrant, determine and declare to the meeting that
any business which was not properly brought before the meeting is out of order
and shall not be transacted at the meeting.
Section 1.2 SPECIAL MEETINGS. Special meetings of stockholders
for the transaction of such business as may properly come before the meeting may
be called by order of the Board of Directors or by stockholders holding together
at least a majority of all the shares of the Corporation entitled to vote at the
meeting, and shall be held at such date and time, within or without the State of
Delaware, as may be specified by such order. Whenever the directors shall fail
to fix such place, the meeting shall be held at the principal executive office
of the Corporation.
Section 1.3 NOTICE OF MEETINGS. Written notice of all meetings
of the stockholders, stating the place, date and hour of the meeting and the
place within the city or other municipality or community at which the list of
stockholders may be examined, shall be mailed or delivered to each stockholder
not less than 10 nor more than 60 days prior to the meeting. Notice of any
special meeting shall state with reasonable specificity the purpose or purposes
for which the meeting is to be held and the business proposed to be transacted
thereat.
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Section 1.4 STOCKHOLDER LISTS. The officer who has charge of
the stock ledger of the Corporation shall prepare and make, at least 10 days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 calendar days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present in person thereat.
Section 1.5 QUORUM. Except as otherwise provided by law or the
Corporation's Certificate of Incorporation, a quorum for the transaction of
business at any meeting of stockholders shall consist of the holders of record
of a majority of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote at the meeting, present in person or by proxy. At
all meetings of the stockholders at which a quorum is present, all matters,
except as otherwise provided by law, the Certificate of Incorporation or these
By-laws, shall be decided by the vote of the holders of a majority of the shares
entitled to vote thereat present in person or by proxy. If there be no such
quorum, the holders of a majority of such shares so present or represented may
adjourn the meeting from time to time, without further notice, until a quorum
shall have been obtained. When a quorum is once present it is not broken by the
subsequent withdrawal from the meeting of any stockholder.
Section 1.6 ORGANIZATION. Meetings of stockholders shall be
presided over by the Chairman, if any, or if none or in the Chairman's absence
the Vice-Chairman, if any, or if none or in the Vice-Chairman's absence the
President, if any, or if none or in the President's absence a Vice-President,
or, if none of the foregoing is present, by a chairman to be chosen by the
stockholders entitled to vote who are present in person or by proxy at the
meeting. The Secretary of the Corporation, or in the Secretary's absence an
Assistant Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, the presiding officer of the
meeting shall appoint any person present to act as secretary of the meeting.
Section 1.7 VOTING; PROXIES; REQUIRED VOTE. (a) At each
meeting of stockholders, every stockholder shall be entitled to vote in person
or by proxy appointed by instrument in writing, subscribed by such stockholder
or by such stockholder's duly authorized attorney-in-fact (but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period), and, unless the Certificate of Incorporation
provides otherwise, shall have one vote for each share of stock entitled to vote
registered in the name of such stockholder on the books of the Corporation on
the applicable record date fixed by applicable law or pursuant to these By-laws
in respect of each matter properly presented to the meeting. At all elections of
directors the voting may but need not be by ballot and a plurality of the votes
cast there
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shall elect. Except as otherwise required by law or the Certificate of
Incorporation, any other action shall be authorized by a majority of the votes
cast.
(b) Any action required or permitted to be taken at
any meeting of stockholders may, except as otherwise required by law or the
Certificate of Incorporation, be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of record of the issued and outstanding capital
stock of the Corporation having a majority of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted, and the writing or writings are filed with the
permanent records of the Corporation. Prompt notice of the taking of corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
Section 1.8 INSPECTORS. The Board of Directors shall, in
advance of any meeting, appoint one or more inspectors of election to act at the
meeting or any adjournment thereof and make a written report thereof. If an
inspector or inspectors are not so appointed, the person presiding at the
meeting shall appoint one or more inspectors. In case any person who may be
appointed as an inspector fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, before entering upon the discharge
of his or her duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares represented
at a meeting, the existence of a quorum and the validity of proxies and ballots,
(iii) count all votes and ballots, (iv) determine and retain for a reasonable
period a record of the disposition of any challenges made to any determination
by the inspectors and (v) certify their determination of the number of shares
represented at the meeting, and their count of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of the duties of the inspectors.
Article 2
BOARD OF DIRECTORS
Section 2.1 GENERAL POWERS. The business, property and affairs
of the Corporation shall be managed by, or under the direction of, the Board of
Directors.
Section 2.2 QUALIFICATION; NUMBER; TERM; REMUNERATION. (a)
Each director shall be at least 18 years of age. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The number of directors constituting the entire Board shall be no
fewer than one (1) and no more than twelve (12), or such other number as may be
fixed from time to time by action of the stockholders or Board of Directors, one
of whom may be selected by the Board of Directors to be its Chairman. The use of
the phrase "entire Board" herein refers to the total number of directors which
the Corporation would have if there were no vacancies.
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(b) Directors who are elected at an annual meeting of
stockholders, and directors who are elected in the interim to fill vacancies and
newly created directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until their
earlier resignation or removal.
(c) Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 2.3 NOMINATION OF DIRECTORS. Nominations for the
election of directors may be made by the Board of Directors or a committee
appointed by the Board of Directors or, to the extent permitted by this Section
2.3, by any holder of record of capital stock of the Corporation entitled to
vote generally in the election of directors. Any stockholder entitled to vote
generally in the election of directors may nominate one or more persons for
election as directors only in accordance with the procedures specified in the
next sentence, and only if written notice of such stockholder's intent to make
such nomination or nominations has been received, either by hand delivery or by
United States mail, postage prepaid, by the Secretary of the Corporation not
later than (i) with respect to an election to be held at the Annual Meeting of
Stockholders, not less than 90 calendar days prior to the anniversary date of
the date of the immediately preceding annual meeting (or if there was no such
prior annual meeting, not less than 90 calendar days prior to the date which
represents the fourth Thursday in May of the current year), and (ii) with
respect to an election to be held at a special meeting of stockholders for the
election of directors, the close of business on the fifth calendar day following
the date on which notice of such meeting is first delivered to stockholders.
Each such notice from a stockholder shall set forth: (a) the name and address of
the stockholder who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the stockholder is a holder of record
of capital stock of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all contracts, arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy or information statement filed pursuant to the Exchange Act
and the rules and regulations promulgated thereunder (or any subsequent
provisions replacing such Exchange Act, rules or regulations); and (e) the
consent of each nominee to serve as a director of the Corporation if so elected.
The presiding officer of the meeting may refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedure.
Section 2.4 QUORUM AND MANNER OF VOTING. Except as otherwise
provided by law, a majority of the entire Board shall constitute a quorum. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting from
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time to time to another time and place without notice. The vote of the majority
of the directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors.
Section 2.5 PLACES OF MEETINGS. Meetings of the Board of
Directors may be held at any place within or without the State of Delaware, as
may from time to time be fixed by resolution of the Board of Directors, or as
may be specified in the notice of meeting.
Section 2.6 ANNUAL MEETING. Following the annual meeting of
stockholders, the newly elected Board of Directors shall meet for the purpose of
the election of officers and the transaction of such other business as may
properly come before the meeting. Such meeting may be held without notice
immediately after the annual meeting of stockholders at the same place at which
such stockholders' meeting is held.
Section 2.7 REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times and places as the Board of Directors shall
from time to time by resolution determine. Notice need not be given of regular
meetings of the Board of Directors held at times and places fixed by resolution
of the Board of Directors.
Section 2.8 SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, President
or by a majority of the directors then in office.
Section 2.9 NOTICE OF MEETINGS. A notice of the place, date
and time and the purpose or purposes of each meeting of the Board of Directors
shall be given to each director by mailing the same at least two days before the
special meeting, or by telegraphing or telephoning the same or by delivering the
same personally not later than the day before the day of the meeting.
Section 2.10 ORGANIZATION. At all meetings of the Board of
Directors, the Chairman, if any, or if none or in the Chairman's absence or
inability to act the President, or in the President's absence or inability to
act any Vice-President who is a member of the Board of Directors, or in such
Vice-President's absence or inability to act a chairman chosen by the directors,
shall preside. The Secretary of the Corporation shall act as secretary at all
meetings of the Board of Directors when present, and, in the Secretary's
absence, the presiding officer may appoint any person to act as secretary.
Section 2.11 RESIGNATION AND REMOVAL. Any director may resign
at any time upon written notice to the Corporation and such resignation shall
take effect upon receipt thereof by the President or Secretary, unless otherwise
specified in the resignation. Subject to the rights of the holders of any series
of Preferred Stock or any other class of capital stock of the Corporation (other
than the Common Stock) then outstanding, any director may be removed, with or
without cause, by the holders of a majority of the shares of stock outstanding
and entitled to vote for the election of directors.
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Section 2.12 VACANCIES. Unless otherwise provided in these
By-laws, vacancies on the Board of Directors, whether caused by resignation,
death, disqualification, removal, an increase in the authorized number of
directors or otherwise, may be filled only by the affirmative vote of a majority
of the remaining directors, although less than a quorum, or by a sole remaining
director, and any directors so chosen shall hold office until their successors
are elected and qualified.
Section 2.13 ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all the directors consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors.
Article 3
INDEMNIFICATION
Section 3.1 INDEMNIFICATION. (a) The Corporation shall
indemnify, to the fullest extent permitted by Section 145 of the General
Corporation Law of the State of Delaware, as amended from time to time, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that the person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, have reasonable cause to believe that his or her
conduct was unlawful.
Section 3.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that the person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture or trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by the person in connection with the
defense or settlement of such action or suit if the person acted in good faith
and in a manner the person reasonably believed to be in or not opposed to the
best interests of
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the Corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3.3 INDEMNIFICATION AGAINST EXPENSES. To the extent
that a present or former director or officer of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 3.1 and 3.2 hereof, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
Section 3.4 BOARD DETERMINATIONS. Any indemnification under
Sections 3.1 and 3.2 hereof (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee or agent is
proper in the circumstances because the person has met the applicable standard
of conduct set forth in Sections 3.1 and 3.2 hereof. Such determination shall be
made, with respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who were not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such disinterested directors
or if such directors so direct, by independent legal counsel in a written
opinion, or (4) by the stockholders.
Section 3.5 ADVANCEMENT OF EXPENSES. Expenses including
attorneys' fees incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation as authorized by law or in this section. Such
expenses incurred by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the Corporation deems
appropriate.
Section 3.6 NONEXCLUSIVE. The indemnification and advancement
of expenses provided by, or granted pursuant to, this section shall not be
deemed exclusive of any other rights to which any director, officer, employee or
agent of the Corporation seeking indemnification or advancement of expenses may
be entitled under any other bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent of the Corporation and shall inure to the benefit of the heirs, executors
and administrators of such a person.
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Section 3.7 INSURANCE. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any such capacity or
arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of applicable statutes, the certificate of incorporation or this
section.
Section 3.8 CERTAIN DEFINITIONS. For purposes of this Article
3, (a) references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger that, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued; (b) references to "other enterprises" shall include
employee benefit plans; (c) references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and (d)
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation that
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to any employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
section.
Section 3.9 CHANGE IN GOVERNING LAW. In the event of any
amendment or addition to Section 145 of the General Corporation Law of the State
of Delaware or the addition of any other section to such law that limits
indemnification rights thereunder, the Corporation shall, to the extent
permitted by the General Corporation Law of the State of Delaware, indemnify to
the fullest extent authorized or permitted hereunder, any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Corporation), by
reason of the fact that he or she is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding.
indemnify, to the fullest extent permitted by Section 145 of the General
Corporation Law of the State of Delaware, as amended from time to time, all
persons whom it may indemnify pursuant thereto and in the manner prescribed
thereby.
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Article 4
COMMITTEES
Section 4.1 APPOINTMENT. From time to time the Board of
Directors by a resolution adopted by a majority of the entire Board may appoint
any committee or committees for any purpose or purposes, to the extent lawful,
which shall have powers as shall be determined and specified by the Board of
Directors in the resolution of appointment.
Section 4.2 PROCEDURES, QUORUM AND MANNER OF ACTING. Each
committee shall fix its own rules of procedure, and shall meet where and as
provided by such rules or by resolution of the Board of Directors. Except as
otherwise provided by law, the presence of a majority of the then appointed
members of a committee shall constitute a quorum for the transaction of business
by that committee, and in every case where a quorum is present the affirmative
vote of a majority of the members of the committee present shall be the act of
the committee. Each committee shall keep minutes of its proceedings, and actions
taken by a committee shall be reported to the Board of Directors.
ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if all the members of the committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the committee.
Section 4.3 AUDIT COMMITTEE. The Board of Directors, by
resolution, shall appoint from its members an Audit Committee consisting of at
least three directors, each of which shall be independent of management and free
from any relationship that, in the opinion of the Board of Directors, would
interfere with the exercise of independent judgment as a committee member. The
Audit Committee shall:
(a) Prior to each Annual Meeting of Stockholders, submit a
recommendation in writing to the Board of Directors for the selection of
independent public accountants to be appointed by the Board of Directors in
advance of the Annual Meeting of Stockholders, subject to ratification or
rejection by the stockholders at such meeting;
(b) Consult, at least annually, with the independent public
accountants with regard to the proposed plan of audit and from time to time
consult privately with them and also with the internal auditor and the principal
accounting officer with regard to the adequacy of internal controls;
(c) Upon completion of the report of audit by the independent
public accountants and before the date of the Annual Meeting of Stockholders,
(i) review the financial statements of the Corporation, and (ii) meet with the
independent public accountants and review with them the results of their audit
and any recommendations made to the management; and
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(d) Periodically, but at least annually, review the terms of
all material transactions and arrangements entered into between the Corporation
and its affiliates and subsidiaries.
Section 4.4 TERM; TERMINATION. In the event any person shall
cease to be a director of the Corporation, such person shall simultaneously
therewith cease to be a member of any committee appointed by the Board of
Directors.
Article 5
OFFICERS
Section 5.1 ELECTION AND QUALIFICATIONS. The Board of
Directors shall elect the officers of the Corporation, which shall include a
Chief Executive Officer, a President and a Secretary, and may include, by
election or appointment, a Chief Financial Officer, one or more Vice-Presidents
(any one or more of whom may be given an additional designation of rank or
function), a Controller, a Treasurer and such Assistant Secretaries, Assistant
Controllers and Assistant Treasurers and such other officers as the Board may
from time to time deem proper. Each officer shall have such powers and duties as
may be prescribed by these By-laws and as may be assigned by the Board of
Directors or the President. Any two or more offices may be held by the same
person except the offices of President and Secretary.
Section 5.2 TERM OF OFFICE AND REMUNERATION. The term of
office of all officers shall be one year and until their respective successors
have been elected and qualified, but any officer may be removed from office,
either with or without cause, at any time by the Board of Directors. Any vacancy
in any office arising from any cause may be filled for the unexpired portion of
the term by the Board of Directors. The remuneration of all officers of the
Corporation may be fixed by the Board of Directors or in such manner as the
Board of Directors shall provide.
Section 5.3 RESIGNATION; REMOVAL. Any officer may resign at
any time upon written notice to the Corporation and such resignation shall take
effect upon receipt thereof by the President or Secretary, unless otherwise
specified in the resignation. Any officer shall be subject to removal, with or
without cause, at any time by vote of a majority of the entire Board.
Section 5.4 CHAIRMAN OF THE BOARD. The Chairman of the Board
of Directors shall preside at all meetings of the stockholders and at all
meetings of the Board of Directors and shall see that all orders and resolutions
of the Board of Directors are carried into effect. The Chairman of the Board of
Directors, as such, shall not be an officer of the Corporation.
Section 5.5 PRESIDENT AND CHIEF EXECUTIVE OFFICER. The
President shall be the chief executive officer of the Corporation, and shall
have such duties as customarily pertain to that office. The President shall have
general management and supervision of the property, business and affairs of the
Corporation and over its other
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officers; may appoint and remove assistant officers and other agents and
employees, other than officers referred to in Section 5.1; and may execute and
deliver in the name of the Corporation powers of attorney, contracts, bonds and
other obligations and instruments.
Section 5.6 CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall in general have all duties incident to such position, including,
without limitation, the organization and review of all accounting, tax and
related financial matters involving the Corporation, the implementation of
appropriate Corporation financial controls and procedures, and the supervision
and assignment of the duties of all other financial officers and personnel
employed by the Corporation, and shall have such other duties as may be assigned
by the Board of Directors or the President.
Section 5.7 VICE-PRESIDENT. A Vice-President may execute and
deliver in the name of the Corporation contracts and other obligations and
instruments pertaining to the regular course of the duties of said office, and
shall have such other authority as from time to time may be assigned by the
Board of Directors or the President.
Section 5.8 TREASURER. The Treasurer shall in general have all
duties incident to the position of Treasurer and such other duties as may be
assigned by the Board of Directors or the President.
Section 5.9 SECRETARY. The Secretary shall in general have all
the duties incident to the office of Secretary and such other duties as may be
assigned by the Board of Directors or the President.
Section 5.10 CONTROLLER. The Controller shall in general have
all the duties incident to the office of Controller and such other duties as may
be assigned by the Board of Directors or the Chief Financial Officer.
Section 5.11 ASSISTANT OFFICERS. Any assistant officer shall
have such powers and duties of the officer such assistant officer assists as
such officer or the Board of Directors shall from time to time prescribe.
Article 6
BOOKS AND RECORDS
Section 6.1 LOCATION. The books and records of the Corporation
may be kept at such place or places within or outside the State of Delaware as
the Board of Directors or the respective officers in charge thereof may from
time to time determine. The record books containing the names and addresses of
all stockholders, the number and class of shares of stock held by each and the
dates when they respectively became the owners of record thereof shall be kept
by the Secretary or by the transfer agent or registrar as shall be designated by
the Board of Directors.
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Section 6.2 ADDRESSES OF STOCKHOLDERS. Notices of meetings and
all other corporate notices may be delivered personally or mailed to each
stockholder at the stockholder's address as it appears on the records of the
Corporation.
Section 6.3 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF
RECORD. (a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not be more than 60 nor less than 10 days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which date shall not be
more than 10 days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. If no record date has been fixed by
the Board of Directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in this State,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by this chapter, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall be not more than 60 days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
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Article 7
CERTIFICATES REPRESENTING STOCK
Section 7.1 CERTIFICATES; SIGNATURES. The shares of the
Corporation shall be represented by certificates, provided that the Board of
Directors of the Corporation may provide by resolution or resolutions that some
or all of any or all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate, signed by or
in the name of the Corporation by the Chairman or Vice-Chairman of the Board of
Directors, or the President or Vice-President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, representing the number of shares registered in certificate form.
Any and all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. The name of the holder of record of the
shares represented thereby, with the number of such shares and the date of
issue, shall be entered on the books of the Corporation.
Section 7.2 TRANSFERS OF STOCK. Upon compliance with any
provisions restricting the transfer or registration of transfer of shares of
stock, including, without limitation, restrictions set forth in the Certificate
of Incorporation, shares of capital stock shall be transferable on the books of
the Corporation only by the holder of record thereof in person, or by duly
authorized attorney or legal representative, upon surrender and cancellation of
certificates for a like number of shares (or upon compliance with the provisions
of Section 7.5, if applicable), properly endorsed, and the payment of all taxes
due thereon. Upon such surrender to the Corporation or a transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer (or upon compliance
with the provisions of Section 7.5, if applicable) and of compliance with any
transfer restrictions applicable thereto contained in an agreement to which the
Corporation is a party or of which the Corporation has knowledge by reason of
legend with respect thereto placed on any such surrendered stock certificate, it
shall be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
Section 7.3 OWNERSHIP OF SHARES. The Corporation shall be
entitled to treat the holder of record of any shares or shares of capital stock
of the Corporation as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by law.
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Section 7.4 FRACTIONAL SHARES. The Corporation may, but shall
not be required to, issue certificates for fractions of a share where necessary
to effect authorized transactions, or the Corporation may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive such
fractions are determined, or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder except as therein
provided.
The Board of Directors shall have power and authority to make
all such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Corporation.
Section 7.5 LOST, STOLEN OR DESTROYED CERTIFICATES. The
Corporation may issue a new certificate of stock in place of any certificate,
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Board of Directors may require the owner of any lost, stolen or destroyed
certificate, or his legal representative, to give the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate.
Article 8
DIVIDENDS
Subject always to the provisions of law and the Certificate of
Incorporation, the Board of Directors shall have full power to determine whether
any, and, if any, what part of any, funds legally available for the payment of
dividends shall be declared as dividends and paid to stockholders; the division
of the whole or any part of such funds of the Corporation shall rest wholly
within the lawful discretion of the Board of Directors, and it shall not be
required at any time, against such discretion, to divide or pay any part of such
funds among or to the stockholders as dividends or otherwise; and before payment
of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, thinks proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the Board of Directors
shall think conducive to the interest of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
Article 9
RATIFICATION
Any transaction, questioned in any law suit on the ground of
lack of authority, defective or irregular execution, adverse interest of
director, officer or stockholder, non-disclosure, miscomputation, or the
application of improper principles or practices of accounting, may be ratified
before or after judgment, by the Board of
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Directors or by the stockholders, and if so ratified shall have the same force
and effect as if the questioned transaction had been originally duly authorized.
Such ratification shall be binding upon the Corporation and its stockholders and
shall constitute a bar to any claim or execution of any judgment in respect of
such questioned transaction.
Article 10
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of
the Corporation and the year of its incorporation, and shall be in such form and
contain such other words and/or figures as the Board of Directors shall
determine. The corporate seal may be used by printing, engraving, lithographing,
stamping or otherwise making, placing or affixing, or causing to be printed,
engraved, lithographed, stamped or otherwise made, placed or affixed, upon any
paper or document, by any process whatsoever, an impression, facsimile or other
reproduction of said corporate seal.
Article 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall
be subject to change, by the Board of Directors. Unless otherwise fixed by the
Board of Directors, the fiscal year of the Corporation shall be the calendar
year.
Article 12
WAIVER OF NOTICE
Whenever notice is required to be given by these By-laws or by
the Certificate of Incorporation or by law, a written waiver thereof, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
Article 13
BANK ACCOUNTS, DRAFTS, CONTRACTS, ETC.
Section 13.1 BANK ACCOUNTS AND DRAFTS. In addition to such
bank accounts as may be authorized by the Board of Directors, the primary
financial officer or any person designated by said primary financial officer,
whether or not an employee of the Corporation, may authorize such bank accounts
to be opened or maintained in the name and on behalf of the Corporation as he
may deem necessary or appropriate, payments from such bank accounts to be made
upon and according to the check of the Corporation in accordance with the
written instructions of said primary financial officer, or other person so
designated by the Treasurer.
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Section 13.2 CONTRACTS. The Board of Directors may authorize
any person or persons, in the name and on behalf of the Corporation, to enter
into or execute and deliver any and all deeds, bonds, mortgages, contracts and
other obligations or instruments, and such authority may be general or confined
to specific instances.
Section 13.3 PROXIES; POWERS OF ATTORNEY; OTHER INSTRUMENTS.
The Chairman, the President or any other person designated by either of them
shall have the power and authority to execute and deliver proxies, powers of
attorney and other instruments on behalf of the Corporation in connection with
the rights and powers incident to the ownership of stock by the Corporation. The
Chairman, the President or any other person authorized by proxy or power of
attorney executed and delivered by either of them on behalf of the Corporation
may attend and vote at any meeting of stockholders of any company in which the
Corporation may hold stock, and may exercise on behalf of the Corporation any
and all of the rights and powers incident to the ownership of such stock at any
such meeting, or otherwise as specified in the proxy or power of attorney so
authorizing any such person. The Board of Directors, from time to time, may
confer like powers upon any other person.
Section 13.4 FINANCIAL REPORTS. The Board of Directors may
appoint the primary financial officer or other fiscal officer or any other
officer to cause to be prepared and furnished to stockholders entitled thereto
any special financial notice and/or financial statement, as the case may be,
which may be required by any provision of law.
Article 14
AMENDMENTS
The Board of Directors shall have power to alter, adopt, amend
or repeal By-laws. By-laws adopted by the Board of Directors may be repealed or
changed, and new By-laws made, by the affirmative vote of the holders of a
majority of the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote at any regular meeting of stockholders, or at
any special meeting of stockholders, provided notice of such alteration,
adoption, amendment or repeal shall have been stated in the notice of such
meeting, and the stockholders may prescribe that any By-law made by them shall
not be altered, amended or repealed by the Board of Directors.
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Exhibit 10.1
WGL HOLDINGS, INC.
1997 STOCK OPTION PLAN
1. PURPOSES
WGL HOLDINGS, INC., a Delaware corporation (the "Company"), desires to
afford certain of its key employees, and the key employees of any parent
corporation or subsidiary corporation of the Company now existing or hereafter
formed or acquired, who are responsible for the continued growth of the Company,
an opportunity to acquire a proprietary interest in the Company, and thus to
create in such key employees an increased interest in and a greater concern for
the welfare of the Company and its subsidiaries.
The Company, by means of this 1997 Stock Option Plan (the "Plan"),
seeks to retain the services of persons now holding key positions and to secure
the services of persons capable of filling such positions.
The stock options ("Options") offered pursuant to the Plan are a matter
of separate inducement and are not in lieu of any salary or other compensation
for the services of any key employee.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
meet the requirements of Incentive Options ("Non-Qualified Options"). The
Company makes no warranty, however, as to the qualification of any Option as an
Incentive Option.
2. NUMBER OF SHARES SUBJECT TO THE PLAN
The total number of shares of common stock of the Company which may be
purchased or acquired pursuant to the exercise of Options granted under the Plan
shall not exceed, in the aggregate, 2,400,000 shares of the authorized common
stock, par value $.001 per share, of the Company (the "Shares").
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Shares available for issuance acquired under the Plan may be either
authorized but unissued Shares or Shares of issued stock held in the Company's
treasury, or both, at the discretion of the Company. If and to the extent that
Options granted under the Plan expire or terminate without having been
exercised, the Shares covered by such expired or terminated Options may again be
subject to an Option under the Plan.
Except as provided in Articles 18 and 22 and subject to Article 3, the
Company may, from time to time during the period beginning on September 16, 1997
(the "Effective Date") and ending on September 15, 2007 (the "Termination
Date"), grant Incentive Options and Non-Qualified Options to certain key
employees of the Company or any subsidiary corporation of the Company under the
terms hereinafter set forth.
As used in the Plan, the terms "parent corporation" and "subsidiary
corporation" shall mean a corporation within the definitions of such terms
contained in Sections 424(e) and 424(f) of the Code, respectively.
3. ADMINISTRATION
The board of directors of the Company (the "Board of Directors") shall
administer the Plan, provided that the Board of Directors may, from time to
time, designate from any of its members a Compensation Committee, which shall be
the Compensation Committee of the Board of Directors (the "Committee"), to
administer the Plan. A majority of the members of the Committee shall constitute
a quorum, and the act of a majority of the members of the Committee shall be the
act of the Committee. Any member of the Committee may be removed at any time
either with or without cause by resolution adopted by the Board of Directors,
and any vacancy on the Committee at any time may be filled by resolution adopted
by the Board of Directors. If the Board of Directors administers the Plan, then
reference herein, or in any option agreement granting Options pursuant to the
Plan, to the Committee shall mean the Committee or the Board of Directors, as
appropriate.
Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine the key employees to whom Options
shall be granted (the "Optionholders"), the time when such Options shall be
granted, the number of Shares which shall be subject to each Option, the
purchase price or exercise price of each Option, the period(s) during which such
Options shall be
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exercisable (whether in whole or in part) and the other terms and provisions
thereof (which need not be identical).
Subject to the express provisions of the Plan, the Committee also shall
have authority to construe the Plan and the Options granted thereunder, to amend
the Plan and the Options granted thereunder, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the Options (which need not be identical) granted thereunder and
to make all other determinations necessary or advisable for administering the
Plan.
The Committee may establish performance standards for determining the
periods during which Options shall be exercisable, including without limitation
standards based on the earnings of the Company and its subsidiaries for various
fiscal periods. The Committee shall define such performance criteria and, from
time to time, the Committee in its sole discretion and in administering the Plan
may make adjustments to such performance criteria for any fiscal period so that
extraordinary or unusual charges or credits, acquisitions, mergers,
consolidations, and other corporate transactions and other elements of or
factors influencing the calculations of earnings or any other performance
standard do not distort or affect the operation of the Plan in a manner
inconsistent with the achievement of its purpose.
The determination of the Committee on matters referred to in this
Article 3 shall be conclusive.
The Committee may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such legal counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company. No member or former member of
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award of Options granted hereunder.
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4. ELIGIBILITY
Options may be granted only to key employees of the Company or any
subsidiary corporation of the Company.
The Plan does not create a right in any employee to participate in the
Plan, nor does it create a right in any employee to have any Options granted to
him or her.
5. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Option granted hereunder
shall be such amount as the Committee shall determine in good faith to be the
fair market value (as defined below) per Share at the date the Option is
granted; PROVIDED, HOWEVER, that the exercise price shall not be less than $1.00
per share; and PROVIDED FURTHER, that in the case of an Incentive Option granted
to a key employee who, at the time such Incentive Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any subsidiary corporation or parent
corporation of the Company, the purchase price for each Share shall not be less
than one hundred ten percent (110%) of the fair market value per Share at the
date the Incentive Option is granted. In determining the stock ownership of a
key employee for any purpose under the Plan, the rules of Section 424(d) of the
Code shall be applied, and the Committee may rely on representations of fact
made to it by the key employee and believed by it to be true.
For purposes of the Plan, "fair market value," with respect to any date
of determination, means:
(i) if the Shares are listed or admitted to trading on a
national securities exchange in the United States or reported through
The Nasdaq Stock Market ("Nasdaq") then the closing sale price on such
exchange or Nasdaq on such date or, if no trading occurred or
quotations were available on such date, then on the closest preceding
date on which the Shares were traded or quoted; or
(ii) if not so listed or reported but a regular, active public
market for the Shares exists (as determined in the sole discretion of
the Committee, whose decision shall be conclusive and binding), then
the average of the
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closing bid and ask quotations per Share in the over-the-counter market
for such Shares in the United States on such date or, if no such
quotations are available on such date, then on the closest date
preceding such date. For purposes of the foregoing, a market in which
trading is sporadic and the ask quotations generally exceed the bid
quotations by more than 15% shall not be deemed to be a "regular,
active public market."
If the Committee determines that a regular, active public market does
not exist for the Shares, the Committee shall determine the fair market value of
the Shares in its good faith judgment based on the total number of shares of
Common Stock then outstanding, taking into account all outstanding options,
warrants, rights or other securities exercisable or exchangeable for, or
convertible into, shares of Common Stock.
For purposes of this Plan, the determination by the Committee of the
fair market value of a Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company shall
cause the purchased Shares to be issued only when it shall have received the
full purchase price for the Shares in cash or by certified check; PROVIDED,
HOWEVER, that in lieu of cash, the holder of an Option may, if and to the extent
the terms of such Option so provide and to the extent permitted by applicable
law, exercise an Option in whole or in part, by delivering to the Company (a)
shares of common stock of the Company (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by such holder having a fair market value equal to the exercise price
applicable to that portion of the Option being exercised or (b) such other form
of payment as the Committee shall permit in its sole discretion at the time of
grant of the Option.
6. USE OF PROCEEDS
The cash proceeds of the sale of Shares pursuant to the Plan are to be
added to the general funds of the Company and used for its general corporate
purposes as the Board of Directors shall determine.
7. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
An Option shall be exercisable at such times, in such amounts and
during such period or periods as the Committee shall determine at the date of
the grant of
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such Option; PROVIDED, HOWEVER, that an Option shall not be exercisable after
the expiration of ten (10) years from the date such Option is granted; and
PROVIDED, FURTHER, that an Incentive Option granted to a key employee who, at
the time such Incentive Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any subsidiary corporation or parent corporation of the Company,
shall not be exercisable after the expiration of five (5) years from the date
such Incentive Option is granted.
The Committee shall have the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, rights to exercise any
Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
Except as otherwise provided under the Code, to the extent that the
aggregate fair market value of stock for which Incentive Options (under all
stock option plans of the Company and of any parent corporation or subsidiary
corporation of the Company) are exercisable for the first time by a key employee
during any calendar year exceeds one hundred thousand dollars ($100,000), such
Options shall be treated as Non-Qualified Options. For purposes of this
limitation, (a) the fair market value of the stock is determined as of the time
the Option is granted, and (b) Options will be taken into account in the order
in which they were granted.
In no event shall an Option granted hereunder be exercised for a
fraction of a Share.
8. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the Optionholder
as to all or part of the Shares covered thereby by the giving of written notice
of the exercise thereof to the Corporate Secretary of the Company at the
principal business office of the Company, specifying the number of Shares to be
purchased and specifying a business day not more than fifteen (15) days from the
date such notice is given for the payment of the purchase price against delivery
of the Shares being purchased. Subject to the terms of Articles 13, 14, 15 and
16, the Company shall cause certificates for the Shares so purchased to be
delivered to the
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Optionholder at the principal business office of the Company, against payment of
the full purchase price, on the date specified in the notice of exercise.
9. NON-TRANSFERABILITY OF OPTIONS
No Option granted hereunder shall be transferable, whether by operation
of law or otherwise, other than by will or the laws of descent and distribution
and any Option granted hereunder shall be exercisable during the lifetime of the
Optionholder only by such Optionholder. Except to the extent provided above,
Options may not be assigned, transferred, pledged, hypothecated or disposed of
in any way (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process, and any purported assignment in
contravention hereof shall be void and of no effect. Notwithstanding the
foregoing, at the discretion of the Committee, a Non-Qualified Option may be
transferred by a key employee solely to such key employee's spouse, siblings,
parents, children and grandchildren or trusts for the benefit of such persons or
partnerships, corporations, limited liability companies or other entities owned
solely by such persons, subject to any restrictions included in the award of the
Non-Qualified Option.
10. TERMINATION OF EMPLOYMENT
Upon termination of employment of any Optionholder with the Company and
all subsidiary corporations, an Option previously granted to the Optionholder,
unless otherwise specified by the Committee in the Option, shall, to the extent
not theretofore exercised, terminate and become null and void, provided that:
(a) if the Optionholder shall die while in the employ of such
corporation or during either the six (6) month or thirty (30) day
period, whichever is applicable, specified in clauses (b) and (c)
below, and at a time when such Optionholder was entitled to exercise an
Option as herein provided, the legal representative of such
Optionholder, or such person who acquired such Option by bequest or
inheritance or by reason of the death of the Optionholder, shall have
the right to exercise such Option so granted, to the extent not
theretofore exercised, in respect of any or all of such number of
Shares that such Optionholder is entitled to purchase pursuant to such
Option at the time of such Optionholder's death, at any time up to and
including one (1) year after the date of death;
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(b) if the employment of any Optionholder to whom such Option
shall have been granted shall terminate by reason of the Optionholder's
disability (as defined below), and while such Optionholder is entitled
to exercise such Option as herein provided, such Optionholder shall
have the right to exercise such Option so granted, to the extent not
theretofore exercised, in respect of any or all of such number of
Shares that such Optionholder is entitled to purchase pursuant to such
Option at the time of such termination, at any time up to and including
six (6) months after the date of termination of employment; and
(c) if the employment of any Optionholder to whom such Option
shall have been granted shall terminate by reason of dismissal by the
employer other than for cause (as defined below), and while such
Optionholder is entitled to exercise such Option as herein provided,
such Optionholder shall have the right to exercise such Option so
granted, to the extent not theretofore exercised, in respect of any or
all of such number of Shares that such Optionholder is entitled to
purchase pursuant to such Option at the time of such termination, at
any time up to and including thirty (30) days after the date of
termination of employment.
If an Optionholder (i) voluntarily terminates his or her employment,
UNLESS such termination is a voluntary retirement from the Company and the Board
of Directors approves such retirement, or (ii) is discharged for cause, any
Option granted hereunder shall, unless otherwise specified by the Committee in
the Option, forthwith terminate with respect to any unexercised portion thereof.
If an Option granted hereunder shall be exercised by the legal
representative of a deceased or disabled Optionholder, or by a person who
acquired an Option granted hereunder by bequest or inheritance or by reason of
death of any Optionholder, written notice of such exercise shall be accompanied
by a certified copy of letters testamentary or equivalent proof of the right of
such legal representative or other person to exercise such Option.
For all purposes of the Plan, the term "for cause" shall mean, (i) with
respect to an Optionholder who is a party to a written employment agreement with
the Company, which agreement contains a definition of "for cause" or "cause" (or
words of like import) for purposes of termination of employment thereunder by
the Company, "for cause" or "cause" as defined in the most recent of such
agreements, or (ii) in all other cases, as determined by the Committee, in its
sole
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discretion, that one or more of the following has occurred: (A) any intentional
or willful failure, or failure due to bad faith, by such Optionholder to
substantially perform his or her employment duties which shall not have been
corrected within 30 days following written notice thereof, (B) any misconduct by
such Optionholder which is significantly injurious to the Company or any of its
subsidiaries or affiliates, (C) any breach by such Optionholder of any covenant
contained in the instrument pursuant to which an Option is granted, (D) such
Optionholder's conviction of, or entry of a plea of NOLO CONTENDERE in respect
of, any felony or a misdemeanor which results in, or is reasonably expected to
result in, economic or reputational injury to the Company or any of its
subsidiaries or affiliates.
For all purposes of the Plan, the term "disability" means (i) with
respect to an Optionholder who is a party to a written employment agreement with
the Company, which agreement contains a definition of "disability" or "permanent
disability" (or words of like import) for purposes of termination of employment
thereunder by the Company, "disability" or "permanent disability" as defined in
the most recent of such agreements, or (ii) in all other cases, means such
Optionholder's inability to perform substantially his or her duties and
responsibilities to the Company or any of its subsidiaries by reason of physical
or mental illness, injury, infirmity or condition: (A) for a continuous period
for 120 days or one or more periods aggregating 150 days in any twelve-month
period; (B) at such time as such Optionholder is eligible to receive disability
income payments under any long-term disability insurance plan maintained by the
Company or any of its subsidiaries; or (C) at such earlier time as such
Optionholder or the Company submits medical evidence, in the form of a
physician's certification, that such Optionholder has a physical or mental
illness, injury, infirmity or condition that will likely prevent such
Optionholder from substantially performing his duties and responsibilities for
120 days or longer.
A termination of employment shall not be deemed to occur by reason of
(i) the transfer of an Optionholder from employment by the Company to employment
by a subsidiary corporation of the Company or (ii) the transfer of an
Optionholder from employment by a subsidiary corporation of the Company to
employment by the Company or by another subsidiary corporation of the Company.
Notwithstanding anything to the contrary contained in this Article 10,
in no event shall any person be entitled to exercise any Option after the
expiration of the period of exercisability of such Option as specified therein.
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11. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN
TRANSACTIONS
For purposes of this Plan, a "change in control" of the Company occurs
if: (a) any "Person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended ("Exchange Act")), other than DLJ
Merchant Banking II, Inc. or any of its affiliates or any combination thereof
(collectively, the "DLJ Entities"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 50% of the total combined voting power of all classes of capital stock of
the Company normally entitled to vote for the election of directors of the
Company; or (b) the Board of Directors shall approve a sale of all or
substantially all of the assets of the Company, in one transaction or a series
of related transactions, other than to an entity owned or controlled by the DLJ
Entities; or (c) the Board of Directors shall approve any merger or
consolidation of the Company in which the shareholders of the Company
immediately prior to such transaction own, in the aggregate, less than 50% of
the total combined voting power of all classes of capital stock of the surviving
entity normally entitled to vote for the election of directors of the surviving
entity.
Upon the occurrence of a transaction described in the preceding
paragraph, each Option may, at the discretion of the Committee, be terminated
within a specified number of days after notice to the holder of such Option, and
each such holder will receive, in respect of each Share for which such Option
then is exercisable, an amount equal to the excess of the then fair market value
of such Share over the exercise price per Share, payable in the same
consideration received by the shareholders of the Company upon the closing of
such transaction.
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or other like change in capital structure of the Company, the Committee
shall make such adjustments to each outstanding Option that it, in its sole
discretion, deems appropriate. The term "Shares" after any such change shall
refer to the securities, cash and/or property then receivable upon exercise of
an Option. In addition, in the event of any such change, the Committee shall
make any further adjustment as may be appropriate to the maximum number of
Shares which may be acquired under the Plan pursuant to the exercise of Options,
the maximum number of Shares for which Options may be granted to any individual
under the Plan, the minimum
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exercise price per Share for Options to be granted under the Plan, and the
number of Shares and prices per Share subject to outstanding Options as shall be
equitable to prevent dilution or enlargement of rights under such Options, and
the determination of the Committee as to these matters shall be conclusive.
12. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation thereof to continue the employment of any Optionholder
and it shall not impose any obligation on the part of any Optionholder to remain
in the employ of the Company or of any subsidiary corporation thereof.
13. SECURITIES LAW MATTERS
Except as hereinafter provided, the Committee may require an
Optionholder, as a condition upon exercise of any Option granted hereunder, to
execute and deliver to the Company a written statement, in form satisfactory to
the Committee, in which the Optionholder represents and warrants that Shares are
being acquired for such Optionholder's own account for investment only and not
with a view to the resale or distribution thereof. The Optionholder shall, at
the request of the Committee, be required to represent and warrant in writing
that any subsequent resale or distribution of Shares by the Optionholder shall
be made only pursuant to either (i) a Registration Statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"), which
Registration Statement has become effective and is current with regard to the
Shares being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the
Optionholder shall, prior to any offer of sale or sale of such Shares, obtain a
prior favorable written opinion of counsel, in form and substance satisfactory
to counsel for the Company, as to the application of such exemption thereto. The
foregoing restriction shall not apply to (i) issuances by the Company so long as
the Shares being issued are registered under the Securities Act and a prospectus
in respect thereof is current or (ii) re-offerings of Shares by affiliates of
the Company (as defined in Rule 405 or any successor rule or regulation
promulgated under the Securities Act) if the Shares being re-offered are
registered under the Securities Act and a prospectus in respect thereof is
current.
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14. ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES
Subject to Articles 13, 15 and 16, upon any exercise of an Option which
may be granted hereunder and payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option and shall be delivered to or upon the order of such
person.
The Company may endorse such legend or legends upon the certificates
for Shares issued pursuant to the Plan and, if a transfer agent has been engaged
by the Company, may issue such "stop transfer" instructions to its transfer
agent in respect of such Shares as, in its discretion, it determines to be
necessary or appropriate to (i) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, or (ii)
implement the provisions of the Plan and any agreement between the Company and
the Optionholder with respect to such Shares, or (iii) permit the Company to
determine the occurrence of a disqualifying disposition, as described in Section
421(b) of the Code, of Shares transferred upon exercise of an Incentive Option
granted under the Plan.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer.
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
15. WITHHOLDING TAXES
The Company will require, as a condition to an Optionholder exercising
an Option granted hereunder, that the Optionholder reimburse the corporation
that employs such Optionholder for any taxes required by any government to be
withheld or otherwise deducted and paid by such corporation in respect of the
issuance or disposition of such Shares. In lieu thereof, the corporation that
employs such Optionholder shall have the right to withhold the amount of such
taxes from any other sums due or to become due from such corporation to the
Optionholder upon such terms and conditions as the Committee shall prescribe.
The corporation that employs such Optionholder may, in its discretion, hold the
stock certificate to which such Optionholder is entitled upon the exercise of an
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<PAGE>
Option as security for the payment of such withholding tax liability, until cash
sufficient to pay that liability has been accumulated.
16. LISTING OF SHARES AND RELATED MATTERS
The Committee may delay the issuance or delivery of Shares pursuant to
any Option granted hereunder if it determines that listing, registration or
qualification of Shares or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option under the Plan or the issuance of Shares
thereunder, until such listing, registration, qualification, consent or approval
shall have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Committee.
17. AMENDMENT OF THE PLAN
The Committee may, from time to time, amend the Plan, provided that no
amendment shall be made, without the approval of the stockholders of the
Company, that will (i) increase the total number of Shares reserved for Options
under the Plan or the amount of Options that may be granted to any key employee
(in each case, other than an increase resulting from an adjustment provided for
in Article 11), (ii) reduce the exercise price of any Option granted hereunder
below the price required by Article 5, (iii) modify the provisions of the Plan
relating to eligibility, or (iv) materially increase the benefits accruing to
participants under the Plan. The rights and obligations under any Option granted
before amendment of the Plan or any unexercised portion of such Option shall not
be adversely affected by amendment of the Plan or such Option without the
consent of the holder of such Option.
18. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options may not be
granted while the Plan is suspended or after it is terminated. Rights and
obligations under any Option granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except upon the
consent of the person to whom the Option was granted. The power of the Committee
to construe and administer any Options granted prior to the termination or
suspension of the Plan
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<PAGE>
under Article 3 nevertheless shall continue after such termination or during
such suspension.
19. GOVERNING LAW
The Plan and such Options as may be granted thereunder and all related
matters shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware from time to time obtaining.
20. PARTIAL INVALIDITY
The invalidity or illegibility of any provision hereof shall not be
deemed to affect the validity of any other provision.
21. EFFECTIVE DATE
The Plan shall become effective at 9:00 a.m., New York City Time, on
the Effective Date, provided the Plan is approved by the stockholders of the
Company at an annual meeting or any special meeting of stockholders of the
Company within 12 months of the Effective Date, and such approval of
stockholders shall be a condition to the right of each eligible key employee to
receive any Options under the Plan. Any Options granted under the Plan prior to
such approval of stockholders shall be effective as of the date of the grant
(unless, with respect to any Option, the Committee specifies otherwise at the
time of the grant), but no such Option may be exercised prior to such
stockholder approval, and if stockholders fail to approve the Plan as specified
hereunder, any such Option shall be cancelled.
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"STANDARD" OPTION
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
_________________, 1997
[Name of Optionee]
[Address]
Re: GRANT OF INCENTIVE STOCK OPTION
Dear _________________:
The Board of Directors of WGL Holdings, Inc. (the "COMPANY") has
authorized and approved the 1997 Stock Option Plan (the "PLAN"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"COMMITTEE") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "SHARES") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.
1. GRANT OF OPTION. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "OPTION") to purchase, in accordance
<PAGE>
with the terms and conditions set forth in the Plan, but subject to the
limitations set forth herein and in the Plan, an aggregate of __________ Shares
of the Company (the "TOTAL SHARES") at a price of $1.00 per Share, such option
price being, in the judgment of the Committee, not less than one hundred percent
(100%) of the fair market value of such Share at the date hereof. The Option is
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, but it is specifically
understood that no warranty is made to you as to such qualification.
2. VESTING OF OPTION. Subject to the provisions and limitations of the
Plan, the number of Shares of stock for which this Option may be exercised shall
be determined in accordance with this Section 2.
a. ESTABLISHMENT OF EBITDA TARGETS. For each of the
fiscal years ending on December 31 of 1997, 1998, 1999, 2000
and 2001, the Company has established target amounts (each a
"TARGET AMOUNT"), floor amounts (each, a "FLOOR AMOUNT") and
ceiling amounts (each, a "CEILING AMOUNT") for EBITDA (as
defined below) set forth below:
FLOOR AMOUNT TARGET AMOUNT CEILING AMOUNT
1997 $15,000,000 $16,200,000 $17,400,000
1998 $17,000,000 $18,600,000 $20,200,000
1999 $22,000,000 $26,000,000 $30,000,000
2000 $25,000,000 $29,000,000 $33,000,000
2001 $28,000,000 $34,000,000 $40,000,000
b. IF EBITDA EQUALS TARGET AMOUNT. If the EBITDA of
the Company for a fiscal year is equal to the Target Amount
for such fiscal year, this Option may be exercised to purchase
__________ Shares (I.E., 20% of the Total Shares), subject to
adjustment in accordance with Section 2(f) and subject to
Section 2(g).
c. IF EBITDA IS AT LEAST EQUAL TO FLOOR AMOUNT BUT
LESS THAN TARGET AMOUNT. If the EBITDA of the Company for a
fiscal year is at least equal to the Floor Amount, but less
than the Target Amount, for such fiscal year, then, subject to
adjustment in accordance
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<PAGE>
with Section 2(f) and subject to Section 2(g), this Option may
be exercised to purchase a number of Shares equal to the sum
of (i) __________ (I.E., 15% of the Total Shares) plus (ii)
that number of Shares equal to the product of (x) __________
(I.E., 5% of the Total Shares) and (y) a fraction, the
numerator of which shall be equal to the excess of the EBITDA
of the Company for such fiscal year over the Floor Amount for
such fiscal year and the denominator of which is equal to the
excess of Target Amount for such fiscal year over the Floor
Amount for such fiscal year.
d. IF EBITDA EXCEEDS TARGET AMOUNT. If the EBITDA of
the Company for a fiscal year exceeds the Target Amount for
such fiscal year, then, subject to adjustment in accordance
with Section 2(f) and subject to Section 2(g), this Option may
be exercised to purchase a number of Shares equal to the sum
of (i) __________ (I.E., 20% of the Total Shares) plus (ii)
that number of shares equal to the product of (x) __________
(I.E., 5% of the Total Shares) and (y) a fraction (which shall
not be greater than 1), the numerator of which shall be equal
to the excess of the EBITDA of the Company for such fiscal
year over the Target Amount for such fiscal year and the
denominator of which shall be equal to the excess of the
Ceiling Amount for such fiscal year over the Target Amount for
such fiscal year.
e. IF EBITDA EXCEEDS CEILING AMOUNT; CARRYBACK TO
PRIOR YEAR. If the EBITDA of the Company for such fiscal year
exceeds the Target Amount for such fiscal year (such excess,
an "EXCESS AMOUNT"), and the Target Amount for the immediately
preceding fiscal year (the "PRIOR YEAR") exceeded the EBITDA
of the Company for the Prior Year (such excess, a "PRIOR YEAR
SHORTFALL AMOUNT"), the (i) Excess Amount for such fiscal year
may be carried back to the Prior Year (but in an amount not in
excess of the Prior Year Shortfall Amount), (ii) the EBITDA
for such Prior Year shall be redetermined, and (iii) the
number of Shares for which this Option may be exercised shall
be increased based upon the EBITDA for the Prior Year as so
redetermined.
f. IF EBITDA IS LESS THAN FLOOR AMOUNT; CARRYFORWARD
FROM PRIOR YEAR. If the Floor Amount for a fiscal year (a
"CURRENT YEAR") exceeds the EBITDA of the Company for such
Current Year, this Option shall
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<PAGE>
not become exercisable for any Shares in respect of such
Current Year; PROVIDED, HOWEVER, that if the EBITDA of the
Company for the Prior Year exceeded the Target Amount for the
Prior Year (such excess, a "CARRYFORWARD AMOUNT"), then you
may elect that (i) the Carryforward Amount for the Prior Year
shall be carried forward to such Current Year (but in an
amount not in excess of the amount by which the Target Amount
for the Current Year exceeds the EBITDA of the Company for
such Current Year), (ii) the EBITDA for the Current Year shall
be redetermined to be an amount equal to the sum of the EBITDA
for such Current Year and the amount so carried forward
pursuant to clause (i), (iii) the EBITDA for the Prior Year
shall be redetermined to be an amount equal to the EBITDA for
such Prior Year, reduced by the amount carried forward
pursuant to clause (i), and (iv) the number of Shares for
which this Option may be exercised shall be adjusted based
upon the EBITDA for the Current Year and the Prior Year as so
redetermined in accordance with clauses (ii) and (iii),
respectively.
g. MAXIMUM LIMITATION. Notwithstanding anything to
the contrary set forth herein, (i) in no event shall the
Option become exercisable for more than __________ (I.E., 100%
of the Total Shares) Shares in the aggregate and (ii) in no
event shall the Option become exercisable pursuant to Section
2(e) or Section 2(f) for more than ___________ Shares (I.E.,
40% of the Total Shares) in the aggregate in any two-year
period.
h. DEFINITION OF EBITDA. For purposes of this Section
2, "EBITDA" for a fiscal year (i) shall mean the consolidated
net income of the Company and its subsidiaries for such fiscal
year, determined in accordance with U.S. generally accepted
accounting principles consistently applied in accordance with
the accounting methodologies and procedures of the Company and
its subsidiaries plus (a) provisions for taxes based on income
or profits to the extent deducted in computing such
consolidated net income, plus (b) consolidated interest
expense of the Company and its subsidiaries for such period,
whether paid or accrued, to the extent any such expense was
deducted in computing such consolidated net income, plus (c)
depreciation, amortization and other non-cash expenses of the
Company and its subsidiaries for such period (excluding any
non-cash expenses to the extent it
4
<PAGE>
represents an accrual or reserve for cash expenses in any
future period or amortization of a prepaid cash expenses paid
in a prior period) to the extent any such expense was deducted
in computing such consolidated net income, and (ii) shall be
subject to adjustment as set forth in paragraph i. below.
i. DETERMINATIONS OF THE COMMITTEE. From time to
time, the Committee in its sole discretion and in
administering the Plan may make adjustments in the EBITDA for
a fiscal year so that extraordinary or unusual charges or
credits, acquisitions, mergers, consolidations and other
corporate transactions and other elements of or factors
influencing the calculation of EBITDA do not distort or affect
the operation of the Plan in a manner inconsistent with its
purpose. The decisions of the Committee as to the computation
of EBITDA and other determinations to be made under the Plan
shall be final, conclusive and binding on all parties,
including optionholders.
j. NOTICE. As soon as practicable following receipt
by the Company of audited financial statements of the Company
for a fiscal year, the Company shall notify you of the amount
of EBITDA achieved by the Company for such fiscal year. Upon
receipt of such notice by you, this Option shall become
exercisable in respect of the number of Shares determined in
accordance with Section 2 hereof.
k. VESTING OF REMAINING SHARES. Notwithstanding
anything to the contrary herein, on _________________, 2007
(I.E., the date which is 90 days prior to the tenth
anniversary of the date of grant) this Option shall become
exercisable for the excess of (i) the number of Total Shares
over (ii) the number of Shares, if any, for which this Option
shall have become exercisable pursuant to paragraphs b., c.,
d. or e. of this Section 2.
l. FRACTIONAL SHARES. In no event shall you exercise
this Option for a fraction of a Share.
3. TERMINATION OF OPTION. The unexercised portion of
the Option granted herein will automatically and without notice
terminate and become null and void upon the earliest to occur of the
following:
5
<PAGE>
a. the expiration of ten (10) years from the date of
grant of this Option;
b. the date of termination of your employment if your
employment (i) is terminated by you, unless you voluntarily
retire from the Company or a subsidiary corporation of the
Company and the Board of Directors approves such retirement,
or (ii) is terminated by the Company or subsidiary corporation
of the Company for cause (as defined in the Plan);
c. the expiration of 30 days from the date of
termination by the Company or its subsidiaries of your
employment other than for cause (as defined in the Plan),
except that this Option will be exercisable during such 30-day
period only to the extent that it would have been exercisable
immediately prior to the termination of your employment;
d. the expiration of 6 months after the termination
of your employment by reason of your disability (as defined in
the Plan), except that this Option will be exercisable during
such 6-month period only to the extent that it would have been
exercisable immediately prior to the termination of your
employment;
e. the expiration of one (1) year after your death if
your death occurs during your employment or during the six (6)
month or thirty (30) day period, as the case may be, specified
in clauses (c) and/or (d) above, except that this Option will
be exercisable during such 1-year period only to the extent
that it would have been exercisable immediately prior to your
death; or
f. as determined by the Committee in accordance with
the Plan, upon a Change of Control (as defined in the Plan);
PROVIDED, HOWEVER, that none of the events described above shall extend the
period of exercisability of this Option beyond the day immediately preceding the
tenth anniversary of the date hereof.
4. NON-TRANSFERABILITY OF OPTION. This Option is not
transferable by you otherwise than by will or the laws of descent and
distribution, and is exercisable, during
6
<PAGE>
your lifetime, only by you. This Option may not be assigned, transferred (except
by will or the laws of descent and distribution), pledged or hypothecated in any
way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar proceeding. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of this Option contrary to the
provisions hereof, and the levy of any attachment or similar proceeding upon the
Option, shall be null and void and without effect.
5. EXERCISE OF OPTION.
a. PURCHASE OF SHARES. Any exercise of this Option
shall be in writing addressed to the Secretary of the Company
at the principal place of business of the Company, shall be
substantially in the form attached hereto as Exhibit B and
shall be accompanied by a certified or bank cashier's check to
the order of the Company in the full amount of the purchase
price of the Shares so purchased.
b. LEGENDS. If the Company, in its sole discretion,
shall determine that it is necessary, to comply with
applicable securities laws, the certificate or certificates
representing the Shares purchased pursuant to the exercise of
this Option shall bear an appropriate legend in form and
substance, as determined by the Company, giving notice of
applicable restrictions on transfer under or in respect of
such laws. Further, you hereby acknowledge that the Company
may endorse a legend upon the certificate evidencing the
Shares as the Company, in its sole discretion, determines to
be necessary and appropriate to implement the terms of the
Plan.
c. INVESTMENT INTENT. You hereby covenant and agree
with the Company that if, at the time of exercise of this
Option, there does not exist a Registration Statement on an
appropriate form under the Securities Act of 1933, as amended
(the "ACT"), which Registration Statement shall have become
effective and shall include a prospectus which is current with
respect to the Shares subject to this Option (i) that you will
represent that you are purchasing the Shares for your own
account and not with a view to the resale or distribution
thereof and (ii) that any subsequent offer for sale or sale of
any such Shares shall be made either pursuant to (x) a
Registration Statement on an
7
<PAGE>
appropriate form under the Act, which Registration Statement
shall have become effective and shall be current with respect
to the shares being offered and sold, or (y) a specific
exemption from the registration requirements of the Act, but
in claiming such exemption, you shall, if requested by the
Company, prior to any offer for sale or sale of such Shares,
obtain a favorable written opinion from counsel for or
approved by the Company as to the applicability of such
exemption.
6. WITHHOLDING TAXES. As provided in the Plan, the
Company may withhold or cause to be withheld from sums due or to become
due to you from the Company or a subsidiary corporation or affiliate
thereof an amount necessary to satisfy its obligation (if any) to
withhold taxes incurred by reason of the exercise of this Option or the
disposition of Shares acquired hereunder, or may require you to
reimburse the Company in such amount and may make such reimbursement a
condition to the delivery of the Shares pursuant to the exercise of
this Option.
7. AGREEMENT SUBJECT TO THE PLAN. You and the Company
agree that this agreement is subject to, and that you and the Company
will both be bound by, all terms, conditions, limitations and
restrictions contained in the Plan, which shall be controlling in the
event of any conflicting or inconsistent provisions.
8. STOCKHOLDERS AGREEMENT. It is a condition to the
effectiveness of this Option and the obligation of the Company to
issue any Shares hereunder that you shall have executed, on or prior
to the date hereof, the Stockholders Agreement, dated as of July 16,
1997, by and among the Company and the stockholders named therein (the
"STOCKHOLDERS AGREEMENT"). If you have not executed the Stockholders
Agreement on or before the date hereof, this Option shall
automatically and without further notice terminate and be null and
void.
8
<PAGE>
Please indicate your acceptance of all the terms and conditions of this
Option and the Plan by signing and returning a copy of this letter.
Very truly yours,
WGL HOLDINGS, INC.
By:
--------------------------------
ACCEPTED:
- ------------------------------------
Signature of Employee
- ------------------------------------
Name of Employee - Please Print
Date: , 1997
------------------------
9
<PAGE>
EXHIBIT A
1997 Employee Stock Option Plan
10
<PAGE>
EXHIBIT B
Exercise Letter
[Date]
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: Corporation Secretary
Re: Standard Incentive Stock Option
UNDER THE 1997 STOCK OPTION PLAN
Dear Sir:
I am the holder of a "Standard" Option granted to me under the above-
referenced Plan by WGL Holdings, Inc. (the "COMPANY") on _______, 199_ to
purchase ____________ shares of Common Stock of the Company ("SHARES") at a
price of $1.00 per share. I hereby exercise that option with respect to
___________ Shares, the total purchase price for which is $____________.
On_______________ [a business day not more than 15 days from the date
of this letter], I will present a certified check payable to the order of the
Company in the amount of $_____________ representing the total purchase price
for the Shares. The certificate or certificates representing the Shares should
be registered in my name and upon the presentation of that check [and
___________ shares of Common Stock], the Shares should be [delivered to me]
[forwarded to me at the address indicated below].
I hereby agree to pay the full amount of all withholding taxes which
the Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes
11
<PAGE>
subject by reason of the exercise of this option. I agree that the corporation
by which I am employed may, in its discretion, hold the stock certificate to
which I become entitled upon exercise of this option, as security for the
payment of the aforementioned withholding tax liability, until cash sufficient
to pay that liability has been accumulated.
Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.
Very truly yours,
-----------------------------------
Signature
-----------------------------------
Please Print Name
-----------------------------------
Address
-----------------------------------
-----------------------------------
-----------------------------------
Social Security Number
RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.
By:
-----------------------------------
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<PAGE>
"SPECIAL" OPTION
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
_________________, 1997
[Name of Optionee]
[Address]
Re: GRANT OF NONQUALIFIED OPTION
Dear _____________________:
The Board of Directors of WGL Holdings, Inc. (the "COMPANY") has
authorized and approved the 1997 Stock Option Plan (the "PLAN"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"COMMITTEE") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "SHARES") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.
1. GRANT OF OPTION. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "OPTION") to purchase, in accordance
<PAGE>
with the terms and conditions set forth in the Plan, but subject to the
limitations set forth herein and in the Plan,an aggregate of __________ Shares
of the Company (the "TOTAL SHARES") at a price of $1.00 per Share, such option
price being, in the judgment of the Committee, not less than one hundred percent
(100%) of the fair market value of such Share at the date hereof. The Option is
not intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, but it is
specifically understood that no warranty is made to you as to such
qualification.
2. VESTING OF OPTION. Subject to the provisions and limitations of the
Plan, the number of Shares of stock for which this Option may be exercised shall
be determined in accordance with this Section 2:
a. LIQUIDITY EVENTS. If a Sale Event (as described
below) occurs and the consummation of such Sale Event would
result in a Liquidity Event (as defined below), the Company
shall provide you with notice of such occurrence (the
"LIQUIDITY EVENT NOTICE"). This Option shall become
immediately exercisable in full for such period of time as is
specified in the Liquidity Event Notice. The Liquidity Event
Notice may provide that this Option shall terminate within a
specified number of days after notice to the holder.
b. PRO RATA LIQUIDITY EVENTS. If a Partial Sale Event
(as described below) occurs and the consummation of such
Partial Sale Event would result in a Pro Rata Liquidity Event
(as defined below), the Company shall provide you with notice
of such occurrence (the "PRO RATA LIQUIDITY EVENT NOTICE").
This Option shall become immediately exercisable for a number
of Shares equal to the Pro Rata Option Amount (as defined
below), less the number of Shares for which this Option shall
have previously become exercisable, for such period of time as
is specified in the Pro Rata Liquidity Event Notice. In the
event of any exercise or termination of this Option pursuant
to this paragraph b., the number of Total Shares shall be
reduced by the number of Shares for which this Option was so
exercised or as to which this Option so terminated.
c. DEFINITIONS. For purposes of this Option:
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(i) A "SALE EVENT" shall occur if (A) the
stockholders of the Company shall execute an agreement that
provides for the sale of all the then outstanding capital
stock of the Company to third parties that are not affiliated
with the Initial Stockholders, (B) the Board of Directors
shall approve a sale of all or substantially all of the assets
of the Company, in one transaction or a series of related
transactions, other than to an entity owned or controlled by
the Initial Stockholders, (C) the Board of Directors shall
approve any merger or consolidation or the Company the result
of which would be the occurrence of any event described in
clause (A) or (B) of this sentence or (D) the Board of
Directors shall reject any Bona Fide Offer for the merger or
consolidation or the Company the result of which, if not so
rejected, would be the occurrence of any event described in
clause (A) or (B) of this sentence;
(ii) A "LIQUIDITY EVENT" shall mean the realization
by the Initial Stockholders of the Company, as a result of a
Sale Event, of an amount of cash which in the aggregate equals
or exceeds (A) 300% of the Initial Aggregate Equity Investment
by the Initial Stockholders, if the Sale Event occurs on or
prior to July 10, 2000, (B) 400% of the Initial Aggregate
Equity Investment by the Initial Stockholders, if the Sale
Event occurs subsequent to July 10, 2000 and no later than
July 10, 2001, (C) 500% of the Initial Aggregate Equity
Investment by the Initial Stockholders, if the Sale Event
occurs subsequent to July 10, 2001 and no later than July 10,
2002 and (D) 700% of the Initial Aggregate Equity Investment
by the Initial Stockholders, if the Sale Event occurs
subsequent to July 10, 2002;
(iii) "INITIAL AGGREGATE EQUITY INVESTMENT" by the
Initial Stockholders shall mean $35,500,000;
(iv) "INITIAL STOCKHOLDERS" shall mean DLJ Merchant
Banking Partners II, L.P., a Delaware limited partnership,
DLJMB Funding II, Inc., a Delaware corporation, DLJ Merchant
Banking Partners II-A, L.P., a Delaware limited partnership,
DLJ Diversified Partners, L.P., a Delaware limited
partnership, DLJ Diversified Partners-A, L.P., a Delaware
limited partnership, DLJ Millennium Partners, L.P., a Delaware
limited partnership, DLJ First ESC L.L.C., a Delaware
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limited liability company, DLJ Offshore Partners II, C.V., a
Netherlands Antilles limited partnership, DLJ EAB Partners,
L.P., a Delaware limited partnership and UK Investment Plan
1997 Partners, a Delaware partnership;
(v) "BONA FIDE OFFER" shall mean an offer that, as
determined by the Board of Directors of the Company, is fully
financed, unconditional and made by a credible acquirer
capable of consummating the proposed transaction in an
expeditious manner;
(vi) A "PARTIAL SALE EVENT" shall mean a sale by the
Initial Stockholders of less than all the then outstanding
capital stock of the Company beneficially owned by the Initial
Stockholders to third parties that are not affiliated with the
Initial Stockholders;
(vii) A "PRO RATA LIQUIDITY EVENT" shall mean the
Partial Sale Event that results in the realization by the
Initial Stockholders of an amount of cash which, when
aggregated with the cash proceeds received by the Initial
Stockholders from prior sales of outstanding capital stock of
the Company to third parties that are not affiliated with the
Initial Stockholders, equals or exceeds (A) 300% of the Pro
Rata Initial Aggregate Equity Investment (as defined below) by
the Initial Stockholders, if the Partial Sale Event occurs on
or prior to July 10, 2000, (B) 400% of the Pro Rata Initial
Aggregate Equity Investment by the Initial Stockholders, if
the Partial Sale Event occurs subsequent to July 10, 2000 and
no later than July 10, 2001, (C) 500% of the Pro Rata Initial
Aggregate Equity Investment by the Initial Stockholders, if
the Partial Sale Event occurs subsequent to July 10, 2001 and
no later than July 10, 2002 and (D) 700% of the Pro Rata
Initial Aggregate Equity Investment by the Initial
Stockholders, if the Partial Sale Event occurs subsequent to
July 10, 2002;
(viii) "PRO RATA FRACTION" shall mean, in connection
with the sale of shares of Common Stock by the Initial
Stockholders, a fraction, the numerator of which is the total
number of shares of Common Stock which the Initial
Stockholders shall have sold to third parties that are not
affiliated with the Initial Stockholders in such sale and all
other prior sale
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transactions made after July 16, 1997, and the denominator of
which shall be 35,500,000 (as such number shall be adjusted
from time to time as a result of any stock split or similar
recapitalization event);
(ix) "PRO RATA INITIAL AGGREGATE EQUITY INVESTMENT"
by the Initial Stockholders shall mean, for any Partial Sale
Event, the product of the Initial Aggregate Equity Investment
and the Pro Rata Fraction; and
(x) "PRO RATA OPTION AMOUNT" shall mean a number of
Shares equal to the number of Total Shares MULTIPLIED BY the
Pro Rata Fraction.
d. VESTING OF REMAINING SHARES. Notwithstanding
anything to the contrary herein, on _________________, 2007
(I.E., the date which is 90 days prior to the expiration of
the Option) this Option shall become exercisable for the
excess of (i) the number of Total Shares over (ii) the
aggregate number of shares, if any, for which this Option
shall have become exercisable pursuant to paragraph a. or
paragraph b. of this Section 2.
e. FRACTIONAL SHARES. In no event shall you exercise
this Option for a fraction of a Share.
3. TERMINATION OF OPTION. The unexercised portion of the Option granted
herein will automatically and without notice terminate and become null and void
upon the earliest to occur of the following:
a. the expiration of ten (10) years from the date of
grant of this Option;
b. the date of termination of your employment if your
employment (i) is terminated by you, unless you voluntarily
retire from the Company or a subsidiary corporation of the
Company and the Board of Directors approves such retirement,
or (ii) is terminated by the Company or a subsidiary
corporation of the Company for cause (as defined in the Plan);
c. the expiration of 30 days from the date of
termination by the Company or its subsidiaries of your
employment other than for cause (as defined in the Plan),
except that this Option will be exercisable
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<PAGE>
during such 30-day period only to the extent that it would
have been exercisable immediately prior to the termination of
your employment;
d. the expiration of 6 months after the termination
of your employment by reason of your disability (as defined in
the Plan), except that this Option will be exercisable during
such 6-month period only to the extent that it would have been
exercisable immediately prior to the termination of your
employment;
e. the expiration of one (1) year after your death if
your death occurs during your employment or during the six (6)
month or thirty (30) day period, as the case may be specified
in clauses (c) and/or (d) above, except that this Option will
be exercisable during such 1-year period only to the extent
that it would have been exercisable immediately prior to your
death; or
f. as determined by the Committee in accordance with
the plan, upon a Change of Control (as defined in the Plan);
PROVIDED, HOWEVER, that none of the events described above shall extend the
period of exercisability of this Option beyond the day immediately preceding the
tenth anniversary of the date hereof.
4. NON-TRANSFERABILITY OF OPTION. This Option is not transferable by you
otherwise than by will or the laws of descent and distribution, and is
exercisable, during your lifetime, only by you. This Option may not be assigned,
transferred (except by will or the laws of descent and distribution), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.
5. EXERCISE OF OPTION.
a. PURCHASE OF SHARES. Any exercise of this Option
shall be in writing addressed to the Secretary of the Company
at the principal place of business of
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the Company, shall be substantially in the form attached
hereto as Exhibit B and shall be accompanied by a certified or
bank cashier's check to the order of the Company in the full
amount of the purchase price of the Shares so purchased.
b. LEGENDS. If the Company, in its sole discretion,
shall determine that it is necessary, to comply with
applicable securities laws, the certificate or certificates
representing the Shares purchased pursuant to the exercise of
this Option shall bear an appropriate legend in form and
substance, as determined by the Company, giving notice of
applicable restrictions on transfer under or in respect of
such laws. Further, you hereby acknowledge that the Company
may endorse a legend upon the certificate evidencing the
Shares as the Company, in its sole discretion, determines to
be necessary and appropriate to implement the terms of the
Plan.
c. INVESTMENT INTENT. You hereby covenant and agree
with the Company that if, at the time of exercise of this
Option, there does not exist a Registration Statement on an
appropriate form under the Securities Act of 1933, as amended
(the "ACT"), which Registration Statement shall have become
effective and shall include a prospectus which is current with
respect to the Shares subject to this Option (i) that you will
represent that you are purchasing the Shares for your own
account and not with a view to the resale or distribution
thereof and (ii) that any subsequent offer for sale or sale of
any such Shares shall be made either pursuant to (x) a
Registration Statement on an appropriate form under the Act,
which Registration Statement shall have become effective and
shall be current with respect to the shares being offered and
sold, or (y) a specific exemption from the registration
requirements of the Act, but in claiming such exemption, you
shall, if requested by the Company, prior to any offer for
sale or sale of such Shares, obtain a favorable written
opinion from counsel for or approved by the Company as to the
applicability of such exemption.
6. WITHHOLDING TAXES. As provided in the Plan, the Company may withhold
or cause to be withheld from sums due or to become due to you from the Company
or a subsidiary corporation or affiliate thereof an amount necessary to
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<PAGE>
satisfy its obligation (if any) to withhold taxes incurred by reason of the
exercise of this Option or the disposition of Shares acquired hereunder, or may
require you to reimburse the Company in such amount and may make such
reimbursement a condition to the delivery of the Shares pursuant to the exercise
of this Option.
7. AGREEMENT SUBJECT TO THE PLAN. You and the Company agree that this
agreement is subject to, and that you and the Company will both be bound by, all
terms, conditions, limitations and restrictions contained in the Plan, which
shall be controlling in the event of any conflicting or inconsistent provisions.
8. STOCKHOLDERS AGREEMENT. It is a condition to the effectiveness of
this Option and the obligation of the Company to issue any Shares hereunder that
you shall have executed, on or prior to the date hereof, the Stockholders
Agreement, dated as of July 16, 1997, by and among the Company and the
stockholders named therein (the "STOCKHOLDERS AGREEMENT"). If you have not
executed the Stockholders Agreement on or before the date hereof, this Option
shall automatically and without further notice terminate and be null and void.
Please indicate your acceptance of all the terms and conditions of this
Option and the Plan by signing and returning a copy of this letter.
Very truly yours,
WGL HOLDINGS, INC.
By:
---------------------------------
ACCEPTED:
- ----------------------------------------
Signature of Employee
- ----------------------------------------
Name of Employee - Please Print
Date: , 1997
-------- ---
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EXHIBIT A
1997 Employee Stock Option Plan
9
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EXHIBIT B
Exercise Letter
[Date]
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: Corporation Secretary
Re: Nonqualified Special Stock Option
UNDER THE 1997 STOCK OPTION PLAN
Dear Sir:
I am the holder of a "Special" Option granted to me under the above-
referenced Plan by WGL Holdings, Inc. (the "COMPANY") on _______, 199_ to
purchase ____________ shares of Common Stock of the Company ("SHARES") at a
price of $1.00 per share. I hereby exercise that option with respect to
___________ Shares, the total purchase price for which is $____________.
On _______________ [a business day not more than 15 days from the date
of this letter], I will present a certified check payable to the order of the
Company in the amount of $_____________ representing the total purchase price
for the Shares. The certificate or certificates representing the Shares should
be registered in my name and upon the presentation of that check [and
___________ shares of Common Stock], the Shares should be [delivered to me]
[forwarded to me at the address indicated below].
I hereby agree to pay the full amount of all withholding taxes which the
Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes subject by reason of the exercise of this option. I
agree that the corporation by which I am employed may, in its discretion, hold
the stock certificate to which I become entitled upon exercise of this option,
as security for the payment of the aforementioned withholding tax liability,
until cash sufficient to pay that liability has been accumulated.
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Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.
Very truly yours,
------------------------------------
Signature
------------------------------------
Please Print Name
------------------------------------
Address
------------------------------------
------------------------------------
------------------------------------
Social Security Number
RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.
By:
--------------------------------------
<PAGE>
Exhbit 10.2
WGL HOLDINGS, INC.
1998 STOCK OPTION PLAN
1. PURPOSES
WGL HOLDINGS, INC., a Delaware corporation (the "Company"), desires to
afford certain of its key employees, and the key employees of any parent
corporation or subsidiary corporation of the Company now existing or hereafter
formed or acquired, who are responsible for the continued growth of the Company,
an opportunity to acquire a proprietary interest in the Company, and thus to
create in such key employees an increased interest in and a greater concern for
the welfare of the Company and its subsidiaries.
The Company, by means of this 1998 Stock Option Plan (the "Plan"), seeks
to retain the services of persons now holding key positions and to secure the
services of persons capable of filling such positions.
The stock options ("Options") offered pursuant to the Plan are a matter of
separate inducement and are not in lieu of any salary or other compensation for
the services of any key employee.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
meet the requirements of Incentive Options ("Non-Qualified Options"). The
Company makes no warranty, however, as to the qualification of any Option as an
Incentive Option.
2. NUMBER OF SHARES SUBJECT TO THE PLAN
The total number of shares of common stock, par value $.001 per share, of
the Company (the "Shares") which may be purchased or acquired pursuant to the
exercise of Options granted under the Plan shall not exceed at any time during
the applicable period, (i) pursuant to Options granted in any single calendar
year, an aggregate of 1,220,000 Shares and (ii) pursuant to all Options granted
during the Term (as defined below) of this Plan, an aggregate of 6,100,000
Shares.
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Shares available for issuance acquired under the Plan may be either
authorized but unissued Shares or Shares of issued stock held in the Company's
treasury, or both, at the discretion of the Company. If and to the extent that
Options granted under the Plan expire or terminate without having been
exercised, the Shares covered by such expired or terminated Options may again be
subject to an Option under the Plan.
Except as provided in Articles 18 and 22 and subject to Article 3, the
Company may, from time to time during the period (the "Term") beginning on
September 1, 1998 (the "Effective Date") and ending on August 31, 2008 (the
"Termination Date"), grant Incentive Options and Non-Qualified Options to
certain key employees of the Company or any subsidiary corporation of the
Company under the terms hereinafter set forth.
As used in the Plan, the terms "parent corporation" and "subsidiary
corporation" shall mean a corporation within the definitions of such terms
contained in Sections 424(e) and 424(f) of the Code, respectively.
3. ADMINISTRATION
The board of directors of the Company (the "Board of Directors") shall
administer the Plan, provided that the Board of Directors may, from time to
time, designate from any of its members a Compensation Committee, which shall be
the Compensation Committee of the Board of Directors (the "Committee"), to
administer the Plan. A majority of the members of the Committee shall constitute
a quorum, and the act of a majority of the members of the Committee shall be the
act of the Committee. Any member of the Committee may be removed at any time
either with or without cause by resolution adopted by the Board of Directors,
and any vacancy on the Committee at any time may be filled by resolution adopted
by the Board of Directors. If the Board of Directors administers the Plan, then
reference herein, or in any option agreement granting Options pursuant to the
Plan, to the Committee shall mean the Committee or the Board of Directors, as
appropriate.
Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine the key employees to whom Options
shall be granted (the "Optionholders"), the time when such Options shall be
granted, the number of Shares which shall be subject to each Option, the
purchase price or exercise price of each Option, the period(s) during which such
Options shall be
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exercisable (whether in whole or in part) and the other terms and provisions
thereof (which need not be identical).
Subject to the express provisions of the Plan, the Committee also shall
have authority to construe the Plan and the Options granted thereunder, to amend
the Plan and the Options granted thereunder, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the Options (which need not be identical) granted thereunder and
to make all other determinations necessary or advisable for administering the
Plan.
The Committee may establish performance standards for determining the
periods during which Options shall be exercisable, including without limitation
standards based on the earnings of the Company and its subsidiaries for various
fiscal periods. The Committee shall define such performance criteria and, from
time to time, the Committee in its sole discretion and in administering the Plan
may make adjustments to such performance criteria for any fiscal period so that
extraordinary or unusual charges or credits, acquisitions, mergers,
consolidations, and other corporate transactions and other elements of or
factors influencing the calculations of earnings or any other performance
standard do not distort or affect the operation of the Plan in a manner
inconsistent with the achievement of its purpose.
The determination of the Committee on matters referred to in this Article
3 shall be conclusive.
The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such legal counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company. No member or former member of
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award of Options granted hereunder.
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4. ELIGIBILITY
Options may be granted only to key employees of the Company or any
subsidiary corporation of the Company.
The Plan does not create a right in any employee to participate in the
Plan, nor does it create a right in any employee to have any Options granted to
him or her.
5. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Option granted hereunder
shall be such amount as the Committee shall determine in good faith to be the
fair market value (as defined below) per Share at the date the Option is
granted; provided, however, that the exercise price shall not be less than $1.00
per share; and provided further, that in the case of an Incentive Option granted
to a key employee who, at the time such Incentive Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any subsidiary corporation or parent
corporation of the Company, the purchase price for each Share shall not be less
than one hundred ten percent (110%) of the fair market value per Share at the
date the Incentive Option is granted. In determining the stock ownership of a
key employee for any purpose under the Plan, the rules of Section 424(d) of the
Code shall be applied, and the Committee may rely on representations of fact
made to it by the key employee and believed by it to be true.
For purposes of the Plan, "fair market value," with respect to any date of
determination, means:
(i) if the Shares are listed or admitted to trading on a national
securities exchange in the United States or reported through The Nasdaq
Stock Market ("Nasdaq") then the closing sale price on such exchange or
Nasdaq on such date or, if no trading occurred or quotations were
available on such date, then on the closest preceding date on which the
Shares were traded or quoted; or
(ii) if not so listed or reported but a regular, active public
market for the Shares exists (as determined in the sole discretion of the
Committee, whose decision shall be conclusive and binding), then the
average of the
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closing bid and ask quotations per Share in the over-the-counter market
for such Shares in the United States on such date or, if no such
quotations are available on such date, then on the closest date preceding
such date. For purposes of the foregoing, a market in which trading is
sporadic and the ask quotations generally exceed the bid quotations by
more than 15% shall not be deemed to be a "regular, active public market."
If the Committee determines that a regular, active public market does not
exist for the Shares, the Committee shall determine the fair market value of the
Shares in its good faith judgment based on the total number of shares of Common
Stock then outstanding, taking into account all outstanding options, warrants,
rights or other securities exercisable or exchangeable for, or convertible into,
shares of Common Stock.
For purposes of this Plan, the determination by the Committee of the fair
market value of a Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company shall cause
the purchased Shares to be issued only when it shall have received the full
purchase price for the Shares in cash or by certified check; provided, however,
that in lieu of cash, the holder of an Option may, if and to the extent the
terms of such Option so provide and to the extent permitted by applicable law,
exercise an Option in whole or in part, by delivering to the Company (a) shares
of common stock of the Company (in proper form for transfer and accompanied by
all requisite stock transfer tax stamps or cash in lieu thereof) owned by such
holder for at least six months having a fair market value at the date of
exercise (together with any portion of the exercise price paid in cash) equal to
the exercise price applicable to that portion of the Option being exercised or
(b) such other form of payment as the Committee shall permit in its sole
discretion at the time of grant of the Option.
6. USE OF PROCEEDS
The cash proceeds of the sale of Shares pursuant to the Plan are to be
added to the general funds of the Company and used for its general corporate
purposes as the Board of Directors shall determine.
7. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
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An Option shall be exercisable at such times, in such amounts and during
such period or periods as the Committee shall determine at the date of the grant
of such Option; provided, however, that an Option shall not be exercisable after
the expiration of ten (10) years from the date such Option is granted; and
provided, further, that an Incentive Option granted to a key employee who, at
the time such Incentive Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any subsidiary corporation or parent corporation of the Company,
shall not be exercisable after the expiration of five (5) years from the date
such Incentive Option is granted.
The Committee shall have the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, rights to exercise any
Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
Except as otherwise provided under the Code, to the extent that the
aggregate fair market value of stock for which Incentive Options (under all
stock option plans of the Company and of any parent corporation or subsidiary
corporation of the Company) are exercisable for the first time by a key employee
during any calendar year exceeds one hundred thousand dollars ($100,000), such
Options shall be treated as Non-Qualified Options. For purposes of this
limitation, (a) the fair market value of the stock is determined as of the time
the Option is granted, and (b) Options will be taken into account in the order
in which they were granted.
In no event shall an Option granted hereunder be exercised for a fraction
of a Share.
8. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the Optionholder as
to all or part of the Shares covered thereby by the giving of written notice of
the exercise thereof to the Corporate Secretary of the Company at the principal
business office of the Company, specifying the number of Shares to be purchased
and specifying a business day not more than fifteen (15) days from the date such
notice is given for the payment of the purchase price against delivery of the
Shares
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being purchased. Subject to the terms of Articles 13, 14, 15 and 16, the Company
shall cause certificates for the Shares so purchased to be delivered to the
Optionholder at the principal business office of the Company, against payment of
the full purchase price, on the date specified in the notice of exercise.
9. NON-TRANSFERABILITY OF OPTIONS
No Option granted hereunder shall be transferable, whether by operation of
law or otherwise, other than by will or the laws of descent and distribution and
any Option granted hereunder shall be exercisable during the lifetime of the
Optionholder only by such Optionholder. Except to the extent provided above,
Options may not be assigned, transferred, pledged, hypothecated or disposed of
in any way (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process, and any purported assignment in
contravention hereof shall be void and of no effect. Notwithstanding the
foregoing, at the discretion of the Committee, a Non-Qualified Option may be
transferred by a key employee solely to such key employee's spouse, siblings,
parents, children and grandchildren or trusts for the benefit of such persons or
partnerships, corporations, limited liability companies or other entities owned
solely by such persons, subject to any restrictions included in the award of the
Non-Qualified Option.
10. TERMINATION OF EMPLOYMENT
Upon termination of employment of any Optionholder with the Company and
all subsidiary corporations, an Option previously granted to the Optionholder,
unless otherwise specified by the Committee in the Option, shall, to the extent
not theretofore exercised, terminate and become null and void, provided that:
(a) if the Optionholder shall die while in the employ of such
corporation or during either the six (6) month or thirty (30) day period,
whichever is applicable, specified in clauses (b) and (c) below, and at a
time when such Optionholder was entitled to exercise an Option as herein
provided, the legal representative of such Optionholder, or such person
who acquired such Option by bequest or inheritance or by reason of the
death of the Optionholder, shall have the right to exercise such Option so
granted, to the extent not theretofore exercised, in respect of any or all
of such number of Shares that such Optionholder is entitled to purchase
pursuant to such
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Option at the time of such Optionholder's death, at any time up to and
including one (1) year after the date of death;
(b) if the employment of any Optionholder to whom such Option shall
have been granted shall terminate by reason of the Optionholder's
disability (as defined below), and while such Optionholder is entitled to
exercise such Option as herein provided, such Optionholder shall have the
right to exercise such Option so granted, to the extent not theretofore
exercised, in respect of any or all of such number of Shares that such
Optionholder is entitled to purchase pursuant to such Option at the time
of such termination, at any time up to and including six (6) months after
the date of termination of employment; and
(c) if the employment of any Optionholder to whom such Option shall
have been granted shall terminate by reason of dismissal by the employer
other than for cause (as defined below), and while such Optionholder is
entitled to exercise such Option as herein provided, such Optionholder
shall have the right to exercise such Option so granted, to the extent not
theretofore exercised, in respect of any or all of such number of Shares
that such Optionholder is entitled to purchase pursuant to such Option at
the time of such termination, at any time up to and including thirty (30)
days after the date of termination of employment.
If an Optionholder (i) voluntarily terminates his or her employment,
unless such termination is a voluntary retirement from the Company and the Board
of Directors approves such retirement, or (ii) is discharged for cause, any
Option granted hereunder shall, unless otherwise specified by the Committee in
the Option, forthwith terminate with respect to any unexercised portion thereof.
If an Option granted hereunder shall be exercised by the legal
representative of a deceased or disabled Optionholder, or by a person who
acquired an Option granted hereunder by bequest or inheritance or by reason of
death of any Optionholder, written notice of such exercise shall be accompanied
by a certified copy of letters testamentary or equivalent proof of the right of
such legal representative or other person to exercise such Option.
For all purposes of the Plan, the term "for cause" shall mean, (i) with
respect to an Optionholder who is a party to a written employment agreement with
the Company, which agreement contains a definition of "for cause" or "cause" (or
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words of like import) for purposes of termination of employment thereunder by
the Company, "for cause" or "cause" as defined in the most recent of such
agreements, or (ii) in all other cases, as determined by the Committee, in its
sole discretion, that one or more of the following has occurred: (A) any
intentional or willful failure, or failure due to bad faith, by such
Optionholder to substantially perform his or her employment duties which shall
not have been corrected within 30 days following written notice thereof, (B) any
misconduct by such Optionholder which is significantly injurious to the Company
or any of its subsidiaries or affiliates, (C) any breach by such Optionholder of
any covenant contained in the instrument pursuant to which an Option is granted,
(D) such Optionholder's conviction of, or entry of a plea of nolo contendere in
respect of, any felony or a misdemeanor which results in, or is reasonably
expected to result in, economic or reputational injury to the Company or any of
its subsidiaries or affiliates.
For all purposes of the Plan, the term "disability" means (i) with respect
to an Optionholder who is a party to a written employment agreement with the
Company, which agreement contains a definition of "disability" or "permanent
disability" (or words of like import) for purposes of termination of employment
thereunder by the Company, "disability" or "permanent disability" as defined in
the most recent of such agreements, or (ii) in all other cases, means such
Optionholder's inability to perform substantially his or her duties and
responsibilities to the Company or any of its subsidiaries by reason of physical
or mental illness, injury, infirmity or condition: (A) for a continuous period
for 120 days or one or more periods aggregating 150 days in any twelve-month
period; (B) at such time as such Optionholder is eligible to receive disability
income payments under any long-term disability insurance plan maintained by the
Company or any of its subsidiaries; or (C) at such earlier time as such
Optionholder or the Company submits medical evidence, in the form of a
physician's certification, that such Optionholder has a physical or mental
illness, injury, infirmity or condition that will likely prevent such
Optionholder from substantially performing his duties and responsibilities for
120 days or longer.
A termination of employment shall not be deemed to occur by reason of (i)
the transfer of an Optionholder from employment by the Company to employment by
a subsidiary corporation of the Company or (ii) the transfer of an Optionholder
from employment by a subsidiary corporation of the Company to employment by the
Company or by another subsidiary corporation of the Company.
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Notwithstanding anything to the contrary contained in this Article 10, in
no event shall any person be entitled to exercise any Option after the
expiration of the period of exercisability of such Option as specified therein.
11. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
For purposes of this Plan, a "change in control" of the Company occurs if:
(a) any "Person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended ("Exchange Act")), other than DLJ
Merchant Banking II, Inc. or any of its affiliates or any combination thereof
(collectively, the "DLJ Entities"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 50% of the total combined voting power of all classes of capital stock of
the Company normally entitled to vote for the election of directors of the
Company; or (b) the Board of Directors shall approve a sale of all or
substantially all of the assets of the Company, in one transaction or a series
of related transactions, other than to an entity owned or controlled by the DLJ
Entities; or (c) the Board of Directors shall approve any merger or
consolidation of the Company in which the shareholders of the Company
immediately prior to such transaction own, in the aggregate, less than 50% of
the total combined voting power of all classes of capital stock of the surviving
entity normally entitled to vote for the election of directors of the surviving
entity.
Upon the occurrence of a transaction described in the preceding paragraph,
each Option may, at the discretion of the Committee, be terminated within a
specified number of days after notice to the holder of such Option, and each
such holder will receive, in respect of each Share for which such Option then is
exercisable, an amount equal to the excess of the then fair market value of such
Share over the exercise price per Share, payable in the same consideration
received by the shareholders of the Company upon the closing of such
transaction.
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or other like change in capital structure of the Company, the Committee
shall make such adjustments to each outstanding Option that it, in its sole
discretion, deems appropriate. The term "Shares" after any such change shall
refer to the securities, cash and/or property then receivable upon exercise of
an Option. In addition, in
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the event of any such change, the Committee shall make any further adjustment as
may be appropriate to the maximum number of Shares which may be acquired under
the Plan pursuant to the exercise of Options, the maximum number of Shares for
which Options may be granted to any individual under the Plan, the minimum
exercise price per Share for Options to be granted under the Plan, and the
number of Shares and prices per Share subject to outstanding Options as shall be
equitable to prevent dilution or enlargement of rights under such Options, and
the determination of the Committee as to these matters shall be conclusive.
12. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation thereof to continue the employment of any Optionholder
and it shall not impose any obligation on the part of any Optionholder to remain
in the employ of the Company or of any subsidiary corporation thereof.
13. SECURITIES LAW MATTERS
Except as hereinafter provided, the Committee may require an Optionholder,
as a condition upon exercise of any Option granted hereunder, to execute and
deliver to the Company a written statement, in form satisfactory to the
Committee, in which the Optionholder represents and warrants that Shares are
being acquired for such Optionholder's own account for investment only and not
with a view to the resale or distribution thereof. The Optionholder shall, at
the request of the Committee, be required to represent and warrant in writing
that any subsequent resale or distribution of Shares by the Optionholder shall
be made only pursuant to either (i) a Registration Statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"), which
Registration Statement has become effective and is current with regard to the
Shares being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the
Optionholder shall, prior to any offer of sale or sale of such Shares, obtain a
prior favorable written opinion of counsel, in form and substance satisfactory
to counsel for the Company, as to the application of such exemption thereto. The
foregoing restriction shall not apply to (i) issuances by the Company so long as
the Shares being issued are registered under the Securities Act and a prospectus
in respect thereof is current or (ii) re-offerings of Shares by affiliates of
the Company (as defined in Rule 405 or any successor rule or regulation
promulgated under the Securities Act) if the Shares being re-offered are
registered under the Securities Act and a prospectus in respect thereof is
current.
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14. ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES
Subject to Articles 13, 15 and 16, upon any exercise of an Option which
may be granted hereunder and payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option and shall be delivered to or upon the order of such
person.
The Company may endorse such legend or legends upon the certificates for
Shares issued pursuant to the Plan and, if a transfer agent has been engaged by
the Company, may issue such "stop transfer" instructions to its transfer agent
in respect of such Shares as, in its discretion, it determines to be necessary
or appropriate to (i) prevent a violation of, or to perfect an exemption from,
the registration requirements of the Securities Act, or (ii) implement the
provisions of the Plan and any agreement between the Company and the
Optionholder with respect to such Shares, or (iii) permit the Company to
determine the occurrence of a disqualifying disposition, as described in Section
421(b) of the Code, of Shares transferred upon exercise of an Incentive Option
granted under the Plan.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer.
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
15. WITHHOLDING TAXES
The Company will require, as a condition to an Optionholder exercising an
Option granted hereunder, that the Optionholder reimburse the corporation that
employs such Optionholder for any taxes required by any government to be
withheld or otherwise deducted and paid by such corporation in respect of the
issuance or disposition of such Shares. In lieu thereof, the corporation that
employs such Optionholder shall have the right to withhold the amount of such
taxes from any other sums due or to become due from such corporation to the
Optionholder upon such terms and conditions as the Committee shall prescribe.
The corporation that employs such Optionholder may, in its discretion, hold the
stock certificate to which such Optionholder is entitled upon the exercise of an
Option as security for the payment of such withholding tax liability, until cash
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sufficient to pay that liability has been accumulated and may, in its
discretion, effect such withholding by retaining Shares issuable upon the
exercise of the Option and having a fair market value on the date of exercise
that is equal to the amount to be withheld.
16. LISTING OF SHARES AND RELATED MATTERS
The Committee may delay the issuance or delivery of Shares pursuant to any
Option granted hereunder if it determines that listing, registration or
qualification of Shares or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option under the Plan or the issuance of Shares
thereunder, until such listing, registration, qualification, consent or approval
shall have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Committee.
17. AMENDMENT OF THE PLAN
The Committee may, from time to time, amend the Plan, provided that no
amendment shall be made, without the approval of the stockholders of the
Company, that will (i) increase the total number of Shares reserved for Options
under the Plan or the amount of Options that may be granted to any key employee
(in each case, other than an increase resulting from an adjustment provided for
in Article 11), (ii) reduce the exercise price of any Option granted hereunder
below the price required by Article 5, (iii) modify the provisions of the Plan
relating to eligibility, or (iv) materially increase the benefits accruing to
participants under the Plan. The rights and obligations under any Option granted
before amendment of the Plan or any unexercised portion of such Option shall not
be adversely affected by amendment of the Plan or such Option without the
consent of the holder of such Option.
18. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options may not be
granted while the Plan is suspended or after it is terminated. Rights and
obligations under any Option granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except upon the
consent of the person to whom the Option was granted. The power of the Committee
to construe and
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administer any Options granted prior to the termination or suspension of the
Plan under Article 3 nevertheless shall continue after such termination or
during such suspension.
19. GOVERNING LAW
The Plan and such Options as may be granted thereunder and all related
matters shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware from time to time obtaining.
20. PARTIAL INVALIDITY
The invalidity or illegality of any provision hereof shall not be deemed
to affect the validity of any other provision.
21. EFFECTIVE DATE
The Plan shall become effective at 9:00 a.m., New York City Time, on the
Effective Date, provided the Plan is approved by the stockholders of the Company
at an annual meeting or any special meeting of stockholders of the Company
within 12 months of the Effective Date, and such approval of stockholders shall
be a condition to the right of each eligible key employee to receive any Options
under the Plan. Any Options granted under the Plan prior to such approval of
stockholders shall be effective as of the date of the grant (unless, with
respect to any Option, the Committee specifies otherwise at the time of the
grant), but no such Option may be exercised prior to such stockholder approval,
and if stockholders fail to approve the Plan as specified hereunder, any such
Option shall be cancelled.
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"Special" Option
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
_______________, 199_
[Name of Optionee]
[Address]
Re: Grant of Nonqualified Option
Dear_______________:
The Board of Directors of WGL Holdings, Inc. (the "Company") has
authorized and approved the 1998 Stock Option Plan (the "Plan"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"Committee") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "Shares") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.
1. Grant of Option. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "Option") to purchase, in accordance with
the terms and conditions set forth in the Plan, but subject to the limitations
set forth herein and in the Plan, an aggregate of ___________ Shares of the
Company (the "Total Shares") at a price of $____ per Share, such option price
being, in the judgment of the Committee, not less than one hundred percent
(100%) of the fair market value of such Share at the date hereof. The Option is
not intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, but it is
specifically understood that no warranty is made to you as to such
qualification.
<PAGE>
2. Vesting of Option.
a. Vesting Dates and Amounts. Subject to the provisions and
limitations of the Plan, the Option shall become exercisable for
Shares on the dates and in the amounts set forth in the following
table:
Percentage of Original
Date Vested Option Vested
----------- -------------
1st Anniversary of Grant 33 1/3 %
2nd Anniversary of Grant 33 1/3 %
3rd Anniversary of Grant 33 1/3 %
b. Cummulative Effect of Vesting. The right to purchase Shares
shall be cumulative so that when the right to purchase any Shares
has vested such Shares or any part thereof may be purchased at any
time thereafter until the expiration or termination of the Option.
c. Fractional Shares. In no event shall you exercise this
Option for a fraction of a Share.
3. Termination of Option. The unexercised portion of the Option granted
herein will automatically and without notice terminate and become null and void
upon the earliest to occur of the following:
a. the expiration of ten (10) years from the date of grant of
this Option;
b. the date of termination of your employment if your
employment (i) is terminated by you, unless you voluntarily retire
from the Company or a subsidiary corporation of the Company and the
Board of Directors approves such retirement, or (ii) is terminated
by the Company or a subsidiary corporation of the Company for cause
(as defined in the Plan);
c. the expiration of 30 days from the date of termination by
the Company or its subsidiaries of your employment other than for
cause (as defined in the Plan), except that this Option will be
exercisable during such 30-day period only to the extent that it
would have been exercisable immediately prior to the termination of
your employment;
d. the expiration of 6 months after the termination of your
employment by reason of your disability (as defined in the Plan),
except that this Option will be exercisable during such 6-month
period only to the extent that it would have been exercisable
immediately prior to the termination of your employment;
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e. the expiration of one (1) year after your death if your
death occurs during your employment or during the six (6) month or
thirty (30) day period, as the case may be specified in clauses (c)
and/or (d) above, except that this Option will be exercisable during
such 1-year period only to the extent that it would have been
exercisable immediately prior to your death; or
f. as determined by the Committee in accordance with the plan,
upon a Change of Control (as defined in the Plan);
provided, however, that none of the events described above shall extend the
period of exercisability of this Option beyond the day immediately preceding the
tenth anniversary of the date hereof.
4. Non-transferability of Option. This Option is not transferable by you
otherwise than by will or the laws of descent and distribution, and is
exercisable, during your lifetime, only by you. This Option may not be assigned,
transferred (except by will or the laws of descent and distribution), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.
5. Exercise of Option.
a. Purchase of Shares. Any exercise of this Option shall be in
writing addressed to the Secretary of the Company at the principal
place of business of the Company, shall be substantially in the form
attached hereto as Exhibit B and shall be accompanied by a certified
or bank cashier's check to the order of the Company in the full
amount of the purchase price of the Shares so purchased.
b. Legends. If the Company, in its sole discretion, shall
determine that it is necessary, to comply with applicable securities
laws, the certificate or certificates representing the Shares
purchased pursuant to the exercise of this Option shall bear an
appropriate legend in form and substance, as determined by the
Company, giving notice of applicable restrictions on transfer under
or in respect of such laws. Further, you hereby acknowledge that the
Company may endorse a legend upon the certificate evidencing the
Shares as the Company, in its sole discretion, determines to be
necessary and appropriate to implement the terms of the Plan.
c. Investment Intent. You hereby covenant and agree with the
Company that if, at the time of exercise of this Option, there does
not exist a Registration Statement on an appropriate form under the
Securities Act
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<PAGE>
of 1933, as amended (the "Act"), which Registration Statement shall
have become effective and shall include a prospectus which is
current with respect to the Shares subject to this Option (i) that
you will represent that you are purchasing the Shares for your own
account and not with a view to the resale or distribution thereof
and (ii) that any subsequent offer for sale or sale of any such
Shares shall be made either pursuant to (x) a Registration
Statement on an appropriate form under the Act, which Registration
Statement shall have become effective and shall be current with
respect to the shares being offered and sold, or (y) a specific
exemption from the registration requirements of the Act, but in
claiming such exemption, you shall, if requested by the Company,
prior to any offer for sale or sale of such Shares, obtain a
favorable written opinion from counsel for or approved by the
Company as to the applicability of such exemption.
6. Withholding Taxes. As provided in the Plan, the Company may withhold or
cause to be withheld from sums due or to become due to you from the Company or a
subsidiary corporation or affiliate thereof an amount necessary to satisfy its
obligation (if any) to withhold taxes incurred by reason of the exercise of this
Option or the disposition of Shares acquired hereunder, or may require you to
reimburse the Company in such amount and may make such reimbursement a condition
to the delivery of the Shares pursuant to the exercise of this Option.
7. Agreement Subject to the Plan. You and the Company agree that this
agreement is subject to, and that you and the Company will both be bound by, all
terms, conditions, limitations and restrictions contained in the Plan, which
shall be controlling in the event of any conflicting or inconsistent provisions.
8. Stockholders Agreement. It is a condition to the effectiveness of this
Option and the obligation of the Company to issue any Shares hereunder that you
shall have executed, on or prior to the date hereof, the Stockholders Agreement,
dated as of July 16, 1997, by and among the Company and the stockholders named
therein (the "Stockholders Agreement"). If you have not executed the
Stockholders Agreement on or before the date hereof, this Option shall
automatically and without further notice terminate and be null and void.
Please indicate your acceptance of all the terms and conditions of this
Option and the Plan by signing and returning a copy of this letter.
Very truly yours,
WGL HOLDINGS, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
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ACCEPTED:
_______________________________
Signature of Employee
_______________________________
Name of Employee - Please Print
Date: ___ _,199_
5
<PAGE>
Exhibit A
1998 Employee Stock Option Plan
6
<PAGE>
Exhibit B
Exercise Letter
[Date]
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: Corporation Secretary
Re: Nonqualified Special Stock Option
Under the 1998 Stock Option Plan
Dear Sir:
I am the holder of a "Special" Option granted to me under the above-
referenced Plan by WGL Holdings, Inc. (the "Company") on _____, 19_ to purchase
____________ shares of Common Stock of the Company ("Shares") at a price of
$____ per share. I hereby exercise that option with respect to ____________
Shares, the total purchase price for which is $____________
On _______________ [a business day not more than 15 days from the date of
this letter], I will present a certified check payable to the order of the
Company in the amount of $_____________ representing the total purchase price
for the Shares. The certificate or certificates representing the Shares should
be registered in my name and upon the presentation of that check [and
___________ shares of Common Stock], the Shares should be [delivered to me]
[forwarded to me at the address indicated below].
I hereby agree to pay the full amount of all withholding taxes which the
Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes subject by reason of the exercise of this option. I
agree that the corporation by which I am employed may, in its discretion, hold
the stock certificate to which I become entitled upon exercise of this option,
as security for the payment of the aforementioned withholding tax liability,
until cash sufficient to pay that liability has been accumulated.
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Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.
Very truly yours,
WGL HOLDINGS, NC.
___________________________________________
Signature
___________________________________________
Please Print name
___________________________________________
Address
___________________________________________
___________________________________________
___________________________________________
Social Security Number
RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.
By:_____________________________
Name:___________________________
Title:__________________________
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"Standard" Option
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
_______________, 199_
[Name of Optionee]
[Address]
Re: Grant of Incentive Stock Option
Dear ___________________:
The Board of Directors of WGL Holdings, Inc. (the "Company") has
authorized and approved the 1998 Stock Option Plan (the "Plan"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"Committee") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "Shares") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.
1. Grant of Option. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "Option") to purchase, in accordance
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<PAGE>
with the terms and conditions set forth in the Plan, but subject to the
limitations set forth herein and in the Plan, an aggregate of __________ Shares
of the Company (the "Total Shares") at a price of $____ per Share, such option
price being, in the judgment of the Committee, not less than one hundred percent
(100%) of the fair market value of such Share at the date hereof. The Option is
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, but it is specifically
understood that no warranty is made to you as to such qualification.
2. Vesting of Option. Subject to the provisions and limitations of
the Plan, the number of Shares of stock for which this Option may be exercised
shall be determined in accordance with this Section 2.
a. Establishment of EBITDA Targets. For each of the fiscal years
ending on December 31 of 1998, 1999, 2000, 2001 and 2002, the
Company has established target amounts (each a "Target Amount"),
floor amounts (each, a "Floor Amount") and ceiling amounts (each, a
"Ceiling Amount") for EBITDA (as defined below) set forth below:
Floor Amount Target Amount Ceiling Amount
------------ ------------- --------------
1998 $20,100,000 $22,100,000 $24,100,000
1999 $32,000,000 $36,000,000 $40,000,000
2000 $36,000,000 $40,000,000 $44,000,000
2001 $40,000,000 $46,000,000 $52,000,000
2002 $44,000,000 $50,000,000 $56,000,000
b. If EBITDA Equals Taraet Amount. If the EBITDA of the Company for
a fiscal year is equal to the Target Amount for such fiscal year,
this Option may be exercised to purchase _________ Shares (i.e., 20%
of the Total Shares), subject to adjustment in accordance with
Section 2(f) and subject to Section 2(g).
c. If EBITDA Is At Least Equal to Floor Amount But Less Than Target
Amount. If the EBITDA of the Company for a fiscal year is at least
equal to the
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Floor Amount, but less than the Target Amount, for such fiscal year,
then, subject to adjustment in accordance with Section 2(f) and
subject to Section 2(g), this Option may be exercised to purchase a
number of Shares equal to the sum of (i) _________ (i.e., 15% of the
Total Shares) plus (ii) that number of Shares equal to the product
of (x) _________ (i.e., 5% of the Total Shares) and (y) a fraction,
the numerator of which shall be equal to the excess of the EBITDA of
the Company for such fiscal year over the Floor Amount for such
fiscal year and the denominator of which is equal to the excess of
Target Amount for such fiscal year over the Floor Amount for such
fiscal year.
d. If EBITDA Exceeds Target Amount. If the EBITDA of the Company for
a fiscal year exceeds the Target Amount for such fiscal year, then,
subject to adjustment in accordance with Section 2(f) and subject to
Section 2(g), this Option may be exercised to purchase a number of
Shares equal to the sum of (i) _________ (i.e., 20% of the Total
Shares) plus (ii) that number of shares equal to the product of (x)
_________ (i.e., 5% of the Total Shares) and (y) a fraction (which
shall not be greater than 1), the numerator of which shall be equal
to the excess of the EBITDA of the Company for such fiscal year over
the Target Amount for such fiscal year and the denominator of which
shall be equal to the excess of the Ceiling Amount for such fiscal
year over the Target Amount for such fiscal year.
e. If EBITDA Exceeds Ceiling Amount; Carryback to Prior Year. If the
EBITDA of the Company for such fiscal year exceeds the Target Amount
for such fiscal year (such excess, an "Excess Amount"), and the
Target Amount for the immediately preceding fiscal year (the "Prior
Year") exceeded the EBITDA of the Company for the Prior Year (such
excess, a "Prior Year Shortfall Amount"), the (i) Excess Amount for
such fiscal year may be carried back to the Prior Year (but in an
amount not in excess of the Prior Year Shortfall Amount), (ii) the
EBITDA for such Prior Year shall be redetermined, and (iii) the
number of Shares for which this Option may be exercised
3
<PAGE>
shall be increased based upon the EBITDA for the Prior Year as so
redetermined.
f. IF EBITDA Is Less Than Floor Amount; Carryforward from Prior
Year. If the Floor Amount for a fiscal year (a "Current Year")
exceeds the EBITDA of the Company for such Current Year, this Option
shall not become exercisable for any Shares in respect of such
Current Year; provided, however, that if the EBITDA of the Company
for the Prior Year exceeded the Target Amount for the Prior Year
(such excess, a "Carryforward Amount"), then you may elect that (i)
the Carryforward Amount for the Prior Year shall be carried forward
to such Current Year (but in an amount not in excess of the amount
by which the Target Amount for the Current Year exceeds the EBITDA
of the Company for such Current Year), (ii) the EBITDA for the
Current Year shall be redetermined to be an amount equal to the sum
of the EBITDA for such Current Year and the amount so carried
forward pursuant to clause (i), (iii) the EBITDA for the Prior Year
shall be redetermined to be an amount equal to the EBITDA for such
Prior Year, reduced by the amount carried forward pursuant to clause
(i), and (iv) the number of Shares for which this Option may be
exercised shall be adjusted based upon the EBITDA for the Current
Year and the Prior Year as so redetermined in accordance with
clauses (ii) and (iii), respectively.
g. Maximum Limitation. Notwithstanding anything to the contrary set
forth herein, (i) in no event shall the Option become exercisable
for more than _________ (i.e., 100% of the Total Shares) Shares in
the aggregate and (ii) in no event shall the Option become
exercisable pursuant to Section 2(e) or Section 2(f) for more than
___________ Shares (i.e., 40% of the Total Shares) in the aggregate
in any two-year period.
h. Definition of EBITDA. For purposes of this Section 2, "EBITDA"
for a fiscal year (i) shall mean the consolidated net income of the
Company and its subsidiaries for such fiscal year, determined in
accordance with U.S. generally accepted accounting principles
consistently applied in accordance with the accounting
4
<PAGE>
methodologies and procedures of the Company and its subsidiaries
plus (a) provisions for taxes based on income or profits to the
extent deducted in computing such consolidated net income, plus (b)
consolidated interest expense of the Company and its subsidiaries
for such period, whether paid or accrued, to the extent any such
expense was deducted in computing such consolidated net income, plus
(c) depreciation, amortization and other non-cash expenses of the
Company and its subsidiaries for such period (excluding any non-cash
expenses to the extent it represents an accrual or reserve for cash
expenses in any future period or amortization of a prepaid cash
expenses paid in a prior period) to the extent any such expense was
deducted in computing such consolidated net income, and (ii) shall
be subject to adjustment as set forth in paragraph i. below.
i. Determinations of the Committee. From time to time, the Committee
in its sole discretion and in administering the Plan may make
adjustments in the EBITDA for a fiscal year so that extraordinary or
unusual charges or credits, acquisitions, mergers, consolidations
and other corporate transactions and other elements of or factors
influencing the calculation of EBITDA do not distort or affect the
operation of the Plan in a manner inconsistent with its purpose. The
decisions of the Committee as to the computation of EBITDA and other
determinations to be made under the Plan shall be final, conclusive
and binding on all parties, including optionholders.
j. Notice. As soon as practicable following receipt by the Company
of audited financial statements of the Company for a fiscal year,
the Company shall notify you of the amount of EBITDA achieved by the
Company for such fiscal year. Upon receipt of such notice by you,
this Option shall become exercisable in respect of the number of
Shares determined in accordance with Section 2 hereof.
k. Vesting of Remaining Shares. Notwithstanding anything to the
contrary herein, on ________________ 2008 (i.e., the date which is
90 days prior to the tenth anniversary of the date
5
<PAGE>
of grant) this Option shall become exercisable for the excess of (i)
the number of Total Shares over (ii) the number of Shares, if any,
for which this Option shall have become exercisable pursuant to
paragraphs b., c., d. or e. of this Section 2.
1. Fractional Shares. In no event shall you exercise this Option for
a fraction of a Share.
3. Termination of Option. The unexercised portion of the Option
granted herein will automatically and without notice terminate and become null
and void upon the earliest to occur of the following:
a. the expiration of ten (10) years from the date of grant of this
Option;
b. the date of termination of your employment if your employment (i)
is terminated by you, unless you voluntarily retire from the Company
or a subsidiary corporation of the Company and the Board of
Directors approves such retirement, or (ii) is terminated by the
Company or subsidiary corporation of the Company for cause (as
defined in the Plan);
c. the expiration of 30 days from the date of termination by the
Company or its subsidiaries of your employment other than for cause
(as defined in the Plan), except that this Option will be
exercisable during such 30-day period only to the extent that it
would have been exercisable immediately prior to the termination of
your employment;
d. the expiration of 6 months after the termination of your
employment by reason of your disability (as defined in the Plan),
except that this Option will be exercisable during such 6-month
period only to the extent that it would have been exercisable
immediately prior to the termination of your employment;
e. the expiration of one (1) year after your death if your death
occurs during your employment or during the six (6) month or thirty
(30) day period, as the case may be, specified in clauses (c) and/or
(d) above, except that this Option will
6
<PAGE>
be exercisable during such 1-year period only to the extent that it
would have been exercisable immediately prior to your death; or
f. as determined by the Committee in accordance with the Plan, upon
a Change of Control (as defined in the Plan);
provided, however, that none of the events described above shall extend the
period of exercisability of this Option beyond the day immediately preceding the
tenth anniversary of the date hereof.
4. Non-transferability of Option. This Option is not transferable by
you otherwise than by will or the laws of descent and distribution, and is
exercisable, during your lifetime, only by you. This Option may not be assigned,
transferred (except by will or the laws of descent and distribution), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.
5. Exercise of Option.
a. Purchase of Shares. Any exercise of this Option shall be in
writing addressed to the Secretary of the Company at the principal
place of business of the Company, shall be substantially in the form
attached hereto as Exhibit B and shall be accompanied by a certified
or bank cashier's check to the order of the Company in the full
amount of the purchase price of the Shares so purchased.
b. Legends. If the Company, in its sole discretion, shall determine
that it is necessary, to comply with applicable securities laws, the
certificate or certificates representing the Shares purchased
pursuant to the exercise of this Option shall bear an appropriate
legend in form and substance, as determined by the Company, giving
notice of applicable restrictions on transfer under or in respect of
such laws. Further, you hereby acknowledge that the Company may
endorse a legend upon the certificate
7
<PAGE>
evidencing the Shares as the Company, in its sole discretion,
determines to be necessary and appropriate to implement the terms of
the Plan.
c. Investment Intent. You hereby covenant and agree with the Company
that if, at the time of exercise of this Option, there does not
exist a Registration Statement on an appropriate form under the
Securities Act of 1933, as amended (the "Act"), which Registration
Statement shall have become effective and shall include a prospectus
which is current with respect to the Shares subject to this Option
(i) that you will represent that you are purchasing the Shares for
your own account and not with a view to the resale or distribution
thereof and (ii) that any subsequent offer for sale or sale of any
such Shares shall be made either pursuant to (x) a Registration
Statement on an appropriate form under the Act, which Registration
Statement shall have become effective and shall be current with
respect to the shares being offered and sold, or (y) a specific
exemption from the registration requirements of the Act, but in
claiming such exemption, you shall, if requested by the Company,
prior to any offer for sale or sale of such Shares, obtain a
favorable written opinion from counsel for or approved by the
Company as to the applicability of such exemption.
6. Withholding Taxes. As provided in the Plan, the Company may
withhold or cause to be withheld from sums due or to become due to you from the
Company or a subsidiary corporation or affiliate thereof an amount necessary to
satisfy its obligation (if any) to withhold taxes incurred by reason of the
exercise of this Option or the disposition of Shares acquired hereunder, or may
require you to reimburse the Company in such amount and may make such
reimbursement a condition to the delivery of the Shares pursuant to the exercise
of this Option.
7. Agreement Subject to the Plan. You and the Company agree that
this agreement is subject to, and that you and the Company will both be bound
by, all terms, conditions, limitations and restrictions contained in the Plan,
which shall be controlling in the event of any conflicting or inconsistent
provisions.
8
<PAGE>
8. Stockholders Agreement. It is a condition to the effectiveness of
this Option and the obligation of the Company to issue any Shares hereunder that
you shall have executed, on or prior to the date hereof, the Stockholders
Agreement, dated as of July 16, 1997, by and among the Company and the
stockholders named therein (the "Stockholders Agreement"). If you have not
executed the Stockholders Agreement on or before the date hereof, this Option
shall automatically and without further notice terminate and be null and void.
Please indicate your acceptance of all the terms and conditions of
this Option and the Plan by signing and returning a copy of this letter.
Very truly yours,
WGL HOLDINGS, INC.
ACCEPTED:
_______________________________
Signature of Employee
_______________________________
Name of Employee - Please Print
Date:________
9
<PAGE>
Exhibit A
1998 Employee Stock Option Plan
10
<PAGE>
Exhibit B
Exercise Letter
[Date]
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: Corporation Secretary
Re: Standard Incentive Stock Option
Under the 1998 Stock Option Plan
Dear Sir:
I am the holder of a "Standard" Option granted to me under the
above-referenced Plan by WGL Holdings, Inc. (the "Company") on _____, 199_ to
purchase shares of Common Stock of the Company ("Shares") at a price of $_____
per share. I hereby exercise that option with respect to ___________ Shares, the
total purchase price for which is $____________
On ________________ [a business day not more than 15 days from the
date of this letter], I will present a certified check payable to the order of
the Company in the amount of $_______________ representing the total purchase
price for the Shares. The certificate or certificates representing the Shares
should be registered in my name and upon the presentation of that check [and
____________ shares of Common Stock], the Shares should be [delivered to me]
[forwarded to me at the address indicated below].
I hereby agree to pay the full amount of all withholding taxes which
the Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes
11
<PAGE>
subject by reason of the exercise of this option. I agree that the corporation
by which I am employed may, in its discretion, hold the stock certificate to
which I become entitled upon exercise of this option, as security for the
payment of the aforementioned withholding tax liability, until cash sufficient
to pay that liability has been accumulated.
Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.
Very truly yours,
___________________________________________
Signature
___________________________________________
Please Print name
___________________________________________
Address
___________________________________________
___________________________________________
___________________________________________
Social Security Number
RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.
By:_____________________________
12
<PAGE>
Non-Standard Option
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
September 24, 1999
Name
Address
Address
Re: Grant of Nonqualified Option
Dear
The Board of Directors of WGL Holdings, Inc. (the "Company") has
authorized and approved the 1998 Stock Option Plan (the "Plan"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"Committee") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.O01 per share, of the
Company (the "Shares)") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.
1. Grant of Option. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "Option") to purchase, in accordance with
the terms and conditions set forth in the Plan, but subject to the limitations
set forth herein and in the Plan, an aggregate of ______Shares of the Company
(the "Total Shares") at a price of $3.00 per Share, such option price being, in
the judgment of the Committee, not less than one hundred percent (100%) of the
fair market value of such Share at the date hereof. The Option will be a
Non-Qualified Option and is not intended to qualify as an "incentive stock
option" within the meaning of Section 42 of the Internal Revenue Code of 1986,
as amended.
1
<PAGE>
2. Vesting of Option
a. Vesting Dates and Amounts. Subject to clause (b) of this
Section 2 and to the other provisions and limitations of the Plan,
the Option shall become exercisable for Shares on the dates and in
the amounts set forth in the following table:
Percentage of Original
Date Vested Option Vested
----------- -------------
December 31,1999 33 1/3%
December 31,2000 33 1/3%
December 31,2001 33 1/3%
b. Additional Limitations on Exercisability. In addition to
the time limitations on exercisability set forth in clause (a) of
this Section 2, the Option will not be exercisable for any Shares
vested under said clause (a) until the first to occur of the
following: (i) a Liquidity Event (as hereinafter defined), (ii) your
death, retirement or termination of employment or (iii) the fifth
anniversary of the Grant of Option. For purposes hereof, "Liquidity
Event" shall mean a Qualified IPO (as defined in the Stockholders
Agreement) or a Change of Control (as defined in the Plan) [on
account of which the Committee shall have determined to terminate
the Option].
c. Cumulative Effect of Vesting. The right to purchase Shares
shall be cumulative so that when the right to purchase any Shares
has vested under clauses (a) and (b) of this Section, such Shares or
any part thereof may be purchased at any time thereafter until the
expiration or termination of the Option.
d. Fractional Shares. In no event shall you exercise this
Option for a fraction of a Share.
3. Termination of Option. The unexercised portion of the Option
granted herein will automatically and without notice terminate and become null
and void upon the earliest to occur of the following:
a. the expiration of ten (10) years from the date of grant of
this Option;
b. the date of termination of your employment if your
employment (i) is terminated by you, unless you voluntarily retire
from the Company or a subsidiary corporation of the Company and the
Board of Directors approves such retirement, or (ii) is terminated
by the Company or a subsidiary corporation of the Company for cause
(as defined in the Plan);
c. the expiration of 30 days from the date of termination by
the Company or its subsidiaries of your employment other than for
cause (as defined in the Plan), except that this Option will be
exercisable during such 30-day period only to the extent that it
would have been exercisable immediately prior to the termination of
your employment;
2
<PAGE>
d. the expiration of 6 months after the termination of your
employment by reason of your disability (as defined in the Plan),
except that this Option will be exercisable during such 6-month
period only to the extent that it would have been exercisable
immediately prior to the termination of your employment;
e. the expiration of one (1) year after your death if your
death occurs during your employment or during the six (6) month or
thirty (30) day period, as the case may be specified in clauses (c)
and/or (d) above, except that this Option will be exercisable during
such 1-year period only to the extent that it would have been
exercisable immediately prior to your death; or
f. as determined by the Committee in accordance with the Plan,
upon a Change of Control (as defined in the Plan); provided however,
that none of the events described above shall extend the period of
exercisability of this Option beyond the day immediately preceding
the tenth anniversary of the date hereof.
4. Non-Transferability of Option. This Option is not transferable by
you otherwise than by will or the laws of descent and distribution, and is
exercisable, during your lifetime, only by you. This Option may not be assigned,
transferred (except by will or the laws of descent and distribution), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.
5. Exercise of Option.
a. Purchase of Shares. Any exercise of the Option shall be in
writing addressed to the Secretary of the Company at the principal
place of business of the Company, shall be substantially in the form
attached hereto as Exhibit B and shall be accompanied by a certified
or bank cashiers check to the order of the Company in the full
amount of the purchase price of the Shares so purchased.
You may also pay the purchase price of the Shares, in
whole or in part, by delivering to the Company shares of common
stock of the Company owned by you for at least six months having a
fair market value at the date of exercise of the Option (together
with any portion of the purchase price paid in cash) equal to the
purchase price of the Shares so purchased.
b. Legends. If the Company, in its sole discretion, shall
determine that it is necessary, to comply with applicable securities
laws, the certificate or certificates representing the Shares
purchased pursuant to the exercise of this Option shall bear an
appropriate legend in form and substance, as determined by the
Company, giving notice of applicable restrictions on transfer under
or in respect of such laws. Further, you hereby acknowledge that the
Company may endorse a legend upon the certificate evidencing the
Shares as the Company, in its sole discretion, determines to be
necessary and appropriate to implement the terms of the Plan.
3
<PAGE>
c. Investment Intent. You hereby covenant and agree with the
Company that if, at the time of exercise of this Option, there does
not exist a Registration Statement on an appropriate form under the
Securities Act of 1933, as amended (the "Act") which Registration
Statement shall have become effective and shall include a prospectus
which is current with respect to the Shares subject to this Option
(i) that you will represent that you are purchasing the Shares for
your own account and not with a view to the resale of distribution
thereof and (ii) that any subsequent offer for sale or sale of any
such Shares shall be made either pursuant to (x) a Registration
Statement on an appropriate form under the Act, which Registration
Statement shall have become effective and shall be current with
respect to the Shares being offered and sold, or (y) a specific
exemption from the registration requirements of the Act, but in
claiming such exemption, you shall, if requested by the Company,
prior to any offer for sale or sale of such Shares, obtain a
favorable written opinion from counsel for or approved by the
Company as to the applicability of such exemption.
d. Restrictions Applicable Until the Company is Subject to
Federal Reporting Requirements. Notwithstanding any other provisions
of this Option or the Plan, you hereby acknowledge and agree that
unless and until the Company has become a reporting company with
respect to any class of its equity securities under the Securities
Exchange Act of 1934, as amended: (i) this Option may not be
exercised prior to the first day of the calendar month in which its
expiration date occurs; (ii) at any time prior to the expiration
date of this Option, the Company has the right, exercisable at its
discretion, to cancel and purchase this Option (or any portion
hereof) for an amount equal to the excess, if any, of the fair
market value (as defined in the Plan) of the Shares subject to the
Option over the exercise price of the Option on the date the Company
exercises such right. The Company's right to cancel and purchase the
Option under this paragraph is exercised when the Company gives
written notice to you of the cancellation and purchase of the Option
under this paragraph specifying the fair market value of the Shares
subject to the Option on which basis the purchase price shall be
calculated and a date, not later than the Option's expiration date,
on which the purchase price is to be paid.
6. Withholding Taxes. As provided in the Plan, the Company may
withhold or cause to be withheld from sums due or to become due to you from the
Company or a subsidiary corporation or affiliate thereof an amount necessary to
satisfy its obligation (if any) to withhold taxes incurred by reason of the
exercise of this Option or the disposition of Shares acquired hereunder, or may
require you to reimburse the Company in such amount and may make such
reimbursement a condition to the delivery of the Shares pursuant to the exercise
of this Option.
7. Agreement Subject to the Plan. You and the Company agree that
this agreement is subject to, and that you and the Company will both be bound
by, all terms, conditions, limitations and restrictions contained in the Plan,
which shall be controlling in the event of any conflicting or inconsistent
provisions.
4
<PAGE>
8. Stockholders Agreement. It is a condition to the effectiveness of
this Option and the obligation of the Company to issue any Shares hereunder that
you shall have executed, on or prior to the date hereof, the Stockholders
Agreement, dated as of July 16, 1997, by and among the Company and the
stockholders named therein (the "Stockholders Agreement"). If you have not
executed the Stockholders Agreement on or before the date hereof, this Option
shall automatically and without further notice terminate and be null and void.
9. Restrictions on Transfer. You acknowledge and agree that the
Company may require you, as a condition to the exercise of the Option, to become
bound by any reasonable agreement restricting transfer of the Shares received on
exercise of the Option or providing the Company with a right of first purchase
or other similar right.
5
<PAGE>
Please indicate your acceptance of all the terms and conditions of this Option
and the Plan by signing and returning a copy of this letter.
Very truly yours,
WGL HOLDINGS, INC.
By:______________________________________________
Name: Larry T. DeAngelo
Title: Vice President, Administration & Secretary
ACCEPTED:
_______________________________
Signature of Employee
_______________________________
Name of Employee - Please Print
Date___________________________
Exhibit A
1998 Employee Stock Option Plan
7
<PAGE>
Exhibit B
Exercise Letter
Date________________
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: Corporation Secretary
Re: Nonqualified Stock Option
Under the 1998 Stock Option Plan
Dear Sir:
I am the holder of a "Non-Standard" Option granted to me under the above
referenced Plan by WGL Holdings, Inc. (the "Company") on _____________ to
purchase _______ shares of Common Stock of the Company ("Shares") at a price of
$3.00 per share. I hereby exercise that option with respect to ______________
Shares, the total purchase price for which is $____________________________.
On ______________[a business day not more than 15 days from the date of
this letter], I will present a certified check payable to the order of the
Company in the amount of $___ representing the total purchase price for the
Shares. The certificate or certificates representing the Shares should be
registered in my name and upon the presentation of that check [and shares of
Common Stock]. The Shares should be [delivered to me] [forwarded to me at the
address indicated below].
I hereby agree to pay the full amount of all withholding taxes which the
Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State, or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes subject by reason of the exercise of this Option. I
agree that the corporation by which I am employed may, in its discretion, hold
the stock certificate to which I become entitled upon exercise of this Option,
as security for the payment of the aforementioned withholding tax liability,
until cash sufficient to pay that liability has been accumulated.
8
<PAGE>
Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.
Very truly yours,
WGL HOLDINGS, INC.
--------------------------------
Signature
--------------------------------
Please Print Name
--------------------------------
Address
--------------------------------
--------------------------------
--------------------------------
Social Security Number
--------------------------------
RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
9
<PAGE>
Exhibit 10.3
================================================================================
WILSON GREATBATCH LTD. EQUITY PLUS PLAN
MONEY PURCHASE PLAN
Effective
January 1, 1998
================================================================================
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
ARTICLE I DEFINITIONS 1
Section 1.1 References 1
Section 1.2 Compensation 1
Section 1.3 Dates 2
Section 1.4 Employee 2
Section 1.5 Employer 4
Section 1.6 Fiduciaries 4
Section 1.7 Participant/Beneficiary 5
Section 1.8 Participant Accounts 5
Section 1.9 Plan 5
Section 1.10 Service 5
Section 1.11 Trust 6
Section 1.12 ESOP Specific Definitions 6
ARTICLE II PARTICIPATION 8
Section 2.1 Eligibility Service 8
Section 2.2 Plan Participation 8
Section 2.3 Termination of Participation 8
Section 2.4 Re-Participation (Break In Service Rules) 9
ARTICLE III ALLOCATIONS TO PARTICIPANT ACCOUNTS 10
Section 3.1 General Provisions 10
Section 3.2 Allocation of Contributions and Forfeitures 11
Section 3.3 Rollover/Transfer Account 12
Section 3.4 Allocation of Investment Results 12
ARTICLE IV PAYMENT OF PARTICIPANT ACCOUNTS 14
Section 4.1 Vesting Service Rules 14
Section 4.2 Vesting of Participant Accounts 14
Section 4.3 Payment of Participant Account 17
Section 4.4 Form of Distribution 21
Section 4.5 In-Service Payments 21
Section 4.6 Distributions under Domestic Relations Orders 21
i
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
ARTICLE V ADDITIONAL QUALIFICATION RULES 1
Section 5.1 Limitations on Allocations under Code Section 415 1
Section 5.2 Joint and Survivor Annuity Requirements 6
Section 5.3 Distribution Requirements 8
Section 5.4 Top-Heavy Provisions 11
Section 5.6 ESOP Distribution Options 15
ARTICLE VI ADMINISTRATION OF THE PLAN 18
Section 6.1 Fiduciary Responsibility 18
Section 6.2 Plan Administrator 19
Section 6.3 Claims Procedure 21
Section 6.4 Trust Fund 21
Section 6.5 Investment Policy 22
Section 6.6 Valuation of the Trust Fund 23
Section 6.7 Voting Company Stock 23
Section 6.8 Current Obligations 24
ARTICLE VII AMENDMENT AND TERMINATION OF PLAN 25
Section 7.1 Right to Discontinue and Amend 25
Section 7.2 Amendments 25
Section 7.3 Protection of Benefits in Case of Plan Merger 26
Section 7.4 Termination of Plan 26
ARTICLE VIII MISCELLANEOUS PROVISIONS 27
Section 8.1 Exclusive Benefit-- Non-Reversion 27
Section 8.2 Inalienability of Benefits 27
Section 8.3 Employer-Employee Relationship 28
Section 8.4 Binding Agreement 28
Section 8.5 Separability 28
Section 8.6 Construction 28
Section 8.7 Copies of Plan 28
Section 8.8 Interpretation 28
Section 8.9 Securities and Exchange Commission Approval 28
Section 8.10 Nonterminable Right of Certain Holders 28
ii
<PAGE>
WILSON GREATBATCH LTD. EQUITY PLUS PLAN
MONEY PURCHASE PLAN
This plan, executed on the date indicated at the end hereof, is made
effective as of January 1, 1998, by Wilson Greatbatch Ltd., a Corporation, with
its principal office located in Clarence, New York.
WITNESSETH:
WHEREAS, the Employer desires to establish a permanent qualified employee
stock ownership plan for its employees in order to enable its employees to share
in the growth and prosperity of the Corporation and to provide its employees and
their beneficiaries with financial security in the event of retirement,
disability or death; and
WHEREAS, the Employer intends to establish a stock bonus plan to be
hereinafter called the Wilson Greatbatch Ltd. Equity Plus Plan - Stock Bonus
Plan to constitute an employee stock ownership plan in conjunction with the plan
established hereunder;
NOW THEREFORE, the premises considered, the following are the provisions
of the qualified plan of the Employer.
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ARTICLE I DEFINITIONS
Section 1.1 References
(a) Code means the Internal Revenue Code of 1986, as it may be amended
from time to time.
(b) ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Section 1.2 Compensation
(a) Compensation means, except as provided in paragraph (b) hereof, any
earnings reportable as W-2 wages for Federal income tax withholding purposes
plus elective contributions for the plan year.
Elective contributions are amounts excludible from the employee's Federal
taxable income and contributed by the Employer, at the employee's election to:
(1) A cafeteria plan (excludible under Code Section 125);
(2) A Code Section 401(k) arrangement (excludible under Code Section
402(e)(3));
(3) A simplified employee pension (excludible under Code Section
402(h)); or
(4) A tax sheltered annuity (excludible under Code Section 403(b)).
Any reference in this plan to compensation shall be a reference to the
definition in this Section 1.2, unless the plan reference specifies a
modification to this definition. The plan administrator shall take into account
only compensation actually paid by the Employer for the relevant period. A
compensation payment includes compensation by the Employer through another
person under the common paymaster provisions in Code Sections 3121 and 3306.
Compensation from a related Employer which is not a participating Employer under
this plan shall be excluded.
(b) Exclusions From Compensation - Notwithstanding the provisions of
paragraph 1.2(a), the following types of remuneration shall be excluded from the
Participant's compensation:
Bonuses
Compensation received during the current plan year which was considered
deferred compensation in a prior plan year
Moving Expense Payment
SAR Payments
Contributions to or benefits from this plan
Educational Assistance Payments
Referral Payments
Taxable Fringe Benefits (Auto, Group Term Life)
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(c) Limitations on Compensation - For any plan year beginning after
December 31, 1993, the plan administrator shall take into account only the first
$150,000 (or beginning January 1, 1995, such larger amount as the Commissioner
of Internal Revenue may prescribe) of any Participant's compensation for
determining all benefits provided under the plan. The compensation dollar
limitation for a plan year shall be the limitation amount in effect on January 1
of the calendar year in which the plan year begins. If the plan should determine
compensation on a period of time that contains fewer than 12 calendar months
(such as for a short plan year), the annual compensation dollar limitation shall
be an amount equal to the compensation dollar limitation for the plan year
multiplied by the ratio obtained by dividing the number of full months in the
period by 12.
(d) Compensation for Nondiscrimination Test - For purposes of determining
whether the plan discriminates in favor of highly compensated employees,
compensation means compensation as defined in this Section 1.2(a), except that
the Employer will not give effect to any exclusion from compensation specified
in Section 1.2(b). Notwithstanding the above, the Employer may elect to exclude
from this nondiscrimination definition of compensation any items of compensation
excludable under Code Section 414(s) and the applicable Treasury regulations,
provided such adjusted definition conforms to the nondiscrimination requirements
of those regulations.
Section 1.3 Dates
(a) Accounting Date means the date(s) on which investment results are
allocated to Participants' accounts, including the allocation date and any
interim accounting date(s) noted below:
No interim investment allocation dates.
(b) Allocation Date means the last day of each plan year which is the date
on which any contributions are allocated to Participants' accounts.
(c) The Effective Date of the plan is January 1, 1998.
(d) Plan Entry Date means the participation date(s) specified in Article
II.
(e) Plan Year means the 12-consecutive month period beginning on January 1
and ending on December 31.
(f) Limitation Year (for purposes of limitations on benefits and
contributions under Code Section 415) means the plan year.
Section 1.4 Employee
(a) (1) Employee means any person employed by the Employer. The term
employee shall include any employee of the Employer maintaining the plan or of
any other Employer required to be aggregated with such Employer under Code
Sections 414(b), (c), (m) or (o). The term employee shall also include any
leased employee deemed to be an employee of any Employer as provided in Code
Sections 414(n) or (o) and as defined in paragraph (2).
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(2) Leased Employee means an individual (who otherwise is not an
employee of the Employer) who, pursuant to a leasing agreement between the
Employer and any other person, has performed services for the Employer (or for
the Employer and any persons related to the Employer within the meaning of Code
Section 414(n)(6)) on a substantially full time basis for at least one year; and
such services are performed under the primary direction or control of the
Employer. If a leased employee is treated as an employee by reason of this
Section 1.4(a)(2), compensation from the leasing organization which is
attributable to services performed for the Employer shall be considered as
compensation under the plan. Contributions or benefits provided a leased
employee by the leasing organization which are attributable to services
performed for the Employer shall be treated as provided by the Employer.
Safe harbor plan exception - The plan shall not treat a leased employee as
an employee if the leasing organization covers the employee in a safe harbor
plan and, prior to application of this safe harbor plan exception, 20% or less
of the Employer's employees (other than highly compensated employees) are leased
employees. A safe harbor plan is a money purchase pension plan providing
immediate participation, full and immediate vesting, and a nonintegrated
contribution formula equal to at least 10% of the employee's compensation
without regard to employment by the leasing organization on a specified date.
The safe harbor plan must determine the 10% contribution on the basis of
compensation as defined in Code Section 415(c)(3) plus elective contributions.
(b) Highly Compensated Employee means any employee who:
(1) was a more than 5% owner of the Employer (applying the
constructive ownership rules of Code Section 318, and applying the principles of
Code Section 318, for an unincorporated entity) at any time during the current
or the preceding year; or
(2) for the preceding year -
(A) had compensation from the Employer in excess of $80,000
(as adjusted by the Secretary of the Treasury pursuant to Code Section 415(d),
except that the base period shall be the calendar quarter ending September 30,
1996), and
(B) if the Employer elects the application of this clause for
such preceding year, was in the top-paid group of employees for such preceding
year. For this purpose, an employee is in the top-paid group of employees for
any year if such employee is in the group consisting of the top 20% of the
employees when ranked on the basis of compensation paid during such year:
The term highly compensated employee also includes any former employee who
separated from service (or has a deemed separation from service, as determined
under Treasury regulations) prior to the plan year, performs no service for the
Employer during the plan year, and was a highly compensated employee either for
the separation year or any plan year ending on or after his 55th birthday, based
on the applicable rules in effect for such plan year.
For purposes of determining who is a highly compensated employee under
this Section 1.4(b), compensation means compensation as defined in Section
5.1(d)(2). The plan administrator shall make the determination of who is a
highly compensated employee, and, if the Employer so elects, this determination
shall include the determination of the number and identity of the top-paid 20%
group, consistent with Code Section 414(q) and
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regulations issued under that Code Section. The Employer may make a calendar
year data election with regard to the year preceding the current plan year to
determine the employees with compensation in excess of $80,000 and the top-paid
20% group, as prescribed by Treasury regulations. A top-paid 20% group election
or a calendar year data election must apply to all plans and arrangements of the
Employer.
Section 1.5 Employer
Employer means Wilson Greatbatch Ltd., or any successor entity by merger,
purchase, consolidation, or otherwise; or an organization affiliated with the
Employer which may assume the obligations of this plan with respect to its
employees by becoming a party to this plan. Another Employer whether or not it
is affiliated with the sponsor Employer may adopt this plan to cover its
employees by filing with the sponsor Employer a written resolution adopting the
plan, upon which the sponsor Employer shall indicate its acceptance of such
Employer as an Employer under the plan. Each such Employer shall be deemed to be
the Employer only as to persons who are on its payroll.
The following Employer(s) have adopted this plan and been accepted as a
participating Employer:
Employer Effective Date
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Greatbatch-Hittman, Inc. 1-1-1999
Section 1.6 Fiduciaries
(a) Named Fiduciary means the person or persons having fiduciary
responsibility for the management and control of plan assets.
(b) Plan Administrator means the person or persons appointed by the named
fiduciary to administer the plan.
(c) Trustee means the trustee named in the trust agreement executed
pursuant to this plan, or any duly appointed successor trustee.
(d) Investment Manager means a person or corporation other than the
trustee appointed for the investment of plan assets:
(1) who has the power to manage acquire or dispose of any asset of
the Plan;
(2) who is registered as an investment adviser under the Investment
Advisors Act of 1940, a bank as defined in such Act, or an insurance company
qualified to perform services described in (1) above under the laws of more than
one state; and
(3) who has acknowledged in writing that he or she is a fiduciary
with respect to the Plan.
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Section 1.7 Participant/Beneficiary
(a) Participant means an eligible employee of the Employer who becomes a
member of the plan pursuant to the provisions of Article II, or a former
employee who has an accrued benefit under the plan.
(b) Beneficiary means a person designated by a Participant who is or may
become entitled to a benefit under the plan. A beneficiary who becomes entitled
to a benefit under the plan remains a beneficiary under the plan until the
trustee has fully distributed his benefit to him. A beneficiary's right to (and
the plan administrator's, or a trustee's duty to provide to the beneficiary)
information or data concerning the plan shall not arise until he first becomes
entitled to receive a benefit under the plan.
Section 1.8 Participant Accounts
(a) Employer Contribution Account means the balance of the separate
account derived from Employer contributions, including forfeitures (if any).
(See Section 3.2.)
(b) Rollover/Transfer Account means the balance of the separate account
derived from rollover contributions and/or transfer contributions. (See Section
3.3.)
(c) Accrued Benefit means the Participant's account balance(s) as of the
accounting date falling on or before the day on which the accrued benefit is
being determined.
Section 1.9 Plan
Plan means Wilson Greatbatch Ltd. Equity Plus Plan - Money Purchase Plan
as set forth herein and as it may be amended from time to time.
Section 1.10 Service
(a) Service means any period of time the employee is in the employ of the
employer, including any period the employee is on an unpaid leave of absence
authorized by the employer under a uniform, nondiscriminatory policy applicable
to all employees. Separation from service means that the employee no longer has
an employment relationship with the employer.
(b) Hour of Service means each hour for which an employee is paid or
entitled to payment for the performance of duties for the employer.
(c) Break in Service means a period of severance of at least 12
consecutive months.
(d) (1) Period of Severance means a continuous period of time during which
the employee is not employed by the employer and is not credited with an hour of
service. Such period begins on the date the employee retires, terminates
service, or if earlier, the 12 month anniversary of the date on which the
employee was otherwise first absent from service. An employee shall receive
credit for any period of severance of less than 12 consecutive months.
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(2) In the case of an individual who is absent from work for
maternity or paternity reasons, the 12-consecutive month period beginning on the
first anniversary of the first date of such absence shall not constitute a break
in service. For purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence: (i) by reason of the pregnancy of the
individual, (ii) by reason of a birth of a child of the individual, (iii) by
reason of the placement of a child with the individual in connection with the
adoption of such child by such individual, or (iv) for purposes of caring for
such child for a period beginning immediately following such birth or placement.
(e) Other Service Credited - If the employer is a member of an affiliated
service group (under Code Section 414(m)), a controlled group of corporations
(under Code Section 414(b)), or a group of trades or businesses under common
control (under Code Section 414(c)), or any other entity required to be
aggregated with the employer pursuant to Code Section 414(o), service shall be
credited for any employment for any period of time for any other member of such
group. Service shall also be credited for any leased employee who is considered
an employee for purposes of this plan under Code Section 414(n) or (o).
(f) (1) Year of Service means a 12-consecutive month period of service
during which the employee does not incur a break in service.
(2) Crediting Years of Service - Generally, no service shall be
credited for periods during which the employee performs no services for the
employer. Further, no more than one year of service will be credited for any 12
consecutive-month period unless otherwise required by Code Section 410 or 411.
(3) Predecessor Service - Service as an employee of
Greatbatch-Hittman, Inc. shall be credited as service under the plan for the
purposes of eligibility and vesting.
(g) Qualified Military Service - Notwithstanding any provision of this
plan to the contrary, contributions, benefits, and service credit with respect
to qualified military service will be provided in accordance with Code Section
414(u).
Section 1.11 Trust
(a) Trust means the qualified trust created under the Employer's plan.
(b) Trust Fund means all property held or acquired by the plan.
Section 1.12 ESOP Specific Definitions
(a) ESOP means an employee stock ownership plan. For the purpose of this
plan, an employee stock ownership plan means two defined contribution plans one
of which is a stock bonus plan and the other of which is a money purchase plan
where both plans are qualified under Code Section 401(a), are designed to invest
primarily in qualifying Employer securities, and satisfy the regulatory
requirements prescribed by the Secretary of the Treasury.
(b) Company Stock means common stock issued by the Employer (or by a
corporation which is a member of the controlled group of corporations of which
the Employer is a member) which is readily tradable on an established securities
market. If
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there is no common stock which meets the foregoing requirement, the term company
stock means common stock issued by the Employer (or by a corporation which is a
member of the same controlled group) having a combination of voting power and
dividend rights equal to or in excess of: (A) that class of common stock of the
Employer (or of any other such corporation) having the greatest voting power,
and (B) that class of stock of the Employer (or of any other such corporation)
having the greatest dividend rights. Noncallable preferred stock shall be deemed
to be company stock if such stock is convertible at any time into stock which
constitutes company stock hereunder and if such conversion is at a conversion
price which (as of the date of the acquisition by the trust) is reasonable. For
purposes of the preceding sentence, pursuant to Code regulations, preferred
stock shall be treated as noncallable if after the call there will be a
reasonable opportunity for a conversion which meets the requirements of the
preceding sentence.
(c) Investment Accounts - For investment purposes, a Participant's
accounts may be placed in three accounts as described herein.
(1) Company Stock Account means the investment account of a
Participant which is credited with the shares of company stock purchased and
paid for by the trust fund or contributed to the trust fund.
(2) Other Investment Account means the investment account of a
Participant which is credited with his share of the net gain (or loss) of the
plan, forfeitures, and Employer contributions in other than company stock and
which is debited with payments made to pay for company stock.
(3) Directed Investment Account means the investment account of a
Participant which he elects under the provisions of Section 3.4(c) and which is
credited with the net gain (or loss) on his directed investments.
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ARTICLE II PARTICIPATION
Section 2.1 Eligibility Service
For purposes of determining an employee's initial or continued eligibility
to participate in the plan, an employee shall receive credit for the aggregate
of all time periods commencing with the employee's first day of employment or
reemployment and ending on the date a break in service begins, except for
periods of service disregarded under Section 2.4. The first day of employment or
reemployment is the first day the employee performs an hour of service.
Fractional periods of a year will be expressed in terms of days.
Section 2.2 Plan Participation
(a) Eligibility
(1) Age/service requirements - An employee who is a member of the
eligible class of employees shall be immediately eligible for plan
participation.
(2) Eligible class of employees - All employees of the Employer
shall be eligible to be covered under the plan except for employees in the
following categories:
- Employees included in a unit of employees covered by a
collective bargaining agreement between the Employer and employee
representatives if retirement benefits were the subject of good faith bargaining
and if less than two percent of the employees of the Employer who are covered
pursuant to that agreement are professionals as defined in Regulation Section
1.410(b)-9(g). For this purpose, the term "employee representatives" does not
include any organization more than half of whose members are employees who are
owners, officers or executives of the Employer.
- Leased employees who are considered employees under the
plan, unless such exclusion would cause the plan to fail to satisfy the
participation test or the coverage test of Code Section 410 or the
nondiscrimination requirements of Code Section 401(a)(4).
- Interns.
- Cooperative Student Program Participants.
(b) Entry Date - An eligible employee shall participate in the plan on the
December 31 entry date coinciding with or immediately following the date of his
employment. If an employee who is not a member of the eligible class of
employees becomes a member of the eligible class, such employee shall
participate immediately, if he would have otherwise previously become a
Participant.
Section 2.3 Termination of Participation
A Participant shall continue to be an active Participant of the plan so
long as he is a member of the eligible class of employees and he does not incur
a one-year break in service due to termination of employment. He shall become an
inactive Participant when he
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incurs a one-year break in service due to termination of employment, or at the
end of the plan year during which he ceases to be a member of the eligible class
of employees. He shall cease participation completely upon the later of his
receipt of a total distribution of his nonforfeitable account balance under the
plan or the forfeiture of the nonvested portion of the account balance.
Section 2.4 Re-Participation (Break In Service Rules)
(a) Vested Participant - A former Participant who had a nonforfeitable
right to all or a portion of his account balance derived from Employer
contributions at the time of his termination from service shall become a
Participant immediately upon returning to the employ of the Employer, if he is a
member of the eligible class of employees.
(b) Nonvested Participant - In the case of a former Participant who did
not have any nonforfeitable right to his account balance derived from Employer
contributions at the time of his termination from service, years of service
before a period of consecutive one-year breaks in service shall not be taken
into account in computing service if the number of consecutive one-year breaks
in service in such period equals or exceeds the greater of 5 or the aggregate
number of years of service before such breaks in service. Such aggregate number
of years of service shall not include any years of service disregarded under the
preceding sentence by reason of prior breaks in service.
If such former Participant's years of service before termination from
service are disregarded pursuant to the preceding paragraph, he shall be
considered a new employee for eligibility purposes. If such former Participant's
years of service before termination from service may not be disregarded pursuant
to the preceding paragraph, he shall participate immediately upon returning to
the employ of the Employer, if he is a member of the eligible class of
employees.
(c) Return to Eligible Class - If a Participant becomes an inactive
Participant, because he is no longer a member of the eligible class of
employees, but does not incur a break in service; such inactive Participant
shall become an active Participant immediately upon returning to the eligible
class of employees. If such Participant incurs a break in service, eligibility
shall be determined under the re-participation rules in paragraphs (a) and (b)
above.
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ARTICLE III ALLOCATIONS TO PARTICIPANT ACCOUNTS
Section 3.1 General Provisions
(a) Maintenance of Participant Accounts - The plan administrator shall
maintain one or more separate accounts covering each Participant under the plan.
Such account(s) shall be increased by contributions, investment income, and
market value appreciation of the fund. It shall be decreased by market value
depreciation of the fund, forfeiture of nonvested amounts, benefit payments,
withdrawals and expenses.
(b) Amount and Payment of Employer Contribution
(1) Amount of Contribution - For each plan year, the Employer
contribution to the plan shall be the amount which is determined under the
provisions of this Article and Section 6.9. For any plan year with respect to
which Employer contributions are applied to repay principal on a loan made to
the plan under Section 6.9, the total amount of Employer contributions shall not
exceed twenty-five percent (25%) of the aggregate Participant compensation for
the plan year. The Employer may contribute any amount in excess of the maximum
for the plan year, without limitation, for the purpose of paying interest on
such loans. Further, the Employer contribution shall not exceed the maximum
amount deductible under Code Section 404.
The Employer contributes to this plan on the conditions that its
contribution is not due to a mistake of fact and that the Internal Revenue
Service will not disallow the deduction for its contribution. The trustee, upon
written request from the Employer, shall return to the Employer the amount of
the Employer's contribution made due to a mistake of fact or the amount of the
Employer's contribution disallowed as a deduction under Code Section 404. The
trustee shall not return any portion of the Employer's contribution under the
provisions of this paragraph more than one year after the earlier of: (A) The
date on which the Employer made the contribution due to a mistake of fact; or
(B) The time of disallowance of the contribution as a deduction, and then, only
to the extent of the disallowance. The trustee will not increase the amount of
the Employer contribution returnable under this Section for any earnings
attributable to the contribution, but the trustee will decrease the Employer
contribution returnable for any losses attributable to it. The trustee may
require the Employer to furnish whatever evidence it deems necessary to confirm
that the amount the Employer has requested be returned is properly returnable
under ERISA.
(2) Payment of Contribution - The Employer shall make its
contribution to the plan in cash or company stock within the time prescribed by
the Code or applicable Treasury regulations. Company stock will be valued at its
then fair market value.
(c) Limitations and Conditions - Notwithstanding the allocation procedures
set forth in this Article, the allocations to Participants' accounts shall be
limited or modified to the extent required to comply with the provisions of
Article V (limitations on allocations under Code Section 415 and top heavy
provisions under Code Section 416).
In any limitation year in which the allocation to one or more
Participants' accounts would be in excess of the limitations on allocations
under Code Section 415, the annual additions under the Wilson Greatbatch Ltd.
Equity Plus - Stock Bonus Plan which the
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Employer also sponsors will be reduced to the extent necessary to comply with
such limitations first. If any further reduction is required, the annual
additions under this plan will then be reduced with respect to such
Participants. Finally, if any further reduction is required, the annual
additions under the Wilson Greatbatch Ltd. Equity Plus Plan - 401(k) Retirement
Plan (formerly the Wilson Greatbatch Ltd. Profit Sharing Retirement Plan) will
be reduced with respect to such Participants.
Section 3.2 Allocation of Contributions and Forfeitures
(a) Conditions for Allocations - An active Participant shall be eligible
for an allocation of the Employer contribution as of an allocation date,
provided that he satisfies the following conditions:
(1) He completed at least one (1) hour of service during the current
plan year.
AND
(2) He is employed by the Employer on the last day of the plan year,
unless his employment terminated during the plan year by reason of retirement,
disability, or death.
Notwithstanding the above conditions for allocation of contributions, if
the plan would otherwise fail to satisfy the participation test or coverage test
of Code Section 410 or the nondiscrimination requirements of Code Section
401(a)(4), the plan administrator shall amend the plan in a nondiscriminatory
manner to provide for the participation of additional employees and/or to cause
additional active Participants to be eligible for an allocation.
(b) (1) Amount of Contribution - For each plan year, the Employer will
contribute and allocate to each eligible Participant's account an amount equal
to 5% of each such eligible Participant's compensation.
(2) Top-Heavy Plan Years
In any year in which this plan is top-heavy (as defined in Section
5.4(e)(2)) when aggregated with the Wilson Greatbatch Ltd. Equity Plus Plan -
401(k) Retirement Plan and the Wilson Greatbatch Ltd. Equity Plus Plan - Stock
Bonus Plan which the Employer also sponsors, the top-heavy minimum benefit
requirement shall be met under this plan.
For such a plan year, the contribution on behalf of each Participant who
participates in both plans shall be increased as necessary to equal 3% of his
compensation. If a Participant only participates in this plan, the contribution
on his behalf shall be increased as necessary to equal 3% of his compensation.
(3) Compensation - For purposes of the allocation of the Employer
contribution, compensation means compensation as defined in Section 1.2 for the
entire plan year.
(c) Allocation of Forfeitures - Forfeitures for the plan year shall be
used to reduce Employer contributions for the current plan year.
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Section 3.3 Rollover/Transfer Account
Rollover and transfer contributions shall not be permitted under this plan
and no amount shall be credited to the rollover/transfer account.
Section 3.4 Allocation of Investment Results
(a) Company Stock Account - The company stock account of each Participant
shall be credited as of each allocation date with his allocable share of company
stock (including fractional shares) purchased and paid for by the plan or
contributed in kind by the Employer. Stock dividends on company stock held in
his company stock account shall be credited to his company stock account when
paid.
(b) Other Investments Account - As of each allocation date, prior to the
allocation of Employer contributions, any earnings or losses (net appreciation
or net depreciation) of the trust fund shall be allocated in the same proportion
that each Participant's other investments account bears to the total of all
Participants' other investment accounts as of such date. For this purpose, each
account balance shall be equal to the average balance for the period commencing
on the day following the prior accounting date and ending on the current
accounting date.
Cash dividends on company stock allocated to each Participant's other
investments account after the first month of the plan year shall not share in
any earnings or losses of the trust fund for such year. However, the
administrator may direct that cash dividends on company stock be segregated into
a separate account for each Participant in a federally insured savings account,
certificate of deposit in a bank or savings and loan association, money market
certificate, or other short term debut security acceptable to the trustee until
such time as the allocations pursuant to this plan have been made, at which time
they may remain segregated or be invested as part of the general trust fund, or
such cash dividends may be distributed pursuant to Section 4.3(c)(6).
Earnings or losses include the increase (or decrease) in the fair market
value of assets of the trust fund (other than company stock in the Participants'
company stock accounts) since the preceding allocation date.
(c) Directed Investment Account
(1) Each qualified Participant may elect within ninety (90) days
after the close of each plan year during the qualified election period to direct
the trustee in writing as to the investment of 25 percent of the total number of
shares of company stock that have ever been allocated to such qualified
Participant's company stock account (reduced by the number of shares of company
stock previously invested pursuant to a prior election). In the case of the
election year in which the Participant can make his last election, the preceding
sentence shall be applied by substituting "50 percent" for "25 percent." If the
qualified Participant elects to direct the trustee as to the investment of his
company stock account, such direction shall be effective no later than 180 days
after the close of the plan year to which such direction applies.
Notwithstanding the above, if the fair market value (determined pursuant
to Section 6.7(b) at the plan valuation date immediately preceding the first day
on which a qualified Participant is eligible to make an election) of company
stock acquired by or contributed to
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the plan and allocated to a qualified Participant's company stock account is
$500 or less, then such company stock shall not be subject to this paragraph.
For purposes of determining whether the fair market value exceeds $500, company
stock held in accounts of all employee stock ownership plans (as defined in Code
Section 4975(e)(7)) and tax credit employee stock ownership plans (as defined in
Code Section 409(a)) maintained by the Employer or any affiliated Employer shall
be considered as held by the plan.
(2) For the purposes of this Section the following definitions shall
apply:
(A) Qualified Participant means any Participant who has
completed ten years of participation as a Participant in this plan and has
attained age 55.
(B) Qualified election period means the six plan year period
beginning with the first plan year in which the Participant first became a
qualified Participant.
(3) If a qualified Participant elects to direct the investment of
his company stock account, the trustee shall convert the designated amount of
company stock to its fair market value cash equivalent and shall transfer such
cash value to the Participant's rollover/transfer account in the Wilson
Greatbatch Ltd. Equity Plus Plan - 401(k) Retirement Plan which the Employer
also sponsors (of its successor plan) where said account shall be subject to the
Participant's investment direction.
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ARTICLE IV PAYMENT OF PARTICIPANT ACCOUNTS
Section 4.1 Vesting Service Rules
(a) Vesting Year of Service - For purposes of determining the
nonforfeitable interest in the Participant's account balance, the Participant
shall receive credit for the aggregate of all time periods commencing with the
Participant's first day of employment or reemployment and ending on the date a
break in service begins, except for periods of service disregarded below. The
first day of employment or reemployment is the first day the Participant
performs an hour of service. Fractional periods of a year will be expressed in
terms of days. One vesting year of service shall be credited for each 12 month
period.
(b) Break in Service Rules
(1) Vested Participant - A former Participant who had a
nonforfeitable right to all or a portion of his account balance derived from
Employer contributions at the time of his termination from service shall retain
credit for all vesting years of service prior to a break in service.
(2) Nonvested Participant - In the case of a former Participant who
did not have any nonforfeitable right to his account balance derived from
Employer contributions at the time of his termination from service, years of
service before a period of consecutive one year breaks in service shall not be
taken into account in computing service if the number of consecutive one year
breaks in service in such period equals or exceeds the greater of 5 or the
aggregate number of years of service before such breaks in service. Such
aggregate number of years of service shall not include any years of service
disregarded under the preceding sentence by reason of prior breaks in service.
(3) Vesting for Pre-Break and Post-Break Accounts - In the case of a
Participant who has 5 or more consecutive one-year breaks in service, all years
of service after such breaks in service shall be disregarded for the purpose of
vesting the Employer-derived account balance that accrued before such breaks in
service. Whether or not such Participant's pre-break service counts in vesting
the post-break Employer-derived account balance shall be determined according to
the rules set forth in sub-paragraphs (1) and (2) above. Separate accounts shall
be maintained for the Participant's pre-break and post-break Employer-derived
account balance. Both accounts shall share in the investment earnings and losses
of the fund.
Section 4.2 Vesting of Participant Accounts
(a) Determination of Vesting
(1) Normal Retirement - A Participant's right to his account balance
shall be 100% vested and nonforfeitable upon the attainment of age 59 1/2 or the
fifth anniversary of participation, if later. If the Employer enforces a
mandatory retirement age, the normal retirement age shall be the lesser of the
mandatory age or the age specified herein.
(2) Late Retirement - If a Participant remains employed after his
normal retirement age, his account balance shall remain 100% vested and
nonforfeitable. Such
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Participant shall continue to receive allocations to his account as he did
before his normal retirement age.
(3) Early Retirement - Not applicable.
(4) Disability - If a Participant separates from service due to
disability, such Participant's right to his account balance as of his date of
disability shall be 100% vested and nonforfeitable. Disability means inability
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. The permanence and degree of such impairment shall be
supported by medical evidence. Notwithstanding such definition, a Participant
who is eligible for Social Security disability benefits shall automatically
satisfy the definition of disability. Disability shall be determined by the plan
administrator after consultation with a physician chosen by the administrator.
In the administration of this section, all employees shall be treated in a
uniform manner in similar circumstances.
(5) (A) Death - In the event of the death of a Participant who has
an accrued benefit under the plan, (whether or not he is an active Participant),
100% of the Participant's account balance as of the date of death shall be paid
to his surviving spouse; except that, if there is no surviving spouse, or if the
surviving spouse has already consented in a manner which is (or conforms to) a
qualified election under the joint and survivor annuity provisions of Code
Section 417(a) and regulations issued pursuant thereto and as set forth in
Section 5.2, then such balance shall be paid to the Participant's designated
beneficiary.
(B) Beneficiary Designation - Subject to the spousal consent
requirements of Section 5.2, the Participant shall have the right to designate
his beneficiaries, including a contingent death beneficiary, and shall have the
right at any time to change such beneficiaries. The designation shall be made in
writing on a form signed by the Participant and supplied by and filed with the
plan administrator. If the Participant fails to designate a beneficiary, or if
the designated person or persons predecease the Participant, "beneficiary" shall
mean the spouse, children, parents, brothers and sisters, or estate of the
Participant, in the order listed.
(6) Termination From Service
(A) On or before the anniversary date coinciding with or
subsequent to the termination of a Participant's employment for any reason other
than retirement, disability or death, the amount of the vested portion of such
Participant's account shall remain in a separate account for the Participant and
share in allocations pursuant to Section 3.4 until such time as a distribution
is made to the Participant.
If a portion of a Participant's account is forfeited, company stock
allocated to the Participant's company stock account must be forfeited only
after any other investment allocable to the Participant has been depleted. If
interest in more than one class of company stock has been allocated to a
Participant's account, the Participant must be treated as forfeiting the same
proportion of each such class.
(B) Effective for a Participant who is employed on or after
January 5, 1998, if such Participant separates from the service of the Employer
other than by retirement, disability, or death, his vested interest in his
Employer contribution account
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shall be equal to the account balance multiplied by the vesting percentage
determined based on his vesting years of service as follows:
Years of Service Vesting Percentage
---------------- ------------------
0 Years 0%
1 20%
2 40%
3 60%
4 80%
5 or More Years 100%
(C) Effective for a Participant who is employed before January
5, 1998, if such Participant separates from the service of the Employer other
than by retirement, disability, or death, his vested interest in his Employer
contribution account shall be 100% immediately vested on the date of his
participation in the plan.
(b) Cashout Distributions and Restoration
(1) Cashout Distribution - If an employee terminates service and the
value of his vested account balance derived from Employer and employee
contributions is not (and have never been) greater than $5,000, the employee
shall receive a distribution of the value of the entire vested portion of such
account balance and the nonvested portion will be treated as a forfeiture. For
purposes of this section, if the value of an employee's vested account balance
is zero, he shall be deemed to have received a distribution of such vested
account balance as of his separation from service.
If an employee terminates service and the value of his vested account
balance exceeds (or has previously exceeded) $5,000, he may elect to receive the
value of his vested account balance after such termination as provided in
Section 4.3; however, the nonvested portion shall be treated as a forfeiture. If
the employee elects to have distributed less than the entire vested portion of
the account balance derived from Employer contributions, the part of the
nonvested portion that will be treated as a forfeiture is the total nonvested
portion multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to Employer contributions and the denominator of which
is the total value of the vested Employer derived account balance.
(2) Restoration of Account - If an employee receives a cashout
distribution pursuant to this section and resumes employment covered under this
plan before he incurs 5 consecutive one-year breaks in service, his
Employer-derived account balance shall be restored to the amount on the date of
distribution, if he repays to the plan the full amount of the distribution
attributable to Employer contributions before the earlier of 5 years after the
first date on which he is subsequently re-employed by the Employer, or the date
he incurs 5 consecutive one-year breaks in service following the date of the
distribution. If an employee is deemed to receive a distribution pursuant to
this Section 4.2(b), and he resumes employment covered under this plan before he
incurs 5 consecutive one-year breaks in service, upon the reemployment of such
employee, his Employer-derived account balance will be restored to the amount on
the date of such deemed distribution.
(c) Forfeitures - If a Participant terminates employment before his
account balance derived from Employer contributions is fully vested, the
nonvested portion of his account shall be forfeited on the earlier of:
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(A) The last day of the vesting computation period in which
the Participant first incurs 5 consecutive one-year breaks in service, or
(B) The date the Participant receives his entire vested
accrued benefit.
If a Participant returns to employment with the Employer, and if the
forfeited amount is restored pursuant to subparagraph (b), then any amount
required to restore such forfeitures shall be deducted from forfeitures
occurring in the plan year of restoration. If forfeitures are insufficient for
the restoration, the Employer may make a contribution to the plan for such plan
year to satisfy the restoration. However, by the end of the plan year following
the plan year of restoration, sufficient forfeitures or Employer contributions
shall be credited to the account to satisfy the restoration.
(d) Unclaimed Benefits
(1) Forfeiture - The plan does not require the trustee or the plan
administrator to search for, or to ascertain the whereabouts of, any Participant
or beneficiary. At the time the Participant's or beneficiary's benefit becomes
distributable under the plan, the plan administrator, by certified or registered
mail addressed to his last known address of record, shall notify any Participant
or beneficiary that he is entitled to a distribution under this plan. If the
Participant or beneficiary fails to claim his distributive share or make his
whereabouts known in writing to the plan administrator within twelve months from
the date of mailing of the notice, the plan administrator shall treat the
Participant's or beneficiary's unclaimed payable accrued benefit as forfeited
and shall be used to reduce Employer contributions in accordance with Section
3.2(c). A forfeiture under this paragraph shall occur at the end of the notice
period or, if later, the earliest date applicable Treasury regulations would
permit the forfeiture. These forfeiture provisions apply solely to the
Participant's or beneficiary's accrued benefit derived from Employer
contributions.
(2) Restoration - If a Participant or beneficiary who has incurred a
forfeiture of his accrued benefit under the provisions of this subsection makes
a claim, at any time, for his forfeited accrued benefit, the plan administrator
shall restore the Participant's or beneficiary's forfeited accrued benefit to
the same dollar amount as the dollar amount of the accrued benefit forfeited,
unadjusted for any gains or losses occurring after the date of the forfeiture.
The plan administrator shall make the restoration during the plan year in which
the Participant or beneficiary makes the claim from forfeitures occurring in
that plan year. If forfeitures are insufficient for the restoration, the
Employer shall make a contribution to the plan to satisfy the restoration. The
plan administrator shall direct the trustee to distribute the Participant's or
beneficiary's restored accrued benefit to him not later than 60 days after the
close of the plan year in which the plan administrator restores the forfeited
accrued benefit.
Section 4.3 Payment of Participant Account
(a) Time of Payment
(1) Commencement of Benefits - Unless the Participant elects
otherwise, distribution of benefits shall begin no later than the 60th day after
the latest of the close of the plan year in which:
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(A) The Participant attains age 65 (or the plan's normal
retirement age, if earlier);
(B) Occurs the 10th anniversary of the year in which the
Participant commenced participation in the plan; or
(C) the Participant terminates service with the Employer,
(i.e. late retirement).
Notwithstanding the foregoing, the failure of a Participant to consent to
a distribution while a benefit is immediately distributable, within the meaning
of Section 5.2(b), shall be deemed to be an election to defer commencement of
payment of any benefit sufficient to satisfy this section.
(2) Payment Upon Retirement, Disability, or Death - Subject to the
provisions set forth in subparagraph (1) and in the Distribution Requirements of
Section 5.3, if the Participant terminates employment due to retirement,
disability or death, his account shall be paid as soon as administratively
possible after the occurrence of the event creating the right to a distribution.
(3) Payment Upon Other Termination of Employment - Subject to the
provisions set forth in subparagraph (1) and in the Distribution Requirements of
Section 5.3, if the Participant terminates employment other than by retirement,
disability or death, his account shall be paid within a reasonable period after
the end of the plan year in which severance occurs. However, the distribution
shall not include any company stock acquired with the proceeds of an exempt loan
until the close of the plan year in which such loan is repaid in full.
(b) Distribution of Benefits
(1) Subject to Section 4.3(b)(3), the administrator, pursuant to the
written election of the Participant (or if no election has been made prior to
the Participant's death, by his beneficiary), shall direct the trustee to
distribute to a Participant or his beneficiary any amount to which he is
entitled under the plan in one of the following methods:
(A) One lump-sum payment.
(B) Payments over a period certain in monthly, quarterly,
semiannual, or annual installments. The period over which such payment is to be
made shall not extend beyond the earlier of the Participant's life expectancy
(or the life expectancy of the Participant and his designated beneficiary) or
the limited distribution period provided for in (3) below. Such life expectancy
to be determined by Internal Revenue Service Life Expectancy Tables (currently
in IRS Publication 590).
(2) Any payment meeting the requirements of an eligible rollover
distribution may be paid directly in a direct rollover at the election of the
distributee, at the time and in the manner provided by the plan administrator,
to an eligible retirement plan specified by the distributee.
(A) Eligible Rollover Distribution - An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of
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substantially equal periodic payments (not less frequently than annually) made
for the life expectancy of the distributee or the joint life expectancies of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under Code Section 401(a)(9); the portion of any distribution that is
not includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to Employer securities) and dividends
paid on Employer securities as described in Code Section 404(k).
(B) Eligible Retirement Plan - An eligible retirement plan is
an individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan described
in Code Section 403(a), or a qualified trust described in Code Section 401(a),
that accepts the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity.
(C) Distributee - A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code Section
4l4(p), are distributees with regard to the interest of the spouse or former
spouse.
(D) Direct Rollover - A direct rollover is a payment by the
plan to the eligible retirement plan specified by the distributee.
(3) Unless the Participant elects in writing a longer distribution
period, distributions to a Participant or his beneficiary attributable to
company stock shall be in substantially equal monthly, quarterly, semiannual, or
annual installments over a period not longer than five years. In the case of a
Participant with an account balance attributable to company stock in excess of
$500,000, the five year period shall be extended one additional year (but not
more than five additional years) for each $100,000 or fraction thereof by which
such balance exceeds $500,000. The dollar limits shall be adjusted at the same
time and in the same manner as provided in Code Section 4.15(d).
(4) If installment payments are to be made from the fund in cash,
the plan administrator may direct the trustee to segregate all or any part of
the Participant's accrued benefit in a separate account. A segregated account
remains a part of the trust, but it alone shares in any income it earns, and it
alone bears any expense or loss it incurs.
(5) Each optional form of benefit provided under the plan shall be
made available to all Participants on a nondiscriminatory basis. The plan may
not retroactively reduce or eliminate optional forms of benefits and any other
Code Section 411(d)(6) protected benefits, except as provided in Regulation
section 1.411(d)-4, Q&A-2(d) and in other relief granted statutorily or by the
Commissioner of Internal Revenue. Any reduction or elimination of optional forms
of benefits shall apply only to benefits accrued after the effective date of
such change.
(6) Notwithstanding the above, if the sum of the vested Employer
contribution accounts under this plan and under the Wilson Greatbatch Ltd.
Equity Plus Plan - Stock Bonus Plan are no more than $5,000, the benefit shall
automatically be paid in a lump sum. If the total of such vested Employer
contribution accounts exceeds $5,000, the benefit
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shall automatically be paid in installments, except to the extent that the
benefit is held under the directed investment account.
(c) General Payment Provisions
(1) Any part of a Participant's benefit which is retained in the
plan after the allocation date on which his participation ends will continue to
be treated as a company stock account, other investment account, or directed
investment account subject to Section 4.2(a)(6)(A). However, no further Employer
contributions will be credited.
(2) All distributions due to be made under this plan shall be made
on the basis of the amount to the credit of the Participant as of the accounting
date coincident with or preceding the occurrence of the event calling for a
distribution.
If a distributable event occurs after an allocation date and before
allocations have been made to the account of the Participant, the distribution
shall also include the amounts allocable to the account as of such allocation
date.
(3) If any person entitled to receive benefits hereunder is
physically or mentally incapable of receiving or acknowledging receipt thereof,
and if a legal representative has been appointed for him, the plan administrator
may direct the benefit payment to be made to such legal representative.
(4) In the event a distribution is to be made to a minor, then the
administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such beneficiary or a responsible adult with whom the
beneficiary maintains his residence, or to the custodian for such beneficiary
under the Uniform Gift to Minors Act or the Gift to Minors Act, if such is
permitted by the laws of the state in which said beneficiary resides. Such a
payment to the legal guardian, custodian or parent of a minor beneficiary shall
fully discharge the trustee, Employer, and plan from further liability on
account thereof.
(5) Notwithstanding anything herein to the contrary if the Board of
Directors of Wilson Greatbatch Ltd. acting in a nondiscriminatory manner shall
so direct, cash dividends on shares of company stock shall be paid directly in
cash to the Participants in the plan or such dividends shall be paid to the plan
and distributed in cash to Participants within 90 days after the close of the
plan year in which the dividend is paid. In the absence of any direction from
the Board of Directors of Wilson Greatbatch Ltd., cash dividends in company
stock shall be paid to the plan and allocated to Participants' accounts.
(d) Payment Election Procedures
As described in Section 5.2(b), an account balance in excess of $5,000
shall not be immediately distributed without the consent of the Participant. The
Participant shall receive the notice required under Regulation Section
1.411(a)-11(c) no less than 30 days and no more than 90 days before the annuity
starting date with respect to the distribution. For any distribution in excess
of $200, the plan administrator shall give the Participant notice of his
eligible rollover distribution rights. The Participant shall receive such notice
in the same time period as the 411 notice is required to be provided. If a
distribution is one to which Code Sections 401(a)(11) and 417 do not apply, such
distribution may commence less than 30 days after the 411 notice is given,
provided that:
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(1) The plan administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(2) The Participant, after receiving the notice, affirmatively
elects a distribution.
Section 4.4 Form of Distribution
(a) Distribution of a Participant's benefit shall be made in cash, as
provided under ERISA Regulation Section 54.4975-11(f)(1).
(b) The trustee shall make distribution from the trust only on
instructions from the administrator.
(c) Put Option - Distributions in the form of company stock are not
currently permitted under this plan.
(d) Right of First Refusal - Distributions in the form of company stock
are not currently permitted under this plan.
Section 4.5 In-Service Payments
(a) Withdrawals - A Participant may withdraw amounts from his account(s)
before his separation from service only under the circumstances and only to the
extent provided below.
No payments other than cash dividends on shares of company stock paid
pursuant to Section 3.4(a) shall be made before separation from service.
(b) Participant Loans - No Participant loans shall be permitted under the
plan.
Section 4.6 Distributions under Domestic Relations Orders
Nothing contained in this plan prevents the trustee, in accordance with
the direction of the plan administrator, from complying with the provisions of a
qualified domestic relations order (as defined in Code Section 414(p)).
A distribution will not be made to an alternate payee until the
Participant attains (or would have attained) his earliest retirement age. For
this purpose, earliest retirement age means the earlier of: (1) the date on
which the Participant is entitled to a distribution under this plan; or (2) the
later of the date the Participant attains age 50 or the earliest date on which
the Participant could begin receiving benefits under this plan if the
Participant separated from service.
Nothing in this Section gives a Participant a right to receive
distribution at a time otherwise not permitted under the plan nor does it permit
the alternate payee to receive a form of payment not otherwise permitted under
the plan.
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The plan administrator shall establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the plan administrator promptly will notify the Participant and
any alternate payee named in the order, in writing, of the receipt of the order
and the plan's procedures for determining the qualified status of the order.
Within a reasonable period of time after receiving the domestic relations order,
the plan administrator shall determine the qualified status of the order and
shall notify the Participant and each alternate payee, in writing, of its
determination. The plan administrator shall provide notice under this paragraph
by mailing to the individual's address specified in the domestic relations
order, or in a manner consistent with Department of Labor regulations.
If any portion of the Participant's nonforfeitable accrued benefit is
payable during the period the plan administrator is making its determination of
the qualified status of the domestic relations order, the plan administrator
shall make a separate accounting of the amounts payable. If the plan
administrator determines the order is a qualified domestic relations order
within 18 months of the date amounts first are payable following receipt of the
order, it shall direct the trustee to distribute the payable amounts in
accordance with the order. If the plan administrator does not make its
determination of the qualified status of the order within the 18-month
determination period, it shall direct the trustee to distribute the payable
amounts in the manner the plan would distribute if the order did not exist and
will apply the order prospectively if it later determines the order is a
qualified domestic relations order.
The trustee will make any payments or distributions under this section by
separate benefit checks or other separate distribution to the alternate
payee(s).
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ARTICLE V ADDITIONAL QUALIFICATION RULES
Section 5.1 Limitations on Allocations under Code Section 415
(a) Single Plan Limitations
(1) If the Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer or a welfare
benefit fund, as defined in Code Section 419(e) maintained by the Employer, or
an individual medical account, as defined in Code Section 415(l)(2), maintained
by the Employer, which provides an annual addition as defined in Section
5.1(d)(1), the amount of annual additions which may be credited to the
Participant's account for any limitation year will not exceed the lesser of the
maximum permissible amount or any other limitation contained in this plan. If
the Employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the annual additions for the limitation
year to exceed the maximum permissible amount, the amount contributed or
allocated will be reduced so that the annual additions for the limitation year
will equal the maximum permissible amount.
(2) Prior to determining the Participant's actual compensation for
the limitation year, the Employer may determine the maximum permissible amount
for a Participant on the basis of a reasonable estimation of the Participant's
compensation for the limitation year, uniformly determined for all Participants
similarly situated.
(3) As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the limitation year will be
determined on the basis of the Participant's actual compensation for the
limitation year.
(4) If pursuant to Section 5.1(a)(3) or as a result of the
allocation of forfeitures, there is an excess amount the excess will be disposed
of as follows:
(A) Any nondeductible voluntary employee contributions (and
any gain attributable thereto), to the extent they would reduce the excess
amount, will be returned to the Participant.
(B) If after the application of paragraph (A) an excess amount
still exists, the excess amount in the Participant's account shall be
reallocated to the remaining Participants who are eligible for an allocation of
Employer contribution for the plan year in which the limitation year ends, but
only to the extent that such reallocation will not exceed the maximum
permissible amount of each such remaining Participant.
(C) If after the application of paragraph (B) an excess amount
still exists, the excess amount will be held unallocated in a suspense account.
The suspense account will be applied to reduce future Employer contributions for
all Participants in the next limitation year, and each succeeding limitation
year if necessary.
(D) If a suspense account is in existence at any time during a
limitation year pursuant to this Section 5.1(a)(4), it will not participate in
the allocation of the trust's investment gains and losses. If a suspense account
is in existence at any time during a particular limitation year, all amounts in
the suspense account must be allocated and reallocated to Participants' accounts
before any Employer or any employee contributions
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may be made to the plan for that limitation year. Excess amounts may not be
distributed to Participants or former Participants.
(b) Combined Limitations -- Other Defined Contribution Plan
(1) This Subsection applies if, in addition to this plan, the
Participant is covered under another qualified defined contribution plan (e.g.
Stock Bonus and 401(k)) maintained by the Employer, a welfare benefit fund, as
defined in Code Section 419(e) maintained by the Employer, or an individual
medical account, as defined in Code Section 415(l)(2), maintained by the
Employer, which provides an annual addition as defined in Section 5.1(d)(1),
during any limitation year. The annual additions which may be credited to a
Participant's account under this plan for any such limitation year will not
exceed the maximum permissible amount reduced by the annual additions credited
to a Participant's account under the other plans and welfare benefit funds for
the same limitation year. If the annual additions with respect to the
Participant under other defined contribution plans and welfare benefit funds
maintained by the Employer are less than the maximum permissible amount and the
Employer contribution that would otherwise be contributed or allocated to the
Participant's account under this plan would cause the annual additions for the
limitation year to exceed this limitation, the amount contributed or allocated
will be reduced so that the annual additions under all such plans and funds for
the limitation year will equal the maximum permissible amount. If the annual
additions with respect to the Participant under such other defined contribution
plans and welfare benefit funds in the aggregate are equal to or greater than
the maximum permissible amount, no amount will be contributed or allocated to
the Participant's account under this plan for the limitation year.
(2) Prior to determining the Participant's actual compensation for
the limitation year, the Employer may determine the maximum permissible amount
for a Participant in the manner described in Section 5.1(a)(2).
(3) As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the limitation year will be
determined on the basis of the Participant's actual compensation for the
limitation year.
(4) If, pursuant to Section 5.1(b)(3) or as a result of the
allocation of forfeitures, a Participant's annual additions under this plan and
such other plans would result in an excess amount for a limitation year, the
excess amount will be deemed to consist of the annual additions last allocated,
except that annual additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(5) If an excess amount was allocated to a Participant on an
allocation date of this plan which coincides with an allocation date of another
plan, the excess amount will be disposed of in the manner provided in Section
3.1(c).
(6) Any excess amount attributed to this plan will be disposed of in
the manner described in Section 5.1(a)(4).
(c) Combined Limitations -- Other Defined Benefit Plan
If the Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any Participant in this plan, the sum of the Participant's
defined benefit plan
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fraction and defined contribution plan fraction will not exceed 1.0 in any
limitation year. Any excess amounts shall be disposed of in the manner provided
in Section 3.1(c). Any excess amount attributed to this plan will be disposed of
in the manner described in Section 5.1(a)(4).
(d) Definitions (Code Section 415 Limitations)
(1) Annual Additions - The sum of the following amounts credited to
a Participant's account for the limitation year:
(A) Employer contributions,
(B) employee contributions,
(C) forfeitures, and
(D) amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer are treated as annual
additions to a defined contribution plan. Also amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits,
allocated to the separate account of a key employee, as defined in Code Section
419A(d)(3), under a welfare benefit fund, as defined in Code Section 419(e),
maintained by the Employer are treated as annual additions to a defined
contribution plan.
For this purpose, any excess amount applied under Section 5.1(a)(4) or
(b)(6) in the limitation year to increase the accounts of Participants who did
not have an excess amount or to reduce Employer contributions will be considered
annual additions for such limitation year.
Annual additions shall not include forfeitures of company stock purchased
with the proceeds of an exempt loan and Employer contributions applied to the
payment of interest on an exempt loan if no more than one-third of the Employer
contribution for the year is allocated to the account of highly compensated
employees.
Further, annual additions shall not include proceeds from the sale of
company stock as such proceeds constitute earnings on a plan asset allocable as
such.
(2) Compensation - A Participant's earned income and any earnings
reportable as W-2 wages for Federal income tax withholding purposes.. W-2 wages
means wages as defined in Code Section 3401(a) but determined without regard to
any rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2)).
Compensation shall include elective contributions as defined in Section
1.2(a). For or purposes of applying the limitations of this Section 5.1,
compensation for a limitation year is the compensation actually paid or
includible in gross income during such limitation year.
Notwithstanding the preceding sentence, compensation for a Participant in
a defined contribution plan who is permanently and totally disabled (as defined
in Code Section 22(e)(3)) is the compensation such Participant would have
received for the limitation year if the Participant had been paid at the rate of
compensation paid immediately before
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becoming permanently and totally disabled; such imputed compensation for the
disabled Participant may be taken into account only if the contributions made on
behalf of such Participant are nonforfeitable when made.
(3) Defined Benefit Fraction - A fraction, the numerator of which is
the sum of the Participant's projected annual benefits under all the defined
benefit plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the dollar limitation
determined for the limitation year under Code Sections 415(b) and (d) or 140
percent of the highest average compensation, including any adjustments under
Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as of the
first day of the first limitation year beginning after December 31, 1986, in one
or more defined benefit plans maintained by the Employer which were in existence
on May 6, 1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which the Participant
had accrued as of the close of the last limitation year beginning before January
1, 1987, disregarding any changes in the terms and conditions of the plan after
May 5, 1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code Section 415
for all limitation years beginning before January 1, 1987.
(4) Defined Contribution Dollar Limitation - $30,000, as adjusted
under Code Section 415(d).
(5) Defined Contribution Fraction - A fraction, the numerator of which
is the sum of the annual additions to the Participant's account under all the
defined contribution plans (whether or not terminated) maintained by the
Employer for the current and all prior limitation years (including the annual
additions attributable to the Participant's nondeductible employee contributions
to all defined benefit plans, whether or not terminated, maintained by the
Employer, and the annual additions attributable to all welfare benefit funds, as
defined in Code Section 419(e), and individual medical accounts, as defined in
Code Section 415(l)(2), maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the current and all prior
limitation years of service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The maximum aggregate amount
in any limitation year is the lesser of 125 percent of the dollar limitation
determined under Code Sections 415(b) and (d) in effect under Code Section
415(c)(1)(A) or 35 percent of the Participant's compensation for such year.
If the employee was a Participant as of the end of the first day of the
first limitation year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the defined benefit fraction would otherwise exceed 1.0 under the
terms of this plan. Under the adjustment, an amount equal to the product of(1)
the excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last limitation year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the plan made
after May 5, 1986, but using the Code Section 415 limitation applicable to the
first limitation year beginning on or after January 1, 1987.
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The annual addition for any limitation year beginning before January 1,
1987, shall not be recomputed to treat all employee contributions as annual
additions.
(6) Employer - For purposes of this Section 5.1, Employer shall mean
the Employer that adopts this plan, and all members of a controlled group of
corporations (as defined in Code Section 414(b) as modified by Section 415(h)),
all commonly controlled trades or businesses (as defined in Code Section 414(c)
as modified by Section 415(h)) or affiliated service groups (as defined in Code
Section 414(m)) of which the adopting Employer is a part, and any other entity
required to be aggregated with the Employer pursuant to regulations under Code
Section 414(o).
(7) Excess Amount - The excess of the Participant's annual additions
for the limitation year over the maximum permissible amount.
(8) Highest Average Compensation - The average compensation for the
three consecutive years of service with the Employer that produces the highest
average. A year of service with the Employer is the 12-consecutive month period
coinciding with the plan year.
(9) Limitation Year - A calendar year, or the 12-consecutive month
period coinciding with the plan year, unless the Employer adopts another
12-consecutive month period by means of a written resolution. All qualified
plans maintained by the Employer must use the same limitation year. If the
limitation year is amended to a different 12-consecutive month period, the new
limitation year must begin on a date within the limitation year in which the
amendment is made.
(10) Maximum Permissible Amount - The maximum annual addition that
may be contributed or allocated to a Participant's account under the plan for
any limitation year shall not exceed the lesser of:
(A) the defined contribution dollar limitation as defined in
Section 5.1(d)(4), or
(B) 25 percent of the Participant's compensation for the
limitation year.
The compensation limitation referred to in (B) shall not apply to any
contribution for medical benefits (within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)) which is otherwise treated as an annual addition under
Code Section 415(l)(1) or 419A(d)(2).
If a short limitation year is created because of an amendment changing the
limitation year to a different 12-consecutive month period, the maximum
permissible amount will not exceed the defined contribution dollar limitation
multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
(11) Projected Annual Benefit - The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or qualified joint and
survivor annuity) to which the Participant would be entitled under the terms of
the plan assuming:
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(A) the Participant will continue employment until normal
retirement age under the plan (or current age, if later), and
(B) the Participant's compensation for the current limitation
year and all other relevant factors used to determine benefits under the plan
will remain constant for all future limitation years.
Section 5.2 Joint and Survivor Annuity Requirements
(a) Non-application to This Plan - No annuity form of payment is provided
under Section 4.3(b), all funds that are subject to a qualified Participant's
investment direction are transferred to the Wilson Greatbatch Ltd. Equity Plus
Plan - 401(k) Retirement Plan, and no direct or indirect transfer is accepted
under Section 3.7 from a defined benefit plan, money purchase pension plan
(including a target benefit plan), stock bonus or profit sharing plan which
would otherwise have provided for a life annuity form of payment to any
participant; therefore, the requirements of Code Sections 401(a)(11) and 417 do
not apply to this employee stock ownership plan, except for the provisions of
Section 5.2(b) and (c).
(b) Restrictions on Immediate Distributions - If the value of a
Participant's vested account balance derived from Employer and employee
contributions exceeds (or at the time of any prior distribution exceeded)
$5,000, and the account balance is immediately distributable, the Participant
must consent to any distribution of such account balance. The consent of the
Participant shall be obtained in writing within the 90-day period ending on the
annuity starting date. The annuity starting date is the first day of the first
period for which an amount is paid as an annuity or any other form. The plan
administrator shall notify the Participant of the right to defer any
distribution until the Participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the plan in a manner that would satisfy the
notice requirements of Code Section 417(a)(3), and shall be provided no less
than 30 days and no more than 90 days prior to the annuity starting date.
The consent of the Participant shall not be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or Section 415. In
addition, upon termination of this plan if the plan does not offer an annuity
option (purchased from a commercial provider) and if the Employer or any entity
within the same controlled group as the Employer does not maintain another
defined contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)), the Participant's account balance may,
without the Participant's consent, be distributed to the Participant. However,
if any entity within the same controlled group as the Employer maintains another
defined contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)), the Participant's account balance will be
transferred, without the Participant's consent, to the other plan if the
Participant does not consent to an immediate distribution.
An account balance is immediately distributable if any part of the account
balance could be distributed to the Participant before the Participant attains
(or would have attained if not deceased) the later of normal retirement age or
age 62.
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(c) Safe Harbor Rules
This Paragraph (c) shall apply to a Participant in this stock bonus plan
if the following conditions are satisfied: (1) the Participant does not or
cannot elect payments in the form of a life annuity; and (2) on the death of a
Participant, the Participant's vested account balance will be paid to the
Participant's surviving spouse, but if there is no surviving spouse, or if the
surviving spouse has consented in a manner conforming to a qualified election,
then to the Participant's designated beneficiary. The surviving spouse may elect
to have distribution of the vested account balance commence within the 90-day
period following the date of the Participant's death. The account balance shall
be adjusted for gains or losses occurring after the Participant's death in
accordance with the provisions of the plan governing the adjustment of account
balances for other types of distributions. This Paragraph (c) shall not be
operative with respect to a Participant if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, target benefit plan,
stock bonus plan, or profit-sharing plan which is subject to the survivor
annuity requirements of Code Section 401(a)(11) and Section 417.
(1) The Participant may waive the spousal death benefit described in
this Paragraph (c) at any time provided that no such waiver shall be effective
unless it satisfies the conditions of Paragraph (c)(3) that would apply to the
Participant's waiver of the qualified preretirement survivor annuity.
(2) For purposes of this Paragraph (c), vested account balance shall
mean the aggregate value of the Participant's vested account balances derived
from Employer and employee contributions (including rollovers), whether vested
before or upon death, including the proceeds of insurance contracts, if any, on
the Participant's life. The provisions of this Subsection 5.2 shall apply to a
Participant who is vested in amounts attributable to Employer contributions,
employee contributions (or both) at the time of death or distribution.
(3) Any waiver of a qualified preretirement survivor annuity shall
not be effective unless: (a) the Participant's spouse consents in writing to the
election; (b) the election designates a specific beneficiary, including any
class of beneficiaries or any contingent beneficiaries, which may not be changed
without spousal consent (or the spouse expressly permits designations by the
Participant without any further spousal consent); (c) the spouse's consent
acknowledges the effect of the election; and (d) the spouse's consent is
witnessed by a plan representative or notary public. Additionally, a
Participant's waiver shall not be effective unless the election designates a
form of benefit payment which may not be changed without spousal consent (or the
spouse expressly permits designations by the Participant without any further
spousal consent). If it is established to the satisfaction of a plan
representative that there is no spouse or that the spouse cannot be located, a
waiver will be deemed a qualified election.
Any consent by a spouse obtained under this provision (or establishment
that the consent of a spouse may not be obtained) shall be effective only with
respect to such spouse. A consent that permits designations by the Participant
without any requirement of further consent by such spouse must acknowledge that
the spouse has the right to limit consent to a specific beneficiary, and a
specific form of benefit where applicable, and that the spouse voluntarily
elects to relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the spouse at any
time before the commencement of benefits. The number of revocations shall not be
limited.
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Section 5.3 Distribution Requirements
Subject to Subsection 5.2 Joint and Survivor Annuity Requirements, the
requirements of this Subsection 5.3 shall apply to any distribution of a
Participant's interest and will take precedence over any inconsistent provisions
of this plan. Unless otherwise specified, the provisions of this Subsection
apply to calendar years beginning after December 31, 1984.
All distributions required under this Subsection shall be determined and
made in accordance with the proposed regulations under Code Section 401(a)(9),
including the minimum distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the Proposed Regulations.
(a) Required Beginning Date - The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's required
beginning date.
(b) Limits on Distribution Periods - As of the first distribution calendar
year, distributions, if not made in a single sum, may only be made over one of
the following periods (or a combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and a designated beneficiary,
(3) a period certain not extending beyond the life expectancy of the
Participant, or
(4) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated beneficiary.
(c) Determination of Amount to Be Distributed Each Year - If the
Participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date.
(1) Individual Account
(A) If a Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy (tables in IRS Publication 590)
of the Participant or the joint life and last survivor expectancy of the
Participant and the Participant's designated beneficiary or (2) a period not
extending beyond the life expectancy of the designated beneficiary, the amount
required to be distributed for each calendar year, beginning with distributions
for the first distribution calendar year, must at least equal the quotient
obtained by dividing the Participant's benefit by the applicable life
expectancy.
(B) The amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall not be less than
the quotient obtained by dividing the Participant's benefit by the lesser of(1)
the applicable life expectancy or (2) if the Participant's spouse is not the
designated beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Regulations.
Distributions after the death of the Participant shall be distributed using the
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applicable life expectancy in Paragraph (c)(1)(A) above as the relevant divisor
without regard to Proposed Regulation Section 1.401(a)(9)-2.
(C) The minimum distribution required for the Participant's
first distribution calendar year must be made on or before the Participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in which
the employee's required beginning date occurs, must be made on or before
December 31 of that distribution calendar year.
(2) Other Forms - If the Participant's benefit is distributed in the
form of an annuity purchased from an insurance company, distributions thereunder
shall be made in accordance with the requirements of Code Section 401(a)(9) and
the proposed regulations thereunder.
(d) Death Distribution Provisions
(1) Distribution beginning before death - If the Participant dies
after distribution of his or her interest has begun, the remaining portion of
such interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
(2) Distribution beginning after death - If the Participant dies
before distribution of his or her interest begins, distribution of the
Participant's entire interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's death except to the
extent that an election is made to receive distributions in accordance with (A)
or (B) below:
(A) If any portion of the Participant's interest is payable to
a designated beneficiary, distributions may be made over the life or over a
period certain not greater than the life expectancy of the designated
beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(B) If the designated beneficiary is the Participant's
surviving spouse, the date distributions are required to begin in accordance
with (A) above shall not be earlier than the later of (i) December 31 of the
calendar year immediately following the calendar year in which the Participant
died and (ii) December 31 of the calendar year in which the Participant would
have attained age 70 1/2.
If the Participant has not made an election pursuant to this Paragraph
(d)(2) by the time of his or her death, the Participant's designated beneficiary
must elect the method of distribution no later than the earlier of (1) December
31 of the calendar year in which distributions would be required to begin under
this Paragraph, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has no
designated beneficiary, or if the designated beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
(3) For purposes of Paragraph (d)(2) above, if the surviving spouse
dies after the Participant, but before payments to such spouse begin, the
provisions of Paragraph
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(d)(2) with the exception of paragraph (B) therein, shall be applied as if the
surviving spouse were the Participant.
(4) For purposes of this Paragraph (d), any amount paid to a child
of the Participant will be treated as if it had been paid to the surviving
spouse if the amount becomes payable to the surviving spouse when the child
reaches the age of majority.
(5) For the purposes of this Paragraph (d), distribution of a
Participant's interest is considered to begin on the Participant's required
beginning date (or, if Subparagraph (3) above is applicable, the date
distribution is required to begin to the surviving spouse pursuant to
Subparagraph (2) above). If distribution in the form of an annuity irrevocably
commences to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution actually commences.
(e) Definitions (Code Section 401(a)(9) Requirements)
(1) Applicable Life Expectancy - The life expectancy (or joint and
last survivor expectancy) calculated using the attained age of the Participant
(or designated beneficiary) as of the Participant's (or designated
beneficiary's) birthday in the applicable calendar year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the applicable life
expectancy shall be the life expectancy as so recalculated. The applicable
calendar year shall be the first distribution calendar year, and if life
expectancy is being recalculated such succeeding calendar year.
(2) Designated Beneficiary - The individual who is designated as the
beneficiary under the plan in accordance with Code Section 401(a)(9) and the
proposed regulations thereunder.
(3) Distribution Calendar Year - A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's required beginning
date. For distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which distributions are
required to begin pursuant to Paragraph (d) above.
(4) Life Expectancy - Life expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in Tables V and
VI of Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in Paragraph (d)(2)(B) above) by the time distributions
are required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse beneficiary may not
be recalculated.
(5) Participant's Benefit
(A) The account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the account balance as of
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dates in the valuation calendar year after the valuation date and decreased by
distributions made in the valuation calendar year after the valuation date.
(B) Exception for second distribution calendar year. For
purposes of Subparagraph (5)(A) above, if any portion of the minimum
distribution for the first distribution calendar year is made in the second
distribution calendar year on or before the required beginning date, the amount
of the minimum distribution made in the second distribution calendar year shall
be treated as if it had been made in the immediately preceding distribution
calendar year.
(6) Required Beginning Date
(A) Non-5-percent owner - The required beginning date is April
1 of the calendar year following the later of: (i) the calendar year in which
the Participant attains age 70 1/2, or (ii) the calendar year in which the
Participant retires. If a Participant who is not a 5-percent owner attains age
70 1/2 after December 31, 1995 and before January 1, 1999, the Participant shall
be permitted to elect to commence the distribution of his benefits as if his
required beginning date were April 1 of the calendar year following the calendar
year in which he attains age 70 1/2.
(B) 5-percent owner - The required beginning date for a
Participant who is a 5-percent owner is April 1 of the calendar year following
the calendar year in which the Participant attains age 70 1/2. A Participant is
treated as a 5-percent owner for purposes of this Paragraph (e) if such
Participant is a 5-percent owner as defined in Code Section 416(i) (determined
in accordance with Section 416 but without regard to whether the plan is
top-heavy) at any time during the plan year ending with or within the calendar
year in which such owner attains age 66 1/2 or any subsequent plan year.
(C) Once distributions have begun to a 5-percent owner under
this Paragraph, they must continue to be distributed, even if the Participant
ceases to be a 5-percent owner in a subsequent year.
Section 5.4 Top-Heavy Provisions
(a) Application of Provisions - If the plan is or becomes top-heavy in any
plan year beginning after December 31, 1983, the provisions of Subsection 5.4
will supersede any conflicting provisions in the plan.
(b) Minimum Allocation
(1) Except as otherwise provided in (3) and (4) below, the Employer
contributions and forfeitures allocated on behalf of any Participant who is not
a key employee shall not be less than the lesser of three percent of such
Participant's compensation (as defined in Section 1.2) or in the case where the
Employer has no defined benefit plan which designates this plan to satisfy Code
Section 401, the largest percentage of Employer contributions and forfeitures,
as a percentage of the key employee's compensation which may be taken into
account under Section 1.2(c), allocated on behalf of any key employee for that
year. The minimum allocation is determined without regard to any Social Security
contribution. This minimum allocation shall be made even though, under other
plan provisions, the Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the year because of
(i) the
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Participant's failure to complete 1,000 hours of service (or any equivalent
provided in the plan), or (ii) the Participant's failure to make mandatory
employee contributions to the plan, or (iii) compensation less than a stated
amount.
(2) For purposes of computing the minimum allocation, compensation
shall mean compensation as defined in Section 1.2(a) of the plan.
(3) The provision in (1) above shall not apply to any Participant
who was not employed by the Employer on the last day of the plan year.
(4) The provision in (1) above shall not apply to any Participant to
the extent the Participant is covered under any other plan or plans of the
Employer and the Employer has provided in Section 3.2 that the minimum
allocation or benefit requirement applicable to top-heavy plans will be met in
the other plan or plans. If this plan is intended to meet the minimum allocation
or benefit requirement applicable to another plan or plans, the Employer shall
so provide in Section 3.2.
(5) The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 4 16(b)) may not be forfeited under Code
Section 411(a)(3)(B) or 411(a)(3)(D).
(c) Adjustments in Code Section 415 Limits - If the plan is top-heavy, the
defined benefit fraction and the defined contribution fraction shall be computed
by applying a factor of 1.0 (instead of 1.25) to the applicable dollar limits
under Code Section 415(b)(1)(A) and 415(C)(1)(A) for such year, unless the plan
meets both the following conditions:
(1) Such plan would not be a top-heavy plan if "90%" were
substituted for "60%" in the top-heavy tests; and
(2) The minimum Employer contribution percentage under paragraph (b)
is 4 percent instead of 3 percent.
However, the reduced Code Section 415 factor of 1.0 shall not apply under
a top-heavy plan with respect to any individual so long as there are no Employer
contributions, forfeitures, or voluntary non-deductible contributions allocated
to such individual.
(d) Minimum Vesting Schedules - For any plan year in which this plan is
top-heavy, the following minimum vesting schedule shall automatically apply to
the plan:
Years of Service Vesting Percentage
---------------- ------------------
0 Years 0%
1 20%
2 40%
3 60%
4 80%
5 or More Years 100%
The minimum vesting schedule shall apply to all benefits within the meaning
of Code Section 411(a)(7) except those attributable to employee contributions,
including benefits accrued before the effective date of Code Section 416 and
benefits accrued before the plan became top-heavy. Further, no decrease in a
Participant's nonforfeitable percentage may occur in the event the plan's status
as top-heavy changes for any plan year, and the
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provisions of Section 7.2(d) shall apply. However, this Section does not apply
to the account balances of any employee who does not have an hour of service
after the plan has initially become top-heavy and such employee's account
balance attributable to Employer contributions and forfeitures will be
determined without regard to this Section.
(e) Definitions (Code Section 416 Requirements)
(1) Key Employee - Any employee or former employee (and the
beneficiaries of such employee) who at any time during the determination period
was an officer of the Employer if such individual's annual compensation exceeds
50 percent of the dollar limitation under Code Section 415(b)(1)(A), an owner
(or considered an owner under Code Section 318) of one of the ten largest
interests in the Employer if such individual's compensation exceeds 100 percent
of the dollar limitation under Code Section 415(c)(1)(A), a 5-percent owner of
the Employer, or a 1-percent owner of the Employer who has an annual
compensation of more than $150,000. Annual compensation means compensation as
defined in Code Section 415(c)(3), but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are excludable from the
employee's gross income under Code Section 125, Section 402(a)(8), Section
402(h) or Section 403(b). The determination period is the plan year containing
the determination date and the four (4) preceding plan years.
The determination of who is a key employee will be made in accordance with
Code Section 416(i)(1) and the regulations thereunder.
(2) Top-Heavy Plan - For any plan year beginning after December 31,
1983, this plan is top-heavy if any of the following conditions exists:
(A) If the top-heavy ratio for this plan exceeds 60 percent
and this plan is not part of any required aggregation group or permissive
aggregation group of plans.
(B) If this plan is a part of a required aggregation group of
plans but not part of a permissive aggregation group and the top-heavy ratio for
the group of plans exceeds 60 percent.
(C) If this plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top-heavy ratio for the
permissive aggregation group exceeds 60 percent.
(3) Top-Heavy Ratio
(A) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan) and the Employer has not
maintained any defined benefit plan which during the 5-year period ending on the
determination date(s) has or has had accrued benefits, the top-heavy ratio for
this plan alone or for the required or permissive aggregation group as
appropriate is a fraction, the numerator of which is the sum of the account
balances of all key employees as of the determination date(s) (including any
part of any account balance distributed in the 5-year period ending on the
determination date(s)), and the denominator of which is the sum of all account
balances (including any part of any account balance distributed in the 5-year
period ending on the determination date(s)), both computed in accordance with
Code Section 416 and the regulations thereunder. Both the numerator and
denominator of the top-heavy ratio are increased to reflect any contribution not
actually made as of the determination date, but
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which is required to be taken into account on that date under Code Section 416
and the regulations thereunder.
(B) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan) and the Employer
maintains or has maintained one or more defined benefit plans which during the
5-year period ending on the determination date(s) has or has had any accrued
benefits, the top-heavy ratio for any required or permissive aggregation group
as appropriate is a fraction, the numerator of which is the sum of account
balances under the aggregated defined contribution plan or plans for all key
employees, determined in accordance with (A) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all key
employees as of the determination date(s), and the denominator of which is the
sum of the account balances under the aggregated defined contribution plan or
plans for all Participants, determined in accordance with (A) above, and the
present value of accrued benefits under the defined benefit plan or plans for
all Participants as of the determination date(s), all determined in accordance
with Code Section 416 and the regulations thereunder. The accrued benefits under
a defined benefit plan in both the numerator and denominator of the top-heavy
ratio are increased for any distribution of an accrued benefit made in the
five-year period ending on the determination date.
(C) For purposes of (A) and (B) above the value of account
balances and the present value of accrued benefits will be determined as of the
most recent valuation date that falls within or ends with the 12-month period
ending on the determination date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a defined benefit
plan. The account balances and accrued benefits of a Participant (1) who is not
a key employee but who was a key employee in a prior year, or (2) who has not
been credited with at least one hour of service with any Employer maintaining
the plan at any time during the 5-year period ending on the determination date
will be disregarded. The calculation of the top-heavy ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with Code Section 416 and the regulations thereunder.
Deductible employee contributions will not be taken into account for purposes of
computing the top-heavy ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar year.
The accrued benefit of a Participant other than a key employee shall be
determined under (1) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by the Employer, or (2) if
there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C).
(4) Permissive Aggregation Group - The required aggregation group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the required aggregation group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(5) Required Aggregation Group - (1) Each qualified plan of the
Employer in which at least one key employee participates or participated at any
time during the determination period (regardless of whether the plan has
terminated), and (2) any other qualified plan of the Employer which enables a
plan described in (1) to meet the requirements of Code Sections 401(a)(4) or
410.
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(6) Determination Date - For any plan year subsequent to the first
plan year, the last day of the preceding plan year. For the first plan year of
the plan, the last day of that year.
(7) Valuation Date - The allocation date as defined in Section
1.3(b), which shall be the date as of which account balances or accrued benefits
are valued for purposes of calculating the top-heavy ratio.
(8) Present Value - Present value shall be based only on the
interest and mortality rates specified in the Employer's defined benefit plan.
(9) Non-Key Employee - Any employee who is not a key employee.
Non-key employees include employees who are former key employees.
Section 5.6 ESOP Distribution Options
(a) The Employer retains the sole discretion to implement the provisions
of this Section 5.6. Such discretion may only be exercised through a duly
adopted plan amendment. Except to the extent permitted by ERISA, the Code and
regulations thereunder, any such amendment shall only be effective
prospectively. No such amendment shall violate Code Section 411(d)(6).
(b) Right to Receive Stock
The right to receive distributions in the form of shares of company stock
shall be automatically terminated in the event of the sale or other disposition
by the trustee of all shares of company stock held by the trust.
(c) Restricted Stock
(1) Notwithstanding anything contained herein to the contrary, if
the Employer's charter or by-laws restrict ownership of substantially all shares
of company stock to employees and the trust fund, as described in Code Section
409(h)(2), the administrator shall distribute a Participant's account entirely
in cash without granting the Participant the right to demand distribution in
shares of company stock.
(2) Except as otherwise provided herein, company stock distributed
by the trustee may be restricted as to sale or transfer by the by-laws or
articles of incorporation of the Employer, provided restrictions are applicable
to all company stock of the same class. If a Participant is required to offer
the sale of his company stock to the Employer before offering to sell his
company stock to a third party, in no event may the Employer pay a price less
than that offered to the distributee by another potential buyer making a bona
fide offer and in no event shall the trustee pay a price less than the fair
market value of the company stock.
(d) Right of First Refusal
(1) If any Participant, his beneficiary or any other person to whom
shares of company stock are distributed from the plan (the selling Participant)
shall, at any time that the stock is not publicly traded, desire to sell some or
all of such shares (the offered shares) to a third party, the selling
Participant shall give written notice of such desire to
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the Employer and the administrator. The notice shall contain the number of
shares offered for sale, the proposed terms of the sale and the names and
addresses of both the selling Participant and third party. Both the trust fund
and the Employer shall each have the right of first refusal for a period of
fourteen (14) days from the date the selling Participant gives such written
notice to the Employer and the administrator to acquire the offered shares. The
fourteen day period shall run concurrently against the trust fund and the
Employer. As between the trust fund and the Employer, the trust fund shall have
priority to acquire the shares pursuant to the right of first refusal. The
selling price and terms shall not be less than the greater of the value of the
stock determined under Section 6.7(b) or the price and terms offered by the
third party.
(2) If the trust fund and the Employer do not exercise their right
of first refusal within the required fourteen day period provided above, the
selling Participant shall have the right, at any time following the expiration
of such period, to dispose of the offered shares to the third party; provided,
however, that (i) no disposition shall be made to the third party on terms more
favorable to the third party than those set forth in the written notice
previously given by the selling Participant, and (ii) if such disposition shall
not be made to a third party on the terms offered to the Employer and the trust
fund, the offered shares shall again be subject to the right of first refusal
set forth above.
(3) The closing pursuant to the exercise of the right of first
refusal shall take place at such place agreed upon between the administrator and
the selling Participant, but not later than ten (10) days after the Employer or
the trust fund shall have notified the selling Participant of the exercise of
the right of first refusal. At such closing, the selling Participant shall
deliver certificates representing the offered shares duly endorsed in blank for
transfer, or with stock powers attached duly executed in blank with all required
transfer tax stamps attached or provided for, and the Employer or the trust fund
shall deliver the purchase price, or an appropriate portion thereof, to the
selling Participant.
(e) Put Option
(1) If company stock is distributed to a Participant and such
company stock is not readily tradable on an established securities market, a
Participant has a right to require the Employer to repurchase the company stock
distributed to such Participant under a fair valuation formula. Such stock shall
be subject to the provisions of (c).
(2) The put option must be exercisable only by a Participant, by the
Participant's donees, or by a person (including an estate or its distributee) to
whom the company stock passes by reason of a Participant's death. The put option
must permit a Participant (or beneficiary) to put the company stock to the
Employer. Under no circumstances may the put option bind the plan. However, it
shall grant the plan an option to assume the rights and obligations of the
Employer at the time that the put option is exercised. If it is known at the
time a loan is made that Federal or State law will be violated by the Employer's
honoring such put option, the put option must permit the company stock to be
put, in a manner consistent with such law, to a third party (e.g., an affiliate
of the Employer or a shareholder other than the plan) that has substantial net
worth at the time the loan is made and whose net worth is reasonably expected to
remain substantial.
The put option shall commence as of the day following the date the company
stock is distributed to the Participant (or beneficiary) and end 60 days
thereafter and if not exercised within such 60-day period, an additional 60-day
option shall commence on the
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first day of the fifth month of the plan year next following the date the stock
was distributed to the Participant (or such other 60-day period as provided in
Code regulations). However, in the case of company stock that is publicly traded
without restrictions when distributed but ceases to be so traded within either
of the 60-day periods described herein after distribution, the Employer must
notify each holder of such company stock in writing on or before the tenth day
after the date the company stock ceases to be so traded that for the remainder
of the applicable 60-day period the company stock is subject to the put option.
The number of days between the tenth day and the date on which notice is
actually given, if later than the tenth day, must be added to the duration of
the put option. The notice must inform distributees of the term of the put
options that they are to hold. The terms must satisfy the requirements of this
paragraph.
The put option is exercised by the holder by notifying the Employer in
writing that the put option is being exercised. The notice shall state the name
and address of the holder and the number of shares to be sold. Upon receipt of a
written notification from the holder, the Employer shall immediately inform the
administrator of such notice. The administrator shall have 10 days to notify the
Employer if it wishes the trust fund to assume the rights and obligations of the
Employer with respect to the required purchase of company stock.
The period during which a put option is exercisable does not include any
time when a distributee is unable to exercise it because the party bound by the
put option is prohibited from honoring it by applicable Federal or State law.
The price at which a put option must be exercisable is the value of the company
stock determined in accordance with Section 6.7(b) as of the allocation date
coincident with or immediately preceding the Employer's receipt of the written
notification. The total purchase price shall be paid to the holder within 30
days after the notification, provided however, that the Employer may defer such
payments on a reasonable basis, if it gives written notice to the holder within
the 30 day period. Such deferred payments shall be paid in substantially equal
monthly, quarterly, semiannual, or annual installments over a period certain
beginning not later than thirty (30) days after the exercise of the put option
and not extending beyond five (5) years. The deferral of payment is reasonable
if adequate security and a reasonable interest rate on the unpaid amounts are
provided. The amount to be paid under the put option involving installment
distributions must be paid not later than thirty (30) days after the exercise of
the put option. Payment under a put option must not be restricted by the
provisions of a loan or any other arrangement, including the terms of the
Employer's articles of incorporation, unless so required by applicable state
law.
For purposes of this Section, total distribution means a distribution to a
Participant or his beneficiary within one taxable year of the Participant's
entire vested account.
(3) An arrangement involving the plan that creates a put option must
not provide for the issuance of put options other than as provided under this
Section. The plan (and the trust fund) must not otherwise obligate itself to
acquire company stock from a particular holder thereof at an indefinite time
determined upon the happening of an event such as the death of the holder.
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ARTICLE VI ADMINISTRATION OF THE PLAN
Section 6.1 Fiduciary Responsibility
(a) Fiduciary Standards - A fiduciary shall discharge his duties with
respect to a plan solely in the interest of the Participants and beneficiaries
and --
For the exclusive purpose of providing benefits to Participants and their
beneficiaries and defraying reasonable expenses of administering the plan;
With the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with
like aims;
By diversifying the investments of the plan so as to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not to do so;
and
In accordance with the documents and instruments governing the plan
insofar as such documents and instruments are consistent with the provisions of
ERISA.
(b) Allocation of Fiduciary Responsibility
(1) It is intended to allocate to each fiduciary, either named or
otherwise, the individual responsibility for the prudent execution of the
functions assigned to him. None of the allocated responsibilities or any other
responsibilities shall be shared by two or more fiduciaries unless specifically
provided for in the plan.
(2) When one fiduciary is required to follow the directions of
another fiduciary, the two fiduciaries shall not be deemed to share such
responsibility. Instead, the responsibility of the fiduciary giving the
directions shall be deemed to be his sole responsibility and the responsibility
of the fiduciary receiving directions shall be to follow those directions
insofar as such instructions on their face are proper under applicable law.
(3) Any person or group of persons may serve in more than one
fiduciary capacity with respect to this plan.
(4) A fiduciary under this plan may employ one or more persons,
including independent accountants, attorneys and actuaries to render advice with
regard to any responsibility such fiduciary has under the plan.
(c) Indemnification by Employer - Unless resulting from the gross
negligence, willful misconduct or lack of good faith on the part of a fiduciary
who is an officer or employee of the Employer, the Employer shall indemnify and
save harmless such fiduciary from, against, for and in respect of any and all
damages, losses, obligations, liabilities, liens, deficiencies, costs and
expenses, including without limitation, reasonable attorney's fees and other
costs and expenses incident to any suit, action, investigation, claim or
proceedings suffered in connection with his acting as a fiduciary under the
plan.
(d) Named Fiduciary - The person or persons named by the Employer as
having fiduciary responsibility for the management and control of plan assets
shall be known as the "named fiduciary" hereunder. Such responsibility shall
include the appointment of the
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plan administrator (Section 6.2(a)), the trustee (Section 6.4(a)) and the
investment manager (Section 6.4(b)), and the deciding of benefit appeals
(Section 6.3).
(e) Bonding - Every fiduciary, except a bank or an insurance company,
unless exempted by the ERISA and regulations thereunder, shall be bonded in an
amount not less than 10% of the amount of the funds such fiduciary handles;
provided, however, that the minimum bond shall be $1,000 and the maximum bond,
$500,000. The amount of funds handled shall be determined at the beginning of
each plan year by the amount of funds handled by such person, group, or class to
be covered and their predecessors, if any, during the preceding plan year, or if
there is no preceding plan year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the plan
against any loss by reason of acts of fraud or dishonesty by the fiduciary alone
or in connivance with others. The surety shall be a corporate surety company (as
such term is used in ERISA Section 412(a)(2)), and the bond shall be in a form
approved by the Secretary of Labor. Notwithstanding anything in the plan to the
contrary, the cost of such bonds shall be an expense of and may, at the election
of the administrator, be paid from the trust fund or by the Employer.
Section 6.2 Plan Administrator
(a) Appointment of Plan Administrator
The named fiduciary shall appoint a plan administrator who may be a person
or an administrative committee consisting of no more than five members.
Vacancies occurring upon resignation or removal of a plan administrator or a
committee member shall be filled promptly by the named fiduciary. Any
administrator may resign at any time by giving notice of his resignation to the
named fiduciary, and any administrator may be removed at any time by the named
fiduciary. The named fiduciary shall review at regular intervals the performance
of the administrator(s) and shall re-evaluate the appointment of such
administrator(s). After the named fiduciary has appointed the administrator and
has received a written notice of acceptance, the fiduciary responsibility for
administration of the plan shall be the responsibility of the plan administrator
or administrative committee.
(b) Duties and Powers of Plan Administrator
The plan administrator shall have the following duties and discretionary
powers and such other duties and discretionary powers as relate to the
administration of the plan:
(1) To determine in a non-discriminatory manner all questions
relating to the eligibility of employees to become Participants.
(2) To determine in a non-discriminatory manner eligibility for
benefits and to determine and certify the amount and kind of benefits payable to
Participants.
(3) To authorize all disbursements from the fund.
(4) To appoint or employ any independent person to perform necessary
plan functions and to assist in the fulfillment of administrative
responsibilities as he deems advisable, including legal and actuarial counsel.
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(5) When appropriate, to select an insurance company and annuity
contracts which, in his opinion, will best carry out the purposes of the plan.
(6) To construe and interpret any ambiguities in the plan and to
make, publish, interpret, alter, amend or revoke rules for the regulation of the
plan which are consistent with the terms of the plan and with ERISA.
(7) To prepare and distribute, in such manner as determined to be
appropriate, information explaining the plan.
(8) To establish and communicate to Participants a procedure and
method to insure that each Participant will vote company stock allocated to such
Participant's company stock account pursuant to Section 6.8.
(9) To assist any Participant regarding his rights, benefits, or
elections available under the plan.
(c) Allocation of Fiduciary Responsibility Within Administrative Committee
If the plan administrator is an administrative committee, the committee
shall choose from its members a chairman and a secretary. The committee may
allocate responsibility for those duties and powers listed in Section 6.2(b)(1)
and (2) (except determination of qualification for disability retirement) and
other purely ministerial duties to one or more members of the committee. The
committee shall review at regular intervals the performance of any committee
member to whom fiduciary responsibility has been allocated and shall re-evaluate
such allocation of responsibility. After the committee has made such allocations
of responsibilities and has received written notice of acceptance, the fiduciary
responsibilities for such administrative duties and powers shall then be
considered as the responsibilities of such committee member(s).
(d) Miscellaneous Provisions
(1) Administrative Committee Actions - The actions of such committee
shall be determined by the vote or other affirmative expression of a majority of
its members. Either the chairman or the secretary may execute any certificate or
other written direction on behalf of the committee. A member of the committee
who is a Participant shall not vote on any question relating specifically to
himself. If the remaining members of the committee, by majority vote thereof,
are unable to come to a determination of any such question, the named fiduciary
shall appoint a substitute member who shall act as a member of the committee for
the special vote.
(2) Expenses - The plan administrator shall serve without
compensation for service as such. All reasonable expenses of the plan
administrator shall be paid by the Employer or from the fund.
(3) Examination of Records - The plan administrator shall make
available to any Participant for examination during business hours such of the
plan records as pertain only to the Participant involved.
(4) Information to the Plan Administrator - To enable the plan
administrator to perform the administrative functions, the Employer shall supply
full and timely
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information to the plan administrator on all Participants as the plan
administrator may require.
Section 6.3 Claims Procedure
(a) Notification - The plan administrator shall notify each Participant in
writing of his determination of benefits. If the plan administrator denies any
benefit, such written denial shall include:
- The specific reasons for denial;
- Reference to provisions on which the denial is based;
- A description of and reason for any additional information needed
to process the claim; and
- An explanation of the claims procedure.
(b) Appeal - The Participant or his duly authorized representative may:
- Request a review of the Participant's case in writing to the named
fiduciary;
- Review pertinent documents;
- Submit issues and comments in writing.
The written request for review must be submitted no later than 60 days
after receiving written notification of denial of benefits.
(c) Review - The named fiduciary must render a decision no later than 60
days after receiving the written request for review, unless circumstances make
it impossible to do so; but in no event shall the decision be rendered later
than 120 days after the request for review is received.
Section 6.4 Trust Fund
(a) Appointment of Trustee
The named fiduciary shall appoint a trustee for the proper care and
custody of all funds, securities and other properties in the trust, and for
investment of plan assets (or for execution of such orders as it receives from
an investment manager appointed for investment of plan assets). The duties and
powers of the trustee shall be set forth in a trust agreement executed by the
Employer, which is incorporated herein by reference. The named fiduciary shall
review at regular intervals the performance of the trustee and shall re-evaluate
the appointment of such trustee. After the named fiduciary has appointed the
trustee and has received a written notice of acceptance of its responsibility,
the fiduciary responsibility with respect to the proper care and custody of plan
assets shall be considered as the responsibility of the trustee. Unless
otherwise allocated to an investment manager, the fiduciary responsibility with
respect to investment of plan assets shall likewise be considered as the
responsibility of the trustee.
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(b) Appointment of Investment Manager
The named fiduciary may appoint an investment manager who is other than
the trustee, which investment manager may be a bank or an investment advisor
registered with the Securities and Exchange Commission under the Investment
Advisors Act of 1940. Such investment manager, if appointed, shall have sole
discretion in the investment of plan assets, subject to the funding policy. The
named fiduciary shall review at regular intervals no less frequently than
annually, the performance of such investment manager and shall re-evaluate the
appointment of such investment manager. After the named fiduciary has appointed
an investment manager and has received a written notice of acceptance of its
responsibility, the fiduciary responsibility with respect to investment of plan
assets shall be considered as the responsibility of the investment manager.
Section 6.5 Investment Policy
(a) The plan is designed to invest primarily in company stock. It is
specifically intended that this employee stock ownership plan qualify and
operate as an individual account plan. As such, and without limiting the
generality of the foregoing, the trustee is hereby specifically authorized to:
(1) acquire, hold, sell, and distribute Company stock.
(2) invest in Company stock and not limit its holdings of such stock
to ten percent of trust assets but may invest up to 100% of plan assets in
Company stock without regard to any plan or trust agreement requirement to
diversify investments as permitted under ERISA section 404(a)(2).
(3) acquire or sell Company stock in a transaction with a
disqualified person or a party in interest (as those terms are defined in ERISA
and the Code) provided that no commission is charged and the transaction is for
adequate consideration.
(b) With due regard to subparagraph (a) above, the administrator may also
direct the trustee to invest funds under the plan in other property described in
the Trust Agreement or in life insurance policies to the extent permitted by
subparagraph (c) below, or the trustee may hold such funds in cash or cash
equivalents.
(c) The plan may not obligate itself to acquire company stock from a
particular holder thereof at an indefinite time determined upon the happening of
an event such as the death of the holder.
(d) The plan may not obligate itself to acquire company stock under a put
option binding upon the plan. However, at the time a put option is exercised,
the plan may be given an option to assume the rights and obligations of the
Employer under a put option binding upon the Employer.
(e) All purchases of company stock shall be made at a price which, in the
judgment of the administrator, does not exceed the fair market value thereof.
All sales of company stock shall be made at a price which, in the judgment of
the administrator, is not less than the fair market value thereof. The valuation
rules set forth in Section 6.7 shall be applicable.
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Section 6.6 Valuation of the Trust Fund
(a) The administrator shall direct the trustee, as of each allocation
date, and at such other date or dates deemed necessary by the administrator,
herein called valuation date, to determine the net worth of the assets
comprising the trust fund as it exists on the valuation date prior to taking
into consideration any contribution to be allocated for that plan year. In
determining such net worth, the trustee shall value the assets comprising the
trust fund at their fair market value as of the valuation date and shall deduct
all expenses for which the trustee has not yet obtained reimbursement from the
Employer or the trust fund.
(b) Valuations must be made in good faith and based on all relevant
factors for determining the fair market value of securities. In the case of a
transaction between a plan and a disqualified person, value must be determined
as of the date of the transaction. For all other plan purposes, value must be
determined as of the most recent valuation date under the plan. An independent
appraisal will not in itself be a good faith determination of value in the case
of a transaction between the plan and a disqualified person. However, in other
cases, a determination of fair market value based on at least an annual
appraisal independently arrived at by a person who customarily makes such
appraisals and who is independent of any party to the transaction will be deemed
to be a good faith determination of value. Company stock not readily tradable on
an established securities market shall be valued by an independent appraiser
meeting requirements similar to the requirements of the Regulations prescribed
under Code Section 170(a)(1).
Section 6.7 Voting Company Stock
The trustee shall vote all company stock held by it as part of the plan
assets at such time and in such manner as the administrator shall direct,
provided, however, that if any agreement entered into by the trust provides for
voting of any shares of company stock pledged as security for any obligation of
the plan, then such shares of company stock shall be voted in accordance with
such agreement. If the administrator shall fail or refuse to give the trustee
timely instructions as to how to vote any company stock as to which the trustee
otherwise has the right to vote, the trustee shall not exercise its power to
vote such company stock.
If the by-laws of the Employer require the plan to vote an issue in a
manner that reflects a one-man, one-vote philosophy, each Participant or
beneficiary shall be entitled to cast one vote on an issue and the trustee shall
vote the shares held by the plan in proportion to the results of the votes cast
on the issue by the Participants and beneficiaries.
In the event a tender offer is made for shares of company stock, each
Participant (or beneficiary) shall be entitled to direct the trustee as to
whether or not the shares of company stock allocated to his company stock
account shall be tendered pursuant to such offer. The trustee shall tender
shares of company stock held in the unallocated company stock suspense account
in the same proportion as Participants actually tender the shares allocated to
their individual accounts, provided, however, that the trustee shall not tender
any shares which are pledged as security for an exempt loan without first
obtaining any required approvals.
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Section 6.8 Current Obligations
Employer contributions in cash and other cash received by the trust fund
shall first be applied to pay any current obligations of the trust fund. Current
obligations means trust fund expenses and trust obligations arising from the
extension of credit to the trust and payable in cash within one year from the
date an Employer contribution is due.
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ARTICLE VII AMENDMENT AND TERMINATION OF PLAN
Section 7.1 Right to Discontinue and Amend
It is the expectation of the Employer that it will continue this plan
indefinitely and make the payments of its contributions hereunder, but the
continuance of the plan is not assumed as a contractual obligation of the
Employer and the right is reserved by the Employer, at any time, to reduce,
suspend or discontinue its contributions hereunder.
Section 7.2 Amendments
Except as herein limited, the Employer shall have the right to amend this
plan at any time to any extent that it may deem advisable. Such amendment shall
be stated in writing, shall be authorized by action of the board of directors,
and shall be executed by the person designated in conjunction with the
authorization.
The Employer's right to amend the plan shall be limited as follows:
(a) No amendment shall increase the duties or liabilities of the plan
administrator, the trustee, or other fiduciary without their respective written
consent.
(b) No amendments shall have the effect of vesting in the Employer any
interest in or control over any contracts issued pursuant hereto or any other
property in the fund.
(c) No amendment to the plan shall be effective to the extent that it has
the effect of decreasing a Participant's accrued benefit. Notwithstanding the
preceding sentence, a Participant's account balance may be reduced to the extent
permitted under Code Section 412(c)(8). For purposes of this paragraph, a plan
amendment which has the effect of decreasing a Participant's account balance or
eliminating an optional form of benefit, with respect to benefits attributable
to service before the amendment shall be treated as reducing an accrued benefit.
Furthermore, if the vesting schedule of a plan is amended, in the case of an
employee who is a Participant as of the later of the date such amendment is
adopted or the date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such employee's right to his Employer-derived
accrued benefit will not be less than his percentage computed under the plan
without regard to such amendment.
(d) No amendment to the vesting schedule adopted by the Employer hereunder
shall deprive a Participant of his vested portion of his Employer contribution
account to the date of such amendment. If the plan's vesting schedule is
amended, or the plan is amended in any way that directly or indirectly affects
the computation of the Participant's nonforfeitable percentage or if the plan is
deemed amended by an automatic change to or from a top-heavy vesting schedule,
each Participant with at least 3 years of service with the Employer may elect,
within a reasonable period after the adoption of the amendment or change, to
have the nonforfeitable percentage computed under the plan without regard to
such amendment or change. For Participants who do not have at least one hour of
service in any plan year beginning after December 31, 1988, "5 years of service"
shall be substituted for "3 years of service" in the preceding sentence. The
period during which the election may be made shall commence with the date the
amendment is adopted or deemed to be made and shall end on the latest of:
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(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written notice of the
amendment by the Employer or plan administrator.
Section 7.3 Protection of Benefits in Case of Plan Merger
In the event of a merger or consolidation with, or transfer of assets to
any other plan, each Participant will receive a benefit immediately after such
merger, consolidation or transfer (if the plan then terminated) which is at
least equal to the benefit the Participant was entitled to immediately before
such merger, consolidation or transfer (if the plan had terminated).
Section 7.4 Termination of Plan
(a) When Plan Terminates - This plan shall terminate upon the happening of
any of the following events: legal adjudication of the Employer as bankrupt; a
general assignment by the Employer to or for the benefit of its creditors; the
legal dissolution of the Employer; or termination of the plan by the Employer.
(b) Allocation of Assets - Upon termination, partial termination or
complete discontinuance of Employer contributions, the account balance of each
affected Participant who is an active Participant or who is not an active
Participant but has neither received a complete distribution of his vested
accrued benefit nor incurred five one-year breaks in service shall be 100%
vested and nonforfeitable. The amount of the fund assets shall be allocated to
each Participant, subject to provisions for expenses of administration of the
liquidation, in the ratio that such Participant's account bears to all accounts.
If a Participant under this plan has terminated his employment at any time after
the anniversary date of the year in which the Employer made his final
contribution to the plan, and if any portion of the account of such terminated
Participant was forfeited and reallocated to the remaining Participants, such
forfeiture shall be reversed and the forfeited amount shall be credited to the
account of such terminated Participant.
B-26
<PAGE>
ARTICLE VIII MISCELLANEOUS PROVISIONS
Section 8.1 Exclusive Benefit -- Non-Reversion
The plan is created for the exclusive benefit of the employees of the
Employer and shall be interpreted in a manner consistent with its being a
qualified plan as defined in Section 401(a) of the Internal Revenue Code and
with ERISA. The corpus or income of the trust may not be diverted to or used for
other than the exclusive benefit of the Participants or their beneficiaries
(except for defraying reasonable expenses of administering the plan).
Notwithstanding the above, a contribution paid by the Employer to the
trust may be repaid to the Employer under the following circumstances:
(a) Any contribution made by the Employer because of a mistake of fact
must be returned to the Employer within one year of the contribution.
(b) In the event the deduction of a contribution made by the Employer is
disallowed under Code Section 404, such contribution (to the extent disallowed)
must be returned to the Employer within one year of the disallowance of the
deduction.
(c) If the Commissioner of Internal Revenue determines that the plan is
not initially qualified under the Internal Revenue Code, any contribution made
incident to that initial qualification by the Employer must be returned to the
Employer within one year after the date the initial qualification is denied, but
only if the application for the qualification is made by the time prescribed by
law for filing the Employer's return for the taxable year in which the plan is
adopted, or such later date as the Secretary of the Treasury may prescribe.
Section 8.2 Inalienability of Benefits
No benefit or interest available hereunder including any annuity contract
distributed herefrom shall be subject to assignment or alienation, either
voluntarily or involuntarily. The preceding sentence shall also apply to the
creation, assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order, unless such
order is determined to be a qualified domestic relations order as defined in
Code Section 414(p), or any domestic relations order entered before January 1,
1985. A loan made to a Participant and secured by his nonforfeitable account
balance under Section 4.5(b) will not be treated as an assignment or alienation
and such securing account balance shall be subject to attachment by the plan in
the event of default.
Notwithstanding the preceding paragraph, effective with respect to
judgments, orders, and decrees issued, and settlement agreements entered into,
on or after August 5, 1997, a Participant's benefit (and that of his spouse)
shall be reduced to satisfy liabilities of the Participant to the plan due to
(1) the Participant being convicted of committing a crime involving the plan,
(2) a civil judgment (or consent order or decree) entered by a court in an
action brought in connection with a violation of the fiduciary provisions of
Title I of ERISA, or (3) a settlement agreement between the Secretary of Labor
or the Pension Benefit Guaranty Corporation and the Participant in connection
with a violation of the fiduciary
B-27
<PAGE>
provisions of ERISA. Any reduction made pursuant to this paragraph shall be done
in accordance with the requirements of ERISA Section 206(d).
Section 8.3 Employer-Employee Relationship
This plan is not to be construed as creating or changing any contract of
employment between the Employer and its employees, and the Employer retains the
right to deal with its employees in the same manner as though this plan had not
been created.
Section 8.4 Binding Agreement
This plan shall be binding on the heirs, executors, administrators,
successors and assigns as such terms may be applicable to any or all parties
hereto, and on any Participants, present or future.
Section 8.5 Separability
If any provision of this plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof and
this plan shall be construed and enforced as if such provision had not been
included.
Section 8.6 Construction
The plan shall be construed in accordance with the laws of the state in
which the Employer was incorporated and with ERISA.
Section 8.7 Copies of Plan
This plan may be executed in any number of counterparts, each of which
shall be deemed as an original, and said counterparts shall constitute but one
and the same instrument which may be sufficiently evidenced by any one
counterpart.
Section 8.8 Interpretation
Wherever appropriate, words used in this plan in the singular may include
the plural or the plural may be read as singular, and the masculine may include
the feminine.
Section 8.9 Securities and Exchange Commission Approval
The Employer may request an interpretative letter from the Securities and
Exchange Commission stating that the transfers of company stock contemplated
hereunder do not involve transactions requiring a registration of such company
stock under the Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the right to amend
the Plan and Trust retroactively to their effective dates in order to obtain a
favorable interpretative letter or to terminate the plan.
B-28
<PAGE>
IN WITNESS WHEREOF, the Employer has caused this Plan to be executed this
31st day of DECEMBER, 1998.
EMPLOYER:
Wilson Greatbatch Ltd.
By: /s/ Larry T. DeAngelo
-----------------------------------
Title: V.P. Administration & Secretary
--------------------------------
B-29
<PAGE>
FIRST AMENDMENT
to
WILSON GREATBATCH LTD. EQUITY PLUS PLAN -
MONEY PURCHASE PLAN
Under Article VII of the Wilson Greatbatch Ltd. Equity Plus Plan -
Money Purchase Plan (the "Plan"), Wilson Greatbatch Ltd. (the "Employer") has
the right to make written amendments to the Plan that are authorized by the
board of directors of the Employer and executed by an authorized officer of the
Employer. Therefore, the Employer hereby amends the Plan in the following
respects:
1. Effective January 1, 1999, paragraphs (2) and (3) of Plan Section
4.3(a) are hereby deleted in their entirety, and are replaced with the following
provisions:
(2) Participant Elections to Commence Distributions - If
a Participant terminates employment with the Employer, the
Participant may make a written election directing the plan
administrator to make a distribution of his or her vested accounts
under the Plan. The form of distribution will be determined under
the provisions of Section 4.3(b). The timing of the distribution
depends on when the Participant elects to receive a distribution and
the accounting date the Participant elects to use to determine the
value of his or her account for distribution purposes. A Participant
may elect an immediate distribution and request that the
distribution amount be determined using the value of his or her
vested plan account as of the accounting date that coincides with or
immediately precedes the date the Participant submits the election,
in which case the distribution will be processed as soon as
practicable after the date the plan administrator receives the
election. Alternatively, a Participant may elect to defer the
distribution and request that the distribution amount be determined
using the value of his or her vested plan account as of the next
annual accounting date for valuing company stock that immediately
follows the date the Participant submits the election, in which case
the distribution will be processed as soon as practicable after that
accounting date.
2. Effective January 1, 1999, the first sentence of Plan Section
4.3(c)(2) is hereby deleted in its entirety.
3. Effective January 1, 1999, the second and third paragraphs of
Section 6.7 are hereby deleted in their entirety, and are replaced with the
following provisions:
If a tender offer is made for shares of company stock, each
Participant or beneficiary will be entitled to direct the trustee as
to whether or not the shares allocated to his or her company stock
account may be tendered under the offer.
All shares of company stock allocated to accounts for which
the trustee did not receive tender instructions from a Participant
or beneficiary and all shares held
<PAGE>
in the unallocated company stock suspense account will be tendered
or not tendered by the trustee in its discretion and in accordance
with its fiduciary duties under ERISA. The trustee may not tender
any shares that are pledged as security for an exempt loan without
first obtaining any required approvals.
On all other corporate matters requiring pass-through voting
rights under Code Section 409(e)(3), each Participant or beneficiary
is entitled to direct the trustee on the manner in which to vote the
shares of company stock allocated to his or her company stock
account. All shares of company stock allocated to accounts for which
the trustee did not receive timely voting instructions from
Participants or beneficiaries and all shares held in the unallocated
company stock suspense account will be voted by the trustee in its
discretion and in accordance with its fiduciary duties under ERISA.
In all other respects, the Plan will remain unchanged.
WILSON GREATBATCH LTD.
Date: March 27, 1999 By /s/ Larry T. DeAngelo
---------------- ---------------------------------
<PAGE>
SECOND AMENDMENT
to
WILSON GREATBATCH LTD. EQUITY PLUS PLAN -
MONEY PURCHASE PLAN
Under Article VII of the Wilson Greatbatch Ltd. Equity Plus Plan -
Money Purchase Plan (the "Plan"), Wilson Greatbatch Ltd. (the "Employer") has
the right to make written amendments to the Plan that are authorized by the
board of directors of the Employer and executed by an authorized officer of the
Employer. Therefore, the Employer hereby amends the Plan in the following
respects:
1. Effective January 1, 1999, Plan Section 4.4 is hereby deleted in
its entirety, and is replaced by the following provision:
Section 4.4 Form of Distribution
(a) Unless a Participant or a beneficiary demands that his or
her benefits attributable to the Company Stock Account be
distributed in the form of company stock, the plan administrator
may, but is not obligated to, direct the trustee to distribute
benefits in cash only. The amount of any cash payment to a
Participant will be equal to the fair market value of the company
stock that would otherwise have been distributed to the Participant,
plus the value of his or her other investment account and directed
investment account.
(b) The trustee may make distributions from the trust only on
instructions from the plan administrator.
2. Effective January 1, 1998, the words "stock bonus" are hereby
deleted from the first sentence of Plan Section 5.2(c).
3. Effective January 1, 1999, Plan Section 5.6 is hereby deleted in
its entirety, and is replaced by the following provision:
Section 5.5 ESOP Distribution Options
(a) Right to Receive Stock
The right to receive distributions in the form of shares of
company stock is automatically terminated in the event of the sale
or other disposition by the trustee of all shares of company stock
held by the trust.
<PAGE>
2
(b) Restricted Stock
(1) Notwithstanding any other provision of the Plan, if
the Employer's charter or by-laws restrict ownership of
substantially all shares of company stock to employees and the trust
fund, as described in Code Section 409(h)(2), the administrator will
distribute a Participant's account entirely in cash, without
granting the Participant the right to demand distribution in shares
of company stock.
(2) Except as otherwise provided under the plan, company
stock distributed by the trustee may be restricted as to sale or
transfer by the by-laws or articles of incorporation of the
Employer, if the restrictions are applicable to all company stock of
the same class. Certificates representing company stock distributed
by the plan will bear a legend or notation required by applicable
federal and state securities laws and regulations.
(c) Right of First Refusal
(1) If any Participant, his or her beneficiary or any
other person to whom shares of company stock are distributed from
the plan (the selling Participant) wants, at any time that the stock
is not publicly traded, to sell some or all of his or her shares
(the offered shares) to a third party, the selling Participant must
give prior written notice of his or her plans to sell the stock to
the Employer and the trustee. The notice must contain the number of
shares offered for sale, the proposed terms of the sale and the
names and addresses of both the selling Participant and third party.
The trustee and the Employer each will have the right of first
refusal for a period of 14 days from the date the selling
Participant gives written notice to the Employer and to the trustee
to acquire the offered shares. The 14-day period runs concurrently
with respect to the trust fund and the Employer. As between the
trust fund and the Employer, the trust fund has priority to acquire
the shares pursuant to the right of first refusal. If the trustee or
the Employer exercises their right of first refusal, the selling
price and terms may not be less than the price and terms offered by
the third party.
(2) If the trustee and the Employer do not exercise
their right of first refusal within the required 14-day period, the
selling Participant has the right, at any time following the
expiration of the period, to dispose of the offered shares to the
third party. Nevertheless, no disposition may be made to the third
party on terms more favorable to the third party than those set
forth in the written notice previously given by the selling
Participant to the Employer and trustee. If the disposition is not
made to a third party on the terms offered to the Employer and the
trustee, the offered shares are again subject to the right of first
refusal described above.
(3) The closing following the exercise of a right of
first refusal
<PAGE>
3
will take place at such place agreed on between the administrator
and the selling Participant, but not later than ten (10) days after
the Employer or the trustee notifies the selling Participant of the
exercise of the right of first refusal. At the closing, the selling
Participant must deliver certificates representing the offered
shares duly endorsed in blank for transfer, or with stock powers
attached duly executed in blank with all required transfer tax
stamps attached or provided for, and the Employer or the trustee
must deliver the purchase price, or an appropriate portion thereof,
to the selling Participant.
(d) Put Option
(1) If company stock is distributed to a Participant and
the company stock is not readily tradeable on an established
securities market, a Participant has a right to require the Employer
to repurchase the company stock distributed to such Participant
under a fair valuation formula. That stock shall be subject to the
provisions of (c).
(2) The put option is exercisable only by a Participant,
by the Participant's donees, or by a person (including an estate or
its distributee) to whom the company stock passes by reason of a
Participant's death. The put option must permit a Participant (or a
beneficiary) to put the company stock to the Employer. Under no
circumstance may the put option bind the plan. However, the put
option grants the plan an option to assume the rights and
obligations of the Employer at the time that the put option is
exercised. If it is known at the time a loan is made that Federal or
State law will be violated by the Employer honoring the put option,
the put option must permit the company stock to be put, in a manner
consistent with applicable law, to a third party (e.g., an affiliate
of the Employer or a shareholder other than the plan) that has
substantial net worth at the time the loan is made and whose net
worth is reasonably expected to remain substantial.
The put option may be exercised during the period that begins
on the date the company stock is distributed to the Participant (or
a beneficiary) and ends 60 days thereafter. If the put option is not
exercised within the 60-day period, an additional 60-day option
commences on the 1st day of the 5th month of the plan year next
following the date the stock was distributed to the Participant (or
any other 60-day period as provided in Treasury regulations).
However, in the case of company stock that is publicly traded
without restrictions when distributed and ceases to be publicly
traded within either of the 60-day periods described above, the
Employer must notify each holder of the company stock in writing on
or before the 10th day after the date the company stock ceases to be
publicly traded that for the remainder of the applicable 60-day
period the company stock is subject to the put option. The number of
days between the 10th day and the date on which notice is actually
given, if later than the 10th day, must be added to the duration of
the put option. The notice must inform distributees of the term of
the put options that they are to hold. The terms must satisfy the
requirements of this
<PAGE>
4
paragraph.
The put option is exercised by the holder by notifying the
Employer in writing that the put option is being exercised. The
notice must state the name and address of the holder and the number
of shares to be sold. When written notification from the holder is
received, the Employer will immediately inform the administrator of
the notice. The administrator will have 10 days to notify the
Employer if it wishes the trust fund to assume the rights and
obligations of the Employer with respect to the required purchase of
company stock.
The period during which a put option is exercisable does not
include any time when a distributee is unable to exercise it because
the party bound by the put option is prohibited from honoring it by
applicable Federal or State law. The price at which a put option
must be exercisable is the fair market value of the company stock,
as determined by the plan administrator in good faith based on all
the relevant factors, as of the allocation date coincident with or
immediately preceding the Employer's receipt of the written
notification. The total purchase price must be paid to the holder
within 30 days after the notification. The Employer, however, may
defer the payments on a reasonable basis, if it gives written notice
to the holder within the 30 days period. The deferred payments must
be paid in substantially equal monthly, quarterly, semiannual, or
annual installments over a period certain beginning not later than
30 days after the exercise of the put option and not extending
beyond 5 years. The deferral of payment is reasonable if adequate
security and a reasonable interest rate on the unpaid amounts are
provided. The amount to be paid under the put option involving
installment distributions must be paid not later than 30 days after
the exercise of the put option. Payment under a put option must not
be restricted by the provisions of a loan or any other arrangement,
including the terms of the employer's articles of incorporation,
unless so required by applicable state law.
For purposes of this Section, total distribution means a
distribution within 1 taxable year to a Participant or his
beneficiary of the Participant's entire vested account.
(3) An arrangement involving the plan that creates a put
option must not provide for the issuance of put options other than
as provided under this Section. The plan (and the trust fund) must
not otherwise obligate itself to acquire company stock from an
option holder at an indefinite time determined on the happening of
an event, such as the death of the holder.
<PAGE>
5
In all other respects, the Plan will remain unchanged.
WILSON GREATBATCH LTD.
Date: May 31, 1999 By /s/ Larry T. DeAngelo
-------------------- ----------------------------
<PAGE>
WILSON GREATBATCH EQUITY PLUS ESOP PLAN
MASTER TRUST AGREEMENT
THIS AGREEMENT, made and entered into on the date of its execution, is
effective for all purposes as of March 11, 1998 by and between:
Wilson Greatbatch, Ltd. ("Employer")
and
Curt Cashmore, Larry T. DeAngelo, Scott Ferguson, Arthur Lalonde,
and Esther Takeuchi ("Trustee"),
and shall be construed in accordance with the laws of the State of New York.
WITNESSETH:
WHEREAS the Employer has established the Wilson Greatbatch Equity Plus
ESOP Plan-Money Purchase Plan and the Wilson Greatbatch Equity Plus-Stock Bonus
Plan ("the participating plans"); and
WHEREAS, the Employer desires to establish a Master Trust to allow for the
commingling of trust fund assets for investment purposes;
NOW THEREFORE, the Employer and the Trustee do hereby agree to the
following provisions of this master trust agreement established for the purpose
of implementing said participating plans.
1
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01: General
The definitions set forth in the participating plans shall govern in this
master trust agreement.
The term plan administrator shall mean the person or persons appointed
under the provisions of the participating plans. If the same persons are not
appointed to this position for all participating plans, then for the purposes of
this master trust agreement the term plan administrator shall mean the person or
persons appointed under the particular participating plan in question.
Section 1.02: Trustee
The Trustee may be one or more individuals or an institution; the pronoun
"it" when referring to the Trustee shall mean he, she, they or it as necessary.
Where the Trustee is more than one individual, the individuals shall
determine, subject to the approval of the Named Fiduciary, how responsibilities
shall be allocated. The actions of the Trustee shall be determined by the vote
or other affirmative expression of a majority of the appointed individuals.
ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 2.01: Establishment of the Trust
The Employer hereby establishes with the Trustee a trust fund consisting
of such sums of money or other property, real or personal, as shall from time to
time be transferred to the Trustee. Such sums shall include any assets
transferred from the separate trust of a participating plan. All such money and
property, all investments and reinvestments made therewith and proceeds thereof
and all earnings and profits thereon, less any losses thereon and less the
payments which at the time of reference shall have been made by the Trustee, as
authorized herein, are referred to herein as the "fund" or "trust fund." The
fund shall be held by the Trustee in trust and dealt with in accordance with the
provisions of this agreement.
Even though several participating plans may be funded under this master
trust agreement, the share of the fund allocable to each participating plan
shall be a separate trust fund for the exclusive benefit of the participants in
such participating plan and their beneficiaries and shall not be liable for any
expenses, debts, expenditures, or liabilities that are not properly allocable or
chargeable to such participating plan pursuant to the terms of this agreement.
The Trustee hereby accepts this trust and agrees to hold all property
constituting the trust fund subject to the terms and conditions of this master
trust agreement and the participating plans.
The trust is intended to be a qualified trust under section 401(a) of the
Internal Revenue Code of 1986, as amended, ("Code") and exempt from taxation
pursuant to Code section 501(a).
2
<PAGE>
Section 2.02: Participation in the Fund
In addition to the plans listed in this agreement, any pension or profit
sharing plan of the Employer may be funded in whole or in part through this
master trust provided all of the following conditions have been met:
(a) such plan meets the requirements for qualification contained in
Code section 401;
(b) the Employer has adopted this master trust as a funding vehicle
under such plan;
(c) the Employer and the Trustee have consented to the Employer's
adoption of the master trust; and
(d) the Employer has appointed the same Named Fiduciary as it has
appointed for the current participating plans.
ARTICLE III
PROVISIONS RELATING TO THE TRUSTEE
Section 3.01: General Responsibilities
The Trustee accepts the trust hereby created in accordance with the
documents and instruments governing the participating plans, insofar as they are
consistent with law and upon the express terms and conditions of the
participating plans, including the following:
(a) The Trustee shall have exclusive authority and discretion to
manage, invest and control the trust fund, as provided in this agreement, and
shall have no other responsibilities other than those provided in this
agreement.
(b) The Trustee shall exercise its powers and shall discharge its
duties with respect to the participating plans and this agreement solely in the
interests of the participants and beneficiaries and for the exclusive purpose of
providing benefits to participants and their beneficiaries and for defraying
reasonable expenses of administering the participating plans. The said powers
and duties shall be discharged with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims. The duty to invest shall be
discharged by diversifying the investments of the fund so as to minimize the
risk of large losses, unless under the circumstances it is clearly prudent not
to do so.
(c) The Trustee shall maintain proper care and custody of all funds,
securities and other properties in the fund. The Trustee shall receive all
payments or other transfer of assets of the fund as shall be made from time to
time. However, the Trustee shall not be under any duty to determine the amount
of contributions to be paid by the Employer or to take any steps to collect such
amounts as may be due to it under each participating plan.
(d) Whenever in the administration of a participating plan a
certification is required to be given to the Trustee or the Trustee shall deem
it necessary that a matter be proved prior to taking, permitting or omitting any
action hereunder, such certification shall be duly made and said matter may be
determined to be conclusively proved by an instrument delivered to the Trustee
signed by the Named Fiduciary, or, if
3
<PAGE>
the matter shall concern the authority of the plan administrator, signed as
provided in Section 5.01; but in its discretion, the Trustee may in lieu thereof
accept other evidence of the matter or may acquire such further evidence as is
reasonable. The Trustee shall be protected in acting in good faith upon any
written document reasonably believed by the Trustee to be genuine and to have
been signed by the proper party or parties.
(e) All moneys deposited with the Trustee under any provisions
hereof may be deposited by the Trustee in a trust account. The Trustee shall be
under no duty to invest or disburse such moneys except as provided in the
applicable participating plan and this agreement.
(f) The Trustee may consult with legal counsel (who may be counsel
for the Employer) with respect to the interpretation of the master trust
agreement or its duties hereunder or with respect to any legal proceeding or any
question of law and shall be fully protected with respect to any act taken or
omitted by it in good faith pursuant to the advice of such counsel. Expenses or
fees incurred by the Trustee in its consultation shall be paid or reimbursed
from the fund.
(g) The Trustee may make any payment required to be made hereunder
by mailing its check in the amount thereof by first class mail in a sealed
envelope addressed to the person to whom such payment is to be made according to
the certification of the plan administrator. The Trustee shall not be required
to make any investigation to determine the identity or mailing address of any
person entitled to benefits under a participating plan and shall be entitled to
withhold making payments or giving instructions to issuing companies pertaining
to the payment of benefits until the identity and mailing addresses of persons
entitled to benefits are certified to it by the plan administrator. The Trustee
shall not be responsible in any way respecting the purpose or propriety of such
payments except for the provisions of Section 3.03. In the event that any
dispute shall arise as to the identity or rights of persons entitled to benefits
hereunder, the Trustee may withhold payment of benefits until such dispute shall
have been determined by arbitration or by a court of competent jurisdiction or
shall have been settled by written stipulation by the parties concerned.
(h) The Trustee shall receive reasonable compensation for its
services from the Employer or the trust fund on a basis as shall be mutually
agreed upon by the Employer and the Trustee. All reasonable unreimbursed
expenses of the fund, taxes and other items not payable out of the Trustee's
compensation shall be paid from the fund. However, if the Trustee is an
individual who is compensated as a full-time employee of the Employer, he shall
receive no compensation for serving as a Trustee and all reasonable expenses
incurred as Trustee shall be paid from the fund.
(i) The Trustee shall pay from the fund all taxes of any kind or
nature which are imposed either as a result of the creation or operation of the
fund or because of any payment made under this agreement.
(j) The Trustee shall keep full records of the administration of the
trust which the plan administrator shall have the right to examine at any time.
To the extent that the responsibilities set forth in Section 3.01(j)(1) are
accounting and bookkeeping responsibilities, the Named Fiduciary may delegate
such responsibilities to the Plan Administrator.
(1) A separate plan account shall be established and
maintained for each participating plan into which shall be paid the
contributions made by the Employer for such plan, which contributions, together
with any income, gains or profits, less distributions, expenses and losses,
shall comprise a separate trust fund for such participating plan. The
establishment of a separate plan account hereunder shall be for accounting and
bookkeeping purposes only and shall not require a segregation of any
4
<PAGE>
part of the assets of the trust fund, and no participating plan, or a
participant or former participant of a participating plan, shall acquire any
right to or interest in any specific asset of the fund; provided, however, that
any insurance policy or annuity contract acquired for or under a participating
plan shall be segregated by the Trustee and separately maintained. The Trustee
shall hold, invest, reinvest, manage, administer and distribute the assets of
each separate plan account, as hereinafter set forth, for the exclusive benefit
of the employees participating in such participating plan and their
beneficiaries. If an Employer maintains more than one participating plan, the
Employer shall advise the Trustee and the Plan Administrator as to which
separate plan account contributions made by it are to be credited.
As of the end of each plan year or more frequently as
determined by the Trustee or directed by the Employer, any increase or decrease
in the net worth of the fund attributable to investment earnings, gains, losses,
expenses and unrealized appreciation or depreciation, as determined by the
Trustee, shall be credited to or deducted from each separate plan account as
follows:
(A) Any expenses or portions thereof which are
separately identifiable as attributable to a separate plan account, rather than
to the fund as a whole (such as actuarial fees), shall be charged against such
account. To the extent that any expenses or portions thereof are not separately
identifiable as attributable to a separate plan account, such expenses shall be
allocated among all separate plan accounts in proportion to the value that each
such account bears to the total of all such accounts.
(B) Investment earnings, gains, losses, and unrealized
appreciation or depreciation shall be allocated between all separate plan
accounts in proportion to the value that each such account bears to the total of
all such accounts.
(2) Within sixty (60) days following the close of each plan
year and within sixty (60) days after its resignation or removal, the Trustee
shall furnish the plan administrator with a statement of the entire fund. This
statement shall contain such information as is required to comply with the
reporting and disclosure requirements of the Employee Retirement Income Security
Act of 1974, as amended, ("ERISA"). The report shall show all purchases, sales,
receipts, disbursements and other transactions effected by the Trustee during
the year or period for which the report is filed, and shall contain an exact
description, the cost as shown on the Trustee's books, and where readily
ascertainable, the market value as of the end of such period of every item held
in the trust and the amount and nature of every obligation owed by the trust.
For purposes of determining the market value of securities held by the Trustee,
such securities shall be valued as of the close of business on the last day of
the reporting period.
The approval by the plan administrator of the final statement
of account upon the Trustee's resignation or removal or the participating plans'
termination shall be binding as to all matters embodied in the statement, on all
parties to the trust and on all participants to the same extent as if the
account of the Trustee had been settled by a judgment or decree in an action for
judicial settlement of its account in a court of competent jurisdiction in which
the Trustee, the Employer, the plan administrator and all persons having or
claiming any interest in the trust fund were parties. If the plan administrator
disapproves the Trustee's statement and the matter cannot be satisfactorily
adjusted by the parties, the Trustee shall have the right to apply to a court of
competent jurisdiction for judicial settlement of its account.
(k) The Trustee is authorized to sue upon, defend, compromise or
otherwise settle any obligation or liability due to or from it as Trustee
hereunder, including any claim that may be asserted for taxes under present or
future laws or to contest the same
5
<PAGE>
by appropriate legal proceedings; but it shall not be required to institute or
continue litigation unless it is in possession of money sufficient for that
purpose or unless it has been indemnified by the Employer against counsel fees
and all other expenses and liabilities to which it may, in its judgment, be
subject by such action, provided further that the Trustee shall be entitled out
of recoveries of any litigation to reimbursement for its expenses in connection
therewith. Further, the Trustee is authorized with regard to an obligation due
the fund to reduce the rate of interest thereon, extend or otherwise modify it,
or to foreclose upon default or otherwise enforce any such obligation; to bid in
property on foreclosure or to take a deed in lieu of foreclosure with or without
paying consideration therefor and in connection therewith to release the
obligation on the bond secured by the mortgage.
(l) A third party dealing with the Trustee shall not be required to
make any inquiry whether the plan administrator has instructed the Trustee or
the Trustee is otherwise authorized to take or omit any action.
(m) A participating plan fiduciary shall be liable for a breach of
fiduciary responsibility of another fiduciary of the participating plan or this
trust as provided by law, which may include the following circumstances:
(1) If it participates knowingly in, or knowingly undertakes
to conceal an act or omission of such other fiduciary, knowing such act or
omission is a breach;
(2) If, by its failure to comply with the prudent man standard
(established in paragraph (b) of this Master Trust Agreement or the
administrative provisions of the participating plans) in the administration of
its specific responsibilities which give rise to its status as a fiduciary, it
has enabled such other fiduciary to commit a breach; or
(3) If it has knowledge of a breach by some other fiduciary,
unless it makes reasonable efforts under the circumstances to remedy the breach.
(n) Any liabilities under a participating plan shall be satisfied
only out of such plan's separate account. A liability shall not be satisfied by
any account of the trust fund if it is due to or arising from fraud, dishonesty,
misconduct of the Trustee or arising from acts which are in violation of the
Trustee's duties as set forth in paragraph (b) and Section 3.03 or which are
described in paragraph (m).
(o) The Trustee is hereby authorized to execute all necessary
receipts and releases to any insurance companies concerned, and it shall be
under the duty, upon being advised by the plan administrator that the proceeds
of any life insurance, retirement income, endowment or annuity contact have
become payable, to take whatever steps may be indicated, with reasonable
diligence, in collecting such sums as may appear to be due.
The Trustee shall have no responsibility for the form, genuineness,
validity, sufficiency or effect of any life insurance, retirement income,
endowment or annuity contract at any time included in the trust or for any act
of the Employer, the plan administrator, a participant or any other person which
may render any such contract void, or for the failure of any insurer to pay the
proceeds of any such contract as and when the same shall become payable or for
any delay occasioned by reason of any provision contained in any such contract,
or for the refusal of any insurer to take any action requested by the Trustee,
or for any reason whatsoever (except for the Trustee's own violation of the
prudent man rule in paragraph (b)) any contract shall lapse or otherwise become
uncollectible.
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<PAGE>
(p) The Trustee may enter into any transaction authorized by this
agreement with trustees or legal representatives of any other trust or estate,
even though any such trustee or legal representative is also Trustee hereunder.
(q) If the Trustee shall determine that the trust assets consist in
whole or in part of property not traded freely on a recognized market, or that
information necessary to ascertain the fair market value thereof is not readily
available to the Trustee, the Trustee shall request the Named Fiduciary to
instruct the Trustee as to the value of such property, for all purposes under
the participating plans and this agreement; and the Named Fiduciary shall comply
with such request. The value placed upon such property by the Named Fiduciary's
instructions to the Trustee shall be conclusive and binding upon the Trustee
subject to the Trustee's responsibility not to commit a prohibited transaction.
If the Named Fiduciary shall fail or refuse to instruct the Trustee as to the
value of such property within a reasonable time after receipt of the Trustee's
request to do so, the Trustee may engage a competent appraiser to fix the fair
market value of such property for all purposes hereunder. The determination of
any such appraiser as to the fair market value of such property shall be the
value reported hereunder. The reasonable fees and expenses incurred for any such
appraisal shall be deemed an expense of the Trustee and paid as provided herein.
Section 3.02: Resignation or Removal of Trustee
(a) The Trustee may resign at any time upon delivering to the Named
Fiduciary of the participating plans a written notice of its resignation to take
effect not less than thirty (30) days after the delivery thereof, unless such
notice shall be waived.
(b) Any Trustee appointed hereunder may be removed by the delivering
to the Trustee a written notice from the Named Fiduciary removing the Trustee,
to take effect at a date specified therein, which shall not be less than thirty
(30) days after delivery of such notice to such Trustee, unless such notice
shall be waived.
(c) In case of resignation or removal of the Trustee, the Trustee
shall have the right to a settlement of its accounts as described in Section
3.01(j). Upon such settlement, the Trustee shall transfer to the successor
Trustee the trust fund as it may then be constituted and copies of such of its
records as relate to the trust and shall execute upon request all documents
necessary for transferring the assets of the trust and thereupon the Trustee
shall be discharged from further accountability for all matters embodied in such
settlement.
(d) The Employer, upon its receipt of notice from the Named
Fiduciary of the resignation or removal of a Trustee, shall appoint forthwith a
successor Trustee. A successor Trustee so appointed may qualify as such by
executing, acknowledging and delivering to the Employer and to the resigned or
removed Trustee an instrument accepting such appointment; and upon delivery of
the fund, such successor Trustee without further act shall be vested with all of
the duties, rights, and powers of its predecessor Trustee with the same effect
as if it had been originally named as Trustee herein.
Section 3.03: Prohibited Transactions
Notwithstanding any other provision of this agreement, the Trustee is
expressly prohibited from engaging in the following actions:
(a) diversion of any part of the fund to any purpose other than the
exclusive benefit of participants and beneficiaries under the participating
plans.
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<PAGE>
(b) engaging in any transaction which results in a diversion of any
part of the fund to the Employer or to any other person or entity with whom or
which such a transaction is prohibited by the Code or by ERISA, including with
regard to such persons or entities: lending any part of the fund without
adequate security and a reasonable rate of interest; paying any compensation in
excess of a reasonable allowance for services actually rendered; making any
purchase of securities or other property at more than fair market value; selling
any securities or other property for less than fair market value; or making any
part of the fund available on preferential basis.
ARTICLE IV
Section 4.01: Investment of Participating Plan Assets
The Trustee shall manage the fund in the manner and for the uses and
purposes herein provided. The Trustee is authorized to manage the fund in
accordance with the funding policy; provided, however, that if an investment
manager has been appointed or if the Named Fiduciary provides specific
investment directions, the Trustee shall be subject to the directions of said
investment manager or Named Fiduciary. To the extent that a participant has
given specific investment directions as allowed by the participating plans, the
Trustee shall be subject to such directions as transmitted to it by the plan
administrator. In addition to the powers given by law, the Trustee is
authorized, within its discretion and subject to the above conditions:
(a) To invest and reinvest the fund or any part thereof without
distinction between principal and income in any common or preferred stocks,
bonds, mortgage notes, put and call options (including the granting of options
to purchase and sell securities) or other securities or any other form of
property, real or personal on margin or otherwise (including short sales), as
authorized by law for the investment of trust funds, including common or pooled
investment funds established and maintained by the Trustee or an affiliate of
the Trustee and stock in any registered investment company which may be advised
by the Trustee or any affiliate and from which the Trustee may receive
compensation as advisor. Whenever the fund acquires units in a common/collective
trust available only to trust funds qualified under Code section 401(a), the
provisions of the particular common/collective trust indenture, as amended from
time to time, with respect to investment duties, responsibilities and powers of
its trustee shall be deemed to be incorporated herein and be a part hereof to
the extent required by law. The trustee of the common/collective trust shall be
governed solely by such trust indenture. For purposes of valuation, the value of
the interest maintained by the fund in such common/collective trust shall be the
fair market value of the units held, determined in accordance with generally
recognized valuation procedures. The Employer expressly understands and agrees
that any such common/collective trust may provide for the lending of its
securities by its trustee and that the common/collective trust's trustee will
receive compensation from such trust for the lending thereof which is separate
from any compensation of the Trustee hereunder or any compensation of the
common/collective trust's trustee for the management of such trust. Further, the
Trustee shall diversify the investments of the fund so that the risk of loss
will be minimized.
(b) To retain in cash or other property unproductive of income so much of
the fund as may be deemed advisable, or to invest in the savings department of a
banking institution, including a bank acting as Trustee, or a bank affiliated
with the Trustee, or in a loan association or building and loan association.
Such investments may include savings accounts, time deposits or certificates of
deposit with maturities of less or more than one year; however, such investments
shall be federally insured and shall bear a prevailing rate of interest.
8
<PAGE>
(c) To sell property held in the fund at either public or private sale for
cash or on credit at such times as it may deem appropriate; to exchange such
property; to grant options for the purchase or exchange thereof without need for
the purchasers to see to the application of the purchase money.
(d) To oppose or consent to and participate in any plan of reorganization,
recapitalization, consolidation, sale, merger, extension or other similar plan
affecting property held in the fund; to consent to any contract, lease,
mortgage, purchase, sale or other action by any corporation pursuant to any such
plan; to accept and retain property issued under such plan.
(e) To deposit property in the fund with any protective, reorganization or
similar committee; to delegate discretionary power thereto and to pay the
reasonable share in such committee's expenses and compensation and any
assessments levied with respect to any property so deposited.
(f) To exercise all conversion and subscription rights pertaining to
property held in the fund.
(g) To vote in person or by proxy the stocks, securities, or other
investments which it holds as Trustee; and to execute and deliver proxies,
powers of attorney, and other agreements which it deems advisable; to exchange
the securities of any corporation or issuing authority for other securities upon
such terms and conditions as it deems advisable; to consent to or oppose any
corporate action; to pay all assessments and subscriptions as it deems
advisable; to exercise options and, in general, to exercise in respect of all
stocks, securities, or other investments which it holds as Trustee all rights,
powers and privileges as might be exercised by an individual in his own right.
(h) To cause securities and other properties to be registered and held in
its name as Trustee or in the name of a nominee, provided that the records of
the Trustee show that all such investments are part of the fund.
(i) To borrow money (subject to the prohibitions of Section 3.03) for the
purposes of the participating plans and, for sums so borrowed, to issue a
promissory note or bond and mortgage and to secure payment thereof by the
pledging of securities held in the fund or mortgaging real property contained
therein, and to pay interest at a reasonable rate upon sums so borrowed;
however, no insurance contract shall be pledged except to secure a loan to pay
premiums thereon. Borrowing on insurance contracts to a premiums shall be on a
pro rata basis.
(j) To invest the fund or any part thereof with an insurance company under
a deposit administration contract, an investment-only contract, or contracts of
like character offered by such insurance company; to apply for, purchase, hold
or transfer, pursuant to the participating plans, and in accordance with written
instructions from the plan administrator, any life insurance, retirement income,
endowment or annuity contract; to exercise any of the rights under any such
contract, in any manner for the purpose of benefiting the participating plans.
(k) To invest in life insurance contracts on the lives of key employees of
the Employer; such contracts shall be owned by and shall name the Trustee as
beneficiary for the benefit of the trust fund as a whole and shall not be
allocated to the account of any particular participant.
(l) To make participant loans, if permitted, in accordance with the
provisions of each participating plan.
9
<PAGE>
(m) To receive, hold, manage, improve, repair, lease, pledge, mortgage, or
otherwise dispose of all or any part of the fund upon such terms, prices and
conditions as it deems advisable; to execute such instruments, deeds, leases,
mortgages, contracts, agreements, assignments, transfers, bills of sale, and
other documents of any kind, as it deems advisable; to pay out of trust assets
normal brokerage charges, commissions, taxes and other costs incident to the
purchase and sale of securities which are included in the cost of securities
purchased, or charges against the proceeds in the case of sales.
(n) To employ agents with or without discretionary powers (including
investment counsel, attorneys, auditors, depositaries and proxies) for advice
and to manage the investment of the trust property. All such parties shall have
the right to rely upon and execute the written instructions of the Trustee and
shall not be obliged to inquire into the propriety of the acts or directions of
the Trustee.
(o) Notwithstanding other provisions of this Section, under no
circumstances may the Trustee invest in any Employer securities which are not
qualifying Employer securities (as defined in ERISA section 407(d)(1)) nor shall
the Trustee invest in any Employer real property which is not qualifying
Employer real property (as defined in ERISA section 407(d)(2)). Additionally,
the Trustee may not acquire any qualifying Employer security or qualifying
Employer real property if immediately after such acquisition the aggregate fair
market value of Employer securities and Employer real property held by the trust
fund exceeds ten percent of the fair market value of all trust assets, unless
the plan is an employee stock ownership plan or an individual account plan.
(p) Generally, to do such acts, execute all such instruments, act on such
proceedings and to exercise all rights and privileges with relation to property
constituting the fund as if it were the absolute owner thereof.
Section 4.02:
Upon instructions of the plan administrator, the Trustee shall purchase
from an insurance company single premium annuity contracts of such amount as the
plan administrator directs for the purpose of providing the benefits to which
the participants individually or severally shall be entitled under the
particular participating plan. Any such annuity contracts shall be
nontransferable.
Section 4.03:
All title in every contract purchased and held hereunder shall be vested
in the Trustee.
Section 4.04: Appointment of Investment Manager
The Named Fiduciary may at any time and from time to time appoint, and
revoke the appointment of, an investment manager ("Investment Manager"), who
shall be registered as an investment advisor under the Investment Advisers Act
of 1940, shall be exempt from such registration as a trust company or as a
commercial bank authorized to conduct trust business, or shall be an insurance
company qualified to perform investment services under the laws of more than one
state of the United States and who shall acknowledge in writing to the Employer
and the Trustee that he is a fiduciary with respect to the Master Trust and each
participating plan and shall provide to them a certificate evidencing such
qualification. The Investment Manager shall not be the agent of the Trustee. The
Named Fiduciary shall notify the Trustee in writing of any such appointment (or
revocation thereof), and the Trustee shall be protected in relying upon such
appointment continuing in effect until it receives written notice from the Named
Fiduciary of its revocation. So long as, and to the extent that, any such
Investment Manager is appointed, the following provisions shall apply:
10
<PAGE>
(a) The Trustee shall invest, reinvest and retain the trust fund in
accordance with the instructions received from such Investment Manager;
(b) With respect to assets in the trust fund, the Trustee shall follow any
instructions received by it from such Investment Manager as to the exercise by
the Trustee of the powers conferred upon it under Section 4.01(a), (c), (d),
(f), (g), (j) and (m) hereof, and
(c) That part of the trust fund not assigned to an Investment Manager
shall be invested, reinvested and retained by the Trustee in accordance with its
own discretion.
(d) All instructions from the Investment Manager to the Trustee shall be
in writing (or by telephone or telegraph confirmed in writing) and shall be
complete in all reasonable and necessary details. The Trustee shall have no duty
to question such instructions nor shall the Trustee incur any liability for its
actions in following such instructions or for its omissions when no instructions
are received by it.
(e) The Employer shall indemnify and hold the Trustee or its nominee
harmless against any and all claims, actions, demands, liabilities, losses,
damages or expenses of whatsoever kind and nature, which either arise from the
failure of the Trustee to pay for property purchased by the Investment Manager
for the trust fund by reason of the insufficiency of funds in the trust fund, or
from any actions taken by the Trustee in following investment direction of the
Investment Manager or inaction by the Trustee in the absence of investment
direction by an Investment Manager, or from the trading activities conducted by
the Investment Manager on behalf of the trust fund.
(f) If the Named Fiduciary so directs, the Investment Manager may take and
keep custody and possession of all or part of the assets of the fund, and may
perform the other functions of Trustee as set forth in this agreement. The
accounts, books and records of the Trustee shall reflect the segregation of said
portions of the fund in separate investment management accounts. The Investment
Manager's records shall at all times reflect fund assets in its custody as
assets of this trust. The Trustee shall have no further responsibility for
either the safekeeping or management of such assets. Trustee shall continue to
perform its record-keeping function under Section 3.01(j) as to such assets, but
in doing so may rely on information furnished by the Investment Manager. Upon
notification by the Named Fiduciary and the receipt of physical custody of
assets held by the Investment Manager, the Trustee shall assume management
responsibility for such assets in accordance with Articles III and IV.
ARTICLE V
PROVISIONS RELATING TO THE PLAN ADMINISTRATOR AND EMPLOYER
Section 5.01: Plan Administrator
Whenever a new plan administrator or a new member of an administrative
committee is appointed, the Named Fiduciary shall certify to the Trustee in
writing the name or names of the person or persons so appointed and the name of
the participating plan to which the person is so appointed, and the Trustee
shall be fully warranted in assuming that such person or persons shall continue
in office until advised differently in the same manner. Whenever the Trustee
must or may act upon the direction or approval of an administrative committee,
the Trustee may act upon written communication signed by its Chairman or
Secretary or any agent appointed in writing by all members of the committee to
act on their behalf, and the authority of any such agent shall be deemed to
continue until revoked in writing.
11
<PAGE>
Section 5.02: Duties of Employer
It shall be the duty of the Employer, subject to the provisions of each
participating plan, to pay over to the Trustee from time to time its
contributions to the trust fund as provided in each such participating plan and
to keep accurate books and records with respect to the employees and their
compensation.
Whenever a new Named Fiduciary is appointed, the Employer shall certify to
the Trustee in writing the name or names of the person or persons so appointed,
and the Trustee shall be fully warranted in assuming that such person or persons
shall continue in office until advised differently in the same manner.
The Employer shall deliver to the Trustee a copy of each participating
plan and any amendments thereto as soon as administratively feasible.
The Employer shall indemnify the Trustee (if such Trustee is an individual
or individuals) by paying the costs of defending a suit, including any
settlement or judgment connected therewith, for any act or omission in
accordance with instructions received from the Employer or plan administrator
and in connection with which no gross negligence or lack of good faith can be
shown. The Employer may agree to further indemnify the Trustee as to certain or
all additional liability in connection with its duties as set forth herein, in
stead of permitting the trust fund to satisfy the liability as provided in
Section 3.01(n).
ARTICLE VI
AMENDMENT OR TERMINATION OF TRUST
Section 6.01:
The Employer may amend or terminate this master trust agreement at any
time; provided that no amendment affecting the Trustee may be made without its
consent, nor shall any amendment divest any benefit then vested in a participant
or his beneficiary under any participating plan. The Employer shall deliver to
the Trustee notice of any amendment or termination of a participating plan or
trust agreement.
Section 6.02:
If a participating plan is terminated (including a partial termination),
if there is a complete discontinuance of contributions to a participating plan,
or if this master trust agreement is revoked or terminated; the Trustee shall
reserve from such plan's separate account such sums as the Trustee shall deem
necessary to settle its accounts and to discharge any obligation of the trust
fund for which the Trustee may be liable. Thereafter, the Trustee shall apply
and distribute the plans separate account portion of the trust fund in
accordance with the provisions of the participating plan and any written
instructions of the plan administrator pursuant thereto.
Section 6.03:
The Trustee shall have a right to have its applicable accounts settled as
provided in Section 3.01(j) of this agreement. When the trust fund shall have
been so applied or distributed and the applicable accounts of the Trustee shall
have been so settled, the Trustee shall be released and discharged from all
further accountability or liability respecting the applicable accounts, or any
part thereof so applied or distributed.
12
<PAGE>
Section 6.04:
The trust shall continue until it has been entirely transferred, paid over
or distributed pursuant to the directions of the plan administrator. If,
pursuant to the provisions of a participating plan, the Employer's liability is
assumed by any other business organization; then such other business
organization shall be deemed to succeed to the position of Employer or to be an
additional Employer under this trust agreement, as appropriate.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01: No Reversion to Employer
The participating plans and this master trust agreement are created for
the exclusive benefit of the employees of the Employer and shall be interpreted
in a manner consistent with being a qualified plan as defined in Code Section
401(a) and with ERISA. Subject to Article VI and this Section 7.01, the trust is
irrevocable. The corpus and income of the trust may not be diverted to or used
for other than the exclusive benefit of the participants or their beneficiaries
(except for defraying reasonable expenses of administering the participating
plans).
Notwithstanding the above, a contribution paid by the Employer to the
trust may be repaid to the Employer under the following circumstances:
(a) Any contributions made by the Employer are subject to the
conditions that its contribution is not due to a mistake of fact and that the
Internal Revenue Service will not disallow the deduction for its contribution.
The Trustee, upon written request from the Employer, shall return to the
Employer the amount of the Employer's contribution made by mistake of fact or
disallowed as a deduction under Code section 404. The Trustee shall not return
any portion of the Employer's contribution under the provisions of this
paragraph more than one year after: (1) The date on which the Employer made the
contribution by mistake of fact; or (2) The time of disallowance of the
contribution as a deduction, and then, only to the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution returnable
under this paragraph for any earnings attributable to the contribution, but the
Trustee will decrease the Employer contribution returnable for any losses
attributable to it. The Trustee may require the Employer to furnish whatever
evidence it deems necessary to confirm that the amount the Employer has
requested be returned is properly returnable under ERISA.
(b) In the event the deduction of a contribution made by the
Employer is disallowed under Code section 404, such contribution (to the extent
disallowed) must be returned to the Employer within one year of the disallowance
of the deduction.
(c) If the Commissioner of Internal Revenue determines that a
participating plan is not initially qualified under the Code, all contribution
made incident to that initial qualification by the Employer must be returned to
the Employer within one year after the date the initial qualification is denied
after adjustment for any earnings, losses or necessary expenditures, but only if
the application for the qualification is made by the time prescribed by law for
filing the employer's return for the taxable year in which the plan is adopted,
or such later date as the Secretary of the Treasury may prescribe.
13
<PAGE>
Section 7.02: Binding Agreement
This agreement shall be binding on the heirs, executors, administrators,
successors and assigns as such terms may be applicable to any or all parties
hereto, and on any participants, present or future.
Section 7.03: Trust Fund Exclusive Source
All payments of benefits under a participating plan shall be made
exclusively from its separate account by means of the assets of the trust fund
as they may be constituted at the time or times of payment, and no persons shall
be entitled to look to any other source for such payments.
Section 7.04: Separability Provision
If any provision of this agreement shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provision hereof,
and this agreement shall be construed and enforced as if such provision had not
been included.
Section 7.05: Construction
This agreement shall be construed in accordance with the laws of the state
named in the preamble, except to the extent preempted by Federal law.
Section 7.06: Copies of Agreement
This agreement may be executed in any number of counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument which may be sufficiently evidenced by any one
counterpart.
Section 7.07: Other Employer
If any other employer adopts a participating plan, it shall be deemed
thereby to have assented to the provisions of this agreement and to have become
a party hereto as fully and completely as if it had been named herein as an
Employer and had executed same.
Section 7.08: Successor Employer
If a corporation with which the Employer is merged or consolidated, or a
corporation which acquires substantially all of the assets of the Employer,
elects to continue the participating plans, such surviving or acquiring
corporation may notify the Trustee, in writing; and thereafter every reference
to Employer herein shall be treated as a reference to such surviving or
acquiring corporation. If the Employer is liquidated or merged or consolidated
with another company and the participating plans are not continued, then the
plan administrator shall succeed to the functions of Employer under the
participating plans and this agreement.
Section 7.09: Enforcement
The Employer or plan administrator shall have authority to enforce this
agreement on behalf of any person claiming any interest in the fund or under a
participating plan. To protect the fund from expenses which might otherwise be
incurred, it is agreed and imposed as a condition for securing any interest in
the fund that no other person may institute or maintain any action or proceeding
against Trustee or the fund in the absence of written authority from the
Employer or plan administrator or the judgment of a court of competent
jurisdiction.
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<PAGE>
Section 7.10: Alienation
No distribution or payment under this agreement to any participant or his
beneficiary under the participating plans shall be subject in any manner to
anticipation, sale, transfer, assignment or encumbrance, whether voluntary or
involuntary; and no attempt to so anticipate, sell, transfer, assign or encumber
the same shall be valid or recognized by the Trustee, nor shall any such
distribution or payment be in any way liable for or subject to the debts,
contracts, liabilities or torts of any person entitled to such distribution or
payment, except to such extent as may be required by law or expressly provided
in the participating plans.
Section 7.11: ERISA
Any provision of this agreement shall be interpreted as being consistent
with the Employee Retirement Income Security Act of 1974, as amended. Where such
interpretation is not possible, such provision shall be inapplicable, void and
severable, but only to the extent that it is inconsistent with such Act and the
regulations and rulings thereunder.
15
<PAGE>
IN WITNESS WHEREOF, the Employer and the Trustee have caused this
agreement to be executed by their duly authorized representatives on this 1st
day of March, 1998.
EMPLOYER:
By: /s/ Larry T. DeAngelo
-----------------------------------
Title: V.P. Administration & Secretary
--------------------------------
WILSON GREATBATCH, LTD.
By: /s/ Curt Cashmore
-----------------------------------
TRUSTEE: CURT CASHMORE
By: /s/ Larry T. DeAngelo
-----------------------------------
TRUSTEE: LARRY T. DEANGELO
By: /s/ Scott Ferguson
-----------------------------------
TRUSTEE: SCOTT FERGUSON
By: /s/ Arthur Lalonde
-----------------------------------
TRUSTEE: ARTHUR LALONDE
By: /s/ Esther Takeuchi
-----------------------------------
TRUSTEE: ESTHER TAKEUCHI
16
<PAGE>
FIRST AMENDMENT
to
WILSON GREATBATCH LTD. EQUITY PLUS PLAN -
MASTER TRUST AGREEMENT
Under Article VI of the Wilson Greatbatch Ltd. Equity Plus Plan -
Master Trust Agreement (the "Agreement"), Wilson Greatbatch Ltd. (the
"Employer") and the Trustee have the right to amend the Agreement at any time.
Therefore, the Employer and the Trustee hereby amend the Plan in the following
respect:
1. Effective January 1, 1999, the first sentence of Section 3.01(g)
is hereby deleted in its entirety, and is replaced by the following:
The Trustee may make any payment or distribution directed by the
plan administrator to be made from the trust by mailing a check for
the specified amount, or by delivering the specified property, to
the person to whom, or on whose behalf, the payment or distribution
is to be made.
In all other respects, the Agreement will remain unchanged.
WILSON GREATBATCH LTD.
Date: March 27, 1999 By /s/ Larry T. DeAngelo
-------------------- -----------------------------
TRUSTEE:
Date: March 17, 1999 /s/ Curt Cashmore
---------------------------------------------------------
Curt Cashmore
Date: March 27, 1999 /s/ Larry T. Deangelo
---------------------------------------------------------
Larry T. Deangelo
Date: March 16, 1999 /s/ Barbara Davis
---------------------------------------------------------
Barbara Davis
Date: 3/24/99 /s/ Arthur Lalonde
---------------------------------------------------------
Arthur Lalonde
Date: March 17, 1999 /s/ Esther Takeuchi
---------------------------------------------------------
Esther Takeuchi
<PAGE>
SECOND AMENDMENT
to
WILSON GREATBATCH LTD. EQUITY PLUS PLAN -
MONEY PURCHASE PLAN
Under Article VII of the Wilson Greatbatch Ltd. Equity Plus Plan -
Money Purchase Plan (the "Plan"), Wilson Greatbatch Ltd. (the "Employer") has
the right to make written amendments to the Plan that are authorized by the
board of directors of the Employer and executed by an authorized officer of the
Employer. Therefore, the Employer hereby amends the Plan in the following
respects:
1. Effective January 1, 1999, Plan Section 4.4 is hereby deleted in
its entirety, and is replaced by the following provision:
Section 4.4 Form of Distribution
(a) Unless a Participant or a beneficiary demands that his or
her benefits attributable to the Company Stock Account be
distributed in the form of company stock, the plan administrator
may, but is not obligated to, direct the trustee to distribute
benefits in cash only. The amount of any cash payment to a
Participant will be equal to the fair market value of the company
stock that would otherwise have been distributed to the Participant,
plus the value of his or her other investment account and directed
investment account.
(b) The trustee may make distributions from the trust only on
instructions from the plan administrator.
2. Effective January 1, 1998, the words "stock bonus" are hereby
deleted from the first sentence of Plan Section 5.2(c).
3. Effective January 1, 1999. Plan Section 5.6 is hereby deleted in
its entirety, and is replaced by the following provision:
Section 5.5 ESOP Distribution Options
(a) Right to Receive Stock
The right to receive distributions in the form of shares of
company stock is automatically terminated in the event of the sale
or other disposition by the trustee of all shares of company stock
held by the trust.
<PAGE>
2
(b) Restricted Stock
(1) Notwithstanding any other provision of the Plan, if
the Employer's charter or by-laws restrict ownership of
substantially all shares of company stock to employees and the trust
fund, as described in Code Section 409(h)(2), the administrator will
distribute a Participant's account entirely in cash, without
granting the Participant the right to demand distribution in shares
of company stock.
(2) Except as otherwise provided under the plan, company
stock distributed by the trustee may be restricted as to sale or
transfer by the bylaws or articles of incorporation of the Employer,
if the restrictions are applicable to all company stock of the same
class. Certificates representing company stock distributed by the
plan will bear a legend or notation required by applicable federal
and state securities laws and regulations.
(c) Right of First Refusal
(1) If any Participant, his or her beneficiary or any
other person to whom shares of company stock are distributed from
the plan (the selling Participant) wants, at any time that the stock
is not publicly traded, to sell some or all of his or her shares
(the offered shares) to a third party, the selling Participant must
give prior written notice of his or her plans to sell the stock to
the Employer and the trustee. The notice must contain the number of
shares offered for sale, the proposed terms of the sale and the
names and addresses of both the selling Participant and third party.
The trustee and the Employer each will have the right of first
refusal for a period of 14 days from the date the selling
Participant gives written notice to the Employer and to the trustee
to acquire the offered shares. The 14-day period runs concurrently
with respect to the trust fund and the Employer. As between the
trust fund and the Employer, the trust fund has priority to acquire
the shares pursuant to the right of first refusal. If the trustee or
the Employer exercises their right of first refusal, the selling
price and terms may not be less than the price and terms offered by
the third party.
(2) If the trustee and the Employer do not exercise
their right of first refusal within the required 14-day period, the
selling Participant has the right, at any time following the
expiration of the period, to dispose of the offered shares to the
third party. Nevertheless, no disposition may be made to the third
party on terms more favorable to the third party than those set
forth in the written notice previously given by the selling
Participant to the Employer and trustee. If the disposition is not
made to a third party on the terms offered to the Employer and the
trustee, the offered shares are again subject to the right of first
refusal described above.
(3) The closing following the exercise of a right of
first refusal
<PAGE>
3
will take place at such place agreed on between the administrator
and the selling Participant, but not later than ten (10) days after
the Employer or the trustee notifies the selling Participant of the
exercise of the right of first refusal. At the closing, the selling
Participant must deliver certificates representing the offered
shares duly endorsed in blank for transfer, or with stock powers
attached duly executed in blank with all required transfer tax
stamps attached or provided for, and the Employer or the trustee
must deliver the purchase price, or an appropriate portion thereof,
to the selling Participant.
(d) Put Option
(1) If company stock is distributed to a Participant and
the company stock is not readily tradeable on an established
securities market, a Participant has a right to require the Employer
to repurchase the company stock distributed to such Participant
under a fair valuation formula. That stock shall be subject to the
provisions of (c).
(2) The put option is exercisable only by a Participant,
by the Participant's donees, or by a person (including an estate or
its distributee) to whom the company stock passes by reason of a
Participant's death. The put option must permit a Participant (or a
beneficiary) to put the company stock to the Employer. Under no
circumstance may the put option bind the plan. However, the put
option grants the plan an option to assume the rights and
obligations of the Employer at the time that the put option is
exercised. If it is known at the time a loan is made that Federal or
State law will be violated by the Employer honoring the put option,
the put option must permit the company stock to be put, in a manner
consistent with applicable law, to a third party (e.g., an affiliate
of the Employer or a shareholder other than the plan) that has
substantial net worth at the time the loan is made and whose net
worth is reasonably expected to remain substantial.
The put option may be exercised during the period that begins
on the date the company stock is distributed to the Participant (or
a beneficiary) and ends 60 days thereafter. If the put option is not
exercised within the 60-day period, an additional 60-day option
commences on the 1st day of the 5th month of the plan year next
following the date the stock was distributed to the Participant (or
any other 60-day period as provided in Treasury regulations).
However, in the case of company stock that is publicly traded
without restrictions when distributed and ceases to be publicly
traded within either of the 60-day periods described above, the
Employer must notify each holder of the company stock in writing on
or before the 10th day after the date the company stock ceases to be
publicly traded that for the remainder of the applicable 60-day
period the company stock is subject to the put option. The number of
days between the 10th day and the date on which notice is actually
given, if later than the 10th day, must be added to the duration of
the put option. The notice must inform distributees of the term of
the put options that they are to hold. The terms must satisfy the
requirements of this
<PAGE>
4
paragraph.
The put option is exercised by the holder by notifying the
Employer in writing that the put option is being exercised. The
notice must state the name and address of the holder and the number
of shares to be sold. When written notification from the holder is
received, the Employer will immediately inform the administrator of
the notice. The administrator will have 10 days to notify the
Employer if it wishes the trust fund to assume the rights and
obligations of the Employer with respect to the required purchase of
company stock.
The period during which a put option is exercisable does not
include any time when a distributee is unable to exercise it because
the party bound by the put option is prohibited from honoring it by
applicable Federal or State law. The price at which a put option
must be exercisable is the fair market value of the company stock,
as determined by the plan administrator in good faith based on all
the relevant factors, as of the allocation date coincident with or
immediately preceding the Employer's receipt of the written
notification. The total purchase price must be paid to the holder
within 30 days after the notification. The Employer, however, may
defer the payments on a reasonable basis, if it gives written notice
to the holder within the 30 days period. The deferred payments must
be paid in substantially equal monthly, quarterly, semiannual, or
annual installments over a period certain beginning not later than
30 days after the exercise of the put option and not extending
beyond 5 years. The deferral of payment is reasonable if adequate
security and a reasonable interest rate on the unpaid amounts are
provided. The amount to be paid under the put option involving
installment distributions must be paid not later than 30 days after
the exercise of the put option. Payment under a put option must not
be restricted by the provisions of a loan or any other arrangement,
including the terms of the employer's articles of incorporation,
unless so required by applicable state law.
For purposes of this Section, total distribution means a
distribution within 1 taxable year to a Participant or his
beneficiary of the Participant's entire vested account.
(3) An arrangement involving the plan that creates a put
option must not provide for the issuance of put options other than
as provided under this Section. The plan (and the trust fund) must
not otherwise obligate itself to acquire company stock from an
option holder at an indefinite time determined on the happening of
an event, such as the death of the holder.
<PAGE>
5
In all other respects, the Plan will remain unchanged.
WILSON GREATBATCH LTD.
Date: May 31, 1999 By /s/ Larry T. DeAngelo
--------------------- ------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 10.4
WILSON GREATBATCH LTD. EQUITY PLUS PLAN
STOCK BONUS PLAN
Effective
January 1, 1998
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
ARTICLE I DEFINITIONS 1
Section 1.1 References 1
Section 1.2 Compensation 1
Section 1.3 Dates 2
Section 1.4 Employee 2
Section 1.5 Employer 4
Section 1.6 Fiduciaries 4
Section 1.7 Participant/Beneficiary 5
Section 1.8 Participant Accounts 5
Section 1.9 Plan 5
Section 1.10 Service 5
Section 1.11 Trust 6
Section 1.12 Stock Bonus Specific Definitions 6
ARTICLE II PARTICIPATION 8
Section 2.1 Eligibility Service 8
Section 2.2 Plan Participation 8
Section 2.3 Termination of Participation 9
Section 2.4 Re-Participation (Break In Service Rules) 9
ARTICLE III ALLOCATIONS TO PARTICIPANT ACCOUNTS 10
Section 3.1 General Provisions 10
Section 3.2 Allocation of Contributions and Forfeitures 11
Section 3.3 Rollover/Transfer Account 12
Section 3.4 Allocation of Investment Results 12
ARTICLE IV PAYMENT OF PARTICIPANT ACCOUNTS 14
Section 4.1 Vesting Service Rules 14
Section 4.2 Vesting of Participant Accounts 14
Section 4.3 Payment of Participant Account 17
Section 4.4 Form of Distribution 21
Section 4.5 In-Service Payments 21
Section 4.6 Distributions under Domestic Relations Orders 21
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Table of Contents
- --------------------------------------------------------------------------------
ARTICLE V ADDITIONAL QUALIFICATION RULES 1
Section 5.1 Limitations on Allocations under Code Section 415 1
Section 5.2 Joint and Survivor Annuity Requirements 6
Section 5.3 Distribution Requirements 8
Section 5.4 Top-Heavy Provisions 11
ARTICLE VI ADMINISTRATION OF THE PLAN 16
Section 6.1 Fiduciary Responsibility 16
Section 6.2 Plan Administrator 17
Section 6.3 Claims Procedure 19
Section 6.4 Trust Fund 19
Section 6.5 Investment Policy 20
Section 6.6 Valuation of the Trust Fund 21
Section 6.7 Voting Company Stock 21
Section 6.8 Current Obligations 22
ARTICLE VII AMENDMENT AND TERMINATION OF PLAN 23
Section 7.1 Right to Discontinue and Amend 23
Section 7.2 Amendments 23
Section 7.3 Protection of Benefits in Case of Plan Merger 24
Section 7.4 Termination of Plan 24
ARTICLE VIII MISCELLANEOUS PROVISIONS 25
Section 8.1 Exclusive Benefit -- Non-Reversion 25
Section 8.2 Inalienability of Benefits 25
Section 8.3 Employer-Employee Relationship 26
Section 8.4 Binding Agreement 26
Section 8.5 Separability 26
Section 8.6 Construction 26
Section 8.7 Copies of Plan 26
Section 8.8 Interpretation 26
Section 8.9 Securities and Exchange Commission Approval 26
ii
<PAGE>
WILSON GREATBATCH LTD. EQUITY PLUS PLAN
STOCK BONUS PLAN
This plan, executed on the date indicated at the end hereof, is made
effective as of January 1, 1998, by Wilson Greatbatch Ltd., a Corporation, with
its principal office located in Clarence, New York.
W I T N E S S E T H :
WHEREAS, the Employer desires to establish a permanent qualified employee
stock ownership plan for its employees in order to enable its employees to share
in the growth and prosperity of the Corporation and to provide its employees and
their beneficiaries with financial security in the event of retirement,
disability or death; and
WHEREAS, the Employer intends to establish a money purchase plan to be
hereinafter called the Wilson Greatbatch Ltd. Equity Plus Plan - Money Purchase
Plan to constitute an employee stock ownership plan in conjunction with the plan
established hereunder;
NOW THEREFORE, the premises considered, the following are the provisions
of the qualified plan of the Employer.
<PAGE>
ARTICLE I DEFINITIONS
Section 1.1 References
(a) Code means the Internal Revenue Code of 1986, as it may be amended
from time to time.
(b) ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Section 1.2 Compensation
(a) Compensation means, except as provided in paragraph (b) hereof, any
earnings reportable as W-2 wages for Federal income tax withholding purposes
plus elective contributions for the plan year.
Elective contributions are amounts excludible from the employee's Federal
taxable income and contributed by the Employer, at the employee's election to:
(1) A cafeteria plan (excludible under Code Section 125);
(2) A Code Section 401(k) arrangement (excludible under Code Section
402(e)(3));
(3) A simplified employee pension (excludible under Code
Section 402(h)); or
(4) A tax sheltered annuity (excludible under Code Section 403(b)).
Any reference in this plan to compensation shall be a reference to the
definition in this Section 1.2, unless the plan reference specifies a
modification to this definition. The plan administrator shall take into account
only compensation actually paid by the Employer for the relevant period. A
compensation payment includes compensation by the Employer through another
person under the common paymaster provisions in Code Sections 3121 and 3306.
Compensation from a related Employer which is not a participating Employer under
this plan shall he excluded.
(b) Exclusions From Compensation - Notwithstanding the provisions of
paragraph 1.2(a), the following types of remuneration shall be excluded from the
Participant's compensation:
Bonuses
Compensation received during the current plan year which was considered
deferred compensation in a prior plan year.
Moving Expense Payment
SAR Payments
Contributions to or benefits from this plan.
Educational Assistance Payments
Referral Payments
Taxable Fringe Benefits (Auto, Group Term Life)
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(c) Limitations on Compensation - For any plan year beginning after
December 31, 1993, the plan administrator shall take into account only the first
$150,000 (or beginning January 1, 1995, such larger amount as the Commissioner
of Internal Revenue may prescribe) of any Participant's compensation for
determining all benefits provided under the plan. The compensation dollar
limitation for a plan year shall be the Limitation amount in effect on January 1
of the calendar year in which the plan year begins. If the plan should determine
compensation on a period of time that contains fewer than 12 calendar months
(such as for a short plan year), the annual compensation dollar limitation shall
be an amount equal to the compensation dollar limitation for the plan year
multiplied by the ratio obtained by dividing the number of full months in the
period by 12.
(d) Compensation for Nondiscrimination Test - For purposes of determining
whether the plan discriminates in favor of highly compensated employees,
compensation means compensation as defined in this Section 1.2(a), except that
the Employer will not give effect to any exclusion from compensation specified
in Section 1.2(b). Notwithstanding the above, the Employer may elect to exclude
from this nondiscrimination definition of compensation any items of compensation
excludable under Code Section 414(s) and the applicable Treasury regulations,
provided such adjusted definition conforms to the nondiscrimination requirements
of those regulations.
Section 1.3 Dates
(a) Accounting Date means the date(s) on which investment results are
allocated to Participants' accounts, including the allocation date and any
interim accounting date(s) noted below:
There shall be a one-time special accounting and allocation date of March
12, 1998.
(b) Allocation Date means the last day of each plan year which is the date
on which any contributions are allocated to Participants' accounts.
(c) The Effective Date of the plan is January 1, 1998.
(d) Plan Entry Date means the participation date(s) specified in Article
II.
(e) Plan Year means the 12-consecutive month period beginning on January 1
andending on December 31.
(f) Limitation Year (for purposes of limitations on benefits and
contributions under Code Section 415) means the plan year.
Section 1.4 Employee
(a) (1) Employee means any person employed by the Employer. The term
employee shall include any employee of the Employer maintaining the plan or of
any other Employer required to be aggregated with such Employer under Code
Sections 414(b), (c), (m) or (o). The term employee shall also include any
leased employee deemed to be an employee of any Employer as provided in Code
Sections 414(n) or (o) and as defined in paragraph (2).
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<PAGE>
(2) Leased Employee means an individual (who otherwise is not an employee
of the Employer) who, pursuant to a leasing agreement between the Employer and
any other person, has performed services for the Employer (or for the Employer
and any persons related to the Employer within the meaning of Code Section
414(n)(6)) on a substantially full time basis for at least one year; and such
services are performed under the primary direction or control of the Employer.
If a leased employee is treated as an employee by reason of this Section 1
.4(a)(2), compensation from the leasing organization which is attributable to
services performed for the Employer shall be considered as compensation under
the plan. Contributions or benefits provided a leased employee by the leasing
organization which are attributable to services performed for the Employer shall
be treated as provided by the Employer.
Safe harbor plan exception - The plan shall not treat a leased employee as
an employee if the leasing organization covers the employee in a safe harbor
plan and, prior to application of this safe harbor plan exception, 20% or less
of the Employer's employees (other than highly compensated employees) are leased
employees. A safe harbor plan is a money purchase pension plan providing
immediate participation, full and immediate vesting, and a nonintegrated
contribution formula equal to at least 10% of the employee's compensation
without regard to employment by the leasing organization on a specified date.
The safe harbor plan must determine the 10% contribution on the basis of
compensation as defined in Code Section 415(c)(3) plus elective contributions.
(b) Highly Compensated Employee means any employee who:
(1) was a more than 5% owner of the Employer (applying the
constructive ownership rules of Code Section 318, and applying the principles of
Code Section 318, for an unincorporated entity) at any time during the current
or the preceding year; or
(2) for the preceding year -
(A) had compensation from the Employer in excess of $80,000
(as adjusted by the Secretary of the Treasury pursuant to Code Section 415(d),
except that the base period shall be the calendar quarter ending September 30,
1996), and
(B) if the Employer elects the application of this clause for
such preceding year, was in the top-paid group of employees for such preceding
year. For this purpose, an employee is in the top-paid group of employees for
any year if such employee is in the group consisting of the top 20% of the
employees when ranked on the basis of compensation paid during such year.
The term highly compensated employee also includes any former employee who
separated from service (or has a deemed separation from service, as determined
under Treasury regulations) prior to the plan year, performs no service for the
Employer during the plan year, and was a highly compensated employee either for
the separation year or any plan year ending on or after his 55th birthday, based
on the applicable rules in effect for such plan year.
For purposes of determining who is a highly compensated employee under
this Section 1.4(b), compensation means compensation as defined in Section
5.1(d)(2). The plan administrator shall make the determination of who is a
highly compensated employee, and, if the Employer so elects, this determination
shall include the determination of the number and identity of the top-paid 20%
group, consistent with Code Section 414(q) and
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<PAGE>
regulations issued under that Code Section. The Employer may make a calendar
year data election with regard to the year preceding the current plan year to
determine the employees with compensation in excess of $80,000 and the top-paid
20% group, as prescribed by Treasury regulations. A top-paid 20% group election
or a calendar year data election must apply to all plans and arrangements of the
Employer.
Section 1.5 Employer
Employer means Wilson Greatbatch Ltd., or any successor entity by merger,
purchase, consolidation, or otherwise; or an organization affiliated with the
Employer which may assume the obligations of this plan with respect to its
employees by becoming a party to this plan. Another Employer whether or not it
is affiliated with the sponsor Employer may adapt this plan to cover its
employees by filing with the sponsor Employer a written resolution adopting the
plan, upon which the sponsor Employer shall indicate its acceptance of such
Employer as an Employer under the plan. Each such Employer shall be deemed to be
the Employer only as to persons who are on its payroll.
The following Employer(s) have adopted this plan and been accepted as a
participating Employer:
Employer Effective Date
-------- --------------
Greatbatch-Hittman, Inc. 1-1-1999
Section 1.6 Fiduciaries
(a) Named Fiduciary means the person or persons having fiduciary
responsibility for the management and control of plan assets.
(b) Plan Administrator means the person or persons appointed by the named
fiduciary to administer the plan.
(c) Trustee means the trustee named in the trust agreement executed
pursuant to this plan, or any duly appointed successor trustee.
(d) Investment Manager means a person or corporation other than the
trustee appointed for the investment of plan assets:
(1) who has the power to manage acquire or dispose of any asset of
the Plan;
(2) who is registered as an investment adviser under the Investment
Advisors Act of 1940, a bank as defined in such Act, or an insurance company
qualified to perform services described in (1) above under the laws of more than
one state; and
(3) who has acknowledged in writing that he or she is a fiduciary
with respect to the Plan.
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Section 1.7 Participant/Beneficiary
(a) Participant means an eligible employee of the Employer who becomes a
member of the plan pursuant to the provisions of Article II, or a former
employee who has an accrued benefit under the plan.
(b) Beneficiary means a person designated by a Participant who is or may
become entitled to a benefit under the plan. A beneficiary who becomes entitled
to a benefit under the plan remains a beneficiary under the plan until the
trustee has fully distributed his benefit to him. A beneficiary's right to (and
the plan administrator's, or a trustee's duty to provide to the beneficiary)
information or data concerning the plan shall not arise until he first becomes
entitled to receive a benefit under the plan.
Section 1.8 Participant Accounts
(a) Employer Contribution Account means the balance of the separate
account derived from Employer contributions, including forfeitures (if any).
(See Section 3.2.)
(b) Rollover/Transfer Account means the balance of the separate account
derived from rollover contributions and/or transfer contributions. (See Section
3.3.)
(c) Accrued Benefit means the Participant's account balance(s) as of the
accounting date falling on or before the day on which the accrued benefit is
being determined.
Section 1.9 Plan
Plan means Wilson Greatbatch Ltd. Equity Plus Plan - Stock Bonus Plan as
set forth herein and as it may be amended from time to time.
Section 1.10 Service
(a) Service means any period of time the employee is in the employ of the
employer, including any period the employee is on an unpaid leave of absence
authorized by the employer under a uniform, nondiscriminatory policy applicable
to all employees. Separation from service means that the employee no longer has
an employment relationship with the employer.
(b) Hour of Service means each hour for which an employee is paid or
entitled to payment for the performance of duties for the employer.
(c) Break in Service means a period of severance of at least 12
consecutive months.
(d) (1) Period of Severance means a continuous period of time during
which the employee is not employed by the employer and is not credited with an
hour of service. Such period begins on the date the employee retires, terminates
service, or if earlier, the 12 month anniversary of the date on which the
employee was otherwise first absent from service. An employee shall receive
credit for any period of severance of less than 12 consecutive months.
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<PAGE>
(2) In the case of an individual who is absent from work for
maternity or paternity reasons, the 12-consecutive month period beginning on the
first anniversary of the first date of such absence shall not constitute a break
in service. For purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence: (i) by reason of the pregnancy of the
individual, (ii) by reason of a birth of a child of the individual, (iii) by
reason of the placement of a child with the individual in connection with the
adoption of such child by such individual, or (iv) for purposes of caring for
such child for a period beginning immediately following such birth or placement.
(e) Other Service Credited - If the employer is a member of an affiliated
service group (under Code Section 414(m)), a controlled group of corporations
(under Code Section 414(b)). or a group of trades or businesses under common
control (under Code Section 414(c)), or any other entity required to be
aggregated with the employer pursuant to Code Section 414(o), service shall be
credited for any employment for any period of time for any other member of such
group. Service shall also be credited for any leased employee who is considered
an employee for purposes of this plan under Code Section 414(n) or (o).
(f) (1) Year of Service means a 12-consecutive month period of service
during which the employee does not incur a break in service.
(2) Crediting Years of Service - Generally, no service shall be
credited for periods during which the employee performs no services for the
employer. Further, no more than one year of service will be credited for any 12
consecutive-month period unless otherwise required by Code Section 410 or 411.
(3) Predecessor Service - Service as an employee of
Greatbatch-Hittman, Inc. shall be credited as service under the plan for the
purposes of eligibility and vesting.
(g) Qualified Military Service - Notwithstanding any provision of this
plan to the contrary, contributions, benefits, and service credit with respect
to qualified military service will be provided in accordance with Code Section
414(u).
Section 1.11 Trust
(a) Trust means the qualified trust created under the Employer's plan.
(b) Trust Fund means all property held or acquired by the plan.
Section 1.12 Stock Bonus Specific Definitions
(a) ESOP means an employee stock ownership plan. For the purpose of this
plan, an employee stock ownership plan means two defined contribution plans one
of which is a stock bonus plan and the other of which is a money purchase plan
where both plans are qualified under Code Section 401(a), are designed to invest
primarily in qualifying Employer securities, and satisfy the regulatory
requirements prescribed by the Secretary of the Treasury.
(b) Company Stock means common stock issued by the Employer (or by a
corporation which is a member of the controlled group of corporations of which
the Employer is a member) which is readily tradable on an established securities
market. If
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<PAGE>
there is no common stock which meets the foregoing requirement, the term company
stock means common stock issued by the Employer (or by a corporation which is a
member of the same controlled group) having a combination of voting power and
dividend rights equal to or in excess of: (A) that class of common stock of the
Employer (or of any other such corporation) having the greatest voting power,
and (B) that class of stock of the Employer (or of any other such corporation)
having the greatest dividend rights. Noncallable preferred stock shall be deemed
to be company stock if such stock is convertible at any time into stock which
constitutes company stock hereunder and if such conversion is at a conversion
price which (as of the date of the acquisition by the trust) is reasonable. For
purposes of the preceding sentence, pursuant to Code regulations, preferred
stock shall be treated as noncallable if after the call there will be a
reasonable opportunity for a conversion which meets the requirements of the
preceding sentence.
(c) Investment Accounts - For investment purposes, a Participant's
accounts may be placed in three accounts as described herein.
(1) Company Stock Account means the investment account of a
Participant which is credited with the shares of company stock purchased and
paid for by the trust fund or contributed to the trust fund.
(2) Other Investment Account means the investment account of a
Participant which is credited with his share of the net gain (or loss) of the
plan, forfeitures, and Employer contributions in other than company stock and
which is debited with payments made to pay for company stock.
(3) Directed Investment Account means the investment account of a
Participant which he elects under the provisions of Section 3.4(c) and which is
credited with the net gain (or loss) on his directed investments.
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<PAGE>
ARTICLE II PARTICIPATION
Section 2.1 Eligibility Service
For purposes of determining an employee's initial or continued eligibility
to participate in the plan, an employee shall receive credit for the aggregate
of all time periods commencing with the employee's first day of employment or
reemployment and ending on the date a break in service begins, except for
periods of service disregarded under Section 2.4. The first day of employment or
reemployment is the first day the employee performs an hour of service.
Fractional periods of a year will be expressed in terms of days.
Section 2.2 Plan Participation
(a) Eligibility
(1) Age/service requirements - An employee who is a member of the
eligible class of employees shall be immediately eligible for plan
participation.
(2) Eligible class of employees - All employees of the Employer
shall be eligible to be covered under the plan except for employees in the
following categories:
- Employees included in a unit of employees covered by a
collective bargaining agreement between the Employer and employee
representatives if retirement benefits were the subject of good faith bargaining
and if less than two percent of the employees of the Employer who are covered
pursuant to that agreement are professionals as defined in Regulation Section
1.410(b)-9(g). For this purpose, the term "employee representatives" does not
include any organization more than half of whose members are employees who are
owners, officers or executives of the Employer.
- Leased employees who are considered employees under the
plan, unless such exclusion would cause the plan to fail to satisfy the
participation test or the coverage test of Code Section 410 or the
nondiscrimination requirements of Code Section 401(a)(4).
- Interns
- Cooperative Student Program Participants
(b) Entry Date - An eligible employee shall participate in the plan on the
December 31 entry date coinciding with or immediately following the date of his
employment. If an employee who is not a member of the eligible class of
employees becomes a member of the eligible class, such employee shall
participate immediately, if he would have otherwise previously become a
Participant.
(c) Initial Eligibility Requirement and Entry Date for First Plan Year
Notwithstanding the preceding, any employee who is a member of the
eligible class of employees and who was employed by the Employer on January 5,
1998 shall participate in
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the plan as of March 12, 1998, regardless of credited service, provided the
person remains employed as of such entry date.
Section 2.3 Termination of Participation
A Participant shall continue to be an active Participant of the plan so
long as he is a member of the eligible class of employees and he does not incur
a one-year break in service due to termination of employment. He shall become an
inactive Participant when he incurs a one-year break in service due to
termination of employment, or at the end of the plan year during which he ceases
to be a member of the eligible class of employees. He shall cease participation
completely upon the later of his receipt of a total distribution of his
nonforfeitable account balance under the plan or the forfeiture of the nonvested
portion of the account balance.
Section 2.4 Re-Participation (Break In Service Rules)
(a) Vested Participant - A former Participant who had a nonforfeitable
right to all or a portion of his account balance derived from Employer
contributions at the time of his termination from service shall become a
Participant immediately upon returning to the employ of the Employer, if he is a
member of the eligible class of employees.
(b) Nonvested Participant - In the case of a former Participant who did
not have any nonforfeitable right to his account balance derived from Employer
contributions at the time of his termination from service, years of service
before a period of consecutive one-year breaks in service shall not be taken
into account in computing service if the number of consecutive one-year breaks
in service in such period equals or exceeds the greater of 5 or the aggregate
number of years of service before such breaks in service. Such aggregate number
of years of service shall not include any years of service disregarded under the
preceding sentence by reason of prior breaks in service.
If such former Participant's years of service before termination from
service are disregarded pursuant to the preceding paragraph, he shall be
considered a new employee for eligibility purposes. If such former Participant's
years of service before termination from service may not be disregarded pursuant
to the preceding paragraph, he shall participate immediately upon returning to
the employ of the Employer, if he is a member of the eligible class of
employees.
(c) Return to Eligible Class - If a Participant becomes an inactive
Participant, because he is no longer a member of the eligible class of
employees, but does not incur a break in service; such inactive Participant
shall become an active Participant immediately upon returning to the eligible
class of employees. If such Participant incurs a break in service, eligibility
shall be determined under the re-participation rules in paragraphs (a) and (b)
above.
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ARTICLE III ALLOCATIONS TO PARTICIPANT ACCOUNTS
Section 3.1 General Provisions
(a) Maintenance of Participant Accounts - The plan administrator shall
maintain one or more separate accounts covering each Participant under the plan.
Such account(s) shall be increased by contributions, investment income, and
market value appreciation of the fund. It shall be decreased by market value
depreciation of the fund, forfeiture of nonvested amounts, benefit payments,
withdrawals and expenses.
(b) Amount and Payment of Employer Contribution
(1) Amount of Contribution - For each plan year, the Employer
contribution to the plan shall be the amount which is determined under the
provisions of this Article and Section 6.9. The Employer may not make a
contribution to the plan for any plan year to the extent the contribution would
exceed fifteen percent of the aggregate Participant compensation (as defined in
Code Section 415(c)(3)) for the plan year. Further, the Employer contribution
shall not exceed the maximum amount deductible under Code Section 404.
The Employer contributes to this plan on the conditions that its
contribution is not due to a mistake of fact and that the Internal Revenue
Service will not disallow the deduction for its contribution. The trustee, upon
written request from the Employer, shall return to the Employer the amount of
the Employer's contribution made due to a mistake of fact or the amount of the
Employer's contribution disallowed as a deduction under Code Section 404. The
trustee shall not return any portion of the Employer's contribution under the
provisions of this paragraph more than one year after the earlier of: (A) The
date on which the Employer made the contribution due to a mistake of fact; or
(B) The time of disallowance of the contribution as a deduction, and then, only
to the extent of the disallowance. The trustee will not increase the amount of
the Employer contribution returnable under this Section for any earnings
attributable to the contribution, but the trustee will decrease the Employer
contribution returnable for any losses attributable to it. The trustee may
require the Employer to furnish whatever evidence it deems necessary to confirm
that the amount the Employer has requested be returned is properly returnable
under ERISA.
(2) Payment of Contribution - The Employer shall make its
contribution to the plan in cash or company stock within the time prescribed by
the Code or applicable Treasury regulations. Subject to the consent of the
trustee, the Employer may make its contribution in other property, provided the
contribution of such property is not a prohibited transaction under the Code or
ERISA. Company stock and other property will be valued at their then fair market
value.
(c) Limitations and Conditions - Notwithstanding the allocation procedures
set forth in this Article, the allocations to Participants' accounts shall be
limited or modified to the extent required to comply with the provisions of
Article V (limitations on allocations under Code Section 415 and top heavy
provisions under Code Section 416).
In any limitation year in which the allocation to one or more
Participants' accounts would be in excess of the limitations on allocations
under Code Section 415, the annual
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additions under this plan will be reduced to the extent necessary to comply with
such limitations first. If further reduction is required, the annual additions
under the Wilson Greatbatch Ltd. Equity Plus Plan - Money Purchase Plan will be
reduced with respect to such Participants. Finally, if further reduction is
required, annual additions under the Wilson Greatbatch Ltd. Equity Plus Plan -
401(k) Retirement Plan (formerly the Wilson Greatbatch Ltd. Profit Sharing
Retirement Plan) will be reduced with respect to such participants.
Section 3.2 Allocation of Contributions and Forfeitures
(a) Amount of Contribution - The Employer shall determine, in its sole
discretion, the amount of Employer contribution to be made to the plan each
year; provided, however, that the Employer shall contribute such amount as may
be required for restoration of a forfeited amount under Section 4.2.
(b) Conditions for Allocations - An active Participant shall be eligible
for an allocation of the Employer contribution and forfeitures as of an
allocation date, provided that he satisfies the following conditions:
(1) He completed at least one (1) hour of service during the current
plan year.
AND
(2) He is employed by the Employer on the last day of the plan year,
unless his employment terminated during the plan year by reason of retirement,
disability, or death.
Notwithstanding the above conditions for allocation of contributions, if
the plan would otherwise fail to satisfy the participation test or coverage test
of Code Section 410 or the nondiscrimination requirements of Code Section
401(a)(4), the plan administrator shall amend the plan in a nondiscriminatory
manner to provide for the participation of additional employees and/or to cause
additional active Participants to be eligible for an allocation.
(c) (1) Allocation Formula
(A) Effective for allocations made on or after December 31,
1998, the Employer contribution and forfeitures for the plan year shall be
allocated to the account of each eligible Participant in the ratio that such
Participant's compensation bears to the compensation of all Participants.
(B) There shall be a special allocation as of March 12, 1998.
The Employer contribution of company stock made with respect to this allocation
date shall be allocated to the account of each Participant who participated as
of March 12, 1998 as follows:
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Vesting Years of
Service Number of Shares
---------------- ----------------
0 - 4.99 100
5 - 9.99 200
10 - 14.99 300
15 - 19.99 400
20 - 24.99 500
25 or More Years 600
However, the amount allocated to a Participant who is a reduced schedule
employee shall be proportionately reduced based upon his hours of service
credited for the 1997 calendar year as compared to 1,000 hours of service.
(2) Top-Heavy Plan Years
In any year in which this plan is top-heavy (as defined in Section
5.4(e)(2)) when aggregated with the Wilson Greatbatch Ltd. Equity Plus Plan -
401(k) Retirement Plan and the Wilson Greatbatch Ltd. Equity Plus Plan - Money
Purchase Plan which the Employer also sponsors, the top-heavy minimum benefit
requirement shall be met under the Wilson Greatbatch Ltd. Equity Plus Plan -
Money Purchase Plan.
If a Participant only participates in this plan, his account will receive
an allocation that is not less than an amount equal to 3% of such Participant's
compensation.
(3) Compensation - For purposes of the allocation of the Employer
contribution, compensation means compensation as defined in Section 1.2 for the
entire plan year.
Section 3.3 Rollover/Transfer Account
Rollover and transfer contributions shall not be permitted under this plan
and no amount shall be credited to the rollover/transfer account.
Section 3.4 Allocation of Investment Results
(a) Company Stock Account - The company stock account of each Participant
shall be credited as of each allocation date with forfeitures of company stock
and his allocable share of company stock (including fractional shares) purchased
and paid for by the plan or contributed in kind by the Employer. Stock dividends
on company stock held in his company stock account shall be credited to his
company stock account when paid.
(b) Other Investments Account - As of each allocation date, prior to the
allocation of Employer contributions and forfeitures, any earnings or losses
(net appreciation or net depreciation) of the trust fund shall be allocated in
the same proportion that each Participant's other investments account bears to
the total of all Participants' other investment accounts as of such date. For
this purpose, each account balance shall be equal to the average balance for the
period commencing on the day following the prior accounting date and ending on
the current accounting date.
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Cash dividends on company stock allocated to each Participant's other
investments account after the first month of the plan year shall not share in
any earnings or losses of the trust fund for such year. However, the
administrator may direct that cash dividends on company stock be segregated into
a separate account for each Participant in a federally insured savings account,
certificate of deposit in a bank or savings and loan association, money market
certificate, or other short term debut security acceptable to the trustee until
such time as the allocations pursuant to this plan have been made, at which time
they may remain segregated or be invested as part of the general trust fund, or
such cash dividends may be distributed pursuant to Section 4.3(c)(6).
Earnings or losses include the increase (or decrease) in the fair market
value of assets of the trust fund (other than company stock in the Participants'
company stock accounts) since the preceding allocation date.
(c) Directed Investment Account
(1) Each qualified Participant may elect within ninety (90) days
after the close of each plan year during the qualified election period to direct
the trustee in writing as to the investment of 25 percent of the total number of
shares of company stock that have ever been allocated to such qualified
Participant's company stock account (reduced by the number of shares of company
stock previously invested pursuant to a prior election). In the case of the
election year in which the Participant can make his last election, the preceding
sentence shaft be applied by substituting "50 percent" for "25 percent." If the
qualified Participant elects to direct the trustee as to the investment of his
company stock account, such direction shall be effective no later than 180 days
after the close of the plan year to which such direction applies.
Notwithstanding the above, if the fair market value (determined pursuant
to Section 6.7(b) at the plan valuation date immediately preceding the first day
on which a qualified Participant is eligible to make an election) of company
stock acquired by or contributed to the plan and allocated to a qualified
Participant's company stock account is $500 or less, then such company stock
shall not be subject to this paragraph. For purposes of determining whether the
fair market value exceeds $500, company stock held in accounts of all employee
stock ownership plans (as defined in Code Section 4975(e)(7)) and tax credit
employee stock ownership plans (as defined in Code Section 409(a)) maintained by
the Employer or any affiliated Employer shall be considered as held by the plan.
(2) For the purposes of this Section the following definitions shall
apply:
(A) Qualified Participant means any Participant who has
completed ten years of participation as a Participant in this plan and has
attained age 55.
(B) Qualified election period means the six plan year period
beginning with the first plan year in which the Participant first became a
qualified Participant.
(3) If a qualified Participant elects to direct the investment of
his company stock account, the trustee shall convert the designated amount of
company stock to its fair market value cash equivalent and shall transfer such
cash value to the Participant's rollover/transfer account in the Wilson
Greatbatch Ltd. Equity Plus Plan - 401(k) Retirement Plan which the Employer
also sponsors (or its successor plan) where said account shall be subject to the
Participant's investment direction.
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ARTICLE IV PAYMENT OF PARTICIPANT ACCOUNTS
Section 4.1 Vesting Service Rules
(a) Vesting Year of Service - For purposes of determining the
nonforfeitable interest in the Participant's account balance, the Participant
shall receive credit for the aggregate of all time periods commencing with the
Participant's first day of employment or reemployment and ending on the date a
break in service begins, except for periods of service disregarded below. The
first day of employment or reemployment is the first day the Participant
performs an hour of service. Fractional periods of a year will be expressed in
terms of days. One vesting year of service shall be credited for each 12 month
period.
(b) Break in Service Rules
(1) Vested Participant - A former Participant who had a
nonforfeitable right to all or a portion of his account balance derived from
Employer contributions at the time of his termination from service shall retain
credit for all vesting years of service prior to a break in service.
(2) Nonvested Participant - In the case of a former Participant who
did not have any nonforfeitable right to his account balance derived from
Employer contributions at the time of his termination from service, years of
service before a period of consecutive one year breaks in service shall not be
taken into account in computing service if the number of consecutive one year
breaks in service in such period equals or exceeds the greater of 5 or the
aggregate number of years of service before such breaks in service. Such
aggregate number of years of service shall not include any years of service
disregarded under the preceding sentence by reason of prior breaks in service.
(3) Vesting for Pre-Break and Post-Break Accounts - In the case of a
Participant who has 5 or more consecutive one-year breaks in service, all years
of service after such breaks in service shall be disregarded for the purpose of
vesting the Employer-derived account balance that accrued before such breaks in
service. Whether or not such Participant's pre-break service counts in vesting
the post-break Employer-derived account balance shall be determined according to
the rules set forth in sub-paragraphs (1) and (2) above. Separate accounts shall
be maintained for the Participant's pre-break and post-break Employer-derived
account balance. Both accounts shall share in the investment earnings and losses
of the fund.
Section 4.2 Vesting of Participant Accounts
(a) Determination of Vesting
(1) Normal Retirement - A Participant's right to his account balance
shall be 100% vested and nonforfeitable upon the attainment of age 59 1/2 or the
fifth anniversary of participation, if later. If the Employer enforces a
mandatory retirement age, the normal retirement age shall be the lesser of the
mandatory age or the age specified herein.
(2) Late Retirement - If a Participant remains employed after his
normal retirement age, his account balance shall remain 100% vested and
nonforfeitable. Such
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Participant shall continue to receive allocations to his account as he did
before his normal retirement age.
(3) Early Retirement - Not applicable.
(4) Disability - If a Participant separates from service due to
disability, such Participant's right to his account balance as of his date of
disability shall be 100% vested and nonforfeitable. Disability means inability
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. The permanence and degree of such impairment shall be
supported by medical evidence. Notwithstanding such definition, a Participant
who is eligible for Social Security disability benefits shall automatically
satisfy the definition of disability. Disability shall be determined by the plan
administrator after consultation with a physician chosen by the administrator.
In the administration of this section, all employees shall be treated in a
uniform manner in similar circumstances.
(5) (A) Death - In the event of the death of a Participant who has
an accrued benefit under the plan, (whether or not he is an active Participant).
100% of the Participant's account balance as of the date of death shall be paid
to his surviving spouse; except that, if there is no surviving spouse, or if the
surviving spouse has already consented in a manner which is (or conforms to) a
qualified election under the joint and survivor annuity provisions of Code
Section 417(a) and regulations issued pursuant thereto and as set forth in
Section 5.2. then such balance shall be paid to the Participant's designated
beneficiary.
(B) Beneficiary Designation - Subject to the spousal consent
requirements of Section 5.2, the Participant shall have the right to designate
his beneficiaries, including a contingent death beneficiary, and shall have the
right at any time to change such beneficiaries. The designation shall be made in
writing on a form signed by the Participant and supplied by and filed with the
plan administrator. If the Participant fails to designate a beneficiary, or if
the designated person or persons predecease the Participant, "beneficiary" shall
mean the spouse, children, parents, brothers and sisters, or estate of the
Participant, in the order listed.
(6) Termination From Service
(A) On or before the anniversary date coinciding with or
subsequent to the termination of a Participant's employment for any reason other
than retirement, disability or death, the amount of the vested portion of such
Participant's account shall remain in a separate account for the Participant and
share in allocations pursuant to Section 3.4 until such time as a distribution
is made to the Participant.
If a portion of a Participant's account is forfeited, company stock
allocated to the Participant's company stock account must be forfeited only
after any other investment allocable to the Participant has been depleted. If
interest in more than one class of company stock has been allocated to a
Participant's account, the Participant must be treated as forfeiting the same
proportion of each such class.
(B) Effective for a Participant who is employed on or after
January 5, 1998, if such Participant separates from the service of the Employer
other than by retirement, disability, or death, his vested interest in his
Employer contribution account
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shall be equal to the account balance multiplied by the vesting percentage
determined based on his vesting years of service as follows:
Years of Service Vesting Percentage
---------------- ------------------
0 Years 0%
1 20%
2 40%
3 60%
4 80%
5 or More Years 100%
(C) Effective for a Participant who is employed before January
5, 1998, if such Participant separates from the service of the Employer other
than by retirement, disability, or death, his vested interest in his Employer
contribution account shall be 100% immediately vested on the date of his
participation in the plan.
(b) Cashout Distributions and Restoration
(1) Cashout Distribution - If an employee terminates service and the
value of his vested account balance derived from Employer and employee
contributions is not (and have never been) greater than $5,000, the employee
shall receive a distribution of the value of the entire vested portion of such
account balance and the nonvested portion will be treated as a forfeiture. For
purposes of this section, if the value of an employee's vested account balance
is zero, he shall be deemed to have received a distribution of such vested
account balance as of his separation from service.
If an employee terminates service and the value of his vested account
balance exceeds (or has previously exceeded) $5,000, he may elect to receive the
value of his vested account balance after such termination as provided in
Section 4.3; however, the nonvested portion shall be treated as a forfeiture. If
the employee elects to have distributed less than the entire vested portion of
the account balance derived from Employer contributions, the part of the
nonvested portion that will be treated as a forfeiture is the total nonvested
portion multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to Employer contributions and the denominator of which
is the total value of the vested Employer derived account balance.
(2) Restoration of Account - If an employee receives a cashout
distribution pursuant to this section and resumes employment covered under this
plan before he incurs 5 consecutive one-year breaks in service, his
Employer-derived account balance shall be restored to the amount on the date of
distribution, if he repays to the plan the full amount of the distribution
attributable to Employer contributions before the earlier of 5 years after the
first date on which he is subsequently re-employed by the Employer, or the date
he incurs 5 consecutive one-year breaks in service following the date of the
distribution. If an employee is deemed to receive a distribution pursuant to
this Section 4.2(b), and he resumes employment covered under this plan before he
incurs 5 consecutive one-year breaks in service, upon the reemployment of such
employee, his Employer-derived account balance will be restored to the amount on
the date of such deemed distribution.
(c) (1) Forfeitures - If a Participant terminates employment before his
account balance derived from Employer contributions is fully vested, the
nonvested portion of his account shall be forfeited on the earlier of:
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(A) The last day of the vesting computation period in which
the Participant first incurs 5 consecutive one-year breaks in service, or
(B) The date the Participant receives his entire vested
accrued benefit.
If a Participant returns to employment with the Employer, and if the
forfeited amount is restored pursuant to subparagraph (b), then any amount
required to restore such forfeitures shall be deducted from forfeitures
occurring in the plan year of restoration. If forfeitures are insufficient for
the restoration, the Employer may make a contribution to the plan for such plan
year to satisfy the restoration. However, by the end of the plan year following
the plan year of restoration, sufficient forfeitures or Employer contributions
shall be credited to the account to satisfy the restoration.
(2) Disposition of Forfeitures - Forfeitures first shall be used to
reduce administrative expenses; any remaining forfeitures shall be used to
reduce the Employer contribution for the plan year in which such forfeitures
occur.
(d) Unclaimed Benefits
(1) Forfeiture - The plan does not require the trustee or the plan
administrator to search for, or to ascertain the whereabouts of, any Participant
or beneficiary. At the time the Participant's or beneficiary's benefit becomes
distributable under the plan, the plan administrator, by certified or registered
mail addressed to his last known address of record, shall notify any Participant
or beneficiary that he is entitled to a distribution under this plan. If the
Participant or beneficiary fails to claim his distributive share or make his
whereabouts known in writing to the plan administrator within twelve months from
the date of mailing of the notice, the plan administrator shall treat the
Participant's or beneficiary's unclaimed payable accrued benefit as forfeited
and shall reallocate such forfeiture in accordance with Section 4.2(c)(2). A
forfeiture under this paragraph shall occur at the end of the notice period or,
if later, the earliest date applicable Treasury regulations would permit the
forfeiture. These forfeiture provisions apply solely to the Participant's or
beneficiary's accrued benefit derived from Employer contributions.
(2) Restoration - If a Participant or beneficiary who has incurred a
forfeiture of his accrued benefit under the provisions of this subsection makes
a claim, at any time, for his forfeited accrued benefit, the plan administrator
shall restore the Participant's or beneficiary's forfeited accrued benefit to
the same dollar amount as the dollar amount of the accrued benefit forfeited,
unadjusted for any gains or losses occurring after the date of the forfeiture.
The plan administrator shall make the restoration during the plan year in which
the Participant or beneficiary makes the claim from forfeitures occurring in
that plan year. If forfeitures are insufficient for the restoration, the
Employer shall make a contribution to the plan to satisfy the restoration. The
plan administrator shall direct the trustee to distribute the Participant's or
beneficiary's restored accrued benefit to him not later than 60 days after the
close of the plan year in which the plan administrator restores the forfeited
accrued benefit.
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Section 4.3 Payment of Participant Account
(a) Time of Payment
(1) Commencement of Benefits - Unless the Participant elects
otherwise, distribution of benefits shall begin no later than the 60th day after
the latest of the close of the plan year in which:
(A) The Participant attains age 65 (or the plan's normal
retirement age, if earlier);
(B) Occurs the 10th anniversary of the year in which the
Participant commenced participation in the plan; or
(C) the Participant terminates service with the Employer,
(i.e. late retirement).
Notwithstanding the foregoing, the failure of a Participant (and spouse
where the spouse's consent is required) to consent to a distribution while a
benefit is immediately distributable, within the meaning of Section 5.2(b),
shall be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
(2) Payment Upon Retirement, Disability, or Death - Subject to the
provisions set forth in subparagraph (1) and in the Distribution Requirements of
Section 5.3, if the Participant terminates employment due to retirement,
disability or death, his account shall be paid as soon as administratively
possible after the occurrence of the event creating the right to a distribution.
(3) Payment Upon Other Termination of Employment - Subject to the
provisions set forth in subparagraph (1) and in the Distribution Requirements of
Section 5.3, if the Participant terminates employment other than by retirement,
disability or death, his account shall be paid within a reasonable period after
the end of the plan year in which severance occurs.
(b) Distribution of Benefits
(1) Subject to Section 4.3(b)(3), the administrator, pursuant to the
written election of the Participant (or if no election has been made prior to
the Participant's death, by his beneficiary), shall direct the trustee to
distribute to a Participant or his beneficiary any amount to which he is
entitled under the plan in one of the following methods:
(A) One lump-sum payment.
(B) Payments over a period certain in monthly, quarterly,
semiannual, or annual installments. The period over which such payment is to be
made shall not extend beyond the earlier of the Participant's life expectancy
(or the life expectancy of the Participant and his designated beneficiary) or
the limited distribution period provided for in (3) below. Such life expectancy
to be determined by Internal Revenue Service Life Expectancy Tables (currently
in IRS Publication 590).
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(2) Any payment meeting the requirements of an eligible rollover
distribution may be paid directly in a direct rollover at the election of the
distributee, at the time and in the manner provided by the plan administrator,
to an eligible retirement plan specified by the distributes.
(A) Eligible Rollover Distribution - An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life
expectancy of the distributee or the joint life expectancies of the distributee
and the distributee's designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is required
under Code Section 401(a)(9); the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities) and dividends paid
on Employer securities as described in Code Section 404(k).
(B) Eligible Retirement Plan - An eligible retirement plan is
an individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan described
in Code Section 403(a), or a qualified trust described in Code Section 401(a),
that accepts the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity.
(C) Distributee - A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code Section
414(p), are distributees with regard to the interest of the spouse or former
spouse.
(D) Direct Rollover - A direct rollover is a payment by the
plan to the eligible retirement plan specified by the distributee.
(3) Unless the Participant elects in writing a longer distribution
period, distributions to a Participant or his beneficiary attributable to
company stock shall be in substantially equal monthly, quarterly, semiannual, or
annual installments over a period not longer than five years. In the case of a
Participant with an account balance attributable to company stock in excess of
$500,000, the five year period shall be extended one additional year (but not
more than five additional years) for each $100,000 or fraction thereof by which
such balance exceeds $500,000. The dollar limits shall be adjusted at the same
time and in the same manner as provided in Code Section 415(d).
(4) If installment payments are to be made from the fund in cash,
the plan administrator may direct the trustee to segregate all or any part of
the Participant's accrued benefit in a separate account. A segregated account
remains a part of the trust, but it alone shares in any income it earns, and it
alone bears any expense or loss it incurs.
(5) Notwithstanding the above, if the sum of the vested Employer
contribution accounts under this plan and under the Wilson Greatbatch Ltd.
Equity Plus Plan - Money Purchase Plan are no more than $5,000, the benefit
shall automatically be paid in a lump sum. If the total of such vested Employer
contribution accounts exceeds $5,000, the benefit
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shall automatically be paid in installments, except to the extent that the
benefit is held under the directed investment account in the Wilson Greatbatch
Ltd. Equity Plus Plan - Money Purchase Plan.
(c) General Payment Provisions
(1) Any part of a Participant's benefit which is retained in the
plan after the allocation date on which his participation ends will continue to
be treated as a company stock account, other investment account, or directed
investment account subject to Section 4.2(a)(6)(A). However, no further Employer
contributions or forfeitures will be credited.
(2) All distributions due to be made under this plan shall be made
on the basis of the amount to the credit of the Participant as of the accounting
date coincident with or preceding the occurrence of the event calling for a
distribution.
If a distributable event occurs after an allocation date and before
allocations have been made to the account of the Participant, the distribution
shall also include the amounts allocable to the account as of such allocation
date.
(3) If any person entitled to receive benefits hereunder is
physically or mentally incapable of receiving or acknowledging receipt thereof
and if a legal representative has been appointed for him, the plan administrator
may direct the benefit payment to be made to such legal representative.
(4) In the event a distribution is to be made to a minor, then the
administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such beneficiary or a responsible adult with whom the
beneficiary maintains his residence, or to the custodian for such beneficiary
under the Uniform Gift to Minors Act or the Gift to Minors Act, if such is
permitted by the laws of the state in which said beneficiary resides. Such a
payment to the legal guardian, custodian or parent of a minor beneficiary shall
fully discharge the trustee, Employer, and plan from further liability on
account thereof.
(5) Each optional form of benefit provided under the plan shall be
made available to all Participants on a nondiscriminatory basis. The plan may
not retroactively reduce or eliminate optional forms of benefits and any other
Code Section 411(d)(6) protected benefits, except as provided in Regulation
section 1.411(d)-4, Q&A-2(d) and in other relief granted statutorily or by the
Commissioner of Internal Revenue. Any reduction or elimination of optional forms
of benefits shall apply only to benefits accrued after the effective date of
such change.
(6) Notwithstanding anything herein to the contrary if the Board of
Directors of Wilson Greatbatch, Ltd. acting in a nondiscriminatory manner shall
so direct, cash dividends on shares of company stock shall be paid directly in
cash to the Participants in the plan or such dividends shall be paid to the plan
and distributed in cash to Participants within 90 days after the close of the
plan year in which the dividend is paid. In the absence of any direction from
the Board of Directors of Wilson Greatbatch, Ltd., cash dividends in company
stock shall be paid to the plan and allocated to Participants' accounts.
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(d) Payment Election Procedures
As described in Section 5.2(b), an account balance in excess of $5,000
shall not be immediately distributed without the consent of the Participant. The
Participant shall receive the notice required under Regulation Section
1.411(a)-11(c) no less than 30 days and no more than 90 days before the annuity
starting date with respect to the distribution. For any distribution in excess
of $200, the plan administrator shall give the Participant notice of his
eligible rollover distribution rights. The Participant shall receive such notice
in the same time period as the 411 notice is required to be provided. If a
distribution is one to which Code Sections 401(a)(11) and 417 do not apply, such
distribution may commence less than 30 days after the 411 notice is given,
provided that:
(1) The plan administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(2) The Participant, after receiving the notice, affirmatively
elects a distribution.
Section 4.4 Form of Distribution
(a) Distribution of a Participant's benefit shall be made in cash.
(b) The trustee shall make distribution from the trust only on
instructions from the administrator.
Section 4.5 In-Service Payments
(a) Withdrawals - A Participant may withdraw amounts from his account(s)
before his separation from service only under the circumstances and only to the
extent provided below.
No payments shall be made before separation from service.
(b) Participant Loans - No Participant loans shall be permitted under the
plan.
Section 4.6 Distributions under Domestic Relations Orders
Nothing contained in this plan prevents the trustee, in accordance with
the direction of the plan administrator, from complying with the provisions of a
qualified domestic relations order (as defined in Code Section 414(p)).
A distribution will not be made to an alternate payee until the
Participant attains (or would have attained) his earliest retirement age. For
this purpose, earliest retirement age means the earlier of: (1) the date on
which the Participant is entitled to a distribution under this plan; or (2) the
later of the date the Participant attains age 50 or the earliest date on which
the Participant could begin receiving benefits under this plan if the
Participant separated from service.
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Nothing in this Section gives a Participant a right to receive
distribution at a time otherwise not permitted under the plan nor does it permit
the alternate payee to receive a form of payment not otherwise permitted under
the plan.
The plan administrator shall establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the plan administrator promptly will notify the Participant and
any alternate payee named in the order, in writing, of the receipt of the order
and the plan's procedures for determining the qualified status of the order.
Within a reasonable period of time after receiving the domestic relations order,
the plan administrator shall determine the qualified status of the order and
shall notify the Participant and each alternate payee, in writing, of its
determination. The plan administrator shall provide notice under this paragraph
by mailing to the individual's address specified in the domestic relations
order, or in a manner consistent with Department of Labor regulations.
If any portion of the Participant's nonforfeitable accrued benefit is
payable during the period the plan administrator is making its determination of
the qualified status of the domestic relations order, the plan administrator
shall make a separate accounting of the amounts payable. If the plan
administrator determines the order is a qualified domestic relations order
within 18 months of the date amounts first are payable following receipt of the
order, it shall direct the trustee to distribute the payable amounts in
accordance with the order. If the plan administrator does not make its
determination of the qualified status of the order within the 18-month
determination period, it shall direct the trustee to distribute the payable
amounts in the manner the plan would distribute if the order did not exist and
will apply the order prospectively if it later determines the order is a
qualified domestic relations order.
The trustee will make any payments or distributions under this section by
separate benefit checks or other separate distribution to the alternate
payee(s).
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ARTICLE V ADDITIONAL QUALIFICATION RULES
Section 5.1 Limitations on Allocations under Code Section 415
(a) Single Plan Limitations
(1) If the Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer or a welfare
benefit fund, as defined in Code Section 419(e) maintained by the Employer, or
an individual medical account, as defined in Code Section 415(l)(2), maintained
by the Employer, which provides an annual addition as defined in Section
5.1(d)(1), the amount of annual additions which may be credited to the
Participant's account for any limitation year will not exceed the lesser of the
maximum permissible amount or any other limitation contained in this plan. If
the Employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the annual additions for the limitation
year to exceed the maximum permissible amount, the amount contributed or
allocated will be reduced so that the annual additions for the limitation year
will equal the maximum permissible amount.
(2) Prior to determining the Participant's actual compensation for
the limitation year, the Employer may determine the maximum permissible amount
for a Participant on the basis of a reasonable estimation of the Participant's
compensation for the limitation year, uniformly determined for all Participants
similarly situated.
(3) As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the limitation year will be
determined on the basis of the Participant's actual compensation for the
limitation year.
(4) If pursuant to Section 5.1(a)(3) or as a result of the
allocation of forfeitures, there is an excess amount the excess will be disposed
of as follows:
(A) Any nondeductible voluntary employee contributions (and
any gain attributable thereto), to the extent they would reduce the excess
amount, will be returned to the Participant.
(B) If after the application of paragraph (A) an excess amount
still exists, the excess amount in the Participant's account shall be
reallocated to the remaining Participants who are eligible for an allocation of
Employer contribution for the plan year in which the limitation year ends, but
only to the extent that such reallocation will not exceed the maximum
permissible amount of each such remaining Participant.
(C) If after the application of paragraph (B) an excess amount
still exists, the excess amount will be held unallocated in a suspense account.
The suspense account will be applied to reduce future Employer contributions for
all Participants in the next limitation year, and each succeeding limitation
year if necessary.
(D) If a suspense account is in existence at any time during a
limitation year pursuant to this Section 5.1(a)(4), it will not participate in
the allocation of the trust's investment gains and losses. If a suspense account
is in existence at any time during a particular limitation year, all amounts in
the suspense account must be allocated and reallocated to Participants' accounts
before any Employer or any employee contributions
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may be made to the plan for that limitation year. Excess amounts may not be
distributed to Participants or former Participants.
(b) Combined Limitations - Other Defined Contribution Plan
(1) This Subsection applies if, in addition to this plan, the
Participant is covered under another qualified defined contribution plan (e.g.
ESOP and 401(k) Plan) maintained by the Employer, a welfare benefit fund, as
defined in Code Section 419(e) maintained by the Employer, or an individual
medical account, as defined in Code Section 415(1)(2), maintained by the
Employer, which provides an annual addition as defined in Section 5.1(d)(1),
during any limitation year. The annual additions which may be credited to a
Participant's account under this plan for any such limitation year will not
exceed the maximum permissible amount reduced by the annual additions credited
to a Participant's account under the other plans and welfare benefit funds for
the same limitation year. If the annual additions with respect to the
Participant under other defined contribution plans and welfare benefit funds
maintained by the Employer are less than the maximum permissible amount and the
Employer contribution that would otherwise be contributed or allocated to the
Participant's account under this plan would cause the annual additions for the
limitation year to exceed this limitation, the amount contributed or allocated
will be reduced so that the annual additions under all such plans and funds for
the limitation year will equal the maximum permissible amount. If the annual
additions with respect to the Participant under such other defined contribution
plans and welfare benefit funds in the aggregate are equal to or greater than
the maximum permissible amount, no amount will be contributed or allocated to
the Participant's account under this plan for the limitation year.
(2) Prior to determining the Participant's actual compensation for
the limitation year, the Employer may determine the maximum permissible amount
for a Participant in the manner described in Section 5.1(a)(2).
(3) As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the limitation year will be
determined on the basis of the Participant's actual compensation for the
limitation year.
(4) If, pursuant to Section 5.1(b)(3) or as a result of the
allocation of forfeitures, a Participant's annual additions under this plan and
such other plans would result in an excess amount for a limitation year, the
excess amount will be deemed to consist of the annual additions last allocated,
except that annual additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(5) If an excess amount was allocated to a Participant on an
allocation date of this plan which coincides with an allocation date of another
plan, the excess amount will be disposed of In the manner provided in Section
3.1(c).
(6) Any excess amount attributed to this plan will be disposed of in
the manner described in Section 5.1(a)(4).
(c) Combined Limitations - Other Defined Benefit Plan
If the Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any Participant in this plan, the sum of the Participant's
defined benefit plan
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fraction and defined contribution plan fraction will not exceed 1.0 in any
limitation year. Any excess amounts shall be disposed of in the manner provided
in Section 3.1(c). Any excess amount attributed to this plan will be disposed of
in the manner described in Section 5.1(a)(4).
(d) Definitions (Code Section 415 Limitations)
(1) Annual Additions - The sum of the following amounts credited to
a Participant's account for the limitation year:
(A) Employer contributions,
(B) employee contributions,
(C) forfeitures, and
(D) amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer are treated as annual
additions to a defined contribution plan. Also amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits,
allocated to the separate account of a key employee, as defined in Code Section
419A(d)(3), under a welfare benefit fund, as defined in Code Section 419(e),
maintained by the Employer are treated as annual additions to a defined
contribution plan.
For this purpose, any excess amount applied under Section 5.1(a)(4) or
(b)(6) in the limitation year to increase the accounts of Participants who did
not have an excess amount or to reduce Employer contributions will be considered
annual additions for such limitation year.
Annual additions shall not include forfeitures of company stock purchased
with the proceeds of an exempt loan and Employer contributions applied to the
payment of interest on an exempt loan if no more than one-third of the Employer
contribution for the year is allocated to the account of highly compensated
employees.
Further, annual additions shall not include proceeds from the sale of
company stock as such proceeds constitute earnings on a plan asset allocable as
such.
(2) Compensation - A Participant's earned income and any earnings
reportable as W-2 wages for Federal income tax withholding purposes.. W-2 wages
means wages as defined in Code Section 3401(a) but determined without regard to
any rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2)).
Compensation shall include elective contributions as defined in Section
1.2(a). For purposes of applying the limitations of this Section 5.1,
compensation for a limitation year is the compensation actually paid or
includible in gross income during such limitation year.
Notwithstanding the preceding sentence, compensation for a Participant in
a defined contribution plan who is permanently and totally disabled (as defined
in Code Section 22(e)(3)) is the compensation such Participant would have
received for the limitation year if the Participant had been paid at the rate of
compensation paid immediately before
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becoming permanently and totally disabled; such imputed compensation for the
disabled Participant may be taken into account only if the contributions made on
behalf of such Participant are nonforfeitable when made.
(3) Defined Benefit Fraction - A fraction, the numerator of which is
the sum of the Participant's projected annual benefits under all the defined
benefit plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the dollar limitation
determined for the limitation year under Code Sections 415(b) and (d) or 140
percent of the highest average compensation, including any adjustments under
Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as of the
first day of the first limitation year beginning after December 31, 1986, in one
or more defined benefit plans maintained by the Employer which were in existence
on May 6, 1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which the Participant
had accrued as of the close of the last limitation year beginning before January
1, 1987, disregarding any changes in the terms and conditions of the plan after
May 5, 1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code Section 415
for all limitation years beginning before January 1, 1987.
(4) Defined Contribution Dollar Limitation - $30,000, as adjusted
under Code Section 415(d).
(5) Defined Contribution Fraction - A fraction, the numerator of
which is the sum of the annual additions to the Participant's account under all
the defined contribution plans (whether or not terminated) maintained by the
Employer for the current and all prior limitation years (including the annual
additions attributable to the Participant's nondeductible employee contributions
to all defined benefit plans, whether or not terminated, maintained by the
Employer, and the annual additions attributable to all welfare benefit funds, as
defined in Code Section 419(e), and individual medical accounts, as defined in
Code Section 415(l)(2), maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the current and all prior
limitation years of service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The maximum aggregate amount
in any limitation year is the lesser of 125 percent of the dollar limitation
determined under Code Sections 415(b) and (d) in effect under Code Section
415(c)(1)(A) or 35 percent of the Participant's compensation for such year.
If the employee was a Participant as of the end of the first day of the
first limitation year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the defined benefit fraction would otherwise exceed 1.0 under the
terms of this plan. Under the adjustment, an amount equal to the product of(1)
the excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last limitation year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the plan made
after May 5, 1986, but using the Code Section 415 limitation applicable to the
first limitation year beginning on or after January 1, 1987.
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The annual addition for any limitation year beginning before January 1,
1987, shall not be recomputed to treat all employee contributions as annual
additions.
(6) Employer - For purposes of this Section 5.1, Employer shall mean
the Employer that adopts this plan, and all members of a controlled group of
corporations (as defined in Code Section 414(b) as modified by Section 415(h)),
all commonly controlled trades or businesses (as defined in Code Section 414(c)
as modified by Section 415(h)) or affiliated service groups (as defined in Code
Section 414(m)) of which the adopting Employer is a part, and any other entity
required to be aggregated with the Employer pursuant to regulations under Code
Section 414(o).
(7) Excess Amount - The excess of the Participant's annual additions
for the limitation year over the maximum permissible amount.
(8) Highest Average Compensation - The average compensation for the
three consecutive years of service with the Employer that produces the highest
average. A year of service with the Employer is the 12-consecutive month period
coinciding with the plan year
(9) Limitation Year - A calendar year, or the 12-consecutive month
period coinciding with the plan year, unless the Employer adopts another
12-consecutive month period by means of a written resolution. All qualified
plans maintained by the Employer must use the same limitation year. If the
limitation year is amended to a different 12-consecutive month period, the new
limitation year must begin on a date within the limitation year in which the
amendment is made.
(10) Maximum Permissible Amount - The maximum annual addition that
may be contributed or allocated to a Participant's account under the plan for
any limitation year shall not exceed the lesser of:
(A) the defined contribution dollar limitation as defined in
Section 5.1(d)(4), or
(B) 25 percent of the Participant's compensation for the
limitation year.
The compensation limitation referred to in (B) shall not apply to any
contribution for medical benefits (within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)) which is otherwise treated as an annual addition under
Code Section 415(l)(1) or 419A(d)(2).
If a short limitation year is created because of an amendment changing the
limitation year to a different 12-consecutive month period, the maximum
permissible amount will not exceed the defined contribution dollar limitation
multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
(11) Projected Annual Benefit - The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or qualified joint and
survivor annuity) to which the Participant would be entitled under the terms of
the plan assuming:
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(A) the Participant will continue employment until normal
retirement age under the plan (or current age, if later), and
(B) the Participant's compensation for the current limitation
year and all other relevant factors used to determine benefits under the plan
will remain constant for all future limitation years.
Section 5.2 Joint and Survivor Annuity Requirements
(a) Non-application to This Plan - No annuity form of payment is provided
under Section 4.3(b), all funds that are subject to a qualified Participant's
investment direction are transferred to the Wilson Greatbatch Ltd. Equity Plus
Plan - 401(k) Retirement Plan, and no direct or indirect transfer is accepted
under Section 3.7 from a defined benefit plan, money purchase pension plan
(including a target benefit plan), stock bonus or profit sharing plan which
would otherwise have provided for a life annuity form of payment to any
participant; therefore, the requirements of Code Sections 401(a)(11) and 417 do
not apply to this employee stock ownership plan, except for the provisions of
Section 5.2(b) and (c).
(b) Restrictions on Immediate Distributions - If the value of a
Participant's vested account balance derived from Employer and employee
contributions exceeds (or at the time of any prior distribution exceeded)
$5,000, and the account balance is immediately distributable, the Participant
must consent to any distribution of such account balance. The consent of the
Participant shall be obtained in writing within the 90-day period ending on the
annuity starting date. The annuity starting date is the first day of the first
period for which an amount is paid as an annuity or any other form. The plan
administrator shall notify the Participant of the right to defer any
distribution until the Participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the plan in a manner that would satisfy the
notice requirements of Code Section 417(a)(3), and shall be provided no less
than 30 days and no more than 90 days prior to the annuity starting date.
The consent of the Participant shall not be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or Section 415. In
addition, upon termination of this plan if the plan don not offer an annuity
option (purchased from a commercial provider) and if the Employer or any entity
within the same controlled group as the Employer does not maintain another
defined contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)), the Participant's account balance may,
without the Participant's consent, be distributed to the Participant. However,
if any entity within the same controlled group as the Employer maintains another
defined contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)), the Participant's account balance will be
transferred, without the Participant's consent, to the other plan if the
Participant does not consent to an immediate distribution.
An account balance is immediately distributable if any part of the account
balance could be distributed to the Participant before the Participant attains
(or would have attained if not deceased) the later of normal retirement age or
age 62.
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(c) Safe Harbor Rules
This Paragraph (c) shall apply to a Participant in this stock bonus plan
if the following conditions are satisfied: (1) the Participant does not or
cannot elect payments in the form of a life annuity; and (2) on the death of a
Participant, the Participant's vested account balance will be paid to the
Participant's surviving spouse, but if there is no surviving spouse, or if the
surviving spouse has consented in a manner conforming to a qualified election,
then to the Participant's designated beneficiary. The surviving spouse may elect
to have distribution of the vested account balance commence within the 90-day
period following the date of the Participant's death. The account balance shall
be adjusted for gains or losses occurring after the Participant's death in
accordance with the provisions of the plan governing the adjustment of account
balances for other types of distributions. This Paragraph (c) shall not be
operative with respect to a Participant if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, target benefit plan,
stock bonus plan, or profit-sharing plan which is subject to the survivor
annuity requirements of Code Section 401(a)(11) and Section 417.
(1) The Participant may waive the spousal death benefit described in
this Paragraph (c) at any time provided that no such waiver shall be effective
unless it satisfies the conditions of Paragraph (c)(3) that would apply to the
Participant's waiver of the qualified preretirement survivor annuity.
(2) For purposes of this Paragraph (c), vested account balance shall
mean the aggregate value of the Participant's vested account balances derived
from Employer and employee contributions (including rollovers), whether vested
before or upon death, including the proceeds of insurance contracts, if any, on
the Participant's life. The provisions of this Subsection 5.2 shall apply to a
Participant who is vested in amounts attributable to Employer contributions,
employee contributions (or both) at the time of death or distribution.
(3) Any waiver of a qualified preretirement survivor annuity shall
not be effective unless: (a) the Participant's spouse consents in writing to the
election; (b) the election designates a specific beneficiary, including any
class of beneficiaries or any contingent beneficiaries, which may not be changed
without spousal consent (or the spouse expressly permits designations by the
Participant without any further spousal consent); (c) the spouse's consent
acknowledges the effect of the election; and (d) the spouse's consent is
witnessed by a plan representative or notary public. Additionally, a
Participant's waiver shall not be effective unless the election designates a
form of benefit payment which may not be changed without spousal consent (or the
spouse expressly permits designations by the Participant without any further
spousal consent). If it is established to the satisfaction of a plan
representative that there is no spouse or that the spouse cannot be located, a
waiver will be deemed a qualified election.
Any consent by a spouse obtained under this provision (or establishment
that the consent of a spouse may not be obtained) shall be effective only with
respect to such spouse. A consent that permits designations by the Participant
without any requirement of further consent by such spouse must acknowledge that
the spouse has the right to limit consent to a specific beneficiary, and a
specific form of benefit where applicable, and that the spouse voluntarily
elects to relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the spouse at any
time before the commencement of benefits. The number of revocations shall not be
limited.
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Section 5.3 Distribution Requirements
Subject to Subsection 5.2 Joint and Survivor Annuity Requirements, the
requirements of this Subsection 5.3 shall apply to any distribution of a
Participant's interest and will take precedence over any inconsistent provisions
of this plan. Unless otherwise specified, the provisions of this Subsection
apply to calendar years beginning after December 31, 1984.
All distributions required under this Subsection shall be determined and
made in accordance with the proposed regulations under Code Section 401(a)(9),
including the minimum distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the Proposed Regulations.
(a) Required Beginning Date - The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's required
beginning date.
(b) Limits on Distribution Periods - As of the first distribution calendar
year, distributions, if not made in a single sum, may only be made over one of
the following periods (or a combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and a designated beneficiary,
(3) a period certain not extending beyond the life expectancy of the
Participant, or
(4) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated beneficiary.
(c) Determination of Amounts to Be Distributed Each Year - If the
Participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date.
(1) Individual Account
(A) If a Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy (tables in IRS Publication 590)
of the Participant or the joint life and last survivor expectancy of the
Participant and the Participant's designated beneficiary or (2) a period not
extending beyond the life expectancy of the designated beneficiary, the amount
required to be distributed for each calendar year, beginning with distributions
for the first distribution calendar year, must at least equal the quotient
obtained by dividing the Participant's benefit by the applicable life
expectancy.
(B) The amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall not be less than
the quotient obtained by dividing the Participant's benefit by the lesser of (1)
the applicable life expectancy or (2) if the Participant's spouse is not the
designated beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.40l(a)(9)-2 of the Proposed Regulations.
Distributions after the death of the Participant shall be distributed using the
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applicable life expectancy in Paragraph (c)(1)(A) above as the relevant divisor
without regard to Proposed Regulation Section 1.401(a)(9)-2.
(C) The minimum distribution required for the Participant's
first distribution calendar year must be made on or before the Participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in which
the employee's required beginning date occurs, must be made on or before
December 31 of that distribution calendar year.
(2) Other Forms - If the Participant's benefit is distributed in the
form of an annuity purchased from an insurance company, distributions thereunder
shall be made in accordance with the requirements of Code Section 401(a)(9) and
the proposed regulations thereunder.
(d) Death Distribution Provisions
(1) Distribution beginning before death - If the Participant dies
after distribution of his or her interest has begun, the remaining portion of
such interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
(2) Distribution beginning after death - If the Participant dies
before distribution of his or her interest begins, distribution of the
Participant's entire interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's death except to the
extent that an election is made to receive distributions in accordance with (A)
or (B) below:
(A) If any portion of the Participant's interest is payable to
a designated beneficiary, distributions may be made over the life or over a
period certain not greater than the life expectancy of the designated
beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(B) If the designated beneficiary is the Participant's
surviving spouse, the date distributions are required to begin in accordance
with (A) above shall not be earlier than the later of (i) December 31 of the
calendar year immediately following the calendar year in which the Participant
died and (ii) December 31 of the calendar year in which the Participant would
have attained age 70 1/2.
If the Participant has not made an election pursuant to this Paragraph
(d)(2) by the time of his or her death, the Participant's designated beneficiary
must elect the method of distribution no later than the earlier of (1) December
31 of the calendar year in which distributions would be required to begin under
this Paragraph, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has no
designated beneficiary, or if the designated beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
(3) For purposes of Paragraph (d)(2) above, if the surviving spouse
dies after the Participant, but before payments to such spouse begin, the
provisions of Paragraph
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(d)(2) with the exception of paragraph (B) therein, shall be applied as if the
surviving spouse were the Participant.
(4) For purposes of this Paragraph (d), any amount paid to a child
of the Participant will be treated as if it had been paid to the surviving
spouse if the amount becomes payable to the surviving spouse when the child
reaches the age of majority
(5) For the purposes of this Paragraph (d), distribution of a
Participant's interest is considered to begin on the Participant's required
beginning date (or, if Subparagraph (3) above is applicable, the date
distribution is required to begin to the surviving spouse pursuant to
Subparagraph (2) above). If distribution in the form of an annuity irrevocably
commences to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution actually commences.
(e) Definitions (Code Section 401(a)(9) Requirements)
(1) Applicable Life Expectancy - The life expectancy (or joint and
last survivor expectancy) calculated using the attained age of the Participant
(or designated beneficiary) as of the Participant's (or designated
beneficiary's) birthday in the applicable calendar year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the applicable life
expectancy shall be the life expectancy as so recalculated. The applicable
calendar year shall be the first distribution calendar year, and if life
expectancy is being recalculated such succeeding calendar year.
(2) Designated Beneficiary - The individual who is designated as the
beneficiary under the plan in accordance with Code Section 401(a)(9) and the
proposed regulations thereunder.
(3) Distribution Calendar Year - A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's required beginning
date. For distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which distributions are
required to begin pursuant to Paragraph (d) above.
(4) Life Expectancy - Life expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in Tables V and
VI of Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in Paragraph (d)(2)(B) above) by the time distributions
are required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse beneficiary may not
be recalculated.
(5) Participant's Benefit
(A) The account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the account balance as of
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dates in the valuation calendar year after the valuation date and decreased by
distributions made in the valuation calendar year after the valuation date.
(B) Exception for second distribution calendar year. For
purposes of Subparagraph (5)(A) above, if any portion of the minimum
distribution for the first distribution calendar year is made in the second
distribution calendar year on or before the required beginning date, the amount
of the minimum distribution made in the second distribution calendar year shall
be treated as if it had been made in the immediately preceding distribution
calendar year.
(6) Required Beginning Date
(A) Non-5-percent owner - The required beginning date is April
1 of the calendar year following the later of: (i) the calendar year in which
the Participant attains age 70 1/2, or (ii) the calendar year in which the
Participant retires. If a Participant who is not a 5-percent owner attains age
70 1/2 after December 31, 1995 and before January 1, 1999, the Participant shall
be permitted to elect to commence the distribution of his benefits as if his
required beginning date were April 1 of the calendar year following the calendar
year in which he attains age 70 1/2.
(B) 5-percent owner - The required beginning date for a
Participant who is a 5-percent owner is April 1 of the calendar year following
the calendar year in which the Participant attains age 70 1/2. A Participant is
treated as a 5-percent owner for purposes of this Paragraph (e) if such
Participant is a 5-percent owner as defined in Code Section 416(i) (determined
in accordance with Section 416 but without regard to whether the plan is
top-heavy) at any time during the plan year ending with or within the calendar
year in which such owner attains age 66 1/2 or any subsequent plan year.
(C) Once distributions have begun to a 5-percent owner under
this Paragraph, they must continue to be distributed, even if the Participant
ceases to be a 5-percent owner in a subsequent year.
Section 5.4 Top-Heavy Provisions
(a) Application of Provisions - If the plan is or becomes top-heavy in any
plan year beginning after December 31, 1983, the provisions of Subsection 5.4
will supersede any conflicting provisions in the plan.
(b) Minimum Allocation
(1) Except as otherwise provided in (3) and (4) below, the Employer
contributions and forfeitures allocated on behalf of any Participant who is not
a key employee shall not be less than the lesser of three percent of such
Participant's compensation (as defined in Section 1.2) or in the case where the
Employer has no defined benefit plan which designates this plan to satisfy Code
Section 401, the largest percentage of Employer contributions and forfeitures,
as a percentage of the key employee's compensation which may be taken into
account under Section 1.2(c), allocated on behalf of any key employee for that
year. The minimum allocation is determined without regard to any Social Security
contribution. This minimum allocation shall be made even though, under other
plan provisions, the Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the year because
of (i) the
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Participant's failure to complete 1,000 hours of service (or any equivalent
provided in the plan), or (ii) the Participant's failure to make mandatory
employee contributions to the plan, or (iii) compensation less than a stated
amount.
(2) For purposes of computing the minimum allocation, compensation
shall mean compensation as defined in Section 1.2(a) of the plan.
(3) The provision in (1) above shall not apply to any Participant
who was not employed by the Employer on the last day of the plan year.
(4) The provision in (1) above shall not apply to any Participant to
the extent the Participant is covered under any other plan or plans of the
Employer and the Employer has provided in Section 3.2 that the minimum
allocation or benefit requirement applicable to top-heavy plans will be met in
the other plan or plans. If this plan is intended to meet the minimum allocation
or benefit requirement applicable to another plan or plans, the Employer shall
so provide in Section 3.2.
(5) The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code
Section 411(a)(3)(B) or 411(a)(3)(D).
(c) Adjustments in Code Section 415 Limits - If the plan is top-heavy, the
defined benefit fraction and the defined contribution fraction shall be computed
by applying a factor of 1.0 (instead of 1.25) to the applicable dollar limits
under Code Section 415(b)(1)(A) and 415(C)(1)(A) for such year, unless the plan
meets both the following conditions:
(1) Such plan would not be a top-heavy plan if "90%" were
substituted for "60%" in the top-heavy tests; and
(2) The minimum Employer contribution percentage under paragraph (b)
is 4 percent instead of 3 percent.
However, the reduced Code Section 415 factor of 1.0 shall not apply under
a top-heavy plan with respect to any individual so long as there are no Employer
contributions, forfeitures, or voluntary non-deductible contributions allocated
to such individual.
(d) Minimum Vesting Schedules - For any plan year in which this plan is
top-heavy, the following minimum vesting schedule shall automatically apply to
the plan:
Years of Service Vesting Percentage
---------------- ------------------
0 Years 0%
1 20%
2 40%
3 60%
4 80%
5 or More Years 100%
The minimum vesting schedule shall apply to all benefits within the
meaning of Code Section 411(a)(7) except those attributable to employee
contributions, including benefits accrued before the effective date of Code
Section 416 and benefits accrued before the plan became top-heavy. Further, no
decrease in a Participant's nonforfeitable percentage may
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occur in the event the plan's status as top-heavy changes for any plan year, and
the provisions of Section 7.2(d) shall apply. However, this Section does not
apply to the account balances of any employee who does not have an hour of
service after the plan has initially become top-heavy and such employee's
account balance attributable to Employer contributions and forfeitures will be
determined without regard to this Section.
(e) Definitions (Code Section 416 Requirements)
(1) Key Employee - Any employee or former employee (and the
beneficiaries of such employee) who at any time during the determination period
was an officer of the Employer if such individual's annual compensation exceeds
50 percent of the dollar limitation under Code Section 415(b)(1)(A), an owner
(or considered an owner under Code Section 318) of one of the ten largest
interests in the Employer if such individual's compensation exceeds 100 percent
of the dollar limitation under Code Section 415(c)(1)(A), a 5-percent owner of
the Employer, or a 1-percent owner of the Employer who has an annual
compensation of more than $150,000. Annual compensation means compensation as
defined in Code Section 415(c)(3), but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are excludable from the
employee's gross income under Code Section 125, Section 402(a)(8), Section
402(h) or Section 403(b). The determination period is the plan year containing
the determination date and the four (4) preceding plan years.
The determination of who is a key employee will be made in accordance with
Code Section 416(i)(1) and the regulations thereunder.
(2) Top-Heavy Plan - For any plan year beginning after December 31,
1983, this plan is top-heavy if any of the following conditions exists:
(A) If the top-heavy ratio for this plan exceeds 60 percent
and this plan is not part of any required aggregation group or permissive
aggregation group of plans.
(B) If this plan is a part of a required aggregation group of
plans but not part of a permissive aggregation group and the top-heavy ratio for
the group of plans exceeds 60 percent.
(C) If this plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top-heavy ratio for the
permissive aggregation group exceeds 60 percent.
(3) Top-Heavy Ratio
(A) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan) and the Employer has not
maintained any defined benefit plan which during the 5-year period ending on the
determination date(s) has or has had accrued benefits, the top-heavy ratio for
this plan alone or for the required or permissive aggregation group as
appropriate is a fraction, the numerator of which is the sum of the account
balances of all key employees as of the determination date(s) (including any
part of any account balance distributed in the 5-year period ending on the
determination date(s)), and the denominator of which is the sum of all account
balances (including any part of any account balance distributed in the 5-year
period ending on the determination date(s)), both computed in accordance with
Code Section 416 and the regulations thereunder. Both the numerator and
denominator of the top-heavy ratio are
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increased to reflect any contribution not actually made as of the determination
date, but which is required to be taken into account on that date under Code
Section 416 and the regulations thereunder.
(B) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan) and the Employer
maintains or has maintained one or more defined benefit plans which during the
5-year period ending on the determination date(s) has or has had any accrued
benefits, the top-heavy ratio for any required or permissive aggregation group
as appropriate is a fraction, the numerator of which is the sum of account
balances under the aggregated defined contribution plan or plans for all key
employees, determined in accordance with (A) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all key
employees as of the determination date(s), and the denominator of which is the
sum of the account balances under the aggregated defined contribution plan or
plans for all Participants, determined in accordance with (A) above, and the
present value of accrued benefits under the defined benefit plan or plans for
all Participants as of the determination date(s), all determined in accordance
with Code Section 416 and the regulations thereunder. The accrued benefits under
a defined benefit plan in both the numerator and denominator of the top-heavy
ratio are increased for any distribution of an accrued benefit made in the
five-year period ending on the determination date.
(C) For purposes of (A) and (B) above the value of account
balances and the present value of accrued benefits will be determined as of the
most recent valuation date that falls within or ends with the 12-month period
ending on the determination date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a defined benefit
plan. The account balances and accrued benefits of a Participant (1) who is not
a key employee but who was a key employee in a prior year, or (2) who has not
been credited with at least one hour of service with any Employer maintaining
the plan at any time during the 5-year period ending on the determination date
will be disregarded. The calculation of the top-heavy ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with Code Section 416 and the regulations thereunder.
Deductible employee contributions will not be taken into account for purposes of
computing the top-heavy ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar year.
The accrued benefit of a Participant other than a key employee shall be
determined under (1) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by the Employer, or (2) if
there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C).
(4) Permissive Aggregation Group - The required aggregation group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the required aggregation group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(5) Required Aggregation Group - (1) Each qualified plan of the
Employer in which at least one key employee participates or participated at any
time during the determination period (regardless of whether the plan has
terminated), and (2) any other
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qualified plan of the Employer which enables a plan described in (1) to meet the
requirements of Code Sections 401(a)(4) or 410.
(6) Determination Date - For any plan year subsequent to the first
plan year, the last day of the preceding plan year. For the first plan year of
the plan, the last day of that year.
(7) Valuation Date - The allocation date as defined in Section
1.3(b), which shall be the date as of which account balances or accrued benefits
are valued for purposes of calculating the top-heavy ratio.
(8) Present Value - Present value shall be based only on the
interest and mortality rates specified in the Employer's defined benefit plan.
(9) Non-Key Employee - Any employee who is not a key employee.
Non-key employees include employees who are former key employees.
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ARTICLE VI ADMINISTRATION OF THE PLAN
Section 6.1 Fiduciary Responsibility
(a) Fiduciary Standards - A fiduciary shall discharge his duties with
respect to a plan solely in the interest of the Participants and beneficiaries
and -
For the exclusive purpose of providing benefits to Participants and their
beneficiaries and defraying reasonable expenses of administering the plan;
With the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with
like aims;
By diversifying the investments of the plan so as to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not to do so;
and
In accordance with the documents and instruments governing the plan
insofar as such documents and instruments are consistent with the provisions of
ERISA.
(b) Allocation of Fiduciary Responsibility
(1) It is intended to allocate to each fiduciary, either named or
otherwise, the individual responsibility for the prudent execution of the
functions assigned to him. None of the allocated responsibilities or any other
responsibilities shall be shared by two or more fiduciaries unless specifically
provided for in the plan.
(2) When one fiduciary is required to follow the directions of
another fiduciary, the two fiduciaries shall not be deemed to share such
responsibility. Instead, the responsibility of the fiduciary giving the
directions shall be deemed to be his sole responsibility and the responsibility
of the fiduciary receiving directions shall be to follow those directions
insofar as such instructions on their face are proper under applicable law.
(3) Any person or group of persons may serve in more than one
fiduciary capacity with respect to this plan.
(4) A fiduciary under this plan may employ one or more persons,
including independent accountants, attorneys and actuaries to render advice with
regard to any responsibility such fiduciary has under the plan.
(c) Indemnification by Employer - Unless resulting from the gross
negligence, willful misconduct or lack of good faith on the part of a fiduciary
who is an officer or employee of the Employer, the Employer shall indemnify and
save harmless such fiduciary from, against, for and in respect of any and all
damages, losses, obligations, liabilities, liens, deficiencies, costs and
expenses, including without limitation, reasonable attorney's fees and other
costs and expenses incident to any suit, action, investigation, claim or
proceedings suffered in connection with his acting as a fiduciary under the
plan.
(d) Named Fiduciary - The person or persons named by the Employer as
having fiduciary responsibility for the management and control of plan assets
shall be known as
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the "named fiduciary" hereunder. Such responsibility shall include the
appointment of the plan administrator (Section 6.2(a)), the trustee (Section
6.4(a)) and the investment manager (Section 6.4(b)), and the deciding of benefit
appeals (Section 6.3).
(e) Bonding - Every fiduciary, except a bank or an insurance company,
unless exempted by the ERISA and regulations thereunder, shall be bonded in an
amount not less than 10% of the amount of the funds such fiduciary handles;
provided, however, that the minimum bond shall be $1,000 and the maximum bond,
$500,000. The amount of funds handled shall be determined at the beginning of
each plan year by the amount of funds handled by such person, group, or class to
be covered and their predecessors, if any, during the preceding plan year, or if
there is no preceding plan year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the plan
against any loss by reason of acts of fraud or dishonesty by the fiduciary alone
or in connivance with others. The surety shall be a corporate surety company (as
such term is used in ERISA Section 412(a)(2)), and the bond shall be in a form
approved by the Secretary of Labor. Notwithstanding anything in the plan to the
contrary, the cost of such bonds shall be an expense of and may, at the election
of the administrator, be paid from the trust fund or by the Employer.
Section 6.2 Plan Administrator
(a) Appointment of Plan Administrator
The named fiduciary shall appoint a plan administrator who may be a person
or an administrative committee consisting of no more than five members.
Vacancies occurring upon resignation or removal of a plan administrator or a
committee member shall be filled promptly by the named fiduciary. Any
administrator may resign at any time by giving notice of his resignation to the
named fiduciary, and any administrator may be removed at any time by the named
fiduciary. The named fiduciary shall review at regular intervals the performance
of the administrator(s) and shall re-evaluate the appointment of such
administrator(s). After the named fiduciary has appointed the administrator and
has received a written notice of acceptance, the fiduciary responsibility for
administration of the plan shall be the responsibility of the plan administrator
or administrative committee.
(b) Duties and Powers of Plan Administrator
The plan administrator shall have the following duties and discretionary
powers and such other duties and discretionary powers as relate to the
administration of the plan:
(1) To determine in a non-discriminatory manner all questions
relating to the eligibility of employees to become Participants.
(2) To determine in a non-discriminatory manner eligibility for
benefits and to determine and certify the amount and kind of benefits payable to
Participants.
(3) To authorize all disbursements from the fund.
(4) To appoint or employ any independent person to perform necessary
plan functions and to assist in the fulfillment of administrative
responsibilities as he deems advisable, including legal and actuarial counsel.
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(5) When appropriate, to select an insurance company and annuity
contracts which, in his opinion, will best carry out the purposes of the plan.
(6) To construe and interpret any ambiguities in the plan and to
make, publish, interpret, alter, amend or revoke rules for the regulation of the
plan which are consistent with the terms of the plan and with ERISA.
(7) To prepare and distribute, in such manner as determined to be
appropriate, information explaining the plan.
(8) To establish and communicate to Participants a procedure and
method to insure that each Participant will vote company stock allocated to such
Participant's company stock account pursuant to Section 6.8.
(9) To assist any Participant regarding his rights, benefits, or
elections available under the plan.
(c) Allocation of Fiduciary Responsibility Within Administrative Committee
If the plan administrator is an administrative committee, the committee
shall choose from its members a chairman and a secretary. The committee may
allocate responsibility for those duties and powers listed in Section 6.2(b)(1)
and (2) (except determination of qualification for disability retirement) and
other purely ministerial duties to one or more members of the committee. The
committee shall review at regular intervals the performance of any committee
member to whom fiduciary responsibility has been allocated and shall re-evaluate
such allocation of responsibility. After the committee has made such allocations
of responsibilities and has received written notice of acceptance, the fiduciary
responsibilities for such administrative duties and powers shall then be
considered as the responsibilities of such committee member(s).
(d) Miscellaneous Provisions
(1) Administrative Committee Actions - The actions of such committee
shall be determined by the vote or other affirmative expression of a majority of
its members. Either the chairman or the secretary may execute any certificate or
other written direction on behalf of the committee. A member of the committee
who is a Participant shall not vote on any question relating specifically to
himself. If the remaining members of the committee, by majority vote thereof,
are unable to come to a determination of any such question, the named fiduciary
shall appoint a substitute member who shall act as a member of the committee for
the special vote.
(2) Expenses - The plan administrator shall serve without
compensation for service as such. All reasonable expenses of the plan
administrator shall be paid by the Employer or from the fund.
(3) Examination of Records - The plan administrator shall make
available to any Participant for examination during business hours such of the
plan records as pertain only to the Participant involved.
(4) Information to the Plan Administrator - To enable the plan
administrator to perform the administrative functions, the Employer shall supply
full and timely
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information to the plan administrator on all Participants as the plan
administrator may require.
Section 6.3 Claims Procedure
(a) Notification - The plan administrator shall notify each Participant
in writing of his determination of benefits. If the plan administrator denies
any benefit, such written denial shall include:
- The specific reasons for denial;
- Reference to provisions on which the denial is based;
- A description of and reason for any additional information needed
to process the claim; and
- An explanation of the claims procedure.
(b) Appeal - The Participant or his duly authorized representative may:
- Request a review of the Participant's case in writing to the named
fiduciary;
- Review pertinent documents;
- Submit issues and comments in writing.
The written request for review must be submitted no later than 60 days
after receiving written notification of denial of benefits.
(c) Review - The named fiduciary must render a decision no later than 60
days after receiving the written request for review, unless circumstances make
it impossible to do so; but in no event shall the decision be rendered later
than 120 days after the request for review is received.
Section 6.4 Trust Fund
(a) Appointment of Trustee
The named fiduciary shall appoint a trustee for the proper care and
custody of all funds, securities and other properties in the trust, and for
investment of plan assets (or for execution of such orders as it receives from
an investment manager appointed for investment of plan assets). The duties and
powers of the trustee shall be set forth in a trust agreement executed by the
Employer, which is incorporated herein by reference. The named fiduciary shall
review at regular intervals the performance of the trustee and shall re-evaluate
the appointment of such trustee. After the named fiduciary has appointed the
trustee and has received a written notice of acceptance of its responsibility,
the fiduciary responsibility with respect to the proper care and custody of plan
assets shall be considered as the responsibility of the trustee. Unless
otherwise allocated to an investment manager, the fiduciary responsibility with
respect to investment of plan assets shall likewise be considered as the
responsibility of the trustee.
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(b) Appointment of Investment Manager
The named fiduciary may appoint an investment manager who is other than
the trustee, which investment manager may be a bank or an investment advisor
registered with the Securities and Exchange Commission under the Investment
Advisors Act of 1940. Such investment manager, if appointed, shall have sole
discretion in the investment of plan assets, subject to the funding policy. The
named fiduciary shall review at regular intervals no less frequently than
annually, the performance of such investment manager and shall re-evaluate the
appointment of such investment manager. After the named fiduciary has appointed
an investment manager and has received a written notice of acceptance of its
responsibility, the fiduciary responsibility with respect to investment of plan
assets shall be considered as the responsibility of the investment manager.
Section 6.5 Investment Policy
(a) The plan is designed to invest primarily in company stock. It is
specifically intended that this plan qualify and operate as an eligible
individual account plan as defined in ERISA section 407(d)(3). As such, and
without limiting the generality of the foregoing, the trustee is hereby
specifically authorized to:
(1) acquire, hold, sell, and distribute Company stock.
(2) invest in Company stock and not limit its holdings of such stock
to ten percent of trust assets but may invest up to 100% of plan assets in
Company stock without regard to any plan or trust agreement requirement to
diversify investments as permitted under ERISA section 404(a)(2).
(3) acquire or sell Company stock in a transaction with a
disqualified person or a party in interest (as those terms are defined in ERISA
and the Code) provided that no commission is charged and the transaction is for
adequate consideration.
(b) With due regard to subparagraph (a) above, the administrator may also
direct the trustee to invest funds under the plan in other property described in
the Trust Agreement or in life insurance policies to the extent permitted by
subparagraph (c) below, or the trustee may hold such funds in cash or cash
equivalents.
(c) The plan may not obligate itself to acquire company stock from a
particular holder thereof at an indefinite time determined upon the happening of
an event such as the death of the holder.
(d) The plan may not obligate itself to acquire company stock under a put
option binding upon the plan. However, at the time a put option is exercised,
the plan may be given an option to assume the rights and obligations of the
Employer under a put option binding upon the Employer.
(e) All purchases of company stock shall be made at a price which, in the
judgment of the administrator, does not exceed the fair market value thereof.
All sales of company stock shall be made at a price which, in the judgment of
the administrator, is not less than the fair market value thereof. The valuation
rules set forth in Section 6.7 shall be applicable.
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Section 6.6 Valuation of the Trust Fund
(a) The administrator shall direct the trustee, as of each allocation
date, and at such other date or dates deemed necessary by the administrator,
herein called valuation date, to determine the net worth of the assets
comprising the trust fund as it exists on the valuation date prior to taking
into consideration any contribution to be allocated for that plan year. In
determining such net worth, the trustee shall value the assets comprising the
trust fund at their fair market value as of the valuation date and shall deduct
all expenses for which the trustee has not yet obtained reimbursement from the
Employer or the trust fund.
(b) Valuations must be made in good faith and based on all relevant
factors for determining the fair market value of securities. In the case of a
transaction between a plan and a disqualified person, value must be determined
as of the date of the transaction. For all other plan purposes, value must be
determined as of the most recent valuation date under the plan. An independent
appraisal will not in itself be a good faith determination of value in the case
of a transaction between the plan and a disqualified person. However, in other
cases, a determination of fair market value based on at least an annual
appraisal independently arrived at by a person who customarily makes such
appraisals and who is independent of any party to the transaction will be deemed
to be a good faith determination of value. Company stock not readily tradable on
an established securities market shall be valued by an independent appraiser
meeting requirements similar to the requirements of the Regulations prescribed
under Code Section 170(a)(1).
Section 6.7 Voting Company Stock
The trustee shall vote all company stock held by it as part of the plan
assets at such time and in such manner as the administrator shall direct,
provided, however, that if any agreement entered into by the trust provides for
voting of any shares of company stock pledged as security for any obligation of
the plan, then such shares of company stock shall be voted in accordance with
such agreement. If the administrator shall fail or refuse to give the trustee
timely instructions as to how to vote any company stock as to which the trustee
otherwise has the right to vote, the trustee shall not exercise its power to
vote such company stock.
If the by-laws of the Employer require the plan to vote an issue in a
manner that reflects a one-man, one-vote philosophy, each Participant or
beneficiary shall be entitled to cast one vote on an issue and the trustee shall
vote the shares held by the plan in proportion to the results of the votes cast
on the issue by the Participants and beneficiaries.
In the event a tender offer is made for shares of company stock, each
Participant (or beneficiary) shall be entitled to direct the trustee as to
whether or not the shares of company stock allocated to his company stock
account shall be tendered pursuant to such offer. The trustee shall tender
shares of company stock held in the unallocated company stock suspense account
in the same proportion as Participants actually tender the shares allocated to
their individual accounts, provided, however, that the trustee shall not tender
any shares which are pledged as security for an exempt loan without first
obtaining any required approvals.
B-21
<PAGE>
Section 6.8 Current Obligations
Employer contributions in cash and other cash received by the trust fund
shall first be applied to pay any current obligations of the trust fund. Current
obligations means trust fund expenses and trust obligations arising from the
extension of credit to the trust and payable in cash within one year from the
date an Employer contribution is due.
B-22
<PAGE>
ARTICLE VII AMENDMENT AND TERMINATION OF PLAN
Section 7.1 Right to Discontinue and Amend
It is the expectation of the Employer that it will continue this plan
indefinitely and make the payments of its contributions hereunder, but the
continuance of the plan is not assumed as a contractual obligation of the
Employer and the right is reserved by the Employer, at any time, to reduce,
suspend or discontinue its contributions hereunder.
Section 7.2 Amendments
Except as herein limited, the Employer shall have the right to amend this
plan at any time to any extent that it may deem advisable. Such amendment shall
be stated in writing, shall be authorized by action of the board of directors,
and shall be executed by the person designated in conjunction with the
authorization.
The Employer's right to amend the plan shall be limited as follows:
(a) No amendment shall increase the duties or liabilities of the plan
administrator, the trustee, or other fiduciary without their respective written
consent.
(b) No amendments shall have the effect of vesting in the Employer any
interest in or control over any contracts issued pursuant hereto or any other
property in the fund.
(c) No amendment to the plan shall be effective to the extent that it has
the effect of decreasing a Participant's accrued benefit. Notwithstanding the
preceding sentence, a Participant's account balance may be reduced to the extent
permitted under Code Section 412(c)(8). For purposes of this paragraph, a plan
amendment which has the effect of decreasing a Participant's account balance or
eliminating an optional form of benefit, with respect to benefits attributable
to service before the amendment shall be treated as reducing an accrued benefit.
Furthermore, if the vesting schedule of a plan is amended, in the case of an
employee who is a Participant as of the later of the date such amendment is
adopted or the date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such employee's right to his Employer-derived
accrued benefit will not be less than his percentage computed under the plan
without regard to such amendment.
(d) No amendment to the vesting schedule adopted by the Employer hereunder
shall deprive a Participant of his vested portion of his Employer contribution
account to the date of such amendment. If the plan's vesting schedule is
amended, or the plan is amended in any way that directly or indirectly affects
the computation of the Participant's nonforfeitable percentage or if the plan is
deemed amended by an automatic change to or from a top-heavy vesting schedule,
each Participant with at least 3 years of service with the Employer may elect,
within a reasonable period after the adoption of the amendment or change, to
have the nonforfeitable percentage computed under the plan without regard to
such amendment or change. For Participants who do not have at least one hour of
service in any plan year beginning after December 31, 1988, "5 years of service"
shall be substituted for "3 years of service" in the preceding sentence. The
period during which the election may be made shall commence with the date the
amendment is adopted or deemed to be made and shall end on the latest of:
B-23
<PAGE>
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written notice of the
amendment by the Employer or plan administrator.
Section 7.3 Protection of Benefits in Case of Plan Merger
In the event of a merger or consolidation with, or transfer of assets to
any other plan, each Participant will receive a benefit immediately after such
merger, consolidation or transfer (if the plan then terminated) which is at
least equal to the benefit the Participant was entitled to immediately before
such merger, consolidation or transfer (if the plan had terminated).
Section 7.4 Termination of Plan
(a) When Plan Terminates - This plan shall terminate upon the happening of
any of the following events: legal adjudication of the Employer as bankrupt; a
general assignment by the Employer to or for the benefit of its creditors; the
legal dissolution of the Employer; or termination of the plan by the Employer.
(b) Allocation of Assets - Upon termination, partial termination or
complete discontinuance of Employer contributions, the account balance of each
affected Participant who is an active Participant or who is not an active
Participant but has neither received a complete distribution of his vested
accrued benefit nor incurred five one-year breaks in service shall be 100%
vested and nonforfeitable. The amount of the fund assets shall be allocated to
each Participant, subject to provisions for expenses of administration of the
liquidation, in the ratio that such Participant's account bears to all accounts.
If a Participant under this plan has terminated his employment at any time after
the anniversary date of the year in which the Employer made his final
contribution to the plan, and if any portion of the account of such terminated
Participant was forfeited and reallocated to the remaining Participants, such
forfeiture shall be reversed and the forfeited amount shall be credited to the
account of such terminated Participant.
B-24
<PAGE>
ARTICLE VIII MISCELLANEOUS PROVISIONS
Section 8.1 Exclusive Benefit - Non-Reversion
The plan is created for the exclusive benefit of the employees of the
Employer and shall be interpreted in a manner consistent with its being a
qualified plan as defined in Section 401(a) of the Internal Revenue Code and
with ERISA. The corpus or income of the trust may not be diverted to or used for
other than the exclusive benefit of the Participants or their beneficiaries
(except for defraying reasonable expenses of administering the plan).
Notwithstanding the above, a contribution paid by the Employer to the
trust may be repaid to the Employer under the following circumstances:
(a) Any contribution made by the Employer because of a mistake of fact
must be returned to the Employer within one year of the contribution.
(b) In the event the deduction of a contribution made by the Employer is
disallowed under Code Section 404, such contribution (to the extant disallowed)
must be returned to the Employer within one year of the disallowance of the
deduction.
(c) If the Commissioner of Internal Revenue determines that the plan is
not initially qualified under the Internal Revenue Code, any contribution made
incident to that initial qualification by the Employer must be returned to the
Employer within one year after the date the initial qualification is denied, but
only if the application for the qualification is made by the time prescribed by
law for filing the Employer's return for the taxable year in which the plan is
adopted, or such later date as the Secretary of the Treasury may prescribe.
Section 8.2 Inalienability of Benefits
No benefit or interest available hereunder including any annuity contract
distributed herefrom shall be subject to assignment or alienation, either
voluntarily or involuntarily. The preceding sentence shall also apply to the
creation, assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order, unless such
order is determined to be a qualified domestic relations order as defined in
Code Section 4l4(p), or any domestic relations order entered before January 1,
1985. A loan made to a Participant and secured by his nonforfeitable account
balance under Section 4.5(b) will not be treated as an assignment or alienation
and such securing account balance shall be subject to attachment by the plan in
the event of default.
Notwithstanding the preceding paragraph, effective with respect to
judgments, orders, and decrees issued, and settlement agreements entered into,
on or after August 5, 1997, a Participant's benefit (and that of his spouse)
shall be reduced to satisfy liabilities of the Participant to the plan due to
(1) the Participant being convicted of committing a crime involving the plan,
(2) a civil judgment (or consent order or decree) entered by a court in an
action brought in connection with a violation of the fiduciary provisions of
Title I of ERISA, or (3) a settlement agreement between the Secretary of Labor
or the Pension Benefit Guaranty Corporation and the Participant in connection
with a violation of the fiduciary
B-25
<PAGE>
provisions of ERISA. Any reduction made pursuant to this paragraph shall be done
in accordance with the requirements of ERISA Section 206(d).
Section 8.3 Employer-Employee Relationship
This plan is not to be construed as creating or changing any contract of
employment between the Employer and its employees, and the Employer retains the
right to deal with its employees in the same manner as though this plan had not
been created.
Section 8.4 Binding Agreement
This plan shall be binding on the heirs, executors, administrators,
successors and assigns as such terms may be applicable to any or all parties
hereto, and on any Participants, present or future.
Section 8.5 Separability
If any provision of this plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof and
this plan shall be construed and enforced as if such provision had not been
included.
Section 8.6 Construction
The plan shall be construed in accordance with the laws of the state in
which the Employer was incorporated and with ERISA.
Section 8.7 Copies of Plan
This plan may be executed in any number of counterparts, each of which
shall be deemed as an original, and said counterparts shall constitute but one
and the same instrument which may be sufficiently evidenced by any one
counterpart.
Section 8.8 Interpretation
Wherever appropriate, words used in this plan in the singular may include
the plural or the plural may be read as singular, and the masculine may include
the feminine.
Section 8.9 Securities and Exchange Contmiaaion Apnroval
The Employer may request an interpretative letter from the Securities and
Exchange Commission stating that the transfers of company stock contemplated
hereunder do not involve transactions requiring a registration of such company
stock under the Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the right to amend
the Plan and Trust retroactively to their effective dates in order to obtain a
favorable interpretative letter or to terminate the plan.
B-26
<PAGE>
IN WITNESS WHEREOF, the Employer has caused this Plan to be executed this
31st day of December, 1998.
EMPLOYER:
Wilson Greatbatch Ltd.
By: /s/ Larry T. DeAngelo
-------------------------------------
Title: V.P. Administration & Secretary
---------------------------------
B-27
<PAGE>
FIRST AMENDMENT
to
WILSON GREATBATCH LTD. EQUITY PLUS PLAN -
STOCK BONUS PLAN
Under Article VII of the Wilson Greatbatch Ltd. Equity Plus Plan -
Stock Bonus Plan (the "Plan"), Wilson Greatbatch Ltd. (the "Employer") has the
right to make written amendments to the Plan that are authorized by the board of
directors of the Employer and executed by an authorized officer of the Employer.
Therefore, the Employer hereby amends the Plan in the following respects:
1. Effective January 1, 1999, paragraphs (2) and (3) of Plan Section
4.3(a) are hereby deleted in their entirety, and are replaced with the following
provisions:
(2) Participant Elections to Commence Distributions - If a
Participant terminates employment with the Employer, the Participant
may make a written election directing the plan administrator to make
a distribution of his or her vested accounts under the Plan. The
form of distribution will be determined under the provisions of
Section 4.3(b). The timing of the distribution depends on when the
Participant elects to receive a distribution and the accounting date
the Participant elects to use to determine the value of his or her
account for distribution purposes. A Participant may elect an
immediate distribution and request that the distribution amount be
determined using the value of his or her vested plan account as of
the accounting date that coincides with or immediately precedes the
date the Participant submits the election, in which case the
distribution will be processed as soon as practicable after the date
the plan administrator receives the election. Alternatively, a
Participant may elect to defer the distribution and request that the
distribution amount be determined using the value of his or her
vested plan account as of the next annual accounting date for
valuing company stock that immediately follows the date the
Participant submits the election, in which case the distribution
will be processed as soon as practicable after that accounting date.
2. Effective January 1, 1999, the first sentence of Plan Section
4.3(c)(2) is hereby deleted in its entirety.
3. Effective January 1, 1999, Plan Section 4.4 is hereby deleted in
its entirety, and is replaced by the following provision:
Section 4.4 Form of Distribution
(a) Unless a Participant or a beneficiary demands that his or
her
<PAGE>
2
benefits attributable to the Company Stock Account be distributed in
the form of company stock, the plan administrator may, but is not
obligated to, direct the trustee to distribute benefits in cash
only. The amount of any cash payment to a Participant will be equal
to the fair market value of the company stock that would otherwise
have been distributed to the Participant, plus the value of his or
her other investment account and directed investment account.
(b) The trustee may make distributions from the trust only on
instructions from the plan administrator.
4. Effective January 1, 1999, the following new Section 5.5 is
hereby added at the end of Article V of the Plan:
Section 5.5 ESOP Distribution Options
(a) Right to Receive Stock
The right to receive distributions in the form of shares of
company stock is automatically terminated in the event of the sale
or other disposition by the trustee of all shares of company stock
held by the trust.
(b) Restricted Stock
(1) Notwithstanding any other provision of the Plan, if
the Employer's charter or by-laws restrict ownership of
substantially all shares of company stock to employees and the trust
fund, as described in Code Section 409(h)(2), the administrator will
distribute a Participant's account entirely in cash, without
granting the Participant the right to demand distribution in shares
of company stock.
(2) Except as otherwise provided under the plan, company
stock distributed by the trustee may be restricted as to sale or
transfer by the bylaws or articles of incorporation of the Employer,
if the restrictions are applicable to all company stock of the same
class. Certificates representing company stock distributed by the
plan will bear a legend or notation required by applicable federal
and state securities laws and regulations.
(c) Right of First Refusal
(1) If any Participant, his or her beneficiary or any
other person to whom shares of company stock are distributed from
the plan (the selling
<PAGE>
3
Participant) wants, at any time that the stock is not publicly
traded, to sell some or all of his or her shares (the offered
shares) to a third party, the selling Participant must give prior
written notice of his or her plans to sell the stock to the Employer
and the trustee. The notice must contain the number of shares
offered for sale, the proposed terms of the sale and the names and
addresses of both the selling Participant and third party. The
trustee and the Employer each will have the right of first refusal
for a period of 14 days from the date the selling Participant gives
written notice to the Employer and to the trustee to acquire the
offered shares. The 14-day period runs concurrently with respect to
the trust fund and the Employer. As between the trust fund and the
Employer, the trust fund has priority to acquire the shares pursuant
to the right of first refusal. If the trustee or the Employer
exercises their right of first refusal, the selling price and terms
may not be less than the price and terms offered by the third party.
(2) If the trustee and the Employer do not exercise
their right of first refusal within the required 14-day period, the
selling Participant has the right, at any time following the
expiration of the period, to dispose of the offered shares to the
third party. Nevertheless, no disposition may be made to the third
party on terms more favorable to the third party than those set
forth in the written notice previously given by the selling
Participant to the Employer and trustee. If the disposition is not
made to a third party on the terms offered to the Employer and the
trustee, the offered shares are again subject to the right of first
refusal described above.
(3) The closing following the exercise of a right of
first refusal will take place at such place agreed on between the
administrator and the selling Participant, but not later than ten
(10) days after the Employer or the trustee notifies the selling
Participant of the exercise of the right of first refusal. At the
closing, the selling Participant must deliver certificates
representing the offered shares duly endorsed in blank for transfer,
or with stock powers attached duly executed in blank with all
required transfer tax stamps attached or provided for, and the
Employer or the trustee must deliver the purchase price, or an
appropriate portion thereof, to the selling Participant.
(d) Put Option
(1) if company stock is distributed to a Participant and
the company stock is not readily tradeable on an established
securities market, a Participant has a right to require the Employer
to repurchase the company stock distributed to such Participant
under a fair valuation formula. That stock shall be subject to the
provisions of (c).
(2) The put option is exercisable only by a Participant,
by the
<PAGE>
4
Participant's donees, or by a person (including an estate or its
distributee) to whom the company stock passes by reason of a
Participant's death. The put option must permit a Participant (or a
beneficiary) to put the company stock to the Employer. Under no
circumstance may the put option bind the plan. However, the put
option grants the plan an option to assume the rights and
obligations of the Employer at the time that the put option is
exercised. If it is known at the time a loan is made that Federal or
State law will be violated by the Employer honoring the put option,
the put option must permit the company stock to be put, in a manner
consistent with applicable law, to a third parry (e.g., an affiliate
of the Employer or a shareholder other than the plan) that has
substantial net worth at the time the loan is made and whose net
worth is reasonably expected to remain substantial.
The put option may be exercised during the period that begins
on the date the company stock is distributed to the Participant (or
a beneficiary) and ends 60 days thereafter. If the put option is not
exercised within the 60-day period, an additional 60-day option
commences on the 1st day of the 5th month of the plan year next
following the date the stock was distributed to the Participant (or
any other 60-day period as provided in Treasury regulations).
However, in the case of company stock that is publicly traded
without restrictions when distributed and ceases to be publicly
traded within either of the 60-day periods described above, the
Employer must notify each holder of the company stock in writing on
or before the 10th day after the date the company stock ceases to be
publicly traded that for the remainder of the applicable 60-day
period the company stock is subject to the put option. The number of
days between the 10th day and the date on which notice is actually
given, if later than the 10th day, must be added to the duration of
the put option. The notice must inform distributees of the term of
the put options that they are to hold. The terms must satisfy the
requirements of this paragraph.
The put option is exercised by the holder by notifying the
Employer in writing that the put option is being exercised. The
notice must state the name and address of the holder and the number
of shares to be sold. When written notification from the holder is
received, the Employer will immediately inform the administrator of
the notice. The administrator will have 10 days to notify the
Employer if it wishes the trust fund to assume the rights and
obligations of the Employer with respect to the required purchase of
company stock.
The period during which a put option is exercisable does not
include any time when a distributee is unable to exercise it because
the party bound by the put option is prohibited from honoring it by
applicable Federal or State law. The price at which a put option
must be exercisable is the fair market value of the company stock,
as determined by the plan administrator in good faith based on all
<PAGE>
5
the relevant factors, as of the allocation date coincident with or
immediately preceding the Employer's receipt of the written
notification. The total purchase price must be paid to the holder
within 30 days after the notification. The Employer, however, may
defer the payments on a reasonable basis, if it gives written notice
to the holder within the 30 days period. The deferred payments must
be paid in substantially equal monthly, quarterly, semiannual, or
annual installments over a period certain beginning not later than
30 days after the exercise of the put option and not extending
beyond 5 years. The deferral of payment is reasonable if adequate
security and a reasonable interest rate on the unpaid amounts are
provided. The amount to be paid under the put option involving
installment distributions must be paid not later than 30 days after
the exercise of the put option. Payment under a put option must not
be restricted by the provisions of a loan or any other arrangement,
including the terms of the employer's articles of incorporation,
unless so required by applicable state law.
For purposes of this Section, total distribution means a
distribution within 1 taxable year to a Participant or his
beneficiary of the Participant's entire vested account.
(3) An arrangement involving the plan that creates a put
option must not provide for the issuance of put options other than
as provided under this Section. The plan (and the trust fund) must
not otherwise obligate itself to acquire company stock from an
option holder at an indefinite time determined on the happening of
an event, such as the death of the holder.
5. Effective January 1, 1999, the second and third paragraphs of
Section 6.7 are hereby deleted in their entirety, and are replaced with the
following provisions:
If a tender offer is made for shares of company stock, each
Participant or beneficiary will be entitled to direct the trustee as
to whether or not the shares allocated to his or her company stock
account may be tendered under the offer.
All shares of company stock allocated to accounts for which
the trustee did not receive tender instructions from a Participant
or beneficiary and all shares held in the unallocated company stock
suspense account will be tendered or not tendered by the trustee in
its discretion and in accordance with its fiduciary duties under
ERISA. The trustee may not tender any shares that are pledged as
security for an exempt loan without first obtaining any required
approvals.
On all other corporate matters requiring pass-through voting
rights under Code Section 409(e)(3), each Participant or beneficiary
is entitled to direct the trustee on the manner in which to vote the
shares of company stock allocated to his or her company stock
account. All shares of company stock allocated to accounts for which
the trustee did not receive timely voting instructions from
<PAGE>
6
Participants or beneficiaries and all shares held in the unallocated
company stock suspense account will be voted by the trustee in its
discretion and in accordance with its fiduciary duties under ERISA.
In all other respects, the Plan remains unchanged.
WILSON GREATBATCH LTD.
Date: March 27, 1999 By /s/ Larry T. DeAngelo
---------------- -----------------------------------
<PAGE>
WILSON GREATBATCH EQUITY PLUS ESOP PLAN
MASTER TRUST AGREEMENT
THIS AGREEMENT, made and entered into on the date of its execution, is
effective for all purposes as of March 11, 1998 by and between:
Wilson Greatbatch, Ltd. ("Employer")
and
Curt Cashmore, Larry T. DeAngelo, Scott Ferguson, Arthur Lalonde,
and Esther Takeuchi ("Trustee"),
and sha1l be construed in accordance with the laws of the State of New York.
WITNESSETH:
WHEREAS the Employer has established the Wilson Greatbatch Equity Plus
ESOP Plan-Money Purchase Plan and the Wilson Greatbatch Equity Plus-Stock Bonus
Plan ("the participating plans"); and
WHEREAS, the Employer desires to establish a Master Trust to allow for the
unmingling of trust fund assets for investment purposes;
NOW THEREFORE, the Employer and the Trustee do hereby agree to the
following provisions of this master trust agreement established for the purpose
of implementing said participating plans.
<PAGE>
ARTICLE I
DEFINITIONS
Section 1:01: General
The definitions set forth in the participating plans shall govern in this
master trust agreement.
The term plan administrator shall mean the person or persons appointed
under the provisions of the participating plans. If the same persons are not
appointed to this position for all participating plans, then for the purposes of
this master trust agreement the term plan administrator shall mean the person or
persons appointed under the particular participating plan in question.
Section 1.02: Trustee
The Trustee may be one or more individuals or an institution; the pronoun
"it" when referring to the Trustee shall mean he, she, they or it as necessary.
Where the Trustee is more than one individual, the individuals shall
determine, subject to the approval of the Named Fiduciary, how responsibilities
shall be allocated. The actions of the Trustee shall be determined by the vote
or other affirmative expression of a majority of the appointed individuals.
ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 2.01: Establishment of the Trust
The Employer hereby establishes with the Trustee a trust fund consisting
of such sums of money or other property, real or personal, as shall from time to
time be transferred to the Trustee. Such sums shall include any assets
transferred from the separate trust of a participating plan. All such money and
property, all investments and reinvestments made therewith and proceeds thereof
and all earnings and profits thereon, less any losses thereon and less the
payments which at the time of reference shall have been made by the Trustee, as
authorized herein, are referred to herein as the "fund" or "trust fund." The
fund shall be held by the Trustee in trust and dealt with in accordance with the
provisions of this agreement.
Even though several participating plans may be funded under this master
trust agreement, the share of the fund allocable to each participating plan
shall be a separate trust fund for the exclusive benefit of the participants in
such participating plan and their beneficiaries and shall not be liable for any
expenses, debts, expenditure, or liabilities that are not properly allocable or
chargeable to such participating plan pursuant to the terms of this agreement.
The Trustee hereby accepts this trust and agrees to hold all property
constituting the trust fund subject to the terms and conditions of this master
trust agreement and the participating plans.
The trust is intended to be a qualified trust under section 401(a) of the
Internal Revenue Code of 1986, as amended, ("Code") and exempt from taxation
pursuant to Code section 501(a).
2
<PAGE>
Section 2.02: Participation in the Fund
In addition to the plans listed in this agreement, any pension or profit
sharing plan of the Employer may be funded in whole or in part through this
master trust provided all of the following conditions have been met:
(a) such plan meets the requirements for qualification contained in
Code section 401;
(b) the Employer has adopted this master trust as a funding vehicle
under such plan;
(c) the Employer and the Trustee have consented to the Employer's
adoption of the master trust; and
(d) the Employer has appointed the same Named Fiduciary as it has
appointed for the current participating plans.
ARTICLE III
PROVISIONS RELATING TO THE TRUSTEE
Section 3.01: General Responsibilities
The Trustee accepts the trust hereby created in accordance with the
documents and instruments governing the participating plans, insofar as they are
consistent with law and upon the express terms and conditions of the
participating plans, including the following:
(a) The Trustee shall have exclusive authority and discretion to
manage, invest and control the trust fund, as provided in this agreement, and
shall have no other responsibilities other than those provided in this
agreement.
(b) The Trustee shall exercise its powers and shall discharge its
duties with respect to the participating plans and this agreement solely in the
interests of the participants and beneficiaries and for the exclusive purpose of
providing benefits to participants and their beneficiaries and for defraying
reasonable expenses of administering the participating plans. The said powers
and duties shall be discharged with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims. The duty to invest shall be
discharged by diversifying the investments of the fund so as to minimize the
risk of large losses, unless under the circumstances it is clearly prudent not
to do so.
(c) The Trustee shall maintain proper care and custody of all funds,
securities and other properties in the fund. The Trustee shall receive all
payments or other transfer of assets of the fund as shall be made from time to
time. However, the Trustee shall not be under any duty to determine the amount
of contributions to be paid by the Employer or to take any steps to collect such
amounts as may be due to it under each participating plan.
(d) Whenever in the administration of a participating plan a
certification is required to be given to the Trustee or the trustee shall deem
it necessary that a matter be proved prior to taking, permitting or omitting any
action hereunder, such certification shall be duly made and said matter may be
determined to be conclusively roved by an instrument delivered to the Trustee
signed by the Named Fiduciary, or, if
3
<PAGE>
the matter shall concern the authority of the plan administrator, signed as
provided in Section 5.01; but in its discretion, the Trustee may in lieu thereof
accept other evidence of the matter or may acquire such further evidence as is
reasonable. The Trustee shall be protected in acting in good faith upon any
written document reasonably believed by the Trustee to be genuine and to have
been signed by the proper party or parties.
(e) All moneys deposited with the Trustee under any provisions
hereof may be deposited by the Trustee in a trust account. The Trustee shall be
under no duty to invest or disburse such moneys except as provided in the
applicable participating plan and this agreement.
(f) The Trustee may consult with legal counsel (who may be counsel
for the Employer) with respect to the interpretation of the master trust
agreement or its duties hereunder or with respect to any legal proceeding or any
question of law and shall be fully protected with respect to any act taken or
omitted by it in good faith pursuant to the advice of such counsel. Expenses or
fees incurred by the Trustee in its consultation shall be paid or reimbursed
from the fund.
(g) The Trustee may make any payment required to be made hereunder
by mailing its check in the amount thereof by first class mail in a sealed
envelope addressed to the person to whom such payment is to be made according to
the certification of the plan administrator. The Trustee shall not be required
to make any investigation to determine the identity or mailing address of any
person entitled to benefits under a participating plan and shall be entitled to
withhold making payments or giving instructions to issuing companies pertaining
to the payment of benefits until the identity and mailing addresses of persons
entitled to benefits are certified to it by the plan administrator. The Trustee
shall not be responsible in any way respecting the purpose or propriety of such
payments except for the provisions of Section 3.03. In the event that any
dispute shall arise as to the identity or rights of persons entitled to benefits
hereunder, the Trustee may withhold payment of benefits until such dispute shall
have been determined by arbitration or by a court of competent jurisdiction or
shall have been settled by written stipulation by the parties concerned.
(h) The Trustee shall receive reasonable compensation for its
services from the Employer or the trust fund on a basis as shall be mutually
agreed upon by the Employer and the Trustee. All reasonable unreimbursed
expenses of the fund, taxes and other items not payable out of the Trustee's
compensation shall be paid from the fund. However, if the Trustee is an
individual who is compensated as a full-time employee of the Employer, he shall
receive no compensation for serving as a Trustee and all reasonable expenses
incurred as Trustee shall be paid from the fund.
(i) The Trustee shall pay from the fund all taxes of any kind or
nature which are imposed either as a result of the creation or operation of the
fund or because of any payment made under this agreement.
(j) The Trustee shall keep full records of the administration of the
trust which the plan administrator shall have the right to examine at any time.
To the extent that the responsibilities set forth in Section 3.01(j)(1) are
accounting and bookkeeping responsibilities, the Named Fiduciary may delegate
such responsibilities to the Plan Administrator.
(1) A separate plan account shall be established and
maintained for each participating plan into which shall be paid the
contributions made by the Employer for such plan, which contributions, together
with any income, gains or profits, less distributions, expenses and losses,
shall comprise a separate trust fund for such participating plan. The
establishment of a separate plan account hereunder shall be for accounting and
bookkeeping purposes only and shall not require a segregation of any
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part of the assets of the trust fund, and no participating plan, or a
participant or former participant of a participating plan, shall acquire any
right to or interest in any specific asset of the fund; provided, however, that
any insurance policy or annuity contract acquired for or under a participating
plan shall be segregated by the Trustee and separately maintained. The Trustee
shall hold, invest, reinvest, manage, administer and distribute the assets of
each separate plan account, as hereinafter set forth, for the exclusive benefit
of the employees participating in such participating plan and their
beneficiaries. If an Employer maintains more than one participating plan, the
Employer shall advise the Trustee and the Plan Administrator as to which
separate plan account contributions made by it are to be credited.
As of the end of each plan year or more frequently as
determined by the Trustee or directed by the Employer, any increase or decrease
in the net worth of the fund attributable to investment earnings, gains, losses,
expenses and unrealized appreciation or depreciation, as determined by the
Trustee, shall be credited to or deducted from each separate plan account as
follows:
(A) Any expenses or portions thereof which are
separately identifiable as attributable to a separate plan account, rather than
to the fund as a whole (such as actuarial fees), shall be charged against such
account. To the extent that any expenses or portions thereof are not separately
identifiable as attributable to a separate plan account, such expenses shall be
allocated among all separate plan accounts in proportion to the value that each
such account bears to the total of all such accounts.
(B) Investment earnings, gains, losses, and unrealized
appreciation or depreciation shall be allocated between all separate plan
accounts in proportion to the value that each such account bears to the total of
all such accounts.
(2) Within sixty (60) days following the close of each plan
year and within sixty (60) days after its resignation or removal, the Trustee
shall furnish the plan administrator with a statement of the entire fund. This
statement shall contain such information as is required to comply with the
reporting and disclosure requirements of the Employee Retirement Income Security
Act of 1974, as amended, ("ERISA"). The report shall show all purchases, sales,
receipts, disbursements and other transactions effected by the Trustee during
the year or period for which the report is filed, and shall contain an exact
description, the cost as shown on the Trustee's books, and where readily
ascertainable, the market value as of the end of such period of every item held
in the trust and the amount and nature of every obligation owed by the trust.
For purposes of determining the market value of securities held by the Trustee,
such securities shall be valued as of the close of business on the last day of
the reporting period.
The approval by the plan administrator of the final statement
of account upon the Trustee's resignation or removal or the participating plans'
termination shall be binding as to all matters embodied in the statement, on all
parties to the trust and on all participants to the same extent as if the
account of the Trustee had been settled by a judgment or decree in an action for
judicial settlement of its account in a court of competent jurisdiction in which
the Trustee, the Employer, the plan administrator and all persons having or
claiming any interest in the trust fund were parties. If the plan administrator
disapproves the Trustee's statement and the matter cannot be satisfactorily
adjusted by the parties, the Trustee shall have the right to apply to a court of
competent jurisdiction for judicial settlement of its account.
(k) The Trustee is authorized to sue upon, defend, compromise or
otherwise settle any obligation or liability due to or from it as Trustee
hereunder, including any aim that may be asserted for taxes under present or
future laws or to contest the same
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by appropriate legal proceedings; but it shall not be required to institute or
continue litigation unless it is in possession of money sufficient for that
purpose or unless it has been indemnified by the Employer against counsel fees
and all other expenses and liabilities to which it may, in its judgment, be
subject by such action, provided further that the Trustee shall be entitled out
of recoveries of any litigation to reimbursement for its expenses in connection
therewith. Further, the Trustee is authorized with regard to an obligation due
the fund to reduce the rate of interest thereon, extend or otherwise modify it,
or to foreclose upon default or otherwise enforce any such obligation; to bid in
property on foreclosure or to take a deed in lieu of foreclosure with or without
paying consideration therefor and in connection therewith to release the
obligation on the bond secured by the mortgage.
(l) A third party dealing with the Trustee shall not be required to
make any inquiry whether the plan administrator has instructed the Trustee or
the Trustee is otherwise authorized to take or omit any action.
(m) A participating plan fiduciary shall be liable for a breach of
fiduciary responsibility of another fiduciary of the participating plan or this
trust as provided by law, which may include the following circumstances:
(1) If it participates knowingly in, or knowingly undertakes
to conceal an act or omission of such other fiduciary, knowing such act or
omission is a breach;
(2) If, by its failure to comply with the prudent man standard
(established in paragraph (b) of this Master Trust Agreement or the
administrative provisions of the participating plans) in the administration of
its specific responsibilities which give rise to its status as a fiduciary, it
has enabled such other fiduciary to commit a breach; or
(3) If it has knowledge of a breach by some other fiduciary,
unless it makes reasonable efforts under the circumstances to remedy the breach.
(n) Any liabilities under a participating plan shall be satisfied
only out of such plans separate account. A liability shall not be satisfied by
any account of the trust fund if it is due to or arising from fraud, dishonesty,
misconduct of the Trustee or arising from acts which are in violation of the
Trustee's duties as set forth in paragraph (b) and Section 303 or which are
described in paragraph (m).
(o) The Trustee is hereby authorized to execute all necessary
receipts and releases to any insurance companies concerned, and it shall be
under the duty, upon being advised by the plan administrator that the proceeds
of any life insurance, retirement income, endowment or annuity contact have
become payable, to take whatever steps may be indicated, with reasonable
diligence, in collecting such sums as may appear to be due.
The Trustee shall have no responsibility for the form, genuineness,
validity, sufficiency or effect of any life insurance, retirement income,
endowment or annuity contract at any time included in the trust or for any act
of the Employer, the plan administrator, a participant or any other person which
may render any such contract void, or for the failure of any insurer to pay the
proceeds of any such contract as and when the same shall become payable or for
any delay occasioned by reason of any provision contained in any such contract,
or for the refusal of any insurer to take any action requested by the Trustee,
or for any reason whatsoever (except for the Trustee's own violation of the
prudent man rule in paragraph (b)) any contract shall lapse or otherwise become
uncollectible.
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(p) The Trustee may enter into any transaction authorized by this
agreement with trustees or legal representatives of any other trust or estate,
even though any such trustee or legal representative is also Trustee hereunder.
(q) If the Trustee shall determine that the trust assets consist in
whole or in part of property not traded freely on a recognized market, or that
information necessary to ascertain the fair market value thereof is not readily
available to the Trustee, the Trustee shall request the Named Fiduciary to
instruct the Trustee as to the value of such property, for all purposes under
the participating plans and this agreement; and the Named Fiduciary shall comply
with such request. The value placed upon such property by the Named Fiduciary's
instructions to the Trustee shall be conclusive and binding upon the Trustee
subject to the Trustee's responsibility not to commit a prohibited transaction.
If the Named Fiduciary shall fail or refuse to instruct the Trustee as to the
value of such property within a reasonable time after receipt of the Trustee's
request to do so, the Trustee may engage a competent appraiser to fix the fair
market value of such property for all purposes hereunder. The determination of
any such appraiser as to the fair market value of such property shall be the
value reported hereunder. The reasonable fees and expenses incurred for any such
appraisal shall be deemed an expense of the Trustee and paid as provided herein.
Section 3.02: Resignation or Removal or Trustees
(a) The Trustee may resign at any time upon delivering to the Named
Fiduciary of the participating plans a written notice of its resignation to take
effect not less than thirty (30) days after the delivery thereof, unless such
notice shall be waived.
(b) Any Trustee appointed hereunder may be removed by the delivering
to the Trustee a written notice from the Named Fiduciary removing the Trustee,
to take effect at a date specified therein, which shall not be less than thirty
(30) days after delivery of such notice to such Trustee, unless such notice
shall be waived.
(c) In case of resignation or removal of the Trustee, the Trustee
shall have the right to a settlement of its accounts as described in Section
3.01(j). Upon such settlement, the Trustee shall transfer to the successor
Trustee the trust fund as it may then be constituted and copies of such of its
records as relate to the trust and shall execute upon request all documents
necessary for transferring the assets of the trust and thereupon the Trustee
shall be discharged from further accountability for all matters embodied in such
settlement.
(d) The Employer, upon its receipt of notice from the Named
Fiduciary of the resignation or removal of a Trustee, shall appoint forthwith a
successor Trustee. A successor Trustee so appointed may qualify as such by
executing, acknowledging and delivering to the Employer and to the resigned or
removed Trustee an instrument accepting such appointment, and upon delivery of
the fund, such successor Trustee without further act shall be vested with all of
the duties, rights, and powers of its predecessor Trustee with the same effect
as if it had been originally named as Trustee herein.
Section 3.03: Prohibit-Transactions
Notwithstanding any other provision of this agreement, the Trustee is
expressly prohibited from engaging in the following actions:
(a) diversion of any part of the fund to any purpose other than the
exclusive benefit of participants and beneficiaries under the participating
plans.
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(b) engaging in any transaction which results in a diversion of any
part or the fund to the Employer or to any other person or entity with whom or
which such a transaction is prohibited by the Code or by ERISA, including with
regard to such persons or entities: lending any part of the fund without
adequate security and a reasonable rate of interest; paying any compensation in
excess of a reasonable allowance for services actually rendered; making any
purchase of securities or other property at more than fair market value; selling
any securities or other property for less than fair market value; or making any
part of the fund available on preferential basis.
ARTICLE IV
Section 4.01: Investment in Participating Plan Assets
The Trustee shall manage the fund in the manner and for the uses and
purposes herein provided. The Trustee is authorized to manage the fund in
accordance with the funding policy; provided, however, that if an investment
manager has been appointed or if the Named Fiduciary provides specific
investment directions, the Trustee shall be subject to the directions of said
investment manager or Named Fiduciary. To the extent that a participant has
given specific investment directions as allowed by the participating plans, the
Trustee shall be subject to such directions as transmitted to it by the plan
administrator. In addition to the powers given by law, the Trustee is
authorized, within its discretion and subject to the above conditions:
(a) To invest and reinvest the fund or any part thereof without
distinction between principal and income in any common or preferred stocks,
bonds, mortgage notes, put and call options (including the granting of options
to purchase and sell securities) or other securities or any other form of
property, real or personal on margin or otherwise (including short sales), as
authorized by law for the investment of trust funds, including common or pooled
investment funds established and maintained by the Trustee or an affiliate of
the Trustee and stock in any registered investment company which may be advised
by the Trustee or any affiliate and from which the Trustee may receive
compensation as advisor. Whenever the fund acquires units in a common/collective
trust available only to trust funds qualified under Code section 401(a), the
provisions of the particular common collective trust indenture, as amended from
time to time, with respect to investment duties, responsibilities and powers of
its trustee shall be deemed to be incorporated herein and be a part hereof to
the extent required by law. The trustee of the common/collective trust shall be
governed solely by such trust indenture. For purposes of valuation, the value of
the interest maintained by the fund in such common/collective trust shall be the
fair market value of the units held, determined in accordance with generally
recognized valuation procedures. The Employer expressly understands and agrees
that any such common/collective trust may provide for the lending of its
securities by its trustee and that the common/collective trust's trustee will
receive compensation from such trust for the lending thereof which is separate
from any compensation of the Trustee hereunder or any compensation of the
common/collective trust's trustee for the management of such trust. Further, the
Trustee shall diversify the investments of the fund so that the risk of loss
will be minimized.
(b) To retain in cash or other property unproductive of income so
much of the fund as may be deemed advisable, or to invest in the savings
department of a banking institution, including a bank acting as Trustee, or a
bank affiliated with the Trustee, or in a loan association or building and loan
association. Such investments may include savings accounts, time deposits or
certificates of deposit with maturities of less or more than one year; however,
such investments shall be federally insured and shall bear a prevailing rate of
interest.
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(c) To sell property held in the fund at either public or private
sale for cash or on credit at such times as it may deem appropriate; to exchange
such property; to grant options for the purchase or exchange thereof without
need for the purchasers to see to the application of the purchase money.
(d) To oppose or consent to and participate in any plan of
reorganization, recapitalization, consolidation, sale, merger, extension or
other similar plan affecting property held in the fund; to consent to any
contract, lease, mortgage, purchase, sale or other action by any corporation
pursuant to any such plan; to accept and retain property issued under such plan.
(e) To deposit property in the fund with any protective,
reorganization or similar committee; to delegate discretionary power thereto and
to pay the reasonable share in such committee's expenses and compensation and
any assessments levied with respect to any property so deposited.
(f) To exercise all conversion and subscription rights pertaining to
property held in the fund.
(g) To vote in person or by proxy the stocks, securities, or other
investments which it holds as Trustee; and to execute and deliver proxies,
powers of attorney, and other agreements which it deems advisable; to exchange
the securities of any corporation or issuing authority for other securities upon
such terms and conditions as it deems advisable; to consent to or oppose any
corporate action; to pay all assessments and subscriptions as it deems
advisable; to exercise options and, in general, to exercise in respect of all
stocks, securities, or other investments which it holds as Trustee all rights,
powers and privileges as might be exercised by an individual in his own right.
(h) To cause securities and other properties to be registered and
held in its name as Trustee or in the name of a nominee, provided that the
records of the Trustee show that all such investments are part of the fund.
(1) To borrow money (subject to the prohibitions of Section 3.03)
for the purposes of the participating plans and, for sums so borrowed, to issue
a promissory note or bond and mortgage and to secure payment thereof by the
pledging of securities held in the fund or mortgaging real property contained
therein, and to pay interest at a reasonable rate upon sums so borrowed;
however, no insurance contract shall be pledged except to secure a loan to pay
premiums thereon. Borrowing on insurance contracts to pay premiums shall be on a
pro rata basis.
(j) To invest the fund or any part thereof with an insurance company
under a deposit administration contract, an investment-only contract, or
contracts of like character offered by such insurance company; to apply for,
purchase, hold or transfer, pursuant to the participating plans, and in
accordance with written instructions from the plan administrator, any life
insurance, retirement income, endowment or annuity contract; to exercise any of
the rights under any such contract, in any manner for the purpose of benefiting
the participating plans.
(k) To invest in life insurance contracts on the lives of key
employees of the Employer; such contracts shall be owned by and shall name the
Trustee as beneficiary for the benefit of the trust fund as a whole and shall
not be allocated to the account of any particular participant.
(l) To make participant loans, if permitted, in accordance with the
provisions of each participating plan.
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(m) to receive, hold, manage, improve, repair, lease, pledge,
mortgage, or otherwise dispose of all or any part of the fund upon such terms,
prices and conditions as it deems advisable; to execute such instruments, deeds,
leases, mortgages, contracts, agreements, assignments, transfers, bills of sale,
and other documents of any kind, as it deems advisable; to pay out of trust
assets normal brokerage charges, commissions, taxes and other costs incident to
the purchase and sale of securities which are included in the cost of securities
purchased, or charges against the proceeds in the case of sales.
(n) To employ agents with or without discretionary powers (including
investment counsel, attorneys, auditors, depositaries and proxies) for advice
and to manage the investment of the trust property. All such parties shall have
the right to rely upon and execute the written instructions of the Trustee and
shall not be obliged to inquire into the propriety of the acts or directions of
the Trustee.
(o) Notwithstanding other provisions of this Section, under no
circumstances may the Trustee invest in any Employer securities which are not
qualifying Employer securities (as defined in ERISA section 407(d)(1)) nor shall
the Trustee invest in any Employer real property which is not qualifying
Employer real property (as defined in ERISA section 407(d)(2)). Additionally,
the Trustee may not acquire any qualifying Employer security or qualifying
Employer real property if immediately after such acquisition the aggregate fair
market value of Employer securities and Employer real property held by the trust
fund exceeds ten percent of the fair market value of all trust assets, unless
the plan is an employee stock ownership plan or an individual account plan.
(p) Generally, to do such acts, execute all such instruments, act on
such proceedings and to exercise all rights and privileges with relation to
property constituting the fund as if it were the absolute owner thereof.
Section 4.02:
Upon instructions of the plan administrator, the Trustee shall purchase
from an insurance company single premium annuity contracts of such amount as the
plan administrator directs for the purpose of providing the benefits to which
the participants individually or severally shall be entitled under the
particular participating plan. Any such annuity contracts shall be
nontransferable.
Section 4.03:
All title in every contract purchased and held hereunder shall be vested
in the Trustee.
Section 4.04: Appointment of Investment Manager
The Named Fiduciary may at any time and from time to time appoint, and
revoke the appointment of, an investment manager ("Investment Manager"), who
shall be registered as an investment advisor under the Investment Advisers Act
of 1940, shall be exempt from such registration as a trust company or as a
commercial bank authorized to conduct trust business, or shall be an insurance
company qualified to perform investment services under the laws of more than one
state of the United States and who shall acknowledge in writing to the Employer
and the Trustee that he is a fiduciary with respect to the Master Trust and each
participating plan and shall provide to them a certificate evidencing such
qualification. The Investment Manager shall not be the agent of the Trustee. The
Named Fiduciary shall notify the Trustee in writing of any such appointment (or
revocation thereof), and the Trustee shall be protected in relying upon such
appointment continuing in effect until it receives written notice from the Named
Fiduciary of its revocation. So long as, and to the extent that, any such
Investment Manager is appointed, the following provisions shall apply:
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(a) The Trustee shall invest, reinvest and retain the trust fund in
accordance with the instructions received from such Investment Manager;
(b) With respect to assets in the trust fund, the Trustee shall
follow any instructions received by it from such Investment Manager as to the
exercise by the Trustee of the powers conferred upon it under Section 4.01(a),
(c), (d), (f), (g), (j) and (m) hereof; and
(c) That part of the trust fund not assigned to an Investment
Manager shall be invested, reinvested and retained by the Trustee in accordance
with its own discretion.
(d) All instructions from the Investment Manager to the Trustee
shall be in writing (or by telephone or telegraph confirmed in writing) and
shall be complete in all reasonable and necessary details. The Trustee shall
have no duty to question such instructions nor shall the Trustee incur any
liability for its actions in following such instructions or for its omissions
when no instructions are received by it.
(e) The Employer shall indemnify and hold the Trustee or its nominee
harmless against any and all claims, actions, demands, liabilities, losses,
damages or expenses of whatsoever kind and nature, which either arise from the
failure of the Trustee to pay for property purchased by the Investment Manager
for the trust fund by reason of the insufficiency of funds in the trust fund, or
from any actions taken by the Trustee in following investment direction of the
Investment Manager or inaction by the Trustee in the absence of investment
direction by an Investment Manager, or from the trading activities conducted by
the Investment Manager on behalf of the trust fund.
(f) If the Named Fiduciary so directs, the Investment Manager may
take and keep custody and possession of all or part of the assets of the fund,
and may perform the other functions of Trustee as set forth in this agreement.
The accounts, books and records of the Trustee shall reflect the segregation of
said portions of the fund in separate investment management accounts. The
Investment Manager's records shall at all times reflect fund assets in its
custody as assets of this trust. The Trustee shall have no further
responsibility for either the safekeeping or management of such assets. Trustee
shall continue to perform its record-keeping function under Section 3.01(j) as
to such assets, but in doing so may rely on information furnished by the
Investment Manager. Upon notification by the Named Fiduciary and the receipt of
physical custody of assets held by the Investment Manager, the Trustee shall
assume management responsibility for such assets in accordance with Articles III
and IV.
ARTICLE V
PROVISIONS RELATING TO THE PLAN ADMINISTRATOR AND EMPLOYER
Section 5.01: Plan Administrator
Whenever a new plan administrator or a new member of an administrative
committee is appointed, the Named Fiduciary shall certify to the Trustee in
writing the name or named of the person or persons so appointed and the name of
the participating plan to which the person is so appointed, and the Trustee
shall be fully warranted in assuming that such person or persons shall continue
in office until advised differently in the same manner. Whenever the Trustee
must or may act upon the direction or approval of an administrative committee,
the Trustee may act upon written communication signed by its Chairman or
Secretary or any agent appointed in writing by all members of the committee to
act on their behalf, and the authority of any such gent shall be deemed to
continue until revoked in writing.
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Section 5.02: Duties of Employer
It shall be the duty of the Employer, subject to the provisions of each
participating plan, to pay over to the Trustee from time to time its
contributions to the trust fund as provided in each such participating plan and
to keep accurate books and records with respect to the employees and their
compensation.
Whenever a new Named Fiduciary is appointed, the Employer shall certify to
the Trustee in writing the name or names of the person or persons so appointed,
and the Trustee shall be fully warranted in assuming that such person or persons
shall continue in office until advised differently in the same manner.
The Employer shall deliver to the Trustee a copy of each participating
plan and any amendments thereto as soon as administratively feasible.
The Employer shall indemnify the Trustee (if such Trustee is an individual
or individuals) by paying the costs of defending a suit, including any
settlement or judgment connected therewith, for any act or omission in
accordance with instructions received from the Employer or plan administrator
and in connection with which no gross negligence or lack of good faith can be
shown. The Employer may agree to further indemnify the Trustee as to certain or
all additional liability in connection with its duties as set forth herein,
instead of permitting the trust fund to satisfy the liability as provided in
Section 8.O1(n).
ARTICLE VI
AMENDMENT OR TERMINATION OF TRUST
Section 6.01:
The Employer may amend or terminate this master trust agreement at any
time; provided that no amendment affecting the Trustee may be made without its
consent, nor shall any amendment divest any benefit then vested in a participant
or his beneficiary under any participating plan. The Employer shall deliver to
the Trustee notice of any amendment or termination of a participating plan or
trust agreement.
Section 6.02:
If a participating plan is terminated (including a partial termination),
if there is a complete discontinuance of contributions to a participating plan,
or if this master trust agreement is revoked or terminated; the Trustee shall
reserve from such plan's separate account such sums as the Trustee shall deem
necessary to settle its accounts and to discharge any obligation of the trust
fund for which the Trustee may be liable. Thereafter, the Trustee shall apply
and distribute the plan's separate account portion of the trust fund In
accordance with the provisions of the participating plan and any written
instructions of the plan administrator pursuant thereto.
Section 6.03:
The Trustee shall have a right to have its applicable accounts settled as
provided in Section 3.01(j) of this agreement. When the trust fund shall have
been so applied or distributed and the applicable accounts of the Trustee shall
have been so settled, the Trustee shall be released and discharged from all
further accountability or liability respecting the applicable accounts, or any
part thereof so applied or distributed.
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Section 6.04:
The trust shall continue until it has been entirely transferred, paid over
or distributed pursuant to the directions of the plan administrator. If,
pursuant to the provisions of a participating plan, the Employer's liability is
assumed by any other business organization; then such other business
organization shall be deemed to succeed to the position of Employer or to be an
additional Employer under this trust agreement, as appropriate.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01: No Reversion to Employer
The participating plans and this master trust agreement are created for
the exclusive benefit of the employees of the Employer and shall be interpreted
in a manner consistent with being a qualified plan as defined in Code Section
401(a) and with ERISA. Subject to Article VI and this Section 7.01, the trust is
irrevocable. The corpus and income of the trust may not be diverted to or used
for other than the exclusive benefit of the participants or their beneficiaries
(except for defraying reasonable expenses of administering the participating
plans).
Notwithstanding the above, a contribution paid by the Employer to the
trust may be repaid to the Employer under the following circumstances:
(a) Any contributions made by the Employer are subject to the
conditions that its contribution is not due to a mistake of fact and that the
Internal Revenue service will not disallow the deduction for its contribution.
The Trustee, upon written request from the Employer, shall return to the
Employer the amount of the Employers contribution made by mistake of fact or
disallowed as a deduction under Code section 404. The Trustee shall not return
any portion of the Employer's contribution under the provisions of this
paragraph more than one year after: (1) The date on which the Employer made the
contribution by mistake of fact; or (2) The time of disallowance of the
contribution as a deduction, and then, only to the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution returnable
under this paragraph for any earnings attributable to the contribution, but the
Trustee will decrease the Employer contribution returnable for any losses
attributable to it. The Trustee may require the Employer to furnish whatever
evidence it deems necessary to confirm that the amount the Employer has
requested be returned is properly returnable under ERISA.
(b) In the event the deduction of a contribution made by the
Employer is disallowed under Code section 404, such contribution (to the extent
disallowed) must be returned to the Employer within one year of the disallowance
of the deduction.
(c) If the Commissioner of Internal Revenue determines that a
participating plan is not initially qualified under the Code, all contribution
made incident to that initial qualification by the Employer must be returned to
the Employer within one year after the date the initial qualification is denied
after adjustment for any earnings, losses or necessary expenditures, but only if
the application for the qualification is made by the time prescribed by law for
filing the employer's return for the taxable year in which the plan is adopted,
or such later date as the Secretary of the Treasury may prescribe.
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Section 7.02: Binding Agreement
This agreement shall be binding on the heirs, executors, administrators,
successors and assigns as such terms may be applicable to any or all parties
hereto, and on any participants, present or future.
Section 7.03: Trust Fund Exclusive Source
All payments of benefits under a participating plan shall be made
exclusively from its separate account by means of the assets of the trust fund
as they may be constituted at the time or times of payment, and no persons shall
be entitled to look to any other source for such payments.
Section 7.04: Separability Provision
If any provision of this agreement shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provision hereof;
and this agreement shall be construed and enforced as if such provision had not
been included.
Section 7.05: Construction
This agreement shall be construed in accordance with the laws of the state
named in the preamble, except to the extent preempted by Federal law.
Section 7.06: Copies of Agreement
This agreement may be executed in any number of counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument which may be sufficiently evidenced by any one
counterpart.
Section 7.07: Other Employer
If any other employer adopts a participating plan, it shall be deemed
thereby to have assented to the provisions of this agreement and to have become
a party hereto as fully and completely as if it had been named herein as an
Employer and had executed same.
Section 7.08: Successor Employer
If a corporation with which the Employer is merged or consolidated, or a
corporation which acquires substantially all of the assets of the Employer,
elects to continue the participating plans, such surviving or acquiring
corporation may notify the Trustee, in writing; and thereafter every reference
to Employer herein shall be treated as a reference to such surviving or
acquiring corporation. If the Employer is liquidated or merged or consolidated
with another company and the participating plans are not continued, then the
plan administrator shall succeed to the functions of Employer under the
participating plans and this agreement.
Section 7.09: Enforcement
The Employer or plan administrator shall have authority to enforce this
agreement on behalf of any person claiming any interest in the fund or under a
participating plan. To protect the fund from expenses which might otherwise be
incurred, it is agreed and imposed as a condition for securing any interest in
the fund that no other person may institute or maintain any action or proceeding
against Trustee or the fund in the absence of written authority from the
Employer or plan administrator or the judgment of a court of competent
jurisdiction.
14
<PAGE>
Section 7.10. Alienation
No distribution or payment under this agreement to any participant or his
beneficiary under the participating plans shall be subject in any manner to
participation, sale, transfer, assignment or encumbrance, whether voluntary or
involuntary; and no attempt to so anticipate, sell, transfer, assign or encumber
the same shall be valid or recognized by the Trustee, nor shall any such
distribution or payment be in any way liab1e for or subject to the debts,
contracts, liabilities or torts of any person entitled to such distribution or
payment, except to such extent as may be required by law or expressly provided
in the participating plans.
Section 7.11: ERISA
Any provision of this agreement shall be interpreted as being consistent
with the Employee Retirement Income Security Act of 1974, as amended. Where such
interpretation is not possible, such provision shall be inapplicable, void and
severable, but only to the extent that it is inconsistent with such Act and the
regulations and rulings thereunder.
15
<PAGE>
IN WITNESS WHEREOF, the Employer and the Trustee have caused this
agreement be executed by their duly authorized representatives on this 1st day
of March, 1998.
EMPLOYER:
By: /s/Larry T. DeAngelo
-----------------------------------
Title: V.P. Administration Secretary
WILSON GREATBATCH, LTD.
By: /s/Curt Cashmore
-----------------------------------
TRUSTEE: CURT CASHMORE
By: /s/Larry T. DeAngelo
-----------------------------------
TRUSTEE: LARRY T. DEANGELO
By: /s/Scott Ferguson
-----------------------------------
TRUSTEE: SCOTT FERGUSON
By: /s/Arthur Lalonde
-----------------------------------
TRUSTEE: ARTHUR LALONDE
By: /s/Esther Takeuchi
-----------------------------------
TRUSTEE: ESTHER TAKEUCHI
16
<PAGE>
WILSON GREATBATCH, LTD.
BOARD MINUTES
The Board of Directors of Wilson Greatbatch, Ltd. hereby adopts the following
with respect to the Wilson Greatbatch Equity Plus ESOP Plan:
RESOLVED that the proposed plan document for the Wilson Greatbatch Equity Plus
ESOP Plan-Money Purchase Plan and for the Wilson Greatbatch Equity Plus ESOP
Plan-Stock Bonus Plan be adopted effective January 1, 1998. Curt Cashmore is
hereby authorized and directed to execute the plans and to execute such
amendments as may be required by the Internal Revenue Service to obtain a
favorable determination letter regarding the qualified status of the plans.
BE IT FURTHER RESOLVED that the following persons are hereby appointed the
plans' named fiduciary to have responsibility for the operation and
administration of the plans and for management and control of plan assets:
Curt Cashmore
Larry T. DeAngelo
Scott Ferguson
Arthur Lalonde
Esther Takeuchi
BE IT FURTHER RESOLVED that the named fiduciary act as plan administrator at any
time that there is no appointed plan administrator to be responsible for the
operation and administration of the plans and that the named fiduciary appoint
as plan administrator at this time the following persons:
Curt Cashmore
Larry T. DeAngelo
Scott Ferguson
Arthur Lalonde
Esther Takeuchi
BE IT FURTHER RESOLVED that Curt Cashmore, Larry T. DeAngelo, Scott Ferguson,
Arthur Lalonde, and Esther Takeuchi are hereby appointed as the Trustee to have
responsibility for the management and control of plan assets and that the
president of the corporation is hereby authorized and directed to execute the
Trust Agreement (and to execute the amendment attached thereto and made
effective as of the effective date of the Trust Agreement).
I do hereby certify the foregoing to be a true and correct excerpt from the
minutes of the Board of Directors meeting held on February 10, 1998 (Meeting
Date).
December 31, 1998 Larry T. DeAngelo
----------------- -------------------
Date Corporate Secretary
<PAGE>
FIRST AMENDMENT
to
WILSON GREATBATCH LTD. EQUITY PLUS PLAN -
MASTER TRUST AGREEMENT
Under Article VI of the Wilson Greatbatch Ltd. Equity Plus Plan - Master
Trust Agreement (the "Agreement"), Wilson Greatbatch Ltd. (the "Employer") and
the Trustee have the right to amend the Agreement at any time. Therefore, the
Employer and the Trustee hereby amend the Plan in the following respect:
1. Effective January 1, 1999, the first sentence of Section 3.01(g) is
hereby deleted in its entirety, and is replaced by the following:
The Trustee may make any payment or distribution directed by
the plan administrator to be made from the trust by mailing
a check for the specified amount, or by delivering the
specified property, to the person to whom, or on whose
behalf, the payment or distribution is to be made.
In all other respects, the Agreement will remain unchanged.
WILSON GREATBATCH LTD.
Date: March 27, 1999 By /s/ Larry T. DeAngelo
-------------- ---------------------------------
TRUSTEE:
Date: March 17, 1999 /s/ Curt Cashmore
-------------- ---------------------------------
Curt Cashmore
Date: March 27, 1999 /s/ Larry T. DeAngelo
-------------- ---------------------------------
Larry T. DeAngelo
Date: March 16, 1999 /s/ Barbara Davis
-------------- ---------------------------------
Barbara Davis
Date: March 24, 1999 /s/ Arthur Lalonde
-------------- ---------------------------------
Arthur Lalonde
Date: March 17, 1999 /s/ Esther Takeuchi
-------------- ---------------------------------
Esther Takeuchi
<PAGE>
Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made by and between WILSON GREATBATCH LTD.,
a New York corporation, with an office at 10,000 Wehrle Drive, Clarence, New
York 14031 (the "Corporation") and EDWARD F. VOBORIL, residing at 33 Four Winds
Way, Snyder, New York 14226 (the "Executive").
INTRODUCTORY STATEMENT. The Executive has previously served as
President and Chief Executive Officer of the Corporation under an employment
agreement dated January 1, 1992 and a written extension thereof dated January
25, 1997. After all payments are made under tacit agreement and extension, that
agreement and extension are cancelled and superseded in their entirety by this
Agreement, and this Agreement satisfies the condition of Section 7.5(f) of the
Stock Purchase Agreement between WGL Holdings, Inc. and the Corporation (the
"Stock Purchase Agreement"). The Corporation desires to secure the future
services of the Executive as President, Chief Executive Officer, and Chairman of
the Board of the Corporation, and the Executive desires to accept such
employment upon the terms and conditions contained in this Agreement. Therefore,
in consideration of the mutual covenants and agreements contained in this
Agreement, the parties agree as follows:
1. TERM OF EMPLOYMENT.
------------------
1.1 INITIAL TERM. Subject to the terms and conditions, set
forth in this Agreement, the Corporation hereby agrees to employ the Executive
for a period beginning on the Effective Date of this Agreement and ending on
June 30, 2000, or until earlier terminated as provided herein.
1.2 EFFECTIVE DATE. Fur purposes of this Agreement, the term
"Effective Date" shall mean the Closing Date (as defined in the Stock Purchase
Agreement). It is the intention of the parties that this Agreement be executed
prior to the Closing Date (as defined, in the Stock Purchase Agreement), and be
held in escrow and become effective upon
<PAGE>
-2-
consummation of the transaction described in the Stock Purchase Agreement (the
"Acquisition"), and the Executive's acquisition of 285,000 shares of common
stock of WGL Holdings, Inc. for an aggregate purchase price of $285,000
simultaneous with such consummation. The parties agree that the Corporation
shall implement an equity plan for benefit of the Executive and other members of
the Corporation's management on the terms outlined in Exhibit A, which shall be
attached hereto and made a part hereof.
1.3 EXTENSIONS. The Agreement shall be automatically extended
for additional one-year periods beyond the existing term of the Agreement
(subject to written modifications acceptable to both parties), unless either the
Corporation or the Executive gives timely notice to the other party that the
term of the Agreement shall not be so extended. Notice under this Section,
whether given by the Corporation or the Executive, shall be given in writing and
must be delivered not later than twelve (12) months prior to the date (including
extensions) the Agreement would otherwise terminate.
2. EMPLOYMENT; DUTIES.
------------------
Subject to the formal election by the Board of Directors
in the exercise of its judgment, the Corporation does hereby employ the
Executive, and the Executive does hereby accept employment by the Corporation,
as President, Chief Executive Officer, and Chairman of the Board of the
Corporation. As an executive officer of the Corporation, the Executive shall
perform his duties and discharge his responsibilities in accordance with the
by-laws of the Corporation and as the Board of Directors of the Corporation
shall from time to time reasonably direct recognizing the nature and scope of
the Executive's employment. Subject to yearly election by the Board of
Directors, it is contemplated that the Executive will continue to be elected to
the position of President, Chief Executive Officer, and Chairman of the Board of
the Corporation during the term of this Agreement.
<PAGE>
-3-
The Executive agrees to perform his duties and discharge his
responsibilities in a faithful manner and to the best of his ability. The
Executive agrees to devote his full business time and attention to the
supervision and conduct of the business and affairs of the Corporation and to
faithfully and to the best of his ability promote the interests of the
Corporation. The Executive further agrees that he will engage in no outside
business concerns or activities, and shall not accept other gainful employment,
without the Corporation's written consent. The Corporation hereby acknowledges
and consents to the Executive continuing as a Member of the Board of Directors
of Analogic, Inc. and a Member of the Board of Directors and other membership
related activities of HIMA and HCIA.
3. COMPENSATION AND OTHER BENEFITS.
-------------------------------
3.1 BASE SALARY. So long as the Executive is employed by the
Corporation pursuant to this Agreement, the Corporation agrees that the
Executive shall receive a base salary earned and payable in bi-weekly
installments. As of the Effective Date of this Agreement, the base salary is
$285,000 per year.
The Compensation Committee of the Board of Directors (the
"Compensation Committee"), with the concurrence of the Board of Directors, shall
in good faith review the performance and salary of the Executive on an annual
basis, and shall consider appropriate increases in such salary based on the
successful achievement of agreed upon operating objectives. Such review shall be
made as soon as practicable after the audited financial statements of the
Corporation for the past year are available, and any salary increase authorized
by the Compensation Committee shall be effective at the time specified by the
Committee.
<PAGE>
-4-
Notwithstanding the foregoing, for years after 1997, the
Executive's base salary may, at the discretion of the Compensation Committee of
the Board of Directors, be increased annually by an amount that is at least
equal to the cost of living increase as determined by the Compensation
Committee.
3.2 ANNUAL BONUS. For each year, including 1997, the Executive
shall be entitled to a bonus targeted at 75% of the base salary paid to the
Executive under this Agreement during the year if the Corporation achieves the
target earnings before income tax, depreciation and amortization ("Target
EBITDA"). The annual Target EBITDA shall be determined for all years, including
1997, by agreement between the Executive and the Compensation Committee. The
Target EBITDA for each year generally shall be as reflected in the annual budget
of the Corporation.
For purposes of computing and paying the annual bonus, the
following rules, shall apply:
(a) FLOOR EBITDA. In addition to the annual Target
EBITDA, the Executive and the Compensation Committee shall agree upon the
minimum amount of earnings before income tax, depreciation and amortization
("Floor EBITDA") required for the Executive to receive any annual bonus for the
year. The Floor EBITDA for each year generally shall be as reflected in the
annual budget of the Corporation.
(b) DETERMINING TARGET AND FLOOR EBITDAS. The Target and
Floor EBITDAs agreed upon by the parties shall be determined after deducting all
profit sharing and compensation payments, including payment of the Executive's
bonus payment due under this Agreement. The Target and Floor EBITDAs for any
year shall be further adjusted for any future recapitalization, stock split,
merger or acquisition, or any other unusual or extraordinary item that would
require adjustment of the EBITDA. For purposes of
<PAGE>
-5-
calculating the annual bonus, (1) all calculations shall be based on the annual
audited financial statements of the Corporation, (ii) all items shall be
classified consistently from year to year and from target amounts to actual
amounts, and (iii) the Compensation Committee shall make appropriate adjustments
for extraordinary items as described above.
(c) EBITDA CALCULATIONS. For purposes of the 1997 annual
bonus, the 1997 Target and Floor EBITDAs for the 1997 year, as defined in (h)
below, shall be determined in good faith by agreement of the parties to this
Agreement and such determination shall be made by disregarding all items related
to the Acquisition, including without limitation, change-in-control payments and
any other one-time or other extraordinary compensation amounts payable to the
Executive and others in connection with the Acquisition.
(d) BONUS AMOUNT. If the Floor EBITDA for any year is
achieved, the annual bonus will equal 50% of actual base salary paid to the
Executive under this Agreement for such year. If the Target EBITDA for any year
is achieved, the annual bonus will equal 75% of base salary paid to the
Executive under this Agreement for such year. If the actual EBITDA for the year
in greater than the Floor EBITDA, but less than the Target EBITDA for the year
the annual bonus amount for such year will be extrapolated accordingly. If the
actual EBITDA for the year is less than the Floor EBITDA, the Executive shall
not receive any annual bonus for such year. If the actual EBITDA for the Year is
greater than the Target EBITDA, then the annual bonus amount will be increased
from 75% of base salary by one percent of base salary for each $100,000 by which
the actual EBITDA is greater than the Target EBITDA.
Notwithstanding the foregoing, the bonus amount for the 1997
year shall be determined by taking into account only that base salary paid to
the Executive under this Agreement during the 1997 year.
<PAGE>
-6-
(e) COMPUTATION OF BONUS AMOUNT. Computation of the
annual bonus shall be made by the Compensation Committee. The determination of
the Compensation Committee shall be final and conclusive.
(f) TIME OF BONUS PAYMENT. The annual bonus shall be paid
to the Executive within 30 calendar days after the receipt of the annual audited
financial statements of the Corporation.
(g) FORM OF BONUS PAYMENT. The annual bonus shall be paid
to the Executive in the form of a lump sum payment. The Executive, however,
shall have the option to defer payment of all or a portion of the annual bonus
by entering into a written deferral agreement prior to the date the annual bonus
is payable. Any annual bonus, or portion thereof, that is deferred by the
Executive shall be contributed to, and held in, a rabbi trust established by the
Corporation. The Corporation shall reasonably agree to the terms and conditions
for the deferred payment of the annual bonuses. Such terms and conditions,
including the length of the deferral and the method of paying the deferred
amounts, shall be set forth in a deferral agreement executed by the Executive
and the Corporation. To the extent permitted by law, the assets of the rabbi
trust shall be invested at the discretion of the Executive, and may not be
invested in stock of the Corporation.
(h) YEAR. For purposes of this Section, the term "year"
means the calendar year. Notwithstanding the preceding, the "1997 year" shall be
the period beginning on the Effective Date and ending on December 31, 1997.
3.3 OTHER BENEFITS. During the term of the Executive's
employment under this Agreement, the Executive shall receive the fringe benefits
provided for the executive officers of the Corporation that may be authorized
from time to time by the Board of
<PAGE>
-7-
Directors of the Corporation in its sole discretion, including, but not limited
to, the following:
(a) LIFE INSURANCE. The Corporation shall provide and
maintain, at the Corporation's sole expense, term life insurance with a total
face value of not less than $250,000 on the life of the Executive. The death
beneficiary with respect to such term life insurance shall be the person
designated by the Executive in his sole discretion. This amount includes (and is
not in addition to) any insurance that may be provided generally to executive
officers. The Corporation will also endeavor to obtain from the life insurance
carrier the option to purchase, at the Executive's sole option and expense,
supplemental life insurance coverage or life insurance covering his dependents
at favorable rates to be determined in advance by the carrier.
(b) FINANCIAL PLANNER. Every year, including 1997, the
Corporation shall reimburse the Executive for the reasonable fees and expenses,
not to exceed $5,000, for services rendered by a financial planner selected by
the Executive, in his sole discretion. In addition to any reimbursements
payable to the Executive under this paragraph, the Executive shall receive an
additional payment (a "Gross-Up Payment") in an amount such that after Payment
by the Executive of all taxes imposed on the reimbursement and the Gross-Up
Payment, the Executive retains an amount of the reimbursement and Gross-Up
Payment equal to the reimbursement payable to the Executive under this
paragraph.
(c) AUTOMOBILE. The Corporation shall pay the costs of
leasing to the Executive a Ford Expedition equipped with all options and
features selected by the Executive, including the Eddie Bauer options package,
or, at the Executive's option, the equivalent thereof. In addition, the
Executive shall have the right of first refusal to purchase the vehicle for the
buy-out price stated in the lease at the end of the three-year term.
<PAGE>
-8-
(d) VACATION. The Executive shall be entitled to a total
of 160 hours of vacation in each calendar year, at such times as shall be agreed
upon by the Corporation and the Executive and subject to the Corporation's
generally applicable procedures on carryover and accrual. These hours include
(and are not in addition to) any vacation time that may be provided generally to
executive officers.
(e) DISABILITY. The Corporation shall reimburse the
Executive for any premiums paid by the Executive, whether for an individual or
group Policy maintained by the Corporation or for an individual policy selected
and maintained by the Executive or a combination thereof, for disability
insurance that provides the Executive with after-tax disability income equal to
50% of his base salary in effect at the time of a disability. In addition to
any reimbursement payable to the Executive under this paragraph, the Executive
shall receive a Gross-Up Payment, the amount of which shall be determined in the
same manner as described in paragraph (b). Notwithstanding the foregoing, (1)
the Corporation shall not be required to reimburse the Executive for any
premiums paid by the Executive with respect to any disability insurance policy
purchased after the Effective Date, unless (i) the Executive passes any physical
examination required for such policy, and (ii) such policy provides for "any
occupation coverage," and (2) the Corporation shall reimburse the Executive, in
the case of any Executive-maintained policy described above, only to the extent
of premiums related to an amount equal to (i) the after-tax 50% level described
above less (ii) the after-tax percentage level provided in a policy or policies
maintained by the Corporation.
3.4 WITHHOLDING. The Corporation shall deduct or withhold from
salary payments, and from all other payments made to the Executive pursuant to
this Agreement, all amounts which may be required to be deducted or withheld
under any applicable law now in effect or which may become effective during the
term of this Agreement (including but not limited to Social Security
contributions and income tax withholdings).
<PAGE>
-9-
4. REIMBURSEMENT FOR EXPENSES.
--------------------------
The Corporation shall reimburse the Executive for expenses
which the Executive may from time to time reasonably incur on behalf of and at
the request of the Corporation in the performance of his responsibilities and
duties under this Agreement, provided that the Executive shall be expected to
exercise reasonable and prudent expense control practices which are subject to
audit by a designated representative of the Compensation Committee.
5. DEATH OR PERMANENT DISABILITY OF EXECUTIVE.
------------------------------------------
5.1 BENEFITS. If the Executive dies or becomes permanently
disabled during the term of this Agreement, the Corporation shall pay to the
Executive's spouse, if surviving, or legal representatives, in the case of the
Executive's death, or to the Executive, in the case of the Executive's permanent
disability, the following compensation and benefits:
(a) SALARY CONTINUATION. The Corporation shall continue
to pay the base salary at the same rate and in the same manner as in effect at
the time the Executive dies or becomes permanently disabled, for the balance of
the term of this Agreement (including any one-year extensions under Section 1.3
that have commenced at the time of such death or disability). If the Executive
dies after becoming permanently disabled and while payments are being made under
this subsection, the remaining payments shall be made to the Executive's spouse,
if surviving, or legal representatives.
(b) ANNUAL BONUS. The annual bonus payable pursuant to
Section 3.2 shall be calculated at the end of the year in which the Executive
dies or becomes permanently disabled, as the case may be, and a fraction of such
bonus shall be payable to the Executive's spouse, if surviving, or legal
representatives in, the case of the Executive's
<PAGE>
-10-
death, or to the Executive, in the case of the Executive becoming permanently
disabled. For purposes of this paragraph, the fraction generally shall be
determined using a numerator equal to the number of days that elapse from, and
including, January 1 of the year in which the Executive dies or becomes
permanently disabled until, and including, the date of death or such disability,
as the case may be, and a denominator equal to 365. If the Executive dies or is
permanently disabled during the 1997 year, the numerator shall be equal to the
number of days that elapse from, and including, the Effective Date until, and
including, the date of such death or disability, and the denominator shall be
equal to the number of days in the 1997 year.
(c) STOCK OPTIONS/CORPORATION STOCK. Any and all stock
options granted to the Executive with respect to which he is not yet vested on
the date he dies or becomes permanently disabled, as the case may be, shall be
forfeited and canceled. If the Executive dies or becomes permanently disabled
prior to a Qualified IPO, for a period of twelve (12) months after such death or
disability, the Corporation shall have the right, but not the obligation, to
purchase (i) any and all shares of capital stock of the Corporation, owned or
previously owned by the Executive or his assignee, and (ii) any and all stock
options granted to the Executive in which he is vested on the date he dies or
becomes permanently disabled, at the Fair Market Value for such shares or
options on the date the Executive dies or becomes permanently disabled.
5.2 "PERMANENTLY DISABLED." For purposes of this Agreement,
the Executive shall be "permanently disabled" if he is determined to be
permanently disabled for Purposes of any disability insurance policy maintained
by the Corporation that covers the Executive. If the Corporation maintains no
such policy, the Executive shall be "permanently disabled" if he has a
disability because of which the Executive is physically or mentally unable to
substantially perform his regular duties as President, Chief Executive Officer
or Chairman of the Board of the Corporation for a sufficiently long period of
time such that the
<PAGE>
-11-
business of the Corporation could be materially adversely affected. Any question
as to the existence, extent or potentiality of disability of the Executive upon
which the Executive and the Corporation cannot agree shall be determined by a
qualified independent physician jointly selected by the Executive and the
Corporation (or if the Executive is unable to make such a selection, it shall be
made by an adult member of his immediate family). The determination of such
physician, made in writing to the Corporation and to the Executive, shall be
final and conclusive for all purposes of this Agreement. In the event the
Executive is permanently disabled, the Executive shall cease to be employed on
the last day of the month in which the Executive's disability is determined by
written agreement of the Executive and the Corporation, or the written
determination of a physician, as the case may be.
6. TERMINATION OF EMPLOYMENT.
-------------------------
6.1 TERMINATION WITHOUT CAUSE. If, at any time prior to
termination of this Agreement other than for cause (as defined in Section 6.4),
the Corporation terminates the Executive's employment, the Corporation shall
provide the Executive with the following payments and benefits:
(a) SALARY. A lump sum payment, within thirty (30) days
of such termination, in an amount equal to the greater of (i) $285,000, or (ii)
the Executive's annual base salary in effect under Section 3.1 on the date of
his termination.
(b) ANNUAL BONUS. An annual bonus for the calendar year
in which termination occurs in an amount equal to 75% of the Executive's base
salary in effect at the time of termination, payable without regard to the
actual performance of the Corporation for that year, and payable following the
end of such year the time it would normally be paid.
<PAGE>
-12-
(c) OPTIONS/CORPORATION STOCK. Any and all stock options
granted to the Executive with respect to which he is not yet vested on the date
of his termination under this Section shall be forfeited and canceled (except
that if such termination occurs during the initial term of employment ending
June 30, 2000, any remaining performance options shall be vested (without regard
to any Super Performance options, which will be canceled) in the same proportion
that options theretofore subject to vesting have actually been vested, up to
100% thereof annually).
If the termination occurs prior to a Qualified IPO, for a
period of twelve (12) months after the date of the Executive's termination, the
Corporation shall have the right, and the Executive shall have the right to
require the Corporation, to purchase from the Executive (i) all shares of
capital stock of the Corporation owned or previously owned by the Executive or
his assignee, and (ii) any and all stock options granted to the Executive with
respect to which he is vested on the date of his termination (including without
limitation those options vested in connection with the termination), at the Fair
Market Value for such shares and options. If the Corporation exercises its right
to purchase such shares and options from the Executive, the purchase price shall
be paid to the Executive in a single lump sum cash payment. If the Executive
exercises his right to require the Corporation to purchase such shares and
options, payment shall be made in three equal annual installments on the first,
second and third anniversaries of the Executive's termination.
6.2 TERMINATION WITH GOOD REASON.
(a) REDUCTION IN DUTIES/COMPENSATION. The Corporation
shall not significantly reduce the scope of the Executive's duties under the
Agreement, materially diminish the Executive's title, significantly reduce the
total potential compensation under the Agreement, including, without limitation,
fringe benefits and payments at death, or require the Executive to relocate to a
location where the Corporation currently does not have, or is
<PAGE>
-13-
not currently discussing or contemplating building or placing a facility (each
such event a "Reduction Event"). The Executive at any time during the six (6)
month period following a Reduction Event may voluntarily terminate his
employment and receive the payments and benefits described in paragraph (c)
below.
(b) MATERIAL BREACH BY THE CORPORATION. If there is a
material breach by the Corporation of this Agreement which the Corporation fails
to cure within 30 days after its receipt of written notice thereof, the
Executive at anytime during the six (6) month period following the end of such
30-day period may voluntarily terminate his employment and receive the payments
and benefits described in paragraph (c) below.
(c) BENEFITS. If the Executive terminates his employment
under this Section, the Corporation shall provide the Executive with the
following payments and benefits:
(1) SALARY. A lump sum payment, within thirty (30)
days of such termination, in an amount equal to the greater of (i) $285,000 or
(ii) the Executive's annual base salary in effect under Section 3.1 on the date
of his termination.
(2) ANNUAL BONUS. The annual bonus payable pursuant
to Section 3.2 shall be calculated at the end of the year in which the Reduction
Event occurs, and a fraction of such bonus shall be payable to the Executive.
For purposes of this subparagraph, the fraction shall be determined using a
numerator equal to the number of days that elapse from, and including, January 1
of the year in which the Reduction Event occurs until, and including, the day of
such Reduction Event, and a denominator equal to 365. No annual bonus shall be
payable to the Executive for any year commencing after a Reduction Event.
<PAGE>
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(3) OPTIONS/CORPORATION STOCK. With respect to any
and all capital stock of the Corporation owned or previously owned by the
Executive or his assignee, and any and all stock options granted to the
Executive, the Corporation and the Executive shall have the same rights and
obligations as described in Section 6.1 (c).
6.3 CHANGE IN CONTROL.
-----------------
(a) IN GENERAL. If the Executive's employment is
terminated (except for a termination for cause under Section 6.4) within six (6)
months prior to or twelve (12) months following a Change in Control, the
Corporation shall provide the Executive with the following payments and
benefits;
(1) SALARY. A lump sum payment, within thirty (30)
days of such termination, in an amount equal to the Executive's annual base
salary in effect under Section 3.1 on the date of such termination.
(2) ANNUAL BONUS. An annual bonus for the calendar
year in which termination occurs in an amount equal to 75% of the Executive's
base salary in effect at the time of termination, payable without regard to the
actual performance of the Corporation for that year, and payable following the
end of such year at the time it would normally be paid.
(3) CORPORATION STOCK. The Executive shall be fully
vested in any and all performance stock options (provided that Super Performance
options shall continue to be outstanding pursuant to their terms) granted to the
Executive. The Executive shall have the right to exercise all unexercised
options, including those options vested in connection with such termination, for
a period of not less than twelve (12) months commencing on the date of the
Executive's termination under this Section.
<PAGE>
-15-
If the termination under this Section occurs prior to a
Qualified IPO, the Executive, for a period of twelve months following the date
of termination, shall have the right, but not the obligation, to require the
Corporation to purchase, for cash payable at the time of the sale, (i) all
shares of capital stock of the Corporation owned or previously owned by the
Executive or his assignee, and (ii) any and all stock options granted to the
Executive with respect to all of which he is vested at the time of his
termination (including without limitation those options vested in connection
with the termination), at the Fair Market Value for such shares and options,
provided, that all performance options (but not Super Performance options) shall
be vested upon the Executive's termination under this Section.
(b) DEFINITION. For purposes of this Agreement, the
term "Change in Control" shall mean any of the following events:
(i) All or substantially all of the assets of the
Corporation are sold as an entirety to any person or entity or group
(within the meaning of Rule 13d-5 under the Exchange Act and Sections
13(d) and 14(d) of the Exchange Act (a "Group")) other than a Group
including WGL Holdings, Inc. or its affiliates or related parties,
(ii) The stockholders of the Corporation approve a
plan of liquidation or dissolution (other than in connection with a
merger between or among the affiliates of the Corporation); or
(iii) Any person, entity or Group (other than WGL
Holdings, Inc., its affiliates or their related parties) becomes
directly or indirectly, the "beneficial owner," as defined in Rule
13d-3 under the Exchange Act (in a single transaction or in a related
series of transactions, by way of merger, consolidation or other
business combination or otherwise) of
<PAGE>
-16-
more than the greater of (1) 40 percent of the total voting power
entitled to vote in the election of directors of the Corporation (or
such other persons surviving the transaction) and (2) the total voting
power entitled to vote in the election of directors of the Corporation
beneficially owned by WGTL Holdings, Inc., its affiliates or their
related parties.
6.4 TERMINATION FOR CAUSE.
---------------------
(a) IN GENERAL. The Corporation may terminate the
Executive's employment in the event that the Executive shall do or cause to be
done any act which constitutes "cause" (as hereinafter defined) for termination.
For purposes of this Agreement, "cause" shall be deemed to mean a material
breach by the Executive of this Agreement, gross negligence or willful
misconduct in the performance of his duties, dishonesty to the Corporation, or
the commission of a felony that results in a conviction in a court of law.
(b) OBLIGATIONS. Should the Executive's employment be
terminated by the Corporation for cause, (1) the Corporation shall pay the
Executive his base salary and other compensation under Article 3 of this
Agreement which has accrued as of the date of such termination (excluding any
annual bonus payable pursuant to such Article 3), (2) any and all stock options
granted to the Executive in which he is not yet vested on the date of such
termination shall be forfeited and canceled, and (3) for a period of twelve (12)
months after such termination, the Corporation shall have the right, but not the
obligation, to purchase from the Executive (A) all shares of capital stock owned
or previously owned by the Executive or his assignee (except to the extent such
shares of capital stock were sold in the public market following a Qualified
IPO), and (B) any and all stock options with respect to which the Executive is
vested on the date of such termination, and in such a purchase, the Corporation
shall purchase all such shares and options at a price equal to the lesser of
cost
<PAGE>
-17-
thereof to the Executive or the Fair Market Value for such shares and options
(less the principal amount of any notes due to the Corporation from the
Executive, which notes shall be canceled to the extent that such notes are less
than or equal to such purchase price; any excess shall continue in full force
and effect). The purchase price shall be paid by the Corporation by delivery of
a promissory note, subordinated to all debt of the Corporation, bearing interest
at 7% per annum (which interest may be payable by delivery of notes of like
tenor in principal amount equal to the interest then due) with a maturity one
year beyond the maturity of the Corporation's subordinated debt at Closing of
the Acquisition.
6.5 TERMINATION WITHOUT GOOD REASON.
-------------------------------
(a) IN GENERAL. The Executive shall be entitled to
terminate his employment without good reason at any time. For purposes of this
Section, an election by the Executive under Section 1.3 not to extends this
Agreement beyond the earlier of (i) the date of a Qualified IPO or (ii) June
30, 2002, shall be treated as a termination without good reason under this
Section.
(b) OBLIGATIONS. If the Executive's employment
terminates under this Section (1) no additional compensation after the date of
such termination and no annual bonus shall be payable by the Corporation to the
Executive, (2) any and all stock options in which the Executive is not vested on
the date of such termination shall be forfeited and canceled, and (3) if the
termination occurs prior to the earlier of (i) a Qualified IPO, or (ii) June 30,
2002, the Corporation shall, for a period of twelve (12) months after the
termination have the right, but not the obligation, to purchase from the
Executive (i) all shares of capital stock of the Corporation owned or previously
owned by the Executive or his assignee, and (ii) any and all stock options in
which the Executive is vested on the date of such termination, and in such a
purchase the Corporation shall purchase all such shares and options at a price
equal to the lesser of cost thereof to the Executive or the Fair Market
<PAGE>
-18-
Value for such shares and options. The Corporation shall pay the purchase price
in the form of three (3) equal annual installments on the first, second and
third anniversaries of the Executive's termination.
6.6 OPTIONS/CORPORATION STOCK.
-------------------------
(a) FAIR MARKET VALUE. For purposes of this Agreement,
and notwithstanding any provisions to the contrary in any shareholder or stock
option agreement between the Executive and the Corporation, the "Fair Market
Value" of the capital stock of the Corporation, or of any stock options granted
to the Executive, shall mean the value of such stock or options determined by a
certified independent appraiser selected by the Executive and the Corporation.
With respect to any independent appraisal of the Corporation's stock under this
Agreement, in all cases where an independent appraiser is not mutually agreed
upon, each of the parties will select a certified appraiser and those two
appraisers will select a third certified appraiser, whose appraisal shall be
binding on the parties.
(b) PURCHASE RIGHTS. For purposes of the capital stock
and stock option purchase rights set forth in Sections 5.1(c), 6.1(c),
6.2(c)(3), 6.3(a)(3), 6.4(b)(3) and 6.5(b)(3):
(1) capital stock and stock options shall include
only such stock and stock options acquired by the Executive in connection with
his employment by the Corporation;
(2) the right of the Corporation to purchase, and
the right of the Executive to require the Corporation, to purchase capital stock
of the Corporation owned or previously owned by the Executive, shall apply to
shares of capital stock of the Corporation and WGL Holdings, Inc. acquired by
the Executive pursuant to the terms of the equity plan set forth in Exhibit A;
<PAGE>
-19-
(3) the right of the Corporation to purchase, and
the right of the Executive to require the Corporation, to purchase any and all
stock options granted to the Executive, shall apply equally to options to
purchase either the capital stock of the Corporation or capital stock of WGL
Holdings, Inc.; and
(4) WGL Holdings, Inc. shall have the right to
exercise the purchase rights or obligations, as the case may be, on behalf of
the Corporation.
(c) EXERCISE OF OPTIONS. With respect to any
unexercised options that are not cancelled upon termination of the Executive's
employment, including those options vested in connection with the termination,
the Executive shall have the right to exercise all unexercised options for a
period of not less than twelve (12) months commencing on the date of the
Executive's termination.
(d) QUALIFIED IPO. For purposes of the Agreement, the
term "Qualified IPO" means a consummated initial public offering of common
shares of the Corporation or WGL Holdings, Inc. which is underwritten on a firm
commitment basis by a nationally-recognized investment banking firm.
(e) INCONSISTENT TERMS. To the extent that the terms of
this Agreement are specifically inconsistent with any provisions in any
shareholder or stock option agreement between the Executive and the Corporation
and WGL Holdings, Inc., the terms of this Agreement shall supersede the terms of
any such shareholder or stock option agreement.
7. CONFIDENTIALITY.
---------------
The Executive shall not, except as required in the performance
of his duties under this Agreement, divulge to any person, at any time during or
after the term of his
<PAGE>
-20-
employment with the Corporation, any trade secret of the Corporation, any
privileged or confidential information gained as a result of his employment with
the Corporation, or any document, writing or other tangible item containing or
relating to any such trade secret or privileged or confidential information.
8. NON-COMPETITION.
---------------
8.1 During the term of this Agreement and for a period of
twenty-four (24) months after (a) the termination of the Agreement or (b) the
end of the last pay period in respect of which the Executive receives any
compensation or other annual bonus pursuant to the Agreement (except that if the
Executive is terminated by the Corporation without cause, the provisions of
this Article 8 shall be inapplicable), the Executive agrees that he shall not
directly or indirectly, for his own account or as agent, employee, officer,
director, trustee, consultant or shareholder of any person (except for a ten
percent (10%) interest or less in any publicly traded corporation) or a member
of any firm or otherwise, anywhere in the sales territory of the Corporation
engage or attempt to engage in any business activity which is the same as,
substantially similar to or directly competitive with the business of the
Corporation as conducted by it during the term of this Agreement, or
substantially similar to or directly competitive with the related business
activities of the 10 largest customers of the Corporation, ranked by gross
sales, at the time of the termination of the Agreement.
8.2 During the term of this Agreement and for a period of one
year from the date of termination of this Agreement for any reason, the
Executive agrees that he shall not, directly or indirectly, for his own account
or as agent, employee, officer, director, trustee, consultant or shareholder of
any person, or member of any firm or otherwise, employ or solicit the employment
of any person employed by the Corporation within twenty-four (24) months prior
to the date of the Executive's termination.
<PAGE>
-21-
9. RIGHTS TO DISCOVERIES.
---------------------
The Executive agrees that all ideas, inventions (whether
patentable or unpatentable), trademarks and other developments or improvements
conceived, developed or acquired by the Executive, whether or not during working
hours, at the premises of the Corporation or elsewhere, alone or with others,
that are within the scope of the Corporation's business operations or that
relate to any work or projects of the Corporation, shall be the sole and
exclusive property of the Corporation. The Executive agrees to disclose promptly
and fully to the Corporation all such ideas, inventions, trademarks or other
developments and, at the request of the Corporation, the Executive shall submit
to the Corporation a full written report thereof regardless of whether the
request for written report is made after the termination of this Agreement. The
Executive agrees that during the term of this Agreement and thereafter, upon the
request of the Corporation and at its expense, he shall execute and deliver any
and all applications, assignments and other instruments which the Corporation
shall deem necessary or advisable to transfer to and vest in the Corporation the
Executive's entire right, title and interest in and to all such ideas,
inventions, trademarks or other developments and to permit and enable the
Corporation to apply for and obtain patents or copyright or trademark
registrations for any such patentable or copyrightable or trademarkable ideas,
inventions, trademarks and other developments, throughout the world. To the
extent applicable law provides that any such idea, invention, trademark or other
development belongs to the Executive rather than the Corporation, the Executive
hereby grants to the Corporation a royalty-free, non-exclusive, worldwide
perpetual license to use such idea, invention, trademark or other development
for no added consideration other than that which is given in connection with
this Agreement.
<PAGE>
-22-
10. DOCUMENTS.
---------
In addition to the obligations under Articles 7, 8 and 9, the
Executive shall execute any documents relating to the subject of those Articles
as required generally by the Corporation of its executive officers and such
documents already executed or executed after the effective date of this
Agreement shall thereby become part of this Agreement. In the case of any
inconsistency between such documents and this Agreement, the broader provisions
shall prevail.
11. NOTICES.
-------
All notices and other communications given pursuant to this
Agreement shall be in writing and shall be deemed given only when (a) delivered
by hand, (b) transmitted by telex, telecopier or other form of electronic
transmission (provided that a copy is sent at approximately the same time by
first class mail), or (c) received by the addressee, if sent by registered or
certified mail, return receipt requested, or by Express Mail, Federal Express or
other overnight delivery service, to the appropriate party at the address given
below for such party (or to such other address designated by the party in
writing and delivered to the other party pursuant to this Article 11.
If to the Corporation: Corporate Secretary
Wilson Greatbatch Ltd.
10,000 Wehrle Drive
Clarence, New York 14031
Telecopier:
Attention:
With a copy to: David Wittels
Telecopier:
Attention:
If to the Executive: Edward F. Voboril
<PAGE>
-23-
33 Four Winds Way
Snyder, New York 14226
Telecopier:
With a copy to: _____________________________
_____________________________
_____________________________
Telecopier:
12. EQUITABLE RELIEF.
----------------
The Executive acknowledges that the Corporation will
suffer damages incapable of ascertainment in the event that any of the
provisions of Article 7, 8, 9 or 10 hereof are breached and that the Corporation
will be irreparably damaged in the event that the provisions of Articles 7, 8, 9
and 10 are not enforced. Therefore, should any dispute arise with respect to the
breach or threatened breach of Articles 7, 8, 9 or 10 of this Agreement, the
Executive agrees and consents that in addition to any and all other remedies
available to the Corporation, an injunction or restraining order or other
equitable relief may be issued or ordered by a court of competent jurisdiction
restraining any breach or threatened breach of Articles 7, 8, 9 or 10 of this
Agreement. The Executive agrees not to urge in any such action that an adequate
remedy exists at law. The Executive consents to jurisdiction in New York and
venue in Erie County for purposes of all claims arising under this Agreement.
13. TERM OF AGREEMENT.
-----------------
For the limited purpose of making payments hereunder, and not,
for example, for purposes of extending the periods referenced in Article 8, this
Agreement shall not terminate until all payments hereunder have been made.
<PAGE>
-24-
14. MISCELLANEOUS.
-------------
This Agreement shall be governed by the internal domestic laws
of the State of New York without reference to conflict of laws principles. This
Agreement shall be binding upon and inure to the benefit of the legal
representatives, successors and assigns of the parties hereto (provided,
however, that the Executive shall not have the right to assign this Agreement in
view of its personal nature). All headings and subheadings are for convenience
only and are not of substantive effect. Except as otherwise specifically
provided for herein, this Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior negotiations, understandings and writings (or any part thereof) whether
oral or written between the parties hereto relating to the subject matter
hereof. Except as specifically referenced herein, no agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party that are not expressly set
forth in this Agreement. No provision of this Agreement may be waived, modified
or amended, orally or by any course of conduct, unless such waiver, modification
or amendment is set forth in a written agreement duly executed by both of the
parties hereto. If any article, section, portion, subsection or subportion of
this Agreement shall be determined to be unenforceable or invalid, then such
article, section, portion, subsection or subportion shall be modified in the
letter and spirit of this Agreement to the extent permitted by applicable law so
as to be rendered valid and any such determination shall not affect the
remainder of this Agreement, which shall be and remain binding and effective as
against all parties hereto.
<PAGE>
-25-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date set forth below.
Dated: July 9, 1997 /s/ Edward F. Voboril
-----------------------------------
Edward F. Voboril
WILSON GREATBATCH LTD. by its
shareholder as of the Acquisition
WGL HOLDINGS, INC.
Dated: July 9, 1997 /s/ David Wittels
-----------------------------------
Title
<PAGE>
-26-
STATE OF NEW YORK )
: SS.
COUNTY OF NEW YORK )
On this 9th day of July, 1997, before me personally came
Edward F. Voboril, to me known and known to me to be the same person described
in and who executed the foregoing instrument, and he duly acknowledged that he
executed the same.
/S/ FRANCES MADRID
---------------------------------
FRANCES G. MADRID
Notary Public, State of New York
No. 01MA5076163
Qualified in New York County
Commission Expires 1999
STATE OF NEW YORK )
: SS.
COUNTY OF NEW YORK )
On this 9th day of July, before me personally came David
Wittels, to me personally known who, being by me duly sworn, did depose and say
that he resides at No. 254 E 68th Street in the City of New York, State of New
York; that he is the President of WGL HOLDINGS, INC., the shareholder as of the
Acquisition of Wilson Greatbatch Ltd., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
/S/ FRANCES MADRID
--------------------------------
FRANCES G. MADRID
Notary Public, State of New York
No. 01MA5076163
Qualified in New York County
Commission Expires 1999
<PAGE>
Exhibit 10.6
================================================================================
WGL HOLDINGS, INC.
WGL ACQUISITION CORP.
SECURITIES PURCHASE AGREEMENT
13.0% Senior Subordinated Notes
Shares of Common Stock
Dated as of July 10, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
PARAGRAPH 1. AUTHORIZATION OF ISSUE OF SECURITIES ..................... 1
PARAGRAPH 2. PURCHASE AND SALE OF SECURITIES .......................... 2
PARAGRAPH 3. CONDITIONS PRECEDENT ..................................... 2
PARAGRAPH 4. COVENANTS ................................................ 5
PARAGRAPH 5. REPRESENTATIONS AND WARRANTIES ........................... 10
PARAGRAPH 6. REPRESENTATIONS AND AGREEMENT OF
THE PURCHASERS ........................................... 17
PARAGRAPH 7. DEFINITIONS .............................................. 19
PARAGRAPH 8. MISCELLANEOUS ............................................ 22
Exhibits
Exhibit A - Form of Note
Exhibit B - Form of Registration and Anti-Dilution Agreement
Exhibit C-1 - Certificate of Incorporation of each
of Holdings, Intermediate Holdings,
Acquisition, the Company and Wilson
Exhibit C-2 - Shareholders' Agreements
Exhibit D-1 - Closing Documents
Exhibit D-2 - Form of Opinion of Counsel
Exhibit E - Form of Assumption Agreement
Exhibit F - Form of Note Registration Rights Agreement
Exhibit G - Confidential Information Memorandum
-i-
<PAGE>
WGL Holdings, Inc.
WGL Acquisition Corp.
Securities Purchase Agreement
Ladies and Gentlemen:
The undersigned, WGL Acquisition Corp., a New York corporation
("Acquisition") to be merged with and into Wilson Greatbatch Ltd. ("Wilson" and,
upon consummation of the Merger (as defined below), the "Company"), WGL
Holdings, Inc., a Delaware corporation ("Holdings" and, together with the
Company, the "Sellers"), hereby agree with the parties named on the signature
pages hereto (collectively, the "Purchasers") as follows:
PARAGRAPH 1. AUTHORIZATION OF ISSUE OF SECURITIES.
lA. General. The Securities are being issued and sold in connection
with the acquisition by Acquisition of all of the outstanding capital stock of
Wilson and the merger of Acquisition (the "Merger") with and into Wilson, with
Wilson as the surviving corporation. At the time the Merger is consummated (the
"Effective Time"), the Company will be a direct wholly owned subsidiary of WGL
Intermediate Holdings, Inc. ("Intermediate Holdings") and an indirect wholly
owned subsidiary of Holdings. Capitalized terms used herein and not otherwise
defined have the meanings specified in paragraph 7.
lB. Authorization of Notes. Acquisition has authorized the issuance
of its 13.0% Senior Subordinated Notes (the "Notes") in the aggregate principal
amount of $25.0 million, to be dated the date of issuance thereof, to mature on
July 1, 2007, and to be in the form of Exhibit A attached hereto. The term
"Notes" as used in this agreement (the "Agreement") shall include the promissory
notes delivered pursuant to this Agreement and each such promissory note
delivered in substitution or exchange for any other Note pursuant to any such
provision hereof, of such Note or of the Indenture governing such Note. The
Notes will have the benefit of the Note Registration Rights Agreement.
1C. Authorization of Shares. Holdings has authorized the issuance
and delivery of an aggregate of 3,188,312 shares (the "Shares") of its Common
Stock, par value tool per
<PAGE>
- 2 -
share (the "Common Stock"), constituting approximately 7% of the ownership of
Holdings, such shares having the rights, restrictions, privileges and
preferences set forth in the Certificate of Incorporation of Holdings in the
form of such certificate of Holdings which, along with the certificate of
incorporation of Intermediate Holdings, the Company and Wilson, is attached
hereto as Exhibit C-1 (the "Certificate of Incorporation") and being subject to
the provisions of the agreement among certain shareholders (including the
Purchasers as holders of the Shares) of Holdings and Holdings (the
"Shareholders' Agreement") in the form of such agreement which, along with the
two other agreements among Holdings and certain of its shareholders (the "Other
Shareholders' Agreements" and together with the Shareholders' Agreement, the
"Shareholders' Agreements"), is attached hereto as Exhibit C-2. The Shares will
have the benefit of the registration and anti-dilution rights set forth in the
Registration and Anti-Dilution Agreement.
PARAGRAPH 2. PURCHASE AND SALE OF SECURITIES.
2A. Purchase of Notes. Subject to and upon the terms and conditions
herein set forth, each Purchaser agrees, severally and not jointly, to purchase
from Acquisition Notes in the principal amounts and purchase prices set forth on
the signature page hereto of such Purchaser on July 10, 1997 (the "Date of
Closing")
2B. Purchase of Shares. Subject to and upon the terms and conditions
herein set forth, each Purchaser agrees, severally and not jointly, to purchase
from Holdings the number of Shares (at a purchase price of $1.00 per Share) set
forth on the signature page hereto of such Purchaser on the Date of Closing.
2C. Purchase Price Allocation. Each of Holdings, Acquisition and the
Purchasers agree to use the foregoing purchase prices as the issue prices for
U.S. federal income tax purposes.
PARAGRAPH 3. CONDITIONS PRECEDENT.
3. Conditions to Closing. The obligation of each Purchaser to
purchase and pay for the Notes and Shares to be
<PAGE>
- 3 -
purchased by it is subject to the satisfaction of the following conditions:
3A. Documents To Be Delivered. On or before the Date of Closing, the
Purchasers shall have received all of the following, duly executed and
delivered:
(i) the Notes being purchased by each Purchaser in the name and
denomination set forth on the signature page hereto of such Purchaser;
(ii) the Shares being purchased by each Purchaser in the name and
denomination set forth on the signature page hereto of such Purchaser;
(iii) certificates of the Secretary and of the Chairman of the Board
or President of each of Holdings and Acquisition, dated the Date of
Closing, which shall contain the names and signatures of the officers of
such Seller authorized to execute this Agreement and which shall certify
to the truth, correctness and completeness of the following exhibits
attached hereto as Exhibit D-l: (a) a copy of resolutions duly adopted by
the Board of Directors of each of Holdings and Acquisition and in full
force and effect at the time this Agreement is entered into, authorizing
the execution of this Agreement and the other Transaction Documents
delivered or to be delivered in connection herewith on the part of such
Sellers and the consummation of the transactions contemplated herein and
therein, (b) a copy of the charter documents of each of the Sellers and
each of their subsidiaries and all amendments thereto, certified by the
appropriate official of the state of organization, and (c) a copy of the
bylaws of each of the Sellers and each of their subsidiaries in effect on
the Date of Closing;
(iv) The representations and warranties of each of Holdings and
Acquisition 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 Date
of Closing as if made on and as of the Date of Closing; the statements of
Holdings' and Acquisition's officers made pursuant to any certificate
delivered in accordance with the provisions hereof shall be true and
correct in all material respects on and as of the date made and on and as
of the Date of Closing; Holdings and Acquisition shall have complied in
all material respects with all agreements and satisfied all conditions on
their part to be performed or satisfied
<PAGE>
- 4 -
hereunder at or prior to the Date of Closing; and, there shall have been
no event or events that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect or any
development that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
(v) a certificate (or certificates) of the due formation, valid
existence and good standing of each of the Sellers and their subsidiaries
in its state of organization, issued by the appropriate authorities of
such jurisdiction;
(vi) a certificate of the president of each of the Sellers and their
subsidiaries dated the Date of Closing, in which such officer certifies to
the satisfaction of the conditions set out in subsections (i) and (ii) of
paragraph 3B;
(vii) a favorable opinion of each of Weil Gotshal & Manges and Davis
Polk & Wardwell, counsel to Holdings and Acquisition and Wilson, dated the
Date of Closing and substantially in the form set forth in Exhibit D-2,
subject only to such qualifications, limitations or exceptions as may be
acceptable to each of the Purchasers;
(viii) a letter from Hodgson, Russ, Andrews, Woods & Goodyear, LLP
allowing each of the Purchasers to rely, as if it had been addressed to
such Purchaser, on the opinion of Hodgson, Russ, Andrews, Woods &
Goodyear, LLP delivered pursuant to Section 9.5 of the Stock Purchase
Agreement; and
(ix) certificates of Holdings', Intermediate Holdings',
Acquisition's and Wilson's good standing and due qualification to do
business, issued by appropriate officials in any states where each of
Holdings', Intermediate Holdings', Acquisition's and Wilson's ownership or
leasing of its properties or the conduct of its business requires such
qualification.
On or before the Date of Closing, the Purchasers and Cahill Gordon &
Reindel, counsel for the Purchasers, shall have received such further documents,
opinions, certificates and schedules or instruments relating to the business,
corporate, legal and financial affairs of each of Holdings, Acquisition, Wilson,
the Company and their respective Subsidiaries as they shall reasonably request.
<PAGE>
- 5 -
3B. Representations; No Default.
(i) All representations and warranties made by each of the Sellers
in this Agreement shall be true and correct on and as of the Date of Closing as
if such representations and warranties had been made on and as of such date,
unless such representation and warranty expressly indicates that it is being
made as of any other specific date in which case on and as of such other date.
(ii) Each of the Sellers shall have performed and complied with all
agreements and conditions required in this Agreement to be performed or complied
with by it on or prior to the Date of Closing.
3C. Purchase permitted By Applicable Laws. On the Date of Closing,
the offer by Holdings and Acquisition of, and the purchase of and payment for,
the Securities on the terms and conditions herein provided (including the use of
the proceeds of the sale of such Securities by Holdings and Acquisition) shall
not violate any applicable law or governmental regulation (including, without
limitation, section 5 of the Securities Act or Regulation U, G, T or X of the
Board of Governors of the Federal Reserve System) and shall not subject any
purchaser to any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation.
3D. proceedings. On the Date of Closing, all corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in substance and form to the Purchasers, and the purchasers shall
have received all such counterpart originals or certified or other copies of
such documents as they or their counsel may reasonably request.
3E. Obligations. Each of the Sellers shall have satisfied any other
obligations to the Purchasers required to be paid or complied with by it on or
prior to the Date of Closing.
PARAGRAPH 4. COVENANTS.
4. Covenants. To induce the Purchasers to enter into this Agreement
and purchase the Securities, Holdings and
<PAGE>
- 6 -
Acquisition jointly and severally warrant, covenant and agree as follows:
4A. Financial Information, Reports, Notices, etc. Holdings will, and
will cause the Company to, furnish, or will cause to be furnished, to the
Holders copies of the following financial statements, reports, notices and
information, at the Sellers' expense:
(i) as soon as available and in any event within 45 days after the
end of each Fiscal Quarter of each Fiscal Year of Holdings, consolidated
balance sheets of each of Holdings and the Company as of the end of such
Fiscal Quarter and consolidated statements of operations and cash flow of
each of Holdings and the Company for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending with
the end of such Fiscal Quarter, certified by the chief financial officer
of each of Holdings and the Company, respectively, in each case with prior
period comparisons and a management's discussion and analysis of financial
condition and results of operations;
(ii) as soon as available and in any event within 90 days after the
end of each Fiscal Year, a copy of the annual review report for such
Fiscal Year for each of Holdings and the Company, including therein
consolidated balance sheets of each of Holdings and the Company as of the
end of such Fiscal Year and consolidated statements of operations and cash
flow of each of Holdings and the Company for such Fiscal Year, certified
in a manner reasonably acceptable to the Holders by Price Waterhouse or
other independent public accountants acceptable to the Holders together,
in each case, with a management's discussion and analysis of financial
condition and results of operations;
(iii) promptly after (a) the sending or filing thereof, copies of
all reports which Holdings, the Company or any of their Subsidiaries send
to any lenders pursuant to the Credit Agreement and (b) the sending or
filing thereof, all reports and registration statements which Holdings,
the Company or any of their Subsidiaries file with the Securities and
Exchange Commission or any national securities exchange; and
(iv) such other information respecting the condition or operations,
financial or otherwise, of each of Holdings and the Company as any Holder
may reasonably request.
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In the event that, pursuant to the terms of the Notes, an indenture is qualified
under the Trust Indenture Act of 1939 with respect to the Notes, the information
required to be furnished pursuant to this Paragraph 4A shall be limited to
information regarding Holdings and shall be provided pursuant hereto only to
Holders of Shares.
4B. Information Required by Rule 144A. Holdings will, and will cause
the Company to, upon the request of any Holder, provide such Holder, and any
qualified institutional buyer designated by such Holder, such financial and
other information as such Holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes or Shares. For the
purpose of this paragraph 48, the term "qualified institutional buyer" shall
have the meaning specified in Rule 144A under the Securities Act. At the request
of holders of in excess of 25% of the aggregate principal amount of the Notes,
Acquisition will use its best efforts to cause the Notes to be eligible for
participation in the book-entry system of The Depository Trust Company.
4C. Indemnity. Holdings and Acquisition, jointly and severally,
agree and Holdings will cause Intermediate Holdings, jointly and severally with
Holdings and Acquisition, to agree, to indemnify each of the Purchasers, as
debtholders, shareholders, directors and officers of Acquisition and Holdings,
as the case may be, upon demand, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (including reasonable fees of attorneys,
accountants, experts and advisors) of any kind or nature whatsoever (in this
section collectively called "liabilities and costs") which to any extent (in
whole or in part) may be imposed on, incurred by, or asserted against any of the
Purchasers arising out of, resulting from or in any other way associated with
the execution, delivery or performance of the Transaction Documents or such
Purchaser's being a debtholder, shareholder, director or officer of Holdings or
Acquisition. The foregoing indemnification shall apply whether or not such
liabilities and costs are in any way or to any extent caused, in whole or in
part, by any negligent act or omission of any kind by such holder, provided only
that no Purchaser shall be entitled under this paragraph to receive
indemnification for that portion, if any, of any liabilities and costs which is
proximately caused by such Purchaser's willful misconduct. If any Person
(including Holdings, Acquisition or any of their respective Affiliates) ever
alleges such willful misconduct by a purchaser, the indemnifi-
<PAGE>
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cation provided for in this paragraph shall nonetheless be paid upon demand,
subject to later adjustment or reimbursement, until such time as a court of
competent jurisdiction enters a final judgment as to the extent and effect of
the alleged willful misconduct. As used in this section the term "Purchaser"
shall refer also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Purchaser.
4D. Additional Interest On the Notes.
(a) Acquisition and the Purchasers agree that the holders of Notes
will suffer damages if Acquisition fails to fulfill its obligations under
Section 1 of the Note Registration Rights Agreement and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
Acquisition agrees to pay additional interest on the Notes ("Additional
Interest") under the circumstances and to the extent set forth below:
(i) if a registration statement relating to the Notes has not been
filed on or prior to the date that is 45 days after the first written
demand for the filing of such registration statement pursuant to Section
1(a) (1) of the Note Registration Rights Agreement (the "Required Filing
Date"), then commencing on the day after the Required Filing Date,
Additional Interest shall be accrued on the Notes at a rate of .50% per
annum;
(ii) if such registration statement is not declared effective on or
prior to the date that is 45 days after the Required Filing Date, then
commencing on the day after such date, Additional Interest shall be
accrued on the Notes at a rate of 50% per annum; and
(iii) if (A) such registration statement has been declared effective
and ceases to be effective at any time during the period in which it is
required to remain effective pursuant to Section 1(c) (2) of the Note
Registration Rights Agreement or (B) a notice under Section 1(c) (7) with
respect to such registration statement is effective or required to be
effective at a time when the aggregate number of days in any 365-day
period for which all such notices issued or required to be issued pursuant
to such section have been or were required to be in effect exceeds 30
days, whether or not consecutive, then Additional Interest shall be
accrued on the Notes at a rate of .50% per annum immediately following
the (y) day such registration
<PAGE>
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statement ceases to be effective in the case of (A) above or (z) the date
on which the 30-day limit is exceeded in the case of (B) above;
provided, however, that (1) upon the filing of such registration statement (in
the case of (i) above), (2) upon the effectiveness of such registration
statement (in the case of (ii) above), or (3) upon the effectiveness of such
registration statement which had ceased to remain effective (in the case of
(iii) (A) above) or, on the date on which a notice issued, or required to be
issued, pursuant to Section 1 (c) (7) is no longer effective or required to be
effective (in the case of (iii) (B) above), Additional Interest on the Notes as
a result of such clause (i), (ii) or (iii) (or the relevant subclause thereof),
as the case may be, shall cease to accrue.
(b) Acquisition shall notify the Trustee (or, if there is no
Trustee, each Holder) within one business day after each and every date on which
an event occurs in respect of which Additional Interest is required to be paid
(an "Event Date"). Additional Interest shall be paid by depositing with the
Trustee, in trust, for the benefit of the holders of Notes, on or before the
semi-annual interest payment date provided in the Indenture (whether or not any
interest other than Additional Interest is then payable on the Notes),
immediately available funds in sums sufficient to pay the Additional Interest
then due to holders of Notes with respect to which the Trustee serves. The
Additional Interest due shall be payable on each interest payment date to the
record holders of Notes who would be entitled to receive the interest payment to
be made on such date as set forth in the Indenture. Each obligation to pay
Additional Interest shall be deemed to accrue on the applicable Event Date.
Additional Interest on the Notes may not exceed in the aggregate 1.0% per annum.
The amount of Additional Interest will be determined by multiplying
the applicable Additional Interest rate set forth in clauses (i), (ii) and (iii)
above by the principal amount of the Notes, in each case, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on a basis of a 360-day year
comprised of twelve 30-day months) and the denominator of which is 360.
<PAGE>
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PARAGRAPH 5. REPRESENTATIONS AND WARRANTIES.
5. Representations and Warranties. To induce the Purchasers to enter
into this Agreement and to purchase the Securities, Holdings and Acquisition,
jointly and severally, represent and warrant as follows:
5A. Organization and Good Standing. Each of Holdings, Intermediate
Holdings, Acquisition, Wilson and their respective Subsidiaries is, and at and
as of the Effective Time the Company will be, duly incorporated, validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, and each has (and with respect to the Company, at and as of the
Effective Time, will have) the corporate power and authority to carry on its
business as it is currently being conducted and to own, lease and operate its
properties, and each is (and with respect to the Company, at and as of the
Effective Time, will be) duly qualified and is (and with respect to the Company,
at and as of the Effective Time, will be) in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Each of Holdings', Intermediate Holdings', Acquisition's and Wilson's
Subsidiaries and at and as of the Effective Time the Company's Subsidiaries,
that is a partnership has been duly formed and is (and with respect to the
Company, at and as of the Effective Time, will be) currently existing under the
laws of its jurisdiction of formation and has (and with respect to the Company,
at and as of the Effective Time, will have) the partnership power and authority
to carry on its business as it is currently being conducted and to own, lease
and operate its properties, and each is (and with respect to the Company, at and
as of the Effective Time, will be) duly qualified to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
5B. Authorization. Each of Holdings, Intermediate Holdings, and
Acquisition have, and as of the Effective Time the Company, will have taken all
corporate action necessary to authorize the execution and delivery by it of each
of this Agreement and the other Transaction Documents to which it is a
<PAGE>
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party and to authorize the consummation of the transactions contemplated hereby
and thereby and the performance of its obligations hereunder and thereunder.
5C. No Conflicts or Consents. The execution, delivery and
performance of the Transaction Documents, compliance by each of Holdings,
Intermediate Holdings and Acquisition, and at and as of the Effective Time the
Company, with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not require any consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may be required
under the securities or Blue Sky laws of the various states) and will not
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, the charter or bylaws of Holdings, Intermediate Holdings or
Acquisition, or at and as of the Effective Time the Company, or any of their
respective Subsidiaries or any agreement, indenture or other instrument to which
Holdings, Intermediate Holdings or Acquisition, or at and as of the Effective
Time the Company, or any of their respective Subsidiaries is a party or by which
Holdings, Intermediate Holdings or Acquisition or at and as of the Effective
Time the Company, or any of their respective Subsidiaries or their respective
property is bound, or violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to Holdings, Intermediate
Holdings or Acquisition, or at and as of the Effective Time the Company, or any
of their respective Subsidiaries or their respective property.
5D. Enforceable Obligations. Each of the Transaction Documents
constitutes (and with respect to the Assumption Agreement, at or prior to the
Effective Time will constitute) a valid and legally binding agreement of each of
Holdings, Intermediate Holdings, Acquisition and the Company to the extent each
is or will be a party thereto, enforceable against it in accordance with its
terms (assuming due authorization, execution and delivery of each Transaction
Document by any other party thereto), except that enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and the discretion of any court
before which any proceeding therefor may be brought.
5E. Shares. When issued and paid for in accordance with the terms
hereof, the Shares will be duly authorized, val-
<PAGE>
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idly issued, fully paid and nonassessable and will not be subject to any
preemptive or similar rights. The aggregate number of shares of Common Stock
issued and outstanding on the Date of Closing is 42,973,312.
5F. Notes. The Notes have been duly and validly authorized by
Acquisition and, when executed by Acquisition in accordance with the provisions
thereof, and delivered to and paid for by the Purchasers in accordance with the
terms hereof, will be entitled to the benefits thereof and will constitute valid
and binding obligations of Acquisition (and at and as of the Effective Time, of
the Company) enforceable in accordance with their terms, except that the
enforcement thereof may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity) and the discretion of any court before which any proceeding therefor may
be brought.
5G. No Conflict. None of Holdings, Intermediate Holdings,
Acquisition or Wilson is, and at and as of the Effective Time the Company will
not be, in violation of its respective charter or bylaws or in default in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any other agreement,
indenture or instrument material to the conduct of the business of Holdings,
Intermediate Holdings, Acquisition, Wilson and their respective Subsidiaries,
taken as a whole, to which Holdings, Intermediate Holdings, Acquisition, the
Company, Wilson or any of their respective Subsidiaries is a party or by which
Holdings, Intermediate Holdings, Acquisition, the Company, Wilson or any of
their respective Subsidiaries or property is bound except for such violations or
defaults which, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
5H. Financial Statements. The Financial Statements, together with
related schedules and notes, present fairly the consolidated financial position,
results of operations and changes in financial position of Wilson on the basis
stated in such Financial Statements at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with GAAP consistently applied
throughout the periods involved, except as disclosed therein and except that the
financial statements for the period ended May 25, 1997 do not include footnotes
or adjustments normally made at year end; and
<PAGE>
- 13 -
the other financial and statistical information and data set forth in the
Memorandum is, in all material respects, accurately presented.
5I. No Undisclosed Liabilities. Except as fully reflected or
reserved against in the Financial Statements and the notes thereto, there are no
liabilities or obligations with respect to Holdings, Intermediate Holdings,
Acquisition, Wilson or any of their respective Subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due) which, either individually or in the aggregate, would be material to
Holdings, Intermediate Holdings, Acquisition, Wilson and their respective
Subsidiaries, taken as a whole. Each of Holdings, Intermediate Holdings and
Acquisition and, to the best knowledge of Holdings or Acquisition, after due
inquiry, Wilson or any of its Subsidiaries does not know of any basis for the
assertion against Holdings, Intermediate Holdings, Acquisition, Wilson or any of
their respective Subsidiaries of any liability or obligation of any nature
whatsoever that is not fully reflected in the Financial Statements which, either
individually or in the aggregate, would reasonably be expected to be material to
Holdings, Intermediate Holdings, Acquisition, Wilson and their respective
Subsidiaries, taken as a whole.
5J. Full Disclosure. The information delivered herewith or
heretofore by Holdings, Intermediate Holdings, Acquisition, Wilson or the
Company to the Purchasers in connection with the negotiation of this Agreement
or in connection with any transaction contemplated hereby, does not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained herein or therein not misleading. There is no
fact known to Holdings, Intermediate Holdings, Acquisition or Wilson that has
not been disclosed to the Purchasers which, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Effect.
5K. Litigation. Except as disclosed in Schedule 4.14 to the Stock
Purchase Agreement, there are no legal or governmental proceedings pending to
which any of Holdings, Intermediate Holdings, Acquisition or Wilson is, or at
and as of the Effective Time the Company will be, or any of their respective
Subsidiaries is a party or of which any of their respective property is the
subject which would reasonably be expected to result in a Material Adverse
Effect, and, to the best knowledge of Holdings, Intermediate Holdings,
Acquisition and Wilson, no such proceedings are threatened or contemplated.
<PAGE>
- 14 -
5L. Environmental and Other Laws. Except as disclosed in Schedule
4.23 or 4.14 to the Stock Purchase Agreement, none of Holdings, Intermediate
Holdings, Acquisition or Wilson, nor any of their respective Subsidiaries has
violated any foreign, federal, state of local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), nor any
federal or state law relating to discrimination in the hiring, promotion or pay
of employees nor any applicable federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each case would reasonably be
expected to result in any Material Adverse Effect.
5M. Permits. Each of Holdings, Intermediate Holdings, Acquisition,
Wilson and their respective Subsidiaries has such permits, licenses, franchises,
consents, approvals, orders, certificates and authorizations of governmental or
regulatory authorities ("permits"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease and operate its
respective properties and to conduct its business except for those the absence
of which, individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect; each of Holdings, Intermediate Holdings,
Acquisition, Wilson and their respective Subsidiaries 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 impairment of the rights of the
holder of any such permit, in each case where the same, individually or in the
aggregate, would reasonably be expected to result in a Material Adverse Effect;
each permit is in full force and effect; each of Holdings, Intermediate
Holdings, Acquisition, Wilson and their respective Subsidiaries is operating in
compliance with its permits, and there are no proceedings pending or, to
Holdings', Intermediate Holdings', Acquisition's or Wilson's knowledge,
threatened against Holdings, Intermediate Holdings, Acquisition, Wilson or any
of their respective Subsidiaries that seek to cause any permit of any of them to
be revoked, withdrawn, canceled, suspended or not renewed, except where the
failure of a permit to be in full force or effect or noncompliance with a permit
would not, individually or in the aggregate, to result in a Material Adverse
Effect.
5N. Title to Properties. Except as disclosed on Schedules 4.9 or
4.10 to the Stock purchase Agreement or as are
<PAGE>
- 15 -
not material to the business, prospects, financial condition or results of
operations of Holdings, Intermediate Holdings, Acquisition, Wilson and their
respective Subsidiaries, taken as a whole, each of Holdings, Intermediate
Holdings, Acquisition, Wilson and their respective Subsidiaries has (and at and
as of the Effective Time will have) good and marketable title, free and clear of
all Liens, claims, encumbrances and restrictions, to all property and assets
described in the Memorandum as being owned by them. All leases to which
Holdings, Intermediate Holdings, Acquisition, Wilson and their respective
Subsidiaries is a party are valid and binding and no default has occurred or is
continuing thereunder, which, individually or in the aggregate, would reasonably
be expected to result in any Material Adverse Effect; and Holdings, Intermediate
Holdings, Acquisition, Wilson and their respective Subsidiaries enjoy peaceful
and undisturbed possession under all such leases to which any of them is a party
as lessee other than such exceptions that, individually or in the aggregate,
would not reasonably be expected to result in any Material Adverse Effect.
5O. Insurance. Each of Holdings, Intermediate Holdings, Acquisition,
Wilson and their respective Subsidiaries maintain, and at and as of the
Effective Time, the Company will maintain reasonably adequate insurance.
5P. Reports. Each of Holdings, Intermediate Holdings, Acquisition,
Wilson and their respective Subsidiaries has (and at and as of the Effective
Time will have) timely filed all reports, data and other information required by
any other regulatory agency with authority to regulate Holdings, Intermediate
Holdings, Acquisition, Wilson, their respective Subsidiaries, or the business of
any of them in any manner except where the failure to do so would not reasonably
be expected to result in a Material Adverse Effect; and (i) each of Holdings,
Intermediate Holdings, Acquisition, Wilson and their respective Subsidiaries are
(and at and as of the Effective Time will be) in compliance with all rules,
regulations and requirements of all regulatory agencies, except where such
noncompliance, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect, and (ii) the conduct of the
business of each of Holdings, Intermediate Holdings, Acquisition, Wilson and
their respective Subsidiaries does not violate 42 U.S.C. ss. 1320a-7b (commonly
known as the "Anti-Kickback Statute") or 42 U.S.C. ss. 1395nn (commonly known as
the "Stark Amendments"), including all amendments thereto to the extent
effective on the date hereof, unless any noncompliance, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
<PAGE>
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5Q. Investment Company. None of Holdings, Intermediate Holdings,
Acquisition, Wilson, or their respective Subsidiaries is or upon application of
the proceeds from the sale of the Securities as contemplated by the Memorandum
will be and at and as of the Effective Time, the Company will not be, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
5R. Intellectual Property. Each of Holdings, Intermediate Holdings,
Acquisition, Wilson and their respective Subsidiaries owns or otherwise
possesses all material licenses, patents, patent rights, patent applications,
inventions, trade secrets, know-how, proprietary information and techniques,
including processes, trademarks, service marks, trade names, computer software
and copyrights described or referred to in the Memorandum as owned or used by it
or that are necessary for and/or used in the conduct of its business as
described in the Memorandum. Any registrations covering such patents,
trademarks, service marks, trade names or copyrights owned by, or licensed to,
Holdings, Intermediate Holdings, Acquisition, Wilson or any of their respective
Subsidiaries are valid and subsisting, have not been cancelled, abandoned or
otherwise terminated and, if applicable, have been duly issued or filed. Except
as set forth in Schedule 4.11 to the Stock Purchase Agreement, none of Holdings,
Intermediate Holdings, Acquisition, Wilson or any of their respective
Subsidiaries is aware of or has received any notice of infringement of, or
conflict or claimed conflict with, asserted rights of others with respect to any
licenses, patents, patent rights, patent applications, inventions, trade
secrets, know-how, proprietary information or techniques, including processes,
trademarks, service marks, trade names, computer software or copyrights.
5S. Offering of Notes or Shares. Except for solicitations to no more
than 10 offerees reasonably believed by each of Holdings and Acquisition to be
"accredited investors" as such term is defined in Regulation D of the Securities
Act in connection with the Memorandum neither Holdings or Acquisition nor any
agent acting on their behalf has, directly or indirectly, offered the Notes or
Shares or any similar security of Holdings or Acquisition for sale to, or
solicited any offers to buy the Notes or Shares or any similar security of
Holdings or Acquisition from, or otherwise approached or negotiated with respect
thereto with, any Person other than the purchasers, and neither Holdings or
Acquisition nor any agent acting on their behalf has taken or will take any
action which would subject the issuance or sale of the Notes or Shares to the
provisions
<PAGE>
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of section 5 of the Securities Act or to the registration provisions of any
securities or Blue Sky law of any applicable jurisdiction in such a manner as to
require that the Notes or Shares actually be registered.
5T. Use of Proceeds. Neither Holdings or Acquisition nor any of
their respective Subsidiaries owns or has any present intention of acquiring any
"margin stock" as defined in Regulation U or Regulation G (12 CFR Part 207) of
the Board of Governors of the Federal Reserve System ("margin stock"). The
proceeds of sale of the Notes and Shares will be used to purchase all of the
outstanding capital stock of Wilson. None of such proceeds will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the purpose of
maintaining, reducing or retiring any indebtedness which was originally incurred
to purchase or carry any stock that is currently a margin stock or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of such Regulation U or Regulation 0. Neither Holdings or Acquisition
nor any agent acting on its behalf has taken or will take any action which could
reasonably be expected to cause this Agreement or the Notes to violate
Regulation U, Regulation G, Regulation T or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Exchange Act, in each
case as in effect now or as the same may hereafter be in effect.
5U. Other Representations and Warranties. The representations and
warranties of each party to the Credit Agreement, the Stock Purchase Agreement
and the Equity Agreements are true and correct as of the date hereof and as of
the Date of Closing as if made on each such date.
Any certificate signed by any officer of Holdings or Acquisition and
delivered to any Purchaser or to counsel for the Purchasers shall be deemed a
representation and warranty by Holdings and Acquisition to each Purchaser as to
the matters covered thereby.
PARAGRAPH 6. REPRESENTATIONS AND AGREEMENT OF THE PURCHASERS.
6A. Acknowledgments of the Purchasers. Each Purchaser understands
and acknowledges to Holdings and Acquisition that:
<PAGE>
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(i) the offering and sale of the Securities is intended to be exempt
from registration under the Securities Act by virtue of the provisions of
Section 4(2) of the Securities Act;
(ii) there is no existing public or other market for the Securities
and there can be no assurance that such Purchaser will be able to sell or
dispose of such Purchaser's Notes and Shares;
(iii) the Securities have not been registered under the Securities
Act and must be held indefinitely unless they are subsequently registered
under the Securities Act or such sale is permitted pursuant to an
available exemption from such registration requirement;
(iv) if any transfer of the Securities is to be made in reliance on
an exemption under the Securities Act, Holdings and Acquisition may
require an opinion of counsel reasonably satisfactory to it that such
transfer may be made pursuant to an exemption under the Securities Act;
and
(v) that the Securities will have the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THIS SECURITIES ACT OF 1933 OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS AND THE COMPANY
MAY REQUIRE AN OPINION OF COUNSEL WITH RESPECT TO SUCH EXEMPTION."
6B. Representations of the Purchasers. Each Purchaser, severally and
not jointly, represents and warrants to Holdings and Acquisition that:
(i) the Securities to be acquired by it pursuant to this Agreement
are being acquired for its own account, not as a nominee or agent for any
other Person, and without a view to the distribution of such Securities or
any interest therein in violation of the Securities Act;
<PAGE>
- 19 -
(ii) it is an "Accredited Investor" as such term is defined in
Regulation D under the Securities Act and has such knowledge and
experience in financial and business matters so as to be capable of
evaluating the merits and risks of its investment in the Securities, and
such Purchaser is capable of bearing the economic risks of such investment
and is able to bear a complete loss of its investment in the Securities;
(iii) it has been provided, to its satisfaction, the opportunity to
ask questions concerning the terms and conditions of the offering and sale
of the Securities, has had all such questions answered to its satisfaction
and has been supplied all additional information as it has requested;
(iv) the execution, delivery, and performance of this Agreement is
within such Purchaser's powers (corporate or otherwise) and has been duly
authorized by all requisite action (corporate or otherwise); and
(v) it shall take all further actions necessary to facilitate the
issuance of the Securities to it under an appropriate exemption from
registration under the Securities Act of applicable Blue Sky Laws,
including, without limitation, providing the Company with such information
as the Company may require to complete a Form D and any related or similar
forms or applications required under the Securities Act or applicable Blue
Sky Laws.
PARAGRAPH 7. DEFINITIONS.
7. Definitions. For the purpose of this Agreement, the terms defined
in the indenture attached as part of Exhibit A hereto (the "Indenture") shall
have the respective meanings set forth in the Indenture, except that terms
defined in this Agreement shall have the respective meanings specified therein,
and the following terms shall have the meanings specified with respect thereto
below (such meanings to be equally applicable to both the singular and plural
forms of the terms defined)
"all or substantially all" shall have the meaning given such phrase
in the Revised Model Business Corporation Act.
<PAGE>
- 20 -
"Assumption Agreement" means the agreement in the form of Exhibit E
attached hereto among the Company and each Purchaser whereby the Company assumes
all of the obligations and duties of Acquisition under this Agreement, the Notes
and the Note Registration Rights Agreement.
"Equity Agreements" means the subscription agreements relating to
the purchase of Capital Stock of Holdings dated as of the date hereof and the
Shareholders' Agreements.
"Financial Statements" means the audited annual consolidated
financial statements of Wilson for the years ended December 31, 1996, 1995 and
1994, as updated by the unaudited consolidated financial statements dated as of,
and for the period ended, May 25, 1997.
"Fiscal Quarter" shall mean a three-month period ending on March 31,
June 30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of
any year.
"Holder" means any holder of Securities from time to time.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Indebtedness owed to such Person or any
other arrangement with such creditor which provides for the payment of such
Indebtedness out of such property or assets or which allows such Person to have
such Indebtedness satisfied out of such property or assets prior to the general
creditors of any owner thereof, including without limitation any lien, mortgage,
security interest, pledge, deposit, production payment, rights of a vendor under
any title retention or conditional sale agreement or lease substantially
equivalent thereto, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business.
"Material Adverse Effect" means a material adverse effect to the
business, financial condition, operations, assets, business or properties of
Holdings, Intermediate Holdings, Acquisition, Wilson, the Company and their
respective Subsidiaries, taken as a whole or the ability or obligation of
Holdings, Acquisition, Wilson or the Company to perform on a
<PAGE>
- 21 -
timely basis their respective obligations under this Agreement or the other
Transaction Documents.
"Memorandum" means the Confidential Information Memorandum of
Holdings dated June 1997 delivered to the Purchasers attached hereto as Exhibit
G.
"Note Registration Rights Agreement" means the Registration Rights
Agreement by and among Acquisition and the Purchasers, dated the Date of
Closing, in the form of Exhibit F hereto, as amended or supplemented from time
to time.
"Registration and Anti-Dilution Agreement" means the Registration
and Anti-Dilution Agreement by and among Holdings and the Purchasers, dated the
Date of Closing, in the form of Exhibit C hereto, as amended or supplemented
from time to time.
"Securities" means the Notes and the Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated
June 19, 1997, by and among Holdings and Wilson, Warren D. Greatbatch, Peter N.
Greatbatch, Kenneth A. Greatbatch, Anne K. Maciariello and Ericka Dee
Greatbatch.
"Transaction Documents" means this Agreement, the Notes, the Notes
Registration Rights Agreement, the Registration and Anti-Dilution Agreement, the
Shareholders' Agreements, the Credit Agreement, the Equity Agreements, the
Assumption Agreement and all other agreements, certificates, documents,
instruments and writings at any time delivered in connection herewith or
therewith.
"Transferee" means any direct or indirect transferee of all or any
part of any Security purchased under this Agreement.
7A. Terms and Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared in accordance with GAAP as
in effect from time to time, applied on a basis consistent with the most recent
Financial Statements.
<PAGE>
- 22 -
PARAGRAPH 8. MISCELLANEOUS.
8. Miscellaneous.
8A. Expenses. The Sellers, jointly and severally, agree, whether or
not the transactions contemplated hereby or the other Transaction Documents
shall be consummated, to pay, and save the Purchasers and any Transferee
harmless against liability for the payment of, all reasonable out-of-pocket
expenses arising in connection with such transactions promptly (and, in any
event, within 30 days after any invoice or other statement or notice), including
(i) all reasonable fees and expenses of Cahill Gordon & Reindel, special counsel
to the Purchasers, in connection with this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby, (ii) all
document production and duplication charges and the reasonable fees and expenses
of one counsel engaged by the Purchasers or such Transferees in connection with
any subsequent proposed modification of, or proposed consent under, this
Agreement or the other Transaction Documents whether or not such proposed
modification shall be effected or proposed consent granted, and (iii) the costs
and expenses, including reasonable attorneys' fees, incurred by the Purchasers
or such Transferee in enforcing (or determining whether or how to enforce) any
rights under this Agreement or the other Transaction Documents or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement, the other Transaction Documents or the
transactions contemplated hereby or thereby or by reason of the Purchasers' or
such Transferee's having acquired any Security, including without limitation
costs and expenses incurred in any bankruptcy case. The obligations of the
Company under this Paragraph 8A shall survive the transfer of any Note or Share
or portion thereof or interest therein by any Purchaser or any Transferee, and
the payment of any Note or Share.
8B. Consent to Amendments. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended and the Sellers may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Sellers have obtained the written consent of each
of the holders of Notes and/or Shares, as the case may be, purchased hereunder.
8C. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein or made in writing by or on
behalf of the Sellers in
<PAGE>
- 23 -
connection herewith shall survive the execution and delivery of this Agreement,
the Notes, the transfer by any Purchaser of any Note or Shares or portion
thereof or interest therein and the payment of any Note, and may be relied upon
by any Transferee, regardless of any investigation made at any time by or on
behalf of any Purchaser or any Transferee. Subject to the preceding sentence,
this Agreement and the other Transaction Documents embody the entire agreement
and understanding between each Purchaser and the Sellers and supersede all prior
agreements and understandings relating to the subject matter hereof.
8D. Successors and Assigns. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
8E. Notices. All notices or other communications provided for
hereunder shall be in writing and sent by telecopy or nationwide overnight
delivery service (with charges prepaid) and (i) if to any Purchaser, addressed
to it at the address specified for such communications on the signature pages
hereof, or at such other address as such Purchaser shall have specified to
Holdings and Acquisition in writing, (ii) if to any other Holder, addressed to
such other Holder at such address as such other Holder shall have specified to
Holdings and Acquisition in writing or, if any such other Holder shall not have
so specified an address to Holdings and Acquisition, then addressed to such
other Holder in care of the last Holder which shall have so specified an address
to Holdings and Acquisition and (iii) if to Holdings and Acquisition, addressed
to them at WGL Holdings, Inc., 10,000 Wehrle Drive, Clarence, New York 14031,
Attention: President, or at such other address as Holdings and Acquisition shall
have specified to the holder of each Security in writing, with a copy to Weil,
Gotshal & Manges, LLP, 7000 Louisiana, Suite 1600, Houston, TX 77002, Attention:
Steven D. Rubin, Esq.
8F. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Holders, the determination of such
satisfaction shall be made by the Holders in the sole and exclusive judgment
(exercised in good faith) of the Person or Persons making such determination.
<PAGE>
- 24 -
8G. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. Any
legal action or proceeding with respect to this Agreement or any other
Transaction Document may be brought in the courts of the State of New York or of
the United States for the Southern District of New York, and, by execution and
delivery of this Agreement, each Seller hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts. Each of Holdings and Acquisition further
irrevocably consent to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to them at their address for
notices pursuant to paragraph 8E, such service to become effective 5 days after
such mailing. Holdings and Acquisition hereby irrevocably appoint CT Corporation
System and such other persons as may hereafter be selected by CT Corporation
System irrevocably agreeing in writing to serve as their agent for service of
process in respect of any such action or proceeding. Nothing herein shall affect
the right of any Holder to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against Holdings or
Acquisition in any other jurisdiction. Each of Holdings and Acquisition hereby
irrevocably waive any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Transaction Document brought in the
courts referred to above and hereby further irrevocably waive and agree not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
8H. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8I. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
<PAGE>
- 25 -
8J. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
<PAGE>
- 26 -
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to
Holdings and Acquisition whereupon this letter shall become a binding agreement
by and among Holdings, Acquisition and each of you.
Very truly yours,
WGL HOLDINGS, INC.
By: /s/ David M Wittels
-------------------------------------
Name: David M Wittels
Title: President
WGL ACQUISITION CORP.
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
Title: President
<PAGE>
SIGNATURE PAGE TO PURCHASE AGREEMENT
Accepted and Agreed as of the
date first above written:
DLJ INVESTMENT PARTNERS, L.P. Principal Amount Notes
Purchased: $10,101,010
($8,812,803 aggregate
By: DLJ INVESTMENT PARTNERS, INC., purchase price for
Managing General Partner Notes)
Number of Shares: 1,238,207
($1,258,207 aggregate
purchase price for
Shares)
Address of Purchaser:
John Moriarty, Jr./Ivy Dodes
DLJ Investment Funding, Inc.
277 Park Avenue
New York, NY 10172
Telecopy No.: (212) 892-7272
Designated Bank: Citibank, N.A.
ABA Number: 021 - 000 - 089
Account Name: DLJ Securities Corp. Special Reserve Account
Address: 111 Wall Street
New York, NY 10005
Account No.: 4061 - 0209
For further credit to: DLJ Internal Account 275 - 001295
Attention: Fran Argento
Taxpayer I.D. Number: 13 - 3868693
(if registered in the name of a
nominee, the nominee Taxpayer
I.D. Number)
<PAGE>
Nominee (name in which Notes are to be registered, if different
than name of Purchaser)
- -----------------------------------
<PAGE>
SIGNATURE PAGE TO PURCHASE AGREEMENT
Accepted and Agreed as of the
date first above written:
DLJ INVESTMENT FUNDING, INC. Principal Amount Notes
Purchased: $1,439,394
($1,255,825 aggregate
purchase price for
Notes)
Number of Shares: 183,569
By: /s/ Ivy Dodes ($183,569 aggregate
-------------------------------- purchase price for
Name: Ivy Dodes Shares)
Title: Vice President
Address of Purchaser:
John Moriarty, Jr./Ivy Dodes
DLJ Investment Funding, Inc.
277 Park Avenue
New York, NY 10172
Telecopy No.: (212) 892-7272
Designated Bank: Citibank, N.A.
Account Name: DLJ Securities Corp. Special Reserve Account
ABA Number: 021 - 000 - 089
Address: 111 Wall Street
New York, NY 10005
Account No.: 4061 - 0209
For further credit to: DLJ Internal Account 295 - 001451
Attention: Fran Argento
Taxpayer I.D. Number: 13 - 3887953
(if registered in the name of a
nominee, the nominee Taxpayer
I.D. Number)
<PAGE>
Nominee (name in which Notes are to be registered, if different
than name of Purchaser)
- -----------------------------------
<PAGE>
SIGNATURE PAGE TO PURCHASE AGREEMENT
Accepted and Agreed as of the
date first above written:
DLJ FIRST ESC L.L.C Principal Amount Notes
Purchased: $959,596
($837,216 aggregate
By: DLJ LBO PLANS MANAGEMENT purchase price for
CORPORATION Notes)
Number of Shares: 122,380
By: /s/ Ivy Dodes ($122,380 aggregate
-------------------------------- purchase price for
Name: Ivy Dodes Shares)
Title: Vice President
Address of Purchaser:
Ivy Dodes/Nicole Arnaboldi
DLJ First ESC L.L.C.
c/o DLJ LBO Plans Management Corporation
277 Park Avenue
New York, NY 10172
Telecopy No.: (212) 892-7272
Designated Bank: Citibank, N.A.
Account Name: DLJ Securities Corp Special Reserve Account
ABA Number: 021 - 000 - 089
Address: 111 Wall Street
New York, NY 10005
Account No.: 4061 - 0209
For further credit to: DLJ Internal Account 275 - 882652
Attention: Fran Argento
Taxpayer I.D. Number: 13 - 3790645
(if registered in the name of a
nominee, the nominee Taxpayer
I.D. Number)
<PAGE>
Nominee (name in which Notes are to be registered, if different
than name of Purchaser)
- -----------------------------------
<PAGE>
SIGNATURE PAGE TO PURCHASE AGREEMENT
Accepted and Agreed as of the
date first above written:
THE NORTHWESTERN MUTUAL LIFE Principal Amount Notes
INSURANCE COMPANY Purchased: $7,500,000
($6,543,506 aggregate
By: /s/ A. Kipp Koester purchase price for
-------------------------------- Notes)
Name: A. Kipp Koester
Title: Vice President
Number of Shares: 956,494
($956,494 aggregate
purchase price for
Shares)
Address of Purchaser:
For confirmation of payments: All other communications:
The Northwestern Mutual Life The Northwestern Mutual Life
Insurance Company Insurance Company
720 East Wisconsin Avenue 720 East Wisconsin Avenue
Milwaukee, WI 53202 Milwaukee, WI 53202
Attn: Investment Operations Attn: Securities Department
Telecopy No.: (414) 299-7124
Telecopy No.: (212) 299-5714
Designated Bank: Bankers Trust Company
ABA Number: 021-001-033
Account Name: 16 Wall Street
Insurance Unit - 4th Floor
New York, NY 10005
Account No.: 00-000-027
Attention: The Northwestern Mutual Life Insurance Company
Taxpayer I.D. Number: 39-0509570
(if registered in the name of a
nominee, the nominee Taxpayer
I.D. Number)
Nominee (name in which Notes are to be registered, if different
than name of Purchaser)
- -----------------------------------
<PAGE>
SIGNATURE PAGE TO PURCHASE AGREEMENT
Accepted and Agreed as of the
date first above written:
DONALDSON, LUFKIN & JENRETTE Principal Amount Notes
SECURITIES CORPORATION Purchased: $5,000,000
($4,362,338 aggregate
purchase price for
Notes)
Number of Shares: 637,662
By: /s/ Ivy Dodes ($637,662 aggregate
-------------------------------- purchase price for
Name: Ivy Dodes Shares)
Title: Vice President
Address of Purchaser:
Telecopy No.: (212) 892-7272
Designated Bank: Citibank, N.A.
ABA Number: 021 - 000 - 089
Account Name: DLJ Securities Corp.
Address: 111 Wall Street
New York, New York 10005
Account No.: 3889 - 6041
Attention: Fran Argento
Taxpayer I.D. Number: 13 - 2741727
(if registered in the name of a
nominee, the nominee Taxpayer
I.D. Number)
Nominee (name in which Notes are to be registered, if different
than name of Purchaser)
- -----------------------------------
<PAGE>
Exhibit A to Securities
Purchase Agreement --
Form of 13% Senior
Subordinated Note due 2007
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL
AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $872.46752; (2) THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $127.53248; (3) THE ISSUE DATE IS JULY 10, 1997; AND
(4) THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 15.556%. THIS NOTE (AND
PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICA-BLE EXEMPTION THEREFROM. THE HOLDER
OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (W) INSIDE THE UNITED STATES
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION
MEETING THE REQUIRE-MENTS OF RULE 144A, OR IN ACCORDANCE WITH RULE 144 UNDER THE
SECURITIES ACT, OR PURSUANT TO ANOTHER EXEMPTION FROM THE REG-ISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL, IF THE
COMPANY SO REQUESTS), (X) TO THE COMPANY, (Y) OUTSIDE THE UNITED STATES TO A
FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SE-CURITIES ACT OR (Z) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (2) IN EACH CASE, IN AC-CORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NO-TIFY ANY PURCHASER OF THIS NOTE OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.
WGL ACQUISITION CORP.
13% SENIOR SUBORDINATED NOTE DUE 2007
No. ______ $___________
WGL ACQUISITION CORP., a New York corporation (the "Company,"
which term includes any successor entity, including
<PAGE>
- 2 -
without limitation WILSON GREATBATCH LTD.), for value received, promises to pay
to ____________________________, or registered assigns, the principal sum of
_________________________________, on July 1, 2007.
Interest Payment Dates: January 1 and July I
Record Dates: December 15 and June 15
Reference is made to the further provisions of this Note
contained on the reverse hereof or elsewhere herein, which will for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
WGL ACQUISITION CORP.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Dated: July 10, 1997
<PAGE>
- 3 -
(REVERSE OF SECURITY)
13% SENIOR SUBORDINATED NOTE DUE 2007
1. INCORPORATION BY REFERENCE OF PROVISION OF THE INDENTURE.
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the indenture (as amended in accordance herewith, the "Indenture")
attached hereto as Exhibit A. At all times during which an indenture is not
required to be qualified under the TIA with respect to the Notes or the
Indenture has not otherwise been executed and delivered, to the extent not
inconsistent with any other terms of the Notes set forth herein, all of the
terms and conditions of the Indenture shall be and are hereby incorporated by
this reference in the Notes as if fully set forth herein, and shall be binding
upon the Company and, by accepting a Note, each Holder and inure to the benefit
of the Holders of the Notes, except that, to the extent that the Indenture
requires (i) any notices, certificates or other items to be delivered by the
Company to the Trustee or any Paying Agent, such notices, certificates or other
items shall be delivered instead to each Holder, (ii) any notices, certificates
or other items to be delivered by the Holders or the holders of Senior Debt
(including the Representative) to the Trustee, such notices, certificates or
other item shall be delivered instead by the Holders or the holders of Senior
Debt (including the Representative), as the case may be, to the Company (and, in
respect of notices, certificates or other items delivered by the holders of
Senior Debt (including the Representative), shall be delivered by the Company to
each Holder), (iii) any notices, certificates or other items to be delivered by
the Trustee to the Holders, such notices, certificates or other items shall be
delivered instead by the Company to the Holders, (iv) any payments to be made by
the Company to the Paying Agent for payment to Holders, such payments shall
instead be paid directly by the Company to the applicable Holder in the same
manner as set forth in Section 3 below Section 2.04 of the Indenture not to
apply to any such payments), (v) approval of the form of Notes or notations,
legends or endorsements thereon by the Trustee, the Holders of a majority in
outstanding principal amount of the Notes shall instead approve such form and
notations, legends or
<PAGE>
- 4 -
endorsements (the form of Notes delivered to the initial Holders on the date of
original issuance of the Notes and notations, legends and endorsements thereon
being deemed to have been so approved), (vi) any Note to be authenticated by the
Trustee, the Notes shall instead be authenticated by the Company (the execution
and delivery of any Note by manual signature of the Company to be deemed to
constitute such authentication for all purposes) (vii) that a Person other than
the Company and any Affiliate thereof act as Paying Agent for presentation or
surrender of Notes for payment, the Company or an Affiliate thereof may
nonetheless so act, (viii) the Company to initially appoint the Trustee as
Registrar, Paying Agent (to the extent of acting as agent for receiving
surrender or presentations of, but not deposits of payments on, Notes) and agent
for service of demands and notices in connection with the Notes, the Company
instead hereby appoints its office in New York City at WGL Acquisition Corp.,
10,000 Wehrle Drive, Clarence, NY 14031 for such purpose (with Section 2.04 of
the Indenture not to apply thereto), (ix) Notes to be canceled by the Trustee,
such Notes shall instead be canceled by the Company, (x) any Opinion of Counsel
to be delivered to the Trustee, such documents shall instead be delivered to the
Holders, (xi) any Notes to be surrendered or forwarded to the Trustee or any
Paying Agent, such Notes shall be surrendered or forwarded instead to the
Company, (xii) any notices, certificates or other items to be delivered by the
Holders to the Paying Agent, such notices, certificates or other items shall be
delivered instead to the Company, and (xiii) Notes to be redeemed upon a partial
redemption to be selected by the Trustee, such Notes shall be selected instead
by the Company.
2. INTEREST. WGL ACQUISITION CORP., a New York corporation (the
"Company," which term includes any successor entity, including without
limitation WILSON GREATBATCH LTD.), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from July 10, 1997. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing January 1,
1998. Interest
<PAGE>
- 5 -
will be computed an the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes plus 2% per annum, and on overdue installments of interest (without regard
to any applicable grace periods) to the extent lawful.
3. METHOD OF PAYMENT. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to the Company
to collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by its check payable (in immediately available
funds) in U.S. Legal Tender or, at the request of a Holder, by wire transfer in
immediately available funds to an account specified in writing by a Holder. The
Company may deliver any such interest payment to the Holder's registered address
or such other address or account as the Holder may designate in writing.
4. PAYING AGENT AND REGISTRAR. Initially, the Company will act as
Paying Agent (for purposes of receiving surrender or presentment of, but not
deposits of payments on, Notes) and Registrar. The Company may change any such
Paying Agent, Registrar or co-Registrar without notice to the Holders.
5. INDENTURE. In the event an indenture is required to be qualified
under the Trust Indenture Act of 1939 (U.S. Code ss.ss. 77aaa-77bbbb), as
amended from time to time (the "TIA"), with respect to the Notes, or upon the
request of holders of in excess of 25% in principal amount of outstanding Notes
the Company shall and at any other time the Company, in its sole discretion, may
appoint a Trustee who satisfies the eligibility requirements set forth in
Section 7.10 of the In-
<PAGE>
- 6 -
denture and, in any such event, the Company shall take whatever actions are
necessary to cause an indenture substantially in the form of Exhibit A attached
hereto to be executed and delivered by the Company and the Trustee and to be
qualified under the TIA (which Indenture shall provide for the same restrictions
on transfer set forth hereon if such Indenture is executed and delivered at the
election of the Company). In such event, (i) this Note shall be deemed to be one
of an issue of Notes of the Company issued under the Indenture; (ii) the terms
of the Notes shall be deemed to include those stated in the Indenture and those
made part of the Indenture by reference to the TIA, as amended from time to
time; and (iii) the Notes shall be subject to all such terms. Holders of Notes
are referred to the Indenture and the TIA for a statement of all such term. In
such event, the Company may require holders of the Notes, and each Holder by his
or her acceptance hereof agrees upon the Company's request, to surrender to the
Trustee all Notes in the form hereof in exchange for replacement Notes
substantially in the form of Exhibit A to the Indenture. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the TIA, as in effect on the date of the Indenture. This Note is
one of a duly authorized issue of Notes of the Company consisting of any other
13% Senior Subordinated Notes due 2007 of the Company issued on July 10, 1997
and any replacement Notes issued in exchange for, or in lieu of, the foregoing
in accordance with the Indenture. The Notes are limited in aggregate principal
amount to $___________. Notwithstanding anything to the contrary herein, the
Notes are subject to all such terms, and Holders of Notes are referred to the
Indenture and said Act for a statement of them. The Notes are general unsecured
obligations of the Company.
6. SUBORDINATION. The Notes are subordinated in right of payment, in
the manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by his or her acceptance hereof agrees to be
bound by such provisions and to
<PAGE>
- 7 -
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture.
7. 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 July 1,
1999, at the following redemption prices (expressed as percentages of the
principal amount thereof) if redeemed during the twelve-month period commencing
on July 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1999 ......................................................110.11%
2000 ......................................................108.67%
2001 ......................................................107.22%
2002 ......................................................105.78%
2003 ......................................................104.33%
2004 ......................................................102.89%
2005 ......................................................101.44%
2006 ......................................................100.00%
</TABLE>
(b) OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERINGS. At any time, or
from time to time, on or prior to July 1, 1999, the company may, at its option,
use the net cash proceeds of one or more Public Equity offerings (as defined in
the Indenture) to redeem up to 100% but no less than 50% of the aggregate
principal amount of Notes originally issued at a redemption price equal to 112%
of the principal amount thereof plus, in each case, accrued and unpaid interest
to the date of 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 60
days after the consummation of any such Public Equity Offering.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at
<PAGE>
- 8 -
such Holder's registered address. Notes in denominations larger than $1,000 may
be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued and unpaid interest, if any, the
Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued and unpaid interest, if
any.
9. OFFERS TO PURCHASE. Sections 4.15 and 4.16 of the Indenture provide
that, after certain Asset Sales (as defined in the Indenture) and upon the
occurrence of a Change of Control (as defined in the Indenture), and subject to
further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
10. REGISTRATION RIGHTS. Pursuant to the Registration Rights Agreement
(as defined in the Indenture), in certain instances, the Company will be
obligated to register this Note under the Securities Act.
11. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with the Indenture. The Company may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Company need not register the transfer of or
exchange of any Notes or portions thereof selected for redemption.
12. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
<PAGE>
- 9 -
13. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any
time deposits with a trustee who otherwise could qualify to serve as Trustee
under the Indenture U.S. Legal Tender or U.S. Government Obligations sufficient
to pay the principal of and interest on the Notes to redemption or maturity and
complies with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the Indenture and the
Notes (including certain covenants, but excluding its obligation to pay the
principal of and interest on the Notes) .
14. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions set
forth in Section 9.02(b) of the Indenture, the Indenture or the Notes may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding, and any
existing Default or Event of Default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in aggregate
principal amount of the Notes then outstanding. Without notice to or consent of
any Holder, the Company, when authorized by a Board Resolution, may amend or
supplement the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, provide for uncertificated Notes in addition to or in place of
certificated Notes, or comply with Article Five of the Indenture, comply with
any requirements of the SEC in order to effect or maintain the qualification of
this Indenture under the TIA, make any change that would provide any additional
benefit or rights to the Holders or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.
15. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on
the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, enter into transactions with Affiliates, create
dividend or other payment restrictions affecting Subsidiaries, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number
<PAGE>
- 10 -
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
16. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
17. DEFAULTS AND REMEDIES. Events of Default shall be as set forth in
the Indenture. If an Event of Default occurs and is continuing, the Holders of
at least 25% in aggregate principal amount of Notes then outstanding may declare
all the Notes to be due and payable in the manner, at the time and with the
effect provided in the Indenture, except that in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
become due and payable immediately without further action or notice. If an Event
of Default occurs and is continuing, Holders of a majority in- principal amount
of the then outstanding Notes may pursue any available remedy at law or in
equity to collect the payment of principal or interest on the Notes or to
enforce the performance of any provision of the Notes. The Company shall pay all
costs of collecting or enforcing payment of the Notes, together with attorneys,
fees and expenses paid or incurred by holders, whether or not suit be brought by
the Holders.
18. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture (if
executed and delivered), in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company, its
Subsidiaries or their respective Affiliates as if it were not the Trustee.
19. NO RECOURSE AGAINST OTHERS. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note
<PAGE>
- 11 -
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
20. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS
NOTE AND THE INDENTURE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS (OTHER
THAN NEW YORK GENERAL OBLIGATIONS LAW ss. 5-1401).
21. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act) .
22. PROVISIONS OF INDENTURE. Each Holder, by accepting a Note, agrees
to be bound by all of the terms and provisions of the Indenture, as the same may
be amended from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to:
WGL Acquisition Corp.
10,000 Wehrle Drive .
Clarence, New York 14031
Attention: President
<PAGE>
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:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint __________________________ agent to transfer this Note
on the books of the Company. The agent may substitute another to act for him.
Date: ______________________ Signed: ______________________
(Signed exactly as your name
appears on the other side of
this Note)
Signature Guarantee: ______________________
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) July 10, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
<PAGE>
[CHECK ONE]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the Securities Act;
or
(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has furnished
to the Company a signed letter containing certain representations and
agreements (the form of which letter is attached hereto); or
(4) __ outside the United states to a "foreign person, in compliance with Rule
904 of Regulation S under the Securities Act; or
(5) __ pursuant to the exemption from registration provided by Rule 144 under
the Securities Act; or
(6) __ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Company 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), (5) or (6) is checked,
the Company may require, prior to registering any such transfer of the Notes, in
its sole discretion, such legal opinions, certifications (including an
investment letter in the case of box (3) or (4)) and other information as 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.
If none of the foregoing boxes is checked, the Company 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
shall have been satisfied.
Date: ______________________ Signed: ____________________________
(Signed exactly as your name appears
on the other side of this Note)
Signature Guarantee: ____________________________
<PAGE>
[FORM OF LETTER TO BE COMPLETED]
BY PURCHASER IF (3) ABOVE IS CHECKED]
Ladies and Gentlemen:
1. The undersigned understands that any subsequent transfer of the
Notes is subject to certain restrictions and conditions set forth in the Notes
and in 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.
2. The undersigned understands that the offer and sale of 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. The undersigned
agrees, on its own behalf and on behalf of any accounts for which it is acting
as hereinafter stated, that if it should sell, pledge or otherwise transfer any
Notes it will do so only (1)(W) inside the United States to a person who the
seller reasonably believes is a qualified institutional buyer within the meaning
of rule 144A under the securities act in a transaction meeting the requirements
of Rule 144A, or in accordance with Rule 144 under the Securities Act, or
pursuant to another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel, if the company so
requests), (x) to the Company, (y) outside the United States to a foreign person
in a transaction meeting the requirements of Rule 904 under the Securities Act
or (z) pursuant to an effective registration statement under the Securities Act
and (2) in each case, in accordance with the applicable securities laws of any
state of the United States or any other applicable jurisdiction, and the
undersigned further agrees 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.
3. The undersigned understands that, on any proposed resale of any
Notes, it may be required to furnish the Company such certification and other
information as the Company may reasonably require to confirm that the proposed
sale complies with the foregoing restrictions. The undersigned further
un-
<PAGE>
- 2 -
derstands that the Notes purchased by it will bear a legend to the foregoing
effect.
4. The undersigned is an institutional "accredited investor" (as
defined in Rule 501(a) (1), (2), (3) and (7) 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 the
undersigned and any accounts for which it is acting are each able to bear the
economic risk of our or its investment, as the case may be.
5. The undersigned is acquiring the Notes purchased by us f or our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which the undersigned exercises sole
investment discretion.
Date: ____________________________ ____________________________
NOTICE: To be executed by an
executive officer
<PAGE>
- 3 -
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
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
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$ ____________________________
Dated: ____________________________ __________________________
NOTICE: The signature on
this assignment, must
correspond with the name
as it appears upon the
face of the within Note in
every particular without
alteration or enlargement
or any change whatsoever
and be guaranteed by the
endorser's bank or broker.
Signature Guarantee: ____________________________
<PAGE>
Exhibit A to 13% Senior
Subordinated Note due 2007
of WGL Acquisition Corp.
Issued on July 10, 1997
================================================================================
WILSON GREATBATCH LTD.,
as Issuer
and
[ ],
as Trustee
----------------------
INDENTURE
Dated as of [ ]
----------------------
$25,000,000
13% Senior Subordinated Notes due 2007
================================================================================
<PAGE>
CROSS - REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1) ................................................ 7.10
(a)(2) ................................................ 7.10
(a)(3) ................................................ N.A.
(a)(4) ................................................ N.A.
(a)(5) ................................................ 7.08; 7.10
(b) ................................................... 7.08; 7.10; 11.02
(c) ................................................... N.A.
311(a) ................................................... 7.11
(b) ................................................... 7.11
(c) ................................................... N.A.
312(a) ................................................... 2.05
(b) ................................................... 11.03
(c) ................................................... 11.03
313(a) ................................................... 7.06
(b)(1) ................................................ N.A.
(b)(2) ................................................ 7.06
(c) ................................................... 7.06; 11.02
(d) ................................................... 7.06
314(a) ................................................... 4.07; 4.08; 11.02
(b) ................................................... N.A.
(c)(1) ................................................ 11.04
(c)(2) ................................................ 11.04
(c)(3) ................................................ N.A.
(d) ................................................... N.A.
(e) ................................................... 11.05
(f) ................................................... N.A.
315(a) ................................................... 7.01(b)
(b) ................................................... 7.05; 11.02
(c) ................................................... 7.01(a)
(d) ................................................... 7.01(c)
(e) ................................................... 6.11
316(a)(last sentence) .................................... 2.09
(a)(1)(A) ............................................. 6.05
(a)(1)(B) ............................................. 6.04
(a)(2) ................................................ N.A.
(b) ................................................... 6.07
(c) ................................................... 9.05
317(a)(1) ................................................ 6.08
(a)(2) ................................................ 6.09
(b) ................................................... 2.04
318(a) ................................................... 11.01
(c) ................................................... 11.01
- ----------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions ................................................. 1
SECTION 1.02. Incorporation by Reference of TIA ........................... 28
SECTION 1.03. Rules of Construction ....................................... 28
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating ............................................. 29
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount .... 29
SECTION 2.03. Registrar and Paying Agent .................................. 30
SECTION 2.04. Paying Agent To Hold Assets in Trust ........................ 31
SECTION 2.05. Noteholder Lists ............................................ 31
SECTION 2.06. Transfer and Exchange ....................................... 32
SECTION 2.07. Replacement Notes ........................................... 32
SECTION 2.08. Outstanding Notes ........................................... 33
SECTION 2.09. Treasury Notes .............................................. 33
SECTION 2.10. Temporary Notes ............................................. 34
SECTION 2.11. Cancellation ................................................ 34
SECTION 2.12. Payment of Interest; Defaulted Interest ..................... 34
SECTION 2.13. CUSIP Number ................................................ 35
SECTION 2.14. Deposit of Moneys ........................................... 35
SECTION 2.15. Persons Deemed Owners ....................................... 35
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee .......................................... 36
SECTION 3.02. Selection of Notes To Be Redeemed ........................... 36
SECTION 3.03. Notice of Redemption ........................................ 37
SECTION 3.04. Effect of Notice of Redemption .............................. 38
- i -
<PAGE>
Page
----
SECTION 3.05. Deposit of Redemption Price ................................. 38
SECTION 3.06. Notes Redeemed in Part ...................................... 38
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes ............................................ 38
SECTION 4.02. Maintenance of Office or Agency ............................. 39
SECTION 4.03. Corporate Existence ......................................... 39
SECTION 4.04. Payment of Taxes and Other Claims ........................... 40
SECTION 4.05. Maintenance of Properties and Insurance ..................... 40
SECTION 4.06. Compliance Certificate; Notice of Default ................... 41
SECTION 4.07. Compliance with Laws ........................................ 42
SECTION 4.08. SEC Reports ................................................. 42
SECTION 4.09. Waiver of Stay, Extension or Usury Laws ..................... 43
SECTION 4.10. Limitation on Restricted Payments ........................... 43
SECTION 4.11. Limitation on Transactions with Affiliates .................. 46
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness ......... 47
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries .................................... 48
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt ....... 48
SECTION 4.15. Change of Control ........................................... 49
SECTION 4.16. Limitation on Asset Sales ................................... 51
SECTION 4.17. Limitation on Preferred Stock of Restricted Subsidiaries .... 55
SECTION 4.18. Limitation on Liens ......................................... 55
SECTION 4.19. Limitation of Guarantees by Restricted Subsidiaries ......... 56
SECTION 4.20. Limitation on Issuance of Shares of Restricted Subsidiaries . 57
SECTION 4.21. Conduct of Business ......................................... 57
SECTION 4.22. Consummation of Acquisition ................................. 57
- ii -
<PAGE>
Page
----
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets .................... 58
SECTION 5.02. Successor Corporation Substituted ........................... 59
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default ........................................... 60
SECTION 6.02. Acceleration ................................................ 62
SECTION 6.03. Other Remedies .............................................. 63
SECTION 6.04. Waiver of Past Defaults ..................................... 63
SECTION 6.05. Control by Majority ......................................... 63
SECTION 6.06. Limitation on Suits ......................................... 64
SECTION 6.07. Rights of Holders To Receive Payment ........................ 64
SECTION 6.08. Collection Suit by Trustee .................................. 65
SECTION 6.09. Trustee May File Proofs of Claim ............................ 65
SECTION 6.10. Priorities .................................................. 66
SECTION 6.11. Undertaking for Costs ....................................... 66
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee ........................................... 67
SECTION 7.02. Rights of Trustee ........................................... 68
SECTION 7.03. Individual Rights of Trustee ................................ 69
SECTION 7.04. Trustee's Disclaimer ........................................ 69
SECTION 7.05. Notice of Default ........................................... 70
SECTION 7.06. Reports by Trustee to Holders ............................... 70
SECTION 7.07. Compensation and Indemnity .................................. 70
SECTION 7.08. Replacement of Trustee ...................................... 72
SECTION 7.09. Successor Trustee by Merger, Etc. ........................... 73
SECTION 7.10. Eligibility; Disqualification ............................... 73
SECTION 7.11. Preferential Collection of Claims Against Company ........... 74
- iii -
<PAGE>
Page
----
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations ................... 74
SECTION 8.02. Legal Defeasance and Covenant Defeasance ................... 76
SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance ...... 77
SECTION 8.04. Application of Trust Money ................................. 79
SECTION 8.05. Repayment to the Company ................................... 80
SECTION 8.06. Reinstatement .............................................. 80
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. without Consent of Holders ................................. 81
SECTION 9.02. With Consent of Holders .................................... 82
SECTION 9.03. Effect on Senior Debt ...................................... 83
SECTION 9.04. Compliance with TIA ........................................ 83
SECTION 9.05. Revocation and Effect of Consents .......................... 83
SECTION 9.06. Notation on or Exchange of Notes ........................... 84
SECTION 9.07. Trustee To Sign Amendments, Etc. ........................... 84
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt .......................... 85
SECTION 10.02. No Payment on Notes in Certain Circumstances ............... 85
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc. ............ 87
SECTION 10.04. Payments May Be Paid Prior to Dissolution .................. 89
SECTION 10.05. Subrogation ................................................ 89
SECTION 10.06. Obligations of the Company Unconditional ................... 90
SECTION 10.07. Notice to Trustee .......................................... 90
- iv -
<PAGE>
Page
----
SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating
Agent .................................................... 91
SECTION 10.09. Trustee's Relation to Senior Debt .......................... 91
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Debt ................. 92
SECTION 10.11. Noteholders Authorize Trustee
To Effectuate Subordination of Notes ..................... 92
SECTION 10.12. This Article Ten Not To Prevent Events of Default .......... 93
SECTION 10.13. Trustee's Compensation Not Prejudiced ...................... 93
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls ............................................... 93
SECTION 11.02. Notices .................................................... 94
SECTION 11.03. Communications by Holders with Other Holders ............... 95
SECTION 11.04. Certificate and Opinion as to Conditions Precedent ......... 95
SECTION 11.05. Statements Required in Certificate or Opinion .............. 95
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar .................. 96
SECTION 11.07. Legal Holidays ............................................. 96
SECTION 11.06. Governing Law .............................................. 96
SECTION 11.09. No Adverse Interpretation of Other Agreements .............. 97
SECTION 11.10. No Recourse Against Others ................................. 97
SECTION 11.11. Successors ................................................. 97
SECTION 11.12. Duplicate Originals ........................................ 97
SECTION 11.13. Severability ............................................... 97
Signatures
Exhibit A - Form of Note .................................................. A-1
Note: This Table of Contents shall not, for any purpose, be deemed to be part of
the Indenture.
- v -
<PAGE>
INDENTURE, dated as of July 10, 1997, between Wilson Greatbatch
Ltd., a New York corporation (the "Company"), and [ ],
a [ ], as Trustee (the "Trustee").
The Company has duly authorized the creation of an issue of 13%
Senior Subordinated Notes due 2007 (the "Notes") and, to provide therefor, the
Company has duly authorized the execution and delivery of this Indenture. All
things necessary to make the Notes, when duly issued and executed by the
Company, and authenticated and delivered hereunder, the valid obligations of the
Company, and to make this Indenture a valid and binding agreement of the
Company, have been done.
Each party hereto agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" has the meaning provided in Section 6.02 (a).
"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 Restricted 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.
"Acquisition" means the acquisition of all of the capital stock of
the Company by Holdings on the Issue Date.
"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
<PAGE>
- 2 -
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. For purposes of Section 2.09, the term "Affiliate"
shall not include any Permitted Holder.
"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"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 of the Company of (a) any Capital Stock of any Restricted Subsidiary
of the Company 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 $50,000 and
(ii) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company as permitted under Section 5.01.
"Authenticating Agent" has the meaning provided in Section 2.02.
<PAGE>
- 3 -
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.02.
"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 a day that is not a Legal Holiday.
"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 that is included on a balance sheet of such Person at
such date, determined in accordance with GAAP.
"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 such Person's 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.
"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
<PAGE>
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obtainable from either Standard & Poor's Ratings Service ("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 $500,000,000; (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; and (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"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 or Holdings 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); (ii) the approval by the holders of Capital Stock of the
Company or Holdings, as the case may be, of any plan or proposal for the
liquidation or dissolution of the Company or Holdings, as the case may be
(whether or not otherwise in compliance with the provisions of this Indenture);
(iii) any Person or Group (other than the Permitted Holders) becomes, directly
or indirectly, the "beneficial owner," as defined in Rule 13d-3 under the
Exchange Act (in a single transaction or in a related series of transactions, by
way of merger, consolidation or other business combination or otherwise) of
greater than (a) 35% of the total voting power entitled to vote in the election
of directors of the Company, Holdings or WGL Intermediate Holdings, Inc. or such
other person surviving the transaction and (b) the total voting power entitled
to vote in the election of directors of the Company, Holdings or WGL
Intermediate Holdings, Inc. beneficially owned by the Permitted Holders; or (iv)
the replacement of a majority of the Board of Directors of the Company, Holdings
or WGL Intermediate Holdings, Inc. over a two-year period from the directors who
constituted the Board of Directors of the Company, Holdings or WGL Intermediate
Holdings, Inc., as the case may be, at the beginning of such period, and such
re-
<PAGE>
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placement shall not have been approved by a vote of at least a majority of the
Board of Directors of the Company, Holdings or WGL Intermediate Holdings, Inc.,
as the case may be, then still in office who either were members of such Board
of Directors at the beginning of such period or whose election as a member of
such Board of Directors was previously so approved or who were nominated by, or
designees of, any of the Permitted Holders.
"Change of Control Date" has the meaning provided in Section 4.15.
"Change of Control Offer" has the meaning provided in Section 4.15.
"Change of Control Payment Date" has the meaning provided in Section
4.15.
"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.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"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, (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
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"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 of Indebtedness in the ordinary course of business for
working capital purposes pursuant to 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 becoming liable for Acquired Indebtedness and also including any
Consolidated EBITDA (including any pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Securities Act)
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 becoming liable for any such
Indebtedness or Acquired Indebtedness) occurred on the first day of the Four
Quarter Period. 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 and (2) 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
(excluding amortization of
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debt discount or amortization or write-off of deferred financing costs), plus
(ii) the product of (x) the amount of all dividend payments on any Preferred
Stock of such Person (other than dividends paid in Qualified Capital Stock) paid
in cash or, without duplication and with respect to Disqualified Capital Stock,
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 conformity 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) without duplication of any amount in clause (i),
the interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued (in each case, without duplication) 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
and losses from Asset Sales (without regard to the exclusions set forth in the
proviso to the definition thereof), (b) after-tax items classified as
extraordinary or non-recurring gains, (c) the net income 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 contract, operation of law
or otherwise, except to the extent of cash dividends or distributions paid to
the referent Person or a Wholly Owned Restricted Subsidiary of the referent
Person by such Person, (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
<PAGE>
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the referent Person or 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), (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, the aggregate net income (or loss) of the successor corporation prior to
such consolidation, merger or transfer of assets and (i) the amount deducted in
determining Consolidated Net Income representing executive, board and
shareholder payments described in Sections 7.5(c), (d) and (g) of the Stock
Purchase Agreement and fees, expenses and financing costs incurred in connection
with the Acquisition.
"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
non-cash charge which requires an accrual of or a reserve for cash charges for
any future period).
"Covenant Defeasance" has the meaning provided in Section 8.02.
"Credit Agreement" means the Credit Agreement dated as of the Issue
Date, among Holdings, the Company, the lenders party thereto in their capacities
as lenders thereunder and DLJ Capital Funding, Inc., 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 extending the
maturity of, refinancing, replacing or otherwise restructuring (including,
without limitation, adding Restricted Subsidiaries of the Company as additional
guarantors thereunder, to the extent permitted by Section 4.19) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders; provided that no such amendment, supplement or other modification shall
increase the amount of available borrowings or letter of credit exposure
thereunder, except to the extent other-
<PAGE>
- 9 -
wise permitted under this Indenture, to any amount in excess of that which is
available in the absence of any such amendment, supplement or other
modification.
"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.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"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.
"Default Notice" has the meaning provided in Section 10.02.
"Depository" means The Depository Trust Company, its nominees and
successors.
"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.
"Event of Default" has the meaning provided in Section 6.01.
"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, neither of whom
is under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
<PAGE>
- 10 -
"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 approved by a significant segment of the
accounting profession of the United States, which are in effect as of December
31, 1996.
"Guarantee" has the meaning provided in Section 4.19.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Holdings" means WGL Holdings, Inc., a Delaware corporation, and the
parent corporation of the Company.
"incur" has the meaning provided in Section 4.12.
"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, (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, (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 swap
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,
<PAGE>
- 11 -
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 reasonably and in good faith by the Board of
Directors of the issuer of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"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.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Notes.
"Interest Swan 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.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"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.
<PAGE>
- 12 -
"Investment" shall exclude (i) extensions of trade credit 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, and (ii) any transaction involving the purchase or other acquisition
(including by way of merger) of Capital Stock by the Company and its Restricted
Subsidiaries to the extent such purchase or other acquisition is in exchange for
Qualified Capital Stock of the Company or Holdings. For the purposes of Section
4.10, (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 and (ii) 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 any repayment of principal or a return of capital, as the case may be, and by
the payment of dividends or distributions in connection with such Investment or
any other amounts received in respect of such Investment; provided that no such
repayment of principal, return of capital, payment of dividends or distributions
or receipt of any such other amounts shall reduce the amount of any Investment
if such repayment of principal, return of capital, 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 July 10, 1997.
"Junior Security" means any Qualified Capital Stock, any Qualified
Rights and any Indebtedness of the Company that is (i) subordinated in right of
payment to Senior Debt at least to the same extent as the Notes, as applicable,
(ii) has no scheduled installment of principal due, by redemption, sinking fund
payment or otherwise, on or prior to the stated maturity
<PAGE>
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of the Notes and (iii) has no terms more beneficial in the aggregate to the
holders thereof than those in effect with respect to the Notes on the Issue
Date.
"Legal Defeasance" has the meaning provided in Section 8.02.
"Legal Holiday" has the meaning provided in Section 11.07.
"Lien" means, with respect to any property, any lien, mortgage, deed
of trust, pledge, security interest, charge or encumbrance of any kind thereon
(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
assignment or other conveyance of a right to receive income or profits
therefrom.
"Maturity Date" means July 1, 2007.
"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) reasonable 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,
(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, and (e) all
distributions and other payments made to minority interest holders in Restricted
Subsidiaries or joint ventures as a result of such Asset Sale.
"Net Proceeds Offer" has the meaning provided in Section 4.16.
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- 14 -
"Net Proceeds Offer Payment Date" has the meaning provided in
Section 4.16.
"Net Proceeds Offer Trigger Date" has the meaning provided in
Section 4.16.
"Notes" has the meaning provided in the preamble to this Indenture.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing or otherwise relating to
any Indebtedness, including with respect to any rights to rescission.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of an
Officers' Certificate.
"Opinion of Counsel" means a written opinion from legal counsel, who
may be counsel for the Company, and who is reasonably acceptable to the Trustee
and not rendered by any employee of the Company or any of its Affiliates or
Subsidiaries complying with the requirements of Sections 11.04 and 11.05, as
they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Holders" means DLJ Merchant Banking II, Inc. and its
Affiliates.
"Permitted Holdings Payments" means any loans, advances, dividends
and distributions by the Company to Holdings to the extent necessary to permit
Holdings to pay, directly or indirectly, (A) (i) expenses (including
professional fees and expenses) in connection with conducting the ongoing
operations of Holdings as the holding company for the Company or complying
<PAGE>
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with reporting obligations and obligations to prepare and distribute business
records, proxy or other stockholder materials, financial statements or other
documents to any lender or other persons or as may be required by any laws,
rules or regulations; (ii) costs and expenses (including any funding
arrangements in respect thereof) in connection with the determination and
payment of foreign, federal, state, local or foreign taxes and other
governmental charges, indemnification agreements, insurance premiums, surety
bonds and insurance brokers' fees; (iii) expenses for directors', officers' and
employees' compensation and benefits, professional fees and any other
administrative expenses incurred in the ordinary course of business; (iv) for
shares of Capital Stock of Holdings repurchased or redeemed by Holdings solely
for purposes of eliminating fractional shares (including upon exercise of any
warrants); and (v) the expenses and obligations of Holdings in connection with
Holdings' obligations arising pursuant to, or expenses relating to, that certain
securities purchase agreement entered into on the Issue Date in connection with
the initial offering of the Notes, but only to the extent that all such loans,
dividends and distributions under this clause (A) do not exceed $300,000 in the
aggregate in any fiscal year of the Company; provided, however, that, at any
time after the consolidated assets of the Company and its Restricted
Subsidiaries are less than 90% of the consolidated assets of Holdings and its
Subsidiaries, the amounts specified in subclauses (i), (ii) and (iii) above
shall be adjusted to exclude therefrom such portion thereof as shall be
allocable to Subsidiaries of Holdings other than the Company and its Restricted
Subsidiaries, (B) to the extent not duplicative of amounts paid under subclause
(A) (ii) above, Permitted Tax Payments and (C) so long as no Default shall have
occurred and be continuing on the date such Restricted Payment is declared or
made, after giving effect thereto, (y) purchase, redeem, acquire or otherwise
retire for value shares of Capital Stock of Holdings held by directors, officers
or employees of Holdings or the Company or any of its Restricted Subsidiaries,
if any, or options on any such shares or related stock appreciation rights or
similar securities owned by such directors, officers or employees (or any
Management Holder Permitted Transferee (as defined in the Stockholders Agreement
to be entered into between Holdings and certain members of management of the
Company) and (z) pay interest or principal in cash on notes issued to members of
management in respect of any purchase, redemption, acquisition or other
retirement referred to in subclause (y) above, in all cases under this clause
(C), only upon death, disability, retirement, termination of employment or
pursuant to the terms of such stock option plan or any other agreement under
which such shares of Capital Stock, op-
<PAGE>
- 16 -
tions, related rights or similar securities were issued in an aggregate amount
not to exceed $4,000,000 in the aggregate. For purposes of the definition,
payments which may be made to holdings may also be made to any stockholder of
the Company which is wholly owned by Holdings.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Notes and this Indenture;
(ii) Indebtedness incurred pursuant to the Credit Agreement in an
aggregate principal amount at any time outstanding not to
exceed $60 million (A) less the amount of all scheduled
amortization payments and mandatory principal payments,
whether or not actually made by the Company in respect of term
loans thereunder (excluding any such payments to the extent
refinanced at the time of payment under a replaced Credit
Agreement) and (B) in the case of a revolving credit facility,
reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction)
thereunder;
(iii) 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;
(iv) 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
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fees, indemnities and compensation payable thereunder;
(v) Indebtedness of a Wholly Owned Restricted Subsidiary of the
Company to the Company or to a 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 date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
(vi) 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 date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness by the Company;
(vii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (including in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of
business; provided, however, that such Indebtedness is
extinguished within five Business Days of incurrence;
(viii) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of
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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, performance bonds, surety
bonds or similar requirements in the ordinary course of
business;
(ix) Capitalized Lease Obligations and Purchase Money Indebtedness
of the Company and its Restricted Subsidiaries incurred in
the ordinary course of business not to exceed $7,000,000 at
any one time outstanding;
(x) Refinancing Indebtedness;
(xi) guarantees by the Company and its Wholly Owned Restricted
Subsidiaries of each other's Indebtedness; provided that such
Indebtedness is permitted to be incurred under this
Indenture, including, with respect to guarantees by Wholly
Owned Restricted Subsidiaries of the Company, the provisions
of Section 4.19; and
(xii) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed
$10,000,000 at any one time outstanding (which Indebtedness
may be incurred as additional Indebtedness under the Credit
Agreement).
For the purpose of determining compliance with Section 4.12, (A) in the event
that an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the above clauses, the Company, in its sole
discretion, shall classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses, (B) the
amount of Indebtedness issued at a price which is less than the principal amount
thereof shall be equal to the amount of the liability in respect thereof
determined in accordance with GAAP and (C) so as to avoid duplication in
determining the amount of Permitted Indebtedness under any clause of this
definition, guarantees of, or obligations in respect of letters of credit
supporting, Indebtedness otherwise included in the determination of such amount
shall not also be included.
"Permitted Investments" means: (i) Investments by the Company or any
Restricted Subsidiary of the Company in any
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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, provided that
such Wholly Owned Restricted Subsidiary is not restricted from making dividends
or similar distributions by contract, operation of law or otherwise; (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 $250,000 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 (x) constituting accounts receivable if
credited or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms, provided that nothing in
this clause shall prevent the Company or any Restricted Subsidiary from
providing such concessionary trade terms as management deems reasonable in the
circumstances, (y) resulting from settlements or compromises of accounts
receivable or trade payables in the ordinary course of business, and (z) in
securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers; (vii) Investments consisting of non-cash proceeds,
or 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 4.16; (viii) guarantees permitted by Section 41.9; (ix) Investments by
the Company in any Person (including any Unrestricted Subsidiary of the Company)
engaged in substantially the same line of business as the Company and its
Restricted Subsidiaries in an aggregate amount not to exceed $7,500,000 at any
time outstanding; and (x) Permitted Holdings Payments.
"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;
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(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 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 (exclusive of obligations for the payment of borrowed
money), including, in any such case, any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith;
(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 or minor
irregularities of title incident thereto in each case 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) Liens securing Capitalized Lease Obligations and Purchase
Money Indebtedness permitted under clause (ix) of the definition of
"Permitted Indebtedness"; provided, however, that in the case of Purchase
Money Indebtedness (A) the Indebtedness shall not exceed the cost of such
property or assets being acquired or constructed 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 being acquired or
constructed and (B) the
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Lien securing such Indebtedness shall be created within 180 days of such
acquisition or construction;
(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;
(xiii) Liens securing Acquired Indebtedness incurred in accordance
with Section 41.2; 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 no 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; and
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"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Rights" means options, warrants or other rights to
purchase Capital Stock (other than Disqualified Stock), other than any such
rights that, by their terms or upon the happening of any event, are mandatorily
redeemable or redeemable at the sole option of the holder thereof on or prior to
the final maturity date of the Notes.
"Quarter" means, with respect to any Person, a fiscal quarterly
period of such Person. If during the 50-day period immediately following the
completion of any Quarter (or, if the Quarter is the last Quarter of the fiscal
year, then the 100-day period immediately following the completion of such
Quarter), a calculation is required to be made under Article Four and financial
statements of such Person for such Quarter are unavailable, any calculation for
the immediately preceding four Quarters (or, if fewer, all Quarters as shall
have ended after the Issue Date and prior to the Quarter for which such
financial statements are unavailable) required under Article Four shall be based
instead upon the four Quarters (or, if fewer, all Quarters as shall have ended
after the Issue Date and prior to the Quarter for which such financial
statements are unavailable) immediately preceding the Quarter for which such
financial statements are not available (giving effect to all adjustments
required under Article Four in respect of events occurring subsequent to the
close of such Quarters on which such calculation is to be based).
"Record Date" means the Record Dates specified in the Notes, whether
or not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Notes.
"Redemption Price," when used with respect to any Note to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and the Notes.
"Reference Date" has the meaning provided in Section 4.10.
"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 Indebted-
<PAGE>
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ness 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 4.12 (other than pursuant to clauses (ii), (iii), (iv), (v), (vi),
(vii), (viii), (ix), (xi) or (xii) 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 reasonable
expenses 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.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated July 10, 1997 among the Company, the parties named therein, as
the same may be amended or modified from time to time in accordance with the
terms thereof.
"Replacement Assets" has the meaning provided in Section 4.16.
"Representative" means Fleet National Bank, as administrative agent
under the Credit Agreement.
"Restricted Payment" has the meaning provided in Section 4.10.
"Restricted Security" has the meaning assigned to such term in Rule
144(a) (3) under the Securities Act; provided that the Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
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"Restricted Subsidiary" of any Person means any Subsidiary of such
Person which at the time of determination is not an Unrestricted Subsidiary.
"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.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor statute or statutes thereto.
"Senior Debt" means the principal of, premium, if any, interest
(including any interest accruing subsequent to the filing of, or which would
have accrued but for the filing of, a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other amounts
owing in respect of, (x) all monetary obligations (including guarantees thereof)
of every nature of the Company under the Credit Agreement, including, without
limitation, obligations to pay principal and interest, reimbursement obligations
under letters of credit, fees, expenses and indemnities and (y) all Interest
Swap Obligations (including guarantees thereof) to the extent incurred in
connection with the Company's obligations under the Credit Agreement, in each
case whether outstanding on the Issue Date or thereafter incurred.
Notwithstanding the foregoing, Senior Debt shall not include that portion of any
Indebtedness incurred in violation of the provisions set forth under clauses
(ii) and, if applicable, (xii) of the definition of "Permitted Indebtedness"
(but, as to any such obligation, no such violation shall be deemed to exist for
purposes of this clause if the holder(s) of such obligation or their
representative and the Trustee shall have received an Officers' Certificate of
the Company to the effect that the incurrence of such Indebtedness does not (or,
in the case of revolving credit Indebtedness, that the incurrence of the entire
committed amount thereof at the date on which the initial borrowing thereunder
is made would not) violate such provisions of this Indenture).
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sidiary) 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 4.10 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 of the Company 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 4.12 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 direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"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
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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. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Note-holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as in effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular; and
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(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or depository rule
or usage. The Company and the Trustee shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its issuance and shall show the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
Exhibit A, 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 2.02. Execution and Authentication; Aggregate Principal Amount.
Two Officers, or an Officer and an Assistant Secretary, shall sign,
or one Officer shall sign and one Officer or an Assistant Secretary (each of
whom shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or facsimile
signature. The Company's seal shall also be reproduced on the Notes.
If an Officer or Assistant Secretary whose 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.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authenti-
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cation on the Note. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall authenticate Notes for original issue in the
aggregate principal amount not to exceed $25,000,000, upon written orders of the
Company in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Notes to be authenticated, the date on which the Notes are
to be authenticated and the aggregate principal amount of Notes outstanding on
the date of authentication. The aggregate principal amount of Notes outstanding
at any time may not exceed $25,000,000, except as provided in Section 2.07.
The Trustee shall not be required to authenticate Notes if the
issuance of such Notes pursuant to this Indenture will affect the Trustee's own
rights, duties or immunities under the Notes and this Indenture in a manner
which is not reasonably acceptable to the Trustee.
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 and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in the City of New York, State of New York)
where (a) Notes may be presented or surrendered for registration of transfer or
for exchange ("Registrar"), (b) Notes may be presented or surrendered for
payment ("Paying Agent") and (c) notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Registrar shall keep
a register of the Notes and of their transfer and exchange. The Company, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional paying agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any addi-
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tional Paying Agent. Neither the Company nor any Affiliate of the Company may
act as Paying Agent.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of demands and notices in connection with the Notes,
until such time as the Trustee has resigned or a successor has been appointed.
The Paying Agent or Registrar may resign upon 30 days notice to the Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the benefit
of the Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, or interest on, the Notes (whether such assets have
been distributed to it by the Company or any other obligor on the Notes), and
the Company and the Paying Agent shall notify the Trustee of any Default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of
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such date and in such form as the Trustee may reasonably require of the names
and addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.06. Transfer and Exchange.
When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes of other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Company and the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit registrations of
transfer and exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.10, 3.06, 4.15, 4.16 or 9.06, in which event
the Company shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder
of a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, such
Holder must provide an affidavit of lost certificate and an indemnity bond or
other indemnity, sufficient in the judgment of both the Company and the Trustee,
to protect the
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Company, the Trustee or any Agent from any loss which any of them may suffer if
a Note is replaced. The Company may charge such Holder for its reasonable,
out-of-pocket expenses in replacing a Note, including reasonable fees and
expenses of counsel. Every replacement Note shall constitute an additional
obligation of the Company, and shall be entitled to the benefits of this
Indenture.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives an Opinion of Counsel that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Motes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver, consent or notice, Notes owned
by the Company or any of its Affiliates shall be considered as though they are
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so considered. The Company shall notify the Trustee, in writing, when it or any
of its Affiliates repurchases or otherwise acquires Notes, of the aggregate
principal amount of such Notes so repurchased or otherwise acquired.
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SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Notes to be
authenticated and the date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate upon receipt of a written order of the Company pursuant to Section
2.02 definitive Notes in exchange for temporary Notes.
SECTION 2.2.1. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Company, shall dispose
of all Notes surrendered for transfer, exchange, payment or cancellation.
Subject to Section 2.07, the Company may not issue new Notes to replace Notes
that it has paid or delivered to the Trustee for cancellation. If the Company
shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Notes unless
and until the same are surrendered to the Trustee for cancellation pursuant to
this Section 2.11.
SECTION 2.12. Payment of Interest; Defaulted Interest.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Note is registered in the register maintained by the Registrar
at the close of business on the Record Date for such interest.
If the Company defaults in a payment of interest on the Notes, such
interest shall forthwith cease to be payable to the Holder on the relevant
Record Date by virtue of having been such Holder, and the Company shall pay the
defaulted interest, plus (to the extent lawful) any interest payable on the de-
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faulted interest to the Persons who are Holders on a subsequent special record
date, which date shall be the fifteenth day next preceding the date fixed by the
Company for the payment of defaulted interest or the next succeeding Business
Day if such date is not a Business Day. At least 15 days before the subsequent
special record date, the Company shall mail to each Holder, as of a recent date
selected by the Company, with a copy to the Trustee, a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest, and interest payable on such defaulted interest, if any, to be paid.
SECTION 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and if
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; provided that no representation is hereby deemed to
be made by the Trustee 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. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest Payment Date
and on the Maturity Date, the Company shall have deposited with the Paying Agent
in immediately available funds money sufficient to make cash payments, if any,
due on such Interest Payment Date or Maturity Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date or Maturity Date, as the case may be.
SECTION 22.5. Persons Deemed Owners.
Prior to due presentment of a 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 such Note is registered in the register maintained by the
Registrar as the owner of such Note for the purpose of receiving payment of
principal of and (subject to Section 2.12) interest on such Note and for all
other purposes whatsoever, whether or not such Note 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.
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ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 7 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.01
at least 60 days before the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf
of the Trustee), together with an Officers' Certificate stating that such
redemption shall comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed.
If fewer than all of the Notes are to be redeemed, selection of the
Notes to be redeemed will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not then listed on a national securities
exchange, on a pro rata basis, by lot or in such other fair and reasonable
manner chosen at the discretion of the Trustee; provided, however, that if a
partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portion thereof for redemption shall be made by the
Trustee only on a pro rata basis, unless such method is otherwise prohibited.
The Company shall promptly notify the Trustee and the Paying Agent in writing of
the date of listing and the name of the securities exchange if and when the
Notes are listed on a principal national securities exchange. The Trustee shall
make the selection from the Notes outstanding and not previously called for
redemption and shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes in denominations
of $l,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Notes that have denominations larger than $1,000. Provisions of this Indenture
that apply to Notes called for redemption also apply to portions of Notes called
for redemption.
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SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail, postage prepaid, to each Holder whose Notes are to be redeemed, with
a copy to the Trustee and any Paying Agent. At the Company's written request,
the Trustee shall give the notice of redemption in the Company's name and at the
Company's expense.
Each notice for redemption shall identify the Notes to be redeemed
and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption
is being made;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if
any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders of
such Notes is to receive payment of the Redemption Price plus accrued
interest, if any, to the Redemption Date, upon surrender to the Paying
Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes in
the aggregate principal amount equal to the unredeemed portion thereof
will be issued; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
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SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the Redemption
Date), but installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant record dates referred to in Section 2.12.
SECTION 3.05. Deposit of Redemption Price.
On or before 11:00 a.m. New York City time on the Redemption Date,
the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to
pay the Redemption Price plus accrued interest, if any, of all Notes to be
redeemed on that date. The Paying Agent shall promptly return to the Company any
U.S. Legal Tender so deposited which is not required for that purpose, except
with respect to monies owed as obligations to the Trustee pursuant to Article
Seven.
If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of such Redemption Price plus accrued
interest, if any, interest on the Notes to be redeemed will cease to accrue on
and after the applicable Redemption Date, whether or not such Notes are
presented for payment.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate for the Holder a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided in the
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Notes and in this Indenture. An installment of principal of or interest on the
Notes shall be considered paid on the date it is due if the Trustee or Paying
Agent (other than the Company or an Affiliate of the Company) holds on that date
U.S. Legal Tender designated for and sufficient to pay the installment in full
and is not prohibited from paying such money to the Holders pursuant to the
terms of this Indenture.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
borne by the Notes plus 2% per annum. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of 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 address of the
Trustee set forth in Section 11.02.
SECTION 4.03. Corporate Existence.
Except as otherwise permitted by Article Five and Section 4.16, the
Company shall do or cause to be done, at its own cost and expense, all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate existence of each of its Restricted Subsidiaries in accordance
with the respective organizational documents of each such Restricted Subsidiary
and the material rights (charter and statutory) and franchises of the Company
and each such Restricted Subsidiary; provided, however, that the Company shall
not be required to preserve any such right or franchise, or the corporate,
partnership or other existence of the Company or any Restricted Subsidiary of
the Company, if the Board of Directors of the Company shall determine in good
faith (which such determination shall be evidenced by a Board Resolution) that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and its respective Restricted Subsidiaries taken as a whole and
the loss thereof is not adverse in any material respect to the Holders; and
provided further that any Restricted Subsidiary of the Company may consolidate
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with, merge into, or transfer or distribute all or part of its properties and
assets to, the Company or any Wholly Owned Restricted Subsidiary of the Company.
SECTION 4.04. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all taxes, assessments
and governmental charges (including withholding taxes and any penalties,
interest and additions to taxes) levied or imposed upon it or any of its
Subsidiaries or properties of it or any of its Subsidiaries and (ii) all lawful
claims for labor, materials and supplies that, if unpaid, might by law become a
Lien upon the property of it or any of its 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 (y) whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted for which adequate
reserves have been taken or (z) the failure to pay or discharge, or cause to be
paid or discharged such tax, assessment, charge or claim would not reasonably be
expected to result in a material adverse effect on the business operations or
financial condition of the Company.
SECTION 4.05. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, maintain its material properties in good working order and
condition (subject to ordinary wear and tear) and make all necessary repairs,
renewals, replacements, additions, betterments and improvements thereto and
actively conduct and carry on its business; provided, however, that nothing in
this Section 4.05 shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the operation and maintenance of any of its
properties, if such discontinuance is, in the good faith judgment of the Board
of Directors of the Company or the Restricted Subsidiary, as the case may be,
desirable in the conduct of their respective businesses and is not
disadvantageous in any material respect to the Holders.
(b) The Company shall provide or cause to be provided, for itself
and each of its Restricted Subsidiaries, insurance against loss or damage of the
kinds that, in the good faith judgment of the Board of Directors of the Company,
are adequate and appropriate for the conduct of the business of the Company and
such Restricted Subsidiaries in a prudent manner,
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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,
and by such methods as shall be customary, in the good faith judgment of the
Board of Directors of the Company, for companies similarly situated in the
industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of the Company's fiscal year, an Officers' Certificate stating that a
review of its activities and the activities of its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture and further
stating, as to each such Officer signing such certificate, that to the best of
such Officer's knowledge the Company during such preceding fiscal year has kept,
observed, performed and fulfilled each and every such covenant and no Default or
Event of Default occurred during such year and at the date of such certificate
there is no Default or Event of Default that has occurred and is continuing or,
if such signers do know of such Default or Event of Default, the certificate
shall describe the Default or Event of Default and its status with
particularity. The Officers' Certificate shall also notify the Trustee should
the Company elect to change the manner in which it fixes its fiscal year end.
(b) The annual financial statements delivered pursuant to Section
4.08 shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Company has violated any
provisions of Article Four, Five or Six of this Indenture insofar as they relate
to accounting matters or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 11.02 hereof,
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by registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action within five Business Days of its
becoming aware of such occurrence.
SECTION 4.07. Compliance with Laws.
The Company shall comply, and shall cause each of its Subsidiaries
to comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or results of operations of the Company and its Restricted Subsidiaries, taken
as a whole.
SECTION 4.08. SEC Reports.
(a) So long as the Notes are outstanding, if the Company is required
to file annual or quarterly reports with the SEC under Section 13 or 15(d) of
the Exchange Act, the Company (at its own expense) shall file with the SEC and
shall file with the Trustee within 15 days after it files them with the SEC
copies of the quarterly and annual reports and of the information, documents,
and other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) required to be filed pursuant to Section
13 or 15(d) of the Exchange Act. Upon qualification of this Indenture under the
TIA, the Company shall also comply with the provisions of TIA ss. 314(a).
(b) At the Company's expense, the Company shall cause an annual
report, if furnished by it to its stockholders generally and each quarterly or
other financial report if furnished by it to its stockholders generally to be
filed with the Trustee and mailed to the Holders at their addresses appearing in
the register of Notes maintained by the Registrar at the time of such mailing or
furnishing to stockholders.
(c) If the Company is not required to file annual or quarterly
reports with the SEC under Section 13 or 15(d) of the Exchange Act for any
fiscal period ending after the Issue Date, the Company shall cause its
consolidated financial statements,
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including any notes thereto (and, in the case of a fiscal year end, an auditor's
report by an accounting firm of nationally established reputation), and a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" comparable to that which would have been required to appear in
annual or quarterly reports filed under Section 13 or 15(d) of the Exchange Act
if the Company had a class of securities listed on a national securities
exchange, to be so filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar within
100 days after the end of each fiscal year and within 50 days after the end of
each of the Company's first three fiscal quarters in each fiscal year.
(d) The Company shall provide to any Holder any information
reasonably requested by such Holder concerning the Company (including financial
statements) necessary in order to permit such Holder to sell or transfer Notes
in compliance with Rule 144A under the Securities Act.
SECTION 4.09. 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, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company 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.
SECTION 4.10. Limitation on Restricted Payments.
The Company shall not, and shall 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 or Qualified Rights 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,
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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 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 4.12 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) shall exceed the sum of: (w) 50% 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 (i) 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 and (ii) the aggregate net proceeds (as defined
below) received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance subsequent to the Issue Date and on or prior to the
Reference Date of Qualified Capital Stock of the Company upon conversion or
exchange of Indebtedness of the Company (other than such Indebtedness that is
subordinate or junior in right of payment to the Notes); plus (y) without
duplication of any amounts included in clause (iii) (x) above, 100% of the
aggregate net cash proceeds of any equity contribution received by the Company
from a holder of the Company's Capital Stock; plus (z) without duplication and
to the extent amounts would not be included in Consolidated Net Income, the sum
of (1) the aggregate amount returned in cash on or with respect to Investments
(other than Permitted Investments) made subsequent to the Issue Date, (2) the
net cash proceeds received by the Company or any Restricted Subsidiary from the
disposition of all or any portion of such Investments (other than to the Company
or a Restricted Subsidiary of the Company) and (3) upon redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of
such
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Subsidiary; provided, however, that with respect to all Investments made in any
Unrestricted Subsidiary or joint venture, the sum of clauses (1), (2) and (3)
above with respect to such Investment shall not exceed the aggregate amount of
all such Investments made subsequent to the Issue Date in such Unrestricted
Subsidiary or joint venture.
For the purposes of this Section 4.10, the net proceeds from the
issuance of shares of Qualified Capital Stock of the Company upon conversion or
exchange of Indebtedness shall be deemed to be an amount equal to the net book
value of such Indebtedness (plus the additional amount required to be paid upon
such conversion, if any), less any cash payment on account of fractional shares;
the "net book value" of Indebtedness shall be the amount received by the
Company on the incurrence of such Indebtedness, as adjusted on the books of the
Company to the date of conversion or exchange.
Notwithstanding the foregoing, the provisions of (ii) and (iii) set
forth in the first paragraph of this Section do not prohibit: (l) 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) the
acquisition or retirement for value of any shares of Capital Stock of the
Company or warrants, rights or options to purchase or acquire shares of any
class of such Capital Stock, either (i) solely in exchange for shares of
Qualified Capital Stock or Qualified Rights 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 or
Qualified Rights of the Company; (3) the acquisition or retirement for value of
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Notes solely in exchange for shares of Qualified Capital Stock or
Qualified Rights of the Company; (4) Permitted Holdings Payments; or (5) any
Restricted Payment designated by written notice to the Trustee as being made
pursuant to this clause (5) which, when added together with all other Restricted
Payments previously so designated, does not exceed $1,000,000. In determining
the aggregate amount of Restricted Payments made subsequent to the Issue Date in
accordance with clause (iii) of the first paragraph of this Section, (y) amounts
expended pursuant to clauses (1), (2) (ii), (4) (to the extent such payments are
made pursuant to clause (B) or (C) of the definition of Permitted Holdings
Payment", but with respect to such clause (B), solely to the extent of any
Permitted Holdings Payment made to permit Holdings to pay an expense specified
therein that is an expense of Holdings and its Subsidiaries, but is not
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an expense of the Company and its Restricted Subsidiaries, as determined on a
consolidated basis in accordance with GAAP) and (5) as well as amounts expended
pursuant to clause (ix) of the definition of "Permitted Investments" shall be
included in such calculation and (z) amounts expended pursuant to clauses
(2)(i), (3) and (4) (except as aforesaid) shall be excluded from 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 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.
SECTION 4.11. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall 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 conducted in
good faith, the terms of which are fair and reasonable to the Company or such
Restricted Subsidiary and which are no less favorable to the Company or such
Restricted Subsidiary 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. 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 $500,000 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 or
payments to an Affiliate, as the case may be, of more than $2,500,000, the
Company or such Restricted Subsidiary, as the case may be, shall, prior to the
consumma-
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tion 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 foregoing restrictions shall not apply to (i) reasonable
fees, compensation and out-of-pocket expenses 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 between or
among the Company and any of its Restricted Subsidiaries or exclusively between
or among such Restricted Subsidiaries, provided that such transactions are not
otherwise prohibited by this Indenture; (iii) the agreement between the Company
and Donaldson, Lufkin & Jenrette Securities Corporation 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 and Permitted
Investments permitted by this Indenture; and (v) any Permitted Holdings Payment.
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
The Company shall not, and shall 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 or as a
consequence of the incurrence of any such Indebtedness, the Company may incur
Indebtedness (including, without limitation, Acquired Indebtedness) and the
Restricted Subsidiaries of the Company may incur Acquired Indebtedness, in each
case 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.
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SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company shall not, and shall 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) customary non-assignment
provisions of any contract or lease governing a leasehold or ownership interest
of any Restricted Subsidiary of the Company; (4) 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 relating to any property
acquired by the Company or any of its Restricted Subsidiaries after the Issue
Date, provided that such encumbrance or restriction exists of the time such
property is acquired, relates only to the property which is acquired and was not
incurred in connection with, or in anticipation or contemplation of, such
acquisition; (5) agreements existing on the Issue Date (including, without
limitation, the Credit Agreement) to the extent and in the manner such
agreements are in effect on the Issue Date; (6) an agreement governing
Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred
pursuant to an agreement referred to in clause (2), (4) or (5) above; provided,
however, that the provisions relating to such encumbrance or restriction
contained in any such Indebtedness are no less favorable to the Company in any
material respect than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (2), (4) or (5); or (7)
agreements restricting the sale or other disposition of any property securing
Indebtedness which constitutes a Permitted Lien on such property.
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt.
The Company shall not incur or suffer to exist Indebtedness that is
senior in right of payment to the Notes and
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subordinate in right of payment to any other Indebtedness of the Company.
SECTION 4.15. Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer to purchase all outstanding Notes pursuant to the offer described
in paragraph (b) below (the "Change of Control Offer") at a purchase price equal
to 101% of the principal amount thereof plus accrued interest, if any, to the
date of purchase, but installments of interest, the maturity of which is on or
prior to the Change of Control Payment Date, shall be payable to Holders of
record at the close of business on the relevant record dates referred to in
Section 2.12. Prior to the mailing of the notice referred to below, but in any
event within 30 days following any Change of Control, the Company shall (i)
repay in full and terminate all commitments under Indebtedness under the Credit
Agreement or offer to repay in full and terminate all commitments under all
Indebtedness under the Credit Agreement and to repay the Indebtedness owed to
each lender which has accepted such offer or (ii) obtain the requisite consents
under the Credit Agreement to permit the repurchase of the Notes as provided
below. The Company shall first comply with the covenant in the immediately
preceding sentence before it shall be required to repurchase Notes pursuant to
the provisions described in this Section 4.15. The Company's failure to comply
with the covenants described in this paragraph shall constitute an Event of
Default hereunder.
(b) Within 30 days following the date upon which the Change of
Control occurred (the "Change of Control Date"), the Company shall 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. The notice to the
Holders shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Change of Control Offer. Such notice
shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall 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");
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(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a 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;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than two Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Notes the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral
multiples thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall
(i) accept for payment Notes or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all Notes
so tendered and (iii) forward to the Trustee Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any, and the Trustee shall promptly authenticate and mail to such Holders new
Notes equal in principal amount to any unpurchased portion of the Notes
surrendered. Any Notes not so ac-
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cepted shall be promptly mailed by the Company to the Holder thereof. For
purposes of this Section 4.15, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to a
Change of Control Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.
SECTION 4.16. Limitation on Asset Sales.
(a) The Company shall not, and shall 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 7S% of the consideration received
by the Company or the Restricted Subsidiary, as the case may be, from such Asset
Sale shall be in the form of cash or Cash Equivalents (provided that the amount
of any liabilities (as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet) of the Company or any such Restricted Subsidiary
(other than liabilities that are by their terms subordinated to the Notes) that
are assumed by the transferee of any such assets shall be deemed to be cash for
the purposes of this provision) and is received at the time of such disposition
or within 180 days thereafter; 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 365 days of receipt thereof
either (A) to prepay any Senior Debt or Indebtedness of a Wholly Owned
Restricted Subsidiary and, in the case of any 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
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will be used in the business of the Company and its Restricted Subsidiaries as
existing on the Issue Date or in businesses the same, similar or reasonably
related thereto ("Replacement Assets"), or (C) a combination of prepayment and
investment permitted by the foregoing clauses (iii) (A) and (iii) (B). Subject
to the last sentence of this paragraph, on the 366th day 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 clause (iii) (A), (iii) (B) or (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 (each a "Net Proceeds Offer
Amount") shall be applied by the Company or such Restricted Subsidiary to make
an offer to purchase (the "Net Proceeds Offer") 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 on a pro rata
basis, that amount of Notes equal to the Net Proceeds Offer Amount 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, but installments
of interest, the maturity of which is on or prior to the Proceeds Purchase Date,
shall be payable to Holders of record at the close of business on the relevant
record dates referred to in Section 2.12; provided, however, that if at any time
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 is an
aggregate unutilized Net Proceeds Offer Amount equal to or in excess of
$2,000,000 resulting from one or more Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, and not just the amount in excess of
$2,000,000, shall be applied as required pursuant to the preceding 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 trans-
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action permitted under Section 5.01, the successor entity shall be deemed to
have sold such portion, if any, of the properties and assets of the Company and
its Restricted Subsidiaries not so transferred the fair market value of which
exceeds the fair market value (as determined in good faith by the Company's
Board of Directors) of the property and assets of such successor entity
immediately prior to consummation of such transaction 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 as aforesaid shall be deemed to be Net Cash Proceeds for
purposes of this Section 4.16.
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 this 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. To the extent Holders properly tender
Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering
Holders will be purchased on a pro rata basis (based on amounts tendered). To
the extent that the aggregate amount of Notes tendered pursuant to a Net
Proceeds Offer is less than the Net Proceeds Offer Amount, the Company may use
such excess Net Proceeds Offer Amount for general corporate purposes or for any
other purpose not prohibited by this Indenture. Upon completion of any such Net
Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero. A Net
Proceeds Offer shall remain open for a period of 20 Business Days or such longer
period as may be required by law.
(b) Subject to the deferral of the Net Proceeds Offer Trigger Date
contained in the second paragraph of subsection (a) above, each notice of a Net
Proceeds Offer pursuant to this Section 4.16 shall be mailed or caused to be
mailed, by first class mail, by the Company not more than 25 days after the Net
Proceeds Offer Trigger Date to all Holders at their last registered addresses as
of a date within 15 days of the mailing of such notice, with a copy to the
Trustee. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Net Proceeds Offer and shall
state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to Section
4.16 and that all Notes tendered will be
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accepted for payment; provided, however, that if the aggregate principal
amount of Notes tendered in a Net Proceeds Offer exceeds the aggregate
amount of the Net Proceeds Offer, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000
or multiples thereof shall be purchased);
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be 20 Business Days from the date of
mailing of notice of such Net Proceeds Offer, or such longer period as
required by law) (the "Proceeds Purchase Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Net Proceeds Offer shall
cease to accrue interest after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased pursuant to a Net
Proceeds 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
Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than two Business Days prior to the
Proceeds Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder
is withdrawing his election to have such Note purchased; and
(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
issued shall be in an original principal amount of $1,000 or integral
multiples thereof;
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On or before the Proceeds Purchase Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b) (1) above,
(ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the
purchase price plus accrued interest, if any, of all Notes to be purchased and
(iii) deliver to the Trustee Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any. For purposes of this Section 4.16, the Trustee shall act as the Paying
Agent.
Any amounts remaining after the purchase of Notes pursuant to a Net
Proceeds Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-l 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
4.16, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.16 by virtue thereof.
SECTION 4.17. Limitation on Preferred Stock of Restricted Subsidiaries.
The Company shall 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 4.18. Limitation on Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or suffer to exist any Liens of any kind
against or upon any of its 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, unless, except in the case of Liens
securing Indebtedness that is subordinate or junior in
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right of payment to the Notes which shall not be permitted, 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 as of the Issue Date;
(B) Liens securing Senior Debt and Liens on assets of Restricted Subsidiaries
securing guarantees of Senior Debt; (C) Liens securing the Notes; (D) Liens of
the Company or a Wholly Owned Restricted Subsidiary of the Company on assets of
any Restricted Subsidiary of the Company; (E) Liens securing Refinancing
Indebtedness which is incurred to Refinance 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 no less favorable to the Holders and are no 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 of the Company or any of its Restricted Subsidiaries not securing the
Indebtedness so Refinanced; and (F) Permitted Liens.
SECTION 4.19. Limitation of Guarantees by Restricted Subsidiaries.
The Company shall not permit any of its Restricted Subsidiaries,
directly or indirectly, by way of the pledge of any intercompany note or
otherwise, to assume, guarantee or in any other manner become liable with
respect to any Indebtedness of the Company or any other Restricted Subsidiary
(other than with respect to Permitted Indebtedness specified in clause (v),
(vi), (vii) or (viii) of the definition thereof), unless, in any such case (a)
such Restricted Subsidiary executes and delivers a supplemental indenture to
this Indenture providing a guarantee of payment of the Notes by such Restricted
Subsidiary (the "Guarantee") and (b) such assumption, guarantee or other
liability of such Restricted Subsidiary is provided in respect of Senior Debt,
and the guarantee or other instrument provided by such Restricted Subsidiary in
respect of such Senior Debt may be superior to the Guarantee pursuant to
subordination provisions no less favorable to the Holders of the Notes than
those contained in this Indenture.
Notwithstanding the foregoing, any such Guarantee of the Notes by a
Restricted Subsidiary of the Company shall provide by its terms that it shall be
automatically and unconditionally released and discharged, without any further
action required on the part of the Trustee or any Holder, upon: (i) the
unconditional release of such Restricted Subsidiary from its liability in
respect of the Indebtedness in connection
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with which such Guarantee was executed and delivered pursuant to the preceding
paragraph; or (ii) any sale or other disposition (by merger or otherwise) to any
Person which is not a Restricted Subsidiary of the Company, of all of the
Company's Capital Stock in, or all or substantially all of the assets of, such
Restricted Subsidiary; provided that (a) such sale or disposition of such
Capital Stock or assets is otherwise in compliance with the terms of this
Indenture and (b) such assumption, guarantee or other liability of such
Restricted Subsidiary has been released by the holders of the other Indebtedness
so guaranteed.
SECTION 4.20. Limitation on Issuance of Shares of Restricted Subsidiaries.
The Company shall not permit any of its Restricted Subsidiaries to
issue shares of Capital Stock (other than director's qualifying shares) to any
Person other than the Company or a Wholly Owned Restricted Subsidiary of the
Company; provided that (i) if the issuing Restricted Subsidiary is not a Wholly
Owned Restricted Subsidiary, the issuing Restricted Subsidiary may also
simultaneously issue additional shares of Capital Stock of the same class to
other shareholders of the issuing Restricted Subsidiary so long as such issuance
will not reduce the percentage of Capital Stock of the issuing Restricted
Subsidiary which was owned by the Company or its Restricted Subsidiaries
immediately prior to such issuance; and (ii) a Restricted Subsidiary may issue
Capital Stock to any Person to the extent that and subject to the conditions
under which the Company or another Restricted Subsidiary of the Company holding
the Capital Stock of such issuing Restricted Subsidiary would be permitted to
sell, transfer or otherwise dispose of such Capital Stock in an Asset Sale
pursuant to Section 4 16.
SECTION 4.21. Conduct of Business.
The Company shall not, and shall not permit its Restricted
Subsidiaries to, engage in any businesses which are not the same as, similar or
reasonably related to the businesses in which the Company and its Restricted
Subsidiaries are engaged on the Issue Date.
SECTION 4.22. Consummation of Acquisition.
No provision of this Indenture shall prevent the Company or any
Restricted Subsidiary thereof from consummating the Acquisition and the
transactions contemplated thereby.
<PAGE>
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ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
(a) The Company shall not, in a single transaction or a series of
related transactions, consolidate with or merge with or into any Person (other
than the merger of a Wholly Owned Restricted Subsidiary of the Company into the
Company), 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 properties and assets (determined on a consolidated basis for the
Company and its Restricted Subsidiaries) to any Person whether as an entirety or
substantially as an entirety unless:
(1) either (A) the Company shall be the surviving or continuing
corporation or (B) 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 its Restricted
Subsidiaries substantially as an entirety (the "Surviving Entity") (x)
shall be a corporation, partnership, limited liability company or business
trust 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 reasonably
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, if applicable, the Registration Rights
Agreement on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and the
assumption contemplated by clause (1) (B) (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,
shall be able to incur at least $1.00 of additional In-
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debtedness (other than Permitted Indebtedness) in compliance with Section
4.12;
(3) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (1) (B) (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 and be continuing; and
(4) the Company or the Surviving Entity, as the case may be, 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.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties and 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.
Notwithstanding the foregoing, this Section shall not prohibit a
transaction, the principal purpose of which is (as determined in good faith by
the Board of Directors of the Company) to change the state of incorporation of
the Company and such transaction does not have as one of its purposes the
evasion of the limitations imposed by this Section.
When a successor assumes all of the obligations of the Company under
the Notes and this Indenture in a transaction permitted by this Section 5.01,
the Company will be deemed to be released from those obligations.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Com-
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pany 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.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
Each of the following constitutes an "Event of Default":
(1) failure to pay interest on any Notes when the same becomes due
and payable and the Default continues for a period of 20 days (whether or
not such payment shall be prohibited by Article Ten of this Indenture); or
(2) failure to pay the principal 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) (whether or
not such payment shall be prohibited by Article Ten); or
(3) 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 failure to comply with Section 4.10,
Section 4.12 or Section 5.01, which shall constitute Events of Default
upon notice but without passage of time); or
(4) the Company fails to pay at final stated maturity (giving effect
to any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness for borrowed money of the Company or any
Restricted Subsidiary of the Company or interest thereon, or the ac-
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celeration 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 not paid at final stated
maturity or which has been accelerated aggregates $2,000,000 or more at
any time; or
(5) one or more judgments for the payment of money in an aggregate
amount in excess of $2,000,000 shall have been rendered against the
Company or any of its Restricted Subsidiaries and such judgments remain
undischarged, unpaid or unstayed for a period of 60 days after such
judgment or judgments become final and non-appealable; or
(6) the Company or any Significant Subsidiary of the Company (A)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it or
for substantially all of its property, (D) consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it,
(E) makes a general assignment for the benefit of its creditors, or (F)
takes any corporate action to authorize or effect any of the foregoing; or
(7) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any Significant Subsidiary
of the Company in an involuntary case or proceeding under any Bankruptcy
Law, which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any such Significant Subsidiary, (B) appoint a Custodian of the
Company or any such Significant Subsidiary or for substantially all of its
property or (C) order the winding-up or liquidation of its affairs; and
such judgment, decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(8) the lenders under the Credit Agreement commence proceedings to
foreclose upon any assets of the Company or any of its Restricted
Subsidiaries as a result of a default with respect to Obligations of at
least $2,000,000; or
(9) any Guarantee ceases to be in full force and effect or any
Guarantee is declared to be null and void and
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unenforceable or any Guarantee is found to be invalid or any guarantor
denies its liability under its Guarantee (other than by reason of release
of a Guarantee in accordance with Section 4.19).
SECTION 6.02. Acceleration.
(a) If an Event of Default (other than an Event of Default specified
in Section 6.01(6) or (7) with respect to the Company) occurs and is continuing
and has not been waived pursuant to Section 6.04, then 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" (the "Acceleration
Notice"), and the same (i) shall become immediately due and payable or (ii) if
there are any amounts or letters of credit outstanding under the Credit
Agreement, shall become immediately due and payable upon the first to occur of
an acceleration under the Credit Agreement or five business days after receipt
by the Company and the Representative under the Credit Agreement of such
Acceleration Notice but only if such Event of Default is then continuing. Upon
any such declaration, but subject to the immediately preceding sentence, such
amount shall be immediately due and payable.
(b) If an Event of Default specified in Section 6.01(6) or (7)
occurs and is continuing with respect to the Company, 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.
(c) At any time after a declaration of acceleration with respect to
the Notes in accordance with Section 6.02(a), the Holders of a majority in
principal amount of the Notes may, on behalf of the Holders of all of the Notes,
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
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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 Section 6.01(6) or (7), 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 principal amount of the
Notes may waive any existing Default or Event of Default under this Indenture,
and its consequences, except a default in the payment of the principal of or
interest on any Notes.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority
in principal amount of the outstanding Notes by notice to the Trustee may waive
an existing Default or Event of Default and its consequences, except a Default
in the payment of principal (other than principal due by reason of acceleration)
of or interest on any Note as specified in clauses (l) and (2) of Section 6.01.
When a Default or Event of Default is waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal
amount of the outstanding Notes may 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 it, including, without limitation, any remedies
provided for in Section 6.03. Subject to Section 7.01, however,
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the Trustee may refuse to follow any direction that the Trustee reasonably
believes conflicts with any law or this Indenture, that the Trustee determines
may be unduly prejudicial to the rights of another Holder, or that may involve
the Trustee in personal liability; provided that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction; and provided further that this provision shall not affect the rights
of the Trustee set forth in Section 7.01(d).
SECTION 6.06. Limitation on Suits.
A Holder may not pursue any remedy with respect to this Indenture or
the Notes unless:
(l) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) Holders of at least 25% in principal amount of the outstanding
Notes make a written request to the Trustee to pursue the remedy;
(3) such Holders offer to the Trustee indemnity in its sole
discretion satisfactory to the Trustee against any loss, liability or
expense to be incurred in compliance with such request;
(4) the Trustee does not comply with the request within 45 days
after receipt of the request and the offer of satisfactory indemnity; and
(5) during such 45-day period the Holders of a majority in principal
amount of the outstanding Notes do not give the Trustee a direction which,
in the opinion of the Trustee, is inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of
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any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in clause (l) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount of principal and
accrued interest remaining unpaid, together with interest on overdue ,principal
and, to the extent that payment of such interest is lawful, interest on overdue
installments of interest at the rate set forth in Section 4.01 and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents, consultants and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings 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 to the Trustee any amount due to it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agents, consultants and counsel, and any other amounts due the Trustee under
Section 7.07. The Company's payment obligations under this Section 6.09 shall be
secured in accordance with the provisions of Section 7.07 hereunder. 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.
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SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the Company
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no covenants or obligations shall be
implied in this Indenture against the Trustee.
(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.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
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(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 in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not herein expressly provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note or other paper or document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate, an Opinion of
Counsel or both, which shall conform to Sections 11.04 and 11.05. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of
Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or indirectly or by or
through agents or attorneys and the Trustee shall not be responsible for
the misconduct or negligence of any agent or attorney appointed with due
care.
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(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, 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 see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled, upon reasonable
notice to the Company, to examine the books, records, and premises of the
Company, personally or by agent or attorney and to consult with the
officers and representatives of the Company, including the Company's
accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee security
or indemnity satisfactory to the Trustee in its sole discretion against
the costs, expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
(g) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The recitals contained herein and in the Notes shall be taken as
statements of the Company and the Trustee assumes no responsibility for their
correctness. The Trustee makes no
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representation as to the validity or adequacy of this Indenture or the Notes,
and it shall not be accountable for the Company's use of the proceeds from the
Notes, and it shall not be responsible for any statement of the Company in this
Indenture or the Notes other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 90 days after such Default or Event
of Default occurs. Except in the case of a Default or an Event of Default in
payment of principal of, or interest on, any Note, including an accelerated
payment and the failure to make payment on the Change of Control Payment Date
pursuant to a Change of Control Offer or on the Proceeds Purchase Date pursuant
to a Net Proceeds Offer and, except in the case of a failure to comply with
Article Five hereof, the Trustee may withhold the notice if and so long as its
Board of Directors, the executive committee of its Board of Directors or a
committee of its directors and/or Trust Officers in good faith determines that
withholding the notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15, the Trustee shall, to the extent
that any of the events described in TIA ss. 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Holder a brief report dated as of
such date that complies with TIA ss. 313(a). The Trustee also shall comply with
TIA ss.ss. 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the SEC and each stock exchange, if any, on
which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any stock exchange and the Trustee shall comply with TIA ss. 313(d).
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable fees and expenses, in-
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cluding reasonable out-of-pocket expenses incurred or made by it in connection
with the performance of its duties under this Indenture. Such expenses shall
include the reasonable fees and expenses of the Trustee's agents, consultants
and counsel.
The Company shall indemnify the Trustee and its agents, employees,
stockholders and directors and officers for, and hold them harmless against, any
loss, liability or expense incurred by them except for such actions to the
extent caused by any negligence, bad faith or willful misconduct on their part,
arising out of or in connection with the administration of this trust including
the reasonable costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their rights,
powers or duties hereunder. The Trustee shall notify the Company promptly of any
claim asserted against the Trustee for which it may seek indemnity. At the
Trustee's sole discretion, the Company shall defend the claim and the Trustee
shall cooperate and may participate in the defense; provided that any settlement
of a claim shall be approved in writing by the Trustee. Alternatively, the
Trustee may at its option have separate counsel of its own choosing and the
Company shall pay the reasonable fees and expenses of such counsel; provided
that the Company will not be required to pay such fees and expenses if it
assumes the Trustee's defense and there is no conflict of interest between the
Company and the Trustee in connection with such defense as reasonably determined
by the Trustee. The Company need not pay for any settlement made without its
written consent. The Company need not reimburse any expense or indemnify against
any loss or liability to the extent incurred by the Trustee through its
negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes. The Trustee's
right to receive payment of any amounts due under this Section 7.07 shall not be
subordinate to any other liability or indebtedness of the Company (even though
the Notes may be subordinate to such other liability or indebtedness).
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(6) or (7) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law; provided, however, that this shall not
affect
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the Trustee's rights as set forth in the preceding paragraph or Section 6.10.
SECTION 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Company and the Trustee and may appoint a successor Trustee.
The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition any
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court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee in connection with the rights and duties
hereunder prior to such replacement.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this Article Seven.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA ss. ss. 310(a) (1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition. In
addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA ss. 310(a)(2). The Trustee shall comply with TIA ss.
310(b); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b) (1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA ss.
310(b) (1) are met. The provisions of TIA ss. 310 shall apply to the Company, as
obligor of the Notes.
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SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall apply to the Company, as obligor on the Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations.
The Company may terminate its obligations under the Notes and this
Indenture, except those obligations referred to in the penultimate paragraph of
this Section 8.01, if all Notes previously authenticated and delivered (other
than destroyed, lost or stolen Notes which have been replaced or paid or Notes
for whose payment U.S. Legal Tender has theretofore been deposited with the
Trustee or the Paying Agent in trust or segregated and held in trust by the
Company and thereafter repaid to the Company, as provided in Section 8.05) have
been delivered to the Trustee for cancellation and the Company has paid all sums
payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, a notice of redemption to
each Holder of the redemption of all of the Notes shall be given within
one year under arrangements satisfactory to the Trustee for the giving of
such notice or (ii) all Notes have otherwise become due and payable
hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the
benefit of the Holders for that purpose, U.S. Legal Tender in such amount
as is sufficient without consideration of reinvestment of such interest,
U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms,
will provide, not later than one day before the due date
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of any payment on the Notes, U.S. Legal Tender, 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 principal of,
premium, if any, and interest on the outstanding Notes, on the dates on
which such payments are due and payable in accordance with the terms of
this Indenture, to maturity or redemption; provided that the Trustee shall
have been irrevocably instructed to apply such U.S. Legal Tender to the
payment of said principal, premium, if any, and interest with respect to
the Notes and, provided, further, that from and after the time of deposit,
the money deposited shall not be subject to the rights of holders of
Senior Debt pursuant to the provisions of Article Ten;
(c) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under, any
other instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for or relating to the termination of the Company's
obligations under the Notes and this Indenture have been complied with.
Such Opinion of Counsel shall also state that such satisfaction and
discharge does not result in a default under the Credit Agreement (if then
in effect) or any other agreement or instrument then known to such counsel
that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations
in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall
survive until the Notes are no longer outstanding pursuant to the last paragraph
of Section 2.08. After the Notes are no longer outstanding, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Notes and this Indenture except for those surviving obligations specified
above.
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SECTION 8.02. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution of the Board
of Directors of the Company, at any time, elect to have either paragraph (b) or
(c) below be applied to all outstanding Notes upon compliance with the
conditions set forth in Section 8.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.04 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any obligations to, or
the rights of, any holder of Senior Debt under Article Ten or otherwise, except
for the following provisions, which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of and interest
on such Notes when such payments are due, (ii) the Company's obligations with
respect to such Notes under Article Two and Section 4.02 hereof, (iii) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (iv) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03 hereof, be released
from its obligations under the covenants contained in Sections 4.03 through 4.21
and Article Five hereof with respect to the outstanding Notes on
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and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), 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) and Holders of the Notes and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any obligations to, or
the rights of, any holder of Senior Debt under Article Ten or otherwise. For
this purpose, such Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event or Default under Section
6.01(3) hereof, but, except as specified above, the remainder of this Indenture
and such Notes shall be unaffected thereby. In addition, upon the Company's
exercise under paragraph (a) hereof of the option applicable to this paragraph
(c), subject to the satisfaction of the conditions set forth in Section 8.03
hereof, Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6) (solely with respect to
Persons other than the Company) or 6.01(7) (solely with respect to Persons other
than the Company) shall not constitute Defaults or Events of Default.
SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02(b) or 8.02(c) hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender or U.S. Government
Obligations which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms, will provide, not later
than one day before the due date of any payment on the Notes, U.S. Legal
Tender, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a
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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, of such principal or installment of principal of or interest on
the Notes; provided that the Trustee shall have received an irrevocable
written order from the Company instructing the Trustee to apply such U.S.
Legal Tender or the proceeds of such U.S. Government Obligations to said
payments with respect to the Notes;
(b) in the case of an election under Section 8.02(b) hereof, 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 of the Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of an election under Section 8.02(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) no Default or Event of Default or event which with notice or
lapse of time or both would become a Default or an Event of Default with
respect to the Notes shall have occurred and be continuing (x) on the date
of such deposit (other than a Default or Event of Default resulting from
the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or (y) insofar as Sections 6.01(6) and
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6.01(7) hereof are concerned, at any time in the period ending on the 91st
day after the date of such deposit;
(e) 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;
(f) 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;
(g) 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 (other than the condition in clause (d)
(y)); and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel substantially to the effect that (i) the trust funds will not be
subject to any rights of any holders of Senior Debt, including, without
limitation, those arising under this Indenture, and (ii) assuming no
intervening bankruptcy or insolvency of the Company between the date of
deposit and the 91st day following the deposit and that no Holder is an
insider of the Company, after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable Bankruptcy
Law.
SECTION 8.04. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Article Eight, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of principal of and
interest on the Notes. The Trustee shall be under no obligation to invest said
U.S. Legal Tender or U.S. Government Obligations except as it may agree with the
Company.
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The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any U.S. Legal Tender or U.S. Government Obligations held by it as
provided in Section 8.03 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
SECTION 8.05. Repayment to the Company.
Subject to Article Eight, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided that the
Trustee or such Paying Agent, before being required to make any payment, may at
the expense of the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein which shall be at least 30 days from the date of such publication or
mailing any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Holders entitled to such money must look
to the Company for payment as general creditors unless an applicable law
designates another Person.
SECTION 8.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Article Eight 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
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application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Article
Eight until such time as the Trustee or Paying Agent is permitted to apply all
such U.S. Legal Tender or U.S. Government Obligations in accordance with Article
Eight; provided that if the Company has made any payment of interest on or
principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Notes without notice to
or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency; provided that
such amendment or supplement does not, in the opinion of the Trustee,
adversely affect the rights of any Holder in any material respect;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(4) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(5) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the rights of any
Holder; or
(6) to make any other change that does not, in the opinion of the
Trustee, adversely affect in any material respect the rights of any
Holders hereunder;
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provided that the Company has delivered to the Trustee an Opinion of Counsel
stating that such amendment or supplement complies with the provisions of this
Section 9.01.
SECTION 9.02. With Consent of Holders.
(a) Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, may amend or supplement this Indenture or the Notes, without notice to
any other Holders. Subject to Section 6.07, the Holder or Holders of a majority
in aggregate principal amount of the outstanding Notes may waive compliance by
the Company with any provision of this Indenture or the Notes without notice to
any other Holder.
(b) No amendment, supplement or waiver, including a waiver pursuant
to Section 6.04, shall, without the consent of each Holder of each Note affected
thereby:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes;
(3) 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;
(4) make any Notes payable in money other than that stated in the
Notes;
(5) 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 principal amount of
Notes to waive Defaults or Events of Default, other than ones with respect
to the payment of principal of or interest on the Notes;
(6) amend, modify, change or waive any provision of this Section
9.2;
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(7) amend, modify or change in any material respect the obligation
of the Company to make or consummate a Change of Control Offer in the
event of a Change of Control or make and consummate a Net Proceeds Offer
in respect of any Asset Sale that has been consummated or modify any of
the provisions or definitions with respect thereto after a Change of
Control has occurred or the subject Asset Sale has been consummated; or
(8) modify Article Ten or the definitions used in Article Ten to
adversely affect the Holders of the Notes in any material respect.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Effect on Senior Debt.
No amendment of this Indenture shall adversely affect the rights of
any holder of Senior Debt under Article Ten of this Indenture, without the
consent of such holder.
SECTION 9.04. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall, except as may otherwise be provided in any order of the SEC pursuant to
TIA ss 304(d), comply with the TIA as then in effect.
SECTION 9.05. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or
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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
theretofore 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, which record date shall be at least 30 days prior to the
first solicitation of such consent. 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 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 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (1)
through (8) of Section 9.02(b), in which case, the amendment, supplement or
waiver shall bind only 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 may require the Holder of such Note to deliver it to the Trustee.
The Trustee may 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. Any such notation
or exchange shall be made at the sole cost and expense of the Company.
SECTION 9.07. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized or permitted pursuant to this Article Nine; provided that the Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and
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an Officers' Certificate each stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture. Such Opinion of Counsel shall not be an expense of
the Trustee.
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt.
The Company covenants and agrees, and each Holder of the Notes, by
its acceptance thereof, likewise covenants and agrees, that all Notes shall be
issued subject to the provisions of this Article Ten; and each Person holding
any Note, whether upon original issue or upon transfer, assignment or exchange
thereof, accepts and agrees that the payment of all Obligations on the Notes by
the Company shall, to the extent and in the manner herein set forth, be
subordinated and junior in right of payment to the prior payment in full in cash
or Cash Equivalents of all Obligations on the Senior Debt; that the
subordination is for the benefit of, and shall be enforceable directly by, the
holders of Senior Debt, and that each holder of Senior Debt whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Notes; provided however that the
Indebtedness represented by the Notes shall cease to be so subordinate, junior
and subject in right of payment upon any defeasance thereof in accordance with
Article Eight.
SECTION 10.02. No Payment on Notes in Certain Circumstances.
(a) Unless Section 10.03 shall be applicable, if any default occurs
and is continuing in the payment when due, whether at maturity, upon 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 Debt, and such default shall not have ceased to exist or
have been cured or waived by or on behalf of the holders of such Senior Debt, no
payment of any kind or character (other than payments by a trust previously
established pursuant to Article Eight), by set-off or other
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wise, 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, in each case, other than
payments in Junior Securities. In addition, unless Section 10.03 shall be
applicable, if any other event of default occurs and is continuing with respect
to any Senior Debt, as such event of default is defined in the instrument
creating or evidencing such Senior Debt, permitting the holders of such Senior
Debt then outstanding to accelerate the maturity thereof and if the
Representative for the Senior Debt gives 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
thereof from the Representative for the respective issue of Senior Debt
terminating the Blockage Period (as defined below), during the 179 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 (other than payments by a trust previously established pursuant to
Article Eight), by set-off or otherwise, with respect to any Obligations on the
Notes or (y) acquire any of the Notes for cash or property or otherwise, in each
case, other than payments in Junior Securities. Notwithstanding anything herein
to the contrary, in no event will a Blockage Period extend beyond 179 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 Senior Debt shall be, or be made, the basis for the commencement
of a second Blockage Period by the Representative of the Senior Debt 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).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 10.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to such
holders on the basis of the respective amount of Senior
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Debt held by such holders) or their respective Representatives, as their
respective interests may appear. The Trustee shall be entitled to rely on
information regarding amounts then due and owing on the Senior Debt, if any,
received from the holders of Senior Debt (or their Representatives) or, if such
information is not received from such holders or their Representatives, from the
Company and only amounts included in the information provided to the Trustee
shall be paid to the holders of Senior Debt.
Nothing contained in this Article Ten 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 Section 6.02 or to pursue any rights or remedies
hereunder.
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc.
(a) 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 total or partial 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 Debt shall
first be paid in full in cash or Cash Equivalents, or such payment duly provided
for to the satisfaction of the holders of Senior Debt, before any payment or
distribution of any kind or character (other than payments by a trust previously
established pursuant to Article Eight) 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, other than payments or distributions in Junior Securities. Upon any
such dissolution, winding-up, liquidation, reorganization, receivership or
similar proceeding, any payment or distribution of assets of the Company of any
kind or character (other than payments by a trust previously established
pursuant to Article Eight), whether in cash, property or securities, other than
payments or distributions in Junior Securities, to which the Holders of the
Notes or the Trustee under this Indenture would be entitled, except for the
provisions of this Article Ten, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders or by the Trustee under this
Indenture if received by them, directly to the holders of Senior Debt (pro rata
to such
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holders on the basis of the respective amounts of Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear, for application to the payment
of Senior Debt remaining unpaid until all such Senior Debt has been paid in full
in cash or Cash Equivalents after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Debt or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character (other than
payments by a trust previously established pursuant to Article Eight), whether
in cash, property or securities, other than in Junior Securities, shall be
received by any Holder when such payment or distribution is prohibited by this
Section 10.03(c), such payment or distribution shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior Debt
(pro rata to such holders on the basis of the respective amount of Senior Debt
held by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of Senior Debt remaining unpaid until all such Senior Debt has been paid
in full in cash or Cash Equivalents, after giving effect to any concurrent
payment, distribution or provision thereof or to or for the holders of such
Senior Debt.
(d) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of
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the Senior Debt shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, assume the
Company's obligations hereunder in accordance with Article Five hereof.
SECTION 10.04. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
10.02 and 10.03, from making payments at any time for the purpose of making
payments of principal of and interest on the Notes, or from depositing with the
Trustee any moneys for such payments, or (ii) in the absence of actual knowledge
by the Trustee that a given payment would be prohibited by Section 10.02 or
10.03, the application by the Trustee of any moneys deposited with it for the
purpose of making such payments of principal of, and interest on, the Notes to
the Holders entitled thereto unless at least two Business Days prior to the date
upon which such payment would otherwise become due and payable a Trust Officer
shall have actually received the written notice provided for in the second
sentence of Section 10.02(a) or in Section 10.07. The Company shall give prompt
written notice to the Trustee of any dissolution, winding-up, liquidation or
reorganization of the Company.
SECTION 10.05. Subrogation.
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Notes shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Debt until the Notes shall be
paid in full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of the Senior Debt by or on behalf of the Company
or by or on behalf of the Holders by virtue of this Article Ten which otherwise
would have been made to the Holders shall, as between the Company and the
Holders of the Notes, be deemed to be a payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article Ten
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 the Senior Debt,
on the other hand.
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SECTION 10.06. Obligations of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Debt, and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders the
principal of and any interest on the Notes as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of the Holders and creditors of the Company other than the
holders of the Senior Debt, nor shall anything herein or therein prevent the
Holder of any Note or the Trustee on its behalf from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
SECTION 10.07. Notice to Trustee.
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 pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company, or from a holder of Senior Debt or a
Representative therefor, together with proof satisfactory to the Trustee of
such holding of Senior Debt or of the authority of such Representative, and,
prior to the receipt of any such written notice, the Trustee shall be entitled
to assume (in the absence of actual knowledge to the contrary) that no such
facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt 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
<PAGE>
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Article Ten, 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 10.08. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred
to in this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any insolvency,
bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization
or similar case or proceeding is pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, receiver, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or the Holders of the Notes, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten.
SECTION 10.09. Trustee's Relation to Senior Debt.
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
Whenever a distribution is to be made or a notice given to holders
or owners of Senior Debt, the distribution may
<PAGE>
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be made and the notice may be given to their Representative, if any.
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Debt.
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein 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
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Ten or the obligations
hereunder of the Holders of the Notes to the holders of the Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt, or otherwise
amend or supplement in any manner Senior Debt, or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the payment or collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 10.11. Noteholders Authorize Trustee To Effectuate Subordination
of Notes.
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Notes, the subordination provided in this Article Ten, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy,
<PAGE>
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insolvency, receivership, reorganization or similar proceedings or upon an
assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of the Company, the filing of a claim for
the unpaid balance of its Notes and accrued interest in the form required in
those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right (but not the
obligation) to file and are or is hereby authorized to file an appropriate claim
for and on behalf of the Holders of said Notes. Nothing herein contained shall
be deemed to authorize the Trustee or the holders of Senior Debt or their
Representative 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 or the holders of Senior Debt or their Representative to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 10.12. This Article Ten Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
SECTION 10.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article Ten will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
Except as may otherwise be provided in any order of the SEC pursuant
to TIA ss 304(d), if any provision of this Indenture limits, qualifies, or
conflicts with another provision
<PAGE>
-94-
which is required to be included in this Indenture by the TIA, the required
provision shall control.
SECTION 11.02. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by commercial courier service, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Company:
Wilson Greatbatch, Ltd.
10,000 Wehrle Drive
Clarence, NY 14031
Facsimile No.: 716-759-8579
Attn: President
with a copy to:
Weil, Gotshal & Manges LLP
7000 Louisiana, Suite 1600
Houston, TX 77002
Facsimile No.: 713-224-9511
Attn: Steven D. Rubin, Esq.
if to the Trustee:
[ ]
Facsimile No.: [ ]
Attn: Corporate Trust Department
Each of the Company and the Trustee by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when receipt is confirmed if delivered by commercial courier service;
when answered back, if telexed; when receipt is acknowledged, if faxed; and five
(5) calendar days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee).
<PAGE>
-95-
Any notice or communication mailed to a Holder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA ss 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other Person shall have the protection of TIA ss
312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action have
been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
<PAGE>
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(1) a statement that the Person making such certificate or opinion
has read such covenant or condition and the definitions relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is reasonably necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.07. Legal Holidays,
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 11.08. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW ss 5-1401). 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
INDENTURE.
<PAGE>
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SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Company or of the Trustee shall not have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. Such waiver
and release are part of the consideration for the issuance of the Notes.
SECTION 11.11. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture or in
the Notes shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
Issuer:
WILSON GREATBATCH LTD.
By:
------------------------------------
Name:
Title:
Trustee:
[ ],
as Trustee
By:
------------------------------------
Name:
Title:
<PAGE>
Exhibit 10.7
REGISTRATION AND ANTI-DILUTION AGREEMENT (this "Agreement") dated as
of July 10, 1997 (the "Issue Date") between WGL Holdings, Inc., a Delaware
corporation ("Holdings"), and the parties named herein (together with their
successors and assigns, the "Holders").
Terms defined in the Securities Purchase Agreement (the "Securities
Purchase Agreement") dated as of July 10, 1997 between WGL Acquisition Corp.
(the "Company"), Holdings and the purchasers named therein (the "Purchasers")
unless defined herein are used as therein defined.
WHEREAS, Holdings proposes to issue shares of Common Stock (the
"Common Stock"), as hereinafter described (the "Shares"), representing
approximately 7% of the total number of shares of Common Stock, in connection
with a private placement of an aggregate of $25,000,000 principal amount of the
Company's 13% Senior Subordinated Notes due 2007.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Shares. The Shares shall be subject to the terms set
forth in the Securities Purchase Agreement and in the Shareholders' Agreement
dated the date hereof among Holdings, the Holders and certain other shareholders
of Holdings.
Holdings or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of
Holdings' capital stock will be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be required for purpose of
issuing shares of Common Stock upon adjustments pursuant to Section 4 hereof.
Holdings will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of Holdings' capital stock.
Holdings will furnish such Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder pursuant to Section
6 hereof.
Holdings covenants that all Shares which may be issued and paid for
as provided in the Securities Purchase Agreement will, upon issue, be fully
paid, nonassessable, free of preemptive rights and free from all taxes, liens,
charges and security interests with respect to the issue thereof.
<PAGE>
- 2 -
SECTION 2. Payment of Taxes. Holdings will pay all documentary stamp
taxes attributable to the initial issuance of Shares hereunder, including Shares
issued pursuant to Section 4 hereof.
SECTION 3. obtaining Stock Exchange Listings. Holdings will from
time to time take all action which may be necessary so that the Shares will be
listed on the principal securities exchanges and markets within the United
States of America, if any, on which other shares of Common Stock are then
listed.
SECTION 4. Adjustment of Number of Shares. In the event an
adjustment is required under the terms of this Section 4, of each holder of
Shares shall have the right (the "Adjustment Right"), to purchase, at a price
equal to their par value, any or all that number of shares of Common Stock
determined pursuant to the formulas set out in this Section 4. For purposes of
this Section 4, "Common Stock" means shares now or hereafter authorized of any
class of common stock of Holdings and any other stock of Holdings, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of Holdings without limit as to per share amount. Any securities
acquired by a holder of Shares pursuant to the adjustment provisions set forth
below shall constitute Shares for purposes of this Agreement.
(a) Adjustment for Common Stock Issue.
If Holdings issues shares of Common Stock for a consideration per
share less than the current market price per share on the date Holdings fixes
the offering price of such additional shares, the number of Shares which would
be held by a holder of Shares upon exercise in full of such holder's Adjustment
Right shall be determined in accordance with the formula:
N' = N x A
-----
0 + P
-
M
where:
N' = the adjusted number of Shares which would be held by such holder
upon exercise in fully of such holder's Adjustment Right.
<PAGE>
- 3 -
N = the then current number of Shares held by such holder.
O = the number of shares outstanding immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of sale of such
additional shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (a) does not apply to:
(1) the conversion or exchange of other securities convertible or
exchangeable for Common Stock,
(2) Common Stock issued to Holdings' employees under bona fide
employee benefit plans adopted by the Board of Directors and approved by
the holders of Common Stock when required by law, if such Common Stock
would otherwise be covered by this subsection (a) (but only to the extent
that the aggregate number of shares excluded hereby and issued on or after
the date of this Agreement shall not exceed 5% of the Common Stock
outstanding at the time of the adoption of each such plan, exclusive of
anti-dilution adjustments thereunder),
(3) Common Stock issued upon the exercise of rights or warrants
issued to the holders of Common Stock,
(4) Common Stock issued to shareholders of any person which merges
into Holdings in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger, or
(5) Common Stock issued in a bona fide public offering pursuant to a
firm commitment underwriting.
<PAGE>
- 4 -
(b) Adjustment for Convertible Securities Issue.
If Holdings issues any securities convertible into or exchangeable
for Common Stock for a consideration per share of Common Stock initially
deliverable upon conversion or exchange of such securities less than the current
market price per share on the date of issuance of such securities, the number of
Shares which would be held by a holder of Shares upon exercise in full of such
holder's Adjustment Right shall be determined in accordance with this formula:
N' = N x O + D
-----
0 + P
-
M
where:
N' = the adjusted number of Shares which would be held by such holder
upon exercise in full of such holder's Adjustment Right.
N = the then current number of Shares held by such holder.
O = the number of shares outstanding immediately prior to the issuance
of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of sale of such
securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or exchange
rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange
of such securities have not been issued when such securities are no longer
outstanding, then the number of Shares shall promptly be readjusted to the
number of Shares which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual
<PAGE>
- 5 -
number of shares of Common Stock issued upon conversion or exchange of such
securities.
This subsection (b) does not apply to:
(1) convertible securities issued to shareholders of any person
which merges into Holdings, or with a subsidiary of Holdings, in
proportion to their stock holdings of such person immediately prior to
such merger, upon such merger, or
(2) convertible securities issued in a bona fide public offering
pursuant to a firm commitment underwriting.
(c) Current Market Price.
In subsections (a) and (b) of this Section 10 the current market price per
share of Common Stock on any date is the average of the Quoted Prices of the
Common Stock for 30 consecutive trading days commencing 45 trading days before
the date in question. The "Quoted Price" of the Common Stock is the last
reported sales price of the Common Stock as reported by NASDAQ, National Market
System, or if the Common Stock is listed on a securities exchange, the last
reported sales price of the Common Stock on such exchange which shall be for
consolidated trading if applicable to such exchange, or if neither so reported
or listed, the last reported bid price of the Common Stock. In the absence of
one or more such quotations, the Board of Directors of Holdings shall determine
the current market price (i) based on the most recently completed arm's-length
transaction between Holdings and a person other than an Affiliate of Holdings
and the closing of which occurs on such date or shall have occurred within the
six months preceding such date, (ii) if no such transaction shall have occurred
on such date or within such six-month period, the value of the security most
recently determined as of a date within the six months preceding such date by a
nationally recognized investment banking firm or appraisal firm which is not an
Affiliate of Holdings (an "Independent Financial Advisor") or (iii) if neither
clause (i) nor (ii) is applicable, the value of the security determined as of
such date by an Independent Financial Advisor.
(d) Consideration Received.
For purposes of any computation respecting consideration received
pursuant to subsections (a) and (b) of this Section 4, the following shall
apply:
<PAGE>
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(1) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by Holdings for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive,
and described in a Board resolution;
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by Holdings for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by Holdings upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(e) When De Minimis Adjustment May Be Deferred.
No adjustment in the number of Shares need be made unless the
adjustment would require an increase or decrease of at least 1% in the number of
Shares held by each holder. Any adjustments that are not made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section shall be made to the nearest
1/100th of a share.
(f) When No Adjustment Required.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
(g) Notice of Adjustment.
Whenever the number of Shares may be adjusted, Holdings shall
provide the notices required by Section 6 hereof.
<PAGE>
- 7 -
(h) Notice of Certain Transactions.
If:
(1) Holdings takes any action that would require an adjustment in
the number of Shares pursuant to subsection (a) or (b) of this Section 4;
(2) Holdings takes any action that would require a supplemental
Registration and Anti-Dilution Agreement pursuant to subsection (i) of
this Section 4; or
(3) there is a liquidation or dissolution of Holdings,
Holdings shall mail to holders of Shares a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. Holdings shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
(i) Reorganization of Company.
If Holdings consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person, upon consummation of
such transaction the Adjustment Right shall automatically become exercisable for
the kind and amount of securities, cash or other assets which the holder of
Shares would have owned immediately after the consolidation, merger, transfer or
lease if the holder had exercised the Adjustment Right immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than Holdings, or the person to which such sale or conveyance
shall have been made, shall enter into a supplemental Registration and
Anti-Dilution Agreement so providing and further providing for registration
rights and adjustments which shall be as nearly equivalent as may be practical
to the registration rights adjustments provided for in this Agreement. The
successor company shall mail to holders of Shares a notice describing the
supplemental Registration and Anti-Dilution Agreement.
If the issuer of securities deliverable upon exercise of Adjustment
Rights under the supplemental Registration and Anti-Dilution Agreement is an
affiliate of the formed, surviv-
<PAGE>
- 8 -
ing, transferee or lessee corporation, that issuer shall join in the
supplemental Registration and Anti-Dilution Agreement.
If this subsection (i) applies, subsections (a) and (b) of this
Section 4 do not apply.
(j) Company Determination Final.
Any determination that Holdings or the Board of Directors must make
pursuant to subsection (a), (b), (c), (d) or (f) of this Section 4 is
conclusive.
(k) When Issuance or Payment May Be Deferred.
In any case in which this Section 4 shall require that an adjustment
in the number of Shares be made effective as of a record date for a specified
event, Holdings may elect to defer until the occurrence of such event (i)
issuing to the holder of Shares subject to any Adjustment Right exercised after
such record date the Shares issuable upon such exercise over and above the
Shares and other capital stock of Holdings, if any, issuable upon such exercise
on the basis of the current number of Shares issuable upon exercise of such
Adjustment Right and (ii) paying to such holder any amount in cash in lieu of a
fractional share pursuant to Section 5; provided, however, that Holdings shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional Shares and cash upon the
occurrence of the event requiring such adjustment.
(1) No Dilution or Impairment.
If any event shall occur as to which the provisions of this Section
4 are not strictly applicable but the failure to make any adjustment would
adversely affect the ownership interest in Holdings and rights represented by
the Shares in accordance with the essential intent and principles of this
Section, then, in each such case, Holdings shall appoint an investment banking
firm of recognized national standing, or any other financial expert that does
not (or whose directors, officers, employees, affiliates or stockholders do not)
have a direct or material indirect financial interest in Holdings or any of its
subsidiaries, who has not been, and, at the time it is called upon to give
independent financial advice to Holdings, is not (and none of its directors,
officers, employees, affiliates or stockholders are) a promoter, director or
officer of Holdings or any of its subsidiaries, which shall give their opinion
upon the adjustment, if any, on a basis consistent with
<PAGE>
- 9 -
the essential intent and principles established in this Section 4, necessary to
preserve, without dilution, the ownership interest in Holdings and other rights
represented by each Share. Upon receipt of such opinion, Holdings will promptly
mail a copy thereof to the holders of the Shares and shall make the adjustments
described therein.
Holdings will not, by amendment of its certificate of incorporation
or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Agreement, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of each holder of the Shares against
dilution or other impairment. Without limiting the generality of the foregoing,
Holdings (1) will take all such action as may be necessary or appropriate in
order that Holdings may validly and legally issue fully paid and nonassessable
shares of Common Stock on the exercise of the Adjustment Rights from time to
time outstanding and (2) will not take any action which results in any
adjustment of the number of Shares issuable upon exercise of such Adjustment
Rights if the total number of Shares issuable after the action upon the exercise
of all of the Adjustment Rights would exceed the total number of shares of
Common Stock then authorized by Holdings' certificate of incorporation and
available for the purposes of issue upon such exercise. A consolidation, merger,
reorganization or transfer of assets involving the Company covered by Section
4(i) shall not be prohibited by or require any adjustment under this subsection
(1).
(m) Exercise of Adjustment Right.
In the event that a holder of Shares is granted an Adjustment Right
pursuant to this Section 4, such holder shall have 30 days from the later of the
date of any action requiring an adjustment and the date notice of such action is
provided pursuant to Section 6 hereof to exercise such Adjustment Right. Any
Adjustment Right may be exercised by delivery of a notice to Holdings in the
form of the Election to Purchase attached hereto (which form shall be included
in each notice of an adjustment sent to holders of Shares) along with, if
required by such form, a certified check payable to the order of Holdings in an
amount equal to the aggregate par value of the additional Shares to be issued to
such holder pursuant to its exercise of the Adjustment Right. Upon delivery of
such form and, if required, such payment, Holdings shall promptly cause the
addi-
<PAGE>
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tional Shares to be issued and delivered to such holder or to another person or
address specified in writing by such holder.
SECTION 5. Fractional Interests. Any Adjustment Rights may be
exercised in full or in part; provided that Holdings shall not be required to
issue fractional Shares on the exercise of Adjustment Rights. If more than one
Adjustment Right shall be exercised at the same time by the same holder, the
number of full Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Shares purchasable on exercise
of the Adjustment Rights so requested to be exercised. If any fraction of a
Share would, except for the provisions of this Section 5, be issuable on the
exercise of any Adjustment Rights (or specified portion thereof), Holdings shall
pay an amount in cash equal to the product of (i) such fraction of a Adjustment
Right Share and (ii) the difference between the current market price of a share
of Common Stock and its par value.
SECTION 6. Notices to Holders. Upon any event which may require
adjustment of the number of Shares pursuant to Section 4, Holdings shall
promptly thereafter (i) cause to be filed with Holdings a certificate which
includes the report of a firm of independent public accountants of recognized
standing selected by the Board of Directors of Holdings (who may be the regular
auditors of Holdings) setting forth the number of Shares issuable upon exercise
of the Adjustment Right in respect of each Share and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based, which certificate shall be conclusive evidence of the correctness of the
matters set forth therein, and (ii) cause to be given to each of the registered
holders of the Shares at his or her address appearing on the share register
written notice of such adjustments by first-class mail, postage prepaid. Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this Section 6.
SECTION 7. Registration Rights.
(a) Demand Registration.
(1) Request for Registration. At any time after the earlier of July
10, 2002 or the date of any initial public offering (the "IPO") of any capital
stock of Holdings or one of its subsidiaries, the Holder or Holders of in excess
of 25% of the outstanding Registrable Securities may make a written request for
registration under the Securities Act ("Demand Regis-
<PAGE>
- 11 -
tration") of all or part of its or their Registrable Securities; provided that
Holdings shall not be obligated to effect more than two Demand Registrations in
respect of the Registrable Securities. Such request will specify the number of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof. Within 10 days after receipt of such request,
Holdings will give written notice of such registration request to all other
Holders of Registrable Securities and include in such registration all
Registrable Securities with respect to which Holdings has received written
requests for inclusion therein from the Holders thereof within 15 Business Days
after receipt by the applicable Holder of Holdings' notice. Each such request
will also specify the aggregate number of Registrable Securities to be
registered and the intended method of disposition thereof.
(2) Effective Registration and Expenses. A registration will not
count as a Demand Registration until it has become effective (unless the Holders
demanding such registration withdraw the Registrable Securities, in which case
such demand will count as a Demand Registration unless the Holders of such
Registrable Securities agree to pay all Registration Expenses (as hereinafter
defined) relating to such registration). Except as provided above, Holdings will
pay all Registration Expenses in connection with any registration initiated as a
Demand Registration, whether or not it becomes effective.
(3) Priority on Demand Registrations. If the Holders of a majority
of the Registrable Securities to be registered in a Demand Registration so
elect, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of an underwritten offering. In such event, if
the managing Underwriter or Underwriters of such offering advise Holdings and
the Holders in writing that in their opinion the Registrable Securities
requested to be included in such offering is sufficiently large to materially
and adversely affect the success of such offering, Holdings will include in such
registration the number of Registrable Securities which in the opinion of such
managing Underwriter or Underwriters can be sold without any such material
adverse effect, and such amount shall be allocated pro rata among the Holders of
Registrable Securities on the basis of the amount of Registrable Securities
requested to be included in such registration by each such Holder. To the extent
Registrable Securities in a number equal to or exceeding one half of the
Registrable Securities so requested to be registered are excluded from the
offering, the Holders of Registrable Securities, as a group, shall have the
<PAGE>
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right to one additional Demand Registration under this section with respect to
Registrable Securities.
(4) Selection of Underwriters. If any Demand Registration is in the
form of an underwritten offering, the Holders of a majority of the aggregate
number of the outstanding Registrable Securities shall designate the Underwriter
or a group of Underwriters to be utilized in connection with a public offering
of the applicable issue of Registrable Securities.
(5) Deferral. Notwithstanding anything to the contrary contained
herein, Holdings shall not be obligated to prepare and file, or cause to become
effective, any registration statement pursuant to this Section 7(a) hereof at
any time when, in the good faith judgment of its Board of Directors, the filing
thereof at the time requested or the effectiveness thereof after filing should
be delayed to permit Holdings to include in the registration statement Holdings'
financial statements (and any required audit opinion thereon) for the then
immediately preceding fiscal year or fiscal quarter, as the case may be. The
filing of a registration statement by Holdings cannot be deferred pursuant to
the provisions of the immediately preceding sentence beyond the time that such
financial statements (or any required audit opinion thereon) would be required
to be filed with the Commission as part of Holdings' Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, if Holdings were then
obligated to file such reports. Notwithstanding anything to the contrary
contained herein, Holdings shall not be obligated to cause a registration
statement previously filed pursuant to this Section 13 to become effective, and
may suspend sales by the Holders of Registrable Securities under any
registration that has previously become effective, at any time when, in the good
faith judgment of its Board of Directors, it reasonably believes that the
effectiveness of such registration statement or the offering of securities
pursuant thereto would materially adversely affect a pending or proposed
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction or negotiations, discussions or pending proposals with respect
thereto; provided that deferrals pursuant to this sentence shall not exceed, in
the aggregate, 120 days in any calendar year. The filing of a registration
statement, or any amendment or supplement thereto, by Holdings cannot be
deferred, and the rights of Holders of Registrable Securities to make sales
pursuant to an effective registration statement cannot be suspended, pursuant to
the provisions of the immediately preceding sentence for more than 15 days after
the abandonment or consummation of any of the foregoing proposals or transac-
<PAGE>
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tions or, in any event, for more than 30 days after the date of the Board's
determination pursuant to the immediately preceding sentence of this Section 7
(a) (5).
(b) Piggy-Back Registration.
(1) If Holdings proposes to file a registration statement under the
Securities Act with respect to an offering (including an IPO) by Holdings for
its own account or for the account of any of its security holders of any class
of equity security (other than a registration statement on Form S-4 or S-8 (or
any substitute form that may be adopted by the Commission) or a registration
statement in connection with an exchange offer or offering to Holdings' existing
security holders), then Holdings shall give written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable (but in
no event less than ten Business Days before the anticipated filing date), and
such notice shall offer such Holders the opportunity to register such number of
Registrable Securities as each such Holder may request (a "Piggy-Back
Registration").
(2) Holdings shall use its best efforts to cause the managing
Underwriter or Underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in the registration statement
for such offering to be included on the same terms and conditions as any similar
securities of Holdings or of such other security holders included therein.
Notwithstanding the foregoing, if the managing Underwriter or Underwriters of
such offering deliver a written opinion to Holdings that either because of (i)
the kind or combination of securities which the Holders, Holdings and any other
persons or entities intend to include in such offering or (ii) the size of the
offering which the Holders, Holdings and such other persons intend to make, are
such that the success of the offering would be materially and adversely affected
by inclusion of the Registrable Securities requested to be included, then (a) in
the event that the size of the offering is the basis of such managing
Underwriter's opinion, the amount of securities to be offered for the accounts
of Holders shall be reduced pro rata (according to the Registrable Securities
and other securities proposed for registration by Persons ("Non-Priority
Persons") other than Holdings (if such registration was initially to be filed
for the account of Holdings) or the other Persons for whose account such
registration was initially to be filed) to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing Underwriter or Underwriters; pro-
<PAGE>
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vided that if securities are being offered for the account of Non-Priority
Persons other than holders of Registrable Securities, then with respect to the
Registrable Securities intended to be offered by Holders, the proportion by
which the amount of such class of securities intended to be offered by Holders
is reduced shall not exceed the proportion by which the amount of such class of
securities intended to be offered by Non-Priority Persons other than holders of
Registrable Securities is reduced; and (b) in the event that the kind (or
combination) of securities to be offered is the basis of such managing
Underwriter's opinion, (x) the Registrable Securities to be included in such
offering shall be reduced as described in clause (a) above (subject to the
proviso in clause (a)) or (y) if the actions described in clause (x) would, in
the judgment of the managing Underwriter, be insufficient to substantially
eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
Holdings will pay all Registration Expenses (as defined herein) in
connection with each registration of Registrable Securities.
(c) Registration Procedures.
If and whenever Holdings is required to use its best efforts to
effect the registration of any Registrable Securities under the Securities Act,
Holdings will promptly:
(1) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such securities, make all required
filings with the NASD and use best efforts to cause such registration
statement to become effective;
(2) prepare and file with the Securities and Exchange 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, but in no event for a period of more
<PAGE>
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than one year after such registration statement becomes effective;
(3) furnish to counsel (if any) elected by holders of a majority (by
number of shares) of the Registrable Securities covered by such
registration statement copies of all documents proposed to be filed with
the Securities and Exchange Commission in connection with such
registration, which documents will be subject to the review of such
counsel;
(4) furnish to each seller of such securities such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits, except that
Holdings shall not be obligated to furnish any seller of securities with
more than two copies of such exhibits), such number of copies of the
prospectus included in such registration statement (including such
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the disposition of
the securities owned by such seller;
(5) use its commercially reasonable efforts to register or qualify
such securities covered by such registration statement under such other
securities or Blue Sky Laws of such jurisdictions as each seller shall
request, and do any and all other acts and things which may be necessary
or advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that Holdings
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, or to consent to general service of process in any such
jurisdiction;
(6) furnish to each seller a signed counterpart, addressed to the
sellers, of
(i) an opinion of counsel for Holdings, dated the effective
date of the registration statement, and
(ii) subject to the accountants obtaining the necessary
representations as specified in Statement on Auditing Standards No.
72, a "comfort" letter signed by the independent public accountants
who have
<PAGE>
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certified Holdings' financial statements included in the
registration statement,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to changes subsequent to the date of
such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letter delivered to the underwriters
in underwritten public offerings of securities;
(7) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, 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 then
existing;
(8) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but not
more than eighteen months, beginning with the first month after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(9) use its best efforts to list such securities on any securities
exchange on which the Common Stock is then listed, if such securities are
not already so listed and if such listing is then permitted under the
rules of such exchange, and to provide a transfer agent and registrar for
such Registrable Securities not later than the effective date of such
registration statement; and
<PAGE>
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(10) in any underwritten offering, use its best efforts to cause the
indemnity and contribution terms between the sellers and the underwriters
to be no more burdensome to the sellers than the indemnity and
contribution terms between the sellers and Holdings set forth in Section
7(d) hereof.
Holdings may require each seller of any securities as to which any
registration is being effected to furnish to Holdings such information regarding
such seller and the distribution of such securities as Holdings may from time to
time reasonably request in writing and as shall be required by law in connection
therewith. Each such holder agrees to furnish promptly to Holdings all
information required to be disclosed in order to make the information previously
furnished to Holdings by such holder not materially misleading.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from Holdings of the happening of any event of the kind described in
Section 7(c) (7) hereof, such holder will promptly discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 7(c) (7)
hereof. If so directed by Holdings, each holder of Registrable Securities will
deliver to Holdings (at Holdings' expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event Holdings shall give any such notice, the period mentioned in Section 7(c)
(2) hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each seller of any Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 7(c) (7) hereof.
In connection with any underwritten offering, all Registrable
Securities to be included in such registration shall be subject to the related
underwriting agreement and no person may participate in such registration unless
such person agrees to sell such person's securities on the basis provided in the
underwriting arrangement approved by the persons for whose account such
underwritten registration is initially filed and completes and executes all
customary questionnaires, indemnities, underwriting agreements and other
reasonable documents
<PAGE>
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which must be executed under the terms of such underwriting arrangements.
(d) Indemnification.
(1) Indemnification by Holdings. Holdings agrees to indemnify and
hold harmless each Holder of Registrable Securities, its officers, directors,
partners, employees and agents and each Person who controls such Holder within
the meaning of either Section 15 of the Securities Act or Section 20(a) of the
Exchange Act (each such person being sometimes hereinafter referred to as an
"Indemnified Holder") from and against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or 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 light of the circumstances under which they were made, not misleading,
except insofar as (i) such losses, claims, damages, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or
allegation thereof based upon information relating to such Indemnified Holder
and furnished in writing to Holdings by such Indemnified Holder expressly for
use therein, or (ii) such losses, claims, damages, liabilities (or proceedings
in respect thereof) or expenses result from such Indemnified Holder selling
Registrable Securities to a person asserting the existence of an untrue
statement or alleged untrue statement or omission or alleged omission in a
preliminary prospectus and to whom there was not given or sent, at or prior to
the written confirmation of the sale of such Registrable Securities, a copy of
the final prospectus or of the final prospectus as then amended or supplemented
in any case where such delivery is required by the Securities Act but only if
(x) such statement or omission was corrected in such final prospectus prior to
such written confirmation and such Indemnified Holder was furnished copies of
such final prospectus in sufficient quantity, prior to such written confirmation
and (y) the claims asserted by such person do not include allegations of other
untrue statements or omissions made in such preliminary prospectus or final
prospectus which was not corrected in the final prospectus or in the prospectus
as then amended or supplemented, respectively, which allegations are upheld by a
final judgment. This indemnity will be in addition to any liability which
Holdings may otherwise have.
<PAGE>
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If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against an Indemnified
Holder in respect of which indemnity may be sought from Holdings, such
Indemnified Holder shall promptly notify Holdings in writing, and Holdings shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Holder and the payment of all expenses. Such
Indemnified Holder shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Holder except that
Holdings shall be responsible for the reasonable fees and expenses of such
counsel if (but only if) (a) Holdings has agreed to pay such fees and expenses
or (b) Holdings shall have failed to assume the defense of such action or
proceeding and has failed to employ counsel reasonably satisfactory to such
Indemnified Holder in any such action or proceeding or (c) the named parties to
any such action or proceeding (including any inpleaded parties) include both
such Indemnified Holder and Holdings, and there are one or more legal defenses
available to such Indemnified Holder which are different from or additional to
those available to Holdings (in which case, if such Indemnified Holder notifies
Holdings in writing that it elects to employ separate counsel at the expense of
Holdings, Holdings shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Holder, it being understood,
however, that Holdings shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys at any time for such Indemnified Holder and any other
Indemnified Holders, which firm shall be designated in writing by such
Indemnified Holders). Holdings shall not be liable for any settlement of any
such action or proceeding effected without its written consent, but if settled
with its written consent, or if there be a final judgment for the plaintiff in
any such action or proceeding, Holdings agrees to indemnify and hold harmless
such Indemnified Holders from and against any loss or liability by reason of
such settlement or judgment.
(2) Indemnification by Holder of Registrable Securities. Each Holder
of Registrable Securities agrees to indemnify and hold harmless Holdings, its
directors and officers and each Person, if any who controls Holdings within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from
<PAGE>
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Holdings to such Holders, but only with respect to information relating to such
Holders furnished in writing by such Holders expressly for use in any
registration statement or prospectus, or any amendment or supplement thereto, or
any preliminary prospectus. In case any action or proceeding shall be brought
against Holdings or its directors or officers or any such controlling person, in
respect of which indemnity may be sought against a Holder of Registrable
Securities, such Holder-shall have the rights and duties given to Holdings and
Holdings or its directors or officers or such controlling person shall have the
rights and duties given to each Holder by the preceding paragraph. In no event
shall the liability of any Holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
(3) Contribution. If the indemnification provided for in this
Section 7(d) is unavailable to an indemnified party under Section 7(d) (1) or
Section 7(d) (2) hereof (other than by reason of exceptions provided in those
Sections) in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each applicable 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 losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of Holdings on the one hand and of the Indemnified Holder on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of Holdings on the one hand and of
the Indemnified Holder on the other 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 Holdings or by the Indemnified Holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. 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 the
second paragraph of Section 7 (d) (1), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
Holdings and each Holder of Registrable Securities agree that it
would not be just and equitable if contribution
<PAGE>
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pursuant to this Section 7(d) (3) 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.
Notwithstanding the provisions of this Section 7(d) (3), an Indemnified Holder
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Registrable Securities sold by such Indemnified
Holder or its affiliated indemnified Holders and distributed to the public were
offered to the public exceeds the amount of any damages which such Indemnified
Holder, or its affiliated Indemnified Holder, has otherwise been required to pay
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.
(4) Certain Definitions.
(i) The term "Registrable Securities" shall mean the Shares and any
other securities issued or issuable upon exercise of the Adjustment
Rights. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (A) a
registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (B)
they shall have been distributed to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act, (C) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by Holdings and
subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state law
then in force, or (D) they shall have ceased to be outstanding.
(ii) The term "Registration Expenses" shall mean all expenses
incident to Holdings' performance of or compliance with Section 7 hereof,
including, without limitation, all registration and filing fees, all fees
and expenses of complying with securities or blue sky laws, fees and other
expenses associated with filings with the National Association of
Securities Dealers, Inc. (including, if required, the reasonable fees and
expenses of any "qualified independent underwriter" and its counsel), all
printing
<PAGE>
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expenses, the fees and disbursements of counsel for Holdings and of its
independent public accountants, the fees and disbursements of one counsel
retained by the holders of Registrable Securities, the expenses of any
special audits made by such accountants required by or incident to such
performance and compliance, but not including (a) fees and disbursements
of more than one counsel retained by the holders of Registrable
Securities, or (b) such holders' proportionate share of underwriting
discounts and commissions.
SECTION 8. Notices to Holdings and Holders of Shares. Any notice or
demand authorized by this Agreement to be given or made by the registered holder
of any Share Certificate to or on Holdings shall be sufficiently given or made
when and if deposited in the mail, first class or registered, postage prepaid,
addressed to the office of Holdings expressly designated by Holdings at its
office for purposes of this Agreement (until the holders of Shares are otherwise
notified in accordance with this Section by Holdings), as follows:
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: President
with a copy to
Steven D. Rubin, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, TX 77002
Any notice pursuant to this Agreement to be given by Holdings to the
registered holder(s) of any Share Certificate shall be sufficiently given when
and if deposited in the mail, first class or registered, postage prepaid,
addressed (until Holdings is otherwise notified in accordance with this Section
by such holder) to such holder at the address appearing on the share register of
Holdings.
SECTION 9. Supplements and Amendments. Holdings may from time to
time supplement or amend this Agreement without the approval of any holders of
Share Certificates in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which Holdings
<PAGE>
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may deem necessary or desirable and which shall not in any way adversely affect
the interests of the holders of Share Certificates. Any amendment or supplement
to this Agreement that has an adverse effect on the interests of holders shall
require the written consent of registered holders of a majority of the then
outstanding Shares (excluding Shares held by Holdings or any of its Affiliates).
The consent of each holder of a Share affected shall be required for any
amendment pursuant to which the number of Shares purchasable upon exercise of an
Adjustment Right would be decreased (other than in accordance with Section 4 or
5 hereof).
SECTION 10. Successors. All the covenants and provisions of this
Agreement by or for the benefit of Holdings shall bind and inure to the benefit
of its respective successors and assigns hereunder.
SECTION 11. Termination. This Agreement (except for Section 7 (d))
shall terminate at 5:00 p.m., New York City time on July 10, 2007.
SECTION 12. Governing Law. THIS AGREEMENT AND EACH SHARE CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF SAID STATE.
SECTION 13. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than Holdings and
the registered holders of the Share Certificates any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of Holdings and the registered holders of the Share
Certificates and the Shares. Nothing herein shall prohibit or limit Holdings
from entering into an agreement providing holders of securities which may
hereafter be issued by Holdings with such registration rights exercisable at
such time or times and in such manner as the Board of Directors shall deem in
the best interests of Holdings so long as the performance by Holdings of its
obligations under such other agreement will not cause Holdings to breach its
obligations hereunder to the Holders.
SECTION 14. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
<PAGE>
- 24 -
(Signature Page Follows]
<PAGE>
[Signature Page of Registration and Anti-Dilution Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL HOLDINGS INC.
By: /s/ David M. Wittels
-----------------------------------------
Name: David M. Wittels
Title: President
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
-----------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT CORPORATION
As Manager
By:
-----------------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
<PAGE>
[Signature Page of Registration and Anti-Dilution Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL HOLDINGS INC.
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By: /s/ Ivy Dodes
-----------------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ INVESTMENT FUNDING, INC.
By: /s/ Ivy Dodes
-----------------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT CORPORATION
As Manager
By: /s/ Ivy Dodes
-----------------------------------------
Name: Ivy Dodes
Title: Vice President
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
<PAGE>
[Signature Page of Registration and Anti-Dilution Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL HOLDINGS INC.
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
-----------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT CORPORATION
As Manager
By:
-----------------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ A. Kipp Koester
-----------------------------------------
Name: A. Kipp Koester
Title: Vice President
By:
-----------------------------------------
Name:
Title:
<PAGE>
[Signature Page of Registration and Anti-Dilution Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL HOLDINGS INC.
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.,
Managing General Partner
By:
-----------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
-----------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
As Manager
By:
-----------------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By:
-----------------------------------------
Name:
Title:
Donaldson Lutkin & Jenrette Securities
Corporation
By: /s/ Ivy Dodes
-----------------------------------------
Name: Ivy Dodes
Title: Vice President
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Adjustment Right)
The undersigned hereby irrevocably elects to exercise the Adjustment
Right to receive _________ shares of Common Stock and herewith (check item)
(i) tenders payment for such shares to the order of WGL Holdings,
Inc. in the amount of $_________ in accordance with the terms hereof; or
(ii) converts its Adjustment Right, in whole or in part, into a
number of shares of Common Stock determined by dividing (a) the aggregate
current market price of the number of shares of Common Stock for which its
Adjustment Right is being exercised, minus the aggregate par value of such
number of shares and transfer taxes, if any, by (b) the current market
price of one Share.
The undersigned requests that a certificate for such shares be
registered in the name of ___________________, whose address is
___________________________, and that such shares be delivered to
__________________, whose address is ____________.
Signature: __________________________
Date:
Signature Guaranteed:
A-1
<PAGE>
Exhibit 10.8
NOTE REGISTRATION RIGHTS AGREEMENT
AMONG
WGL ACQUISITION CORP.,
and
the parties named herein
Dated as of July 10, 1997
<PAGE>
NOTE REGISTRATION RIGHTS AGREEMENT (the "Note Registration Rights
Agreement" or this "Agreement") dated as of July 10, 1997 (the "Issue Date")
among WGL Acquisition Corp., a Delaware corporation (the "Company," which term
includes any successor entity, including without limitation WILSON GREATBATCH
LTD.), and the parties named herein (together with their respective successors
and assigns, the "Holders").
Terms defined in the Securities Purchase Agreement (the "Securities
Purchase Agreement") dated as of July 10, 1997 between the Company, WGL
Holdings, Inc. and the purchasers named therein (the "Purchasers") unless
defined herein are used as therein defined.
WHEREAS, the Company proposes to issue an aggregate principal amount
of $25,000,000 of its 13% Senior Subordinated Notes due 2007 (the "Notes")
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Registration Rights.
(a) Demand Registration.
(1) Request for Registration. At any time on or after the first
anniversary of the Issue Date, the Holder or Holders of in excess of 25% of the
aggregate principal amount of the outstanding Notes may make a written request
for registration under the Securities Act ("Demand Registration") of all or part
of its or their Registrable Securities; provided that the Company shall not be
obligated to effect more than two Demand Registrations in respect of the
Registrable Securities. Such request will specify the number of Registrable
Securities proposed to be sold and will also specify the intended method of
disposition thereof. Within 10 days after receipt of such request, the Company
will give written notice of such registration request to all other Holders of
Notes and include in such registration all Registrable Securities with respect
to which the Company has received written requests for inclusion therein from
the Holders thereof within 15 Business Days after receipt by the applicable
Holder of the Company's notice. Each such request will also specify the
aggregate number of Registrable Securities to be registered and the intended
method of disposition thereof.
<PAGE>
(2) Effective Registration and Expenses. A registration will not
count as a Demand Registration until it has become effective (unless the Holders
demanding such registration withdraw the Registrable Securities, in which case
such demand will count as a Demand Registration unless the Holders of such
Registrable Securities agree to pay all Registration Expenses (as hereinafter
defined) relating to such registration). Except as provided above, the Company
will pay all Registration Expenses in connection with any registration initiated
as a Demand Registration, whether or not it becomes effective.
(3) Priority on Demand Registrations. If the Holders of a majority
of the Registrable Securities to be registered in a Demand Registration so
elect, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of an underwritten offering. In such event, if
the managing Underwriter or Underwriters of such offering advise the Company and
the Holders in writing that in their opinion the Registrable Securities
requested to be included in such offering is sufficiently large to materially
and adversely affect the success of such offering, the Company will include in
such registration the number of Registrable Securities which in the opinion of
such managing Underwriter or Underwriters can be sold without any such material
adverse effect, and such amount shall be allocated pro rata among the Holders of
Registrable Securities on the basis of the amount of Registrable Securities
requested to be included in such registration by each such Holder.
(4) Selection of Underwriters. If any Demand Registration is in the
form of an underwritten offering, the Holders of a majority of the aggregate
number of the outstanding Registrable Securities shall designate the Underwriter
or a group of Underwriters to be utilized in connection with a public offering
of the applicable issue of Registrable Securities.
(5) Deferral. Notwithstanding anything to the contrary contained
herein, the Company shall not be obligated to prepare and file, or cause to
become effective, any registration statement pursuant to this Section 13(a)
hereof at any time when, in the good faith judgment of its Board of Directors,
the filing thereof at the time requested or the effectiveness thereof after
filing should be delayed to permit the Company to include in the registration
statement the Company's financial statements (and any required audit opinion
thereon) for the then immediately preceding fiscal year or fiscal quarter, as
the case may be. The filing of a registration state-
<PAGE>
ment by the Company cannot be deferred pursuant to the provisions of the
immediately preceding sentence beyond the time that such financial statements
(or any required audit opinion thereon) would be required to be filed with the
Commission as part of the Company's Annual Report on Form 10-K or Quarterly
Report on Form l0-Q, as the case may be, if the Company were then obligated to
file such reports. Notwithstanding anything to the contrary contained herein,
the Company shall not be obligated to cause a registration statement previously
filed pursuant to this Section 13 to become effective, and may suspend sales by
the Holders of Registrable Securities under any registration that has previously
become effective, at any time when, in the good faith judgment of its Board of
Directors, it reasonably believes that the effectiveness of such registration
statement or the offering of securities pursuant thereto would materially
adversely affect a pending or proposed acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction or negotiations,
discussions or pending proposals with respect thereto; provided that deferrals
pursuant to this sentence shall not exceed, in the aggregate, 120 days in any
calendar year. The filing of a registration statement, or any amendment or
supplement thereto, by the Company cannot be deferred, and the rights of Holders
of Registrable Securities to make sales pursuant to an effective registration
statement cannot be suspended, pursuant to the provisions of the immediately
preceding sentence for more than 15 days after the abandonment or consummation
of any of the foregoing proposals or transactions or, in any event, for more
than 30 days after the date of the Board's determination pursuant to the
immediately preceding sentence of this Section 1(a)(5).
(b) Piggy-Back Registration.
(1) If the Company proposes to file a registration statement under
the Securities Act with respect to an offering by the Company for its own
account or for the account of any of its security holders of any class of debt
security, then the Company shall give written notice of such proposed filing to
the Holders of Registrable Securities as soon as practicable (but in no event
less than ten Business Days before the anticipated filing date), and such notice
shall offer such Holders the opportunity to register such number of Registrable
Securities as each such Holder may request (a "Piggy-Back Registration")
(2) The Company shall use its best efforts to cause the managing
Underwriter or Underwriters of a proposed underwritten offering to permit the
Registrable Securities requested
<PAGE>
to be included in the registration statement for such offering to be included on
the same terms and conditions as any similar securities of the Company or of
such other security holders included therein. Notwithstanding the foregoing, if
the managing Underwriter or Underwriters of such offering deliver a written
opinion to the Company that either because of (i) the kind or combination of
securities which the Holders, the Company and any other persons or entities
intend to include in such offering or (ii) the size of the offering which the
Holders, the Company and such other persons intend to make, are such that the
success of the offering would be materially and adversely affected by inclusion
of the Registrable Securities requested to be included, then (a) in the event
that the size of the offering is the basis of such managing Underwriter's
opinion, the amount of securities to be offered for the accounts of Holders
shall be reduced pro rata (according to the Registrable Securities and other
securities proposed for registration by Persons ("Non-Priority Persons") other
than the Company (if such registration was initially to be filed for the account
of the Company) or the other Persons for whose account such registration was
initially to be filed) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing Underwriter or Underwriters; provided that if securities are being
offered for the account of Non-Priority Persons other than holders of
Registrable Securities, then with respect to the Registrable Securities intended
to be offered by Holders, the proportion by which the amount (taking into
account the initial net proceeds to the Company on issuance of such securities
and not the face amount thereof) of such class of securities intended to be
offered by Holders is reduced shall not exceed the proportion by which the
amount of such class of securities intended to be offered by Non-Priority
Persons other than holders of Registrable Securities is reduced; and (b) in the
event that the kind (or combination) of securities to be offered is the basis of
such managing Underwriter's opinion, (x) the Registrable Securities to be
included in such offering shall be reduced as described in clause (a) above
(subject to the proviso in clause (a)) or (y) if the actions described in clause
(x) would, in the judgment of the managing Underwriter, be insufficient to
substantially eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering, such
Registrable Securities will be excluded from such offering.
The Company will pay all Registration Expenses (as defined herein)
in connection with each registration of Registrable Securities.
<PAGE>
(c) 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,
the Company will promptly:
(1) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such securities, make all required
filings with the NASD and use best efforts to cause such registration
statement to become effective;
(2) prepare and file with the Securities and Exchange 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, but in no event for a period of more than one year
after such registration statement becomes effective;
(3) furnish to counsel (if any) elected by holders of a majority (by
aggregate principal amount) of the Registrable Securities covered by such
registration statement copies of all documents proposed to be filed with
the Securities and Exchange Commission in connection with such
registration, which documents will be subject to the review of such
counsel;
(4) furnish to each seller of such securities such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits, except that
the Company shall not be obligated to furnish any seller of securities
with more than two copies of such exhibits), such number of copies of the
prospectus included in such registration statement (including such
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the disposition of
the securities owned by such seller;
<PAGE>
(5) use its commercially reasonable efforts to register or qualify
such securities covered by such registration statement under such other
securities or Blue Sky Laws of such jurisdictions as each seller shall
request, and do any and all other acts and things which may be 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 is not
so qualified, or to consent to general service of process in any such
jurisdiction;
(6) furnish to each seller a signed counterpart, addressed to the
sellers, of
(i) an opinion of counsel for the Company, dated the effective
date of the registration statement, and
(ii) subject to the accountants obtaining the necessary
representations as specified in Statement on Auditing Standards No.
72, a "comfort" letter signed by the independent public accountants
who have certified the Company's financial statements included in
the registration statement,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to changes subsequent to the date of
such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letter delivered to the underwriters
in underwritten public offerings of securities;
(7) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, 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
<PAGE>
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 then existing;
(8) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its Security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but not
more than eighteen months, beginning with the first month after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(9) use its best efforts to list such securities on any securities
exchange on which the Common Stock is then listed, if such securities are
not already so listed and if such listing is then permitted under the
rules of such exchange, and to provide a trustee, transfer agent and
registrar and paying agent for such Registrable Securities not later than
the effective date of such registration statement;
(10) in any underwritten offering, use its best efforts to cause the
indemnity and contribution terms between the sellers and the underwriters
to be no more burdensome to the sellers than the indemnity and
contribution terms between the sellers and the Company set forth in
Section 1(d) hereof; and
(11) cause the Indenture relating to the Notes to be qualified under
the Trust Indenture Act of 1939, as amended.
The Company may require each seller of any securities as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such holder agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such holder not materially
misleading.
<PAGE>
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 1(c) (7) hereof, such holder will promptly discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 1(c) (7)
hereof. If so directed by the Company, each holder of Registrable Securities
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 1(c) (2) hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each seller of any Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 1(c) (7) hereof.
In connection with any underwritten offering, all Registrable
Securities to be included in such registration shall be subject to the related
underwriting agreement and no person may participate in such registration unless
such person agrees to sell such person's securities on the basis provided in the
underwriting arrangement approved by the persons for whose account such
underwritten registration is initially filed and completes and executes all
customary questionnaires, indemnities, underwriting agreements and other
reasonable documents which must be executed under the terms of such underwriting
arrangements.
(d) Indemnification.
(1) Indemnification by the Company. The Company agrees to indemnify
and hold harmless each Holder of Registrable Securities, its officers,
directors, employees and agents and each Person who controls such Holder within
the meaning of either Section 15 of the Securities Act or Section 20(a) of the
Exchange Act (each such person being sometimes hereinafter referred to as an
"Indemnified Holder") from and against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration
<PAGE>
statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or 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 light of the circumstances
under which they were made, not misleading, except insofar as (i) such losses,
claims, damages, liabilities or expenses arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon information
relating to such Indemnified Holder and furnished in writing to the Company by
such Indemnified Holder expressly for use therein, or (ii) such losses, claims,
damages, liabilities (or proceedings in respect thereof) or expenses result from
such Indemnified Holder selling Registrable Securities to a person asserting the
existence of an untrue statement or alleged untrue statement or omission or
alleged omission in a preliminary prospectus and to whom there was not given or
sent, at or prior to the written confirmation of the sale of such Registrable
Securities, a copy of the final prospectus or of the final prospectus as then
amended or supplemented in any case where such delivery is required by the
Securities Act but only if (x) such statement or omission was corrected in such
final prospectus prior to such written confirmation and such Indemnified Holder
was furnished copies of such final prospectus in sufficient quantity, prior to
such written confirmation and (y) the claims asserted by such person do not
include allegations of other untrue statements or omissions made in such
preliminary prospectus or final prospectus which was not corrected in the final
prospectus or in the prospectus as then amended or supplemented, respectively,
which allegations are upheld by a final judgment. This indemnity will be in
addition to any liability which the Company may otherwise have.
If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against an Indemnified
Holder in respect of which indemnity may be sought from the Company, such
Indemnified Holder shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Holder and the payment of all expenses. Such
Indemnified Holder shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Holder except that the
Company shall be responsible for the reasonable fees and expenses of such
counsel if (but only if) (a) the Company has agreed to pay such fees and
expenses or (b) the Company shall have failed to assume the defense of such
action or
<PAGE>
proceeding and has failed to employ counsel reasonably satisfactory to such
Indemnified Holder in any such action or proceeding or (c) the named parties to
any such action or proceeding (including any impleaded parties) include both
such Indemnified Holder and the Company, and there are one or more legal
defenses available to such Indemnified Holder which are different from or
additional to those available to the Company (in which case, if such Indemnified
Holder notifies the Company in writing that it elects to employ separate counsel
at the expense of the Company, the Company shall not have the right to assume
the defense of such action or proceeding on behalf of such Indemnified Holder,
it being understood, however, that the Company shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for such Indemnified Holder and any
other Indemnified Holders, which firm shall be designated in writing by such
Indemnified Holders). The Company shall not be liable for any settlement of any
such action or proceeding effected without its written consent, but if settled
with its written consent, or if there be a final judgment for the plaintiff in
any such action or proceeding, the Company agrees to indemnify and hold harmless
such Indemnified Holders from and against any loss or liability by reason of
such settlement or judgment.
(2) Indemnification by Holder of Registrable Securities. Each Holder
of Registrable Securities agrees to indemnify and hold harmless the Company, its
directors and officers and each Person, if any who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Holders, but only with respect to information relating to such Holders
furnished in writing by such Holders expressly for use in any registration
statement or prospectus, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling person,
in respect of which indemnity may be sought against a Holder of Registrable
Securities, such Holder shall have the rights and duties given to the Company
and the Company or its directors or officers or such controlling person shall
have the rights and duties given to each Holder by the preceding paragraph. In
no event shall the liability of any Holder of Registrable Securities hereunder
be greater in amount than the dollar amount of the proceeds received by such
Holder
<PAGE>
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(3) Contribution. If the indemnification provided for in this
Section 1(d) is unavailable to an indemnified party under Section 1(d)(1) or
Section 1(d)(2) hereof (other than by reason of exceptions provided in those
Sections) in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each applicable 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 losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of the Indemnified Holder on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of the Indemnified Holder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. 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 the second paragraph of Section 1(d)(1), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and each Holder of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 1(d)
(3) 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. Notwithstanding the provisions of this Section
1(d)(3), an Indemnified Holder shall not be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities sold by such Indemnified Holder or its affiliated indemnified Holders
and distributed to the public were offered to the public exceeds the amount of
any damages which such Indemnified Holder, or its affiliated Indemnified Holder,
has otherwise been required to pay 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
<PAGE>
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(4) Certain Definitions.
(i) The term "Registrable Securities" shall mean the Notes and any
other securities issued or issuable in exchange for the Notes. As to any
particular Registrable Securities, once issued such securities shall cease
to be Registrable Securities when (A) a registration statement with
respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (B) they shall have been
distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (C) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of them shall not require registration or qualification of
them under the Securities Act or any similar state law then in force, or
(D) they shall have ceased to be outstanding.
(ii) The term "Registration Expenses" shall mean all expenses
incident to the Company's performance of or compliance with Section 1
hereof, including, without limitation, all registration and filing fees,
all fees and expenses of complying with securities or blue sky laws, fees
and other expenses associated with filings with the National Association
of Securities Dealers, Inc. (including, if required, the reasonable fees
and expenses of any "qualified independent underwriter" and its counsel),
all printing expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants, the fees and
disbursements of one counsel retained by the holders of Registrable
Securities, the expenses of any special audits made by such accountants
required by or incident to such performance and compliance, but not
including (a) fees and disbursements of more than one counsel retained by
the holders of Registrable Securities, or (b) such holders' proportionate
share of underwriting discounts and commissions.
SECTION 2. Notices to Company and Note Holder. Any notice or demand
authorized by this Agreement to be given or made by the registered holder of any
Note to or on the Company
<PAGE>
shall be sufficiently given or made when and if deposited in the mail, first
class or registered, postage prepaid, addressed to the office of the Company
expressly designated by the Company at its office for purposes of this Agreement
(until the Note holders are otherwise notified in accordance with this Section
by the Company), as follows:
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: President
Any notice pursuant to this Agreement to be given by the Company to
the registered holder(s) of any Note shall be sufficiently given when and if
deposited in the mail, first class or registered, postage prepaid, addressed
(until the Company is otherwise notified in accordance with this Section by such
holder) to such holder at the address appearing on the Note register of the
Company.
SECTION 3. Supplements and Amendments. This Agreement may not be
amended without the consent of the Company and each Holder of Notes.
SECTION 4. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 5. Termination. This Agreement (except for Section l(d))
shall terminate at 5:00 p.m., New York City time, on July 1, 2007.
SECTION 6. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL
BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE.
SECTION 7. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered holders of the Notes any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company and the registered holders of the Notes.
Nothing herein shall prohibit or limit the Company from entering into an
agreement providing holders of securities which may hereafter be issued by the
Company with such registration rights exercisable at such time or times and in
such
<PAGE>
manner as the Board of Directors shall deem in the best interests of the Company
so long as the performance by the Company of its obligations under such other
agreement will not cause the Company to breach its obligations hereunder to the
Holders.
SECTION 8. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page Follows]
<PAGE>
[Signature Page of Note Registration Rights Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL ACQUISITION CORP.
By: /s/ David M. Wittels
------------------------------------
Name: David M. Wittels
Title: President
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.
Managing General Partner
By:
------------------------------------
Name:
Title:
DLJ INVESTMENT FUNDING, INC.
By:
------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGMENT
CORPORATION
As Manager
By:
------------------------------------
Name:
Title:
<PAGE>
[Signature Page of Note Registration Rights Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WGL ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ INVESTMENT PARTNERS, INC.
Managing General Partner
By: /s/ Ivy Dodes
------------------------------------
Name: IVY DODES
Title: Vice President
DLJ INVESTMENT FUNDING, INC.
By: /s/ Ivy Dodes
------------------------------------
Name: IVY DODES
Title: Vice President
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGMENT
CORPORATION
As Manager
By: /s/ Ivy Dodes
------------------------------------
Name: IVY DODES
Title: Vice President
<PAGE>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ A. Kipp Koester
------------------------------------
Name: A. Kipp Koester
Title: Vice President
By:
------------------------------------
Name:
Title:
<PAGE>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By:
------------------------------------
Name:
Title:
Donaldson Lufkin & Jenrette
Securities Corporation
By: /s/ Ivy Dodes
------------------------------------
Name: IVY DODES
Title: Vice President
<PAGE>
Exhibit 10.9
U.S. $130,000,000
AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of August 7, 1998,
(amending and restating the Credit Agreement,
dated as of July 10, 1997)
among
WILSON GREATBATCH LTD.
(the successor by merger with
WGL ACQUISITION CORP.)
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent for the Lenders,
HELLER FINANCIAL, INC.,
as the Documentation Agent for the Lenders,
and
FLEET NATIONAL BANK,
as the Administrative Agent for the Lenders.
ARRANGED BY
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms....................................................... 4
1.2. Use of Defined Terms................................................ 39
1.3. Cross-References.................................................... 39
1.4. Accounting and Financial Determinations............................. 39
ARTICLE II
CONTINUATION AND REALLOCATION OF EXISTING
LOANS AND EXISTING LETTERS OF CREDIT,
COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES,
NOTES AND LETTERS OF CREDIT
2.1. Commitments......................................................... 40
2.1.1. Term Loan Commitments............................................... 40
2.1.2. Revolving Loan Commitment and Swing Line Loan Commitment............ 41
2.1.3. Letter of Credit Commitment......................................... 42
2.1.4. Lenders Not Required to Make the Loans.............................. 43
2.1.5. Issuer Not Required to Issue Letters of Credit...................... 43
2.1.6. Assignment and Reallocation of Existing Commitments and
Existing Loans.................................................... 43
2.2. Reduction of the Commitment Amounts................................. 46
2.2.1. Optional............................................................ 46
2.3. Borrowing Procedures and Funding Maintenance........................ 46
2.3.1. Additional Term Loans and Revolving Loans........................... 46
2.3.2. Swing Line Loans.................................................... 47
2.4. Continuation and Conversion Elections............................... 48
2.5. Funding............................................................. 49
2.6. Issuance Procedures................................................. 49
2.6.1. Other Lenders' Participation........................................ 50
2.6.2. Disbursements; Conversion to Revolving Loans........................ 50
2.6.3. Reimbursement....................................................... 51
2.6.4. Deemed Disbursements................................................ 51
2.6.5. Nature of Reimbursement Obligations................................. 51
2.7. Notes............................................................... 52
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
SECTION PAGE
2.8. Registered Notes.................................................... 52
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments; Application............................. 53
3.1.1. Repayments and Prepayments.......................................... 53
3.1.2. Application......................................................... 57
3.2. Interest Provisions................................................. 58
3.2.1. Rates............................................................... 58
3.2.2. Post-Maturity Rates................................................. 58
3.2.3. Payment Dates....................................................... 58
3.3. Fees................................................................ 59
3.3.1. Commitment Fee...................................................... 59
3.3.2. Administrative Agent Fee............................................ 59
3.3.3. Letter of Credit Fee................................................ 59
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful.......................................... 60
4.2. Deposits Unavailable................................................ 60
4.3. Increased LIBO Rate Loan Costs, etc................................. 60
4.4. Funding Losses...................................................... 61
4.5. Increased Capital Costs............................................. 61
4.6. Taxes............................................................... 62
4.7. Payments, Computations, etc......................................... 64
4.8. Sharing of Payments................................................. 64
4.9. Setoff.............................................................. 65
4.10. Mitigation.......................................................... 65
4.11. Replacement of Lenders.............................................. 65
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
SECTION PAGE
ARTICLE V
CONDITIONS TO RESTATEMENT
EFFECTIVENESS AND CREDIT EXTENSIONS
5.1. Initial Credit Extension............................................ 66
5.1.1. Resolutions, etc.................................................... 66
5.1.2. Hittman Acquisition Agreement....................................... 67
5.1.3. Consummation of the Hittman Acquisition............................. 67
5.1.4. Restatement Effective Date Certificate.............................. 67
5.1.5. Delivery of Notes................................................... 67
5.1.6. Affirmation and Consent............................................. 67
5.1.7. Payment of Outstanding Indebtedness, etc............................ 67
5.1.8. Subsidiary Guaranty................................................. 68
5.1.9. Borrower Pledge Agreement........................................... 68
5.1.10. Security Agreement.................................................. 68
5.1.11. Mortgage Amendments................................................. 69
5.1.12. Financial Information, etc.......................................... 69
5.1.13. Solvency, etc. ..................................................... 69
5.1.14. Litigation.......................................................... 69
5.1.15. Material Adverse Change............................................. 69
5.1.16. Opinions of Counsel................................................. 69
5.1.17. Perfection Certificate.............................................. 70
5.1.18. Reliance Letters.................................................... 70
5.1.19. Closing Fees, Expenses, etc......................................... 70
5.1.20. Satisfactory Legal Form............................................. 70
5.2. All Credit Extensions............................................... 70
5.2.1. Compliance with Warranties, No Default, etc......................... 70
5.2.2. Credit Extension Request............................................ 70
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc................................................... 71
6.2. Due Authorization, Non-Contravention, etc........................... 71
6.3. Government Approval, Regulation, etc. .............................. 71
6.4. Validity, etc....................................................... 72
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
SECTION PAGE
6.5. Financial Information............................................... 72
6.6. No Material Adverse Change.......................................... 72
6.7. Litigation, Labor Controversies, etc................................ 72
6.8. Subsidiaries........................................................ 73
6.9. Ownership of Properties............................................. 73
6.10. Taxes............................................................... 73
6.11. Pension and Welfare Plans........................................... 73
6.12. Environmental Matters............................................... 73
6.13. Regulations U and X................................................. 74
6.14. Accuracy of Information............................................. 75
6.15. Solvency............................................................ 75
6.16. Year 2000 Problem................................................... 75
ARTICLE VII
COVENANTS
7.1. Affirmative Covenants............................................... 76
7.1.1. Financial Information, Reports, Notices, etc........................ 76
7.1.2. Compliance with Laws, etc........................................... 78
7.1.3. Maintenance of Properties........................................... 78
7.1.4. Insurance........................................................... 78
7.1.5. Books and Records................................................... 78
7.1.6. Environmental Covenant.............................................. 79
7.1.7. Future Subsidiaries; Material Subsidiaries.......................... 79
7.1.8. Future Leased Property and Future Acquisitions of Real Property;
Future Acquisition of Other Property.............................. 80
7.1.9. Use of Proceeds, etc................................................ 81
7.1.10. Hedging Obligations................................................. 81
7.1.11. Leasehold Mortgage.................................................. 81
7.2. Negative Covenants.................................................. 82
7.2.1. Business Activities................................................. 82
7.2.2. Indebtedness........................................................ 82
7.2.3. Liens............................................................... 84
7.2.4. Financial Covenants................................................. 86
7.2-5. Investments......................................................... 87
7.2.6. Restricted Payments, etc............................................ 89
7.2.7. Capital Expenditures, etc........................................... 90
-iv-
<PAGE>
TABLE OF CONTENTS
(continued)
SECTION PAGE
7.2.8. Consolidation, Merger, etc.......................................... 91
7.2.9. Asset Dispositions, etc............................................. 91
7.2.10. Modification of Certain Agreements.................................. 92
7.2.11. Transactions with Affiliates........................................ 92
7.2.12. Negative Pledges, Restrictive Agreements, etc....................... 92
7.2.13. Stock of Subsidiaries............................................... 93
7.2.14 Sale and Leaseback.................................................. 93
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Listing of Events of Default........................................ 93
8.1.1. Non-Payment of Obligations.......................................... 93
8.1.2. Breach of Warranty.................................................. 93
9.1.3. Non-Performance of Certain Covenants and Obligations................ 94
8.1.4. Non-Performance of Other Covenants and Obligations.................. 94
8.1.5. Default on Other Indebtedness....................................... 94
8.1.6. Judgments........................................................... 94
8.1.7. Pension Plans....................................................... 94
8.1.8. Change in Control................................................... 94
8.1.9. Bankruptcy, Insolvency, etc......................................... 95
8.1.10. Impairment of Security, etc......................................... 95
8.1.11. Subordinated Notes.................................................. 96
8.2. Action if Bankruptcy, etc........................................... 96
8.3. Action if Other Event of Default.................................... 96
ARTICLE IX
THE AGENTS
9.1. Actions............................................................. 96
9.2. Funding Reliance, etc............................................... 97
9.3. Exculpation......................................................... 97
9.4. Successor........................................................... 98
9.5. Credit Extensions by Each Agent..................................... 98
9.6. Credit Decisions.................................................... 99
-v-
<PAGE>
TABLE OF CONTENTS
(continued)
SECTION PAGE
9.7. Copies, etc......................................................... 99
9.8. The Syndication Agent, the Documentation Agent and the
Administrative Agent............................................. 99
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc............................................ 99
10.2. Notices............................................................. 101
10.3. Payment of Costs and Expenses....................................... 101
10.4. Indemnification..................................................... 102
10.5. Survival............................................................ 103
10.6. Severability........................................................ 104
10.7. Headings............................................................ 104
10.8. Execution in Counterparts, Effectiveness, etc....................... 104
10.9. Governing Law; Entire Agreement..................................... 104
10.10. Successors and Assigns.............................................. 104
10.11. Sale and Transfer of Loans and Notes; Participations in Loans and
Notes............................................................ 104
10.11.1.Assignments......................................................... 105
10.11.2.Participations...................................................... 107
10.11.3.Assignment of Registered Notes...................................... 107
10.12. Other Transactions.................................................. 108
10.13. Forum Selection and Consent to Jurisdiction......................... 108
10.14. Waiver of Jury Trial................................................ 109
10.15. Confidentiality..................................................... 109
-vi-
<PAGE>
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages and Administrative Information
EXHIBIT A-1 - Form of Revolving Note
EXHIBIT A-2 - Form of Term-A Note
EXHIBIT A-3 - Form of Term-B Note
EXHIBIT A-4 - Form of Registered Note
EXHIBIT A-5 - Form of Swing Line Note
EXHIBIT B-1 - Form of Borrowing Request
EXHIBIT B-2 - Form of Borrowing Base Certificate
EXHIBIT B-3 - Form of Issuance Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Restatement Effective Date Certificate
EXHIBIT E - Form of Compliance Certificate
EXHIBIT F-1 - Form of Borrower Security Agreement
EXHIBIT F-2 - Form of Subsidiary Security Agreement
EXHIBIT G-1 - Form of Holdco Guaranty and Pledge Agreement
EXHIBIT G-2 - Form of Intermediate Holdco Guaranty and Pledge Agreement
EXHIBIT G-3 - Form of Borrower Pledge Agreement
EXHIBIT G-4 - Form of Subsidiary Pledge Agreement
EXHIBIT H - Form of Subsidiary Guaranty
EXHIBIT I - Form of Perfection Certificate
EXHIBIT J - Form of Lender Assignment Agreement
EXHIBIT K - Form of New York Counsel Opinion
EXHIBIT L - Form of Affirmation and Consent
-vii-
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 7, 1998,
amending and restating the Credit Agreement (as defined below), is among Wilson
Greatbatch Ltd., a New York corporation ("WGL" or the "BORROWER"), and the
survivor by merger with WGL Acquisition Corp., a New York corporation
("MERGERCO"), the various financial institutions as are or may become parties
hereto (collectively, the "LENDERS"), DLJ Capital Funding, Inc. ("DLJ"), as
syndication agent (the "SYNDICATION AGENT"), Heller Financial, Inc. ("HELLER"),
as the documentation agent (the "DOCUMENTATION AGENT") for the Lenders, Fleet
National Bank ("FLEET"), as administrative agent (the "ADMINISTRATIVE AGENT")
for the Lenders and Donaldson, Lufkin & Jenrette Securities Corporation, as Lead
Arranger (the Syndication Agent and the Administrative Agent are sometimes
referred to herein as the "AGENTS" and each as an "AGENT").
WITNESSETH:
WHEREAS, DLJ Funding II, L.P., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJMB Funding II, Inc., DLJ Merchant Banking
Partners II-A, L.P., DLJ Diversified Partners A L.P., DLJ Millennium Partners,
L.P., DLJ Millennium Partners-A, L.P., UK Investment Plan 1997 Partners and
DLJ First ESC LLC (collectively the "DLJMB ENTITIES" established WGL
Intermediate Holdings, Inc., a Delaware corporation ("INTERMEDIATE HOLDCO") and
a wholly-owned Subsidiary of WGL Holdings, Inc. ("HOLDCO"), a Delaware
corporation, to acquire (the "ACQUISITION") 100% of the outstanding capital
stock of WGL through a merger (the "MERGER") of Mergerco with and into WGL (with
WGL being the surviving corporation of the Merger) and a series of
capital-raising and contribution transactions (such Acquisition, Merger and all
transactions related thereto, including those referenced in the recitals hereto,
being herein collectively referred to as the "TRANSACTION");
WHEREAS, in connection with the Transaction and to provide for the
ongoing working capital and general corporate needs of the Borrower and its
Subsidiaries, the Borrower, the various financial institutions (the "EXISTING
LENDERS") parties thereto on the Restatement Effective Date (such and other
capitalized terms being used herein with the meanings provided in SECTION 1.1),
the Syndication Agent, the Documentation Agent and the Administrative Agent
entered into the Credit Agreement, dated as of July 10, 1997 (as heretofore
modified and supplemented and in effect from time to time, the "CREDIT
AGREEMENT") pursuant to which the Existing Lenders provided, and will continue
to provide until the date (the "RESTATEMENT EFFECTIVE DATE") when all of the
conditions set forth in Section 5.1 shall have been satisfied, to the Borrower
on the terms and conditions set forth therein.
(a) Existing Term-A Loans and Existing Term-B Loans made on
the Closing Date in a maximum, original principal amount of $30,000,000
(in the case of Existing Term-A Loans) and $20,000,000 (in the case of
Existing Term-B Loans);
<PAGE>
(b) a Revolving Loan Commitment for Existing Revolving Loans,
Existing Swing Line Loans and Existing Letters of Credit in a maximum
aggregate principal amount (together with all Existing Swing Line Loans
and Existing Letter of Credit Outstandings) not to exceed $ 10,000,000
at any one time outstanding;
(c) a Letter of Credit Commitment for the issuance by the
Issuer of Existing Letters of Credit for the account of the Borrower
and its Subsidiaries in a maximum aggregate Stated Amount at any one
time outstanding not to exceed $5,000,000; and
(d) a Swing Line Loan Commitment for Existing Swing Line Loans
in an aggregate outstanding principal amount not to exceed $2,000,000
at any one time outstanding;
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of August
7,1998 (the "HITTMAN ACQUISITION AGREEMENT"), by and among the Borrower, Fred
Hittman and Hittman Materials & Medical Components, Inc., a Delaware corporation
("HITTMAN"), the Borrower has agreed to acquire, for cash, 100% of the
outstanding capital stock of Hittman (the "HITTMAN ACQUISITION");
WHEREAS, prior to or contemporaneously with the consummation of the
Hittman Acquisition, certain shareholders of the Borrower shall make a cash
equity contribution to the Borrower (the "EQUITY CONTRIBUTION") in an amount of
not less than $13,000,000 which, together with the proceeds from the Additional
Term Loans hereunder, shall be applied by the Borrower to consummate the Hittman
Acquisition;
WHEREAS, in order to finance the Hittman Acquisition and pay fees and
expenses related thereto, refinance certain existing Indebtedness of the
Borrower, and provide for the ongoing working capital and general corporate
needs of the Borrower and its Subsidiaries, the Borrower desires to amend and
restate in its entirety the Credit Agreement to, among other things,
(a) continue in effect the Existing Term Loans as Term Loans
under this Agreement;
(b) obtain from certain of the Lenders
(i) an Additional Term-A Loan Commitment pursuant to
which a single Borrowing of Additional Term-A Loans in a
maximum aggregate principal amount not to exceed $20,000,000
will be made to the Borrower on the Restatement Effective
Date, and
(ii) an Additional Term-B Loan Commitment pursuant to
which a single Borrowing of Additional Term-B Loans in a
maximum aggregate principal
2
<PAGE>
amount not to exceed $40,000,000 will be made to the Borrower
on the Restatement Effective Date;
(c) extend the Stated Maturity Date of (i) the Term-A Loans,
whether evidencing Existing Term-A Loans or Additional Term-A Loans,
from the sixth anniversary of the Closing Date to the sixth anniversary
of the Restatement Effective Date and (ii) the Term-B Loans, whether
evidencing Existing Term-B Loans or Additional Term-B Loans, from the
seventh anniversary of the Closing Date to the eighth anniversary of
the Restatement Effective Date;
(d) extend the Revolving Loan Commitment Termination Date from
the sixth anniversary of the Closing Date to the sixth anniversary of
the Restatement Effective Date for the purposes of continuing
outstanding on the Restatement Effective Date the aggregate outstanding
principal amount of all Existing Revolving Loans and permitting the
Borrower to obtain from certain of the Lenders (and the Issuer, as the
case may be)
(i) a Revolving Loan Commitment for Revolving Loans,
Swing Line Loans and Letters of Credit pursuant to which
Borrowings of Revolving Loans, in a maximum aggregate
principal amount (together with all Swing Line Loans and
Letter of Credit Outstandings) not to exceed $20,000,000 will
be made to the Borrower from time to time on and subsequent to
the Restatement Effective Date but prior to the Revolving Loan
Commitment Termination Date;
(ii) a Letter of Credit Commitment pursuant to which
the Issuer will issue Letters of Credit for the account of the
Borrower and its Subsidiaries from time to time on and
subsequent to the Restatement Effective Date but prior to the
Revolving Loan Commitment Termination Date in a maximum
aggregate Stated Amount at any one time outstanding not to
exceed $10,000,000 (provided, that the aggregate outstanding
principal amount of Revolving Loans, Swing Line Loans and
Letter of Credit Outstandings at any time shall not exceed the
then existing Revolving Loan Commitment Amount); and
(iii) a Swing Line Loan Commitment pursuant to which
Borrowings of Swing Line Loans in an aggregate outstanding
principal amount not to exceed $2,000,000 will be made on and
subsequent to the Restatement Effective Date but prior to the
Revolving Loan Commitment Termination Date (provided, that the
aggregate outstanding principal amount of such Swing Line
Loans, together with Revolving Loans and Letter of Credit
Outstandings, at any time shall not exceed the then existing
Revolving Loan Commitment Amount);
with all the proceeds of such Credit Extensions to be used for the purposes set
forth in SECTION 7.1.9;
3
<PAGE>
WHEREAS, all Loans and Obligations shall continue to be and shall be
fully guaranteed pursuant to the Holdco Guaranty and Pledge Agreement and the
Intermediate Holdco Guaranty and Pledge Agreement and fully secured by, among
other things, the Borrower Security Agreement, the Intermediate Holdco Guaranty
and Pledge Agreement and the Holdco Guaranty and Pledge Agreement; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including ARTICLE V), to (i) amend and restate
in its entirety the Credit Agreement in accordance with the terms hereof, (ii)
continue as Term-A Loans hereunder the Existing Term-A Loans, (iii) continue as
Term-B Loans hereunder the Existing Term-B Loans, (iv) continue as Revolving
Loans hereunder the Existing Revolving Loans, (v) continue as Swing Line Loans
hereunder the Existing Swing Line Loans, (vi) continue as Letters of Credit
hereunder the Existing Letters of Credit, and (vii) extend such Commitments
(including as certain Commitments of certain Lenders are increased hereby) and
make Additional Term Loans and Revolving Loans to the Borrower and issue (or
participate in) Letters of Credit for the account of the Borrower and its
Subsidiaries pursuant to such Commitments;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"ACCOUNT" means any account (as that term is defined in Section 9-106
of the UCC) of the Borrower or any of its wholly-owned U.S. Subsidiaries arising
from the sale or lease of goods or the rendering of services.
"ACCOUNT DEBTOR" is defined in CLAUSE (B) of the definition of
"Eligible Account".
"ACQUISITION" is defined in the FIRST RECITAL.
"ADDITIONAL TERM-A LOAN" is defined in CLAUSE (II)(A) of SECTION 2.1.1.
"ADDITIONAL TERM-A LOAN COMMITMENT" is defined in CLAUSE (II)(A) of
SECTION 2.1.1.
"ADDITIONAL TERM-A LOAN COMMITMENT AMOUNT" means $20,000,000.
4
<PAGE>
"ADDITIONAL TERM-A LOAN COMMITMENT TERMINATION DATE" means the earliest
of (i) August 7, 1998, if the Additional Term-A Loans have not been made on or
prior to such date, (ii) the Restatement Effective Date (immediately after the
making of the Additional Term-A Loans on such date), and (iii) the date on which
any Commitment Termination Event occurs.
"ADDITIONAL TERM-B LOAN" is defined in CLAUSE (II)(B) of SECTION 2.1.1.
"ADDITIONAL TERM-B LOAN COMMITMENT" defined in CLAUSE (II)(B) of
SECTION 2.1.1.
"ADDITIONAL TERM-B LOAN COMMITMENT AMOUNT" means $40,000,000.
"ADDITIONAL TERM-B LOAN COMMITMENT TERMINATION DATE" means the earliest
of (i) August 7, 1998, if the Additional Term-B Loans have not been made on or
prior to such date, (ii) the Restatement Effective Date (immediately after the
making of the Additional Term-B Loans on such date), and (iii) the date on which
any Commitment Termination Event occurs.
"ADDITIONAL TERM LOAN" means, collectively, the Additional Term-A Loans
and the Additional Term-B Loans.
"ADMINISTRATIVE AGENT" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to SECTION 9.4.
"ADMINISTRATIVE AGENT'S FEE LETTER" means the confidential fee letter,
dated as of August 7, 1998, between the Borrower and the Administrative Agent.
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (i)
to vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the election of directors or managing general partners, or (ii)
to direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"AGENTS" means, collectively, the Administrative Agent and the
Syndication Agent.
"AGREEMENT" means, on any date, the Credit Agreement, as amended and
restated effective on the Restatement Effective Date and as thereafter from time
to time amended, supplemented, amended and restated, or otherwise modified and
in effect on such date.
"ALTERNATE BASE RATE" means, for any day and with respect to all Base
Rate Loans, the higher of. (a) 0.50% per annum above the latest Federal Funds
Rate; and (b) the rate of interest in effect for such day as most recently
publicly announced or established by the Administrative Agent in Boston,
Massachusetts, as its "prime rate." (The prime rate is a rate set by the
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Administrative Agent based upon various factors including the Administrative
Agent's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above or below such announced rate.) Any change in the prime rate established or
announced by the Administrative Agent shall take effect at the opening of
business on the day of such establishment or announcement.
"ANNUALIZED" means (i) with respect to the end of the first Fiscal
Quarter of the Borrower ending after the Restatement Effective Date, the
applicable amount for such Fiscal Quarter multiplied by four, (ii) with respect
to the second Fiscal Quarter of the Borrower ending after the Restatement
Effective Date, the sum of the applicable amount for such Fiscal Quarter and the
immediately preceding Fiscal Quarter multiplied by two, and (iii) with respect
to the third Fiscal Quarter of the Borrower ending after the Restatement
Effective Date, the sum of the applicable amount for such Fiscal Quarter and the
immediately preceding two Fiscal Quarters, multiplied by one and one-third.
"APPLICABLE COMMITMENT FEE" means, (i) for each day from the
Restatement Effective Date through (but excluding) the date upon which the
Compliance Certificate for the Fiscal Quarter ending December 31, 1998 is
delivered or required to be delivered by the Borrower to the Administrative
Agent pursuant to clause (c) of SECTION 7.1.1, a fee which shall accrue at a
rate of 1/2 of 1% per annum, and (ii) for each day thereafter, a fee which "I
accrue at the applicable rate per annum set forth below under the column
entitled "Applicable Commitment Fee", determined by reference to the Senior
Leverage Ratio as in effect for the Fiscal Quarter last ended as of such time of
determination:
Applicable
Senior Leverage Ratio Commitment Fee
--------------------- --------------
greater than or
equal to 4.0:1 0.500%
greater than or
equal to 3.5:1 and
less than 4.0:1 0.375%
greater than or
equal to 3.0:1 and
less than 3.5:1 0.300%
less than 3.0:1 0.250%
The Senior Leverage Ratio used to compute the Applicable Commitment Fee
for any day referred to in CLAUSE (II) above shall be the Senior Leverage Ratio
set forth in the Compliance
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Certificate most recently delivered by the Borrower to the Administrative Agent
on or prior to such day pursuant to clause (c) of SECTION 7.1.1. Changes in the
Applicable Commitment Fee resulting from a change in the Senior Leverage Ratio
shall become effective (as of the first day following the Fiscal Quarter in
respect of which such Compliance Certificate was required to be delivered) upon
delivery by the Borrower to the Administrative Agent of a new Compliance
Certificate pursuant to clause (c) of SECTION 7.1.1. In the event the Borrower
fails to timely deliver a Compliance Certificate as required pursuant to clause
(c) of SECTION 7.1.1, the Applicable Commitment Fee from (and including) the
first day after the last date on which such Compliance Certificate was required
to have been delivered to (but not including) the date such Compliance
Certificate is actually delivered to the Administrative Agent shall conclusively
equal the highest Applicable Commitment Fee set forth above. Notwithstanding the
foregoing, the Borrower may, in its sole discretion, within ten Business Days
following the end of any Fiscal Quarter deliver to the Administrative Agent a
written estimate (the "SENIOR LEVERAGE RATIO ESTIMATE") setting forth the
Borrower's good faith estimate of the Senior Leverage Ratio (based on
calculations contained in a Compliance Certificate) that will be set forth in
the Compliance Certificate required to be delivered by the Borrower to the
Administrative Agent pursuant to clause (c) of SECTION 7.1.1 in respect of such
Fiscal Quarter. In the event that the Senior Leverage Ratio Estimate indicates a
Senior Leverage Ratio that would result in an Applicable Commitment Fee which is
greater or lesser than the Applicable Commitment Fee then in effect, then such
greater or lesser Applicable Commitment Fee shall be deemed to be in effect for
all purposes of this Agreement from the first day following delivery of the
Senior Leverage Ratio Estimate. If, upon delivery of the Compliance Certificate
in respect of such Fiscal Quarter, the Senior Leverage Ratio set forth in such
Compliance Certificate is greater or lesser than the Senior Leverage Ratio
Estimate in respect of such Fiscal Quarter, then (A) such greater or lesser
Applicable Commitment Fee shall be deemed to be in effect for all purposes of
this Agreement from the first day following delivery of the Senior Leverage
Ratio Estimate and (B) if the Borrower shall have made any payment in respect of
fees during the period from the first day following the delivery of the Senior
Leverage Ratio Estimate to the actual delivery of such Compliance Certificate,
then, on the next Quarterly Payment Date the Borrower shall pay in the form of a
supplemental payment of fees, an amount which equals the difference between the
amount of fees that would otherwise have been paid based on such new Senior
Leverage Ratio and the amount of such fees so paid, or as the case may be, an
amount shall be deducted from the fees then otherwise payable in an amount which
equals the difference between the amount of fees so paid and the amount of fees
that would otherwise have been paid based on such new Senior Leverage Ratio.
"APPLICABLE MARGIN" means at all times during the applicable periods
set forth below,
(a) with respect to the unpaid principal amount of each Term-B
Loan maintained as a (i) Base Rate Loan, 1.75% per annum and (ii) LIBO
Rate Loan, 3.00% per annum;
(b) from the Restatement Effective Date through (but
excluding) the date upon which the Compliance Certificate for the
Fiscal Quarter ending December 31, 1998 is delivered by the Borrower to
the Administrative Agent pursuant to clause (c) of SECTION
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7.1.1, with respect to the unpaid principal amount of (i) each Swing
Line Loan (each of which shall be borrowed and maintained only as a
Base Rate Loan) and each Revolving Loan and Term-A Loan maintained as a
Base Rate Loan, 1.50% per annum, and (ii) each Revolving Loan and
Term-A Loan maintained as a LIBO Rate Loan, 2.75% per annum; and
(c) at all times after the date of such delivery of the
Compliance Certificate described in clause (b) above, with respect to
the unpaid principal amount of each Swing Line Loan (each of which
shall be borrowed and maintained only as a Base Rate Loan) and each
Revolving Loan and Term-A Loan, by reference to the applicable Senior
Leverage Ratio and at the applicable percentage per annum set forth
below under the column entitled "Applicable Margin for Base Rate
Loans", in the case of Base Rate Loans, or by reference to the
applicable Senior Leverage Ratio and at the applicable percentage per
annum. set forth below under the column entitled "Applicable Margin for
LIBO Rate Loans", in the case of LIBO Rate Loans:
APPLICABLE MARGIN FOR REVOLVING LOANS AND TERM-A LOANS
Applicable Applicable
Margin For Base Margin For LIBO
Senior Leverage Ratio Rate Loans Rate Loans
--------------------- --------------- ---------------
greater than or equal to 4.0:1 1.50% 2.75%
greater than or equal to 3.5:1 and
less than 4.0:1 1.25% 2.50%
greater than or equal to 3.0:1 and
less than 3.5:1 0.75% 2.00%
greater than or equal to 2.5:1 and
less than 3.0:1 0.25% 1.50%
less than 2.0:1 0.00% 1.00%
The Senior Leverage Ratio used to compute the Applicable Margin for
Swing Line Loans, Revolving Loans and Term-A Loans for any day shall be the
Senior Leverage Ratio set forth in the Compliance Certificate most recently
delivered by the Borrower to the Administrative Agent on or prior to such day
pursuant to clause (c) of Section 7. 1. 1. Changes in the Applicable Margin for
Swing Line Loans, Revolving Loans and Term-A Loans resulting from a change in
the Senior Leverage Ratio shall become effective (as the first day following the
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<PAGE>
Fiscal Quarter in respect of which such Compliance Certificate was required to
be delivered) upon delivery by the Borrower to the Administrative Agent of a new
Compliance Certificate pursuant to clause (c) of SECTION 7.1.1. In the event the
Borrower fails to timely deliver a Compliance Certificate as required pursuant
to clause (c) of SECTION 7.1.1, the Applicable Margin for Swing Line Loans,
Revolving Loans and Term-A Loans from (and including) the first day after the
last date on which such Compliance Certificate was required to have been
delivered to (but not including) the date such Compliance Certificate is
actually delivered to the Administrative Agent shall conclusively equal the
highest Applicable Margin for Swing Line Loans, Revolving Loans and Term-A Loans
set forth above. Notwithstanding the foregoing, the Borrower may, in its sole
discretion, within ten Business Days following the end of any Fiscal Quarter
deliver to the Administrative Agent a Senior Leverage Ratio Estimate setting
forth the Borrower's good faith estimate of the Senior Leverage Ratio (based on
calculations set forth in a Compliance Certificate) that will be set forth in
the Compliance Certificate required to be delivered by the Borrower to the
Administrative Agent pursuant to clause (c) of SECTION 7.1.1 in respect of such
Fiscal Quarter. In the event that the Senior Leverage Ratio Estimate indicates a
Senior Leverage Ratio that would result in an Applicable Margin which is greater
or lesser than the Applicable Margin then in effect, then such greater or lesser
Applicable Margin shall be deemed to be in effect for all purposes of this
Agreement from the first day following delivery of the Senior Leverage Ratio
Estimate. If, upon delivery of the Compliance Certificate in respect of such
Fiscal Quarter, the Senior Leverage Ratio set forth in such Compliance
Certificate is greater or lesser than the Senior Leverage Ratio Estimate in
respect of such Fiscal Quarter, then (A) such greater or lesser Applicable
Margin shall be deemed to be in effect for all purposes of this Agreement from
the first day following delivery of the Senior Leverage Ratio Estimate and (B)
if the Borrower shall have made any payment in respect of interest during the
period from the first day following the delivery of the Senior Leverage Ratio
Estimate to the actual date of delivery of such Compliance Certificate, then, on
the next Quarterly Payment Date, the Borrower shall pay in the form of a
supplemental payment of interest, an amount which equals the difference between
the amount of interest that would otherwise have been paid based on such new
Senior Leverage Ratio and the amount of such interest so paid, or as the case
may be, an amount shall be credited to the Borrower in an amount which equals
the difference between the amount of interest so paid and the amount of interest
that would otherwise have been paid based on such new Senior Leverage Ratio.
"ARRANGER" means Donaldson, Lufkin & Jenrette Securities Corporation, a
Delaware corporation.
"ASSIGNEE LENDER" is defined in SECTION 10.11.1.
"ASSIGNOR LENDER" is defined in SECTION 10.11.1.
"ASSUMED INDEBTEDNESS" means Indebtedness of a Person which is (i) in
existence at the time such Person becomes a Subsidiary of the Borrower or (ii)
is assumed in connection with an Investment in or acquisition of such Person,
and has not been incurred or created by such Person
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<PAGE>
in connection with, or in anticipation or contemplation of, such Person becoming
a Subsidiary of the Borrower.
"AUTHORIZED OFFICE" means, relative to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the
Administrative Agent and the Lenders pursuant to SECTION 5.1.1.
"BASE FINANCIAL STATEMENTS" is defined in clause(a) of SECTION 5.1.12.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"BORROWER" is defined in the preamble.
"BORROWER PLEDGE AGREEMENT" means the Pledge Agreement executed and
delivered by an Authorized Officer of the Borrower pursuant to SECTION 5.1.9 or
clause (b) of SECTION 7.1.7, substantially in the form of Exhibit G-3 hereto, as
amended, supplemented, amended and restated or otherwise modified from time to
time.
"BORROWER SECURITY AGREEMENT" means the Security Agreement executed and
delivered by an Authorized Officer of the Borrower on the Closing Date,
substantially in the form of EXHIBIT F-1 hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"BORROWING" means Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period made by the relevant Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
SECTION 2.1.
"BORROWING BASE AMOUNT" mom, at any time, an aggregate amount equal to
$6,000,000 (for the period from the Restatement Effective Date to the three and
one-half year anniversary of the Restatement Effective Date to be applied solely
for the purpose of making earnout payments to Fred Hittman pursuant to the
Hittman Acquisition Agreement) plus the Net Asset Value of all Eligible Accounts
and Eligible Inventory, as determined in accordance with the definition of "Net
Asset Value" and as certified by the Borrower to the Lenders in the most
recently delivered Borrowing Base Certificate.
"BORROWING BASE CERTIFICATE" means a certificate duly completed and
executed by the president, chief executive officer, treasurer, assistant
treasurer, controller or chief financial Authorized Officer of the Borrower,
substantially in the form of EXHIBIT B-2 hereto.
"BORROWING REQUEST" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of EXHIBIT
B-1 hereto.
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<PAGE>
"BUSINESSDAY" means any day which is neither a Saturday or Sunday nor a
legal holiday on which banks are authorized or required to be closed in New York
City or Boston, Massachusetts and, with respect to Borrowings of, Interest
Periods with respect to, payments of principal and interest in respect of, and
conversions of Base Rate Loans into, LIBO Rate Loans, any day on which dealings
in Dollars are carried on in the London interbank market.
"CAPITAL EXPENDITURES" means for any period, the sum, without
duplication, of (i) the aggregate amount of all expenditures of the Borrower and
its Subsidiaries for fixed or capital assets made during such period which, in
accordance with GAAP, would be classified as capital expenditures (excluding
expenditures made in connection with the replacement or restoration of assets to
the extent such replacement or restoration is financed with insurance proceeds
paid on account of the loss of or damage to the assets so replaced or restored
or awards of compensation arising from the taking by condemnation or eminent
domain of the assets so replaced), and (ii) the aggregate amount of the
principal component of all Capitalized Lease Liabilities incurred during such
period by the Borrower and its Subsidiaries.
"CAPITAL STOCK" means, with respect to any Person, (i) any and all
shares, interests, participations, rights or other equivalents of or interests
in (however designated) corporate or capital stock, including, without
limitation, shares of preferred or preference stock of such Person, (ii) all
partnership interests (whether general or limited) in such Person, (iii) all
membership interests or limited liability company interests in such Person, and
(iv) all other equity or ownership interests in such Person of any other type.
"CAPITALIZED LEASE LIABILITIES" means, without duplication, all
monetary obligations of the Borrower or any of its Subsidiaries under any
leasing or similar arrangement which, in accordance with GAAP, would be
classified as capitalized leases, and, for purposes of this Agreement and each
other Loan Document, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP, and the stated maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
year after such time, issued directly by the United States of America
or any agency thereof or guaranteed by the United States of America or
any agency thereof;
(b) commercial paper, maturing not more than nine months from
the date of issue, which is issued by (i) a corporation (other than an
Affiliate of any Obligor) organized under the laws of any state of the
United States or of the District of Columbia and rated at least A-1 by
S&P or P-1 by Moody's, or (ii) any Lender (or its holding company);
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<PAGE>
(c) any time deposit, certificate of deposit or bankers
acceptance, maturing not more than one year after such time, maintained
with or issued by either (i) a commercial banking institution
(including U.S. branches of foreign banking institutions) that is a
member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500,000,000, or (ii)
any Lender;
(d) short-term tax-exempt securities rated not lower than
MIG-1/1+ by either Moody's or S&P with provisions for liquidity or
maturity accommodations of 183 days or less;
(e) repurchase agreements (i) which, are entered into with any
entity referred to in clause (b) or (c) above or any other financial
institution whose unsecured long-term debt (or the unsecured long-term
debt of whose holding company) is rated at least A- or better by S&P or
Baal or better by Moody's and maturing not more than one year after
such time, (ii) which, in the event treated as a secured loan, would be
secured by a fully perfected security interest in securities of the
type referred to in clause (a) above and (iii) involving securities
which have a market value at the time of such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of such
counterparty entity with whom such repurchase agreement has been
entered into; or
(f) any money market or similar fund the assets of which am
comprised at least 90% of any of the items specified in clauses (a)
through (d) above and as to which withdrawals are permitted at least
every 90 days.
"CASUALTY EVENT" means the damage, destruction or condemnation, as the
case may be, of any property of the Borrower or any of its Subsidiaries.
"CASUALTY PROCEEDS" means, with respect to any Casualty Event, the
amount of any insurance proceeds or condemnation awards received by the Borrower
or any of its Subsidiaries in connection therewith, but excluding any proceeds
or awards required to be paid to a creditor (other than the Lenders) which holds
a first-priority Lien permitted by SECTION 7.2.3 on the property which is the
subject of such Casualty Event.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"CHANGE IN CONTROL" means (i) the failure of Holdco at any time to own,
free and clear of all Liens and encumbrances (other than Liens described in
clauses (b) (d) and (g) of SECTION 7.2.3), all right, title and interest in 100%
of the Capital Stock of Intermediate Holdco; (ii) the failure of Intermediate
Holdco at any time to own, free and clear of all Liens and encumbrances (other
than Liens described in clauses (b), (d) and (g) of SECTION 7.2.3), all right,
title and interest
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in 100% of the Capital Stock of the Borrower, (iii) the failure of the DLJMB
Entities and their Affiliates to own, free and clear of all Liens and
encumbrances all right, title and interest in excess of 50% (on a fully diluted
basis) of the Capital Stock of Holdco; or (iv) the failure of the DLJM[B
Entities and their Affiliates at any time to have the right to elect a majority
of the Board of Directors of Holdco or of Intermediate Holdco at any time to
have the right to elect a majority of the Board of Directors of the Borrower.
"CLOSING DATE" means the date of the initial Borrowing, which date
occurred on July 10, 1997.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" means, as the context may require, (i) a Lender's Existing
Term-A Loan Commitment, Additional Term-A Loan Commitment, Existing Term-B Loan
Commitment, Additional Term-B Loan Commitment, Revolving Loan Commitment or
Letter of Credit Commitment or (ii) the Swing Line Lender's Swing Line Loan
Commitment.
"COMMITMENT AMOUNT" means, as the context may require, the Existing
Term-A Loan Commitment Amount, the Additional Term-A Loan Commitment Amount, the
Existing Term-B Loan Commitment Amount, the Additional Term-B Loan Commitment
Amount, the Revolving Loan Commitment Amount, the Letter of Credit Commitment
Amount or the Swing Line Loan Commitment Amount.
"COMMITMENT LETTER" means the commitment letter, dated July 7, 1998,
among the Borrower, the Arranger and the Syndication Agent, including all
annexes and exhibits thereto.
"COMMITMENT TERMINATION DATE" means, as the context may require, the
Revolving Loan Commitment Termination Date or any Term Loan Commitment
Termination Date.
"COMMITMENT TERMINATION EVENT" means (i) the occurrence of any Event of
Default described in clauses (b) through (d) of SECTION 8.1.9 with respect to
any Obligor (other than immaterial Subsidiaries), or (ii) the occurrence and
continuance of any other Event of Default and either (x) the declaration of the
Loans to be due and payable pursuant to SECTION 8.3 or (y) in the absence of
such declaration, the giving of notice to the Borrower by the Administrative
Agent, acting at the direction of the Required Lenders, that the Commitments
have been terminated.
"COMPLIANCE CERTIFICATE" means a certificate duly completed and
executed by the president, chief executive officer, treasurer, assistant
treasurer, controller or chief financial Authorized Officer of the Borrower,
substantially in the form of EXHIBIT E hereto.
"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or
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<PAGE>
otherwise to invest in, a debtor, or otherwise to assure a creditor against
loss) the indebtedness, obligation or any other liability of any other Person
(other than by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount of the debt, obligation or other liability
guaranteed thereby.
"CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of EXHIBIT C hereto.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA, or for purposes of Section 412 of the Code,
Section 414(m) or Section 414(o) of the Code.
"CREDIT AGREEMENT" is defined in the SECOND RECITAL.
"CREDIT EXTENSION" means, as the context may require, (i) the making of
a Loan by a Lender, or (ii) the issuance of any Letter of Credit, or the
extension of any Stated Expiry Date of any previously issued Letter of Credit,
by the Issuer.
"CREDIT EXTENSION REQUEST" means, as; the context may require, any
Borrowing Request or Issuance Request.
"CURRENT ASSETS" means, on any date, without duplication, all assets
which, in accordance with GAAP, would be included as current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date as
current assets (excluding, however, amounts due and to become due from
Affiliates of the Borrower which have arisen from transactions which are other
than arm's-length and in the ordinary course of its business).
"CURRENT LIABILITIES" means, on any date, without duplication, all
amounts which, in accordance with GAAP, would be included as current liabilities
on a consolidated balance sheet of the Borrower and its Subsidiaries at such
date, excluding current maturities of Indebtedness.
"DEBT" means, without duplication, the outstanding principal amount of
all Indebtedness of the Borrower and its Subsidiaries that (i) is of the type
referred to in clause (a), (b) (other than undrawn commercial letters of credit
and undrawn letters of credit in respect of workers' compensation, insurance,
performance and surety bonds and similar obligations, in each case incurred in
the ordinary course of business), (c) or (e) of the definition of "Indebtedness"
and (ii) any Contingent Liability in respect of any of the foregoing types of
Indebtedness.
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"DEFAULT" shall mean any Event of Default or any condition, occurrence
or event which, after notice or lapse of time or both, would, unless cured or
waived, constitute an Event of Default.
"DISBURSEMENT is defined in SECTION 2.6.2.
"DISBURSEMENT DATE" is defined in SECTION 2.6.2.
"DISBURSEMENT DUE DATE" is defined in SECTION 2.6.2.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
SCHEDULE I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Required Lenders.
"DLJ" is defined in the PREAMBLE.
"DLJMB ENTITIES" is defined in the FIRST RECITAL.
"DLJSC AGREEMENT" means the agreement, dated July 10, 1997, between
Holdco and Donaldson, Lufkin & Jenrette Securities Corporation.
"DOCUMENTATION AGENT" is defined in the PREAMBLE and includes each
other Person as shall have subsequently been appointed as the successor
Documentation Agent by the predecessor Documentation Agreement.
"DOLLAR" and the sign "$" means lawful money of the United States.
"EBITDA" means, for any applicable period, the sum (without
duplication) for the Borrower and its Subsidiaries on a consolidated basis of
(a) Net Income,
PLUS
(b) the amount deducted in determining Net Income
representing non-cash charges, including depreciation and amortization,
PLUS
(c) the amount deducted in determining Net Income
representing income taxes (whether paid or deferred),
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PLUS
(d) the amount deducted in determining Net Income representing
Interest Expense,
PLUS
(e) the amount deducted in determining Net Income representing
executive, board and shareholder payments and costs described in
Sections 7.5(c), (d) and (g) of the Stock Purchase Agreement and fees,
expenses and financing costs incurred in connection with the
Transaction or the Hittman Acquisition (including non-recurring
reorganizational costs associated with the integration of Hittman
incurred by the Borrower or Hittman prior to December 31, 1998 in an
amount not to exceed $500,000),
PLUS
(f) the amount of costs incurred in the 1997 and 1998 calendar
years relating to the net medical devices and surgical instruments
business lines for such applicable period,
PLUS
(g) to the extent deducted in determining Net Income, earnout
payments to Fred Hittman in an aggregate amount not to exceed
$6,000,000 pursuant to the Hittman Acquisition Agreement,
MINUS
(h) the amount of all non-cash credits included in determining
Net Income,
MINUS
(i) Restricted Payments of the type referred to in clause
(c)(i) of SECTION 7.2.6 made during such period.
"ELIGIBLE ACCOUNT" means, with respect to the Borrower and any of its
wholly-owned U.S. Subsidiaries, at time of determination thereof, any Account as
to which each of the following requirements has been fulfilled to the reasonable
satisfaction of the Administrative Agent:
(a) the Borrower of such Subsidiary owns such Account free and
clear of all Liens other than any Lien permitted to exist under clause
(b), (d), (e) or (g) of Section 7.2.3;
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(b) such Account is a legal, valid, binding and enforceable obligation
of the Person obligated under such Account (the "ACCOUNT DEBTOR");
(c) such Account is not subject to any bona fide dispute, setoff,
counterclaim or other right, claim or defense on the part of the Account Debtor
or any other Person denying liability under such Account; provided, however,
that any such Account shall constitute an Eligible Account to the extent it is
not subject to any such dispute, setoff, counterclaim or other claim or defense;
(d) the Borrower or such Subsidiary has the full and unqualified right
to assign and grant a Lien on such Account to the Administrative Agent, for the
benefit of the Agents and the Lenders, as security for the Obligations (and the
Administrative Agent shall have a perfected, first-priority (other than inchoate
statutory Liens otherwise permitted by SECTION 7.2.3) Lien on such Account);
(e) such Account is evidenced by an invoice rendered to the Account
Debtor (which shall include computer records) or is reflected by computer
records maintained by the Borrower or such Subsidiary evidencing such Account
and is not evidenced by any instrument or chattel paper (as the terms
"instrument" and "chattel paper" are defined in SECTION 9-105 of the UCC),
unless such instrument or chattel paper has been delivered to the Administrative
Agent;
(f) such Account arose from the sale of goods or services by the
Borrower or such Subsidiary in the ordinary course of the Borrower's or such
Subsidiary's business, and such goods or services have been shipped or delivered
(in the case of goods) or rendered in full (in the case of services) to the
Account Debtor for such Account;
(g) with respect to such Account, no Account Debtor is (i) an Affiliate
of the Borrower or any of its Subsidiaries, or (ii) the subject of any
reorganization, bankruptcy, receivership, custodianship, insolvency or other
condition analogous with respect to such Account Debtor to those described in
clauses (a) through (d) of Section 8.1.9;
(h) such Account is not outstanding more than 90 days (or 135 days, in
the case of Accounts arising from the sale of goods or services by the
Borrower's MRI compatible medical device business or surgical instruments
business) from the original billing date (which date shall not be later than
five days from the date of the shipment of the goods or the rendering of the
services giving rise to such Account), in each case for such Account;
(i) such Account is not an Account owing by an Account Debtor having,
at the time of any determination of Eligible Accounts, in excess of 15% of the
aggregate outstanding amount of all Accounts of such Account Debtor (other than
any Accounts which are the subject of bona fide disputes between such Account
Debtor and the Borrower or such Subsidiary, as the case may be) outstanding more
than 90 days (or 135 days, in the case of Accounts arising from the sale of
goods or services by the Borrower's
17
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MRI compatible medical device business or surgical instruments business) past
the original billing date (which date shall not be later than five days from the
date of the shipment of the goods or the rendering of the services giving rise
to such Account), in each case for such Account;
(j) with respect to the Account Debtor under such Account, neither the
Borrower nor any such Subsidiary is indebted to such Account Debtor, unless the
Borrower or such Subsidiary and such Account Debtor have entered into an
agreement whereby the Account Debtor is prohibited from exercising any right of
setoff with respect to the Accounts of the Borrower or such Subsidiary; provided
that, in any event, if such an agreement prohibiting setoff rights is not
delivered by the Account Debtor, then only up to the amount that the Borrower or
such Subsidiary is indebted to such Account Debtor shall be excluded as an
Eligible Account pursuant to this clause; and
(k) the Account Debtor in respect of such Account is located within the
United States, Puerto Rico or Canada or the Account Debtor's obligations (or
that portion of such obligations which is acceptable to the Administrative
Agent) with respect to such Account are secured by a letter of credit, guaranty
or eligible bankers' acceptance having terms, and from such issuers and
confirmation banks, as are acceptable to the Administrative Agent.
"ELIGIBLE INVENTORY" means, with respect to the Borrower and any of its
wholly-owned U.S. Subsidiaries, at the time of any determination thereof, any
Inventory arising in the ordinary course of business and as to which each of the
following requirements has been fulfilled to the reasonable satisfaction of the
Agents:
(a) such Inventory is located in the United States;
(b) the Borrower or its wholly-owned U.S. Subsidiary owning
such Inventory, as the case may be, has full and unqualified right to
assign and grant a Lien in such Inventory to the Administrative Agent
for the benefit of the Agents, and the Lenders, as security for the
Obligations;
(c) the Borrower or one of its wholly-owned U.S. Subsidiaries
owns such Inventory free and clear of all Liens in favor of any Person
other than any Lien permitted to exist under clause (b), (d), (e) or
(g) of SECTION 7.2.3; and
(d) none of such Inventory is obsolete, unsaleable, damaged or
otherwise unfit for sale or consumption or further processing or, in
the case of finished goods, has remained unsold in inventory for over
180 days.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules and regulations (including consent
decrees and administrative orders) relating to public health and safety and
protection of the environment.
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"EQUITY CONTRIBUTION" is defined in the FOURTH RECITAL.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" is defined in SECTION 8.1.
"EXCESS CASH FLOW" means, for any applicable period, the excess (if
any), of
(a) EBITDA for such applicable period;
OVER
(b) the sum, without duplication (for such applicable period)
of
(i) the cash portion of Interest Expense (net of cash
interest income) for such applicable period;
PLUS
(ii) scheduled payments of the principal amount of
the Term Loans or any other funded Debt (including Capitalized
Lease Liabilities) and mandatory prepayments of the principal
amount of the Revolving Loans pursuant to clause (b) or (g) of
SECTION 3.1.1 in connection with a reduction of the Revolving
Loan Commitment Amount, in each case for such applicable
period;
PLUS
(iii) all federal, state and foreign income taxes
actually paid in cash by the Borrower and its Subsidiaries for
such applicable period;
PLUS
(iv) Capital Expenditures actually made during such
applicable period pursuant to clause (a) or (b)(ii) of SECTION
7.2.7 (excluding Capital Expenditures constituting Capitalized
Lease Liabilities and by way of the incurrence of Indebtedness
permitted pursuant to SECTION 7.2.2(C) to a vendor of any
assets permitted to be acquired pursuant to SECTION 7.2.7 to
finance the acquisition of such assets);
PLUS
(v) the amount of the net increase (if any) of
Current Assets, other than cash and Cash Equivalent
Investments, over Current Liabilities of the Borrower and its
Subsidiaries for such applicable period;
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PLUS
(vi) Investments permitted and actually made pursuant
to clauses (d), (i) and (j) of SECTION 7.2.5 during such
applicable period;
PLUS
(vii) Restricted Payments of the type described in
clause (c)(ii) of SECTION 7.2.6 made during such period;
PLUS
(viii) to the extent included in the calculation of
EBITDA for such period, gains on sales of assets (other than
sales of assets permitted under clause (a)(i) of SECTION
7.2.9);
PLUS
(ix) the aggregate amount (not to exceed $6,000,000)
of earnout payments to Fred Hittman pursuant to the Hittman
Acquisition Agreement.
"EXISTING COMMITMENT" means, as the context may require, (i) a
Lender's Existing Term-A Loan Commitment, Existing Term-B Loan Commitment,
Existing Revolving Loan Commitment or Existing Letter of Credit Commitment or
(ii) the Swing Line Lender's Existing Swing Line Loan Commitment.
"EXISTING LENDERS" is defined in the SECOND RECITAL.
"EXISTING LETTER OF CREDIT" is defined in SECTION 2.1.3.
"EXISTING LETTER OF CREDIT OUTSTANDINGS" is defined in clause (a)(i) of
SECTION 2.1.6.
"EXISTING LOANS" means, as the context may require, the Existing Term
Loans, the Existing Revolving Loans and the Existing Swing Line Loans.
"EXISTING REVOLVING LOAN" is defined in clause (i)(a) of SECTION 2.1.2.
"EXISTING REVOLVING LOAN COMMITMENT" is defined in clause (i)(a) of
SECTION 2.1.2.
"EXISTING SWING LINE LOAN" is defined in clause (i)(b) of SECTION
2.1.2.
"EXISTING SWING LINE LOAN COMMITMENT" is defined in clause (i)(b) of
SECTION 2.1.2.
"EXISTING TERM-A LOAN" is defined in clause (i)(a) of SECTION 2.1.1.
20
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"EXISTING TERM-A LOAN COMMITMENT" is defined in clause (i)(a) of
SECTION 2.1.L.
"EXISTING TERM-A LOAN COMMITMENT AMOUNT" means $30,000,000.
"EXISTING TERM-A LOAN COMMITMENT TERMINATION DATE" means the earliest
of (i) July 15, 1997, if the Existing Term-A Loans have not been made on or
prior to such date, (ii) the Closing Date (immediately after the making of the
Existing Term-A Loans on such date) and (iii) the date on which any Commitment
Termination Event occurs.
"EXISTING TERM-B LOAN" is defined in clause (i)(b) of SECTION 2.1.1.
"EXISTING TERM-B LOAN COMMITMENT" is defined in clause (i)(h) of
SECTION 2.1.1.
"EXISTING TERM-B LOAN COMMITMENT AMOUNT" means $20,000,000.
"EXISTING TERM-B LOAN COMMITMENT TERMINATION DATE" means the earliest
of (i) July 15, 1997, if the Existing Term-B Loans have not been made on or
prior to such date, (ii) the Closing Date (immediately after the making of the
Existing Term-B Loans on such date) and (iii) the date on which any Commitment
Termination Event occurs.
"EXISTING TERM LOANS" means, collectively, the Existing Term-A Loans
and the Existing Term-B Loans.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to (i) 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 (ii) 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 the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"FEE LETTER" means the confidential fee letter, dated as of June 20,
1997, among DLJMB II, Inc., the Arranger and the Syndication Agent.
"FISCAL QUARTER" means any fiscal quarter of a Fiscal Year.
"FISCAL YEAR" means any period of twelve consecutive months ending on
December 31st of any calendar year.
"FIXED CHARGE COVERAGE RATIO" means, at the end of any Fiscal Quarter,
the ratio computed for the period consisting of such Fiscal Quarter and each of
the three immediately prior Fiscal Quarters of
21
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(a) EBITDA for all such Fiscal Quarters
TO
(b) the sum (without duplication) of
(i) Capital Expenditures actually made during all
such Fiscal Quarters pursuant to clause (a) of SECTION 7.2.7
(excluding Capital Expenditures constituting Capitalized Lease
Liabilities and by way of the incurrence of Indebtedness
permitted pursuant to Section 7.2.2(c) to a vendor of any
assets permitted to be acquired pursuant to Section 7.2.7 to
finance the acquisition of such assets);
PLUS
(ii) the cash portion of Interest Expense (net of
cash interest income) for all such Fiscal Quarters, provided
that for the first three Fiscal Quarters ending after the
Restatement Effective Date, Interest Expense shall be
determined on an Annualized basis;
PLUS
(iii) all scheduled payments of principal of the Term
Loans and other funded Debt (including the principal portion
of any Capitalized Lease Liabilities) during all such Fiscal
Quarters, provided that for the first three Fiscal Quarters
ending after the Restatement Effective Date, such payments
shall be determined on an Annualized basis;
provided that if, during any such period, the Borrower or any of its
Subsidiaries shall have made one or more acquisitions, the Fixed Charge Coverage
Ratio for such period shall be calculated (on a good faith basis by the chief
financial Authorized Officer of the Borrower) on a pro forma basis as if each
such acquisition had been made, and all Indebtedness incurred to finance each
such acquisition had been incurred, on the first day of such period.
"FLEET" is defined in the PREAMBLE.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in SECTION 1.4.
22
<PAGE>
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"HEDGING OBLIGATIONS" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"HELLER" is defined in the PREAMBLE.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"HITTMAN" is defined in the THIRD RECITAL.
"HITTMAN ACQUISITION" is defined in the THIRD RECITAL.
"HITTMAN ACQUISITION AGREEMENT" is defined in the THIRD RECITAL.
"HOLDCO" is defined in the FIRST RECITAL.
"HOLDCO GUARANTY AND PLEDGE AGREEMENT" means the Guaranty and Pledge
Agreement executed and delivered by an Authorized Officer of Holdco on the
Closing Date, substantially in the form of Exhibit B-1 hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification
(i) which is of a "going concern" or similar nature,
23
<PAGE>
(ii) which relates to the limited scope of examination Of matters relevant to
such financial statement (except, in the case of matters relating to any
acquired business or assets, in respect of the period prior to the acquisition
by such Obligor of such business or assets), or (iii) which relates to the
treatment or classification of any item in such financial statement and which,
as a condition to its removal, would require an adjustment to such item the
effect of which would be to cause such Obligor to be in default of any of its
obligations under SECTION 7.2.4.
"INCLUDING" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of EJUSDEM GENERIS
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money or for
the deferred purchase price of property or services (exclusive of
deferred purchase price arrangements in the nature of open or other
accounts payable owed to suppliers on normal terms in connection with
the purchase of goods and services in the ordinary course of business)
and all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all Capitalized Lease Liabilities;
(d) net liabilities of such Person under all Hedging
Obligations;
(e) whether or not so included as liabilities in accordance
with GAAP, all Indebtedness of the types referred to in clauses (a)
through (d) above (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including
Indebtedness arising under conditional sales or other title retention
agreements), whether or not such Indebtedness shall have been assumed
by such Person or is limited in recourse; provided, however, that, to
the extent such Indebtedness is limited in recourse to the assets
securing such Indebtedness, the amount of such Indebtedness shall be
limited to the fair market value of such assets; and
(f) all Contingent Liabilities of such Person in respect of
any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer (to the extent such Person is liable for
such Indebtedness).
24
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"Indemnified Liabilities" is defined in SECTION 10.4.
"INDEMNIFIED PARTIES" is defined in SECTION 10.4.
"INTEREST COVERAGE RATIO" means, at the end of any Fiscal Quarter, the
ratio computed for the period consisting of such Fiscal Quarter and each of the
three immediately prior Fiscal Quarters of:
(a) EBITDA (for all such Fiscal Quarters)
(b) the cash portion of Interest Expense (for all such Fiscal
Quarters; provided that for the first three Fiscal Quarters ending
after the Restatement Effective Date, Interest Expense shall be
determined on an Annualized basis);
provided that if, during any such period, the Borrower or any of its
Subsidiaries shall have made one or more acquisitions, the Interest Coverage
Ratio for such period shall be calculated (on a good faith basis by the chief
financial Authorized Officer of the Borrower) on a pro forma basis as if each
such acquisition had been made, and all Indebtedness incurred to finance each
such acquisition had been incurred, on the first day of such period.
"INTEREST EXPENSE" means, for any applicable period, the aggregate
consolidated interest expense of the Borrower and its Subsidiaries for such
applicable period, as determined in accordance with GAAP, including the portion
of any payments made in respect of Capitalized Lease Liabilities allocable to
interest expense, but excluding (to the extent included in interest expense)
up-front fees and expenses and other deferred financing costs incurred in
connection with the Transaction or the Hittman Acquisition.
"INTEREST PERIOD" means, as to any LIBO Rate Loan, the period
commencing on the Borrowing date of such Loan or on the date on which the Loan
is converted into or continued as a LIBO Rate Loan, and ending on the date one,
two, three, six or, if available in the Administrative Agent's reasonable
determination, nine or twelve months thereafter as selected by the Borrower in
its Borrowing Request or its Conversion/Continuation Notice; provided, however,
that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) 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
25
<PAGE>
the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period;
(iii) no Interest Period for any Loan shall extend beyond the
Stated Maturity Date for such Loan;
(iv) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Term Loans unless the aggregate
principal amount of Term Loans represented by Base Rate Loans, or by
LIBO Rate Loans having Interest Periods that will expire on or before
such date, equals or exceeds the amount of such principal payment; and
(v) there shall be no more than ten Interest Periods in effect
at any one time;
provided that (i) with respect to the initial Borrower, Interest Period means
the period commencing on (and including) the Business Day on which the Borrowing
is made and ending on (and including) the last Business Day of the month in
which such initial Borrowing is made and (ii) with respect to Borrowings of
Additional Term-A Loans and Additional Term-B Loans, Interest Period means,
initially, the period commencing on (and including) the Business Day on which
such Borrowerings are made and ending on (and including) the last day of the
then existing Interest Period in respect of then outstanding Existing Term-A
Loans or Existing Term-B Loans, as the case may be.
"INTERMEDIATE HOLDCO" is defined in the FIRST RECITAL.
"INTERMEDIATE HOLDCO GUARANTY AND PLEDGE AGREEMENT" means the Guaranty
and Pledge Agreement executed and delivered by an Authorized Officer of
Intermediate Holdco on the Closing Date, substantially in the form of EXHIBIT
G-2 hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.
"INVENTORY" means, any "inventory" (as that term is defined in Section
9-109(4) of the UCC) of the Borrower or any of its wholly owned U.S.
Subsidiaries.
"INVESTMENT" means, relative to any Person, (i) any loan or advance
made by such Person to any other Person (excluding commission, travel and
similar advances to officers, directors and employees (or individuals acting in
similar capacities) made in the ordinary course of business), and (ii) any
ownership or similar interest held by such Person in any other Person. The
amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange or property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property at the time of such transfer or exchange.
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<PAGE>
"ISSUANCE REQUEST" means a Letter of Credit request and certificate
duly executed by an Authorized Officer of the Borrower, substantially in the
form of EXHIBIT B-3 hereto.
"ISSUER" means Fleet in its capacity as issuer of Letters of Credit and
any Lender as may be designated by the Borrower (and consented to by the Agents
and such Lender, such consent by the Agents not to be unreasonably withheld) in
its capacity as issuer of Letters of Credit.
"JOINT VENTURE" means any Person, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate legal
entity) now or hereafter formed by the Borrower or any of its Subsidiaries with
another Person or Persons which is not an Affiliate of the Borrower or any of
its Subsidiaries by means of an Investment made pursuant to clause (i) of
SECTION 7.2.5.
"LENDER ASSIGNMENT AGREEMENT" means a Lender Assignment Agreement
substantially in the form of EXHIBIT J hereto.
"LENDERS" is defined in the PREAMBLE.
"LETTER OF CREDIT" is defined in SECTION 2.1.3.
"LETTER OF CREDIT COMMITMENT" means, with respect to the Issuer, the
Issuer's obligation to issue Letters of Credit pursuant to SECTION 2.13 and,
with respect to each of the other Lenders that has a Revolving Loan Commitment,
the obligation of each such Lender to participate in such Letters of Credit
pursuant to SECTION 2.6.1.
"LETTER OF CREDIT COMMITMENT AMOUNT" means, on any date, a maximum
amount of $10,000,000, as such amount may be reduced from time to time pursuant
to SECTION 2.2.
"LETTER OF CREDIT OUTSTANDINGS" means, on any date, an amount equal to
the sum of
(a) the then aggregate amount which is undrawn and available
under all issued and outstanding Letters of Credit (whether or not the
conditions to drawing thereunder could be satisfied on such date),
PLUS
the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations in respect of such Letters of Credit.
"LEVERAGE RATIO" means, at the end of any Fiscal Quarter, the ratio of
(a) total Debt (excluding earnout amounts (to the extent such
amounts have not been paid to Fred Hittman pursuant to the Hittman
Acquisition Agreement) not to exceed
27
<PAGE>
$6,000,000) less cash and Cash Equivalent Investments Of the Borrower
and its Subsidiaries on a consolidated basis outstanding at such time;
TO
(b) EBITDA for the period of four consecutive Fiscal Quarters
ended on such date;
provided that if, during the period of four consecutive Fiscal Quarters ended on
such date, the Borrower or any of its Subsidiaries shall have made one or more
acquisitions, the Leverage Ratio shall be calculated (on a good faith basis by
the chief financial Authorized Officer of the Borrower) on a pro forma basis as
if each such acquisition had been made, and all Indebtedness incurred to finance
each such acquisition had been incurred, on the first day of such period.
"LIBO RATE" means, relative to any Interest Period for LIBO Rate Loans,
(i) the rate of interest as determined by the Administrative Agent equal to the
offered rate per annum for Dollar deposits as quoted on Telerate Page 3750
(rounded, if necessary, to the nearest 1/16 of 1%) at or about 11:00 a.m.
(London time) two Business Days prior to the commencement on the day which is
the first day of such Interest Period for a period approximately equal to such
Interest Period and (ii) if such quotation is not available, the rate of
interest per annum determined by the Administrative Agent to be the arithmetic
mean (rounded upward to the next 1/100th of 1%) of the rates of interest per
annum at which dollar deposits in the approximate amount of the Loan to be made
or continued as, or converted into, a LIBO Rate Loan by the Administrative Agent
and having a maturity comparable to such Interest Period would be offered to the
Administrative Agent in the London interbank market at its request at
approximately 11:00 am. (London time) two Business Days prior to the
commencement of such Interest Period.
"LIBO RATE LOAN" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO RATE RESERVE ADJUSTED" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, the rate of interest per annum (rounded upwards to the next 100th of
10%) determined by the Administrative Agent as follows:
LIBO Rate = LIBO RATE
-------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be adjusted automatically as to all LIBO Rate Loans then outstanding
as of the effective date of any change in the LIBOR Reserve Percentage.
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"LIBOR OFFICE" means, relative to any Lender, the office of such Lender
designated as such on SCHEDULE II, hereto or designated in the Lender Assignment
Agreement pursuant to which such Lender became a Lender hereunder or such other
office of a Lender as shall be so designated from time to time by notice from
such Lender to the Borrower and the Administrative Agent, which shall be making
or maintaining LIBO Rate Loans of such Lender hereunder.
"LIBOR RESERVE PERCENTAGE" means, relative to any Interest Period for
LIBO Rate Loans, the percentage (expressed as a decimal, rounded upward to the
next 100th of 1%) in effect on such day (whether or not applicable to any
Lender) under regulations issued from time to time by the F.R.S. Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the F.R.S. Board).
"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or any filing or recording of any
instrument or document in respect of the foregoing, to secure payment of a debt
or performance of an obligation or any other priority or preferential treatment
of any kind or nature whatsoever that has the practical effect of creating a
security interest in property.
"LOAN" means, as the context may require, a Revolving Loan, a Term-A
Loan, a Term-B Loan or a Swing Line Loan, of any type.
"LOAN DOCUMENT" means this Agreement, the Notes, the Letters of Credit,
each Rate Protection Agreement under which the counterparty to such agreement is
(or at the time such Rate Protection Agreement was entered into, was) a Lender
or an Affiliate of a Lender relating to Hedging Obligations of the Borrower or
any of its Subsidiaries, each Borrowing Request, each Issuance Request, each
Borrowing Base Certificate, the Fee Letter, each Pledge Agreement, each
Subsidiary Guaranty, each Mortgage (upon execution and delivery thereof), each
Security Agreement and each other agreement, document or instrument delivered in
connection with this Agreement or any other Loan Document, whether or not
specifically mentioned herein or therein.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect on the
financial condition, operations, assets, business or properties of the Borrower
and its Subsidiaries, taken as a whole, (b) a material impairment of the ability
of the Borrower or any other Obligor to perform its respective material
obligations under the Loan Documents to which it is or will be a party, or (c)
an impairment of the validity or enforceability of, or a material impairment of
the rights, remedies or benefits available to the Issuer, the Agents, the
Arranger or the Lenders under, this Agreement or any other Loan Document.
"MATERIAL DOCUMENTS" means the Stock Purchase Agreement, the Hittman
Acquisition Agreement, the Subordinated Note Indenture, and the articles of
incorporation of the Borrower,
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each as amended or otherwise modified from time to time as permitted in
accordance with the terms hereof or of any other Loan Document.
"MERGER" is defined in the FIRST RECITAL.
"MERGERCO" is defined in the PREAMBLE.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means, collectively, each Mortgage or Deed of Trust executed
and delivered pursuant to the terms of this Agreement, including SECTION
7.1.8(B) or 7.1.1.1 in form and substance reasonably satisfactory to the Agents.
"NET ASSET VALUE" means, at any time of any determination, (i) with
respect to Eligible Accounts, 85% of an amount equal to (x) the book value of
all Eligible Accounts as reflected on the books of the Borrower and its
Subsidiaries in accordance with GAAP, net of (y) all credits, discounts and
allowances (and net of all unissued credits in the form of competitive
allowances or otherwise) in respect of such Eligible Accounts and (ii) with
respect to Eligible Inventory, an amount (determined on a first-in, first-out
basis) equal to (x) 25% of Eligible Inventory constituting work-in-process
(other than post close weld cells), (y) 50% of Eligible Inventory constituting
raw materials and (z) 65% of Eligible Inventory constituting finished goods
inventory and post close weld cells, in each case valued at the lesser of market
value and cost and as reflected on the books of the Borrower and its U.S.
Subsidiaries as at such time, valued in accordance with GAAP.
"NET DEBT PROCEEDS" means, with respect to the incurrence, sale or
issuance by the Borrower or any of its Subsidiaries (other than a Subsidiary
which is a Joint Venture) of any Debt (other than Debt incurred as part of the
Transaction and other Debt permitted by SECTION 7.2.2), the excess of:
(a) the gross cash proceeds received by the Borrower or any of
its Subsidiaries from such incurrence, sale or issuance,
OVER
(b) all reasonable and customary underwriting commissions and
legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements and all other
reasonable fees, expenses and charges, in each case actually incurred
in connection with such incurrence, sale or issuance.
"NET DISPOSITION PROCEEDS" means, with respect to any sale, transfer or
other disposition of any assets of the Borrower or any of its Subsidiaries
(other than a Subsidiary which is a Joint Venture) (other than transfers made as
part of the Transaction and other sales permitted pursuant to clause (a) or (b)
of SECTION 7.2.9), the excess of
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(a) the gross cash proceeds received by the Borrower or any of
its Subsidiaries from any such sale, transfer or other disposition and
any cash payments received in respect of promissory notes or other
non-cash consideration delivered to the Borrower or such Subsidiary in
respect thereof,
LESS
(b) the sum (without duplication) of (i) all reasonable and
customary fees and expenses with respect to legal, investment banking,
brokerage, accounting and other professional fees, sales commissions
and disbursements and all other reasonable fees, expenses and charges,
in each case actually incurred in connection with such sale, transfer
or other disposition, (ii) all taxes and other governmental costs and
expenses actually paid or estimated by the Borrower (in good faith) to
be payable in cash in connection with such sale, transfer or other
disposition, (iii) payments made by the Borrower or any of its
Subsidiaries to retire Indebtedness (other than the Loans) of the
Borrower or any of its Subsidiaries where payment of such Indebtedness
is required in connection with such sale, transfer or other disposition
and (iv) reserves for obligations incurred or to be incurred by the
Borrower or any of its Subsidiaries in connection with such sale,
transfer or other disposition;
provided, however that if, after the payment of all taxes with respect to such
sale, transfer or other disposition, the amount of estimated taxes, if any,
pursuant to clause (b)(ii) above exceeded the tax amount actually paid in cash
in respect of such sale, transfer or other disposition, the aggregate amount of
such excess shall be immediately payable, pursuant to clause (b) of SECTION 3.
1. 1, as Net Disposition Proceeds; provided further that if the Net Disposition
Proceeds with respect to any sale, transfer or other disposition would be less
than $50,000 whether in a single transaction or a series of related
transactions, then the Net Disposition Proceeds for such sale, transfer or other
disposition shall be deemed to be $0.
"NET EQUITY PROCEEDS" means with respect to the sale or issuance by the
Borrower, Intermediate Holdco or Holdco to any Person of any of its capital
stock or any warrants or options with respect to its capital stock or the
exercise of any such warrants or options after the Closing Date (other than
pursuant to (i) capital contributions or capital stock, warrant or option
issuances (from other than a Public Offering) which are concurrently contributed
to the Borrower, (ii) any subscription agreement, incentive plan or similar
arrangement with any officer, employee or director of Holdco, Intermediate
Holdco, the Borrower or any Subsidiary of the Borrower, (iii) any loan by the
Borrower or Holdco to such officer, employee or director solely for the purpose
of purchasing such shares pursuant to clause (h) of SECTION 7.2.5, (iv) proceeds
from the sale of any Capital Stock to any officer, director or employee of
Holdco, Intermediate Holdco, the Borrower or any Subsidiary of Holdco,
Intermediate Holdco or the Borrower in an aggregate amount not to exceed
$4,000,000 after the Closing Date, (v) cash contributions to the Borrower from
Holdco (whether through Intermediate Holdco or otherwise) specifically
identified in a certificate delivered by an Authorized Officer of the Borrower
to the Administrative Agent on or about the time of such contribution for
purposes of making Capital
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Expenditures and (vi) cash proceeds received by Holdco from the purchase by
certain current equity owners and employees of WGL of Capital Stock of Holdco in
an aggregate amount not to exceed $1,500,000), the EXCESS of:
(a) the gross cash proceeds received by Holdco, Intermediate
Holdco, the Borrower and the Borrower's Subsidiaries from such sale,
exercise or issuance,
OVER
(b) all reasonable and customary underwriting commissions and
legal, investment banking, brokerage, accounting and other professional
fees, sales commissions and disbursements and all other reasonable
fees, expenses and charges, in each case actually incurred in
connection with such sale or issuance.
"NET INCOME" means, for any period, the net income of the Borrower and
its Subsidiaries for such period on a consolidated basis, excluding
extraordinary or non-recurring gains.
"NON-U.S. LENDER" means any Leader (including each Assignee Lender)
that is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any state thereof, or (iii) an estate or trust that is subject
to U.S. Federal income taxation regardless of the source of its income.
"NON-U.S. SUBSIDIARY" means a Subsidiary of the Borrower that is not a
U.S. Subsidiary.
"NOTE" means, as the context may require, a Revolving Note, a
Registered Note, a Term-A Note, a Term-B Note or a Swing Line Note.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, any Rate Protection Agreement, the Notes, each Letter of Credit and
each other Loan Document.
"OBLIGOR" means the Borrower or any other Person (other than any Agent,
the Arranger, or any Lender or any Affiliate thereof) obligated under any Loan
Document.
"ORGANIC DOCUMENT" means, relative to any Obligor, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements to which such Obligor is a party applicable to any of its
authorized share of Capital Stock.
"PARTICIPANT" is defined in SECTION 10.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
entity.
"PENSION PLAN" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section
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4001 (a)(3) of ERISA), and to which the Borrower or any corporation, trade or
business that is, along with the Borrower, a member of a Controlled Group, has
or within the prior six years has had any liability, including any liability by
reason of having been a substantial employer within the meaning of section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under section 4069 of ERISA.
"PERCENTAGE" means, relative to any Lender, the applicable percentage
relating to Existing Term-A Loans, Additional Term-A Loans, Existing Term-B
Loans, Additional Term-B Loans, or Revolving Loans, as the case may be, as set
forth opposite its name on SCHEDULE II hereto under the applicable column
heading or set forth in Lender Assignment Agreement(s) under the applicable
column heading, as such percentage may be adjusted from time to time pursuant to
Lender Assignment Agreement(s) executed by such Lender and its Assignee
Lender(s) and delivered pursuant to SECTION 10.11. A Lender shall not have any
Commitment to make Revolving Loans, Existing Term-A Loans, Additional Term-A
Loans, Existing Term-B Loans or Additional Term-B Loans (as the case may be) if
its percentage under the respective column heading is zero.
"PERFECTION CERTIFICATE" means the Perfection Certificate executed and
delivered by an Authorized Officer of the Borrower pursuant to SECTION 5.1.17,
substantially in the form of EXHIBIT I hereto, as amended, supplemented, amended
and restated or otherwise modified from time to time.
"PERSON" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency, limited liability company
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"PLEDGE AGREEMENT" means, as the context may require, the Borrower
Pledge Agreement, the Holdco Guaranty and Pledge Agreement, the Intermediate
Holdco Guaranty and Pledge Agreement or a Subsidiary Pledge Agreement.
"PRO FORMA BALANCE SHEET" is defined in clause (b) of SECTION 5.1.12.
"PUBLIC OFFERING" mean for any Person, any sale of the Capital Stock of
such Person to the public pursuant to any primary offering registered under the
Securities Act of 1933.
"QUARTERLY PAYMENT DATE" means the last day of each of March, June,
September and December, or, if any such day is not a Business Day, the next
succeeding Business Day, commencing with September 30, 1998.
"RATE PROTECTION AGREEMENT" means, collectively, any interest rate
swap, cap, collar or similar agreement entered into by the Borrower pursuant to
the terms of this Agreement under
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which the counterparty to such agreement is (or at the time such Rate Protection
Agreement was entered into, was) a Lender or an Affiliate of a Lender.
"REFUNDED SWING LINE LOANS" is defined in clause (b) of SECTION 2.3.2.
"REGISTER" is defined in clause (b) of SECTION 2.8.
"REGISTERED NOTE" means a promissory note of the Borrower payable to
any Registered Noteholder, in the form of EXHIBIT A-4 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from outstanding Revolving Loans and Term Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
"REGISTERED NOTEHOLDER" means any Lender that has been issued a
Registered Note.
"REIMBURSEMENT OBLIGATION" is defined in SECTION 2.6.3.
"RELEASE" means a "release", as such term is defined in CERCLA.
"REPLACEMENT NOTICE" is defined in SECTION 4.11.
"REPLACEMENT LENDER" is defined in SECTION 4.11.
"REQUIRED LENDERS" means, at any time, (i) prior to the date of the
making of the initial Credit Extension hereunder, Lenders having at least 51 %
of the sum of the Revolving Loan Commitments, Term-A Loan Commitments and Term-B
Loan Commitments and (ii) on and after the date of the initial Credit Extension,
Lenders holding at least 51 % of the Total Exposure Amount.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect
from time to time.
"RESTATEMENT EFFECTIVE DATE" is defined in the SECOND RECITAL.
"RESTATEMENT EFFECTIVE DATE CERTIFICATE" means a certificate of an
Authorized Officer of the Borrower substantially in the form of EXHIBIT D
hereto, delivered pursuant to SECTION 5.1.4.
"RESTRICTED PAYMENTS" is defined in SECTION 7.2.6.
"REVOLVING LOAN" is defined in clause (ii)(a) of SECTION 2.1.2.
"REVOLVING LOAN COMMITMENT" is defined in clause (ii)(a) of SECTION
2.1.2.
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"REVOLVING LOAN COMMITMENT AMOUNT" means, on any date, $20,000,000, as
such amount may be reduced from time to time pursuant to SECTION 2.2.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the earliest of (i)
August 7, 1998 if the Additional Term Loans have not been made on or prior to
such date, (ii) the sixth anniversary of the Restatement Effective Date, (iii)
the date on which the Revolving Loan Commitment Amount is terminated in full or
reduced to zero pursuant to SECTION 2.2, and (iv) the date on which any
Commitment Termination Event occurs.
"REVOLVING NOTE" means a promissory note of the Borrower payable to any
Lender, substantially in the form of EXHIBIT A-1 hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrower to such Lender resulting from
outstanding Revolving Loans, and also means all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"SECURITY AGREEMENT" means, as the context may require, the Borrower
Security Agreement or a Subsidiary Security Agreement.
"SENIOR LEVERAGE RATIO" means, at the end of any Fiscal Quarter, the
ratio of
(a) total Debt (excluding earnout amounts (to the extent such
amounts have not been paid to Fred Hittman pursuant to the Hittman
Acquisition Agreement) not to exceed $6,000,000) and Debt that, by its
terms, is subordinate in right of payment to the payment in full in
cash of the Obligations) less cash and Cash Equivalent Investments of
the Borrower and its Subsidiaries on a consolidated basis outstanding
at such time;
TO
(b) EBITDA for the period of four consecutive Fiscal Quarters
ended on such date;
provided that if, during the period of four consecutive Fiscal Quarters ended on
such date, the Borrower or any of its Subsidiaries shall have made one or more
acquisitions, the Senior Leverage Ratio shall be calculated (on a good faith
basis by the chief financial Authorized Officer of the Borrower) on a pro forma
basis as if each such acquisition had been made, and all Indebtedness incurred
to finance each such acquisition had been incurred, on the first day of such
period.
"SOLVENT" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
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Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature, and
(d) such Person is not engaged in business or a transaction, and such person is
not about to engage in business or a transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that, in
light of all the facts and circumstances existing at such time, can reasonably
be expected to become an actual or matured liability.
"STATED AMOUNT" of each Letter of Credit means the total amount
available to be drawn under such Letter of Credit upon the issuance thereof.
"STATED EXPIRY DATE" is defined in SECTION 2.6.
"STATED MATURITY DATE" means (i) in the case of any Revolving Loan, the
sixth anniversary of the Restatement Effective Date, (ii) in the case of any
Term-A Loan, the sixth anniversary of the Restatement Effective Date, and (iii)
in the case of any Term-B Loan, the eighth anniversary of the Restatement
Effective Date or, in the case of any such day that is not a Business Day, the
first Business Day following such day,
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement, dated as
of June 19, 1997 (as amended or otherwise modified from time to time in
accordance with SECTION 7.2.10) between Holdco, WGL and Warren D. Greatbatch and
the other individual shareholders parties thereto, as sellers.
"SUBORDINATED DEBT ISSUANCE" means the issuance by Mergerco of the
Subordinated Notes.
"SUBORDINATED NOTE INDENTURE" means the form of Indenture attached as
Exhibit A to and incorporated by reference into the Subordinated Notes, as the
same may be entered into with [ ], as trustee, in each case as amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with SECTION 7.2.1.
"SUBORDINATED NOTES" means the 13% Senior Subordinated Notes due 2007
in the original aggregate principal amount of $25,000,000 issued by Mergerco on
the Closing Date, as amended or otherwise modified from time to time in
accordance with SECTION 7.2.10.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership or other business entity (other than Joint Ventures) of which more
than 50% of the outstanding Capital Stock (or other ownership interest) having
ordinary voting power to elect a majority of the board of directors, managers or
other voting members of the governing body of such entity (irrespective of
whether at the time Capital Stock (or other ownership interests) of any other
class or classes of such entity shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person.
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"SUBSIDIARY GUARANTOR" means any Subsidiary of the Borrower that is
required, pursuant to SECTION 5.1.8 or SECTION 7.1.7, to execute and deliver a
Subsidiary Guaranty or a supplement to a Subsidiary Guaranty.
"SUBSIDIARY GUARANTY" means any Guaranty executed and delivered by an
Authorized Officer of a Subsidiary Guarantor pursuant to SECTION 5.1.8,
substantially in the form of EXHIBIT H hereto, as amended, supplemented
(pursuant to SECTION 7.1.7 or otherwise), amended and restated or otherwise
modified from time to time.
"SUBSIDIARY PLEDGE AGREEMENT" means any Pledge Agreement executed and
delivered by an Authorized Officer of a U.S. Subsidiary of the Borrower pursuant
to SECTION 5.1.9 or clause (b) or SECTION 7.1.7. substantially in the form of
EXHIBIT G-3 hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"SUBSIDIARY SECURITY AGREEMENT" means any Security Agreement executed
and delivered by an Authorized Officer of a U.S. Subsidiary of the Borrower
pursuant to SECTION 5.1.10 or SECTION 7.1.7, substantially in the form of
EXHIBIT F-2 hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"SWING LINE LENDER" means Fleet in its capacity as Swing Line Lender
hereunder.
"SWING LINE LOAN" is defined in clause (ii)(b) of SECTION 2.1.2.
"SWING LINE LOAN COMMITMENT" is defined in clause (ii)(b) of Section
2.1.2.
"SWING LINE LOAN COMMITMENT AMOUNT" means, on any date, $2,000,000, as
such amount may be reduced from time to time pursuant to SECTION 2.2.
"SWING LINE NOTE" means a promissory note of the Borrower payable to
the Swing Line Lender, in the form of EXHIBIT A-5 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to the Swing Line Lender
resulting from outstanding Swing Line Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"SYNDICATION AGENT" is defined in the PREAMBLE and includes each other
Person as shall have subsequently been appointed as the successor Syndication
Agent by the predecessor Syndication Agent and the Borrower.
"TAXES" is defined in SECTION 4.6.
"TERM-A LOAN" means an Existing Term-A Loan or an Additional Term-A
Loan.
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"TERM-A NOTE" means a promissory note of the Borrower payable to the
order of any Lender, in the form of EXHIBIT A-2 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from outstanding Term-A Loans, and also means all other promissory notes
accepted from time to time in substitution therefor or renewal thereof.
"TERM-B LOAN" means an Existing Term-B Loan or an Additional Term-B
Loan.
"TERM-B NOTE" means a promissory note of the Borrower payable to the
order of any Lender, in the form of EXHIBIT A-3 hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrower to such Lender resulting from
outstanding Term-B Loans, and also means all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.
"TERM LOAN COMMITMENT TERMINATION DATE" means, as the context may
require, the Existing Term-A Loan Commitment Termination Date, the Additional
Term-A Loan Commitment Termination Date, the Existing Term-B Loan Commitment
Termination Date or the Additional Term-B Loan Commitment Termination Date.
"TERM LOANS" means, collectively, the Term-A Loans and the Term-B
Loans.
"TOTAL EXPOSURE AMOUNT" means, on any date of determination, the then
outstanding principal amount of all Term Loans and the then effective Revolving
Loan Commitment Amount.
"TRANCHE" means, as the context may require, the Loans constituting
Term-A Loans, Term-B Loans, Revolving Loans or Swing Line Loans.
"TRANSACTION" is defined in the FIRST RECITAL.
"TRANSACTION DOCUMENTS" means each of the Material Documents and all
other agreements, documents, instruments, certificates, filings, consents,
approvals, board of directors resolutions and opinions finished pursuant to or
in connection with the Acquisition, the Merger, the Subordinated Debt Issuance,
and the transactions contemplated hereby or thereby, each as amended,
supplemented, amended and restated or otherwise modified from time to time as
permitted in accordance with the terms hereof or of any other Loan Document.
"TYPE" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of New York.
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"UNITED STATES" or "U.S." means the United States of America, its fifty
states and the District of Columbia.
"U.S. SUBSIDIARY" means any Subsidiary of the Borrower that is
incorporated or organized in or under the laws of the United States or any state
thereof.
"WAIVER" means an agreement in favor of the Agents for the benefit of
the Lenders in form and substance reasonably satisfactory to the Agents.
"WELFARE PLAN" means a "welfare plan", as such term is defined in
section 3(1) of ERISA, and to which the Borrower has any liability.
"WGL" is defined in the PREAMBLE.
"WHOLLY-OWNED SUBSIDIARY" shall mean, with respect to any Person, any
Subsidiary of such Person all of the Capital Stock (and all rights and options
to purchase such Capital Stock) of which, other than directors' qualifying
shares, are owned, beneficially and of record, by such Person and/or one or more
wholly-owned Subsidiaries of such Person.
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each other Loan Document, notice and other communication delivered from time to
time in connection with this Agreement or any other Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS.
(a) Unless otherwise specified, all accounting terms used herein or in
any other Loan Document shall be interpreted, all accounting determinations and
computations hereunder or thereunder (including under Section 7.2.4) shall be
made, and all financial statements required to be delivered hereunder or
thereunder shall be prepared in accordance with, those generally accepted
accounting principles ("GAAP"), as in effect on December 31, 1997 and, unless
otherwise expressly provided herein, shall be computed or determined on a
consolidated basis and without duplication.
(b) For purposes of computing EBITDA, the Fixed Charge Coverage Ratio,
the Interest Coverage Ratio, the Leverage Ratio and the Senior Leverage Ratio
(and any financial calculations required to be made or included within such
amount or ratios) as of the end of any
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Fiscal Quarter, all components of such amount or ratios (other than Capital
Expenditures) for the period of four Fiscal Quarters ending at the end of such
Fiscal Quarter shall include, without duplication, such components of such
amount or ratios attributable to any business or assets that have been acquired
or disposed of by the Borrower or any of its Subsidiaries (including through
mergers or consolidations) after the first day of such period of four Fiscal
Quarters and prior to the end of such period, as determined in good faith by the
Borrower and set forth in the relevant Compliance Certificate on a pro forma
basis for such period of four Fiscal Quarters as if such acquisition or
disposition had occurred on such first day of such period (including, whether or
not such inclusion would be permitted under GAAP or Regulation S-X of the
Securities and Exchange Commission, cost savings that would have been realized
had such acquisition or disposition occurred on such day).
ARTICLE II
CONTINUATION AND REALLOCATION OF EXISTING
LOANS AND EXISTING LETTERS OF CREDIT;
COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES,
NOTES AND LETTERS OF CREDIT
SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of
this Agreement (including SECTIONS 2.1.4, 2.1.5 and ARTICLE V,
(a) each Lender severally agrees to the continuation and
reallocation (as the case may be) of Existing Loans and Existing
Commitments and to make Loans (other than Swing Line Loans) pursuant to
the Commitments and the Swing Line Lender agrees to make Swing Line
Loans pursuant to the Swing Line Loan Commitment, in each case as
described in this SECTION 2.1; and
(b) each Issuer severally agrees that it will issue Letters of
Credit pursuant to SECTION 2.1.3 and each other Lender that has a
Revolving Loan Commitment severally agrees that it will purchase
participation interests in such Letters of Credit pursuant to SECTION
2.6.1.
SECTION 2.1.1. TERM LOAN COMMITMENTS. (i) On the Closing Date, each
Lender with a Percentage in excess of zero of the Existing Term-A Loan
Commitment or the Existing Term-B Loan Commitment, as applicable,
(a) made loans (relative to such Lender, its "EXISTING TERM-A
LOANS") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of Existing Term-A
Loans requested by the Borrower to be made on the Closing Date (with
the commitment of each such Lender described in this clause (i)(a)
herein referred to as its "EXISTING TERM-A LOAN COMMITMENT"); and
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(b) made loans (relative to such Lender, its "EXISTING TERM-B
LOANS") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of Existing Term-B
Loans requested by the Borrower to be made on the Closing Date (with
the commitment of each such Lender described in this clause (i)(b)
herein referred to as its "EXISTING TERM-B LOAN COMMITMENT").
Each of the parties hereto acknowledges and agrees that the Existing Term Loans
shall continue as Term Loans for all purposes under this Agreement and the other
Loan Documents.
(ii) Subject to compliance by the Borrower with the terms of SECTIONS
2.1.4, 5.1 and 5.2 on (but solely on) the Restatement Effective Date (which
shall be on a Business Day), each Lender that has a Percentage in excess of zero
of the Additional Term-A Loan Commitment or the Additional Term-B Loan
Commitment, as applicable,
(a) will make loans (relative to such Lender, its "ADDITIONAL
TERM-A LOANS") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of Additional Term-A
Loans requested by the Borrower to be made on the Restatement Effective
Date (with the commitment of each such Lender described in this clause
(ii)(a) herein referred to as its "ADDITIONAL TERM-A LOAN COMMITMENT");
and
(b) will make loans (relative to such Lender, its "ADDITIONAL
TERM-B LOANS") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of Additional Term-B
Loans requested by the Borrower to be made on the Restatement Effective
Date (with the commitment of each such Lender described in this clause
(ii)(b) herein referred to as its "ADDITIONAL TERM-B LOAN COMMITMENT").
No amounts repaid or prepaid with respect to Term-A Loans or Term-B Loans may be
reborrowed.
SECTION 2.1.2. REVOLVING LOAN COMMITMENT AND SWING LINE LOAN
COMMITMENT. (i) The Existing Revolving Loans and Existing Swing Line Loans were
made as follows:
(a) From time to time on any Business Day occurring
concurrently with (or after) the making of the Existing Term Loans but
prior to the Revolving Loan Commitment Termination Date, each Lender
with a Percentage of the Existing Revolving Loan Commitment in excess
of zero made loans (relative to such Lender, its "EXISTING REVOLVING
LOAN") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of Existing Revolving
Loans requested by the Borrower to be made on such day. The Commitment
of each Lender described in this clause (i)(a) is herein referred to as
its "EXISTING REVOLVING LOAN COMMITMENT".
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(b) From time to time on any Business Day occurring
concurrently with (or after) the making of the Existing Term Loans but
prior to the Revolving Loan Commitment Termination Date, the Swing Line
Lender made a loan (an "EXISTING SWING LINE LOAN") to the Borrower
equal to the principal amount of the Existing Swing Line Loan requested
by the Borrower to be made on such day. The Commitment of the Swing
Line Lender described in this clause (i)(b) is herein referred to as
its "EXISTING SWING LINE LOAN COMMITMENT".
Each of the parties hereto acknowledges and agrees that the Existing Revolving
Loans and Existing Swing Line Loans shall continue as Revolving Loans and Swing
Line Loans for all purposes of this Agreement and the other Loan Documents.
(ii) Subject to compliance by the Borrower with the terms of SECTION
2.1.4, 5.1 and 5.2, the Revolving Loans and Swing Line Loans will be made as set
forth below:
(a) From time to time on any Business Day occurring
concurrently with (or after) the making of the Additional Term Loans
but prior to the Revolving Loan Commitment Termination Date, each
Lender that has a Percentage of the Revolving Loan Commitment in excess
of zero will make loans (relative to such Lender, its "REVOLVING
LOANS") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing or Borrowings of Revolving Loans
requested by the Borrower to be made on such day. The Commitment of
each Lender described in this clause (ii)(a) is herein referred to as
its "REVOLVING LOAN COMMITMENT". On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay
and reborrow Revolving Loans.
(b) From time to time on any Business Day occurring
concurrently with (or after) the making of the Additional Term Loans
but prior to the Revolving Loan Commitment Termination Date, the Swing
Line Lender will make a loan (a "SWING LINE LOAN") to the Borrower
equal to the principal amount of the Swing Line Loan requested by the
Borrower to be made on such day. The Commitment of the Swing Line
Lender described in this clause (ii)(b) is herein referred to as its
"SWING LING LOAN COMMITMENT". On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay
and reborrow Swing Line Loans.
SECTION 2.1.3. LETTER OF CREDIT COMMITMENT. Each of the parties hereto
acknowledges and agrees that all Letters of Credit issued and outstanding on the
Restatement Effective Date (each referred to as an "EXISTING LETTER OF CREDIT")
shall continue as Letters of Credit for all purposes under this Agreement and
the other Loan Documents. In addition, subject to compliance by the Borrower
with the terms of SECTIONS 2.1.5, 5.1 and 5.2, from time to time on any
Business Day occurring concurrently with (or after) the Restatement Effective
Date but prior to the Revolving Loan Commitment Termination Date, the Issuer
will (a) issue one or more standby or commercial letters of credit (each
referred to as a "LETTER OF CREDIT") for the account of the Borrower in the
Stated Amount requested by the Borrower on such day, or (b) extend the Stated
Expiry Date of an existing standby or commercial Letter of Credit previously
issued
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hereunder to a date not later than the earlier of (x) the sixth anniversary of
the Restatement Effective Date and (y) one year from the date of such extension,
subject to the proviso in the penultimate sentence of Section 2.6.
SECTION 2.1.4. LENDERS NOT REQUIRED TO MAKE THE LOANS. No Lender shall
be required to, and the Borrower shall not request any Lender to, make
(a) any Additional Term-A Loan or Additional Term-B Loan (as
the case may be) if, after giving effect thereto, the aggregate
original principal amount of all the Additional Term-A Loans or
Additional Term-B Loans (as the case may be) of such Lender would
exceed such Lender's Percentage of the Additional Term-A Loan
Commitment Amount (in the case of Additional Term-A Loans) or the
Additional Term-B Loan Commitment Amount (in the case of Additional
Term-B Loans);
(b) any Revolving Loan if, after giving effect thereto, the
aggregate outstanding principal amount of all the Revolving Loans of
such Lender, together with such Lender's Percentage of the aggregate
amount of all Letter of Credit Outstandings, and such Lender's
Percentage of the outstanding principal amount of all Swing Line Loans,
would exceed such Lender's Percentage of the lesser of (x) the
Revolving Loan Commitment Amount and (y) the then applicable Borrowing
Base Amount; or
(c) any Swing Line Loan if, after giving effect thereto, the
aggregate outstanding principal amount of all Swing Line Loans would
exceed the Swing Line Loan Commitment Amount.
SECTION 2.1.5. ISSUER NOT REQUIRED TO ISSUE LETTERS OF CREDIT. No
Issuer shall be required to issue any Letter of Credit if, after giving effect
thereto, (a) the aggregate amount of all Letter of Credit Outstandings would
exceed the Letter of Credit Commitment Amount or (b) the sum of the aggregate
amount of all Letter of Credit Outstandings plus the aggregate principal amount
of all Revolving Loans and Swing Line Loans then outstanding would exceed the
lesser of (x) the Revolving Loan Commitment Amount and (y) the then applicable
Borrowing Base Amount.
SECTION 2.1.6. ASSIGNMENT AND REALLOCATION OF EXISTING COMMITMENTS AND
EXISTING LOANS. Each of the parties hereto severally and for itself agrees to
the assignment and reallocation of Existing Commitments and Existing Loans as
set forth below.
(a) Upon the occurrence of the Restatement Effective Date,
(i) each of the Existing Lenders shall sell and
assign to the Administrative Agent (and the Administrative
Agent shall purchase) the portion (if any) of such Existing
Lender's Existing Loans and Existing Commitments, including
participating interests in Existing Swing Line Loans and
Letter of Credit Outstandings under (and as defined in) the
Credit Agreement (referred to as "EXISTING LETTER OF CREDIT
OUTSTANDINGS") which is
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in excess of the amount of such Existing Lender's outstanding
Loans and Commitments (including, in the case of Revolving
Loan Lenders, participating interests in Swing Line Loans and
Letter of Credit Outstandings) respectively, under this
Agreement after giving effect to the effectiveness hereof and
immediately before the making of any Loans hereunder pursuant
to SECTIONS 2.1.1, 2.1.2 or 2.1.3;
(ii) each of the Existing Lenders that will continue
to have Loans and Commitments under this Agreement shall be
deemed to have converted that portion (if any) of its Existing
Loans (and, in the case of Revolving Loan Lenders,
participating interests in Existing Swing Line Loans and
Existing Letter of Credit Outstandings) which were not sold
and assigned pursuant to clause (a)(i) into its outstanding
Loans of a corresponding tranche and corresponding Commitment
under this Agreement; and
(iii) the Administrative Agent shall (A) purchase and
assume that portion of the Existing Loans and Existing
Commitments (including participating interests in Existing
Swing Line Loans and Existing Letter of Credit Outstandings)
of each Existing Lender which are being assigned and sold
pursuant to clause (a)(i) above, and (B) reallocate, sell and
assign such portions to the Lenders that will continue to have
Loans and Commitments under this Agreement, and such Lenders
shall purchase and assume that portion of the Existing Loans
and Existing Commitments (including, in the case of Revolving
Loan Lenders, participating interests in Existing Swing Line
Loans and Existing Letter of Credit Outstandings) of the
Administrative Agent which are being assigned and sold
pursuant to this clause (a)(iii) in such a manner and in such
amounts so as to cause such Lender's outstanding Loans (and,
in the case of Revolving Loan Lenders, Revolving Loan
Commitment, including participating interest in Swing Line
Loans and Letter of Credit Outstandings), when taken together
with such Lender's Loans and Commitments retained in
accordance with clause (a)(ii), to be in each case as set
forth on Schedule II hereto.
(b) Each Existing Lender hereby represents and warrants to
each Lender that, immediately before giving effect to the effectiveness
of this Agreement,
(i) it is the legal and beneficial owner of its
Existing Commitments and its Existing Loans; and
(ii) to the extent that such Existing Lender is
making a sale and assignment pursuant to clause (a)(i) above,
the rights and interests being assigned and sold are free and
clear of any adverse claim or encumbrance created by it (other
than any encumbrance to be released automatically upon receipt
of payment in respect of such sale and assignment), and
without recourse or representation or warranty of any kind
whatsoever except for the representations and warranties set
forth in this clause.
(c) the Administrative Agent hereby represents and warrants to
each Lender that immediately before giving effect to the effectiveness
of clause (a)(iii), to the extent that the
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Administrative Agent is making a sale and assignment pursuant to such
clause, the rights and interests being assigned and sold are free and
clear of any adverse claim or encumbrance created by it (other than any
encumbrance to be released automatically upon receipt of payment in
respect of such sale and assignment), and without recourse or
representation or warranty of any kind whatsoever other than for the
representations and warranties set forth in this clause.
(d) Each of the Lenders acknowledges and agrees that:
(i) other than the representations and warranties
contained in clauses (b) and (c), none of the Existing
Lenders, the Administrative Agent or the other Agents have
made representations or warranties or assumed any
responsibility with respect to
(A) any statements, warranties or
representations made in or in connection with this
Agreement or the execution, legality, validity,
enforceability, genuineness or sufficiency of this
Agreement, the Credit Agreement, or any other Loan
Document, or
(B) the financial condition of the Borrower
or any other Obligor or the performance by the
Borrower or any other Obligor of the Obligations;
(ii) it has reviewed the financial information of the
Borrower, this Agreement, the other Loan Documents (the terms
and provisions of which being satisfactory to such Lender) and
such other documents, information and investigations as such
Lender has deemed appropriate to make its own credit analysis
and decision to enter into this Agreement; and
(iii) it has made and continues to make its own
credit decisions in taking or not taking action under this
Agreement or any other Loan Document, independently and
without reliance upon the Administrative Agent, the other
Agents, any Lender or any Existing Lender.
(e) Each of the parties hereto agrees that each Existing
Lender which is making a sale and assignment pursuant to this Section
shall, as of the Restatement Effective Date, relinquish its rights and
be discharged and released from its obligations under this Agreement
and the Credit Agreement to the extent of the rights and interests so
sold and assigned.
(f) Concurrently with the occurrence of the Restatement
Effective Date,
(i) each Lender which is purchasing any portion of
the Existing Loans and/or Existing Commitments (including, in
the case of Revolving Loan Lenders, participating interests in
Existing Letter of Credit Outstandings and Existing Swing Line
Loans), pursuant to clause (a)(iii) shall deliver to the
Administrative Agent immediately available funds in the full
amount of the purchase made by it; and
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(ii) the Administrative Agent shall, to the extent of
the funds so received, disburse such funds to the Existing
Lenders which are making sales and assignments pursuant to
clause (a)(i) in the amount of the portions so sold and
assigned.
(g) The Administrative Agent hereby agrees that it will waive
the processing fee pursuant to SECTION 10.11.1 in connection with this
SECTION 2.1.6.
SECTION 2.2. REDUCTION OF THE COMMITMENT AMOUNTS. The Commitment
Amounts are subject to reductions from time to time pursuant to this
SECTION 2.2.
SECTION 2.2.1. OPTIONAL. The Borrower may, from time to time on any
Business Day occurring after the time of the initial Credit Extension hereunder,
voluntarily reduce the Revolving Loan Commitment Amount; provided, however, that
all such reductions shall require at least three Business Days' prior notice to
the Administrative Agent and be permanent, and any partial reduction of the
Revolving Loan Commitment Amount shall be in an aggregate amount of $500,000 or
any larger integral multiple of $50,000. Any such reduction of the Revolving
Loan Commitment Amount which reduces the Revolving Loan Commitment Amount below
the Letter of Credit Commitment Amount or the Swing Line Loan Commitment Amount
shall result in an automatic and corresponding reduction of the Letter of Credit
Commitment Amount or the Swing Line Loan Commitment Amount, as the case may be,
to an aggregate amount not in excess of the Revolving Loan Commitment Amount, as
so reduced, without any further action on the part of the Issuer or the Swing
Line Lender.
SECTION 2.3. BORROWING PROCEDURES AND FUNDING MAINTENANCE. Loans (other
than Swing Line Loans) shall be made by the Lenders in accordance with SECTION
2.3.1, and Swing Line Loans shall be made by the Swing Line Lender in accordance
with SECTION 2.3.2.
SECTION 2.3.1. ADDITIONAL TERM LOANS AND REVOLVING LOANS. By delivering
a Borrowing Request to the Administrative Agent on or before 12:00 noon, New
York time, on a Business Day, the Borrower may from time to time irrevocably
request, on not less than one Business Day's notice (in the case of Base Rate
Loans) or three Business Days' notice (in the case of LIBO Rate Loans) nor more
than five Business Days' notice (in the case of any Loans), that a Borrowing be
made in an aggregate amount of $250,000 or any larger integral multiple of
$50,000 or in the unused amount of the applicable Commitment. No Borrowing
Request shall be required, and the minimum aggregate amounts specified under
this Section 2.3.1 shall not apply, in the case of Revolving Loans made under
clause (b) of SECTION 2.3.2 to refund Refunded Swing Line Loans or deemed made
under SECTION 2.6.2 in respect of unreimbursed Disbursements. On the terms and
subject to the conditions of this Agreement, each Borrowing shall be comprised
of the type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. On or before 12:00 noon, New York time, on such Business Day
each Lender shall deposit with the Administrative Agent same day funds in an
amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Administrative Agent shall specify
from time to time by notice to the Lenders. To the extent funds are received
from
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the Lenders, the Administrative Agent shall make such funds available to the
Borrower by wire transfer to the accounts the Borrower shall have specified in
its Borrowing Request. No Lender's obligation to make any Loan shall be affected
by any other Lender's failure to make any Loan.
SECTION 2.3.2. SWING LINE LOANS. (a) By telephonic notice, promptly
followed (within one Business Day) by the delivery of a confirming Borrowing
Request, to the Swing Line Lender on or before 1:00 p.m., New York City time, on
the Business Day the proposed Swing Line Loan is to be made, the Borrower may
from time to time irrevocably request that a Swing Line Loan be made by the
Swing Line Lender in a minimum principal amount of $50,000 or any larger
integral multiple of $10,000. All Swing Line Loans shall be made as Base Rate
Loans and shall not be entitled to be converted into LIBO Rate Loans. The
proceeds of each Swing Line Loan shall be made available by the Swing Line
Lender, by 2:00 p.m., New York City time, on the Business Day telephonic notice
is received by it as provided in this clause (a), to the Borrower by wire
transfer to the account the Borrower shall have specified in its notice
therefor.
(b) If (i) any Swing Line Loan shall be outstanding for more than four
Business Days or (ii) any Default shall occur and be continuing, each Lender
with a Revolving Loan Commitment (other than the Swing Line Lender) irrevocably
agrees that it will, at the request of the Swing Line Lender and upon notice
from the Administrative Agent, unless such Swing Line Loan shall have been
earlier repaid, make a Revolving Loan (which shall initially be funded as a Base
Rate Loan) in an amount equal to such Lender's Percentage of the aggregate
principal amount of all such Swing Line Loans then outstanding (such outstanding
Swing Line Loans hereinafter referred to as the "REFUNDED SWING LINE LOANS");
provided, that the Swing Line Lender shall not request, and no Lender with a
Revolving Loan Commitment shall make, any Refunded Swing Line Loan if, after
giving effect to the making of such Refunded Swing Line Loan, the sum of all
Swing Line Loans and Revolving Loans made by such Lender, plus such Lender's
Percentage of the aggregate amount of all Letter of Credit Outstandings, would
exceed such Lender's Percentage of the then existing Revolving Loan Commitment
Amount. On or before 12:00 noon (New York time) on the first Business Day
following receipt by each Lender of a request to make Revolving Loans as
provided in the preceding sentence, each such Lender with a Revolving Loan
Commitment shall deposit in an account specified by the Swing Line Lender the
amount so requested in same day funds and such funds shall be applied by the
Swing Line Lender to repay the Refunded Swing Line Loans. At the time the
aforementioned Lenders make the above referenced Revolving Loans, the Swing Line
Lender shall be deemed to have made, in consideration of the making of the
Refunded Swing Line Loans, a Revolving Loan in an amount equal to the Swing Line
Lender's Percentage of the aggregate principal amount of the Refunded Swing Line
Loans. Upon the making (or deemed making, in the case of the Swing Line Lender)
of any Revolving Loans pursuant to this clause (b), the amount so funded shall
become outstanding under such Lender's Revolving Note and shall no longer be
owed under the Swing Line Note. All interest payable with respect to any
Revolving Loans made (or deemed made, in the case of the Swing Line Lender)
pursuant to this clause (b) shall be appropriately adjusted to reflect the
period of time during which the Swing Line Lender had outstanding Swing Line
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Loans in respect of which such Revolving Loans were made. Each Lender's
obligation (in the case of Lenders with a Revolving Loan Commitment) to make the
Revolving Loans referred to in this clause (b) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the Borrower or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of
any Default; (iii) any adverse change in the condition (financial or otherwise)
of the Borrower; (iv) the acceleration or maturity of any Loans or the
termination of any Commitment after the making of any Swing Line Loan; (v) any
breach of this Agreement or any other Loan Document by the Borrower or any
Lender; or (vi) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing.
(c) In the event that the Borrower or any other Obligor is subject to
any bankruptcy or insolvency proceedings as provided in SECTION 8.1.9, or if for
any other reason Revolving Loans cannot be made or are unavailable, each Lender
with a Revolving Loan Commitment shall acquire without recourse or warranty an
undivided participation interest equal to such Lender's Percentage of any Swing
Line Loan otherwise required to be repaid by such Lender pursuant to the
preceding clause by paying to the Swing Line Lender on the date on which such
Lender would otherwise have been required to make a Revolving Loan in respect of
such Swing Line Loan pursuant to the preceding clause, in same day funds, an
amount equal to such Lender's Percentage of such Swing Line Loan, and no
Revolving Loans shall be made by such Lender pursuant to the preceding clause.
From and after the date on which any Lender purchases an undivided participation
interest in a Swing Line Loan pursuant to this clause, the Swing Line Lender
shall distribute to such Lender (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender's participation
interest is outstanding and funded) its ratable amount of all payments of
principal and interest in respect of such Swing Line Loan in like funds as
received; provided however, that in the event such payment received by the Swing
Line Lender is required to be returned to the Borrower, such Lender shall return
to the Swing Line Lender the portion of any amounts which such Lender had
received from the Swing Line Lender in like funds.
SECTION 2.4. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 12:00
noon, New York time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than one Business Day's notice (in the case of a
conversion of LIBO Rate Loans to Base Rate Loans) or three Business Days' notice
(in the case of a continuation of LIBO Rate Loans or a conversion of Base Rate
Loans into LIBO Rate Loans) nor more than five Business Days' notice (in the
case of any Loans) that all, or any portion in a minimum amount of $250,000 or
any larger integral multiple of $50,000, be, in the case of Base Rate Loans,
converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, converted
into Base Rate Loans or continued as LIBO Rate Loans (in the absence of delivery
of a Continuation/Conversion Notice with respect to any LIBO Rate Loan at least
three Business Days before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided, however, that (x) each such conversion
or continuation
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shall be pro rated among the applicable outstanding Loans of the relevant
Lenders, and (y) no portion of the outstanding principal amount of any Loans may
be continued as, or be converted into, LIBO Rate Loans when any Default has
occurred and is continuing.
SECTION 2.5. FUNDING. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan, so long as such
action does not result in increased costs to the Borrower; provided, however,
that such LIBO Rate Loan shall nonetheless be deemed to have been made and to be
held by such Lender, and the obligation of the Borrower to repay such LIBO Rate
Loan shall nevertheless be to such Lender for the account of such foreign
branch, Affiliate or international banking facility; and provided, further,
however, that, except for purposes of determining whether any such increased
costs are payable by the Borrower, such Lender shall cause such foreign branch,
Affiliate or international banking facility to comply with the applicable
provisions of clause (b) of SECTION 4.6 with respect to such LIBO Rate Loan. In
addition, the Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of SECTION 4.1, 4.2, 4.3 or 4.4, it shall
be conclusively assumed that each Lender elected to fund all LIBO Rate Loans by
purchasing Dollar deposits in its LIBOR Office's interbank Eurodollar market.
SECTION 2.6. ISSUANCE PROCEDURES. By delivering to the Administrative
Agent an Issuance Request on or before 12:00 noon, New York time, on a Business
Day, the Borrower may, from time to time irrevocably request, on not less than
three nor more than ten Business Days' notice (or such shorter or longer notice
as may be acceptable to the Issuer), in the case of an initial issuance of a
Letter of Credit, and not less than three nor more than ten Business Days'
notice (unless a shorter or longer notice period is acceptable to the Issuer)
prior to the then existing Stated Expiry Date of a Letter of Credit, in the case
of a request for the extension of the Stated Expiry Date of a Letter of Credit,
that the Issuer issue, or extend the Stated Expiry Date of, as the case may be,
an irrevocable Letter of Credit on behalf of the Borrower (whether issued for
the account of or on behalf of the Borrower or any of its Subsidiaries) in such
form as maybe requested by the Borrower and approved by the Issuer, for the
purposes described in SECTION 7.1.9. Notwithstanding anything to the contrary
contained herein or in any separate application for any Letter of Credit, the
Borrower hereby acknowledges and agrees that it shall be obligated to reimburse
the Issuer upon each Disbursement paid under a Letter of Credit, and it shall be
deemed to be the obligor for purposes of each such Letter of Credit issued
hereunder (whether the account party on such Letter of Credit is the Borrower or
a Subsidiary of the Borrower). Upon receipt of an Issuance Request, the
Administrative Agent shall promptly notify the Issuer and each Lender thereof.
Each Letter of Credit shall by its terms be stated to expire on a date (its
"STATED EXPIRE Date") no later than the earlier to occur of (i) the sixth
anniversary of the Restatement Effective Date or (ii) one year from the date of
its issuance; provided, notwithstanding the terms of clause (i) above, that a
Letter of Credit may, if required by the beneficiary thereof, contain
"evergreen" provisions pursuant to which the Stated Expiry Date shall be
automatically extended, unless notice to the contrary shall have been given to
the beneficiary by the Issuer or the account party more than a specified period
prior to the then
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existing Stated Expiry Date. The Issuer will make available to the beneficiary
thereof the original of each Letter of Credit which it issues hereunder.
SECTION 2.6.1. OTHER LENDERS' PARTICIPATION. Upon the issuance of each
Letter of Credit issued by the Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) that has a Revolving Loan Commitment
shall be deemed to have irrevocably purchased from the Issuer, to the extent of
its Percentage in respect of Revolving Loans, and the Issuer shall be deemed to
have irrevocably granted and sold to such Lender a participation interest in
such Letter of Credit (including the Contingent Liability and any Reimbursement
Obligation and all rights with respect thereto), and such Lender shall, to the
extent of its Percentage in respect of Revolving Loans, be responsible for
reimbursing promptly (and in any event within one Business Day) the Issuer for
Reimbursement Obligations which have not been reimbursed by the Borrower in
accordance with SECTION 2.6.3. In addition, such Lender shall, to the extent of
its Percentage in respect of Revolving Loans, be entitled to receive a ratable
portion of the Letter of Credit fees payable pursuant to SECTION 3.3.3 with
respect to each Letter of Credit and of interest payable pursuant to SECTION
2.6.2 with respect to any Reimbursement Obligation. To the extent that any
Lender has reimbursed the Issuer for a Disbursement as required by this Section,
such Lender shall be entitled to receive its ratable portion of any amounts
subsequently received (from the Borrower or otherwise) in respect of such
Disbursement.
SECTION 2.6.2. DISBURSEMENTS; CONVERSION TO REVOLVING LOANS. The Issuer
will notify the Borrower and the Administrative Agent promptly of the
presentment for payment of any drawing under any Letter of Credit issued by the
Issuer, together with notice of the date (the "DISBURSEMENT DATE") such payment
shall be made (each such payment, a "DISBURSEMENT"). Subject to the terms and
provisions of such Letter of Credit and this Agreement, the Issuer shall make
such payment to the beneficiary (or its designee) of such Letter of Credit.
Prior to 12:30 p.m., New York time, on the first Business Day following the
Disbursement Date (the "DISBURSEMENT DUE DATE"), the Borrower will reimburse the
Administrative Agent, for the account of the Issuer, for all amounts which the
Issuer has disbursed under such Letter of Credit, together with interest thereon
at the rate per annum otherwise applicable to Revolving Loans (made as Base Rate
Loans) from and including the Disbursement Date to but excluding the
Disbursement Due Date and, thereafter (unless such Disbursement is converted
into a Base Rate Loan on the Disbursement Due Date), at a rate per annum equal
to the rate per annum then in effect with respect to overdue Revolving Loans
(made as Base Rate Loans) pursuant to SECTION 3.2.2 for the period from the
Disbursement Due Date through the date of such reimbursement; provided, however,
that, if no Default shall have then occurred and be continuing, unless the
Borrower has notified the Administrative Agent no later than one Business Day
prior to the Disbursement Due Date that it will reimburse the Issuer for the
applicable Disbursement, then the amount of the Disbursement shall be deemed to
be a Borrowing of Revolving Loans constituting Base Rate Loans and following the
giving of notice thereof by the Administrative Agent to the Lenders, each Lender
with a Revolving Loan Commitment (other than the Issuer) will deliver to the
Issuer on the Disbursement Due Date immediately available funds in an amount
equal to such Lender's Percentage of such Borrowing. Each conversion of
Disbursement amounts into Revolving Loans shall constitute a representation and
warranty by
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the Borrower that on the date of the making of such Revolving Loans all of the
statements set forth in SECTION 5.2.1 are true and correct.
SECTION 2.6.3. REIMBURSEMENT. The obligation (a "REIMBURSEMENT
OBLIGATION") of the Borrower under SECTION 2.6.2 to reimburse the Issuer with
respect to each Disbursement (including interest thereon) not converted into a
Base Rate Loan pursuant to SECTION 2.6.2, and, upon the Borrower failing or
electing not to reimburse the Issuer and the giving of notice thereof by the
Administrative Agent to the Lenders, each Lender's (to the extent it has a
Revolving Loan Commitment) obligation under SECTION 2.6.1 to reimburse the
Issuer or fund its Percentage of any Disbursement converted into a Base Rate
Loan, shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower or such Lender, as the case may be, may have or have had against the
Issuer or any such Lender, including any defense based upon the failure of any
Disbursement to conform to the terms of the applicable Letter of Credit (if, in
the Issuer's good faith opinion, such Disbursement is determined to be
appropriate) or any non-application or misapplication by the beneficiary of the
proceeds of such Letter of Credit; provided, however, that after paying in full
its Reimbursement Obligation hereunder, nothing herein shall adversely affect
the right of the Borrower or such Lender, as the case may be, to commence any
proceeding against the Issuer for any wrongful Disbursement made by the Issuer
under a Letter of Credit as a result of acts or omissions constituting gross
negligence or willful misconduct on the part of the Issuer.
SECTION 2.6.4. DEEMED DISBURSEMENTS. Upon the occurrence and during the
continuation of any Event of Default of the type described in clauses (b)
through (d) of SECTION 8.1.9 with respect to any Obligor (other than immaterial
Subsidiaries) or, with notice from the Administrative Agent acting at the
direction of the Required Lenders, upon the occurrence and during the
continuation of any other Event of Default,
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn
and available under all Letters of Credit issued and outstanding shall,
without demand upon or notice to the Borrower or any other Person, be
deemed to have been paid or disbursed by the Issuer under such Letters
of Credit (notwithstanding that such amount may not in fact have been
so paid or disbursed); and
(b) the Borrower shall be immediately obligated to reimburse
the Issuer for the amount deemed to have been so paid or disbursed by
the Issuer.
Any amounts so payable by the Borrower pursuant to this Section shall be
deposited in cash with the Administrative Agent and held as collateral security
for the Obligations in connection with the Letters of Credit issued by the
Issuer. At such time as the Events of Default giving rise to the deemed
disbursements hereunder shall have been cured or waived, the Administrative
Agent shall return to the Borrower all amounts then on deposit with the
Administrative Agent pursuant to this Section, together with accrued interest at
the Federal Funds Rate, which have not been applied to the satisfaction of such
Obligations.
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SECTION 2.6.5. NATURE OF REIMBURSEMENT OB1IGATIONS. The Borrower and,
to the extent set forth in SECTION 2.6.1 each Lender with a Revolving Loan
Commitment, shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Issuer (except to the extent of
its own gross negligence or willful misconduct) shall not be responsible for (i)
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
Letter of Credit or any document submitted by any party in connection with the
application for and issuance of a 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 form, validity, sufficiency, ' accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
the proceeds thereof in whole or in part, which may prove to be invalid or
ineffective for any reason, (iii) failure of the beneficiary to comply fully
with conditions required in order to demand payment under a Letter of Credit,
(iv) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, or (v) any loss or
delay in the transmission or otherwise of any document or draft required in
order to make a Disbursement under a Letter of Credit. None of the foregoing
shall affect, impair or prevent the vesting of any of the rights or powers
granted to the Issuer or any Lender with a Revolving Loan Commitment hereunder.
In furtherance and extension and not in limitation or derogation of any of the
foregoing, any action taken or omitted to be taken by the Issuer in good faith
(and not constituting gross negligence or willful misconduct) shall be binding
upon the Borrower, each Obligor and each such Lender, and shall not put the
Issuer under any resulting liability to the Borrower, any Obligor or any such
Lender, as the case may be.
SECTION 2.7. NOTES. Each Lender's Loans under a Commitment shall be
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage of the original applicable Commitment
Amount. The Borrower hereby irrevocably authorizes each Lender to make (or cause
to be made) appropriate notations on the grid attached to such Lender's Notes
(or on any continuation of such grid), which notations, if made, shall evidence,
INTER ALIA, the date of, the outstanding principal amount of, and the interest
rate and Interest Period applicable to the Loans evidenced thereby. Such
notations shall be conclusive and binding on the Borrower absent manifest error;
provided, however, that the failure of any Lender to make any such notations
shall not limit or otherwise affect any Obligations of the Borrower or any other
Obligor.
SECTION 2.8. REGISTERED NOTES. (a) Any Non-U.S. Lender that could
become completely exempt from withholding of any Taxes in respect of payment of
any interest due to such Non-U.S. Lender under this Agreement if the Notes held
by such Lender were in registered form for U.S. Federal income tax purposes may
request the Borrower (through the Administrative Agent), and the Borrower agrees
(i) to exchange for any Notes held by such Lender, or (ii) to issue to such
Lender on the date it becomes a Lender, promissory notes(s) registered as
provided in clause (b) of this SECTION 2.8 (each, a "REGISTERED NOTE", to be in
substantially the form of EXHIBIT A-4 hereto). Registered Notes may not be
exchanged for Notes that are not Registered Notes.
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(b) The Borrower shall maintain, or cause to be maintained, a register
(the "REGISTER") (which, at the request of the Borrower, shall be kept by the
Administrative Agent on behalf of the Borrower at no extra charge to the
Borrower at the address to which notices to the Administrative Agent are to be
sent under this Agreement) on which it enters the name of the registered owner
of the Non-U.S. Lender's Obligation(s) evidenced by a Registered Note.
(c) The Register shall be available for inspection by the Borrower and
any Lender at any reasonable time upon reasonable prior notice.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS; APPLICATION.
SECTION 3.1.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date
therefor. Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal
amount of any
(i) Loans (other than Swing Line Loans); provided,
however that
(A) any such prepayment of the Term-A Loans
or Term-B Loans shall be made PRO RATA among Term-A
Loans and Term-B Loans, as applicable, of the same
type and, if applicable, having the same Interest
Period of all Lenders that have made such Term-A
Loans or Term-B Loans, and any such prepayment of
Revolving Loans shall be made PRO RATA among the
Revolving Loans of the same type and, if applicable,
having the same Interest Period of all Lenders that
have made such Revolving Loans;
(B) the Borrower shall comply with SECTION
4.4 in the event that any LIBO Rate Loan is prepaid
on any day other than the last day of the Interest
Period for such Loan;
(C) all such voluntary prepayments shall
require at least one Business Day's notice in the
case of Base Rate Loans, three Business Days' notice
in the case of LIBO Rate Loans, but no more than five
Business Days' notice in the case of any Loans, in
each case in writing to the Administrative Agent; and
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(D) all such voluntary partial prepayments
shall be in an aggregate amount of $250,000 or any
larger integral multiple of $50,000 or in the
aggregate principal amount of all Loans of the
applicable Tranche and type then outstanding; or
(ii) Swing Line Loans, provided that
(A) all such voluntary prepayments shall
require prior telephonic notice to the Swing Line
Lender on or before 1:00 p.m., New York City time, on
the day of such prepayment (such notice to be
confirmed in writing by the Borrower within 24 hours
thereafter); and
(B) all such voluntary partial prepayments
shall be in an aggregate amount of $50,000 and
integral multiples of $10,000 or in the aggregate
principal amount of all Swing Line Loans then
outstanding;
(b) shall, on each date when any reduction in the then
applicable Borrowing Base Amount shall become effective, make a
mandatory prepayment of Revolving Loans or Swing Line Loans (or both)
and (if necessary) deposit with the Administrative Agent cash
collateral for Letter of Credit Outstandings, in an aggregate amount
equal to the excess, if any, of the sum of (i) the aggregate
outstanding principal amount of all Revolving Loans and Swing Line
Loans and (ii) the aggregate amount of all Letter of Credit
Outstandings over the then applicable Borrowing Base Amount;
(c) shall, no later than five Business Days following the
delivery by the Borrower of its annual audited financial reports
required pursuant to clause (b) of SECTION 7.1.1 (commencing January 1,
1999), deliver to the Administrative Agent a calculation of the Excess
Cash Flow for the Fiscal Year last ended and, no later than five
Business Days following the delivery of such calculation, make a
mandatory prepayment of the Term Loans in an amount equal to (i) 50% of
the Excess Cash Flow (if any) for such Fiscal Year LESS (ii) the
aggregate amount of voluntary prepayments of the principal of Term
Loans actually made in such Fiscal Year pursuant to clause (a) of
SECTION 3.1.1, to be applied as set forth in SECTION 3.1.2; provided,
however, that no such prepayment shall be required to be made to the
extent that the amount of Debt as reduced by giving effect to such
prepayment would result in a Leverage Ratio of less than 3.50:1 on a
pro forma basis as of the end of the immediately preceding Fiscal
Quarter;
(d) shall, not later than 30 days following the receipt of any
Net Disposition Proceeds or not later than one Business Day following
the receipt of any Net Debt Proceeds by the Borrower or any of its
Subsidiaries, deliver to the Administrative Agent a calculation of the
amount of such Net Disposition Proceeds or Net Debt Proceeds, as the
case may be, and, subject to the following proviso, to the extent the
amount of such Net Disposition Proceeds or Net Debt Proceeds, as the
case may be, exceeds $500,000 (in the aggregate), make a mandatory
prepayment of the Term Loans in an amount equal to
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100% of such Net Disposition Proceeds or Net Debt Proceeds, as the case
may be, to be applied as set forth in SECTION 3.1.2; provided that no
mandatory prepayment on account of such Net Disposition Proceeds shall
be required under this clause if the Borrower informs the Agents no
later than 30 days following the receipt of any Net Disposition
Proceeds of its or its Subsidiary's good faith intention to apply such
Net Disposition Proceeds to the acquisition of other assets or property
consistent with its permitted businesses (including by way of merger or
investment) within 365 days following the receipt of such Net
Disposition Proceeds, with the amount of such Net Disposition Proceeds
unused after such 365 day period being applied to the Loans pursuant to
SECTION 3.1.2, except that if any Net Disposition Proceeds with respect
to any sale, transfer or other disposition would exceed $10,000,000,
whether in a single transaction or a series of related transactions,
then only $10,000,000 may be applied to the acquisition of such assets
or property and the amount of such Net Disposition Proceeds in excess
of $10,000,000 shall be applied as set forth in SECTION 3.1.2;
provided, further, however that at any time when an Event of Default
shall have occurred and be continuing, such Net Disposition Proceeds
will be deposited in an account maintained with the Administrative
Agent for disbursement at the request of the Borrower to pay for such
acquisition;
(e) shall, concurrently with the receipt of any Net Equity
Proceeds by the Borrower or any of its Subsidiaries, deliver to the
Administrative Agent a calculation of the amount of such Net Equity
Proceeds, and no later than five Business Days following the delivery
of such calculation, and, to the extent that the amount of such Net
Equity Proceeds exceeds $500,000 (in the aggregate), make a mandatory
prepayment of the Term Loans in an amount equal to 50% of such Net
Equity Proceeds to be applied as set forth in SECTION 3.1.2; provided,
however, that no such prepayment shall be required to be made to the
extent that the amount of Debt as reduced by giving effect to such
prepayment would result in a Leverage Ratio of less than 3.50:1 on a
pro forma basis as of the end of the immediately preceding Fiscal
Quarter;
(f) shall, concurrently with the receipt of any Casualty
Proceeds by the Borrower or any of its Subsidiaries in excess of
$500,000 (individually or in the aggregate over the course of a Fiscal
Year), deposit such Casualty Proceeds in an account maintained with the
Administrative Agent and within 60 days following the receipt by the
Borrower or any of its Subsidiaries of such Casualty Proceeds, direct
the Administrative Agent to apply such Casualty Proceeds to prepay the
Term Loans in an amount equal to 100% of such Casualty Proceeds, to be
applied as set forth in SECTION 3.1.2; provided, that no mandatory
prepayment on account of Casualty Proceeds shall be required under this
clause if the Borrower informs the Agents no later than 60 days
following the occurrence of the Casualty Event resulting in such
Casualty Proceeds of its or its Subsidiary's good faith intention to
apply such Casualty Proceeds to the rebuilding or replacement of the
damaged, destroyed or condemned assets or property and in fact uses
such Casualty Proceeds to rebuild or replace the damaged, destroyed or
condemned assets or property within 365 days following the receipt of
such Casualty Proceeds, with the amount of such
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Casualty Proceeds unused after such 365 day period being applied to the
Loans pursuant to SECTION 3.1.2;
(g) shall, on each date when any reduction in the Revolving
Loan Commitment Amount shall become effective, including pursuant to
SECTION 3.1.2, make a mandatory prepayment of Revolving Loans and (if
necessary) deposit with the Administrative Agent cash collateral for
Letter of Credit Outstandings in an aggregate amount equal to the
excess, if any, of the sum of (i) the aggregate outstanding principal
amount of all Revolving Loans and Swing Line Loans and (ii) the
aggregate amount of all Letter of Credit Outstandings over the
Revolving Loan Commitment Amount as so reduced;
(h) shall, on the Stated Maturity Date and on each Quarterly
Payment Date, commencing December 31, 1999, occurring during any period
set forth below, make a scheduled repayment of the outstanding
principal amount, if any, of Term-A Loans in an aggregate amount equal
to the amount set forth below opposite such Stated Maturity Date or
period, as applicable (in each case as such amounts may have otherwise
been reduced pursuant to this Agreement):
SCHEDULED
PERIOD REPAYMENT PRINCIPAL
10/l/98 to 9/30/99 $625,000
10/1/99 to 9/30/00 $1,250,000
10/1/00 to 9/30/01 $1,875,000
10/1/01 to 9/30/02 $1,875,000
10/1/02 to 9/30/03 $3,125,000
10/1/03 to 6/30/04 $3,750,000
Term-A Stated Maturity
Date $3,750,000
(i) shall, on the Stated Maturity Date and on each Quarterly
Payment Date, commencing December 31, 1998, occurring during any period
set forth below, make a scheduled repayment of the outstanding
principal amount, if any, of Term-B Loans in an aggregate amount equal
to the amount set forth below opposite such Stated Maturity Date or
period, as applicable (in each case as such amounts may have otherwise
been reduced pursuant to this Agreement):
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SCHEDULED
PERIOD REPAYMENT PRINCIPAL
10/1/98 to 9/30/05 $150,000
10/1/05 to 6/30/06 $13,950,000
Term-B Stated
Maturity Date $13,950,000
(j) shall, immediately upon any acceleration of the Stated
Maturity Date of any Loans or Obligations pursuant to SECTION 8.2 or
SECTION 8.3 repay all outstanding Loans and other Obligations, unless,
pursuant to Section 8.3, only a portion of all Loans and other
Obligations are so accelerated (in which case the portion so
accelerated shall be so prepaid).
Each prepayment of any Loans made pursuant to this Section shall be
without premium or penalty, except as may be required by SECTION 4.4. No
prepayment of principal of any Revolving Loans or Swing Line Loans pursuant to
clause (a), (b) or (j) of this SECTION 3.1.1 shall cause a reduction in the
Revolving Loan Commitment Amount or the Swing Line Loan Commitment Amount, as
the case may be.
SECTION 3.1.2. APPLICATION.
(a) Subject to clause (b) below, each prepayment or repayment
of principal of the Loans of any Tranche shall be applied, to the
extent of such prepayment or repayment, first, to the principal amount
thereof being maintained as Base Rate Loans, and SECOND, to the
principal amount thereof being maintained as LIBO Rate Loans.
(b) Each prepayment of Term Loans made pursuant to clauses
(a), (c), (d), (e) and (f) of SECTION 3.1.1 shall be applied, (i) on a
PRO RATA basis, to the outstanding principal amount of all remaining
Term-A Loans and Term-B Loans and (ii) in respect of each Tranche of
Term Loans, in direct order of maturity of the remaining scheduled
quarterly amortization payments in respect thereof, until all such
Term-A Loans and Term-B Loans have been paid in full; provided,
however, that if the Borrower at any time elects in writing, in its
sole discretion, to permit any Lender that has Term-B Loans to decline
to have such Term-B Loans prepaid, then any Lender having Term-B Loans
outstanding may, by delivering a notice to the Agents at least one
Business Day prior to the date that such prepayment is to be made,
decline to have such Term-B Loans prepaid with the amounts set forth
above, in which case 50% of the amounts that would have been applied to
a prepayment of such Lender's Term-B Loans shall instead be applied to
a prepayment of the Term-A Loans (until paid in full), with the balance
being retained by the Borrower.
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SECTION 3.2 INTEREST PROVISIONS. Interest on the outstanding principal
amount of the Loans shall accrue and be payable in accordance with this SECTION
3.2.
SECTION 3.2.1. RATES. Each Base Rate Loan shall accrue interest on the
unpaid principal amount thereof for each day from and including the day upon
which such Loan was made or converted to a Base Rate Loan to but excluding the
date such Loan is repaid or converted to a LIBO Rate Loan at a rate per annum
equal to the sum of the Alternate Base Rate for such day plus the Applicable
Margin for such Loan on such day. Each Swing Line Loan shall accrue interest on
the unpaid principal amount thereof for each day from and including the day upon
which such Loan was made to but excluding the date such Loan is repaid at a rate
per annum equal to the sum of the then effective Alternate Base Rate PLUS the
Applicable Margin MINUS the Applicable Commitment Fee. Each LIBO Rate Loan shall
accrue interest on the unpaid principal amount thereof for each day during each
Interest Period applicable thereto at a rate per annum equal to the sum of the
LIBO Rate (Reserve Adjusted) for such Interest Period plus the Applicable Margin
for such Loan on such day. All LIBO Rate Loans shall bear interest from and
including the first day of the applicable Interest Period to (but not including)
the last day of such Interest Period at the interest rate determined as
applicable to such LIBO Rate Loan.
SECTION 3.2.2. POST-MATURITY RATES. After the date any principal amount
of any Loan shall have become due and payable (whether on the applicable Stated
Maturity Date, upon acceleration or otherwise), or any other monetary Obligation
(other than overdue Reimbursement Obligations which shall bear interest as
provided in SECTION 2.6.2) of the Borrower shall have become due and payable,
the Borrower shall pay, but only to the extent permitted by law, interest (after
as well as before judgment) on such amounts at a rate per annum equal to (a) in
the case of any overdue principal of Loans, overdue interest thereon, overdue
commitment fees or other overdue amounts in respect of Loans or other
obligations (or the related Commitments) under a particular Tranche, the rate
that would otherwise be applicable to Base Rate Loans under such Tranche
pursuant to SECTION 3.2.1 plus 2% and (b) in the case of other overdue monetary
Obligations, the rate that would otherwise be applicable to Revolving Loans that
were Base Rate Loans plus 2%.
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) in the case of a LIBO Rate Loan, on the date of any
payment or prepayment, in whole or in part, of principal outstanding on
such Loan, to the extent of the unpaid interest accrued through such
date on the principal so paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the Closing Date;
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(d) with respect to LIB0 Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, at intervals of three months after the first day of such
Interest Period);
(e) with respect to the principal amount of any Base Rate
Loans converted into LIBO Rate Loans on a day when interest would not
otherwise have been payable pursuant to clause (c), on the date of such
conversion; and
(f) an that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to SECTION 8.2 or SECTION 8.3,
immediately upon such acceleration.
Interest accrued on Loans, Reimbursement Obligations or other monetary
Obligations arising under this Agreement or any other Loan Document after the
date such amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.
SECTION 3.3. FEES. The Borrower agrees to pay the fees set forth in
this SECTION 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. COMMITMENT FEE. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender that has a Revolving Loan
Commitment, for each day during the period (including any portion thereof when
any of the Lenders' Revolving Loan Commitments are suspended by reason of the
Borrower's inability to satisfy any condition of ARTICLE V) commencing on the
Restatement Effective Date and continuing to but excluding the Revolving Loan
Commitment Termination Date, a commitment fee on such Lender's Percentage of the
unused portion, whether or not then available, of the Revolving Loan Commitment
Amount (net of Letter of Credit Outstandings) for such day at a rate per annum
equal to the Applicable Commitment Fee for such day. Such commitment fee shall
be payable by the Borrower in arrears on each Quarterly Payment Date, commencing
with the first such day following the Restatement Effective Date, and on the
Revolving Loan Commitment Termination Date. The making of Swing Line Loans shall
not constitute usage of the Revolving Loan Commitment with respect to the
calculation of commitment fees to be paid by the Borrower to the Lenders
pursuant to this SECTION 3.3. 1.
SECTION 3.3.2. ADMINISTRATIVE AGENT FEE. The Borrower agrees to pay an
administration fee to the Administrative Agent, for its own account, in the
amount and at the times set forth in the Administrative Agent's Fee Letter.
SECTION 3.3.3. LETTER OF CREDIT FEE. The Borrower agrees to pay to the
Administrative Agent, for the PRO RATA account of the Issuer and each other
Lender that has a Revolving Loan Commitment, a Letter of Credit fee for each day
on which there shall be any Letters of Credit outstanding in an amount equal to
(i) with respect to each standby Letter of Credit, a rate per annum equal to the
then Applicable Margin for Revolving Loans maintained as LIBO Rate Loans, minus
1/8 of 1% per annum, multiplied by the Stated Amount of each such Letter of
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Credit; and (ii) with respect to each documentary Letter of Credit, 1.25% per
annum MULTIPLIED BY the Stated Amount of each such Letter of Credit. The
Borrower further agrees to pay to the Issuer for its own account, for each day
on which there shall be any Letters of Credit outstanding, an issuance fee on
the aggregate undrawn amount of all Letters of Credit outstanding on such day at
a rate per annum equal to 1/4 of 1%. All such fees shall be payable quarterly
in arrears on each Quarterly Payment Date. The Borrower agrees to reimburse the
Issuer, on demand, for all usual and customary fees and out-of-pocket costs and
expenses incurred in connection with the issuance or maintenance of any Letter
of Credit issued by such Issuer.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO RATE LENDING UNLAWFUL. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law, in each case after the date upon
which such Lender shall have become a Lender hereunder, makes it unlawful, or
any central bank or other governmental authority asserts, after such date, that
it is unlawful, for such Lender to make, continue or maintain any Loan as, or to
convert any Loan into, a LIBO Rate Loan, the obligations of such Lender to make,
continue, maintain or convert any Loans as or to LIBO Rate Loans shall, upon
such determination, forthwith be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist (with the date of such notice being the "REINSTATEMENT DATE"), and (i) all
LIBO Rate Loans previously made by such Lender shall automatically convert into
Base Rate Loans at the end of the then current Interest Periods with respect
thereto or sooner, if required by such law or assertion and (ii) all Loans
thereafter made by such Lender and outstanding prior to the Reinstatement Date
shall be made as Base Rate Loans, with interest thereon being payable on the
same date that interest is payable with respect to the corresponding Borrowing
of LIBO Rate Loans made by Lenders not so affected.
SECTION 4.2. DEPOSITS UNAVAILABLE. If the Administrative Agent shall
have determined that (i) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Administrative Agent in its
relevant market, or (ii) by reason of circumstances affecting the Administrative
Agent's relevant market, adequate means do not exist for ascertaining the
interest rate applicable hereunder to LIBO Rate Loans, then, upon notice from
the Administrative Agent to the Borrower and the Lenders, the obligations of all
Lenders under SECTION 2.3 and SECTION 2.4 to make or continue any Loans as, or
to convert any Loans into, LIBO Rate Loans shall forthwith be suspended until
the Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
SECTION 4.3. INCREASED LIBO RATE LOAN COSTS, ETC. The Borrower agrees
to reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any
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sum receivable by such Lender in respect of, making, continuing or maintaining
(or of its obligation to make, continue or maintain) any Loans as, or of
converting (or of its obligation to convert) any Loans into, LIBO Rate Loans
(excluding any amounts, whether or not constituting Taxes, referred to in
SECTION 4.6) arising as a result of any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority that occurs after the date upon which such Lender became
a Lender hereunder. Such Lender shall promptly notify the Administrative Agent
and the Borrower in writing of the occurrence of any such event, such notice to
state, in reasonable detail, the reasons therefor and the additional amount
required fully to compensate such Lender for such increased cost or reduced
amount. Such additional amounts shall be payable by the Borrower directly to
such Lender within five days of its receipt of such notice, and such notice
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.4. FUNDING LOSSES. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan, but excluding any loss of margin, after the date of any such
conversion, repayment, prepayment or failure to borrow, continue or convert) as
a result of (i) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to SECTION 3.1 or
otherwise, (ii) any Loans not being borrowed as LIBO Rate Loans in accordance
with the Borrowing Request therefor, or (iii) any Loans not being continued as,
or converted into, LIBO Rate Loans in accordance with the Continuation/
Conversion Notice therefor, then, upon the written notice of such Lender to the
Borrower (with a copy to the Administrative Agent), the Borrower shall, within
five days of its receipt thereof, pay directly to such Lender such amount as
will (in the reasonable determination of such Lender) reimburse such Lender for
such loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrower.
SECTION 4.5. INCREASED CAPITAL COSTS. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority, in each case occurring after the applicable
Lender becomes a Lender hereunder, affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments, participation in Letters of Credit or the Loans
made by such Lender is reduced to a level below that which such Lender or such
controlling Person could have achieved but for the occurrence of any such
circumstance, then, in any such case upon notice from time to time by such
Lender to the Borrower, the Borrower shall
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immediately pay directly to such Leader additional amounts sufficient to
compensate such Lender or such controlling Person for such reduction in rate of
return. A statement of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower. In determining such
amount, such Lender may use any method of averaging and attribution that it (in
its sole and absolute discretion) shall deem applicable; provided that such
Lender may not impose materially greater costs on the Borrower than on other
similarly situated borrowers by virtue of any such averaging or attribution
method.
SECTION 4.6. TAXES. (a) All payments by the Borrower of principal of,
and interest on, the Loans and all other amounts payable hereunder (including
Reimbursement Obligations), fees and expenses) shall be made free and clear of
and without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding (i) any
income, excise, stamp or franchise taxes and other similar taxes, fees, duties,
withholdings or other charges imposed on either of the Agents as a result of a
present or former connection between the applicable lending office (or office
through which it performs any of its actions as Agent) of such Agent, and any
income, excise, stamp or franchise taxes and other similar taxes, fees, duties,
withholdings or other charges imposed on any Lender as a result of a present or
former connection between the applicable lending office of such Lender, in each
case, and the jurisdiction of the governmental authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or taken any
action to enforce, this Agreement and any Note) or (ii) any income, excise,
stamp or franchise taxes and other similar taxes, fees, duties, withholdings or
other charges to the extent that they are in effect and would apply as of the
date any Person becomes a Lender or Assignee Lender, or as of the date that any
Lender changes its applicable lending office, to the extent such taxes become
applicable as a result of such change (other than a change in an applicable
lending office made pursuant to SECTION 4.10 below) (such non-excluded items
being called "TAXES"). In the event that any withholding or deduction from any
payment to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrower will (i)
pay directly to the relevant taxing authority the full amount required to be so
withheld or deducted, (ii) promptly forward to the Administrative Agent an
official receipt or other documentation available to the Borrower and reasonably
satisfactory to the Administrative Agent evidencing such payment to such
authority, and (iii) pay to the Administrative Agent for the account of the
Lenders such additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such Lender
would have received had no such withholding or deduction been required,
provided, however, that the Borrower shall not be required to pay any such
additional amounts in respect of amounts payable to any Lender that is not
organized under the laws of the United States or a state thereof if such Lender
fails to comply with the requirements of clause (b) of SECTION 4.6.
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Moreover, if any Taxes am directly asserted against either of the
Agents or any Lender with respect to any payment received by such Agents or such
Lender hereunder, such Agents or such Lender may pay such Taxes and the Borrower
will promptly pay to such Person such additional amount (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by such Person (including any Taxes on such additional amount) shall
equal the amount of such Taxes paid by such Person; provided, however, that the
Borrower shall not be obligated to make payment to the Lenders or the Agents (as
the case may be) pursuant to this sentence in respect of penalties or interest
attributable to any Taxes, if written demand therefor has not been made by such
Lenders or the Agents within 60 days from the date on which such Lenders or the
Agents knew of the imposition of Taxes by the relevant taxing authority or for
any additional imposition which may arise from the failure of the Lenders or the
Agents to apply payments in accordance with the tax law after the Borrower has
made the payments required hereunder, provided, further, that the Borrower shall
not be required to pay any such additional amounts in respect of any amounts
payable to any Lender or the Agent (as the case may be) that is not organized
under the laws of the United States or a state thereof to the extent the related
Tax is imposed as a result of such Leader failing to comply with the
requirements of clause (b) of SECTION 4.6. After the Lenders or the Agents (as
the case may be) learn of the imposition of Taxes, such Lenders and the Agents
will act in good faith to notify the Borrower of its obligations hereunder as
soon as reasonably possible.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure.
(b) Each Non-U.S. Lender shall, (i) on or prior to the date of the
execution and delivery of this Agreement, in the case of each Lender listed on
the signature pages hereof, or, in the case of an Assignee Lender, on or prior
to the date it becomes a Lender, execute and deliver to the Borrower and the
Administrative Agent, two or more (as the Borrower or the Agents may reasonably
request) United States Internal Revenue Service Forms 4224 or Forms 1001 or,
solely if such Lender is claiming exemption from United States withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest", United States Internal Revenue Service Forms W-8 and a
certificate signed by a duly authorized officer of such Lender representing that
such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code, or such other forms or documents (or successor forms or documents),
appropriately completed, establishing that payments to such Lender are exempt
from withholding or deduction of Taxes; and (ii) deliver to the Borrower and the
Administrative Agent two further copies of any such form or documents on or
before the date that any such form or document expires or becomes obsolete and
after the occurrence of any event requiring a change in the most recent such
form or document previously delivered by it to the Borrower.
(c) If the Borrower determines in good faith that a reasonable basis
exists for contesting the imposition of a Tax with respect to a Lender or either
of the Agents, the relevant Lender or
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Agent, as the case may be, shall cooperate with the Borrower in challenging such
Tax at the Borrower's expense if requested by the Borrower (but in no event
shall any Agent or any Lender be obligated to engage in any litigation with any
taxing authority).
(d) If a Lender or an Agent shall receive a refund (including any
offset or credits from a taxing authority (as a result of any error in the
imposition of Taxes by such taxing authority) of any Taxes paid by the Borrower
pursuant to SUBSECTION 4.6(a) above), such Lender or the Agent (as the case may
be) shall promptly pay the Borrower the amount so received, with interest from
the taxing authority with respect to such refund.
(e) Each Lender and each Agent agrees, to the extent reasonable and
without material cost to it, to cooperate with the Borrower to minimize any
amounts payable by the Borrower under this SECTION 4.6.
SECTION 4.7. PAYMENTS, COMPUTATIONS ETC. Unless otherwise expressly
provided, all payments by or on behalf of the Borrower pursuant to this
Agreement, the Notes or any other Loan Document shall be made by the Borrower to
the Administrative Agent for the PRO RATA account of the Lenders, Agents or
Arranger, as applicable, entitled to receive such payment. All such payments
required to be made to the Administrative Agent shall be made, without setoff,
deduction or counterclaim, not later than 1:00 p.m., New York time, on the date
due, in same day or immediately available funds, to such account as the
Administrative Agent shall specify from time to time by notice to the Borrower.
Funds received after that time shall be deemed to have been received by the
Administrative Agent on the next succeeding Business Day. The Administrative
Agent shall promptly remit in same day funds to each Lender, Agent or Arranger,
as the case may be, its share, if any, of such payments received by the
Administrative Agent for the account of such Lender, Agent or Arranger, as the
case may be. All interest and fees shall be computed on the basis of the actual
number of days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 360 days (or, in the case of interest on a Base Rate Loan, 365 days
or, if appropriate, 366 days). Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall (except as
otherwise required by clause (i) of the definition of the term "INTEREST
PERIOD") be made on the next succeeding Business Day and such extension of time
shall be included in computing interest and fees, if any, in connection with
such payment.
SECTION 4.8. SHARING OF PAYMENTS. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan or Reimbursement Obligations
(other than pursuant to the terms of SECTIONS 4.3, 4.4 and 4.5) in excess of
its PRO RATA share of payments then or therewith obtained by all Lenders
entitled thereto, such Lender shall purchase from the other Lenders such
participation in the Credit Extensions made by them as shall be necessary to
cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of
the excess payment or other recovery is thereafter recovered from such
purchasing Lender the purchase shall be rescinded and each Lender which has
sold a participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent
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of such recovery together with an amount equal to such selling Lender's ratable
share (according to the proportion of (i) the amount of such selling Lender's
required repayment to the purchasing Lender in respect of such recovery, to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including pursuant
to SECTION 4.9) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 4.9. SETOFF. Each Lender shall, upon the occurrence of any
Event of Default described in clauses (b) through (d) of SECTION 8.1.9 with
respect to any Obligor (other than immaterial Subsidiaries) or, with the consent
of the Required Lenders, upon the occurrence of any other Event of Default, to
the fullest extent permitted by law, have the right to appropriate and apply to
the payment of the Obligations then due to it, and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with or otherwise held by such Lender;
provided, however, that any such appropriation and application shall be subject
to the provisions of SECTION 4.8. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender; provided, however, that the failure to give such notice shall
not affect the validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable law or otherwise) which such
Lender may have.
SECTION 4.10. MITIGATION. Each Lender agrees that if it makes any
demand for payment under Section 4.3, 4.4, 4.5, or 4.6, or if any adoption or
change of the type described in SECTION 4.1 shall occur with respect to it, it
will use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, as determined in its sole discretion) to designate a different lending
office if the making of such a designation would reduce or obviate the need for
the Borrower to make payments under SECTION 4.3, 4.4, 4.5, or 4.6, or would
eliminate or reduce the effect of any adoption or change described in Section
4.1.
SECTION 4.11. REPLACEMENT OF LENDERS. Each Lender hereby severally
agrees as set forth in this Section. If any Lender (a "SUBJECT LENDER") makes
demand upon the Borrower for (or if the Borrower is otherwise required to pay)
amounts pursuant to SECTION 4.3, 4.5 or 4.6, or gives notice pursuant to SECTION
4.1 requiring a conversion of such Subject Lender's LIBO Rate Loans to Base Rate
Loans or suspending such Lender's obligation to make Loans as, or to convert
Loans into, LIBO Rate Loans, the Borrower may, within 90 days of receipt by the
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Borrower of such demand or notice (or the occurrence of such other event causing
the Borrower to be required to pay such compensation), as the case may be, give
notice (a "REPLACEMENT NOTICE") in writing to the Agents and such Subject Lender
of its intention to replace such Subject Lender with a financial institution (a
"REPLACEMENT LENDER") designated in such Replacement Notice. If the Agents
shall, in the exercise of their reasonable discretion and within 30 days of
their receipt of such Replacement Notice, notify the Borrower and such Subject
Lender in writing that the designated financial institution is satisfactory to
the Agents (such consent not being required where the Replacement Lender is
already a Lender), then such Subject Lender shall, subject to the payment of any
amounts due pursuant to Section 4.4, assign, in accordance with SECTION 10.11.1
all of its Commitments, Loans, Notes and other rights and obligations under this
Agreement and all other Loan Documents (including, without limitation,
Reimbursement Obligations) to such designated financial institution; provided,
however that (i) such assignment shall be without recourse, representation or
warranty and shall be on terms and conditions reasonably satisfactory to such
Subject Lender and such designated financial institution and (ii) the purchase
price paid by such designated financial institution shall be in the amount of
such Subject Lender's Loans and its Percentage of outstanding Reimbursement
Obligations, together with all accrued and unpaid interest and fees in respect
thereof, plus all other amounts (including the amounts demanded and unreimbursed
under SECTIONS 4.3, 4.5 and 4.6), owing to such Subject Lender hereunder. Upon
the effective date of an assignment described above, the Borrower shall issue a
replacement Note or Notes, as the case may be, to such designated financial
institution or Replacement Lender, as applicable, and such institution shall
become a "Lender" for all purposes under this Agreement and the other Loan
Documents.
ARTICLE V
CONDITIONS TO RESTATEMENT
EFFECTIVENESS AND CREDIT EXTENSIONS
SECTION 5. 1. INITIAL CREDIT EXTENSION. The obligations of (i) the
Existing Lenders to continue the Existing Loans as Loans under this Agreement,
(ii) the Issuer to continue Letters of Credit outstanding on the Restatement
Effective Date under this Agreement and (iii) the Lenders and, if applicable,
the Issuer to fund the initial Credit Extension on or after the Restatement
Effective Date shall be subject to the prior or concurrent satisfaction of each
of the conditions precedent set forth in this SECTION 5.1.
SECTION 5.1.1. RESOLUTIONS, ETC. The Agents shall have received from
each Obligor a certificate, dated the Restatement Effective Date, of its
Secretary or Assistant Secretary as to (i) resolutions of its Board of Directors
then in full force and effect authorizing the execution, delivery and
performance of each Loan Document to be executed by it, and (ii) the incumbency
and signatures of those of its officers authorized to act with respect to each
Loan Document executed by it, upon which certificate each Agent and each Lender
may conclusively rely until it shall have received a further certificate of the
Secretary or Assistant Secretary of such Obligor canceling or amending such
prior certificate.
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SECTION 5.1.2. HITTMAN ACQUISITION AGREEMENT. The Agents shall have
received (with copies for each Lender that shall have expressly requested copies
thereof) copies of fully executed versions of the Hittman Acquisition Agreement,
certified to be true and complete copies thereof by an Authorized Officer of the
Borrower. The Hittman Acquisition Agreement shall be in full force and effect
and shall not have been modified or waived in any material respect, nor shall
there have been any forbearance to exercise any material rights with respect to
any of the terms or provisions relating to the conditions to the consummation of
the Hittman Acquisition set forth in the Hittman Acquisition Agreement unless
otherwise agreed to by the Required Lenders.
SECTION5.1.3. CONSUMMATION OF THE HITTMAN ACQUISITION. The Agents shall
have received evidence satisfactory to each of them that all actions necessary
to consummate Hittman Acquisition shall have occurred, including, without
limitation, evidence that (i) all actions necessary to consummate the Hittman
Acquisition shall have been taken in accordance with law and the Hittman
Acquisition Agreement, (ii) the Borrower shall have received the Equity
Contribution in an amount of not less than $13,000,000 and (iii) the Hittman
Acquisition shall be consummated for an aggregate amount not to exceed
$69,000,000 plus earnout amounts not to exceed $6,000,000 in the aggregate
(excluding any amounts necessary to pay related fees and expenses, which shall
not exceed $6,000,000), in each case in a manner (and pursuant to documentation)
in all respects reasonably satisfactory to the Agents.
SECTION 5.1.4. RESTATEMENT EFFECTIVE DATE CERTIFICATE. Each of the
Agents shall have received, with counterparts for each Lender, the Restatement
Effective Date Certificate, substantially in the form of EXHIBIT D hereto,
dated the Restatement Effective Date and duly executed and delivered by the
chief executive, financial or accounting (or equivalent) Authorized Officer of
the Borrower, in which certificate the Borrower shall agree and acknowledge that
the statements made therein shall be deemed to be true and correct
representations and warranties of the Borrower made as of such date under this
Agreement, and, at the time such certificate is delivered, such statements shall
in fact be true and correct.
SECTION 5.1.5. DELIVERY OF NOTES. The Agents shall have received, for
the account of each Lender, a Note of each applicable Tranche duly executed and
delivered by the Borrower.
SECTION 5.1.6. AFFIRMATION AND CONSENT. The Agents shall have received
an affirmation and consent in form set forth as EXHIBIT L hereto executed and
delivered by an Authorized Officer of Holdco and Intermediate Holdco.
SECTION 5.1.7. PAYMENT OF OUTSTANDING INDEBTEDNESS, ETC. All
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the Borrowing of
Additional Term Loans); and all Liens securing payment of any such Indebtedness
shall have been released and the Administrative Agent shall have received all
Uniform Commercial Code
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Form UCC-3 termination statements or other instruments as may be suitable or
appropriate in connection therewith.
SECTION 5.1.8. SUBSIDIARY GUARANTY. The Agents shall have received
executed counterparts of a Subsidiary Guaranty, dated the Restatement Effective
Date, duly executed by Hittman.
SECTION 5.1.9. BORROWER PLEDGE AGREEMENT. The Agents shall have
received executed counterparts of the Borrower Pledge Agreement, dated as of the
Restatement Effective Date, duly executed by an Authorized Officer of the
Borrower, together with the certificates evidencing all of the issued and
outstanding shares of Capital Stock of Hittman which shall be pledged pursuant
to the Borrower Pledge Agreement, which certificates shall in each case be
accompanied by undated stock powers duly executed in blank. If any securities
pledged pursuant to a Pledge Agreement are uncertificated securities or are held
through a financial intermediary, the Administrative Agent shall have received
confirmation and evidence satisfactory to it that appropriate book entries have
been made in the relevant books or records of a financial intermediary or the
issuer of such securities, as the case may be, or other appropriate steps have
been taken under applicable law resulting in the perfection of the security
interest granted in favor of the Administrative Agent in such securities
pursuant to the terms of the applicable Pledge Agreement.
SECTION 5.1.10. SECURITY AGREEMENT. The Agents shall have received
executed counterparts of the Subsidiary Security Agreement, dated as of the
Restatement Effective Date, duly executed by Hittman, together with
(a) executed Uniform Commercial Code financing statements
(Form UCC-1) naming Hittman as the debtor and the Administrative Agent
as the secured party, or other similar instruments or documents, to be
filed under the Uniform Commercial Code of all jurisdictions as may be
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the security interest of the Administrative Agent pursuant to
the Subsidiary Security Agreement (provided that perfection of security
interests in motor vehicles shall not be required);
(b) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens
and other rights of any Person in any collateral described in the
Subsidiary Security Agreement previously granted to such Person,
together with such other Uniform Commercial Code Form UCC-3 termination
statements as the Administrative Agent may reasonably request from such
Obligor; and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agents, dated a date reasonably
near to the Restatement Effective Date, listing all effective financing
statements which name Hittman or any of its Subsidiaries (under their
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present names and any previous names) as the debtor and which are filed
in the jurisdictions in which filings are to be made pursuant to clause
(a) above, together with copies of such financing statements.
SECTION 5.1.11. MORTGAGE AMENDMENTS. The Agents shall have received
amendments to each Mortgage relating to each property listed on Item 7.1.11(a)
("MORTGAGED PROPERTIES") of the Disclosure Schedule to evidence the increased
Indebtedness secured by such Mortgage.
SECTION 5.1.12. FINANCIAL INFORMATION, ETC. The Agents shall have
received, with counterparts for each Lender,
(a) the (i) audited balance sheets of each of the Borrower and
Hittman, in each case as at December 31, 1995, December 31, 1996 and
December 31, 1997 and the audited statements of income, cash flows and
stockholders' equity for the fiscal years ended December 31, 1995,
December 31, 1996 and December 31, 1997 and (ii) unaudited balance
sheet of each of the Borrower and Hittman, in each case as at March 31,
1998 and unaudited statements of income, cash flows and stockholders'
equity for the three months then ended (collectively, the "BASE
FINANCIAL STATEMENTS"); and
(b) a PRO FORMA consolidated balance sheet of the Borrower and
its Subsidiaries (including Hittman), as of December 31, 1997 (the "PRO
FORMA BALANCE SHEET"), certified by the chief financial or accounting
Authorized Officer of the Borrower, giving effect to the consummation
of the Hittman Acquisition, and reflecting the proposed legal and
capital structure of the Borrower, which legal and capital structure
shall be satisfactory in all respects to the Arranger and the
Syndication Agent.
SECTION 5.1.13. SOLVENCY, ETC. The Agents shall have received a
solvency certificate from the chief financial Authorized Officer of the
Borrower, dated the Restatement Effective Date, in form and substance
satisfactory to the Agents.
SECTION 5.1.14. LITIGATION. There shall exist no pending or threatened
material litigation, proceedings or investigations which (x) contests the
consummation of the Hittman Acquisition or (y) could reasonably be expected to
have a material adverse effect on the financial condition, operations, assets,
businesses, properties or prospects of the Borrower or Hittman.
SECTION 5.1.15. MATERIAL ADVERSE CHANGE. There shall have occurred no
material adverse change in the financial condition, operations, assets,
business, properties or prospects of the Borrower or Hittman, since December 31,
1997.
SECTION 5.1.16. OPINIONS OF COUNSEL. The Agents shall have received
opinions, dated the date of the initial Credit Extension on the Restatement
Effective Date and addressed to the Agents and all Lenders from Weil, Gotshal &
Manges LLP, special New York counsel to each of the Obligors, in substantially
the form of EXHIBIT K hereto.
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SECTION 5.1.17. PERFECTION CERTIFICATE. The Administrative Agent shall
have received the Perfection Certificate, dated as of the Restatement Effective
Date, duly executed and delivered by an Authorized Officer of the Borrower.
SECTION 5.1.18. RELIANCE LETTERS. The Agents shall, unless otherwise
agreed, have received reliance letters, dated the date of the making of the
initial Credit Extension on the Restatement Effective Date and addressed to each
Lender and each Agent, in respect of each of the legal opinions (other than
"disclosure and other similar opinions) delivered in connection with the
Hittman Acquisition.
SECTION 5.1.19. CLOSING FEES, EXPENSES, ETC. The Agents and the
Arranger shall have received, each for its own respective account or, in the
case of the Administrative Agent, for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to SECTIONS 3.3
and 10.3, if then invoiced.
SECTION 5.1.20. SATISFACTORY LEGAL FORM. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any other Obligor
shall be reasonably satisfactory in form and substance to the Agents and their
counsel; the Agents and their counsel shall have received all information,
approvals, opinions, documents or instruments as the Agents or their counsel may
reasonably request.
SECTION 5.2. ALL CREDIT EXTENSIONS. The obligation of each Lender and,
if applicable, the Issuer, to make any Credit Extension (including its initial
Credit Extension) shall be subject to the satisfaction of each of the conditions
precedent set forth in this SECTION 5.2.
SECTION 5.2.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before
and after giving effect to any Credit Extension the following statements shall
be true and correct:
(a) the representations and warranties set forth in ARTICLE VI
and in each other Loan Document shall, in each case, be true and
correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all
material respects as of such earlier date);
(b) the sum of (i) the aggregate outstanding principal amount
of all Revolving Loans and including Swing Line Loans, plus (ii) the
aggregate amount of all Letter of Credit Outstandings, does not exceed
the lesser of (x) the Revolving Loan Commitment Amount then in effect
and (y) the then applicable Borrowing Base Amount; and
(c) no Default shall have then occurred and be continuing.
SECTION 5.2.2. CREDIT EXTENSION REQUEST. The Agents shall have received
a Borrowing Request if Loans are being requested, or an Issuance Request if a
Letter of Credit is being requested or extended. Each of the delivery of a
Borrowing Request or Issuance Request
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and the acceptance by the Borrower of proceeds of any Credit Extension shall
constitute a representation and warranty by the Borrower that on the date of
such Credit Extension (both immediately before and after giving effect thereto
and the application of the proceeds thereof) the statements made in SECTION
5.2.1 are true and correct.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Issuer and the Agents to enter into
this Agreement and to make Credit Extensions hereunder, the Borrower represents
and warrants unto the Agents, the Issuer and each Lender as set forth in this
ARTICLE VI.
SECTION 6.1. ORGANIZATION, ETC. The Borrower and each of its
Subsidiaries (a) is a corporation validly organized and existing and in good
standing to the extent required under the laws of the jurisdiction of its
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation to the extent required under the laws of each jurisdiction
where the nature of its business requires such qualification, except to the
extent that the failure to qualify would not reasonably be expected to result in
a Material Adverse Effect, and (b) has full power and authority and holds all
requisite governmental licenses, permits and other approvals to (i) enter into
and perform its Obligations in connection with the Transaction and under this
Agreement, the Notes and each other Loan Document to which it is a party and
(ii) own and hold under lease its property and to conduct its business
substantially as currently conducted by it except, in the case of this clause
(b)(ii), where the failure to do so could not reasonably be expected to result
in a Material Adverse Effect.
SECTION 6.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Obligor of each Loan Document executed or
to be executed by it and the Borrower's and, where applicable, each such other
Obligor's participation in the consummation of the Transaction, are within the
Borrower's and each such Obligor's corporate powers, have been duly authorized
by all necessary corporate action, and do not (i) contravene the Borrower's or
any such Obligor's Organic Documents, (ii) contravene any contractual
restriction, law or governmental regulation or court decree or order binding on
or affecting the Borrower or any such Obligor, where such contravention,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or (iii) result in, or require the creation or
imposition of, any Lien on any of the Borrower's or any other Obligor's
properties, except pursuant to the terms of a Loan Document.
SECTION 6.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person, is required for the due execution,
delivery or performance by the Borrower or any other Obligor of this Agreement,
the Notes or any other Loan Document to which it is a party, or
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for the Borrower's and each such other Obligor's participation in the
consummation of the Transaction, except as have been duly obtained or made and
are in full force and effect or those which the failure to obtain or make could
not reasonably be expected to have a Material Adverse Effect. None of the
Borrower nor any other Obligor, nor any of the Borrower's Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 6.4. VALIDITY, ETC. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of
the Borrower enforceable in accordance with their respective terms; and each
Loan Document executed pursuant hereto by each other Obligor will, on the due
execution and delivery thereof by such Obligor, be the legal, valid and binding
obligation of such Obligor enforceable in accordance with its terms, in each
case with respect to this SECTION 6.4 subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
SECTION 6.5. FINANCIAL INFORMATION. The Borrower has delivered to the
Agents and each Lender copies of (a) the Base Financial Statements and (b) the
Pro Forma Balance Sheet. Each of the financial statements described above has
been prepared in accordance with GAAP consistently applied (in the case of
clause (a)) and, in the case of clause (b) on a basis substantially consistent
with the basis used to prepare the financial statements referred to in clause
(a) and (in the case of clause (a)) present fairly the consolidated financial
condition of the corporations covered thereby as at the date thereof and the
results of their operations for the periods then ended and (in the case of
clause (b)) include appropriate pro forma adjustments to give pro forma effect
to the Hittman Acquisition.
SECTION 6.6. NO MATERIAL ADVERSE CHANGE. Since December 31, 1996, there
has been no material adverse change in the financial condition, operations,
assets, business, properties or prospects of the Borrower and its Subsidiaries,
taken as a whole.
SECTION 6.7. LITIGATION, LABOR CONTROVERSIES, ETC. There is no pending
or, to the knowledge of the Borrower, threatened, litigation, action,
proceeding, labor controversy, arbitration or governmental investigation
affecting any Obligor, or any of their respective properties, businesses, assets
or revenues, which could reasonably be expected to result in a Material Adverse
Effect except as disclosed in ITEM 6.7 ("Litigation") of the Disclosure
Schedule. No material adverse development has occurred in any litigation,
action, labor controversy, arbitration or governmental investigation or other
proceeding disclosed in ITEM 6.7 ("Litigation") of the Disclosure Schedule.
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SECTION 6.8. SUBSIDIARIES. The Borrower has only those Subsidiaries (i)
which are identified in ITEM 6.8 ("Existing Subsidiaries") of the Disclosure
Schedule, or (ii) which are permitted to have been acquired in accordance with
SECTION 7.2.5 or 7.2.8.
SECTION 6.9. OWNERSHIP OF PROPERTIES. Except to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect, the Borrower and each of its Subsidiaries owns good title to, or
leasehold interests in, all of its properties and assets (other than
insignificant properties and assets), real and personal, tangible and
intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens or material
claims (including material infringement claims with respect to patents,
trademarks, copyrights and the like), except as permitted pursuant to SECTION
7.2.3.
SECTION 6.10. TAXES. Each of Holdco, Intermediate Holdco, the Borrower
and each of their respective Subsidiaries has filed all Federal, State and other
material tax returns, if any, required by law to have been filed by it and has
paid all taxes and governmental charges, if any, thereby shown to be owing,
except any such taxes or charges which are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
SECTION 6.11. PENSION AND WELFARE PLANS. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement, no steps have been taken to terminate any Pension Plan, and
no contribution failure has occurred with respect to any Pension Plan sufficient
to give rise to a Lien under section 302(f) of ERISA. No condition exists or
event or transaction has occurred with respect to any Pension Plan which could
reasonably be expected to result in the incurrence by the Borrower or any member
of the Controlled Group of any material liability, fine or penalty other than
such condition, event or transaction which would not reasonably be expected to
have a Material Adverse Effect. Except as disclosed in ITEM 6.11 ("Employee
Benefit Plans") of the Disclosure Schedule or otherwise approved by the Agents
(such approval not to be unreasonably withheld or delayed), since the date of
the last financial statement the Borrower has not increased any contingent
liability with respect to any post-retirement benefit under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of Subtitle B
of Title I of ERISA, except as would not have Material Adverse Effect.
SECTION 6.12. ENVIRONMENTAL MATTERS. Except as set forth in Item 6.12
("Environmental Matters") of the Disclosure Schedule or as, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its Subsidiaries
have been, and continue to be, owned or leased by the Borrower and its
Subsidiaries in compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or
threatened (i) written claims, complaints, notices or requests for
information received by the Borrower or any
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of its Subsidiaries with respect to any alleged violation of any
Environmental Law, or (ii) written complaints, notices or inquiries to
the Borrower or any of its Subsidiaries regarding potential liability
under any Environmental Law;
(c) to the best knowledge of the Borrower, there have been no
Releases of Hazardous Materials at, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries;
(d) the Borrower and its Subsidiaries have been issued and are
in compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and necessary or
desirable for their businesses;
(e) no property now or previously owned or leased by the
Borrower or any of its Subsidiaries is listed or, to the knowledge of
the Borrower or any of its Subsidiaries, proposed for listing (with
respect to owned property only) on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list of
sites requiring investigation or clean-up;
(f) to the best knowledge of the Borrower, there are no
underground storage tanks, active or abandoned, including petroleum
storage tanks, on or under any property now or previously owned or
leased by the Borrower or any of its Subsidiaries;
(g) the Borrower and its Subsidiaries have not directly
transported or directly arranged for the transportation of any
Hazardous Material to any location (i) which is listed or to the
knowledge of the Borrower or any of its Subsidiaries, proposed for
listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list, or (ii) which is the subject of
federal, state or local enforcement actions or other investigations;
(h) to the best knowledge of the Borrower, there are no
polychlorinated biphenyls or friable asbestos present in a manner or
condition at any property now or previously owned or leased by the
Borrower or any Subsidiary of the Borrower; and
(i) to the best knowledge of the Borrower, no conditions exist
at, on or under any property now or previously owned or leased by the
Borrower or any of its Subsidiaries which, with the passage of time, or
the giving of notice or both, would give rise to liability under any
Environmental Law.
SECTION 6.13. REGULATIONS U AND X. Neither the Borrower, Intermediate
Holdco nor Holdco is engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock, and no proceeds of any Credit Extension
will be used to acquire any "margin stock". Terms for which meanings are
provided in F.R.S. Board Regulation U or X or any regulations substituted
therefor, as from time to time in effect, are used in this Section with such
meanings.
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SECT10N 6.14. ACCURACY OF INFORMATION. All material factual information
concerning the financial condition, operations or prospects of the Borrower,
Holdco and their respective Subsidiaries heretofore or contemporaneously
furnished by or on behalf of the Borrower in writing to the Agents, the
Arranger, the Issuer or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby or with respect to the
Transaction is, and all other such factual information hereafter furnished by or
on behalf of the Borrower, or any of its respective Subsidiaries to the Agents,
the Arranger, the Issuer or any Lender will be, taken as a whole, true and
accurate in every material respect on the date as of which such information is
dated or certified and such information is not, or shall not be, taken as a
whole, as the case may be, incomplete by omitting to state any material fact
necessary to make such information not misleading. Any term or provision of this
Section to the contrary notwithstanding, insofar as any of the factual
information described above includes assumptions, estimates, projections or
opinions, no representation or warranty is made herein with respect thereto;
provided, however, that to the extent any such assumptions, estimates,
projections or opinions are based on factual matters, the Borrower has reviewed
such factual matters and nothing has come to its attention in the context of
such review which would lead it to believe that such factual matters were not or
are not true and correct in all material respects or that such factual matters
omit to state any material fact necessary to make such assumptions, estimates,
projections or opinions not misleading in any material respect.
SECTION 6.15. SOLVENCY. The Transaction (including, among other things,
the incurrence of the initial Credit Extension hereunder, the incurrence by the
Borrower of the Indebtedness represented by the Notes and the Subordinated Notes
and the application of the proceeds of the Credit Extensions), will not involve
or result in any fraudulent transfer or fraudulent conveyance under the
provisions of Section 548 of the Bankruptcy Code (11 U.S.C. ss. 101 et seq., as
from time to time hereafter amended, and any successor or similar statute) or
any applicable state law respecting fraudulent transfers or fraudulent
conveyances. On the Restatement Effective Date, after giving effect to the
Hittman Acquisition, the Borrower is Solvent.
SECTION 6.16. YEAR 2000 PROBLEM. Each Obligor has reviewed the areas
within its business and operations which could be adversely affected by, and has
developed or is developing a program to address on a timely basis, the "Year
2000 Problem" (that is, the risk that computer applications used by such Obligor
may be unable to recognize and properly perform date-sensitive functions
involving certain dates prior to and any date after December 31, 1999). Based on
such review and program, no Obligor reasonably believes that the "Year 2000
Problem" could reasonably be expected to have a Material Adverse Effect. At the
request of any Agent, the Borrower shall provide the Agents assurance reasonably
acceptable to the Agents of the Borrower's Year 2000 compatibility.
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ARTICLE VII
COVENANTS
SECTION 7.1. AFFIRMATIVE COVENANTS. The Borrower agrees with the
Agents, the Issuer and each Lender that, until all Commitments have terminated
and all Obligations have been paid and performed in full, the Borrower will
perform the obligations set forth in this Section 7.1.
SECTION 7.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The
Borrower will furnish, or will cause to be furnished, to each Lender and each
Agent copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 60 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
of the Borrower (or, if the Borrower is required to file such
information on a Form 10-Q with the Securities and Exchange Commission,
promptly following such filing), a consolidated (if applicable) balance
sheet of the Borrower and its Subsidiaries, if any, as of the end of
such Fiscal Quarter, together with the related consolidated (if
applicable) statements of income and cash flows for such Fiscal Quarter
and for the period commencing at the end of the previous Fiscal Year
and ending with the end of such Fiscal Quarter (it being understood
that the foregoing requirement may be satisfied by delivery of the
Borrower's report to the Securities and Exchange Commission on Form
10-Q, if any), certified by the president, chief executive officer,
treasurer, assistant treasurer, controller or chief financial
Authorized Officer of the Borrower;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year of the Borrower (or, if the Borrower is
required to file such information on a Form 10-K with the Securities
and Exchange Commission, promptly following such filing), a copy of the
annual audit report for such Fiscal Year for the Borrower and its
Subsidiaries, including therein a consolidated balance sheet for the
Borrower and its Subsidiaries as of the end of such Fiscal Year,
together with the related consolidated statements of income and cash
flows for such Fiscal Year (it being understood that the foregoing
requirement may be satisfied by delivery of the Borrower's report to
the Securities and Exchange Commission on Form 10-K, if any), in each
case certified (without any Impermissible Qualification) by Deloitte &
Touche LLP or another "Big Six" firm of independent public accountants,
together with a certificate from such accountants as to whether, in
making the examination necessary for the signing of such annual report
by such accountants, they have not become aware of any Default that has
occurred and is continuing or, if in the opinion of such accounting
firm such a Default or Event of Default has occurred and is continuing,
a statement as to the nature thereof;
(c) together with the delivery of the financial information
required pursuant to clauses (a) and (b), a Compliance Certificate, in
substantially the form of EXHIBIT E, executed by the president, chief
executive officer, treasurer, assistant treasurer, controller
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or chief financial Authorized Officer of the Borrower, showing (in reasonable
detail and with appropriate calculations and computations in all respects
satisfactory to the Agents) compliance with the financial covenants set forth in
SECTION 7.2.4;
(d) as soon as possible and in any event within five Business Days
after obtaining knowledge of the occurrence of any Default, if such Default is
then continuing, a statement of the president, chief executive officer,
treasurer, assistant treasurer, controller or chief financial Authorized Officer
of the Borrower setting forth details of such Default and the action which the
Borrower has taken or proposes to take with respect thereto;
(e) as soon as possible and in any event within five Business Days
after (x) the occurrence of any material adverse development with respect to any
litigation, action, proceeding or labor controversy described in SECTION 6.7 or
(y) the commencement of any labor controversy, litigation, action, proceeding of
the type described in SECTION 6.7, notice thereof and of the action which the
Borrower has taken or proposes to take with respect thereto;
(f) promptly after the sending or filing thereof, copies of all reports
and registration statements (other than exhibits thereto and any registration
statement on Form S-8 or its equivalent) which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any national
securities exchange;
(g) as soon as practicable after the chief financial officer or the
chief executive officer of the Borrower or a member of the Borrower's Controlled
Group becomes aware of (i) formal steps in writing to terminate any Pension Plan
or (ii) the occurrence of any event with respect to a Pension Plan which, in the
case of (i) or (ii), could reasonably be expected to result in a contribution to
such Pension Plan by (or a liability to) the Borrower or a member of the
Borrower's Controlled Group in excess of $1,000,000, (iii) the failure to make a
required contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under section 302(f) of ERISA, (iv) the taking of any action with
respect to a Pension Plan which could reasonably be expected to result in the
requirement that the Borrower furnish a bond to the PBGC or such Pension Plan or
(v) any material increase in the contingent liability of the Borrower with
respect to any post-retirement Welfare Plan benefit, notice thereof and copies
of all documentation relating thereto;
(h) within 15 days after the end of each calendar month, a Borrowing
Base Certificate that is calculated as of the last day of such calendar month;
(i) promptly when available but in any event within 45 days following
the end of each Fiscal Year, a budget for the Borrower and its Subsidiaries for
the next succeeding Fiscal Year, which budget shall be presented on a Fiscal
Quarter basis and shall compute, on a pro forma basis, anticipated performance
relative to the financial covenants set forth in SECTION 7.2.4 hereof; and
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(j) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through the Administrative Agent may from
time to time reasonably request.
SECTION 7.1.2. COMPLIANCE WITH LAWS, ETC. The Borrower will, and will
cause each of its Subsidiaries, if any, to, comply in all material respects with
all applicable laws, rules, regulations and orders, such compliance to include
(without limitation) (i) except as permitted under SECTION 7.2.8, the
maintenance and preservation of its corporate existence and qualification as a
foreign corporation, except where the failure to so qualify could not reasonably
be expected to have a Material Adverse Effect, and (ii) the payment, before the
same become delinquent, of all material taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books.
SECTION 7.1.3. MAINTENANCE OF PROPERTIES. Except to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect, the Borrower will, and will cause each of its Subsidiaries, if any, to,
maintain, preserve, protect and keep its properties (other than insignificant
properties) in good repair, working order and condition (ordinary wear and tear
excepted), and make necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be properly conducted
at all times unless the Borrower determines in good faith that the continued
maintenance of any of its properties is no longer economically desirable.
SECTION 7.1.4. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries, if any, to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
against such casualties and contingencies and of such types and in such amounts
as is customary in the case of similar businesses and with such provisions and
endorsements as the Agents may reasonably request and will, upon request of the
Agents, furnish to the Agents and each Lender a certificate of an Authorized
Officer of the Borrower setting forth the nature and extent of all insurance
maintained by the Borrower and its Subsidiaries, if any, in accordance with this
Section.
SECTION 7.1.5. BOOKS AND RECORDS. The Borrower will, and will cause
each of its Subsidiaries, if any, to, keep books and records which accurately
reflect in all material respects all of its business affairs and transactions
and permit the Agents, the Issuer and each Lender or any of their respective
representatives, at reasonable times and intervals, and upon reasonable notice,
to visit all of its offices, to discuss its financial matters with its officers
and, after notice to the Borrower and provision of an opportunity for the
Borrower to participate in such discussion, its independent public accountants
(and the Borrower hereby authorizes such independent public accountants to
discuss the Borrower's financial matters with the Issuer and each Lender or its
representatives whether or not any representative of the Borrower is present, so
long as the Borrower has been afforded a reasonable opportunity to be present)
and to examine, and photocopy extracts from, any of its books or other corporate
records. The cost and expense of each such visit shall be borne by the
applicable Agent or Lender, except that each
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Agent may make one such visit each Fiscal Year and the cost and expense thereof
shall be borne by the Borrower.
SECTION 7.1.6. ENVIRONMENTAL COVENANT. The Borrower will and will cause
each of its Subsidiaries, if any, to,
(a) use and operate all of its facilities and properties in
compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in compliance therewith, and
handle all Hazardous Materials in compliance with all applicable
Environmental Laws, in each case except where the failure to comply
with the terms of this clause could not reasonably be expected to have
a Material Adverse Effect;
(b) promptly notify the Agents and provide copies of all
written claims, complaints, notices or inquiries relating to the
condition of its facilities and properties or compliance with
Environmental Laws which would have, or would reasonably be expected to
have, a Material Adverse Effect, and promptly cure and have dismissed
with prejudice any material actions and proceedings relating to
compliance with Environmental Laws, except to the extent being
diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP have been set aside on
its books; and
(c) provide such information and certifications which the
Agents may reasonably request from time to time to evidence compliance
with this SECTION 7.1.6.
SECTION 7.1.7. FUTURE SUBSIDIARIES; MATERIAL SUBSIDIARIES. The Borrower
hereby covenants and agrees that, upon any Person becoming, after the Closing
Date, a Subsidiary of the Borrower, or (in the case of clause (b) below only)
upon the Borrower or any Subsidiary acquiring additional Capital Stock of any
existing Subsidiary, the Borrower shall notify the Agents of such acquisition,
and
(a) the Borrower shall promptly cause such Subsidiary (other
than a Subsidiary which is a Joint Venture) to execute and deliver to
the Administrative Agent, with counterparts for each Lender, a
Subsidiary Guaranty and a Subsidiary Security Agreement (and, if such
Subsidiary owns any real property having a value in excess of $500,000,
a Mortgage), together with Uniform Commercial Code financing statements
(form UCC-1) executed and delivered by the Subsidiary naming the
Subsidiary as the debtor and the Administrative Agent as the secured
party, or other similar instruments or documents, in appropriate form
for filing under the Uniform Commercial Code and any other applicable
recording statutes, in the case of real property, of all jurisdictions
as may be necessary or, in the opinion of the Administrative Agent,
desirable to perfect the security interest of the Administrative Agent
pursuant to the Subsidiary Security Agreement or a Mortgage, as the
case may be (other than the perfection of security interests in motor
vehicles); and
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(b) the Borrower shall promptly deliver, or cause to be
delivered, to the Administrative Agent under a Pledge Agreement (or a
supplement thereto) certificates (if any) representing all of the
issued and outstanding shares of Capital Stock of such Subsidiary owned
by the Borrower or any Subsidiary of the Borrower, as the case may be,
along with undated stock powers for such certificates, executed in
blank, or, if any securities subject thereto are uncertificated
securities or are held through a financial intermediary, confirmation
and evidence satisfactory to the Agents that appropriate book entries
have been made in the relevant books or records of a financial
intermediary or the issuer of such securities, as the case may be, or
other appropriate steps shall have been taken under applicable law
resulting in the perfection of the security interest granted in favor
of the Administrative Agent pursuant to the terms of a Pledge
Agreement;
together, in each case, with such opinions, in form and substance and from
counsel satisfactory to the Agents, as the Agents may reasonably require;
provided, however, that notwithstanding the foregoing, no Non-U.S. Subsidiary
shall be required to execute and deliver a Mortgage or a Subsidiary Guaranty or
Security Agreement, nor will the Borrower or any Subsidiary of the Borrower be
required to deliver in pledge pursuant to a Pledge Agreement in excess of 65% of
the total combined voting power of all classes of Capital Stock of a Non-U.S.
Subsidiary entitled to vote.
SECTION 7.1.8. FUTURE LEASED PROPERTY AND FUTURE ACQUISITIONS OF REAL
PROPERTY; FUTURE ACQUISITION OF OTHER PROPERTY.
(a) Prior to entering into any new lease of real property or
renewing any existing lease of real property following the Closing
Date, the Borrower shall, and shall cause each of its U.S. Subsidiaries
(other than a Subsidiary which is a Joint Venture) to, use its (and
their) best efforts (which shall not require the expenditure of cash or
the making of any material concessions under the relevant lease) to
deliver to the Administrative Agent a Waiver executed by the lessor of
any real property that is to be leased by the Borrower or such U.S.
Subsidiary for a term in excess of one year in any state which by
statute grants such lessor a "landlord's" (or similar) Lien which is
superior to the Administrative Agent's, to the extent the value of any
personal property of the Borrower or its U.S. Subsidiaries to be held
at such leased property exceeds (or it is anticipated that the value of
such personal property will, at any point in time during the term of
such leasehold term, exceed) $1,000,000.
(b) In the event that the Borrower or any of its U.S.
Subsidiaries (other than a Subsidiary which is a Joint Venture) shall
acquire any real property having a value as determined in good faith by
the Administrative Agent in excess of $500,000 in the aggregate, the
Borrower or the applicable U.S. Subsidiary shall, promptly after such
acquisition, execute a Mortgage and provide the Administrative Agent
with (i) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of such Mortgage as may
be necessary or, in the reasonable opinion of the Administrative Agent,
desirable effectively to create a valid, perfected first priority Lien,
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subject to Liens permitted by SECTION 7 2.3, against the properties
purported to be covered thereby, (ii) mortgagee's title insurance
policies in favor of the Agents and the Lenders in amounts and in form
and substance and issued by insurers, reasonably satisfactory to the
Agents, with respect to the property purported to be covered by such
Mortgage, insuring that title to such property is marketable and that
the interests created by the Mortgage constitute valid first Liens
thereon free and clear of all defects and encumbrances other than as
permitted by SECTION 7.2.3 or approved by the Agents, and such policies
shall, to the extent available in the applicable jurisdiction, also
include a revolving credit endorsement and such other endorsements as
the Agents shall request and shall be accompanied by evidence of the
payment in full of all premiums thereon, and (iii) such other
approvals, opinions, or documents as the Agents may reasonably request.
(c) In accordance with the terms and provisions of any
Security Agreement, provide the Agents with evidence of all recordings
and filings as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable to create a valid, perfected first
priority Lien, subject to the Liens permitted by SECTION 7.2.3, against
all property acquired after the Closing Date (excluding motor vehicles
and leases of real property) and not otherwise subject to SECTION
7.1.11.
SECTION 7.1.9. USE OF PROCEEDS ETC. The Borrower shall
(a) apply the proceeds of the Additional Term Loans (i) to pay
the cash portion of the obligations of the Borrower in connection with
the Hittman Acquisition and to pay reasonable transaction fees and
expenses associated therewith; provided, that the aggregate amount of
such transaction fees and expenses shall not exceed [$6,000,000]; and
(ii) in the cast of Revolving Loans and Swing Line Loans, for working
capital and general corporate purposes of the Borrower and its
Subsidiaries; and
(b) use Letters of Credit only for purposes of supporting
working capital and general corporate purposes of the Borrower and its
Subsidiaries.
SECTION 7.1.10. HEDGING OBLIGATIONS. Within six months following the
Closing Date, the Administrative Agent shall have received evidence satisfactory
to it that the Borrower has entered into interest rate swap, cap, collar or
similar arrangements designed to protect the Borrower against fluctuations in
interest rates with respect to at least 50% of the aggregate principal amount of
the Term Loans for a period of at least three years from the date the initial
interest rate protection arrangement was obtained with terms reasonably
satisfactory to the Borrower and the Agents.
SECTION 7.1.11. LEASEHOLD MORTGAGE. Within 60 days after the
Restatement Effective Date, the Borrower shall use its best efforts to deliver
to the Agents counterparts of a leasehold Mortgage relating to the property
listed on ITEM 7.1.11(B) ("Leasehold Mortgaged Property") of
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the Disclosure Schedule, dated as of the date of such delivery, duly executed by
the Borrower or Hittman, as the case may be, together with
(a) evidence of the completion (or satisfactory arrangements
for the completion) of all recordings and filings of such leasehold
Mortgage as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable effectively to create a valid,
perfected first priority Lien against the properties purported to be
covered thereby;
(b) leasehold mortgagee's title insurance policies in favor of
the Agents and the Lenders in amounts and in form and substance and
issued by insurers, reasonably satisfactory to the Agents, with respect
to the property purported to be covered by such leasehold Mortgage,
insuring that title to such property is marketable and that the
interests created by the leasehold Mortgage constitute valid first
Liens thereon free and clear of all defects and encumbrances other than
as permitted by SECTION 7.2.3 or as approved by the Agents, and such
policies shall, to the extent available in the applicable jurisdiction,
also include a revolving credit endorsement and such other endorsements
as the Administrative Agent shall request and shall be accompanied by
evidence of the payment in full of all premiums thereon; and
(c) such other approvals, opinions, or documents as the Agents
may reasonably request.
SECTION 7.2. NEGATIVE COVENANTS. The Borrower agrees with the Agents
and each Lender that, until all Commitments have terminated; and all Obligations
have been paid and performed in full, the Borrower will perform the obligations
set forth in this SECTION 7.2.
SECTION 7.2.1. BUSINESS ACTIVITIES. The Borrower will not, and will not
permit any of its Subsidiaries, if any, to, engage in any business activity,
except business activities of the type in which the Borrower is engaged on the
date hereof (after giving effect to the Acquisition and the Merger) and such
activities as may be incidental, similar or related thereto.
SECTION 7.2.2. INDEBTEDNESS. The Borrower will not, and will not permit
any of its Subsidiaries, if any, to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness outstanding on the Closing Date and
identified in ITEM 7.2.2(A) ("Ongoing Indebtedness") of the Disclosure
Schedule, and refinancing and replacements thereof in an aggregate
principal amount not exceeding the principal amount of the Indebtedness
so refinanced or replaced, plus the fees and expenses incurred in
connection with such refinancings or replacements, and with an average
life to maturity of not less than the then average life to maturity of
the Indebtedness so refinanced or replaced;
(b) Indebtedness in respect of the Credit Extensions and other
Obligations;
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(c) Indebtedness incurred by the Borrower or any of its
Subsidiaries that is represented by Capitalized Lease Liabilities,
mortgage financings or purchase money obligations (but only to the
extent otherwise permitted by SECTION 7.2.7); provided, that the
maximum aggregate amount of all Indebtedness permitted under this
clause (c) shall not at any time exceed $10,000,000;
(d) Hedging Obligations of the Borrower or any of its
Subsidiaries in respect of the Credit Extensions;
(e) intercompany Indebtedness of (x) any Subsidiary of the
Borrower owing to the Borrower or any of its Subsidiaries or (y) the
Borrower to any of its Subsidiaries, which Indebtedness (i) shall be
evidenced by one or more promissory notes in form and substance
satisfactory to the Agents which (except in the case of any such notes
held by a Non-U.S. Subsidiary) have been duly executed and delivered to
(and indorsed to the order of) the Administrative Agent in pledge
pursuant to a Pledge Agreement, and (ii) shall not be forgiven or
otherwise discharged for any consideration other than payment (Dollar
for Dollar) in cash unless the Agents otherwise consent;
(f) Indebtedness evidenced by any Subordinated Note and
guarantees thereof in an aggregate outstanding principal amount not to
exceed $25,000,000, and refinancings and replacements thereof (i) in a
principal amount equal to the aggregate the principal amount of the
Indebtedness so refinanced or replaced plus any prepayment penalties,
fees and expenses incurred in connection with such refinancings or
replacements, (ii) with an all-in cost which is less than the
Indebtedness so refinanced or replaced, (iii) with an average life to
maturity of not less than the then average life to maturity of the
Indebtedness so refinanced or replaced and (iv) on terms and conditions
(including, without limitation, as to subordination) no less favorable
to the Borrower or the Lenders;
(g) Assumed Indebtedness of the Borrower and its Subsidiaries
in an aggregate principal amount not to exceed $7,500,000 at any time
outstanding, and refinancings and replacements thereof (i) in a
principal amount not exceeding in the aggregate the principal amount of
the Indebtedness so refinanced or replaced plus any prepayment
penalties, fees and expenses incurred in connection with such
refinancings or replacements, (ii) with an all-in cost which is less
than the Indebtedness so refinanced or replaced, (iii) with an average
life to maturity of not less than the then average life to maturity of
the Indebtedness so refinanced or replaced and (iv) on terms and
conditions (including, without limitation, as to principal
amortization, redemption, covenants, events of default, remedies and
subordination) no less favorable to the Borrower or the Lenders;
(h) Indebtedness incurred by a Subsidiary of the Borrower
which is a Joint Venture which is non-recourse to the Borrower or any
other Subsidiary, and the parties hereby agree that such Indebtedness
(including, without limitation, interest in respect thereof) shall be
excluded for purposes of calculating compliance with the financial
covenants contained in SECTION 7.2.4;
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(i) Indebtedness of the Borrower in an aggregate amount not to
exceed $6,000,000 in respect of earnout payments to Fred Hillman
pursuant to the Hittman Acquisition Agreement; and
(j) other unsecured Indebtedness of the Borrower and its
Subsidiaries in an aggregate amount at any time outstanding not to
exceed $7,500,000;
provided, however, that (i) no Indebtedness otherwise permitted by clause (c),
(e), (g), (h), (i) or (J) may be incurred if, after giving effect to the
incurrence thereof, any Default shall have occurred and be continuing, and (ii)
that all such Indebtedness of the type described in clause (e)(y) above that is
owed to Subsidiaries shall be subordinated, in writing, to the Obligations upon
terms satisfactory to the Agents.
SECTION 7.2.3. LIENS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(a) Liens existing on the Closing Date and identified in ITEM
7.2.3(A) ("Ongoing Liens") of the Disclosure Schedule and Liens
securing any refinancing or replacement of any obligations secured by
any such Lien; provided, however, that such Lien shall only cover the
same assets which originally secured the obligations being refinanced
or replaced;
(b) Liens securing payment of the Obligations, granted
pursuant to any Loan Document or any Rate Protection Agreement;
(c) Liens granted to secure payment of Indebtedness of the
type permitted and described in clause (c) of SECTION 7.2.2;
(d) Liens for taxes, assessments or other governmental charges
or levies, including Liens pursuant to Section 107(1) of CERCLA or
other similar law, not at the time delinquent or thereafter payable
without penalty or being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(e) Liens of carriers, warehousemen, mechanics, repairmen,
materialmen, contractors, laborers and landlords or other like liens
incurred in the ordinary course of business for sums not overdue for a
period of more than 30 days or being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books;
(f) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, bids, statutory or regulatory
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obligations, insurance obligations, leases and contracts (other than
for borrowed money) entered into in the ordinary course of business or
to secure obligations on surety or appeal bonds;
(g) judgment Liens in existence less than 30 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full by a bond or (subject to a
customary deductible) by insurance maintained with responsible
insurance companies;
(h) Liens with respect to minor imperfections of title and
easements, rights-of-way, restrictions, reservations, permits,
servitudes and other similar encumbrances on real property and fixtures
which do not materially detract from the value or materially impair the
use by the Borrower or any such Subsidiary, if any, in the ordinary
course of their business of the property subject thereto;
(i) leases or subleases granted by the Borrower or any of its
Subsidiaries, if any, to any other Person in the ordinary course of
business;
(j) Liens in the nature of trustees' Liens granted pursuant to
any indenture governing any Indebtedness permitted by SECTION 7.2.2, in
each case in favor of the trustee under such indenture and securing
only obligations to pay compensation to such trustee, to reimburse its
expenses and to indemnify it under the terms thereof;
(k) Liens of sellers of goods to the Borrower and its
Subsidiaries arising under Article 2 of the U.C.C. or similar
provisions of applicable law in the ordinary course of business,
covering only the goods sold and securing only the unpaid purchase
price for such goods and related expenses;
(l) Liens securing Assumed Indebtedness of the Borrower and
its Subsidiaries, if any, permitted pursuant to clause (g) of SECTION
7.2.2 and Liens securing any refinancing or replacement of any Assumed
Indebtedness secured by any such Lien; provided, however, that (i) any
such Liens attach only to the property acquired in connection with such
Assumed Indebtedness and shall not attach to any assets of the Borrower
or any of its Subsidiaries, if any, then existing or which arise after
the date thereof and (ii) the Assumed Indebtedness and other secured
Indebtedness of the Borrower and its Subsidiaries, if any, secured by
any such Lien shall not exceed 100% of the fair market value of the
assets being acquired in connection with such Assumed Indebtedness; and
(m) Liens securing indebtedness of a Subsidiary of the
Borrower which is a Joint Venture; provided, however, that any such
Liens shall not attach to any assets of the Borrower or any of its
Subsidiaries, if any (other than such Joint Venture) then existing or
which arise after the date thereof.
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SECTION 7.2.4. FINANCIAL COVENANTS.
(a) EBITDA. The Borrower will not permit EBITDA for the period
of four consecutive Fiscal Quarters ending on the last day of any
Fiscal Quarter occurring during any period set forth below to be less
than the amount set forth opposite such period:
PERIOD EBITDA
------ ------
Restatement Effective $24,000,000
Date to 12/31/99
1/1/00 to 12/31/00 30,000,000
1/1/01 to 12/31/01 34,000,000
1/1/02 to 12/31/02 38,000,000
1/1/03 and thereafter 40,000,000
(b) LEVERAGE RATIO. The Borrower will not permit the Leverage
Ratio as of the end of any Fiscal Quarter ending during any period set
forth below to be greater than the ratio set forth opposite such
period:
PERIOD LEVERAGE RATIO
------ --------------
Restatement Effective Date to 5.75:1
9/30/99
10/1/99 to 12/31/99 5.00:1
1/1/00 to 12/31/00 4.50:1
1/1/01 to 12/31/01 4.00:1
1/1/02 and thereafter 3.00:1
(c) INTEREST COVERAGE RATIO. The Borrower will not permit the
Interest Coverage Ratio as of the end of any Fiscal Quarter ending
during any period set forth below to be less than the ratio set forth
opposite such period:
INTEREST COVERAGE
PERIOD RATIO
------ -----
Restatement Effective Date to 1.75:1
9/30/99
10/1/99 to 12/31/00 2.00:1
1/1/01 to 12/31/01 2.50:1
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1/1/02 to 12/31/02 3.00:1
1/1/03 and thereafter 4.00:1
(d) FIXED CHARGE COVERAGE RATIO. The Borrower will not permit
the Fixed Charge Coverage Ratio as of the end of any Fiscal Quarter
ending during any period set forth below to be less than the ratio set
forth opposite such period:
FIXED CHARGE
PERIOD COVERAGE RATIO
------ --------------
Restatement Effective Date to 1.00:1
12/31/99
1/1/00 and thereafter 1.10:1
SECTION 7.2.5. INVESTMENTS. The Borrower will not, and will not permit
any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the Closing Date and identified in
Item 7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Indebtedness
pursuant to SECTION 7.2.2;
(d) without duplication, Investments permitted as Capital
Expenditures pursuant to SECTION 7.2.7;
(e) without duplication, Investments permitted pursuant to
clause (d) of SECTION 3.1.1;
(f) Investments by the Borrower in any of its Subsidiaries, if
any, or by any such Subsidiary in any Subsidiary of the Borrower, by
way of contributions to capital;
(g) Investments made by the Borrower or any of its
Subsidiaries, if any, solely with proceeds which have been contributed,
directly or indirectly after the Closing Date, to the Borrower or such
Subsidiary as cash equity from Holdco (whether such contribution shall
be made by Holdco through Intermediate Holdco or otherwise) for the
purpose of making an Investment identified in a notice to the Agents on
or prior to the date that such capital contribution is made;
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(h) Investments to the extent the consideration received
pursuant to clause (c)(i) of SECTION 7.2.9 is not all cash;
(i) Investments in the form of loans to officers, directors
and employees of the Borrower and its Subsidiaries, if any, for the
sole purpose of purchasing Holdco's common stock (or purchases of such
loans made by others) in an aggregate amount at any time outstanding
not to exceed $5,000,000;
(j) Investments made by the Borrower or any of its
Subsidiaries in Joint Ventures in an aggregate amount not to exceed
$10,000,000 over the term of this Agreement; provided, that if Capital
Stock is being acquired by the Borrower or any such Subsidiary in
connection with such Investment, the Borrower or such Subsidiary shall
cause such Capital Stock to be pledged to the Administrative Agent for
the benefit of the Lenders;
(k) other Investments (including Assumed Indebtedness) made by
the Borrower or any of its Subsidiaries in an aggregate amount not to
exceed (i) $15,000,000 for the period from the Restatement Effective
Date to the first anniversary of the Restatement Effective Date and
(ii) an incremental $5,000,000 for each subsequent twelve-month period,
which Investments shall result in the Borrower or the relevant
Subsidiary acquiring (subject to SECTION 7.2.1) a majority controlling
interest (except with respect to the Investment made by the Borrower in
the distributor obtaining the assets of the Greatbatch Scientific
division) in the Person in which such Investment was made or increasing
any such controlling interest maintained by it in such Person;
provided, that the Borrower shall be permitted to carry forward to each
subsequent twelve-month period the aggregate amount of Investments
permitted (but not made) pursuant to this clause (k) in the prior
twelve-month period; or
(l) Investments consisting of, or made in connection with, the
Hittman Acquisition;
provided, however, that
(m) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment"
may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements;
(n) no Investment otherwise permitted by clause (c) (except to
the extent permitted under SECTION 7.2.2), (e), (f), (h), (i) (j), (k)
or (l) shall be permitted to be made if, immediately before or after
giving effect thereto, any Default shall have occurred and be
continuing.
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SECTION 7.2.6. RESTRICTED PAYMENTS, ETC. On and at all times after the
date hereof:
(a) the Borrower will not, and will not permit any of its
Subsidiaries, if any, to, declare, pay or make any dividend,
distribution or exchange (in cash, property or obligations) on or in
respect of any shares of any class of Capital Stock (now or hereafter
outstanding) of the Borrower or on any warrants, options or other
rights with respect to any shares of any class of Capital Stock (now or
hereafter outstanding) of the Borrower (other than (i) dividends or
distributions payable in its common stock or warrants to purchase its
common stock and (ii) splits or reclassifications of its stock into
additional or other shares of its common stock) or apply, or permit any
of its Subsidiaries to apply, any of its funds, property or assets to
the purchase, redemption, exchange, sinking fund or other retirement
of, or agree or permit any of its Subsidiaries to purchase, redeem or
exchange, any shares of any class of Capital Stock (now or hereafter
outstanding) of the Borrower, warrants, options or other rights with
respect to any shares of any class of Capital Stock (now or hereafter
outstanding) of the Borrower; and
(b) the Borrower will not, and will not permit any of its
Subsidiaries to (i) make any payment or prepayment of principal of, or
make any payment of interest on, any Subordinated Note except for
scheduled payments made on the stated, scheduled date therefor set
forth in the documents and instruments memorializing such Subordinated
Note, or which would violate the subordination provisions of such
Subordinated Note, or (ii) redeem, purchase or defease any Subordinated
Note (the foregoing prohibited acts referred to in clauses (a) and (b)
above are herein collectively referred to as "RESTRICTED PAYMENTS");
provided, however, that
(c) notwithstanding the provisions of clause (a) above, the
Borrower shall be permitted to make Restricted Payments to Intermediate
Holdco to the extent necessary to enable Intermediate Holdco or Holdco
(i) to pay advisory fees and retainer (in an amount not to exceed
$100,000 in the aggregate in any Fiscal Year) pursuant to the DLJSC
Agreement as in effect on the Closing Date and expenses, (ii) to make
payments in respect of taxes and (iii) so long as (A) no Default shell
have occurred and be continuing on the date such Restricted Payment is
declared or to be made, nor would a Default result from the making of
such Restricted Payment, (B) after giving effect to the making of such
Restricted Payment the Borrower shall be in PRO FORMA compliance with
the covenants set forth in SECTION 7.2.4 for the most recent full
Fiscal Quarter immediately preceding the date of the payment of such
Restricted Payment for which the relevant financial information has
been delivered pursuant to clause (a) or clause (b) of SECTION 7.1.1,
and (c) an Authorized Officer of the Borrower shall have delivered a
certificate to the Agents in form and substance satisfactory to the
Agents (including a calculation of the Borrower's compliance with the
covenants set forth in Section 7.2.4) certifying as to the accuracy of
clauses (c)(iii)(A) and (c)(iii)(A) above, to purchase, redeem, acquire
or otherwise retire for value shares of Capital Stock of Holdco held by
directors, officers or
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employees of Holdco, Intermediate Holdco, the Borrower or any of its
Subsidiaries, if any, or options on any such shares or related stock
appreciation rights or similar securities owned by such directors,
officers or employees (or their estates or beneficiaries under their
estates), in all cases only upon death, disability, retirement,
termination of employment or pursuant to the terms of such stock option
plan or any other agreement under which such shares of Capital Stock,
options, related rights or similar securities were issued (collectively
referred to as a "REDEMPTION") (or to pay principal of or interest on
notes issued by Holdco as consideration for any Redemption) in an
aggregate amount, in the case of this clause (c)(iii), not to exceed
$5,000,000; and
(d) notwithstanding the provisions of clauses (a) and (b)
above, the Borrower and its Subsidiaries shall be permitted to make the
Restricted Payments included in the Transaction and to make payments to
Holdco in an amount not to exceed $1,000,000 to finance the purchase by
certain current equity owners and employees of WGL of Capital Stock of
Holdco acquired by the DLJMB Entities in the Acquisition.
SECTION 7.2.7. CAPITAL EXPENDITURES, ETC. With respect to Capital
Expenditures, the parties covenant and agree as follows:
(a) The Borrower will not, and will not permit any of its
Subsidiaries, if any, to, make or commit to make Capital Expenditures
in any Fiscal Year, except Capital Expenditures (i) which do not
aggregate in excess of $10,000,000 in such Fiscal Year PLUS (ii) an
aggregate amount equal to $10,000,000 over the term of this Agreement;
provided, however, that, to the extent the amount of Capital
Expenditures permitted to be made in any Fiscal Year pursuant to clause
(i) above exceeds the aggregate amount of Capital Expenditures actually
made during such Fiscal Year, such excess amount (up to an aggregate of
50% of the amount of Capital Expenditures permitted for such Fiscal
Year, without giving effect to this proviso) may be carried forward to
(but only to) the next succeeding Fiscal Year (any such amount to be
certified by the Borrower to the Agents in the Compliance Certificate
delivered for the last Fiscal Quarter of such Fiscal Year, and any such
amount carried forward to a succeeding Fiscal Year shall be deemed to
be used prior to the Borrower and its Subsidiaries, if any, using the
amount of Capital Expenditures permitted by this Section in such
succeeding Fiscal Year, without giving effect to such carry-forward).
(b) The parties acknowledge and agree that the permitted
Capital Expenditure level set forth in clause (a) above shall be
exclusive of (i) the amount of Capital Expenditures actually made with
cash capital contributions made to the Borrower or any of its
Subsidiaries, if any, by Holdco or Intermediate Holdco, after the
Closing Date and specifically identified in a certificate delivered by
an Authorized Officer of the Borrower to the Agents on or about the
time such capital contribution is made, (ii) that portion of any
acquisition that is permitted under SECTION 7.2.5 (other than pursuant
to clause (d) thereof) that is accounted for as a Capital Expenditure
and (iii) any Capital Expenditure
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made with Net Disposition Proceeds pursuant to the proviso to clause
(d) of SECTION 3.L.1.
SECTION 7.2.8. CONSOLIDATION, MERGER, ETC. The Borrower will not, and
will not permit any of its Subsidiaries, if any, to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) except
(a) any such Subsidiary may liquidate or dissolve voluntarily
into, and may merge with and into, the Borrower (so long as the
Borrower is the surviving corporation of such combination or merger) or
any other Subsidiary, and the assets or stock of any such Subsidiary
may be purchased or otherwise acquired by the Borrower or any other
Subsidiary; provided, that notwithstanding the above, a Subsidiary may
only liquidate or dissolve into, or merge with and into, another
Subsidiary of the Borrower if, after giving effect to such combination
or merger, the Borrower continues to own (directly or indirectly), and
the Administrative Agent continues to have pledged to it pursuant to a
Pledge Agreement, a percentage of the issued and outstanding shares of
Capital Stock (on a fully diluted basis) of the Subsidiary surviving
such combination or merger that is equal to or in excess of the
percentage of the issued and outstanding shares of Capital Stock (on a
fully diluted basis) of the Subsidiary that does not survive such
combination or merger that was (immediately prior to the combination or
merger) owned by the Borrower or pledged to the Administrative Agent;
(b) so long as no Default has occurred and is continuing or
would occur after giving effect thereto, the Borrower or any of its
Subsidiaries may purchase all or substantially all of the assets of any
Person (or any division thereof) not then a Subsidiary, or acquire such
Person by merger, if permitted (without duplication) pursuant to
SECTION 7.2.7 or clause (f) or (i) of SECTION 7.2.5; and
(c) the Borrower and its Subsidiaries may consummate the
Transaction.
SECTION 7.2.9. ASSET DISPOSITIONS, ETC. The Borrower will not, and will
not permit any of its Subsidiaries, if any, to, sell, transfer, lease,
contribute or otherwise convey, or grant options, warrants or other rights with
respect to, all or any part of its assets, whether now owned or hereafter
acquired (including accounts receivable and Capital Stock of Subsidiaries) to
any Person, unless:
(a) such sale, transfer, lease, contribution or conveyance of
such assets is (i) in the ordinary course of its business or is of
obsolete or worn out property, (ii) permitted by SECTION 7.2.8, or
(iii) between the Borrower and one of its Subsidiaries or between U.S.
Subsidiaries of the Borrower;
(b) such sale, transfer, lease, contribution or conveyance
constitutes (i) an Investment permitted under SECTION 7.2.5, (ii) a
Lien permitted under SECTION 7.2.3 or (iii) a Restricted Payment
permitted under SECTION 7.2.6; or
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(c) (i) such sale, transfer, lease, contribution or conveyance
of such assets is for fair market value and the consideration (other
than in respect of the disposition of the assets of the Greatbatch
Scientific division) consists of no less than 75% in cash and (ii) an
amount equal to the Net Disposition Proceeds generated from such sale,
transfer, lease, contribution or conveyance is applied, to the extent
required therein, to prepay the Loans pursuant to the terms of SECTION
3.1.1 and SECTION 3.1.2.
SECTION 7.2.10. MODIFICATION OF CERTAIN AGREEMENTS. Without the prior
written consent of the Required Lenders, the Borrower will not, and will not
permit any of its Subsidiaries to, consent to any amendment, supplement,
amendment and restatement, waiver or other modification of any of the terms or
provisions contained in, or applicable to, any Subordinated Note (including the
Subordinated Note Indenture or to the Subordinated Debt Issuance) or any
Material Document or any schedules, exhibits or agreements related thereto, is
each case which would adversely affect the rights or remedies of the Lenders, or
the Borrower's or any Subsidiary's, if any, ability to perform hereunder or
under any Loan Document or which would increase the cash consideration payable
in respect of the Acquisition or, in the case of the Stock Purchase Agreement,
which would increase the Borrower's or any of its Subsidiaries' obligations or
liabilities, contingent or otherwise (other than adjustments to the cash
consideration payable in respect of the Acquisition made pursuant to the terms
of the Stock Purchase Agreement).
SECTION 7.2.11. TRANSACTIONS WITH AFFILIATES. The Borrower will not,
and will not permit any of its Subsidiaries, if any, to, enter into, or cause,
suffer or permit to exist any arrangement or contract with any of its other
Affiliates unless such arrangement or contract is fair and equitable to the
Borrower or such Subsidiary and is as arrangement or contract of the kind which
would be entered into by a prudent Person in the position of the Borrower or
such Subsidiary with a Person which is not one of its Affiliates; provided,
however, that the Borrower and its Subsidiaries, if any, shall be permitted (i)
to enter into and perform their obligations under the Transaction Documents,
(ii) to make any Restricted Payment permitted under SECTION 7.2.6 and (iii) to
enter into and perform their obligations under arrangements with DLJ and its
Affiliates for underwriting, investment banking and advisory services (including
payments of the fee and the retainer in respect of advisory services referred to
in clause (c)(i) of SECTION 7.2 6) on usual and customary terms.
SECTION 7.2.12. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The
Borrower will not, and will not permit any of its Subsidiaries, if any, to,
enter into any agreement prohibiting
(a) the (i) creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter acquired
(other than, in the case of any assets acquired with the proceeds of
any Indebtedness permitted under SECTION 7.2.2(c) or (g) (provided,
that any such Liens on assets securing Indebtedness of the type
described in such clause (c) or (g) type described as such attach only
to the assets leased or acquired in connection with such Indebtedness
and shall not attach to any other assets of the Borrower or any of its
Subsidiaries then existing or which arise after the date thereof),
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customary limitations and prohibitions contained in such Indebtedness,
or (ii) ability of the Borrower or any other Obligor to amend or
otherwise modify this Agreement or any other Loan Document; or
(b) any Subsidiary from making any payments, directly or
indirectly, to the Borrower by way of dividends, advances, repayments
of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the
ability of any such Subsidiary to make any payment, directly or
indirectly, to the Borrower.
SECTION 7.2.13. STOCK OF SUBSIDIARIES. The Borrower will not permit any
Subsidiary (other than a Subsidiary which is a Joint Venture), if any, to issue
any Capital Stock (whether for value or otherwise) to any Person other than the
Borrower or another wholly-owned Subsidiary of the Borrower.
SECTION 7.2.14. SALE AND LEASEBACK. The Borrower will not, and will not
permit any of its Subsidiaries, if any, to, enter into any agreement or
arrangement with any other Person, whether an operating lease or capital lease,
providing for the leasing by the Borrower or any of its Subsidiaries, if any, of
real or personal property which has been or is to be sold or transferred by the
Borrower or any of its Subsidiaries, if any, to such other Person or to any
other Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or any of its
Subsidiaries, if any.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. LISTING OF EVENTS OF DEFAULT. Each of the following events
or occurrences described in this SECTION 8.1 shall constitute an "EVENT OF
DEFAULT".
SECTION 8.1.1. NON-PAYMENT OF OBLIGATIONS. (a) The Borrower shall
default in the payment or prepayment of any principal of any Loan when due or
any Reimbursement Obligations or any deposit of cash for collateral purposes
pursuant to SECTION 2.6.2 or SECTION 2.6.4, as the case may be, or (b) any
Obligor (including the Borrower) shall default (and such default shall continue
unremedied for a period of three Business Days) in the payment when due of any
interest or commitment fee with respect to the Loans or Commitments or of any
other monetary Obligation.
SECTION 8.1.2. BREACH OF WARRANTY. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate
(including the Restatement Effective Date Certificate) furnished by or on behalf
of the Borrower or any other Obligor to the Agents, the
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Issuer, the Arranger or any Lender for the purposes of or in connection with
this Agreement or any such other Loan Document (including any certificates
delivered pursuant to ARTICLE V) is or shall be incorrect when made in any
material respect.
SECTION 8.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS.
The Borrower shall default in the due performance and observance of any of its
obligations under SECTIONS 7.1.9 or 7.1.10 or 7.2 (other than SECTION 7.2.1).
SECTION 8.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 30 days after notice
thereof shall have been given to the Borrower by the Administrative Agent at the
direction of the Required Lenders.
SECTION 8.1.5. DEFAULT ON OTHER INDEBTEDNESS. A default shall occur (i)
in the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness, other than Indebtedness
described in SECTION 8.1.1, of the Borrower or any of its Subsidiaries or Holdco
having a principal amount, individually or in the aggregate, in excess of
$5,000,000, or (ii) a default shall occur in the performance or observance of
any obligation or condition with respect to such Indebtedness having a principal
amount, individually or in the aggregate, in excess of $5,000,000 if the effect
of such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient
to permit the holder or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due and payable prior to
its expressed maturity.
SECTION 8.1.6. JUDGMENTS. Any judgment or order for the payment of
money in excess of $5,000,000 (not covered by insurance from a responsible
insurance company that is not denying its liability with respect thereto) shall
be rendered against the Borrower or any of its Subsidiaries, if any, and remain
unpaid and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order, or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect.
SECTION 8.1.7. PENSION PLANS. Any of the following events shall occur
with respect to any Pension Plan (i) the termination of any Pension Plan if, as
a result of such termination, the Borrower would be required to make a
contribution to such Pension Plan, or would reasonably expect to incur a
liability or obligation to such Pension Plan, in excess of $1,0000, or (ii) a
contribution failure occurs with respect to any Pension Plan sufficient to give
rise to a Lien under section 302(f) of ERISA in an amount in excess of
$1,000,000.
SECTION 8.1.8. CHANGE IN CONTROL. Any Change in Control shall occur.
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SECTION 8.1.9. BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any other
Obligor shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for the Borrower
or any other Obligor or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent, acquiescence
or assignment, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any other
Obligor or for a substantial part of the property of any thereof, and
such trustee, receiver, sequestrator or other custodian shall not be
discharged within 60 days, provided that the Borrower and each other
Obligor hereby expressly authorizes the Agents, the Issuer and each
Lender to appear in any court conducting any relevant proceeding during
such 60-day period to preserve, protect and defend their rights under
the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Borrower or any
other Obligor, and, if any such case or proceeding is not commenced by
the Borrower or such other Obligor, such case or proceeding shall be
consented to or acquiesced in by the Borrower or such other Obligor or
shall result in the entry of an order for relief or shall remain for 60
days undismissed, provided that the Borrower and each other Obligor
hereby expressly authorizes the Agents, the Issuer and each Lender to
appear in any court conducting any such case or proceeding during such
60-day period to preserve, protect and defend their rights under the
Loan Documents; or
(e) take any action (corporate or otherwise) authorizing, or
in furtherance of, any of the foregoing.
SECTION 8.1.10. IMPAIRMENT OF SECURITY, ETC. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be in full force and effect or cease to be the
legally valid, binding and enforceable obligation of any Obligor party thereto;
the Borrower or any other Obligor shall, directory or indirectly, contest in any
manner the effectiveness, validity, binding nature or enforceability thereof; or
any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first priority Lien, subject only to those exceptions expressly
permitted by the Loan Documents, except to the extent any event referred to
above (a) relates to assets of the Borrower or any of its Subsidiaries, if any,
which are immaterial, (b) results from the failure of the Administrative Agent
to maintain possession of certificates representing securities pledged under any
Pledge Agreement or to file continuation statements under the Uniform Commercial
Code of any applicable jurisdiction or (c) is covered by a lender's title
insurance policy and the relevant
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insurer promptly after the occurrence thereof shall have acknowledged in writing
that the same is covered by such title insurance policy.
SECTION 8.1.11. SUBORDINATED NOTES. The subordination provisions
relating to the Subordinated Notes (the "SUBORDINATION PROVISIONS") shall fail
to be enforceable by the Lenders (which have not effectively waived the benefits
thereof) in accordance with the terms thereof, or the principal or interest on
any Loan, Reimbursement Obligation or other Obligations shall fail to constitute
"Senior Debt" (as defined in any Subordinated Note) or "senior indebtedness" (or
any other similar term)); or the Borrower or any of its Subsidiaries, if any,
shall, directly or indirectly, disavow or contest in any manner (i) the
effectiveness, validity or enforceability of any of the Subordination
Provisions, or (ii) that any of such Subordination Provisions exist for the
benefit of the Agents and the Lenders.
SECTION 8.2. ACTION IF BANKRUPTCY, ETC. If any Event of Default
described in clauses (b), (c) and (d) of SECTION 8.1.9 shall occur with respect
to any Obligor (other than immaterial Subsidiaries) the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations (including
Reimbursement Obligations) shall automatically be and become immediately due
and payable, without notice or demand and the Borrower shall automatically and
immediately be obligated to deposit with the Administrative Agent cash
collateral in an amount equal to all Letter of Credit Outstandings.
SECTION 8.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than an Event of Default described in clauses (b), (c) and (d) of SECTION
8.1.9 with respect to any Obligor (other than immaterial Subsidiaries)) shall
occur for any reason, whether voluntary or involuntary, and be continuing, the
Administrative Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare all or any portion of the outstanding principal
amount of the Loans and other Obligations (including Reimbursement Obligations)
to be due and payable, require the Borrower to provide cash collateral to be
deposited with the Administrative Agent in an amount equal to the undrawn amount
of all Letters of Credit outstanding and/or declare the Commitments (if not
theretofore terminated) to be terminated, whereupon the full unpaid amount of
such Loans and other Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or presentment, and/or, as the case may be, the Commitments shall terminate and
the Borrower shall deposit with the Administrative Agent cash collateral in an
amount equal to all Letter of Credit Outstandings.
ARTICLE IX
THE AGENTS
SECTION 9.1. ACTIONS. Each Lender hereby appoints DLJ as its
Syndication Agent and Fleet as its Administrative Agent under and for purposes
of this Agreement, the Notes and each
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other Loan Document. Each Lender authorizes the Agents to act on behalf of such
Lender under this Agreement, the Notes and each other Loan Document and, in the
absence of other written instructions from the Required Lenders received from
time to time by the Agents (with respect to which each of the Agents agrees that
it will comply, except as otherwise provided in this Section or as otherwise
advised by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agents by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto. Each
Lender hereby indemnifies (which indemnity shall survive any termination of this
Agreement) the Agents, ratably in accordance with their respective Term Loans
outstanding and Commitments (or, if no Term Loans or Commitments are at the time
outstanding and in effect, then ratably in accordance with the principal amount
of Term Loans held by such Lender, and their respective Commitments as in effect
in each case on the date of the termination of this Agreement), from and against
any and all liabilities, obligations, losses, damages, claims, costs or expenses
of any kind or nature whatsoever which may at any time be imposed on, incurred
by, or asserted against, either of the Agents in any way relating to or arising
out of this Agreement, the Notes and any other Loan Document, including
reasonable attorneys' fees, and as to which any Agent is not reimbursed by the
Borrower or any other Obligor (and without limiting the obligation of the
Borrower or any other Obligor to do so); PROVIDED, HOWEVER, that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from such
Agent's gross negligence or willful misconduct. The Agents shall not be required
to take any action hereunder, under the Notes or under any other Loan Document,
or to prosecute or defend any suit in respect of this Agreement, the Notes or
any other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any indemnity in favor of either of the Agents shall be or become, in such
Agent's determination, inadequate, such Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 9.2. FUNDING RELIANCE, ETC. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m., New York time, on the day prior to a Borrowing or disbursement with
respect to a Letter of Credit pursuant to SECTION 2.6.2 that such Lender will
not make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, may, but shall not be obligated to, make
available to the Borrower a corresponding amount. If and to the extent that such
Lender shall not have made such amount available to the Administrative Agent,
such Lender severally agrees and the Borrower agrees to repay the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date the Administrative Agent made such amount
available to the Borrower to the date such amount is repaid to the
Administrative Agent, at the interest rate applicable at the time to Loans
comprising such Borrowing.
SECTION 9.3. EXCULPATION. None of the Agents or the Arranger nor any of
their respective directors, officers, employees or agents shall be liable to any
Lender for any action
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taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for its own willful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, nor for the creation,
perfection or priority of any Liens purported to be created by any of the Loan
Documents, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry respecting the
performance by the Borrower of its obligations hereunder or under any other Loan
Document. Any such inquiry which may be made by any Agent or the Issuer shall
not obligate it to make any further inquiry or to take any action. The Agents
and the Issuer shall be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate, statement or writing which
the Agents or the Issuer, as applicable, believe to be genuine and to have been
presented by a proper Person.
SECTION 9.4. SUCCESSOR. The Syndication Agent may resign as such upon
one Business Day's notice to the Borrower and the Administrative Agent. The
Administrative Agent may resign as such at any time upon at least 30 days' prior
notice to the Borrower and all Lenders. The Administrative Agent may also be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to the Administrative Agent and signed by the
Borrower. If the Administrative Agent at any time shall resign or be removed,
the Required Lenders may, with the prior consent of the Borrower (which consent
shall not be unreasonably withheld), appoint another Lender as a successor
Administrative Agent which shall thereupon become the Administrative Agent
hereunder. If no successor Administrative Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Administrative Agent's giving notice of resignation or
receiving notice of removal, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which shall in
any event be one of the Lenders or a commercial banking institution organized
under the laws of the United States or a United States branch or agency of a
commercial banking institution, and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall be entitled to receive from the retiring
Administrative Agent such documents of transfer and assignment as such successor
Administrative Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as the Administrative
Agent, the provisions of (i) this ARTICLE IX shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was the Administrative
Agent under this Agreement, and (ii) SECTION 10.3 and SECTION 10.4 shall
continue to inure to its benefit.
SECTION 9.5. CREDIT EXTENSIONS BY EACH AGENT. Each Agent and the Issuer
shall have the same rights and powers with respect to (x) (i) in the case of the
Agents, the Credit Extensions made by it or any of its Affiliates and (ii) in
the case of the Issuer, the Loans made by it or any of its Affiliates, and (y)
the Notes held by it or any of its Affiliates as any other Lender
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and may exercise the same as if it were not an Agent or the Issuer. Each Agent,
the Issuer and each of their respective Affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower or
any Subsidiary or Affiliate of the Borrower as if such Agent or Issuer were not
an Agent or Issuer hereunder.
SECTION 9.6. CREDIT DECISIONS. Each Lender acknowledges that it has,
independently of each Agent, the Documentation Agent, the Arranger, the Issuer
and each other Lender, and based on such Lender's review of the financial
information of the Borrower, this Agreement, the other Loan Documents (the terms
and provisions of which being satisfactory to such Lender) and such other
documents, information and investigations as such Lender has deemed appropriate,
made its own credit decision to extend its Commitments. Each Lender also
acknowledges that it will, independently of each Agent, the Documentation Agent,
the Arranger, the Issuer and each other Lender, and based on such other
documents, information and investigations as it shall deem appropriate at any
time, continue to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available to it under
this Agreement or any other Loan Document.
SECTION 9.7. COPIES, ETC. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for such Lender's account and copies of all other communications
received by the Administrative Agent from the Borrower for distribution to the
Lenders by the Administrative Agent in accordance with the terms of this
Agreement.
SECTION 9.8. THE SYNDICATION AGENT, THE DOCUMENTATION AGENT AND THE
ADMINISTRATIVE AGENT. Notwithstanding anything else to the contrary contained in
this Agreement or any other Loan Document, the Agents, and the Documentation
Agent, each in such capacity, shall have no duties or responsibilities under
this Agreement or any other Loan Document nor any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against any Agent or the Documentation Agent, as applicable, in such capacity
except as are explicitly set forth herein or in the other Loan Documents.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. WAIVERS, AMENDMENTS, ETC. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and each Obligor party thereto and by the Required
Lenders; provided, however, that no such amendment, modification or waiver which
would:
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(a) modify any requirement hereunder that any particular
action be taken by all the Leaders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this SECTION 10.1, or clause (i) of SECTION 10.10,
change the definition of "Required Lenders", increase any Commitment
Amount or the Percentage of any Lender, reduce any fees described in
SECTION 3.3 (other than the administration fee referred to in SECTION
3.3.2), release any Subsidiary Guarantor from its obligations under any
Subsidiary Guaranty, or release all or substantially all of the
collateral security (except in each case as otherwise specifically
provided in this Agreement any such Subsidiary Guaranty, a Security
Agreement or a Pledge Agreement) or extend any Commitment Termination
Date shall be made without the consent of each Lender adversely
affected thereby;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment of principal of or interest on or fees payable in
respect of any Loan or reduce the principal amount of or rate of
interest on or fees payable in respect of any Loan or any Reimbursement
Obligations (which shall in each case include the conversion of all or
any part of the Obligations into equity of any Obligor), shall be made
without the consent of the holder of the Note evidencing such Loan or,
in the case of a Reimbursement Obligation, the Issuer owed, and those
Lenders participating in, such Reimbursement Obligation;
(d) affect adversely the interests, rights or obligations of
any Agent, Issuer, Arranger or the Swing Line Lender (in its capacity
as Agent, Issuer, Arranger or Swing Line Lender), unless consented to
by such Agent, Issuer, Arranger or Swing Line Lender, as the case may
be;
(e) (i) change the definition of "Borrowing Base Amount",
"Eligible Account", "Eligible Inventory" or "Net Asset Value" (in each
case if the effect of such change would be to require a Lender to make
or participate in a Credit Extension in an amount that is greater than
such Lender would have had to make or participate in immediately prior
to such change), (ii) amend, modify or waive SECTION 3.1.1 (B) or (iii)
have the effect (either immediately or at some later time) of enabling
the Borrower to satisfy a condition precedent to the making of a
Revolving Loan or the issuance of a Letter of Credit without the
consent of Lenders holding at least 51% of the Revolving Loan
Commitments; or
(f) amend, modify or waive the provisions of clause (a)(i) of
SECTION 3.1.1 or clause (b) of SECTION 3.1.2 or effect any amendment,
modification or waiver that by its terms adversely affects the rights
of Lenders participating in any Tranche differently from those of
Lenders participating in other Tranches, without the consent of the
holders of the Notes evidencing at 51% of the aggregate amount of Loans
outstanding under the Tranche or Tranches affected by such
modification, or, in the case of a modification
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affecting the Revolving Loan Commitment Amount, the Lenders holding at
least 51% of the Revolving Loan Commitments.
No failure or delay on the part of any Agent, the Issuer, any Lender or the
holder of any Note in exercising any power or right under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by any Agent, the Issuer,
any Lender or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION 10.2. NOTICES. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth on Schedule II hereto or, in the case
of a Lender that becomes a party hereto after the date hereof, as set forth in
the Lender Assignment Agreement pursuant to which such Lender becomes a Lender
hereunder or at such other address or facsimile number as may be designated by
such party in a notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted (and telephonic
confirmation of receipt thereof has been received).
SECTION 10.3. PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to pay
on demand all reasonable expenses of each of the Agents (including the
reasonable fees and out-of-pocket expenses of a single counsel to the Agents and
of any local or foreign counsel, if any, who may be retained by counsel to the
Agents) in connection with
(a) the syndication by the Syndication Agent and the Arranger
of the Loans, the negotiation, preparation, execution and delivery of
this Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated;
(b) the filing, recording, refiling or rerecording of each
Mortgage, each Pledge Agreement and each Security Agreement and/or any
Uniform Commercial code financing statements relating thereto and all
amendments, supplements and modifications to any thereof and any and
all other documents or instruments of further assurance required to be
filed or recorded or refiled or rerecorded by the terms hereof or of
such Mortgage, Pledge Agreement or Security Agreement; and
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(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Agents, the Issuer and the
Lenders harmless from all liability for, any stamp or other similar taxes which
may be payable in connection with the execution or delivery of this Agreement,
the Credit Extensions made hereunder or the issuance of the Notes or Letters of
Credit or any other Loan Documents. The Borrower also agrees to reimburse each
Agent, the Issuer and each Lender upon demand for all reasonable out-of-pocket
expenses (including reasonable attorneys' fees and legal expenses) incurred by
such Agent, the Issuer or such Lender in connection with (x) the negotiation of
any restructuring or "work-out", whether or not consummated, of any Obligations
and (y) the enforcement of any Obligations.
SECTION 10.4. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby, to the fullest extent permitted under applicable law,
indemnifies, exonerates and holds each Agent, the Documentation Agent, the
Issuer, the Arranger and each Lender and each of their respective Affiliates,
and each of their respective partners, officers, directors, employees and
agents, and each other Person controlling any of the foregoing within the
meaning of either Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934, as amended (collectively, the
"INDEMNIFIED PARTIES"), free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities and damages, and expenses
actually incurred in connection therewith (irrespective of whether any such
Indemnified Party is a party to the action for which indemnification hereunder
is sought), including reasonable attorneys' fees and disbursements
(collectively, the "INDEMNIFIED LIABILITIES"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Credit
Extension;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties (excluding
any successful action brought by or on behalf of the Borrower as the
result of any failure by any Lender to make any Credit Extension
hereunder);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries, if any, of all or any portion of the stock or assets of
any Person, whether or not such Agent, such Documentation Agent, such
Issuer, such Arranger or such Lender is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the Borrower's or any of its Subsidiaries', if any, compliance with or
liability under Environmental Law or the Release by the Borrower or any
of its Subsidiaries, if any, of any Hazardous Material; or
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(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, any real property owned
or operated by the Borrower or any Subsidiary, if any, thereof of any
Hazardous Material present on or under such property in a manner giving
rise to liability at or prior to the time the Borrower or such
Subsidiary owned or operated such property (including any losses,
liabilities, damages, injuries, costs, expenses or claims assessed or
arising under any Environmental Law), regardless of whether caused by,
or within the control of, the Borrower or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct or any Hazardous Materials that are first
manufactured, emitted, generated, treated, released, stored or disposed of on
any real property of the Borrower or any of its Subsidiaries, if any, or any
violation of Environmental Law that first occurs on or with respect to any real
property of the Borrower or any of its Subsidiaries, if any, after such real
property is transferred to any Indemnified Person or its successor by
foreclosure sale, deed in lieu of foreclosure, or similar transfer, except to
the extent such manufacture, emission, release, generation, treatment, storage
or disposal or violation is actually caused by the Borrower or any of the
Borrower's Subsidiaries, if any. The Borrower and its permitted successors and
assigns hereby waive, release and agree not to make any claim, or bring any cost
recovery action against, any Agent, the Issuer, the Documentation Agent, the
Arranger or any Lender under CERCLA or any state equivalent, or any similar law
now existing or hereafter enacted, except to the extent arising out of the gross
negligence or willful misconduct of any Indemnified Party. It is expressly
understood and agreed that to the extent that any of such Persons is strictly
liable under any Environmental Laws, the Borrower's obligation to such Person
under this indemnity shall likewise be without regard to fault on the part of
the Borrower, to the extent permitted under applicable law, with respect to the
violation or condition which results in liability of such Person.
Notwithstanding anything to the contrary herein, each Agent, the Documentation
Agent, the Issuer, the Arranger and each Lender shall be responsible with
respect to any Hazardous Materials that are first manufactured, emitted,
generated, treated, released, stored or disposed of on any real property of the
Borrower or any of its Subsidiaries, if any, or any violation of Environmental
Law that first occurs on or with respect to any such real property after such
real property is transferred to any Agent, Documentation Agent, Issuer, Arranger
or Lender to its successor by foreclosure sale, deed in lieu of foreclosure, or
similar transfer, except to the extent such manufacture, emission, release,
generation, treatment, storage or disposal or violation is actually caused by
the Borrower or any of the Borrower's Subsidiaries. If and to the extent that
the foregoing undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law.
SECTION,10.5. SURVIVAL. The obligations of the Borrower under SECTIONS
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4. and the obligations of the Lenders under
SECTIONS 4.8 and 9.1, shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by the Borrower and
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each other Obligor in this Agreement and in each other Loan Document shall
survive the execution and delivery of this Agreement and each such other Loan
Document.
SECTION 10.6. SEVERABILITY. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. HEADINGS. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 10.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SECTION 10.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE
NOTES AND, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED THEREIN, EACH OTHER
LOAN DOCUMENT SHALL EACH BE DEEMED TO BE CONTRACTS MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the Notes and the
other Loan Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto. Upon the execution and
delivery of this Agreement by the parties hereto, all obligations and
liabilities of DLJMB Funding II, Inc. under or relating or with respect to the
Commitment Letter shall be terminated and of no further force or effect.
SECTION 10.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that (i) the Borrower may not assign
or transfer its rights or obligations hereunder without the prior written
consent of each of the Agents and all Lenders, and (ii) the rights of sale,
assignment and transfer of the Lenders are subject to SECTION 10.11.
SECTION 10.11. SALES AND TRANSFER OF LOANS AND NOTES; PARTICIPATIONS IN
LOANS AND NOTES. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more other Persons, on a non PRO RATA basis (except as
provided below), in accordance with this SECTION 10.11.
SECTION 10.11.1. ASSIGNMENTS. Any Lender (the "ASSIGNOR LENDER"),
(a) with the written consents of the Borrower, the Agents and
(in the case of any assignment of participations in Letters of Credit
or Revolving Loan Commitments) the
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Issuer and the Swing Line Lender (which consents shall not be
unreasonably delayed or withheld and which consents of the Agents and
the Issuer and the Swing Line Lender shall not be required in the case
of assignments made to or by DLJ or any of its Affiliates), may at any
time assign and delegate to one or more commercial banks or other
financial institutions, and
(b) with notice to the Borrower, the Agents, and (in the case
of any assignment of participations in Letters of Credit or Revolving
Loan Commitments) the Issuer, but without the consent of the Borrower,
the Agents, the Issuer or the Swing Line Lender, may assign and
delegate to any of its Affiliates or to any other Lender or to any
Person whose investment manager or investment advisor is the investment
manager or investment advisor of such Lender
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "ASSIGNEE LENDER"), all or any fraction of such Lender's total Loans,
participations in Letters of Credit and Letter of Credit Outstandings with
respect thereto and Commitments (which assignment and delegation shall be, as
among Revolving Loan Commitments, Revolving Loans and participations in Letters
of Credit, of a constant, and not a varying, percentage) in a minimum aggregate
amount equal to the lesser of (i) $2,500,000 or (ii) the then remaining amount
of such Lender's Loans and Commitments; provided, however, that any such
Assignee Lender will comply, if applicable, with the provisions contained in
Section 4.6 and the Borrower, each other Obligor and the Agents shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned and delegated to an Assignee Lender until
(c) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower
and the Agents by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to
the Borrower and the Agents a Lender Assignment Agreement, accepted by
the Agents;
(e) the processing fees described below shall have been paid,
and
(f) the Administrative Agent shall have recorded such
assignment and delegation.
From and after the date that the Agents accept such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the Assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its
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obligations hereunder and under the other Loan Documents. Within ten Business
Days after its receipt of notice that the Administrative Agent has received an
executed Lender Assignment Agreement, the Borrower shall execute and deliver to
the Administrative Agent (for delivery to the relevant Assignee Lender) now
Notes evidencing such Assignee Lender's assigned Loans and Commitments and, if
the Assignor Lender has retained Loans and Commitments hereunder, replacement
Notes in the principal amount of the Loans and Commitments retained by the
Assignor Lender hereunder (such Notes to be in exchange for, but not in payment
of, those Notes then held by such Assignor Lender). Each such Note shall be
dated the date of the predecessor Notes. The Assignor Lender shall mark the
predecessor Notes "exchanged" and deliver them to the Borrower. Accrued interest
on that part of the predecessor Notes evidenced by the new Notes, and accrued
fees, shall be paid as provided in the Lender Assignment Agreement. Accrued
interest on that part of the predecessor Notes evidenced by the replacement
Notes shall be paid to the Assignor Lender. Accrued interest and accrued fees
shall be paid at the same time or times provided in the predecessor Notes and in
this Agreement. Such Assignor Lender or such Assignee Lender (but excluding DLJ
and its Affiliates) must also pay a processing fee to the Administrative Agent
upon delivery of any Lender Assignment Agreement in the amount of $2,500, unless
such assignment and delegation is by a Lender to its Affiliate or if such
assignment and delegation is by a Lender to a Federal Reserve Bank, as provided
below or is otherwise consented to by the Administrative Agent. Any attempted
assignment and delegation not made in accordance with this SECTION 10.11.1 shall
be null and void. Nothing contained in this SECTION 10.11.1 shall prevent or
prohibit any Lender from pledging its rights (but not its obligations to make
Loans or participate in Letters of Credit of Letter of Credit Outstandings)
under this Agreement and/or its Loans and/or its Notes hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from such Federal
Reserve Bank. In the event that S&P, Moody's or Thompson's BankWatch (or
InsuranceWatch Ratings Service, in the case of Lenders that are insurance
companies (or Best's Insurance Reports, if such insurance company is not rated
by Insurance Watch Ratings Service)) shall, after the date that any Lender with
a Commitment to make Revolving Loans or participate in Letters of Credit becomes
a Lender, downgrade the long-term certificate of deposit rating or long-term
senior unsecured debt rating of such Lender, and the resulting rating shall be
below BBB-, Baa3 or C (or BB, in the case of Lender that is an insurance company
(or B, in the case of an insurance company not rated by InsuranceWatch Ratings
Service)) respectively, then the Borrower (with the consent of the Agents, the
Swing Line Lender and the Issuer) shall have the right, but not the obligation,
upon notice to such Lender and the Agents, to replace such Lender with an
Assignee Lender in accordance with and subject to the restrictions contained in
this Section, and such Lender hereby agrees to transfer and assign without
recourse (in accordance with and subject to the restrictions contained in this
Section) all its interests, rights and obligations in respect of its Revolving
Loan Commitment under this Agreement to such Assignee Lender; provided, however,
that (i) no such assignment shall conflict with any law, rule and regulation or
order of any governmental authority and (ii) such Assignee Lender shall pay to
such Lender in immediately available funds on the date of such assignment the
principal of and interest and fees (if any) accrued to the date of payment on
the Loans made, and Letters of Credit participated in, by such Lender hereunder
and all other amounts accrued for such Lender's account or owed to it hereunder.
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SECTION 10.11.2. PARTICIPATIONS. Any Lender may at any time sell to one
or more commercial banks or other Persons (each such commercial bank and other
Person being herein called a "PARTICIPANT") participating interests in any of
the Loans, Commitments, participations in Letters of Credit and Letters of
Credit Outstandings or other interests of such Lender hereunder; provided,
however, that
(a) no participation contemplated in this Section shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
(c) the Borrower and each other Obligor and the Agents shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and each
of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under
any other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, agree to (i) any reduction in the interest rate or amount of
fees that such Participant is otherwise entitled to, (ii) a decrease in
the principal amount, or an extension of the final Stated Maturity
Date, of any Loan in which such Participant has purchased a
participating interest or (iii) a release of all or substantially all
of the collateral security under the Loan Documents or any Subsidiary
Guarantor under any Subsidiary Guaranty, in each case except as
otherwise specifically provided in a Loan Document; and
(e) the Borrower shall not be required to pay any amount under
SECTIONS 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, that is greater
than the amount which it would have been required to pay had no
participating interest been sold.
The Borrower acknowledges and agrees, subject to clause (e) above, that to the
extent permitted under applicable law, each Participant, for purposes of
SECTIONS 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4 shall be considered a
Lender.
SECTION 10.11.3. ASSIGNMENT OF REGISTERED NOTES. A Registered Note and
the Obligations evidenced thereby may be assigned or otherwise transferred in
whole or in part pursuant to the terms of SECTION 10.11.1 and only by
registration of such assignment or transfer of such Registered Note and the
Obligations evidenced thereby on the Register (and each Registered Note shall
expressly so provide). Any assignment or transfer of all or part of such
Obligations and the Registered Note(s) evidencing the same shall be registered
on the Register only upon surrender for registration of assignment or transfer
of the Registered Note(s) evidencing such Obligations, duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed by)
the Registered Noteholder thereof, and thereupon one
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or more new Registered Notes(s) in the same aggregate principal amount shall be
issued to the designated Assignee Lender, and the old Registered Notes(s) shall
be returned by the Administrative Agent to the Borrower marked "canceled." Prior
to the due presentment for registration of assignment or transfer of any
Registered Note, the Borrower and the Agents shall treat the Person in whose
name such Obligations and the Registered Note(s) evidencing the same is
registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding any notice to the contrary.
SECTION 10.12. OTHER TRANSACTIONS. Nothing contained herein shall
preclude any Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE
LENDERS, THE ISSUER OR THE BORROWER RELATING THERETO SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE
COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE
BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR TO
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NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY
IRREVOCABLY WAIVES (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) SUCH IMMUNITY
IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.14. WAIVER OF JURY TRIAL. THE AGENTS, THE ISSUER, THE
LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS OR THE BORROWER
RELATING THERETO. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF
EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT
AND EACH SUCH OTHER LOAN DOCUMENT.
SECTION 10.15. CONFIDENTIALITY. The Agents, the Documentation Agent,
the Issuer, the Arranger and the Lenders shall hold all non-public information
obtained pursuant to or in connection with this Agreement or obtained by them
based on a review of the books and records of the Borrower or any of its
Subsidiaries, if any, in accordance with their customary procedures for handling
confidential information of this nature, but may make disclosure to any of their
examiners, Affiliates, outside auditors, counsel and other professional advisors
in connection with this Agreement or as reasonably required by any potential
BONA FIDE transferee, participant or assignee, or in connection with the
exercise of remedies under a Loan Document, or as requested by any governmental
agency or representative thereof or pursuant to legal process; provided,
however, that
(a) unless specifically prohibited by applicable law or court
order, each Agent, the Documentation Agent, the Arranger and each
Lender shall notify the Borrower of any request by any governmental
agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such
Agent, the Documentation Agent, the Issuer, Arranger and Lender by such
governmental agency) for disclosure of any such non-public information
prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this SECTION
10.15, each Agent, the Documentation Agent, the Issuer, the Arranger
and each Lender shall require any such bona fide transferee,
participant and assignee receiving a disclosure of non-public
information to agree in writing
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(i) to be bound by this SECTION 10.15; and
(ii) to require such Person to require any other
Person to whom such Person discloses such non-public
information to be similarly bound by this SECTION 10.15; and
(c) except as may be required by an order of a court of
competent jurisdiction and to the extent set forth therein, no Lender
shall be obligated or required to return any materials furnished by the
Borrower or any Subsidiary, if any.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
WILSON GREATBACH LTD.
(the successor by merger with WGL
Acquisition Corp.)
By: /s/ Arthur J. Lalonde
---------------------------------
Name:
Title:
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DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent and as
Lender
By: /s/ Harold J. Phillips
---------------------------------
Name: Harold J. Phillips
Title: Managing Director
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HELLER FINANCIAL, INC.,
as the Documentation Agent and as
Lender
By: /s/ Kathy J. Inorio
---------------------------------
Name: Kathy J. Inorio
Title: Vice President
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FLEET NATIONAL BANK,
as the Administrative Agent, Swing
Line Lender and as Lender
By: /s/ A. Glen Kewley
---------------------------------
Name: A. Glen Kewley
Title: Assistant Vice President
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LENDERS:
BANKBOSTON, N.A.
By: /s/ Linda E. C. Alto
---------------------------------
Name: Linda E.C. Alto
Title: Vice President
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PARIBAS, NEW YORK BRANCH
By: /s/ Brett Mehlman
---------------------------------
Name: Brett Mehlman
Title: Vice President
By: /s/David Canavan
---------------------------------
Name: David Canavan
Title: Director
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BHF - BANK AKTIENGESELLSCHAFT
By: /s/ Anthony Heyman
---------------------------------
Name: Anthony Heyman
Title: Assistant Vice President
By: /s/ John Sykes
---------------------------------
Name: John Sykes
Title: VP
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THE CHASE MANHATTAN BANK, N.A.
By: /s/ Alan Boyce
---------------------------------
Name: Alan E. Boyce
Title: Vice President
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CITY NATIONAL BANK
By: /s/ Arman Walker
---------------------------------
Name: Arman Walker
Title: Vice President
119
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COMERICA BANK
By: /s/ David W. Shirey
---------------------------------
Name: David W. Shirey
Title: Account Officer
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MARINE MIDLAND BANK
By: /s/ Christopher F. French
---------------------------------
Name: Christopher F. French
Title: Authorized Signatory
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MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ Paul T. Pitman
---------------------------------
Name: Paul T. Pitman
Title: Vice President
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MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ Colleen Cunniffe
---------------------------------
Name: Colleen Cunniffe
Title: Vice President
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DEEPROCK & COMPANY
By:
---------------------------------
Eaton Vance Management, as
Investment Advisor
By: /s/ Scott H. Page
---------------------------------
Name: Scott H. Page
Title: Vice President
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VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Jeffrey W. Maillot
---------------------------------
Name: Jeffrey W. Maillot
Title: Senior Vice President and
Director
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STRATA FUNDING LTD.
By: /s/ John H. Cullinane
---------------------------------
Name: John H. Cullinane
Title: Director
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CERES FINANCE LTD.
By: /s/ John H. Cullinane
---------------------------------
Name: John H. Cullinane
Title: Director
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SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 6.7 LITIGATION.
DESCRIPTION OF PROCEEDING ACTION OR CLAIM SOUGHT
None.
ITEM 6.8 EXISTING SUBSIDIARIES.
Hittman Materials & Medical Components, Inc., a Delaware
corporation.
ITEM 6.11 EMPLOYEE BENEFIT PLANS.
None.
ITEM 6.12 ENVIRONMENTAL MATTERS.
None.
ITEM 7.1.11(a) MORTGAGED PROPERTIES.
Burton Road
Clarence, New York 14031
10,000 Wehrle Drive
Clarence, New York 14031
ITEM 7.1.11(b) LEASEHOLD MORTGAGED PROPERTIES.
9190 Red Branch Road
Columbia, Maryland 21045
ITEM 7.2.2(a) ONGOING INDEBTEDNESS.
None.
ITEM 7.2.3(a) ONGOING LIENS.
None.
ITEM 7.2.5(a) ONGOING INVESTMENTS.
None.
<PAGE>
SCHEDULE II to
Credit Agreement
PERCENTAGES
<TABLE>
<CAPTION>
Revolving Existing Additional Existing Additional
Loan Term-A Loan Term-A Loan Term-B Loan Term-B Loan
Commitment Commitment Commitment Commitment Commitment
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
DLJ Capital Funding. Inc. 12.5000000% 12.5000000% 0 0 15.483871%
Heller Financial, Inc. 12.5000000% 25.0000000% 0 0 0
Fleet National Bank 12.5000000% 25.0000000% 0 0 0
BankBoston, N.A. 6.2500000% 18.7500000% 0 0 0
Banque Paribas 8.3333334% 0 16.6666667% 0 0
BHF-Bank Aktiengesellschaft 8.3333334% 0 16.6666667% 0 0
The Chase Manhattan Bank, N.A. 6.2500000% 18.7500000% 0 0 0
Comerica Bank 8.3333334% 0 16.6666667% 0 0
Marine Midland Bank 8.3333334% 0 16.6666667% 0 0
Manufacturers and Traders Trust
Company 16.6666667% 0 13.3333334% 0 0
Van Kampen American Capital Prime
Rate Income Trust 0 0 0 0 19.851117%
Deeprock & Company 0 0 0 5.000000% 0
Strata Funding Ltd. 0 0 0 8.333300% 0
Ceres Finance Ltd. 0 0 0 16.666700% 0
</TABLE>
<PAGE>
ADMINISTRATIVE INFORMATION
NOTICE INFORMATION
Wilson Greatbatch, Ltd. 10,000 Wehrle Drive
Clarence, New York 14031
Contact: Arthur Lalonde
Fax:716-759-5508
DLJ Capital Funding, Inc. 277 Park Avenue
New York, New York 10172
Contact: Wendy LaMantia
Fax: 212-892-7272
Fleet National Bank 1 Federal Street
Boston, Massachusetts 02211
Contact: Eric Vander Mel
Fax: 617-346-4806
Heller Financial, Inc. 500 West Monroe Street
Chicago, Illinois 60661
Contact: Craig Gallehugh
Fax: 312-441-7367
LENDERS' DOMESTIC AND LIBOR OFFICES
DLJ Capital Funding, Inc. 525 Washington Blvd.
Jersey City, New Jersey 07310
Contact: Ed Vowinkel
Fax: 201-610-1965
Fleet National Bank 1 Federal Street
Boston, Massachusetts 02211
Contact: Eric Vander Mel
Fax: 617-346-4806
Heller Financial, Inc. 500 Monroe Street
Chicago, Illinois 60661
Contact: Craig Gallehugh
Fax: 312-441-7367
<PAGE>
EXHIBIT A-1
REVOLVING NOTE
$___________ July ___, 1997
FOR VALUE RECEIVED, the undersigned, WGL ACQUISITION CORP., a New York
corporation (the "Borrower"), promises to pay to the order of
______________________ (the "Lender") on the Stated Maturity Date (as defined in
the Credit Agreement referred to below), the principal sum of _______________
DOLLARS ($__________) or, if less, the aggregate unpaid principal amount of all
Revolving Loans shown on the schedule attached hereto (and any continuation
thereof) made by the Lender pursuant to that certain Credit Agreement, dated as
of July 10, 1997 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
various financial institutions as are or may become parties thereto, DLJ Capital
Funding, Inc., as the Syndication Agent, Fleet National Bank, as the
Administrative Agent and Heller Financial, Inc., as the Documentation Agent for
the Lenders.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
<PAGE>
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
WGL ACQUISITION CORP.
By___________________________
Title:
Upon the merger of WGL Acquisition
Corp. with and into the undersigned,
the undersigned acknowledges and agrees
that it shall have assumed all obligations
of WGL Acquisition Corp. under this
Revolving Note and each other Loan
Document executed by WGL Acquisition Corp.,
as if the undersigned was the direct
signatory of this Note and each such other
Loan Document.
WILSON GREATBATCH LTD.
By_______________________________
Title:
-2-
<PAGE>
REVOLVING LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
===============================================================================================================
Amount of Amount of Unpaid
Revolving Principal Principal
Loan Made Repaid Balance
--------- Interest --------- ---------
Date Period Total Notation
- ---- (If Applicable) ----- Made By
Base LIBO --------------- Base LIBO Base LIBO --------
Rate Rate Rate Rate Rate Rate
---- ---- ---- ---- ---- ----
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
</TABLE>
-3-
<PAGE>
EXHIBIT A-2
TERM-A NOTE
$_________________ July __, 1997
FOR VALUE RECEIVED, the undersigned, WGL ACQUISITION CORP., a New York
corporation (the "Borrower"), promises to pay to the order of
_____________________ (the "Lender") the principal sum of _______________
DOLLARS ($_________) or, if less, the aggregate unpaid principal amount of all
Term-A Loans shown on the schedule attached hereto (and any continuation
thereof) made by the Lender pursuant to that certain Credit Agreement, dated as
of July 10, 1997 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
various financial institutions as are or may become parties thereto, DLJ Capital
Funding, Inc., as the Syndication Agent, Fleet National Bank, as the
Administrative Agent and Heller Financial, Inc., as the Documentation Agent for
the Lenders.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Term-A Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
<PAGE>
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
WGL ACQUISITION CORP.
By___________________________
Title:
Upon the merger of WGL Acquisition
Corp. with and into the undersigned,
the undersigned acknowledges and agrees
that it shall have assumed all obligations
of WGL Acquisition Corp. under this
Term-A Note and each other Loan
Document executed by WGL Acquisition Corp.,
as if the undersigned was the direct
signatory of this Note and each such other
Loan Document.
WILSON GREATBATCH LTD.
By__________________________
Title:
-2-
<PAGE>
TERM-A LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
===============================================================================================================
Amount of Amount of Unpaid
Term-A Principal Principal
Loan Made Repaid Balance
--------- Interest --------- ---------
Date Period Total Notation
- ---- (If Applicable) ----- Made By
Base LIBO --------------- Base LIBO Base LIBO --------
Rate Rate Rate Rate Rate Rate
---- ---- ---- ---- ---- ----
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
</TABLE>
<PAGE>
EXHIBIT A-3
TERM-B NOTE
$____________ July ___, 1997
FOR VALUE RECEIVED, the undersigned, WGL ACQUISITION CORP., a New York
corporation (the "Borrower"), promises to pay to the order of
____________________ (the "Lender") the principal sum of ______________ DOLLARS
($___________________) or, if less, the aggregate unpaid principal amount of all
Term-B Loans shown on the schedule attached hereto (and any continuation
thereof) made by the Lender pursuant to that certain Credit Agreement, dated as
of July 10, 1997 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
various financial institutions as are or may become parties thereto, DLJ Capital
Funding, Inc., as the Syndication Agent, Fleet National Bank, as the
Administrative Agent and Heller Financial, Inc., as the Documentation Agent for
the Lenders.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Note is one of the Term-B Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
-2-
<PAGE>
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
WGL ACQUISITION CORP.
By___________________________
Title:
Upon the merger of WGL Acquisition
Corp. with and into the undersigned,
the undersigned acknowledges and agrees
that it shall have assumed all obligations
of WGL Acquisition Corp. under this
Term-B Note and each other Loan
Document executed by WGL Acquisition Corp.,
as if the undersigned was the direct
signatory of this Note and each such other
Loan Document.
WILSON GREATBATCH LTD.
By__________________________
Title:
-3-
<PAGE>
TERM-B LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
===============================================================================================================
Amount of Amount of Unpaid
Term-B Principal Principal
Loan Made Repaid Balance
--------- Interest --------- ---------
Date Period Total Notation
- ---- (If Applicable) ----- Made By
Base LIBO --------------- Base LIBO Base LIBO --------
Rate Rate Rate Rate Rate Rate
---- ---- ---- ---- ---- ----
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
</TABLE>
-4-
<PAGE>
EXHIBIT A-4
REGISTERED NOTE
THIS REGISTERED NOTE MAY NOT BE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS REGISTERED
NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH
CREDIT AGREEMENT.
$________________________ _________ __, ____
FOR VALUE RECEIVED, the undersigned, WGL ACQUISITION CORP., a New York
corporation (the "Borrower"), promises to pay to the order of
_____________________ (the "Lender") the principal sum of ________________
DOLLARS ($ ________) or, if less, the aggregate unpaid principal amount of all
the Term [A and Revolving] [B] Loans shown on the schedule attached hereto (and
any continuation thereof) made by the Lender pursuant to that certain Credit
Agreement, dated as of July 10, 1997 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "Credit Agreement"), among
the Borrower, the various financial institutions as are or may become parties
thereto, DLJ Capital Funding, Inc., as the Syndication Agent, Fleet National
Bank, as the Administrative Agent and Heller Financial, Inc., as the
Documentation Agent for the Lenders, payable in installments as set forth in the
Credit Agreement, with a final installment (in the amount necessary to pay in
full this Registered Note) due and payable on the Stated Maturity Date for all
Term [A and Revolving] [B] Loans. Unless otherwise defined, terms used herein
have the meanings provided in the Credit Agreement.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Administrative Agent pursuant to the Credit Agreement.
This Registered Note is one of the Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Registered Note and for a statement
of the terms and conditions on which the Borrower is permitted and required to
<PAGE>
make prepayments and repayments of principal of the Indebtedness evidenced by
this Registered Note and on which such Indebtedness may be declared to be
immediately due and payable.
As provided in Section 10.11.3 of the Credit Agreement, this Registered
Note and the Obligation(s) evidenced hereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer of this Registered Note and the Obligation(s) evidenced hereby on the
Register described in clause (b) of Section 2.8 of the Credit Agreement. Any
assignment or transfer of all or part of such Obligations(s) and this Registered
Note evidencing the same shall be registered on the Register only upon surrender
for registration of assignment or transfer of this Registered Note evidencing
such Obligations(s), duly endorsed by (or accompanied by a written instrument of
assignment or transfer duly executed by) the Registered Noteholder hereof, and
thereupon one or more new Registered Note(s) in the same aggregate principal
amount shall be issued to the designated Assignee Lender, and this Registered
Note shall be returned by the Administrative Agent to the Borrower marked
"canceled". Prior to the due presentment for registration of assignment or
transfer of this Registered Note, the Borrower and the Administrative Agent
shall treat the Person in whose name such Obligation(s) and this Registered
Note(s) evidencing the same is registered as the owner thereof for the purpose
of receiving all payments thereon and for all other purposes, notwithstanding
any notice to the contrary. This Registered Note may not be exchanged for
promissory notes that are not Registered Notes.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
-2-
<PAGE>
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
WGL ACQUISITION CORP.
By________________________________________
Title:
-3-
<PAGE>
TERM [A AND REVOLVING] [B] LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
==============================================================================================================
Amount of
Term [A and
Revolving] Amount of Unpaid
[B] Loan Principal Principal
Made Repaid Balance
---------- Interest ----------- -----------
Base LIBO Period (If Base LIBO Base LIBO Notation
Date Rate Rate Applicable) Rate Rate Rate Rate Total Made By
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
===============================================================================================================
</TABLE>
-4-
<PAGE>
EXHIBIT A-5
SWING LINE NOTE
$______________________ July __, 1997
FOR VALUE RECEIVED, the undersigned, WGL ACQUISITION CORP., a New York
corporation (the "Borrower"), promises to pay to the order of ______________
(the "Lender") on the Stated Maturity Date for Swing Line Loans the principal
sum of _______________ DOLLARS ($__________) or, if less, the aggregate unpaid
principal amount of all Swing Line Loans shown on the schedule attached hereto
(and any continuation thereof) made by the Lender pursuant to that certain
Credit Agreement, dated as of July 10, 1997 (as amended, supplemented, amended
and restated or otherwise modified from time to time, the "Credit Agreement"),
among the Borrower, the various financial institutions (including the Lender) as
are or may from time to time become parties thereto, DLJ Capital Funding, Inc.,
as the Syndication Agent, Fleet National Bank, as the Administrative Agent and
Heller Financial, Inc., as the Documentation Agent for the Lenders. Unless
otherwise defined, terms used herein have the meanings provided in the Credit
Agreement.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Lender pursuant to the Credit Agreement.
This Swing Line Note is the Swing Line Note referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Swing Line Note and for a statement
of the terms and conditions on which the Borrower is permitted and required to
make prepayments and repayments of principal of the Indebtedness evidenced by
this Swing Line Note and on which such Indebtedness may be declared to be
immediately due and payable.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
<PAGE>
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
WGL ACQUISITION CORP.
By____________________________
Title:
-2-
<PAGE>
SWING LINE LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
=======================================================================================
Amount of
Amount of Swing Principal Outstanding Principal Notation
Date Line Loan Made Repaid Balance Total Made By
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
=======================================================================================
</TABLE>
-3-
<PAGE>
EXHIBIT B-1
BORROWING REQUEST
FLEET NATIONAL BANK,
as Administrative Agent
1 Federal Street
Boston, Massachusetts 02110
Attention: [Name]
[Title]
WILSON GREATBATCH LTD.
Ladies and Gentlemen:
This Borrowing Request is delivered to you pursuant to Section 2.3 of the
Credit Agreement, dated as of July 10, 1997 (together with all amendments, if
any, from time to time made thereto, the "Credit Agreement"), among Wilson
Greatbatch Ltd. (the "Borrower", following the Merger), the various financial
institutions as are or may become parties thereto, DLJ Capital Funding, Inc., as
the Syndication Agent, Fleet National Bank, as the Administrative Agent and
Heller Financial, Inc., as the Documentation Agent for the Lenders. Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.
The Borrower hereby requests that a [Revolving Loan] [Term-A Loan] [Term-B
Loan] [Swing Line Loan] be made in the aggregate principal amount of
$___________ on ______, 19__ as a [LIBO Rate Loan having an Interest Period of
______ days ______] [Base Rate Loan].
The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in Section 5.2.1 are true and
correct in all material respects.
The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify the Administrative Agent.
Except to the extent, if any, that prior to the time of the Borrowing requested
hereby the Administrative Agent shall receive written
<PAGE>
notice to the contrary from the Borrower, each matter certified to herein shall
be deemed once again to be certified as true and correct at the date of such
Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:
Person to be Paid
Amount to be --------------------------- Name, Address, etc.
Transferred Name Account No. of Transferee Lender
- ----------- ---- ----------- --------------------
$____________ ______________ ___________ ______________________
______________________
Attention: ______________________
$____________ ______________ ___________ ______________________
______________________
Attention: ______________________
Balance of The Borrower______________ ______________________
such proceeds ______________________
Attention: ______________________
-2-
<PAGE>
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this ____ day of ___,19__.
WILSON GREATBATCH LTD.
By__________________________
Title:
-3-
<PAGE>
EXHIBIT B-2
BORROWING BASE CERTIFICATE
WILSON GREATBATCH LTD.
This Borrowing Base Certificate is delivered pursuant to [clause (c) of
Section 5.1.8] [clause (h) of Section 7.1.1] of the Credit Agreement, dated as
of July 10, 1997 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Credit Agreement") among Wilson Greatbatch Ltd.
(the "Borrower", following the Merger), the various financial institutions as
are or may become parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as
the Syndication Agent, Fleet National Bank, as the Administrative Agent and
Heller Financial, Inc., as the Documentation Agent for the Lenders. Unless
otherwise defined herein or the context otherwise requires, terms used herein
and on the attached schedules have the meanings provided in the Credit
Agreement.
The Borrower hereby certifies, represents and warrants that as of _____
__, ____ (the "Borrowing Base Calculation Date"):
1. The book value of all Eligible Accounts as reflected on the books of the
Borrower and its Subsidiaries in accordance with GAAP, net of all credits,
discounts and allowances (and net of all unissued credits in the form of
competitive allowances or otherwise) in respect of such Eligible Accounts,
as set forth in Item 14 of Attachment 1 hereto, as of the Borrowing Base
Calculation Date is:________
2. 85% of the amount designated in Item 1 above is:_________.
3. The lesser of the market value and the cost (determined on a first-in,
first-out basis) of all Eligible Inventory constituting work-in-process
(other than post close weld cells) as reflected on the books of the
Borrower and its U.S. Subsidiaries, valued in accordance with GAAP, as set
forth in Item 7 of Attachment 2 hereto, as of the Borrowing Base
Calculation Dates is ________.
4. 25% of the amount designated in Item 3 above is:________.
5. The lesser of the market value and the cost (determined on a first-in,
first-out basis) of all Eligible Inventory constituting raw materials as
reflected on the books of the Borrower and its U.S. Subsidiaries, valued
in accordance with GAAP, as set forth in Item 7 of Attachment 2 hereto, as
of the Borrowing Base Calculation Date is ____.
6. 50% of the amount designated in Item 5 above is: ______.
<PAGE>
7. The lesser of the market value and the cost (determined on a first-in,
first-out basis) of all Eligible Inventory constituting finished goods
inventory and post close weld cells as reflected on the books of the
Borrower and its U.S. Subsidiaries, valued in accordance with GAAP, as set
forth in Item 7 of Attachment 2 hereto, as of the Borrowing Base
Calculation Date is ________.
8. 65% of the amount designated in Item 7 above is: ________.
9. The Borrowing Base Amount (the sum of the amounts designated in Item 2,
Item 4, Item 6 and Item 8) is: __________.
10. As of the date hereof, the aggregate outstanding principal amount of all
Revolving Loans, Letter of Credit Outstandings and Swing Line Loans (after
giving effect to the making of any Revolving Loans and Swing Line Loans
and issuances of any Letters of Credit being requested on the date of
delivery of this Certificate, if any) of the Borrower is:_________.
11. The excess of the Borrowing Base Amount over the amount set forth in Item
10 is: __________.
12. The calculations contained herein, to the best of the Borrower's
knowledge, are based upon book value, determined in accordance with GAAP
and are, in each case, relative to Accounts which meet the criteria set
forth in the Credit Agreement for Eligible Accounts or relative to
Inventory which meets the criteria set forth in the Credit Agreement for
Eligible Inventory, as applicable.
13. The information contained in this Certificate (including the information
upon which the foregoing calculations are based) is accurate, true and
complete in all material respects.
-2-
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Certificate to be
executed and delivered, and the certification, representations and warranties
contained herein to be made, by its Authorized Officer on ______ day of ______,
____.
WILSON GREATBATCH LTD.
By________________________________
Title:
-3-
<PAGE>
Attachment 1
(to __/__/__ Borrowing
Base Certificate)
ELIGIBLE ACCOUNTS
on ____, 19_
(the "Borrowing Base Calculation Date")
================================================================================
1. All Accounts of the Borrower and its wholly-owned
U.S. Subsidiaries ................................ $________
================================================================================
2. the amount of all Accounts that are not owned free
and clear of all Liens other than any Lien
permitted to exist under clauses (b), (d), (e) or
(g) of Section 7.2.3 of the Credit Agreement ..... $________
================================================================================
3. the amount of all Accounts that are not a legal,
valid, binding and enforceable obligation of the
Person obligated under such Account (the "Account
Debtor") ......................................... $________
================================================================================
4. the amount of all Accounts that are subject to any
bona fide dispute, setoff, counterclaim or other
right, claim or defense on the part of the Account
Debtor or any other Person denying liability under
such Account, in each case to the extent that such
Account is subject to any such dispute, setoff,
counterclaim or other claim or defense ........... $________
================================================================================
5. the amount of all Accounts in which the Borrower
or such Subsidiary does not have the full and
unqualified right to assign and grant a Lien in
such Account to the Administrative Agent, for the
benefit of the Agents and the Lenders, as security
for the Obligations or in which the Administrative
Agent does not have a perfected, first-priority
(other than inchoate statutory Liens otherwise
permitted by Section (7.2.3) Lien on such Account) $________
================================================================================
<PAGE>
================================================================================
6. the amount of all Accounts not evidenced by an
invoice rendered to the Account Debtor (which
shall include computer records) and not reflected
by computer records maintained by the Borrower or
such Subsidiary evidencing such Account or
evidenced by any instrument or chattel paper (as
the terms "instrument" and "chattel paper" are
defined in Section 9-105 of the UCC), unless such
instrument or chattel paper has not been delivered
to the Administrative Agent ...................... $________
================================================================================
7. the amount of all Accounts that did not arise from
the sale of goods or services by the Borrower or
such Subsidiary in the ordinary course of their
respective businesses, or in respect of goods or
services that have not been shipped or delivered
(in the case of goods) or rendered in full (in the
case of services) to the Account Debtor for such
Account .......................................... $________
================================================================================
8. the amount of all Accounts in which the Account
Debtor is (i) an Affiliate of the Borrower or any
of its Subsidiaries or (ii) the subject of any
reorganization, bankruptcy, receivership,
custodianship, insolvency or other condition
analogous with respect to such Account Debtor to
those described in clauses (a) through (d) of
Section 8.1.9 of the Credit Agreement ............ $________
================================================================================
9. the amount of all Accounts that are outstanding
more than 90 days (or 135 days, in the case of
Accounts arising from the sale of goods or
services by the Borrower's MRI compatible medical
device business or surgical instruments business)
from the original billing date (which date is not
later than five days from the date of the shipment
of the goods or the rendering of the services
giving rise to such Account), in each case for
such Account ..................................... $________
================================================================================
-2-
<PAGE>
================================================================================
10. the amount of all Accounts that are Accounts owing
by an Account Debtor having, at the time of any
determination of Eligible Accounts, in excess of
15% of the aggregate outstanding amount of all
Accounts of such Account Debtor (other than any
Accounts which are the subject of bona fide
disputes between such Account Debtor and the
Borrower or such Subsidiary, as the case may be)
outstanding more than 90 days (or 135 days, in the
case of Accounts arising from the sale of goods or
services by the Borrower's MRI compatible medical
device business or surgical instruments business)
past the original billing date (which date is not
later than five days from the date of the shipment
of the goods or the rendering of the services
giving rise to such Account), in each case for
such Account ..................................... $________
================================================================================
11. the amount of all Accounts in which, with respect
to the Account Debtors under such Accounts, the
owner of such Account is indebted to such Account
Debtor, unless the owner of such Account and such
Account Debtor have entered into an agreement
whereby the Account Debtor is prohibited from
exercising any right of setoff with respect to the
Accounts of such Person; provided that, in any
event, if such an agreement prohibiting setoff
rights is not delivered by the Account Debtor,
then only up to the amount that the owner of such
Account is indebted to such Account Debtor shall
be included herein ............................... $___________
================================================================================
12. the amount of all Accounts in which the relevant
Account Debtor is not located within the United
States, Puerto Rico or Canada and such Accounts
are not secured by a letter of credit, guaranty or
eligible bankers' acceptance having terms, and
from such issuers and confirmation banks, as are
acceptable to the Administrative Agent ........... $___________
================================================================================
13. the sum (without duplication) of Items 2 through
12................................................ $___________
- --------------------------------------------------------------------------------
14. ELIGIBLE ACCOUNTS: the amount in Item 1 less the
amount in Item 13 ................................ $___________
================================================================================
-3-
<PAGE>
Attachment 2
(to __/__/__ Borrowing
Base Certificate)
ELIGIBLE INVENTORY
on ____,19__
(the "Borrowing Base Calculation Date")
================================================================================
1. all Inventory of the Borrower and its U.S.
Subsidiaries ..................................... $___________
================================================================================
2. the amount of all Inventory that is not located
in the United States ............................. $___________
================================================================================
3. the amount of all Inventory to which the Borrower
or its U.S. Subsidiaries does not have a full and
unqualified right to assign and grant a Lien in
such Inventory to the Administrative Agent, for
the benefit of the Agents and the Lenders, as
security for the Obligations ..................... $___________
================================================================================
4. the amount of all Inventory that is not owned free
and clear of all Liens in favor of any Person
other than any Lien permitted to exist under
clause (b), (d), (e) or (g) of Section 7.2.3 of
the Credit Agreement ............................. $___________
================================================================================
5. the amount of all Inventory that is obsolete,
unsaleable, damaged or otherwise unfit for sale or
consumption or further processing or, in the case
of finished goods, has remained unsold in
inventory for over 180 days ...................... $___________
- --------------------------------------------------------------------------------
6. the sum (without duplication) of Items 2 through 5 $___________
- --------------------------------------------------------------------------------
7. ELIGIBLE INVENTORY: the amount in Item 1 less the
amount in Item 6 ................................. $___________
================================================================================
<PAGE>
EXHIBIT B-3
ISSUANCE REQUEST
Fleet National Bank,
as Administrative Agent
1 Federal Street
Boston, Massachusetts 02110
Attention: ________________
Re: Credit Agreement, dated as of July 10, 1997 (together with
all amendments, if any, thereafter from time to time made
thereto, the "Credit Agreement"), among Wilson Greatbatch
Ltd. (the "Borrower", following the Merger), various
financial institutions as are or may from time to time
thereafter become parties thereto (the "Lenders"), the
Agents and the Documentation Agent.
Ladies and Gentlemen:
This Issuance Request is delivered to you pursuant to Section 2.6 of the
Credit Agreement. Unless otherwise defined herein, terms used herein have the
meanings assigned to them in the Credit Agreement.
The Borrower hereby requests that on _________, 19__ (the "Date of
Issuance") ______________ (the "Issuer") *[issue a Letter of Credit in the
initial Stated Amount of $________________ with a Stated Expiry Date (as defined
therein) of _____________, 19__] [extend the Stated Expiry Date (as defined
under Irrevocable Standby Letter of Credit No. __, issued on
___________________________, 19 __, in the initial Stated Amount of
$______________) to a revised Stated Expiry Date (as defined therein) of
__________________, 19__].
- ----------
* Insert as appropriate.
<PAGE>
The beneficiary of the requested Letter of Credit will be
*______________________________________________, and such Letter of Credit will
be in support of **______________________________________________.
Each of the Borrowers hereby acknowledges that, pursuant to Section 5.2.2
of the Credit Agreement, each of the delivery of this Issuance Request and the
[issuance] [extension] of the Letter of Credit requested hereby constitutes a
representation and warranty by each of the Borrowers that, on such date of
[issuance] [extension] all statements set forth in Section 5.2.1 are true and
correct in all material respects.
Each of the Borrowers agrees that if, prior to the time of the
***[issuance] [extension] of the Letter of Credit requested hereby, any matter
certified to herein by it will not be true and correct at such time as if then
made, it will immediately so notify the Administrative Agent. Except to the
extent, if any, that prior to the time of the issuance or extension requested
hereby the Administrative Agent and the Issuer shall receive written notice to
the contrary from each of the Borrowers, each matter certified to herein shall
be deemed to be certified at the date of such issuance or extension.
- ----------
* Insert name and address of beneficiary.
** Insert description of supported Indebtedness or other obligations and name
of agreement to which it relates.
*** Complete as appropriate.
-2-
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this request to be executed
and delivered by its Authorized Officer this ____ day of _________ __, 199_.
WILSON GREATBATCH LTD.
By:________________________
Title:
-3-
<PAGE>
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
FLEET NATIONAL BANK,
as Administrative Agent
1 Federal Street
Boston, Massachusetts 02110
Attention: [Name]
[Title]
WILSON GREATBATCH LTD.
Ladies and Gentlemen:
This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.4 of the Credit Agreement dated as of July 10, 1997 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Credit Agreement"), among Wilson Greatbatch Ltd. (the "Borrower", following the
Merger), the various financial institutions as are or may become parties
thereto, DLJ Capital Funding, Inc., as the Syndication Agent, Fleet National
Bank, as the Administrative Agent and Heller Financial, Inc., as the
Documentation Agent for the Lenders. Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Credit Agreement.
The Borrower hereby requests that on _____________, 19__ (the
"Continuation/Conversion Date"),
(1) $___________ of the presently outstanding principal amount of
the [Revolving Loans] [Term-A Loans] [Term-B Loans] [Swing Line Loans],
(2) all presently being maintained as *[Base Rate Loans] [LIBO Rate
Loans with an Interest Period ending on the Continuation/Conversion Date],
(3) be [converted into] [continued as],
(4) **[LIBO Rate Loans having an Interest Period of _______ months]
[Base Rate Loans].
- ----------
* Select appropriate interest rate option.
** Insert appropriate interest rate option.
<PAGE>
[The Borrower hereby:
(a) certifies and warrants that no Default has occurred and is
continuing; and
(b) agrees that if prior to the time of such continuation or
conversion any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Administrative Agent.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Administrative Agent shall receive written
notice to the contrary from the Borrower, each matter certified to herein shall
be deemed to be certified at the date of such continuation or conversion as if
then made.]*
The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Authorized Officer this ___ day of __________, 19__.
WILSON GREATBATCH LTD.
By____________________________________
Title:
- ----------
* To be included in the case of any continuation of Loans as, or conversion
of Loans into, LIBO Rate Loans.
-2-
<PAGE>
EXHIBIT D
RESTATEMENT EFFECTIVE DATE CERTIFICATE
Wilson Greatbatch Ltd.
This certificate is delivered pursuant to Section 5.1.4 of an Amended and
Restated Credit Agreement, dated as of August 7, 1998, amending and restating
the Credit Agreement, dated as of July 10, 1997 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the "Credit
Agreement"), among Wilson Greatbatch Ltd., a New York corporation and the
successor by merger with WGL Acquisition Corp. (the "Borrower"), the various
financial institutions as are, or may from time to time become parties thereto
(the "Lenders"), DLJ Capital Funding, Inc., as the Syndication Agent, Fleet
National Bank, as the Administrative Agent and Heller Financial, Inc., as the
Documentation Agent for the Lenders. Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Credit Agreement.
The undersigned hereby certifies, represents and warrants that, as of the
Restatement Effective Date:
1. The Hittman Acquisition. The Hittman Acquisition has been consummated
and the following events have occurred:
(a) the Hittman Acquisition Agreement has been executed and
delivered by all parties thereto, all material filings necessary to
consummate the Hittman Acquisition have been made in accordance with all
applicable laws, rules and regulations and the Hittman Acquisition has
been consummated in accordance with the terms and provisions of the
Hittman Acquisition Agreement, without waiver, amendment or other
modification. True and correct copies of the Hittman Acquisition
Agreement, together with all agreements delivered in connection therewith,
are annexed hereto as Appendix I; and
(b) the Borrower has received the Equity Contribution in an amount
of not less than $13,000,000.
2. Warranties, No Default, etc. Both immediately before and immediately
after giving effect to the initial Credit Extension on the Restatement Effective
Date:
(a) the representations and warranties set forth in Article VI of
the Credit Agreement and in each of the other
<PAGE>
Loan Documents are in each case true and correct in all material respects;
(b) the sum of the aggregate principal amount of all Revolving Loans
including Swing Line Loans plus (ii) the aggregate amount of all Letter of
Credit Outstandings on or as of the date of the initial Credit Extension
on the Restatement Effective Date, does not exceed the lesser of (x) the
Revolving Loan Commitment Amount and (y) the Borrowing Base Amount; and
(c) no Default has occurred and is continuing.
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed and delivered, and the certification, representations and warranties
contained herein to be made, by its Authorized Officer this 7th day of August,
1998.
WILSON GREATBATCH LTD.
By:____________________________
Title:
-3-
<PAGE>
APPENDIX I
[Copy of Hittman Acquisition Agreement]
<PAGE>
EXHIBIT E
COMPLIANCE CERTIFICATE
Wilson Greatbatch Ltd.
This Compliance Certificate is delivered pursuant to clause (c) of Section
7.1.1 of the Amended and Restated Credit Agreement, dated as of August 7, 1998,
amending and restating in its entirety the Credit Agreement, dated as of July
10, 1997 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement"), among Wilson Greatbatch Ltd.,
formerly known as WGL Acquisition Corp., a New York corporation (the
"Borrower"), the various financial institutions as are, or may from time to time
become, parties thereto as Lenders, the Agents and the Documentation Agent named
therein. Unless otherwise defined herein or the context otherwise requires,
terms used herein or in any of the attachments hereto have the meanings provided
in the Credit Agreement.
The Borrower hereby certifies, represents and warrants in respect of the
period (the "Computation Period") commencing on ________ _____, and ending on
___________ (such latter date being the "Computation Date"):
(a) As of the Computation Date, no Default had occurred and was
continuing.
(b) EBITDA was $______, as computed on Attachment 1 hereto. The
minimum EBITDA required pursuant to clause (a) of Section 7.2.4 of the
Credit Agreement on the Computation Date was $________, as computed on
Attachment 1 hereto.
(c) The Leverage Ratio was _________, as computed on Attachment 2
hereto. The maximum Leverage Ratio permitted pursuant to clause (b) of
Section 7.2.4 of the Credit Agreement on the Computation Date was _______.
(d) The Interest Coverage Ratio was _________, as computed on
Attachment 3 hereto. The minimum Interest Coverage Ratio permitted
pursuant to clause (c) of Section 7.2.4 of the Credit Agreement on the
Computation Date was _______.
(e) The Fixed Charge Coverage Ratio was _________, as computed on
Attachment 4 hereto. The minimum Fixed Charge Coverage Ratio permitted
pursuant to clause (d) of Section 7.2.4 of the Credit Agreement on the
Computation Date was _______.
<PAGE>
(f) During the period of four consecutive Fiscal Quarters ended on
the Computation Date, the Borrower or any of its Subsidiaries acquired or
disposed of the following business or assets:
The projected cost savings associated with such acquisition or disposition
used in such computation is set forth in the copy of the resolutions of
the Board of Directors of the Borrower or such Subsidiary attached hereto.
The Equipment and Inventory is located as indicated on Item A of
Attachment 5 hereto or as set forth on the relevant Item of the relevant
Security Agreement or in a previous Compliance Certificate.
The chief executive office of the Borrower or any Subsidiary where the
Borrower or any Subsidiary keeps its records concerning the Receivables, and all
originals of all chattel paper which evidences Receivables, is located as
indicated on Item B of Attachment 5 hereto or as set forth on the relevant Item
of the relevant Security Agreement or in a previous Compliance Certificate.
Neither the Borrower nor any Subsidiary has changed its legal name, used
any tradename (except as listed in the Borrower Security Agreement or the
Subsidiary Security Agreement (as applicable)) or been the subject of any merger
or other corporate reorganization except (i) as indicated on Item C of
Attachment 5 hereto, (ii) as set forth on the relevant Item of the relevant
Security Agreement or (iii) as set forth in a previous Compliance Certificate.
The Deposit Accounts (as defined in each Security Agreement) are located
as indicated on Item E of Attachment 5 hereto or as set forth on the relevant
Item of the relevant Security Agreement or in a previous Compliance Certificate.
-2-
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate to
be executed and delivered, and the certification and warranties contained herein
to be made, by its [president] [chief executive officer] [treasurer] [assistant
treasurer] [controller] [chief financial Authorized Officer] on this ____ day of
__________, ____.
WILSON GREATBATCH LTD.
By____________________________
Title:
-3-
<PAGE>
Attachment 1
(to __/__/__ Compliance
Certificate)
* EBITDA
on ____________
(the "Computation Date")
EBITDA: the sum (without duplication) of:
1. Net Income (the net income of the
Borrower and its Subsidiaries for the
Computation Period on a consolidated
basis, excluding extraordinary or non-
recurring gains)................................. $______________
2. The amount deducted in determining Net
Income representing non-cash charges,
including depreciation and amortization.......... $______________
3. The amount deducted in determining Net
Income representing income taxes
(whether paid or deferred)....................... $______________
4. The amount deducted in determining Net
Income representing Interest Expense (the
aggregate consolidated interest expense
of the Borrower and its Subsidiaries for the
Computation Period, as determined in accordance
with GAAP, including the portion of any
payments made in respect of Capitalized
Lease Liabilities allocable to interest expense,
but excluding (to the extent included in
interest expense) up-front fees and expenses
and other deferred financing costs incurred in
connection with the Transaction or the Hittman
Acquisition)...................................... $______________
5. The amount deducted in determining Net
Income representing executive, board and
shareholder payments and costs described
in Schedule 7.5(c), (d) and (g) of the Stock
Purchase Agreement and fees, expenses and
financing costs incurred in connection with
the Transaction or the Hittman Acquisition
(including non-recurring reorganizational costs
associated with the integration of Hittman
incurred by the Borrower or Hittman prior to
December 31, 1998 in an amount not to exceed
$500,000)......................................... $______________
- -----------------
* Computed for the period consisting of the Fiscal Quarter ending on the
Computation Date and each of the three immediately preceding Fiscal
Quarters.
<PAGE>
6. The amount of costs incurred in the 1997 and
1998 calender years relating to the new medical
devices and surgical instruments business lines
for such applicable period........................ $______________
7. The amount of all non-cash credits included
in determining Net Income......................... $______________
8. Restricted Payments (as defined in Section 7.2.6
of the Credit Agreement) of the type referred
to in clause (c) (i) of Section 7.2.6. of the
Credit Agreement made during the Computation
Period............................................ $______________
9. EBITDA: The sum of Items 1 through 6 minus the
sum of Items 7 and 8.............................. $______________
1-2
<PAGE>
Attachment 2
(to __/__/__ Compliance
Certificate)
* LEVERAGE RATIO
on ____________
(the "Computation Date")
Leverage Ratio:
1. Total Debt (excluding earnout amounts (to the
extent such amounts have not been paid to Fred
Hittman pursuant to the Hittman Acquisition
Agreement) not to exceed $6,000,000) less cash
and Cash Equivalent Investments of the Borrower and
its Subsidiaries on a consolidated basis outstanding
on the Computation Date............................. $______________
2. EBITDA: (see Item 9 of Attachment 1)................ $______________
3. LEVERAGE RATIO: ratio of Item 1 to Item 2........... :1
- ---------------------
* If, during the period of four consecutive Fiscal Quarters ended on the
Computation Date, the Borrower or any of its Subsidiaries shall have made
one or more acquisitions, the Leverage Ratio shall be calculated (on a
good faith basis by the chief financial Authorized Officer of the Borrower
and set forth in the copy of the resolutions of the Board of Directors of
the Borrower or such Subsidiary authorizing such acquisition attached
hereto) on a pro forma basis as if each such acquisition had been made,
and all Indebtedness incurred to finance each such acquisition had been
incurred, on the first day of the Computation Period.
<PAGE>
Attachment 3
(to __/__/__ Compliance
Certificate)
* INTEREST COVERAGE RATIO
on ____________
(the "Computation Date")
Interest Coverage Ratio:
1. EBITDA (see Item 9 of Attachment 1)................. $______________
2. The cash portion of Interest Expense................ $______________
3. INTEREST COVERAGE RATIO: ratio of Item 1
to Item 2........................................... :1
- ---------------------
* At the close of any Fiscal Quarter, the ratio computed for the period
consisting of such Fiscal Quarter and each of the three immediately prior
Fiscal Quarters; provided, however, that (i) for the first three Fiscal
Quarters ending after the Restatement Effective Date, the Interest Expense
included in Item 2 shall be determined on an Annualized basis and (ii) if,
during any such period, the Borrower or any of its Subsidiaries shall have
made one or more acquisitions, the Interest Coverage Ratio for such period
shall be calculated (on a good faith basis by the chief financial
Authorized Officer of the Borrower and set forth in the copy of the
resolutions of the Board of Directors of the Borrower or such Subsidiary
authorizing such acquisition attached hereto) on a pro forma basis as if
each such acquisition had been made, and all Indebtedness incurred to
finance each such acquisition had been incurred, on the first day of such
period.
<PAGE>
Attachment 4
(to __/__/__ Compliance
Certificate)
*FIXED CHARGE COVERAGE RATIO
on ____________
(the "Computation Date")
Fixed Charge Coverage Ratio:
1. EBITDA (see Item 9 of Attachment 1)................. $______________
2. Capital Expenditures actually made during
the Computation Period pursuant to clause (a)
of Section 7.2.7 of the Credit Agreement
(excluding Capital Expenditures constituting
Capitalized Lease Liabilities and by way of
the incurrence of Indebtedness permitted
pursuant to Section 7.2.2(c) to a vendor of any
assets permitted to be acquired pursuant to
Section 7.2.7 of the Credit Agreement to finance
the acquisition of such assets)..................... $______________
3. The cash portion of Interest Expense (net of
interest income).................................... $______________
4. All scheduled payments of principal of the
Term Loans and other funded Debt (including
the principal portion of any Capital Lease
Liabilities)........................................ $______________
5. The sum (without duplication) of Items 2
through 4........................................... $______________
6. Fixed Charge Coverage Ratio: ratio of Item
l to Item 5......................................... :1
- ---------------------
* At the close of any Fiscal Quarter, the ratio computed for the period
consisting of such Fiscal Quarter and each of the three immediately prior
Fiscal Quarters (provided, however, that (i) for the first three Fiscal
Quarters ending after the Restatement Effective Date, the Interest Expense
(net of interest income) and scheduled payments of principal of Term Loans
and other funded Debt shall be determined on an Annualized basis and (ii)
if, during any such period, the Borrower or any of its Subsidiaries shall
have made one or more acquisitions, the Fixed Charge Coverage Ratio for
such period shall be calculated (on a good faith basis by the chief
financial Authorized Officer of the Borrower and set forth in the copy of
the resolutions of the Board of Directors of the Borrower or such
Subsidiary authorizing such acquisition attached hereto) on a pro forma
basis as if each such acquisition had been made, and all Indebtedness
incurred to finance each such acquisition had been incurred, on the first
day of such period).
<PAGE>
Attachment 5
(to __/__/__ Compliance
Certificate)
Item A. Change of Location of Equipment
Description New Location
----------- ------------
1.
2.
3.
Item B. Change of Location of Inventory
Description New Location
----------- ------------
1.
2.
3.
Item C. Change of Place of Business, etc.
Name of Borrower or Subsidiary New Address
------------------------------ -----------
1.
2.
3.
Item D. Change of Trade or Legal Names
New Trade Name or
Name of Borrower or Subsidiary New Legal Name
------------------------------ --------------
1.
2.
3.
<PAGE>
Item E. New Deposit Accounts
Account
Bank Address of Bank Type of Account Number
---- --------------- --------------- ------
1-2
<PAGE>
EXHIBIT F-1
BORROWER SECURITY AGREEMENT
This SECURITY AGREEMENT (as amended, supplemented, amended and restated or
otherwise modified from time to time, this "Security Agreement"), dated as of
July 10, 1997, is made by WGL ACQUISITION CORP., a New York corporation (the
"Grantor"), in favor of FLEET NATIONAL BANK, as administrative agent (together
with any successor(s) thereto in such capacity, the "Administrative Agent") for
each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become parties thereto (the
"Lenders"), the Agents and the Documentation Agent named therein, the Lenders
and the Issuer have extended Commitments to make Credit Extensions to the
Grantor; and
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Security Agreement; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Security Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
and the Issuer to make each Credit Extension (including the initial Credit
Extension) to the Grantor pursuant to the Credit Agreement, the Grantor agrees,
for the benefit of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
<PAGE>
"Assigned Agreement" is defined in clause (d) of Section 2.1.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in clause (c) of Section 4.1.2.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories and all peripheral
devices and other related computer hardware;
(b) all software programs (including both source code, object code
and all related applications and data files), whether now owned, licensed
or leased or hereafter acquired by the Grantor, designed for use on the
computers and electronic data processing hardware described in clause (a)
above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through
(c); and
(e) all rights with respect to all of the foregoing, including,
without limitation, any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and indemnifications
and any substitutions, replacements, additions or model conversions of any
of the foregoing.
"Copyright Collateral" means:
(a) all copyrights (including copyrights for semiconductor chip
product mask works) of the Grantor, whether statutory or common law,
registered or unregistered, now or hereafter in force throughout the world
including, without limitation, all of the Grantor's right, title and
interest in and to all copyrights registered in the United States
Copyright Office or anywhere else in the world, and all applications for
registration thereof (including pending applications), and all copyrights
resulting from such applications;
-2-
<PAGE>
(b) all extensions and renewals of any thereof;
(c) all copyright licenses and other agreements providing the
Grantor with the right to use any of the items of the type referred to in
clauses (a) and (b);
(d) the right to sue for past, present and future infringements of
any of the Copyright Collateral referred to in clauses (a) and (b) and, to
the extent applicable, clause (c); and
(e) all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages and proceeds of
suit and all rights corresponding thereto throughout the world.
"Credit Agreement" is defined in the first recital.
"Deposit Accounts" means any and all demand, time, savings, passbook or
other accounts with a bank or other financial institution, including general
deposit and cash concentration accounts, in which any cash, payments or receipts
of or for the benefit of the Grantor are or are to be deposited, and all
deposits therein and investments thereof, whether now or at any time hereafter
existing.
"Equipment" is defined in clause (a) of Section 2.1.
"Grantor" is defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Inventory" is defined in clause (b) of Section 2.1
"Lender Party" means, as the context may require, each Lender, the Issuer
and each Agent and each of their respective successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent
throughout the world;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
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(c) all patent licenses and other agreements providing the Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b);
(d) the right to sue third parties for past, present or future
infringements of any Patent Collateral described in clauses (a) and (b)
and, to the extent applicable, clause (c); and
(e) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), and all
rights corresponding thereto throughout the world.
"Receivables" is defined in clause (c) of Section 2.1.
"Related Contracts" is defined in clause (c) of Section 2.1.
"Secured Obligations" is defined in Section 2.2.
"Security Agreement" is defined in the preamble.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, trade dress,
service marks, certification marks, collective marks, logos, other source
of business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like nature,
and designs (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing in the United States or
hereafter adopted or acquired in the United States, whether currently in
use or not, all registrations and recordings thereof and all applications
in connection therewith, whether pending or in preparation for filing,
including registrations, recordings and applications in the United States
Patent and Trademark Office or in any office or agency of the United
States of America or any State thereof or any foreign country;
(b) all Trademark licenses and other agreements providing the
Grantor with the right to use any items of the type described in clause
(a);
(c) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clauses (a) and (b);
(d) the right to sue third parties for past, present and future
infringements of any Trademark Collateral described in clause (a) and, to
the extent applicable, clause (b); and
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(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, including any Trademark, Trademark
registration or Trademark license, or for any injury to the goodwill
associated with the use of any such Trademark or for breach or enforcement
of any Trademark license and all rights corresponding thereto throughout
the world.
"Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential proprietary or useful information (to the
extent such confidential, proprietary or useful information is protected by the
Grantor against disclosure and is not readily ascertainable) and all know-how
obtained by or used in or contemplated at any time for use in the business of
the Grantor (all of the foregoing being collectively called a "Trade Secret"),
whether or not such Trade Secret has been reduced to a writing or other tangible
form, including all documents and things embodying, incorporating or referring
in any way to such Trade Secret, all Trade Secret licenses, and including the
right to sue for and to enjoin and to collect damages for the actual or
threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect from time to time
in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or in the Credit Agreement or the context otherwise requires, terms used in this
Security Agreement, including its preamble and recitals, have the meanings
provided in the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Security Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. The Grantor hereby assigns and pledges to
the Administrative Agent for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent for its benefit
and the ratable benefit of each of the Lender Parties, a security interest in
all of the following, whether now or hereafter existing or acquired by the
Grantor (the "Collateral"):
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(a) all equipment in all of its forms of the Grantor, wherever
located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefor and all accessories related thereto (any and all of the foregoing
being the "Equipment");
(b) all inventory in all of its forms of the Grantor, wherever
located, including
(i) all raw materials and work in process therefor, finished
goods thereof, and materials used or consumed in the manufacture or
production thereof,
(ii) all goods in which the Grantor has an interest in mass or
a joint or other interest or right of any kind (including goods in
which the Grantor has an interest or right as consignee), and
(iii) all goods which are returned to or repossessed by the
Grantor,
and all accessions thereto, products thereof and documents therefor (any
and all such inventory, materials, goods, accessions, products and
documents being the "Inventory")
(c) all accounts, contracts, contract rights, chattel paper,
documents, instruments, and general intangibles (including tax refunds) of
the Grantor, whether or not arising out of or in connection with the sale
or lease of goods or the rendering of services, and all rights of the
Grantor now or hereafter existing in and to all security agreements,
guaranties, leases and other contracts securing or otherwise relating to
any such accounts, contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (any and all such accounts,
contracts, contract rights, chattel paper, documents, instruments, and
general intangibles being the "Receivables", and any and all such security
agreements, guaranties, leases and other contracts being the "Related
Contracts");
(d) the Stock Purchase Agreement, as amended or otherwise modified
from time to time (as so amended or otherwise modified from time to time
(as to amended or modified, the "Assigned Agreement"), including
(i) all rights of the Grantor to receive moneys due and to
become due under or pursuant to the Assigned Agreement,
(ii) all rights of the Grantor to receive proceeds of any
insurance, indemnity, warranty, guaranty or
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collateral security with respect to the Assigned Agreement,
(iii) all claims of the Grantor for damages arising out of or
for breach of or default under the Assigned Agreement, and
(iv) the right of the Grantor to terminate the Assigned
Agreement, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder;
(e) all Intellectual Property Collateral of the Grantor;
(f) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing in this
Section 2.1;
(g) all of the Grantor's other property and rights of every kind and
description and interests therein (including all Deposit Accounts); and
(h) all products, offspring, rents, issues, profits, returns, income
and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (a), (b), (c), (d), (e), (f), and (g), proceeds deposited from
time to time in the Collateral Account and in any lock boxes of the
Grantor, and, to the extent not otherwise included, all payments under
insurance (whether or not the Administrative Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing
Collateral).
Notwithstanding the foregoing, "Collateral" shall not include (i) the Grantor's
real property leaseholds, (ii) motor vehicles owned by the Grantor and (iii) any
general intangibles or other rights arising under any contracts, instruments,
licenses or other documents as to which the grant of a security interest would
constitute a violation of a valid and enforceable restriction in favor of a
third party on such grant, unless and until any required consents shall have
been obtained. The Grantor agrees to use its best efforts (which shall not
require the expenditure of cash of the making of any material concessions under
the relevant contract, instrument, license or document) to obtain any such
required consent to the extent reasonably requested by the Administrative Agent.
SECTION 2.2. Security for Obligations. This Security Agreement secures the
payment of all Obligations now or hereafter existing (the "Secured
Obligations").
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SECTION 2.3. Continuing Security Interest; Transfer of Notes. This
Security Agreement shall create a continuing assignment of and security interest
in the Collateral and shall
(a) remain in full force and effect until payment in full in cash of
all Secured Obligations and the termination of all Commitments,
(b) be binding upon the Grantor, its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Commitment, Note, Credit
Extension, Hedging Obligation or other Secured Obligation held by it to any
other Person or entity, and such other Person or entity shall thereupon become
vested with all the rights and benefits in respect thereof granted to such
Lender under any Loan Document (including this Security Agreement) or document
relating to such Hedging Obligation or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
Section 10.11 and Article IX of the Credit Agreement. Upon (i) the sale,
transfer or other disposition of Collateral in accordance with the Credit
Agreement or a waiver or consent granted under the Credit Agreement or (ii) the
payment in full of all Secured Obligations, the termination or expiration of all
Letters of Credit and Rate Protection Agreements, and the termination of all
Commitments, the security interest granted herein shall automatically terminate
with respect to (x) such Collateral (in the case of clause (i) or (y) all
Collateral (in the case of clause (ii)). Upon any such termination, the
Administrative Agent will, at the Grantor's sole expense, execute and deliver to
the Grantor such documents as the Grantor shall reasonably request to evidence
such termination. Upon any sale or other transfer of Collateral permitted by the
terms of Section 7.2.9 of the Credit Agreement or any waiver or consent granted
under the Credit Agreement, the security interest created hereunder in such
Collateral (but not in the proceeds thereof) shall be deemed to be automatically
released and the Administrative Agent will, at the Grantor's sole expense,
execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such release.
SECTION 2.4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
(a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and
shall perform all of its
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duties and obligations under such contracts and agreements to the same
extent as if this Security Agreement had not been executed,
(b) the exercise by the Administrative Agent of any of its rights
hereunder shall not release the Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral, and
(c) neither the Administrative Agent nor any other Lender Party
shall have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this Security
Agreement, nor shall the Administrative Agent or any other Lender Party
be obligated to perform any of the obligations or duties of the Grantor
thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Grantor represents and
warrants unto each Lender Party as set forth in this Article.
SECTION 3.1.1. Validity of Assigned Agreement. The Assigned Agreement, a
true and complete copy of which has been furnished to each Lender, has been duly
authorized, executed and delivered by the parties thereto, has not been amended
or otherwise modified except as set forth in Section 2.1, and is in full force
and effect and is binding upon and enforceable against the parties thereto in
accordance with its terms.
SECTION 3.1.2. Location of Collateral, etc. All of the Equipment and
Inventory (other than Inventory in transit) of the Grantor are located (i) at
the places specified in Item A and Item B, respectively, of Schedule I hereto,
or (ii) after the Closing Date, at such other locations as are notified to the
Administrative Agent pursuant to clause (a) of Section 4.1.2. The place(s) of
business and chief executive office of the Grantor and the office(s) where the
Grantor keeps its records concerning the Receivables, all originals of all
chattel paper which evidence Receivables, and the original copies of the
Assigned Agreement, are located at the address set forth in Item C of Schedule
I hereto, and at such other locations as are notified to the Administrative
Agent pursuant to clause (a) of Section 4.1.2. As of the date hereof, the
Grantor has no trade name, except as set forth in Item D of Schedule I hereto.
During the four months preceding the date hereof, the Grantor has not been known
by any legal name different from the one set forth on the signature page hereto,
nor has the Grantor been the subject
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of any merger or other corporate reorganization, except as set forth in Item E
of Schedule I hereto. If the Collateral includes any Inventory located in the
State of California, the Grantor is not a "retail merchant" within the meaning
of Section 9-102 of the Uniform Commercial Code - Secured Transactions of the
State of California. All Receivables evidenced by a promissory note or other
instrument, negotiable document or chattel paper have been duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Administrative Agent and delivered and pledged
to the Administrative Agent pursuant to Section 4.1.8.
SECTION 3.1.3. Ownership, No Liens, etc. The Grantor owns the Collateral
free and clear of any Lien except for the security interest created by this
Security Agreement and except as permitted by the Credit Agreement. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except such as may
have been filed in favor of the Administrative Agent relating to this Security
Agreement or as have been filed in connection with Liens permitted pursuant to
Section 7.2.3 of the Credit Agreement.
SECTION 3.1.4. Negotiable Documents, Instruments and Chattel Paper. The
Grantor has delivered to the Administrative Agent possession of all originals of
all negotiable documents, instruments and chattel paper currently owned or held
by the Grantor (duly endorsed in blank, if requested by the Administrative
Agent).
SECTION 3.1.5. Intellectual ProPerty Collateral. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
could reasonably be expected to have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and enforceable;
(c) the Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property Collateral, including,
recordations of all of its interests in the Patent Collateral and
Trademark Collateral in the United States Patent and Trademark Office and
in corresponding offices throughout the world and its claims to the
Copyright Collateral in the United States Copyright Office and in
corresponding offices throughout the world (except, in the case of any
filing or recordation outside the United States Patent and Trademark
Office where the
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failure to make any such filing or recordation would not have a Material
Adverse Effect);
(d) the Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted rights
of any third party; and
(e) except as permitted by Section 4.1.5, the Grantor has performed
and will continue to perform all acts and has paid and will continue to
pay all required fees and taxes to maintain each and every item of such
Intellectual Property Collateral in full force and effect throughout the
world, as applicable (except where the failure to perform or pay would not
have a Material Adverse Effect).
The Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of the Grantor's
business.
SECTION 3.1.6. Validity, etc. This Security Agreement creates a valid
first priority security interest in the Collateral (subject to Section 9-306 of
the U.C.C. and Liens permitted pursuant to Section 7.2.3 of the Credit
Agreement), securing the payment of the Secured Obligations, and all filings and
other actions necessary or desirable in the State of New York and in each other
jurisdiction where the failure to make any such filing or other action would
have a Material Adverse Effect to perfect and protect such security interest
have been duly taken, except as permitted by Section 7.1.12 of the Credit
Agreement with respect to Intellectual Property Collateral, and except as
contemplated by Section 5.1.7 of the Credit Agreement.
SECTION 3.1.7. Authorization, Approval, etc. Except as have been obtained
or made and are in full force and effect, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required (except in the case of Receivables owing to any
governmental authority) either
(a) for the grant by the Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Security
Agreement by the Grantor, or
(b) for the perfection of or the exercise by the Administrative
Agent of its rights and remedies hereunder.
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ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. The Grantor covenants and agrees that, so
long as any portion of the Secured Obligations shall remain unpaid, any Rate
Protection Agreements shall remain in full force and effect or any Lender shall
have any outstanding Commitment, the Grantor will, unless the Required Lenders
shall otherwise consent in writing, perform, comply with and be bound by the
obligations set forth in this Section.
SECTION 4.1.1. As to Equipment and Inventory. The Grantor hereby agrees
that it shall
(a) keep all the Equipment and Inventory (other than Equipment and
Inventory sold in accordance with the Credit Agreement) at (i) the places
therefor specified in clauses (i) or (ii) of Section 3.1.2 or (ii) such
other places in a jurisdiction where all other representations and
warranties set forth in Article III including Sections 3.1.6 and 3.1.7
shall be true and correct, and all action required pursuant to the first
sentence of Section 4.1.8 shall have been taken with respect to the
Equipment and Inventory; and
(b) cause the Equipment to be maintained and preserved in accordance
with Section 7.1.3 of the Credit Agreement.
SECTION 4.1.2. As to Receivables.
(a) The Grantor shall give the Administrative Agent a supplement to
Schedule I hereto on each date a Compliance Certificate is required to be
delivered to the Administrative Agent under the Credit Agreement, which
shall set forth any changes to the information set forth in Section 3.1.2.
The Grantor shall keep its place(s) of business and chief executive office
and the office(s) where it keeps its records concerning the Receivables
located at the address set forth in Item C of Schedule I hereto, or at
such other locations in a jurisdiction where all actions required by the
first sentence of Section 4.1.8 shall have been taken with respect to the
Receivables, and shall not change its name except upon 30 days' prior
written notice to the Administrative Agent.
(b) The Grantor shall list each of its Deposit Accounts in Schedule
II hereto, as such Schedule is supplemented by notice to the
Administrative Agent pursuant to clause (a) of Section 4.1.1. Subject to,
and without limiting the effect of, clause (c) of this Section 4.1.2,
following the occurrence and continuance of an Event of Default and at the
direction of the Required Lenders, the Grantor shall make its best efforts
to maintain each of its
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Deposit Accounts pursuant to a deposit account agreement which is in all
respects satisfactory to the Administrative Agent and which provides,
among other things, that (i) until the deposit account bank shall have
received written notice from the Administrative Agent pursuant to this
clause, the deposit account bank will make all payments from the Deposit
Account as specified by the Grantor, and, after any such notice, the
deposit account bank will make all payments from the Deposit Account to
the Administrative Agent for credit to the Collateral Account, (ii) the
deposit account bank (if other than the Administrative Agent or a Lender)
waives all set off rights (other than setoff rights for reasonable and
customary account service charges and fees and amounts based on items that
are dishonored by the payor thereof and returned to the deposit account
bank), and (iii) such deposit account agreement may not be amended without
the written consent of the Administrative Agent. The Administrative Agent
will not give the notice referred to in the preceding clause (b) (i)
unless it has given, or is contemporaneously giving, notice pursuant to
clause (c) of this Section. In the event that a deposit account bank
refuses to enter into a deposit account agreement in accordance with the
above listed terms within 30 days of the Grantor's request, the
Administrative Agent shall have the right to direct the Grantor to
transfer the assets in that deposit account to a bank which will enter
into a deposit account agreement in accordance with the above listed
terms.
(c) Upon written notice by the Administrative Agent to the Grantor
pursuant to this clause, all proceeds of Collateral received by the
Grantor shall be delivered in kind to the Administrative Agent for deposit
to a deposit account (the "Collateral Account") of the Grantor maintained
with the Administrative Agent, and the Grantor shall not commingle any
such proceeds, and shall hold separate and apart from all other property,
all such proceeds in express trust for the benefit of the Administrative
Agent until delivery thereof is made to the Administrative Agent. The
Administrative Agent will not give the notice referred to in the preceding
sentence unless there shall have occurred and be continuing a Default of
the nature set forth in clause (b), (c) or (d) of Section 8.1.9 of the
Credit Agreement with respect to any Obligor (other than an immaterial
Subsidiary) or any other Event of Default. No funds, other than proceeds
of Collateral, will be deposited in the Collateral Account.
(d) The Administrative Agent shall have the right to apply any
amount in the Collateral Account to the payment of any Secured Obligations
which are due and payable or payable upon demand. The Administrative Agent
may at any time transfer to the Grantor's general demand deposit account
at the Administrative Agent any or all of the collected funds
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in the Collateral Account; provided, however, that any such transfer shall
not be deemed to be a waiver or modification of any of the Administrative
Agent's rights under this clause.
SECTION 4.1.3. As to the Assigned Agreement. The Grantor shall at its
expense:
(a) perform and observe in all material respects the terms and
provisions of the Assigned Agreement to be performed or observed by it,
maintain the Assigned Agreement in full force and effect, enforce the
Assigned Agreement in accordance with its terms, and take all such action
to such end as may be from time to time reasonably requested by the
Administrative Agent; and
(b) furnish to the Administrative Agent promptly upon receipt
thereof copies of all notices, requests and other documents received by
the Grantor under or pursuant to the Assigned Agreement, and from time to
time furnish to the Administrative Agent such information and reports
regarding the Assigned Agreement as the Administrative Agent may
reasonably request.
SECTION 4.1.4. As to Collateral.
(a) Until such time as the Administrative Agent shall notify the
Grantor of the revocation of such power and authority (which notice may
not be given unless there shall have occurred and be continuing a Default
of the nature set forth in clause (b), (c) or (d) of Section 8.1.9 of the
Credit Agreement with respect to any Obligor (other than an immaterial
Subsidiary) or any other Event of Default), the Grantor may, in accordance
with the Credit Agreement, at its own expense, sell, lease or furnish
under the contracts of service any of the Inventory, and use and consume,
in accordance with the Credit Agreement, any raw materials, work in
process or materials. The Administrative Agent, however, may, at any time
after any such revocation of such power and authority, notify any parties
obligated on any of the Collateral to make payment to the Administrative
Agent of any amounts due or to become due thereunder and enforce
collection of any of the Collateral by suit or otherwise and surrender,
release, or exchange all or any part thereof, or compromise or extend or
renew for any period (whether or not longer than the original period) any
indebtedness thereunder or evidenced thereby. Upon request of the
Administrative Agent (which request may not be made unless there shall
have occurred and be continuing a Default of the nature set forth in
clause (b), (c) or (d) of Section 8.1.9 of the Credit Agreement with
respect to any Obligor (other than an immaterial Subsidiary) or any other
Event of Default), the Grantor will, at its own expense, notify any
parties
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obligated on any of the Collateral to make payment to the Administrative
Agent of any amounts due or to become due thereunder.
(b) The Administrative Agent is authorized to endorse, in the name
of the Grantor, any item, howsoever received by the Administrative Agent,
representing any payment on or other proceeds of any of the Collateral.
SECTION 4.1.5. As to Intellectual Property Collateral. The Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral material to the operations or
business of the Grantor:
(a) The Grantor shall not, unless (i) the Grantor shall have a valid
business purpose to do otherwise or (ii) to do otherwise could not
reasonably be expected to have a Material Adverse Effect, do any act, or
omit to do any act, whereby any of the Patent Collateral may lapse or
become abandoned or dedicated to the public or unenforceable.
(b) The Grantor shall not, and the Grantor shall not permit any of
its licensees to, unless (i) the Grantor shall have a valid business
purpose to do otherwise or (ii) to do otherwise could not reasonably be
expected to have a Material Adverse Effect.
(i) fail to continue to use any of the Trademark Collateral in
order to maintain all of the Trademark Collateral in full force free
from any claim of abandonment for non-use,
(ii) fail to maintain as in the past the quality of products
and services offered under all of the Trademark Collateral,
(iii) fail to use a notice of registration as appropriate in
connection with goods using any Trademark Collateral registered with
the United States Patent and Trademark Office or equivalent foreign
authority, and
(iv) do or permit any act or knowingly omit to do any act
whereby any of the Trademark Collateral may lapse or become invalid
or unenforceable.
(c) The Grantor shall not, unless (i) the Grantor shall have a valid
business purpose to do otherwise or (ii) to do otherwise could not
reasonably be expected to have a Material Adverse Effect, do or permit any
act or knowingly omit to do any act whereby any of the Copyright
Collateral or any of the Trade Secrets Collateral may lapse or become
invalid or unenforceable or placed in the public domain
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except upon expiration of the end of an unrenewable term of a registration
thereof.
(d) The Grantor shall notify the Administrative Agent upon each
delivery of a Compliance Certificate as required pursuant to the Credit
Agreement if it knows, or has reason to know, that any application or
registration relating to any material item of the Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in
the public domain or invalid or unenforceable, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any
foreign counterpart thereof or any court) regarding the Grantor's
ownership of any of the Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same.
(e) The Grantor shall notify the Administrative Agent upon each
delivery of a Compliance Certificate as required pursuant to the Credit
Agreement, of the prior filing of any application for the registration of
any Intellectual Property Collateral with the United States Patent and
Trademark Office, the United States Copyright Office, and upon request of
the Administrative Agent, execute and deliver any and all agreements,
instruments, documents and papers as the Administrative Agent may
reasonably request to evidence the Administrative Agent's security
interest in such Intellectual Property Collateral and the goodwill and
general intangibles of the Grantor relating thereto or represented
thereby.
(f) The Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the
United States Copyright Office to maintain and pursue any application (and
to obtain the relevant registration) filed with respect to, and to
maintain any registration of, the Intellectual Property Collateral,
including the filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition, interference and
cancellation proceedings and the payment of fees and taxes (except to the
extent that dedication, abandonment or invalidation is permitted under the
foregoing clauses (a), (b) and (c)).
(g) Except as permitted by Section 7.1.12 of the Credit Agreement,
if the Grantor shall own any Intellectual Property Collateral, the Grantor
shall execute and deliver to the Administrative Agent a Patent Security
Agreement, a Trademark Security Agreement and a Copyright Security
Agreement in the forms Exhibit A, Exhibit B and Exhibit C hereto,
respectively, and shall execute and deliver to the
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<PAGE>
Administrative Agent any other document required to acknowledge or
register or perfect the Administrative Agent's interest in the U.S. in any
part of the Intellectual Property Collateral.
SECTION 4.1.6. Insurance. The Grantor will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business as required
pursuant to the Credit Agreement. Without limiting the foregoing, the Grantor
further agrees that within 30 days of the Closing Date:
(a) Each policy for property insurance shall show the Administrative
Agent as loss payee.
(b) Each policy for liability insurance shall show the
Administrative Agent as an additional insured.
(c) Each insurance policy shall provide that at least 30 days' prior
written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insured.
(d) The Grantor shall, if so requested by the Administrative Agent,
deliver to the Administrative Agent a copy of each insurance policy.
SECTION 4.1.7. Transfers and Other Liens. The 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) create or suffer to exist any Lien upon or with respect to any
of the Collateral to secure Indebtedness of any Person or entity, except
for the security interest created by this Security Agreement and except as
permitted by the Credit Agreement.
SECTION 4.1.8. Further Assurances. etc. The Grantor agrees that, from time
to time at its own expense, the Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable in the State of New York, or that the Administrative
Agent may reasonably request (whether in New York or otherwise), in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby in any portion of the Collateral located in the United States
which the Administrative Agent in its sole discretion determined to be material
to the Lender Parties or to enable the Administrative Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, the Grantor will
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<PAGE>
(a) if any Receivable shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, deliver and pledge
to the Administrative Agent hereunder such promissory note, instrument,
negotiable document or chattel paper duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
reasonably satisfactory to the Administrative Agent;
(b) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including,
without limitation, at the request of the Administrative Agent, any
assignment of claim form under or pursuant to the federal assignment of
claims statute, 31 U.S.C. ss. 3726, any successor or amended version
thereof or any regulation promulgated under or pursuant to any version
thereof), as may be necessary or desirable in the State of New York, or as
the Administrative Agent may reasonably request (whether in New York or
otherwise), in order to perfect and preserve the security interests and
other rights in any portion of the Collateral which the Administrative
Agent in its sole discretion determines to be material to the Lender
Parties granted or purported to be granted to the Administrative Agent
hereby; and
(c) furnish to the Administrative Agent, from time to time at the
Administrative Agent's reasonable request, statements and schedules
further identifying and describing the Collateral and such other reports
in connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
the Grantor hereby authorizes the Administrative Agent 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 the Grantor where permitted
by law. A carbon, photographic or other reproduction of this Security Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Administrative Agent the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time in the Administrative
Agent's discretion following the occurrence and during the continuance of
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<PAGE>
an Event of Default and notice to the Grantor, to take any action and to execute
any instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement, including, without
limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral;
and
(d) to perform the affirmative obligations of the Grantor hereunder
(including all obligations of the Grantor pursuant to Section 4.1.8).
The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent May Perform. If the Grantor fails to
perform any agreement contained herein within 30 days after written notice from
the Administrative Agent, the Administrative Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable by the Grantor pursuant to
Section 6.2.
SECTION 5.3. Administrative Agent Has No Duty. In addition to, and not in
limitation of, Section 2.4, the powers conferred on the Administrative Agent
hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent 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.
SECTION 5.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to
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<PAGE>
have exercised reasonable care in the custody and preservation of any of the
Collateral, if it takes such action for that purpose as the Grantor reasonably
requests in writing at times other than upon the occurrence and during the
continuance of any Event of Default, but failure of the Administrative Agent to
comply with any such request at any time shall not in itself be deemed a failure
to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may exercise any and all rights and
remedies of the Grantor under or in connection with the Assigned Agreement
and also may
(i) require the Grantor to, and the Grantor hereby agrees that
it will, at its expense and upon request of the Administrative Agent
forthwith, assemble all or part of the Collateral as directed by the
Administrative Agent and make it available to the Administrative
Agent at a place to be designated by the Administrative Agent which
is reasonably convenient to both parties and
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' prior notice to the
Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
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<PAGE>
(b) All cash proceeds received by the Administrative Agent in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may, in the discretion of the Administrative
Agent, be held by the Administrative Agent as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to
the Administrative Agent pursuant to Section 6.2) in whole or in part by
the Administrative Agent for the benefit of the Lender Parties against,
all or any part of the Secured Obligations as follows: (i) first, to the
reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the retaking, holding, preparing for sale, selling or
other disposition of the Collateral, including, without limitation, all
court costs and the reasonable fees and expenses of its agents and legal
counsel; (ii) second, to the payment in full of the Secured Obligations or
in the event that such proceeds are insufficient to pay in full the
Secured Obligations, equally and ratably in accordance with each Lender's
respective amounts owing to it under or pursuant to the Credit Agreement
or any other Loan Document, or under or pursuant to any Hedging Obligation
included in the Secured Obligations (as to each Lender, applied first to
fees and expense reimbursements then due to such Lender, then to interest
due to such Lender, then to pay or prepay principal of the Loans or owing
to, or to reduce the "credit exposure" of, such Lender under such Hedging
Obligation, as the case may be, then to pay (or cash collateralize) the
remaining obligations); (iii) third, without duplication of any amounts
paid pursuant to clause (ii) above, to the Indemnified Parties to the
extent of any amounts owing pursuant to Section 10.4 of the Credit
Agreement; and (iv) fourth, to the Grantor, or its successors and assigns,
or as a court of competent jurisdiction may direct, of any surplus then
remaining. For purposes of this Agreement, the "credit exposure" at any
time of any Lender with respect to a Hedging Obligation to which such
Lender is a party shall be determined at such time in accordance with the
customary methods of calculating credit exposure under similar
arrangements by the counterparty to such arrangements, taking into account
potential interest rate movements, mitigating factors such as other
interest rate swaps, caps, collars and hedges, and the respective
termination provisions and notional principal amount and term of such
Hedging Obligation. The Grantor shall remain liable to the Lenders for any
deficiency. If the Administrative Agent has funds available to apply to a
portion of, but not all of, one of the amounts described in clauses (i)
through (iv) above, then the Administrative Agent shall apply such funds
to the applicable parties in proportion to the amounts to which such
parties would have been entitled if the entire amount described in any
such clause had been available.
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<PAGE>
SECTION 6.2. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Administrative Agent from
and against any and all claims, losses and liabilities arising out of or
resulting from this Security Agreement (including, without limitation,
enforcement of this Security Agreement), except claims, losses or
liabilities resulting from the Administrative Agent's gross negligence or
wilful misconduct.
(b) The Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees
and disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral,
(iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the Lender Parties hereunder, or
(iv) the failure by the Grantor to perform or observe any of
the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Security Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any provision
of this Security Agreement nor consent to any departure by the Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 7.3. Addresses for Notices. All notices and other communications
provided to the Grantor under this Security
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<PAGE>
Agreement shall be in writing or by facsimile and addressed, delivered or
transmitted to the Grantor at its address or facsimile number as set forth in
the Credit Agreement, or at such other address or facsimile number as may be
designated by the Grantor in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted.
SECTION 7.4. Section Captions. Section captions used in this Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Security Agreement.
SECTION 7.5. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
SECTION 7.6. Governing Law, Entire Agreement, etc. THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR 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. THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
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<PAGE>
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
WGL ACQUISITION CORP.
By:
------------------------------------
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By:
------------------------------------
Title:
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<PAGE>
SCHEDULE I
to
Borrower Security Agreement
Item A. Location of Equipment
Description Location
----------- --------
1. SEE ATTACHMENT A
2.
3.
Item B. Location of Inventory
Description Location
----------- --------
1.
2.
3.
Item C. Place (s) of Business and Chief Executive Office
Name of Grantor Address
--------------- -------
WGL Acquisition Corp. 10,000 Wehrle Drive
Clarence, New York 14031
Item D. Trade Names
Name of Grantor Trade Name
--------------- ----------
WGL Acquisition Corp. Electrochem Industries
WGL Acquisition Corp. Greatbatch Scientific
WGL Acquisition Corp. Donnington Group
Item E. Corporate Reorganization
Name of Grantor
---------------
<PAGE>
SCHEDULE II
to
Borrower Security Agreement
Account
Bank Address of Bank Type of Account Number
- ---- --------------- --------------- ------
Chase Manhattan 2300 Main Place Tower Lock Box
Buffalo, NY 14202
<PAGE>
EXHIBIT A
to Borrower
Security Agreement
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of ______ __,
___, is made between WGL ACQUISITION CORP., a New York corporation (the
"Grantor"), and FLEET NATIONAL BANK, as administrative agent (together with any
successor(s) thereto in such capacity, the "Administrative Agent") for each of
the Lender Parties;
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto (each,
individually, a "Lender", and collectively, the "Lenders"), the Agents and the
Issuer, the Lenders have extended Commitments to make Credit Extensions to the
Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Borrower Security Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Grantor pursuant to the Credit Agreement, and to induce the Lender Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Lender Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement,
<PAGE>
including its preamble and recitals, have the meanings provided (or incorporated
by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Administrative Agent, and grant to the Administrative
Agent a security interest in, for its benefit and the benefit of each Lender
Party, all of the following property (the "Patent Collateral"), whether now
owned or hereafter acquired or existing by it:
(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in preparation for
filing anywhere in the world and including each patent and patent
application referred to in Item A of Attachment 1 attached hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all patent licenses, including each patent license referred to
in Item B of Attachment 1 attached hereto; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, including any patent or patent
application referred to in Item A of Attachment 1 attached hereto, and for
breach or enforcement of any patent license, including any patent license
referred to in Item B of Attachment 1 attached hereto, and all rights
corresponding thereto throughout the world.
Notwithstanding the foregoing, "Patent Collateral" shall not include any general
intangibles or other rights arising under any contracts, instruments, licenses
or other documents as to which the grant of a security interest would constitute
a violation of a valid and enforceable restriction in favor of a third party on
such grant, unless and until any required consents shall have been obtained. The
Grantor agrees to use its best efforts (which shall not require the expenditure
of cash or the making of any material concessions under the relevant contract,
instrument, license or document) to obtain any such required consent to the
extent reasonably requested by the Administrative Agent.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Patent Collateral with the United States Patent
and Trademark
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<PAGE>
Office and corresponding offices in other countries of the world. The security
interest granted hereby has been granted as a supplement to, and not in
limitation of, the security interest granted to the Administrative Agent for its
benefit and the benefit of each Lender Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Administrative Agent and
each Lender Party thereunder) shall remain in full force and effect in
accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash of
all Secured Obligations, the termination or expiry of all Letters of Credit, the
termination of all Rate Protection Agreements and the termination of all
Commitments, the Administrative Agent shall, at the Grantor's expense, execute
and deliver to the Grantor all instruments and other documents as may be
necessary or proper to release the lien on and security interest in the Patent
Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
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<PAGE>
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 day and year first above written.
WGL ACQUISITION CORP.
By:
------------------------------------
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By:
------------------------------------
Title:
<PAGE>
ATTACHMENT 1
to Borrower Patent
Security Agreement
Item A. Patents
Issued Patents
* Country Patent No. Issue Date Inventor (s) Title
- --------- ---------- ---------- ------------ -----
Pending Patent Applications
* Country Serial No. Filing Date Inventor (s) Title
- --------- ---------- ----------- ------------ -----
Patent Applications in Preparation
Expected
* Country Docket No. Filing Date Inventor (s) Title
- --------- ---------- ----------- ------------ -----
Item B. Patent Licenses
*Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
- ----------- -------- -------- --------- ---------- -------
- ----------
* List items related to the United States first for ease of
recordation. List items related to other countries next, grouped by
country and in alphabetical order by country name.
<PAGE>
EXHIBIT B
to Borrower
Security Agreement
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of ________
__, ___, is made between WGL ACQUISITION CORP., a New York corporation ( the
"Grantor"), and FLEET NATIONAL BANK, as administrative agent (together with any
successor(s) thereto in such capacity, the "Administrative Agent") for each of
the Lender Parties;
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto (each,
individually, a "Lender", and collectively, the "Lenders") and the Agents and
the Issuer, the Lenders and the Issuer have extended Commitments to make Credit
Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Borrower Security Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Trademark
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make Credit
Extensions (including the initial Credit Extension) to the Grantor pursuant to
the Credit Agreement, and to induce the Lender Parties to enter into Rate
Protection Agreements, the Grantor agrees, for the benefit of each Lender Party,
as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement,
<PAGE>
including its preamble and recitals, have the meanings provided (or incorporated
by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Administrative Agent, and grant to the Administrative
Agent a security interest in, for its benefit and the benefit of each Lender
Party, all of the following property (the "Trademark Collateral"), whether now
owned or hereafter acquired or existing by it:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared
or appear, designs and general intangibles of a like nature (all of the
foregoing items in this clause (a) being collectively called a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and
recordings thereof and all applications in connection therewith, whether
pending or in preparation for filing, including registrations, recordings
and applications in the United States Patent and Trademark Office or in
any office or agency of the United States of America or any State thereof
or any foreign country, including those referred to in Item A of
Attachment 1 attached hereto;
(b) all Trademark licenses, including each Trademark license
referred to in Item B of Attachment 1 attached hereto;
(c) all reissues, extensions or renewals of any of the items
described in clauses (a) and (b);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, including any Trademark, Trademark
registration or Trademark license referred to in Item A and Item B of
Attachment 1 attached hereto, or for any injury to the goodwill associated
with the use of any such Trademark or for breach or enforcement of any
Trademark license.
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<PAGE>
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Trademark Collateral with the United States
Patent and Trademark Office and corresponding offices in other countries of the
world. The security interest granted hereby has been granted as a supplement to,
and not in limitation of, the security interest granted to the Administrative
Agent for its benefit and the benefit of each Lender Party under the Security
Agreement. The Security Agreement (and all rights and remedies of the
Administrative Agent and each Lender Party thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash of
all Secured Obligations, the termination or expiry of all Letters of Credit, the
termination of all Rate Protection Agreements and the termination of all
Commitments, the Administrative Agent shall, at the Grantor's expense, execute
and deliver to the Grantor all instruments and other documents as may be
necessary or proper to release the lien on and security interest in the
Trademark Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Trademark Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
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<PAGE>
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 day and year first above written.
WGL ACQUISITION CORP.
By:
------------------------------------
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By:
------------------------------------
Title:
<PAGE>
ATTACHMENT 1
to Borrower Trademark
Security Agreement
Item A. Trademarks
Registered Trademarks
*Country Trademark Registration No. Registration Date
- -------- --------- ---------------- -----------------
Pending Trademark Applications
*Country Trademark Serial No. Filing Date
- -------- --------- ---------- -----------
Trademark Applications in Preparation
Expected Products/
*Country Trademark Docket No. Filing Date Services
- -------- --------- ---------- ----------- ---------
Item B. Trademark Licenses
*Country or Effective Expiration
Territory Trademark Licensor Licensee Date Date
--------- --------- -------- -------- --------- ----------
- ----------
* List items related to the United States first for ease of
recordation. List items related to other countries next, grouped by
country and in alphabetical order by country name.
<PAGE>
EXHIBIT C
to Borrower
Security Agreement
COPYRIGHT SECURITY AGREEMENT
This COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of ________
__, ___, is made between WGL ACQUISITION CORP., a New York corporation (the
"Grantor"), and FLEET NATIONAL BANK, as administrative agent (together with any
successor(s) thereto in such capacity, the "Administrative Agent") for each of
the Lender Parties;
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto (each
individually a "Lender" and collectively the "Lenders"), the Agents and the
Issuer, the Lenders and the Issuer have extended Commitments to make Credit
Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Borrower Security Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Copyright
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Grantor pursuant to the Credit Agreement, and to induce the Lender Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Lender Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement,
<PAGE>
including its preamble and recitals, have the meanings provided (or incorporated
by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Administrative Agent, and grant to the Administrative
Agent a security interest in, for its benefit and the benefit of each Lender
Party, all of the following property (the "Copyright Collateral"), whether now
owned or hereafter acquired or existing by it, being all copyrights (including
all copyrights for semiconductor chip product mask works) of the Grantor,
whether statutory or common law, registered or unregistered, now or hereafter in
force throughout the world including all of the Grantor's right, title and
interest in and to all copyrights registered in the United States Copyright
Office or anywhere else in the world and also including the copyrights referred
to in Item A of Attachment 1 attached hereto, and all applications for
registration thereof, whether pending or in preparation, all copyright licenses,
including each copyright license referred to in Item B of Attachment 1 attached
hereto, the right to sue for past, present and future infringements of any
thereof, all rights corresponding thereto throughout the world, all extensions
and renewals of any thereof and all proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Copyright Collateral with the United States
Copyright Office and corresponding offices in other countries of the world. The
security interest granted hereby has been granted as a supplement to, and not in
limitation of, the security interest granted to the Administrative Agent for its
benefit and the benefit of each Lender Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Administrative Agent and
each Lender Party thereunder) shall remain in full force and effect in
accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash of
all Secured Obligations, the termination or expiry of all Letters of Credit, the
termination of all Rate Protection Agreements and the termination of all
Commitments, the Administrative Agent shall, at the Grantor's expense, execute
and deliver to the Grantor all instruments and other documents as may be
necessary or proper to release the lien on and security interest in the
Copyright Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of
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<PAGE>
the Administrative Agent with respect to the security interest in the Copyright
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which (including the remedies provided for therein)
are incorporated by reference herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
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<PAGE>
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 day and year first above written.
WGL ACQUISITION CORP.
By:
-------------------------------------
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By:
-------------------------------------
Title:
<PAGE>
ATTACHMENT 1
to Borrower Copyright
Security Agreement
Item A. Copyrights/Mask Works
Registered Copyrights/Mask Works
*Country Registration No. Registration Date Author(s) Title
- -------- ---------------- ----------------- --------- -----
Copyright/Mask Work Pending Registration Applications
*Country Serial No. Filing Date Author(s) Title
- -------- ---------- ----------- --------- -----
Copyright/Mask Work Registration Applications in Preparation
Expected
*Country Docket No. Filing Date Author(s) Title
- -------- ---------- ----------- --------- -----
Item B. Copyright/Mask Work Licenses
*Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
--------- -------- -------- --------- ---------- -------
- ----------
* List items related to the United States first for ease of
recordation. List items related to other countries next, grouped by
country and in alphabetical order by country name.
<PAGE>
EXHIBIT F-2
SUBSIDIARY SECURITY AGREEMENT
This SECURITY AGREEMENT (as amended, supplemented, amended and restated or
otherwise modified from time to time, this "Security Agreement"), dated as of
____________, 19__, is made by each Subsidiary (as defined in the Credit
Agreement referred to below) a signatory hereto on the date hereof and each
other Subsidiary that may from time to time become, pursuant to the terms of the
Credit Agreement, a party hereto (individually, a "Grantor", and collectively,
the "Grantors"), in favor of FLEET NATIONAL BANK, as administrative agent
(together with any successor(s) thereto in such capacity, the "Administrative
Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among WGL Acquisition Corp., a New York
corporation (the "Borrower"), the various financial institutions as are, or may
from time to time become parties thereto (the "Lenders"), the Agents and the
Documentation Agent named therein, the Lenders and the Issuer have extended
Commitments to make Credit Extensions to the Borrower; and
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, each
Grantor is required to execute and deliver this Security Agreement; and
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Security Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this
Security Agreement inasmuch as each Grantor will derive substantial direct and
indirect benefits from the Credit Extensions made from time to time to the
Borrower by the Lenders and the Issuer pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
and the Issuer to make each Credit Extension (including the initial Credit
Extension) to the Borrower pursuant to the Credit Agreement, and to induce the
Lender Parties to enter into Rate Protection Agreements, each Grantor jointly
and severally agrees, for the benefit of each Lender Party, as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in clause (c) of Section 4.1.2.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories and all peripheral
devices and other related computer hardware;
(b) all software programs (including both source code, object code
and all related applications and data files), whether now owned, licensed
or leased or hereafter acquired by any Grantor, designed for use on the
computers and electronic data processing hardware described in clause (a)
above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through (c);
and
(e) all rights with respect to all of the foregoing, including,
without limitation, any and all copyrights, licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and indemnifications
and any substitutions, replacements, additions or model conversions of any
of the foregoing.
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<PAGE>
"Copyright Collateral" means:
(a) all copyrights (including, without limitation, copyrights for
semi-conductor chip product mask works) of each Grantor, whether statutory
or common law, registered or unregistered, now or hereafter in force
throughout the world including, without limitation, all of each Grantor's
right, title and interest in and to all copyrights registered in the
United States Copyright Office or anywhere else in the world, and all
applications (including pending applications) for registration thereof and
all copyrights resulting from such applications;
(b) all extensions and renewals of any thereof;
(c) all copyright licenses and other agreements providing each
Grantor with the right to use any of the items of the type referred to in
clauses (a) and (b);
(d) the right to sue for past, present and future infringements of
any of the Copyright Collateral referred to in clauses (a) and (b) and, to
the extent applicable, clause (c); and
(e) all proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages and proceeds of
suit and all rights corresponding thereto throughout the world.
"Credit Agreement" is defined in the first recital.
"Deposit Accounts" means any and all demand, time, savings, passbook or
other accounts with a bank or other financial institution, including general
deposit and cash concentration accounts, in which any cash, payments or receipts
of or for the benefit of any Grantor are or are to be deposited, and all
deposits therein and investments thereof, whether now or at any time hereafter
existing.
"Equipment" is defined in clause (a) of Section 2.1.
"Grantor" and "Grantors" is defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the
Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Inventory" is defined in clause (b) of Section 2.1
"Lender Party" means, as the context may require, each Lender, the Issuer
and each Agent and each of its respective successors, transferees and assigns.
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<PAGE>
"Lenders" is defined in the first recital.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent
throughout the world;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all patent licenses and other agreements providing any Grantor
with the right to use any of the items of the type referred to in clauses
(a) and (b);
(d) the right to sue third parties for past, present or future
infringements of any Patent Collateral described in clauses (a) and (b)
and, to the extent applicable, clause (c); and
(e) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), and all
rights corresponding thereto throughout the world.
"Receivables" is defined in clause (c) of Section 2.1.
"Related Contracts" is defined in clause (c) of Section 2.1.
"Secured Obligations" is defined in Section 2.2.
"Security Agreement" is defined in the preamble.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, trade dress,
service marks, certification marks, collective marks, logos, other source
of business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like nature,
and designs (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing in the United States or
hereafter adopted or acquired in the United States, whether currently in
use or not, all registrations and recordings thereof and all applications
in connection therewith, whether pending or in preparation for filing,
including registrations, recordings and applications in the United States
Patent and Trademark Office or in any office or agency of the United
States of America or any State thereof or any foreign country;
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<PAGE>
(b) all Trademark licenses and other agreements providing any
Grantor with the right to use any items of the type described in clause
(a);
(c) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clause (a);
(d) the right to sue third parties for past, present and future
infringements of any Trademark Collateral described in clause (a) and, to
the extent applicable, clause (b); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by any Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, or for any injury to the goodwill
associated with the use of any such Trademark or for breach or enforcement
of any Trademark license and all rights corresponding thereto throughout
the world.
"Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential or proprietary or useful information (to the
extent such confidential, proprietary or useful information is protected by any
Grantor against disclosure and is not readily ascertainable) and all know-how
obtained by or used in or contemplated at any time for use in the business of
any Grantor (all of the foregoing being collectively called a "Trade Secret"),
whether or not such Trade Secret has been reduced to a writing or other tangible
form, including all documents and things embodying, incorporating or referring
in any way to such Trade Secret, all Trade Secret licenses, including the right
to sue for and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect from time to time
in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or in the Credit Agreement or the context otherwise requires, terms used in this
Security Agreement, including its preamble and recitals, have the meanings
provided in the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Security Agreement, including its preamble and recitals, with
such meanings.
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<PAGE>
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. Each Grantor, to the extent it has any
interest therein whatsoever, hereby assigns and pledges to the Administrative
Agent for its benefit and the ratable benefit of each of the Lender Parties, and
hereby grants to the Administrative Agent for its benefit and the ratable
benefit of each of the Lender Parties a security interest in, all of the
following, whether now or hereafter existing or acquired by such Grantor (the
"Collateral"):
(a) all equipment in all of its forms of such Grantor, wherever
located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefor and all accessories related thereto (any and all of the foregoing
being the "Equipment");
(b) all inventory in all of its forms of such Grantor, wherever
located, including
(i) all raw materials and work in process therefor, finished
goods thereof, and materials used or consumed in the manufacture or
production thereof,
(ii) all goods in which such Grantor has an interest in mass
or a joint or other interest or right of any kind (including goods
in which such Grantor has an interest or right as consignee), and
(iii) all goods which are returned to or repossessed by such
Grantor,
and all accessions thereto, products thereof and documents therefor (any
and all such inventory, materials, goods, accessions, products and
documents being the "Inventory");
(c) all accounts, contracts, contract rights, chattel paper,
documents, instruments and general intangibles (including tax refunds) of
such Grantor, whether or not arising out of or in connection with the sale
or lease of goods or the rendering of services, and all rights of such
Grantor now or hereafter existing in and to all security agreements,
guaranties, leases and other contracts securing or otherwise relating to
any such accounts, contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (any and all such accounts,
contracts, contract rights, chattel paper, documents, instruments, and
general intangibles being the "Receivables", and any and all such security
agreements, guaranties, leases and other contracts being the "Related
Contracts");
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<PAGE>
(d) all Intellectual Property Collateral of such Grantor;
(e) all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to, any of the foregoing in this
Section 2.1;
(f) all of the other property and rights of every kind and
description and interests therein of such Grantor (including all Deposit
Accounts); and
(g) all products, offspring, rents, issues, profits, returns, income
and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (a), (b), (c), (d), (e) and (f), proceeds deposited from time to
time in the Collateral Account and in any lock boxes of such Grantor, and,
to the extent not otherwise included, all payments under insurance
(whether or not the Administrative Agent is the loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss or damage
to or otherwise with respect to any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include (i) such Grantor's
real property leaseholds, (ii) motor vehicles owned by such Grantor and (iii)
any general intangibles or other rights arising under any contracts,
instruments, licenses or other documents as to which the grant of a security
interest would constitute a violation of a valid and enforceable restriction in
favor of a third party on such grant, unless and until any required consents
shall have been obtained. Each Grantor agrees to use its best efforts to obtain
any such required consent to the extent reasonably requested by the
Administrative Agent.
SECTION 2.2. Security for Obligations. This Security Agreement secures the
payment of all Obligations now or hereafter existing, whether for principal,
interest, costs, fees, expenses or otherwise (the "Secured Obligations").
SECTION 2.3. Continuing Security Interest; Transfer of Notes. This
Security Agreement shall create a continuing security interest in the Collateral
and shall
(a) remain in full force and effect until payment in full in cash of
all Secured Obligations and the termination of all Commitments,
(b) be binding upon each Grantor, its successors, transferees and
assigns, and
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<PAGE>
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note, Credit Extension or
Hedging Obligation or other Secured Obligation held by it to any other Person or
entity, and such other Person or entity shall thereupon become vested with all
the rights and benefits in respect thereof granted to such Lender under any Loan
Document (including this Security Agreement) or document relating to such
Hedging Obligation or otherwise, subject, however, to any contrary provisions
in such assignment or transfer, and to the provisions of Section 10.11 and
Article IX of the Credit Agreement. Upon (i) the sale, transfer or other
disposition of Collateral in accordance with the Credit Agreement or a waiver or
consent granted under the Credit Agreement or (ii) the payment in full of all
Secured Obligations, the termination or expiration of all Letters of Credit and
Rate Protection Agreements and the termination of all Commitments, the security
interest granted herein shall automatically terminate with respect to (x) such
Collateral (in the case of clause (i)) or (y) all Collateral (in the case of
clause (ii)). Upon any such termination, the Administrative Agent will, at such
Grantor's sole expense, execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence such termination. Upon any
sale or other transfer of Collateral permitted by the terms of Section 7.2.9 of
the Credit Agreement or any waiver or consent granted under the Credit
Agreement, the security interest created hereunder in such Collateral (but not
in the proceeds thereof) shall be deemed to be automatically released and the
Administrative Agent will, at such Grantor's sole expense, execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to
evidence such release.
SECTION 2.4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding
(a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and
shall perform all of its duties and obligations under such contracts and
agreements to the same extent as if this Security Agreement had not been
executed,
(b) the exercise by the Administrative Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral, and
(c) neither the Administrative Agent nor any other Lender Party
shall have any obligation or liability under
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<PAGE>
any such contracts or agreements included in the Collateral by reason of
this Security Agreement, nor shall the Administrative Agent or any other
Lender Party be obligated to perform any of the obligations or duties of
any Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 2.5. Security Interest Absolute. All rights of the Administrative
Agent and the security interests granted to the Administrative Agent hereunder,
and all obligations of each Grantor hereunder, shall be, to the extent permitted
under applicable law, absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement,
any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
under the provisions of the Credit Agreement, any Note, any other
Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of the
Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligations of the Borrower or any other
Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and each Grantor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of the Borrower, any other Obligor
or otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or nonperfection of
any collateral (including the Collateral), or
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<PAGE>
any amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 2.6. Postponement of Subrogation, etc. Each Grantor agrees that it
will not exercise any rights which it may acquire by way of subrogation under
this Agreement, by any payment made hereunder or otherwise, until the prior
payment, in full and in cash, of all Obligations of the Borrower and each other
Obligor and the termination of all Commitments. Any amount paid to any Grantor
on account of such subrogation rights prior to the payment in full of all
Obligations of the Borrower and each other Obligor shall be held in trust for
the benefit of the Lender Parties and each holder of a Note and shall
immediately be paid to the Lender Parties and each holder of a Note and credited
and applied against the Obligations of the Borrower and each other Obligor,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement; provided, however, that if all Obligations of the Borrower and each
other Obligor have been paid in full and all Commitments have been permanently
terminated, each Lender Party and each holder of a Note agrees that, at such
Grantor's request, the Lender Parties and the holders of the Notes will execute
and deliver to such Guarantor appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to such Grantor of an interest in the Obligations of the Borrower
and each other Obligor resulting from such payment by such Grantor. In
furtherance of the foregoing, for so long as any Obligations or Commitments
remain outstanding or any Rate Protection Agreement remains in full force and
effect, each Grantor shall refrain from taking any action or commencing any
proceeding against the Borrower or any other Obligor (or its successors or
assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amounts in respect of payments made under this Security Agreement to
any Lender Party or any holder of a Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Grantor represents and
warrants insofar as the representations and warranties contained herein are
applicable to such Grantor and its properties, to each Lender Party as set forth
in this Article.
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<PAGE>
SECTION 3.1.1. Location of Collateral, etc. All of the Equipment and
Inventory (other than Inventory in transit) of such Grantor are located (i) at
the places specified in Item A and Item B, respectively, of Schedule I hereto or
(ii) after the Closing Date, at such other locations as are notified to the
Administration Agent pursuant to clause (a) of Section 4.1.2. The place(s) of
business and chief executive office of such Grantor and the office(s) where such
Grantor keeps its records concerning the Receivables, and all originals of all
chattel paper which evidence Receivables, are located at the address as set
forth in Item C of Schedule I hereto and at such other locations as are notified
to the Administration Agent pursuant to clause (a) of Section 4.1.2.. As of the
date hereof, such Grantor has no trade name except as set forth in Item D of
Schedule I hereto. During the four months preceding the date hereof, such
Grantor has not been known by any legal name different from the one set forth on
the signature page hereto, nor has such Grantor been the subject of any merger
or other corporate reorganization, except as set forth in Item D of Schedule I
hereto. If the Collateral includes any Inventory located in the State of
California, such Grantor is not a "retail merchant" within the meaning of
Section 9102 of the Uniform Commercial Code - Secured Transactions of the State
of California. All Receivables evidenced by a promissory note or other
instrument, negotiable document or chattel paper have been duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Administrative Agent and delivered and pledged
to the Administrative Agent pursuant to Section 4.1.7.
SECTION 3.1.2. Ownership, No Liens, etc. Such Grantor owns the Collateral
free and clear of any Lien except for the security interest created by this
Security Agreement and except as permitted by the Credit Agreement. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except such as may
have been filed in favor of the Administrative Agent relating to this Security
Agreement or as have been filed in connection with Liens permitted pursuant to
Section 7.2.3 of the Credit Agreement.
SECTION 3.1.3. Negotiable Documents, Instruments and Chattel Paper. Such
Grantor has delivered to the Administrative Agent possession of all originals of
all negotiable documents, instruments and chattel paper currently owned or held
by such Grantor (duly endorsed in blank, if requested by the Administrative
Agent).
Such Grantor owns directly or is entitled to use by license or otherwise,
all patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of such Grantor's
business.
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SECTION 3.1.4. Possession and Control. Such Grantor has exclusive
possession and control of its Equipment and Inventory.
SECTION 3.1.5. Intellectual Property Collateral. With respect to any
Intellectual Property Collateral the loss, impairment or infringement of which
could reasonably be expected to have a Material Adverse Effect:
(a) such Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part;
(b) such Intellectual Property Collateral is valid and enforceable;
(c) the Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property Collateral, including,
recordations of all of its interests in the Patent Collateral and
Trademark Collateral in the United States Patent and Trademark Office and
in corresponding offices throughout the world and its claims to the
Copyright Collateral in the United States Copyright Office and in
corresponding offices throughout the world;
(d) the Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted rights
of any third party; and
(e) except as permitted by Section 4.1.4, the Grantor has performed
and will continue to perform all acts and has paid and will continue to
pay all required fees and taxes to maintain each and every item of such
Intellectual Property Collateral in full force and effect throughout the
world, as applicable.
The Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of the Grantor's
business.
SECTION 3.1.6. Validity, etc. This Security Agreement creates a valid
first priority security interest in the Collateral (subject to Section 9-306 of
the U.C.C. and Liens permitted pursuant to Section 7.2.3 of the Credit
Agreement), 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 taken.
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SECTION 3.1.7. Authorization, Approval, etc. Except as have been obtained
or made and are in full force and effect, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required (except in the case of Receivables owing to any
governmental entity) either
(a) for the grant by such Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Security
Agreement by such Grantor, or
(b) for the perfection of or the exercise by the Administrative
Agent of its rights and remedies hereunder.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. Each Grantor covenants and agrees insofar
as the covenants contained herein are applicable to such Grantor and its
properties, that, so long as any portion of the Secured Obligations shall remain
unpaid or any Lender shall have any outstanding Commitment, it will, unless the
Required Lenders shall otherwise consent in writing, perform the obligations set
forth in this Section.
SECTION 4.1.1. As to Equipment and Inventory. Such Grantor hereby agrees
that it shall
(a) keep all the Equipment and Inventory (other than Equipment and
Inventory sold in accordance with the Credit Agreement) at (i) the places
therefor specified in clauses (i) or (ii) of Section 3.1.1 or (ii) such
other places in a jurisdiction where all other representations and
warranties set forth in Article III (including Section 3.1.6 and Section
3.1.7) shall be true and correct, and all action required pursuant to the
first sentence of Section 4.1.7 shall have been taken with respect to the
Equipment and Inventory; and
(b) cause the Equipment to be maintained and preserved in accordance
with Section 7.1.3. of the Credit Agreement.
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SECTION 4.1.2. As to Receivables.
(a) Such Grantor shall give the Administration Agent a supplement to
Schedule I hereto on each date a Compliance Certificate is required to be
delivered to the Administrative Agent under the Credit Agreement, which
shall set forth any changes to the information set forth in Section 3.1.1.
Such Grantor shall keep its place(s) of business and chief executive
office and the office(s) where it keeps its records concerning the
Receivables located at the address set forth below its name on the
signature page hereof, or at such other locations in a jurisdiction where
all actions required by the first sentence of Section 4.1.7 shall have
been taken with respect to the Receivables, and shall not change its name
except upon 30 days' prior written notice to the Administrative Agent.
(b) Such Grantor shall list each of its Deposit Accounts in Schedule
II hereto, as such Schedule is supplemented by notice to the
Administrative Agent pursuant to clause (a) of Section 4.1.1. Subject to
and without limiting the effect of clause (c) of this Section 4.1.2,
following the occurrence and continuance of an Event of Default and at the
direction of the Required Lenders, such Grantor shall make its best
efforts to maintain each of its Deposit Accounts pursuant to a deposit
account agreement which is in all respects satisfactory to the
Administrative Agent and which provides, among other things, that (i)
until the deposit account bank shall have received written notice from the
Administrative Agent pursuant to this clause, the deposit account bank
will make all payments from the Deposit Account as specified by such
Grantor, and, after any such notice, the deposit account bank will make
all payments from the Deposit Account to the Administrative Agent for
credit to the Collateral Account, (ii) the deposit account bank (if other
than the Administrative Agent or a Lender) waives all set off rights
(other than setoff rights for reasonable and customary account service
charges and fees and amounts based on items that are dishonored by the
payor thereof and returned to the deposit account bank), and (iii) such
deposit account agreement may not be amended without the written consent
of the Administrative Agent. The Administrative Agent will not give the
notice referred to in the preceding clause (b) (i) unless it has given, or
is contemporaneously giving, notice pursuant to clause (c) of this
Section. In the event that a deposit account bank refuses to enter into a
deposit account agreement in accordance with the above listed terms within
30 days of the requesting Grantor's request, the Administrative Agent
shall have the right to direct such Grantor to transfer the assets in that
deposit account to a bank which will enter into a deposit account
agreement in accordance with the above listed terms.
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(c) Upon written notice by the Administrative Agent to such Grantor
pursuant to this clause, all proceeds of Collateral received by such
Grantor shall be delivered in kind to the Administrative Agent for deposit
to a deposit account (the "Collateral Account") of such Grantor maintained
with the Administrative Agent, and such Grantor shall not commingle any
such proceeds, and shall hold separate and apart from all other property,
all such proceeds in express trust for the benefit of the Administrative
Agent until delivery thereof is made to the Administrative Agent. The
Administrative Agent will not give the notice referred to in the preceding
sentence unless there shall have occurred and be continuing a Default of
the nature set forth in clauses (b), (c), or (d) of Section 8.1.9 of the
Credit Agreement with respect to any Obligor (other than any immaterial
Subsidiary) or any other Event of Default. No funds, other than proceeds
of Collateral, will be deposited in the Collateral Account.
(d) The Administrative Agent shall have the right to apply any
amount in the Collateral Account to the payment of any Secured Obligations
which are due and payable or payable upon demand. The Administrative Agent
may at any time transfer to the applicable Grantor's general demand
deposit account at the Administrative Agent any or all of the collected
funds in the Collateral Account; provided, however, that any such transfer
shall not be deemed to be a waiver or modification of any of the
Administrative Agent's rights under this clause.
SECTION 4.1.3. As to Collateral.
(a) Until such time as the Administrative Agent shall notify such
Grantor of the revocation of such power and authority (which notice may
not be given unless there shall have occurred and be continuing a Default
of the nature set forth in clause (b), (c), or (d) of Section 8.1.9 of the
Credit Agreement with respect to any Obligor (other than any immaterial
Subsidiary) or any other Event of Default), such Grantor may, in
accordance with the Credit Agreement, at its own expense, sell, lease or
furnish under the contracts of service any of the Inventory, and use and
consume, in accordance with the Credit Agreement, any raw materials, work
in process or materials. The Administrative Agent, however, may, at any
time after any such revocation of such power and authority, notify any
parties obligated on any of the Collateral to make payment to the
Administrative Agent of any amounts due or to become due thereunder and
enforce collection of any of the Collateral by suit or otherwise and
surrender, release, or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original
period) any indebtedness thereunder or evidenced thereby. Upon request of
the Administrative
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Agent (which request may not be made unless there shall have occurred and
be continuing a Default of the nature set forth in clause (b), (c), or (d)
of Section 8.1.9 of the Credit Agreement with respect to any Obligor
(other than any immaterial Subsidiary) or any other Event of Default),
such Grantor will, at its own expense, notify any parties obligated on any
of the Collateral to make payment to the Administrative Agent of any
amounts due or to become due thereunder.
(b) The Administrative Agent is authorized to endorse, in the name
of such Grantor, any item, howsoever received by the Administrative Agent,
representing any payment on or other proceeds of any of the Collateral.
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SECTION 4.1.4. As to Intellectual Property Collateral. Grantor covenants
and agrees to comply with the following provisions as such provisions relate to
any Intellectual Property Collateral material to the operations or business of
each Grantor:
(a) Such Grantor covenants and agrees that it will not, unless (i)
such Grantor shall have a valid business purpose to do otherwise or (ii)
to do otherwise could not reasonably be expected to have a Material
Adverse Effect, do any act, or omit to do any act, whereby any of the
Patent Collateral may lapse or become abandoned or dedicated to the public
or unenforceable.
(b) Such Grantor covenants and agrees that it will not, and that it
will not permit any of its licensees to, (x) unless it has a valid
business purpose to do otherwise or (y) to do otherwise could not
reasonably be expected to have a Material Adverse Effect,:
(i) fail to continue to use any of the Trademark Collateral in
order to maintain all of the Trademark Collateral in full force free
from any claim of abandonment for non-use,
(ii) fail to maintain as in the past the quality of products
and services offered under all of the Trademark Collateral,
(iii) fail to use a notice of registration as appropriate in
connection with goods using any Trademark Collateral registered with
the United States Patent and Trademark Office or equivalent foreign
authority,
(iv) do or permit any act or knowingly omit to do any act
whereby any of the Trademark Collateral may lapse or become invalid
or unenforceable.
(c) Such Grantor covenants and agrees that it will not, unless (i)
such Grantor shall have a valid business purpose to do otherwise or (ii)
to do otherwise could not reasonably be expected to have a Material
Adverse Effect, do or permit any act or knowingly omit to do any act
whereby any of the Copyright Collateral or any of the Trade Secrets
Collateral may lapse or become invalid or unenforceable or placed in the
public domain except upon expiration of the end of an unrenewable term of
a registration thereof.
(d) Such Grantor covenants and agrees that it shall notify the
Administrative Agent upon each delivery of a Compliance Certificate as
required pursuant to the Credit Agreement if it knows, or has reason to
know, that any
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application or registration relating to any material item of the
Intellectual Property Collateral may become abandoned or dedicated to the
public or placed in the public domain or invalid or unenforceable, or of
any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or
any foreign counterpart thereof or any court) regarding such Grantor's
ownership of any of the Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same.
(e) Such Grantor covenants and agrees that it shall notify the
Administrative Agent upon each delivery of a Compliance Certificate as
required pursuant to the Credit Agreement, of the prior filing of any
application for the registration of any Intellectual Property Collateral
with the United States Patent and Trademark Office or the United States
Copyright Office, and upon request of the Administrative Agent, execute
and deliver any and all agreements, instruments, documents and papers as
the Administrative Agent may reasonably request to evidence the
Administrative Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby.
(f) Such Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office or the
United States Copyright Office to maintain and pursue any application (and
to obtain the relevant registration) filed with respect to, and to
maintain any registration of, the Intellectual Property Collateral,
including the filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition, interference and
cancellation proceedings and the payment of fees and taxes (except to the
extent that dedication, abandonment or invalidation is permitted under the
foregoing clauses (a), (b) and (c)).
(g) If such Grantor shall own any Patent Collateral, such Grantor
shall execute and deliver to the Administrative Agent a Patent Security
Agreement in the form of Exhibit A hereto and, with respect to the Patent
Collateral and any other Intellectual Property Collateral, shall execute
and deliver to the Administrative Agent any other document required to
acknowledge or register or perfect the Administrative Agent's interest in
the U.S. in any part of the Intellectual Property Collateral.
SECTION 4.1.5. Insurance. Such Grantor will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with
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respect to its properties and business as required pursuant to the Credit
Agreement. Without limiting the foregoing, such Grantor further agrees as
follows:
(a) Each policy for property insurance shall show the Administrative
Agent as loss payee.
(b) Each policy for liability insurance shall show the
Administrative Agent as an additional insured.
(c) Each insurance policy shall provide that at least 30 days' prior
written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insured.
(d) Such Grantor shall, if so requested by the Administrative Agent,
deliver to the Administrative Agent a copy of each insurance policy.
SECTION 4.1.6. Transfers and Other Liens. Such Grantor covenants and
agrees that it will 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) create or suffer to exist any Lien upon or with respect to any
of the Collateral to secure Indebtedness of any Person or entity, except
for the security interest created by this Security Agreement and except as
permitted by the Credit Agreement.
SECTION 4.1.7. Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may reasonably request,
in order to perfect, preserve and protect any security interest granted or
purported to be granted hereby in Collateral located in the United States or to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, such Grantor will
(a) if any Receivable shall be evidenced by a promissory note or
other instrument, negotiable document or chattel paper, deliver and
pledge to the Administrative Agent hereunder such promissory note,
instrument, negotiable document or chattel paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in
form and substance reasonably satisfactory to the Administrative Agent;
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(b) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including,
without limitation, at the request of the Administrative Agent, any
assignment of claim form under or pursuant to the federal assignment of
claims statute, 31 U.S.C. ss. 3726, any successor or amended version
thereof or any regulation promulgated under or pursuant to any version
thereof), as may be necessary or desirable, or as the Administrative Agent
may reasonably request, in order to perfect and preserve the security
interests and other rights granted or purported to be granted to the
Administrative Agent hereby; and
(c) furnish to the Administrative Agent, from time to time at the
Administrative Agent's reasonable request, statements and schedules
further identifying and describing the Collateral and such other reports
in connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail; and
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Administrative Agent 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 such Grantor where permitted
by law. A carbon, photographic or other reproduction of this Security Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the
Administrative Agent's discretion following the occurrence and during the
continuance of an Event of Default and notice to such Grantor, to take any
action and to execute any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Security Agreement,
including:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
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(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral;
and
(d) to perform the affirmative obligations of such Grantor hereunder
(including all obligations of such Grantor pursuant to Section 4.1.7).
Such Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein within 30 days after written notice from
the Administrative Agent, the Administrative Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall be payable by such Grantor pursuant to
Section 6.2.
SECTION 5.3. Administrative Agent Has No Duty. In addition to, and not in
limitation of, Section 2.4, the powers conferred on the Administrative Agent
hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent 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.
SECTION 5.4. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as such Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
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ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may
(i) require each Grantor to, and each Grantor hereby agrees
that it will, at its expense and upon request of the Administrative
Agent forthwith, assemble all or part of the Collateral as directed
by the Administrative Agent and make it available to the
Administrative Agent at a place to be designated by the
Administrative Agent which is reasonably convenient to both parties
and
(ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially
reasonable. Each Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' prior notice to such
Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(b) All cash proceeds received by the Administrative Agent in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may, in the discretion of the Administrative
Agent, be held by the Administrative Agent as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to
the Administrative Agent pursuant to Section 6.2) in whole or in part by
the Administrative Agent for the benefit of the Lender Parties against,
all or any part of the Secured Obligations as follows: (i) first, to the
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reasonable out of pocket costs and expenses of the Administrative Agent in
connection with the retaking, holding, preparing for sale, selling or
other disposition of the Collateral, including, without limitation, all
court costs and the reasonable fees and expenses of its agents and legal
counsel; (ii) second, to the payment in full of the Secured Obligations or
in the event that such proceeds are insufficient to pay in full the
Secured Obligations, equally and ratably in accordance with each Lender's
Obligations owing to it under or pursuant to the Credit Agreement or any
other Loan Document, or under or pursuant to any Hedging Obligation
included in the Secured Obligations (as to each Lender, applied first to
fees and expense reimbursements then due to such Lender, then to interest
due to such Lender, then to pay or prepay principal of the Loans or owing
to, or to reduce the "credit exposure" of, such Lender under such Hedging
Obligation, as the case may be, then to pay (or cash collateralize) the
remaining Obligations); (iii) third, without duplication of any amounts
paid pursuant to clause (ii) above, to the Indemnified Parties to the
extent of any amounts owing pursuant to Section 10.4 of the Credit
Agreement; and (iv) fourth, to each Grantor, or its successors and
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining. For purposes of this Agreement, the "credit
exposure" at any time of any Lender with respect to a Hedging Obligation
to which such Lender is a party shall be determined at such time in
accordance with the customary methods of calculating credit exposure under
similar arrangements by the counterparty to such arrangements, taking into
account potential interest rate movements, mitigating factors such as
other interest rate swaps, caps, collars and hedges, and the respective
termination provisions and notional principal amount and term of such
Hedging Obligation. Each Grantor shall remain liable to the Lenders for
any deficiency. If the Administrative Agent has funds available to apply
to a portion of, but not all of, one of the amounts described in clauses
(i) through (iv) above, then the Administrative Agent shall apply such
funds to the applicable parties in proportion to the amounts to which such
parties would have been entitled if the entire amount described in any
such clause had been available.
SECTION 6.2. Indemnity and Expenses.
(a) Each Grantor jointly and severally agrees to indemnify the
Administrative Agent from and against any and all claims, losses and
liabilities arising out of or resulting from this Security Agreement
(including, without limitation, enforcement of this Security Agreement),
except claims, losses or liabilities resulting from the Administrative
Agent's gross negligence or wilful misconduct.
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(b) Each Grantor will upon demand pay to the Administrative Agent
the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which
the Administrative Agent may incur in connection with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral,
(iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the Lender Parties hereunder, or
(iv) the failure by any Grantor to perform or observe any of
the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Security Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any provision
of this Security Agreement nor consent to any departure by any Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 7.3. Addresses for Notices. All notices and other communications
provided to each Guarantor under this Security Agreement shall be in writing or
by facsimile and addressed, delivered or transmitted to such Grantor at its
address or facsimile number as set forth in the Subsidiary Guaranty or at such
other address or facsimile number as may be designated by such Grantor in a
notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by facsimile,
shall be deemed given when transmitted.
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SECTION 7.4. Captions. Section captions used in this Security Agreement
are for convenience of reference only, and shall not affect the construction of
this Security Agreement.
SECTION 7.5. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
SECTION 7.6. Governing Law. Entire Agreement, etc. THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR 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. THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 7.7. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SECURITY
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR EACH GRANTOR SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW) IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF NEW YORK. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GRANTOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR
-25-
<PAGE>
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR HEREBY
IRREVOCABLY WAIVES (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) SUCH IMMUNITY
IN RESPECT OF ITS OBLIGATIONS UNDER THIS SECURITY AGREEMENT.
SECTION 7.8. Waiver of Jury Trial. THE LENDER PARTIES AND EACH GRANTOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS SECURITY AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
LENDER PARTIES OR ANY GRANTOR. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
-26-
<PAGE>
SCHEDULE I
to
Subsidiary Security Agreement
Item A. Location of Equipment
Description Location
----------- --------
1.
2.
3.
Item B. Location of Inventory
Description Location
----------- --------
1.
2.
3.
Item C. Place of Business. etc. (Section 3.1.2)
Address
-------
Item D. Trade Names
Name of Grantor Trade Name
--------------- ----------
<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF SUBSIDIARY]
By:______________________________________
Title:
FLEET NATIONAL BANK, as
Administrative Agent
By:______________________________________
Title:
-27-
<PAGE>
SCHEDULE II
to
Subsidiary Security Agreement
Account
Bank Address of Bank Type of Account Number
- ---- --------------- --------------- ------
<PAGE>
EXHIBIT A
to Subsidiary
Security Agreement
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of ________
__, ____, is made between ________________, a ________ corporation (the
"Grantor"), and FLEET NATIONAL BANK, as administrative agent (together with any
successor(s) thereto in such capacity, the "Administrative Agent") for each of
the Lender Parties;
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto (each,
individually, a "Lender", and collectively, the "Lenders"), the Agents and the
Issuer, the Lenders have extended Commitments to make Credit Extensions to the
Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Subsidiary Security Agreement, dated as of ______ ___ , ____ (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Grantor pursuant to the Credit Agreement, and to induce the Lender Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Lender Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement,
<PAGE>
including its preamble and recitals, have the meanings provided (or incorporated
by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Administrative Agent, and grant to the Administrative
Agent a security interest in, for its benefit and the benefit of each Lender
Party, all of the following property (the "Patent Collateral"), whether now
owned or hereafter acquired or existing by it:
(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in preparation for
filing anywhere in the world and including each patent and patent
application referred to in Item A of Attachment 1 attached hereto;
(b) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clause (a);
(c) all patent licenses, including each patent license referred to
in Item B of Attachment 1 attached hereto; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, including any patent or patent
application referred to in Item A of Attachment 1 attached hereto, and for
breach or enforcement of any patent license, including any patent license
referred to in Item B of Attachment 1 attached hereto, and all rights
corresponding thereto throughout the world.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Patent Collateral with the United States Patent
and Trademark Office and corresponding offices in other countries of the world.
The security interest granted hereby has been granted as a supplement to, and
not in limitation of, the security interest granted to the Administrative Agent
for its benefit and the benefit of each Lender Party under the Security
Agreement. The Security Agreement (and all rights and remedies of the
Administrative Agent and each Lender Party thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash of
all Secured Obligations, the termination or expiry of all Letters of Credit, the
termination of all Rate
-2-
<PAGE>
Protection Agreements and the termination of all Commitments, the Administrative
Agent shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Patent Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
-3-
<PAGE>
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 day and year first above written.
[NAME OF SUBSIDIARY]
By: _________________________________
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By: _________________________________
Title:
<PAGE>
ATTACHMENT 1
to Subsidiary Patent
Security Agreement
Item A. Patents
Issued Patents
**Country Patent No. Issue Date Inventor(s) Title
- --------- ---------- ---------- ----------- -----
Pending Patent Applications
*Country Serial No. Filing Date Inventor(s) Title
- -------- ---------- ----------- ----------- -----
Patent Applications in Preparation
Expected
*Country Docket No. Filing Date Inventor(s) Title
- -------- ---------- ----------- ----------- -----
Item B. Patent Licenses
*Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
- ----------- --------- -------- --------- ---------- -------
- ----------
* List items related to the United States first for ease of recordation.
List items related to other countries next, grouped by country and in
alphabetical order by country name.
<PAGE>
EXHIBIT B
to Subsidiary
Security Agreement
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of
___________ __, ____, is made between _________________, a ________ corporation
(the "Grantor"), and FLEET NATIONAL BANK, as administrative agent (together with
any successor(s) thereto in such capacity, the "Administrative Agent") for each
of the Lender Parties;
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto (each,
individually, a "Lender", and collectively, the "Lenders") and the Agents and
the Issuer, the Lenders and the Issuer have extended Commitments to make Credit
Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Subsidiary Security Agreement, dated as of ____ __, ____ (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement");
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Trademark
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make Credit
Extensions (including the initial Credit Extension) to the Grantor pursuant to
the Credit Agreement, and to induce the Lender Parties to enter into Rate
Protection Agreements, the Grantor agrees, for the benefit of each Lender Party,
as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings
<PAGE>
provided (or incorporated by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Administrative Agent, and grant to the Administrative
Agent a security interest in, for its benefit and the benefit of each Lender
Party, all of the following property (the "Trademark Collateral"), whether now
owned or hereafter acquired or existing by it:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared
or appear, designs and general intangibles of a like nature (all of the
foregoing items in this clause (a) being collectively called a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and
recordings thereof and all applications in connection therewith, whether
pending or in preparation for filing, including registrations, recordings
and applications in the United States Patent and Trademark Office or in
any office or agency of the United States of America or any State thereof
or any foreign country, including those referred to in Item A of
Attachment 1 attached hereto;
(b) all Trademark licenses, including each Trademark license
referred to in Item B of Attachment 1 attached hereto;
(c) all reissues, extensions or renewals of any of the items
described in clauses (a) and (b);
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by the Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, including any Trademark, Trademark
registration or Trademark license referred to in Item A and Item B of
Attachment 1 attached hereto, or for any injury to the goodwill associated
with the use of any such Trademark or for breach or enforcement of any
Trademark license.
-2-
<PAGE>
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Trademark Collateral with the United States
Patent and Trademark Office and corresponding offices in other countries of the
world. The security interest granted hereby has been granted as a supplement to,
and not in limitation of, the security interest granted to the Administrative
Agent for its benefit and the benefit of each Lender Party under the Security
Agreement. The Security Agreement (and all rights and remedies of the
Administrative Agent and each Lender Party thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash of
all Secured Obligations, the termination or expiry of all Letters of Credit, the
termination of all Rate Protection Agreements and the termination of all
Commitments, the Administrative Agent shall, at the Grantor's expense, execute
and deliver to the Grantor all instruments and other documents as may be
necessary or proper to release the lien on and security interest in the
Trademark Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Administrative Agent with respect to
the security interest in the Trademark Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
-3-
<PAGE>
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 day and year first above written.
[NAME OF SUBSIDIARY]
By: _________________________________
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By: _________________________________
Title:
<PAGE>
ATTACHMENT 1
to Subsidiary Trademark
Security Agreement
Item A. Trademarks
Registered Trademarks
*Country Trademark Registration No. Registration Date
- -------- --------- ---------------- -----------------
Pending Trademark Applications
*Country Trademark Serial No. Filing Date
- -------- --------- ---------- -----------
Trademark Applications in Preparation
Expected Products/
*Country Trademark Docket No. Filing Date Services
- -------- --------- ---------- ----------- --------
Item B. Trademark Licenses
*Country or Effective Expiration
Territory Trademark Licensor Licensee Date Date
- ----------- --------- -------- -------- --------- ----------
- ----------
* List items related to the United States first for ease of recordation.
List items related to other countries next, grouped by country and in
alphabetical order by country name.
<PAGE>
EXHIBIT C
to Subsidiary
Security Agreement
COPYRIGHT SECURITY AGREEMENT
This COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of
___________ __, ____, is made between _________________, a ________ corporation
(the "Grantor"), and FLEET NATIONAL BANK, as administrative agent (together with
any successor(s) thereto in such capacity, the "Administrative Agent") for each
of the Lender Parties;
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Grantor, the various financial
institutions as are, or may from time to time become, parties thereto (each
individually a "Lender" and collectively the "Lenders"), the Agents and the
Issuer, the Lenders and the Issuer have extended Commitments to make Credit
Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has executed
and delivered a Subsidiary Security Agreement, dated as of ____ , ____ (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement")
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Grantor
is required to execute and deliver this Agreement and to grant to the
Administrative Agent a continuing security interest in all of the Copyright
Collateral (as defined below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Grantor pursuant to the Credit Agreement, and to induce the Lender Parties to
enter into Rate Protection Agreements, the Grantor agrees, for the benefit of
each Lender Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement,
<PAGE>
including its preamble and recitals, have the meanings provided (or incorporated
by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Administrative Agent, and grant to the Administrative
Agent a security interest in, for its benefit and the benefit of each Lender
Party, all of the following property (the "Copyright Collateral"), whether now
owned or hereafter acquired or existing by it, being all copyrights (including
all copyrights for semiconductor chip product mask works) of the Grantor,
whether statutory or common law, registered or unregistered, now or hereafter in
force throughout the world including all of the Grantor's right, title and
interest in and to all copyrights registered in the United States Copyright
Office or anywhere else in the world and also including the copyrights referred
to in Item A of Attachment 1 attached hereto, and all applications for
registration thereof, whether pending or in preparation, all copyright licenses,
including each copyright license referred to in Item B of Attachment 1 attached
hereto, the right to sue for past, present and future infringements of any
thereof, all rights corresponding thereto throughout the world, all extensions
and renewals of any thereof and all proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Administrative Agent in the Copyright Collateral with the United States
Copyright Office and corresponding offices in other countries of the world. The
security interest granted hereby has been granted as a supplement to, and not in
limitation of, the security interest granted to the Administrative Agent for its
benefit and the benefit of each Lender Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Administrative Agent and
each Lender Party thereunder) shall remain in full force and effect in
accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash of
all Secured Obligations, the termination or expiry of all Letters of Credit, the
termination of all Rate Protection Agreements and the termination of all
Commitments, the Administrative Agent shall, at the Grantor's expense, execute
and deliver to the Grantor all instruments and other documents as may be
necessary or proper to release the lien on and security interest in the
Copyright Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of
-2-
<PAGE>
the Administrative Agent with respect to the security interest in the Copyright
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which (including the remedies provided for therein)
are incorporated by reference herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
-3-
<PAGE>
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 day and year first above written.
[NAME OF SUBSIDIARY]
By: _________________________________
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By: _________________________________
Title:
<PAGE>
ATTACHMENT 1
to Subsidiary Copyright
Security Agreement
Item A. Copyrights/Mask Works
Registered Copyrights/Mask Works
*Country Registration No. Registration Date Author(s) Title
- -------- ---------------- ----------------- --------- -----
Copyright/Mask Work Pending Registration Applications
*Country Serial No. Filing Date Author(s) Title
- -------- ---------- ----------- --------- -----
Copyright/Mask Work Registration Applications in Preparation
Expected
*Country Docket No. Filing Date Author(s) Title
- -------- ---------- ----------- --------- -----
Item B. Copyright/Mask Work Licenses
*Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
- --------- -------- -------- --------- ---------- -------
- ----------
* List items related to the United States first for ease of recordation.
List items related to other countries next, grouped by country and in
alphabetical order by country name.
<PAGE>
EXHIBIT G-1
HOLDCO GUARANTY AND PLEDGE AGREEMENT
This HOLDCO GUARANTY AND PLEDGE AGREEMENT (this "Agreement"), dated as of
July 10, 1997, is made by WGL Holdings, INC., a Delaware corporation ("Holdco"),
in favor of Fleet National Bank, as administrative agent (together with any
successor(s) thereto in such capacity, the "Administrative Agent") for each of
the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among WGL Acquisition Corp., a New York
corporation (the "Borrower"), the various financial institutions as are or may
from time to time become parties thereto (the "Lenders"), the Agents and the
Documentation Agent named therein, the Lenders and the Issuer have extended
Commitments to make Credit Extensions to, and for the benefit of, the Borrower;
WHEREAS, the Borrower is a direct, wholly-owned Subsidiary of WGL
Intermediate Holdings, Inc., a Delaware corporation ("Intermediate Holdco") and
itself a direct, wholly-owned Subsidiary of Holdco;
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, Holdco is
required to execute and deliver this Agreement;
WHEREAS, Holdco has duly authorized the execution, delivery and
performance of this Agreement; and
WHEREAS, it is in the best interests of Holdco to execute this Agreement
inasmuch as Holdco will derive substantial direct and indirect benefits from the
Credit Extensions made from time to time to the Borrower by the Lenders and the
Issuer pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the Lenders
and the Issuer to make each Credit Extension (including the initial Credit
Extension) to the Borrower pursuant to the Credit Agreement, Holdco agrees, for
the benefit of each Lender Party, as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"Holdco" is defined in the preamble.
"Intermediate Holdco" is defined in the second recital.
"Lender Party" means, as the context may require, any Lender, the Issuer
and each Agent and each of their respective successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Pledged Property" means all Pledged Shares, and all other pledged shares
of capital stock, all other securities, all assignments of any amounts due or to
become due, all other instruments which are now being delivered by Holdco to the
Administrative Agent or may from time to time hereafter be delivered by Holdco
to the Administrative Agent for the purpose
-2-
<PAGE>
of pledge under this Agreement or any other Loan Document, and all proceeds of
any of the foregoing.
"Pledged Share Issuer" means Intermediate Holdco.
"Pledged Shares" means all shares of capital stock of the Pledged Share
Issuer which are delivered by Holdco to the Administrative Agent as Pledged
Property hereunder.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 7.2.
"U.C.C." means the Uniform Commercial Code as in effect from time to time
in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in the
Credit Agreement or the context otherwise requires, terms for which meanings are
provided in the U.C.C. are used in this Agreement, including its preamble and
recitals, with such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. Holdco hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Administrative Agent, for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Lender Parties, a continuing security interest
in, all of the following property (the "Collateral"):
(a) all issued and outstanding shares of capital stock of the
Pledged Share Issuer;
(b) all other Pledged Shares issued from time to time;
(c) all other Pledged Property, whether now or hereafter delivered
to the Administrative Agent in connection with this Agreement;
(d) all Dividends, Distributions, and other payments and rights with
respect to any Pledged Property; and
-3-
<PAGE>
(e) all proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Agreement secures the payment
in full of all Obligations now or hereafter existing (the "Secured
Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares, shall
be delivered to and held by or on behalf of the Administrative Agent pursuant
hereto, shall be in suitable form for transfer by delivery, and shall be
accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.
SECTION 2.4. Dividends on Pledged Shares. In the event that any Dividend
is permitted to be paid (in accordance with Section 7.2.6 of the Credit
Agreement) on any Pledged Share, such Dividend may be paid directly to Holdco.
If any Dividend is paid in contravention of Section 7.2.6 of the Credit
Agreement, Holdco shall hold the same segregated and in trust for the
Administrative Agent until paid to the Administrative Agent in accordance with
Section 5.4 hereto.
SECTION 2.5. Continuing Security Interest; Transfer of Note. This
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full in cash of
all Obligations, the termination or expiration of all Letters of Credit
and the termination of all Commitments,
(b) be binding upon Holdco and its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Commitment, Note, Credit Extension, Hedging
Obligation or other Secured Obligation held by it to any other Person or entity,
and such other Person or entity shall thereupon become vested with all the
rights and benefits in respect thereof granted to such Lender under any Loan
Document (including this Agreement) or any document relating to such Hedging
Obligation or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 10.11 and Article IX of
the Credit Agreement. Upon (i) the sale, transfer or other disposition of
Collateral in accordance with the Credit Agreement or (ii) the
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payment in full of all Secured Obligations, the termination or expiration of all
Letters of Credit and the termination of all Commitments, the security interest
granted herein shall automatically terminate with respect to (x) such Collateral
(in the case of clause (i)) or (y) all Collateral (in the case of clause (ii)).
Upon any such termination, the Administrative Agent will, at Holdco's sole
expense, deliver to Holdco, without any representations, warranties or recourse
of any kind whatsoever, all certificates and instruments representing or
evidencing all Pledged Shares, together with all other Collateral held by the
Administrative Agent hereunder, and execute and deliver to Holdco such documents
as Holdco shall reasonably request to evidence such termination.
SECTION 2.6. Postponement of Subrogation. Holdco agrees that it will not
exercise any rights which it may acquire by way of subrogation under this
Agreement, by any payment made hereunder or otherwise, until the prior payment,
in full and in cash, of all Secured Obligations. Any amount paid to Holdco on
account of any such subrogation rights prior to the payment in full of all
Secured Obligations shall be held in trust for the benefit of the Lender Parties
and each holder of a Note and shall immediately be paid to the Lender Parties
and each holder of a Note and credited and applied against the Secured
Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement; provided, however, that if all Secured Obligations have been
paid in full and all Commitments have been permanently terminated, each Lender
Party and each holder of a Note agrees that, at Holdco's request, the Lender
Parties and the holders of the Notes, will execute and deliver to Holdco
appropriate documents (without recourse and without representation or warranty)
necessary to evidence the transfer by subrogation to Holdco of an interest in
the Secured Obligations resulting from such payment by Holdco. In furtherance of
the foregoing, for so long as any Obligations or Commitments remain outstanding,
Holdco shall refrain from taking any action or commencing any proceeding against
the Borrower or any other Obligor (or its successors or assigns, whether in
connection with a bankruptcy proceeding or otherwise) to recover any amounts in
the respect of payments made under this Agreement to any Lender Party or any
holder of a Note.
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ARTICLE III
GUARANTY PROVISIONS
SECTION 3.1. Guaranty. Holdco hereby absolutely, unconditionally and
irrevocably
(a) guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand
or otherwise, of all Obligations of Intermediate Holdco, the Borrower and
each other Obligor now or hereafter existing under the Credit Agreement,
the Notes, any Letter of Credit and each other Loan Document to which the
Borrower or such other Obligor is or may become a party (or, in the case
of Letters of Credit, is or may become the account party), whether for
principal, interest, Reimbursement Obligations, fees, expenses or
otherwise (including all such amounts which would become due but for the
operation of the automatic stay under Section 362(a) of the United States
Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b)
and 506(b) of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and
ss.506(b)), and
(b) indemnifies and holds harmless each Lender Party and each holder
of a Note for any and all costs and expenses (including reasonable
attorney's fees and expenses) incurred by such Lender Party or such
holder, as the case may be, in enforcing any rights under this Agreement;
provided, however, that Holdco shall be liable under this Agreement only for the
maximum amount of such liability that can be hereby incurred without rendering
this Agreement, as it relates to Holdco, voidable under applicable law relating
to fraudulent conveyance or fraudulent transfer, and not for any greater amount.
This Agreement constitutes a guaranty of payment when due and not of collection,
and Holdco specifically agrees that it shall not be necessary or required that
any Lender Party or any holder of any Note exercise any right, assert any claim
or demand or enforce any remedy whatsoever against Intermediate Holdco, the
Borrower or any other Obligor (or any other Person) before or as a condition to
the obligations of Holdco hereunder.
SECTION 3.2. Acceleration of Guaranty. Holdco agrees that, in the event of
the occurrence of any Event of Default described in clauses (b) through (d) of
Section 8.1.9 of the Credit Agreement with respect to any Obligor (other than an
immaterial Subsidiary) and if such event shall occur at a time when any of the
Obligations of Intermediate Holdco, the Borrower and each other Obligor may not
then be due and payable, Holdco agrees that it will pay to the Lenders forthwith
the full amount which would
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be payable hereunder by Holdco if all such Obligations were then due and
payable.
SECTION 3.3. Guaranty and Security Interest Absolute, etc. This Agreement
shall in all respects be a continuing, absolute, unconditional and irrevocable
guaranty of payment and shall remain in full force and effect until all
Obligations of the Borrower and each other Obligor have been paid in full, all
Letters of Credit have been terminated or expired, all obligations of Holdco
hereunder shall have been paid in full and all Commitments shall have
terminated. Holdco guarantees, to the extent permitted under applicable law,
that the Obligations of Intermediate Holdco, the Borrower and each other Obligor
will be paid strictly in accordance with the terms of the Credit Agreement and
each other Loan Document under which they arise, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of any Lender Party or any holder of any Note with
respect thereto. The liability of Holdco under this Agreement, and all rights of
the Administrative Agent and the security interests granted to the
Administrative Agent hereunder, and all obligations of Holdco hereunder, shall,
to the extent permitted under applicable law, be absolute, unconditional and
irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against Intermediate Holdco, the Borrower, any other Obligor
or any other Person (including any other guarantor) under the
provisions of the Credit Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Secured Obligations;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other
extension, compromise or renewal of any Secured Obligation;
(d) any reduction, limitation, impairment or termination of any
Secured Obligations for any reason, including any claim of waiver,
release, surrender,
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alteration or compromise, and shall not be subject to (and Holdco hereby
waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability of,
or any other event or occurrence affecting, any Secured Obligations or
otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral, or any amendment to or waiver or release or addition of,
or consent to departure from, any other guaranty, held by any Lender Party
or any holder of any Note securing any of the Secured Obligations; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, Intermediate
Holdco, the Borrower, any other Obligor, any surety or any guarantor.
SECTION 3.4. Reinstatement, etc. Holdco agrees that this Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment (in whole or in part) of any of the Obligations is rescinded or must
otherwise be restored by any Lender Party or any holder of any Note, upon the
insolvency, bankruptcy or reorganization of Intermediate Holdco, the Borrower,
any other Obligor or otherwise, all as though such payment had not been made.
SECTION 3.5. Waiver, etc. Holdco hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
of Intermediate Holdco, the Borrower or any other Obligor and this Agreement and
any requirement that the Administrative Agent, any other Lender Party or any
holder of any Note protect, secure, perfect or insure any security interest or
Lien, or any property subject thereto, or exhaust any right or take any action
against Intermediate Holdco, the Borrower, any other Obligor or any other Person
(including any other guarantor) or entity or any collateral securing the
Obligations of Intermedite Holdco, the Borrower or any other Obligor, as the
case may be.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties, etc. Holdco represents and
warrants unto each Lender Party, as at the date of each pledge and delivery
hereunder (including each pledge and delivery of Pledged Shares) by Holdco to
the Administrative Agent of any Collateral, as set forth in this Article.
SECTION 4.1.1. Organization, etc. Holdco (a) is a corporation validly
organized and existing and in good standing under the laws of the State of its
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the nature of its business
requires such qualification, except to the extent that the failure to qualify
would not reasonably be expected to result in a Material Adverse Effect, and (b)
has full power and authority and holds all requisite governmental licenses,
permits and other approvals to (i) enter into and perform its obligations in
connection with the Transaction and under this Agreement and each other Loan
Document to which it is a party and (ii) own and hold under lease its property
and to conduct its business substantially as currently conducted by it except,
in the case of this clause (b) (ii), where the failure could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 4.1.2. Ownership, No Liens, etc. Holdco is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all Liens
except any Lien granted pursuant hereto in favor of the Administrative Agent.
SECTION 4.1.3. Valid Security Interest. The execution and delivery of this
Agreement, together with the delivery of such Collateral to the Administrative
Agent, is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Secured
Obligations. Possession by the Administrative Agent of the Collateral is the
only action necessary to perfect or protect such security interest in the
Collateral, subject to Section 9-306 of the U.C.C.
SECTION 4.1.4. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock of the Pledged Share Issuer. On the
Closing Date, Holdco has no Subsidiary other than the Pledged Share Issuer.
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SECTION 4.1.5. Authorization, Approval, etc. No authorization, approval,
or other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(a) for the pledge by Holdco of any Collateral pursuant to this
Agreement or for the execution, delivery, and performance of this
Agreement by Holdco, or
(b) for the exercise by the Administrative Agent of the voting or
other rights provided for in this Agreement, or, except, with respect to
any Pledged Shares, as may be required in connection with a disposition of
such Pledged Shares by laws affecting the offering and sale of securities
generally, the remedies in respect of the Collateral pursuant to this
Agreement.
SECTION 4.1.6. Credit Agreement Representations and Warranties. The
representations and warranties contained in Article VI of the Credit Agreement,
insofar as the representations and warranties contained therein are applicable
to Holdco and its properties, are true and correct in all material respects,
each such representation and warranty set forth in such Article (insofar as
applicable as aforesaid) and all other terms of the Credit Agreement to which
reference is made therein, together with all related definitions and ancillary
provisions, being hereby incorporated into this Agreement by reference as though
specifically set forth in this Section.
ARTICLE V
COVENANTS
SECTION 5.1. Protect Collateral; Further Assurances, etc. Holdco will not
sell, assign, transfer, pledge, or encumber in any other manner the Collateral
(except in favor of the Administrative Agent hereunder), except as permitted
under the Credit Agreement. Holdco will warrant and defend the right and title
herein granted unto the Administrative Agent in and to the Collateral (and all
right, title, and interest represented by the Collateral) against the claims and
demands of all Persons whomsoever. Holdco agrees that at any time, and from time
to time, at the expense of Holdco, Holdco will promptly execute and deliver all
further instruments, and take all further action, that may be necessary or
desirable, or that the Administrative Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral.
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SECTION 5.2. Stock Powers, etc. Holdco agrees that all Pledged Shares (and
all other shares of capital stock constituting Collateral) delivered by Holdco
pursuant to this Agreement will be accompanied by duly executed undated blank
stock powers, or other equivalent instruments of transfer acceptable to the
Administrative Agent. Holdco will, from time to time upon the request of the
Administrative Agent, promptly deliver to the Administrative Agent such stock
powers, instruments, and similar documents, satisfactory in form and substance
to the Administrative Agent, with respect to the Collateral as the
Administrative Agent may reasonably request and will, from time to time upon the
request of the Administrative Agent after the occurrence of any Event of
Default, promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the
Administrative Agent.
SECTION 5.3. Continuous Pledge. Subject to Section 2.4, Holdco will, at
all times, keep pledged to the Administrative Agent pursuant hereto all Pledged
Shares and all other shares of capital stock constituting Collateral, all
Dividends and Distributions with respect thereto, and all other Collateral and
other securities, instruments, proceeds, and rights from time to time received
by or distributable to Holdco in respect of any Collateral and will not permit
the Pledged Share Issuer to issue any capital stock which shall not have been
immediately duly pledged hereunder on a first priority perfected basis.
SECTION 5.4. Voting Rights; Dividends, etc. Holdco agrees:
(a) after any (i) Default of the nature referred to in clause (b),
(c) or (d) of Section 8.1.9 of the Credit Agreement in respect of any
Obligor (other than an immaterial Subsidiary) shall have occurred and be
continuing or (ii) any other Event of Default shall have occurred and be
continuing, and the giving of notice from the Administrative Agent of its
intent to exercise its remedies (in the case of this clause (a) (ii)),
Holdco will deliver promptly upon receipt thereof (properly endorsed where
required hereby or requested by the Administrative Agent) to the
Administrative Agent all Dividends, Distributions, all interest, all
principal, all other cash payments, and all proceeds of the Collateral,
all of which shall be held by the Administrative Agent as additional
Collateral for use in accordance with Section 7.4; and
(b) after any Event of Default shall have occurred and be continuing
and the Administrative Agent has notified Holdco of the Administrative
Agent's intention to exercise its voting power under this clause
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(i) the Administrative Agent may exercise (to the exclusion of
Holdco) the voting power and all other incidental rights of
ownership with respect to any Pledged Shares or other shares of
capital stock constituting Collateral and Holdco hereby grants the
Administrative Agent an irrevocable proxy, exercisable under such
circumstances, to vote the Pledged Shares and such other Collateral;
and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to allow
the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by Holdco but which Holdco
is then obligated to deliver to the Administrative Agent, shall, until delivery
to the Administrative Agent, be held by Holdco separate and apart from its other
property in trust for the Administrative Agent. The Administrative Agent agrees
that unless an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have given the notice referred to in Section 5.4(b),
Holdco shall have the exclusive voting power with respect to any shares of
capital stock (including any of the Pledged Shares) constituting Collateral and
the Administrative Agent shall, upon the written request of Holdco, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by Holdco which are necessary to allow Holdco to exercise voting power
with respect to any such share of capital stock (including any of the Pledged
Shares) constituting Collateral; provided, however, that no vote shall be cast,
or consent, waiver, or ratification given, or action taken by Holdco that would
impair any Collateral or be inconsistent with or violate any provision of the
Credit Agreement or any other Loan Document (including this Agreement).
SECTION 5.5. Maintenance of Corporate Existence; Payment of Net Equity
Proceeds. Holdco will cause to be taken all actions necessary to maintain and
preserve at all times its corporate existence. Upon receipt of any Net Equity
Proceeds, Holdco will repay, or cause the Borrower to repay, the Loans in the
amounts, if any, and on the dates required pursuant to clause (e) of Section
3.1.1 of the Credit Agreement.
SECTION 5.6. Financial Information, Reports, Notices, etc. Holdco will
furnish, or will cause to be furnished, to each Lender and each Agent promptly
after the sending or filing thereof, copies of all reports and registration
statements (other than exhibits thereto and any registration statement on Form
S-8 or its equivalent), if any, which Holdco or any of its
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Subsidiaries files with the Securities and Exchange Commission or any national
securities exchange.
SECTION 5.7. Compliance with Laws, etc. Holdco will, and will cause each
of its Subsidiaries to, comply in all material respects with all applicable
laws, rules, regulations and orders, such compliance to include (without
limitation):
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation, except where the failure to so
qualify could not reasonably be expected to have a Material Adverse
Effect; and
(b) the payment, before the same become delinquent, of all material
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books.
SECTION 5.8. Business Activities. Holdco will not engage in any business
activity other than in connection with Holdco's continuing ownership of the
issued and outstanding shares of capital stock of Intermediate Holdco and the
holding of Investments permitted under Section 5.11.
SECTION 5.9. Indebtedness. Holdco will not create, incur, assume or suffer
to exist or otherwise become or be liable in respect of any Indebtedness, other
than, without duplication, the following:
(a) Indebtedness with respect to taxes, assessments or other
governmental charges; provided that such Indebtedness does not create
Liens upon any of its assets except Liens of the type permitted with
respect to assets of the Borrower pursuant to Section 7.2.3 of the Credit
Agreement;
(b) Indebtedness in respect of the Obligations; and
(c) Indebtedness incurred with respect to promissory notes issued by
Holdco to repurchase shares of Capital Stock of Holdco held by directors,
officers or employees of Holdco, Intermediate Holdco, the Borrower or any
of its Subsidiaries, if any, or options on any such shares or related
stock appreciation rights or similar securities owned by such directors,
officers or employees (or their estates or beneficiaries under their
estates), in all cases only upon death, disability, retirement,
termination of employment or pursuant to the terms of such stock option
plan or any other agreement under which such shares of
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Capital Stock, options, related rights or similar securities were issued.
SECTION 5.10. Liens, etc. Holdco will not create, incur, assume, or enter
into any agreement which by its terms creates, incurs or assumes any Lien upon
any of its assets (including any shares of capital stock of Intermediate Holdco
or the Borrower), whether now owned or hereafter acquired by Holdco, except
Liens of the type permitted pursuant to Section 7.2.3 of the Credit Agreement
with respect to assets of the Borrower; nor will Holdco sell, transfer,
contribute or otherwise dispose of or convey (or grant any options, warrants or
other rights with respect thereto) any shares of capital stock of the
Intermediate Holdco on the Borrower (except pursuant to a transaction in which
all Obligations will be simultaneously discharged in full and all Commitments
will be simultaneously terminated in full).
SECTION 5.11. Investments. Holdco will not make, incur, assume or suffer
to exist any Investment of Holdco in any other Person, except (i) Investments in
Intermedite Holdco or the Borrower, (ii) Investments of the type permitted under
Section 7.2.5(b) of the Credit Agreement for the Borrower and (iii) other
Investments in which the consideration paid by Holdco consists solely of common
stock of Holdco.
SECTION 5.12. Fixed Assets. Holdco will not make or commit to make any
Capital Expenditure or enter into any arrangement which would give rise to any
Capitalized Lease Liability.
SECTION 5.13. Rental Obligations. Holdco will not enter into any
arrangement which involves the leasing by Holdco from any lessor of any real or
personal property (or any interest therein) other than the lease of office
space.
SECTION 5.14. Consolidation. Merger. Holdco will not windup, liquidate or
dissolve, consolidate or amalgamate with, or merge into or with any other
corporation or purchase or otherwise acquire all or any part of the assets of
any Person (or division thereof).
SECTION 5.15. Asset Dispositions, etc. Holdco will not sell, transfer,
lease or otherwise dispose of, or grant to any Person options, warrants or other
rights with respect to any of the Collateral, unless otherwise permitted by the
Credit Agreement.
SECTION 5.16. No Defaults. Holdco will not, and will not permit
Intermediate Holdco or the Borrower or any of its Subsidiaries to, take any
action or fail to take any action if such action or failure to act would result
in a Default under the Credit Agreement.
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ARTICLE VI
THE ADMINISTRATIVE AGENT
SECTION 6.1. Administrative Agent Appointed Attorney-in-Fact. Holdco
hereby irrevocably appoints the Administrative Agent Holdco's attorney-in-fact,
with full authority in the place and stead of Holdco and in the name of Holdco
or otherwise, from time to time in the Administrative Agent's discretion, upon
the occurrence and during the continuance of an Event of Default and subject to
delivery of notice to Holdco, to take any action and to execute any instrument
which the Administrative Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral.
Holdco hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 6.2. Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of
the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
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SECTION 6.3. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral if it takes such action for that purpose as Holdco
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VII
REMEDIES
SECTION 7.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable. Holdco
agrees that, to the extent notice of sale shall be required by law, at
least ten days' prior notice to Holdco of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name
of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and security
interest hereunder,
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(ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature
of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in Holdco's
name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of Holdco)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 7.2. Securities Laws. If the Administrative Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
7.1, Holdco agrees that, upon request of the Administrative Agent, Holdco will,
at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to register such Collateral
under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the
Administrative Agent;
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<PAGE>
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
Holdco further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Administrative Agent or the Lender Parties
by reason of the failure by Holdco to perform any of the covenants contained in
this Section and, consequently, to the extent permitted under applicable law,
agrees that, if Holdco shall fail to perform any of such covenants, it shall
pay, as liquidated damages and not as a penalty, an amount equal to the value
(as determined by the Administrative Agent) of the Collateral on the date the
Administrative Agent shall demand compliance with this Section.
SECTION 7.3. Compliance with Restrictions. Holdco agrees that in any sale
of any of the Collateral whenever an Event of Default shall have occurred and be
continuing, the Administrative Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and Holdco further agrees that such compliance shall not result in such sale
being considered or deemed not to have been made in a commercially reasonable
manner, nor shall the Administrative Agent be liable nor accountable to Holdco
for any discount allowed by the reason of the fact that such Collateral is sold
in compliance with any such limitation or restriction.
SECTION 7.4. Application of Proceeds. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section
10.3 of the Credit
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Agreement and Section 7.5) in whole or in part by the Administrative Agent
against, all or any part of the Secured Obligations as follows: (i) first, to
the reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the retaking, holding, preparing for sale, selling or other
disposition of the Collateral, including, without limitation, all court costs
and the reasonable fees and expenses of its agents and legal counsel; (ii)
second, to the payment in full of the Obligations or in the event that such
proceeds are insufficient to pay in full the Obligations, equally and ratably in
accordance with each Lender's Obligations owing to it under or pursuant to the
Credit Agreement or any other Loan Document, or under or pursuant to any Hedging
Obligation included in the Secured Obligations (as to each Lender, applied first
to fees and expense reimbursements then due to such Lender, then to interest due
to such Lender, then to pay or prepay principal of the Loans owing to, or to
reduce the "credit exposure" of, such Lender under such Hedging Obligation, as
the case may be, then to pay (or cash collateralize) the remaining Obligations);
(iii) third, without duplication of any amounts paid pursuant to clause (ii)
above, to the Indemnified Parties to the extent of any amounts owing pursuant to
Section 10.4 of the Credit Agreement; and (iv) fourth, to Holdco, or its
successors and assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining. For purposes of this Agreement, the "credit
exposure" at any time of any Lender with respect to a Hedging Obligation to
which such Lender is a party shall be determined at such time in accordance with
the customary methods of calculating credit exposure under similar arrangements
by the counterparty to such arrangements, taking into account potential interest
rate movements and the respective termination provisions and notional principal
amount and term of such Hedging Obligation. Holdco shall remain liable to the
Lenders for any deficiency. If the Administrative Agent has funds available to
apply to a portion of, but not all of, one of the amounts described in clauses
(i) through (iv) above, then the Administrative Agent shall apply such funds to
the applicable parties in proportion to the amounts to which such parties would
have been entitled if the entire amount described in any such clause had been
available.
SECTION 7.5. Indemnity and Expenses. Holdco hereby indemnifies and holds
harmless the Administrative Agent from and against any and all claims, losses
and liabilities arising out of or resulting from this Agreement (including
enforcement of this Agreement), except claims, losses, or liabilities resulting
from the Administrative Agent's gross negligence or wilful misconduct. Upon
demand, Holdco will pay to the Administrative Agent the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any
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experts and agents, which the Administrative Agent may incur in connection with:
(a) the administration of this Agreement, the Credit Agreement and
each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by Holdco to perform or observe any of the
provisions hereof.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1. Loan Document. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
SECTION 8.2. Amendments, etc. No amendment to or waiver of any provision
of this Agreement nor consent to any departure by Holdco herefrom shall in any
event be effective unless the same shall be in writing and signed by the
Administrative Agent (on behalf of the Lenders or the Required Lenders, as the
case may be), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 8.3. Protection of Collateral. The Administrative Agent may from
time to time, at its option, perform any act which Holdco agrees hereunder to
perform and which Holdco shall fail to perform within 30 days after being
requested in writing so to perform and the Administrative Agent may from time to
time take any other action which the Administrative Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION 8.4. Addresses for Notices. All notices and other communications
provided to any party under this Agreement shall be in writing (including
telecopier communication) and (i) if to Holdco, mailed, telecopied or delivered
to it, at the address of the Borrower specified in the Credit Agreement, and
(ii) if to the Administrative Agent, mailed, telecopied or delivered to it
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at the address of the Administrative Agent specified in the Credit Agreement.
All such notices and other communications, when mailed and properly addressed
with postage prepaid or if properly addressed and sent by pre-paid courier
service, shall be deemed given when received; any such notice or communication,
if transmitted by telecopier, shall be deemed given when transmitted and
electronically confirmed.
SECTION 8.5. Section Captions. Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.
SECTION 8.6. Severability. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 8.7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SECTION 8.8. Governing Law, Entire Agreement, etc. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR 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. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 8.9. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR HOLDCO SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. HOLDCO HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
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DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. HOLDCO FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. HOLDCO HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT HOLDCO HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, HOLDCO
HEREBY IRREVOCABLY (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 8.10. Waiver of Jury Trial. THE LENDER PARTIES AND HOLDCO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER
PARTIES OR HOLDCO. HOLDCO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDER PARTIES ENTERING INTO THE CREDIT AGREEMENT
AND EACH SUCH OTHER LOAN DOCUMENT.
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<PAGE>
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 day and year first above written.
WGL HOLDINGS, INC.
By ___________________________
Name:
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By __________________________
Name:
Title:
<PAGE>
ATTACHMENT 1
to
Holdco Guaranty and Pledge Agreement
Item A. Pledged Shares
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Pledged Share Issuer Description of Shares
- --------------------------------------------------------------------------------
% of
Outstanding
Authorized Outstanding Shares
Shares Shares Pledged
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WGL Intermediate 3,000 1,000 100%
Holdings, Inc.
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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EXHIBIT G-2
INTERMEDIATE HOLDCO GUARANTY AND PLEDGE AGREEMENT
This INTERMEDIATE HOLDCO GUARANTY AND PLEDGE AGREEMENT (this "Agreement"),
dated as of July 10, 1997, is made by WGL Intermediate Holdings, Inc., a
Delaware corporation ("Intermediate Holdco"), in favor of Fleet National Bank,
as administrative agent (together with any successor(s) thereto in such
capacity, the "Administrative Agent") for each of the Lender Parties (as defined
below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among WGL Acquisition Corp., a New York
corporation (the "Borrower"), the various financial institutions as are or may
from time to time become parties thereto (the "Lenders"), the Agents and the
Documentation Agent named therein, the Lenders and the Issuer have extended
Commitments to make Credit Extensions to, and for the benefit of, the Borrower;
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement,
Intermediate Holdco is required to execute and deliver this Agreement;
WHEREAS, Intermediate Holdco has duly authorized the execution, delivery
and performance of this Agreement; and
WHEREAS, it is in the best interests of Intermediate Holdco to execute
this Agreement inasmuch as Intermediate Holdco will derive substantial direct
and indirect benefits from the Credit Extensions made from time to time to the
Borrower by the Lenders and the Issuer pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the Lenders
and the Issuer to make each Credit Extension (including the initial Credit
Extension) to the Borrower pursuant to the Credit Agreement, Intermediate Holdco
agrees, for the benefit of each Lender Party, as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"Intermediate Holdco" is defined in the preamble.
"Lender Party" means, as the context may require, any Lender, the Issuer
and each Agent and each of their respective successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Pledged Property" means all Pledged Shares, and all other pledged shares
of capital stock, all other securities, all assignments of any amounts due or to
become due, all other instruments which are now being delivered by Intermediate
Holdco to the Administrative Agent or may from time to time hereafter be
delivered by Intermediate Holdco to the Administrative Agent for the purpose of
pledge under this Agreement or any other Loan Document, and all proceeds of any
of the foregoing.
"Pledged Share Issuer" means the Borrower.
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<PAGE>
"Pledged Shares" means all shares of capital stock of the Pledged Share
Issuer which are delivered by Intermediate Holdco to the Administrative Agent as
Pledged Property hereunder.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 7.2.
"U.C.C." means the Uniform Commercial Code as in effect from time to time
in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in the
Credit Agreement or the context otherwise requires, terms for which meanings are
provided in the U.C.C. are used in this Agreement, including its preamble and
recitals, with such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. Intermediate Holdco hereby
pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to
the Administrative Agent, for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Lender Parties, a continuing security interest
in, all of the following property (the "Collateral"):
(a) all issued and outstanding shares of capital stock of the
Pledged Share Issuer;
(b) all other Pledged Shares issued from time to time;
(c) all other Pledged Property, whether now or hereafter delivered
to the Administrative Agent in connection with this Agreement;
(d) all Dividends, Distributions, and other payments and rights with
respect to any Pledged Property; and
(e) all proceeds of any of the foregoing.
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<PAGE>
SECTION 2.2. Security for Obligations. This Agreement secures the payment
in full of all Obligations now or hereafter existing (the "Secured
Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares, shall
be delivered to and held by or on behalf of the Administrative Agent pursuant
hereto, shall be in suitable form for transfer by delivery, and shall be
accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.
SECTION 2.4. Dividends on Pledged Shares. In the event that any Dividend
is permitted to be paid (in accordance with Section 7.2.6 of the Credit
Agreement) on any Pledged Share, such Dividend may be paid directly to
Intermediate Holdco. If any Dividend is paid in contravention of Section 7.2.6
of the Credit Agreement, Intermediate Holdco shall hold the same segregated and
in trust for the Administrative Agent until paid to the Administrative Agent in
accordance with Section 5.4 hereto.
SECTION 2.5. Continuing Security Interest; Transfer of Note. This
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full in cash of
all Obligations, the termination or expiration of all Letters of Credit
and the termination of all Commitments,
(b) be binding upon Intermediate Holdco and its successors,
transferees and assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Commitment, Note, Credit Extension, Hedging
Obligation or other Secured Obligation held by it to any other Person or entity,
and such other Person or entity shall thereupon become vested with all the
rights and benefits in respect thereof granted to such Lender under any Loan
Document (including this Agreement) or any document relating to such Hedging
Obligation or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 10.11 and Article IX of
the Credit Agreement. Upon (i) the sale, transfer or other disposition of
Collateral in accordance with the Credit Agreement or (ii) the payment in full
of all Secured Obligations, the termination or expiration of all Letters of
Credit and the termination of all
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<PAGE>
Commitments, the security interest granted herein shall automatically terminate
with respect to (x) such Collateral (in the case of clause (i)) or (y) all
Collateral (in the case of clause (ii)). Upon any such termination, the
Administrative Agent will, at Intermediate Holdco's sole expense, deliver to
Intermediate Holdco, without any representations, warranties or recourse of any
kind whatsoever, all certificates and instruments representing or evidencing all
Pledged Shares, together with all other Collateral held by the Administrative
Agent hereunder, and execute and deliver to Intermediate Holdco such documents
as Intermediate Holdco shall reasonably request to evidence such termination.
SECTION 2.6. Postponement of Subrogation. Intermediate Holdco agrees that
it will not exercise any rights which it may acquire by way of subrogation under
this Agreement, by any payment made hereunder or otherwise, until the prior
payment, in full and in cash, of all Secured Obligations. Any amount paid to
Intermediate Holdco on account of any such subrogation rights prior to the
payment in full of all Secured Obligations shall be held in trust for the
benefit of the Lender Parties and each holder of a Note and shall immediately be
paid to the Lender Parties and each holder of a Note and credited and applied
against the Secured Obligations, whether matured or unmatured, in accordance
with the terms of the Credit Agreement; provided, however, that if all Secured
Obligations have been paid in full and all Commitments have been permanently
terminated, each Lender Party and each holder of a Note agrees that, at
Intermediate Holdco's request, the Lender Parties and the holders of the Notes,
will execute and deliver to Intermediate Holdco appropriate documents (without
recourse and without representation or warranty) necessary to evidence the
transfer by subrogation to Intermediate Holdco of an interest in the Secured
Obligations resulting from such payment by Intermediate Holdco. In furtherance
of the foregoing, for so long as any Obligations or Commitments remain
outstanding, Intermediate Holdco shall refrain from taking any action or
commencing any proceeding against the Borrower or any other Obligor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in the respect of payments made under this
Agreement to any Lender Party or any holder of a Note.
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<PAGE>
ARTICLE III
GUARANTY PROVISIONS
SECTION 3.1. Guaranty. Intermediate Holdco hereby absolutely,
unconditionally and irrevocably
(a) guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand
or otherwise, of all Obligations of the Borrower and each other Obligor
now or hereafter existing under the Credit Agreement, the Notes, any
Letter of Credit and each other Loan Document to which the Borrower or
such other Obligor is or may become a party (or, in the case of Letters of
Credit, is or may become the account party), whether for principal,
interest, Reimbursement Obligations, fees, expenses or otherwise
(including all such amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the United States Bankruptcy
Code, 11 U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b)
of the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)),
and
(b) indemnifies and holds harmless each Lender Party and each holder
of a Note for any and all costs and expenses (including reasonable
attorney's fees and expenses) incurred by such Lender Party or such
holder, as the case may be, in enforcing any rights under this Agreement;
provided, however, that Intermediate Holdco shall be liable under this Agreement
only for the maximum amount of such liability that can be hereby incurred
without rendering this Agreement, as it relates to Intermediate Holdco, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer,
and not for any greater amount. This Agreement constitutes a guaranty of payment
when due and not of collection, and Intermediate Holdco specifically agrees that
it shall not be necessary or required that any Lender Party or any holder of any
Note exercise any right, assert any claim or demand or enforce any remedy
whatsoever against the Borrower or any other Obligor (or any other Person)
before or as a condition to the obligations of Intermediate Holdco hereunder.
SECTION 3.2. Acceleration of Guaranty. Intermediate Holdco agrees that, in
the event of the occurrence of any Event of Default described in clauses (b)
through (d) of Section 8.1.9 of the Credit Agreement with respect to any Obligor
(other than an immaterial Subsidiary) and if such event shall occur at a time
when any of the Obligations of the Borrower and each other Obligor may not then
be due and payable, Intermediate Holdco agrees that it will pay to the Lenders
forthwith the full amount
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<PAGE>
which would be payable hereunder by Intermediate Holdco if all such Obligations
were then due and payable.
SECTION 3.3. Guaranty and Security Interest Absolute, etc. This Agreement
shall in all respects be a continuing, absolute, unconditional and irrevocable
guaranty of payment and shall remain in full force and effect until all
Obligations of the Borrower and each other Obligor have been paid in full, all
Letters of Credit have been terminated or expired, all obligations of
Intermediate Holdco hereunder shall have been paid in full and all Commitments
shall have terminated. Intermediate Holdco guarantees, to the extent permitted
under applicable law, that the Obligations of the Borrower and each other
Obligor will be paid strictly in accordance with the terms of the Credit
Agreement and each other Loan Document under which they arise, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Lender Party or any holder of
any Note with respect thereto. The liability of Intermediate Holdco under this
Agreement, and all rights of the Administrative Agent and the security interests
granted to the Administrative Agent hereunder, and all obligations of
Intermediate Holdco hereunder, shall, to the extent permitted under applicable
law, be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
(including any other guarantor) under the provisions of the Credit
Agreement, any Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Secured Obligations;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other
extension, compromise or renewal of any Secured Obligation;
(d) any reduction, limitation, impairment or termination of any
Secured Obligations for any reason, including any claim of waiver,
release, surrender,
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<PAGE>
alteration or compromise, and shall not be subject to (and Intermediate
Holdco hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any
Secured Obligations or otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral, or any amendment to or waiver or release or addition of,
or consent to departure from, any other guaranty, held by any Lender Party
or any holder of any Note securing any of the Secured Obligations; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 3.4. Reinstatement, etc. Intermediate Holdco agrees that this
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender Party or any holder of any
Note, upon the insolvency, bankruptcy or reorganization of the Borrower, any
other Obligor or otherwise, all as though such payment had not been made.
SECTION 3.5. Waiver, etc. Intermediate Holdco hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Agreement and any
requirement that the Administrative Agent, any other Lender Party or any holder
of any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other Person (including any other
guarantor) or entity or any collateral securing the Obligations of the Borrower
or any other Obligor, as the case may be.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties, etc. Intermediate Holdco
represents and warrants unto each Lender Party, as at the date of each pledge
and delivery hereunder (including each pledge and delivery of Pledged Shares) by
Intermediate Holdco to the Administrative Agent of any Collateral, as set forth
in this Article.
SECTION 4.1.1. Organization, etc. Intermediate Holdco (a) is a corporation
validly organized and existing and in good standing under the laws of the State
of its incorporation, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the nature of its business
requires such qualification, except to the extent that the failure to qualify
would not reasonably be expected to result in a Material Adverse Effect, and (b)
has full power and authority and holds all requisite governmental licenses,
permits and other approvals to (i) enter into and perform its obligations in
connection with the Transaction and under this Agreement and each other Loan
Document to which it is a party and (ii) own and hold under lease its property
and to conduct its business substantially as currently conducted by it except,
in the case of this clause (b) (ii), where the failure could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 4.1.2. Ownership, No Liens, etc. Intermediate Holdco is the legal
and beneficial owner of, and has good and marketable title to (and has full
right and authority to pledge and assign) such Collateral, free and clear of all
Liens except any Lien granted pursuant hereto in favor of the Administrative
Agent.
SECTION 4.1.3. Valid Security Interest. The execution and delivery of this
Agreement, together with the delivery of such Collateral to the Administrative
Agent, is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Secured
Obligations. Possession by the Administrative Agent of the Collateral is the
only action necessary to perfect or protect such security interest in the
Collateral, subject to Section 9-306 of the U.C.C.
SECTION 4.1.4. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock of the Pledged Share Issuer. On the
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Closing Date, Intermediate Holdco has no Subsidiary other than the Pledged Share
Issuer.
SECTION 4.1.5. Authorization, Approval, etc. No authorization, approval,
or other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(a) for the pledge by Intermediate Holdco of any Collateral pursuant
to this Agreement or for the execution, delivery, and performance of this
Agreement by Intermediate Holdco, or
(b) for the exercise by the Administrative Agent of the voting or
other rights provided for in this Agreement, or, except, with respect to
any Pledged Shares, as may be required in connection with a disposition of
such Pledged Shares by laws affecting the offering and sale of securities
generally, the remedies in respect of the Collateral pursuant to this
Agreement.
SECTION 4.1.6. Credit Agreement Representations and Warranties. The
representations and warranties contained in Article VI of the Credit Agreement,
insofar as the representations and warranties contained therein are applicable
to Intermediate Holdco and its properties, are true and correct in all material
respects, each such representation and warranty set forth in such Article
(insofar as applicable as aforesaid) and all other terms of the Credit Agreement
to which reference is made therein, together with all related definitions and
ancillary provisions, being hereby incorporated into this Agreement by reference
as though specifically set forth in this Section.
ARTICLE V
COVENANTS
SECTION 5.1. Protect Collateral; Further Assurances, etc. Intermediate
Holdco will not sell, assign, transfer, pledge, or encumber in any other manner
the Collateral (except in favor of the Administrative Agent hereunder), except
as permitted under the Credit Agreement. Intermediate Holdco will warrant and
defend the right and title herein granted unto the Administrative Agent in and
to the Collateral (and all right, title, and interest represented by the
Collateral) against the claims and demands of all Persons whomsoever.
Intermediate Holdco agrees that at any time, and from time to time, at the
expense of Intermediate Holdco, Intermediate Holdco will promptly execute and
deliver all further instruments, and take all further action,
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that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 5.2. Stock Powers, etc. Intermediate Holdco agrees that all
Pledged Shares (and all other shares of capital stock constituting Collateral)
delivered by Intermediate Holdco pursuant to this Agreement will be accompanied
by duly executed undated blank stock powers, or other equivalent instruments of
transfer acceptable to the Administrative Agent. Intermediate Holdco will, from
time to time upon the request of the Administrative Agent, promptly deliver to
the Administrative Agent such stock powers, instruments, and similar documents,
satisfactory in form and substance to the Administrative Agent, with respect to
the Collateral as the Administrative Agent may reasonably request and will, from
time to time upon the request of the Administrative Agent after the occurrence
of any Event of Default, promptly transfer any Pledged Shares or other shares of
common stock constituting Collateral into the name of any nominee designated by
the Administrative Agent.
SECTION 5.3. Continuous Pledge. Subject to Section 2.4, Intermediate
Holdco will, at all times, keep pledged to the Administrative Agent pursuant
hereto all Pledged Shares and all other shares of capital stock constituting
Collateral, all Dividends and Distributions with respect thereto, and all other
Collateral and other securities, instruments, proceeds, and rights from time to
time received by or distributable to Intermediate Holdco in respect of any
Collateral and will not permit the Pledged Share Issuer to issue any capital
stock which shall not have been immediately duly pledged hereunder on a first
priority perfected basis.
SECTION 5.4. Voting Rights; Dividends, etc. Intermediate Holdco agrees:
(a) after any (i) Default of the nature referred to in clause (b),
(c) or (d) of Section 8.1.9 of the Credit Agreement in respect of any
Obligor (other than an immaterial Subsidiary) shall have occurred and be
continuing or (ii) any other Event of Default shall have occurred and be
continuing, and the giving of notice from the Administrative Agent of its
intent to exercise its remedies (in the case of this clause (a) (ii)),
Intermediate Holdco will deliver promptly upon receipt thereof (properly
endorsed where required hereby or requested by the Administrative Agent)
to the Administrative Agent all Dividends, Distributions, all interest,
all principal, all other cash payments, and all proceeds of the
Collateral, all
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of which shall be held by the Administrative Agent as additional
Collateral for use in accordance with Section 7.4; and
(b) after any Event of Default shall have occurred and be continuing
and the Administrative Agent has notified Intermediate Holdco of the
Administrative Agent's intention to exercise its voting power under this
clause
(i) the Administrative Agent may exercise (to the exclusion of
Intermediate Holdco) the voting power and all other incidental
rights of ownership with respect to any Pledged Shares or other
shares of capital stock constituting Collateral and Intermediate
Holdco hereby grants the Administrative Agent an irrevocable proxy,
exercisable under such circumstances, to vote the Pledged Shares and
such other Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to allow
the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by Intermediate Holdco but
which Intermediate Holdco is then obligated to deliver to the Administrative
Agent, shall, until delivery to the Administrative Agent, be held by
Intermediate Holdco separate and apart from its other property in trust for the
Administrative Agent. The Administrative Agent agrees that unless an Event of
Default shall have occurred and be continuing and the Administrative Agent shall
have given the notice referred to in Section 5.4(b), Intermediate Holdco shall
have the exclusive voting power with respect to any shares of capital stock
(including any of the Pledged Shares) constituting Collateral and the
Administrative Agent shall, upon the written request of Intermediate Holdco,
promptly deliver such proxies and other documents, if any, as shall be
reasonably requested by Intermediate Holdco which are necessary to allow
Intermediate Holdco to exercise voting power with respect to any such share of
capital stock (including any of the Pledged Shares) constituting Collateral;
provided, however, that no vote shall be cast, or consent, waiver, or
ratification given, or action taken by Intermediate Holdco that would impair any
Collateral or be inconsistent with or violate any provision of the Credit
Agreement or any other Loan Document (including this Agreement)
SECTION 5.5. Maintenance of Corporate Existence; Payment of Net Equity
Proceeds. Intermediate Holdco will cause to be taken all actions necessary to
maintain and preserve at all times its corporate existence. Upon receipt of any
Net Equity Proceeds,
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Intermediate Holdco will repay, or cause the Borrower to repay, the Loans in the
amounts, if any, and on the dates required pursuant to clause (e) of Section
3.1.1 of the Credit Agreement.
SECTION 5.6. Financial Information, Reports, Notices, etc. Intermediate
Holdco will furnish, or will cause to be furnished, to each Lender and each
Agent promptly after the sending or filing thereof, copies of all reports and
registration statements (other than exhibits thereto and any registration
statement on Form S-8 or its equivalent), if any, which Intermediate Holdco or
any of its Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange.
SECTION 5.7. Compliance with Laws, etc. Intermediate Holdco will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation, except where the failure to so
qualify could not reasonably be expected to have a Material Adverse
Effect; and
(b) the payment, before the same become delinquent, of all material
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books.
SECTION 5.8. Business Activities. Intermediate Holdco will not engage in
any business activity other than in connection with Intermediate Holdco's
continuing ownership of the issued and outstanding shares of capital stock of
the Borrower and the holding of Investments permitted under Section 5.11.
SECTION 5.9. Indebtedness. Intermediate Holdco will not create, incur,
assume or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:
(a) Indebtedness with respect to taxes, assessments or other
governmental charges; provided that such Indebtedness does not create
Liens upon any of its assets except Liens of the type permitted with
respect to assets of the Borrower pursuant to Section 7.2.3 of the Credit
Agreement;
(b) Indebtedness in respect of the Obligations;
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SECTION 5.10. Liens, etc. Intermediate Holdco will not create, incur,
assume, or enter into any agreement which by its terms creates, incurs or
assumes any Lien upon any of its assets (including any shares of capital stock
of the Borrower), whether now owned or hereafter acquired by Intermediate
Holdco, except Liens of the type permitted pursuant to Section 7.2.3 of the
Credit Agreement with respect to assets of the Borrower; nor will Intermediate
Holdco sell, transfer, contribute or otherwise dispose of or convey (or grant
any options, warrants or other rights with respect thereto) any shares of
capital stock of the Borrower (except pursuant to a transaction in which all
Obligations will be simultaneously discharged in full and all Commitments will
be simultaneously terminated in full).
SECTION 5.11. Investments. Intermediate Holdco will not make, incur,
assume or suffer to exist any Investment of Intermediate Holdco in any other
Person, except (i) Investments in the Borrower, (ii) Investments of the type
permitted under Section 7.2.5(b) of the Credit Agreement for the Borrower and
(iii) other Investments in which the consideration paid by Intermediate Holdco
consists solely of common stock of Intermediate Holdco.
SECTION 5.12. Fixed Assets. Intermediate Holdco will not make or commit to
make any Capital Expenditure or enter into any arrangement which would give rise
to any Capitalized Lease Liability.
SECTION 5.13. Rental Obligations. Intermediate Holdco will not enter into
any arrangement which involves the leasing by Intermediate Holdco from any
lessor of any real or personal property (or any interest therein) other than the
lease of office space.
SECTION 5.14. Consolidation, Merger. Intermediate Holdco will not wind-up,
liquidate or dissolve, consolidate or amalgamate with, or merge into or with any
other corporation or purchase or otherwise acquire all or any part of the assets
of any Person (or division thereof)
SECTION 5.15. Asset Dispositions, etc. Intermediate Holdco will not sell,
transfer, lease or otherwise dispose of, or grant to any Person options,
warrants or other rights with respect to any of the Collateral, unless otherwise
permitted by the Credit Agreement.
SECTION 5.16. No Defaults. Intermediate Holdco will not, and will not
permit the Borrower or any of its Subsidiaries to, take any action or fail to
take any action if such action or failure to act would result in a Default under
the Credit Agreement.
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ARTICLE VI
THE ADMINISTRATIVE AGENT
SECTION 6.1. Administrative Agent Appointed Attorney-in-Fact.
Intermediate Holdco hereby irrevocably appoints the Administrative Agent
Intermediate Holdco's attorney-in-fact, with full authority in the place and
stead of Intermediate Holdco and in the name of Intermediate Holdco or
otherwise, from time to time in the Administrative Agent's discretion, upon the
occurrence and during the continuance of an Event of Default and subject to
delivery of notice to Intermediate Holdco, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral.
Intermediate Holdco hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
SECTION 6.2. Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of
the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
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SECTION 6.3. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral if it takes such action for that purpose as Intermediate
Holdco reasonably requests in writing at times other than upon the occurrence
and during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VII
REMEDIES
SECTION 7.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable.
Intermediate Holdco agrees that, to the extent notice of sale shall be
required by law, at least ten days' prior notice to Intermediate Holdco of
the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The
Administrative Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Administrative Agent
may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name
of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and security
interest hereunder,
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(ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature
of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in
Intermediate Holdco's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of Intermediate
Holdco) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or any of
the Collateral.
SECTION 7.2. Securities Laws. If the Administrative Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
7.1, Intermediate Holdco agrees that, upon request of the Administrative Agent,
Intermediate Holdco will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to register such Collateral
under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the
Administrative Agent;
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(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
Intermediate Holdco further acknowledges the impossibility of ascertaining the
amount of damages that would be suffered by the Administrative Agent or the
Lender Parties by reason of the failure by Intermediate Holdco to perform any of
the covenants contained in this Section and, consequently, to the extent
permitted under applicable law, agrees that, if Intermediate Holdco shall fail
to perform any of such covenants, it shall pay, as liquidated damages and not as
a penalty, an amount equal to the value (as determined by the Administrative
Agent) of the Collateral on the date the Administrative Agent shall demand
compliance with this Section.
SECTION 7.3. Compliance with Restrictions. Intermediate Holdco agrees that
in any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and Intermediate Holdco further agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Administrative Agent be liable nor accountable
to Intermediate Holdco for any discount allowed by the reason of the fact that
such Collateral is sold in compliance with any such limitation or restriction.
SECTION 7.4. Application of Proceeds. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be
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applied (after payment of any amounts payable to the Administrative Agent
pursuant to Section 10.3 of the Credit Agreement and Section 7.5) in whole or in
part by the Administrative Agent against, all or any part of the Secured
Obligations as follows: (i) first, to the reasonable out-of-pocket costs and
expenses of the Administrative Agent in connection with the retaking, holding,
preparing for sale, selling or other disposition of the Collateral, including,
without limitation, all court costs and the reasonable fees and expenses of its
agents and legal counsel; (ii) second, to the payment in full of the Obligations
or in the event that such proceeds are insufficient to pay in full the
Obligations, equally and ratably in accordance with each Lender's Obligations
owing to it under or pursuant to the Credit Agreement or any other Loan
Document, or under or pursuant to any Hedging Obligation included in the Secured
Obligations (as to each Lender, applied first to fees and expense reimbursements
then due to such Lender, then to interest due to such Lender, then to pay or
prepay principal of the Loans owing to, or to reduce the "credit exposure" of,
such Lender under such Hedging Obligation, as the case may be, then to pay (or
cash collateralize) the remaining Obligations); (iii) third, without duplication
of any amounts paid pursuant to clause (ii) above, to the Indemnified Parties to
the extent of any amounts owing pursuant to Section 10.4 of the Credit
Agreement; and (iv) fourth, to Intermediate Holdco, or its successors and
assigns, or as a court of competent jurisdiction may direct, of any surplus then
remaining. For purposes of this Agreement, the "credit exposure" at any time of
any Lender with respect to a Hedging Obligation to which such Lender is a party
shall be determined at such time in accordance with the customary methods of
calculating credit exposure under similar arrangements by the counterparty to
such arrangements, taking into account potential interest rate movements and the
respective termination provisions and notional principal amount and term of such
Hedging Obligation. Intermediate Holdco shall remain liable to the Lenders for
any deficiency. If the Administrative Agent has funds available to apply to a
portion of, but not all of, one of the amounts described in clauses (i) through
(iv) above, then the Administrative Agent shall apply such funds to the
applicable parties in proportion to the amounts to which such parties would have
been entitled if the entire amount described in any such clause had been
available.
SECTION 7.5. Indemnity and Expenses. Intermediate Holdco hereby
indemnifies and holds harmless the Administrative Agent from and against any and
all claims, losses and liabilities arising out of or resulting from this
Agreement (including enforcement of this Agreement), except claims, losses, or
liabilities resulting from the Administrative Agent's gross negligence or wilful
misconduct. Upon demand, Intermediate Holdco will pay to the Administrative
Agent the amount of any and
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all reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Administrative Agent may incur
in connection with:
(a) the administration of this Agreement, the Credit Agreement and
each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by Intermediate Holdco to perform or observe any of
the provisions hereof.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1. Loan Document. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
SECTION 8.2. Amendments, etc. No amendment to or waiver of any provision
of this Agreement nor consent to any departure by Intermediate Holdco herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it is given.
SECTION 8.3. Protection of Collateral. The Administrative Agent may from
time to time, at its option, perform any act which Intermediate Holdco agrees
hereunder to perform and which Intermediate Holdco shall fail to perform within
30 days after being requested in writing so to perform and the Administrative
Agent may from time to time take any other action which the Administrative Agent
reasonably deems necessary for the maintenance, preservation or protection of
any of the Collateral or of its security interest therein.
SECTION 8.4. Addresses for Notices. All notices and other communications
provided to any party under this Agreement shall be in writing (including
telecopier communication) and (i) if to Intermediate Holdco, mailed, telecopied
or delivered to it, at
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the address of the Borrower specified in the Credit Agreement, and (ii) if to
the Administrative Agent, mailed, telecopied or delivered to it at the address
of the Administrative Agent specified in the Credit Agreement. All such notices
and other communications, when mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any such notice or communication, if transmitted by
telecopier, shall be deemed given when transmitted and electronically confirmed.
SECTION 8.5. Section Captions. Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.
SECTION 8.6. Severability. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 8.7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SECTION 8.8. Governing Law, Entire Agreement, etc. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR 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. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 8.9. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR INTERMEDIATE HOLDCO SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW) IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
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INTERMEDIATE HOLDCO HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH SUCH LITIGATION. INTERMEDIATE HOLDCO FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
INTERMEDIATE HOLDCO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT INTERMEDIATE HOLDCO HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY,
INTERMEDIATE HOLDCO HEREBY IRREVOCABLY (TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW) WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 8.10. Waiver of Jury Trial. THE LENDER PARTIES AND INTERMEDIATE
HOLDCO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
LENDER PARTIES OR INTERMEDIATE HOLDCO. INTERMEDIATE HOLDCO ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PARTIES ENTERING
INTO THE CREDIT AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
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<PAGE>
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 day and year first above written.
WGL INTERMEDIATE HOLDINGS,
INC.
By ________________________________
Name:
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By ________________________________
Name:
Title:
<PAGE>
ATTACHMENT 1
to
Intermediate Holdco Guaranty and Pledge Agreement
Item A. pledged Shares
================================================================================
Pledged Share Issuer Description of Shares
- --------------------------------------------------------------------------------
% of
Outstanding
Authorized Outstanding Shares
Shares Shares Pledged
- --------------------------------------------------------------------------------
Wilson Greatbatch Ltd. 1,000 1,000 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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<PAGE>
EXHIBIT G-3
BORROWER PLEDGE AGREEMENT
This BORROWER PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of July
10, 1997, is made by WGL ACQUISITION CORP., a New York corporation (the
"Pledgor"), in favor of FLEET NATIONAL BANK, as administrative agent (together
with any successor(s) thereto in such capacity, the "Administrative Agent") for
each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Pledgor, the various financial
institutions as are, or may from time to time become parties thereto (the
"Lenders"), the Agents and the Documentation Agent named therein, the Lenders
and the Issuer have extended Commitments to make Credit Extensions to, and for
the benefit of, the Pledgor;
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, the Pledgor
is required to execute and deliver this Pledge Agreement; and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement;
NOW, THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuer to
make each Credit Extension (including the initial Credit Extension) to the
Pledgor pursuant to the Credit Agreement, the Pledgor agrees, for the benefit of
each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
<PAGE>
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"Lender Party" means, as the context may require, any Lender, the Issuer
and each Agent and each of their respective successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Note Issuer" means each Person identified in Item A of Attachment
1 hereto as the issuer of the Pledged Note identified opposite the name of such
Person.
"Pledged Notes" means all promissory notes of any Pledged Note Issuer in
the form satisfactory to the Administrative Agent or substantially the form of
Exhibit A hereto which are delivered by the Pledgor to the Administrative Agent
as Pledged Property hereunder, as such promissory notes, in accordance with
Section 4.5, are amended, modified or supplemented from time to time and
together with any promissory note of any Pledged Note Issuer taken in extension
or renewal thereof or substitution therefor.
"Pledged Property" means all Pledged Shares, all Pledged Notes, and all
other pledged shares of capital stock or promissory notes, all other securities,
all assignments of any amounts due or to become due, all other instruments which
are now being delivered by the Pledgor to the Administrative Agent or may from
time to time hereafter be delivered by the Pledgor to the Administrative Agent
for the purpose of pledge under this Pledge Agreement or any other Loan
Document, and all proceeds of any of the foregoing.
"Pledged Share Issuer" means each Person identified in Item B of
Attachment 1 hereto as the issuer of the Pledged Shares identified opposite the
name of such Person.
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"Pledged Shares" means all shares of capital stock of any Pledged Share
Issuer which are delivered by the Pledgor to the Administrative Agent as Pledged
Property hereunder.
"Pledgor" is defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 6.2.
"U.C.C." means the Uniform Commercial Code as in effect from time to time
in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Pledge Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Administrative Agent, for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Lender Parties, a continuing security interest
in, all of the following property (the "Collateral"):
(a) all promissory notes of each Pledged Note Issuer identified in
Item A of Attachment 1 hereto;
(b) all other Pledged Notes issued from time to time;
(c) all issued and outstanding shares of capital stock of each
Pledged Share Issuer identified in Item B of Attachment 1 hereto;
(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter delivered
to the Administrative Agent in connection with this Pledge Agreement;
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(f) all Dividends, Distributions, interest and other payments and
rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures the
payment in full of all Obligations now or hereafter existing (the "Secured
Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares and all
Pledged Notes, shall be delivered to and held by or on behalf of (and in the
case of the Pledged Notes, endorsed to the order of) the Administrative Agent
pursuant hereto, shall be in suitable form for transfer by delivery, and shall
be accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.
SECTION 2.4. Continuing Security Interest; Transfer of Note. This Pledge
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full in cash of
all Secured Obligations, the termination or expiration of all Letters of
Credit and the termination of all Commitments,
(b) be binding upon the Pledgor and its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Commitment, Note, Credit Extension, Hedging
Obligation or other Secured Obligation held by it to any other Person or entity,
and such other Person or entity shall thereupon become vested with all the
rights and benefits in respect thereof granted to such Lender under any Loan
Document (including this Pledge Agreement) or document relating to such Hedging
Obligation or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 10.11 and Article IX of
the Credit Agreement. Upon (i) the sale, transfer or other disposition of
Collateral in accordance with the Credit Agreement or (ii) the payment in full
of all Secured Obligations, the termination or expiration of all Letters of
Credit and the termination of all Commitments, the security interest granted
herein shall
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automatically terminate with respect to (x) such Collateral (in the case of
clause (i)) or (y) all Collateral (in the case of clause (ii)). Upon any such
termination, the Administrative Agent will, at the Pledgor's sole expense,
deliver to the Pledgor, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments representing or evidencing
all Pledged Shares and all Pledged Notes, together with all other Collateral
held by the Administrative Agent hereunder, and execute and deliver to the
Pledgor such documents as the Pledgor shall reasonably request to evidence such
termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties, etc. The Pledgor represents
and warrants unto each Lender Party, as at the date of each pledge and delivery
hereunder (including each pledge and delivery of Pledged Shares and each pledge
and delivery of a Pledged Note) by the Pledgor to the Administrative Agent of
any Collateral, as set forth in this Article.
SECTION 3.1.1. Ownership, No Liens, etc. The Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all Liens
except any Lien granted pursuant hereto in favor of the Administrative Agent.
SECTION 3.1.2. Valid Security Interest. The execution and delivery of this
Pledge Agreement, together with the delivery of such Collateral to the
Administrative Agent is effective to create a valid, perfected, first priority
security interest in such Collateral and all proceeds thereof, securing the
Secured Obligations. Possession by the Administrative Agent of the Collateral is
the only action necessary to perfect or protect such security interest in the
Collateral subject to Section 9-306 of the U.C.C.
SECTION 3.1.3. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock of each Pledged Share Issuer owned by
the Pledgor and required to be delivered in pledge under the terms of the Credit
Agreement. On the Closing Date, the Pledgor has no Subsidiary other than the
Pledged Share Issuers.
SECTION 3.1.4. As to Pledged Notes. In the case of each Pledged Note, all
of such Pledged Notes have been duly
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authorized, executed, endorsed, issued and delivered, and are the legal, valid
and binding obligation of the issuers thereof, and are not in default.
SECTION 3.1.5. Authorization, Approval, etc. No authorization, approval,
or other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(a) for the pledge by the Pledgor of any Collateral pursuant to this
Pledge Agreement or for the execution, delivery, and performance of this
Pledge Agreement by the Pledgor, or
(b) for the exercise by the Administrative Agent of the voting or
other rights provided for in this Pledge Agreement, or, except, with
respect to any Pledged Shares or the Pledged Notes, as may be required in
connection with a disposition of such Pledged Shares or the Pledged Notes
by laws affecting the offering and sale of securities generally, the
remedies in respect of the Collateral pursuant to this Pledge Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, etc. The Pledgor will
not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Administrative Agent hereunder) except as
permitted under the Credit Agreement. The Pledgor will warrant and defend the
right and title herein granted unto the Administrative Agent in and to the
Collateral (and all right, title, and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. The Pledgor agrees
that at any time, and from time to time, at the expense of the Pledgor, the
Pledgor will promptly execute and deliver all further instruments, and take all
further action, that may be necessary or desirable, or that the Administrative
Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral.
SECTION 4.2. Stock Powers, etc. The Pledgor agrees that all Pledged Shares
(and all other shares of capital stock constituting Collateral) delivered by the
Pledgor pursuant to this Pledge Agreement will be accompanied by duly executed
undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Administrative Agent. The Pledgor
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<PAGE>
will, from time to time upon the request of the Administrative Agent, promptly
deliver to the Administrative Agent such stock powers, instruments, and similar
documents, satisfactory in form and substance to the Administrative Agent, with
respect to the Collateral as the Administrative Agent may reasonably request and
will, from time to time upon the request of the Administrative Agent after the
occurrence of any Event of Default, promptly transfer any Pledged Shares or
other shares of common stock constituting Collateral into the name of any
nominee designated by the Administrative Agent.
SECTION 4.3. Continuous pledge, The Pledgor will, at all times, keep
pledged to the Administrative Agent pursuant hereto all Pledged Shares and all
other shares of capital stock constituting Collateral, all Dividends and
Distributions with respect thereto, all Pledged Notes, all interest, principal
and other proceeds received by the Administrative Agent with respect to the
Pledged Notes, and all other Collateral and other securities, instruments,
proceeds, and rights from time to time received by or distributable to the
Pledgor in respect of any Collateral and will not permit any Pledged Share
Issuer to issue any capital stock which shall not have been immediately duly
pledged hereunder on a first priority perfected basis; provided, however, that,
notwithstanding anything to the contrary contained herein, the Pledgor shall not
be required to pledge more than 65% of the issued and outstanding capital stock
of any Non-U.S. Subsidiary.
SECTION 4.4. Voting Rights; Dividends, etc. The Pledgor agrees:
(a) after any (i) Default of the nature referred to in clause (b),
(c) or (d) of Section 8.1.9 of the Credit Agreement with respect to any
Obligor (other than an immaterial Subsidiary) shall have occurred and be
continuing or (ii) any other Event of Default shall have occurred and be
continuing, and the giving of notice from the Administrative Agent of its
intent to exercise its remedies (in the case of this clause (a) (ii)), the
Pledgor will deliver promptly upon receipt thereof (properly endorsed
where required hereby or requested by the Administrative Agent) to the
Administrative Agent all Dividends, Distributions, all interest, all
principal, all other cash payments, and all proceeds of the Collateral,
all of which shall be held by the Administrative Agent as additional
Collateral for use in accordance with Section 6.4; and
(b) after any Event of Default shall have occurred and be continuing
and the Administrative Agent has notified the Pledgor of the
Administrative Agent's intention to exercise its voting power under this
Section 4.4(b)
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(i) the Administrative Agent may exercise (to the exclusion of
the Pledgor) the voting power and all other incidental rights of
ownership with respect to any Pledged Shares or other shares of
capital stock constituting Collateral and the Pledgor hereby grants
the Administrative Agent an irrevocable proxy, exercisable under
such circumstances, to vote the Pledged Shares and such other
Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to allow
the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Pledgor but which the
Pledgor is then obligated to deliver to the Administrative Agent, shall, until
delivery to the Administrative Agent, be held by the Pledgor separate and apart
from its other property in trust for the Administrative Agent. The
Administrative Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given the notice
referred to in Section 4.4(b), the Pledgor shall have the exclusive voting power
with respect to any shares of capital stock (including any of the Pledged
Shares) constituting Collateral and the Administrative Agent shall, upon the
written request of the Pledgor, promptly deliver such proxies and other
documents, if any, as shall be reasonably requested by the Pledgor which are
necessary to allow the Pledgor to exercise voting power with respect to any such
share of capital stock (including any of the Pledged Shares) constituting
Collateral; provided, however, that no vote shall be cast, or consent, waiver,
or ratification given, or action taken by the Pledgor that would impair any
Collateral or be inconsistent with or violate any provision of the Credit
Agreement or any other Loan Document (including this Pledge Agreement).
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. The Pledgor
hereby irrevocably appoints the Administrative Agent the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time in the Administrative
Agent's discretion, upon the occurrence and during the continuance of an Event
of Default and subject to delivery of notice to the Pledgor, to take any action
and to execute any instrument which the Administrative Agent may deem necessary
or advisable to
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accomplish the purposes of this Pledge Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of
the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
SECTION 5.3. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as the Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
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ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten days' prior notice to the 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. The Administrative Agent shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name
of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and security
interest hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature
of any party with respect thereto,
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(iv) endorse any checks, drafts, or other writings in the
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. Securities Laws. If the Administrative Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
6.1, the Pledgor agrees that, upon request of the Administrative Agent, the
Pledgor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to register such Collateral
under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the
Administrative Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
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The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Administrative Agent or the Lender Parties
by reason of the failure by the Pledgor to perform any of the covenants
contained in this Section and, consequently, to the extent permitted under
applicable law, agrees that, if the Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value (as determined by the Administrative Agent) of the Collateral
on the date the Administrative Agent shall demand compliance with this Section.
SECTION 6.3. Compliance with Restrictions. The Pledgor agrees that in any
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Administrative Agent is hereby authorized to comply with
any limitation or restriction in connection with such sale as it may be advised
by counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Administrative Agent be liable nor accountable
to the Pledgor for any discount allowed by the reason of the fact that such
Collateral is sold in compliance with any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section
10.3 of the Credit Agreement and Section 6.5) in whole or in part by the
Administrative Agent against, all or any part of the Secured Obligations as
follows: (i) first, to the reasonable out-of-pocket costs and expenses of the
Administrative Agent in connection with the retaking, holding, preparing for
sale, selling or other disposition of the Collateral, including, without
limitation, all court costs and the reasonable fees and expenses of its agents
and legal counsel; (ii) second, to the payment in full of the Secured
Obligations or in the event that
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such proceeds are insufficient to pay in full the Secured Obligations, equally
and ratably in accordance with each Lender's respective amounts owing to it
under or pursuant to the Credit Agreement or any other Loan Document, or under
or pursuant to any Hedging Obligation included in the Secured Obligations (as to
each Lender, applied first to fees and expense reimbursements then due to such
Lender, then to interest due to such Lender, then to pay or prepay principal of
the Loans owing to, or to reduce the "credit exposure" of, such Lender under
such Hedging Obligation, as the case may be, then to pay (or cash collateralize)
the remaining Secured Obligations); (iii) third, without duplication of any
amounts paid pursuant to clause (ii) above, to the Indemnified Parties to the
extent of any amounts owing pursuant to Section 10.4 of the Credit Agreement;
and (iv) fourth, to the Pledgor, or its successors and assigns, or as a court of
competent jurisdiction may direct, of any surplus then remaining. For purposes
of this Agreement, the "credit exposure" at any time of any Lender with respect
to a Hedging Obligation to which such Lender is a party shall be determined at
such time in accordance with the customary methods of calculating credit
exposure under similar arrangements by the counterparty to such arrangements,
taking into account potential interest rate movements and the respective
termination provisions and notional principal amount and term of such Hedging
Obligation. The Pledgor shall remain liable to the Lenders for any deficiency.
If the Administrative Agent has funds available to apply to a portion of, but
not all of, one of the amounts described in clauses (i) through (iv) above, then
the Administrative Agent shall apply such funds to the applicable parties in
proportion to the amounts to which such parties would have been entitled if the
entire amount described in any such clause had been available.
SECTION 6.5. Indemnity and Expenses. The Pledgor hereby indemnifies and
holds harmless the Administrative Agent from and against any and all claims,
losses, and liabilities arising out of or resulting from this Pledge Agreement
(including enforcement of this Pledge Agreement), except claims, losses, or
liabilities resulting from the Administrative Agent's gross negligence or wilful
misconduct. Upon demand, the Pledgor will pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit
Agreement and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
13
<PAGE>
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any provision
of this Pledge Agreement nor consent to any departure by the Pledgor herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it is given.
SECTION 7.3. Protection of Collateral. The Administrative Agent may from
time to time, at its option, perform any act which the Pledgor agrees hereunder
to perform and which the Pledgor shall fail to perform within 30 days after
being requested in writing so to perform and the Administrative Agent may from
time to time take any other action which the Administrative Agent reasonably
deems necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other communications
provided to any party under this Agreement shall be in writing (including
telecopier communication) and mailed, telecopied or delivered to such party at
such party's address specified in the Credit Agreement. All such notices and
other communications, when mailed and properly addressed with postage prepaid or
if properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any such notice or communication, if transmitted by
telecopier, shall be deemed given when transmitted and electronically confirmed.
SECTION 7.5. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
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SECTION 7.6. Severability. Wherever possible each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Pledge Agreement.
SECTION 7.7. Counterparts. This Pledge Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 7.8. Governing Law, Entire Agreement, etc. THIS PLEDGE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR 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. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
WGL ACQUISITION CORP.,
By: ____________________________________
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By: ____________________________________
Title:
16
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ATTACHMENT 1
to
Borrower Pledge Agreement
Item A. Pledged Notes
Pledged Note Issuer Description
Item B. Pledged Shares
<TABLE>
<CAPTION>
Pledged Share Issuer Description of Shares
- ----------------------------------------- ----------------------------------------------------
% of
Outstanding
Authorized Outstanding Shares
Shares Shares Pledged
- ----------------------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
- ----------------------------------------- ---------- ----------- -----------
- ----------------------------------------- ---------- ----------- -----------
- ----------------------------------------- ---------- ----------- -----------
- ----------------------------------------- ---------- ----------- -----------
- ----------------------------------------- ---------- ----------- -----------
</TABLE>
<PAGE>
EXHIBIT G-4
SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (as amended, supplemented, amended and
restated or otherwise modified from time to time, this "Pledge Agreement"),
dated as of __________, 19__, is made by each Subsidiary (as defined in the
Credit Agreement referred to below) a signatory hereto on the date hereof and
each other Subsidiary that may from time to time become, pursuant to the terms
of the Credit Agreement, a party hereto (each, individually, a "Pledgor" and
collectively, the "Pledgors"), in favor of DLJ Capital Funding, Inc., as
administrative agent (together with any successor(s) thereto in such capacity,
the "Administrative Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among WGL Acquisition Corp., a New York
corporation (the "Borrower"), the various financial institutions as are or may
from time to time become parties thereto (the "Lenders"), the Agents and the
Issuer named therein, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, each
Pledgor is required to execute and deliver this Pledge Agreement;
WHEREAS, each Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement; and
WHEREAS, it is in the best interest of each Pledgor to execute this Pledge
Agreement inasmuch as each Pledgor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
and the Issuer to make each Credit Extension (including the initial Credit
Extension) to the
<PAGE>
Borrower pursuant to the Credit Agreement, and to induce the Lender Parties to
enter into Rate Protection Agreements, each Pledgor jointly and severally
agrees, for the benefit of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"Lender Party" means, as the context may require, each Lender, the Issuer
and each Agent and each of their respective successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Note Issuer" means each Person identified in Item A of Attachment
1 hereto as the issuer of the Pledged Note identified opposite the name of such
Person.
"Pledged Notes" means all promissory notes of each Pledged Note Issuer in
the form satisfactory to the Administrative Agent
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or substantially the form of Exhibit A hereto which are delivered by such
Pledgor to the Administrative Agent as Pledged Property hereunder, as such
promissory notes, in accordance with Section 2.3, are amended, modified or
supplemented from time to time and together with any promissory note of such
Pledged Note Issuer taken in extension or renewal thereof or substitution
therefor.
"Pledged Property" means all Pledged Shares, all Pledged Notes, and all
other pledged shares of capital stock or promissory notes, all other securities,
all assignments of any amounts due or to become due, all other instruments which
are now being delivered by each Pledgor to the Administrative Agent or may from
time to time hereafter be delivered by each Pledgor to the Administrative Agent
for the purpose of pledge under this Pledge Agreement or any other Loan
Document, and all proceeds of any of the foregoing.
"Pledged Share Issuer" means each Person identified in Item B of
Attachment 1 hereto as issuer of the Pledged Shares identified opposite the name
of such Person.
"Pledged Shares" means all shares of capital stock of any Pledged Share
Issuer which are delivered by such Pledgor to the Administrative Agent as
Pledged Property hereunder.
"Pledgor" is defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 6.2.
"U.C.C." means the Uniform Commercial Code as in effect from time to time
in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Pledge Agreement, including its preamble and recitals, with
such meanings.
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<PAGE>
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Administrative Agent, for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent, for its benefit
and the ratable benefit of the Lender Parties, a continuing security interest
in, all of the following property (the "Collateral"):
(a) all promissory notes of each Pledged Note Issuer identified in
Item A of Attachment 1 hereto;
(b) all other Pledged Notes issued from time to time;
(c) all issued and outstanding shares of capital stock of each
Pledged Share Issuer identified in Item B of Attachment 1 hereto;
(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter delivered
to the Administrative Agent in connection with this Pledge Agreement;
(f) all Dividends, Distributions, interest, and other payments and
rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures the
payment in full of all Obligations now or hereafter existing (the "Secured
Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares and all
Pledged Notes, shall be delivered to and held by or on behalf of (and, in the
case of the Pledged Notes, endorsed to the order of) the Administrative Agent
pursuant hereto, shall be in suitable form for transfer by delivery, and shall
be accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.
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<PAGE>
SECTION 2.4. Continuing Security Interest; Transfer of Note. This Pledge
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full of all
Secured Obligations, the termination or expiration of all Letters of
Credit and the termination of all Commitments,
(b) be binding upon each Pledgor and its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Commitment, Note, Credit Extension, Hedging
Obligation or other Secured Obligation held by it to any other Person or entity,
and such other Person or entity shall thereupon become vested with all the
rights and benefits in respect thereof granted to such Lender under any Loan
Document (including this Pledge Agreement) or document relating to such Hedging
Obligation or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 10.11 and Article IX of
the Credit Agreement. Upon (i) the sale, transfer or other disposition of
Collateral in accordance with the Credit Agreement or (ii) the payment in full
of all Secured Obligations, the termination or expiration of all Letters of
Credit and the termination of all Commitments, the security interests granted
herein shall automatically terminate with respect to (x) such Collateral (in the
case of clause (i)) or (y) all Collateral (in the case of clause (ii)). Upon any
such termination, the Administrative Agent will, at such Pledgor's sole expense,
deliver to such Pledgor, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments representing or evidencing
all Pledged Shares and all Pledged Notes, together with all other Collateral
held by the Administrative Agent hereunder, and execute and deliver to such
Pledgor such documents as such Pledgor shall reasonably request to evidence such
termination.
SECTION 2.6. Security Interest Absolute. All rights of the Administrative
Agent and the security interests granted to the Administrative Agent hereunder,
and all obligations of each Pledgor hereunder, shall, to the extent permitted
under applicable law, be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement,
any Note or any other Loan Document,
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<PAGE>
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
under the provisions of the Credit Agreement, any Note, any other
Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of the
Borrower or any other Obligor,
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligation of the Borrower or any other
Obligor,
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and each Pledgor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of the Borrower, any other Obligor
or otherwise,
(e) any amendment to, recision, waiver, or other modification of, or
any consent to departure from, any of the terms of the Credit Agreement,
any Note or any other Loan Document,
(f) any addition, exchange, release, surrender or non-perfection of
any collateral (including the Collateral), or any amendment to or waiver
or release of or addition to or consent to departure from any guaranty,
for any of the Secured Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
SECTION 2.7. postponement of Subrogation. Each Pledgor covenants and
agrees that it will not exercise any rights which it may acquire by way of
subrogation under this Pledge Agreement, by any payment made hereunder or
otherwise, until the prior payment, in full and in cash, of all Obligations of
the Borrower
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<PAGE>
and each other Obligor and the termination of all Commitments. Any amount paid
to such Guarantor on account of any such subrogation rights prior to the payment
in full of all Obligations of the Borrower and each other Obligor shall be held
in trust for the benefit of the Lender Parties and each holder of a Note and
shall immediately be paid to the Lender Parties and each holder of a Note and
credited and applied against the Obligations of the Borrower and each other
Obligor, whether matured or unmatured, in accordance with the terms of the
Credit Agreement; provided, however, that if all Obligations of the Borrower and
each other Obligor have been paid in full and all Commitments have been
permanently terminated, each Lender Party and each holder of a Note agrees that,
at such Guarantor's request, the Lender Parties and the holders of the Notes,
will execute and deliver to such Guarantor appropriate documents (without
recourse and without representation or warranty) necessary to evidence the
transfer by subrogation to such Guarantor of an interest in the Obligations of
the Borrower and each other Obligor resulting from such payment by such
Guarantor. In furtherance of the foregoing, for so long as any Obligations or
Commitments remain outstanding, each Guarantor shall refrain from taking any
action or commencing any proceeding against the Borrower or any other Obligor
(or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in the respect of payments made
under this Guaranty to any Lender Party or any holder of a Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties, etc. Each Pledgor represents
insofar as the representations and warranties contained herein are applicable to
such Pledgor and its properties, to each Lender Party, as of the date of each
pledge and delivery hereunder (including each pledge and delivery of Pledged
Shares and each pledge and delivery of a Pledged Note) by each Pledgor to the
Administrative Agent of any Collateral, as set forth in this Article.
SECTION 3.1.1. Ownership, No Liens, etc. Each Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) its Collateral, free and clear of all Liens
except any Lien granted pursuant hereto in favor of the Administrative Agent.
SECTION 3.1.2. Valid Security Interest. The execution and delivery of this
Pledge Agreement, together with the delivery of such Collateral to the
Administrative Agent is effective to create a valid, perfected, first priority
security interest in
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<PAGE>
such Collateral and all proceeds thereof, securing the Secured Obligations.
Possession by the Administrative Agent of the Collateral is the only action
necessary to perfect or protect such security interest in the Collateral,
subject to Section 9-306 of the U.C.C.
SECTION 3.1.3. As to Pledged Shares. In the case of any Pledged Shares
constituting Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock of each Pledged Share Issuer owned by
such Pledgor that are required to be delivered in pledge under the terms of the
Credit Agreement. On the Closing Date, such Pledgor has no Subsidiary other than
the Pledged Share Issuers.
SECTION 3.1.4. As to pledged Notes. In the case of each Pledged Note, all
of such Pledged Notes have been duly authorized, executed, endorsed, issued and
delivered, and are the legal, valid and binding obligation of the issuers
thereof, and are not in default.
SECTION 3.1.5. Authorization, Approval, etc. No authorization, approval,
or other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(a) for the pledge by such Pledgor of any Collateral pursuant to
this Pledge Agreement or for the execution, delivery, and performance of
this Pledge Agreement by such Pledgor, or
(b) for the exercise by the Administrative Agent of the voting or
other rights provided for in this Pledge Agreement, or, except, with
respect to any Pledged Shares or the Pledged Notes, as may be required in
connection with a disposition of such Pledged Shares or the Pledged Notes
by laws affecting the offering and sale of securities generally, the
remedies in respect of the Collateral pursuant to this Pledge Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, etc. Each Pledgor
agrees and covenants that it will not sell, assign, transfer, pledge, or
encumber in any other manner the Collateral (except in favor of the
Administrative Agent hereunder), except as permitted under the Credit Agreement.
Each Pledgor will warrant and defend the right and title herein granted unto the
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Administrative Agent in and to the Collateral (and all right, title, and
interest represented by the Collateral) against the claims and demands of all
Persons whomsoever. Each Pledgor agrees that at any time, and from time to time,
at the expense of such Pledgor, such Pledgor will promptly execute and deliver
all further instruments, and take all further action, that may be necessary or
desirable, or that the Administrative Agent may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral.
SECTION 4.2. Stock Powers, etc. Each Pledgor agrees that all Pledged
Shares (and all other shares of capital stock constituting Collateral) delivered
by it pursuant to this Pledge Agreement will be accompanied by duly executed
undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Administrative Agent. Each Pledgor will, from time to time
upon the request of the Administrative Agent, promptly deliver to the
Administrative Agent such stock powers, instruments, and similar documents,
satisfactory in form and substance to the Administrative Agent, with respect to
the Collateral as the Administrative Agent may reasonably request and will, from
time to time upon the request of the Administrative Agent after the occurrence
of any Event of Default, promptly transfer any Pledged Shares or other shares of
common stock constituting Collateral into the name of any nominee designated by
the Administrative Agent.
SECTION 4.3. Continuous Pledge. Subject to Section 2.4, each Pledgor will,
at all times, keep pledged to the Administrative Agent pursuant hereto all
Pledged Shares and all other shares of capital stock constituting Collateral,
all Dividends and Distributions with respect thereto, all Pledged Notes, all
interest, principal and other proceeds received by the Administrative Agent with
respect to the Pledged Notes, and all other Collateral and other securities,
instruments, proceeds, and rights from time to time received by it or
distributable to it in respect of any Collateral and will not permit any Pledged
Share Issuer to issue any capital stock which shall not have been immediately
duly pledged hereunder on a first priority perfected basis; provided, however,
that, notwithstanding anything to the contrary contained herein, the Pledgors
shall not be required to pledge more than 65% of the issued and outstanding
capital stock of any Non-U.S. Subsidiary.
SECTION 4.4. Voting Rights; Dividends, etc. Each Pledgor agrees:
(a) after any (i) Default of the nature referred to in clause (b),
(c) or (d) of Section 10.1.9 of the Credit
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Agreement with respect to any Obligor (other than an immaterial
Subsidiary) shall have occurred and be continuing or (ii) any other Event
of Default shall have occurred and be continuing, and the giving of notice
from the Administrative Agent of its intent to exercise its remedies (in
the case of this clause (a) (ii)), such Pledgor will deliver promptly upon
receipt thereof (properly endorsed where required hereby or requested by
the Administrative Agent) to the Administrative Agent all Dividends,
Distributions, all interest, all principal, all other cash payments, and
all proceeds of the Collateral, all of which shall be held by the
Administrative Agent as additional Collateral for use in accordance with
Section 6.4; and
(b) after any Event of Default shall have occurred and be continuing
and the Administrative Agent has notified each Pledgor of the
Administrative Agent's intention to exercise its voting power under this
Section 4.4(b)
(i) the Administrative Agent may exercise (to the exclusion of
each Pledgor) the voting power and all other incidental rights of
ownership with respect to any Pledged Shares or other shares of
capital stock constituting Collateral and each Pledgor hereby grants
the Administrative Agent an irrevocable proxy, exercisable under
such circumstances, to vote the Pledged Shares and such other
Collateral; and
(ii) promptly to deliver to the Administrative Agent such
additional proxies and other documents as may be necessary to allow
the Administrative Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by such Pledgor but which
such Pledgor is then obligated to deliver to the Administrative Agent, shall,
until delivery to the Administrative Agent, be held by such Pledgor separate and
apart from its other property in trust for the Administrative Agent. The
Administrative Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given the notice
referred to in Section 4.4(b), such Pledgor shall have the exclusive voting
power with respect to any shares of capital stock (including any of the Pledged
Shares) constituting Collateral and the Administrative Agent shall, upon the
written request of such Pledgor, promptly deliver such proxies and other
documents, if any, as shall be reasonably requested by such Pledgor which are
necessary to allow such Pledgor to exercise voting power with respect to any
such share of capital stock (including any of the Pledged Shares) constituting
Collateral; provided, however, that no vote shall be
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<PAGE>
cast, or consent, waiver, or ratification given, or action taken by such Pledgor
that would impair any Collateral or be inconsistent with or violate any
provision of the Credit Agreement or any other Loan Document (including this
Pledge Agreement).
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. Each Pledgor
hereby irrevocably appoints the Administrative Agent such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time in the
Administrative Agent's discretion, upon the occurrence and continuation of an
Event of Default and subject to delivery of notice to such Pledgor, to take any
action and to execute any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Pledge Agreement,
including without limitation:
(a) to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Administrative Agent with respect to any of the Collateral.
Each Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of
the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for monies actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or responsibility
for (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities,
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tenders or other matters relative to any Pledged Property, whether or not the
Administrative Agent has or is deemed to have knowledge of such matters, or (b)
taking any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
SECTION 5.3. Reasonable Care. The Administrative Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Administrative Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral if it takes such action for that purpose as such Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the
Administrative Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the U.C.C. (whether or not the U.C.C. applies to
the affected Collateral) and also may, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable. Each
Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten days' prior notice to such 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. The Administrative Agent shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
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(b) The Administrative Agent may
(i) transfer all or any part of the Collateral into the name
of the Administrative Agent or its nominee, with or without
disclosing that such Collateral is subject to the lien and security
interest hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Administrative Agent of any amount due or to
become due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any obligations of any nature
of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in each
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of each Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. Securities Laws. If the Administrative Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
6.1, each Pledgor agrees that, upon request of the Administrative Agent, it
will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Agent, advisable to register such Collateral
under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Administrative Agent, are
necessary or
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<PAGE>
advisable, all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange Commission
applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the
Administrative Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11 (a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
Each Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Administrative Agent or the Lender
Parties by reason of the failure by any Pledgor to perform any of the covenants
contained in this Section and, consequently, to the extent permitted under
applicable law, agrees that, if any Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value (as determined by the Administrative Agent) of the Collateral
on the date the Administrative Agent shall demand compliance with this Section.
SECTION 6.3. Compliance with Restrictions. Each Pledgor agrees that in any
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Administrative Agent is hereby authorized to comply with
any limitation or restriction in connection with such sale as it may be advised
by counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and each Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Administrative Agent be liable nor accountable
to any Pledgor for any discount allowed by the reason of the fact that such
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<PAGE>
Collateral is sold in compliance with any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Administrative Agent, be held by the Administrative Agent as additional
collateral security for, or then or at any time thereafter be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section
10.3 of the Credit Agreement and Section 6.5) in whole or in part by the
Administrative Agent against, all or any part of the Secured Obligations as
follows: (i) first, to the reasonable out-of-pocket costs and expenses of the
Administrative Agent in connection with the retaking, holding, preparing for
sale, selling or other disposition of the Collateral, including, without
limitation, all court costs and the reasonable fees and expenses of its agents
and legal counsel; (ii) second, to the payment in full of the Secured
Obligations or in the event that such proceeds are insufficient to pay in full
the Secured Obligations, equally and ratably in accordance with each Lender's
Obligations owing to it under or pursuant to the Credit Agreement or any other
Loan Document, or under or pursuant to any Hedging Obligation included in the
Secured Obligations (as to each Lender, applied first to fees and expense
reimbursements then due to such Lender, then to interest due to such Lender,
then to pay or prepay principal of the Loans owing to, or to reduce the "credit
exposure" of, such Lender under such Hedging Obligation, as the case may be,
then to pay (or cash collateralize) the remaining Secured Obligations); (iii)
third, without duplication of any amounts paid pursuant to clause (ii) above, to
the Indemnified Parties to the extent of any amounts owing pursuant to Section
10.4 of the Credit Agreement; and (iv) fourth, to each Pledgor, or its
successors and assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining. For purposes of this Agreement, the "credit
exposure" at any time of any Lender with respect to a Hedging Obligation to
which such Lender is a party shall be determined at such time in accordance with
the customary methods of calculating credit exposure under similar arrangements
by the counterparty to such arrangements, taking into account potential interest
rate movements and the respective termination provisions and notional principal
amount and term of such Hedging Obligation. Each Pledgor shall remain liable to
the Lenders for any deficiency. If the Administrative Agent has funds available
to apply to a portion of, but not all of, one of the amounts described in
clauses (i) through (iv) above, then the Administrative Agent shall apply such
funds to the applicable parties in proportion to the amounts to which such
parties would have been entitled if the entire amount described in any such
clause had been available.
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SECTION 6.5. Indemnity and Expenses. Each Pledgor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses, and liabilities arising out of or resulting
from this Pledge Agreement (including enforcement of this Pledge Agreement),
except claims, losses, or liabilities resulting from the Administrative Agent's
gross negligence or wilful misconduct. Upon demand, each Pledgor will pay to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Administrative Agent may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit
Agreement and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Administrative Agent hereunder; or
(d) the failure by any Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any provision
of this Pledge Agreement nor consent to any departure by any Pledgor herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it is given.
SECTION 7.3. Protection of Collateral. The Administrative Agent may from
time to time, at its option, perform any act which each Pledgor agrees hereunder
to perform and which such Pledgor shall fail to perform within 30 days after
being requested in writing so to perform and the Administrative Agent may from
time
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<PAGE>
to time take any other action which the Administrative Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other communications
provided to any party under this Agreement shall be in writing (including
telecopier communication) and, (i) if to any Pledgor, mailed, telecopied or
delivered to it, addressed to it in care of the Borrower at the address of the
Borrower specified in the Credit Agreement and (ii) if to the Administrative
Agent, mailed, telecopied or delivered to it, at the address of the
Administrative Agent specified in the Credit Agreement. All such notices and
other communications, when mailed and properly addressed with postage prepaid or
if properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any such notice or communication, if transmitted by
telecopier, shall be deemed given when transmitted and electronically confirmed.
SECTION 7.5. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Pledge Agreement.
SECTION 7.7. Counterparts. This Pledge Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 7.8. Governing Law, Entire Agreement, etc. THIS PLEDGE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR 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. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
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<PAGE>
SECTION 7.9. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR EACH PLEDGOR SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE
COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PLEDGOR HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK, NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH PLEDGOR HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
EACH PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, EACH PLEDGOR HEREBY IRREVOCABLY WAIVES (TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW) SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS PLEDGE AGREEMENT.
SECTION 7.10. Waiver of Jury Trial. EACH PLEDGOR AND EACH LENDER PARTY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EACH
PLEDGOR OR ANY LENDER PARTY. EACH PLEDGOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT ENTERING INTO
THIS AGREEMENT AND THE LENDER PARTIES ENTERING INTO THE CREDIT AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
[NAME OF PLEDGOR]
By: ___________________________________
Title:
[NAME OF PLEDGOR]
By: ___________________________________
Title:
[NAME OF PLEDGOR]
By: ___________________________________
Title:
DLJ Capital Funding, Inc.,
as Administrative Agent
By: ___________________________________
Title:
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<PAGE>
ATTACHMENT 1
to
Subsidiary Pledge Agreement
PLEDGOR:
Item A. Pledged Notes
pledged Note Issuer Description
Item B. Pledged Shares
<TABLE>
<CAPTION>
Pledged Share Issuer Description of Shares
- ----------------------------------------- ----------------------------------------------------
% of
Outstanding
Authorized Outstanding Shares
Shares Shares Pledged
- ----------------------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
- ----------------------------------------- ---------- ----------- -----------
- ----------------------------------------- ---------- ----------- -----------
- ----------------------------------------- ---------- ----------- -----------
- ----------------------------------------- ---------- ----------- -----------
- ----------------------------------------- ---------- ----------- -----------
</TABLE>
<PAGE>
EXHIBIT H
SUBSIDIARY GUARANTY
This GUARANTY (as amended, supplemented, amended and restated or otherwise
modified from time to time, this "Guaranty"), dated as of ________, 19__, is
made by each Subsidiary (as defined in the Credit Agreement referred to below) a
signatory hereto on the date hereof and each other Subsidiary that may, from
time to time become, pursuant to the terms of the Credit Agreement, a party
hereto (individually, a "Guarantor" and collectively, the "Guarantors"), in
favor of FLEET NATIONAL BANK, as administrative agent (together with any
successor(s) thereto in such capacity, the "Administrative Agent") for each of
the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 10, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement") among WGL Acquisition Corp., a New York
corporation (the "Borrower"), the various financial institutions as are, or may
from time to time become parties thereto (the "Lenders"), the Agents and the
Documentation Agent named therein, the Lenders and the Issuer have extended
Commitments to make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of each Credit Extension
(including the initial Credit Extension) under the Credit Agreement, each
Guarantor is required to execute and deliver this Guaranty;
WHEREAS, each Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of each Guarantor to execute this
Guaranty inasmuch as such Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make each Credit
Extension (including the initial Credit Extension) to the Borrower pursuant to
the Credit Agreement, each Guarantor jointly and severally agrees, for the
benefit of each Lender Party, as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Guarantors" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Lender Party" means, as the context may require, each Lender, the Issuer
and each Agent and each of their respective successors, transferees and assigns.
"Lenders" is defined in the first recital.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Guaranty, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. Each Guarantor hereby jointly and severally,
absolutely, unconditionally and irrevocably
(a) guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand
or otherwise, of all Obligations of the Borrower and each other Obligor
now or hereafter existing under the Credit Agreement, the Notes, the
Letter of Credit and each other Loan Document to which the Borrower or
such other Obligor is or may become a party (or, in the case of Letters of
Credit, is or may become the account party), whether for principal,
interest, Reimbursement Obligations, fees, expenses or otherwise
(including all such amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the United States Bankruptcy
Code, 11 U.S.C. ss. 362(a), and the operation of Sections 502(b) and
506(b) of the United
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<PAGE>
States Bankruptcy Code, 11 U.S.C. ss. 502(b) and ss. 506(b)), and
(b) indemnifies and holds harmless each Lender Party and each holder
of a Note for any and all costs and expenses (including reasonable
attorneys' fees and expenses) incurred by such Lender Party or such
holder, as the case may be, in enforcing any rights under this Guaranty;
provided, however, that each Guarantor shall be liable under this Guaranty only
for the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount. This Guaranty constitutes a guaranty of payment when due
and not of collection, and each Guarantor specifically agrees that it shall not
be necessary or required that any Lender Party or any holder of any Note
exercise any right, assert any claim or demand or enforce any remedy whatsoever
against the Borrower or any other Obligor (or any other Person) before or as a
condition to the obligations of such Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. Each Guarantor agrees that, in the
event of the occurrence of any Event of Default described in clauses (b) through
(d) of Section 8.1.9 of the Credit Agreement with respect to any Obligor (other
than an immaterial Subsidiary) and if such event shall occur at a time when any
of the Obligations of the Borrower and each other Obligor may not then be due
and payable, each Guarantor jointly and severally agrees that it will pay to the
Lenders forthwith the full amount which would be payable hereunder by such
Guarantor if all such Obligations were then due and payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all respects
be a continuing, absolute, unconditional and irrevocable guaranty of payment,
and shall remain in full force and effect until all Obligations of the Borrower
and each other Obligor have been paid in full, all Letters of Credit have been
terminated or expired, all obligations of each Guarantor hereunder shall have
been paid in full and all Commitments shall have terminated. Each Guarantor
guarantees, to the extent permitted under applicable law, that the Obligations
of the Borrower and each other Obligor will be paid strictly in accordance with
the terms of the Credit Agreement and each other Loan Document under which they
arise, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of any Lender Party
or any holder of any Note with respect thereto. The liability of each Guarantor
under this Guaranty shall be joint and several, and shall be absolute,
unconditional and irrevocable irrespective of:
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<PAGE>
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
(including any other guarantor (including any Guarantor)) under the
provisions of the Credit Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor (including any Guarantor) of, or collateral securing, any
Obligations of the Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower or any other
Obligor, or any other extension, compromise or renewal of any Obligation
of the Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and each Guarantor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of the Borrower, any other Obligor
or otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral, or any amendment to or waiver or release or addition of,
or consent to departure from, any other guaranty, held by any Lender Party
or any holder of any Note securing any of the Obligations of the Borrower
or any other Obligor; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
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<PAGE>
SECTION 2.4. Reinstatement, etc. Each Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must otherwise be restored by any Lender Party or any holder of any Note, upon
the insolvency, bankruptcy or reorganization of the Borrower, any other Obligor
or otherwise, all as though such payment had not been made.
SECTION 2.5. Waiver, etc. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Administrative Agent, any other Lender Party or any holder
of any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other Person (including any other
guarantor) or entity or any collateral securing the Obligations of the Borrower
or any other Obligor, as the case may be.
SECTION 2.6. Postponement of Subrogation. Each Guarantor agrees that it
will not exercise any rights which it may acquire by way of subrogation under
this Guaranty, by any payment made hereunder or otherwise, until the prior
payment, in full and in cash, of all Obligations of the Borrower and each other
Obligor and the termination of all Commitments. Any amount paid to such
Guarantor on account of any such subrogation rights prior to the payment in full
of all Obligations of the Borrower and each other Obligor shall be held in trust
for the benefit of the Lender Parties and each holder of a Note and shall
immediately be paid to the Lender Parties and each holder of a Note and credited
and applied against the Obligations of the Borrower and each other Obligor,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement; provided, however, that if all Obligations of the Borrower and each
other Obligor have been paid in full and all Commitments have been permanently
terminated, each Lender Party and each holder of a Note agrees that, at such
Guarantor's request, the Lender Parties and the holders of the Notes will
execute and deliver to such Guarantor appropriate documents (without recourse
and without representation or warranty) necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Obligations of the Borrower
and each other Obligor resulting from such payment by such Guarantor. In
furtherance of the foregoing, for so long as any Obligations or Commitments
remain outstanding, each Guarantor shall refrain from taking any action or
commencing any proceeding against the Borrower or any other Obligor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in the respect of payments made under this
Guaranty to any Lender Party or any holder of a Note.
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<PAGE>
SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes, etc.
This Guaranty shall:
(a) be binding upon each Guarantor, and each Guarantor's successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the Administrative
Agent and each other Lender Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including this Guaranty) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer, and
to the provisions of Section 10.11 and Article IX of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Guarantor hereby
represents and warrants to each Lender Party that the representations and
warranties contained in Article VI of the Credit Agreement, insofar as the
representations and warranties contained therein are applicable to such
Guarantor and its properties, are true and correct in all material respects,
each such representation and warranty set forth in such Article (insofar as
applicable as aforesaid) and all other terms of the Credit Agreement to which
reference is made therein, together with all related definitions and ancillary
provisions, being hereby incorporated into this Guaranty by reference as though
specifically set forth in this Section.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. Covenants. Each Guarantor covenants and agrees that, so long
as any portion of the Obligations shall remain unpaid, any Letters of Credit
shall be outstanding or any Lender shall have any outstanding Commitment, such
Guarantor will, unless the Required Lenders shall otherwise consent in writing,
perform, comply with and be bound by all of the agreements, covenants and
obligations contained in Article VII of the Credit Agreement which are
applicable to such Guarantor or its properties, each such agreement, covenant
and obligation contained in such Article and all other terms of the Credit
Agreement to which reference is made herein, together with all
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<PAGE>
related definitions and ancillary provisions, being hereby incorporated into
this Guaranty by reference as though specifically set forth in this Section.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
SECTION 5.2. Binding on Successors, Transferees and Assigns; Assignment.
In addition to, and not in limitation of, Section 2.7, this Guaranty shall be
binding upon each Guarantor and its successors, transferees and assigns and
shall inure to the benefit of and be enforceable by each Lender Party and each
holder of a Note and their respective successors, transferees and assigns (to
the full extent provided pursuant to Section 2.7); provided, however, that no
Guarantor may assign any of its obligations hereunder without the prior written
consent of all Lenders; provided further that upon the transfer, sale or other
disposition of all of the Capital Stock of any Guarantor in accordance with the
terms of the Credit Agreement (other than to the Borrower or another Guarantor),
such Guarantor will automatically be released from its obligations hereunder. At
the sole expense of the Borrower, the Administrative Agent will deliver any
documents reasonably requested by the Borrower to evidence such release.
SECTION 5.3. Amendments, etc. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by any Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent (on behalf of the Lenders or the Required Lenders, as the
case may be) and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 5.4. Addresses for Notices to Each Guarantor. All notices and
other communications provided to any party under this Agreement shall be in
writing (including telecopier communication) and (i) if to any Guarantor,
mailed, telecopied or delivered to it, addressed to it in care of the Borrower
at the address of the Borrower specified in the Credit Agreement, and (ii) if to
the Administrative Agent, mailed, telecopied or delivered to it, at the address
of the Administrative Agent specified in the Credit Agreement. All such notices
and other communications, when mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier
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<PAGE>
service, shall be deemed given when received; any such notice or communication,
if transmitted by telecopier, shall be deemed given when transmitted and
electronically confirmed.
SECTION 5.5. No Waiver; Remedies. In addition to, and not in limitation
of, Section 2.3 and Section 2.5, no failure on the part of any Lender Party or
any holder of a Note to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 5.6. Section Captions. Section captions used in this Guaranty are
for convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 5.7. Setoff. In addition to, and not in limitation of, any rights
of any Lender Party or any holder of a Note under applicable law, each Lender
Party and each such holder shall, upon the occurrence of any Event of Default
described in any of clause (b), (c) or (d) of Section 8.1.9 of the Credit
Agreement with respect to any Obligor (other than an immaterial Subsidiary) or,
with the consent of the Required Lenders, any Event of Default, have the right
to appropriate and apply to the payment of the obligations of each Guarantor
then due to it hereunder, and each Guarantor hereby grants to each Lender Party
and each such holder a continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of such Guarantor then or thereafter
maintained with such Lender Party or such holder and any and all property of
every kind or description of or in the name of such Guarantor now or hereafter,
for any reason or purpose whatsoever, in the possession or control of, or in
transit to, such Lender Party, such holder or any agent or bailee for such
Lender Party or such holder; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 4.8 of the Credit
Agreement.
SECTION 5.8. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.9. Governing Law, Entire Agreement. etc. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
-8-
<PAGE>
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 5.10. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE LENDER PARTIES OR ANY GUARANTOR SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE
COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE BROUGHT, AT THE
ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
PROPERTY MAY BE FOUND. EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY AND
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR
THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF NEW YORK. EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT SUCH GUARANTOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH GUARANTOR HEREBY IRREVOCABLY WAIVES (TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW) SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
GUARANTY AND THE OTHER LOAN DOCUMENTS.
SECTION 5.11. Waiver of Jury Trial. EACH GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR ANY
GUARANTOR. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT AGREEMENT.
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<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
[SUBSIDIARY GUARANTOR]
By _____________________________________
Title:
[SUBSIDIARY GUARANTOR]
By _____________________________________
Title:
FLEET NATIONAL BANK,
as Administrative Agent
By _____________________________________
Title:
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<PAGE>
EXHIBIT I
PERFECTION CERTIFICATE
The undersigned, the ________________ of WGL Acquisition Corp., a New York
corporation (the "Company"), hereby certifies with reference to the Credit
Agreement, dated as of July 10, 1997 (the "Credit Agreement"), among the
Company, certain financial institutions parties thereto (the "Lenders"), DLJ
Capital Funding, Inc., as the Syndication Agent, Fleet National Bank, as the
Administrative Agent and Heller Financial, Inc., as the Documentation Agent for
the Lenders (the Syndication Agent and the Administrative Agent are sometimes
referred to herein as the "Agents" and each as an "Agent") (terms used but not
defined herein have the meaning given to them in the Credit Agreement), to each
of the Agents and each Lender as follows:
1. Names. (a) The exact corporate name of the Company and each of its U.S.
Subsidiaries as such names appear in their respective certificates of
incorporation, is as follows:
(b) Set forth below is each other corporate name that the Company
and each of its U.S. Subsidiaries has had since its organization together
with the date of the relevant change:
(c) Except as set forth in item (b) above, none of the Company or
any of its U.S. Subsidiaries has changed its identity or corporate
structure in any way within the past five years.
(d) The following is a list of all other names (including trade
names or similar appellations) used by the Company or any of its U.S.
Subsidiaries or any of their divisions or other business units at any time
during the past five years:
<PAGE>
2. Taxpayer Identification Numbers. (a) The exact corporate taxpayer
identification numbers of the Company and each of its U.S. Subsidiaries are as
follows:
(b) Set forth below is each other corporate taxpayer identification
number the Company and each of its U.S. Subsidiaries has had since its
organization together with the date of the relevant change:
(c) The following is a list of all other taxpayer identification
numbers used by the Company or any of its U.S. Subsidiaries or any of
their divisions or other business units at any time during the past five
years:
3. Current Locations. (a) The chief executive office of the Company and
each of its U.S. Subsidiaries is located at the following address:
(b) The following are all locations where the Company and each of
its U.S. Subsidiaries maintain any chattel paper or any books or records
relating to any accounts receivable:
(c) The following are all locations where the Company and each of
its U.S. Subsidiaries maintain any lock-box accounts:
(d) The following, listed on a state-by-state basis, are all the
places of business of the Company and each of its U.S. Subsidiaries not
identified above (identify whether location is owned or leased by the
Company or a U.S. Subsidiary):
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<PAGE>
(e) The following are all the locations where the Company and each
of its U.S. Subsidiaries maintain any Equipment not identified above:
(f) The following are the names and addresses of all persons other
than the Company and its U.S. Subsidiaries which have possession of any of
the Company's or any of its U.S. Subsidiaries' Equipment:
(g) The following are all the locations where the Company and each
of its U.S. Subsidiaries maintain any Inventory not identified above
(identify whether locations are owned by the Company or a U.S. Subsidiary,
leased by the Company or a U.S. Subsidiary or are public warehouses):
(h) The following are the names and addresses of all persons other
than the Company and its U.S. Subsidiaries which have possession of any of
the Company's or any of its U.S. Subsidiaries' Inventory (explain
relationship of such persons to the Company or a U.S. Subsidiary, e.g.,
consignee, etc.):
4. Mobile Goods. Does the Company or any U.S. Subsidiary own railroad
cars? Yes ___ No ___. Does the Company or any U.S. Subsidiary own any aircraft?
Yes __ No___.
5. Consigned Inventory. Approximate dollar amount of Inventory of the
Company and U.S. Subsidiaries consigned to third parties at any time.
$__________.
6. Inventory Located Outside of U.S. Approximate dollar amount of
Inventory of the Company and U.S. Subsidiaries located outside of the United
States of America at any time. $__________.
7. Method of Shipment of Inventory. List the methods by which Inventory of
the Company and U.S. Subsidiaries is shipped
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<PAGE>
to customers (e.g., common carrier, by company owned vehicles, company owned
railroad cars, etc.):
8. Unusual Transactions. All Receivables have been originated by the
Company and its U.S. Subsidiaries and all Inventory has been acquired by the
Company and its U.S. Subsidiaries in the ordinary course of its business.
9. File Search Reports. Attached hereto as Schedule 9(A) are true copies
of file search reports from the Uniform Commercial Code filing offices where
filings described in paragraph 10 were made. Attached hereto as Schedule 9(B) is
a true copy of each financing statement or other filing identified in such file
search reports.
10. UCC Filings. True, correct and complete copies of all financing
statements to be filed in the Uniform Commercial Code filing offices in each
jurisdiction identified in paragraph 3 hereof have been delivered to the
Administrative Agent.
11. Schedule of Filings. Attached hereto as Schedule 11 is a schedule
setting forth filing information with respect to the filings described in
paragraph 10 above.
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<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of July,
1997.
WGL ACQUISITION CORP.
By: ______________________________
Title:
-5-
<PAGE>
SCHEDULE 9(A)
File Search Reports
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<PAGE>
SCHEDULE 9(B)
Financing Statements or Other Filings
-7-
<PAGE>
SCHEDULE 11
Schedule of Filings
Debtor Filing Office File Number Date of Filing
- ------ ------------- ----------- --------------
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<PAGE>
EXHIBIT J
LENDER ASSIGNMENT AGREEMENT
To: WILSON GREATBATCH LTD.
To: Fleet National Bank,
as the Administrative Agent
WILSON GREATBATCH LTD.
Ladies and Gentlemen:
We refer to clause (d) of Section 10.11.1 of the Credit Agreement dated as
of July 10, 1997, among Wilson Greatbatch Ltd., a New York corporation (the
"Borrower", following the Merger), the various financial institutions as are or
may become parties thereto (the "Lenders"), DLJ Capital Funding, Inc., as the
Syndication Agent, Fleet National Bank, as the Administrative Agent (the
Syndication Agent and the Administrative Agent are sometimes referred to herein
as the "Agents") and Heller Financial, Inc., as the Documentation Agent for the
Lenders. Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Credit Agreement.
This agreement is delivered to you pursuant to clause (d) of Section
10.11.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to clause (c) of Section 10.11.1 of the Credit Agreement, of the
assignment and delegation to _______________ (the "Assignee") of ___% of the
[insert type of Credit Extensions being assigned] [Letter of Credit Outstandings
and Commitments] of _____________ (the "Assignor") outstanding under the Credit
Agreement on the date hereof. After giving effect to the foregoing assignment
and delegation, the Assignor's and the Assignee's Percentages in respect of the
applicable Tranche for the purposes of the Credit Agreement are set forth
opposite such Person's name on the signature pages hereof.
[Add paragraph dealing with accrued interest and fees with respect to
Loans assigned.]
The Assignee hereby acknowledges and confirms that it has received a copy
of the Credit Agreement and the exhibits related thereto, together with copies
of the documents which were required to be delivered under the Credit Agreement
as a condition to the making of the Credit Extensions thereunder. The Assignee
further confirms and agrees that in becoming a Lender
<PAGE>
and in making its Commitments and Credit Extensions under the Credit Agreement,
the Assignee has performed its own analysis of the creditworthiness and
financial condition of the Borrower and the other Obligors and such actions have
and will be made without recourse to, or representation or warranty by the
Agents.
Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Agents
(a) the Assignee
(i) shall be deemed automatically to have become a party to
the Credit Agreement, have all the rights and obligations of a
"Lender" under the Credit Agreement and the other Loan Documents as
if it were an original signatory thereto to the extent specified in
the second paragraph hereof; and
(ii) agrees to be bound by the terms and conditions set forth
in the Credit Agreement and the other Loan Documents as if it were
an original signatory thereto; and
(b) the Assignor shall be released from its obligations under the
Credit Agreement and the other Loan Documents to the extent specified in
the second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Agent the processing fee referred to in Section 10.11.1 of the
Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitments and requests the
Administrative Agent to acknowledge receipt of this document:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
Telex (Answerback):
LIBOR Office:
Telephone:
Facsimile:
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<PAGE>
Telex (Answerback):
(B) Payment Instructions:
The Assignee agrees to furnish the tax form required by clause (b) of
Section 4.6 (if so required) of the Credit Agreement no later than the date of
acceptance hereof by the Agents.
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
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<PAGE>
Adjusted Percentage [ASSIGNOR]
Term-A Loan Commitment
and
Term-A Loans: __%
Term-B Loan Commitment
and
Term-B Loans: __%
Swing Line Loan
Commitment
and
Swing Line Loans __%
Revolving Loan
Commitment
and
Revolving Loans
and
Letters of Credit: __%
By:____________________
Title:
-4-
<PAGE>
Percentage [ASSIGNEE]
Term-A Loan Commitment
and
Term-A Loans: __%
Term-B Loan Commitment
and
Term-B Loans: __%
Swing Line Loan
Commitment
and
Swing Line Loans __%
Revolving Loan
Commitment
and
Revolving Loans __%
Letters of Credit: __%
By:____________________
Title:
-5-
<PAGE>
Accepted and Acknowledged
this __ day of ________, 19__
WILSON GREATBATCH LTD.
By: __________________________
Title:
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent
By: __________________________
Title:
FLEET NATIONAL BANK,
as Administrative Agent
and as Issuer
By: __________________________
Title:
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<PAGE>
AFFIRMATION AND CONSENT
Exhibit L
August 7, 1998
DLJ Capital Funding, Inc.,
as Syndication Agent under the
Amended and Restated Credit Agreement
referred to below
Fleet National Bank,
as Administrative Agent under the
Amended and Restated Credit Agreement
referred to below
-and-
Each of the Lenders party to the
Amended and Restated Credit Agreement
referred to below.
WILSON GREATBATCH LTD.
Ladies and Gentlemen:
This Affirmation and Consent is being delivered to the Agents and the
Lenders pursuant to Section 5.1.6 of the Amended and Restated Credit Agreement,
dated as of August 7, 1998 (the "Amended and Restated Credit Agreement"),
amending and restating in its entirety the Credit Agreement dated as of July 10,
1997 (as amended, supplemented, amended and restated or otherwise modified prior
to the Restatement Effective Date (as defined in the Amended and Restated Credit
Agreement), the "Credit Agreement"), among Wilson Greatbatch Ltd., a New York
corporation (the "Borrower") and the survivor by merger with WGL Acquisition
Corp., DLJ Capital Funding, Inc., as Syndication Agent for the Lenders, Heller
Financial, Inc., as Documentation Agent for the Lenders and Fleet National Bank,
as Administrative Agent for the Lenders. Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Amended and Restated Credit Agreement.
By its signature below, each of the undersigned Obligors hereby
acknowledges, consents and agrees to the terms and provisions set forth in the
Amended and Restated Credit Agreement and further acknowledges that the Amended
and Restated Credit Agreement provides for, among other things, an increased
Revolving Loan Commitment in a maximum aggregate principal amount equal to
$20,000,000 as well as an Additional Term-A Loan Commitment in a maximum
<PAGE>
aggregate principal amount equal to $20,000,000 and an Additional Term-B Loan
Commitment in a maximum aggregate principal amount equal to $40,000,000.
Each of the undersigned Obligors hereby reaffirms, as of the Restatement
Effective Date, (i) the covenants and agreements contained in each Loan Document
to which it is a party, including, in each case, as such covenants and
agreements may be modified by the Amended and Restated Credit Agreement and the
transactions contemplated thereby and (ii) its guarantee of payment of, and
grant of security interest to secure, all Obligations under the Amended and
Restated Credit Agreement, the Notes and each other Loan Document pursuant to
the Holdco Guaranty and Pledge Agreement (in the case of Holdco) and the
Intermediate Holdco Guaranty and Pledge Agreement (in the case of Intermediate
Holdco), as such Obligations may be increased and otherwise modified pursuant to
the Amended and Restated Credit Agreement.
Each of the undersigned Obligors hereby certifies that, as of the date
hereof (both before and after giving effect to the occurrence of the Restatement
Effective Date), the representations and warranties made by it contained in the
Loan Documents to which it is a party are true and correct in all material
respects with the same effect as if made on the date hereof, except to the
extent any such representation or warranty refers or pertains solely to a date
prior to the date hereof (in which case such representation and warranty was
true and correct in all material respects as of such earlier date).
Each of the undersigned Obligors further confirms that each Loan Document
to which it is a party is and shall continue to be in full force and effect and
the same are hereby ratified and confirmed in all respects, except that upon the
occurrence of the Restatement Effective Date, all references in such Loan
Documents to the "Credit Agreement", "Loan Documents", "thereunder", "thereof",
or words of similar import shall mean the Credit Agreement and the Loan
Documents, as the case may be, in each case after giving effect to the amendment
and restatement set forth in the Amended and Restated Credit Agreement.
Each of the undersigned Obligors hereby acknowledges and agrees that the
acceptance by the Agents and each Lender of this document shall not be construed
in any manner to establish any course of dealing on any Agent's or Lender's
part, including the providing of any notice or the requesting of any
acknowledgment not otherwise expressly provided for in any Loan Document with
respect to any future amendment, waiver, supplement or other modification to any
Loan Document or any arrangement contemplated by any Loan Document.
THIS AFFIRMATION AND CONSENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Affirmation and Consent as of the date first above written.
WGL HOLDINGS, INC.
By ____________________________________
Name:
Title:
WGL INTERMEDIATE HOLDINGS, INC.
By ____________________________________
Name:
Title:
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<PAGE>
Exhibit 10.10
WAIVER AND AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS WAIVER AND AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment
No. 1"), dated as of November 15, 1999, among Wilson Greatbatch Ltd., a New York
corporation (the "Borrower"), each of the entities identified as Consenting
Obligors on the signature pages hereto (collectively, the "Consenting
Obligors"), the various financial institutions from time to time parties thereto
(collectively, the "Lenders"), DLJ Capital Funding, Inc., as syndication agent
(the "Syndication Agent") for the Lenders, Heller Financial, Inc., as
documentation agent (the "Documentation Agent") for the Lenders and Fleet
National Bank, as administrative agent (the "Administrative Agent") for the
Lenders.
WITNESSETH:
WHEREAS, the Borrower, the Lenders, the Syndication Agent, the
Documentation Agent and the Administrative Agent are parties to the Amended and
Restated Credit Agreement, dated as of August 7, 1998 (as heretofore modified
and supplemented and in effect from time to time, the "Credit Agreement");
WHEREAS, the Borrower has requested the Lenders to (i) waive
compliance with the requirement contained in the Credit Agreement to maintain
certain financial covenants for the period ending December 31, 1999 and (ii)
amend certain provisions of the Credit Agreement;
WHEREAS, all Loans and Obligations shall continue to be and shall be
fully guaranteed pursuant to the Holdco Guaranty and Pledge Agreement, the
Intermediate Holdco Guaranty and Pledge Agreement and the Subsidiary Guaranty
and fully secured by, among other things, the Holdco Guaranty and the Pledge
Agreement, the Intermediate Holdco Guaranty and Pledge Agreement, the Borrower
Pledge Agreement, the Borrower Security Agreement and the Subsidiary Security
Agreement; and
WHEREAS, the Borrower desires, and the Lenders are willing, on the
terms and subject to the conditions hereinafter set forth, to grant the waiver
and amend the Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the agreements herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
PART I
DEFINITIONS
SUBPART 1.1. CERTAIN DEFINITIONS. Unless otherwise defined herein or
the context otherwise requires, terms used in this Amendment No. 1, including
its preamble and recitals, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):
"ADMINISTRATIVE AGENT" is defined in the preamble.
"AMENDMENT NO. 1" is defined in the preamble.
"AMENDMENT NO. 1 EFFECTIVE DATE" is defined in Subpart 5.1.
"BORROWER" is defined in the preamble.
"CONSENTING OBLIGORS" means each of the entities identified as such on
the signature pages hereof.
"CREDIT AGREEMENT" is defined in the first recital.
"DOCUMENTATION AGENT" is defined in the preamble.
"LENDERS" is defined in the preamble.
"SYNDICATION AGENT" is defined in the preamble.
"WAIVER EFFECTIVE PERIOD" is defined in Subpart 2.1.
SUBPART 1.2. OTHER DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment No. 1, including its
preamble and recitals, have the meanings ascribed thereto in the Credit
Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and
each other similar reference and each reference to "this Agreement" and each
other similar reference contained in the Credit Agreement shall from and after
the Amendment No. 1 Effective Date refer to the Credit Agreement, as amended
hereby.
2
<PAGE>
PART II
WAIVER OF CERTAIN PROVISIONS OF THE
CREDIT AGREEMENT AS OF THE AMENDMENT NO. 1 EFFECTIVE DATE
Effective on (and subject to the occurrence of) the Amendment No. l
Effective Date, and in reliance upon the representations and warranties made
herein, each of the Lenders hereby agrees that certain terms and provisions of
the Credit Agreement are hereby waived, but only to the extent set forth in this
Part II. Except as expressly so waived, the Credit Agreement shall continue in
full force and effect in accordance with its terms.
SUBPART 2.1. WAIVER OF CERTAIN. FINANCIAL COVENANTS OF ARTICLE VII OF
THE CREDIT AGREEMENT. Compliance by the Borrower with the covenants contained in
(i) clause (b) of Section 7.2.4 of the Credit Agreement restricting the Leverage
Ratio to a maximum of 5.00:1.00 for the Fiscal Quarter ending December 31, 1999
and (ii) clause (c) of Section 7.2.4 of the Credit Agreement restricting the
Interest Coverage Ratio to a minimum of 2.00:1.00 for the Fiscal Quarter ending
December 31, 1999, and any Default or Event of Default that would otherwise
arise under the Credit Agreement by reason of the Borrower's failure to comply
with such covenants, are hereby waived for the period from the Amendment No. 1
Effective Date through (and including) February 15, 2000 (the "WAIVER EFFECTIVE
PERIOD").
PART III
AMENDMENTS TO CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 1
Effective Date, the Credit Agreement is hereby amended in accordance with this
Part III. Except to the extent amended by this Amendment No. 1, the Credit
Agreement is and shall continue to be in full force and effect and is hereby
ratified and confirmed in all respects.
SUBPART 3.1. AMENDMENTS TO ARTICLE I. Article I of the Credit
Agreement is amended as set forth in this SUBPART 3.1.
(a) The definition of "APPLICABLE MARGINS" contained in
Section 1.1 of the Credit Agreement is amended to (i) replace the ratio
of "2.0:1" appearing in the last row of the first column entitled
"Senior Leverage Ratio" of clause (c) thereof with the ratio of "2.5:1"
and (ii) insert a new paragraph at the end of such definition to read
in its entirety as follows:
"Notwithstanding the foregoing, at all times during
the Waiver Effective Period, the Applicable Margin means with
respect to the unpaid principal amount of (a) each Swing Line
3
<PAGE>
Loan (each of which shall be borrowed and maintained only as a
Base Rate Loan) and each Revolving Loan and Term-A Loan
maintained as (a)(i) Base Rate Loan 2.25% per annum and (ii)
LIBO Rate Loan, 3.50% per annum and (b) each Term B Loan
maintained as a (i) Base Rate Loan, 2.50% per annum and (ii)
LIBO Rate Loan, 3.75% per annum."
(b) The definition of "REVOLVING LOAN COMMITMENT AMOUNT"
contained in Section 1.1 of the Credit Agreement is amended to insert a
proviso immediately following the reference therein to "Section 2.2" to
read in its entirety as follows:
"; PROVIDED, that at all times during the Waiver Effective
Period, the "Revolving Loan Commitment Amount" shall not
exceed $8,000,000".
(c) The following now definitions are added to Section 1.1 of
the Credit Agreement in their appropriate alphabetical order:
"AMENDMENT NO. 1" means Waiver and Amendment No. 1 to Credit
Agreement, dated as of November 15, 1999, among the Borrower, the
other Obligors party thereto, the Lenders, the Syndication Agent,
the Documentation Agent and the Administrative Agent.
"AMENDMENT NO. 1 EFFECTIVE DATE" shall have the meaning set
forth in Subpart 5.1 of Amendment No. 1.
"WAIVER EFFECTIVE PERIOD" means the period from the Amendment
No. 1 Effective Date through (and including) February 15, 2000.
SUBPART 3.2. AMENDMENTS TO ARTICLE VII. Article VII of the Credit
Agreement is amended as set forth in this Subpart 3.2.
(a) Clause (a) of Section 7.1.1 of the Credit Agreement is
amended to replace existing clause (a) with a new clause (a) to read in
its entirety as follows:
"(a)(i) as soon as available and in any event within
30 days after the end of each calendar month (other than the
months of March, June, September and December) of each Fiscal
Year of the Borrower, consolidated balance sheets of the
Borrower and its Subsidiaries as at the end of such month,
together with the related consolidated statements of income
and cash flows for such month and for the period commencing at
the end of the previous Fiscal Year and ending with the end of
such month, certified as complete and correct by the
president, chief executive officer, treasurer, assistant
treasurer, controller or chief financial
4
<PAGE>
Authorized Officer of the Borrower, and (ii) as soon as
available and in any event within 60 days after the end of
each of the first three Fiscal Quarters of each Fiscal Year of
the Borrower (or, if the Borrower is required to file such
information on a Form 10-Q with the Securities and Exchange
Commission, promptly following such filing), a consolidated
balance sheet of the Borrower and its Subsidiaries as of the
end of such Fiscal Quarter, together with the related
consolidated statements of income and cash flows for such
Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal
Quarter (it being understood that the foregoing requirement
may be satisfied by delivery of the Borrower's report to the
Securities and Exchange Commission on Form 10-Q, if any),
certified as complete and correct by the president, chief
executive officer, treasurer, assistant treasurer, controller
or chief financial Authorized Officer of the Borrower;"
(b) Clause (a) of Section 7.2.4 of the Credit Agreement is
amended to replace the amount of "$24,000,000" appearing in the first
row of the second column thereof entitled "EBITDA" with the amount of
"$20,000,000".
(c) Section 7.2.5 of the Credit Agreement is amended to (i)
replace the "." at the end of clause (n) thereof with ";and" and (ii)
insert a new clause (o) immediately following existing clause (n) to
read in its entirety as follows:
"(o) no Investments of the type described in clauses
(i), (j) or (k) shall be permitted to be made during the Waiver
Effective Period".
(d) Section 7.2.6 of the Credit Agreement is amended to insert a
proviso immediately following the amount of "$5,000,00" at the end of
clause (c)(iii) thereof to read in its entirety as follows:
"(provided, however, that no Restricted Payment of the type of
described in this clause (c)(iii) shall be permitted to be
made during the Waiver Effective Period)".
PART IV
AFFIRMATION AND CONSENT
SUBPART 4.1. ACKNOWLEDGMENT AND REAFFIRMATION. Each of the Consenting
Obligors hereby acknowledges the amendments to the Credit Agreement pursuant to
the terms and provisions set forth in this Amendment No. 1. Each of the
Consenting Obligors hereby reaffirms, as of the Amendment No. 1 Effective Date,
(i) the covenants and agreements contained in each Loan Document to which it is
a party, including, in each case, as such covenants and agreements may be
modified by this Amendment No. 1, and (ii) its guarantee of payment of the
Obligations pursuant to the Holdco Guaranty and Pledge Agreement (in the case of
Holdco), the Intermediate
5
<PAGE>
Holdco Guaranty and Pledge Agreement (in the case of Intermediate Holdco) or the
Subsidiary Guaranty (in the case of Hittman).
SUBPART 4.2. REPRESENTATIONS AND WARRANTIES, ETC. Each of the
Consenting Obligors hereby certifies that, as of the date hereof (after giving
effect to the occurrence of the Amendment No. 1 Effective Date), the
representations and warranties made by it in the Holdco Guaranty and Pledge
Agreement (in the case of Holdco), the Intermediate Holdco Guaranty and Pledge
Agreement (in the case of Intermediate Holdco) or the Subsidiary Guaranty (in
the case of Hittman) are true and correct in all material respects with the same
effect as if made on the date hereof (unless stated to relate solely to an
earlier date, in which case such representations and warranties were true and
correct in all material respects as of such earlier date).
SUBPART 4.3. LOAN DOCUMENTS. Each of the Consenting Obligors further
confirms that the Holdco Guaranty and Pledge Agreement (in the case of Holdco),
the Intermediate Holdco Guaranty and Pledge Agreement (in the case of
Intermediate Holdco) or the Subsidiary Guaranty (in the case of Hittman) is and
shall continue to be in full force and effect and the same is hereby ratified
and confirmed in all respects, except that upon the occurrence of the Amendment
No. 1 Effective Date, all references in the Holdco Guaranty and Pledge
Agreement, the Intermediate Holdco Guaranty and Pledge Agreement and the
Subsidiary Guaranty, as the case may be, to the "Credit Agreement", "Loan
Documents", "thereunder", "thereof", or words of similar import shall mean the
Credit Agreement and the Loan Documents, as the case may be, in each case after
giving effect to the amendments and other modifications provided for in this
Amendment No. 1.
SUBPART 4.4. COURSE OF DEALING, ETC. Each of the Consenting Obligors
hereby acknowledges and agrees that the acceptance by the Agents and each Lender
of this document shall not be construed in any manner to establish any course of
dealing on the Agents' or Lender's part, including the providing of any notice
or the requesting of any acknowledgment not otherwise expressly provided for in
any Loan Document with respect to any future amendment waiver, supplement or
other modification to any Loan Document or any arrangement contemplated by any
Loan Document.
PART V
CONDITIONS TO EFFECTIVENESS
SUBPARTS 5.1. AMENDMENT NO. 1 EFFECTIVE DATE. This Amendment No. 1
shall become effective on November 15, 1999 (the "Amendment No. 1 Effective
Date") upon the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Part V.
SUBPART 5.1.1. EXECUTION OF COUNTERPARTS. The Agents shall have
received counterparts of this Amendment No. 1, duly executed by the Borrower,
the Consenting Obligors and the Required Lenders (or evidence thereof
satisfactory to the Agents). The delivery of an
6
<PAGE>
executed counterpart hereof by the Borrower shall constitute a representation
and warranty by the Borrower that, on the Amendment No. 1 Effective Date, after
giving effect to this Amendment No. 1, all statements set forth in Article VI of
the Credit Agreement, as amended by this Amendment No. 1, are true and correct
as of such date, except to the extent that such statement expressly relates to
an earlier date (in which case such statement shall be true and correct on and
as of such earlier date).
SUBPART 5.1.2. RESOLUTIONS, ETC. The Agents shall have received from
each Obligor a certificate, dated the Amendment No. 1 Effective Date, of its
Secretary or Assistant Secretary as to (i) resolutions of its Board of Directors
then in full force and effect authorizing the execution, delivery and
performance of this Amendment No. 1 and each other Loan Document to be executed
by it, and (ii) the incumbency and signatures of those of its officers
authorized to act with respect to this Amendment No. 1 and each other Loan
Document executed by it, upon which certificate each Agent and each Lender may
conclusively rely until it shall have received a further certificate of the
Secretary or Assistant Secretary of such Obligor canceling or amending such
prior certificate.
SUBPART 5.1.3. PAYMENT OF FEES AND EXPENSES. The Administrative Agent
shall have received, for the account of each Lender which shall have delivered
to the Agents a duly executed counterpart of this Amendment No. 1 by November 4,
1999, an amendment fee in the amount of .25% of such Lender's Loans and
Commitments. In addition, the Borrower hereby agrees to pay and reimburse the
Syndication Agent for all its reasonable fees and expenses incurred in
connection with the negotiation, preparation, execution and delivery of this
Amendment No. 1 and related documents, including all reasonable fees and
disbursements of counsel to the Syndication Agent.
SUBPART 5.1.4. SATISFACTORY LEGAL FORM. The Syndication Agent and its
counsel shall have received all information, and such counterpart originals or
such certified or other copies of such materials, as the Syndication Agent or
its counsel may reasonably request, and all legal matters incident to the
effectiveness of this Amendment No. 1 shall be satisfactory to the Syndication
Agent and its counsel. All documents executed or submitted pursuant hereto or in
connection herewith shall be reasonably satisfactory in form and substance to
the Syndication Agent and its counsel.
SUBPART 5.2. LIMITATION. Except as expressly provided hereby, all of
the representations, warranties, terms, covenants and conditions of the Credit
Agreement and each other Loan Document shall remain unwaived and shall continue
to be, and shall remain, in full force and effect in accordance with their
respective terms. The modifications and consents set forth herein shall be
limited precisely as provided for herein, and shall not be deemed to be a waiver
of, consent to or modification of any other term or provision of the Credit
Agreement or of any term or provision of any other Loan Document or other
instrument referred to therein or herein, or of any transaction or further or
future action on the part of the Borrower or any other Person
7
<PAGE>
which would require the consent of the Administrative Agent or any of the
Lenders under the Credit Agreement or any such other Loan Document or
instrument.
PART VI
MISCELLANEOUS
SUBPART 6.1. CROSS-REFERENCES. References in this Amendment No. 1 to
any Part or Subpart are, unless otherwise specified, to such Part or Subpart of
this Amendment No. 1. References in this Amendment No. 1 to any Article or
Section are, unless otherwise specified, to such Article or Section of the
Credit Agreement.
SUBPART 6.2. LOAN DOCUMENT PURSUANT TO CREDIT AGREEMENT. This Amendment
No. 1 is a Loan Document executed pursuant to the Credit Agreement and shall
(unless otherwise expressly indicated therein) be construed, administered and
applied in accordance with all of the terms and provisions of the Credit
Agreement, as amended hereby, including Article X thereof.
SUBPART 6.3. SUCCESSORS AND ASSIGNS. This Amendment No. 1 shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 6.4. COUNTERPARTS. This Amendment No. 1 may be executed by the
parties hereto in several counterparts, each of which when executed and
delivered shall be an original and all of which shall constitute together but
one and the same agreement.
SUBPART 6.5. GOVERNING LAW. THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment No. 1 as of the date first above written.
BORROWER: WILSON STREATBATCH LTD.
By:________________________
Name:
Title:
CONSENTING OBLIGORS: WGL HOLDINGS, INC.
By:________________________
Name:
Title:
WGL INTERMEDIATE HOLDINGS,
INC.
By:________________________
Name:
Title:
HITTMAN MATERIALS & MEDICAL
COMPONENTS, INC.
By:________________________
Name:
Title:
<PAGE>
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent
and as Lender
By:________________________
Name:
Title:
<PAGE>
FLEET NATIONAL BANK,
as Administrative Agent
and as Lender
By:________________________
Name:
Title:
<PAGE>
HELLER FINANCIAL, INC.,
as Documentation Agent
and as Lender
By:________________________
Name:
Title:
<PAGE>
BANKBOSTON, N.A.,
By:________________________
Name:
Title:
<PAGE>
PARIBAS, NEW YORK BRANCH
By:________________________
Name:
Title:
By:________________________
Name:
Title:
<PAGE>
BHF-BANK AKTIENGESELLSCHAFT
By:________________________
Name:
Title:
By:________________________
Name:
Title:
<PAGE>
THE CHASE MANHATTAN BANK
By:________________________
Name:
Title:
<PAGE>
CITY NATIONAL BANK
By:________________________
Name:
Title:
<PAGE>
COMERICA BANK
By:________________________
Name:
Title:
<PAGE>
MARINE MIDLAND BANK
By:________________________
Name:
Title:
<PAGE>
MANUFACTURERS AND TRADERS
TRUST COMPANY
By:________________________
Name:
Title:
<PAGE>
SENIOR DEBT PORTFOLIO
By: Boston Management and
Research, as Investment
Advisor
By:________________________
Name:
Title:
<PAGE>
SENIOR INCOME TRUST
By: Boston Management and
Research, as Investment
Advisor
By:________________________
Name:
Title:
<PAGE>
OXFORD STRATEGIC INCOME FUND
By: Boston Management and
Research, as Investment
Advisor
By:________________________
Name:
Title:
<PAGE>
CERES FINANCE LTD.
By:________________________
Name:
Title:
<PAGE>
STRATA FUNDING
By:________________________
Name:
Title:
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By:________________________
Name:
Title:
<PAGE>
AN KAMPEN AMERICAN CAPITAL
SENIOR FLOATING RATE TRUST
By:________________________
Name:
Title:
<PAGE>
Exhibit 10.11
AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "AMENDMENT NO. 2"),
dated as of February 10, 2000, among Wilson Greatbatch Ltd., a New York
corporation (the "BORROWER"), each of the entities identified as Consenting
Obligors on the signature pages hereto (collectively, the "CONSENTING
OBLIGORS"), the various financial institutions from time to time parties thereto
(collectively, the "LENDERS"), DLJ Capital Funding, Inc., as syndication agent
(the "SYNDICATION AGENT") for the Lenders, Heller Financial, Inc., as
documentation agent (the "DOCUMENTATION AGENT") for the Lenders and Fleet
National Bank, as administrative agent (the "ADMINISTRATIVE AGENT") for the
Lenders.
WITNESSETH:
WHEREAS, the Borrower, the Lenders, the Syndication Agent, the
Documentation Agent and the Administrative Agent are parties to the Amended and
Restated Credit Agreement, dated as of August 7, 1998 (as heretofore modified
and supplemented and in effect from time to time, the "CREDIT AGREEMENT");
WHEREAS, the Borrower has requested the Lenders to amend certain
provisions of the Credit Agreement;
WHEREAS, all Loans and Obligations shall continue to be and shall be
fully guaranteed pursuant to the Holdco Guaranty and Pledge Agreement, the
Intermediate Holdco Guaranty and Pledge Agreement and the Subsidiary Guaranty
and fully secured by, among other things, the Holdco Guaranty and the Pledge
Agreement, the Intermediate Holdco Guaranty and Pledge Agreement, the Borrower
Pledge Agreement, the Borrower Security Agreement and the Subsidiary Security
Agreement; and
WHEREAS, the Borrower desires, and the Lenders are willing, on the
terms and subject to the conditions hereinafter set forth, to amend the Credit
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the agreements herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Amendment No. 2, including
its preamble and recitals, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE.
"AMENDMENT NO. 2" is defined in the PREAMBLE.
"AMENDMENT NO. 2 Effective Date" is defined in SUBPART 4. 1.
"BORROWER" is defined in the PREAMBLE.
"CONSENTING OBLIGORS" means each of the entities identified as such on
the signature pages hereof.
"CREDIT AGREEMENT" is defined in the first RECITAL.
"DOCUMENTATION AGENT" is defined in the PREAMBLE.
"LENDERS" is defined in the PREAMBLE.
"SYNDICATION AGENT" is defined in the PREAMBLE.
SUBPART 1.2. OTHER DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment No. 2, including its
preamble and recitals, have the meanings ascribed thereto in the Credit
Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and
each other similar reference and each reference to "this Agreement" and each
other similar reference contained in the Credit Agreement shall from and after
the Amendment No. 2 Effective Date refer to the Credit Agreement, as amended
hereby.
PART II
AMENDMENTS TO CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 2
Effective Date, the Credit Agreement is hereby amended in accordance with this
PART II. Except to the extent
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<PAGE>
amended by this Amendment No. 2, the Credit Agreement is and shall continue to
be in full force and effect and is hereby ratified and confirmed in all
respects.
SUBPART 2.1. AMENDMENTS TO ARTICLE I. Article I of the Credit Agreement
is amended as set forth in this SUBPART 2.1.
(a) The definition of "APPLICABLE MARGIN" contained in Section
1.1 of the Credit Agreement is amended to replace existing clauses (a),
(b) and (c) and the pricing grid following clause (c) thereof (but not
the paragraph following such pricing grid) with new clauses (a) and (b)
and a new pricing grid following clause (b) to read in their entirety
as follows:
(a) with respect to the unpaid principal amount of
each Term-B Loan maintained as a (i) Base Rate Loan, 2.50% per
annum and (ii) LIBO Rate Loan, 3.75% per annum; and
(b) with respect to the unpaid principal amount of
each Swing Line Loan (each of which shall be borrowed and
maintained only as a Base Rate Loan) and each Revolving Loan
and Term-A Loan, by reference to the applicable Senior
Leverage Ratio and at the applicable percentage per annum set
forth below under the column entitled "Applicable Margin for
Base Rate Loans", in the case of Base Rate Loans, or by
reference to the applicable Senior Leverage Ratio and at the
applicable percentage per annum set forth below under the
column entitled "Applicable Margin for LIBO Rate Loans", in
the case of LIBO Rate Loans:
APPLICABLE MARGIN FOR REVOLVING LOANS AND TERM-A LOANS
<TABLE>
<CAPTION>
Applicable Applicable
Margin For Base Margin For LIBO
Senior Leverage Ratio Rate Loans Rate Loans
--------------------- ---------- ----------
<S> <C> <C>
Greater Than or Equal To 4.0:1 2.25% 3.50%
Greater Than or Equal to 3.5:1 and
Less Than 4.0:1 2.00% 3.25%
Greater Than or Equal to 3.0:1 and
Less Than 3.5:1 1.50% 2.75%
Greater Than or Equal to 2.5:1 and
Less Than 3.0:1 1.00% 2.25%
Less Than 2.5:1 0.75% 1.75%
</TABLE>
3
<PAGE>
(b) The definition of "REVOLVING LOAN COMMITMENT AMOUNT"
contained in Section 1.1 of the Credit Agreement is amended to read in
its entirety as follows:
"REVOLVING LOAN COMMITMENT AMOUNT" means (i) at all
times for the period from the Amendment No. 2 Effective Date
through (and including) the date (which in no event shall
occur prior to December 31, 2000) upon which the Agents shall
have received a certificate executed by the president, chief
executive officer, treasurer, assistant treasurer, controller
or chief financial Authorized Officer of the Borrower in form
and substance satisfactory to the Agents setting forth in
sufficient detail calculations demonstrating that the Leverage
Ratio is less than or equal to 5.0:1, $13,000,000, and (ii)
thereafter, $20,000,000, in each case as such amounts may be
reduced from time to time pursuant to SECTION 2.2."
(c) The following new definitions are added to Section 1.1 of
the Credit Agreement in their appropriate alphabetical order:
"AMENDMENT NO. 2" means Amendment No. 2 to Credit
Agreement, dated as of February 10, 2000, among the Borrower,
the other Obligors party thereto, the Lenders, the Syndication
Agent, the Documentation Agent and the Administrative Agent.
"AMENDMENT NO. 2 EFFECTIVE DATE" shall have the
meaning set forth in Subpart 4.1 of Amendment No. 2.
SUBPART 2.2. AMENDMENTS TO ARTICLE VII. Article VII of the Credit
Agreement is amended as set forth in this Subpart 2.2.
(a) Clause (a)(i) of Section 7.1.1 of the Credit Agreement is
amended to insert the words "for the period from the Amendment No. 2
Effective Date through (and including) the end of such calendar month
(which in no event shall occur prior to December 31, 2000) in which the
Agents shall have received a certificate executed by the president,
chief executive officer, treasurer, assistant treasurer, controller or
chief financial Authorized Officer of the Borrower in form and
substance satisfactory to the Agents setting forth in sufficient detail
calculations demonstrating that the Leverage Ratio is less than or
equal to 5.0:1" immediately following the words "each Fiscal Year of
the Borrower" contained in the third line of such clause."
4
<PAGE>
(b) Section 7.2.4 of the Credit Agreement is amended to read
in its entirety as follows:
SECTION 7.2.4. FINANCIAL COVENANTS.
(a) EBITDA. The Borrower will not permit EBITDA for the period
of four consecutive Fiscal Quarters ending on the last day of any
Fiscal Quarter occurring during any period set forth below to be less
than the amount set forth opposite such period:
Period EBITDA
------ ------
1/1/00 to 9/29/00 $20,000,000
9/30/00 to 12/30/00 22,000,000
12/31/00 to 12/30/01 23,500,000
12/31/01 to 12/30/02 30,000,000
12/31/02 to 12/30103 34,000,000
12131/03 to 12/30/04 38,000,000
12/31/04 and thereafter 40,000,000
(b) Leverage Ratio. The Borrower will not permit the Leverage
Ratio as of the end of any Fiscal Quarter ending during any period set
forth below to be greater than the ratio set forth opposite such
period:
Period Leverage Ratio
------ --------------
1/1/00 to 6/29/00 6.50:1
6/30/00 to 9/29/00 6.00:1
9/30/00 to 12/30/00 5.50:1
12/31/00 to 12/30/01 5.25:1
12/31/01 to 12/30/02 4.00:1
12/31/02 and thereafter 3.00:1
5
<PAGE>
(c) INTEREST COVERAGE RATIO. The Borrower will not permit the
Interest Coverage Ratio as of the end of any Fiscal Quarter ending
during any period set forth below to be less than the ratio set forth
opposite such period:
Interest Coverage
Period Ratio
------ -----
1/1/00 to 6/29/00 1.50:1
6/30/00 to 9/29/00 1.55:1
9/30/00 to 12/30/00 1.60:1
12/31/00 to 12/30/01 1.65:1
12/31/01 to 12/30/02 2.25:1
12/31/02 to 12/30/03 3.00:1
12/31/03 and thereafter 4.00:1
(d) FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the Fixed
Charge Coverage Ratio as of the end of any Fiscal Quarter ending during any
period set forth below to be less than the ratio set forth opposite such period:
Fixed Charge
Period Coverage Ratio
------ --------------
1/1/00 to 6/29/00 0.83:1
6/30/00 to 9/29/00 0.84:1
9/30/00 to 12/30/00 0.85:1
12/31/00 to 12/30/01 0.92:1
12/31/01 and thereafter 1.10:1
PART III
AFFIRMATION AND CONSENT
SUBPART 3.1. ACKNOWLEDGMENT AND REAFFIRMATION. Each of the Consenting
Obligors hereby acknowledges the amendments to the Credit Agreement pursuant to
the terms and provisions set forth in this Amendment No. 2. Each of the
Consenting Obligors hereby reaffirms, as of the Amendment No. 2 Effective Date,
(i) the covenants and agreements contained in each Loan Document to which it is
a party, including, in each case, as such covenants and agreements may be
modified by this Amendment No. 2, and (ii) its guarantee of payment of the
Obligations pursuant to the Holdco Guaranty and Pledge Agreement (in the case of
Holdco), the Intermediate
6
<PAGE>
Holdco Guaranty and Pledge Agreement (in the case of Intermediate Holdco or the
Subsidiary Guaranty (in the case of Hittman).
SUBPART 3.2. REPRESENTATIONS AND WARRANTIES, ETC. Each of the
Consenting Obligors hereby certifies that, as of the date hereof (after giving
effect to the occurrence of the Amendment No. 2 Effective Date), the
representations and warranties made by it in the Holdco Guaranty and Pledge
Agreement (in the case of Holdco), the Intermediate Holdco Guaranty and Pledge
Agreement (in the case of Intermediate Holdco) or the Subsidiary Guaranty (in
the case of Hittman) are true and correct in all material respects with the same
effect as if made on the date hereof (unless stated to relate solely to an
earlier date, in which case such representations and warranties were true and
correct in all material respects as of such earlier date).
SUBPART 3.3 LOAN DOCUMENTS. Each of the Consenting Obligors further
confirms that the Holdco Guaranty and Pledge Agreement (in the case of Holdco),
the Intermediate Holdco Guaranty and Pledge Agreement (in the case of
Intermediate Holdco) or the Subsidiary Guaranty (in the case of Hittman) is and
shall continue to be in full force and effect and the same is hereby ratified
and confirmed in all respects except that upon the occurrence of the Amendment
No. 2 Effective Date, all references in the Holdco Guaranty and Pledge
Agreement, the Intermediate Holdco Guaranty and Pledge Agreement and the
subsidiary Guaranty, as the case may be, to the "Credit Agreement", "Loan
Documents", "thereunder", "thereof", or words similar import shall mean the
Credit Agreement and the Loan Documents, as the case may be, in each case after
giving effect to the amendments and other modifications provided for this
Amendment No. 2.
SUBPART 3.4. COURSE OF DEALING, ETC. Each of the Consenting
Obligors hereby acknowledges and agrees that the acceptance by the Agents and
each Lender of this document shall not be construed in any manner to establish
any course of dealing on the Agents' or Lender's part, including the providing
of any notice or the requesting of any acknowledgement not otherwise expressly
provided for in any Loan Document with respect to any future amendment, waiver,
supplement or other modification to any Loan Document or any arrangement
contemplated by any Loan Document.
PART IV
CONDITIONS TO EFFECCTIVENESS
SUBPART 4.1. AMENDMENT NO. 2 EFFECTIVE DATE. This Amendment No. 2 shall
become effective on February 10, 2000 (the "AMENDMENT NO. 2 EFFECTIVE DATE")
upon the prior to concurrent satisfaction of each of the conditions precedent
set forth in this PART IV.
SUBPART 4.1.1. EXECUTION OF COUNTERPARTS. The Agents shall have
received counterparts of this Amendment No. 2, duly executed by the Borrower,
the Consenting Obligors and the Required Lenders (or evidence thereof
satisfactory to the Agents). The delivery of an
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executed counterpart hereof by the Borrower shall constitute a representation
and warranty by the Borrower that, on the Amendment No. 2 Effective Date, after
giving effect to this Amendment No. 2, all statements set forth in Article VI of
the Credit Agreement, as amended by this Amendment No. 2, are true and correct
as of such date, except to the extent that such statement expressly relates to
an earlier date (in which case such statement shall be true and correct on and
as of such earlier date).
SUBPART 4.1.2. RESOLUTIONS, ETC. The Agents shall have received from
each Obligor a certificate, dated the Amendment No. 2 Effective Date, of its
Secretary or Assistant Secretary as to (i) resolutions of its Board of Directors
then in full force and effect authorizing the execution, delivery and
performance of this Amendment No. 2 and each other Loan Document to be executed
by it, and (ii) the incumbency and signatures of those of its officers
authorized to act with respect to this Amendment No. 2 and each other Loan
Document executed by it, upon which certificate each Agent and each Lender may
conclusively rely until it shall have received a further certificate of the
Secretary or Assistant Secretary of such Obligor canceling oz amending such
prior certificate.
SUBPART 4.1.3. PAYMENT OF FEES AND EXPENSES. The Administrative Agent
shall have received, for the account of each Lender which shall have delivered
to the Agents a duly executed counterpart of this Amendment No. 2 by February
10, 2000, an amendment fee in the amount of .25 % of such Lender's Loans and
Commitments. In addition, the Borrower hereby agrees to pay and reimburse the
Syndication Agent for all its reasonable fees and expenses incurred in
connection with the negotiation, preparation, execution and delivery of this
Amendment No. 2 and related documents, including all reasonable fees and
disbursements of counsel to the Syndication Agent.
SUBPART 4.1.4. SATISFACTORY LEGAL FORM. The Syndication Agent and its
counsel shall have received all information, and such counterpart originals or
such certified or other copies of such materials, as the Syndication Agent or
its counsel may reasonably request, and all legal matters incident to the
effectiveness of this Amendment No. 2 shall be satisfactory to the Syndication
Agent and its counsel. All documents executed or submitted pursuant hereto or in
connection herewith shall be reasonably satisfactory in form and substance to
the Syndication Agent and its counsel.
SUBPART 4.2. LIMITATION. Except as expressly provided hereby, all of
the representations, warranties, terms, covenants and conditions of the Credit
Agreement and each other Loan Document shall remain unwaived and shall continue
to be, and shall remain, in full force and effect in accordance with their
respective terms. The modifications and consents set forth herein shall be
limited precisely as provided for herein, and shall not be deemed to be a waiver
of, consent to or modification of any other term or provision of the Credit
Agreement or of any term or provision of any other Loan Document or other
instrument referred to therein or herein, or of any transaction or further or
future action on the part of the Borrower or any other Person
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which would require the consent of the Administrative Agent or any of the
Lenders under the Credit Agreement or any such other Loan Document or
instrument.
PART V
MISCELLANEOUS
SUBPART 5.1. CROSS-REFERENCES. References in this Amendment No. 2 to any
Part or Subpart are, unless otherwise specified, to such Part or Subpart of
this Amendment No. 2. References in this Amendment No. 2 to any Article or
Section are, unless otherwise specified, to such Article or Section of the
Credit Agreement.
SUBPART 5.2. LOAN DOCUMENT PURSUANT TO CREDIT AGREEMENT. This Amendment
No. 2 is a Loan Document executed pursuant to the Credit Agreement and shall
(unless otherwise expressly indicated therein) be construed, administered and
applied in accordance with all of the terms and provisions of the Credit
Agreement, as amended hereby, including Article X thereof.
SUBPART 5.3. SUCCESSORS AND ASSIGNS. This Amendment No. 2 shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SUBPART 5.4. COUNTERPARTS. This amendment No. 2 may be executed by the
parties hereto in several counterparts, each of which when executed and
delivered shall be an original and all of which shall constitute together but
one and the same agreement.
SUBPART 5.5. GOVERNING LAW. THIS AMENDMENT NO. 2 SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
9
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment No. 2 as of the date first above written.
BORROWER: WILSON GREATBATCH LTD.
By: /s/ Arthur J. Lalonde
-----------------------------
Name: Arthur J. Lalonde
Title: Vice President Finance
CONSENTING OBLIGORS: WGL HOLDINGS, INC.
By: /s/ Arthur J. Lalonde
-----------------------------
Name: Arthur J. Lalonde
Title: Vice President Finance
WGL INTERMEDIATE HOLDINGS, INC.
By: /s/ Arthur J. Lalonde
-----------------------------
Name: Arthur J. Lalonde
Title: Vice President Finance
GREATBATCH-HITTMAN, INC.
By: /s/ Arthur J. Lalonde
-----------------------------
Name: Arthur J. Lalonde
Title: Vice President Finance
10
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DLJ CAPITAL FUNDING, INC.,
as Syndication Agent
and as Lender
By: /s/ Dana Kleo
-----------------------------
Name:
Title:
11
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FLEET NATIONAL BANK,
as Administrative Agent
and as Lender
By: /s/ Pauline So
------------------------------
Name: Pauline So
Title: Assistant Vice President
12
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HELLER FINANCIAL, INC.,
as Documentation Agent
and as Lender
By: /s/ Sheila C. Weimer
-----------------------------
Name: Sheila C. Weimer
Title: Vice President
13
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BANKBOSTON, N.A.,
By: /s/ CB Moore
-----------------------------
Name: CB Moore
Title: Vice President
14
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PARIBAS, NEW YORK BRANCH
By: /s/ David I. Canavan
-----------------------------
Name: David I. Canavan
Title: Managing Director
By: /s/ Stan Byhovsky
-----------------------------
Name: Stan Byhovsky
Title: A.V.P.
15
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BHF (USA) CAPITAL CORPORATION
By: /s/ Dan Dobrjanskyi
-------------------------------
Name: Dan Dobrjanskyi
Title: Assistant Vice President
By: /s/ Richard Cameron
-----------------------------
Name: Richard Cameron
Title: Associate
16
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THE CHASE MANHATTAN BANK
By: /s/ Alan E. Boyce
-----------------------------
Name: Alan E. Boyce
Title: Vice President
17
<PAGE>
CITY NATIONAL BANK
By: /s/ James D. Benko
-----------------------------
Name: James D. Benko
Title: Vice President
18
<PAGE>
COMERICA BANK
By: /s/ James R. Grossett
-----------------------------
Name: James R. Grossett
Title: First Vice President
19
<PAGE>
HSBC BANK USA
(formerly Marine Midland Bank)
By: /s/ Stephen V. Prostor
-----------------------------
Name: Stephen V. Prostor
Title: Authorized Signatory
20
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MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ Shelley C. Drake
------------------------------------
Name: Shelley C. Drake
Title: Administrative Vice President
21
<PAGE>
SENIOR DEBT PORTFOLIO
By: Boston Management and Research
as Investment Advisor
By: /s/ Payson F. Swaffield
-----------------------------
Name: Payson F. Swaffield
Title: Vice President
22
<PAGE>
EATON VANCE SENIOR INCOME TRUST
By: Eaton Vance Management and Research,
as Investment Advisor
By: /s/ Payson F. Swaffield
-----------------------------
Name: Payson F. Swaffield
Title: Vice President
23
<PAGE>
OXFORD STRATEGIC INCOME FUND
By: Eaton Vance Management and Research,
as Investment Advisor
By: /s/ Payson F. Swaffield
-----------------------------
Name: Payson F. Swaffield
Title: Vice President
24
<PAGE>
CERES FINANCE LTD.
By: INVESCO Senior Secured Management,
Inc., as Sub-Managing Agent
By: /s/ Joseph Rotondo
-----------------------------
Name: Joseph Rotondo
Title: Authorized Signatory
25
<PAGE>
STRATA FUNDING LTD.
By: INVESCO Senior Secured Management,
Inc., as Sub-Managing Agent
By: /s/ Joseph Rotondo
-----------------------------
Name: Joseph Rotondo
Title: Authorized Signatory
26
<PAGE>
VAN KAMPEN
PRIME RATE INCOME TRUST
By: Van Kampen Investment Advisory Corp.
By: /s/ Darvin D. Pierce
-----------------------------
Name: Darvin D. Pierce
Title: Vice President
27
<PAGE>
VAN KAMPEN
SENIOR FLOATING RATE FUND
By: Van Kampen Investment Advisory Corp.
By: /s/ Darvin D. Pierce
-----------------------------
Name: Darvin D. Pierce
Title: Vice President
28
<PAGE>
Exhibit 10.12
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is entered into and
effective as of July 16, 1997 among WGL Holdings, Inc., a Delaware corporation
(the "Company"), DLJ Merchant Banking Partners II, L.P., a Delaware limited
partnership ("DLJ Partners II"), DLJMB Funding II, Inc., a Delaware corporation
("DLJ Funding II"), DLJ Merchant Banking Partners II-A, L.P., a Delaware limited
partnership ("DLJ Partners II-A"), DLJ Diversified Partners, L.P., a Delaware
limited partnership ("Diversified Partners"), DLJ Diversified Partners-A, L.P.,
a Delaware limited partnership ("Diversified Partners-A"), DLJ Millennium
Partners, L.P., a Delaware limited partnership ("Millennium Partners"), DLJ
First ESC L.L.C., a Delaware limited liability company ("First ESC"), DLJ
Offshore Partners II, C.V., a Netherlands Antilles limited partnership
("Offshore Partners II"), DLJ EAB Partners, L.P., a Delaware limited partnership
("EAB Partners"), UK Investment Plan 1997 Partners, a Delaware partnership ("UK
Partners"), and the former holders of capital stock of Wilson Greatbatch Ltd., a
New York corporation ("WGL"), listed on SCHEDULE I hereto (the "Individual
Holders"), and each other holder of record of Common Shares (as defined below)
who may hereafter duly and properly execute a separate agreement to be bound by
the terms hereof (each DLJ Party (as hereinafter defined), the Individual
Holders, and each other Person (as defined below) that hereafter may become a
party hereto as contemplated hereby being hereinafter referred to individually
as a "Party" and collectively as the "Parties").
RECITALS
1. The Company has authorized 100,000,000 shares of common stock, $.001
par value per share (the "Common Shares").
2. Prior to the date hereof, DLJ, the Company, WGL and the Individual
Holders have consummated the transactions contemplated by that certain Stock
Purchase Agreement, dated as of June 19, 1997 (the "Purchase Agreement"),
pursuant to which the Company acquired 100% of the Capital Shares of WGL.
3. In connection with the Purchase Agreement, the parties hereto are
entering into this Agreement in order to define certain rights and obligations
of such parties.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
AGREEMENT
ARTICLE I
GENERAL PROVISIONS;
REPRESENTATIONS AND WARRANTIES
1.1 CERTAIN TERMS. In addition to the terms defined elsewhere herein,
when used herein the following terms shall have the meanings indicated:
"Adverse Person" means (i) any Persons that are competitors of the
Company, directly involved in the business of designing, developing,
manufacturing, marketing, selling or distributing of implantable power sources,
implantable medical devices, lithium batteries, silver vanadium oxide batteries,
microvasive surgical instruments and close-tolerance medical and aerospace
miniature components intended for commercial distribution, including (without
limitation) pacemakers, cardioverter-defibrillators and capacitors for
defibrillator applications, (ii) any Persons that are present or former
customers of the Company and (iii) any other Persons the Board of Directors
reasonably designates as such from time to time.
"Affiliate" means, with respect to any Person, any Person controlling,
controlled by, or under common control with such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
With respect to any Common Shares, "beneficial" ownership or
"beneficially" owned shall have the same meaning as in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
"Board of Directors" means the board of directors of the Company.
2
<PAGE>
"Capital Shares" means any and all shares, interests, participations or
other equivalents (however designated) of capital shares of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
and any and all warrants, options or other rights to purchase or acquire any of
the foregoing.
"Common Share Equivalents" means (without duplication with any other
Common Shares or Common Share Equivalents) rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Shares or securities convertible or exchangeable into Common
Shares, whether at the time of issuance or upon the passage of time or the
occurrence of some future event.
"DLJ" means all of the DLJ Parties, collectively.
"DLJ Party" means any of DLJ Partners II, DLJ Funding II, DLJ Partners
II-A, Diversified Partners, Diversified Partners-A, Millennium Partners, First
ESC, Offshore Partners II, EAB Partners or UK Partners.
"DLJSC" means Donaldson, Lufkin & Jenrette Securities Corporation or any
successor thereto.
"Fully-Diluted Common Shares" means, at any time, the then outstanding
Common Shares of the Company plus (without duplication) all Common Shares
issuable, whether at such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion or exchange of all then-outstanding
Common Share Equivalents.
"Permitted Individual Holder Transferee" means (i) any trust, limited
partnership or other comparable entity established for the benefit of an
Individual Holder, the spouse and/or one or more of the lineal descendants of
any Individual Holder which is controlled by such Individual Holder or (ii) the
spouse, parent, brother, sister and/or one or more of the lineal descendants,
step-children, brothers-in-law and/or sisters-in-law of any Individual Holder.
"Permitted Transferee" means in the case of any DLJ Party, (A) any other
DLJ Party, (B) any corporation, partnership or other entity which is an
Affiliate of any DLJ Party (collectively, the "DLJ Affiliates"), (C) any
managing
3
<PAGE>
director, general partner, director, limited partner, officer or employee of any
DLJ Party or any DLJ Affiliate, or the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any of the foregoing Persons
referred to in this clause (C) (collectively, "DLJ Associates"), (D) any trust,
the beneficiaries of which, or any corporation, limited liability company or
partnership, the shareholders, members or general or limited partners of which,
include only one or more DLJ Parties, DLJ Affiliates, DLJ Associates, their
spouses or their lineal descendants and (E) a voting trustee for one or more DLJ
Parties or for one or more DLJ Affiliates or DLJ Associates under the terms of a
voting trust.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and any government or agency or political
subdivision thereof.
"Qualified IPO" means a consummated initial public offering of Common
Shares which is underwritten on a firm commitment basis by a
nationally-recognized investment banking firm.
"Registrable Securities" means the Common Shares and any Common Shares
which are issuable upon the exercise of any right, including pursuant to any
option, warrant or security convertible into Common Shares or similar right and
any other securities issued or issuable with respect to such Shares by way of a
share dividend or share split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization; PROVIDED, that any
Registrable Security will cease to be a Registrable Security when (a) a
registration statement covering such Registrable Security has been declared
effective by the SEC and it has been disposed of pursuant to such effective
registration statement, (b) it is sold under circumstances in which all of the
applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or it is eligible for sale under such Rule 144
without respect to any volume limitations or (c) (i) it has been otherwise
transferred and (ii) the Company has delivered a new certificate or other
evidence of ownership for it not bearing the legend required pursuant to Section
7.5 of this Agreement and (iii) it may be resold without subsequent registration
under the Securities Act.
4
<PAGE>
"SEC" means the Securities and Exchange Commission or any successor
governmental agency.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.
"Selling Holder" means a holder of Registrable Securities who is selling
Registrable Securities pursuant to a registration statement under the Securities
Act.
"Subsidiary" means (i) any corporation or other entity a majority of the
Capital Shares of which having ordinary voting power to elect a majority of the
board of directors or other Persons performing similar functions is at the time
owned, directly or indirectly, with power to vote, by the Company or any direct
or indirect Subsidiary of the Company or (ii) a partnership in which the Company
or any direct or indirect Subsidiary is a general partner.
"Underwriter" means a securities dealer which purchases any Common
Shares as principal and not as part of such dealer's market-making activities.
1.2 REPRESENTATIONS AND WARRANTIES.
(a) Each Individual Holder (as to itself only) hereby
represents and warrants to the Company and the other Parties that:
(i) it has full power and authority to execute,
deliver and perform this Agreement and to consummate the
transactions contemplated hereby, and the execution, delivery
and performance by it of this Agreement and the consummation
by it of the transactions contemplated hereby have been duly
authorized by all necessary action;
(ii) this Agreement has been duly and validly
executed and delivered by such Party and constitutes the
binding obligation of such Party enforceable against such
Party in accordance with its terms; and
(iii) the execution, delivery and performance by such
Party of this Agreement and the consummation by such Party of
the transactions contemplated hereby will not, with or without
the giving of notice or the lapse
<PAGE>
of time, or both, (A) violate any provision of law, statute,
rule or regulation to which it is subject, (B) violate any
order, judgment, or decree applicable to it or (C) conflict
with, or result in a breach or default under, any term or
condition of any agreement or other instrument to which such
Party is a party or by which such Party is bound.
(b) The Company hereby represents and warrants to each Party
that:
(i) it is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, it has full corporate power and authority under its
certificate of incorporation to execute, deliver and perform
this Agreement and to consummate the transactions contemplated
hereby, and the execution, delivery and performance by it of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
action;
(ii) this Agreement has been duly and validly
executed and delivered by the Company and constitutes the
binding obligation thereof enforceable against the Company in
accordance with its terms; and
(iii) the execution, delivery and performance by the
Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse
5
<PAGE>
of time, or both, (A) violate any provision of law, statute,
rule or regulation to which the Company is subject, (B)
violate any order, judgment or decree applicable to the
Company or (C) conflict with, or result in a breach or default
under, any term or condition of its certificate of
incorporation or by-laws or any agreement or other instrument
to which the Company is a party or by which it is bound.
(c) Each DLJ Party (as to itself only) hereby represents and
warrants to the Company and the other Parties that:
(i) it is duly organized, validly existing and in
good standing under the laws of its jurisdiction of
incorporation or organization, as the case may be, it has full
power and authority under its certificate
6
<PAGE>
of incorporation or other such organizational document(s) to
execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby, and the execution,
delivery and performance by it of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary action;
(ii) this Agreement has been duly and validly
executed and delivered by such DLJ Party and constitutes the
binding obligation thereof enforceable against such DLJ Party
in accordance with its terms; and
(iii) the execution, delivery and performance by such
DLJ Party of this Agreement and the consummation by such DLJ
Party of the transactions contemplated hereby will not, with
or without the giving of notice or the lapse of time, or both,
(A) violate any provision of law, statute, rule or regulation
to which such DLJ Party is subject, (B) violate any order,
judgment or decree applicable to such DLJ Party or (C)
conflict with, or result in a breach or default under, any
term or condition of its certificate of incorporation or
by-laws (or such other comparable organizational and governing
document(s), as the case may be) or any agreement or other
instrument to which such DLJ Party is a party or by which it
is bound.
ARTICLE II
MANAGEMENT OF THE COMPANY;
ACTIVITIES OF THE PARTIES
2.1 BOARD OF DIRECTORS. The Parties and the Company shall take all
action within their respective power, including, but not limited to, the voting
of Capital Shares of the Company (to the extent that any such Person holds
Capital Shares of the Company entitled to vote thereon), required to cause the
Board of Directors to at all times consist of seven (7) directors (or such
greater number as the DLJ Parties shall select), one of whom shall be the Chief
Executive Officer of the Company.
2.2 ELECTION OF DIRECTOR DESIGNATED BY INDIVIDUAL HOLDERS. So long as
the Individual Holders collectively own
7
<PAGE>
beneficially in the aggregate at least three percent (3%) of the Fully-Diluted
Common Shares, DLJ and each Permitted Transferee (if any) shall take all action
within its power, including, but not limited to, the voting of Capital Shares of
the Company (to the extent that any such Person holds Capital Shares of the
Company entitled to vote thereon), required to cause the Board of Directors to
include either (a) Lawrence A. Maciariello or (b) with the consent of DLJ
Partners II (which consent shall not be unreasonably withheld), one director
designated by the Individual Holders and Permitted Individual Holder Transferees
(if any) then owning beneficially a majority of the aggregate Fully-Diluted
Common Shares then held by all Individual Holders and Permitted Individual
Holder Transferees (if any).
2.3 ELECTION OF DIRECTORS DESIGNATED BY DLJ PARTNERS II. Each Individual
Holder and each Permitted Individual Holder Transferee (if any) shall take all
action within its power, including, but not limited to, the voting of Capital
Shares of the Company (to the extent that any such Person holds Capital Shares
of the Company entitled to vote thereon), required to cause the Board of
Directors to include a number of directors designated by DLJ Partners II, or its
successor in interest, equal to up to (i) one less than the maximum number of
directors then comprising the Board of Directors so long as Section 2.2 hereof
remains in effect or (ii) the maximum number of directors then comprising the
Board of Directors if DLJ and its Permitted Transferees are not required to vote
its Capital Shares in favor of a director designated by the Individual Holders
pursuant to Section 2.2 hereof.
2.4 REPLACEMENT OF DESIGNATED DIRECTORS. In the event that any director
(a "Withdrawing Director") designated in the manner set forth in Section 2.2 or
2.3 is unable to serve, or once having commenced to serve, is removed or
withdraws from the Board of Directors, such Withdrawing Director's replacement
(the "Substitute Director") on the Board of Directors (and, if applicable, any
executive or similar committee thereof) shall be designated in accordance with
Section 2.2 or 2.3, as applicable. The Company and each of the Parties agrees to
take all action within its power, including, but not limited to, (i) the voting
of Capital Shares of the Company (to the extent that any such Person holds
Capital Shares of the Company entitled to vote thereon) to cause the election of
such Substitute Director as soon as practicable following his or her designation
and (ii) the instructing of any director it had previously
8
<PAGE>
designated to serve as a member of the Board of Directors, as the first order of
business at the first meeting thereof after such Substitute Director has been so
designated, to vote to seat such designated Substitute Director as a director in
place of the Withdrawing Director.
ARTICLE III
TRANSFER OF SECURITIES
3.1 TRANSFER OF SHARES. No Party, Permitted Transferee or Permitted
Individual Holder Transferee (other than a DLJ Party) may transfer any Capital
Shares prior to the earlier to occur of (a) a Qualified IPO and (b) the fifth
anniversary of the date of this Agreement (the "Fifth Anniversary"), except as
contemplated by Sections 3.2, 3.3, 3.7 or 3.8 hereof or pursuant to an offering
of equity securities registered under the Securities Act by the Company (except
that the Company shall be under no obligation to register any Capital Shares
then held by the Individual Holders in connection with any such registered
offering), except to the extent required under Article IV; PROVIDED, HOWEVER,
that in the event the Fifth Anniversary occurs before a Qualified IPO, no Party
that is not a DLJ Party may transfer any Common Shares or Common Share
Equivalents to any Adverse Person prior to a Qualified IPO.
3.2 RIGHT OF PARTICIPATION.
(a) If one or more DLJ Parties and/or Permitted Transferees
(if any) propose to sell Common Shares or Common Share Equivalents for value
(such DLJ Parties and any such Permitted Transferees being referred to herein as
a "Transferor") in one transaction or a series of related transactions, but
excluding (a) a sale which is pursuant to a Qualified IPO, (b) a sale or sales
which are effected by one or more DLJ Parties and/or any Permitted
Transferee(s), in a single transaction or series of related transactions, and
which do not involve more than 25% of the Fully-Diluted Common Shares and (c)
any sale in which all of the Parties agree to participate, then such Transferor
shall offer (the "Participation Offer") to include in the proposed sale a number
of Common Shares or Common Shares represented by Common Share Equivalents
designated by any of the Parties, not to exceed, in respect of any such Party,
the number of Common Shares equal to the product of (i) the aggregate number of
Common Shares or Common Shares represented by
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Common Share Equivalents to be sold to the proposed transferee and (ii) a
fraction, the numerator of which is equal to the number of Fully- Diluted Common
Shares held by such Party and the denominator of which is equal to the number of
Fully-Diluted Common Shares. The Transferor shall give written notice to each
Party of the Participation Offer (the "Transferor's Notice") at least 20 days
prior to the proposed sale. The Transferor's Notice shall specify the proposed
transferee, the number of Common Shares or Common Shares represented by Common
Share Equivalents and, if applicable, the class or classes of Common Shares to
be sold to such transferee, the amount and type of consideration to be received
therefor, and the place and date on which the sale is to be consummated. Each
Party who wishes to include Common Shares or Common Share Equivalents in the
proposed sale in accordance with the terms of this Section 3.2 shall so notify
the Transferor not more than 20 days after the date of the Transferor's Notice.
The Participation Offer shall be conditioned upon the Transferor's sale of
Common Shares or Common Share Equivalents pursuant to the transactions
contemplated in the Transferor's Notice with the transferee named therein. If
any Party accepts the Participation Offer, the Transferor shall reduce to the
extent necessary the number of Common Shares or Common Share Equivalents it
otherwise would have sold in the proposed sale so as to permit other Parties who
have accepted the Participation Offer to sell the number of Common Shares or
Common Share Equivalents that they are entitled to sell under this Section 3.2,
and the Transferor and such other Party or Parties shall sell the number of
Common Shares or Common Share Equivalents specified in the Participation Offer
to the proposed transferee in accordance with the terms of such sale set forth
in the Transferor's Notice. Notwithstanding anything in the foregoing to the
contrary, no Common Share Equivalents shall receive the benefits of this Section
3.2 prior to the time such Common Share Equivalents are exercisable for or
convertible or exchangeable into Common Shares and, in order to obtain the
benefits of this Section 3.2, any such Common Share Equivalents in the form of
options, warrants or other securities convertible or exchangeable into or
exercisable for Common Shares must be exercised or cancelled prior to or
simultaneously with the consummation of the sale pursuant to this Section 3.2.
(b) The provisions of this Section 3.2 shall terminate upon
the consummation of a Qualified IPO.
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3.3 DRAG-ALONG RIGHTS.
(a) Notwithstanding any other provision in this Article III, if one or
more DLJ Parties (such DLJ Parties being referred to herein as the "Seller")
propose to sell fifty percent (50%) or more of the Common Shares and Common
Share Equivalents held by DLJ at the time of such sale ("Sale Shares") to a
third party or parties which is not an Affiliate of DLJ (a "Third Party")
pursuant to a Bona Fide Offer (as defined below), then Seller shall have the
right, subject to the provisions of this Section 3.3, to require all other
Parties that are not DLJ Parties (collectively, the "Co-Sellers") to include in
such sale (a "Required Sale") all of the Common Shares and Common Share
Equivalents held by the Co-Sellers (the "Co-Sellers' Shares") by delivering
notice (the "Required Sale Notice") to such other Parties.
(b) The Required Sale Notice shall set forth: (i) the date of such
notice (the "Notice Date"), (ii) the name and address of the Third Party, (iii)
the proposed amount and type of consideration to be paid per Common Shares for
the Sale Shares (the "Sale Price"), and the terms and conditions of payment
offered by the Third Party in reasonable detail, together with written proposals
or agreements, if any, with respect thereto, (iv) the aggregate number of Sale
Shares, (v) confirmation that Seller is selling fifty percent (50%) or more of
the aggregate number of Fully-Diluted Common Shares then held by DLJ to a Third
Party, and (vi) the proposed date of the Required Sale (the "Required Sale
Date"), which shall be not less than 30 nor more than 180 days after the Notice
Date.
(c) The Co-Sellers shall cooperate in good faith with Seller in
connection with consummating the Required Sale (including, without limitation,
the giving of consents and the voting of any Common Shares of the Company held
by the Co-Sellers to approve such Required Sale). On the Required Sale Date, the
Co-Sellers shall deliver, free and clear of all liens, claims or encumbrances, a
certificate or certificates and/or other instrument or instruments for all of
its Common Shares and Common Share Equivalents, duly endorsed and in proper form
for transfer, with the signature guaranteed, to such Third Party in the manner
and at the address indicated in the Required Sale Notice and Seller shall cause
each Co-Seller's share of the purchase price to be paid to such Co-Seller.
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(d) "Bona Fide Offer" shall mean an offer (whether in the form of a
purchase of Common Shares, merger, recapitalization, or otherwise) for Common
Shares.
(e) In the event of any Required Sale, all Co-Sellers which hold Common
Share Equivalents in the form of options, warrants or other securities
convertible into or exercisable for Common Shares must exercise or cancel all
such options, warrants or conversion or other rights prior to or simultaneously
with the consummation of the Required Sale.
(f) The provisions of this Section 3.3 shall terminate upon the
consummation of a Qualified IPO.
3.4 PROHIBITED TRANSFERS. Any purported transfer of Common Shares and/or
Common Share Equivalents by a Party which is not permitted by the provisions of
Section 3.1, 3.2 or 3.3, or which is in violation of such provisions, shall be
void and of no force and effect whatsoever.
3.5 CERTAIN EVENTS NOT DEEMED TRANSFERS. Except as contemplated by
Section 3.3, in no event shall any of the following constitute a transfer of
Common Shares for purposes of Section 3.1, 3.2 or 3.3 or be subject to the terms
hereof: (a) an exchange, reclassification or other conversion of Common Shares
into any cash, securities or other property pursuant to a merger, consolidation
or recapitalization of the Company or any Subsidiary with, or a sale or transfer
by the Company or any Subsidiary of all or substantially all its assets to, any
Person or (b) a conversion of outstanding Common Share Equivalents into Common
Shares in accordance with the terms thereof.
3.6 TRANSFERS SUBJECT TO COMPLIANCE WITH SECURITIES ACT. No Common
Shares may be transferred by a Party (other than pursuant to an effective
registration statement under the Securities Act) unless such Party first
delivers to the Company an opinion of counsel, which opinion and counsel shall
be reasonably satisfactory to the Company, to the effect that such transfer is
not required to be registered under the Securities Act.
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3.7 PERMITTED TRANSFEREES.
(a) Notwithstanding anything in this Agreement to the contrary, any DLJ
Party or any Permitted Transferee may, without the consent of the Company or any
of the Parties and without compliance with Section 3.1, 3.2 or 3.3, at any time
transfer any or all of its Common Shares and Common Share Equivalents to one or
more Permitted Transferees, so long as the transfer to such Person is not in
violation of applicable federal or state securities laws, and such Person(s), by
accepting such Common Shares and/or Common Share Equivalents, shall be deemed to
have agreed to be bound by the terms of this Agreement on the same terms as DLJ
generally. In the event that any DLJ Party or any Permitted Transferee transfers
any Common Shares and/or Common Share Equivalents to any transferee other than a
Permitted Transferee or any Person which is a Party to this Agreement, such
Common Shares and/or Common Share Equivalents, as the case may be, shall
thereafter be free from the restrictions set forth in this Agreement and no
longer subject thereto and such transferee shall have no rights hereunder, and
the definition of Party hereunder shall not include such transferee.
(b) Notwithstanding anything in this Agreement to the contrary, upon the
death of any Party who is a natural person, the transfer of any or all of its
Common Shares and/or Common Share Equivalents to one or more of such Party's
legatees, heirs or trustees of a testamentary trust, or to an executor or
administrator of the estate of such deceased Party incident to guardianship or
probate proceedings involving such estate shall not require the consent of the
Company or any of the Parties and shall not be subject to compliance with
Section 3.1, 3.2, 3.3 or 3.4 so long as (i) such heir shall have agreed in
writing to be bound by the terms of this Agreement and (ii) the transfer to such
heir is not in violation of applicable federal or state securities laws.
3.8 INDIVIDUAL HOLDERS TRANSFERS. Notwithstanding anything in this
Agreement to the contrary, any Individual Holder or Permitted Individual Holder
Transferee may, without the consent of the Company or any of the Parties and
without compliance with Section 3.1, 3.2 or 3.3, at any time transfer any or all
of its Common Shares and Common Share Equivalents to one or more Permitted
Individual Holder Transferees or Individual Holders, so long as the transfer to
such Person is not in violation of applicable federal or
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state securities laws, and such Person(s), by accepting such Common Shares
and/or Common Share Equivalents, shall be deemed to have agreed to be bound by
the terms of this Agreement (on the same terms as the Individual Holder). In the
event that any Individual Holder or any Permitted Individual Holder Transferee
transfers any Common Shares and/or Common Share Equivalents to any transferee
other than a Permitted Individual Holder Transferee or any Person which is a
Party to this Agreement in accordance with the terms of this Agreement, such
Common Shares and/or Common Share Equivalents, as the case may be, shall
thereafter be free from the restrictions set forth in this Agreement and no
longer subject thereto and such transferee shall have no rights hereunder, and
the definition of Party hereunder shall not include such transferee.
ARTICLE IV
PIGGY-BACK REGISTRATION
4.1 NOTICE; PIGGYBACK REGISTRATION. Subject to the provisions of this
Agreement, if the Company proposes to file a registration statement under the
Securities Act with respect to an offering of any equity securities by the
Company for its own account or for the account of any of its equity holders
(other than a registration statement on Form S-4 or Form S-8, or any substitute
form that may be adopted by the SEC, or any registration statement filed in
connection with an exchange offer or offering of securities solely to the
Company's existing security holders), then the Company shall give written notice
of such proposed filing to the Parties (including any Permitted Individual
Holder Transferees) as soon as practicable (but in no event less than 30 days
before the anticipated effective date of such registration statement), and such
notice shall offer such Persons the opportunity to register such number of
Registrable Securities as each such Person may request (a "Piggyback
Registration"). Subject to Sections 4.2, 4.3, 4.4, 4.5 and 4.6 hereof, the
Company shall include in each such Piggyback Registration all Registrable
Securities requested to be included in the registration for such offering. Each
such holder of Registrable Securities shall be permitted to withdraw all or part
of such holder's Registrable Securities from a Piggyback Registration at any
time prior to the effective date thereof.
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4.2 SELECTION OF UNDERWRITERS. DLJ Partners II shall, for a period of
thirty (30) days after the receipt by DLJ Partners II of Notice of a Piggyback
Registration, have the right, but not the obligation, to designate, in its sole
and absolute discretion, the book-running managing Underwriter with respect to
the Piggyback Registration or any other underwritten public offering of
Registrable Securities or other securities of the Company (the "Managing
Underwriter") and shall, in consultation with the Company, select such
additional Underwriters to be used in connection with the offering, if any,
unless, at the time the Company takes the necessary corporate action to approve
the filing of the registration statement, DLJ and Permitted Transferees
collectively do not beneficially own at least five percent (5%) of the
Fully-Diluted Common Shares. In the event that DLJ Partners II exercises such
right by notifying the Company thereof, DLJ Partners II shall select, upon
consultation with the Company, one or more co-managers for each such offering if
DLJ Partners II, in its sole discretion, shall determine that any be necessary,
and the underwriting fees related to any such offering shall be allocated among
any such co-managers in such proportions as DLJ Partners II shall determine. The
Managing Underwriter's compensation for such services will be at market rates
subject to the type and size of the offering. In the event of any such offering,
the Managing Underwriter and the Company will enter into an agreement
appropriate to the circumstances, containing provisions for, among other things,
compensation, indemnification, contribution, and representations and warranties,
which are usual and customary for similar agreements entered into by the
Managing Underwriter or other investment bankers of national standing acting in
similar transactions. The Managing Underwriter shall have no obligation to act
as underwriter or dealer-manager to the Company or to purchase any securities of
the Company, except to the extent that such obligations arise out of an
underwriting agreement or dealer-manager agreement, as the case may be, with
respect to a particular offering executed and delivered by both the Managing
Underwriter and the Company. In the event that DLJ and Permitted Transferees
collectively do not beneficially own at least five percent (5%) of the
Fully-Diluted Common Shares at the time the Company takes the necessary
corporate action to approve the filing of the registration statement, or DLJ
Partners II does not exercise such right within such thirty (30) day period by
notifying the Company thereof, the Company shall select the book-running
managing Underwriter
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and such additional Underwriters to be used in connection with the offering.
4.3 UNDERWRITERS' CUT-BACKS. The Company shall use all commercially
reasonable efforts to cause the Managing Underwriter or any other managing
Underwriter of a proposed underwritten offering, as the case may be, to permit
the Registrable Securities requested to be included in the registration
statement for such offering under Section 4.1 or pursuant to other piggyback
registration rights, if any, granted by the Company ("Piggyback Securities") to
be included on the same terms and conditions as any similar securities included
therein. Notwithstanding the foregoing, the Company shall not be required to
include any Party's Piggyback Securities in such offering unless such Party
accepts the terms of the underwriting agreement between the Company and the
Managing Underwriter (or other managing Underwriter) or Underwriters, and
otherwise complies with the provisions of Section 4.4 below. If the managing
Underwriter or Underwriters of a proposed underwritten offering advise the
Company in writing that in their opinion the total amount of securities,
including Piggyback Securities, to be included in such offering is sufficiently
large to potentially impede or interfere with the offering, then in such event
the securities to be included in such offering shall be allocated first to the
Company and then, to the extent that any additional securities can, in the
opinion of such managing Underwriter or Underwriters, be sold without any such
potential to impede or interfere with the offering, pro rata among the holders
of Piggyback Securities on the basis of the number of Registrable Securities
requested to be included in such registration by each such holder.
4.4 PARTICIPATION. No Party may participate in any underwritten
registration under this Article IV unless such Party (a) agrees to sell such
Party's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Person entitled hereunder to approve such
arrangements, (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and this Agreement and (c) if
requested by another Person participating in such underwritten registration,
provides that all securities convertible or exchangeable into Common Shares that
are included in such underwritten registration shall be so
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converted or exchanged on or prior to the consummation thereof.
4.5 TERMINATION BY THE COMPANY. Notwithstanding anything herein to the
contrary, at any time prior to the effectiveness of any registration statement
filed pursuant hereto, the Company shall have the right, in its sole and
absolute discretion, not to proceed with the registration of any securities
pursuant to such registration statement and, in the event that the Company
exercises such right, no holder of Registrable Securities shall have any right
to require the Company to register any such Registrable Securities except in
accordance with the express provisions of this Agreement.
4.6 LOCK-UP LETTERS. Each holder of Registrable Securities (whether or
not such Registrable Securities are included in a registration statement
pursuant hereto) agrees to execute a written agreement not to effect any public
sale or distribution of the issue being registered or of any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the Securities Act, during the 14 days prior to,
and during the 180-day period beginning on the effective date of a registration
statement filed pursuant hereto except as part of such registration if and to
the extent requested by the Company in the case of a non-underwritten public
offering or if and to the extent requested by the Managing Underwriter or
managing Underwriter or Underwriters, as the case may be, in the case of an
underwritten public offering.
ARTICLE V
REGISTRATION PROCEDURES
5.1 PROCEDURES.
(a) The Company may require each Selling Holder to promptly furnish in
writing to the Company such information regarding the distribution of the
Registrable Securities as it may from time to time reasonably request and such
other information as may be legally required in connection with any
registration. Notwithstanding anything herein to the contrary, the Company shall
have the right to exclude from any offering the Registrable Securities of any
Selling Holder who does not comply with the provisions of the immediately
preceding sentence.
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(b) Each Selling Holder agrees that, (i) upon receipt of any notice from
the Company of the happening of any event which makes any statement made in a
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 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, (ii)
such Selling Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Selling Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 5.1(b)(i) hereof, and, if so
directed by the Company, such Selling Holder will deliver to the Company all
copies, other than permanent file copies, then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective by the number of days during the period
from and including the date of the giving of notice pursuant to Section
5.1(b)(i) hereof to the date when the Company shall make available to the
Selling Holders of Registrable Securities covered by such registration statement
a prospectus supplemented or amended to conform with the requirements of Section
5.1(b)(i) hereof.
5.2 REGISTRATION EXPENSES. In connection with any registration statement
required to be filed hereunder, the Company shall pay the following registration
expenses (the "Registration Expenses"): (a) all registration and filing fees
(including, without limitation, with respect to filings to be made with the
National Association of Securities Dealers, Inc.), (b) fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (c) printing expenses, (d) internal expenses of the
Company (including,
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without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), (e) the fees and expenses incurred in
connection with the listing on an exchange of the Registrable Securities if the
Company shall choose to list such Registrable Securities, (f) fees and
disbursements of counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company, (g) the fees
and expenses of any special experts retained by the Company in connection with
such registration, and (h) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Rule 2720(c) of the National Association of Securities Dealers, Inc.
The Company shall not have any obligation to pay any underwriting fees,
discounts, or commissions attributable to the sale of Registrable Securities or,
except as provided by clause (b) or (h) above, any out-of-pocket expenses of the
Selling Holders (or the agents who manage their accounts) or the fees and
disbursements of counsel for any Underwriter.
5.3 DEFERRAL. Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be obligated to prepare and file, or cause to
become effective, any registration statement pursuant to this Agreement at any
time when, in the good faith judgment of the Board of Directors, the filing
thereof at the time requested or the effectiveness thereof after filing should
be delayed to permit the Company to include in the registration statement the
financial statements of the Company (and any required audit opinion thereon) for
the then immediately preceding fiscal year or fiscal quarter, as the case may
be. The filing of a registration statement by the Company cannot be deferred
pursuant to the provisions of the immediately preceding sentence beyond the time
that such financial statements (or any required audit opinion thereon) would be
required to be filed with the SEC as part of the Company's Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, if the Company were
then obligated to file such reports. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall not be obligated to cause a
registration statement previously filed pursuant hereto to become effective, and
may suspend sales by the Parties of Registrable Securities under any
registration that has previously become effective, at any time when, in the good
faith judgment of the Board of Directors, it reasonably believes that the
effectiveness of such registration statement or the offering of securities
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pursuant thereto would materially adversely affect a pending or proposed
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction or negotiations, discussions or pending proposals with respect
thereto; provided that deferrals pursuant to this sentence shall not exceed, in
the aggregate, 120 days in any calendar year. The filing of a registration
statement, or any amendment or supplement thereto by the Company cannot be
deferred, and the rights of holders of Registrable Securities to make sales
pursuant to an effective registration statement cannot be suspended, pursuant to
the provisions of the immediately preceding sentence, for more than 15 days
after the abandonment or consummation of any of the foregoing proposals or
transactions or, in any event, for more than 30 days after the date of the
determination of the Board of Directors pursuant to the immediately preceding
sentence of this Section 5.3.
ARTICLE VI
TERMINATION
6.1 TERMINATION. This Agreement shall terminate upon the earlier of (i)
the dissolution, liquidation or winding-up of the Company or (ii) the date on
which DLJ and all Permitted Transferees collectively are no longer the
beneficial owner of at least five percent (5%) of the Fully-Diluted Common
Shares. A Person who ceases to hold any Common Shares or Common Share
Equivalents and who ceases to beneficially own any Common Shares or Common Share
Equivalents shall cease to be a Party and shall have no further rights or
obligations under this Agreement.
ARTICLE VII
MISCELLANEOUS
7.1 AMENDMENT. Any provision of this Agreement may be altered,
supplemented, amended, or waived only by the written consent of each of (i) the
Company and (ii) all of the Parties, except that any Party may unilaterally
waive any of its rights hereunder so long as such waiver is in writing.
7.2 SPECIFIC PERFORMANCE. The Parties and the Company recognize that the
obligations imposed on them in this
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Agreement are special, unique, and of extraordinary character, and that in the
event of breach by any party, damages will be an insufficient remedy;
consequently, it is agreed that the Parties and the Company may have specific
performance and injunctive relief (in addition to damages) as a remedy for the
enforcement hereof, without proving damages.
7.3 ASSIGNMENT. Except as otherwise expressly provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the Parties and the Company. No
such assignment shall relieve the assignor from any liability hereunder. Any
purported assignment made in violation of this Section 7.3 shall be void and of
no force and effect.
7.4 SHARES SUBJECT TO THIS AGREEMENT. All Common Shares and Common Share
Equivalents now owned or hereafter acquired by any of the Parties shall be
subject to, and entitled to the benefits of, the terms of this Agreement.
7.5 LEGENDS.
(a) Each certificate for Common Shares and Common Share Equivalents held
by any Person a party hereto shall include a legend in substantially the
following form:
THIS SECURITY IS SUBJECT TO CERTAIN VOTING AGREEMENTS,
RESTRICTIONS ON TRANSFER, AND OTHER TERMS AND CONDITIONS SET
FORTH IN THE STOCKHOLDERS AGREEMENT, DATED AS OF JULY 16,
1997, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF
WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICES.
(b) A restriction on transfer of Common Shares set forth in such legend
(a "Restriction") shall cease and terminate as to any particular Common Shares
when, in the opinion of the Company and counsel reasonably satisfactory to the
Company (which opinion shall be delivered to the Company in writing), such
Restriction is no longer required. Whenever such Restriction shall cease and
terminate as to any Common Shares, the holder thereof shall be entitled to
receive from the Company, without expense to such holder, new certificate(s) not
bearing a legend stating such Restriction.
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7.6 NOTICES. Any and all notices, designations, consents, offers,
acceptances or other communications provided for herein (each a "Notice") shall
be given in writing by overnight courier, telegram or telecopy which shall be
addressed, or sent, to the respective addresses as follows (or such other
address as the Company or any Party may specify to the Company and all other
Parties by Notice):
THE COMPANY:
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: President
Telecopy No.: (716) 759-5527
DLJ PARTIES:
DLJ PARTNERS II
DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
DLJ FUNDING II
DLJMB Funding II, Inc.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
DLJ PARTNERS II-A
DLJ Merchant Banking Partners II-A, L.P.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
DIVERSIFIED PARTNERS
DLJ Diversified Partners, L.P.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
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DIVERSIFIED PARTNERS-A
DLJ Diversified Partners-A, L.P.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
MILLENNIUM PARTNERS
DLJ Millennium Partners, L.P.
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
FIRST ESC
DLJ First ESC L.L.C.
c/o DLJ LBO Plans Management Corporation
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
OFFSHORE PARTNERS II
DLJ Offshore Partners II, C.V.
c/o DLJ Offshore Management N.V.
John B. Gorsiraweg 14
Willemstad, Curacao
Netherlands, Antilles
Telecopy No.: 011-59-99-614-129
EAB PARTNERS
DLJ EAB Partners, L.P.
c/o DLJ LBO Plans Management Corporation
277 Park Avenue
New York, NY 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
UK PARTNERS
UK Investment Plan 1997 Partners
2121 Avenue of the Stars
Fox Plaza, Suite 3000
Los Angeles, CA 90067
Attention: Osamu Watanabe
Telecopy No.: (310) 282-6178
in each case with a copy to:
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Steven D. Rubin, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Telecopy No.: (713) 224-9511
EACH OTHER PARTY:
To such address or telecopy number of such Party as is set forth on SCHEDULE I
hereto or as such Party provides by Notice to the Company and all other Parties
or, if such address is not so provided, to such Party's address as is reflected
on the stock transfer records of the Company at such time.
All Notices shall be deemed effective and received (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified above and
receipt thereof is confirmed; (b) if given by overnight courier, on the business
day immediately following the day on which such Notice is delivered to a
reputable overnight courier service; or (c) if given by telegram, when such
Notice is delivered at the address specified above. No Party shall be entitled
to receive a Notice hereunder (or a copy of a Notice delivered to the Company)
if, at the time such Notice is to be sent, such Party (including its Affiliates
and the employees of such Party and its Affiliates) no longer owns any Common
Shares.
7.7 CONFIDENTIALITY. The Parties shall, and shall cause their respective
officers, directors, employees and agents and the respective subsidiaries and
Affiliates of the Parties and their respective officers, directors, employees
and agents to, hold confidential and not use in any manner detrimental to the
Company or any of its Subsidiaries all information they may have or obtain
concerning the Company or any of its Subsidiaries and their respective assets,
business, operations or prospects ("Confidential Information"); PROVIDED,
HOWEVER, that the foregoing shall not apply to (a) information that is or
becomes generally available to the public other than as a result of a disclosure
by a Party or any of its employees, agents, accountants, legal counsel or other
representatives, (b) information that is or becomes available to a Party or any
of its employees, agents, accountants, legal counsel or other representatives on
a nonconfidential basis prior to its disclosure by the Company or its employees,
agents, accountants, legal counsel or other representatives, and
24
<PAGE>
(c) information that is required to be disclosed by a Party or any of its
employees, agents, accountants, legal counsel or other representatives as a
result of any applicable law, rule or regulation of any governmental authority
or stock exchange. If any Party desires to sell Common Shares and in connection
with such potential sale desires to disclose information regarding the Company
to the potential purchaser in such sale which it is not permitted to disclose
pursuant to the preceding sentence, such Party shall notify the Company of such
Party's desire to disclose such information and shall identify the potential
purchaser in such notification. The Company may require any such potential
purchaser of Common Shares to enter into a confidentiality agreement with
respect to Confidential Information on customary terms used in confidentiality
agreements in connection with corporate acquisitions.
7.8 EXCLUSIVE FINANCIAL ADVISOR AND INVESTMENT BANKING ADVISOR. During
the five-year period beginning on the date hereof, DLJSC, or any Affiliate of
DLJSC that DLJ Partners II or DLJSC may choose, in their sole and absolute
discretion, shall be engaged as the exclusive financial and investment banking
advisor for the Company and its subsidiaries pursuant to the terms of an
agreement substantially in the form of the agreement attached hereto as EXHIBIT
A hereto.
7.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and each counterpart shall be deemed to be an original and all such
counterparts together shall constitute one and the same agreement of the parties
hereto.
7.10 SECTION HEADINGS. Headings contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provisions hereof.
7.11 CHOICE OF LAW. This Agreement, including, without limitation, the
interpretation, construction, validity and enforceability thereof, shall be
governed by the internal laws of the State of New York including Section 5-1401
of the General Obligations Law of the State of New York without regard to the
principles of conflict of laws thereof.
7.12 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties hereto respecting the
25
<PAGE>
subject matter hereof and supersedes all prior agreements, discussions and
understandings with respect thereto.
7.13 CUMULATIVE RIGHTS. The rights of the Parties and the Company under
this Agreement are cumulative and in addition to all similar and other rights of
the parties under other agreements.
7.14 SEVERABILITY. If any term, provision, covenant, or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
7.15 SUBMISSION TO JURISDICTION. (a) Any legal action or proceeding with
respect to this Agreement, the Common Shares or any document related thereto may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Agreement, the Company and each Party hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereto hereby irrevocably waive any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which any of them may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
(b) The Company and each Party irrevocably consent to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Company or such Party, respectively, at its address provided herein or on
SCHEDULE I, as the case may be.
(c) Nothing contained in this Section 7.15 shall affect the right of any
party hereto to serve process in any other manner permitted by law.
7.16 WAIVER OF JURY TRIAL. Each of the parties hereto waives any right
it may have to trial by jury in respect of any litigation based on, or arising
out of, under or in connection with this Agreement, any Common Shares or any
26
<PAGE>
course of conduct, course of dealing, verbal or written statement or action of
any party hereto.
[SIGNATURES CONTAINED ON SUCCEEDING PAGES]
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first above written.
WGL Holdings, Inc.
By: /S/ Edward Voboril
------------------------------------------
Edward F. Voboril
President and Chief Executive Officer
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By:/s/ David M. Wittels
---------------------------------------
Name: David M. Wittels
-------------------------------------
Title: Attorney-in-Fact
------------------------------------
DLJMB FUNDING II, INC.
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
------------------------------------
Title: Attorney-in-Fact
------------------------------------
DLJ MERCHANT BANKING PARTNERS II-A, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
------------------------------------
Title: Attorney-in-Fact
-----------------------------------
28
<PAGE>
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
-------------------------------------
Title: Attorney-in-Fact
------------------------------------
DLJ DIVERSIFIED PARTNERS-A, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
-------------------------------------
Title: Attorney-in-Fact
------------------------------------
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ MERCHANT BANKING II, INC.
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
-------------------------------------
Title: Attorney-in-Fact
------------------------------------
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
As Manager
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
-------------------------------------
Title: Attorney-in-Fact
------------------------------------
29
<PAGE>
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
-------------------------------------
Title: Attorney-in-Fact
------------------------------------
DLJ EAB PARTNERS, L.P.
By: DLJ LBO PLANS MANAGEMENT CORPORATION
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
-------------------------------------
Title: Attorney-in-Fact
------------------------------------
UK INVESTMENT PLAN 1997 PARTNERS
By: DONALDSON, LUFKIN & JENRETTE, INC.
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
-------------------------------------
Title: Attorney-in-Fact
------------------------------------
30
<PAGE>
/s/ Warren D. Greatbatch
--------------------------------------------
Warren D. Greatbatch
/s/ Ami A. Greatbatch
--------------------------------------------
Ami A. Greatbatch
/s/ Peter N. Greatbatch
--------------------------------------------
Peter N. Greatbatch
/s/ Michele A. Greatbatch
--------------------------------------------
Michele A. Greatbatch
/s/ Kenneth A. Greatbatch
--------------------------------------------
Kenneth A. Greatbatch
/s/ Sharon H. Greatbatch
--------------------------------------------
Sharon H. Greatbatch
/s/ Lawrence A. Maciariello
--------------------------------------------
Lawrence A. Maciariello
/s/ Anne K. Maciariello
--------------------------------------------
Anne K. Maciariello
/s/ Ericka Dee Greatbatch
--------------------------------------------
Ericka Dee Greatbatch
/s/ Eleanor F. Greatbatch
--------------------------------------------
Eleanor F. Greatbatch
/s/ Wilson Greatbatch
--------------------------------------------
Wilson Greatbatch
31
<PAGE>
SCHEDULE I
This Schedule I is a part of and is incorporated into that certain
letter agreement (together, the "Agreement") dated July 10, 1997 by and between
WGL Holdings, Inc. (which together with its subsidiaries is hereinafter referred
to as the "Company") and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ").
The Company will indemnify and hold harmless DLJ and its affiliates,
and the respective directors, officers, agents and employees of DLJ and its
affiliates (other than the Company) (DLJ and each such entity or person, an
"Indemnified Person"), from and against any losses, claims, damages, judgments,
assessments, costs and other liabilities (collectively, "Liabilities"), and will
reimburse each Indemnified Person for all fees and expenses (including the
reasonable fees and expenses of counsel) (collectively, "Expenses") as they are
incurred in investigating, preparing, pursuing or defending any claim, action,
proceeding or investigation, whether or not in connection with pending or
threatened litigation and whether or not any Indemnified Person is a party
(collectively, "Actions"), arising out of or in connection with advice or
services rendered or to be rendered by any Indemnified Person pursuant to this
Agreement, the transactions contemplated hereby or any Indemnified Person's
actions or inactions in connection with any such advice, services or
transactions; provided that the Company will not be responsible for any
Liabilities or Expenses of any Indemnified Person that are determined by a
judgment of a court of competent jurisdiction which is no longer subject to
appeal or further review to have resulted solely from such Indemnified Person's
gross negligence or willful misconduct in connection with any of the advice,
actions, inactions or services referred to above. The Company also agrees to
reimburse each Indemnified Person for all Expenses as they are incurred in
connection with enforcing such Indemnified Person's rights under this Agreement
(including, without limitation, its rights under this Schedule I).
Upon receipt by an Indemnified Person of actual notice of an Action
against such Indemnified Person with respect to which indemnity may be sought
under this Agreement, such Indemnified Person shall promptly notify the Company
in writing; provided that failure so to notify the Company shall not relieve the
Company from any liability which the Company may have on account of this
indemnity or otherwise, except to the extent the Company shall have been
materially prejudiced by such failure. The Company shall, if requested by DLJ,
assume the defense of any such Action including the employment of counsel
reasonably satisfactory to DLJ. Any Indemnified Person shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless: (i) the Company has failed promptly to assume
the defense and employ counsel or (ii) the named parties to any such Action
(including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or in addition to those available to the Company; provided that the Company
shall not in such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel in connection with any Action in the same
jurisdiction, in addition to any local counsel. The Company shall not be liable
for any settlement of any Action effected without its written consent. In
addition, the Company will not, without prior written consent of DLJ, settle,
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any pending or threatened Action in respect of which indemnification
or contribution may be sought hereunder (whether or not any Indemnified
<PAGE>
Person is a party thereto) unless such settlement, compromise, consent or
termination includes an unconditional release of each Indemnified Person from
all Liabilities arising out of such Action.
In the event the foregoing indemnity is unavailable to an Indemnified
Person [other than] in accordance with this Agreement, the Company shall
contribute to the Liabilities and Expenses paid or payable by such Indemnified
Person in such proportion as is appropriate to reflect (i) the relative benefits
to the Company and its shareholders, on the one hand, and to DLJ, on the other
hand, of the matters contemplated by this Agreement or (ii) if the allocation
provided by the immediately preceding clause is not permitted by the applicable
law, not only such relative benefits but also the relative fault of the Company,
on the one hand, and DLJ, on the other hand, in connection with the matters as
to which such Liabilities or Expenses relate, as well as any other relevant
equitable considerations; provided that in no event shall the Company contribute
less than the amount necessary to ensure that all Indemnified Persons, in the
aggregate, are not liable for any Liabilities and Expenses in excess of the
amount of fees actually received by DLJ pursuant to the Agreement. For purposes
of this paragraph, the relative benefits to the Company and its shareholders, on
the one hand, and to DLJ, on the other hand, of the matters contemplated by the
Agreement shall be deemed to be in the same proportion as (a) the total value
paid or contemplated to be paid or received or contemplated to be received by
the Company or the Company's shareholders, as the case may be, in the
transaction or transactions that are within the scope of the Agreement, whether
or not any such transaction is consummated, bears to (b) the fees paid or to be
paid to DLJ under the Agreement.
The Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with advice or services rendered or to be rendered
by any Indemnified Person pursuant to this Agreement, the transactions
contemplated hereby or any Indemnified Person's actions or inactions in
connection with any such advice, services or transactions except for Liabilities
(and related Expenses) of the Company that are determined by a judgment of a
court of competent jurisdiction which is no longer subject to appeal or further
review to have resulted solely from such Indemnified Person's gross negligence
or willful misconduct in connection with any such advice, actions, inactions or
services.
The reimbursement, indemnity and contribution obligations of the
Company set forth herein shall apply to any modification of this Agreement and
shall remain in full force and effect regardless of any termination of, or the
completion of any Indemnified Person's services under or in connection with,
this Agreement.
<PAGE>
SCHEDULE I
INDIVIDUAL HOLDERS
Warren D. Greatbatch
Address: 200 Atlantic Street
Islamorada, FL 33036
Telecopy No.: (305) 664-0027
Ami A. Greatbatch
address: 200 Atlantic Street
Islamorada, FL 33036
Telecopy No.: (305) 664-0027
Peter N. Greatbatch
Address: 11778 Buckwheat Road
Alden, NY 14004
Telecopy No.: (716) 542-3496
Michele A. Greatbatch
Address: 11778 Buckwheat Road
Alden, NY 14004
Telecopy No.: (716) 542-3496
Kenneth A. Greatbatch
Address: 98 Forest Avenue
West Swanzey, NH 03469
Telecopy No.: (603) 358-5187
Sharon H. Greatbatch
Address: 98 Forest Avenue
West Swanzey, NH 03469
Telecopy No.: (603) 358-5187
Lawrence A. Maciariello
Address: 8451-3 Gardens Circle
Sarasota, FL 34243
Telecopy No.: (941) 351-5676
Anne K. Maciariello
Address: 8451-3 Gardens Circle
Sarasota, FL 34243
Telecopy No.: (941) 351-5676
Ericka Dee Greatbatch
Address: 41 Pleasant Street; Unit 1
Somersworth, NH 03878
Telecopy No.: (603) 692-6011
33
<PAGE>
Eleanor F. Greatbatch
Address: 5935 Davison Road
Akron, NY 14001
Telecopy No.: (716) 741-4304
Wilson Greatbatch
Address: 5935 Davison Road
Akron, NY 14001
Telecopy No.: (716) 741-4304
34
<PAGE>
Date: Oct 10, 1997 /s/ Jack A. Belstadt
---------------- ------------------------------------
Jack A. Belstadt
Date: Oct 24, 1997 /s/ Tim H. Belstadt
---------------- ------------------------------------
Tim H. Belstadt
Date: Oct 21, 1997 /s/ Richard J. Boos
---------------- ------------------------------------
Richard J. Boos
Date: Oct 17, 1997 /s/ Susan M. Bratton
---------------- ------------------------------------
Susan M. Bratton
Date: Oct 16, 1997 /s/ William H. Bruns
---------------- ------------------------------------
William H. Bruns
Date: Oct 15, 1997 /s/ Curtis A. Cashmore
---------------- ------------------------------------
Curtis A. Cashmore
Date: Oct 16, 1997 /s/ William D. K. Clark
---------------- ------------------------------------
William D. K. Clark
Date: Oct 09, 1997 /s/ Larry T. DeAngelo
---------------- ------------------------------------
Larry T. DeAngelo
Date: Nov 04, 1997 /s/ Steven J. Ebel
---------------- ------------------------------------
Steven J. Ebel
Date: Oct 09, 1997 /s/ Douglas P. Eberhard
---------------- ------------------------------------
Douglas P. Eberhard
Date: Nov 06, 1997 /s/ Gayle E. Fairchild
---------------- ------------------------------------
Gayle E. Fairchild
Date: Nov 03, 1997 /s/ Stuart S. Ferguson
---------------- ------------------------------------
Stuart S. Ferguson
Date: Oct 21, 1997 /s/ John T. Fordyce
---------------- ------------------------------------
John T. Fordyce
Date: Oct 09, 1997 /s/ Frank J. Forkl, Jr.
---------------- ------------------------------------
Frank J. Forkl, Jr.
Date: Oct 18, 1997 /s/ Dominick J. Frustaci
---------------- ------------------------------------
Dominick J. Frustaci
Date: Oct 12, 1997 /s/ Christine A. Frysz
---------------- ------------------------------------
Christine A. Frysz
Date: Oct 30, 1997 /s/ Richard M. Garlapow
---------------- ------------------------------------
Richard M. Garlapow
<PAGE>
Date: Oct 08, 1997 /s/ Robert W. Hammell
---------------- ------------------------------------
Robert W. Hammell
Date: Nov 05, 1997 /s/ Curtis F. Holmes
---------------- ------------------------------------
Curtis F. Holmes
Date: Oct 10, 1997 /s/ Robert C. Jackson
---------------- ------------------------------------
Robert C. Jackson
Date: Oct 13, 1997 /s/ Ricky S. Kline
---------------- ------------------------------------
Ricky S. Kline
Date: Oct 30, 1997 /s/ Authur J. Lalonde
---------------- ------------------------------------
Authur J. Lalonde
Date: Oct 14, 1997 /s/ Randolph A. Leishing
---------------- ------------------------------------
Randolph A. Leishing
Date: Nov 05, 97 /s/ Bruce E. Meyer
---------------- ------------------------------------
Bruce E. Meyer
Date: Oct 10, 1997 /s/ Richard W. Mott
---------------- ------------------------------------
Richard W. Mott
Date: Oct 13, 1997 /s/ Charles L. Mozeko
---------------- ------------------------------------
Charles L. Mozeko
Date: Oct 21, 1997 /s/ Barry C. Muffoletto
---------------- ------------------------------------
Barry C. Muffoletto
Date: Oct 16, 1997 /s/ Michael R. Nowaczyk
---------------- ------------------------------------
Michael R. Nowaczyk
Date: Oct 23 1997 /s/ William M. Paulot
---------------- ------------------------------------
William M. Paulot
Date: Oct 09, 1997 /s/ Joseph M. Probst
---------------- ------------------------------------
Joseph M. Probst
Date: Oct 15, 1997 /s/ Michael F. Pyszczek
---------------- ------------------------------------
Michael F. Pyszczek
Date: Oct 29, 1997 /s/ Janice E. Remigio
---------------- ------------------------------------
Janice E. Remigio
Date: Oct 14, 1997 /s/ Robert C. Rusin
---------------- ------------------------------------
Robert C. Rusin
Date: Oct 19, 1997 /s/ Gary J. Sfeir
---------------- ------------------------------------
Gary J. Sfeir
Date: Oct 31, 1997 /s/ Robert W. Siegler
---------------- ------------------------------------
Robert W. Siegler
<PAGE>
Date: Oct 20, 1997 /s/ Joseph E. Spaulding
---------------- ------------------------------------
Joseph E. Spaulding
Date: Oct 11, 1997 /s/ Esther S. Takeuchi
---------------- ------------------------------------
Esther S. Takeuchi
Date: Oct 09, 1997 /s/ Mark Visbisky
---------------- ------------------------------------
Mark Visbisky
Date: Oct 03, 1997 /s/ Edward F. Voboril
---------------- ------------------------------------
Edward F. Voboril
Date: Oct 20, 1997 /s/ Robert C. Wiegand
---------------- ------------------------------------
Robert C. Wiegand
<PAGE>
Date: Oct 24, 1997 /s/ Tim H. Belstadt
---------------- ------------------------------------
Tim H. Belstadt
Date: Oct 17, 1997 /s/ Susan M. Bratton
---------------- ------------------------------------
Susan M. Bratton
Date: Nov 05, 1997 /s/ Curtis F. Holmes
---------------- ------------------------------------
Curtis F. Holmes
Date: Oct 12, 1997 /s/ Larry T. DeAngelo
---------------- ------------------------------------
Larry T. DeAngelo
Date: Oct 30, 1997 /s/ Arthur J. Lalonde
---------------- ------------------------------------
Arthur J. Lalonde
Date: Oct 27, 1997 /s/ Richard W. Mott
---------------- ------------------------------------
Richard W. Mott
Date: Oct 13, 1997 /s/ Edward F. Voboril
---------------- ------------------------------------
Edward F. Voboril
<PAGE>
ADDENDUM TO SCHEDULE I
INDIVIDUAL HOLDERS
Tim H. Belstadt
Address: 452 East Stenzil Street
North Tonawanda, NY 14120
Telephone: (716) 692-2194
Susan M. Bratton
Address: 1621 North Forest Road
Williamsville, NY 14221
Telephone: (716) 689-6859
Larry T. DeAngelo
Address: 6060 Whitegate Crossing
East Amherst, NY 14051
Telephone: (716) 689-1795
Curtis F. Holmes
Address: 8125 Centre Lane
East Amherst, NY 14051
Telephone: (716) 741-2537
Arthur J. Lalonde
Address: 208 Summit Avenue
Buffalo, NY 14214
Telephone: (716) 838-4043
Richard W. Mott
Address: 8546 Quincy Court
East Amherst, NY 14051
Telephone: (716) 741-8647
Edward F. Voboril
Address: 33 Four Winds Way
Amherst, NY 14226
Telephone: (716) 832-2297
Jack A. Belstadt
Address: 6046 Townline Road
Lockport, NY 14094
Telephone: (716) 693-8586
<PAGE>
Richard J. Boos
Address: 4571 Budd Road
Cambria, NY 14094
Telephone: (716) 433-1749
William H. Bruns
Address: 43 Chipman Place
North Tonawanda, NY 14120
Telephone: (716) 694-7961
Curtis A. Cashmore
Address: 4690 Margaret Drive
Clarence, NY 14031
Telephone: (716) 759-6550
William D. K. Clark
Address: 8175 Clarherst Drive
East Amherst, NY 14051
Telephone: (716) 741-9124
Steven J. Ebel
Address: 9635 Keller Road
Clarence Center, NY 14032
Telephone: (716) 741-4015
Douglas P. Eberhard
Address: 2151 Harvey Road
Grand Island, NY 14072
Telephone: (716) 773-6198
Gayle E. Fairchild
Address: 5048 Alexander Drive
Clarence, NY 14031
Telephone: (716) 759-6868
Stuart S. Ferguson
Address: 8020 Clarence Center Road
East Amherst, NY 14051
Telephone: (716) 636-6034
John T. Fordyce
Address: 249 Countryside Lane
Williamsville, NY 14221
Telephone: (716) 688-0371
2
<PAGE>
Frank J. Forkl, Jr.
Address: 4270 Fairfield Drive
Clarence, NY 14221
Telephone: (716) 632-8114
Dominick J. Frustaci
Address: 53 Lehn Springs Drive
Williamsville, NY 14221
Telephone: (716) 626-0906
Christine A. Frysz
Address: 31 Britannia Drive
East Amherst, NY 14051
Telephone: (716) 688-4473
Richard M. Garlapow
Address: 1495 W. River Road
Grand Island, NY 14072
Telephone: (716) 773-2623
Robert W. Hammell
Address: 9 Monta Vista Court
East Amherst, NY 14051
Telephone: (716) 636-1502
Robert C. Jackson
Address: 4660 Boncrest West
Williamsville, NY 14221
Telephone: (716) 634-9885
Ricky S. Kline
Address: 5234 Randolph Street
Sanborn, NY 14132
Telephone: (716) 434-5198
Randolph A. Leising
Address: 35 Edward Street
Williamsville, NY 14221
Telephone: (716) 634-3065
Bruce E. Meyer
Address: 128 Hirschfield Drive
Williamsville, NY 14221
Telephone: (716) 632-2026
3
<PAGE>
Charles L. Mozeko
Address: 253 Pryor Avenue
Tonawanda, NY 14150
Telephone: (716) 835-7749
Barry C. Muffoletto
Address: 11747 Buckwheat Road
Alden, NY 14004
Telephone: (716) 937-3199
Michael R. Nowaczyk
Address: 6830 Omphalius Road
Colden, NY 14033
Telephone: (716) 941-9128
William M. Paulot
Address: 131 Siebert Road
Lancaster, NY 14086
Telephone: (716) 683-0238
Joseph M. Probst
Address: 188 Seabrook
Williamsville, NY 14221
Telephone: (716) 634-7659
Michael F. Pyszczek
Address: 8055 Lake Road
LeRoy, NY 14482
Telephone: (716) 768-4579
Janice E. Remigio
Address: 97 Mullen Street
Tonawanda, NY 14150
Telephone: (716) 693-7561
Robert C. Rusin
Address: 9125 Hillview Drive
Clarence, NY 14031
Telephone: (716) 741-9796
Gary J. Sfeir
Address: 8850 Woodside Drive
Clarence, NY 14031
Telephone: (716) 741-2223
4
<PAGE>
Robert W. Siegler
Address: 6 Fawnwood Drive
Williamsville, NY 14221
Telephone: (716) 688-1460
Joseph E. Spaulding
Address: 147 Irving Terrace
Tonawanda, NY 14223
Telephone: (716) 877-6297
Esther S. Takeuchi
Address: 38 San Rafael Court
East Amherst, NY 14051
Telephone: (716) 639-7532
Mark Visbisky
Address: 123 St. Boniface Road
Cheektowaga, NY 14225
Telephone: (716) 895-4691
Gary R. Whitcher
Address: 189 Breezewood Commons
East Amherst, NY 14051
Telephone: (716) 688-7417
Robert C. Weigand
Address: 5601 William Street
Lancaster, NY 14086
Telephone: (716) 684-7464
5
<PAGE>
Exhibit 10.13
AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT
This AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT (this "Amendment") is
entered into and effective as of October 31, 1997 among WGL Holdings, Inc., a
Delaware corporation (the "Company"), DLJ Merchant Banking Partners II, L.P., a
Delaware limited partnership, DLJMB Funding II, Inc., a Delaware corporation,
DLJ Merchant Banking Partners II-A, L.P., a Delaware limited partnership, DLJ
Diversified Partners, L.P., a Delaware limited partnership, DLJ Diversified
Partners-A, L.P., a Delaware limited partnership, DLJ Millennium Partners, L.P.,
a Delaware limited partnership, DLJ First ESC L.L.C., a Delaware limited
liability company, DLJ Offshore Partners II, C.V., a Netherlands Antilles
limited partnership, DLJ EAB Partners, L.P., a Delaware limited partnership, UK
Investment Plan 1997 Partners, a Delaware partnership, and the former holders of
capital stock of Wilson Greatbatch Ltd., a New York corporation ("WGL"), and
other Individual Holders listed on SCHEDULE I to the Agreement, and each other
holder of record of Common Shares who may hereafter duly and properly execute a
separate agreement to be bound by the terms of the Agreement (each DLJ Party,
the Individual Holders, and each other Person that hereafter may become a party
to the Agreement as contemplated by the Agreement being hereinafter referred to
collectively as the "Parties").
RECITALS
WHEREAS, the Parties entered into a Stockholders Agreement, dated as of
July 16, 1997 (the "Agreement");
WHEREAS, the Parties now desire to amend the Agreement upon the terms and
conditions contained in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the Parties, intending to be legally bound, hereby agree
as follows:
1. DEFINED TERMS. All terms appearing herein with initial capital letters
that are not defined herein shall have the meaning ascribed to such terms in the
Agreement.
<PAGE>
2. AMENDMENT OF SECTION 1.1. Section 1.1 of the Agreement is hereby
amended by deleting the existing definition of the term "Permitted Individual
Holder Transferee" in its entirety and substituting therefor the following new
definition of "Permitted Individual Holder Transferee":
"Permitted Individual Holder Transferee" means (i) any trust, limited
partnership or other comparable entity established for the benefit of an
Individual Holder, the spouse and/or one or more of the lineal descendants
of any Individual Holder which is controlled by such Individual Holder or
(ii) the spouse, parent, brother, sister and/or one or more of the lineal
descendants, step-children, brothers-in-law and/or sisters-in-law of any
Individual Holder or (iii) any trust established for the benefit of any
person listed in clause (ii) above."
3. EFFECT. Except as expressly provided for herein, the terms of the
Agreement shall remain in full force and effect.
4. CHOICE OF LAW. This Amendment, including, without limitation, the
interpretation, construction, validity and enforceability thereof, shall be
governed by the internal laws of the State of New York including Section 5-1401
of the General Obligations Law of the State of New York without regard to the
principles of conflict of laws thereof.
5. COUNTERPARTS. This Amendment may be executed in two or more
counterparts and each counterpart shall be deemed to be an original and all such
counterparts together shall constitute one and the same agreement of the parties
hereto.
[SIGNATURES CONTAINED ON SUCCEEDING PAGES]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to Stockholders Agreement as of the date first above written.
WGL Holdings, Inc.
By: /s/ Edward F. Voboril
--------------------------------------
Edward F. Voboril
President and Chief Executive Officer
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
--------------------------------
David M. Wittels
Attorney-in-Fact
DLJMB FUNDING II, INC.
By: /s/ David M. Wittels
--------------------------------------
David M. Wittels
Attorney-in-Fact
DLJ MERCHANT BANKING PARTNERS II-A, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
--------------------------------
David M. Wittels
Attorney-in-Fact
3
<PAGE>
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ David M. Wittels
---------------------------------
David M. Wittels
Attorney-in-Fact
DLJ DIVERSIFIED PARTNERS-A, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ David M. Wittels
---------------------------------
David M. Wittels
Attorney-in-Fact
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ MERCHANT BANKING II, INC.
By: /s/ David M. Wittels
---------------------------------
David M. Wittels
Attorney-in-Fact
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
As Manager
By: /s/ David M. Wittels
---------------------------------
David M. Wittels
Attorney-in-Fact
4
<PAGE>
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
---------------------------------
David M. Wittels
Attorney-in-Fact
DLJ EAB PARTNERS, L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
By: /s/ David M. Wittels
---------------------------------
David M. Wittels
Attorney-in-Fact
UK INVESTMENT PLAN 1997 PARTNERS
By: DONALDSON, LUFKIN & JENRETTE,
INC.
By: /s/ David M. Wittels
---------------------------------
David M. Wittels
Attorney-in-Fact
5
<PAGE>
/s/ Warren D. Greatbatch
------------------------------------------
Warren D. Greatbatch
/s/ Ami A. Greatbatch
------------------------------------------
Ami A. Greatbatch
/s/ Peter N. Greatbatch
------------------------------------------
Peter N. Greatbatch
/s/ Michele A. Greatbatch
------------------------------------------
Michele A. Greatbatch
/s/ Kenneth A. Greatbatch
------------------------------------------
Kenneth A. Greatbatch
/s/ Sharon H. Greatbatch
------------------------------------------
Sharon H. Greatbatch
/s/ Lawrence A. Maciariello
------------------------------------------
Lawrence A. Maciariello
/s/ Anne K. Maciariello
------------------------------------------
Anne K. Maciariello
/s/ Ericka Dee Greatbatch
------------------------------------------
Ericka Dee Greatbatch
/s/ Eleanor F. Greatbatch
------------------------------------------
Eleanor F. Greatbatch
/s/ Wilson Greatbatch
------------------------------------------
Wilson Greatbatch
6
<PAGE>
/s/ Tim H. Belstadt
------------------------------------------
Tim H. Belstadt
/s/ Susan M. Bratton
------------------------------------------
Susan M. Bratton
/s/ Curtis F. Holmes
------------------------------------------
Curtis F. Holmes
/s/ Larry T. DeAngelo
------------------------------------------
Larry T. DeAngelo
/s/ Arthur J. Lalonde
------------------------------------------
Arthur J. Lalonde
/s/ Richard W. Mott
------------------------------------------
Richard W. Mott
/s/ Edward F. Voboril
------------------------------------------
Edward F. Voboril
7
<PAGE>
/s/ Jack A. Belstadt
------------------------------------------
Jack A. Belstadt
/s/ Richard J. Boos
------------------------------------------
Richard J. Boos
/s/ William H. Bruns
------------------------------------------
William H. Bruns
/s/ Curtis A. Cashmore
------------------------------------------
Curtis A. Cashmore
/s/ William D. K. Clark
------------------------------------------
William D. K. Clark
/s/ Steven J. Ebel
------------------------------------------
Steven J. Ebel
/s/ Douglas P. Eberhard
------------------------------------------
Douglas P. Eberhard
/s/ Gayle E. Fairchild
------------------------------------------
Gayle E. Fairchild
/s/ Stuart S. Ferguson
------------------------------------------
Stuart S. Ferguson
/s/ John T. Fordyce
------------------------------------------
John T. Fordyce
/s/ Frank J. Forkl, Jr.
------------------------------------------
Frank J. Forkl, Jr.
/s/ Dominick J. Frustaci
------------------------------------------
Dominick J. Frustaci
8
<PAGE>
/s/ Christine A. Frysz
------------------------------------------
Christine A. Frysz
/s/ Richard M. Garlapow
------------------------------------------
Richard M. Garlapow
/s/ Robert W. Hammell
------------------------------------------
Robert W. Hammell
/s/ Robert C. Jackson
------------------------------------------
Robert C. Jackson
/s/ Ricky S. Kline
------------------------------------------
Ricky S. Kline
/s/ Randolph A. Leising
------------------------------------------
Randolph A. Leising
/s/ Bruce E. Meyer
------------------------------------------
Bruce E. Meyer
/s/ Charles L. Mozeko
------------------------------------------
Charles L. Mozeko
/s/ Barry C. Muffoletto
------------------------------------------
Barry C. Muffoletto
/s/ Michael R. Nowaczyk
------------------------------------------
Michael R. Nowaczyk
/s/ William M. Paulot
------------------------------------------
William M. Paulot
/s/ Joseph M. Probst
------------------------------------------
Joseph M. Probst
9
<PAGE>
/s/ Michael F. Pyszczek
------------------------------------------
Michael F. Pyszczek
/s/ Janice E. Remigio
------------------------------------------
Janice E. Remigio
/s/ Robert C. Rusin
------------------------------------------
Robert C. Rusin
/s/ Gary J. Sfeir
------------------------------------------
Gary J. Sfeir
/s/ Robert W. Siegler
------------------------------------------
Robert W. Siegler
/s/ Joseph E. Spaulding
------------------------------------------
Joseph E. Spaulding
/s/ Esther S. Takeuchi
------------------------------------------
Esther S. Takeuchi
/s/ Mark Visbisky
------------------------------------------
Mark Visbisky
/s/ Robert C. Wiegand
------------------------------------------
Robert C. Wiegand
/s/ Gary R. Whitcher
------------------------------------------
Gary R. Whitcher
10
<PAGE>
Exhibit 10.14
MANAGEMENT STOCKHOLDERS AGREEMENT
This MANAGEMENT STOCKHOLDERS AGREEMENT (this "Agreement") is entered into
and effective as of July 10, 1997 among WGL Holdings, Inc., a Delaware
corporation (the "Company"), DLJ Merchant Banking Partners II, L.P., a Delaware
limited partnership ("DLJ Partners II"), DLJMB Funding II, Inc., a Delaware
corporation ("DLJ Funding II"), DLJ Merchant Banking Partners II-A, L.P., a
Delaware limited partnership ("DLJ Partners II-A"), DLJ Diversified Partners,
L.P., a Delaware limited partnership ("Diversified Partners"), DLJ Diversified
Partners-A, L.P., a Delaware limited partnership ("Diversified Partners-A"), DLJ
Millennium Partners, L.P., a Delaware limited partnership ("Millennium
Partners"), DLJ First ESC L.L.C., a Delaware limited liability company ("First
ESC"), DLJ Offshore Partners II, C.V., a Netherlands Antilles limited
partnership ("Offshore Partners II"), DLJ EAB Partners, L.P., a Delaware limited
partnership ("EAB Partners"), UK Investment Plan 1997 Partners, a Delaware
partnership ("UK Partners"), and the holders of capital stock of the Company
listed on SCHEDULE I hereto (the "Management Holders"), and each other holder of
record of Common Shares (as defined below) who may hereafter duly and properly
execute a separate agreement to be bound by the terms hereof (each DLJ Party (as
hereinafter defined), the Management Holders, and each other Person (as defined
below) that hereafter may become a party hereto as contemplated hereby being
hereinafter referred to individually as a "Party" and collectively as the
"Parties").
RECITALS
1. The Company has authorized 100,000,000 shares of common stock, $.001
par value per share (the "Common Shares").
2. Concurrently herewith, DLJ, the Company, Wilson Greatbatch Ltd., a New
York corporation ("WGL") and the Individual Holders are consummating the
transactions contemplated by that certain Stock Purchase Agreement, dated as of
June 19, 1997 (the "Purchase Agreement"), pursuant to which the Company will
acquire 100% of the Capital Shares of WGL.
3. In connection with the transactions contemplated by the Purchase
Agreement, DLJ, the Company and the Individual Holders are hereafter entering
into that
<PAGE>
certain Stockholders Agreement to be dated as of July 16, 1997 (the "Seller
Stockholders Agreement").
4. In connection with the Purchase Agreement, the parties hereto are
entering into this Agreement in order to define certain rights and obligations
of such parties.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
AGREEMENT
ARTICLE I
GENERAL PROVISIONS;
REPRESENTATIONS AND WARRANTIES
1.1 CERTAIN TERMS. In addition to the terms defined elsewhere herein, when
used herein the following terms shall have the meanings indicated:
"Adverse Person" means (i) any Persons that are competitors of the
Company, directly involved in the business of designing, developing,
manufacturing, marketing, selling or distributing of implantable power sources,
implantable medical devices, lithium batteries, silver vanadium oxide batteries,
microvasive surgical instruments and close-tolerance medical and aerospace
miniature components intended for commercial distribution, including (without
limitation) pacemakers, cardioverter-defibrillators and capacitors for
defibrillator applications, (ii) any Persons that are present or former
customers of the Company and (iii) any other Persons the Board of Directors
reasonably designates as such from time to time.
"Affiliate" means, with respect to any Person, any Person controlling,
controlled by, or under common control with such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
With respect to any Common Shares, "beneficial" ownership or
"beneficially" owned shall have the same
2
<PAGE>
meaning as in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
"Board of Directors" means the board of directors of the Company.
"Capital Shares" means any and all shares, interests, participations or
other equivalents (however designated) of capital shares of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
and any and all warrants, options or other rights to purchase or acquire any of
the foregoing.
"Cause" means (i) with respect to any Management Holder who is a party to
a written employment agreement with the Company, which agreement contains a
definition of "cause" or "for cause" (or words of like import) for purposes of
termination of employment thereunder by the Company, "cause" or "for cause" (or
words of like import) as defined in the most recent of such agreements, or (ii)
in all other cases, as determined by the Board of Directors (or the compensation
committee thereof, if applicable), in its sole discretion, that one or more of
the following has occurred: (A) any intentional or willful failure, or failure
due to bad faith, by such Management Holder to substantially perform his or her
employment duties which shall not have been corrected within thirty (30) days
following written notice thereof, (B) any misconduct by such Management Holder
which is significantly injurious to the Company or any Subsidiary or Affiliate
of the Company, (C) any breach by such Management Holder of any covenant
contained in any agreement or contract with the Company (including, without
limitation, this Agreement), (D) such Management Holder's conviction of, or
entry of a plea of NOLO CONTENDERE in respect of, any felony or a misdemeanor
which results in, or is reasonably expected to result in, economic or
reputational injury to the Company or any Subsidiary or Affiliate of the
Company.
"Common Share Equivalents" means (without duplication with any other
Common Shares or Common Share Equivalents) rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Shares or securities convertible or exchangeable into Common
Shares, whether at the time of issuance or upon the passage of time or the
occurrence of some future event.
3
<PAGE>
"DLJ" means all of the DLJ Parties, collectively.
"DLJ Party" means any of DLJ Partners II, DLJ Funding II, DLJ Partners
II-A, Diversified Partners, Diversified Partners-A, Millennium Partners, First
ESC, Offshore Partners II, EAB Partners or UK Partners.
"DLJSC" means Donaldson, Lufkin & Jenrette Securities Corporation or any
successor thereto.
"Fair Market Value" means, as of any date, the fair market value of one
Common Share as of such date as determined in good faith by the Board of
Directors of the Company.
"Fully-Diluted Common Shares" means, at any time, the then outstanding
Common Shares of the Company plus (without duplication) all Common Shares
issuable, whether at such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion or exchange of all then-outstanding
Common Share Equivalents.
"Good Reason" means (i) with respect to any Management Holder who is a
party to a written employment agreement with the Company, a material breach by
the Company of such employment agreement which the Company fails to cure within
30 days after its receipt of written notice thereof or (ii) with respect to any
Management Holder who is not a party to a written employment agreement with the
Company, that one or more of the following has occurred: (A) without Executive's
express written consent, the assignment to such Management Holder of any duties,
or any limitation of such Management Holder's responsibilities, materially
inconsistent with such Management Holder's duties and responsibilities with the
Company as such duties and responsibilities existed on the date hereof; or (B)
any failure by the Company to pay, or any reduction by the Company of, such
Management Holder's annual salary, as reported on such Management Holder's Form
W-2 for the preceding year; or (C) without such Management Holder's express
written consent, the relocation of the principal place of such Management
Holder's employment to a location where, on the date hereof, the Company does
not have and is not currently discussing or contemplating building or placing a
facility.
"Individual Holder" has the meaning assigned to such term in the Seller
Stockholders Agreement.
4
<PAGE>
"Permitted Individual Holder Transferee" has the meaning assigned to such
term in the Seller Stockholders Agreement.
"Permitted Management Holder Transferee" means (i) any trust, limited
partnership or other comparable entity established for the benefit of a
Management Holder, the spouse and/or one or more of the lineal descendants of
any Management Holder which is controlled by such Management Holder or (ii) the
spouse, parent, brother, sister and/or one or more of the lineal descendants,
step-children, brothers-in-law and/or sisters-in-law of any Management Holder.
"Permitted Transferee" means in the case of any DLJ Party (A) any other
DLJ Party, (B) any corporation, partnership or other entity which is an
Affiliate of any DLJ Party (collectively, the "DLJ Affiliates"), (C) any
managing director, general partner, director, limited partner, officer or
employee of any DLJ Party or any DLJ Affiliate, or the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any of the
foregoing Persons referred to in this clause (C) (collectively, "DLJ
Associates"), (D) any trust, the beneficiaries of which, or any corporation,
limited liability company or partnership, the shareholders, members or general
or limited partners of which, include only one or more DLJ Parties, DLJ
Affiliates, DLJ Associates, their spouses or their lineal descendants and (E) a
voting trustee for one or more DLJ Parties or for one or more DLJ Affiliates or
DLJ Associates under the terms of a voting trust.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and any government or agency or political
subdivision thereof.
"Qualified IPO" means a consummated initial public offering of Common
Shares which is underwritten on a firm commitment basis by a
nationally-recognized investment banking firm.
"Registrable Securities" means the Common Shares and any Common Shares
which are issuable upon the exercise of any right, including pursuant to any
option, warrant or security convertible into Common Shares or similar right and
5
<PAGE>
any other securities issued or issuable with respect to such Shares by way of a
share dividend or share split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization; PROVIDED, that any
Registrable Security will cease to be a Registrable Security when (a) a
registration statement covering such Registrable Security has been declared
effective by the SEC and it has been disposed of pursuant to such effective
registration statement, (b) it is sold under circumstances in which all of the
applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or it is eligible for sale under such Rule 144
without respect to any volume limitations or (c) (i) it has been otherwise
transferred and (ii) the Company has delivered a new certificate or other
evidence of ownership for it not bearing the legend required pursuant to Section
7.5 of this Agreement and (iii) it may be resold without subsequent registration
under the Securities Act.
"SEC" means the Securities and Exchange Commission or any successor
governmental agency.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.
"Selling Holder" means a holder of Registrable Securities who is selling
Registrable Securities pursuant to a registration statement under the Securities
Act.
"Subsidiary" means (i) any corporation or other entity a majority of the
Capital Shares of which having ordinary voting power to elect a majority of the
board of directors or other Persons performing similar functions is at the time
owned, directly or indirectly, with power to vote, by the Company or any direct
or indirect Subsidiary of the Company or (ii) a partnership in which the Company
or any direct or indirect Subsidiary is a general partner.
"Underwriter" means a securities dealer which purchases any Common Shares
as principal and not as part of such dealer's market-making activities.
6
<PAGE>
1.2 REPRESENTATIONS AND WARRANTIES.
(a) Each Management Holder (as to itself only) hereby represents and
warrants to the Company and the other Parties that:
(i) it has full power and authority to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby, and the execution, delivery and performance by
it of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
action;
(ii) this Agreement has been duly and validly executed and
delivered by such Party and constitutes the binding obligation of
such Party enforceable against such Party in accordance with its
terms; and
(iii) the execution, delivery and performance by such Party of
this Agreement and the consummation by such Party of the
transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time, or both, (A) violate any
provision of law, statute, rule or regulation to which it is
subject, (B) violate any order, judgment, or decree applicable to it
or (C) conflict with, or result in a breach or default under, any
term or condition of any agreement or other instrument to which such
Party is a party or by which such Party is bound.
(b) The Company hereby represents and warrants to each Party that:
(i) it is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, it has
full corporate power and authority under its certificate of
incorporation to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby, and the execution,
delivery and performance by it of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary action;
(ii) this Agreement has been duly and validly executed and
delivered by the Company and constitutes
7
<PAGE>
the binding obligation thereof enforceable against the Company in
accordance with its terms; and
(iii) the execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the
transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time, or both, (A) violate any
provision of law, statute, rule or regulation to which the Company
is subject, (B) violate any order, judgment or decree applicable to
the Company or (C) conflict with, or result in a breach or default
under, any term or condition of its certificate of incorporation or
by-laws or any agreement or other instrument to which the Company is
a party or by which it is bound.
(c) Each DLJ Party (as to itself only) hereby represents and warrants to
the Company and the other Parties that:
(i) it is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization, as the case may be, it has full power and authority
under its certificate of incorporation or other such organizational
document(s) to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby, and the execution,
delivery and performance by it of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary action;
(ii) this Agreement has been duly and validly executed and
delivered by such DLJ Party and constitutes the binding obligation
thereof enforceable against such DLJ Party in accordance with its
terms; and
(iii) the execution, delivery and performance by such DLJ
Party of this Agreement and the consummation by such DLJ Party of
the transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time, or both, (A) violate any
provision of law, statute, rule or regulation to which such DLJ
Party is subject, (B) violate any order, judgment or decree
applicable to such DLJ Party or (C) conflict with, or result in a
breach or default under, any term or condition of its
8
<PAGE>
certificate of incorporation or by-laws (or such other comparable
organizational and governing document(s), as the case may be) or any
agreement or other instrument to which such DLJ Party is a party or
by which it is bound.
ARTICLE II
MANAGEMENT OF THE COMPANY;
ACTIVITIES OF THE PARTIES
2.1 BOARD OF DIRECTORS. The Parties and the Company shall take all action
within their respective power, including, but not limited to, the voting of
Capital Shares of the Company (to the extent that any such Person holds Capital
Shares of the Company entitled to vote thereon), required to cause the Board of
Directors to at all times consist of seven (7) directors (or such greater number
as the DLJ Parties shall select), one of whom shall be the Chief Executive
Officer of the Company.
2.2 ELECTION OF DIRECTOR DESIGNATED BY INDIVIDUAL HOLDERS. So long as the
Individual Holders collectively own beneficially in the aggregate at least three
percent (3%) of the Fully-Diluted Common Shares, each Management Holder, each
Permitted Management Holder Transferee (if any), DLJ and each Permitted
Transferee (if any) shall take all action within its power, including, but not
limited to, the voting of Capital Shares of the Company (to the extent that any
such Person holds Capital Shares of the Company entitled to vote thereon),
required to cause the Board of Directors to include either (a) Lawrence A.
Maciariello or (b) with the consent of DLJ Partners II (which consent shall not
be unreasonably withheld), one director designated by the Individual Holders and
Permitted Individual Holder Transferees (if any) then owning beneficially a
majority of the aggregate Fully-Diluted Common Shares then held by all
Individual Holders and Permitted Individual Holder Transferees (if any).
2.3 ELECTION OF DIRECTORS DESIGNATED BY DLJ PARTNERS II. Each Management
Holder and each Permitted Management Holder Transferee (if any) shall take all
action within its power, including, but not limited to, the voting of Capital
Shares of the Company (to the extent that any such Person holds Capital Shares
of the Company entitled to vote thereon), required to cause the Board of
Directors to
9
<PAGE>
include a number of directors designated by DLJ Partners II, or its successor in
interest, equal to up to (i) one less than the maximum number of directors then
comprising the Board of Directors so long as Section 2.2 hereof remains in
effect or (ii) the maximum number of directors then comprising the Board of
Directors if DLJ and its Permitted Transferees are not required to vote their
Capital Shares in favor of a director designated by the Individual Holders
pursuant to Section 2.2 hereof.
2.4 REPLACEMENT OF DESIGNATED DIRECTORS. In the event that any director (a
"Withdrawing Director") designated in the manner set forth in Section 2.2 or 2.3
is unable to serve, or once having commenced to serve, is removed or withdraws
from the Board of Directors, such Withdrawing Director's replacement (the
"Substitute Director") on the Board of Directors (and, if applicable, any
executive or similar committee thereof) shall be designated in accordance with
Section 2.2 or 2.3, as applicable. The Company and each of the Parties agrees to
take all action within its power, including, but not limited to, (i) the voting
of Capital Shares of the Company (to the extent that any such Person holds
Capital Shares of the Company entitled to vote thereon) to cause the election of
such Substitute Director as soon as practicable following his or her designation
and (ii) the instructing of any director it had previously designated to serve
as a member of the Board of Directors, as the first order of business at the
first meeting thereof after such Substitute Director has been so designated, to
vote to seat such designated Substitute Director as a director in place of the
Withdrawing Director.
ARTICLE III
TRANSFER OF SECURITIES
3.1 TRANSFER OF SHARES. No Party, Permitted Transferee or Permitted
Management Holder Transferee (other than a DLJ Party) may transfer any Capital
Shares prior to the earlier to occur of (a) the date that is one (1) year after
the date of the consummation of a Qualified IPO and (b) the fifth anniversary of
the date of this Agreement (the "Fifth Anniversary"), except as contemplated by
Sections 3.2, 3.3, 3.7, 3.8 or 3.9 hereof or pursuant to an offering of equity
securities registered under the Securities Act by the Company (except that the
Company shall be under no obligation to register any Capital Shares then held by
the
10
<PAGE>
Management Holders in connection with any such registered offering), except to
the extent required under Article IV; PROVIDED, HOWEVER, that in the event the
Fifth Anniversary occurs before a Qualified IPO, no Party that is not a DLJ
Party may transfer any Common Shares or Common Share Equivalents to any Adverse
Person prior to a Qualified IPO.
3.2 RIGHT OF PARTICIPATION.
(a) If one or more DLJ Parties and/or Permitted Transferees (if any)
propose to sell Common Shares or Common Share Equivalents for value (such DLJ
Parties and any such Permitted Transferees being referred to herein as a
"Transferor") in one transaction or a series of related transactions, but
excluding (a) a sale which is pursuant to a Qualified IPO, (b) a sale or sales
which are effected by one or more DLJ Parties and/or any Permitted
Transferee(s), in a single transaction or series of related transactions, and
which do not involve more than 25% of the Fully-Diluted Common Shares and (c)
any sale in which all of the Parties agree to participate, then such Transferor
shall offer (the "Participation Offer") to include in the proposed sale a number
of Common Shares or Common Shares represented by Common Share Equivalents
designated by any of the Parties, not to exceed, in respect of any such Party,
the number of Common Shares equal to the product of (i) the aggregate number of
Common Shares or Common Shares represented by Common Share Equivalents to be
sold to the proposed transferee and (ii) a fraction, the numerator of which is
equal to the number of Fully-Diluted Common Shares held by such Party and the
denominator of which is equal to the number of Fully-Diluted Common Shares. The
Transferor shall give written notice to each Party of the Participation Offer
(the "Transferor's Notice") at least 20 days prior to the proposed sale. The
Transferor's Notice shall specify the proposed transferee, the number of Common
Shares or Common Shares represented by Common Share Equivalents and, if
applicable, the class or classes of Common Shares to be sold to such transferee,
the amount and type of consideration to be received therefor, and the place and
date on which the sale is to be consummated. Each Party who wishes to include
Common Shares or Common Share Equivalents in the proposed sale in accordance
with the terms of this Section 3.2 shall so notify the Transferor not more than
20 days after the date of the Transferor's Notice. The Participation Offer shall
be conditioned upon the Transferor's sale of Common Shares or Common Share
Equivalents pursuant to the transactions contemplated in the Transferor's Notice
with
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the transferee named therein. If any Party accepts the Participation Offer, the
Transferor shall reduce to the extent necessary the number of Common Shares or
Common Share Equivalents it otherwise would have sold in the proposed sale so as
to permit other Parties who have accepted the Participation Offer to sell the
number of Common Shares or Common Share Equivalents that they are entitled to
sell under this Section 3.2, and the Transferor and such other Party or Parties
shall sell the number of Common Shares or Common Share Equivalents specified in
the Participation Offer to the proposed transferee in accordance with the terms
of such sale set forth in the Transferor's Notice. Notwithstanding anything in
the foregoing to the contrary, no Common Share Equivalents shall receive the
benefits of this Section 3.2 prior to the time such Common Share Equivalents are
exercisable for or convertible or exchangeable into Common Shares and, in order
to obtain the benefits of this Section 3.2, any such Common Share Equivalents in
the form of options, warrants or other securities convertible or exchangeable
into or exercisable for Common Shares must be exercised or cancelled prior to or
simultaneously with the consummation of the sale pursuant to this Section 3.2.
(b) The provisions of this Section 3.2 shall terminate upon the
consummation of a Qualified IPO.
3.3 DRAG-ALONG RIGHTS.
(a) Notwithstanding any other provision in this Article III, if one or
more DLJ Parties (such DLJ Parties being referred to herein as the "Seller")
propose to sell fifty percent (50%) or more of the Common Shares and Common
Share Equivalents held by DLJ at the time of such sale ("Sale Shares") to a
third party or parties which is not an Affiliate of DLJ (a "Third Party")
pursuant to a Bona Fide Offer (as defined below), then Seller shall have the
right, subject to the provisions of this Section 3.3, to require all other
Parties that are not DLJ Parties (collectively, the "Co-Sellers") to include in
such sale (a "Required Sale") all of the Common Shares and Common Share
Equivalents held by the Co-Sellers (the "Co-Sellers' Shares") by delivering
notice (the "Required Sale Notice") to such other Parties.
(b) The Required Sale Notice shall set forth: (i) the date of such notice
(the "Notice Date"), (ii) the name and address of the Third Party, (iii) the
proposed
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amount and type of consideration to be paid per Common Shares for the Sale
Shares (the "Sale Price"), and the terms and conditions of payment offered by
the Third Party in reasonable detail, together with written proposals or
agreements, if any, with respect thereto, (iv) the aggregate number of Sale
Shares, (v) confirmation that Seller is selling fifty percent (50%) or more of
the aggregate number of Fully-Diluted Common Shares then held by DLJ to a Third
Party, and (vi) the proposed date of the Required Sale (the "Required Sale
Date"), which shall be not less than 30 nor more than 180 days after the Notice
Date.
(c) The Co-Sellers shall cooperate in good faith with Seller in connection
with consummating the Required Sale (including, without limitation, the giving
of consents and the voting of any Common Shares of the Company held by the
Co-Sellers to approve such Required Sale). On the Required Sale Date, the
Co-Sellers shall deliver, free and clear of all liens, claims or encumbrances, a
certificate or certificates and/or other instrument or instruments for all of
its Common Shares and Common Share Equivalents, duly endorsed and in proper form
for transfer, with the signature guaranteed, to such Third Party in the manner
and at the address indicated in the Required Sale Notice and Seller shall cause
each Co-Seller's share of the purchase price to be paid to such Co-Seller.
(d) "Bona Fide Offer" shall mean an offer (whether in the form of a
purchase of Common Shares, merger, recapitalization, or otherwise) for Common
Shares.
(e) In the event of any Required Sale, all Co-Sellers which hold Common
Share Equivalents in the form of options, warrants or other securities
convertible into or exercisable for Common Shares must exercise or cancel all
such options, warrants or conversion or other rights prior to or simultaneously
with the consummation of the Required Sale.
(f) The provisions of this Section 3.3 shall terminate upon the
consummation of a Qualified IPO.
3.4 PROHIBITED TRANSFERS. Any purported transfer of Common Shares and/or
Common Share Equivalents by a Party which is not permitted by the provisions of
Section 3.1, 3.2 or 3.3, or which is in violation of such provisions, shall be
void and of no force and effect whatsoever.
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3.5 CERTAIN EVENTS NOT DEEMED TRANSFERS. Except as contemplated by Section
3.3, in no event shall any of the following constitute a transfer of Common
Shares for purposes of Section 3.1, 3.2 or 3.3 or be subject to the terms
hereof: (a) an exchange, reclassification or other conversion of Common Shares
into any cash, securities or other property pursuant to a merger, consolidation
or recapitalization of the Company or any Subsidiary with, or a sale or transfer
by the Company or any Subsidiary of all or substantially all its assets to, any
Person or (b) a conversion of outstanding Common Share Equivalents into Common
Shares in accordance with the terms thereof.
3.6 TRANSFERS SUBJECT TO COMPLIANCE WITH SECURITIES ACT. No Common Shares
may be transferred by a Party (other than pursuant to an effective registration
statement under the Securities Act) unless such Party first delivers to the
Company an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that such transfer is not required to
be registered under the Securities Act.
3.7 PERMITTED TRANSFEREES.
(a) Notwithstanding anything in this Agreement to the contrary, any DLJ
Party or any Permitted Transferee may, without the consent of the Company or any
of the Parties and without compliance with Section 3.1, 3.2 or 3.3, at any time
transfer any or all of its Common Shares and Common Share Equivalents to one or
more Permitted Transferees, so long as the transfer to such Person is not in
violation of applicable federal or state securities laws, and such Person(s), by
accepting such Common Shares and/or Common Share Equivalents, shall be deemed to
have agreed to be bound by the terms of this Agreement on the same terms as DLJ
generally. In the event that any DLJ Party or any Permitted Transferee transfers
any Common Shares and/or Common Share Equivalents to any transferee other than a
Permitted Transferee or any Person which is a Party to this Agreement, such
Common Shares and/or Common Share Equivalents, as the case may be, shall
thereafter be free from the restrictions set forth in this Agreement and no
longer subject thereto and such transferee shall have no rights hereunder, and
the definition of Party hereunder shall not include such transferee.
(b) Notwithstanding anything in this Agreement to the contrary, upon the
death of any Party who is a natural
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person, the transfer of any or all of its Common Shares and/or Common Share
Equivalents to one or more of such Party's legatees, heirs or trustees of a
testamentary trust, or to an executor or administrator of the estate of such
deceased Party incident to guardianship or probate proceedings involving such
estate shall not require the consent of the Company or any of the Parties and
shall not be subject to compliance with Section 3.1, 3.2, 3.3 or 3.4 so long as
(i) such heir shall have agreed in writing to be bound by the terms of this
Agreement and (ii) the transfer to such heir is not in violation of applicable
federal or state securities laws.
3.8 MANAGEMENT HOLDERS TRANSFERS. Notwithstanding anything in this
Agreement to the contrary, any Management Holder or Permitted Management Holder
Transferee may, without the consent of the Company or any of the Parties and
without compliance with Section 3.1, 3.2 or 3.3, at any time transfer any or all
of its Common Shares and Common Share Equivalents to one or more Permitted
Management Holder Transferees or Management Holders, so long as the transfer to
such Person is not in violation of applicable federal or state securities laws,
and such Person(s), by accepting such Common Shares and/or Common Share
Equivalents, shall be deemed to have agreed to be bound by the terms of this
Agreement (on the same terms as the Management Holder). In the event that any
Management Holder or any Permitted Management Holder Transferee transfers any
Common Shares and/or Common Share Equivalents to any transferee other than a
Permitted Management Holder Transferee or any Person which is a Party to this
Agreement in accordance with the terms of this Agreement, such Common Shares
and/or Common Share Equivalents, as the case may be, shall thereafter be free
from the restrictions set forth in this Agreement and no longer subject thereto
and such transferee shall have no rights hereunder, and the definition of Party
hereunder shall not include such transferee.
3.9 MANAGEMENT SHARES.
(a) In the event that any Management Holder voluntarily resigns from the
Company without Good Reason on or before June 30, 1999, the Company shall have
the option, exercisable for a period of twelve (12) months, to acquire any or
all Common Shares and any or all Common Share Equivalents beneficially owned by
such Management Holder and such Management Holder's Permitted Management Holder
Transferees. If the Company elects to exercise such option,
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it shall pay such resigning Management Holder a price for such Common Shares
and/or Common Share Equivalents equal to the lesser of (i) the price originally
paid by such Person to acquire such Common Shares and/or Common Share
Equivalents and (ii) the Fair Market Value thereof.
(b) In the event that at any time the Company dismisses or terminates the
employment of any Management Holder for Cause, the Company shall have the
option, exercisable for a period of twelve (12) months, to acquire any or all
Common Shares and any or all Common Share Equivalents beneficially owned by such
Management Holder and such Management Holder's Permitted Management Holder
Transferees at a price per share for such Common Shares or Common Share
Equivalents equal to the lesser of (i) the price originally paid by such Person
to acquire such Common Shares and/or Common Share Equivalents and (ii) the Fair
Market Value thereof.
(c) In the event that, prior to the consummation of a Qualified IPO, the
Company dismisses or terminates the employment of any Management Holder without
Cause, the Company shall have the option, exercisable for a period of twelve
(12) months, to acquire any or all Common Shares and any or all Common Share
Equivalents beneficially owned by such Management Holder and such Management
Holder's Permitted Management Holder Transferees at a price per share for such
Common Shares or Common Share Equivalents equal to the Fair Market Value
thereof.
(d) In the event that any Management Holder voluntarily resigns from the
Company without Good Reason after June 30, 1999 and prior to the consummation of
a Qualified IPO, the Company shall have the option, exercisable for a period of
twelve (12) months, to acquire any or all Common Shares and any or all Common
Share Equivalents beneficially owned by such Management Holder and such
Management Holder's Permitted Management Holder Transferees. If the Company
elects to exercise such option, it shall pay such resigning Management Holder a
price for such Common Shares and/or Common Share Equivalents equal to the Fair
Market Value thereof.
(e) In the event that any Management Holder voluntarily resigns from the
Company with Good Reason prior to the consummation of a Qualified IPO, the
Company shall have the option, exercisable for a period of twelve (12) months,
to acquire any or all Common Shares and any or all
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Common Share Equivalents beneficially owned by such Management Holder and such
Management Holder's Permitted Management Holder Transferees. If the Company
elects to exercise such option, it shall pay such resigning Management Holder a
price for such Common Shares and/or Common Share Equivalents equal to the Fair
Market Value thereof.
(f) (i) In the event that any Management Holder's employment by the
Company is terminated due to the death or permanent disability of such
Management Holder prior to the consummation of a Qualified IPO, the Company
shall have the option, exercisable for a period of twelve (12) months, to
acquire any or all Common Shares and any or all Common Share Equivalents
beneficially owned by such Management Holder and such Management Holder's
Permitted Management Holder Transferees. If the Company elects to exercise such
option, it shall pay such resigning Management Holder a price for such Common
Shares and/or Common Share Equivalents equal to the Fair Market Value thereof.
(ii) In the event that any Management Holder's employment by the
Company is terminated due to the permanent disability of such Management Holder
prior to the consummation of a Qualified IPO, such Management Holder shall have
the option, exercisable for a period of twelve (12) months, to require the
Company to repurchase from such Management Holder and, if applicable, any of
such Management Holder's Permitted Management Holder Transferees all Common
Shares and all Common Share Equivalents beneficially owned by such Management
Holder and such Management Holder's Permitted Management Holder Transferees. If
such Management Holder elects to exercise such option, the Company shall pay
such resigning Management Holder a price for such Common Shares and/or Common
Share Equivalents equal to the Fair Market Value thereof on the date (the
"Disability Put Exercise Date") of the exercise of such option (the "Disability
Put Price") over a period of three (3) years, without interest, as follows: the
Company shall pay one-third of the disability Put Price on the first anniversary
of the Disability Put Exercise Date, the Company shall pay one-third of the
disability Put Price on the second anniversary of the Disability Put Exercise
Date and the Company shall pay the final one-third of the disability Put Price
on the third anniversary of the Disability Put Exercise Date.
(g) Notwithstanding anything to the contrary in this Section 3.9, in the
event that any Management Holder
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voluntarily resigns from the Company prior to June 30, 2002 and, within the
24-month period thereafter, accepts employment in any capacity with any Adverse
Person, then the Company shall have the option to acquire any or all Common
Shares and any or all Common Share Equivalents beneficially owned by such
Management Holder and such Management Holder's Permitted Management Holder
Transferees at a price per share for such Common Shares or Common Share
Equivalents equal to the lesser of the price originally paid by such Person to
acquire such Common Shares and/or Common Share Equivalents and the Fair Market
Value thereof, and if such Common Shares and Common Share Equivalents have
previously been purchased by the Company pursuant to any other provision of this
Section 3.9, then such Management Holder and such Management Holder's Permitted
Management Holder Transferees shall immediately return to the Company any excess
amounts received by such Management Holder or such Management Holder's Permitted
Management Holder Transferees, respectively, pursuant to such provisions as
compared to the amount receivable under this Section 3.9(g).
(h) In the event that the Company elects to exercise any option granted
pursuant to this Section 3.9 to acquire any Common Shares and/or any Common
Share Equivalents beneficially owned by one or more Management Holders and/or
Permitted Management Holder Transferees, the Company shall pay the purchase
price for such Common Shares and/or Common Share Equivalents (less the principal
amount of all promissory notes due to the Company from the respective Management
Holder, all of which promissory notes shall be canceled insofar as the amount of
such Management Holder's promissory note(s) is less than or equal to such
purchase price) in cash, up to an aggregate maximum purchase price for all such
purchases of $2,000,000; PROVIDED, HOWEVER, that if, with respect to any
Management Holder, the amount of such Management Holder's promissory note(s) is
greater than the purchase price for such Common Shares and/or Common Share
Equivalents, as the case may be, the amount of such promissory note(s) that is
in excess of such purchase price shall continue to be payable pursuant to the
terms of such promissory note(s), which shall otherwise remain in full force and
effect. If the aggregate amount paid to the Management Holders and Permitted
Management Holder Transferees pursuant to this Section 3.9 (without taking into
account the amounts of any such notes) equals $2,000,000, then the Company shall
make any additional payments required under this Section 3.9 by delivery of
promissory notes, each of which shall be subordinated to all
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debt of the Company, bearing interest at 7% per annum (which interest may be
payable by delivery of notes of like tenor in principal amount equal to the
interest then due) with a maturity one year beyond the maturity of Company's
subordinated debt at the close of business on the date of this Agreement.
(i) Notwithstanding anything to the contrary in this Section 3.9, in the
event that (x) any Management Holder voluntarily retires from the Company and
(y) the Board of Directors approves such retirement, then the provisions of
Section 3.9(a), (d) and (e) shall not apply to such Management Holder.
ARTICLE IV
PIGGY-BACK REGISTRATION
4.1 NOTICE; PIGGYBACK REGISTRATION. Subject to the provisions of this
Agreement, if the Company proposes to file a registration statement under the
Securities Act with respect to an offering of any equity securities by the
Company for its own account or for the account of any of its equity holders
(other than a registration statement on Form S-4 or Form S-8, or any substitute
form that may be adopted by the SEC, or any registration statement filed in
connection with an exchange offer or offering of securities solely to the
Company's existing security holders), then the Company shall give written notice
of such proposed filing to the Parties (including any Permitted Management
Holder Transferees) as soon as practicable (but in no event less than 30 days
before the anticipated effective date of such registration statement), and such
notice shall offer such Persons the opportunity to register such number of
Registrable Securities as each such Person may request (a "Piggyback
Registration"). Subject to Sections 4.2, 4.3, 4.4, 4.5 and 4.6 hereof, the
Company shall include in each such Piggyback Registration all Registrable
Securities requested to be included in the registration for such offering. Each
such holder of Registrable Securities shall be permitted to withdraw all or part
of such holder's Registrable Securities from a Piggyback Registration at any
time prior to the effective date thereof.
4.2 SELECTION OF UNDERWRITERS. DLJ Partners II shall have the right, but
not the obligation, to designate, in its sole and absolute discretion, the
book-running managing
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Underwriter (the "Managing Underwriter") with respect to the Piggyback
Registration for a period of thirty (30) days after the receipt by DLJ Partners
II of Notice of a Piggyback Registration, or with respect to any other
underwritten public offering of Registrable Securities or other securities
of the Company for a period of thirty (30) days after the receipt by DLJ
Partners II of notice of such offering and shall, in consultation with the
Company, select such additional Underwriters to be used in connection with the
offering, if any, unless, at the time the Company takes the necessary corporate
action to approve the filing of the registration statement, DLJ and Permitted
Transferees collectively do not beneficially own at least five percent (5%) of
the Fully-Diluted Common Shares. In the event that DLJ Partners II exercises
such right by notifying the Company thereof, DLJ Partners II shall select, upon
consultation with the Company, one or more co-managers for each such offering if
DLJ Partners II, in its sole discretion, shall determine that any be necessary,
and the underwriting fees related to any such offering shall be allocated among
any such co-managers in such proportions as DLJ Partners II shall determine. The
Managing Underwriter's compensation for such services will be at market rates
subject to the type and size of the offering. In the event of any such offering,
the Managing Underwriter and the Company will enter into an agreement
appropriate to the circumstances, containing provisions for, among other things,
compensation, indemnification, contribution, and representations and warranties,
which are usual and customary for similar agreements entered into by the
Managing Underwriter or other investment bankers of national standing acting in
similar transactions. The Managing Underwriter shall have no obligation to act
as underwriter or dealer-manager to the Company or to purchase any securities of
the Company, except to the extent that such obligations arise out of an
underwriting agreement or dealer-manager agreement, as the case may be, with
respect to a particular offering executed and delivered by both the Managing
Underwriter and the Company. In the event that DLJ and Permitted Transferees
collectively do not beneficially own at least five percent (5%) of the
Fully-Diluted Common Shares at the time the Company takes the necessary
corporate action to approve the filing of the registration statement, or DLJ
Partners II does not exercise such right within such thirty (30) day period by
notifying the Company thereof, the Company shall select the book-running
managing Underwriter and such additional Underwriters to be used in connection
with the offering.
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4.3 UNDERWRITERS' CUT-BACKS. The Company shall use all commercially
reasonable efforts to cause the Managing Underwriter or any other managing
Underwriter of a proposed underwritten offering, as the case may be, to permit
the Registrable Securities requested to be included in the registration
statement for such offering under Section 4.1 or pursuant to other piggyback
registration rights, if any, granted by the Company ("Piggyback Securities") to
be included on the same terms and conditions as any similar securities included
therein. Notwithstanding the foregoing, the Company shall not be required to
include any Party's Piggyback Securities in such offering unless such Party
accepts the terms of the underwriting agreement between the Company and the
Managing Underwriter (or other managing Underwriter) or Underwriters, and
otherwise complies with the provisions of Section 4.4 below. If the managing
Underwriter or Underwriters of a proposed underwritten offering advise the
Company in writing that in their opinion the total amount of securities,
including Piggyback Securities, to be included in such offering is sufficiently
large to potentially impede or interfere with the offering, then in such event
the securities to be included in such offering shall be allocated first to the
Company and then, to the extent that any additional securities can, in the
opinion of such managing Underwriter or Underwriters, be sold without any such
potential to impede or interfere with the offering, pro rata among the holders
of Piggyback Securities on the basis of the number of Registrable Securities
requested to be included in such registration by each such holder.
4.4 PARTICIPATION. No Party may participate in any underwritten
registration under this Article IV unless such Party (a) agrees to sell such
Party's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Person entitled hereunder to approve such
arrangements, (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and this Agreement and (c) if
requested by another Person participating in such underwritten registration,
provides that all securities convertible or exchangeable into Common Shares that
are included in such underwritten registration shall be so converted or
exchanged on or prior to the consummation thereof.
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4.5 TERMINATION BY THE COMPANY. Notwithstanding anything herein to the
contrary, at any time prior to the effectiveness of any registration statement
filed pursuant hereto, the Company shall have the right, in its sole and
absolute discretion, not to proceed with the registration of any securities
pursuant to such registration statement and, in the event that the Company
exercises such right, no holder of Registrable Securities shall have any right
to require the Company to register any such Registrable Securities except in
accordance with the express provisions of this Agreement.
4.6 LOCK-UP LETTERS. Each holder of Registrable Securities (whether or not
such Registrable Securities are included in a registration statement pursuant
hereto) agrees to execute a written agreement not to effect any public sale or
distribution of the issue being registered or of any securities convertible into
or exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144 under the Securities Act, during the 14 days prior to, and during the
180-day period beginning on the effective date of a registration statement filed
pursuant hereto except as part of such registration if and to the extent
requested by the Company in the case of a non-underwritten public offering or if
and to the extent requested by the Managing Underwriter or managing Underwriter
or Underwriters, as the case may be, in the case of an underwritten public
offering.
ARTICLE V
REGISTRATION PROCEDURES
5.1 PROCEDURES.
(a) The Company may require each Selling Holder to promptly furnish in
writing to the Company such information regarding the distribution of the
Registrable Securities as it may from time to time reasonably request and such
other information as may be legally required in connection with any
registration. Notwithstanding anything herein to the contrary, the Company shall
have the right to exclude from any offering the Registrable Securities of any
Selling Holder who does not comply with the provisions of the immediately
preceding sentence.
(b) Each Selling Holder agrees that (i) upon receipt of any notice from
the Company of the happening of
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any event which makes any statement made in a 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 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, (ii) such Selling Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Selling Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
5.1(b)(i) hereof, and, if so directed by the Company, such Selling Holder will
deliver to the Company all copies, other than permanent file copies, then in
such Selling Holder's possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event the
Company shall give such notice, the Company shall extend the period during which
such registration statement shall be maintained effective by the number of days
during the period from and including the date of the giving of notice pursuant
to Section 5.1(b)(i) hereof to the date when the Company shall make available to
the Selling Holders of Registrable Securities covered by such registration
statement a prospectus supplemented or amended to conform with the requirements
of Section 5.1(b)(i) hereof.
5.2 REGISTRATION EXPENSES. In connection with any registration statement
required to be filed hereunder, the Company shall pay the following registration
expenses (the "Registration Expenses"): (a) all registration and filing fees
(including, without limitation, with respect to filings to be made with the
National Association of Securities Dealers, Inc.), (b) fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (c) printing expenses, (d) internal expenses of the
Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting
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duties), (e) the fees and expenses incurred in connection with the listing on an
exchange of the Registrable Securities if the Company shall choose to list such
Registrable Securities, (f) fees and disbursements of counsel for the Company
and customary fees and expenses for independent certified public accountants
retained by the Company, (g) the fees and expenses of any special experts
retained by the Company in connection with such registration, and (h) fees and
expenses of any "qualified independent underwriter" or other independent
appraiser participating in an offering pursuant to Rule 2720(c) of the National
Association of Securities Dealers, Inc. The Company shall not have any
obligation to pay any underwriting fees, discounts, or commissions attributable
to the sale of Registrable Securities or, except as provided by clause (b) or
(h) above, any out-of-pocket expenses of the Selling Holders (or the agents who
manage their accounts) or the fees and disbursements of counsel for any
Underwriter.
5.3 SUSPENSION PERIODS. For purposes hereof, "Suspension Period" shall
mean a period of time commencing on the date on which the Company provides
notice that, in connection with a Qualified IPO or any other public offering,
the Company has elected to require the suspension of the sale by the Parties of
Registrable Securities, and shall end on the date when the Parties are advised
in writing by the Company that such Suspension Period has terminated. Each Party
agrees that it will not sell any Registrable Securities during any Suspension
Period. The Company agrees to cause each Suspension Period to end as soon as
reasonably practicable.
ARTICLE VI
TERMINATION
6.1 TERMINATION. This Agreement shall terminate upon the earlier of (i)
the dissolution, liquidation or winding-up of the Company or (ii) the date on
which DLJ and all Permitted Transferees collectively are no longer the
beneficial owner of at least five percent (5%) of the Fully-Diluted Common
Shares. A Person who ceases to hold any Common Shares or Common Share
Equivalents and who ceases to beneficially own any Common Shares or Common Share
Equivalents shall cease to be a Party and shall have no further rights or
obligations under this Agreement.
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ARTICLE VII
MISCELLANEOUS
7.1 AMENDMENT. Any provision of this Agreement may be altered,
supplemented, amended, or waived only by the written consent of each of (i) the
Company and (ii) all of the Parties, except that any Party may unilaterally
waive any of its rights hereunder so long as such waiver is in writing.
7.2 SPECIFIC PERFORMANCE. The Parties and the Company recognize that the
obligations imposed on them in this Agreement are special, unique, and of
extraordinary character, and that in the event of breach by any party, damages
will be an insufficient remedy; consequently, it is agreed that the Parties and
the Company may have specific performance and injunctive relief (in addition to
damages) as a remedy for the enforcement hereof, without proving damages.
7.3 ASSIGNMENT. Except as otherwise expressly provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the Parties and the Company. No
such assignment shall relieve the assignor from any liability hereunder. Any
purported assignment made in violation of this Section 7.3 shall be void and of
no force and effect.
7.4 SHARES SUBJECT TO THIS AGREEMENT. All Common Shares and Common Share
Equivalents now owned or hereafter acquired by any of the Parties shall be
subject to, and entitled to the benefits of, the terms of this Agreement.
7.5 LEGENDS.
(a) Each certificate for Common Shares and Common Share Equivalents held
by any Person a party hereto shall include a legend in substantially the
following form:
THIS SECURITY IS SUBJECT TO CERTAIN VOTING AGREEMENTS, RESTRICTIONS
ON TRANSFER, AND OTHER TERMS AND CONDITIONS SET FORTH IN THE
MANAGEMENT STOCKHOLDERS AGREEMENT, DATED AS OF JULY 10, 1997, AS THE
SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH MAY BE
25
<PAGE>
OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
(b) A restriction on transfer of Common Shares set forth in such legend (a
"Restriction") shall cease and terminate as to any particular Common Shares
when, in the opinion of the Company and counsel reasonably satisfactory to the
Company (which opinion shall be delivered to the Company in writing), such
Restriction is no longer required. Whenever such Restriction shall cease and
terminate as to any Common Shares, the holder thereof shall be entitled to
receive from the Company, without expense to such holder, new certificate(s) not
bearing a legend stating such Restriction.
7.6 NOTICES. Any and all notices, designations, consents, offers,
acceptances or other communications provided for herein (each a "Notice") shall
be given in writing by overnight courier, telegram or telecopy which shall be
addressed, or sent, to the respective addresses as follows (or such other
address as the Company or any Party may specify to the Company and all other
Parties by Notice):
THE COMPANY:
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: President
Telecopy No.: (716) 759-5527
DLJ PARTIES:
DLJ PARTNERS II
DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
DLJ FUNDING II
DLJMB Funding II, Inc.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
DLJ PARTNERS II-A
26
<PAGE>
DLJ Merchant Banking Partners II-A, L.P.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
DIVERSIFIED PARTNERS
DLJ Diversified Partners, L.P.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
DIVERSIFIED PARTNERS-A
DLJ Diversified Partners-A, L.P.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
MILLENNIUM PARTNERS
DLJ Millennium Partners, L.P.
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
FIRST ESC
DLJ First ESC L.L.C.
c/o DLJ LBO Plans Management Corporation
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
OFFSHORE PARTNERS II
DLJ Offshore Partners II, C.V.
c/o DLJ Offshore Management N.V.
John B. Gorsiraweg 14
Willemstad, Curacao
Netherlands, Antilles
Telecopy No.: 011-59-99-614-129
27
<PAGE>
EAB PARTNERS
DLJ EAB Partners, L.P.
c/o DLJ LBO Plans Management Corporation
277 Park Avenue
New York, NY 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
UK PARTNERS
UK Investment Plan 1997 Partners
2121 Avenue of the Stars
Fox Plaza, Suite 3000
Los Angeles, CA 90067
Attention: Osamu Watanabe
Telecopy No.: (310) 282-6178
in each case with a copy to:
Steven D. Rubin, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Telecopy No.: (713) 224-9511
EACH OTHER PARTY:
To such address or telecopy number of such Party as is set forth on SCHEDULE I
hereto or as such Party provides by Notice to the Company and all other Parties
or, if such address is not so provided, to such Party's address as is reflected
on the stock transfer records of the Company at such time.
All Notices shall be deemed effective and received (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified above and
receipt thereof is confirmed; (b) if given by overnight courier, on the business
day immediately following the day on which such Notice is delivered to a
reputable overnight courier service; or (c) if given by telegram, when such
Notice is delivered at the address specified above. No Party shall be entitled
to receive a Notice hereunder (or a copy of a Notice delivered to the Company)
if, at the time such Notice is to be sent, such Party (including its Affiliates
and the employees of such Party and its Affiliates) no longer owns any Common
Shares.
28
<PAGE>
7.7 CONFIDENTIALITY. The Parties shall, and shall cause their respective
officers, directors, employees and agents and the respective subsidiaries and
Affiliates of the Parties and their respective officers, directors, employees
and agents to, hold confidential and not use in any manner detrimental to the
Company or any of its Subsidiaries all information they may have or obtain
concerning the Company or any of its Subsidiaries and their respective assets,
business, operations or prospects ("Confidential Information"); PROVIDED,
HOWEVER, that the foregoing shall not apply to (a) information that is or
becomes generally available to the public other than as a result of a disclosure
by a Party or any of its employees, agents, accountants, legal counsel or other
representatives, (b) information that is or becomes available to a Party or any
of its employees, agents, accountants, legal counsel or other representatives on
a nonconfidential basis prior to its disclosure by the Company or its employees,
agents, accountants, legal counsel or other representatives, and (c) information
that is required to be disclosed by a Party or any of its employees, agents,
accountants, legal counsel or other representatives as a result of any
applicable law, rule or regulation of any governmental authority or stock
exchange. If any Party desires to sell Common Shares and in connection with such
potential sale desires to disclose information regarding the Company to the
potential purchaser in such sale which it is not permitted to disclose pursuant
to the preceding sentence, such Party shall notify the Company of such Party's
desire to disclose such information and shall identify the potential purchaser
in such notification. The Company may require any such potential purchaser of
Common Shares to enter into a confidentiality agreement with respect to
Confidential Information on customary terms used in confidentiality agreements
in connection with corporate acquisitions.
7.8 EXCLUSIVE FINANCIAL ADVISOR AND INVESTMENT BANKING ADVISOR. During the
five-year period beginning on the date hereof, DLJSC, or any Affiliate of DLJSC
that DLJ Partners II or DLJSC may choose, in their sole and absolute discretion,
shall be engaged as the exclusive financial and investment banking advisor for
the Company and its subsidiaries pursuant to the terms of an agreement
substantially in the form of the agreement attached hereto as EXHIBIT A hereto.
7.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and each counterpart shall be
29
<PAGE>
deemed to be an original and all such counterparts together shall constitute one
and the same agreement of the parties hereto.
7.10 SECTION HEADINGS. Headings contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provisions hereof.
7.11 CHOICE OF LAW. This Agreement, including, without limitation, the
interpretation, construction, validity and enforceability thereof, shall be
governed by the internal laws of the State of New York including Section 5-1401
of the General Obligations Law of the State of New York without regard to the
principles of conflict of laws thereof.
7.12 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties hereto respecting the subject matter hereof and supersedes all prior
agreements, discussions and understandings with respect thereto.
7.13 CUMULATIVE RIGHTS. The rights of the Parties and the Company under
this Agreement are cumulative and in addition to all similar and other rights of
the parties under other agreements.
7.14 SEVERABILITY. If any term, provision, covenant, or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
7.15 SUBMISSION TO JURISDICTION. (a) Any legal action or proceeding with
respect to this Agreement, the Common Shares or any document related thereto may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Agreement, the Company and each Party hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereto hereby irrevocably waive any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which any of them may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
30
<PAGE>
(b) The Company and each Party irrevocably consent to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Company or such Party, respectively, at its address provided herein or on
SCHEDULE I, as the case may be.
(c) Nothing contained in this Section 7.15 shall affect the right of any
party hereto to serve process in any other manner permitted by law.
7.16 WAIVER OF JURY TRIAL. Each of the parties hereto waives any right it
may have to trial by jury in respect of any litigation based on, or arising out
of, under or in connection with this Agreement, any Common Shares or any course
of conduct, course of dealing, verbal or written statement or action of any
party hereto.
[SIGNATURES CONTAINED ON SUCCEEDING PAGES]
31
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Management
Stockholders Agreement as of the date first above written.
WGL Holdings, Inc.
By: /s/ Edward F. Voboril
---------------------------------------
Edward F. Voboril
President and Chief Executive
Officer
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
DLJMB FUNDING II, INC.
By: /s/ David M. Wittels
--------------------------------------
Name: David M. Wittels
------------------------------------
Title: Attorney-in-Fact
-----------------------------------
DLJ MERCHANT BANKING PARTNERS II-A, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
32
<PAGE>
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
DLJ DIVERSIFIED PARTNERS-A, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ MERCHANT BANKING II, INC.
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
As Manager
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
33
<PAGE>
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
DLJ EAB PARTNERS, L.P.
By: DLJ LBO PLANS MANAGEMENT CORPORATION
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
UK INVESTMENT PLAN 1997 PARTNERS
By: DONALDSON, LUFKIN & JENRETTE, INC.
By: /s/ David M. Wittels
---------------------------------
Name: David M. Wittels
-------------------------------
Title: Attorney-in-Fact
------------------------------
34
<PAGE>
MANAGEMENT HOLDERS:
/s/ Edward F. Voboril
------------------------------------------
Edward F. Voboril
/s/ Tim H. Belstadt
------------------------------------------
Tim H. Belstadt
/s/ Susan M. Bratton
------------------------------------------
Susan M. Bratton
/s/ Larry T. DeAngelo
------------------------------------------
Larry T. DeAngelo
/s/ Curtis F. Holmes
------------------------------------------
Curtis F. Holmes
/s/ Arthur J. Lalonde
------------------------------------------
Arthur J. Lalonde
/s/ Richard W. Mott
------------------------------------------
Richard W. Mott
35
<PAGE>
SCHEDULE I
This Schedule I is a part of and is incorporated into that certain
letter agreement (together, the "Agreement") dated July 10, 1997 by and between
WGL Holdings, Inc. (which together with its subsidiaries is hereinafter referred
to as the "Company") and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ").
The Company will indemnify and hold harmless DLJ and its affiliates,
and the respective directors, officers, agents and employees of DLJ and its
affiliates (other than the Company) (DLJ and each such entity or person, an
"Indemnified Person"), from and against any losses, claims, damages, judgments,
assessments, costs and other liabilities (collectively, "Liabilities"), and will
reimburse each Indemnified Person for all fees and expenses (including the
reasonable fees and expenses of counsel) (collectively, "Expenses") as they are
incurred in investigating, preparing, pursuing or defending any claim, action,
proceeding or investigation, whether or not in connection with pending or
threatened litigation and whether or not any Indemnified Person is a party
(collectively, "Actions"), arising out of or in connection with advice or
services rendered or to be rendered by any Indemnified Person pursuant to this
Agreement, the transactions contemplated hereby or any Indemnified Person's
actions or inactions in connection with any such advice, services or
transactions; provided that the Company will not be responsible for any
Liabilities or Expenses of any Indemnified Person that are determined by a
judgment of a court of competent jurisdiction which is no longer subject to
appeal or further review to have resulted solely from such Indemnified Person's
gross negligence or willful misconduct in connection with any of the advice,
actions, inactions or services referred to above. The Company also agrees to
reimburse each Indemnified Person for all Expenses as they are incurred in
connection with enforcing such Indemnified Person's rights under this Agreement
(including, without limitation, its rights under this Schedule I).
Upon receipt by an Indemnified Person of actual notice of an Action
against such Indemnified Person with respect to which indemnity may be sought
under this Agreement, such Indemnified Person shall promptly notify the Company
in writing; provided that failure so to notify the Company shall not relieve the
Company from any liability which the Company may have on account of this
indemnity or otherwise, except to the extent the Company shall have been
materially prejudiced by such failure. The Company shall, if requested by DLJ,
assume the defense of any such Action including the employment of counsel
reasonably satisfactory to DLJ. Any Indemnified Person shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless: (i) the Company has failed promptly to assume
the defense and employ counsel or (ii) the named parties to any such Action
(including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or in addition to those available to the Company; provided that the Company
shall not in such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel in connection with any Action in the same
jurisdiction, in addition to any local counsel. The Company shall not be liable
for any settlement of any Action effected without its written consent. In
addition, the Company will not, without prior written consent of DLJ, settle,
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any pending or threatened Action in respect of which indemnification
or contribution may be sought hereunder (whether or not any Indemnified
<PAGE>
Person is a party thereto) unless such settlement, compromise, consent or
termination includes an unconditional release of each Indemnified Person from
all Liabilities arising out of such Action.
In the event the foregoing indemnity is unavailable to an Indemnified
Person [other than] in accordance with this Agreement, the Company shall
contribute to the Liabilities and Expenses paid or payable by such Indemnified
Person in such proportion as is appropriate to reflect (i) the relative benefits
to the Company and its shareholders, on the one hand, and to DLJ, on the other
hand, of the matters contemplated by this Agreement or (ii) if the allocation
provided by the immediately preceding clause is not permitted by the applicable
law, not only such relative benefits but also the relative fault of the Company,
on the one hand, and DLJ, on the other hand, in connection with the matters as
to which such Liabilities or Expenses relate, as well as any other relevant
equitable considerations; provided that in no event shall the Company contribute
less than the amount necessary to ensure that all Indemnified Persons, in the
aggregate, are not liable for any Liabilities and Expenses in excess of the
amount of fees actually received by DLJ pursuant to the Agreement. For purposes
of this paragraph, the relative benefits to the Company and its shareholders, on
the one hand, and to DLJ, on the other hand, of the matters contemplated by the
Agreement shall be deemed to be in the same proportion as (a) the total value
paid or contemplated to be paid or received or contemplated to be received by
the Company or the Company's shareholders, as the case may be, in the
transaction or transactions that are within the scope of the Agreement, whether
or not any such transaction is consummated, bears to (b) the fees paid or to be
paid to DLJ under the Agreement.
The Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with advice or services rendered or to be rendered
by any Indemnified Person pursuant to this Agreement, the transactions
contemplated hereby or any Indemnified Person's actions or inactions in
connection with any such advice, services or transactions except for Liabilities
(and related Expenses) of the Company that are determined by a judgment of a
court of competent jurisdiction which is no longer subject to appeal or further
review to have resulted solely from such Indemnified Person's gross negligence
or willful misconduct in connection with any such advice, actions, inactions or
services.
The reimbursement, indemnity and contribution obligations of the
Company set forth herein shall apply to any modification of this Agreement and
shall remain in full force and effect regardless of any termination of, or the
completion of any Indemnified Person's services under or in connection with,
this Agreement.
<PAGE>
SCHEDULE I
MANAGEMENT HOLDERS
Name: Edward F. Voboril
Address: 33 Four Winds Way
Amherst, N.Y. 14226
Telecopy No.: (716) 759-8579
Name: Tim H. Belstadt
Address: 452 E. Stenzil Street
North Tonawanda, N.Y. 14120
Telecopy No.: (716) 692-2194
Name: Susan M. Bratton
Address: 1621 North Forest Rd.
Williamsville, NY 14221
Telecopy No.: (716) 759-8579
Name: Larry T. DeAngelo
Address: 6060 Whitegate Crossing
East Amherst, N.Y. 14051
Telecopy No.: (716) 759-8579
Name: Curtis F. Holmes
Address: 8125 Centrelanc
E. Amherst, NY 14051
Telecopy No.: (716) 759-5480
Name: Arthur J. Lalonde
Address: 208 Summit Avenue
Buffalo, NY 14214
Telecopy No.: (716) 759-5508
Name: Richard W. Mott
Address: 8546 Quincy Ct.
E. Amherst, NY 14051
Telecopy No.: (716) 759-8579
37
<PAGE>
Exhibit 10.15
SUBORDINATED NOTE HOLDERS STOCKHOLDERS AGREEMENT
This SUBORDINATED NOTE HOLDERS STOCKHOLDERS AGREEMENT (this "Agreement")
is entered into and effective as of July 10, 1997 among WGL Holdings, Inc., a
Delaware corporation (the "Company"), DLJ Merchant Banking Partners II, L.P., a
Delaware limited partnership ("DLJ Partners II"), DLJMB Funding II, Inc., a
Delaware corporation ("DLJ Funding II"), DLJ Merchant Banking Partners II-A,
L.P., a Delaware limited partnership ("DLJ Partners II-A"), DLJ Diversified
Partners, L.P., a Delaware limited partnership ("Diversified Partners"), DLJ
Diversified Partners-A, L.P., a Delaware limited partnership ("Diversified
Partners-A"), DLJ Millennium Partners, L.P., a Delaware limited partnership
("Millennium Partners"), DLJ First ESC L.L.C., a Delaware limited liability
company ("First ESC"), DLJ Offshore Partners II, C.V., a Netherlands Antilles
limited partnership ("Offshore Partners II"), DLJ EAB Partners, L.P., a Delaware
limited partnership ("EAB Partners"), UK Investment Plan 1997 Partners, a
Delaware partnership ("UK Partners"), DLJ Investment Partners, L.P., a Delaware
limited partnership ("DLJIP"), DLJ Investment Funding, Inc. ("Funding"), DLJ
First ESC L.L.C. (in its capacity as a Purchaser under the Purchase Agreement,
as hereinafter defined, "Purchaser First ESC"), The Northwestern Mutual Life
Insurance Company ("Northwestern") and Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJSC") (each of DLJIP, Funding, Purchaser First ESC, Northwestern
and DLJSC being hereinafter referred to individually as a "Holder" and
collectively as the "Holders"), and each other holder of record of Common Shares
(as defined below) who may hereafter duly and properly execute a separate
agreement to be bound by the terms hereof (each DLJ Party (as hereinafter
defined), the Holders, and each other Person (as defined below) that hereafter
may become a party hereto as contemplated hereby being hereinafter referred to
individually as a "Party" and collectively as the "Parties")
RECITALS
1. The Company has authorized 100,000,000 shares of common stock,
$.001 par value per share (the "Common Shares")
2. Concurrently herewith, DLJ, the Company, Wilson Greatbatch Ltd.,
a New York corporation ("WGL"), and
<PAGE>
the Individual Holders are consummating the transactions contemplated by that
certain Stock Purchase Agreement, dated as of June 19, 1997 (the "Purchase
Agreement"), pursuant to which the Company will acquire 100% of the Capital
Shares of WGL.
3. In connection with the transactions contemplated by the Purchase
Agreement, DLJ, the Company and the Individual Holders are hereafter entering
into that certain Stockholders Agreement to be dated as of July 16, 1997 (the
"Seller Stockholders Agreement").
4. Concurrently herewith, the Company and the Holders are entering
into (i) that certain Securities Purchase Agreement dated as of July 10, 1997
(the "Sub-Note Agreement"), pursuant to which the Company is issuing an
aggregate of 3,188,312 Common Shares of the Company in connection with a private
placement of an aggregate of $25,000,000 principal amount of the Company's 13%
Senior Subordinated Notes due 2007 (the "Notes") and (ii) that certain
Registration and Antidilution Agreement dated as of July 10, 1997 pertaining to
the Shares.
5. In connection with the foregoing transactions, the parties hereto
are entering into this Agreement in order to define certain rights and
obligations of such parties.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
AGREEMENT
ARTICLE I
GENERAL PROVISIONS;
REPRESENTATIONS AND WARRANTIES
1.1 Certain Terms. In addition to the terms defined elsewhere herein, when
used herein the following terms shall have the meanings indicated:
"Adverse Person" means (i) any Persons that are competitors of the
Company, directly involved in the business of designing, developing,
manufacturing, marketing,
2
<PAGE>
selling or distributing of implantable power sources, implantable medical
devices, lithium batteries, silver vanadium oxide batteries, microvasive
surgical instruments and close-tolerance medical and aerospace miniature
components intended for commercial distribution, including (without limitation)
pacemakers, cardioverter-defibrillators and capacitors for defibrillator
applications, (ii) any Persons that are present or former customers of the
Company and (iii) any other Persons the Board of Directors reasonably designates
as such from time to time.
"Affiliate" means, with respect to any Person, any Person
controlling, controlled by, or under common control with such Person. For the
purposes of this definition, "control" means the possession of the power to
direct or cause the direction of management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
With respect to any Common Shares, "beneficial" ownership or
"beneficially" owned shall have the same meaning as in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
"Board of Directors" means the board of directors of the Company.
"Capital Shares" means any and all shares, interests, participations
or other equivalents (however designated) of capital shares of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation), and any and all warrants, options or other rights to purchase or
acquire any of the foregoing.
"Common Share Equivalents" means (without duplication with any other
Common Shares or Common Share Equivalents) rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Shares or securities convertible or exchangeable into Common
Shares, whether at the time of issuance or upon the passage of time or the
occurrence of some future event.
"DLJ" means all of the DLJ Parties, collectively.
"DLJ Party" means any of DLJ Partners II, DLJ Funding II, DLJ
Partners II-A, Diversified Partners,
3
<PAGE>
Diversified Partners-A, Millennium Partners, First ESC, Offshore Partners II,
EAB Partners or UK Partners.
"DLJSC" means Donaldson, Lufkin & Jenrette Securities Corporation or
any successor thereto.
"Fully-Diluted Common Shares" means, at any time, the then
outstanding Common Shares of the Company plus (without duplication) all Common
Shares issuable, whether at such time or upon the passage of time or the
occurrence of future events, upon the exercise, conversion or exchange of all
then-outstanding Common Share Equivalents.
"Individual Holder" has the meaning assigned to such term in the
Seller Stockholders Agreement.
"Permitted Transferee" means in the case of any DLJ Party, (A) any
other DLJ Party, (B) any corporation, partnership or other entity which is an
Affiliate of any DLJ Party (collectively, the "DLJ Affiliates"), (C) any
managing director, general partner, director, limited partner, officer or
employee of any DLJ Party or any DLJ Affiliate, or the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any of the
foregoing Persons referred to in this clause (C) (collectively, "DLJ
Associates"), (D) any trust, the beneficiaries of which, or any corporation,
limited liability company or partnership, the shareholders, members or general
or limited partners of which, include only one or more DLJ Parties, DLJ
Affiliates, DLJ Associates, their spouses or their lineal descendants and (E) a
voting trustee for one or more DLJ Parties or for one or more DLJ Affiliates or
DLJ Associates under the terms of a voting trust.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and any government or agency or political
subdivision thereof.
"Qualified IPO" means a consummated initial public offering of
Common Shares which is underwritten on a firm commitment basis by a
nationally-recognized investment banking firm.
"SEC" means the Securities and Exchange Commission or any successor
governmental agency.
4
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.
"Subsidiary" means (i) any corporation or other entity a majority of
the Capital Shares of which having ordinary voting power to elect a majority of
the board of directors or other Persons performing similar functions is at the
time owned, directly or indirectly, with power to vote, by the Company or any
direct or indirect Subsidiary of the Company or (ii) a partnership in which the
Company or any direct or indirect Subsidiary is a general partner.
1.2 Representations and Warranties.
(a) Each Holder (as to itself only) hereby represents and warrants
to the Company and the other Parties that:
(i) it has full power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated
hereby, and the execution, delivery and performance by it of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action;
(ii) this Agreement has been duly and validly executed and
delivered by such Party and constitutes the binding obligation of such
Party enforceable against such Party in accordance with its terms; and
(iii) the execution, delivery and performance by such Party of
this Agreement and the consummation by such Party of the transactions
contemplated hereby will not, with or without the giving of notice or the
lapse of time, or both, (A) violate any provision of law, statute, rule or
regulation to which it is subject, (B) violate any order, judgment or
decree applicable to it or (C) conflict with, or result in a breach or
default under, any term or condition of any agreement or other instrument
to which such Party is a party or by which such Party is bound.
(b) The Company hereby represents and warrants to each Party that:
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(i) it is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, it has full
corporate power and authority under its certificate of incorporation to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby, and the execution, delivery and
performance by it of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary action;
(ii) this Agreement has been duly and validly executed and
delivered by the Company and constitutes the binding obligation thereof
enforceable against the Company in accordance with its terms; and
(iii) the execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated hereby will not, with or without the giving of notice or the
lapse of time, or both, (A) violate any provision of law, statute, rule or
regulation to which the Company is subject, (B) violate any order,
judgment or decree applicable to the Company or (C) conflict with, or
result in a breach or default under, any ten or condition of its
certificate of incorporation or by-laws or any agreement or other
instrument to which the Company is a party or by which it is bound.
(c) Each DLJ Party (as to itself only) hereby represents and
warrants to the Company and the other Parties that:
(i) it is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization, as the case may be, it has full power and authority under
its certificate of incorporation or other such organizational document(s)
to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby, and the execution, delivery and
performance by it of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary action;
(ii) this Agreement has been duly and validly executed and
delivered by such DLJ Party and constitutes the binding obligation thereof
enforceable
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against such DLJ Party in accordance with its terms; and
(iii) the execution, delivery and performance by such DLJ
Party of this Agreement and the consummation by such DLJ Party of the
transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (A) violate any provision of law,
statute, rule or regulation to which such DLJ Party is subject, (B)
violate any order, judgment or decree applicable to such DLJ Party or (C)
conflict with, or result in a breach or default under, any term or
condition of its certificate of incorporation or by-laws (or such other
comparable organizational and governing document(s), as the case may be)
or any agreement or other instrument to which such DLJ Party is a party or
by which it is bound.
ARTICLE II
MANAGEMENT OF THE COMPANY;
ACTIVITIES OF THE PARTIES
2.1 Board of Directors. The Parties and the Company shall take all action
within their respective power, including, but not limited to, the voting of
Capital Shares of the Company (to the extent that any such Person holds Capital
Shares of the Company entitled to vote thereon), required to cause the Board of
Directors to at all times consist of seven (7) directors (or such greater number
as the DLJ Parties shall select), one of whom shall be the Chief Executive
Officer of the Company. At any time DLJIP owns $6,250,000 or more in principal
amount of the Notes, DLJIP shall have the right to designate an observer (the
"DLJIP Observer") who shall be entitled to attend all meetings of the Board of
Directors and to receive any notice delivered with respect to any such meeting.
The Company shall pay all reasonable travel and other such expenses actually
incurred by the DLJIP Observer in connection with the DLJIP Observer's
attendance at any meetings of the Board of Directors.
2.2 Election of Director Designated by Individual Holders. So long as the
Individual Holders collectively own beneficially in the aggregate at least three
percent (3%) of the Fully-Diluted Common Shares, each Holder, DLJ and each
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Permitted Transferee (if any) shall take all action within its power, including,
but not limited to, the voting of Capital Shares of the Company (to the extent
that any such Person holds Capital Shares of the Company entitled to vote
thereon), required to cause the Board of Directors to include either (a)
Lawrence A. Maciariello or (b) with the consent of DLJ Partners II (which
consent shall not be unreasonably withheld), one director designated by the
Individual Holders and Permitted Individual Holder Transferees (if any) then
owning beneficially a majority of the aggregate Fully-Diluted Common Shares then
held by all Individual Holders and Permitted Individual Holder Transferees (if
any).
2.3 Election of Directors Designated by DLJ Partners II. Each Holder shall
take all action within its power, including, but not limited to, the voting of
Capital Shares of the Company (to the extent that any such Person holds Capital
Shares of the Company entitled to vote thereon), required to cause the Board of
Directors to include a number of directors designated by DLJ Partners II, or its
successor in interest, equal to up to (i) one less than the maximum number of
directors then comprising the Board of Directors so long as Section 2.2 hereof
remains in effect or (ii) the maximum number of directors then comprising the
Board of Directors if DLJ and its Permitted Transferees are not required to vote
its Capital Shares in favor of a director designated by the Individual Holders
pursuant to Section 2.2 hereof.
2.4 Replacement of Designated Directors. In the event that any director (a
"Withdrawing Director") designated in the manner set forth in Section 2.2 or 2.3
is unable to serve, or once having commenced to serve, is removed or withdraws
from the Board of Directors, such Withdrawing Director's replacement (the
"Substitute Director") on the Board of Directors (and, if applicable, any
executive or similar committee thereof) shall be designated in accordance with
Section 2.2 or 2.3, as applicable. The Company and each of the Parties agrees to
take all action within its power, including, but not limited to, (i) the voting
of Capital Shares of the Company (to the extent that any such Person holds
Capital Shares of the Company entitled to vote thereon) to cause the election of
such Substitute Director as soon as practicable following his or her designation
and (ii) the instructing of any director it had previously designated to serve
as a member of the Board of Directors, as the first order of business at the
first meeting thereof
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after such Substitute Director has been so designated, to vote to seat such
designated Substitute Director as a director in place of the Withdrawing
Director.
2.5 Termination. Notwithstanding anything to the contrary in this Article
II, at any time after the consummation of a Qualified IPO, in the event that any
Holder transfers any Common Shares to any transferee in accordance with this
Agreement, such Common Shares shall thereafter be free from the voting
agreements set forth in this Article II and no longer subject thereto.
ARTICLE III
TRANSFER OF SECURITIES
3.1 Transfer of Shares. No Holder may transfer any Capital Shares to any
Adverse Person, except pursuant to a transfer contemplated by Section 3.2 or 3.3
hereof.
3.2 Right of Participation.
(a) If one or more DLJ Parties and/or Permitted Transferees (if any)
propose to sell Common Shares or Common Share Equivalents for value (such DLJ
Parties and any such Permitted Transferees being referred to herein as a
"Transferor") in one transaction or a series of related transactions, but
excluding (a) a sale which is pursuant to a Qualified IPO or (b) any sale in
which all of the Parties agree to participate, then such Transferor shall offer
(the "Participation Offer") to include in the proposed sale a number of Common
Shares or Common Shares represented by Common Share Equivalents designated by
any of the Parties, not to exceed, in respect of any such Party, the number of
Common Shares equal to the product of (i) the aggregate number of Common Shares
or Common Shares represented by Common Share Equivalents to be sold to the
proposed transferee and (ii) a fraction, the numerator of which is equal to the
number of Fully-Diluted Common Shares held by such Party and the denominator of
which is equal to the number of Fully-Diluted Common Shares. The Transferor
shall give written notice to each Party of the Participation Offer (the
"Transferor's Notice") at least 20 days prior to the proposed sale. The
Transferor's Notice shall specify the proposed transferee, the number of Common
Shares or Common Shares represented by Common Share Equivalents and, if
applicable, the class or classes of Common Shares to be sold
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to such transferee, the amount and type of consideration to be received
therefor, and the place and date on which the sale is to be consummated. Each
Party who wishes to include Common Shares or Common Share Equivalents in the
proposed sale in accordance with the terms of this Section 3.2 shall so notify
the Transferor not more than 20 days after the date of the Transferor's Notice.
The Participation Offer shall be conditioned upon the Transferor's sale of
Common Shares or Common Share Equivalents pursuant to the transactions
contemplated in the Transferor's Notice with the transferee named therein. If
any Party accepts the Participation Offer, the Transferor shall reduce to the
extent necessary the number of Common Shares or Common Share Equivalents it
otherwise would have sold in the proposed sale so as to permit other Parties who
have accepted the Participation Offer to sell the number of Common Shares or
Common Share Equivalents that they are entitled to sell under this Section 3.2,
and the Transferor and such other Party or Parties shall sell the number of
Common Shares or Common Share Equivalents specified in the Participation Offer
to the proposed transferee in accordance with the terms of such sale set forth
in the Transferor's Notice.
(b) The provisions of this Section 3.2 shall terminate upon the
consummation of a Qualified IPO.
3.3 Drag-Along Rights.
(a) Notwithstanding any other provision in this Article III, if one
or more DLJ Parties (such DLJ Parties being referred to herein as the "Seller")
propose to sell fifty percent (50%) or more of the Common Shares and Common
Share Equivalents held by DLJ at the time of such sale ("Sale Shares") to a
third party or parties which is not an Affiliate of DLJ (a "Third Party")
pursuant to a Bona Fide Offer (as defined below), then Seller shall have the
right, subject to the provisions of this Section 3.3, to require all other
Parties that are not DLJ Parties (collectively, the "Co-Sellers") to include in
such sale (a "Required Sale"), by delivering notice (the "Required Sale Notice")
to such other Parties, a number of the Common Shares and Common Share
Equivalents held by the Co-Sellers (the "Co-Sellers' Shares") equal to, with
respect to each Co-Seller, the number of Common Shares and Common Shares
represented by Common Share Equivalents held by such Co-Seller multiplied by a
fraction, the numerator of which is the number of Common Shares represented by
the Sale Shares and the denominator of which is the number of Common Shares and
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Common Shares represented by Common Share Equivalents held by Seller on the date
of such Required Sale Notice (the "Notice Date")
(b) The Required Sale Notice shall set forth: (i) the Notice Date,
(ii) the name and address of the Third Party, (iii) the proposed amount and type
of consideration to be paid per Common Shares for the Sale Shares (the "Sale
Price"), and the terms and conditions of payment offered by the Third Party in
reasonable detail, together with written proposals or agreements, if any, with
respect thereto, (iv) the aggregate number of Sale Shares, (v) confirmation that
Seller is selling fifty percent (50%) or more of the aggregate number of
Fully-Diluted Common Shares then held by DLJ to a Third Party, (vi) the
aggregate number of Common Shares and Common Shares represented by Common Share
Equivalents held by DLJ on the Notice Date and (vii) the proposed date of the
Required Sale (the "Required Sale Date"), which shall be not less than 30 nor
more than 180 days after the Notice Date.
(c) The Co-Sellers shall cooperate in good faith with Seller in
connection with consummating the Required Sale (including, without limitation,
the giving of consents and the voting of any Common Shares of the Company held
by the Co-Sellers to approve such Required Sale); provided, however, that in the
event of any such Required Sale, the Co-Sellers will not be required to make any
representations, warranties or indemnities in connection therewith except for
representations and warranties as to title to the Common Shares and Common Share
Equivalents to be sold by Co-Seller pursuant to the Required Sale. On the
Required Sale Date, the Co-Sellers shall deliver, free and clear of all liens,
claims or encumbrances, a certificate or certificates and/or other instrument or
instruments for all of its respective Co-Sellers' Shares, duly endorsed and in
proper form for transfer, with the signature guaranteed, to such Third Party in
the manner and at the address indicated in the Required Sale Notice and Seller
shall cause each Co-Seller's share of the purchase price to be paid to such
Co-Seller.
(d) "Bona Fide Offer" shall mean an offer (whether in the form of a
purchase of Common Shares, merger, recapitalization, or otherwise) for Common
Shares.
(e) The provisions of this Section 3.3 shall terminate upon the
consummation of a Qualified IPO.
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3.4 Prohibited Transfers. Any purported transfer of Common Shares and/or
Common Share Equivalents by a Party which is not permitted by the provisions of
Section 3.1, 3.2 or 3.3, or which is in violation of such provisions, shall be
void and of no force and effect whatsoever.
3.5 Certain Events Not Deemed Transfers. Except as contemplated by Section
3.3, in no event shall any of the following constitute a transfer of Common
Shares for purposes of Section 3.1, 3.2 or 3.3 or be subject to the terms
hereof: (a) an exchange, reclassification or other conversion of Common Shares
into any cash, securities or other property pursuant to a merger, consolidation
or recapitalization of the Company or any Subsidiary with, or a sale or transfer
by the Company or any Subsidiary of all or substantially all its assets to, any
Person or (b) a conversion of outstanding Common Share Equivalents into Common
Shares in accordance with the terms thereof.
3.6 Transfers Subject to Compliance with Securities Act. No Common Shares
may be transferred by a Holder (other than (i) to one or more Affiliates of such
Party, (ii) pursuant to an effective registration statement under the Securities
Act, (iii) pursuant to and in compliance with Rule 144A under the Securities
Act, (iv) to an institutional "accredited investor" (as defined in Rule 501(a)
(1), (2), (3) or (7) under the Securities Act) or (v) outside the United States
to a "foreign person" in compliance with Rule 904 of Regulation S under the
Securities Act), provided, that in the case of a transfer pursuant to clause
(iii) (iv) or (v), the transferring Party shall deliver a certificate to the
Company properly completed in the form annexed hereto as Exhibit B, unless such
Party first delivers to the Company an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company, to the effect that such
transfer is not required to be registered under the Securities Act.
3.7 Permitted Transferees.
(a) Notwithstanding anything in this Agreement to the contrary, any
DLJ Party or any permitted Transferee may, without the consent of the Company or
any of the Parties and without compliance with Section 3.1, 3.2 or 3.3, at any
time transfer any or all of its Common Shares and Common Share Equivalents to
one or more permitted Transferees, so long as the transfer to such Person is not
in violation of applicable federal or state securities laws, and such
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Person(s), by accepting such Common Shares and/or Common Share Equivalents,
shall be deemed to have agreed to be bound by the terms of this Agreement on the
same terms as DLJ generally. In the event that any DLJ Party or any Permitted
Transferee transfers any Common Shares and/or Common Share Equivalents to any
transferee other than a Permitted Transferee or any Person which is a Party to
this Agreement, such Common Shares and/or Common Share Equivalents, as the case
may be, shall thereafter be free from the restrictions set forth in this
Agreement and no longer subject thereto and such transferee shall have no rights
hereunder, and the definition of Party hereunder shall not include such
transferee.
(b) Notwithstanding anything in this Agreement to the contrary, upon
the death of any Party who is a natural person, the transfer of any or all of
its Common Shares and/or Common Share Equivalents to one or more of such Party's
legatees, heirs or trustees of a testamentary trust, or to an executor or
administrator of the estate of such deceased Party incident to guardianship or
probate proceedings involving such estate shall not require the consent of the
Company or any of the Parties and shall not be subject to compliance with
Section 3.1, 3.2, 3.3 or 3.4 so long as (i) such heir shall have agreed in
writing to be bound by the terms of this Agreement and (ii) the transfer to such
heir is not in violation of applicable federal or state securities laws.
3.8 Holders Transfers. Any Person(s) to whom any Holder transfers Common
Shares or Common Share Equivalents, by accepting such Common Shares and/or
Common Share Equivalents, shall be deemed to have agreed to be bound by the
terms of this Agreement (on the same terms as the Holder).
ARTICLE IV
TERMINATION
4.1 Termination. This Agreement shall terminate upon the earlier of (i)
the dissolution, liquidation or winding-up of the Company or (ii) the date on
which DLJ and all Permitted Transferees collectively are no longer the
beneficial owner of at least five percent (5%) of the Fully-Diluted Common
Shares. A Person who ceases to hold any Common Shares or Common Share
Equivalents and who ceases
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to beneficially own any Common Shares or Common Share Equivalents shall cease to
be a Party and shall have no further rights or obligations under this Agreement.
ARTICLE V
MISCELLANEOUS
5.1 Amendment. Any provision of this Agreement may be altered,
supplemented, amended, or waived only by the written consent of each of (i) the
Company and (ii) all of the Parties, except that any Party may unilaterally
waive any of its rights hereunder so long as such waiver is in writing.
5.2 Specific Performance. The Parties and the Company recognize that the
obligations imposed on them in this Agreement are special, unique, and of
extraordinary character, and that in the event of breach by any party, damages
will be an insufficient remedy; consequently, it is agreed that the Parties and
the Company may have specific performance and injunctive relief (in addition to
damages) as a remedy for the enforcement hereof, without proving damages.
5.3 Assignment. Except as otherwise expressly provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the Parties and the Company. No
such assignment shall relieve the assignor from any liability hereunder. Any
purported assignment made in violation of this Section 5.3 shall be void and of
no force and effect.
5.4 Shares Subject to this Agreement. All Common Shares and Common Share
Equivalents now owned or hereafter acquired by any of the Parties shall be
subject to, and entitled to the benefits of, the terms of this Agreement.
5.5 Legends.
(a) Each certificate for Common Shares and Common Share Equivalents
held by any Person a party hereto shall include a legend in substantially the
following form:
THIS SECURITY IS SUBJECT TO CERTAIN VOTING AGREEMENTS, RESTRICTIONS
ON TRANSFER, AND
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OTHER TERMS AND CONDITIONS SET FORTH IN THE SUBORDINATED NOTE
HOLDERS STOCKHOLDERS AGREEMENT, DATED AS OF JULY 10, 1997, AS THE
SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
(b) A restriction on transfer of Common Shares and Common Share
Equivalents set forth in such legend (a "Restriction") shall cease and terminate
as to any particular Common Shares or Common Share Equivalents when, in the
opinion of the Company and counsel reasonably satisfactory to the Company (which
opinion shall be delivered to the Company in writing), such Restriction is no
longer required. Whenever such Restriction shall cease and terminate as to any
Common Shares or Common Share Equivalents, the holder thereof shall be entitled
to receive from the Company, without expense to such holder, new certificate(s)
not bearing a legend stating such Restriction.
5.6 Notices. Any and all notices, designations, consents, offers,
acceptances or other communications provided for herein (each a "Notice") shall
be given in writing by overnight courier, telegram or telecopy which shall be
addressed, or sent, to the respective addresses as follows (or such other
address as the Company or any Party may specify to the Company and all other
Parties by Notice):
The Company:
WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: President
Telecopy No.: (716) 759-5527
DLJ Parties:
DLJ Partners II
DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
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DLJ Funding II
DLJMB Funding II, Inc.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
DLJ Partners II-A
DLJ Merchant Banking Partners II-A, L.P.
277 Park Avenue
New York, New York 10172
Attention: Nicole Arnaboldi/Ivy Dodes
Telecopy No.: (212) 892-7272
Diversified Partners
DLJ Diversified Partners, L.P.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
Diversified Partners-A
DLJ Diversified Partners-A, L.P.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
Millennium Partners
DLJ Millennium Partners, L.P.
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
First ESC
DLJ First ESC L.L.C.
c/o DLJ LBO Plans Management Corporation
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
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Offshore Partners II
DLJ Offshore Partners II, C.V.
c/o DLJ Offshore Management N.V.
John B. Gorsiraweg 14
Willemstad, Curacao
Netherlands, Antilles
Telecopy No.: 011-59-99-614-129
EAB Partners
DLJ EAB Partners, L.P.
c/o DLJ LBO Plans Management Corporation
277 Park Avenue
New York, NY 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
UK Partners
UK Investment Plan 1997 Partners
2121 Avenue of the Stars
Fox Plaza, Suite 3000
Los Angeles, CA 90067
Attention: Osamu Watanabe
Telecopy No.: (310) 282-6178
in each case with a copy to:
Steven D. Rubin, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Telecopy No.: (713) 224-9511
Holders:
DLJIP
DLJ Investment Partners, L.P.
c/o DLJ Investment Funding, Inc.
277 Park Avenue
New York, New York 10172
Attention: John Moriarty, Jr./Ivy Dodes
Telecopy No.: (212) 892-7272
Funding
DLJ Investment Funding, Inc.
277 Park Avenue
New York, New York 10172
Attention: John Moriarty, Jr./Ivy Dodes
Telecopy No.: (212) 892-7272
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Purchaser First ESC
DLJ First ESC L.L.C.
c/o DLJ LBO Plans Management Corporation
277 Park Avenue
New York, New York 10172
Attention: Ivy Dodes/Nicole Arnaboldi
Telecopy No.: (212) 892-7272
Northwestern
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Investment Operations
Telecopy No.: (414) 299-5714
DLJSC
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: ____________________
Telecopy No.: _________________
with a copy to:
John Schuster, Esq.
Cahill Gordon & Reindel
Eighty Pine Street
New York, New York 10005-1702
Telecopy No.: (212) 269-5420
Each Other Party:
To such address or telecopy number as such Party provides by Notice to the
Company and all other Parties or, if such address is not so provided, to such
Party's address as is reflected on the stock transfer records of the Company at
such time.
All Notices shall be deemed effective and received (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified above and
receipt thereof is confirmed; (b) if given by overnight courier, on the business
day immediately following the day on which such Notice is delivered to a
reputable overnight courier service; or (c) if given by telegram, when such
Notice is delivered at the address specified above. No Party shall be
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entitled to receive a Notice hereunder (or a copy of a Notice delivered to the
Company) if, at the time such Notice is to be sent, such Party (including its
Affiliates and the employees of such Party and its Affiliates) no longer owns
any Common Shares.
5.7 Confidentiality. The Parties shall, and shall cause their respective
officers, directors, employees and agents and the respective subsidiaries and
Affiliates of the Parties and their respective officers, directors, employees
and agents to, hold confidential and not use in any manner detrimental to the
Company or any of its Subsidiaries all information they may have or obtain
concerning the Company or any of its Subsidiaries and their respective assets,
business, operations or prospects ("Confidential Information"); provided,
however, that the foregoing shall not apply to (a) information that is or
becomes generally available to the public other than as a result of a disclosure
by a Party or any of its employees, agents, accountants, legal counsel or other
representatives, (b) information that is or becomes available to a Party or any
of its employees, agents, accountants, legal counsel or other representatives on
a nonconfidential basis prior to its disclosure by the Company or its employees,
agents, accountants, legal counsel or other representatives, and (c) information
that is required to be disclosed by a Party or any of its employees, agents,
accountants, legal counsel or other representatives as a result of any
applicable law, rule or regulation of any governmental authority or stock
exchange. If any Party desires to sell Common Shares or Common Share Equivalents
and in connection with such potential sale desires to disclose information
regarding the Company to the potential purchaser in such sale which it is not
permitted to disclose pursuant to the preceding sentence, such Party shall
notify the Company of such Party's desire to disclose such information and shall
identify the potential purchaser in such notification. The Company may require
any such potential purchaser of Common Shares or Common Share Equivalents to
enter into a confidentiality agreement with respect to Confidential Information
on customary terms used in confidentiality agreements in connection with
corporate acquisitions.
5.8 Exclusive Financial Advisor and Investment Banking Advisor. During the
five-year period beginning on the date hereof, DLJSC, or any Affiliate of DLJSC
that DLJ Partners II or DLJSC may choose, in their sole and absolute discretion,
shall be engaged as the exclusive financial and
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investment banking advisor for the Company and its subsidiaries pursuant to the
terms of an agreement substantially in the form of the agreement attached hereto
as Exhibit A hereto.
5.9 Counterparts. This Agreement may be executed in two or more
counterparts and each counterpart shall be deemed to be an original and all such
counterparts together shall constitute one and the same agreement of the parties
hereto.
5.10 Section Headings. Headings contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provisions hereof.
5.11 Choice of Law. This Agreement, including, without limitation, the
interpretation, construction, validity and enforceability thereof, shall be
governed by the internal laws of the State of New York including Section 5-1401
of the General Obligations Law of the State of New York without regard to the
principles of conflict of laws thereof.
5.12 Entire Agreement. This Agreement contains the entire understanding of
the parties hereto respecting the subject matter hereof and supersedes all prior
agreements, discussions and understandings with respect thereto.
5.13 Cumulative Rights. The rights of the Parties and the Company under
this Agreement are cumulative and in addition to all similar and other rights of
the parties under other agreements.
5.14 Severability. If any term, provision, covenant, or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
5.15 Submission to Jurisdiction. (a) Any legal action or proceeding with
respect to this Agreement, the Common Shares or any document related thereto may
be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Agreement, the Company and each Party hereby accepts for itself and in
respect of its
20
<PAGE>
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The parties hereto hereby irrevocably waive any objection, including,
without limitation, any objection to the laying of venue or based on the grounds
of forum non conveniens, which any of them may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(b) The Company and each Party irrevocably consent to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Company or such Party, respectively, at its address provided herein.
(c) Nothing contained in this Section 5.15 shall affect the right of
any party hereto to serve process in any other manner permitted by law.
5.16 Waiver of Jury Trial. Each of the parties hereto waives any right it
may have to trial by jury in respect of any litigation based on, or arising out
of, under or in connection with this Agreement, any Common Shares or Common
Share Equivalents or any course of conduct, course of dealing, verbal or written
statement or action of any party hereto.
[SIGNATURES CONTAINED ON SUCCEEDING PAGES]
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WGL Holdings, Inc.
By: /s/ David M. Wittels
---------------------------------------------
David M. Wittels
President
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
DLJB FUNDING II, INC.
By: /s/ David M. Wittels
---------------------------------------------
Name: David M. Wittels
-------------------------------------------
Title: Attorney-in-Fact
------------------------------------------
DLJ MERCHANT BANKING PARTNERS II-A, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
22
<PAGE>
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
DLJ DIVERSIFIED PARTNERS-A, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ MERCHANT BANKING II, INC.
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
As Manager
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
23
<PAGE>
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
DLJ EAB PARTNERS, L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
UK INVESTMENT PLAN 1997 PARTNERS
By: DONALDSON, LUFKIN & JENRETTE,
INC.
By: /s/ David M. Wittels
-------------------------------------
Name: David M. Wittels
-----------------------------------
Title: Attorney-in-Fact
----------------------------------
24
<PAGE>
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ Investment Partners, Inc.,
General Partner
By: /s/ John M. Moriarty, Jr.
-------------------------------------
Name: John M. Moriarty, Jr.
-----------------------------------
Title: Managing Director
----------------------------------
25
<PAGE>
DLJ INVESTMENT FUNDING, INC.
By: /s/ Thomas E. Siegler
-------------------------------------
Name: Thomas E. Siegler
-----------------------------------
Title: Secretary
----------------------------------
26
<PAGE>
DLJ FIRST ESC L.L.C.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
As Manager
By: /s/ Ed Poletti
-------------------------------------
Name: Ed Poletti
-----------------------------------
Title: Vice President
----------------------------------
27
<PAGE>
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY
By: /s/ A. Kipp Koester
-------------------------------------
Name: A. Kipp Koester
-----------------------------------
Title: Vice President
----------------------------------
28
<PAGE>
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
By: /s/ Thomas E. Siegler
-------------------------------------
Name: Thomas E. Siegler
-----------------------------------
Title: Senior Vice President
----------------------------------
29
<PAGE>
SCHEDULE I
This Schedule I is a part of and is incorporated into that certain letter
agreement (together, the "Agreement") dated July 10, 1997 by and between WGL
Holdings, Inc. (which together with its subsidiaries is hereinafter referred to
as the "Company") and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ").
The Company will indemnify and hold harmless DLJ and its affiliates, and
the respective directors, officers, agents and employees of DLJ and its
affiliates (other than the Company) (DLJ and each such entity or person, an
"Indemnified Person"), from and against any losses, claims, damages, judgments,
assessments, costs and other liabilities (collectively, "Liabilities"), and will
reimburse each Indemnified Person for all fees and expenses (including the
reasonable fees and expenses of counsel) (collectively, "Expenses") as they are
incurred in investigating, preparing, pursuing or defending any claim, action,
proceeding or investigation, whether or not in connection with pending or
threatened litigation and whether or not any Indemnified Person is a party
(collectively, "Actions"), arising out of or in connection with advice or
services rendered or to be rendered by any Indemnified Person pursuant to this
Agreement, the transactions contemplated hereby or any Indemnified Person's
actions or inactions in connection with any such advice, services or
transactions; provided that the Company will not be responsible for any
Liabilities or Expenses of any Indemnified Person that are determined by a
judgment of a court of competent jurisdiction which is no longer subject to
appeal or further review to have resulted solely from such Indemnified Person's
gross negligence or willful misconduct in connection with any of the advice,
actions, inactions or services referred to above. The Company also agrees to
reimburse each Indemnified Person for all Expenses as they are incurred in
connection with enforcing such Indemnified Person's rights under this Agreement
(including, without limitation, its rights under this Schedule I).
Upon receipt by an Indemnified Person of actual notice of an Action
against such Indemnified Person with respect to which indemnity may be sought
under this Agreement, such Indemnified Person shall promptly notify the Company
in writing; provided that failure so to notify the Company shall not relieve the
Company from any liability which the Company may have on account of this
indemnity or otherwise, except to the extent the Company shall have been
materially prejudiced by such failure. The Company shall, if requested by DLJ,
assume the defense of any such Action including the employment of counsel
reasonably satisfactory to DLJ. Any Indemnified Person shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless: (i) the Company has failed promptly to assume
the defense and employ counsel or (ii) the named parties to any such Action
(including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or in addition to those available to the Company; provided that the Company
shall not in such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel in connection with any Action in the same
jurisdiction, in addition to any local counsel. The Company shall not be liable
for any settlement of any Action effected without its written consent. In
addition, the Company will not, without prior written consent of DLJ, settle,
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any pending or threatened Action in respect of which indemnification
or contribution may be sought hereunder (whether or not any Indemnified
<PAGE>
Person is a party thereto) unless such settlement, compromise, consent or
termination includes an unconditional release of each Indemnified Person from
all Liabilities arising out of such Action.
In the event the foregoing indemnity is unavailable to an Indemnified
Person [other than] in accordance with this Agreement, the Company shall
contribute to the Liabilities and Expenses paid or payable by such Indemnified
Person in such proportion as is appropriate to reflect (i) the relative benefits
to the Company and its shareholders, on the one hand, and to DLJ, on the other
hand, of the matters contemplated by this Agreement or (ii) if the allocation
provided by the immediately preceding clause is not permitted by the applicable
law, not only such relative benefits but also the relative fault of the Company,
on the one hand, and DLJ, on the other hand, in connection with the matters as
to which such Liabilities or Expenses relate, as well as any other relevant
equitable considerations; provided that in no event shall the Company contribute
less than the amount necessary to ensure that all Indemnified Persons, in the
aggregate, are not liable for any Liabilities and Expenses in excess of the
amount of fees actually received by DLJ pursuant to the Agreement. For purposes
of this paragraph, the relative benefits to the Company and its shareholders, on
the one hand, and to DLJ, on the other hand, of the matters contemplated by the
Agreement shall be deemed to be in the same proportion as (a) the total value
paid or contemplated to be paid or received or contemplated to be received by
the Company or the Company's shareholders, as the case may be, in the
transaction or transactions that are within the scope of the Agreement, whether
or not any such transaction is consummated, bears to (b) the fees paid or to be
paid to DLJ under the Agreement.
The Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with advice or services rendered or to be rendered
by any Indemnified Person pursuant to this Agreement, the transactions
contemplated hereby or any Indemnified Person's actions or inactions in
connection with any such advice, services or transactions except for Liabilities
(and related Expenses) of the Company that are determined by a judgment of a
court of competent jurisdiction which is no longer subject to appeal or further
review to have resulted solely from such Indemnified Person's gross negligence
or willful misconduct in connection with any such advice, actions, inactions or
services.
The reimbursement, indemnity and contribution obligations of the Company
set forth herein shall apply to any modification of this Agreement and shall
remain in full force and effect regardless of any termination of, or the
completion of any Indemnified Person's services under or in connection with,
this Agreement.
<PAGE>
EXHIBIT B
[FORM OF SECURITIES ACT COMPLIANCE CERTIFICATE]
31
<PAGE>
CERTIFICATE
To: WGL Holdings, Inc. ("Holdings" or the "Company")
In connection with a proposal transfer of shares of Common Stock,
par value $.001 per share, of Holdings (the "Shares") occurring prior to the
date of the declaration by the Securities and Exchange Commission ("SEC") of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of such shares (which
effectiveness shall not have been suspended or terminated at the date of the
transfer), the undersigned confirms that it has not utilized any general
solicitation or general advertising in connection with the transfer and that
such Shares are being transferred:
[Check One]
(1) _____ to Holdings or a subsidiary thereof; or
(2) _____ pursuant to and in compliance with Rule 144A under the Securities
Act; or
(3) _____ to an institutional "accredited investor" (as defined in Rule 501
(a) (1), (2), (3) or (7) under the Securities Act) that has
furnished to Holdings a signed letter containing certain
representations and agreements (the form of which appears below); or
(4) _____ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
(5) _____ pursuant to the exemption from registration provided by Rule 144
under the Securities Act; or
(6) _____ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, Holdings will refuse to register any of the
Shares proposed to be transferred in the name of any person other than the
registered Holder thereof; provided, that if box (4), (5) or (6) is checked, the
Company may require, prior to registering any such transfer
<PAGE>
of the Shares, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (4)) and other information as
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.
If none of the foregoing boxes is checked, the Company shall not be obligated to
register Shares 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
shall have been satisfied.
Date: Signed: ________________________
(Sign exactly as your
name appears on the share
certificate(s)
representing the Shares
being transferred
Signature Guarantee:
2
<PAGE>
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED]
The undersigned represents and warrants that it is purchasing the
Shares referred in this certification 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 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
3
<PAGE>
[FORM OF LETTER TO BE COMPLETED
BY PURCHASER IF (3) ABOVE IS CHECKED]
Ladies and Gentlemen:
1. The undersigned understands that the offer and sale of the Shares
referred to in the attached certificate have not been registered under the
Securities Act, and that such Shares may not be offered or sole except as
permitted in the following sentence. The undersigned agrees, on its own behalf
and on behalf of any accounts for which it is acting as hereinafter stated, that
if it should sell, pledge or otherwise transfer any such Shares it will do so
only (1) (W) inside the United States to a person who the seller reasonably
believes is a qualified institutional buyer within the meaning of Rule 144A
under the securities act in a transaction meeting the requirements of rule 144A,
or in accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel, if the company so requests), (x) to Holdings, (y)
outside of the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act or (z) pursuant to an
effective registration statement under the Securities Act and (2) in each case,
in accordance with the applicable securities laws of any state of the United
States or any other applicable jurisdiction, and undersigned further agrees to
provide to any person purchasing any of such Shares from us a notice advising
such purchaser that resales of such Shares are restricted as stated herein.
2. The undersigned understands that, on any proposed resale of all
or any of such Shares, it may be required to furnish Holdings such certification
and other information as Holdings may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. The undersigned further
understands that the Shares purchased by it will bear a legend to the foregoing
effect.
3. The undersigned is an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) and has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of an investment
4
<PAGE>
in the Shares, and the undersigned and any accounts for which it is acting are
each able to bear the economic risk of our or its investment, as the case may
be.
4. The undersigned is acquiring the Shares purchased by us for
its/our account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which the undersigned exercises sole
investment discretion.
Date: ________________________________
NOTICE: To be signed by an
executive officer
5
<PAGE>
Exhibit 10.16*
The confidential portions of this exhibit, which have been removed and
replaced with an asterisk, have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
CONFIDENTIAL
CONFIDENTIAL
SUPPLY AGREEMENT
SVO BATTERIES
This Supply Agreement (this "Agreement") is made as of the 31st day of
July, 1991 by and between Wilson Greatbatch Ltd., a corporation duly organized
under the laws of the State of New York, U.S.A. and having its principal place
of business at 10,000 Wehrle Drive, Clarence, New York 14031 (hereinafter
"WGL"), and Medtronic, Inc., a corporation duly organized under the laws of the
State of Minnesota, U.S.A. and having its principal place of business at 7000
Central Avenue, N.E., Minneapolis, Minnesota 55432 (hereinafter "Medtronic").
RECITALS
A. WGL has the capability and desire to manufacture for and supply to Medtronic
SVO Batteries, as defined below, for use in Products, as defined below.
B. Medtronic desires to purchase a supply of SVO Batteries from WGL for use in
Products all in accordance with the terms of this Agreement.
C. In addition, WGL desires to grant to Medtronic and Medtronic desires to
obtain from WGL on the date first set forth above a worldwide, nonexclusive.
royalty free license to utilize defined Subject Patents and Know-How of WGL
relating to SVO Batteries, all in accordance with the terms of the License
Agreement, as defined below.
D. The parties acknowledge that Medtronic's purpose in entering into this
Agreement is to obtain a reliable source of SVO Batteries of high quality and
that WGL agrees to provide such a source subject to all of the terms and
conditions set forth in this Agreement. The parties further acknowledge that
Medtronic intends over time to develop both its internal capabilities to
manufacture SVO Batteries to meet its anticipated requirements for such SVO
Batteries, and in addition is establishing by this Agreement a second source
supply arrangement with WGL for supply of SVO Batteries to substantially assist
Medtronic in meeting its requirements for SVO Batteries.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Affiliate. "Affiliate" of any entity is any other entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the
-1-
<PAGE>
first entity. Control shall mean owning more than 50 percent of the total voting
power of the entity.
1.2 Confidential Information. "Confidential Information" shall mean know-how,
trade secrets, and unpublished information disclosed by one of the parties (the
"disclosing party") to the other party (the "receiving party") or generated
under this Agreement, excluding information which:
(a) was already in the possession of receiving party prior to its receipt
from the disclosing party, provided that the receiving party shall provide
the disclosing party with reasonable documentary proof thereof;
(b) is or becomes part of the public domain by reason of acts not
attributable to the receiving party;
(c) is or becomes available to receiving party from a source other than
the disclosing party which source, to the receiving party's knowledge, has
rightfully obtained such information and has no obligation of
non-disclosure or confidentiality to the disclosing party with respect
thereto; or
(d) is made available by the disclosing party to a third party
unaffiliated with the disclosing party on an unrestricted basis.
All Confidential Information disclosed by one party to the other under this
Agreement, insofar as practicable, shall ultimately be in writing and bear a
legend "Company Proprietary", "Company Confidential" or words of similar import.
Accordingly, all Confidential Information disclosed in any manner other than
writing shall, insofar as practicable, be preceded by an oral statement
indicating that the information is company proprietary or confidential, and
shall be followed by transmittal of a reasonably detailed written summary of the
information provided to the receiving party with identification as Confidential
Information designated as above within thirty (30) days.
1.3 Intellectual Property. "Intellectual Property" shall mean all patents,
inventions, discoveries, know-how, trade secrets, data, information, technology,
processes, formulas, drawings, designs, computer programs, licenses, and all
amendments, modifications, and improvements to any of the foregoing.
1.4 Contract Year. "Contract Year" shall mean each respective annual period
during the term of this Agreement which commences on August 1 and ends on the
next following July 31.
1.5 First Contract Period, Second Contract Period, and Third Contract Period.
"First Contract Period", "Second Contract Period", and "Third Contract Period"
shall mean, respectively, the
-2-
<PAGE>
periods of (i) August 1, 1991 to July 31, 1995, (ii) August 1, 1995 to July 31,
1998, and (iii) August 1, 1998 to July 31, 2001.
1.6 License Agreement. "License Agreement" shall mean the License Agreement to
be executed by WGL and Medtronic on even date herewith, in the form of the
attached Exhibit A hereto.
1.7 Product. "Product" shall mean implantable medical products used in the
treatment of cardiac tachycardia or fibrillation now and hereafter manufactured
by or for Medtronic.
1.8 Quota. "Quota" shall mean the respective period minimum quantities of SVO
Batteries which Medtronic shall be expected to purchase from WGL in accordance
with the terms and conditions of Article 5 of this Agreement.
1.9 SVO Batteries. "SVO Batteries" shall mean any battery for use in a Product
which battery uses silver vanadium oxide as a cathode material.
1.10 Security Agreement. "Security Agreement" shall mean the Security Agreement
to be executed by WGL on even date herewith, in the form of the attached Exhibit
B hereto, which shall secure WGL's performance of its obligations to Medtronic
under this Agreement.
1.11 New Battery. "New Battery" shall mean any SVO Battery that requires full
WGL qualification as a new cell and that has been in implantable grade
production for less than 180 days. WGL Models 8830 and 8615 are not, for
purposes of this Agreement, considered "New Batteries."
ARTICLE 2
GENERAL OBLIGATIONS OF Medtronic
2.1 Quality Control. Medtronic agrees to follow reasonable quality control
standards with respect to the storage, preservation, and use of SVO Batteries
purchased under this Agreement and consistent in all material respects with the
reasonable recommendations of WGL. Medtronic shall maintain production,
inventory and sales records with respect to Product incorporating SVO
Batteries purchased from WGL under this Agreement, in sufficient detail to
enable Medtronic to conduct an effective recall of such Product should such a
recall be deemed appropriate by Medtronic.
2.2 Regulatory Approval Efforts. During the term of this Agreement Medtronic
shall have responsibility for obtaining at its expense, in its name and at its
discretion any necessary device regulatory approvals from the U.S. Food and
Drug Administration (i.e., PMA's or 510(k)'s as the case may be), and
applicable regulatory agencies of such other countries in which Product
incorporating the SVO Batteries will be sold. WGL shall supply
-3-
<PAGE>
Medtronic with all documents, instruments, information, reports and advice and
general assistance as is necessary to complete, and as is reasonably requested
by Medtronic in connection with, such regulatory approval efforts.
ARTICLE 3
GENERAL OBLIGATIONS OF WGL
3.1 WGL's Manufacture and Supply of SVO Batteries. Except as otherwise provided
in Section 4.2 hereof, WGL shall use all reasonable commercial efforts during
the term of this Agreement to supply to Medtronic SVO Batteries in the
quantities ordered by Medtronic, in accordance with the specifications now in
effect and hereafter agreed to by the parties and with Medtronic's schedules for
delivery thereof. WGL acknowledges that such quantities ordered by Medtronic may
amount to * of Medtronic's requirements for SVO Batteries for use in
Products during the term of this Agreement.
3.2 SVO Battery Specifications. The current specifications for the SVO Batteries
to be purchased under this Agreement are attached hereto as Exhibit C, except
for the specifications for the SVO Battery to be used in Medtronic PCD Model
7218 which specifications are now being finalized by mutual agreement (the SVO
Batteries specifications attached are presently intended for use in Medtronic's
PCD Models 7216, 7217 and 7219). It is the expectation of both parties that WGL
will maintain commercially competitive capabilities in the research, design,
development and manufacture of SVO Batteries. Subject to Section 6.3 hereof, WGL
agrees that it will promptly undertake to implement any changes to existing
designs of SVO Batteries and any new designs of SVO Batteries proposed for
purchase by Medtronic under this Agreement to the extent reasonably requested by
Medtronic from time to time, provided that such efforts requested are reasonably
within the then-existing or imminently planned-for capabilities of WGL and such
efforts are reasonably deemed by Medtronic as likely to enhance Medtronic's
competitive position in and/or profit from the development and sale of Products.
Such implementations shall be conditional upon the successful completion of such
evaluation and qualification procedures as WGL shall reasonably require
to ensure the safety, reliability, quality, and manufacturability of such
proposed changes and new designs. Medtronic may not require delivery of SVO
Batteries incorporating such changes until sixty (60) days after completion of
such qualification procedures and such delivery shall be subject to the
provisions of Section 4.7.
3.3 Compliance With U.S. Laws and Regulations; Compliance With Specifications.
WGL shall be responsible for compliance with present and future applicable
statutes, laws, ordinances and regulations of United States and foreign
national, federal, state and local governments relating to the manufacture and,
except as otherwise provided in Section 2.2 hereof, the sale of SVO Batteries
-4-
<PAGE>
to Medtronic under this Agreement. WGL will provide such Medtronic personnel
as Medtronic reasonably deems appropriate with reasonable access from time to
time to WGL's facilities and records for the purpose of confirming WGL's
compliance with requirements noted in this Section, and for the further purpose
of confirming, if reasonably deemed necessary by Medtronic, WGL's compliance
with applicable specifications for SVO Batteries.
3.4 Failure to Meet Delivery Schedules. If WGL is unable for any reason, other
than Force Majeure, to meet any scheduled deliveries specified by Medtronic for
SVO Batteries, as provided for in Article 4 hereof, and such inability is
material to Medtronic in amount and significance, WGL shall on written request
of Medtronic then allocate, with respect to the Contract Period within which the
delay in delivery originated, the following respective percentages of WGL's SVO
Battery manufacturing capacity to fulfill Medtronic's orders for SVO Batteries:
* percent for the First Contract Period, * percent for the Second
Contract Period, and * percent for the Third Contract Period. Such
allocation of plant capacity by WGL shall continue until the delivery schedule
for SVO Batteries to Medtronic is being met on a current basis. Furthermore, in
the event of any aforementioned inability of WGL to meet scheduled deliveries to
Medtronic, WGL will engage in communications with and will fully cooperate with
Medtronic as requested by Medtronic, and provide appropriate, mutually agreed
upon Medtronic personnel with reasonable access to WGL's SVO Battery
manufacturing facility as requested by Medtronic, to determine the causes of
such inability and possible measures to correct such inability and prevent its
recurrence in the future.
ARTICLE 4
ORDERS FOR SVO BATTERIES
4.1 Orders for SVO Batteries. Medtronic will submit orders for SVO Batteries to
WGL in writing, whether by mail, telecopy, telex or otherwise, and such orders
will set forth at a minimum: (a) an identification of SVO Batteries ordered, (b)
quantities ordered, (c) delivery dates, and (d) shipping instructions.
4.2 Order Limitations. In the event orders placed by Medtronic for delivery
within any month exceed the monthly average of Product units ordered by
Medtronic under the most recent prior period of * consecutive months of
Medtronic firm purchase orders by more than * or by more than * SVO
Battery units, whichever is greater, then WGL shall not be obligated to supply
any such excess above such * or * unit overage as applicable, however,
WGL shall use all reasonable commercial efforts to supply amounts requested for
delivery which are in excess of such overage, it being understood that in the
supply of any such excess beyond the permitted overage WGL may take into account
delivery commitments to other customers. Notwithstanding the foregoing, WGL
shall not be required to supply within any
-5-
<PAGE>
forecast period a number of SVO Battery units which is in excess of * times the
aggregate number of SVO Battery units forecast for delivery by Medtronic during
such forecast period under Section 4.5 hereof. It is understood by the parties,
however, that in the event WGL refuses to supply any SVO Batteries to Medtronic
because of the foregoing cap on WGL's periodic supply requirements and such
refusal makes it impossible for Medtronic to meet a purchase quota under Article
5 hereof, then the relevant Medtronic purchase quota requirement shall be deemed
reduced by the number of SVO Battery units which WGL so refuses to deliver.
4.3 Modification of Orders. No aforementioned order shall be modified or
canceled except upon the mutual agreement of the parties. Mutually agreed change
orders shall be subject to all provisions of this Agreement, whether or not
the change order so states. Notwithstanding the foregoing, Medtronic may in its
sole discretion by written notice to WGL cancel orders for and deliveries of any
SVO Batteries which are not delivered within sixty (60) days of the delivery
date requested by Medtronic and in the event of such cancellation by Medtronic,
Medtronic may then make such appropriate adjustments to any outstanding orders
and forecasts as it deems advisable in light of any shortfalls in supply which
relate to such cancellation. The foregoing rights of cancellation and adjustment
by Medtronic, together with the rights of Medtronic set forth in Section 3.4
hereof and in Section 4.6 hereof, the right of reduction in Quotas set forth in
Section 5.4 hereof, and the right of termination of this Agreement by Medtronic
for material breach of this Agreement set forth in Section 12.2 hereof, shall be
the exclusive remedies to which Medtronic may be entitled as a result of delayed
deliveries by WGL.
4.4 Delivery Terms. All deliveries of SVO Batteries shall be F.O.B. WGL's
manufacturing facility at 10,000 Wehrle Drive, Clarence, New York. Accordingly,
all risk of damage to or loss or delay of SVO Batteries purchased under this
Agreement shall pass to Medtronic upon their delivery at the F.O.B. point to a
common carrier specified by Medtronic or, in the event that no carrier shall
have been specified by Medtronic on or before the date fifteen (15) days prior
to the requested shipment date, a common carrier reasonably selected by WGL.
4.5 Medtronic's Forecasts. Upon execution of this Agreement by the parties,
Medtronic agrees to provide WGL with a twelve (12) month forecast indicating
Medtronic's forecast purchases of SVO Batteries from WGL during the period
August 1, 1991 through July 31, 1992 (and which shall take into account orders
for SVO Batteries placed by Medtronic prior to execution of this Agreement).
Such forecast shall be updated monthly (prior to the final day of each full
month during the term of this Agreement) by Medtronic in writing to WGL on a
rolling basis such that the forecast shall at all times cover the prospective
twelve (12) month period. Such rolling forecasts by Medtronic shall be used
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for purposes of facilitating each party's planning and in order to meet the
lead times required by certain of WGL's suppliers. Such forecasts are not
legally binding in any manner and may be revised from time to time by Medtronic
as it deems appropriate, provided, however, that SVO Batteries scheduled for
delivery within the first four months of each aforesaid twelve month forecast
period shall represent and constitute a firm order by Medtronic.
4.6 Penalties for Specified Delivery Delays. The provisions of this Section 4.6
shall become effective 9 months after the date of both parties signing this
Supply Agreement. If, prior to July 31, 1995 or, while WGL is the sole supplier
of a particular SVO Battery model as to which delays are occurring, WGL is
unable for any reason (other than force majeure) to meet any scheduled
deliveries specified by Medtronic for SVO Batteries, as provided for in Article
4 hereof, and such delay is material to Medtronic in amount and significance
(including but not necessarily limited to any such delay which would cause
Medtronic to reduce its planned production of Products, which shall be deemed
material to Medtronic) then, notwithstanding any contrary provisions of the
Security Agreement or this Agreement or of law, with the exception of Section
3.4 hereof, the rights of cancellation and adjustment set forth in Section 4.3
hereof, the right of reduction in Quotas set forth in Section 5.4 hereof, and
the right of termination of this Agreement by Medtronic for material breach of
this Agreement set forth in Section 11.2 hereof: at Medtronic's request and
until such time as WGL can promptly deliver from its current production
quantities of delayed SVO Batteries to fully support Medtronic manufacturing
requirements, WGL shall use SVO Batteries comprising Inventory under the
Security Agreement (to the extent such SVO Batteries are available in the
appropriate models) to offset delayed SVO Batteries. Subject to the foregoing
conditions of this Section 4.6, for each SVO Battery unit which is not
delivered, whether out of said Inventory or from current production, within
sixty (60) days of the delivery date requested by Medtronic pursuant to the
order and delivery terms of this Agreement, WGL shall immediately make a
repayment to Medtronic of a portion of the * sum referenced in Section 6.7
hereof, to the extent such sum has not already been repaid in whole by WGL under
this Section 4.6 or Section 6.7 of this Agreement or under the Security
Agreement, which repayment shall be determined by multiplying * times the number
of such delayed units. The total of any aforementioned repayments by WGL under
this Section 4.6 together with any repayments under Section 6.7 and under the
Security Agreement shall in no event exceed *. Any such repayments made to
Medtronic shall not relieve WGL of its responsibility to deliver the delayed
units as soon as possible in the event the orders for such delayed units have
not been cancelled by Medtronic. The foregoing provisions shall not reduce or
otherwise affect the adjustments to Medtronic's permitted outstanding account
payable to WGL for SVO Batteries to the extent provided for in Section 6.2
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hereof. The foregoing rights in this Section 4.6, together with the rights of
Medtronic set forth in Section 3.4 hereof and in Section 4.3 hereof, the right
of reduction in Quotas set forth in Section 5.4 hereof, and the right of
termination of this Agreement by Medtronic for material breach of this Agreement
set forth in Section 11.2 hereof, shall be the exclusive remedies to which
Medtronic may be entitled as a result of delayed deliveries by WGL.
4.7 Scheduled Deliveries for New Battery. It is expressly understood that the
first six (6) months of scheduled delivery for any New Battery as defined herein
will be strictly on a best efforts basis by WGL and will not be subject to any
provision regarding failure to deliver including Section 3.4, 4.3, 4.6, 5.4 and
11.2.
ARTICLE 5
PURCHASE QUOTAS
5.1 Contract Year Quota. Medtronic agrees to purchase and take delivery from WGL
of a quota of SVO batteries during each Contract Year in an amount equal to the
lesser of (a) * SVO Batteries, or (b) * of Medtronic's requirements for SVO
Batteries for that Contract Year.
5.2 Contract Period Quota. During the First Contract Period, Second Contract
Period and Third Contract Period, respectively, Medtronic agrees to purchase and
take delivery from WGL of the following quotas of SVO Batteries:
(a) A quota for the First Contract Period in an amount equal to * of
Medtronic's requirements for SVO Batteries during such Contract Period;
(b) A quota for the Second Contract Period in an amount equal to * of
Medtronic's requirements for SVO Batteries during such Contract Period;
and
(c) A quota for the Third Contract Period in an amount equal to * of
Medtronic's requirements for SVO Batteries during such Contract Period.
5.3 Purchase Carry Forwards. For purposes of determining whether Medtronic has
met any Contract Period quota, Medtronic may carry forward from any one Contract
Period to any future Contract Periods such number of purchased SVO Battery units
as is in excess of the Contract Period quota for the period from which such
carry forward is being made. Notwithstanding the foregoing, the maximum number
of purchased SVO Battery units which Medtronic may carry forward from any one
Contract Period to any future Contract Period or Periods shall be * units.
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5.4 Reductions in Quota. Notwithstanding Medtronic's obligations pursuant to
Sections 5.1 and 5.2 hereof, Medtronic's Quota for any quota period shall be
reduced (a) in the case of subpart (i) below by an amount equal to * times the
amount of SVO Batteries, the order and delivery of which has been canceled by
Medtronic pursuant to Section 4.3 hereof, (b) in the case of subpart (ii) below,
by an amount equal to * times the amount of SVO Batteries affected by such
recall or withdrawal, and (c) in the case of subpart (iii) below, by an amount
equal to * times the amount of SVO Batteries of the revised design noted below
which Medtronic itself manufactures and incorporates into Product (or has a
third party manufacture, as permitted under this Agreement), following WGL's
failure to supply such revised design battery.
(i) If WGL fails for any reason to deliver ordered SVO Batteries within
sixty (60) days of the date scheduled for delivery thereof, including but
not limited to a failure to deliver SVO Batteries which conform to the
then current specifications for SVO Batteries;
(ii) If any Product incorporating SVO Batteries provided under this
Agreement is recalled from the market or withdrawn from sale for reasons
of product safety or quality due to battery performance as determined by
any applicable governmental authority or by Medtronic in its reasonable
judgment after consultation with WGL; or
(iii) If WGL is unable or for any other reason fails to implement any
revised SVO Battery design requested by Medtronic under the provisions of
Section 3.2 hereof.
Subject to Section 4.6 regarding penalties for specified delivery delays, the
foregoing adjustments to Quotas shall not be deemed to waive or otherwise
adversely affect any other remedy to which Medtronic may be entitled as a result
of the occurrence of events giving rise to any such reduction in Quotas which
remedy is specifically set forth in Section 3.4, 4.3, 4.6 or 11.2 hereof. The
rights of Medtronic set forth in this Section 5.4, together with the rights of
Medtronic set forth in Section 3.4 hereof, Section 4.3 hereof and in Section 4.6
hereof, and the right of termination of this Agreement by Medtronic for material
breach of this Agreement set forth in Section 11.2 hereof, shall be the
exclusive remedies to which Medtronic may be entitled as a result of delayed
deliveries by WGL.
5.5 Reports and Records. Within ninety (90) days after the end of each Contract
Year, Medtronic shall provide WGL with a written report indicating the number of
Product units manufactured by or for Medtronic during such period which
incorporate an SVO Battery. Upon reasonable notice and during regular business
hours, but no more frequently than once for any Contract Year and only with
respect to a Contract Year which has been completed in the prior
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three year period, Medtronic shall at WGL's written request make available
appropriate records substantiating the number of Product units manufactured by
Medtronic in such prior Contract Years which incorporate an SVO Battery for
audit at WGL's expense by an independent certified accounting representative to
verify the accuracy of the reports provided to WGL. Such representative shall
execute a suitable confidentiality agreement reasonably acceptable to Medtronic
prior to conducting such audit. Such representative may disclose to WGL only its
conclusions regarding the accuracy and completeness of said reports, and shall
not disclose Confidential Information of Medtronic to WGL without the prior
written consent of Medtronic.
5.6 Cure of Quota Shortfalls. In the event WGL determines that Medtronic has
failed to meet a Contract Year or Contract Period Quota as provided for in this
Article 5 it shall promptly notify Medtronic in writing of such failure and the
amount by which the applicable Quota has not been met. Notwithstanding any
contrary provisions of this Agreement, Medtronic shall have a period of ninety
(90) days after receipt of any such written notice from WGL and verification of
the alleged deficiency to cure any failure to purchase Quotas by placing firm
orders for appropriate additional purchases of SVO Batteries from WGL. Any such
purchases made to cure a failure to meet Quota shall not be counted as purchases
for Quota purposes for any Contract Year or Contract Period other than the ones
as to which such cure has been effected.
5.7 Determining Quota Percentage. For purposes of determining whether
Medtronic's Quota for any period has been met (subject to such adjustments as
are provided for in this Agreement), the numerator of the fraction which
determines the percentage of Quota shall be the number of SVO Battery units
delivered by WGL to Medtronic during such period (less the number of such
delivered units, if any, which were rightfully not accepted by Medtronic) and
the denominator of such fraction shall be the total number of SVO Battery units
incorporated in Product units of Medtronic which enter into commercial
production (and are intended for commercial sale, as opposed to use for
development, demonstration, testing or other purposes) during such period.
ARTICLE 6
PRICES AND PAYMENTS
6.1 SVO Batteries Prices. Except as otherwise provided in Section 6.10 hereof,
the price to be paid by Medtronic for SVO Batteries purchased from WGL during
the term of this Agreement shall be * U.S. per SVO Battery. All prices are
F.O.B. WGL's manufacturing facility in Clarence, New York. Except as otherwise
provided in Section 6.5, the foregoing * U.S. per unit price shall apply to all
SVO Batteries purchased from WGL whether such units are prototypes, pilot
production or commercial run units.
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6.2 Unit Payment Terms. Payments made by Medtronic for SVO Batteries purchased
hereunder shall be due and payable thirty (30) days after shipping date F.O.B.
from Clarence, New York. Notwithstanding the foregoing sentence, once the * sum
referenced in Section 6.7 hereof has been delivered to WGL from escrow as
provided for in said Section 6.7, Medtronic shall not be required during the
term of this Agreement to pay down its account payable to WGL for SVO Batteries
purchased hereunder to any amount below the greater of (a) * and (b) * plus the
dollar amount derived by multiplying the then current per unit purchase price
for SVO Batteries under this Agreement times the number of SVO Battery units
which results from subtracting (i) the actual average number of SVO Battery
units in the Minimum Inventory (whether or not the required level of Minimum
Inventory, as defined in the Security Agreement, has been met) during the most
recently completed semi-annual period in the latest Contract Year from (ii) the
threshold level of * units; provided, however, that this sentence shall no
longer be applicable from and after the date WGL shall have repaid in full the *
sum referenced in Section 6.7 hereof. Any interest earned on the advance payment
while in escrow at Chemical Bank, as provided for in Section 6.7, shall be
credited to Medtronic's account, with such credit to be applied by WGL at the
instruction and discretion of Medtronic against any purchases of SVO Batteries
by Medtronic made after the escrowed funds have been disbursed to WGL. In the
event the aforesaid * and interest thereon have been disbursed to Medtronic in
accordance with the terms of the escrow agreement referenced in Section 6.7,
then Medtronic shall have no further right to the aforementioned purchase price
credit relating to interest earned on the escrowed *.
6.3 Design Fees. In the event that during the term of this Agreement Medtronic
requests that WGL supply to it a new model or models of SVO Battery under this
Agreement, then Medtronic will pay to WGL a reasonable design fee for WGL's
efforts in designing such new model or models of SVO Battery. Such design fee
shall be mutually agreed to by the parties in good faith and in no event will
such fee be greater than an amount equal in all material respects to that being
paid at or near the time of such design changes by other purchasers for a
comparable degree of design changes to SVO Batteries purchased from WGL. Any
significant design changes for SVO Batteries in production shall cost a minimum
of *.
6.4 Taxes. Medtronic shall be responsible for and shall pay, or reimburse WGL
for, all taxes, duties, import fees, assessments and other governmental charges
(except net income taxes) including those that relate to the import of SVO
Batteries into countries to which Medtronic has requested delivery of such SVO
Batteries. Notwithstanding the foregoing, WGL shall be responsible for and pay
any import taxes or fees for any importation of SVO Batteries into
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the United States should WGL elect to manufacture the SVO Batteries outside of
the United States.
6.5 Adjustments Relating to Outstanding Order. Notwithstanding any contrary
prior agreements or understandings of the parties with respect to SVO Batteries
presently on order by Medtronic from WGL as of the execution date of this
Agreement (i.e., the WGL #8830 battery for use in Medtronic's #7217 PCD), such
on order units will remain priced at * U.S. per SVO Battery provided, however,
that the last * of such SVO Batteries (currently scheduled for delivery after
January 1, 1992) will be priced at * U.S. per SVO Battery. Moreover, all of such
SVO Batteries on order by Medtronic from WGL as of the execution date of this
Agreement shall be considered as purchases from WGL during the term of this
Agreement for the purpose of determining if Medtronic has met its quota
responsibilities under Article 5 of this Agreement.
6.6 Most Favored Terms. WGL acknowledges and agrees that the price charged to
Medtronic for SVO Batteries shall at no time during the term of this Agreement
be higher than or otherwise less favorable than the price in effect from time to
time during the term of this Agreement for substantially comparable SVO
Batteries purchased by any other party from WGL in equal or lesser quantities
than are to be purchased by Medtronic hereunder, provided, however, that the
foregoing clause shall not apply to SVO Batteries that are not intended for, and
in fact do not rightfully enter into, commercial sale to end user customers,
such as those used for development, demonstration, or testing purposes.
Accordingly, within thirty (30) days of the completion of each Contract Year,
WGL shall provide to Medtronic a written certification by an executive officer
of WGL that WGL has fully complied with the terms of this Section 6.6. Upon
reasonable notice and during regular business hours, but no more frequently than
once for any Contract Year and only with respect to a Contract Year which has
been completed in the prior three year period, WGL shall at Medtronic's written
request make available appropriate records substantiating the accuracy of WGL's
certifications referenced above for audit at Medtronic's expense by an
independent certified accounting representative to verify the accuracy of such
certifications. Such representative shall execute a suitable confidentiality
agreement reasonably acceptable to WGL prior to conducting such audit. Such
representative may disclose to Medtronic only its conclusions regarding the
accuracy and completeness of said certifications, and shall not disclose
Confidential Information of WGL to Medtronic without the prior written consent
of WGL. If appropriate based on information provided by WGL or based on the
result of an audit provided for above, the price charged to Medtronic for SVO
Batteries hereunder shall be downwardly adjusted to the lowest level that such
comparable SVO Batteries are being sold to third parties. Such downward price
adjustment shall be made
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retroactively effective to the date upon which the aforesaid lower pricing first
commenced, with an appropriate adjusting payment to be made to Medtronic for
prior overcharges (which adjusting payment Medtronic may elect to take in the
form of a lump sum cash payment from WGL or in the form of an offsetting credit
against future purchases of SVO Batteries from WGL).
6.7 Advance Payment. Promptly following execution of this Agreement by the
parties hereto, Medtronic shall deliver a check in the amount of * to Chemical
Bank, Buffalo, New York as escrow agent ("Escrow Agent"). The Escrow Agent shall
cause the escrowed funds to be deposited in an interest-bearing account and to
be delivered to WGL, together with all interest earned thereon, upon receipt of
a statement from WGL's independent auditors certifying that WGL's Inventory (as
defined in the Security Agreement) is then comprised of not less that * SVO
Battery units. Such statement shall be provided to Medtronic for review and
comments not less than fifteen (15) days before it is provided by WGL to the
Escrow Agent. If the Escrow Agent shall not have received such certificate
within 365 days of the date this Agreement is executed by both parties, the
Escrow Agent shall deliver the escrowed funds to Medtronic, together with all
interest earned thereon. The parties agree to execute such form of escrow
agreement with the Escrow Agent as sets forth the foregoing terms and such other
terms as are reasonably customary in such agreements. Such sum of * (if received
by WGL) shall constitute an advance payment of purchase price for the last * of
purchases of SVO Batteries by Medtronic from WGL under this Agreement. WGL shall
have the right to repay at any time the * advanced by Medtronic under this
Section 6.7, less the amount of any repayments by WGL under Section 4.6 hereof,
in which event the Security Agreement shall automatically terminate (as provided
for therein) and the credits against the payment of purchase price for the last
* of purchases of SVO Batteries provided for in this Section 6.7 shall no longer
apply. If for any reason it occurs that at the time of any termination of this
Agreement Medtronic has not recouped the entire aforesaid * amount, less the
amount of any repayments already made by WGL under Section 4.6 hereof, in the
form of purchase price credits for SVO Batteries purchased from WGL under this
Agreement, then any unrecouped portion of such * shall constitute a repayment
obligation of WGL which shall be immediately due and payable to Medtronic in
full upon demand by Medtronic of payment thereof. In the event that during
either or both of the final Contract Year of the First Contract Period or the
final Contract Year of the Second Contract Period the actual number of SVO
Batteries delivered to Medtronic in such respective Contract Year totals less
than * units, and the forecast for the succeeding year is less than * units,
then WGL shall immediately make a repayment to Medtronic of a percentage of the
aforesaid
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* which percentage amount shall equal the percentage by which said actual number
of delivered units is short of said * unit level. Any repayment amount due to
Medtronic with respect to the Second Contract Period under the foregoing
provision may be reduced by the amount of any repayment made under such
provision with respect to the First Contract Period.
6.8 Medtronic Manufacturing Payments. If during the Third Contract Period
Medtronic manufactures more than * but * or less of its requirements for SVO
Batteries during such period, Medtronic will pay WGL a per unit fee of * per SVO
Battery manufactured by Medtronic within such * through * category. In addition,
if during the Third Contract Period Medtronic manufactures more than * but * or
less of its requirements for SVO Batteries during such period, Medtronic will
pay WGL a per unit fee of * per SVO Battery manufactured by Medtronic within
such * through * category. Any such payments due by Medtronic shall be made
annually within ninety (90) days of the completion of each Contract Year within
such Third Contract Period. The annual payment due by Medtronic, if any, for
the first Contract Year within such Third Contract Period shall be calculated
based on the number of SVO Batteries manufactured by Medtronic during such first
Contract Year. The annual payment due by Medtronic, if any, for the second
Contract Year within such Third Contract Period shall be calculated based on the
aggregate number of SVO Batteries manufactured by Medtronic during both the
first and second Contract Years within such Third Contract Period, and any such
payment shall take into account and reflect appropriate adjustments for any
overpayments or underpayments by Medtronic with respect to the aforementioned
first Contract Year. The annual payment due by Medtronic, if any, for the third
Contract Year within such Third Contract Period shall be calculated based on the
aggregate number of SVO Batteries manufactured by Medtronic during all of the
first, second and third Contract Years within such Third Contract Period, and
any such payment shall take into account and reflect appropriate adjustments for
any overpayments or underpayments by Medtronic with respect to the
aforementioned first or second Contract Years. In the event it is determined,
after completion of the Third Contract Period, that Medtronic has made annual
payments under this Section 6.8 which in total exceed the aggregate amount to
which WGL is entitled under this Section 6.8 due to Medtronic manufacturing
during the Third Contract Period, then WGL shall promptly repay (but in no event
more than 15 days after written notice from Medtronic identifying the amount of
excess payment by Medtronic) to Medtronic in cash the amount of such excess
payment by Medtronic. In the event that the Quota for the Third Contract Period
is reduced in accordance with the provisions of Section 5.4 hereof, then the
aggregate number of units by which such Quota has been so reduced shall be
considered as SVO Battery units purchased by Medtronic from WGL during the Third
contract Period for purposes of determining any manufacturing payments due from
Medtronic to WGL under the terms of this Section 6.8. References in this Section
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6.8 to SVO Batteries manufactured by Medtronic shall be deemed to include any
SVO Batteries manufactured for Medtronic by a person or entity other than WGL.
For purposes of determining the applicable Medtronic manufacturing payment due
from Medtronic under this Section, if any, there shall be considered only those
SVO Battery units manufactured by Medtronic to be incorporated in Products
intended for commercial sale, as opposed to SVO Battery units manufactured by
Medtronic and to be used alone or with Products for development, demonstration,
testing or other "not for sale" purposes. Any SVO Batteries manufactured by or
for Medtronic (other than by WGL) and in Medtronic's finished goods inventory at
the end of the Third Contract Period shall for purposes of this Section 6.8 be
deemed to be intended for commercial sale and a manufacturing payment shall be
due thereon.
6.9 Meet or Release Provision. On and after August 1, 1995, the following
provisions shall become effective:
Notwithstanding any contrary terms or provisions of this Supply Agreement,
Medtronic shall have the right to solicit written bids from time to time from
any qualified manufacturers (other than an affiliate or a spinoff of Medtronic)
of comparable implantable grade SVO Batteries other than WGL, as defined herein.
Medtronic may submit any such bids it receives to WGL and upon such submission
WGL shall have a period of sixty (60) days in which to advise Medtronic in
writing that WGL is willing and agrees to provide to Medtronic the SVO Batteries
covered by such bid on the pricing terms set forth in such bid. In the event
that WGL elects to provide said SVO Batteries to Medtronic on said terms, then
this Supply Agreement shall then be deemed appropriately amended to incorporate
such revised pricing terms for the SVO Batteries covered by such bid (and any
SVO Batteries purchased by Medtronic relating to such bid shall be deemed to be
SVO Batteries purchased from WGL for all purposes under this Supply Agreement,
including but not limited to the purposes of Article 5 and Section 6.8 hereof).
In the event that WGL does not make a timely election to provide said SVO
Batteries to Medtronic on said pricing terms, then Medtronic may in its
discretion accept such bid and purchase said SVO Batteries from the bidding
manufacturer on the pricing terms set forth in such bid or such other pricing
terms as may be more favorable to Medtronic than the terms set forth in the
initial bid (and any SVO Batteries so purchased by and delivered to Medtronic
under said bid shall be deemed to be SVO Batteries manufactured by Medtronic
with the exception that solely for purposes of calculating Quotas under Article
5 hereof the SVO Battery units delivered to Medtronic by said third party
bidding manufacturer shall be treated as though they were purchased by Medtronic
from WGL.
Such purchases shall not relieve Medtronic of the obligation under Section 5.1
to purchase the lesser of * of its requirements or
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* Batteries per year for the term of this Supply Agreement, from WGL.
For the purposes of this Supply Agreement, a qualified manufacturer is defined
to be a legal entity that has delivered production quantities of SVO Batteries
to a Medtronic competitor for use in FDA (or the regulatory equivalent in any
other country) approved "Products" as defined herein, and who is not involved in
patent or know-how litigation with WGL regarding the Subject Patents and
Know-How, as defined in the License Agreement. Furthermore, if Medtronic accepts
a bid from a qualified manufacturer who contracts to deliver SVO Batteries that
WGL otherwise would have delivered and who fails to deliver within the
contracted time period those quantities contracted for, then Medtronic shall
fully comply with all Article 5 quota terms of this Supply Agreement by, if
necessary to meet the applicable quota reordering from WGL any SVO Batteries not
delivered by said qualified manufacturer.
6.10 Permitted Price Adjustments.
(a) The price of * per SVO Battery provided for in Section 6.1 is subject
to upward modification, from time to time, by WGL during the period which
commences on August 1, 1995 and ends on July 31, 2001 if WGL incurs a
"Significant Cost Increase." The amount of any such permitted price increase due
to a Significant Cost Increase shall in no event exceed the lesser of (1) the
actual per unit amount of the increase over WGL's fully allocated product cost
of SVO Batteries as of the date of this Agreement, or (2) the actual per unit
increase attributable to cost items set forth in (i) through (v) below. For
purposes of this Section 6.10, the term "Significant Cost Increase", shall mean
an increase by * or more in WGL's fully allocated product cost of manufacturing
SVO Batteries over WGL's fully allocated product cost of SVO Batteries as of the
date of this Agreement. Fully allocated product cost as referenced in this
Section shall be reasonably determined in accordance with generally accepted
accounting principles and shall allocate all general, administrative and other
indirect expenses among each of WGL's products proportionately based upon their
respective manufactured product unit volumes. Furthermore, the future fully
allocated product cost of manufacturing SVO Batteries shall be calculated in a
manner consistent with that used for the calculation of the fully allocated
product cost of manufacturing SVO Batteries as of the date of this Agreement.
WGL shall have its independent auditors calculate WGL's fully allocated per unit
product cost of manufacturing SVO Batteries as of the date of this Agreement and
document such determination and the methodology used in such calculation (with
such efforts to be completed not later than 30 days following the date this
Agreement is signed by both of the parties hereto).
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(i) Any requirement under applicable environmental or labor laws,
rules or regulations including but not limited to OSHA,
relating to or affecting work conditions for WGL employees
involved in the manufacture, testing and handling of SVO
Batteries, including, but not limited to, the handling,
storage and disposal of raw materials used by WGL or any waste
resulting therefrom.
(ii) Any requirement under applicable environmental laws, rules or
regulations pertaining to the transportation, handling,
storage and disposal of material actually used by WGL in
manufacturing SVO Batteries, including disposal of any waste
resulting therefrom.
(iii) Any price increases imposed by WGL vendors of raw materials or
parts for the manufacture of SVO Batteries.
(iv) Any state or Federal law, rule, regulation or mandated
program, including, but not limited to, any of the foregoing
which imposes on WGL a new tax, fee, surcharge or employee
benefit, welfare or insurance program (excluding increases in
any existing taxes, fees, surcharges or employee benefit,
welfare or insurance programs).
(v) Any incremental increases in the costs of production labor,
equipment and materials which are directly and exclusively
related to changes expressly required by Medtronic in the
materials, structure or manufacture of SVO Batteries to be
provided by WGL to Medtronic (excluding any labor, equipment,
materials and other WGL costs which are covered by the design
fees provided for in Section 6.3 hereof).
(b) If WGL is entitled and determines to impose a price increase under
this Section 6.10, WGL shall give not less than five months' written notice
thereof in order that the forecasts provided for in Section 4.5 to be made by
Medtronic can take into account any such price increase. WGL may not impose a
price increase during the permitted period hereunder more frequently than once
every 12 months. Notwithstanding the foregoing provisions of this Agreement, WGL
may, at any time before or after August 1, 1995, give immediate effect to price
increases based on costs identified in subpart (v) above if and when such costs
constitute a Significant Cost Increase. WGL shall deliver to Medtronic together
with the notice provided for herein a written report which describes in
reasonable detail the basis for WGL's determination that a price increase is
permitted under this Section 6. 10. WGL
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shall at Medtronic's written request make available appropriate records
substantiating the basis for its determination that a significant Cost Increase
has occurred (including the fully allocated per Unit product cost of
manufacturing SVO Batteries as of the date of this Agreement and methodology
used in such calculation determined as required above) for audit at Medtronic's
expense by an independent certified public accounting representative to verify
the accuracy of the reports provided to Medtronic. Such representative shall
execute a suitable confidentiality agreement reasonably satisfactory to WGL
prior to conducting such audit. Such representative may disclose to Medtronic
only its conclusions regarding the accuracy and completeness of such reports,
and shall not disclose Confidential Information of WGL to Medtronic without the
prior written consent of WGL. Any such request for an audit must be made by
Medtronic within six months of any announced price increase hereunder.
(c) The provisions of this Subsection (c) shall not apply price increases
based on costs identified in subpart (v) paragraph (a) above. Subject to the
preceding sentence notwithstanding any contrary provisions of this Agreement
including but not limited to Medtronic's obligations pursuant to Sections 5.1
and 5.2 hereof, during the period in which price increases are permitted under
this Agreement (i) in the event the price of SVO Batteries is increased beyond *
then each of the purchase Quotas set forth in Section 5.2 shall thereupon be
automatically reduced by * percent *, and (ii) in the event the price of SVO
Batteries is increased beyond * then each of the purchase Quotas set forth in
Section 5.2 shall thereupon be automatically reduced by * percent *, and (iii)
in the event the price of SVO Batteries is increased beyond * then each of the
purchase Quotas set forth in Section 5.1 and 5.2 shall thereupon be
automatically reduced to *, and Medtronic shall not be required to purchase *
SVC Batteries from WGL. Any aforementioned reduction in Quota will not affect
the validity or term of the License Agreement.
ARTICLE 7
INSPECTION, WARRANTY AND SERVICE
7.1 Inspection of SVO Batteries. Medtronic shall conduct any incoming inspection
tests not later than forty five (45) days from the date of receipt of SVO
Batteries at the shipping address to which Medtronic has requested delivery of
such SVO Batteries. SVO Batteries not rejected by Medtronic by written notice to
WGL within such period shall be deemed accepted, with the exception of SVO
Batteries with latent defects that are not readily observable by Medtronic. In
the event of any shortage, damage or discrepancy in or to a shipment of SVO
Batteries or in the event any SVO Batteries fail to comply with the then current
specifications for SVO Batteries, Medtronic shall promptly report the same to
WGL and furnish such written evidence or other documentation as WGL
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reasonably may deem appropriate. If evidence indicates that such shortage,
damage or discrepancy or non-conformity with specifications existed at the time
of delivery of SVO Batteries at the F.O.B. point, Medtronic may return the SVO
Batteries to WGL at WGL's expense, and at Medtronic's request WGL shall promptly
deliver substitute SVO Batteries to Medtronic in accordance with the delivery
procedures set forth herein.
7.2 Warranty. WGL warrants to Medtronic that SVO Batteries sold by WGL to
Medtronic under this Agreement shall be in conformance with applicable
specifications and shall be free from defects in material and workmanship at the
time of delivery of said svo Batteries at the F.O.B. point.
7.3 Limited Warranty. THE WARRANTIES SET FORTH ABOVE ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY WGL,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE.
ARTICLE 8
CONFIDENTIALITY
8.1 Non-Disclosure. Each party agrees not to use any Confidential Information
of the other party during the term of this Agreement and for a period of five
(5) years thereafter for any purpose other than as permitted or required for
performance by the party receiving such Confidential Information of its rights
or duties hereunder or under the License Agreement. Each party further agrees
not to disclose or provide any of such Confidential Information of the other
party to any third party, other than as permitted or required for performance by
the parties receiving such Confidential Information of its rights or duties
hereunder or under the License Agreement, and to take appropriate measures to
prevent any such disclosure by its present and future employees, officers,
agents, subsidiaries, or consultants during the term of this Agreement and for a
period of five (5) years thereafter. Without limitation of the foregoing, the
recipient of Confidential Information of the other party shall protect such
Confidential Information by using the same degree of care, but no less than a
reasonable degree of care, to prevent the unauthorized use, dissemination or
publication of the Confidential Information, as the recipient uses to protect
its own proprietary information of a like nature.
ARTICLE 9
INTELLECTUAL PROPERTY
9.1 Ownership. WGL represents and warrants to Medtronic the following: Neither
WGL, its business nor any of WGL's SVO Batteries nor the execution and
performance of this Agreement and the License Agreement and the transactions
contemplated herein and
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<PAGE>
therein, infringes, misuses, misappropriates or conflicts with the patent and
other intellectual property rights or contract rights, of others. WGL has full
corporate right and authority to enter into this Agreement, the License
Agreement and the Security Agreement. WGL agrees to defend and hold Medtronic
harmless against monetary liability to any third party arising out of any claim
by such third party of patent or other intellectual property rights infringement
or contract rights violation based upon Medtronic's sale of Products
incorporating SVO Batteries supplied by WGL, including reasonable legal fees and
expenses, but excluding incidental, special or consequential damages and,
without limitation, loss of sales, profits or revenues. The provisions of this
Section shall survive the termination and expiration of the Supply Agreement.
ARTICLE 10
LIMITATION OF WGL LIABILITY
10.1 Remedies for Breach of Warranty. In the event that any SVO Battery
manufactured or sold by WGL to Medtronic under this Agreement fails to comply
with the limited warranty provided for in Article 7 and Medtronic delivers
notice of such noncompliance to WGL, within 12 :months of the delivery of such
SVO Battery to Medtronic (or within 12 months of Medtronic's discovery of any
latent defects in an SVO Battery that are not readily observable by Medtronic),
WGL will, upon substantiation that the SVO Battery has been stored, preserved
and used in accordance with Section 2.1, correct such failure by suitable repair
or replacement at its own expense. WGL agrees that it will promptly inform
Medtronic in writing of any actual or potential problems of which WGL becomes
aware relating to the performance of any SVO Battery design manufactured for
Medtronic relative to the specifications for such design.
10.2 Limitation of Liability. The repair or replacement of any defective SVO
Battery or any SVO Battery which does not conform with applicable specifications
as provided, for herein, in the manner provided above, shall (except with
respect to the remedies specifically provided for in this Agreement regarding
delivery delays and such other remedies as are specifically provided for in this
Agreement, including the remedy provided to Medtronic in Section 10.3 hereof)
constitute the full extent of WGL's liability to Medtronic with respect to SVO
Batteries sold hereunder. In no event shall WGL be liable under this Supply
Agreement or the License Agreement for incidental, special or consequential
damages, including, but not limited to, loss of sales, profits or revenues or
costs of any partial or total recall of Product in which SVO Batteries may have
been incorporated, and in no event shall WGL be liable in an amount in excess of
its product liability insurance as provided for under Section 10.3. The
provisions of Sections 10.1 and 10.2 shall survive the expiration or termination
of this Agreement.
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<PAGE>
10.3 products Liability Insurance. WGL shall maintain product liability
insurance in such amounts as ordinary good business practice for its type of
business would make advisable and shall provide Medtronic with evidence of this
coverage. Such product liability insurance shall name Medtronic, Inc. as an
additional named insured thereunder, it being understood that Medtronic shall
have the right to seek recovery under said, product liability insurance for any
claims for damages, liabilities, costs (including but not limited to attorneys'
fees), settlements or judgments which may be made against Medtronic on account
of personal injury or property damage to any person caused by or arising from
defects in materials, design, workmanship, or manufacture of SVO Batteries
supplied by WGL to Medtronic under this Agreement, and Medtronic agrees to seek
recovery for any such claims directly from WGL's product liability insurance
carrier. Medtronic acknowledges and agrees that the amount of product liability
insurance maintained by WGL on the date of this Agreement, which is set forth in
the certificate of insurance to be delivered to Medtronic simultaneously
herewith, satisfies the criteria set forth in this Section 10.3.
ARTICLE 11
TERM AND TERMINATION
11.1 Term. This Agreement shall become binding and enforceable on the date upon
which it is fully executed by the parties hereto, however, the terms and
provisions hereof shall become operative and shall take effect as of July 31,
1991, and this Agreement shall continue in force through July 31, 2001 at which
time it shall expire.
11.2 Termination. Notwithstanding the provisions of Section 11.1 above, this
Agreement may be terminated in accordance with the following provisions:
(a) A party may terminate this Agreement by giving notice in writing to
the other party in the event the other party is in breach of any material
representation, warranty or covenant of this Agreement and shall have
failed to cure such breach within ninety (90) days of receipt of written
notice thereof from the first party;
(b) A party may terminate this Agreement at any time by giving notice in
writing to the other party, which notice shall be effective upon dispatch,
should the other party file a petition of any type as to its bankruptcy,
be declared bankrupt, become insolvent, make an assignment for the benefit
of creditors, go into liquidation or receivership; or
(c) A party may terminate this Agreement by giving notice in writing to
the other party should an event of Force Majeure continue for more than
one hundred eighty (180) consecutive days as provided in section 12.1
below.
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<PAGE>
11.3 Rights-and Obligations on Termination. Termination of this Agreement shall
not release either party from the obligation to make payment of all amounts
previously due and payable, or which become due and payable due to termination
of this Agreement.
ARTICLE 12
FORCE MAJEURE
12.1 Force Majeure. Force Majeure shall mean any event or condition, not
existing as of the date of signature of this Agreement, not reasonably
foreseeable as of such date and not reasonably within the control of either
party, which prevents in whole or in material part the performance by one of the
parties of its obligations hereunder.
12.2 Notice. Upon giving notice to the other party, a party affected by an event
of Force Majeure shall be released without any liability on its part from the
performance of its obligations under this Agreement, except for the obligation
to pay any amounts due and owing hereunder, but only to the extent and only for
the period that its performance of such obligations is prevented by the event of
Force Majeure.
12.3 Suspension of Performance. During the period that the performance by one of
the parties of its obligations under this Agreement has been suspended by reason
of an event of Force Majeure, the other party may likewise suspend the
performance of all or part of its obligations hereunder to the extent that such
suspension is commercially reasonable.
ARTICLE 13
MISCELLANEOUS
13.1 Relationship. This Agreement does not make either party the employee, agent
or legal, representative of the other for any purpose whatsoever. Neither party
is granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. In fulfilling its obligations pursuant to this Agreement, each party
shall be acting as an independent contractor.
13.2 Assignment. This Supply Agreement shall inure to the benefit of and be
binding upon each of the parties hereto and their respective permitted
successors and assigns. It may not be voluntarily assigned in whole or in part
by either party without the prior written consent of the other; provided,
however, that a successor in interest by merger, by operation of law, purchase
or otherwise of the entire business (with respect to Medtronic, the business
being that relating to Products; with respect to WGL, the business being that
relating to SVO Batteries) of either party shall acquire all interest of such
party hereunder, and further provided that a party may assign this Supply
Agreement to an
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<PAGE>
Affiliate of such party (the party to this Supply Agreement who makes any such
assignment to an Affiliate shall, notwithstanding such assignment, remain fully
responsible for assuring, and for any failure to assure, prompt performance by
such Affiliate of all of such assigning party's obligations under this Supply
Agreement). Any prohibited assignment shall be null and void. Nothing
contained in this assignment provision shall be construed as limiting or
restricting in any way WGL's ability to restructure as a publicly owned entity.
13.3 Entire Agreement. This Agreement and the License Agreement and Security
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and Supersedes all previous proposals or agreements, oral
or written, and all negotiations, conversations or discussions heretofore had
between the parties related to the subject matter of this Agreement, the License
Agreement and the Security Agreement. Notwithstanding the foregoing, those
provisions of the existing development contract between WGL and Medtronic dated
July 1990 for WGL battery Model 8952 (for use in Medtronic PCD Model 7219),
those of the development contract between WGL and Medtronic for WGL battery
#8830 (for use in Medtronic PCD Model 7217) and those provisions of any other
development agreements which have provisions which were effective prior to the
date of this Agreement, shall remain in effect to the extent such provisions are
not contrary to the terms and provisions of this Agreement.
13.4 Governing Law. This Agreement shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York, U.S.A.
13.5 Survival. All of the representations, warranties, and indemnifications made
in this Agreement, and all terms and provisions hereof intended to be observed
and performed by the parties after the termination hereof, shall survive such
termination and continue thereafter in full force and effect, subject to
applicable statute of limitations.
13.6 Waiver, Discharge, etc. This Agreement may not be released, discharged,
abandoned, changed or modified in any manner, except by an instrument in writing
signed on behalf of each of the parties to this Agreement by their duly
authorized representatives. The failure of either party to enforce at any time
any of the provisions of this Agreement shall in no way be construed to be a
waiver of any such provision, nor in any way to affect the validity of this
Agreement or any part of it or the right of either party after any such failure
to enforce each and every such provision. No waiver of any breach of this
Agreement shall be held to be a waiver of any other or subsequent breach.
13.7 Execution in Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and
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the same agreement, and shall become a binding agreement when one or more
counterparts have been signed by each party and delivered to the other party.
13.8 Titles and Headings; Construction. The titles and headings to Sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
This Agreement shall be construed without regard to any presumption or other
rule requiring construction hereof against the party causing this Agreement to
be drafted.
13.9 Benefit. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties to this Agreement or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
13.10 Notices. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be delivered personally or by
telecopy (receipt confirmed) to such party (or, in the case of an entity, to an
executive officer of such party) or shall be given by certified mail, postage
prepaid with return receipt requested, addressed as follows:
if to Manufacture, to:
Wilson Greatbatch Ltd.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: Edward F. Voboril, President and Chief Executive Officer
and if to Medtronic, to:
Medtronic, Inc.
Corporate Center
7000 Central Avenue N.E.
Minneapolis, Minnesota 55432
Attention: Michael D. Ellwein, Vice President Corporate
Development and Assistant General counsel
WGL or Medtronic may change their respective above-specified recipient and/or
mailing address by notice to the other party given in the manner herein
prescribed. All notices shall be deemed given on the day when actually delivered
as provided above (if delivered personally or by telecopy) or on the day shown
on the return receipt (if delivered by mail).
13.11 Severability. If any provision of this Agreement is held invalid by a
court of competent jurisdiction, the remaining provisions shall nonetheless be
enforceable according to their
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terms. Further, if any provision is held to be overbroad as written, such
provision shall be deemed amended to narrow its application to the extent
necessary to make the provision enforceable according to applicable law and
shall be enforced as amended.
13.12 Execution of Further Documents. Each party agrees to execute and
deliver without further consideration any further applications, Licenses,
assignments or other documents, and to perform such other lawful acts as the
other party may reasonably require to fully secure and/or evidence the rights
or interests herein.
13.13 No Modification by Form Documents. In no event will the use by Medtronic
of any form of purchase order, or the use by WGL of any form of acknowledgement
or shipping document, be effective to vary, alter or modify the terms and
provisions of this Agreement; nor will such use have the effect of substituting
the provisions set forth on such form for the provisions contained in this
Agreement.
13.14 Contemporaneous Agreements. Contemporaneous with the execution of this
Agreement, each of the parties hereto shall execute and deliver to the other the
License Agreement in form attached hereto as Exhibit A, and WGL shall execute
and deliver to Medtronic the Security Agreement in form attached hereto as
Exhibit B.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed below in the manner appropriate to each.
WILSON GREATBATCH LTD.
By /s/ Edward F. Voboril
--------------------------------------
Its President / CEO
-------------------------------------
MEDTRONIC, INC.
By /s/ B. Kristine Johnson
--------------------------------------
Its Vice President
-------------------------------------
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<PAGE>
Exhibit 10.17*
The confidential portions of this exhibit, which have been removed and
replaced with an asterisk, have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
AMENDMENT TO SUPPLY AGREEMENT
This AMENDMENT TO SUPPLY AGREEMENT (the "Amendment") is made and entered
into this _________day of _____________, 1996, (the "Effective Date"), between
WILSON GREATBATCH LTD., ("WGL") an New York corporation, and MEDTRONIC, INC.,
("Medtronic") a Minnesota corporation.
WITNESSETH
WHEREAS, Medtronic and WGL have entered into a Supply Agreement dated July
31, 1991, whereby WGL will manufacture and supply SVO batteries to Medtronic for
use in medical devices sold by Medtronic.
WHEREAS, Medtronic and WGL desire to amend certain terms of the Supply
Agreement in writing as required in Section 13.6 of the Supply Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for good and valuable
consideration, the receipt and adequacy whereof is mutually acknowledged, the
parties hereby amend the terms end provisions of the Supply Agreement, and
otherwise agree as follows:
1. Development. The capitalized tern's used and not otherwise defined
herein shall have the meanings ascribed thereto in the Supply Agreement
2. Development. Subject to the terms of this Amendment, WGL has agreed to
develop the cell whose specifications are set forth on Exhibit A hereto
(hereinafter the "7221 cell") at no development cost to Medtronic. The parties
agree that for the 7221 Cell the terms of Article 6.3 of the Supply Agreement
shell not be applicable. WGL agrees to provide qualified cells and data for
submission to the FDA to Medtronic no later than December 1, 1996.
3. 7221 Cell Price. The parties agree that the price for the 7221 Cell
shall be * per unit. The parties agree that Article 6.10, Permitted Price
Adjustments, shall not apply to the increase of the 7221 Cell price from * to *.
However, subsequent increases in the price of the 7221 Cell shall be subject to
Article 6.10. The parties further agree that the price for the 7221 Cell shall
not trigger an audit by Medtronic under Article 6.10(b) or trigger the quota
reductions set forth in Article 6.10(c).
<PAGE>
4. Purchase Commitment. Subject to the terms of Section 3 end 4 above and
section 5 below, Medtronic agrees to purchase at least * of the 7221 cells.
Provided, Medtronic's commitment to purchase shall be subject to following
adjustments:
a) In the event WGL fails to provide qualified cells and adequate
battery data for submission to the FDA by December 1, 1996, the
purchase requirement shall be reduced by * cells for every day such
qualified cells and data are not available.
b) In the event WGL cannot provide * units by December 15, 1996 and the
remainder of the * units on a mutually agreeable delivery schedule,
Medtronic's commitment to purchase 7221 cells shall be reduced by *
cells for every failure of WGL to meet a scheduled delivery date.
5. FDA Delay/Lack of Approval. In the event there is a delay in the FDA
approval of the device for which these cells are intended or the device is not
approved by the FDA for any reason, WGL and Medtronic agree to negotiate in good
faith to eliminate, reduce or replace the purchase requirement under Section 4,
above, and compensate WGL far reasonable development expenses.
6. Advance Payment/Inventory Requirement. The parties agree that Article
6.7 of the Supply Agreement shall be amended as follows;
a) Subject to Section 6(b) below, the inventory requirement under
Article 6.7 of the Supply Agreement shall be reduced to * units upon
execution of this Amendment and will be further reduced to * units
upon receipt of the October 31, 1996 payment as set forth below.
b) In consideration for the inventory reductions set forth is Section
6(b) above, WGL shall repay * of the advance payment made pursuant
to Article 6.7 of the Supply Agreement as amended. Such payment to
be made in equal installments on or before October 31, 1996 and
December 31, 1996. Failure to make such payments will reinstate the
inventory requirements of Article 6.7 of the Supply Agreement.
2
<PAGE>
7. Other Terms Remain in Effect/Conflict. Except as modified in this
Amendment all terms and provisions of the Supply Agreement, shall remain in
force and effect. In the event of a conflict between the terms of this amendment
and the Supply Agreement, the Supply Agreement shall control.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to the
Development Agreement to be executed in the manner appropriate to each.
WILSON GREATBATCH LTD.
By: /s/ Edward F. Voboril
--------------------------------
Edward F. Voboril. President
Dated: 5-23-96
-----------------------------
MEDTRONIC, INC.
By: /s/ B Kristine Johnson
--------------------------------
B Kristine Johnson
President
Tachyarrythtmia Management Business
Dated: 6-3-96
-----------------------------
3
<PAGE>
Exhibit 10.18*
The confidential portions of this exhibit, which have been removed and
replaced with an asterisk, have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
SECOND AMENDMENT
TO SUPPLY AGREEMENT
This SECOND AMENDMENT is made to the Supply Agreement between WILSON GREATBATCH
LTD. ("WGL") and MEDTRONIC, INC. ("Medtronic") dated July 31, 1991 (the "Supply
Agreement") and to the first Amendment to that Supply Agreement dated June 3,
1996 (the "First Amendment").
RECITALS
Medtronic and WGL desire to amend certain terms of the Supply Agreement and
First Amendment to Supply Agreement in writing pursuant to Section 13.6 of the
Supply Agreement.
The parties therefore agree as follows:
1. Supply. The parties agree that WGL will become the exclusive supplier of
SVO batteries for Medtronic Model 7221 and Model 7271 implantable cardiac
defibrillators, contingent upon WGL's ability to meet existing or mutually
agreed to modifications of existing battery specifications and qualify the
batteries and subject to Medtronic's ability to receive FDA approval for
the use of the WGL batteries within the Medtronic products identified.
Medtronic will use its best commercial efforts to secure approval for use
of the WGL product on a timely basis.
2. Failure to Meet Delivery Schedules. The parties agree that if WGL is
unable for any reason other than force majeure to meet any scheduled
deliveries specified by Medtronic for the SVO batteries identified under
Section 1 hereof, Medtronic shall be flee to make or have made SVO
batteries which meet Medtronic's product needs.
3. Unit Price. The parties agree that the price for the 7221 and 7271 SVO
battery shall be * each. Any subsequent price increases in the price of
the 7221 and/or 7271 shall be subject to Section 6.10.
4. Design Fee Medtronic agrees to pay WGL a design fee of * for the
development of the WGL battery to be used in Medtronic's Model 7271
device. Medtronic shall pay the design fee to WGL as follows:
* Upon Receipt of purchase order
* Upon WGL's completion of engineering prototypes; and
* Upon completion of the qualification of the cell by WGL and Medtronic
<PAGE>
5. Advance Payment. The parties the First Amendment to the Supply Agreement,
WGL repaid * of the advance payment made pursuant to Section 6.7 of the
Supply Agreement. The parties further agree that WGL shall hold the
balance of the advance payment in the amount of *. Said amount will be
considered an advance and will be applied to the final purchases under the
final Contract Period. The parties further agree that WGL shall not be
required to maintain any finished goods as security for the remaining *
advance payment; however, WGL will use its best commercial efforts to
satisfy Medtronic's supply needs under this Second Amendment. WGL shall
have no continuing obligation to provide any security for its obligation
to repay the remaining * of the advance payment referred to in Article 6.7
of the Supply Agreement, as amended, and the Security Agreement is hereby
terminated.
6. Quota. WGL and Medtronic agree that WGL will waive the minimum purchase
requirements for the remainder of the Second Contract Period. Medtronic
agrees to report on its usage of SVO batteries pursuant to the terms of
the Supply Agreement. This amendment shall not effect, or operate as a
waiver by WGL of, Medtronic's obligations under Section 5.2(c) with
respect to the Third Contract Period or the quota of SVO Batteries to be
purchased by Medtronic in each Contract Year of the Third Contract Period
which are set forth in Section 5.1. The parties further agree that the
price for the 7221 Cell and 7271 Cell shall not trigger a quota reduction
for the Third Contract Period pursuant to Section 6.10(c).
7. Other Terms Remain in Effect. Except as modified by this Second Amendment,
all terms and provisions of the Supply Agreement and First Amendment shall
remain in full force and effect.
With their signature below, each of the parties indicates they have read,
understand and agreed to the terms of this Second Amendment.
MEDTRONIC, INC.
By /s/ Jon T. Tremmel Date: 3/14/97
---------------------------------
Jon T. Tremmel, Vice President and
President Tachyarrhythmia Management
Business
WILSON BREATBATCH LTD.
By /s/ Edward F. Voboril Date: 3/24/97
--------------------------------- -----------------------------------
Edward F. Voboril, President
<PAGE>
Exhibit 10.19*
The confidential portions of this exhibit, which have been removed and
replaced with an asterisk, have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
THIRD AMENDMENT
TO SUPPLY AGREEMENT
This THIRD AMENDMENT is made to the Supply Agreement between WILSON GREATBATCH
LTD. ("WGL") and MEDTRONIC, INC. ("Medtronic") dated July 31, 1991 (the "Supply
Agreement") and to the first Amendment to that Supply Agreement dated June 3,
1996 (the "First Amendment") and to the second Amendment dated March 14, 1997
(the Second Amendment").
RECITALS
Medtronic and WGL desire to amend certain terms of the Supply Agreement, the
First Amendment to Supply Agreement, and the Second Amendment to Supply
Agreement in writing pursuant to Section 13.6 of the Supply Agreement.
The parties therefore agree as follows:
1. WGL will be provided the specifications for cells for one or more models of
Medtronic's Platform B Product family along with Medtronic's model and
parameters for testing any WGL developed product design. The specifications
established by Medtronic will be no more demanding than those specifications
Medtronic would require of the Medtronic Promeon division. However, WGL and
Medtronic agree that it would be difficult for the Medtronic Promeon division
and WGL to provide identical cells for the same Medtronic Platform B product.
Therefore, WGL will be given the opportunity to supply cells for one or more
models of the Platform B Product family subject to the terms and conditions
contained herein. WGL agrees that to the extent the Medtronic Promeon division
can reasonably demonstrate its ability to meet the established specifications,
WGL will not dispute or challenge the validity of the specifications and
testing criteria established. In no event will the fact that the specifications
are not reasonably within the existing or imminently planned for capabilities of
WGL as provided for in the Supply Agreement be submitted as a reason for WGL to
fail to meet the specifications.
2. WGL and Medtronic will mutually agree upon completion dates and development
schedule milestones. WGL will be incorporating new cell technology which will be
qualified in parallel with the Platform B product design. Qualification of the
new technology will include adequate life testing mutually agreed upon by both
Medtronic and WGL.
3. Medtronic agrees to pay nonreoccuring engineering fees to WGL in the amount
of * to design a cell for the Platform B Product line. Payment shall be made in
amounts and at times as mutually agreed upon and consistent with past
development efforts between the parties.
<PAGE>
4. In the event WGL successfully designs a Platform B cell which meets
Medtronics specifications and modeling requirements, Medtronic would agree to
purchase a minimum of * cells at a price of * per cell. In addition, Medtronic
would agree to purchase its requirements for the cells for the specific approved
Platform B design, provided that there are no quality, regulatory or patient
safety issues which would preclude Medtronic from continuing to include WGL's
design in its Platform B product. If at any time, Medtronic determines that the
Platform B design that WGL is supplying under this Agreement is defective or
fails to meet the specifications set forth for the design or model testing of
the design, Medtronic shall be under no further obligation to purchase any cells
from WGL including the minimum set forth herein and Medtronic shall be free to
supply cells for the WGL design from the Medtronic Promeon division.
In the event the Supply Agreement expires prior to Medtronic purchasing the
cells pursuant to the above, Medtronic would agree to continue purchasing cells
up to the minimum amount of * cells beyond the term of the contact, however in
no event will the obligation to purchase the * cells be deemed a requirement to
continue any other obligations under the existing Supply Agreement beyond the
original termination date.
5. If WGL does not successfully meet the Medtronic specifications for design and
model testing, Medtronic shall be under no further obligation to purchase any
cells from WGL either under this Agreement or the original Supply Agreement. The
failure of WGL to meet milestones or delivery schedules shall also entitle
Medtronic to supply batteries from the Medtronic Promeon, division for the
Platform B cell designed by WGL.
6. Minimum purchase quotas required for under the terms of the Supply Agreement
are hereby deleted. Other than as specified in Section 4 above, Medtronic shall
be under no obligation to purchase any minimum requirements for SVO batteries
from WGL during the remaining third contract period.
7. Medtronic and WGL acknowledge that WGL is currently holding a * prepayment
made by Medtronic under the Supply Agreement. Concurrent with the payment by
Medtronic of the * referred to in Section 8 below, WGL will repay to Medtronic
the * prepayment.
8. Medtronic will release payment of * currently being held in accounts payable
at Medtronic for prior WGL product purchases.
9. The requirements under the Supply Agreement pertaining to manufacturing fees
are hereby deleted and replaced as follows:
Medtronic will pay WGL a manufacturing fee in the amount of * for each SVO
cell manufactured by the Medtronic Promeon division which is incorporated
into a finished implantable defibrillator produced by Medtronic. These
payments will be due until the end of the third contract period which is
July 31, 2001. In no event will Medtronic's agreement to purchase the
minimum cells specified in Section 4.
<PAGE>
beyond July 31, 2001, be deemed an extension of this contract for purposes
of payment of manufacturing fees.
The parties acknowledge that the payment of manufacturing fees for the
first contract year under the third contract period are due August 1,
1999.
10. Medtronic shall have no obligation to purchase any further SVO batteries for
the Medtronic Model 7221 and 7271 Implantable Cardiac Defibrillators other than
as follows:
WGL currently has in its possession * cells that may be suitable for use
by Medtronic in its Gem DR device. To preserve the option of using these *
cells, Medtronic has agreed to buy them from WGL. The purchase price for
these * cells shall be * per cell. WGL recognizes that it is in its
interest to have Medtronic purchase the * cells. As a condition of
Medtronic's agreement to purchase, WGL agrees that Medtronic may return
any or all of the * cells to WGL at any time and for any reason, and
further agrees that Medtronic will receive credit for any of the cells
that it chooses to return.
Except as modified by this Third Amendment, all terms and provisions of the
Supply Agreement, First Amendment and Second Amendment shall remain in full
force and effect. To the extent there are any inconsistencies between the terms
of this Amendment and the Supply Agreement, First Amendment or Second Amendment,
the terms of this Third Amendment shall apply.
With their signature below, each of the parties indicated they have read,
understand and agreed to the terms of this Third Amendment
MEDTRONIC, INC.
By /s/ Jon T. Tremmel Date: 7/20/99
--------------------------------- -----------------------------------
Jon T. Tremmel, Vice President and
President Tachyarrhythmia Management
Business
WILSON GREATBATCH LTD.
By /s/ Edward F. Voboril Date: 7/22/99
--------------------------------- -----------------------------------
Edward F. Voboril, President
<PAGE>
Exhibit 10.20*
The confidential portions of this exhibit, which have been removed and
replaced with an asterisk, have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
DEVELOPMENT AGREEMENT
This DEVELOPMENT AGREEMENT (the "Agreement") is made and entered into this
12 day of April, 2000, by and among MEDTRONIC, INC. ("MEDTRONIC"), a Minnesota
corporation with offices at 7000 Central Avenue N.E., Minneapolis, Minnesota
55432, and Wilson Greatbatch, Ltd. Located at 10,000 Wehrle Drive in Clarence,
New York ("WGL").
WITNESSETH:
WHEREAS, MEDTRONIC has developed expertise and intellectual property in
the field of implantable medical devices and external devices used to treat
arrhythmias; and
WHEREAS, WGL has developed expertise and intellectual property with
batteries and tantalum capacitors for use in implantable devices; and
WHEREAS, MEDTRONIC and WGL desire to enter in this Development Agreement
whereby WGL will develop custom tantalum capacitors for use in Medtronic devices
upon the terms and conditions set forth in this Agreement; and
WHEREAS, if development of die tantalum capacitors is successful, WGL
would agree to manufacture and supply the tantalum capacitors to Medtronic under
a separate agreement; and
WHEREAS, MEDTRONIC and WGL desire to work together to develop the
technology for suitable application for MEDTRONIC implantable devices;
AGREEMENTS:
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, and for other valuable consideration
described herein, the receipt and adequacy of which is hereby acknowleged, the
parties mutually agree as follows:
ARTICLE 1
DEFINITIONS
1.1) Specific Definitions. As used in this Agreement, the following
capitalized terms shall have the meanings set forth below:
"Affiliate" of any entity means any other entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the first entity. "Control" shall mean owning more
than fifty percent (50%) of the total voting power of the entity.
"Agreement" means this Agreement and all Appendices hereto.
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"Confidential Information" means know-how, trade secrets, and unpublished
information disclosed by one of the parties (the "disclosing party") to the
other party (the "receiving party") or generated under this Agreement, excluding
information which:
(a) was already in the possession of receiving party prior to its
receipt from the disclosing party, provided that whenever relying on this
paragraph for any reason, the receiving party shall, if requested,
promptly provide the disclosing party with reasonable documentary proof
thereof;
(b) is or becomes part of the public domain by reason of acts not
attributable to the receiving party;
(c) is or becomes available to receiving party from a source other
than the disclosing party which source, to the best of the receiving
party's knowledge, has rightfully obtained such information and has no
obligation of nondisclosure or confidentiality with respect thereto;
(d) is made available by the disclosing party to a third party
unaffiliated with the disclosing party on an unrestricted basis; or
(e) is independently developed by employees or consultants of the
receiving party without the use or knowledge of any Confidential
Information of the disclosing party.
All Confidential Information disclosed by one party to the other under
this Agreement, insofar as practicable, shall ultimately be in writing and bear
a legend "Company Proprietary", "Company Confidential" or words of similar
import. Accordingly, all Confidential Information disclosed in any manner other
than writing shall, insofar as practicable, be preceded by an oral statement
indicating that the information is Company proprietary or confidential, and
shall be followed by transmittal of a reasonably detailed written summary of the
information provided to the receiving party with identification as Confidential
Information designated as above within thirty (30) days.
"Design Qualification" means the satisfactory electrical, mechanical,
stress and life-testing of selected test vehicle for tantalum capacitors. The
criteria for evaluating these lots will include that listed in Appendix B.
"Design Specification" means the complete electrical, chemical, mechanical
shape (including terminal locations) and other specifications, taken as a whole,
developed and delivered to Medtronic for a WGL Capacitors under this Agreement.
"Exclusive Field of Use" means implantable and external medical devices,
including without limitation portable electrically active medical devices used
in connection with any cardiovascular systems of the human body.
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"Intellectual Property" means letters patent and patent applications;
trademarks, service marks and registrations thereof and applications therefore;
copyrights and copyright registrations and applications; inventions, formulas,
drawings, designs, models, computer programs and software; and all license
rights in or to any of the foregoing.
"MEDTRONIC" means MEDTRONIC, INC. and its Affiliates.
"MEDTRONIC Products" means any products designed and/or manufactured by
MEDTRONIC, which incorporates the WGL Capacitor, which is intended for
commercial sale in the Exclusive Field of Use.
"WGL" means WGL and its Affiliates.
"Phase" means the stages of development between the major milestones as
specified in a Statement of Work.
"Prototype" means a prototype WGL Capacitor supplied to MEDTRONIC for
evaluation purposes. Prototypes will be supplied at the quantities listed in
Appendix A and shall be included as deliverables under Phase I.
"Statement of Work" means the mutually agreed upon and written description
of the development process for a Prototype and shall include a description of
each Phase and a designation of the parties' respective responsibilities for the
performance of such Phases including a schedule of payments and such other
details as the pasties may agree in writing. The Statement of Work for Phase I
is attached as Appendix A.
"WGL Capacitor" means a tantalum capacitor developed specifically for
Medtronic under the terms and conditions set forth in this Agreement.
ARTICLE 2
DEVELOPMENT
2.1) Statement of Work.
(a) Development will be conducted under this Agreement in two
Phases. Appendix A contains the Statement of Work for Phase I and the
deliverables due under Phase I. MEDTRONIC and WGL will use reasonable
efforts to perform their respective activities under the agreed upon
Phases of development within the timeframes and budget specified in the
Statement of Work and an accordance with the general allocation of roles
and responsibilities applicable to each party as set forth in the
Statement of Work. Any changes to the Statement of Work and the allocation
of roles and responsibilities will require mutual written agreement by the
parties.
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b) If the scope of any mutually agreed upon development project
changes so as to materially change the costs or length of time necessary
to complete any Phase, the parties shall negotiate in good faith to adjust
the Statement of Work, prospective schedules and budgets included therein
accordingly. The parties shall cooperate in good faith to minimize
development costs to the extent reasonably practical.
(c) The parties shall periodically but no less than quarterly
provide each other with a report setting forth a summary of the work
performed by that party under the current Phase.
2.2) Phase I.
(a) During Phase I, WGL will provide Prototypes for the evaluation
of WGL tantalum capacitor technology. WGL Tantalum capacitor performance,
reliability and life test data and reports will be provided to MEDTRONIC
to supplement this evaluation. WGL will also provide engineering support
and otherwise assist MEDTRONIC as needed and agreed to by WGL in the
development of a Tantalum capacitor Design Specification. The Prototypes
supplied under Phase I may not necessarily represent the final shape or
size of the WGL Capacitors which will ultimately be used in Medtronic
Products. Prototypes provided under Phase I will be used to test and
assess the long term performance of the WGL Capacitors which must meet
specified Design Qualification requirements. WGL will arrange for
MEDTRONIC's reasonable access to WGL's technical employees and
non-production facilities for the purposes of discussing, reviewing and
understanding the technology, design and manufacturing process and of
evaluating Prototypes under Phase I. Prototypes will be supplied by WGL in
the quantities listed in the Statement of Work.
(b) During Phase I, MEDTRONIC will evaluate and assess the
performance characteristics of Prototypes including but not limited to:
(a) life testing, (b) stability, (c) reliability, (d) consistency, (e)
manufacturing reproducibility, (f) yield performance and (g) all
applicable physical and electrical attributes. At the conclusion of Phase
I, MEDTRONIC shall have the option, in its discretion, to continue further
development under Phase II. If MEDTRONIC elects not to proceed with
further development, this Agreement shall automatically terminate, subject
to the provisions of Section 6.3 and the other sections of this Agreement
referred to therein. In addition, Medtronic shall be entitled to exclusive
rights to purchase the exact mechanical design (including termination) of
the design specification for the WGL Capacitor for three (3) years from
date of this agreement.
2.3) Phase II.
(a) If MEDTRONIC elects, in its sole discretion, to continue
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<PAGE>
development under Phase II, WGL will assist MEDTRONIC in incorporating and
integrating the WGL Capacitor, into a Medtronic Product. The milestone for
Phase II will require the delivery by way of custom designed WGL
Capacitors which will meet Design Qualification requirements and be of
implantable grade. WGL will provide Medtronic with long term test data
which will be used to determine whether the Design Specification and
Prototypes meet the agreed upon specifications.
(b) If MEDTRONIC elects to continue development under Phase II,
the parties will mutually agree to a Statement of Work for Phase II
which includes the respective responsibilities of the parties, target
dates for achievement of established milestones, a budget showing
estimated costs to be incurred.
2.4) Access to Technical Data. WGL will provide MEDTRONIC with reasonable
access to all WGL's technical data, design libraries, mask works, reliability
and life testing data and such other technical data and processes sufficient to
allow MEDTRONIC to conduct its evaluation and as appropriate to incorporate the
WGL Capacitors into Medtronic Products. All information provided by WGL to
Medtronic or by Medtronic to WGL will remain the sole property of its provider
as stated in Article 7, paragraph 2.
ARTICLE 3
PAYMENTS
3.1) Payments. MEDTRONIC will make payments to WGL/ pursuant to the
following terms and schedule:
(a) Under Phase I, Medtronic shall pay WGL * which will be paid in
accordance with the schedule set forth in Appendix A.
(b) If, at the conclusion of Phase I, MEDTRONIC elects to proceed
with Phase II of the development MEDTRONIC shall pay WGL * pursuant to the
budget and schedule agreed upon by the Parties.
ARTICLE 4
SUPPLY OF CAPACITORS
4.1) Upon MEDTRONIC's acceptance of WGL Capacitors developed during Phase
One and Two, WGL will supply WGL Capacitors to MFDTRONIC which meet the agreed
upon specifications pursuant to a definitive supply agreement, which will be
negotiated by Medtronic and WGL during Phase II and executed by the Parties upon
Medtronic's acceptance of the Phase II WGL Capacitors. The supply agreement
negotiated in Phase II will (a) require Medtronic to purchase its entire annual
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<PAGE>
requirements for tantalum capacitors from WGL, (b) will be similar in form and
content to the supply agreements for silver vanadium oxide batteries currently
in effect between WGL and Medtronic and (c) will contain the usual and customary
provisions typical in supply agreements of this type, except the parties agree
the supply agreement will not include excluding language related to license of
technology, provisions for purchase quotas, manufacturing fees, minimum purchase
requirements, or advance fees to maintain inventory. The parties do not
anticipate the agreement will include any license to Medtronic of WGL
intellectual property except to the extent such rights to Intellectual Property
are required in order to permit Medtronic to incorporate the WGL Capacitor into
Medtronic Product for sale and distribution, and other information specific to
the design or manufacture of non-capacitor technology. Pricing for WGL
Capacitors will be as stated in the Price List attached as Appendix C.
4.2) MEDTRONIC Exclusivity. WGL will not, without the prior written
consent of MEDTRONIC, supply, sell, transfer or otherwise dispose of capacitors
to any third party for use in the Exclusive Field of Use that have
specifications that are identical to the mechanical portion (including the
terminal locations) of the Design Specifications for any WGL Capacitor developed
by WGL for Medtronic under this Agreement.
4.3) MEDTRONIC will be responsible for submitting documentation with
appropriate Regulatory authorities. WGL agrees that it will cooperate with
MEDTRONIC as necessary in the application process to assist in obtaining
appropriate regulatory approval.
4.4) WGL acknowledges that maintaining continuity of supply once the WGL
Capacitors have been incorporated into a Medtronic product is of critical
importance. Therefore, effective beginning on the date Medtronic issues its
first non cancelable Purchase Order for WGL Capacitors which has been accepted
by WGL, at anytime thereafter WGL determines it wishes to exit the business of
manufacturing tantalum capacitors, for any reason, it will first provide
Medtronic with a 24 month written notice of WGL's intent to exit the tantalum
capacitor business. During the 24 month notice period, Medtronic shall be
permitted to purchase its required volume of WGL Capacitors at the then current
price therefore. At the end of the 24 month notice period, Medtronic shall be
permitted a last time buy sufficient to cover an additional 12 month period at
the then existing purchase volumes of WGL Capacitors, at the then current price
therefore; provided however, that WGL shall not be required to provide WGL
Capacitors to Medtronic pursuant to this provision in an amount or with lead
times or delivery schedules different in any material way from the number, lead
times and delivery schedule over the prior 12 months immediately prior to its 24
month notice.
4.5) Effective beginning on the date that Medtronic issues its first non
cancelable Purchase Order for WGL Capacitors which has been accepted by WGL, in
the event the business of WGL is sold or purchased in part or in whole by a
third party, but excluding, however (A) any public offering of stock and (B) any
private placement of stock not involving the acquisition of 50% or more of the
outstanding voting securities (on a fully-diluted basis) by WGL or the parent
company of WGL, then WGL shall
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<PAGE>
ensure that any such sale or purchase of its business by a third party buyer
("Buyer") is contingent upon the Buyer of WGL's business maintaining continued
supply of WGL Capacitors to Medtronic pursuant to the terms and subject to the
conditions of this Section 4.5. In that regard, WGL shall ensure that any such
Buyer will be required to supply WGL Capacitors to Medtronic in accordance with
the following provisions: (a) the prices and other terms and conditions of sale
set forth in the definitive supply agreement contemplated by Section 4.1,
including any price increases permitted thereby, shall continue to apply to all
WGL Capacitors sold to Medtronic; (b) if at any time after this Section 4.5
becomes applicable a Buyer determines that it wishes either (i) to terminate its
sales of WGL Capacitors to Medtronic or (ii) to exit the business of
manufacturing tantalum capacitors, for any reason ("Termination Decision"), then
it will first provide Medtronic with a 36 month written notice of such
Termination Decision; and (c) WGL or such buyer shall not be required to provide
WGL Capacitors to Medtronic pursuant to this Section 4.5 in any amount or with
lead times or delivery schedules different in any material way from the number,
lead times and delivery schedule over the prior 12 months immediately prior to
its Termination Decision notice. Following such 36 month notice period,
Medtronic shall be permitted to continue to purchase its required volume of WGLS
Capacitors for an additional period of 24 months. At the end of the 24 month
period, Medtronic shall be permitted a last time buy sufficient to cover an
additional 12 month period at the then existing purchase volumes of WGL
Capacitors. The definitive supply agreement contemplated by Section 4.1 shall
include provisions consistent with this Section 4.5.
ARTICLE 5
INTELLECTUAL PROPERTY
5.1) Ownership of Inventions. All Intellectual Property of MEDTRONIC
existing on the Effective Date, any Inventions developed solely by employees of,
or non-WGL consultants working for, MEDTRONIC in the course of any Statement of
Work, shall be and remain the property of MEDTRONIC and WGL shall not acquire
any rights therein. Except for the rights granted to MEDTRONIC herein, all
Intellectual Property of WGL existing on the Effective Date, and any Inventions
developed solely by employees of, or consultant, working for, WGL in the course
of any Statement of Work, shall be the property of WGL, and MEDTRONIC, shall not
acquire any rights therein.
5.2) No Assurance. Neither WGL nor MEDTRONIC make any representation or
warranty that a WGL Capacitor suitable for use in implantable products can or
will be developed satisfactorily for sale. MEDTRONIC will engage in such
research, development, marketing and sales activities concerning capacitors as
MEDTRONIC deems appropriate in its sole commercial judgment. WGL, and MEDTRONIC
acknowledge that MEDTRONIC and its Affiliates are and will continue to be
engaged in developing and exploiting technologies, processes and products which
are similar to or competitive with WGL's products; nothing herein will limit
MEDTRONIC or its Affiliates from continuing to develop or exploit for
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MEDTRONIC's benefit such technologies, processes or products without obligation
to WGL except as set forth herein.
ARTICLE 6
TERMINATION
6.1. MEDTRONIC Option to Terminate.
(a) Evaluation/Development Plan. MEDTRONIC may terminate this
Agreement at any time in its discretion during Phases I and II. If
MEDTRONIC elects to terminate the development at the conclusion of Phase I
or II MEDTRONIC will be only obligated to pay for WGL's assistance as
provided for herein prior and the payments otherwise due up to the date of
termination. In addition, Meditronic shall be entitled to exclusive rights
to purchase the exact mechanical design (including termination) of the
design specification for the WGL Capacitor for three (3) years from date
of this agreement.
6.2) Termination. Notwithstanding the provisions of Section 6.1 above,
this Agreement may be terminated in its entirety (including all uncompleted
Statements of Work) or with respect to any one or more specified Statements of
Work in accordance with the following provisions:
(a) by written notice from WGL to MEDTRONIC in the event of (i) a
breach of any material term of this Agreement by MEDTRONIC that is not
cured within ninety (90) calendar days after receipt by MEDTRONIC of
written notice from WGL specifying the nature of and basis for the
asserted breach, provided that if such breach cannot reasonably be cured
within ninety (90) days, such breach shall be deemed cured if MEDTRONIC
commences to cure such breach within such ninety (90) day period and
diligently thereafter prosecutes such cure, or (ii) the commencement by or
against MEDTRONIC of any bankruptcy, insolvency or reorganization
proceeding which has not been dismissed within ninety (90) days after
commencement;
(b) by WGL for nonpayment by Medtronic of any amounts due under this
Agreement after 10 days written notice from WGL.
(c) by written notice from MEDTRONIC to WGL in the event of (i) a
breach of any material term of this Agreement by WGL that is not cured
within ninety (90) calendar days after receipt by WGL of written notice
from MEDTRONIC specifying the nature of and basis for the assorted breach,
provided that if such breach cannot reasonably be cured within ninety (90)
days, such breach shall be deemed cured if WGL commences to cure such
breach within such ninety (90) day period and diligently prosecutes such
cure, or (ii) the commencement by or against WGL of any bankruptcy,
insolvency or
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reorganization proceeding which has not been dismissed within ninety (90)
days after commencement.
(d) by written notice from either party to the other party (which
notice shall be effective upon dispatch), in the event that such other
party becomes insolvent, makes assignment for the benefit of creditors,
goes into liquidation or receivership or otherwise loses legal control of
its business: or
(e) by written notice from either party to the other party should
such other party's performance be suspended by an event of Force Majeure
for more than one hundred eighty (180) consecutive days.
6.3) Rights and Obligations on Termination. In the event of termination of
this Agreement in its entirety or with respect to any one or more specified
Statements of Work for any reason, the parties shall have the following rights
and obligations:
(a) Termination shall not release either party from the obligation
to make payment of all amounts due and payable with respect to work
performed and the deliverables otherwise, due prior to such termination;
(b) Upon termination of this Agreement and all Statements of Work
hereunder, each party will within thirty (30) days return to the other all
tangible Confidential Information of the other party (except one copy
which may be retained by legal counsel solely for evidentiary purposes in
the event of a dispute), and each party will deliver to the other a copy
of any documentation in its possession or control; and
(c) in addition to the foregoing, the provisions of Articles 5,7 and
8 (and any definitions related thereto set forth in Article 1) shall
survive the termination of this Agreement for any reason whatsoever.
ARTICLE 7
CONFIDENTIALITY
7.1) Protection of Confidential Information. Each party acknowledges that
the other party claims its trade secrets and other Confidential Information as
special, valuable and unique assets. During the Restricted Period, for itself
and on behalf of its officers, directors, agents and employees, each party
agrees to the following;
(a) Each receiving party will not disclose Confidential Information
to any third party or disclose to an employee unless such third party or
employee has a need to know such Confidential Information in order to
enable the disclosing party to exercise its rights or perform its
obligations under this Agreement. Each party will use the Confidential
Information of the other party only for the purposes of exercising its
rights or fulfilling its obligations under this Agreement and will not
otherwise use it for its own benefit. In no event shall the receiving
party use less than the same degree of care to protect the Confidential
Information
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as it would employ with respect to its own information of like importance
which it does not desire to have published or disseminated.
(b) If the receiving party faces legal action or is subject to legal
proceedings requiring disclosure of Confidential Information, then, prior
to disclosing any such Confidential Information, the receiving party shall
promptly notify the disclosing party and, upon the disclosing party's
request, shall cooperate with the disclosing party in contesting such
request.
(c) For purposes hereof, the term "Restricted Period" means (i) in
the case of the trade secrets of a disclosing party, in perpetuity,
subject to the exceptions contained in the definition of Confidential
Information contained in Article 1 and (ii) in the case of other
Confidential Information of a disclosing party, during the term of this
Agreement and for six (6) subject to the defined exceptions.
7.2) Return of Confidential Information. All information furnished under
this Agreement shall remain the property of the disclosing party and shall be
returned to it or destroyed or purged promptly at the request of the disclosing
party upon termination of this Agreement provided, however, that either party
may retain Confidential Information as reasonably necessary to fulfill its
obligations under this Agreement or any executed supply agreement for the supply
of WGL Capacitors and (b) retain a copy of the Confidential Information for
evidentiary purposes only. All other documentation, memoranda, notes and other
tangible embodiments whatsoever prepared by the receiving party based on or
which includes Confidential Information shall by destroyed to the extent
necessary to remove all such Confidential Information upon the disclosing
party's request. Upon request, an authorized officer of the receiving party
shall confirm all destruction required pursuant to this Section in writing to
the disclosing party.
7.3) Public Announcements. Notwithstanding anything to the contrary
contained in this Agreement, neither party may initiate or make any public
announcement or other disclosure concerning the terms and conditions of the
subject matter of this Agreement to any third party without the prior written
approval of the other party except as may be required by law or regulatory
agency.
ARTICLE 8
ALTERNATIVE DISPUTE RESOLUTION
8.1) Arbitration. Except as set forth in Section 8.3, all claims,
disputes, controversies, and other matters in question arising out of or
relating to this Agreement or to an alleged breach thereof shall be settled by
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association.
8.2) Procedural Matters.
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(a) Any arbitration shall be conducted in Minneapolis, Minnesota if
requested by WGL and in Buffalo, New York if requested by Medtronic. In
any dispute involving a claim in excess of $100,000, three arbitrators
shall be employed. Absent a showing of good cause, the hearing shall be
conducted within ninety (90) days from the service of the statement of
claim. All proceedings shall be governed by the Federal Arbitration Act.
(b) Each party shall bear the expense of its own attorneys, experts
and out of pocket costs as well as fifty percent (50%) of the expense of
administration and arbitrator fees.
(c) The parties hereby WAIVE THE RIGHT TO SEEK OR RECEIVE
CONSEQUENTIAL OR PUNITIVE DAMAGES unless the arbitrator(s) or a court of
competent jurisdiction determines that this limitation, under the
circumstances, is unconscionable or violates public policy.
(d) Deposition, other than those taken in lieu of live testimony,
shall not be taken except upon the arbitrator(s) finding of special need.
Parties shall be entitled to conduct document discovery in accordance with
a procedure where responses to information request shall be made within
twenty (20) days from their receipt.
8.3) Injunctive Relief. Either party shall be entitled to pursue
injunctive and other remedies for emergency judicial relief in any court of
competent jurisdiction, including but not limited to an action to enforce
Sections 4.4 and 4.5, Articles 5 and 7, except that immediately following the
preliminary adjudication of such request for emergency relief, the parties
hereby consent to a stay of the judicial proceedings pending a determination of
the dispute on the merits by arbitration as herein provided. WGL expressly
agrees that if the provisions of Section 4.4 or 4.5 are breached, Medtronic may
suffer irreparable harm and that Medtronic shall be entitled to seek injunctive
or other appropriate equitable relief to prevent any such breach or harm.
ARTICLE 9
OTHER PROVISIONS
9.1) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or permitted
assigns of the parties hereto. The rights and obligations of WGL herein may not
be assigned. The rights and obligations of WGL and MEDTRONIC herein may not be
assigned except to an Affiliate of WGL or MEDTRONIC, as the case may be, or to
any person who succeeds to substantially all of that portion of WGL's or
MEDTRONIC's business to which this Agreement relates.
9.2) Complete Agreement. Any Appendices to this Agreement shall be
construed as an integral part of this Agreement to the same extent as if they
had been set
- 11 -
<PAGE>
forth verbatim herein. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
previous proposals or agreements, oral or written, and all negotiations,
Conversations or discussions heretofore had between the parties related to the
subject matter of such agreements.
9.3) Waiver, Discharge, Amendment, Etc. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of the party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated, nor may any waiver, permit, consent or approval of any kind or
character on the part of any party be effective against such party, other than
by a written instrument signed by the party against whom enforcement of such
amendment, waiver, discharge, termination, permit, consent or approval is sought
and expressly stating the extent to which such instrument shall be an amendment,
waiver, discharge, termination, permit, consent or approval relating to this
Agreement.
9.4) Notices. All notices or other communications to a party required or
permitted hereunder shall be in writing in the English language and shall be
delivered personally or by telecopy to such party (or, in the case of an entity,
to an executive officer of such party) or shall be given by certified mail,
postage prepaid with return receipt requested, addressed as follows:
if to MEDTRONIC to:
Medtronic, Inc.
Corporate Center
7000 Central Avenue N.E.
Minneapolis, Minnesota 55432
Attention:
Telecopy Number: (612)
if to WGL, to:
Wilson Greatbatch Ltd.
10,000 Wehrle Drive
Clarence, NY 14031
Attention: Chairman
Telecopy Number: (716) 759-5672
Any party may change the above specified recipient and/or mailing address
by notice to all other parties given in the manner herein prescribed. All
notices shall be
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<PAGE>
deemed given on the day when actually delivered as provided above (if delivered
personally or by telecopy) or on the day shown on the return receipt (if
delivered by mail).
9.5) Public Announcement. In the event any party proposes to issue any
press release or public announcement concerning any provisions of this Agreement
or the transactions contemplated hereby, such party shall so advise the other
parties hereto, and the parties shall thereafter use all reasonable efforts to
cause a mutually agreeable release or announcement to be issued. Except as
otherwise required by law or applicable stock exchange regulations, neither
party will publicly or privately disclose or divulge other than to its employees
(who shall be required to hold such information in confidence) any provisions of
this Agreement or the transactions contemplated hereby without the other party's
written consent.
9.6) Expenses. Each party hereto shall pay its own expenses incident to
the negotiations and preparation of this Agreement and the consummation of the
transactions provided for herein.
9.7) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Minnesota, United States of America,
including all matters of construction, validity, performance and enforcement,
without giving effect to principles of conflict of laws.
9.8) Titles and Headings; Construction. Titles and headings to Sections
herein are inserted for convenience of reference only and are not intended to
affect the meaning or interpretation of this Agreement This Agreement shall be
construed without regard to any presumption or other rule requiring construction
hereof against the party causing this Agreement to be drafted.
9.9) Benefit Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties hereto or their respective
permitted successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.10) Independent Contractors. The parties hereto are independent
contractors and nothing contained in this Agreement shall be deemed or construed
to create the relationship of a partnership or joint venture or of any
association or relationship between the parties. MEDTRONIC and WGL acknowledge
that, except as expressly provided in this Agreement they do not have the
authority to make and shall not make any representation to any third party,
either directly or indirectly, indicating that they have the authority to act
for or on behalf of the other party or to obligate the other party in any manner
whatsoever.
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<PAGE>
9.11) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in the manner appropriate for each, as of the day and year first above
written.
MEDTRONIC, INC. WILSON GREATBATCH, LTD.
By By /s/ Richard W. Mott
--------------------------------- --------------------------------------
Title Title Group Vice President
------------------------------ -----------------------------------
Date: Date: April 12, 2000
------------------------------ -----------------------------------
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<PAGE>
Exhibit 10.21*
The confidential portions of this exhibit, which have been removed and
replaced with an asterisk, have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
Supply Agreement
Wilson Greatbatch Ltd.
&
Guidant/CRM
1
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Table of Contents
Section Title
I. Contract Period
II. Contract Terms
III. Continuity of Supply
IV. Price
V. Lead Time
VI. Forecast Planning
VII. Cancellation Charges
VIII. Safety Stock
IX. Warranty, Indemnity and Liability Limitation
X. Custom Battery Development Charges
XI. Miscellaneous
2
<PAGE>
THIS AGREEMENT, effective the 1st day of February, 1999, is between Wilson
Greatbatch Ltd. (WGL) located at 10,000 Wehrle Drive, Clarence, New York, 14031,
('SELLER') and Guidant/CRM, ('BUYER') a Minnesota Corporation, located at 4100
Hamline Ave. No., St. Paul, Minnesota 55112.
Whereas BUYER wishes to purchase battery material/components for its use in
medical devices; and
Whereas SELLER agrees to manufacture/provide such battery materials/components
in accordance with BUYER's specifications, delivery schedules and other
requirements referenced in the AGREEMENT;
NOW, THEREFORE, SELLER and BUYER hereby agree as follows:
I. CONTRACT PERIOD
This AGREEMENT shall remain in effect from the effective date (February 1,
1999) through December 31, 2001. This agreement may be renewed from year
to year after the initial term with the mutual agreement of both parties.
For the purpose of calculating annual volumes during year one of this
AGREEMENT, the period is January 01, 1999 through December 31, 1999.
II. CONTRACT TERMS:
A. Guidant/CRM may terminate this agreement at any time with one (1)
year written notice to WGL. This notice of cancellation, for early
termination purposes, must occur no later than one (1) year prior to
originally scheduled expiration of agreement.
B. In the event of early termination by Guidant/CRM, WGL will invoice
Guidant/CRM for all accumulated engineering and tooling on any
custom battery model up to the date the termination letter is
received by WGL. MI unique component parts for a custom battery
model will be forwarded to Guidant/CRM and invoiced at aggregate
cost. Guidant/CRM will be responsible for paying for all
work-in-process ("WIP") costs and all finished goods inventory
specific to Guidant/CRM custom designs.
C. In the event of early termination, WGL will dispose of all in-house
tooling for any Guidant/CRM custom cell under the auspices of
Guidant/CRM representatives. This will be done to ensure that
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financially shared tooling between Guidant/CRM and WGL will not be
used for the manufacture of another customers battery and WGL custom
tool designs will not be used by any other battery manufacturer.
D. This agreement may not be modified, changed or terminated orally. No
change, modification, addition, or amendment shall be valid unless
in writing indicating an intent to modify this agreement and signed
by an authorized officer of each party.
III. CONTINUITY OF SUPPLY:
A. In the event WGL experiences a major catastrophe that would prohibit
the shipment of implantable lithium power sources, WGL will
immediately notify Guidant/CRM of the nature of the problem and
begin discussions on the length of time that shipments will be
delayed. If the delay will impact Guidant/CRM's supply of product to
the field, Guidant/CRM and WGL will immediately enter into
negotiations for the following:
1. The transfer of tooling used on Guidant/CRM models to another
lithium battery manufacturer, and
2. If a technology transfer is required, the cost for such a
technology transfer will be negotiated at the time of the
catastrophe.
B. WGL must give Guidant/CRM (2) years prior written notice of any
intent to discontinue supply of implantable power sources to
Guidant/CRM, but WGL shall not be bound after Dec. 31, 2001 to the
pricing set forth in Article IV.
IV. PRICE:
Prices per model will be as called out on the purchase order based on
anticipated annual volumes. Prices are in effect for the original contract
period, February 01, 1999 through December 31, 2001. Where pricing is
specified in B and C below on an annual forecast volume by Guidant, and
the minimum volume requirements for that pricing level are not achieved,
WGL will back-bill Guidant for the difference in price between the volume
levels. Payment terms are net 30, FOB Clarence, New York.
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<PAGE>
A. - SVO Multiplate Defibrillator Batteries -- All Technologies:
* ea.
B. Lithium Iodine Pacemaker Batteries:
1 -- 39,999 per yr./per model $* ea.
40,000 -- 54,999 per yr./per model $* ea.
55,000 -- 74,999 per yr./per model $* ea.
75,000 + per yr./per model $* ea.
C. CFX Batteries -- Stainless Steel Case Versions Only:
1 -- 19,999 per yr./per model $* ea.
20,000 -- 39,999 per yr./per model $* ea.
40,000 + per yr./per model $* ea.
V. LEAD TIME:
Standard lead time for lithium iodine batteries is eight (8) weeks to ship
date.
Standard lead time for SVO batteries is eight (8) weeks to ship date.
WGL will notify Guidant/CRM, in writing, of any changes to these standard
lead times.
VI. FORECAST PLANNING:
Guidant/CRM will provide two (2) months firm orders and an additional
seven (7) months forecasts stating anticipated needs. This will provide
WGL with a total of nine (9) months projected requirements for planning
purposes at all times. A new firm order requirement and the next month
forecasted quantity will be provided each succeeding month.
VII. CANCELLATION CHARGES:
In the event that Guidant/CRM cancels a purchase order inside agreed upon
lead time, Guidant/CRM will be responsible for all finished product, WIP
and raw components. In the event that Guidant/CRM cancels a
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purchase order outside of agreed upon lead time, Guidant/CRM and WGL will
negotiate resulting costs.
VIII. SAFETY STOCK:
WGL agrees to carry completed cells in inventory to mitigate schedule
increases inside lead time. WGL agrees to hold one months' forecast
production of selected high run battery models in the terminated and ready
to ship condition. My safety stock level beyond one months' production
will be negotiated at time of purchase order placement. The model
number/part number and quantity will be specified on a cell by cell basis
as required by Guidant/CRM and agreed upon by WGL. The model numbers and
quantities will be subject to modification based on Guidant/CRM's forecast
and called out on the purchase order and reviewed, at a minimum,
quarterly. Guidant/CRM agrees to financial responsibility for all
completed inventory levels as specified on each purchase order. In the
event of battery obsolescence due to a sudden Guidant product ramp down,
Guidant/CRM agrees to take and/or pay for safety stock inventory before
product ages six months from activation (pour date).
IX. WARRANTY. INDEMNITY AND LIABILITY LIMITATION:
See attached Warranty Form (Attachment A).
X. CUSTOM BATTERY DEVELOPMENT CHARGES:
Quoted development prices will be individually based on the relative
complexity and risk associated with each particular battery design. These
charges represent a "not to exceed" price.
A. WGL will make every effort to deliver "qualified" standard Lithium
SVO batteries to Guidant/CRM within a seven (7) month timeframe and
"qualified" standard Lithium Iodine batteries within a five (5)
month timeframe.
B. WGL will agree to deliver * mock- batteries, * production prototype
batteries and * implantable grade batteries to Guidant/CRM at "no
charge" for every new battery development completed during the time
period of this agreement.
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C. The total number of batteries purchased will be included in the
volume for any specific period to achieve the period pricing
schedule.
D. Should development work be terminated at any time during the
contract period, development charges paid up to and including the
point of termination will not be refunded.
E. Net 15 day terms will apply for all tooling and engineering charges.
F. Pricing for custom Lithium Iodine Batteries (Pacemaker
Applications):
1. Shapes with thicknesses greater than 4mm and use standard seal
technology:
$* upon submission of purchase order.
$* upon completion of a three (3) month progress report.
$* upon shipment of prototype batteries.
$* upon shipment of implantable grade batteries.
Development charges are not refundable.
Battery shapes will remain proprietary to Guidant/CRM.
Price per battery will be in accordance with standard pricing
in effect at time of delivery. In the event that WGL does not
meet committed delivery dates resulting in delivery in a new
calendar year, prices will remain as agreed upon for original
delivery date.
Any term or condition not covered above will be negotiated at
the time of order.
2. Shapes with thickness of less than 5mm and use non-standard
seal technology:
$* upon submission of purchase order.
$* upon completion of a three (3) month progress report.
$* upon shipment of prototype batteries.
$* upon shipment of implantable grade batteries.
Development charges are not refundable.
Battery shapes will remain proprietary to Guidant/CRM.
Price per battery will be in accordance with standard pricing
in effect at time of delivery. In the event that WGL does not
meet committed delivery dates resulting in delivery in a new
calendar year, prices will remain as agreed upon for original
delivery date.
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Any term or condition not covered above will be negotiated at
the time of order.
3. Solid Cathode Multiplate Batteries (High Rate Defibrillator
Applications):
$* upon submission of purchase order.
$* upon completion of three (3) month progress report.
$* upon shipment of prototype batteries.
$* upon shipment of implantable grade batteries.
Development charges are not refundable.
Battery shapes will remain proprietary to Guidant/CRM.
Price per battery will be in accordance with standard pricing
in effect at time of delivery. In the event that WGL does not
meet committed delivery dates resulting in delivery in a new
calendar year, prices will remain as agreed upon for original
delivery date.
Any term or condition not covered above will be negotiated at
the time of order.
4. Lithium Carbon Monofluoride (CFX) Batteries:
$* upon submission of purchase order.
$* upon completion of three (3) months progress report.
$* upon shipment of prototype batteries.
$* upon shipment of implantable grade batteries.
Development charges are not refundable.
Battery shapes will remain proprietary to Guidant/CRM.
Price per battery will be in accordance with standard pricing
in effect at time of delivery. In the event that WGL does not
meet committed delivery dates resulting in delivery in a new
calendar year, prices will remain as agreed upon for original
delivery date.
Any term or condition not covered above will be negotiated at
the time of order.
5. Batteries for Other Applications Will be Quoted on an
Individual Basis.
XI. MISCELLANEOUS:
A. This agreement shall be interpreted, construed and governed by and
in accordance with the laws of the State of Minnesota.
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<PAGE>
B. Either party may assign this agreement to an entity which acquires,
directly or indirectly, substantially all of the assets or merges with it.
Except as set forth herein, neither this agreement nor any rights here
under, in whole or in part, shall be assignable or otherwise transferable
by either party without the express written consent of the other party.
Subject to the above, this agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties here to.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their authorized representatives.
BUYER: SELLER:
GUIDANT CORPORATION/CRM WILSON GREATBATCH LTD.
By: /s/ A. J. Graf By: /s/ Richard W. Mott
-------------------------------- -------------------------------------
A. J. Graf
Title: President & CEO Title: Group Vice President
----------------------------- ----------------------------------
Date: April 15, 1999 Date: April 29, 1999
------------------------------ -----------------------------------
9
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Attachment A
WILSON GREATBATCH LTD.
PRODUCTS WARRANTY AND LIMITATION OF LIABILITY
------------------
WARRANTY
WGL warrants that each battery product manufactured by WGL and delivered to the
user (a) shall meet the WGL specifications for such battery product and (b)
shall be free of defects in material and workmanship for a period of twelve (12)
months from the date of manufacture.
WGL's sole obligation under this Warranty is the repair or replacement, at its
election, of any battery cell or pack in place of any such product which is
found upon WGL's inspection, to be defective in material or workmanship during
the period prescribed above. Such product will be repaired or replaced without
charge to the user provided that, (1) prior written approval is required before
returning any product, (2) freight to WGL shall be prepaid, and (3) any product
return sent to WGL without prior written approval will be returned to the
sender, freight collect.
This Warranty does not apply to depletion, wear and/or any failure occurring as
a result of any of the following: normal use, abuse, misuse, any alteration or
modification made to the product without express written consent of WGL,
attempted disassembly, neglect, improper installation, or any other use
inconsistent with the specifications or warnings or recommended operating
practices specific to the battery product.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES (EXCEPT OF TITLE), EXPRESSED,
IMPLIED, OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS
FOR A PARTICULAR PURPOSE.
------------------
LIMITATION OF LIABILITY
THE REMEDIES OF THE USER IN THE WARRANTY SET FORTH ABOVE ARE EXCLUSIVE, AND THE
TOTAL LIABILITY OF WGL AND/OR ANY WGL DISTRIBUTOR WITH RESPECT TO PRODUCT SOLD
TO THE USER, IN CONNECTION WITH THE PERFORMANCE THEREOF, OR FROM THE SALE,
DELIVERY, INSTALLATION OR REPAIR COVERED BY OR FURNISHED UNDER ANY SALE TO THE
USER WHETHER BASED ON CONTRACT, WARRANTY, NEGLIGENCE, INDEMNITY, STRICT
LIABILITY, OR OTHERWISE, SHALL NOT EXCEED THE PURCHASE PRICE OF THE BATTERY OR
WGL BATTERY ASSEMBLY UPON WHICH SUCH LIABILITY IS PLACED.
WGL, ITS SUPPLIERS, AND ITS DISTRIBUTORS SHALL IN NO EVENT BE LIABLE TO THE
USER, OR TO ANY SUCCESSOR IN INTEREST OR ANY BENEFICIARY OR ASSIGNEE THEREOF,
RELATING TO THE SALE OF ANY WGL PRODUCT FOR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL OR PUNITIVE DAMAGES ARISING OUT OF SUCH SALE, OR ANY DEFECTS
IN, OR FAILURE OF, OR MALFUNCTION OF THE PRODUCT UNDER SUCH SALE INCLUDING BUT
NOT LIMITED TO, DAMAGES BASED UPON LOSS OF USE, LOST PROFITS OR REVENUE,
INTEREST, LOST GOODWILL, INCREASED EXPENSES AND/OR CLAIMS OF CUSTOMERS OF THE
USER, WHETHER OR NOT SUCH LOSS OR DAMAGE IS BASED ON CONTRACT, WARRANTY,
NEGLIGENCE, INDEMNITY, STRICT LIABILITY OR OTHERWISE.
<PAGE>
Exhibit 10.22
The confidential portions of this exhibit, which have been removed and
replaced with an asterisk, have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
CONFIDENTIAL
AGREEMENT BETWEEN WILSON GREATBATCH LTD. AND
PACESETTER, INC.
THIS AGREEMENT (the "Agreement") is between Wilson Greatbatch Ltd. located in
Clarence, New York ("WGL") and Pacesetter, Inc., a St. Jude Medical Company,
located in Sylmar, California ("Pacesetter").
RECITALS: WGL and a predecessor of the Company are parties to a
Purchase Contract, entered into by WGL and the Company's
predecessor-in-interest, Siemens Pacesetter, Inc. on January 1, 1995 (the "1995
Purchase Contract"). WGL and the Company desire to amend the 1995 Purchase
Contract and to expand the business relationship between them as set forth in
this Agreement. The effective date of this Agreement shall be April 16, 1997
("Effective Date").
AGREEMENT: In consideration of the foregoing Recitals, which are
hereby made part of this Agreement, and for valuable consideration, receipt of
which is hereby acknowledged, and in consideration of the mutual covenants and
agreements herein contained, WGL and the Company agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following specially capitalized
terms shall have the meanings set forth below:
1.1 Affiliates. "Affiliates" shall mean any other entity that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the first entity, including both
other entities which are Affiliates at the date of execution (signature of both
parties hereto) of this Agreement and other entities which become Affiliates
after the date of execution of this Agreement. Control of an entity shall mean
ownership of 50 percent or more of the total voting securities or other voting
interests of the entity.
1.2 Batteries. "Battery" and "Batteries" shall mean power sources
for use in the Company's implantable medical devices including, but not limited
to, cardiac rhythm management devices.
1.3 Company. "Company" as used herein shall include both
Pacesetter, Inc. and all of its Affiliates.
1.4 Consignment Batteries. "Consignment Batteries" shall mean
Batteries
<PAGE>
consigned by WGL to the Company at a Company facility pursuant to Section 2.5 of
this Agreement.
1.5 Contract Year. "Contract Year" shall mean each calendar year.
1.6 Micro-Electronic Components. "Micro-Electronic Components" shall
mean hybrids, electronic circuitry, and components therefor which are used in
Company's implantable cardiac rhythm management devices.
1.7 Non-Hybrid Products. "Non-Hybrid Products" shall mean all
components and assemblies, other than Micro-Electric Components, high-voltage
capacitors and Batteries, which are used in the Company's implantable cardiac
rhythm devices, and which are within one of the following categories: (a)
enclosures, (b) pre-molded header components, (c) connectors, (d) coated and
uncoated precious metals, (e) coils, (f) feedthroughs, (g) precision machined
parts and (h) mechanical spacers and other mechanical components used in such
implantable devices. The initial set of such components and assemblies is listed
on Attachment A hereto, and may include such other components or assemblies as
the parties shall agree upon in writing by amending Attachment A.
1.8 Relevant Cost Factors. "Relevant Cost Factors" shall mean the
following:
(a) Any price increases imposed by WGL vendors of raw materials or
purchased components for the manufacture of products covered
by this Agreement ("Raw Material Costs").
(b) Any state or Federal law, rule, regulation or mandated program
which imposes on WGL a new tax, fee or surcharge or additional
costs and which either (i) relates to the handling, storage,
transportation or disposal of hazardous or other materials
that are regulated under environmental laws or (ii) is a tax,
fee or surcharge imposed on WGL based on the nature of the
business operated by WGL (collectively, "Regulatory Costs").
(c) Any incremental increases in the costs of labor, equipment and
materials which are directly and exclusively related to
changes expressly required by the Company in the materials,
structure or manufacture of products to be provided by WGL to
the Company pursuant to this Agreement (excluding any labor,
equipment, materials and other WGL costs which are covered by
any design fees payable by the Company to WGL)("New Design
Costs").
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2. POWER SOURCE SUPPLY ARRANGEMENTS
2.1 Supply of Requirements. The Company hereby agrees to purchase
from WGL, and WGL hereby agrees to sell to the Company, * of the Company's *
requirements for Batteries for use in the Company's implantable medical devices
during the term of this Agreement, upon and subject to the terms and conditions
set forth in this Agreement. This Agreement shall apply to all of the facilities
of the Company and of its Affiliates on a worldwide basis. In addition,
regardless of location, the Company will not replace any existing WGL battery
models with Batteries supplied by others.
2.2 Price. Pricing for Batteries during the remainder of 1997 shall
be as set forth in the 1995 Purchase Contract. Subject to Section 2.8, the
prices for Batteries to be purchased by the Company commencing as of January 1,
1998 shall be determined as provided for in this Section 2.2, and shall apply
regardless of the location of the Company's facility to which Batteries will be
delivered.
(a) The prices for lithium iodine batteries having a thickness of
5 mm or greater shall be * per cell, beginning on January 1,
1998 through the termination of this Agreement on December 31,
2001.
(b) The prices for (i) lithium iodine Batteries having a thickness
of less than 5 mm and (ii) lithium iodine Battery models the
volume of which is less than * cells per Contract Year shall
be the price set forth in Section 2.2(a) plus a premium of *.
(c) The price for titanium CFx Batteries are * per cell, beginning
January 1, 1998 through the termination of this Agreement on
December 31, 2001.
(d) There shall be an extra charge to the Company for unique pin
modifications in the Batteries including, but not limited to,
a modification such as the gold plating requirement in
Pacesetter Model 9438.
(e) If the Company requires power sources which are other than
WGL's current standard production cells or which use
alternative battery chemistry, the pricing shown on Attachment
B will apply.
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(f) If the Company proceeds with the development of a "hi-value
pacemaker," WGL will propose separate pricing and
specifications for the Battery and other components for any
such new pacemaker product of the Company. In that regard, the
Company agrees to involve WGL during the planning and design
of such pacemaker in order to ensure that the product will be
competitive in cost (including Battery) for the intended
market. WGL agrees that if the Company determines that, for
competitive reasons, the new product must include a power
source that WGL does not then have rights to, WGL will use its
reasonable best efforts to obtain a license or other rights to
manufacture and sell such Battery. The parties will agree in
writing on the pricing and other terms and conditions of sale
for WGL's Battery and any other components for any such
hi-value pacemaker product.
2.3 Forecasts. The parties agree as follows:
(a) The Company will provide WGL with a forecast setting forth three
(3) months firm orders for Batteries and an additional nine (9) months forecast
stating anticipated Battery needs. This forecast will provide WGL with a total
of twelve (12) months projected requirements for planning purposes at all times.
Such forecast, including a new firm order for Batteries, will be provided each
succeeding month.
(b) WGL shall not be required to manufacture more than * of the
Company's twelve (12) month forecast quantity of Batteries in any one three (3)
month period, except upon not less than a six (6) month prior written notice.
The sole exception to this provision shall be if WGL has fallen behind on past
deliveries due to its own fault, in which case WGL shall be required to
manufacture and deliver each month up to * more than the average monthly
quantities which were scheduled for the preceding three-month period until WGL
is back on schedule with its deliveries.
2.4 Payment Terms. Payment terms for Batteries are as follows: (a)
for Consignment Batteries purchased by the Company, by the thirtieth (30th) day
after the day on which Consignment Batteries shall have been withdrawn by the
Company or (b) for all other Batteries purchased by the Company, net 30 days
from the date of the invoice, F.O.B. Clarence, NY or point of shipment,
whichever is applicable. Payment terms for tooling and engineering charges are
net 30 days from the date of the invoice. If payments are delinquent, a late
charge fee of * per month will be imposed. The calculation will be based on
thirty (30) day months the percentage will be pro rated based upon the exact
number of days late. Payment terms for these charges will be net 30 days.
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2.5 Consignment.
(a) As promptly after the execution and delivery of this Agreement
as the operations of WGL will permit, but by no means later than January 31,
1998, and the parties shall mutually agree, WGL will consign and ship to itself,
in care of the Company, Consignment Batteries the number of which shall be
approximately equal to * (calculated by dollar cost) of the Batteries purchased
by the Company from WGL in 1997. Thereafter, during the term of this Agreement,
WGL will ship additional quantities of Consignment Batteries to the Company so
that the number of Consignment Batteries at all times shall be approximately
equal to * of the Company's total purchases of Batteries for the preceding
Contract Year (calculated by dollar cost). WGL shall use its reasonable best
efforts to maintain the model mix of Consignment Batteries as close as is
reasonably possible to Company's most recent twelve (12) month forecast of
projected Battery requirements. The Consignment Batteries shall be delivered to
the Company location at which the Company will use the Batteries, based upon
information supplied by the Company to WGL. However, WGL shall have the option
not to make any such shipment unless the Company shall have paid all sums owing
with respect to all previous quantities of Batteries purchased by the Company.
(b) WGL shall use Federal Express or UPS or other recognized courier
services to ship Consignment Batteries, as directed by the Company, and shall
charge the Company's account with such courier service. Consignment Batteries
shall be received by the Company and stored by the Company as WGL's property.
All charges and expenses for receiving, handling, and storing such material
shall be paid by the Company. The Consignment Batteries in all cases shall be
carefully segregated from other goods either of the same or different character
belonging either to the Company or to any third person, shall be marked as WGL's
property, and shall be stored in an area in the Company's facilities separate
from and not mingled with other goods of the Company or of any third person.
(c) The Company shall inspect all Batteries (including the
Consignment Batteries) and notify WGL within one month if any of the Batteries
fail to meet the Company's specifications and quality standards for such
Batteries.
(d) The Company shall comply with all laws which might in any way
affect WGL's ownership of the Consignment Batteries from time to time stored in
the Company's facility(s) and shall indemnify and hold harmless WGL from and
against all loss, damage, and expense arising out of any levy, attachment, lien
or process involving the Consignment Batteries. The Company shall be responsible
for, and shall indemnify WGL against, any loss or shrinkage in the quantity of
the Consignment Batteries while so stored, whether such loss or shrinkage is
caused by theft or pilferage or by fire, flood, tornado or other similar
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catastrophe. The Company shall purchase and maintain insurance covering all such
losses and naming WGL as additional insured.
(e) The Company shall keep at all times a complete list or inventory
of the Consignment Batteries so stored, copies of which list shall be furnished
to WGL upon request. Upon not less than three (3) business days prior notice,
WGL's representatives shall have reasonable access to the Consignment Batteries
at the Company's facilities for the purpose of verifying such lists or
inspecting the condition of Consignment Batteries.
(f) All public charges, whether in the nature of sales, occupational
or other taxes or assessment or license fees, which shall be levied or assessed
against the Consignment Batteries at the Company's facilities, or against the
Company or WGL by reason hereof, by any federal, state or municipal authority,
shall be paid by the Company.
(g) All Consignment Products shall remain the property of WGL and
shall be held by the Company as such until withdrawn from the consigned stock
and purchased by the Company pursuant to this Agreement. The Company will
withdraw Batteries from the inventory of Consignment Batteries on a
first-in-first-out basis for each Battery model.
(h) From time to time, as the Company shall purchase Batteries from
WGL, it may withdraw the Consignment Batteries so purchased from WGL's consigned
stock of the products at the Company's facility(s). Upon each such withdrawal
for purchase by the Company pursuant to this Agreement, title to the Consignment
Batteries so withdrawn shall pass to the Company.
(i) Upon expiration of this Agreement or in the event that this
Agreement shall be terminated by the Company or WGL for any reason whatsoever,
the Company shall purchase, or be deemed to have purchased from WGL, all of the
remaining Consignment Batteries located at a Company facility, which met the
Company's specifications and quality standards at the time of receipt, as of the
date of expiration or termination, at the prices in effect at such time. Payment
shall be made in accordance with Section 2.4.
(j) In the event that the Company changes the model mix of the
Batteries which it requires, the Company agrees to purchase, within six (6)
months, all units of Consignment Batteries which are no longer required by the
Company.
2.6 Changes by WGL. WGL will not change the form, fit, or function
of any Battery supplied to the Company without prior written notice.
2.7 Failure to Deliver Requirements.
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(a) If WGL is unable for any reason to deliver sufficient quantities
of Batteries meeting the Company's specifications and quality standards to the
Company to meet its requirements therefor which are set forth in the firm
purchase order forecasts delivered pursuant to this Agreement, whether through
replenishment of Consignment Batteries or otherwise, for a period of three (3)
months, the Company shall have the right to purchase Batteries from third
parties, including pursuant to a supply agreement with a third party for up to a
one (1) year period if such a commitment is reasonably necessary in order for
the Company to obtain Batteries from a third party; provided, however, that,
upon the expiration of any such supply agreement or if Company does not enter
into a binding supply agreement, as soon as the Company is able to deliver the
Company's requirements, the Company shall resume purchasing its requirements of
Batteries from WGL.
(b) In the event of fire, explosion, strikes, war, act of any
governmental agency, material or labor shortage, transportation contingency, act
of God or any other causes beyond the control of WGL ("Force Majeure"), WGL
shall not be liable for any delay in shipment or non-delivery of Batteries
covered by this Agreement arising from Force Majeure, and the Company shall be
bound to accept the delayed shipment or delivery made within a reasonable time.
In the event of Force Majeure, the Company shall be excused for the failure to
take and pay for Batteries ordered under this Agreement, until such Force
Majeure condition is removed. In the event such conditions cannot be corrected
by the party affected within six (6) months of the date of the occurrence of a
Force Majeure event, then the other party shall have the option to terminate
this Agreement upon one (1) month prior notice.
2.8 Price Adjustment.
(a) If the Company shall not comply with the provisions of Article
3, then WGL shall have the right to increase the prices for all Batteries upon
three (3) months prior notice. If the Company shall not accept any such new
"pricing" for Batteries, then WGL shall have the option and right to terminate
this Agreement upon not less than thirty (30) days prior notice. WGL agrees that
the rights specified in this Section 2.8(a) shall be WGL's sole remedy if the
Company does not comply with the provisions of Article 3 of this Agreement.
(b) The prices for Batteries provided for in this Article 2 are
subject to upward modification, from time to time, by WGL during the period
which commences after December 31, 1998 if WGL incurs a Battery Cost Increase.
For purposes of this Section 3.4, the term "Battery Cost Increase" shall mean an
increase by * or more in WGL's 1998 standard product cost for one or more of the
Relevant Cost Factors listed in Section 1.8 above. The amount of any such
permitted price increase for a Battery due to a
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Battery Cost Increase shall be determined as follows:
(i) In the case of Raw Material Costs, an amount equal to * times
the amount of such Battery Cost Increase.
(ii) In the case of Regulatory Costs, it shall be * to the amount of
any such Battery Cost Increase; and
(iii) In the case of New Design Costs, it shall be an amount equal *
the amount of such Battery Cost Increase.
(c) If after any increase in a price for a Battery due to a Battery
Cost Increase, there occurs a decrease of * or more over WGL's standard product
costs (as adjusted by any such prior Battery Cost Increase) for such Battery for
one or more of the Relevant Cost Factors listed in Section 1.8 above ("Battery
Cost Decrease"), then WGL shall reduce the adjusted price for such Battery in
the same manner and proportion as provided for in Section 2.8(b) for Battery
Cost Increases; provided, however, that in no event shall the price for
Batteries be reduced below the prices set forth in Section 2.2.
(d) If WGL is entitled and determines to impose a price increase
under Paragraph (c) of this Section 2.8, WGL shall give not less than three (3)
months written notice thereof in order that the forecasts provided for in
Section 2.3 to be made by the Company can take into account any such price
increase. WGL may not impose a price increase during the permitted period under
Paragraph (b) of this Section 2.3 more frequently than once every Contract Year.
WGL shall at the Company's written request make available appropriate records
substantiating the basis for its determination that a Battery Cost Increase has
occurred, or any Battery Cost Decrease, for audit at the Company's expense by an
independent certified public accounting representative to verify the accuracy of
the reports provided to the Company. Such representative shall execute a
suitable confidentiality agreement reasonably satisfactory to WGL prior to
conducting such audit. Such representative may disclose to the Company only its
conclusions regarding the accuracy and completeness of such reports, and shall
not disclose Confidential Information of WGL to the Company without the prior
written consent of WGL. Any such request for an audit must be made by the
Company within six months after any announced price increase under Paragraph
(b) of this Section 2.3 or any announced price decrease under Paragraph (c) of
this Section 2.3.
(e) Prior to imposing any increase in the price of Batteries due to
a Battery Cost Increase for Raw Materials Costs, WGL shall allow the Company's
purchasing department a period of one (1) month after the price increase notice
referred to in Section
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2.8(d) to find alternative, qualified sources for any raw materials at a lower
cost than those determined by WGL, and WGL shall be obligated to buy from any
such lower cost sources before imposing any increase in the price of a Battery.
2.9 WGL Warranty. WGL warrants that the Batteries delivered to the
Company will be free from defects in materials and workmanship at the time of
sale. WGL's sole obligation under this warranty is the replacement of any
Battery which is defective without charge. SELLER MAKES NO OTHER WARRANTY WITH
RESPECT TO THE BATTERIES, WRITTEN OR ORAL, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
THE COMPANY EXPRESSLY ASSUMES ALL LIABILITY ARISING FROM OR IN CONNECTION WITH
THE USE OF THE BATTERIES PURCHASED HEREUNDER, WHETHER BASED ON CONTRACT,
WARRANTY, TORT OR OTHERWISE AND AGREES TO HOLD WGL HARMLESS FROM SUCH CLAIMS.
3. NON-HYBRID PRODUCTS.
3.1 Product Development. Subject to all of the terms and conditions
of this Agreement, the Company has agreed to purchase Non-Hybrid Products which
meet the Company's specifications and quality standards, and the pricing
guidelines contained in Section 3.3 below from WGL. The Company and WGL
acknowledge and agree that WGL is not manufacturing or assembling any Non-Hybrid
Products at the present time for the Company and that WGL must complete its
design, tooling, plans and production lines for Non-Hybrid Products, and must
qualify such products with the Company, prior to any purchases of such products
by the Company from WGL. The Company agrees to provide WGL with all
qualification protocols and requirements, plans, designs, specifications,
drawings and other information in the Company's possession as reasonably
requested by WGL ("Qualification and Design Data") which may be necessary or
advisable in order for WGL to be able to manufacture Non-Hybrid Products for the
Company and to cooperate with WGL in connection with WGL's efforts to qualify
Non-Hybrid Products for Company purchase and use. Representatives of the Company
and WGL who have authority to make decisions including, but not limited to, in
the case of the Company, decisions with respect to qualification and purchasing,
shall meet not less frequently than once every three (3) months to discuss WGL's
progress in becoming qualified to supply Non-Hybrid Products to the Company and
any issue which then may exist with respect to WGL's qualification efforts
("Progress Meetings"). If either the Company or WGL believes at any time that
the other party is not fulfilling its obligations under this Article 3 with
respect to qualification, it can request a meeting with the other party, upon
reasonable notice, to discuss any issues or
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problems in that regard.
3.2 Purchase Commitment. Upon execution and delivery of this
Agreement, the Company will provide WGL with * in purchase orders for Non-Hybrid
Products each of which WGL reasonably believes that WGL can qualify and deliver
during calendar years 1997-1998, a copy of which is attached hereto as
Attachment C. The Company further agrees that during the term of this Agreement
the Company will provide WGL with purchase orders for not less than (a) *
(calculated by dollar cost) of the Company's requirements for each such
Non-Hybrid Product in the twelve (12) months beginning with the month following
the first date of qualification of each such Non-Hybrid Product by WGL in
accordance with the Company's specifications and quality standards ("Initial
12-Month Period"); and (b) * (calculated by dollar cost) of the Company's
requirements for each such Non-Hybrid Product after the Initial 12-Month Period.
Subject to the other conditions of this Article 3, the Company shall be deemed
to be in compliance with the purchase commitment requirements for Non-Hybrid
Products of this Section 3.2 immediately upon the delivery to WGL of such
purchase orders. Subject to the other provisions of this Article 3, the Company
will not be deemed to be out of compliance with its purchase commitment due to
failure of WGL to qualify any Non-Hybrid Product or to meet the pricing
guidelines contained in Section 3.3 below, or to deliver any Non-Hybrid Products
as covered by Section 3.10(d) below. Following any failure of WGL to qualify any
such Non-Hybrid Product within six months after the Target Date For
Qualification for such product, or to meet the pricing guidelines contained in
Section 3.3 for any Non-Hybrid Product available to the Company from other
qualified vendors, the Company shall have the right to place purchase orders
with other qualified vendors for a sufficient quantity of such Non-Hybrid
Product to satisfy its requirements for a period not to exceed twelve (12)
months. During this 12-month period or thereafter, if WGL successfully qualifies
such Non-Hybrid Product, the Company will provide WGL with purchase orders for
delivery after the 12-month period for not less than * (calculated by dollar
cost) of the Company's yearly requirements for such Non-Hybrid Product, as
specified in (a) above. For purposes hereof, the term Target Date For
Qualification shall mean the date for each separate Non-Hybrid Product which
shall be specified in writing by WGL, when the Company issues its qualification
order, subject to the Company's approval, which shall not be unreasonably
withheld.
3.3 Pricing.
(a) Base Prices. "Base Prices" for Non-Hybrid Products shall mean
the prices charged to the Company by WGL for Non-Hybrid Products, exclusive of
tooling, shipping, and delivery charges. The Base Prices for certain Non-Hybrid
Products are set forth on Attachment A which may be amended from time to time in
a written instrument
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signed by authorized representatives of both parties to add additional
Non-Hybrid Products to Attachment A. - Except for the price adjustments provided
for in Section 3.4 below, pricing for the Non-Hybrid Products on Attachment A
will remain fixed for the term of this Agreement. Base Prices for Non-Hybrid
products not initially included in Attachment A which the Company is currently
purchasing shall be fixed for the term of this Agreement at the average
historical price that the Company has paid for each such Non-Hybrid Product
during 1997. Subject to Section 3.4, Base Prices for newly designed Non-Hybrid
products will be fixed for the term of this Agreement at the lower of (a) WGL's
pricing, or (b) the average of the pricing available to the Company from two
other qualified vendors.
(b) Tooling charges, which are over and above the Base Prices listed
in Attachment A, shall be determined prior to or at the time WGL qualifies a
Non-Hybrid Product. WGL may charge the Company tooling charges covering the
entire cost of tooling for "L" Connector Assemblies and for Case Halves, but not
for any other Non-Hybrid Products which the Company is currently purchasing from
other vendors. To the extent that Company-owned tooling at the Company's current
vendors (i) is in usable condition, (ii) is compatible with WGL's manufacturing
machinery and (iii) can be transferred from the Company's current vendors. WGL
shall, at its reasonable discretion, use such tooling rather than purchasing new
tooling. Tooling charges may be charged by WGL for any new Non-Hybrid Product
that it qualifies, but not for any new Non-Hybrid Product that it fails to
qualify.
3.4 Permitted Price Adjustments.
(a) The Base Prices for Non-Hybrid Products provided for in this
Article 3 are subject to increase, from time to time, by WGL if WGL, incurs a
Non-Hybrid Cost Increase except that, in the case of changes in Raw Material
Costs (other than costs related to precious metal, no such increase can be made
prior to the second anniversary of the Effective Date. For purposes of this
Section 3.5, the term "Non-Hybrid Cost Increase" shall mean an increase by * or
more in WGL's standard product costs for one or more of the Relevant Cost
Factors listed in Section 1.8 above (other than Raw Material Cost changes
related to precious metals), determined as of the date WGL shall have qualified
such product for sale to the Company. The amount of any such permitted price
increase due to a Non-Hybrid Cost Increase shall be determined as follows:
(i) In the case of Raw Material Costs other than costs related to
precious metals, it shall be an amount equal to * times the amount of such
Non-Hybrid Cost Increase.
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(ii) In the case of Regulatory Costs, it shall be an amount * the
amount of the Non-Hybrid Cost Increase.
(iii) In the case of New Design Costs, it shall be an amount equal *
the amount of the Non-Hybrid Cost Increase.
If the cost of precious metals included in any Non-Hybrid Product increases or
decreases from the Base Cost, then the Base Price for such Non-Hybrid Product
will be increased or decreased, as the case may be by an amount equal * times
the change in the Base Cost. Any such change may be made at any time during the
term of this Agreement but not more frequently than once every two months. For
purposes hereof, the "Base Cost" shall mean the price of the precious metal on
the date of this Agreement as reported in the Wall Street Journal; and changes
in the Base Cost for any precious metal shall be determined by changes in the
prices for the metal as reported in the Wall Street Journal.
(b) If after any increase in a price for a Non-Hybrid Product due to
a Non-Hybrid Cost Increase, there occurs a decrease of * or more over WGL's
standard product costs (as adjusted by any such prior Non-Hybrid Cost Increase)
for such Non-Hybnd Product for one or more of the Relevant Cost Factors listed
in Section 1.8 above ("Non-Hybrid Cost Decrease"), then WGL shall reduce the
adjusted price for such Non-Hybrid Product in the same manner and proportion as
provided for in Section 3.4(a) for Non-Hybrid Cost Increases; provided, however,
that in no event shall the price for any such Non-Hybrid Product be reduced
below the Base Price for such Non-Hybrid Product.
(c) If WGL is entitled and determines to impose a price increase
under this Section 3.4, WGL shall give not less than three months' written
notice thereof. For Non-Hybrid Products other than those fabricated from
precious metals, WGL may not impose a price increase more frequently than once
every six (6) months. The prices for Non-Hybrid Products fabricated from
precious metals may be increased more frequently as provided for in Section
3.4(a). WGL shall deliver to the Company together with the notice provided for
herein a written report which describes in reasonable detail the basis for WGL's
determination that a price increase is permitted under this Section 3.4. WGL
shall at the Company's written request make available appropriate records
substantiating the basis for its determination that a Non-Hybrid Cost Increase
has occurred, or any Non-Hybrid Cost Decrease, for audit at the Company's
expense by an independent certified public accounting representative to verify
the accuracy of the reports provided to the Company. Such representative shall
execute a suitable confidentiality agreement reasonably satisfactory to WGL
prior to conducting such audit. Such representative may disclose to the Company
only its conclusions regarding the accuracy and completeness of such reports,
and shall not disclose Confidential Information of WGL to the Company without
the prior written consent
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of WGL. Any such request for an audit must be made by the Company within six (6)
months of any announced price increase hereunder.
(d) Prior to imposing any increase in the price of Non-Hybrid
Products due to a Non-Hybrid Cost Increase for Raw Material Costs, WGL shall
allow the Company's purchasing department a period one (1) month after the price
increase notice referred to in Section 2.8(d) to find alternative, qualified
sources for any raw materials at a lower cost than those determined by WGL, and
WGL shall be obligated to buy from any such lower cost sources before imposing
any increase in the price of a Non-Hybrid Product.
3.5 Additional Non-Hybrid Products. The Company agrees that it will
notify WGL of all Non-Hybrid Products for new and existing models of its
implantable medical devices, or modifications of existing models, which are not
Micro-Electronic Components. In connection therewith, at WGL's request, the
Company will provide WGL with Qualification and Design Data for each such new
and existing Non-Hybrid Product and cooperate with WGL in connection with WGL's
efforts to qualify for the supply of such Non-Hybnd Product to the Company,
including participation in Progress Meetings. The Company and WGL agree that
Attachment A will be amended in writing, from time to time as specified in
Section 3.3 above, to reflect all such additions.
3.6 License. The Company hereby grants WGL a license or sublicense
(as applicable) to use any and all Qualification and Design Data, and all
patents, copyrights and know-how which the Company owns, or which it has the
right to use and sublicense, which cover Non-Hybrid Products, solely in
connection with WGL's manufacture and supply of Non-Hybrid Products to the
Company. This license shall permit WGL to subcontract out the manufacture the
production of Non-Hybrid Products.
3.7 Estimated Annual Usage.
(a) "Estimated Annual Usage" as used herein shall mean the
quantities of Non-Hybrid Products which the Company estimates as its needs for
Non-Hybrid Products from WGL for the ensuing twelve (12) month period and will
be subject to the minimum purchase quantities specifed in Section 3.2 above.
Initial Estimated Annual Usages for each of the initial Non-Hybrid Products
shall be specified in Attachment A. As additions are made to the Non-Hybrid
Products specified in Attachment A as provided in Section 3.3 above, the Company
shall provide written notice as to the initial Estimated Annual Usage for each
Non-Hybrid Product so added at the time of addition to the Non-Hybrid Products
specified in Attachment A.
(b) As soon as practicable after WGL qualifies a Non-Hybrid Product
as
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contemplated by this Article 3, the Company will provide WGL with its Estimated
Annual Usage for that Non-Hybrid Product, and will provide WGL with a twelve
(12) months forecast stating anticipated needs. This forecast will provide WGL
with a total of twelve (12) months projected requirements for planning purposes.
Such forecast will be updated each succeeding calendar quarter.
(c) WGL shall not be required to manufacture more than * of the
Company's twelve (12) month Estimated Annual Usage of a Non-Hybrid Product in
any one three (3) month period, except upon not less than a three (3) month
prior written notice. The sole exception to this provision shall be if WGL has
fallen behind on past deliveries due to its own fault, in which case WGL shall
be required to manufacture and deliver each month up to * more than the average
monthly quantities which were scheduled for the preceding three-month period
until WGL is back on schedule with its deliveries.
3.8 Supplier Inventory. "Supplier Inventory" shall mean those
quantities of Non-Hybrid Products which WGL is required by this Agreement to
maintain. The levels of Supplier Inventory for each of the Non-Hybrid Products
shall not exceed twenty-five percent (25%), and the specific level for each
Non-Hybrid Product shall be as specified in Attachment A. WGL must be capable of
shipping its entire Supplier Inventory of any and/or all Non-Hybrid Products to
the Company as finished goods within a period of not less than seven (7) nor
more than twenty-one (21) days. The specific period which is applicable for each
Non-Hybrid Product shall be as specified in Attachment A.
3.9 Maintenance of Supplier Inventory by WGL.
(a) Build-Up of Supplier Inventory. It is recognized by the parties
that at the outset of this Agreement, or at the time new Non-Hybrid Products are
added to this Agreement, WGL may not have sufficient Supplier Inventory to meet
the requirements of this Agreement. WGL agrees that within a period of not more
than three (3) months from the date of qualification of each Non-Hybrid Product
it shall possess sufficient Supplier Inventory to meet the requirements of this
Agreement as to all Non-Hybrid Products included in this Agreement at the date
of execution of the Agreement. WGL further agrees that within a period of not
more than three (3) months from the date of qualification of any new Non-Hybrid
Product(s) under this Agreement, WGL shall possess sufficient Supplier Inventory
to meet the requirements of this Agreement as to those Non-Hybrid Products added
to this Agreement. When Company provides WGL with an update in Company's
Estimated Annual Usage for one or more of the Products specified in Attachment A
as provided in Section 3.7 above, and when Estimated Annual Usage for any
Non-Hybrid Product has increased from a previous Estimated Annual Usage, WGL
agrees to use its best efforts to increase the level of Supplier Inventory for
the affected Non-Hybrid Product(s) within a
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period of forty (40) days from the date that Company notifies WGL of the
increase in Company's Estimated Annual Usage for the affected Non-Hybrid
Product(s).
(b) Agreement by WGL to Maintain Supplier Inventory. During the Term
of this Agreement, and subject to the limitations of Sections 3.9(a) above and
3.9(c) below. WGL agrees to maintain sufficient Supplier Inventories of the
Non-Hybrid Products to meet the requirements of this Agreement.
(c) Replenishment of Supplier Inventory. In the event that the
Supplier Inventories of any or all of the Non-Hybrid Products are totally
depleted, WGL agrees to use its best efforts to replenish the Supplier
Inventories within a period of forty (40) days.
(d) Reductions in Supplier Inventories. When the Company provides
WGL with an update in Company's Estimated Annual Usage for one or more of the
Non-Hybrid Products specified in Attachment A, as provided in Section 3.7 above,
and when the Estimated Annual Usage for any Non-Hybrid Product(s) has dropped
from a previous Estimated Annual Usage, WGL agrees to reduce the level of
Supplier Inventory for the affected Product(s) by not rebuilding inventory as it
is provided to the Company until the level of Supplier Inventory for the
affected Non-Hybrid Product(s) drops to the most recent Estimated Annual Usage
level. Within one month after the end of each Contract Year, WGL shall review
the level of Supplier Inventory of each Non-Hybrid Product then maintained by
WGL. If based on the Company's actual usage of any Non-Hybrid Product in such
prior Contract Year, WGL is holding Supplier Inventory of any Non-Hybrid Product
in excess of the level required for such Non-Hybrid Product, the Company, at
WGL's request, shall take delivery and purchase any such excess Supplier
Inventory of that Non-Hybrid Product within two months after the end of such
Contract Year.
(e) Location of Non-Hybrid Product Inventories. WGL agrees to
maintain the Supplier Inventories of the Non-Hybrid Products in the Clarence, NY
area from which the Supplier Inventories of the Non-Hybrid Products can be
shipped within the seven (7) to twenty-one (21) working day period as specified
in Section 3.8 above.
(f) Delivery of the Non-Hybrid Products. WGL agrees to properly
manage its supplies of raw materials, work-in-progress, and finished goods in
order to ensure that it will be capable of shipping the entire Supplier
Inventory as finished goods within the seven (7) to twenty-one (21) working day
period as specified in Section 3.7 above, except and only to the extent that WGL
is delayed in shipping a portion of the Non-Hybrid Products in the Supplier
Inventories due to WGL being in the process of building or timely renewing the
Supplier Inventories of the Products pursuant to Sections 3.9(a) and 3.9(c)
above.
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3.10 Purchase of Non-Hybrid Products by the Company.
(a) Orders: Non-Hybrid Products shall be ordered by the Company from
WGL with purchase orders issued from time to time by the Company. Acceptance by
WGL of such purchase orders submitted by the Company shall create a contract for
sale and purchase on the terms and conditions contained in this Agreement.
(b) Purchase of Supplier Inventories. Upon expiration of this
Agreement or in the event that this Agreement shall be terminated by the Company
or WGL for any reason whatsoever, the Company agrees to purchase the Supplier
Inventories of the Non-Hybrid Products from WGL to the extent that WGL is in
compliance with the terms of this Agreement governing the levels of the Supplier
Inventories. The Company will not be required to purchase excess inventories
from WGL to the extent that such inventories exceed the most recent level of
Estimated Annual Usage provided by the Company, except and only to the extent
that the excess inventory was due to reduction(s) in the Estimated Annual Usage
levels provided by the Company without sufficient intervening purchases by the
Company to allow the levels of the Supplier Inventories to drop to the most
recent Estimated Annual Usage levels.
(c) Option to Purchase Supplier Inventories As Is. At the Company's
option, WGL will supply the Supplier Inventories of Non-Hybrid Products to the
Company either as finished goods within one (1) month after termination of the
Agreement, or as the combination of raw materials, work-in-progress, and/or
finished goods remaining upon termination of the Agreement within one (1) month
after of termination of the Agreement. The parties shall negotiate prices to be
paid by the Company to WGL for Non-Hybrid Products which are work-in-progress or
in raw material form.
(d) Failure to Deliver:
(i) If WGL is unable for any reason, and other than as
provided for in Paragraph (iii) of this Section 3.10(d), to deliver sufficient
quantities of any Non-Hybrid Product meeting the Company's specifications and
quality standards to the Company to meet its requirements therefore which are
set forth in the firm purchase order forecasts delivered pursuant to this
Agreement, and WGL is not able to remedy this situation for a period of three
(3) months, the Company shall have the right to place purchase orders with other
qualified vendors for sufficient quantity of such Non-Hybrid Product to satisfy
its requirements for a period not to exceed six (6) months, except that with
respect to the following categories of Non-Hybrid Products the time period may
be up to twelve (12) months: (A) feed-throughs, (B) Ti Nitrate machined parts,
(C) L-connector assemblies and (D) case halves having an annual requirement of *
units or less. After the applicable
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period, if WGL successfully re-establishes its ability to deliver such
Non-Hybrid Product, the Company will resume purchasing such Non-Hybrid Product
from WGL at the rate specified in Section 3.2 above, i.e., at a forty percent
(40%) rate if the supply disruption occurs during the first year after initial
qualification, or at an eighty percent (80%) rate if the supply disruption
occurs during the second or subsequent years after initial qualification of such
Non-Hybrid Product.
(ii) In the event of Force Majeure, WGL shall not be liable
for any delay in shipment or non-delivery of Non-Hybrid Products covered by this
Agreement arising from Force Majeure, and the Company shall be bound to accept
the delayed shipment or delivery made within a reasonable time. In the event of
Force Majeure, the Company shall be excused for the failure to take and pay for
Non-Hybrid Products ordered under this Agreement, until such Force Majeure
condition is removed. In the event such conditions cannot be corrected by the
party affected within six (6) months of the date of the occurrence of a Force
Majeure event, then the other party shall have the option to terminate this
Agreement upon one (1) month prior notice.
(iii) If the Company (A) rejects or refuses to accept any
Non-Hybrid Product from WGL on the basis of quality, failure to meet or maintain
then current product specifications or qualification standards, or some other
similar or comparable reason and (B) would otherwise purchase a Non-Hybrid
Product from one or more third parties in amounts which would result in the
Company not satisfying the applicable quota set forth in Section 3.2, then the
Company shall send WGL a written notice which sets forth (1) the product
involved and (2) the basis upon which it has determined that WGL is not
satisfactorily delivering the Company's requirements of the Non-Hybrid Product
at issue ("Non-Delivery Notice"). At WGL's written request, the Company agrees
to provide one or more senior managers of the Company to meet with
representatives of WGL to review the reasons set forth in the Company's
Non-Delivery Notice, and to discuss and, if practicable, establish an action
plan to correct any deficiency or failure by WGL in order that the Company shall
purchase or resume purchasing Non-Hybrid Products.
4. NON-HYBRID GENERAL TERMS
4.1 Delivery. WGL shall deliver Non-Hybrid Products to the Company's
facility at Valley View Court in Sylmar, California, and/or to such other
location(s) as the Company may designate. Unless the Company gives WGL written
instructions as to the method of shipment and carrier, WGL shall select the
methods of shipment and the carrier for the respective purchase order. WGL shall
prepay transportation and similar charges upon shipment. Title to all Non-Hybrid
Products conforming to the Company's purchase order
Page 17
<PAGE>
shall pass, free and clear of all encumbrances, at the FOB shipping point, which
shall be WGL's facility.. The Company assumes and agrees to bear all risk of
damage or loss to the goods after delivery by WGL to the carrier at the FOB
shipping point. The Company hereby releases WGL from any and all claims and
liability with respect to any such in-transit damages or losses to the goods.
The Company shall be responsible for securing insurance coverage to cover
shipments and deliveries hereunder.
4.2 Acceptance. The Company may reject any shipments or deliveries
of Non-Hybrid Products which are short, nonconforming, defective or deficient
and may request correction and/or replacement. Rejected shipments or deliveries
of Non-Hybrid Products shall at the request of WGL be set aside for WGL
inspection, or at the request of WGL shipped freight prepaid to WGL. All
Non-Hybrid Products returned to WGL shall be accompanied by a copy of their
original shipping documents and the name and phone number of the person at the
Company to be contacted regarding such return. Promptly upon receipt of notice
of such shortage, non-conformance, defect or deficiency, WGL shall immediately
notify the Company:
(a) as to how WGL will replace the defective or deficient
Non-Hybrid Products upon return to WGL, ship replacement
Non-Hybrid Products, or otherwise promptly correct such
shortage, non-conformance, or deficiency; and/or
(b) whether such shipment of Non-Hybrid Products shall be set
aside and held by the Company or returned to WGL and the
address to which such affected Non-Hybrid Products should be
returned, or whether such Products should otherwise disposed
of.
If the Company elects to cancel or rescind such purchase, WGL shall promptly
refund and reimburse the Company the price paid by the Company for such
purchase, including freight and shipping costs incurred by the Company in such
purchase, prior to the return of the same to WGL. If the Company elects to have
the Non-Hybrid Product replaced, WGL shall bear or shall reimburse the Company
for all costs and expenses incurred by the Company to repackage, ship and return
affected Non-Hybrid Products to WGL and shall issue a credit memo for the amount
of the purchase price of the returned Non-Hybrid Products.
4.3 Payment. WGL shall be paid directly by the Company the sum of
the applicable Base Prices for each Product plus all tooling, shipping and
delivery charges actually incurred by WGL for each shipment of the Products to
the Company. Invoices shall be on or after the date on which the Product(s)
specified on the invoice are shipped to the Company.
Page 18
<PAGE>
4.4 Drawings Used In Manufacture. Only Company drawings shall be
used by WGL to manufacture Non-Hybrid Products; WGL drawings shall only be used
for reference.
4.5 Good Manufacturing Procedures. Products shall be manufactured
and tested by WGL in accordance with all applicable U.S. laws and United States
Food and Drug Administration (FDA) regulations, including but not limited to the
FDA's current Good Manufacturing Practice regulations in effect at the time of
such manufacture or testing. WGL shall notify the Company of any FDA inspection
of its production facilities used to manufacture any Non-Hybrid Products and
shall furnish the Company with copies of any Form 483 report and Establishment
Inspection Reports to the extent that they apply to any product.
4.6 Violation of Law. The Company and WGL shall each strictly
observe and comply with all federal and local laws and regulations which may
govern the manufacture, sale, handling and disposal of any Non-Hybrid Products
herein specified. Violation of any such law or regulation may be viewed as a
breach of this Agreement, and may be cause for termination or suspension of
sales hereunder. Nothing herein shall be construed to allow either party the
right to cancel this Agreement for any inadvertent error or minor violation of
any law or regulation by the other party.
4.7 Inspection and Acceptance. WGL shall perform testing to ensure
that the Non-Hybrid Products meet all applicable specifications. The Company
inspection of incoming Non-Hybrid Products will rely upon WGL testing and may
consist of an examination of WGL's testing documentation as well as independent
testing by the Company.
4.8 Source Inspectors. The Company shall have the right, upon
reasonable notice, to send source inspectors to WGL's facilities for the purpose
of monitoring WGL's performance under this Agreement.
4.9 Warranty.
(a) WGL warrants that each of the Non-Hybrid Products delivered to
the Company will meet all applicable specifications and will be free from
defects in materials and workmanship at the time of sale. WGL's sole obligation
under this Warranty is the repair or replacement, at its election, of any
Non-Hybrid Product which is found, upon WGL's inspection not to meet such
warranty. Such product will be repaired or replaced without charge provided
that, (1) prior written approval is required before returning any product, and
(2) any product return sent to WGL without prior written approval will be
returned to the sender, freight collect.
Page 19
<PAGE>
(b) This Warranty does not apply to depletion, wear and/or any
failure occurring as a result of any of the following: normal use, abuse,
misuse, any alteration or modification made to any Non-Hybrid Product without
the express written consent of WGL, attempted disassembly, neglect, improper
installation, or any other use inconsistent with any applicable law, rule,
regulation or governmental directive, or any use inconsistent with the
specifications or warning or recommended operating practices specific to the
Non-Hybrid Product.
(c) THE WARRANTY SET FORTH IN THIS SECTION 4.9 IS IN LIEU OF ALL
OTHER WARRANTIES (EXCEPT OF TITLE), EXPRESSED, IMPLIED OR STATUTORY, INCLUDING
ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.
5. ASSEMBLY OPERATION
5.1 Phoenix Site. Subject to the terms and conditions of this
Agreement, WGL presently intends to establish an assembly facility in the
Phoenix, Arizona area to provide pre-assembly of Non-Hybrid Products to be
supplied by WGL to the Company, and any components to be supplied by other
vendors, up to the point of integration with the Company's hybrid circuitry. WGL
shall not finalize its plans for an assembly facility in the Phoenix area until
WGL and the Company shall have agreed in writing upon the level of assembly work
and annual volume requirements, which agreement is a precondition to WGL's
establishment of such a facility. If the parties do so agree that WGL shall do
assembly for the Company, WGL will establish a Phoenix assembly facility and, in
such event, the parties will renegotiate the Supplier Inventory requirements set
forth in Article 3.
5.2 Pricing. The parties agree to negotiate in good faith the amount
which WGL will charge for such assembly.
5.3 Timing. The parties anticipate that WGL would establish its
Phoenix facility when it has qualified and has begun to produce a substantial
amount of the non-hybrid components for the Company implantable medial devices,
but, in any event, no later than December 31, 1999.
5.4 Limitation. This Section 5 is written merely as a statement of
the intentions of the parties, and the parties do not intend to be legally bound
by it. The full terms and conditions of this subassembly manufacturing
arrangement shall be contained in a separate agreement which will be negotiated
between the parties. Upon execution of that
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<PAGE>
agreement, the parties will become legally bound under the terms and conditions
of that agreement.
6. LIMITATION OF LIABILITY; COMPLIANCE WITH LAW.
6.1 LIMITATION OF LIABILITY. THE REMEDIES OF THE COMPANY IN THE
WARRANTY SET FORTH IN SECTION 2.9 WITH RESPECT TO BATTERIES AND IN THE WARRANTY
SET FORTH IN SECTION 4.9 WITH RESPECT TO NON-HYBRID PRODUCTS ARE EXCLUSIVE, AND
THE TOTAL LIABILITY OF WGL WITH RESPECT TO ANY BATTERY OR ANY NON-HYBRID PRODUCT
SOLD TO THE COMPANY, IN CONNECTION WITH THE PERFORMANCE THEREOF, OR FROM THE
SALE, DELIVERY, INSTALLATION OR REPAIR COVERED BY OR FURNISHED UNDER ANY SALE TO
THE COMPANY WHETHER BASED ON CONTRACT, WARRANTY, NEGLIGENCE, INDEMNITY, STRICT
LIABILITY, OR OTHERWISE SHALL NOT EXCEED THE PURCHASE PRICE OF THE PRODUCT UPON
WHICH SUCH LIABILITY IS PLACED. WGL SHALL IN NO EVENT BE LIABLE TO THE COMPANY,
OR TO ANY SUCCESSOR IN INTEREST OR ANY BENEFICIARY OR ASSIGNEE THEREOF, RELATING
TO THE SALE OF ANY BATTERY OR ANY NON-HYBRID PRODUCT FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES ARISING OUT OF SUCH SALE OR
ANY DEFECTS IN, OR FAILURE OF, OR MALFUNCTION OF THE PRODUCT UNDER SUCH SALE,
INCLUDING BUT NOT LIMITED TO, DAMAGES BASED UPON LOSS OF USE, LOST PROFITS OR
REVENUE, INTEREST, LOST GOODWILL, INCREASED EXPENSES AND/OR CLAIMS OF CUSTOMERS
OF THE COMPANY, WHETHER OR NOT SUCH LOSS OR DAMAGE IS BASED ON CONTRACT,
WARRANTY, NEGLIGENCE, INDEMNITY, STRICT LIABILITY OR OTHERWISE.
6.2 FDA Compliance. During the term of this Agreement the Company
shall have responsibility for obtaining at its expense, in its name and at its
discretion any necessary device regulatory approvals from the U.S. Food and Drug
Administration (i.e. PMA's or 501 (k)'s as the case may be), and applicable
regulatory agencies of such other countries in which product incorporating the
Batteries or Non-Hybrid Products will be sold. WGL shall supply the Company with
all documents, instruments, information, reports and advice and general
assistance as is necessary to complete, and as is reasonably requested by the
Company in connection with such regulatory approval efforts.
6.3 WGL Compliance. WGL shall be responsible for compliance with
present and future applicable statutes, laws, ordinances and regulations of
United States and
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<PAGE>
foreign national, federal state and local governments relating to the
manufacture and, except as otherwise provided in Section 6.2 above, the sale of
Batteries and Non-Hybrid Products to the Company under this Agreement. Upon not
less than three (3) business days' notice, WGL will provide such Company
personnel as the Company reasonably deems appropriate with reasonable access
from time to time to WGL's facilities and records for the purpose of confirming
WGL's compliance with requirement as noted in this Section, and for the further
purpose of confirming, if reasonably deemed necessary by the Company, WGL's
compliance with applicable specifications for Batteries and Non-Hybrid Products.
7. TERM AND TERMINATION
7.1 Tenn. This Agreement shall become binding and enforceable on the
date upon which it is fully executed by the parties hereto (Effective Date"),
and this Agreement shall continue in force for a term through December 31, 2001.
7.2 Termination. Notwithstanding the provisions of Section 7.1
above, this Agreement may be terminated in accordance with the following
provisions:
(a) A party may terminate this Agreement by giving notice in
writing to the other party in the event the other party is in
breach of any material representation, warranty or covenant of
this Agreement and shall have failed to cure such breach
within three (3) months after receipt of written notice
thereof from the first party;
(b) A party may terminate this Agreement at any time by giving
notice in writing to the other party, which notice shall be
effective upon dispatch, should the other party file a
petition of any type as to its bankruptcy, be declared
bankrupt, become insolvent, make an assignment for the benefit
of creditors, go into liquidation or receivership; or
(c) A party may terminate this Agreement by giving notice in
writing to the other party should an event of Force Majeure
continue for more than six (6) months.
7.3 Rights and Obligations on Termination. Termination of this
Agreement shall not release either party from the obligation to make payment of
all amounts previously due and payable, or which become due and payable due to
termination of this Agreement.
Page 22
<PAGE>
8. COMPANY AFFILIATES; NO OTHER BENEFICIARIES
8.1 Company Affiliates. The Company hereby represents and warrants
to WGL that it has the power, authority and approval to bind its Affiliates to
the provisions of Articles 2 and 3 of this Agreement with respect to the
purchase of their requirements for Batteries and Non-Hybrid Products. The
Company hereby acknowledges that WGL has agreed to the pricing for the Batteries
and Non-Hybrid Products in reliance upon the foregoing representatives and
warranties of the Company.
8.2 No Other Beneficiaries. Except as provided for in Section 6.1,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties to this Agreement or their respective successors
or assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9. CONFIDENTIALITY
9.1 Treatment of Propriety Information. Each of WGL and the Company
(each a "receiving party") agrees to maintain all proprietary information
disclosed by the other party to this Agreement (each a "disclosing party") in
strict secrecy and confidence, and not to disclose such proprietary information
to any third party, nor make any use of such information and technology for its
own benefit or gain other than in carrying out its efforts under this Agreement.
The receiving party agrees to have its employees sign agreements, or to have an
appropriate corporate policy in effect, which requires them to keep confidential
any proprietary information they learn in their positions at the receiving
party; these agreements and/or policies shall require them to maintain
confidentiality of proprietary information disclosed by the disclosing party.
The receiving party further agrees that no proprietary information or materials
will be supplied to any other corporation, partnership, laboratory, or
individuals other than those approved in writing by the disclosing party, with
the exception of disclosure to the FDA and similar regulatory agencies of
information relative to obtaining regulatory approval.
9.2 Limited Release. The receiving party shall be released from the
obligations of Section 9.1 to the extent that any of the disclosed information:
(a) was already part of the public domain at the time of the disclosure by the
disclosing party; (b) becomes part of the public domain through no fault of the
receiving party (but only after and only to the extent that it is published or
otherwise becomes part of the public domain); (c) was in the receiving party's
possession prior to the disclosure by the disclosing party and was not acquired,
directly, or indirectly, from the disclosing part or from a third party who was
under a continuing obligation of confidence to the disclosing party; (d) is
received (after the disclosure by the disclosing party) by the receiving party
from a third party who did not require the receiving party to hold it in
confidence and did not acquire it directly or indirectly, from the disclosing
party under a continuing obligation of
Page 23
<PAGE>
confidence; or (e) is disclosed by the receiving party pursuant to judicial
compulsion, provided that the disclosing party is notified at the time such
judicial action is initiated. In addition, notwithstanding Section 9.1, WGL may
provide proprietary information of the Company to its subcontractors and vendors
without Company's prior approval provided that WGL first requires any such
subcontractor or vendor to sign a confidentiality agreement which requires them
to keep confidential such Company information and not to use it except for the
purpose of performing their obligations to WGL.
9.3 Term of Obligation. The obligation of the receiving party to
receive and hold information disclosed by the disclosing party in confidence, as
required by this Section 8, shall terminate eight (8) years from the date of
disclosure of the information hereunder and shall survive any earlier
termination of this Agreement.
9.4 Disposal Upon Termination. In the event this Agreement is
terminated, any samples, sketches, or other proprietary material provided by the
disclosing party to the receiving party shall be destroyed or returned to the
disclosing party, unless and to the extent such materials are necessary to the
receiving party to provide continuing support.
10. MISCELLANEOUS
10.1 Relationship. This Agreement does not make either party the
employee, agent, legal representative or partner of the other for any purpose
whatsoever. Neither party is granted any right or authority to assume or to
create any obligation or responsibility, express or implied. on behalf of or in
the name of the other party. In fulfilling its obligations pursuant to this
Agreement, each party shall be acting as an independent contractor.
10.2 Assignment. This Agreement shall inure to the benefit of and be
binding upon each of the parties hereto and their respective permitted
successors and assigns. It may not be voluntarily assigned in whole or in part
by either party without the prior written consent of the other; provided,
however, that a successor in interest by merger, by operation of law, purchase
or otherwise of the entire business of either party shall acquire all interest
of such party hereunder, and further provided that a party may assign this
Agreement to an Affiliate of such party (the patty to this Agreement who makes
any such assignment to an Affiliate shall, notwithstanding such assignment,
remain fully responsible for assuring, and for any failure to assure, prompt
performance by such Affiliate of all of such assigning party's obligations under
this Agreement). Any prohibited assignment shall be null and void.
10.3 Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all previous proposals or agreements, oral or written, and all
negotiations, conversations or discussions heretofore had
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<PAGE>
between the parties related to the subject matter of this Agreement. The pates
expressly agree that none of the terms and conditions of any standard preprinted
forms used by either WGL or the Company in effectuating the purchase and sale
transactions contemplated by this Agreement (including, but not limited to,
purchase orders, acknowledgements and acceptance forms, invoices, labels and
shipping documents) which are inconsistent with, or in addition to, those
contained in this Agreement shall have any force or effect.
10.4 Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of New York.
10.5 Waiver, Discharge, etc. This Agreement may not be released,
discharged, abandoned, changed or modified in any manner, except by an
instrument in writing signed on behalf of each of the parties to this Agreement
by their duly authorized representatives. The failure of either party to enforce
at any time any of the provisions of this Agreement shall in no way be construed
to be a waiver of any such provision, nor in any way to affect the validity of
this Agreement or any part of it or the right of either party after any such
failure to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
10.6 Titles and Headings; Construction. The titles and headings to
Sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. This Agreement shall be construed without regard to any presumption
or other rule requiring construction hereof against the party causing this
Agreement to be drafted. When reference is made in this Agreement to a "month"
or to "months" (e.g., "three (3) months notice"), it shall mean a period
commencing on a specific day of a month (e.g., the 15th) and continuing to the
corresponding day of a later month (e.g., three (3) months from April 15 would
mean a period ending on the next succeeding July 15).
10.7 Notices. All notices or other communications to a party
required or permitted hereunder shall be in writing and shall be delivered
personally, by courier or by telecopy (receipt confirmed) to such party (or, in
the case of an entity, to an executive officer of such party) or shall be given
by certified mail, postage prepaid with return receipt requested, addressed as
follows:
if to WGL, to:
Wilson Greatbatch Ltd.
10,000 Wehrle Drive
Clarence, New York 14031
Attention: Edward F. Voboril, President and
Chief Executive Officer
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<PAGE>
and if to the Company, to:
Pacesetter, Inc.
15900 Valley View Court
Sylmar, CA 91342
Attention: General Counsel
WGL or the Company may change their respective above-specified recipient and/or
mailing address by notice to the other party given in the manner herein
prescribed. All notices shall be deemed given on the day when actually delivered
as provided above (if delivered personally or by telecopy) or on the day shown
on the return receipt (if delivered by mail).
9.8 Severability. If any provision of this Agreement is held invalid
by a court of competent jurisdiction, the remaining provisions shall nonetheless
be enforceable according to their terms.
9.9 Execution of Further Documents. Each party agrees to execute and
deliver without further consideration any further applications, licenses,
assignments or other documents, and to perform such other lawful acts as the
other party may reasonably require to fully secure and/or evidence the rights or
interests herein.
WILSON GREATBATCH LTD. PACESETTER, INC., A ST. JUDE
MEDICAL COMPANY
By: /s/ Edward F. Voboril By: /s/ Patrick Forteau
----------------------- -----------------------
Title: President/CEO Title: President
-------------------- --------------------
Date: April 22, 1997 Date: April 21, 1997
--------------------- ---------------------
Page 26
<PAGE>
ATTACHMENT A
NON-HYBRID PRODUCTS LIST
<TABLE>
<CAPTION>
====================================================================================================================================
MINIMUM DAYS TO
WGL TARGETED *ESTIMATED ANNUAL INVENTORY SHIP
QUALIFICATION 1997 ANNUAL UNIT USAGE FROM WGL PERCENT SUPPLIER
P/N REV DESCRIPTION DATE REQUIREMENT PRICE 40% 80% HELD BY WGL INVENTORY
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5041534-099 H SET SCREW ALL Qualified Now * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
5015435-001 B THUMBSCREW MOST LEADS 6/1/97 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6041701-001 B WASHER/1388 LEADS (2 PER) 6/1/97 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6041702-001 C HELIX SHAFT 1188/1388 6/1/97 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6041700-002 U TIN ELECTRODE RING/1388 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
6041700-098 U ELECTRODE RING/1188 6/1/97 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
6041641-003 J ELECTRODE RING TIN/1242 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
6041641-004 J ELECTRODE RING TIN/1238, 1246 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
6041743-001 G DISTAL ELECTRODE TIP/ALL 6/1/98 * * * * * 21
- ------------------------------------------------------------------------------------------------------------------------------------
64-16-759 0 TIN TIP 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
62-02-506 1 TIN TIP 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
61-12-523 2 TIN RING 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
7001630-001 H "L" CONNECTOR ASSEMBLY/ALL 1/1/98 * * * * * 21
- ------------------------------------------------------------------------------------------------------------------------------------
7001441-012 H "L" CONNECTOR/MICRONY 1/1/98 * * * * * 21
- ------------------------------------------------------------------------------------------------------------------------------------
1040175-001 K COIL/TRILOGY 1/1/99 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
63-87-075 0 COIL/MICRONY/REGENCY 1/1/99 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6010987-001 C TRILOGY CASE HALF 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
6010987-002 C TRILOGY CASE HALF 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
6011117-098 J AFFINITY CASE HALF 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
6011117-099 J AFFINITY CASE HALF 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
62-31-463 1 REGENCY CASE HALF 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
62-31-471 0 REGENCY CASE HALF 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
ATTACHMENT A
NON-HYBRID PRODUCTS LIST
<TABLE>
<CAPTION>
====================================================================================================================================
MINIMUM DAYS TO
WGL TARGETED *ESTIMATED ANNUAL INVENTORY SHIP
QUALIFICATION 1997 ANNUAL UNIT USAGE FROM WGL PERCENT SUPPLIER
P/N REV DESCRIPTION DATE REQUIREMENT PRICE 40% 80% HELD BY WGL INVENTORY
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
62-01-854 2 MICRONY CSE HALF 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
62-01-847 2 MICRONY CASE HALF 1/1/98 * * * * * 14
- ------------------------------------------------------------------------------------------------------------------------------------
1080376-001 E QUAD FEEDTHRU/TRILOGY 1/1/99 * * * * * 21
- ------------------------------------------------------------------------------------------------------------------------------------
63-27-659 0 FEEDTHRU 1/1/99 * * * * * 21
- ------------------------------------------------------------------------------------------------------------------------------------
63-27-634 1 FEEDTHRU 1/1/99 * * * * * 21
- ------------------------------------------------------------------------------------------------------------------------------------
6041696-002 D SPACER 6/1/97 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6041504-099 J SET SCREW Qualified Now * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6041697-001 D RING 6/1/97 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6041703-001 B STOPPER 6/1/97 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6041783-097 G COATED ELUT. TIP 6/1/98 * * * * * 1
- ------------------------------------------------------------------------------------------------------------------------------------
6041555-001 G CONNECTOR PIN 6/1/97 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
6041266-002 U PROXIMAL RING 6/1/97 * * * * * 7
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Quantity Indicates applicable estimated usage.
Page 2
<PAGE>
ATTACHMENT B
WGL CUSTOM POWER SOURCE DEVELOPMENT PRICING
For power sources other than standard WGL production cells the following
development charges will apply:
A. Lithium Iodine Power Sources (Pacemaker Applications)
a. Shapes that are 5 mm or greater in thickness
1. * upon submission of the purchase order.
2. * three (3) months after submission of purchase order.
3. * upon shipment of prototype units.
4. * upon shipment of implantable grade cells.
5. Development charges are not refundable.
6. Cell will remain proprietary for two (2) years after shipment
of first implantable grade unit.
7. Price per cell will be in accordance with Section 22(a) of
this Agreement.
8. In the event Company requests the cell to continue exclusivity
in perpetuity the following course of action will apply:
o Upon shipment of the *th unit in the same model
configuration, a letter stating intent of exclusivity in
perpetuity will be sent to WGL and an additional payment
of * will be required.
9. Any term or condition not covered above will be negotiated at
the time of order.
b. Shapes that are less than 5 mm thick.
1. * upon submission of the purchase order.
2. * three (3) months after submission of purchase order.
3. * upon shipment of prototype units.
4. * upon shipment of implantable grade cells.
5. Development charges are not refundable.
6. Cell will remain proprietary for two (2) years after shipment
of first implantable grade unit.
7. Price per cell will be in accordance with Section 2.2(b) of
this Agreement.
8. In the event the Company requests the Cell to continue
exclusivity in perpetuity the following course of action will
apply:
o Upon shipment of the *th unit in the same model
configuration, a letter stating intent of exclusivity in
perpetuity will be sent to WGL and an additional payment
of * will be required.
<PAGE>
9. Any term or condition not covered above will be negotiated at
the time of order.
B. Solid Cathode Multiplate Power Sources (High Rate Defibrillator Applications)
a. All shapes using standard technology including change of existing
shapes. Standard is defined as a rectangular shape with eight
cathode plates or less and manufactured with current assembly
techniques. WGL reserves the right to classify a cell as
non-standard at the time of purchase order placement.
1. * upon submission of the purchase order.
2. * three (3) months after submission of purchase order.
3. * upon shipment of prototype units.
4. * upon shipment of implantable grade cells.
5. Development charges are not refundable.
6. Cell will remain proprietary for three (3) years after
shipment of first implantable grade unit.
7. Price per cell will be in accordance with standard pricing in
effect at time of delivery.
8. In the event the Company requests the cell to continue
exclusivity in perpetuity the following course of action will
apply:
o Upon shipment of the *th unit in the same model
configuration, a letter stating intent of exclusivity in
perpetuity will be sent to WGL and an additional payment
of * will be required.
9. Any term or condition not covered above will be negotiated at
the time of order.
b. WGL expressly reserves the right to classify as non-standard, any
technology incorporated in an SVO battery, beginning with WGL Model
96__. Prices for batteries incorporating said non-standard
technology will be quoted on an individual basis.
C. Power Sources for Other Applications - Development charges will be quoted on
an individual basis.
D. Additional terms for Development Charges
1. Should development work be terminated at any time during the
contract period, WGL reserves the right to continue development of
the cell and market this product as a standard shape. Development
charges paid up to and including the point of termination will not
be refunded.
2. Cells using any WGL electrochemical couple which require the
development of a new assembly or manufacturing technology will be
quoted on an individual basis.
<PAGE>
3. WGL reserves the right to quote the lead time on a case by case
basis. The actual project duration for a specific design will depend
upon the complexity of the design and the workload at the time the
order is placed.
PRICING FOR WGL POWER SOURCES OTHER THAN COVERED IN AGREEMENT
A. Pricing for alternate chemistry power sources will be set according to the
WGL Price List in effect at the time of purchase. The pricing will be
based on the volume of that specific alternate chemistry model. For
pacemakers, the chemistry alternatives to lithium iodine include lithium
thionyl chloride, lithium silver vanadium oxide, and lithium carbon
monofluoride. For defibrillators, the available chemistry is lithium
silver vanadium oxide.
<PAGE>
ATTACHMENT C
INITIAL NON-HYBRID PRODUCT PURCHASE ORDERS (VALUE = $ * )
================================================================================
QUANTITY DUE
PRIOR TO
P/N REV DESCRIPTION 12/31/98 VALUE ($)
================================================================================
6041534-099 H SETSCREW * *
- --------------------------------------------------------------------------------
5015435-001 B THUMBSCREW * *
- --------------------------------------------------------------------------------
6041701-001 B WASHER * *
- --------------------------------------------------------------------------------
6041702-001 C HELIX SHAFT * *
- --------------------------------------------------------------------------------
6041700-002 U TIN ELECTRODE RING * *
- --------------------------------------------------------------------------------
6041700-098 U ELECTRODE RING * *
- --------------------------------------------------------------------------------
6041641-003 J ELECTRODE RING TIN * *
- --------------------------------------------------------------------------------
6041641-004 J ELECTRODE RING TIN * *
- --------------------------------------------------------------------------------
6041743-001 G DISTAL ELECTRODE TIP * *
- --------------------------------------------------------------------------------
64-16-759 0 TIN TIP * *
- --------------------------------------------------------------------------------
62-02-506 1 TIN TIP * *
- --------------------------------------------------------------------------------
61-12-523 2 TIN RING * *
- --------------------------------------------------------------------------------
7001630-001 H "L" CONNECTOR ASSEMBLY * *
- --------------------------------------------------------------------------------
7001441-012 H "L" CONNECTOR MICRONY * *
- --------------------------------------------------------------------------------
6010987-001 C TRILOGY CASE HALF * *
- --------------------------------------------------------------------------------
6010987-002 C TRILOGY CASE HALF * *
- --------------------------------------------------------------------------------
6011117-098 J AFFINITY CASE HALF * *
- --------------------------------------------------------------------------------
6011117-099 J AFFINITY CASE HALF * *
- --------------------------------------------------------------------------------
62-31-463 1 REGENCY CASE HALF * *
- --------------------------------------------------------------------------------
62-31-471 0 REGENCY CASE HALF * *
- --------------------------------------------------------------------------------
62-01-854 2 MICRONY CASE HALF * *
- --------------------------------------------------------------------------------
62-02-847 2 MICRONY CASE HALF * *
- --------------------------------------------------------------------------------
6041696-002 D SPACER * *
- --------------------------------------------------------------------------------
6041504-099 J SET SCREW * *
- --------------------------------------------------------------------------------
6041697-001 D RING * *
- --------------------------------------------------------------------------------
Page 1
<PAGE>
ATTACHMENT C
INITIAL NON-HYBRID PRODUCT PURCHASE ORDERS (VALUE = $ * )
================================================================================
QUANTITY DUE
PRIOR TO
P/N REV DESCRIPTION 12/31/98 VALUE ($)
================================================================================
6041703-001 B STOPPER * *
- --------------------------------------------------------------------------------
6041783-097 G TIP COATED ELUT. * *
- --------------------------------------------------------------------------------
6041555-001 G CONNECTOR PIN * *
- --------------------------------------------------------------------------------
6041266-002 C PROXIMAL RING * *
- --------------------------------------------------------------------------------
6041809-099 B CONNECTOR BLOCK * *
- --------------------------------------------------------------------------------
TOTAL
Connector block (6041499-098) currently being sourced by our current connector
assembly sup [ILLEGIBLE] have the following quantity and dollar amount sourced
through Wilson Great Batch, Ltd
================================================================================
QUANTITY DUE
PRIOR TO
P/N REV DESCRIPTION 12/31/98 VALUE ($)
================================================================================
6041499-098 J CONNECTOR BLOCK * *
- --------------------------------------------------------------------------------
GRAND TOTAL *
Page 2
<PAGE>
Exhibit 10.23
The confidential portions of this exhibit, which have been removed and
replaced with an asterisk, have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406.
LICENSE AGREEMENT
This Agreement, effective the 5th day of August, 1996, is by and between
EVANS CAPACITOR COMPANY, a Delaware corporation having a place of business at 33
Eastern Avenue East Providence, RI (hereinafter referred to as "ECC"), and
Wilson Greatbatch Ltd., a New York corporation having its principal place of
business at 10,000 Wehrle Drive, Clarence, New York 14031 (hereinafter referred
to as "WGL").
WHEREAS, ECC represents that it is the owner of the patents and pending
patent applications set forth in the schedule marked Exhibit A, attached hereto
and hereby made a part hereof, and of the Evans Capacitor Technology as set
forth herein; and
WHEREAS, WGL wishes to acquire a license under the aforesaid patent and
patent applications of ECC, and to the aforesaid Evans Capacitor Technology, and
ECC is willing to grant WGL such a license under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. As used in this Agreement, the following terms shall have the following
meanings:
a. The term "Patent Rights" shall mean (1) the patent and patent
applications set forth in Exhibit A attached hereto
<PAGE>
- 2 -
and hereby made a part hereof, any corresponding foreign patent applications
hereafter filed, and any patents issuing on any of said applications, (2) any
and all reissues, renewals and extensions of any of said patents, and (3) any
and all divisions, continuations and continuations-in-part of, substitutions for
and additions to any of said patent applications and all patents issuing
thereon, as well as any and all reissues, renewals and extensions of any patents
issuing thereon.
b. The term "Licensed Product" shall mean any capacitor product for
medical applications covered by, or manufactured by a process covered by, one or
more claims of an unexpired patent which have not been held invalid or
unenforceable by a final decision which has not been appealed, or of an allowed
or accepted patent application, included in the Patent Rights.
c. "Net Sales" of any Licensed Product shall mean the gross invoice
price received therefor, less any allowance for returns and less (to the extent
separately stated on such invoice and actually deducted from the gross invoice
price) any prompt payment or trade discounts and allowances and any sales, use
or other excise taxes and shipping charges included in such invoice price. "Net
Sales" of any Licensed Product not sold as such, but sold as a component or
constituent of other products, shall mean
<PAGE>
- 3 -
the WGL standard list price for such Licensed Product to offset at that time.
d. "Affiliate" shall mean any and all corporations
(1) fifty percent (50%) or more of the voting stock of which
is owned or controlled directly or indirectly by WGL, or
(2) which own or control directly or indirectly more than
fifty percent (50%) of the voting stock of WGL, or
(3) More than fifty percent (50%) of whose voting stock is
owned or controlled directly or indirectly by a corporation owning or
controlling directly or indirectly more than fifty percent (50%) of the voting
stock of WGL, but any such corporation shall be deemed an "Affiliate" only so
long as such ownership is in effect.
e. "Effective Date" of this Agreement shall mean the date first
above appearing on page 1 of this Agreement.
f. "Term" of this Agreement shall be from the Effective Date to the
date of expiration of the last expiring patent in the Patent Rights, subject to
earlier termination as hereinafter provided.
<PAGE>
- 4 -
g. "Licensed Year" shall mean the year commencing with the Effective
Date and each anniversary year thereafter.
h. "Evans Capacitor Technology" shall have the same meaning as in
the August 8, 1994 Option Agreement between WGL and The Evans Findings Company,
predecessor in interest of ECC.
i. "Know-How" shall mean the Evans Capacitor Technology developed
prior to August 6, 199S and reasonably necessary to practice the inventions of
the Patent Rights.
2. a. ECC hereby grants to WGL and its Affiliates a license under the
Patent Rights; to make, have made, use and sell Licensed Products, throughout
the world, for the Term of this Agreement, together with a license to use the
Know-How in connection with the manufacture, use and sale of Licensed Products,
both during the Term of this Agreement and thereafter.
b. It is understood and agreed that the licenses granted to WGL and
its Affiliates under subparagraph (a) above of this paragraph 2 shall be
exclusive for implantable applications.
3. a. For the license rights granted to WGL and its affiliates under
paragraph 2 above, WGL shall, within thirty (30) days following the end of each
Licensed Year quarter, pay ECC as earned royalties, * of the Net
Sales of all
<PAGE>
- 5 -
Licensed Products sold by WGL and its Affiliates during the immediately
preceding quarter, during the Term of this Agreement.
b. No earned royalty shall be due under subparagraph a. above of
this paragraph 3 on Licensed Products that are tested or used for quality
control purposes or used as sales samples, by WGL or its Affiliates, or for the
use of the Know-How.
c. Beginning with calendar year 1998, WGL may credit the fifty
thousand dollar ($50,000) option payment made under paragraph 2 of the August 8,
1994 Option Agreement between WGL and The Evans Finding Company, predecessor in
interest of ECC, against earned royalties, as being an advance payment thereof.
d. In order to maintain this Agreement in effect, WGL agrees to pay
to ECC a minimum annual royalty, creditable against earned royalties, equal to
forty-five thousand dollars ($45,000). If earned royalties for any Licensed Year
have not at least equalled said minimum royalty, then, with the earned royalty
payment for the last quarter of that Licensed Year WGL shall include an amount
sufficient to bring the total royalty paid for that Licensed Year to said
minimum annual royalty amount. Said minimum royalty shall be prorated for any
Licensed Year of less than twelve (12) months duration.
<PAGE>
- 6 -
e. Only one royalty shall be due for any one Licensed Product,
regardless of the number of patents or patent applications embodied in Patent
Rights which way be involved.
4. a. All royalties payable under paragraph 3 above shall be paid in
United States dollars. In computing the royalty due, any conversion of foreign
currency into United States dollars shall be made at the closing rate for buying
such foreign currency as quoted by Citicorp, in New York City for the last
business day of the period covered by the accounting being made.
b. WGL and its Affiliates shall keep true and complete books of
account of sales or Licensed Products, sufficient for calculation of the amount
of royalty due under paragraph 3 above and to determine the accuracy of such
calculation. With each royalty payment due under paragraph 3 above, WGL shall
furnish ECC a written report of the sales of Licensed Products by WGL and its
affiliates for the period being reported. ECC shall have the right to have such
books of account examined by an independent CPA during normal business hours,
but not more than once in any Licensed Year, as way be necessary to determine
the correctness of any of the reports rendered by WGL hereunder, provided,
however, that any examination with respect to such books of account for any
Licensed Year shall be made within three years after the end of such Licensed
Year and
<PAGE>
- 7 -
further provided that such CPA shall maintain confidential all information
obtained from such examination.
5. Exhibit A sets forth all patents and patent applications presently
owned by ECC and relating to the Evans Capacitor Technology. Any patent or
patent application hereafter acquired by ECC and claiming the Evans Capacitor
Technology or improvements therein as an inventive concept, shall automatically
be included in Patent Rights, to the extent ECC has the right to do so. ECC
agrees to inform WGL, in writing, of any such additional patents and patent
applications, and to inform WGL in writing when patents issue on any patent
applications within the Patent Rights.
6. WGL shall have the right to assign its rights under this License
Agreement to the successor to substantially the entire business of WGL to which
this Agreement relates. WGL may not otherwise sublicense or assign any of its
rights under this Agreement, without the prior written approval of ECC.
7. ECC agrees that if it grants a license under the Patent Rights or any
of them to another party for non-implantable medical applications on royalty
terms which are more favorable to said third party than the term set forth
herein, it shall promptly inform WGL thereof and WGL shall be entitled to elect
<PAGE>
- 8 -
the more favorable royalty terms for non-implantable medical applications in
lieu of the terms hereof.
8. ECC may terminate this Agreement upon ninety days (90) days prior
written notice in the event of any default by WGL under this Agreement,
provided, however that if WGL corrects such default during such ninety (90)
days, this Agreement shall continue in full force as if such notice had not been
given.
9. WGL may terminate this License Agreement as of the end of any Licensed
Year, upon sixty (60) days advance written notice, and upon payment of any
unpaid royalties due as of the effective date of termination, including the
minimum royalty due for the Licensed Year during which termination takes place.
10. WGL agrees to apply an appropriate patent notice to the Licensed
Products, or the packaging therefor, and to consider the reasonable suggestions
of ECC in connection therewith.
11. All costs of obtaining patents in the Patent Rights, and payment of
maintenance fees to keep the same in force, shall be borne by ECC.
12. As part of the consideration for the licenses granted under paragraph
2 above, WGL hereby grants ECC a royalty-free, worldwide, nonexclusive license
to use any improvements made by
<PAGE>
- 9 -
WGL personnel in the Evans Capacitor Technology, on or before August 8, 1995,
for any purpose other than medical applications. The license granted ECC in this
paragraph 12 shall be co-terminus with the license granted WGL under this
Agreement.
13. It is understood and agreed that ECC will own all rights to any
improvements made after August 8, 1995 by ECC personnel or by personnel of said
The Evans Findings Company in the Evans Capacitor Technology, and WGL will have
the right to negotiate a license with ECC for such improvements for medical
applications. WGL will own all rights to any improvements made after August 8,
1995 by WGL personnel in the Evans Capacitor Technology and ECC will have the
right to negotiate a license with WGL for such improvements for non-medical
applications.
14. If WGL informs ECC of an infringement of any of the Patent rights
by a third party, by reason of the manufacture, use or sale of a capacitor
for a medical application, ECC shall be responsible for stopping such
infringement. If ECC does not stop such infringement within six (6) months of
receiving written notice thereof from WGL, the earned royalty rate to be paid
by WGL under paragraph 3a. above shall drop to * at Net Sales, and WGL
shall have no further minimum royalty obligation under paragraph 3d. until
ECC does succeed in stopping such infringement, or until ECC initiates and
diligently pursues legal action against such infringer.
<PAGE>
- 10 -
15. ECC shall not be liable to WGL, or any other party for any injury,
loss or damage of any kind or nature arising out of or in connection with or
resulting from any Licensed Product made, used or sold by WGL or by an
affiliate.
16. This Agreement shall be construed in accordance with the laws of the
State of New York.
17. This Agreement represents the entire agreement between the parties
with respect to the subject matter hereof, and may be amended only by a written
instrument or instruments signed on behalf of the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
EVANS CAPACITOR COMPANY WILSON GREATBATCH LTD.
By: /s/ David A. Evans By: /s/ Curtis F. Holmes
-------------------------------- -------------------------------------
David A. Evans, President Curtis F. Holmes, Ph.D.
Vice President, Technology
<PAGE>
EXHIBIT A
Patents and Pending Patent Applications
U.S. Patent 5,098,485
U.S. Patent 5,369,547
U.S. Patent 5,469,325
USSN 08/514,145 filed 8/11/95, allowed
USSN 08/635,696 filed 4/22/96, pending
PCT Application US94/02882
PCT Application US95/09743
Australia 70280/94 filed 8/15/94
Canada 2,158,165 filed 9/12/95
Europe 94912797.1, 9/21/95
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF WILSON GREATBATCH TECHNOLOGIES, INC.
<TABLE>
<CAPTION>
CORPORATION INCORPORATED
----------- ------------
<S> <C>
Wilson Greatbatch Ltd. New York
Greatbatch-Hittman, Inc. Delaware
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Wilson Greatbatch
Technologies, Inc. on Form S-1 of our report dated January 21, 2000 (March 14,
2000 as to Note 18 and May 18, 2000 as to the effects of the reverse stock split
described in Note 1), appearing in the Prospectus, which is part of this
Registration Statement, and of our report dated January 21, 2000 (March 14, 2000
as to Note 18 and May 18, 2000 as to the effects of the reverse stock split
described in Note 1) relating to the financial statement schedule appearing
elsewhere in this Registration Statement.
We also consent to the reference to us under the headings "Selected
Consolidated Financial Data" and "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
Buffalo, New York
May 22, 2000
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated September 22, 1998, accompanying the
financial statements of Hittman Materials and Medical Components, Inc. contained
in the Registration Statement and Prospectus. We consent to the use of the
aforementioned reports in the Registration Statement and Prospectus, and to the
use of our name as it appears under the caption "Experts."
/s/ Grant Thornton LLP
Baltimore, Maryland
May 22, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
AND THE FISCAL QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-END> MAR-31-2000 DEC-31-1999
<CASH> 2,474 3,863
<SECURITIES> 0 0
<RECEIVABLES> 10,709 11,235
<ALLOWANCES> 249 219
<INVENTORY> 14,717 13,583
<CURRENT-ASSETS> 32,703 33,370
<PP&E> 44,517 42,599
<DEPRECIATION> 10,318 9,042
<TOTAL-ASSETS> 187,782 189,779
<CURRENT-LIABILITIES> 18,735 15,749
<BONDS> 122,393 126,988
0 0
0 0
<COMMON> 20 20
<OTHER-SE> 45,960 46,387
<TOTAL-LIABILITY-AND-EQUITY> 187,782 189,779
<SALES> 22,526 76,590
<TOTAL-REVENUES> 22,526 76,590
<CGS> 12,936 41,057
<TOTAL-COSTS> 17,430 57,631
<OTHER-EXPENSES> 5,673 21,273
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,985 13,420
<INCOME-PRETAX> (577) (2,314)
<INCOME-TAX> (184) (605)
<INCOME-CONTINUING> (393) (1,709)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 (563)
<NET-INCOME> (393) (2,272)
<EPS-BASIC> (0.02) (0.11)
<EPS-DILUTED> (0.02) (0.11)
</TABLE>
