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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 25, 1996
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VERNITRON CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-16182 11-1962029
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(State or other jurisdiction) (Commission) (IRS Employer
Identification Number)
645 MADISON AVENUE, NEW YORK, NEW YORK 10022
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(Address of principal executive offices, including zip code)
(212) 593-7900
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Registrant's telephone number, including area code
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 25, 1996, Vernitron Corporation, a Delaware Corporation
("Vernitron" or the "Company"), completed the previously announced acquisition
of Precision Aerotech, Inc., a Delaware corporation ("PAI"). The acquisition
was accomplished by means of the merger (the "Merger") of PA Acquisition
Corporation, a wholly-owned subsidiary of Vernitron ("Merger Sub"), with and
into PAI, pursuant to the Agreement and Plan of Merger, dated February 16, 1996
("the "Merger Agreement"), between Vernitron, Merger Sub and PAI immediately
following the purchase by Merger Sub of 95% of the outstanding shares of Common
Stock of PAI ("PAI Common Stock") from Foothill Capital Corporation and Teachers
Insurance and Annuity Association of America pursuant to a Shareholders
Agreement, dated February 16, 1996, between PAI, Vernitron and Merger Sub, as
contemplated by the Merger Agreement. As a result of the Merger, PAI became a
wholly-owned subsidiary of Vernitron. Pursuant to the Merger Agreement, at the
effective time of the Merger on April 25, 1996, each outstanding share of common
stock of PAI (other than shares held by Vernitron, Merger Sub, PAI or any of
their subsidiaries) was cancelled and converted into the right to receive $5.00
per share in cash, without interest (the "Merger Consideration"). Based on
789,208 shares of PAI Common Stock outstanding immediately prior to the purchase
by Merger Sub of PAI Common Stock from Foothill and TIAA and the consummation of
the Merger, the aggregate consideration paid therefor was $3,950,000.
PAI designs, manufactures and markets laser scanners, precision metal
optics, high performance air bearings and precision machined parts sold
predominantly in commercial markets. The acquisition by the Company of shares
of PAI Common Stock pursuant to the Merger is deemed to be the indirect
acquisition of the assets of PAI and its subsidiaries, including the plant
equipment and other physical property of PAI and its subsidiaries. It is
expected that, initially following the Merger, the business and operations of
PAI and its subsidiaries will be continued substantially as they are currently
being conducted.
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In order to obtain the funds necessary to finance the Merger, to refinance
PAI's and the Company's existing debt and pay the related fees and expenses of
the transaction, Vernitron entered into a Credit Agreement, dated April 25,
1996, between the Company, the various banks named therein and Banque Paribas,
as agent (the "Credit Agreement"), providing for borrowings under a $36,000,000
senior secured credit facility. Under the Credit Agreement, at the effective
time of the Merger, the Banks (i) made a term loan in the principal amount of
$14,000,000 maturing in four years (the "A Term Loans"), (ii) made a term loan
in the principal amount of $12,000,000 maturing in six years (the "B Term
Loans") and (iii) made available revolving credit loans in an aggregate
principal amount of up to the lesser of $10,000,000 or the borrowing base then
in effect, maturing in four years (the "Revolving Credit Loan Facility"), of
which $5,300,000 was borrowed at the closing. The borrowing base is an amount
equal to (i) 85% of the Company's eligible accounts receivable, plus (ii) 50% of
the Company's eligible inventory.
Vernitron will be required to make scheduled amortization payments in
connection with the Term Loans as follows: (i) with respect to A Term Loans,
$1,500,000 during the balance of 1996, $3,500,000 during 1997 and $4,000,000
during each of 1998 and 1999 and $1,000,000 at maturity on April 25, 2000, and
(ii) with respect to B Term Loans, $150,000 during the balance of 1996, $300,000
in each of 1997 and 1998, $500,000 in 1999, $3,875,000 in 2000, $5,450,000 in
2001 and $1,425,000 at maturity on April 25, 2002.
All amounts outstanding under the Credit Agreement will bear interest at
(i) the Base Rate or Quoted Rate for Eurodollar loans (as defined in the Credit
Agreement), plus an applicable margin based upon the type of loan. With respect
to A Term Loans and loans under the Revolving Credit Loan Facility which are
maintained as Base Rate Loans, the applicable margin is 1.75%. For B Term Loans
which are maintained as Base Rate loans, the applicable margin is 2.25%. In the
case of A Term Loans and loans under the Revolving Credit Loan Facility which
are maintained as Eurodollar loans, the applicable margin is 3.25% and in the
case of B Term Loans which are maintained as Eurodollar loans, the applicable
margin is 3.75%.
The Credit Agreement provides for certain customary affirmative and
negative covenants and events of default, including, but not limited to,
covenants regarding Vernitron's capital expenditures, debt, net worth, leverage,
working capital, interest coverage and fixed charge coverage, as well as
limitations on mergers, acquisitions, sales, other liens and investments. The
Credit Agreement prohibits the payment of dividends and redemptions of capital
stock. As security for the obligations of Vernitron under the Credit Agreement,
the banks have been granted a security interest in substantially all the assets
owned or hereafter acquired by the Company, PAI and each of its subsidiaries,
and PAI and each of its subsidiaries have guaranteed the obligations of the
Company under the Credit Agreement.
Under the Credit Agreement, the loans are subject to certain mandatory
prepayments from, among other things, excess cash flow (as defined) and the
proceeds of sales of assets. In addition, voluntary prepayments are permitted
in whole or in part, with prior notice but without premium or penalty for base
rate loans or upon the expiration date of each Eurodollar loan.
In connection with the Merger and financing, the Company granted to Banque
Paribas a warrant to acquire up to 666,312 shares of common stock, $.01 par
value per share ("Common Stock"), of the Company, at an exercise price of $.01
per share, and a warrant to an affiliate of Banque Paribas, Paribas Principal,
Inc., to acquire up to 776,388 shares of Common Stock, at an exercise price of
$1.25 per share (the "Warrants"). In connection therewith, the parties entered
into a Warrant Purchase Agreement containing customary terms and conditions.
The Company also authorized the granting to an affiliate of Donaldson Lufkin &
Jenrette Securities Corporation of a warrant to acquire up to 100,000 shares of
Common Stock at an exercise price of $1.25 per share.
The foregoing description of the Credit Agreement and related agreements,
and the Warrants and Warrant Purchase Agreement, is only a summary of the
principal terms thereof and is qualified in its entirety by the text of such
documents which are attached as exhibits to this Current Report.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The financial statements of PAI and its subsidiaries required to be
filed were previously reported in PAI's Annual Report on Form 10-K for the
fiscal year ended April 30, 1995 and Quarterly Report on Form 10-Q for the
quarter and nine-month period ended January 30, 1996 and are incorporated herein
by reference.
(b) Pro Forma Financial Information
As of the time of filing this Current Report, it is impracticable to
provide the pro forma financial information required by this Item 7(b). The
registrant intends to file the required pro forma financial information as soon
as practicable and in any event not later than 60 days after the date of this
Current Report.
(c) Exhibits
4.1 Warrant, dated April 25, 1996, issued to Banque Paribas by the Company
4.2 Warrant, dated April 25, 1996, issued to Paribas Principal, Inc. by
the Company
4.3 Warrant Purchase Agreement, dated April 25, 1996, between the
Company, Paribas Principal Inc. and Banque Paribas
10.1 Credit Agreement, dated April 25, 1996, between the Company, various
banks named therein and Banque Paribas, as Agent
10.2 Security Agreement, dated April 25, 1996, between the Company, various
subsidiaries of the Company and Banque Paribas, as Collateral Agent
10.3 Pledge Agreement, dated April 25, 1996, between the Company, various
subsidiaries of the Company and Banque Paribas, as Collateral Agent
10.4 Subsidiaries Guaranty, dated April 25, 1996, by various subsidiaries
of the Company
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized
Vernitron Corporation
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Registrant
Date: May 7, 1996 by: /s/Elliot N. Konopko
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Elliot N. Konopko
Vice President
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EXHIBIT 4.1
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MUST BE HELD
INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER SAID ACT OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION SHALL
HAVE BEEN REGISTERED UNDER SAID ACT OR AN EXEMPTION UNDER SAID ACT IS AVAILABLE
TO PERMIT SUCH WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER TO
BE LEGALLY SOLD OR OTHERWISE TRANSFERRED WITHOUT SUCH REGISTRATION. THIS
WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO THE
TERMS AND PROVISIONS OF THE WARRANT PURCHASE AGREEMENT.
Dated: April 25, 1996
WARRANT
To Purchase 666,312 Shares of Common Stock
VERNITRON CORPORATION
Expiring April 25, 2006
THIS IS TO CERTIFY THAT, for value received, BANQUE PARIBAS ACTING THROUGH ITS
GRAND CAYMAN BRANCH (the "Original Holder"), and its permitted designees,
successors or assigns (collectively, together with the Original Holder, the
"Holder") is entitled to purchase from VERNITRON CORPORATION, a Delaware
corporation (the "Company"), at any time or from time to time after 9:00 a.m.,
New York City time, on the date hereof and prior to 5:00 p.m., New York City
time, on April 25, 2006 (the "Expiration Date"), at the place where a Warrant
Agency (as hereinafter defined) is located, at the Exercise Price (as
hereinafter defined), 666,312 shares of Common Stock, $0.01 par value (the
"Common Stock"), of the Company, all subject to adjustment and upon the terms
and conditions as hereinafter provided and as provided in the Warrant Purchase
Agreement, and is entitled also to exercise the other appurtenant rights, powers
and privileges hereinafter described. If not exercised in total prior to the
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Expiration Date, unless the Holder has given the Company notice to the contrary,
this Warrant shall be deemed automatically exercised on the Expiration Date, and
the Company shall promptly give notice of such automatic exercise to the Holder
on or as soon as practicable after the Expiration Date. Such shares of Common
Stock purchasable under this Warrant, less any such shares actually purchased
hereunder shall be referred to as "Shares."
Certain terms used in this Warrant are defined in Article IV. This
Warrant is one of three Warrants issued by the Company in connection with the
acquisition of Precision Aerotech, Inc. and the other transactions contemplated
hereby. The Warrants are being issued on the date hereof to Banque Paribas and
Paribas Principal, Inc. and are expected to be issued to Donaldson, Lufkin &
Jenrette promptly after the date hereof. In the aggregate, on the date of
issuance of such Warrants, the Warrants will be exercisable into 1,542,700
shares of Common Stock of the Company.
ARTICLE I
EXERCISE OF WARRANTS
1.1 METHOD OF EXERCISE. To exercise this Warrant in whole or in part
with respect to any Shares, the Holder shall deliver to the Company, at the
Warrant Agency, (a) this Warrant, (b) a written notice, in substantially the
form of the Subscription Notice attached hereto, of such Holder's election to
exercise this Warrant, which notice shall specify the number of Shares of Common
Stock to be purchased, the denominations of the share certificate or
certificates desired and the name or names in which such certificates are to be
registered and (c) payment of the Exercise Price with respect to such Shares or
cancellation of this Warrant with respect to a number of Shares. If the Holder
elects to pay the Exercise Price in money, such payment may be made, at the
election of the Holder, by cash, money order, certified or bank cashier's check
or wire transfer of immediately available funds. If the Holder elects to pay
the Exercise Price by cancelling this Warrant with respect to Shares, the
Exercise Price may be paid by cancelling this Warrant with respect to that
number of Shares whose aggregate Current Market Price minus the aggregate
Exercise Price is equal to the aggregate Exercise Price with respect to the
number of Shares to be received upon exercise of this Warrant.
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The Company shall, as promptly as practicable and in any event within
seven days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates,
representing the aggregate number of Shares specified in said notice. The share
certificate or certificates so delivered shall be in such denominations as may
be specified in such notice or, if such notice shall not specify denominations,
in a denomination equal to the aggregate number of Shares specified in said
notice, and shall be issued in the name of the Holder or such other name or
names as shall be designated in such notice, subject to any restrictions
contained in the Warrant Purchase Agreement. Such certificate or certificates
shall be deemed to have been issued, and such Holder or, subject to any
restrictions contained in the Warrant Purchase Agreement, any other Person so
designated to be named therein shall be deemed for all purposes to have become a
holder of record of such shares, as of the date the aforementioned notice and
the Exercise Price is received by the Company. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of the
certificate or certificates, deliver to the Holder a new Warrant evidencing the
rights to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of the Holder, appropriate notation may be made on
this Warrant which shall then be returned to the Holder. The Company shall pay
all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of share certificates and new Warrants,
except that, if share certificates or Warrants shall be registered in a name or
names other than the name of the Holder, funds sufficient to pay all transfer
taxes payable as a result of such transfer shall be paid by the Holder at the
time of delivering the aforementioned notice of exercise or promptly upon
receipt of a written request of the Company for payment.
1.2 SHARES TO BE FULLY PAID AND NONASSESSABLE. All shares of Common
Stock issued upon the exercise of this Warrant shall be validly issued, fully
paid and nonassessable, free of all liens, taxes and other charges, and, if the
Common Stock of any class is then listed on any national securities exchange (as
such term is used in the Exchange Act) or quoted on NASDAQ, shall be duly listed
or quoted thereon, as the case may be.
1.3 NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction
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of a share would, but for this Section, be issuable upon any exercise of this
Warrant, in lieu of such fractional share the Company shall pay to the Holder,
in cash, an amount equal to the same fraction of the Current Market Price per
share of outstanding Common Stock on the Business Day immediately prior to the
date of such exercise.
1.4 SHARE LEGEND. Each certificate for shares of Common Stock issued
upon exercise of this Warrant, unless at the time of exercise such shares are
registered under the Securities Act, shall bear the following legend:
This security has not been registered under the Securities Act of
1933, as amended, and must be held indefinitely unless subsequently
registered under said Act or an exemption from such registration is
available. This security may not be sold, pledged, hypothecated or
otherwise transferred unless such sale, pledge, hypothecation or other
disposition shall have been registered under said act or such disposition
is made in reliance upon an exemption from registration under said act.
This Warrant and the shares of Common Stock purchasable hereunder are
subject to the terms and provisions of the Warrant Purchase Agreement,
dated as of April 25, 1996, between Vernitron Corporation and the other
parties thereto.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act covering such Shares) shall also bear such legend unless, in the
opinion of counsel selected by the holder of such certificate and reasonably
acceptable to the Company (who may be an employee of such holder), the
securities represented thereby need no longer be subject to restrictions on
resale under the Securities Act.
1.5 AUTHORIZED SHARES; RESERVATION OF SHARES FOR ISSUANCE. At all
times while this Warrant is outstanding, the Company shall maintain its
corporate authority to issue, and shall reserve for issuance upon exercise of
this Warrant, such number of shares of Common Stock as shall be sufficient to
perform its obligations under this Warrant (after giving effect to any
adjustments to the number of Shares purchasable upon exercise of this Warrant
pursuant to Article III hereof).
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1.6 NOTIFICATION BY THE COMPANY. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock; or
(ii) the Company shall offer for sale, or shall otherwise issue
(except upon exercise of the Existing Warrants), any additional shares of
stock of any class or any other securities convertible into or exchangeable
for shares of stock or any rights or options to subscribe thereto; or
(iii) the Board of Directors of the Company shall authorize any capital
reorganization, reclassification or similar transaction involving the
capital stock of the Company, or a sale or conveyance of all or
substantially all of the assets of the Company, or a consolidation, merger
or business combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
then, in any one or more of such cases, the Company shall give written notice to
the Holder, at the earliest time legally practicable (and not less than 30 days
before any record date or other date set for definitive action) of the date on
which (A) the books of the Company shall close or a record shall be taken for
such dividend, distribution or sale or other issuance or (B) such
reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up shall take place or be voted on by
stockholders of the Company, as the case may be. Such notice shall also specify
the date as of which the holders of the Common Stock of record shall participate
in said dividend, distribution, sale or other issuance or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up, as the case may be. If the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act or to a favorable vote of stockholders, the
notice required by this Section 1.6 shall so state.
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ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
2.1 WARRANT AGENCY. The Company shall maintain, at its own expense,
an agency (the "Warrant Agency"), for certain purposes specified herein and
shall cause such Warrant Agency to remain open during normal business hours on
each Business Day in connection with the performance of its obligations
hereunder. The Company shall perform the obligations of the Warrant Agency
provided herein at its address at 645 Madison Avenue, New York, New York 10022
or such other address as the Company shall specify by notice to all
Warrantholders.
2.2 OWNERSHIP OF WARRANT. The Company may deem and treat the Person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any Person
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article II.
2.3 TRANSFER OF WARRANT. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of this Warrant and all
rights hereunder shall be registered, in whole or in part, on such books, upon
surrender of this Warrant at the Warrant Agency, together with a written
assignment of this Warrant duly executed by the Holder or its duly authorized
agent or attorney and funds sufficient to pay any transfer taxes payable upon
such transfer. Upon surrender the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in the instrument of assignment, and this Warrant shall
promptly be canceled. Notwithstanding the foregoing, a Warrant may be exercised
by a new holder without having a new Warrant issued.
2.4 DIVISION OR COMBINATION OF WARRANTS. Subject to restrictions
contained in the Warrant Purchase Agreement, this Warrant may be divided or
combined with other Warrants upon surrender hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations in which
the new Warrant or Warrants are to be issued, signed by the holders hereof and
thereof or their respective duly authorized agents or attorneys. Subject to
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compliance with Section 2.3 as to any permitted transfer which may be involved
in the division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
2.5 LOSS, THEFT, DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company (the Original Holder's or any institutional
Warrantholder's indemnity being satisfactory indemnity in the event of loss,
theft or destruction of any Warrant owned by such institutional holder), or, in
the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of shares of Common Stock.
2.6 EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants and Common
Stock hereunder.
ARTICLE III
ANTIDILUTION PROVISIONS
3.1 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of shares purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment and reset from time to time upon
the happening of certain events, as hereinafter described.
3.2 MECHANICAL ADJUSTMENTS. The number of Shares and the Exercise
Price shall be subject to adjustment as follows:
(a) In case the Company shall at any time after the date of this
Agreement (i) declare or pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to all holders of its Common Stock,
(ii) subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or
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(iv) issue any shares of its capital stock in a reclassification or
reorganization of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing entity), this Warrant shall be adjusted to the number of Shares
and amount of any other securities, cash or other property of the Company
which such Holder would have owned or have been entitled to receive after
the happening of any of the events described above had this Warrant been
exercised immediately prior to the happening of such event or any record
date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event. Any Shares
purchasable as a result of such adjustment shall not be issued prior to the
effective date of such event.
(b) Other than if resulting in an adjustment pursuant to Section
3.2(a), in case the Company shall issue rights, options or warrants to
subscribe for or purchase, or other securities exchangeable for or
convertible into, shares of Common Stock (any such rights, options,
warrants or other securities being herein called "Rights") to all holders
of shares of its Common Stock whether or not such Rights are immediately
exercisable or convertible, the Company shall issue such Rights to each
Holder on the same basis as such Holder would have been entitled to receive
such Rights if the Warrants had been exercised immediately prior to the
happening of such event or the record date with respect thereto and no
adjustment in the number and kind of Shares or Exercise Price shall be made
under this Warrant in such circumstance.
(c) Whenever the numbers of Shares are adjusted as herein provided,
the Exercise Price payable upon exercise of this Warrant shall be adjusted
by multiplying such Exercise Price immediately prior to such adjustment by
a fraction, of which the numerator shall be the number of Shares
immediately prior to such adjustment, and of which the denominator shall be
the number of Shares immediately thereafter.
(d) No adjustment in the number of Shares shall be required hereunder
unless such adjustment would result in an increase or decrease of at least
one percent (1%) of the Exercise Price; PROVIDED, HOWEVER, that any
adjustments which by reason of this paragraph (d) are
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not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the nearest
one-hundredth of a cent or to the nearest one-thousandth of a Share, as the
case may be.
(e) No adjustment shall be made pursuant to this Article III in
respect of the issuance of shares of Common Stock pursuant to the Existing
Warrants. No adjustment need be made for a change in the par value of the
Common Stock.
(f) For the purpose of this subsection 3.2, the term "shares of
Common Stock" shall mean (i) the classes of stock designated as Common
Stock at the date of this Agreement, (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value or (iii) any other capital stock
of the Company which is not by its terms restricted in amount or timing to
the entitlement to dividends. In the event that at any time, as a result
of an adjustment made pursuant to this Section 3.2, the Holders shall
become entitled to receive any securities of the Company other than shares
of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price of such
shares shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
the Shares contained in this Article III.
3.3 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at its
option, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company, including such reductions in the Exercise
Price as the Company considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients; PROVIDED, HOWEVER, that no such adjustment in
Exercise Price shall affect the number of Shares.
3.4 NOTICE OF ADJUSTMENT. Whenever the number of Shares or the
Exercise Price is required to be adjusted, as herein provided, the Company
promptly shall mail by first class, postage prepaid, to each Holder, notice of
such
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adjustment or adjustments setting forth the number of Shares and the Exercise
Price after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made.
3.5 DIVIDENDS AND DISTRIBUTIONS. Other than if resulting in an
adjustment pursuant to Section 3.2(a) or issuance covered by 3.2(b), in case the
Company shall declare a dividend or make any other distribution upon Common
Stock (other than in shares of Common Stock), the Company shall hold any
property (including cash) paid in respect of such dividend or distribution that
the Holder would have received if the Holder had theretofore exercised the
Warrant for the benefit of the Holder and promptly pay same over to the Holder.
3.6 PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
In case of any consolidation of the Company with or merger of the Company with
or into another Person or in case of any sale, transfer or lease to another
Person of all or substantially all the assets of the Company, the Company or
such successor or purchasing Person, as the case may be, shall agree (and such
merger, consolidation or transfer of assets shall not be consummated without
such agreement) that each Holder thereafter shall have the right only to
receive, and such Warrant shall only represent the right to receive, upon
payment of the Exercise Price in effect immediately prior to such action, the
kind and amount of shares and other securities, cash and other property which he
would have been entitled to receive after the happening of such consolidation,
merger, sale, transfer or lease had this Warrant been exercised immediately
prior to such action (provided that if the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
is not the same for each share of Common Stock of the Company, then for the
purpose of this Section the kind and amount of securities, cash and other
property receivable upon exercise of this Warrant immediately after such
consolidation, merger, sale or transfer shall be the kind and amount so
receivable per share by a majority of the holders of Common Stock), and if the
successor or purchasing Person is not a corporation, such person shall provide
appropriate tax indemnification with respect to such shares and other securities
and property so that upon exercise of the Warrant, the Holder would have the
same benefits it otherwise would have had if such successor or purchasing Person
were a corporation. Such agreement shall provide for adjustments, which shall
be as nearly equivalent as may be practicable to
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the adjustments provided for in this Article III and that such adjustments shall
similarly apply to successive consolidations, mergers, sales, transfers or
leases.
3.7 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Exercise Price or the number or kind of Shares, this Warrant
may continue to express the same price and number and kind of shares as are
stated on the front page hereof.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Business Day" means each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
"Commission" shall mean the Securities and Exchange Commission or any
other Federal agency then administering the Securities Act and other Federal
securities laws.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant, subject to adjustment pursuant to Article III.
"Company" shall have the meaning set forth in the first paragraph of
this Warrant.
"Current Market Price" shall mean at any date the average of the daily
closing prices for the 10 consecutive trading days prior to the date as of which
the market price is to be computed on the principal national securities exchange
or in the NASDAQ-National Market System on which the shares of Common Stock are
listed or to which such shares are admitted to trading, or, if not listed or
admitted to trading, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market as reported by NASDAQ or any
comparable system, or if the Common Stock is not listed on NASDAQ or a
comparable system, the average of the closing bid and asked prices as furnished
by two members of the National Association of Securities Dealers, Inc. selected
from time to time by the Board of Directors of the Company for that purpose. In
the absence of the foregoing,
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the appropriate Current Market Price per share shall be the fair market value
thereof as determined by Board of Directors of the Company in good faith.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Exercise Price" means $.01 per share of Common Stock, subject to
adjustment pursuant to Article III.
"Existing Warrants" shall mean the Warrants other than this Warrant,
the warrant issued to CIT entitling CIT to purchase 31,345 Shares of Common
Stock on the date hereof and the Management Options.
"Expiration Date" shall have the meaning set forth in the first
paragraph of this Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant.
"Management Options" shall mean the options to acquire up to 193,000
shares of Common Stock issued pursuant to the Company's Long Term Stock
Incentive Plan and any other options granted to employees of the Company or any
of its Subsidiaries having an exercise price equal to or in excess of the
Current Market Price.
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.
"Original Holder" shall have the meaning set forth in the first
paragraph of this Warrant.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"Rights" shall have the meaning set forth in Section 3.2(b).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
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"Shares" shall have the meaning set forth in the first paragraph of
this Warrant.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or (ii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest or, if such other Person is a
partnership, a majority ownership interest in the general partner thereof.
"Warrant shall mean this Warrant as this Warrant may be amended,
modified or supplemented from time to time.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrantholder" means a holder of any Warrant issued by the Company on
the date hereof and such holder's permitted designees, successors and permitted
assigns.
"Warrant Purchase Agreement" means the Warrant Purchase Agreement,
dated as of April 25, 1996, among the Company, Paribas Principal, Inc. and
Banque Paribas acting through its Grand Cayman Branch, as amended, modified or
supplemented and, at the request of the Company, the holder of the Warrant
granted after the date hereof shall be entitled to become a party thereto.
ARTICLE V
MISCELLANEOUS
5.1 NOTICES. Any notice or other communication to be given shall be
in writing and may be personally served, telexed or sent by United States mail
and shall be deemed to have been given when delivered in person, upon receipt of
telex or four Business Days after deposit in the United States mail, registered
or certified, with postage prepaid and properly addressed. In the case of the
Original Holder, such notices and communications shall be addressed to its
address set forth below, unless the Original Holder shall notify the Company
that notices and communications should be
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sent to a different address (or telex number), in which case such notices and
communications shall be sent to the address (or telex number) specified by the
Holder. In the case of other Holders, such notices and communications shall be
addressed to such address as such other Holder shall specify to the Company. In
the case of the Company, such notices and communications shall be addressed as
follows (until notice of a change is given as provided herein):
Vernitron Corporation
645 Madison Avenue
New York, New York 10022
Telecopy: (212) 754-6348
Attention: General Counsel
If to the Original Holder:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Telecopy: (212) 841-2363
Attention: Donald Ercole
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: John M. Reiss, Esq.
5.2 WAIVERS; AMENDMENTS. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof
(except for a failure to exercise this Warrant prior to the Expiration Date),
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the holders of Warrants
substantially identical to this Warrant, voting as a single class, entitling
such holders to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding (exclusive of Warrants then
owned by the Company or any Subsidiary or affiliate thereof); PROVIDED,
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HOWEVER, that no such amendment, modification or waiver shall, without the
written consent of the holders of all Warrants at the time outstanding, (a)
change the number of Shares, the Exercise Price or provisions for payment
thereof or (b) amend, modify or waive the provisions of this Section or Article
III.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the holders of all Warrants and Common Stock
issued upon exercise thereof, upon each future holder thereof and upon the
Company. In the event of any such amendment, modification or waiver the Company
shall give prompt notice thereof to all holders of Warrants and, if appropriate,
notation thereof shall be made on all Warrants thereafter surrendered for
registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
5.3 GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT
THE LAWS OF DELAWARE SHALL BE MANDATORILY APPLICABLE HERETO.
5.4 SURVIVAL OF AGREEMENTS; REPRESENTATIONS AND WARRANTIES, ETC. All
warranties, representations and covenants made by the Company herein or in any
other agreement or in any certificate or other instrument delivered by or on
behalf of it in connection with the Warrants (other than the Credit Documents)
shall be considered to have been relied upon by the Holder and shall survive the
issuance and delivery of the Warrants, regardless of any investigation made by
the Holder, and shall continue in full force and effect so long as this Warrant
is outstanding. All statements in any such other agreement or in any
certificate or other instrument shall constitute representations and warranties
hereunder.
5.5 COVENANTS TO BIND SUCCESSORS AND ASSIGNS. All covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of the Company shall bind its successors and permitted assigns, whether so
expressed or not.
5.6 SEVERABILITY. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legal-
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<PAGE>
ity and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
5.7 CONSTRUCTION. The definitions in this Warrant shall apply
equally to both the singular and the plural forms of the terms defined.
Wherever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The Section headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
5.8 NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company until such time as this
Warrant shall have been exercised.
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SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
To VERNITRON CORPORATION
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to purchase thereunder,
_________ shares of Common Stock as provided for therein, and tenders herewith
payment of the Exercise Price in full in the form of cash, money order,
certified or bank cashier's check or wire transfer or by cancellation of the
Warrant with respect to shares of Common Stock subject to the Warrant.
Please issue a certificate or certificates for such shares of Common
Stock in the following name and names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: ____________, ____
____________________________________________________
NOTE: The above signature should correspond exactly
with the name on the face of the attached
Warrant or with the name of the assignee
appearing in the assignment form below.
<PAGE>
ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, ___________________________ hereby sells, assigns
and transfers unto _________________ the attached Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _________________________ attorney to transfer said Warrant on the books
of VERNITRON CORPORATION, a Delaware corporation, with full power of
substitution in the premises.
___________________________________________
NOTE: The above signature should
correspond exactly with the name on
the face of the attached Warrant.
Dated: __________, ____
<PAGE>
EXHIBIT 4.2
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MUST BE HELD
INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER SAID ACT OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION SHALL
HAVE BEEN REGISTERED UNDER SAID ACT OR AN EXEMPTION UNDER SAID ACT IS AVAILABLE
TO PERMIT SUCH WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER TO
BE LEGALLY SOLD OR OTHERWISE TRANSFERRED WITHOUT SUCH REGISTRATION. THIS
WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO THE
TERMS AND PROVISIONS OF THE WARRANT PURCHASE AGREEMENT.
Dated: April 25, 1996
WARRANT
To Purchase 776,388 Shares of Common Stock
VERNITRON CORPORATION
Expiring April 25, 2006
THIS IS TO CERTIFY THAT, for value received, PARIBAS PRINCIPAL, INC. (the
"Original Holder"), and its permitted designees, successors or assigns
(collectively, together with the Original Holder, the "Holder") is entitled to
purchase from VERNITRON CORPORATION, a Delaware corporation (the "Company"), at
any time or from time to time after 9:00 a.m., New York City time, on the date
hereof and prior to 5:00 p.m., New York City time, on April 25, 2006 (the
"Expiration Date"), at the place where a Warrant Agency (as hereinafter defined)
is located, at the Exercise Price (as hereinafter defined), 776,388 shares of
Common Stock, $0.01 par value (the "Common Stock"), of the Company, all subject
to adjustment and upon the terms and conditions as hereinafter provided and as
provided in the Warrant Purchase Agreement, and is entitled also to exercise the
other appurtenant rights, powers and privileges hereinafter described. Such
shares of Common Stock purchasable under this Warrant, less
<PAGE>
any such shares actually purchased hereunder shall be referred to as "Shares."
Certain terms used in this Warrant are defined in Article IV. This
Warrant is one of three Warrants issued by the Company in connection with the
acquisition of Precision Aerotech, Inc. and the other transactions contemplated
hereby. The Warrants are being issued on the date hereof to Banque Paribas and
Paribas Principal, Inc. and are expected to be issued to Donaldson, Lufkin &
Jenrette promptly after the date hereof. In the aggregate, on the date of
issuance of such Warrants, the Warrants will be exercisable into 1,542,700
shares of Common Stock of the Company.
ARTICLE I
EXERCISE OF WARRANTS
1.1 METHOD OF EXERCISE. To exercise this Warrant in whole or in part
with respect to any Shares, the Holder shall deliver to the Company, at the
Warrant Agency, (a) this Warrant, (b) a written notice, in substantially the
form of the Subscription Notice attached hereto, of such Holder's election to
exercise this Warrant, which notice shall specify the number of Shares of Common
Stock to be purchased, the denominations of the share certificate or
certificates desired and the name or names in which such certificates are to be
registered and (c) payment of the Exercise Price with respect to such Shares or
cancellation of this Warrant with respect to a number of Shares. If the Holder
elects to pay the Exercise Price in money, such payment may be made, at the
election of the Holder, by cash, money order, certified or bank cashier's check
or wire transfer of immediately available funds. If the Holder elects to pay
the Exercise Price by cancelling this Warrant with respect to Shares, the
Exercise Price may be paid by cancelling this Warrant with respect to that
number of Shares whose aggregate Current Market Price minus the aggregate
Exercise Price is equal to the aggregate Exercise Price with respect to the
number of Shares to be received upon exercise of this Warrant.
The Company shall, as promptly as practicable and in any event within
seven days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates,
representing the aggregate number of Shares specified in said notice. The share
certificate or certificates so delivered shall be in such denominations as may
be specified in such notice or, if
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such notice shall not specify denominations, in a denomination equal to the
aggregate number of Shares specified in said notice, and shall be issued in the
name of the Holder or such other name or names as shall be designated in such
notice, subject to any restrictions contained in the Warrant Purchase Agreement.
Such certificate or certificates shall be deemed to have been issued, and such
Holder or, subject to any restrictions contained in the Warrant Purchase
Agreement, any other Person so designated to be named therein shall be deemed
for all purposes to have become a holder of record of such shares, as of the
date the aforementioned notice and the Exercise Price is received by the
Company. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificate or certificates, deliver to
the Holder a new Warrant evidencing the rights to purchase the remaining shares
of Common Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant which shall then be returned to
the Holder. The Company shall pay all expenses, taxes and other charges payable
in connection with the preparation, issuance and delivery of share certificates
and new Warrants, except that, if share certificates or Warrants shall be
registered in a name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes payable as a result of such transfer shall
be paid by the Holder at the time of delivering the aforementioned notice of
exercise or promptly upon receipt of a written request of the Company for
payment.
1.2 SHARES TO BE FULLY PAID AND NONASSESSABLE. All shares of Common
Stock issued upon the exercise of this Warrant shall be validly issued, fully
paid and nonassessable, free of all liens, taxes and other charges, and, if the
Common Stock of any class is then listed on any national securities exchange (as
such term is used in the Exchange Act) or quoted on NASDAQ, shall be duly listed
or quoted thereon, as the case may be.
1.3 NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the Company
shall pay to the Holder, in cash, an amount equal to the same fraction of the
Current Market Price per share of outstanding Common Stock on the Business Day
immediately prior to the date of such exercise.
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1.4 SHARE LEGEND. Each certificate for shares of Common Stock issued
upon exercise of this Warrant, unless at the time of exercise such shares are
registered under the Securities Act, shall bear the following legend:
This security has not been registered under the Securities Act of
1933, as amended, and must be held indefinitely unless subsequently
registered under said Act or an exemption from such registration is
available. This security may not be sold, pledged, hypothecated or
otherwise transferred unless such sale, pledge, hypothecation or other
disposition shall have been registered under said act or such disposition
is made in reliance upon an exemption from registration under said act.
This Warrant and the shares of Common Stock purchasable hereunder are
subject to the terms and provisions of the Warrant Purchase Agreement,
dated as of April 25, 1996, between Vernitron Corporation and the other
parties thereto.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act covering such Shares) shall also bear such legend unless, in the
opinion of counsel selected by the holder of such certificate and reasonably
acceptable to the Company (who may be an employee of such holder), the
securities represented thereby need no longer be subject to restrictions on
resale under the Securities Act.
1.5 AUTHORIZED SHARES; RESERVATION OF SHARES FOR ISSUANCE. At all
times while this Warrant is outstanding, the Company shall maintain its
corporate authority to issue, and shall reserve for issuance upon exercise of
this Warrant, such number of shares of Common Stock as shall be sufficient to
perform its obligations under this Warrant (after giving effect to any
adjustments to the number of Shares purchasable upon exercise of this Warrant
pursuant to Article III hereof).
1.6 NOTIFICATION BY THE COMPANY. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock; or
(ii) the Company shall offer for sale, or shall otherwise issue
(except upon exercise of the Existing
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Warrants), any additional shares of stock of any class or any other
securities convertible into or exchangeable for shares of stock or any
rights or options to subscribe thereto; or
(iii) the Board of Directors of the Company shall authorize any capital
reorganization, reclassification or similar transaction involving the
capital stock of the Company, or a sale or conveyance of all or
substantially all of the assets of the Company, or a consolidation, merger
or business combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
then, in any one or more of such cases, the Company shall give written notice to
the Holder, at the earliest time legally practicable (and not less than 30 days
before any record date or other date set for definitive action) of the date on
which (A) the books of the Company shall close or a record shall be taken for
such dividend, distribution or sale or other issuance or (B) such
reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up shall take place or be voted on by
stockholders of the Company, as the case may be. Such notice shall also specify
the date as of which the holders of the Common Stock of record shall participate
in said dividend, distribution, sale or other issuance or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up, as the case may be. If the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act or to a favorable vote of stockholders, the
notice required by this Section 1.6 shall so state.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
2.1 WARRANT AGENCY. The Company shall maintain, at its own expense,
an agency (the "Warrant Agency"), for certain purposes specified herein and
shall cause such Warrant Agency to remain open during normal business hours on
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each Business Day in connection with the performance of its obligations
hereunder. The Company shall perform the obligations of the Warrant Agency
provided herein at its address at 645 Madison Avenue, New York, New York 10022
or such other address as the Company shall specify by notice to all
Warrantholders.
2.2 OWNERSHIP OF WARRANT. The Company may deem and treat the Person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any Person
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article II.
2.3 TRANSFER OF WARRANT. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of this Warrant and all
rights hereunder shall be registered, in whole or in part, on such books, upon
surrender of this Warrant at the Warrant Agency, together with a written
assignment of this Warrant duly executed by the Holder or its duly authorized
agent or attorney and funds sufficient to pay any transfer taxes payable upon
such transfer. Upon surrender the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in the instrument of assignment, and this Warrant shall
promptly be canceled. Notwithstanding the foregoing, a Warrant may be exercised
by a new holder without having a new Warrant issued.
2.4 DIVISION OR COMBINATION OF WARRANTS. Subject to restrictions
contained in the Warrant Purchase Agreement, this Warrant may be divided or
combined with other Warrants upon surrender hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations in which
the new Warrant or Warrants are to be issued, signed by the holders hereof and
thereof or their respective duly authorized agents or attorneys. Subject to
compliance with Section 2.3 as to any permitted transfer which may be involved
in the division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
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2.5 LOSS, THEFT, DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company (the Original Holder's or any institutional
Warrantholder's indemnity being satisfactory indemnity in the event of loss,
theft or destruction of any Warrant owned by such institutional holder), or, in
the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of shares of Common Stock.
2.6 EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants and Common
Stock hereunder.
ARTICLE III
ANTIDILUTION PROVISIONS
3.1 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of shares purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment and reset from time to time upon
the happening of certain events, as hereinafter described.
3.2 MECHANICAL ADJUSTMENTS. The number of Shares and the Exercise
Price shall be subject to adjustment as follows:
(a) In case the Company shall at any time after the date of this
Agreement (i) declare or pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to all holders of its Common Stock,
(ii) subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue any shares of its capital stock in a
reclassification or reorganization of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing entity), this Warrant shall be adjusted to the
number of Shares and amount of any other securities,
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<PAGE>
cash or other property of the Company which such Holder would have owned or
have been entitled to receive after the happening of any of the events
described above had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event. Any Shares purchasable as a result of
such adjustment shall not be issued prior to the effective date of such
event.
(b) Other than if resulting in an adjustment pursuant to Section
3.2(a), in case the Company shall issue rights, options or warrants to
subscribe for or purchase, or other securities exchangeable for or
convertible into, shares of Common Stock (any such rights, options,
warrants or other securities being herein called "Rights") to all holders
of shares of its Common Stock whether or not such Rights are immediately
exercisable or convertible, the Company shall issue such Rights to each
Holder on the same basis as such Holder would have been entitled to receive
such Rights if the Warrants had been exercised immediately prior to the
happening of such event or the record date with respect thereto and no
adjustment in the number and kind of Shares or Exercise Price shall be made
under this Warrant in such circumstance.
(c) Whenever the numbers of Shares are adjusted as herein provided,
the Exercise Price payable upon exercise of this Warrant shall be adjusted
by multiplying such Exercise Price immediately prior to such adjustment by
a fraction, of which the numerator shall be the number of Shares
immediately prior to such adjustment, and of which the denominator shall be
the number of Shares immediately thereafter.
(d) No adjustment in the number of Shares shall be required hereunder
unless such adjustment would result in an increase or decrease of at least
one percent (1%) of the Exercise Price; PROVIDED, HOWEVER, that any
adjustments which by reason of this paragraph (d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-hundredth of
a cent or to the nearest one-thousandth of a Share, as the case may be.
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<PAGE>
(e) No adjustment shall be made pursuant to this Article III in
respect of the issuance of shares of Common Stock pursuant to the Existing
Warrants. No adjustment need be made for a change in the par value of the
Common Stock.
(f) For the purpose of this subsection 3.2, the term "shares of
Common Stock" shall mean (i) the classes of stock designated as Common
Stock at the date of this Agreement, (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value or (iii) any other capital stock
of the Company which is not by its terms restricted in amount or timing to
the entitlement to dividends. In the event that at any time, as a result
of an adjustment made pursuant to this Section 3.2, the Holders shall
become entitled to receive any securities of the Company other than shares
of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price of such
shares shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
the Shares contained in this Article III.
3.3 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at its
option, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company, including such reductions in the Exercise
Price as the Company considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients; PROVIDED, HOWEVER, that no such adjustment in
Exercise Price shall affect the number of Shares.
3.4 NOTICE OF ADJUSTMENT. Whenever the number of Shares or the
Exercise Price is required to be adjusted, as herein provided, the Company
promptly shall mail by first class, postage prepaid, to each Holder, notice of
such adjustment or adjustments setting forth the number of Shares and the
Exercise Price after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made.
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<PAGE>
3.5 PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
In case of any consolidation of the Company with or merger of the Company with
or into another Person or in case of any sale, transfer or lease to another
Person of all or substantially all the assets of the Company, the Company or
such successor or purchasing Person, as the case may be, shall agree (and such
merger, consolidation or transfer of assets shall not be consummated without
such agreement) that each Holder thereafter shall have the right only to
receive, and such Warrant shall only represent the right to receive, upon
payment of the Exercise Price in effect immediately prior to such action, the
kind and amount of shares and other securities, cash and other property which he
would have been entitled to receive after the happening of such consolidation,
merger, sale, transfer or lease had this Warrant been exercised immediately
prior to such action (provided that if the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, sale or transfer
is not the same for each share of Common Stock of the Company, then for the
purpose of this Section the kind and amount of securities, cash and other
property receivable upon exercise of this Warrant immediately after such
consolidation, merger, sale or transfer shall be the kind and amount so
receivable per share by a majority of the holders of Common Stock), and if the
successor or purchasing Person is not a corporation, such person shall provide
appropriate tax indemnification with respect to such shares and other securities
and property so that upon exercise of the Warrant, the Holder would have the
same benefits it otherwise would have had if such successor or purchasing Person
were a corporation. Such agreement shall provide for adjustments, which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Article III and that such adjustments shall similarly apply to successive
consolidations, mergers, sales, transfers or leases.
3.6 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Exercise Price or the number or kind of Shares, this Warrant
may continue to express the same price and number and kind of shares as are
stated on the front page hereof.
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ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Business Day" means each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
"Commission" shall mean the Securities and Exchange Commission or any
other Federal agency then administering the Securities Act and other Federal
securities laws.
"Common Stock" shall have the meaning set forth in the first paragraph
of this Warrant, subject to adjustment pursuant to Article III.
"Company" shall have the meaning set forth in the first paragraph of
this Warrant.
"Current Market Price" shall mean at any date the average of the daily
closing prices for the 10 consecutive trading days prior to the date as of which
the market price is to be computed on the principal national securities exchange
or in the NASDAQ-National Market System on which the shares of Common Stock are
listed or to which such shares are admitted to trading, or, if not listed or
admitted to trading, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market as reported by NASDAQ or any
comparable system, or if the Common Stock is not listed on NASDAQ or a
comparable system, the average of the closing bid and asked prices as furnished
by two members of the National Association of Securities Dealers, Inc. selected
from time to time by the Board of Directors of the Company for that purpose. In
the absence of the foregoing, the appropriate Current Market Price per share
shall be the fair market value thereof as determined by Board of Directors of
the Company in good faith.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Exercise Price" means $1.25 per share of Common Stock, subject to
adjustment pursuant to Article III.
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<PAGE>
"Existing Warrants" shall mean the Warrants other than this Warrant,
the warrant issued to CIT entitling CIT to purchase 31,345 Shares of Common
Stock on the date hereof and the Management Options.
"Expiration Date" shall have the meaning set forth in the first
paragraph of this Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant.
"Management Options" shall mean the options to acquire up to 193,000
shares of Common Stock issued pursuant to the Company's Long Term Stock
Incentive Plan and any other options granted to employees of the Company or any
of its Subsidiaries having an exercise price equal to or in excess of the
Current Market Price.
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.
"Original Holder" shall have the meaning set forth in the first
paragraph of this Warrant.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"Rights" shall have the meaning set forth in Section 3.2(b).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Shares" shall have the meaning set forth in the first paragraph of
this Warrant.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or (ii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of deter-
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<PAGE>
mination thereof, has at least majority ownership interest or, if such other
Person is a partnership, a majority ownership interest in the general partner
thereof.
"Warrant shall mean this Warrant as this Warrant may be amended,
modified or supplemented from time to time.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrantholder" means a holder of any Warrant issued by the Company on
the date hereof and such holder's permitted designees, successors and permitted
assigns.
"Warrant Purchase Agreement" means the Warrant Purchase Agreement,
dated as of April 25, 1996, among the Company, Paribas Principal, Inc. and
Banque Paribas acting through its Grand Cayman Branch, as amended, modified or
supplemented and, at the request of the Company, the holder of the Warrant
granted after the date hereof shall be entitled to become a party thereto.
ARTICLE V
MISCELLANEOUS
5.1 NOTICES. Any notice or other communication to be given shall be
in writing and may be personally served, telexed or sent by United States mail
and shall be deemed to have been given when delivered in person, upon receipt of
telex or four Business Days after deposit in the United States mail, registered
or certified, with postage prepaid and properly addressed. In the case of the
Original Holder, such notices and communications shall be addressed to its
address set forth below, unless the Original Holder shall notify the Company
that notices and communications should be sent to a different address (or telex
number), in which case such notices and communications shall be sent to the
address (or telex number) specified by the Holder. In the case of other
Holders, such notices and communications shall be addressed to such address as
such other Holder shall specify to the Company. In the case of the Company,
such notices and communications shall be addressed as follows (until notice of a
change is given as provided herein):
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Vernitron Corporation
645 Madison Avenue
New York, New York 10022
Telecopy: (212) 754-6348
Attention: General Counsel
If to the Original Holder:
Paribas Principal, Inc.
787 Seventh Avenue
New York, New York 10019
Telecopy: (212) 841-2363
Attention: Donald Ercole
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: John M. Reiss, Esq.
5.2 WAIVERS; AMENDMENTS. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof
(except for a failure to exercise this Warrant prior to the Expiration Date),
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the holders of Warrants
substantially identical to this Warrant, voting as a single class, entitling
such holders to purchase a majority of the Common Stock subject to purchase upon
exercise of such Warrants at the time outstanding (exclusive of Warrants then
owned by the Company or any Subsidiary or affiliate thereof); PROVIDED, HOWEVER,
that no such amendment, modification or waiver shall, without the written
consent of the holders of all Warrants at the time outstanding, (a) change the
number of Shares, the Exercise Price or provisions for payment thereof or (b)
amend, modify or waive the provisions of this Section or Article III.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the holders of
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<PAGE>
all Warrants and Common Stock issued upon exercise thereof, upon each future
holder thereof and upon the Company. In the event of any such amendment,
modification or waiver the Company shall give prompt notice thereof to all
holders of Warrants and, if appropriate, notation thereof shall be made on all
Warrants thereafter surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
5.3 GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT
THE LAWS OF DELAWARE SHALL BE MANDATORILY APPLICABLE HERETO.
5.4 SURVIVAL OF AGREEMENTS; REPRESENTATIONS AND WARRANTIES, ETC. All
warranties, representations and covenants made by the Company herein or in any
other agreement or in any certificate or other instrument delivered by or on
behalf of it in connection with the Warrants (other than the Credit Documents)
shall be considered to have been relied upon by the Holder and shall survive the
issuance and delivery of the Warrants, regardless of any investigation made by
the Holder, and shall continue in full force and effect so long as this Warrant
is outstanding. All statements in any such other agreement or in any
certificate or other instrument shall constitute representations and warranties
hereunder.
5.5 COVENANTS TO BIND SUCCESSORS AND ASSIGNS. All covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of the Company shall bind its successors and permitted assigns, whether so
expressed or not.
5.6 SEVERABILITY. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
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<PAGE>
5.7 CONSTRUCTION. The definitions in this Warrant shall apply
equally to both the singular and the plural forms of the terms defined. Wherever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The Section headings used herein are for convenience
of reference only, are not part of this Warrant and are not to affect the
construction of or be taken into consideration in interpreting this Warrant.
5.8 NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company until such time as this
Warrant shall have been exercised.
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<PAGE>
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
To VERNITRON CORPORATION
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to purchase thereunder,
__________ shares of Common Stock as provided for therein, and tenders herewith
payment of the Exercise Price in full in the form of cash, money order,
certified or bank cashier's check or wire transfer or by cancellation of the
Warrant with respect to shares of Common Stock subject to the Warrant.
Please issue a certificate or certificates for such shares of Common
Stock in the following name and names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated: ____________, ____
____________________________
NOTE: The above signature should
correspond exactly with the
name on the face of the
attached Warrant or with the
name of the assignee appearing
in the assignment form below.
<PAGE>
ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, ___________________________ hereby sells, assigns
and transfers unto _________________ the attached Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _________________________ attorney to transfer said Warrant on the books
of VERNITRON CORPORATION, a Delaware corporation, with full power of
substitution in the premises.
__________________________________
NOTE: The above signature should
correspond exactly with the
name on the face of the
attached Warrant.
Dated: __________, ____
<PAGE>
EXHIBIT 4.3
WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of April 25,
1996, among VERNITRON CORPORATION (with its successors, the "Company"), Paribas
Principal, Inc. ("PPI") and Banque Paribas acting through its Grand Cayman
Branch, as the initial Holder of the Warrants referred to herein.
W I T N E S S E T H :
-------------------
WHEREAS, the Company, various lending institutions listed on Annex I
thereto (the "Banks") and Banque Paribas, as agent for the Banks, are parties to
a Credit Agreement dated as of April 26, 1996 (as the same shall be modified and
supplemented and in effect from time to time, the "Credit Agreement");
WHEREAS, in order to induce Banque Paribas to enter into the Credit
Agreement, and as compensation therefor, the Company has authorized the issuance
to the Holder of the Warrants which are exercisable, pursuant to the terms and
conditions thereof, for 666,312 shares of Common Stock, $0.01 par value, of the
Company at a purchase price of $.01; and
WHEREAS, PPI may desire to provide additional financing to the Company
and in connection therewith the Company has agreed to sell to PPI a warrant to
purchase, pursuant to terms and conditions thereof, 776,388 shares of Common
Stock, $0.01 par value of the Company at a purchase price of $1.25 per share.
WHEREAS, the Holder desires to subscribe for, and the Company desires
to issue to the Holder, upon the terms and conditions set forth herein, the
Warrant substantially in the form of Exhibit A hereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. DEFINITIONS.
1.01 DEFINITIONS. The following terms, as used herein, shall have
the following respective meanings:
"Affiliate" shall have the meaning ascribed to such term in the Credit
Agreement.
<PAGE>
"Agreement" shall have the meaning provided in the introductory
paragraph hereof.
"Business Day" shall mean any day other than Saturday, Sunday or any
other day on which commercial banks are required by law or authorized to close
in New York City.
"CIT Warrant" shall mean the Warrant issued to CIT exercisable into
31,345 shares of Common Stock on the date hereof.
"Commission" means the Securities and Exchange Commission or any other
United States agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock of the Company.
"Credit Agreement" shall have the meaning ascribed to such term in the
first WHEREAS clause of this Agreement.
"DLJ Warrant" shall mean a warrant exercisable into 100,000 shares of
Common Stock expected to be issued to Donaldson, Lufkin & Jenrette ("DLJ")
promptly after the date hereof which warrant and any purchase agreement pursuant
to which such warrant is purchased shall have terms no more favorable than the
terms and provisions of this Agreement and the Warrant and may, at the request
of the Company, constitute a Warrant and DLJ may become a party to this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Period" shall mean the period of time from April 25, 1996,
until 5:00 P.M., local time in New York City, on April 25, 2006 (or such later
date as specified in Section 4.07).
"Existing Warrants shall have the meaning provided in the Warrant.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time.
"Holder" shall mean the holder of any Warrant or Warrant Interest
unless, with respect to any such Warrant Interest, such Warrant Interest is
acquired in a public distribution pursuant to a registration statement under the
Securities Act or pursuant to a transaction exempt from registration under the
Securities Act if securities sold in such transaction may be resold without
subsequent registration under the Securities Act.
"Person" shall mean an individual, a corporation, a company, a
voluntary association, a partnership, a trust, an unincorporated organization or
a government or any agency, instrumentality or political subdivision thereof.
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<PAGE>
"Public Sale" means any sale of Common Stock pursuant to a widely-
distributed registered public offering under the Securities Act or any sale of
Common Stock to the public pursuant to Rule 144 effected through a broker or
dealer.
"Registrable Securities" shall mean (i) any Warrant Interests issued
or sold to the Holder or any affiliate of the Holder whether or not at the time
of such determination such interests are then held by the Holder or such
affiliate of the Holder and (ii) any securities issued or issuable with respect
to any such Warrant Interests by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (i) 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, (ii) they
shall have been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) they shall have been otherwise
transferred 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 (iv) they shall have ceased to be outstanding. Registerable Securities
shall not include any Warrant.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 5, including, without limitation, (i)
all registration, filing and NASD fees, (ii) all fees and expenses of complying
with securities or blue sky laws, (iii) all word processing, duplicating and
printing expenses, (iv) messenger and delivery expenses, (v) the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, (vi) the
reasonable fees and disbursements of one counsel, who may be counsel for the
Company, chosen by the holders of a majority of the Registrable Securities
included in such registration statement, (vii) premiums and other costs of
policies of insurance against liabilities arising out of the public offering of
the Registrable Securities being registered (if the Company elects to obtain any
such insurance), and (viii) any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding underwriting
fees, discounts and commissions, transfer taxes, if any, and accountants
retained by the selling securityholders in addition to those referred to in
preceding clause (v).
"Regulation Y" shall mean Regulation Y promulgated by the Board of
Governors of the Federal Reserve System or any successor regulation.
"Requesting Holder" shall mean in respect of any registration pursuant
to Section 5.01 hereof, any holder of Registrable Securities who gives notice to
the Company of its request to include Registrable Securities in such
registration.
"Required Holders" shall mean the holders of more than 50% of the
aggregate Warrant Interests then outstanding.
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<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Tag-Along Acceptance" shall have the meaning set forth in Section
6.01(b).
"Tag-Along Notice" shall have the meaning set forth in Section
6.01(a).
"Tag-Along Notice Period" shall have the meaning set forth in
Section 6.01(b).
"Tag-Along Offer" shall have the meaning set forth in Section 6.01(a).
"Tag-Along Offeree" shall have the meaning set forth in Section
6.01(a).
"Tag-Along Offerer" shall have the meaning set forth in Section
6.01(a).
"Tag-Along Offeree Shares" shall have the meaning set forth in Section
6.01(c).
"Tag-Along Shares" shall have the meaning set forth in Section
6.01(a).
"Warrant" shall mean a Warrant to purchase the number of Warrant
Interests indicated therein, substantially in the form of Exhibit A, and any
Warrant or Warrants issued upon transfer of, or in substitution therefor and, in
any event, shall consist of the warrants issued to Banque Paribas and PPI, on
the date hereof and the DLJ Warrant.
"Warrant Interest" shall mean the shares of Common Stock issued or
issuable upon exercise of any Warrant. For purposes of this Agreement, a
Warrant Interest shall be "outstanding" from and after the date hereof until the
redemption or cancellation of such Warrant Interest (or, if the related Warrant
has not been exercised, the expiration, repurchase or cancellation of such
Warrant) by the Company.
"Warrantholder" shall mean the holder of any Warrant.
1.02 ACCOUNTING 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 financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP.
Section 2. TERMS AND CONDITIONS OF ISSUANCE OF WARRANTS.
2.01 ISSUANCE OF THE WARRANTS. In consideration of the premises and
other good and valuable consideration, the Company hereby agrees to issue on the
date hereof to Banque Paribas, acting through its Grand Cayman Branch, a Warrant
to purchase the number of Warrant Interests set forth on the signature page.
The Company hereby agrees to sell to PPI, for a purchase price equal to $1,000,
a Warrant to purchase the number of Warrant Interests
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<PAGE>
set forth on the signature page. The number of Warrant Interests set forth on
the signature page are subject to adjustment from time to time as set forth in
the Warrants issued to the Holders; PROVIDED, HOWEVER, that no Holder shall be
entitled to exercise any Warrant to the extent that, as a result of such
exercise, such Holder and its Affiliates, directly or indirectly, would, in such
Holder's sole judgment, own, control or have power to vote a greater quantity of
securities of any kind issued by the Company than such Holder and its Affiliates
shall be permitted to own, control or have power to vote under any law or under
any regulation, rule or other requirement of any government authority at the
time applicable to such Holder and its Affiliates (including, without
limitation, any applicable provision of Regulation Y).
2.02 OPINION OF COUNSEL. On the date hereof, the Holder shall have
received from Elliot N. Konopko, general counsel to the Company, an opinion in
form and substance satisfactory to the Holder.
2.03 On the date hereof, PPI shall have received from the Company
fully executed Small Business Administration Forms 480 and 652 (together with
Small Business Administration Form 1031, the "SBA Forms").
Section 3.A REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Holders on the date hereof and on each
date on which a Warrant is exercised as follows; PROVIDED, HOWEVER, it is
understood that the Company shall have no liability to the Holders as a result
of the Holder determining not to exercise the Warrant because the Company in
connection therewith discloses that any of the representations and warranties
set forth below became untrue after the date hereof and are untrue on the date
that such representations are required to be remade and the Company shall have
no liability to the Holder in any event as a result of disclosures by the
Company in connection with the making of such representations and warranties
after the date hereof that any of such representations and warranties is not
true after the date hereof and prior to an exercise of a Warrant of which the
Company had prior notice:
3.01 INCORPORATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained in Sections 7.01 through
7.26, inclusive, of the Credit Agreement are incorporated herein by reference
and made a part hereof as if set forth herein. Such representations and
warranties are true and correct in all material respects on the date hereof and
will be true and correct on each date on which a Warrant is exercised.
3.02 AUTHORIZATION. The Company has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement
and the Warrants and to issue and deliver the Warrants and Warrant Interests;
the execution, delivery and performance by the Company of this Agreement and the
Warrants have been duly authorized by all necessary action; each of this
Agreement and each Warrant has been duly executed and delivered by the Company
and constitutes
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<PAGE>
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to creditors'
rights and remedies generally and subject, as to enforceability, to general
equitable principles (regardless of whether an enforcement is sought in a
proceeding in law or at equity).
3.03 VALID ISSUANCES. The Warrants, when issued and delivered
pursuant hereto, and the Warrant Interests, when issued and delivered and paid
for pursuant to the Warrants, will be validly issued, and are not subject to any
preemptive rights, rights of first refusal or rights of first offer except as
set forth herein. Except for the registration rights as set forth in this
Agreement , piggyback registration rights granted to the holder of the CIT
Warrant and rights to be granted to holder of the DLJ Warrant which shall be no
more favorable to the holder thereof than the registration rights provided for
herein, the Company is not under any obligation to cause the registration of any
of its presently outstanding securities or any of its securities which hereafter
may be issued.
3.04 NO BREACH. None of the execution and delivery of this Agreement
and the Warrants, the consummation of the transactions herein or therein
contemplated, including the issuance and delivery of the Warrants and the
Warrant Interests or compliance with the terms and provisions hereof or thereof
will conflict with or result in a breach of, or require any consent (other than
any consent already obtained which remains in full force and effect and other
than requirements for securities registration under applicable laws) under any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any agreement or instrument to
which the Company is a party or by which it is bound or to which any of its
properties or assets is subject, or constitute a default under any such
agreement or instrument or result in the creation or imposition of any lien upon
any of the revenues or assets of the Company pursuant to the terms of any such
agreement or instrument.
3.05 APPROVALS. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency, which have not already been made or obtained, are necessary for the
execution, delivery or performance by the Company of this Agreement or the
Warrants, the consummation of the transactions contemplated herein and therein
or the validity or enforceability hereof or thereof.
3.06 CAPITALIZATION. The capital of the Company on the date hereof
consists of (x) 20,000,000 shares of common stock, $.01 par value, 12,659,957 of
which shares are issued and outstanding, and (y) 4,000,000 shares of preferred
stock, $.01 par value, 738,584 of which shares are issued and outstanding. All
of such outstanding shares have been duly and validly issued, are fully paid and
nonassessable and are free of preemptive rights. Except as set forth on
Schedule VII of the Credit Agreement (which shall include, without limitation,
the Warrants), the Company does not have outstanding any securities convertible
into or exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
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agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock.
3.07 OFFER OF WARRANTS. Neither the Company nor any Person acting on
its behalf has directly or indirectly offered the Warrants or any part thereof
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Holder and Donaldson, Lufkin & Jenrette. Neither the
Company nor any Person acting on its behalf has taken or will take any action
which would subject the issuance and sale of the Warrants to the provisions of
Section 5 of the Securities Act, or to the provisions of any state securities
law requiring registration of securities, notification of the issuance or sale
thereof or confirmation of the availability of any exemption from such
registration.
3.08 SBIC INFORMATION. All information set forth in the SBA Forms
regarding the Company and its affiliates is accurate and complete. Copies of
such forms have been, on or prior to the date hereof (or within the time period
required by Section 4.03 in the case of Form 1031), completed and executed by
the Company and delivered to PPI.
Section 3.B. REPRESENTATION AND WARRANTIES OF THE HOLDERS. Each
Holder represents and warrants to the Company on the date hereof and on each
date on which a Warrant is exercised as follows:
(a) Such Holder represents that the Warrants or the Warrant
Interests, as the case may be, is being acquired by him for his own account
for investment purposes and not with a view to the distribution thereof.
Each Holder understands that the Warrant and the Warrant Interests have not
been registered under the Securities Act of 1933 as amended, on the grounds
that the offer and sale of the Warrants and Warrant Interests are exempt
from the registration requirements of the Securities Act of 1933 under
Section 4(2) thereof as transaction not involving any public offering of
the Warrants or Warrant Interests.
(b) Each Holder understands that he must bear the economic risk of
his investment in the Warrants and Warrant Interests for an indefinite
period of time because such securities have not been registered under the
Act and, therefore, cannot be sold unless they are subsequently registered
under the Act or an exemption from such registration is available.
Section 4. COVENANTS.
4.01 MAINTENANCE OF EXISTENCE; CORPORATE FRANCHISES. The Company
will do, and will cause each of its subsidiaries to do or cause to be done, all
things necessary to preserve and keep in full force and effect its existence and
its rights, franchises, licenses and patents useful and necessary for the
operation of their respective businesses; PROVIDED, HOWEVER, that nothing in
this Section 4.01 shall prevent the withdrawal by the Company or any subsidiary
of the Company of its qualification as a foreign corporation in any jurisdiction
or the taking of any other action or failure
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to take any action by the Company or any subsidiary where such withdrawal,
action or omission could not reasonably be expected to have a material adverse
effect on the performance, business, assets, nature of assets, liabilities,
properties, operations, condition (financial or otherwise) or prospects of the
Company and its subsidiaries taken as a whole.
4.02 INSPECTION. The Company covenants and agrees that it will
permit, on a reasonable basis, any Holder and its representatives (including
without limitation, examiners from the Small Business Administration) to inspect
the properties of the Company and to examine and make extracts and copies from
the books and records of the Company during normal business hours (including,
without limitation, for purposes of verifying the certifications and
representations made by the Company in the SBA Forms and this Agreement and in
verifying compliance with the covenants contained in this Agreement.
4.03 INFORMATION. The Company covenants and agrees that it will
deliver to all of the Holders all the financial statements and other information
required to be delivered under Section 8.01 of the Credit Agreement (as such
agreement is in effect on the date hereof without giving effect to any
amendments, modifications or waivers after the date hereof and whether or not
such agreement is in effect). In addition, the Company covenants and agrees to
provide to the Holders, at least annually, sufficient financial and other
information necessary to allow the Holder to evaluate the financial condition of
the Company for the purpose of valuing the Holder's interest in the Company, to
determine the continued eligibility of the Company under the Small Business
Investment Act of 1958, as amended (the "SBIA") and the regulations thereunder,
including Title 13, Code of Federal Regulations, Section 121.802, and to verify
the use of the proceeds received by the Company from the purchase of the Warrant
as well as the proceeds from the exercise of the Warrant. Prior to each date on
which the Warrant is exercised, the Company shall provide such financial
statements, plans of operation (including intended use of financing proceeds),
cash flow analyses and projections as PPI shall reasonably determine is
necessary to support its investment decision. In addition, prior to each
exercise of the Warrant, the Company shall certify to PPI the intended use of
the proceeds from such exercise. All such information shall be certified by the
President, Chief Executive Officer, Treasurer or Chief Financial Officer of the
Company. Within 30 days of the date hereof and within 30 days of the date of
each exercise of the Warrant, the Company shall have provided PPI a completed
Small Business Administration Form 1031. Promptly after the end of each fiscal
year of the Company (and in any event prior to February 28 of each year), the
Company shall provide to PPI a written assessment in form and substance
satisfactory to PPI of the economic impact of the financing assistance provided
to the Company by PPI, specifying the full time equivalent jobs created or
retained, and the impact of the financing on the revenues and profits of the
business and on taxes paid by the business and its employees. Upon the request
of PPI the Company will also provide all information requested by PPI in order
for it prepare and file SBA Form 468 and any other information requested or
required by any governmental agency asserting jurisdiction over PPI.
4.04 TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any of its subsidiaries to, enter into transactions with an Affiliate
(for purposes of this Section, except
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as specified below, as defined in the Credit Agreement for purposes of Section
9.07 thereof) of the Company other than transactions which have been approved by
a majority of the disinterested members of the Board of Directors and which
transactions are on terms and conditions substantially as favorable to the
Company or such subsidiary as would be obtainable in a comparable arm's-length
transaction with a person other than an Affiliate or as otherwise permitted
pursuant to Section 9.07 of the Credit Agreement. Neither the Company nor any
Subsidiary of the Company will repurchase any equity interests of the Company
except on a basis which is pro rata among all the holders of such equity
interests (including, without limitation, in the event any Warrants are
outstanding the holders of Warrants shall have the option to sell their Warrant
Interests pursuant to such repurchase (with the repurchase price per share to be
reduced by the exercise price)). Neither the Company nor any subsidiary shall
sell a material amount of assets to, or purchase a material amount of assets
from, an Affiliate of the Company, it being agreed that a merger or similar
transaction between the Company and an Affiliate shall not constitute a sale or
purchase of a material amount of assets.
4.05 REPURCHASE OF EQUITY INTERESTS. The Company covenants and
agrees that it will not, without prior written notice to any Holder which is
subject to the provisions of the Bank Holding Company Act of 1956, as amended
(including Regulation Y promulgated thereunder), directly or indirectly,
purchase, redeem, retire or otherwise acquire any partnership interests if, as a
result of such purchase, redemption, retirement or other acquisition, such
Holder, together with its Affiliates, will own, or be deemed to own, Warrant
Interests representing capital equal to 25% or more of the aggregate equity
interests then outstanding (assuming the exercise of all Warrants then held by
such Holder and its Affiliates).
4.06 REGULATORY MATTERS. The Company agrees to cooperate in good
faith with and assist any Holder or any of the Holders' Affiliates as any Holder
may reasonably request in connection with any United States banking regulatory
issues that may arise with respect to the Holder's ownership of the Warrant or
any Warrant Interest.
4.07 NOTICE OF EXPIRATION. The Company covenants and agrees to give
each Holder of a Warrant, as reflected in the books and records of the Company,
prior written notice of the expiration of the Exercise Period of the respective
Warrants. Such notice shall be delivered not less than thirty (30) days but not
more than sixty (60) days prior to such expiration; provided that if the Company
fails to give such notice, the expiration of such Exercise Period shall not
occur, as to the respective Warrants, until thirty (30) days after such notice
is delivered.
4.08 CREDIT AGREEMENT DEBT. It is recognized and agreed that the
fair market value of the Warrants, when taken together with the terms of the
indebtedness arising under the Credit Agreement ("Credit Agreement Debt"), will
not result in any original issue discount for federal income tax purposes
("OID") with respect to the Credit Agreement Debt and the Company agrees not to
claim any OID with respect to the Credit Agreement Debt.
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4.09 PREEMPTIVE RIGHTS. In case the Company shall at any time after
the date of this Agreement in any manner issue or sell any shares of its Common
Stock (other than issuances pursuant to the exercise of Existing Warrants) or
rights, options or warrants to subscribe for or purchase, or other securities
exchangeable for or convertible into, shares of Common Stock (any such rights,
options, warrants or other securities being herein called "Rights"), whether or
not such Rights are immediately exercisable or convertible, other than if made
as a distribution or dividend to all holders of Common Stock, the Company will
give to the Holders written notice (an "Offer Notice") of the Company's
decision, describing the type of Common Stock or Right, the price, and the
general terms upon which the Company has decided to issue such securities. The
Holders shall have twenty-one (21) days from the date on which the Company shall
give the written Offer Notice to agree to purchase such Holder's PRO RATA share
(as described in the next succeeding sentence) of the Common Stock or Rights
proposed to be issued plus its PRO RATA share of the shares of Common Stock and
Rights which the other Holders are entitled to purchase pursuant to this Section
and are not purchased by other Holders, of such Common Stock or Rights for the
price and upon the terms specified in the Offer Notice, by giving written notice
to the Company and stating therein the quantity of Common Stock or Rights to be
purchased by the Holder. The Holders shall be entitled to purchase an amount of
shares of Common Stock and Rights equal to the product of (i) the number of
shares of Common Stock and Rights proposed to be issued and sold multiplied by
(ii) a fraction, the numerator of which is the number of shares of Common Stock
then owned by such Holder which were acquired upon exercise of the Warrants plus
the number of shares of Common Stock which such Holder would be entitled to
purchase upon the exercise of any Rights owned by such Holder immediately prior
to the time of determination and the denominator of which is the total number of
shares of Common Stock then issued and outstanding plus the number of shares of
Common Stock which would be issued upon the exercise of any Rights held by all
holders. In the event that the Holder and the other holders of Warrants or
Warrant Interests shall fail or refuse to exercise in full their preemptive
rights within said twenty-one (21) day period, the Company shall have one
hundred twenty (120) days thereafter to sell the quantity of Common Stock or
Rights which the Holder did not agree to purchase pursuant to this Section, at a
price and upon general terms no more favorable to the purchasers thereof than
specified in the Company's Offer Notice to the Holder. In the event the Company
has not sold the Common Stock or Rights within said period of one hundred twenty
(120) days, the Company will not thereafter issue or sell any Common Stock or
Rights without first offering such securities to the Holder in the manner
provided by the foregoing provisions of this Section. In no event shall any
Holder be entitled to any rights pursuant to this Section 4.09 in the case of
the issuance or sale of shares of Common Stock or Rights (a) for a consideration
other than cash, (b) to providers (other than providers who are Affiliates of
the Company) of debt or preferred stock financing as part of such debt or
preferred stock financing or (c) constituting, or upon the exercise of,
Management Options (as defined in the Warrant).
4.10 USE OF PROCEEDS. The Company agrees that it will use the
proceeds from the sale of the Warrant to PPI and the proceeds from the exercise
of the Warrant for general corporate and working capital purposes and not for
any purpose that would be a violation of Section 107.720 of Title 13 of the Code
of Federal Regulations.
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4.11 BUSINESS. For a period of one year following the date hereof,
the Company will not and will not permit its subsidiaries to, change its
business activity if such change would render the Company ineligible to receive
financial assistance from a Small Business Investment Company under the Small
Business Act and the regulations thereunder. If the Company breaches this
covenant, then, PPI may demand that the Company and, subject to the terms of the
Credit Agreement, the Company shall immediately purchase all securities acquired
by PPI at a purchase price equal to PPI's original cost.
4.12 NON-DISCRIMINATION. The Company will at all time comply with
the nondiscrimination requirements of 13 C.F.R., Parts 112, 113 and 117.
Section 5. REGISTRATION RIGHTS.
5.01 REGISTRATION UNDER SECURITIES ACT.
(a) REGISTRATION ON REQUEST. (i) Subject to the last sentence of
this clause (i), any time and from time to time after the date hereof, upon the
request of the holders of a majority of the Registrable Securities, the Company
will promptly give written notice of such requested registration to all
registered holders of Registrable Securities, and thereupon the Company, in
accordance with the provisions of Section 5.01(c) hereof, will use its best
efforts to effect the registration under the Securities Act of:
(A) the Registrable Securities which the Company has been so
requested to register for disposition in accordance with the intended
method or methods of disposition stated in such request, and
(B) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given
to the Company within 20 days after the giving of such written notice
by the Company (which request shall specify the intended method of
disposition of such Registrable Securities),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered. The Company shall be required to effect no more than two "long-form
registrations" pursuant to this Section 5.01(a) (i.e., registrations on Form S-
1) but there shall be no limit on "short-form registrations" pursuant to this
Section 5.01(a) (i.e., registrations on Form S-2 or S-3 or other short-form
registrations).
In no event may Holders request a registration pursuant to this
Section unless such Holders request the registration of at least 2% of the
outstanding shares of Common Stock of the Company. The Company shall not be
obligated to take any action to effect any registration requested pursuant to
this Section 5.01(a) during the period starting with the date 30 days prior to
the Company's estimate of the date of filing of, and ending on a date 90 days
after the effective date
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of, a Company initiated registration, provided that the Company is using all
reasonable efforts to cause such registration statement to become effective.
(ii) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 5.01(a) shall not be deemed to be effected (A) if a
registration statement with respect thereto shall not have become effective
unless the registration statement shall not have become effective because the
Holders requesting such registration requested that such registration be
withdrawn, (B) if, after it has become effective, such registration is
interfered with for any reason by any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or any court, and
the result of such interference is to prevent the holders of Registrable
Securities to be sold thereunder from disposing thereof in accordance with the
intended methods of disposition, or (C) if the conditions to closing specified
in the purchase agreement or underwriting agreement entered into in connection
with any underwritten registration shall not be satisfied or waived with the
consent of the underwriters of such Registrable Securities that were to have
been sold thereunder, other than as a result of any breach by any such holder of
its obligations thereunder or hereunder.
(iii) REGISTRATION STATEMENT FORM. Registrations under this Section
5.01(a) shall be on such appropriate registration form of the Commission as
shall be selected by the Company and as shall permit the disposition of the
Registrable Securities so to be registered in accordance with the intended
method or methods of disposition specified in the request of the holders of
Registrable Securities being registered for such registration. The Company
agrees to include in any such registration statement all information which the
holders of Registrable Securities being registered shall reasonably request.
(iv) EXPENSES. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this Section 5.01(a). To
the extent expenses of the registration are not required to be paid by the
Company, each holder of securities included in the registration will pay those
expenses allocable to the registration of such holder's securities, and any
expenses not so allocable will be borne by all sellers of securities included in
the registration in proportion to the aggregate selling price of the securities
to be so registered.
(v) SELECTION OF UNDERWRITERS. If a requested registration pursuant
to this Section 5.01(a) involves an underwritten offering, the managing
underwriter or underwriters shall be selected by a majority of the holders of
Registrable Securities requested to be included in such registration, such
underwriter to be reasonably satisfactory to the Company.
(vi) PRIORITY IN REQUESTED REGISTRATIONS. If a requested
registration pursuant to this Section 5.01(a) involves an underwritten offering,
and the managing underwriter shall advise the Company in writing (with a copy to
each Person requesting registration of Registrable Securities) that, in its
opinion, the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities requested
to be included therein, the Company will include in
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such registration to the extent of the number which the Company is so advised
can be sold in such offering PRO RATA among the holders of Registrable
Securities requesting inclusion therein in accordance with the number of
securities requested to be included in such registration by each such holder;
PROVIDED, that if, as a result of the preceding clause, the number of
Registrable Securities registered and sold on behalf of holders of
Registrable Securities in any registration requested pursuant to this Section
5.01(a) is less than 50% of the Registrable Securities as to which such
holders requested registration pursuant to this Section 5.01(a), then such
registration shall be deemed to be a registration under Section 5.01(b)
hereof and not under Section 5.01(a) hereof. If this Section 5.01(a) is
applicable in connection with any such registration, without the written
consent of the holders of at least a majority of the Registrable Securities,
no securities other than Registrable Securities shall be covered by such
registration and the Company will not grant any registration rights
inconsistent with the provisions of this Section 5.01(a).
(b) INCIDENTAL REGISTRATION. (i) RIGHT TO INCLUDE REGISTRABLE
SECURITIES. If the Company at any time proposes to register any of its equity
securities under the Securities Act (other than by a registration on Form S-4 or
S-8 or any successor or similar forms, and other than pursuant to Section
5.01(a)), whether or not for sale for its own account, the Company will each
such time give prompt written notice to all holders of Warrants and of
Registrable Securities of its intention to do so and of such holders' rights
under this Section 5.01(b). Upon the written request of any holder of
Registrable Securities made within 20 days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such holder and the intended method of disposition thereof), the Company
will, subject to the provisions of paragraph (iii) of this Section 5.01(b), use
its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof, to the extent required to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered; PROVIDED, that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to each Requesting Holder and, thereupon,
(A) in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation, to pay the Registration Expenses, if
any, in connection therewith), and (B) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities (but will
pay Registration Expenses, if any, as and when the same become due and payable
during such delay).
(ii) EXPENSES. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 5.01(b). To the extent expenses of the registration are not
required to be paid by the Company, each holder of securities included in the
registration will pay those expenses allocable to the registration of such
holder's
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securities, and any expenses not so allocable will be borne by all sellers of
securities included in the registration in proportion to the aggregate selling
price of the securities to be so registered.
(iii) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration
pursuant to this Section 5.01(b) involves an underwritten offering, and the
managing underwriter shall advise the Company in writing, that, in its opinion,
the number of securities requested and otherwise proposed to be included in such
registration exceeds the number which can be sold in such offering within a
price range acceptable to the Company, the Company will include in such
registration, to the extent of the number which the Company is so advised can be
sold in such offering, (A) if the registration is a primary registration on
behalf of the Company, (x) first, the securities requested to be included in
such registration by the Company until such time as the Company has raised after
the date hereof in public offering gross proceeds of $20 million from the sale
of common equity, (y) second, the Registrable Securities and securities of other
Persons requested to be included in such registration PRO RATA in accordance
with their ownership interests (assuming the exercise of all Warrants) and (B)
if the registration is a secondary registration on behalf of Persons other than
the Company, the Registrable Securities and securities of the other Persons
included in such registration PRO RATA in accordance with their ownership
interests (assuming the exercise of all Warrants). Notwithstanding anything to
the contrary contained in the foregoing, in the event that a reduction in the
number of securities included in an incidental registration is required to be
made in accordance with this Section 5.01(b)(iii), in no event shall the number
of securities to be included by Steven W. Bershad be reduced (except to allow
the Company to include securities) until such time as Mr. Bershad has sold in a
manner after the date hereof at least 1,137,031 shares of Common Stock of the
Company.
(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 as provided in Sections 5.01(a) and (b) the Company
will as expeditiously as possible:
(i) prepare and as soon thereafter as possible file with the
Commission the requisite registration statement to effect such registration
and thereafter use its best efforts to cause such registration statement to
become effective; PROVIDED, that before filing such registration statement
or any amendments thereto, the Company will furnish to the Requesting
Holders copies of all such documents proposed to be filed;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement continuously effective for a period of either (A) not less than
nine months (subject to extension pursuant to the last paragraph of this
Section 5.01(c)) or (B) such shorter period as will terminate when all of
the securities covered by such registration statement 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 any event
not before the expiration of any longer period required under the
Securities Act), and to comply with the provisions of the Securities Act
with respect to the disposition of all
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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;
(iii) furnish to each Requesting Holder such number of conformed copies
of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits, but only one copy thereof to
each such Requesting Holder), such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under
Rule 424 under the Securities Act, in conformity with the requirements of
the Securities Act, and such other documents in order to facilitate the
disposition of the Registrable Securities owned by such Requesting Holder,
as such Requesting Holder may reasonably request;
(iv) use its best efforts to register or qualify such Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions where an
exemption is not available, as each seller thereof shall reasonably
request, to keep such registration or qualification in effect for so long
as such registration statement remains in effect, and to take any other
action which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the securities owned
by such seller; PROVIDED, that the Company shall not for any such purpose
be required to (A) qualify generally to do business as a foreign
corporation in any jurisdiction where it would not otherwise be required to
qualify but for the requirements of this clause (iv), (B) consent to
general service of process in any such jurisdiction or (C) subject itself
to taxation in such jurisdiction;
(v) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller (and the underwriters, if any) of:
(A) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), and
(B) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the independent
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public accountants who have certified the Company's financial
statements included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included, therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities;
(vii) promptly notify each seller of Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the discovery 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 the
light of the circumstances under which they were made, and at the request
of any such seller promptly prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(viii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
a period of at least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act, and will promptly
furnish to each seller of Registrable Securities a copy of any amendment or
supplement to such registration statement or prospectus;
(ix) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such registration statement from
and after a date not later than the effective date of such registration
statement; and
(x) use its best efforts (A) to cause all such Registrable Securities
covered by such registration statement to be listed on any national
securities exchange (if such Registrable Securities are not already so
listed), and on any other securities exchange, on which similar securities
issued by the Company are then listed, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (B) to
secure the designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within
the meaning of Rule 11Aa2-1 of the Commission or, failing that, to secure
NASDAQ authorization for such Registrable Securities, in each case if the
Registrable
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Securities so qualify, in the case of each action referred to in this
clause (B) if requested by a majority of holders covered by such
registration statement or by the managing underwriter.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish 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.
Each holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (vii) of this Section 5.01(c), such holder will forthwith discontinue
such holder's disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's receipt of
the copies of the supplemented or amended prospectus contemplated by clause
(vii) of this Section 5.01(c) and, if so directed by the Company, such holder
will use its best efforts to 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 relating to such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the applicable time period mentioned in clause (ii) of this Section 5.01(c)
during which a Registration Statement is to remain effective shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to clause (vii) of this Section 5.01(c), to and
including the date when each seller of a Registrable Security covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by clause (vii) of this Section 5.01(c).
(d) UNDERWRITTEN OFFERINGS. (i) REQUESTED UNDERWRITTEN OFFERINGS.
If requested by the underwriters for any underwritten offering of Registrable
Securities pursuant to a registration requested under Section 5.01(a), the
Company will enter into an underwriting agreement with such underwriters for
such offering. Such agreement shall be reasonably satisfactory in substance and
form to the Company and the holders of a majority of the Registrable Securities
included in such registration and the underwriters and shall contain such
representations and warranties by the Company and by the selling shareholders
and such other terms as are generally prevailing in agreements of this type,
including, without limitation, indemnities to the effect and to the extent
provided in Section 5.01(f). The holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders and that any or all of the conditions precedent to the obligations
of such underwriters under such underwriting agreement be conditions precedent
to the obligations of such holders of Registrable Securities.
(ii) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 5.01(b) and such securities are to be distributed by or
through one or more underwriters, (i) the managing underwriter
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or underwriters shall be selected by the Company, and (ii) the Company will, if
requested by any holder of Registrable Securities as provided in Section
5.01(b), and subject to the provisions of Section 5.01(b)(iii), use its best
efforts to arrange for such underwriters to include all the Registrable
Securities to be offered and sold by such holder among the securities to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities.
(iii) HOLDBACK AGREEMENTS. (I) The Company agrees without the
consent of the managing underwriter not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during such period of
time (but not to exceed 180 days after any underwritten registration pursuant to
Section 5.01(a) or (b) has become effective) as may be requested by the
underwriters, except as part of such underwritten registration and except
pursuant to registrations on Form S-4 or S-8, or any successor or similar forms
thereto or pursuant to an unregistered offering to employees of the Company or
its Subsidiaries pursuant to an employee benefit plan as defined in Rule 405 of
Regulation C under the Securities Act; PROVIDED, that the provisions of this
clause shall not prevent the conversion or exchange of any securities pursuant
to their terms into or for other securities.
(II) Each Holder agrees not to effect any public sale or
distribution of the issue being registered or a similar security of
the Company, or 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 (or such shorter period as may be agreed to by the
Company) beginning on, the effective date of any registration
statement filed by the Company with respect to the sale of equity
securities (other than a filing pursuant to Form S-8) (except as part
of such registration), if and to the extent requested by the managing
underwriters in the case of an underwritten public offering.
(e) PREPARATION, REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants the opportunity to participate
in the preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and will give each of them such customary access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders, and such
underwriters' and such
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holders' respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act provided that the Company receives customary
confidentiality agreements from such persons.
(f) INDEMNIFICATION. (i) INDEMNIFICATION BY THE COMPANY. In the
event of any registration of any securities of the Company under the Securities
Act pursuant to this Section 5.01, the Company will, and hereby does, indemnify
and hold harmless, the seller of any Registrable Securities covered by such
registration statement, its directors, officers, agents and employees, each
other Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller or any
such director, officer, agent, employee, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (A) any untrue
statement or alleged untrue statement of any material fact contained (x) in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein or used in connection with the offering of
securities covered thereby, or any amendment or supplement thereto or any
document included by reference therein, or (y) in any application or other
document or communication (in this Section 5.01(f) collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify any securities covered by such registration statement under
the "blue sky" or securities laws thereof, or (B) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such seller and each such director, officer, agent, employee,
underwriter and controlling person for any legal or any other expenses incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; PROVIDED, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement, or omission or alleged
omission, made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement, or in any
application, in reliance upon and in conformity with written information
prepared and furnished to the Company by such seller specifically for use in the
preparation thereof which information contained any untrue statement of any
material fact or omitted to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and PROVIDED
FURTHER, that the Company shall not be liable to any Person who participates as
an underwriter in any such registration or any other Person who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended
(provided it has been made available to such Person in accordance with the terms
hereof), to the Person asserting an untrue statement or alleged untrue statement
or omission or alleged omission at or prior to the written confirmation of the
sale of the securities to such Person
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if such statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any such director, officer, agent,
employee, underwriter or controlling Person and shall survive the transfer of
such securities by such seller. The Company shall not be obligated to pay the
fees and expenses of more than one counsel or firm of counsel for all parties
indemnified in respect of a claim for each jurisdiction in which such counsel is
required unless in the reasonable judgment of any such indemnified party a
conflict of interest may exist between such indemnified party and any other
indemnified party in respect of such claim.
(ii) INDEMNIFICATION BY THE SELLERS. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to this Section 5.01, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in clause (i) of this Section 5.01(f)) the Company, each director of the
Company, each officer of the Company and each other Person, if any, who controls
the Company within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
application, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
prepared and furnished to the Company by such seller specifically for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, or such application,
which information contained any untrue statement of any material fact or omitted
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling Person and shall survive
the transfer of such securities by such seller. The indemnity provided by each
seller of securities under this Section 5.01(f)(ii) shall be provided severally,
and not jointly or jointly and severally with any other seller or prospective
seller of securities, and shall be limited in amount to the net amount of
proceeds received by such seller from the sale of Registrable Securities
pursuant to such registration statement.
(iii) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
5.01(f), such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; PROVIDED, that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding subdivisions of this Section 5.01(f), except
to the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent
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that it may wish, with counsel reasonably satisfactory to such indemnified
party. No indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(iv) OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding subdivisions of this Section 5.01(f) (with
appropriate and reasonable modifications) shall be given by the Company and each
seller of Registrable Securities with respect to any required registration or
other qualification of securities under any federal, state or provincial law or
regulation of any governmental authority, other than the Securities Act.
(v) INDEMNIFICATION PAYMENTS. The indemnification required by this
Section 5.01(f) shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred, subject to refund if the party
receiving such payments is subsequently found not to have been entitled thereto
hereunder.
(vi) CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by this
Section 5.01(f) is for any reason not available, the parties required to
indemnify by the terms hereof shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company, any seller of Registrable
Securities and one or more of the underwriters, except to the extent that
contribution is not permitted under Section 11(f) of the Securities Act. In
determining the amounts which the respective parties shall contribute, there
shall be considered the relative benefits received by each party from the
offering of the Registrable Securities (taking into account the portion of the
proceeds of the offering realized by each), the parties' relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission and
any other equitable considerations appropriate under the circumstances. The
Company and each Person selling securities agree with each other that no seller
of Registrable Securities shall be required to contribute any amount in excess
of the amount such seller would have been required to pay to an indemnified
party if the indemnities under clauses (i) and (ii) above of this Section
5.01(f) were available. The Company and each such seller agree with each other
and the underwriters of the Registrable Securities, if requested by such
underwriters, that it would not be equitable if the amount of such contribution
were determined by PRO RATA or per capita allocation (even if the underwriters
were treated as one entity for such purpose) or for the underwriters' portion of
such contribution to exceed the percentage that the underwriting discount bears
to the initial public offering price of the Registrable Securities. For
purposes of this clause (vi), each Person, if any, who controls an underwriter
within the meaning of Section 15 of the Securities Act shall have the same
rights to contribution as such underwriter, and each director and each officer
of the Company who signed the registration statement, and each Person, if any,
who controls the Company or a seller of Registrable Securities within the
meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Company or a seller of Registerable
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Securities, as the case may be. Notwithstanding the foregoing, no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act shall be entitled to contributions from any person who is not
guilty of such fraudulent misrepresentation.
(g) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration hereunder unless such Person agrees
to sell such Person's securities on the basis provided in any underwriting
arrangements reasonably approved by the Company.
(h) LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS UNDER
REGISTRATION COVENANTS. The obligations of the Company under this Section 5 to
file and to use its best efforts to cause the Registerable Securities to be
registered under the Securities Act are subject to the limitation, condition and
qualification that the Company shall be entitled to postpone for a reasonable
period of time (but not exceeding 60 days) the filing of any registration
statement otherwise required to be prepared and filed by it pursuant to this
Section 5 if the Company determines, in its reasonable judgment, that such
registration and offering would interfere with any financing, acquisition,
corporate reorganization or other material transaction involving the Company or
would require premature disclosure thereof and promptly gives the holders of
Registerable Securities requesting registration thereof pursuant to Section 5
written notice of such determination, containing a general statement of the
reasons for such postponement and an approximation of the anticipated delay.
5.02 RULE 144. The Company will file the reports required to be
filed by it under the Exchange Act and the rules and regulations adopted by the
Commission thereunder (or, if the Company is not required to file such reports,
will, upon the request of any holder of Registrable Securities, make publicly
available other information) and will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
5.03 RULE 144A. The Company covenants that, except at such times as
the Company is a reporting company under Section 13 or 15(d) of the Exchange
Act, the Company shall, upon the written request of any holder of Registrable
Securities, provide to any such holder and to any prospective institutional
transferee of Registrable Securities designated by such holder, such financial
and other information as is available to the Company or can be obtained by the
Company without material expense and as such holder may reasonably determine is
required to permit a transfer of such Registrable Securities to comply with the
requirements of Rule 144A promulgated under the Securities Act.
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5.04 OTHER REGISTRATION RIGHTS. The Company will not grant to any
Affiliate of the Company the right to request the Company to register any equity
securities of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the written consent of the holders of
at least a majority of all Registrable Securities at the time outstanding unless
such registration rights permit the holders of the Registrable Securities to
piggyback on all such registrations on a PRO rata basis (determined by ownership
and after giving effect to all cutbacks) with such Affiliate except as otherwise
permitted pursuant to the last sentence of Section 5.01(b)(iii). The Company
represents and warrants to the holders of Registrable Securities that on the
date hereof there are no other "registration rights" held by any Person except
for the Existing Warrants.
Section 6. OTHER RIGHTS AND OBLIGATIONS.
6.01 TAG ALONG RIGHTS. (a) In the event that Stephen W. Bershad or
any Affiliate of Stephen W. Bershad (the "Tag-Along Offeror") intends to sell,
transfer or otherwise in any manner dispose of (other than in connection with
the granting of a security interest in such securities) any shares of Common
Stock owned by him (the "Tag-Along Shares"), other than sales which when
aggregated with all other sales by Mr. Bershad after the date hereof, aggregate
less than 1,137,031 shares of Common Stock, the Tag-Along Offeror shall provide
written notice (the "Tag-Along Notice") to the Holder (and any assignee of the
Holder's rights hereunder who has acquired Common Stock issued upon exercise of
such Holder's Warrant) (the "Tag-Along Offeree") in the manner set forth in this
Section 6.01. The Tag-Along Notice shall identify the proposed transferee or
transferees, the Tag-Along Shares, the Tag-Along Offeree's rights pursuant to
this Section 6.01 (the "Tag-Along Offer"), the estimated expenses associated
with the sale, a description of the price and all the other terms and conditions
of the Tag-Along Offer. The Tag-Along Offeror shall not be permitted to sell,
transfer or otherwise dispose (other than in connection with the granting of a
security interest in such securities) of any shares of Common Stock owned by him
otherwise than as provided in this Section 6.01. In the event that the
consideration payable in a Tag-Along Offer consists in whole or in part of a
consideration which a Tag-Along Offeree is prohibited by law from receiving or
holding, then the Tag-Along Offeree shall receive in lieu of such consideration
cash in an amount equal to the fair market value of such consideration. In
connection with any such sale, neither the Tag-Along Offeror nor any of its
Affiliates shall receive any benefits of any type not received by the Tag-Along
Offeree on a PRO RATA basis, including, without limitation, any consulting, non-
competition, investment banking or other fees other than employment compensation
received in the ordinary course of business for employment services actually
provided by such person to the purchaser in any Tag-Along Offer after
consummation thereof. Notwithstanding the foregoing, the Tag-Along Offeree
shall be responsible for its PRO RATA share of all estimated expenses associated
with the sale. The timing provisions of this Section 6.01 shall not apply to
Tag-Along Offers structured as a merger, consolidation or similar transaction in
which all holders of shares of Common Stock are permitted or required to
transfer their interest on the same terms.
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(b) The Tag-Along Offeree shall have the right and option,
exercisable as set forth below, to accept the Tag-Along Offer for up to such
number of shares of Common Stock in respect of which the Tag-Along Offer is
made, as is determined in accordance with the provisions of this Section 6.01.
The terms of any sale of such shares of Common Stock by a Tag-Along Offeree
pursuant to the exercise of its option under this Section 6.01 shall be the same
terms as those for the sale of shares of Common Stock by the Tag-Along Offeror
as set forth in the Tag-Along Notice; PROVIDED, that the Tag-Along Offeree shall
not be required to give any representations except as to such Tag-Along
Offeree's ownership interests in the Company and its ability to sell such
interests; PROVIDED, FURTHER, HOWEVER, the Holder shall be required to
participate in any indemnity obligations of the selling stockholders on several
not joint, PRO RATA basis so long as the aggregate amount of such holders
indemnity obligation does not exceed the net proceeds received by such person in
connection with such Tag-Along Offer. If the Tag-Along Offeree desires to
exercise such option, it shall provide the Tag-Along Offeror with irrevocable
written notice (the "Tag-Along Acceptance"), specifying, subject to Section
6.01(c), the number of shares of Common Stock as to which it is accepting the
Tag-Along Offer, within 15 Business Days after the date on which the Tag-Along
Notice is given (the "Tag-Along Notice Period").
(c) The Tag-Along Offeree shall have the right to sell, pursuant to
the Tag-Along Offer, a number of shares of Common Stock (the "Tag Along Offeree
Shares") equal to the lesser of (i) the number specified in its Tag-Along
Acceptance or (ii) the number of shares of Common Stock equal to the product of
(i) the total number of shares of Common Stock constituting the Tag-Along
Shares, and (ii) a fraction, the numerator of which shall be the total number of
shares of Common Stock held by such Tag-Along Offeree and the denominator of
which shall be the total number of the then outstanding shares of Common Stock
held by the Tag-Along Offeror and the Tag-Along Offeree; PROVIDED, HOWEVER, in
the event that after giving effect to the sale by the Tag-Along Offeror pursuant
to such Tag-Along Offer, the Tag-Along Offeror and its Affiliates shall own less
than 50% of the amount of shares of Common Stock owned by them on the date
hereof, then in connection with such sale pursuant to the Tag-Along Offer, the
Tag-Along Offeree shall have the right to sell all shares of Common Stock owned
by such Tag-Along Offeree.
(d) If at the termination of the Tag-Along Notice Period the Tag-
Along Offeree shall not have accepted the Tag-Along Offer, the Tag-Along Offeree
will be deemed to have waived any and all of its rights under this Section 6.01
with respect to the sale or other disposition of any shares of Common Stock
pursuant to such Tag-Along Offer as described in the Tag-Along Notice. The Tag-
Along Offeror shall have 120 days in which to sell the Tag-Along Shares and Tag-
Along Offeree Shares not otherwise excluded pursuant to the previous sentence,
at a price not higher than that contained in the Tag-Along Notice and on terms
not materially more favorable to the Tag-Along Offeror than were contained in
the Tag-Along Notice. If, at the end of such 120 day period the Tag-Along
Offeror has not completed the sale of all the Tag-Along Shares, this Section
6.01 shall again apply to offers and sales of Tag-Along Shares.
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(e) Notwithstanding anything contained in this Section 6.01, there
shall be no liability on the part of the Tag-Along Offeror to any person if the
sale of Tag-Along Shares pursuant to this Section 6.01 is not consummated for
whatever reason other than because of the breach by the Tag-Along Offeror of
this Section 6.01. The Tag-Along Offeror shall have full and absolute
discretion to effect or not to effect a sale of shares of Common Stock pursuant
to this Section 6.01.
6.02 BOARD OBSERVATION RIGHTS. All of the Holders, as a group, by
vote of the Required Holders, shall be entitled to have up to two
representatives attend all meetings of the Board of Directors of the Company at
the expense of the Company. The Company agrees to give the Holders (and any
permitted assignee of the Holders' rights hereunder) prior written notice of all
such meetings promptly after the scheduling thereof and in any event no later
than five business days prior to such meeting, or if such meeting is scheduled
less than five business days in advance, on the date on which the date of the
Board meeting is set; PROVIDED, HOWEVER, that to the extent any Holder is a
Person or an Affiliate of any Person providing financing to the Company, such
Holder's representatives may be excluded from that portion of any Board or
committee meeting at which the financing provided by such Person is discussed.
6.03 DRAG-ALONG RIGHTS. (a) At the option of the Company, if at any
time the Company's Board of Directors approves the sale of the Company to any
person who is not an Affiliate of the Company (whether by merger, consolidation,
sale of all or substantially all of the Company's assets or sale of all of the
outstanding shares of Common Stock in which all of the stockholders are entitled
to participate) (an "Approved Sale"), each Holder agrees to sell all of such
Holder's Warrants plus the shares of Common Stock which were acquired upon the
exercise of the Warrants on the terms and conditions approved by the Company's
Board of Directors and, to the extent the Warrants have been converted, to vote
(or execute a consent with respect to) such shares in favor of the Approved
Sale. Notwithstanding the foregoing, no Holders shall be required to make any
representations and warranties to the purchaser in any Approved Sale other than
with respect to such Holder's title to its securities. At the request of the
Company's Board of Directors the Holders shall sell all of their Warrants to a
designee in furtherance of the consummation of an Approved Sale, for the amount
of consideration payable in accordance with Section 6.03(b) less the aggregate
exercise price thereof; provided, however, if the Approved Sale is not
consummated, then the Holders will be restored to the position they had been in
prior to such sale.
(b) The obligations of each Holder with respect to any Approved Sale
are subject to the satisfaction of the conditions that (a) upon the consummation
of the Approved Sale, each stockholder will receive the same form and amount of
consideration per share of outstanding Common Stock as is given to each other
stockholder, or if any holders are given an option as to the form and amount of
consideration to be received, all holders will be given the same option, and no
stockholder will be entitled to receive any benefits of any type not received by
all of the other stockholders on a PRO rata basis; PROVIDED, that (i) no
stockholder shall be required to accept any consideration which it is prohibited
by law from receiving and (b) in such event, such stockholder shall be entitled
to receive cash in an amount equal to the fair market value of such
consideration,
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and (ii) receipt by the Company of a written fairness opinion from an investment
banking firm of national prominence which is not an Affiliate of the Company or
of any stockholder and which is selected by the Company's Board of Directors
that the consideration per share of Common Stock to be received by each
stockholder is fair from a financial point of view. In determining the amount
of consideration per share payable to any stockholder in connection with an
Approved Sale, all consulting, noncompetition, investment banking or other fees
payable to such stockholder in connection with such Approved Sale shall be
deemed to be part of the consideration payable to such stockholder who is an
Affiliate in such Approved Sale other than compensation pursuant to employment
arrangements of the type described in Section 6.01(a). Notwithstanding the
foregoing, each stockholder shall be responsible for its PRO RATA share of all
estimated expenses associated with the sale.
Section 7. REGULATORY SALE OR DISPOSITION.
7.01 REGULATORY SALE OR DISPOSITION. Anything herein or in the
Warrants to the contrary notwithstanding, in the event that any Holder or any of
the Holders' Affiliates shall deliver to the Company an opinion of counsel to
such Holder or such Affiliate, as the case may be, to the effect that if such
Holder or such Affiliate, as the case may be, shall continue to hold some or all
of the Warrants or its Warrant Interest or any other securities of the Company
held by it, there is a material risk that such ownership will result in the
violation of any statute, regulation or rule of any governmental authority
(including, without limitation, Regulation Y), such Holder or such Affiliate, as
the case may be, may sell or otherwise dispose of its Warrants or Warrant
Interest, as the case may be, in as prompt and orderly a manner as is reasonably
necessary. The Company shall cooperate with such Holder or such Affiliate, as
the case may be, in disposing of its Warrants or Warrant Interest, and (without
limiting the foregoing) at the request of such Holder or such Affiliate, as the
case may be, the Company shall provide (and authorize such Holder or such
Affiliate, as the case may be, to provide) financial and other information
concerning the Company to any prospective purchaser of the Warrants or Warrant
Interest owned by such Holder or such Affiliate, as the case may be. The
provisions of this Section 7.01 shall inure solely to the benefit of the Holders
and their Affiliates which are subject to the provisions of the Bank Holding
Company Act of 1956, as amended (including Regulation Y promulgated thereunder).
The Company shall not be required to provide any information under this
Agreement unless the recipient thereof signs a confidentiality agreement
reasonably satisfactory to the Company, which confidentiality agreement shall in
any event include an acknowledgment by the recipient of such information of its
obligations under the United States securities laws relating to insider trading.
Section 8. MISCELLANEOUS.
8.01 EXPENSES. The Company agrees to pay all reasonable fees and
disbursements of the Holder (including reasonable fees and expenses of counsel)
in connection with the purchase and sale of the Warrants as contemplated by this
Agreement and in connection with any exercise of the Warrants, or any amendments
thereto, and the fees and disbursements of each Holder (including
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reasonable fees and expenses of counsel) in connection with the negotiation,
execution and delivery of this Agreement or the Warrants or any waiver or
consent hereunder or thereunder or any amendment hereof or thereof and in
connection with any filings or registrations required to be made in connection
with such Holder's ownership of the Warrants and the Warrant Interests
(including, without limitation, any filings under the Exchange Act, except as
otherwise set forth in the definition of Registration Expenses. In addition,
the Company agrees to pay any and all stamp, transfer and other similar taxes
payable or determined to be payable in connection with the execution and initial
delivery of this Agreement, any Warrants or the issuance or transfer of the
Warrants.
8.02 NOTICES. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex, telegraph,
telecopy, cable or other writing and telexed, telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof; or, as to any party, at
such other address as shall be designated by such party in a notice to the
Company given in accordance with this Section 8.02. All such communications
shall be deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
8.03 EXCLUSION. This Agreement and the Warrants shall be binding
upon, and inure solely to the benefit of the Company and the Holders and their
permitted successors and assigns, and no other Person shall acquire or have any
right under or by virtue of this Agreement or the Warrants. Transferees of the
original Holders of the Warrants on the date hereof shall not be entitled to the
benefits of this Agreement except that (a) Affiliates of Banque Paribas and PPI
and employees of such entities shall be entitled to all rights under this
Agreement so long as the exercise of any such rights shall be effected by Banque
Paribas or PPI, as the case may be, and Banque Paribas or PPI, as the case may
be, shall cause all such Affiliates and employees to comply with their
obligations under this Agreement and (b) a total of four additional Persons not
affiliated with Banque Paribas or PPI at any one time shall be entitled to be
Holders hereunder.
8.04 SPECIFIC PERFORMANCE. The Company acknowledges and agrees that
in the event of any breach of this Agreement or the Warrants by the Company, the
Holders would be irreparably harmed and could not be made whole by monetary
damages. The Company accordingly agrees (i) to waive the defense in any action
for specific performance that a remedy at law would be adequate, and (ii) that
the Holders, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to compel specific performance of this
Agreement or the Warrants in any action instituted in the United States District
Court for the Southern District of New York, or, in the event such Court would
not have jurisdiction for such action, in any court of the United States or any
state thereof having subject matter jurisdiction for such action.
8.05 NO WAIVERS. No failure or delay by any party in exercising any
right, power or privilege hereunder or under the Warrants except a failure to
exercise the purchase rights under
-27-
<PAGE>
the Warrants within the stated time period set forth therein shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by law.
8.06 AMENDMENTS AND WAIVERS. Any provision of this Agreement or the
Warrants may be amended or waived if, but only if, such amendment or waiver is
in writing and signed by the Company and the Required Holders.
8.07 GOVERNING LAW. THIS AGREEMENT AND THE WARRANTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
8.08 COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatories thereto and hereto were upon the same instrument.
8.09 COMPANY AWARENESS. The Company acknowledges its awareness that
PPI is a Federal licensee under the Small Business Investment Act of 1958, as
amended.
8.10 TERMINATION. This Agreement (other than Sections 3, 4.02, 4.03,
4.13 (but in the case of Sections 4.02, 4.03 and 4.13 only to the extent any
Holder is a "small business investment concern" and such survival is reasonably
required in order for the "SBIC" to comply with applicable law), 4.05, 4.06,
4.07, 4.11, 4.12, 5, 7.01 and 8.01) shall terminate at such time as the Holders
and their Affiliates and employees own less than 2.5% of the outstanding shares
of the Company (assuming the exercise of all Warrants).
-28-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
VERNITRON CORPORATION
By________________________________
Title:
Address for Notices:
645 Madison Avenue
New York, New York 10022
Attention: Elliot Konopko
Telecopy Number: (212) 754-6348
-29-
<PAGE>
WARRANT INTERESTS
776,388 Shares of Common Stock PARIBAS PRINCIPAL, INC.
By________________________________
Title:
Address for Notices:
787 Seventh Avenue
New York, New York 10019
Attention: Donald Ercole
Telecopy Number: (212) 841-2363
666,312 Shares of Common Stock BANQUE PARIBAS
By________________________________
Title:
By________________________________
Title:
Address for Notices:
787 Seventh Avenue
New York, New York 10019
Attention: Donald Ercole
Telecopy Number: (212) 841-2363
-30-
<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$36,000,000
CREDIT AGREEMENT
among
VERNITRON CORPORATION,
VARIOUS BANKS
and
BANQUE PARIBAS,
as Agent
--------------------------
Dated as of April 25, 1996
--------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing. . . . . . . . . . . . . . . . 3
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . 3
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . 4
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . 6
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . 9
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.12 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . 11
Section 2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . 12
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 12
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . . 14
2.03 Letter of Credit Requests . . . . . . . . . . . . . . . . . . . 14
2.04 Letter of Credit Participations . . . . . . . . . . . . . . . . 14
2.05 Agreement to Repay Letter of Credit Drawings. . . . . . . . . . 16
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3. Commitment Commission; Fees; Reductions of Commitment. . . . . . 18
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.02 Voluntary Termination of Unutilized Commitments . . . . . . . . 19
3.03 Mandatory Reduction of Commitments. . . . . . . . . . . . . . . 20
Section 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . . 21
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . 21
4.02 Mandatory Repayments and Commitment Reductions. . . . . . . . . 22
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . 27
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5. Conditions Precedent to Loans on the Initial Borrowing Date. . . 29
5.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . . 29
5.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 29
5.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . 29
5.04 Corporate Documents; Proceedings. . . . . . . . . . . . . . . . 30
(i)
<PAGE>
Page
----
5.05 Employee Benefit Plans; Shareholders' Agreements; Management
Agreements; Employment Agreements; Collective Bargaining
Agreements; Debt Agreements; Tax Sharing Agreements;
Material Contracts. . . . . . . . . . . . . . . . . . . . . . 30
5.06 Consummation of the Acquisition; Consummation of the Merger . . 31
5.07 Pledge Agreement. . . . . . . . . . . . . . . . . . . . . . . . 32
5.08 Security Agreement; Banking Arrangements. . . . . . . . . . . . 32
5.09 Mortgage; Title Insurance; Surveys; etc.. . . . . . . . . . . . 33
5.10 Subsidiaries Guaranty . . . . . . . . . . . . . . . . . . . . . 34
5.11 Material Adverse Change, etc. . . . . . . . . . . . . . . . . . 34
5.12 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.13 Fees, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.14 Solvency Certificate; Environmental Analyses. . . . . . . . . . 35
5.15 Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . 36
5.16 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.17 Capital Contribution, Intercompany Loan . . . . . . . . . . . . 36
5.18 Financial Statements; Projections; Management Letters . . . . . 37
5.19 Consent Letter. . . . . . . . . . . . . . . . . . . . . . . . . 37
5.20 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.21 Initial Borrowing Base Certificate. . . . . . . . . . . . . . . 38
5.22 Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6. Conditions Precedent to All Credit Events. . . . . . . . . . . . 39
6.01 No Default; Representations and Warranties. . . . . . . . . . . 39
6.02 Material Adverse Change, etc. . . . . . . . . . . . . . . . . . 39
6.03 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.04 Notice of Borrowing; Letter of Credit Request . . . . . . . . . 39
Section 7. Representations, Warranties and Agreements . . . . . . . . . . . 40
7.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . 40
7.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . 40
7.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.04 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . 41
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc.. . . . . . . . . . . . . . . . 41
7.06 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.07 True and Complete Disclosure. . . . . . . . . . . . . . . . . . 43
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . 43
7.09 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . 44
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 45
7.11 The Security Documents. . . . . . . . . . . . . . . . . . . . . 45
7.12 Representations and Warranties in Documents . . . . . . . . . . 46
(ii)
<PAGE>
Page
----
7.13 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.14 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 47
7.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.16 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . 47
7.17 Investment Company Act. . . . . . . . . . . . . . . . . . . . . 47
7.18 Public Utility Holding Company Act. . . . . . . . . . . . . . . 47
7.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 48
7.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . 49
7.21 Patents, Licenses, Franchises and Formulas. . . . . . . . . . . 49
7.22 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.23 Restrictions on or Relating to Subsidiaries . . . . . . . . . . 50
7.24 Special Purpose Corporation; Immaterial Subsidiaries. . . . . . 50
7.25 The Transaction . . . . . . . . . . . . . . . . . . . . . . . . 51
7.26 Concentration Account and Bank Deposit Accounts . . . . . . . . 51
Section 8. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 51
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . 51
8.02 Books, Records and Inspections. . . . . . . . . . . . . . . . . 55
8.03 Maintenance of Property, Insurance. . . . . . . . . . . . . . . 55
8.04 Corporate Franchises. . . . . . . . . . . . . . . . . . . . . . 56
8.05 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . 56
8.06 Compliance with Environmental Laws. . . . . . . . . . . . . . . 56
8.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.08 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . 58
8.09 Performance of Obligations. . . . . . . . . . . . . . . . . . . 58
8.10 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . 58
8.11 Interest Rate Protection. . . . . . . . . . . . . . . . . . . . 59
8.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 59
8.13 UCC Searches. . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.14 Intellectual Property Rights. . . . . . . . . . . . . . . . . . 59
8.15 Registry. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.16 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . 60
8.17 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 62
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . . 64
9.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.04 Operating Leases. . . . . . . . . . . . . . . . . . . . . . . . 65
9.05 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.06 Advances, Investments and Loans . . . . . . . . . . . . . . . . 67
9.07 Transactions with Affiliates. . . . . . . . . . . . . . . . . . 68
(iii)
<PAGE>
Page
----
9.08 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . 68
9.09 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . 69
9.10 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . 70
9.11 Consolidated Indebtedness to Consolidated EBITDA. . . . . . . . 70
9.12 Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . 71
9.13 Minimum Consolidated Net Worth. . . . . . . . . . . . . . . . . 72
9.14 Maximum Leverage. . . . . . . . . . . . . . . . . . . . . . . . 72
9.15 Minimum Working Capital Ratio . . . . . . . . . . . . . . . . . 73
9.16 Limitation on Modifications of Indebtedness, Certificate of
Incorporation, By-Laws and Certain Other Agreements; etc. . . 73
9.17 Limitation on Certain Restrictions on Subsidiaries. . . . . . . 75
9.18 Limitation on Issuance of Capital Stock . . . . . . . . . . . . 75
9.19 Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.20 Limitation on Creation of Subsidiaries. . . . . . . . . . . . . 76
9.21 Concentration Account and Bank Deposit Accounts . . . . . . . . 76
9.22 Account Receivable Days . . . . . . . . . . . . . . . . . . . . 76
Section 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 76
10.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.02 Representations, etc.. . . . . . . . . . . . . . . . . . . . . 76
10.03 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.04 Default Under Other Agreements . . . . . . . . . . . . . . . . 76
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . 77
10.06 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.07 Security Documents . . . . . . . . . . . . . . . . . . . . . . 78
10.08 Subsidiaries Guaranty. . . . . . . . . . . . . . . . . . . . . 78
10.09 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.10 Change of Control. . . . . . . . . . . . . . . . . . . . . . . 79
Section 11. Definitions and Accounting Terms. . . . . . . . . . . . . . . . 79
11.01 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
12.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . 105
12.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . 105
12.03 Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . 105
12.04 Certain Rights of the Agent. . . . . . . . . . . . . . . . . . 106
12.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 106
12.07 The Agent in Its Individual Capacity . . . . . . . . . . . . . 106
12.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
12.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . 107
(iv)
<PAGE>
Page
----
Section 13. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . . . 107
13.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . 108
13.02 Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . 109
13.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
13.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . 109
13.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . 111
13.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . 111
13.07 Calculations; Computations . . . . . . . . . . . . . . . . . . 112
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . 112
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 113
13.10 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . 114
13.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . 114
13.12 Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . 114
13.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
13.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . 116
13.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 116
13.16 Post-Closing Actions.. . . . . . . . . . . . . . . . . . . . . 116
13.17 No Oral Agreement. . . . . . . . . . . . . . . . . . . . . . . 117
(v)
<PAGE>
SCHEDULE I Commitments
SCHEDULE II Real Property
SCHEDULE III Subsidiaries
SCHEDULE IV Bank Deposit Accounts
SCHEDULE V Insurance
SCHEDULE VI Existing Liens
SCHEDULE VII Securities
SCHEDULE VIII Existing Indebtedness
SCHEDULE IX Liabilities
SCHEDULE X ERISA Matters
EXHIBIT A-1 Form of Notice of Borrowing
EXHIBIT A-2 Form of Notice of Conversion
EXHIBIT B-1 Form of A Term Note
EXHIBIT B-2 Form of B Term Note
EXHIBIT B-3 Form of Revolving Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Opinion of Elliott N. Konopko, Esq.
EXHIBIT E Form of Officers' Certificate of Credit Parties
EXHIBIT F Form of Pledge Agreement
EXHIBIT G-1 Form of Security Agreement
EXHIBIT G-2 Form of Bank Deposit Account Consent Letter
EXHIBIT G-3 Form of Concentration Account Consent Letter
EXHIBIT H Form of Subsidiaries Guaranty
EXHIBIT I Form of Solvency Certificate
EXHIBIT J Form of Consent Letter
EXHIBIT K Form of Section 4.04(b)(ii) Certificate
EXHIBIT L Form of Bank Assignment and Assumption Agreement
EXHIBIT M Form of Borrowing Base Certificate
EXHIBIT N Form of Intercompany Note
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of April 25, 1996, among VERNITRON
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware (the "Borrower"), the financial institutions party hereto from time to
time (each a "Bank" and, collectively, the "Banks"), and BANQUE PARIBAS, as
agent (the "Agent"). Unless otherwise defined herein, all capitalized terms
used herein and defined in Section 11 are used herein as therein defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the respective
credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
Section 1. AMOUNT AND TERMS OF CREDIT.
1.01 THE COMMITMENTS. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with an A Term Loan Commitment severally
agrees to make, on the Initial Borrowing Date, a term loan (each, an "A Term
Loan" and, collectively, the "A Term Loans") to the Borrower, which A Term
Loans:
(i) shall be made and initially maintained as a single Borrowing of
Base Rate Loans (subject to the option to convert such Base Rate Loans
pursuant to Section 1.06); and
(ii) shall not exceed for any Bank, in initial aggregate principal
amount, that amount which equals the A Term Loan Commitment of such Bank on
such date (before giving effect to any reductions thereto on such date
pursuant to Section 3.03(b)(i) but after giving effect to any reductions
thereto on or prior to such date pursuant to Section 3.03(b)(ii)).
Once repaid, A Term Loans incurred hereunder may not be reborrowed.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a B Term Loan Commitment severally agrees to make, on the Initial
Borrowing Date,
<PAGE>
a term loan (each, a "B Term Loan" and, collectively, the "B Term Loans") to the
Borrower, which B Term Loans:
(i) shall be made and initially maintained as a single Borrowing of
Base Rate Loans (subject to the option to convert such Base Rate Loans
pursuant to Section 1.06); and
(ii) shall not exceed for any Bank, in initial aggregate principal
amount, that amount which equals the B Term Loan Commitment of such Bank on
such date (before giving effect to any reductions thereto on such date
pursuant to Section 3.03(c)(i) but after giving effect to any reductions
thereto on or prior to such date pursuant to Section 3.03(c)(ii)).
Once repaid, B Term Loans incurred hereunder may not be reborrowed.
(c) Subject to and upon the terms and conditions set forth herein,
each Bank with a Revolving Loan Commitment severally agrees at any time and from
time to time on and after the Initial Borrowing Date and prior to the Revolving
Loan Maturity Date, to make a loan or loans (each a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower, which Revolving Loans:
(i) shall, at the option of the Borrower, be Base Rate Loans or
Eurodollar Loans, PROVIDED that (x) except as otherwise specifically
provided in Section 1.10(b), all Revolving Loans comprising the same
Borrowing shall at all times be of the same Type and (y) no Eurodollar
Loans may be incurred prior to the Syndication Termination Date;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
(iii) which are not utilized to make a Tax Payment, shall not exceed
for any Bank at any time outstanding that aggregate principal amount which,
when added to the product of (x) such Bank's Percentage and (y) the
aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time,
equals the Revolving Loan Commitment of such Bank at such time minus such
Bank's Percentage of the Blocked Commitment at such time;
(iv) which are utilized to make a Tax Payment, shall not exceed for
all Banks the amount of the Blocked Commitment at such time; and
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(v) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when added to the amount of all Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time, equals the lesser of (x) the
Borrowing Base then in effect and (y) the Total Revolving Loan Commitment
at such time.
Notwithstanding anything to the contrary contained above, the aggregate amount
of Revolving Loans which may be incurred on the Initial Borrowing Date after
giving effect to all Borrowings on such date shall not exceed $6,400,000.
1.02 MINIMUM AMOUNT OF EACH BORROWING. The aggregate principal
amount of each Borrowing hereunder shall not be less than the Minimum Borrowing
Amount and, if greater, shall be in integral multiples of $100,000. More than
one Borrowing may occur on the same date, but at no time shall there be
outstanding more than five Borrowings of Eurodollar Loans.
1.03 NOTICE OF BORROWING. (a) Whenever the Borrower desires to make
a Borrowing hereunder, it shall give the Agent at its Notice Office, prior to
11:00 a.m. (New York time) at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans and at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of each Borrowing of Eurodollar Loans.
Each such notice (each a "Notice of Borrowing"), except as otherwise expressly
provided in Section 1.10, shall be irrevocable and shall be given by the
Borrower in the form of Exhibit A-1, appropriately completed to specify:
(i) the aggregate principal amount of the Loans to be made pursuant to such
Borrowing which shall be at least the Minimum Borrowing Amount; (ii) the date of
such Borrowing (which shall be a Business Day); (iii) whether the Loans being
made pursuant to such Borrowing shall constitute A Term Loans, B Term Loans or
Revolving Loans; and (iv) whether the Loans being made pursuant to such
Borrowing are to be initially maintained as Base Rate Loans or Eurodollar Loans
and, if Eurodollar Loans, the initial Interest Period to be applicable thereto.
The Agent shall promptly give each Bank which is required to make Loans of the
Tranche specified in the respective Notice of Borrowing notice of such proposed
Borrowing, of such Bank's proportionate share thereof and of the other matters
specified in the Notice of Borrowing. Whenever the Borrower desires to utilize
the Blocked Commitment to make a Borrowing of Revolving Loans to make a Tax
Payment, the Notice of Borrowing shall include a statement to such effect, the
details of such payment, including, without limitation, the aggregate principal
amount of such payment and all previous Tax Payments, the aggregate principal
amount of Revolving Loans to be utilized in connection with such payment, the
recipient of such payment, the aggregate principal amount of Revolving Loans
previously incurred and utilized to make a Tax Payment and the proposed date of
such payment.
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(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given under this
Agreement, the Agent or the Issuing Bank (in the case of Letters of Credit), as
the case may be, may prior to receipt of written confirmation act without
liability upon the basis of telephonic notice, believed by the Agent or the
Issuing Bank, as the case may be, in good faith to be from the President, the
Chief Financial Officer, Controller or Treasurer of the Borrower. In each such
case, the Agent's or the Issuing Bank's record of the terms of such telephonic
notice shall be conclusive absent manifest error.
1.04 DISBURSEMENT OF FUNDS. No later than 12:00 Noon (New York time)
on the date specified in each Notice of Borrowing, each Bank with a Commitment
of the respective Tranche will make available its PRO RATA portion (determined
in accordance with Section 1.07) of each such Borrowing requested to be made on
such date. All such amounts shall be made available in Dollars and in
immediately available funds at the Payment Office of the Agent, and the Agent
will make available to the Borrower at the Payment Office the aggregate of the
amounts so made available by the Banks. Unless the Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Agent such Bank's portion of any Borrowing to be
made on such date, the Agent may assume that such Bank has made such amount
available to the Agent on such date of Borrowing and the Agent may, in reliance
upon such assumption, make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Agent by such
Bank, the Agent shall be entitled to recover such corresponding amount on demand
from such Bank. If such Bank does not pay such corresponding amount forthwith
upon the Agent's demand therefor, the Agent shall promptly notify the Borrower
and the Borrower shall immediately pay such corresponding amount to the Agent.
The Agent shall also be entitled to recover on demand from such Bank or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Agent to the Borrower until the date such corresponding amount is recovered by
the Agent, at a rate per annum equal to (i) if recovered from such Bank, the
cost to the Agent of acquiring overnight federal funds and (ii) if recovered
from the Borrower, the rate of interest applicable to the respective Borrowing,
as determined pursuant to Section 1.08. Nothing in this Section 1.04 shall be
deemed to relieve any Bank from its obligation to make Loans hereunder or to
prejudice any rights which the Borrower may have against any Bank as a result of
any failure by such Bank to make Loans hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made by each Bank shall be evidenced (i) if A Term
Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-1, with blanks appropriately completed in
conformity herewith (each, an "A Term Note" and, collectively, the "A Term
Notes"), (ii) if B Term Loans, by a promissory note duly executed and delivered
by the Borrower substantially in the form of Exhibit B-2, with
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blanks appropriately completed in conformity herewith (each, a "B Term Note"
and, collectively, the "B Term Notes") and (iii) if Revolving Loans, by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B-3, with blanks appropriately completed in conformity herewith
(each a "Revolving Note" and, collectively, the "Revolving Notes").
(b) The A Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank or its registered assigns
and be dated the Initial Borrowing Date, (iii) be in a stated principal amount
equal to the A Term Loan made by such Bank on the Initial Borrowing Date and be
payable in the principal amount of the A Term Loan evidenced thereby, (iv)
mature on the A Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary repayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the Subsidiaries Guaranty and be secured by the Security Documents.
(c) The B Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank or its registered assigns
and be dated the Initial Borrowing Date, (iii) be in a stated principal amount
equal to the B Term Loan made by such Bank on the Initial Borrowing Date and be
payable in the principal amount of the B Term Loan evidenced thereby, (iv)
mature on the B Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary repayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the Subsidiaries Guaranty and be secured by the Security Documents.
(d) The Revolving Note issued to each Bank with a Revolving Loan
Commitment shall (i) be executed by the Borrower, (ii) be payable to the order
of such Bank or its registered assigns and be dated the Initial Borrowing Date,
(iii) be in a stated principal amount equal to the Revolving Loan Commitment of
such Bank and be payable in the principal amount of the Revolving Loans
evidenced thereby, (iv) mature on the Revolving Loan Maturity Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to voluntary repayment as provided in Section 4.01, and
mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the Subsidiaries Guaranty and be secured by the
Security Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evi-
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denced thereby. Failure to make any such notation or the making of an incorrect
notation shall not affect the Borrower's obligations in respect of such Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert, on
any Business Day occurring on or after the Syndication Termination Date, all or
a portion, at least equal to the Minimum Borrowing Amount, of the outstanding
principal amount of the Loans made pursuant to one or more Borrowings (so long
as of the same Tranche) of one Type of Loan into a Borrowing or Borrowings (of
the same Tranche) of the other Type of Loan; PROVIDED that:
(i) except as otherwise provided in Section 1.10(b), Eurodollar Loans
may be converted into Base Rate Loans only on the last day of an Interest
Period applicable to the Loans being converted and no such partial
conversion of Eurodollar Loans shall reduce the outstanding principal
amount of such Eurodollar Loans made pursuant to a single Borrowing to less
than the Minimum Borrowing Amount applicable thereto;
(ii) Base Rate Loans may only be converted into Eurodollar Loans if no
Default or Event of Default is in existence on the date of the conversion;
and
(iii) no conversion pursuant to this Section 1.06 shall result in a
greater number of Borrowings of Eurodollar Loans than is permitted under
Section 1.02.
Each such conversion shall be effected by the Borrower by giving the Agent at
its Notice Office prior to 11:00 A.M. (New York time) at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
(each a "Notice of Conversion") which notice shall be in the form of Exhibit
A-2, appropriately completed to specify the Loans to be so converted, the
Borrowing(s) pursuant to which such Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Agent shall give each Bank prompt notice of any such proposed conversion
affecting any of its Loans. Upon any such conversion, the proceeds thereof will
be deemed to be applied directly on the day of such conversion to prepay the
outstanding principal amount of the Loans being converted.
1.07 PRO RATA BORROWINGS. All Borrowings of A Term Loans, B Term
Loans and Revolving Loans under this Agreement shall be incurred from the Banks
PRO RATA on the basis of their respective A Term Loan Commitments, B Term Loan
Commitments and Revolving Loan Commitments, as the case may be. It is
understood that no Bank shall be responsible for any default by any other Bank
of its obligation to make Loans hereunder and that each Bank shall be obligated
to make the Loans provided to be made by it hereunder regardless of the failure
of any other Bank to make its Loans hereunder.
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1.08 INTEREST. (a) The Borrower agrees to pay interest in respect
of the unpaid principal amount of each Base Rate Loan from the date of the
Borrowing thereof until the earlier of (i) the conversion of such Base Rate Loan
to a Eurodollar Loan pursuant to Section 1.06 and (ii) the maturity thereof
(whether by acceleration or otherwise), at a rate per annum which shall at all
times be equal to the sum of the Applicable Margin plus the Base Rate in effect
from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date of the Borrowing thereof
until (i) the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to
Section 1.06, 1.09 or 1.10(b), as applicable, and (ii) the maturity thereof
(whether by acceleration or otherwise) at a rate per annum which shall, during
each Interest Period applicable thereto, be equal to the sum of the Applicable
Margin plus the Quoted Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) the sum of (i) the Base Rate in effect from time to time, (ii) the
Applicable Margin applicable for Base Rate Loans of such Facility and (iii) 2%
and (y) the rate which is 2% in excess of the rate of interest then applicable
to such Loan, in each case with such interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each Loan, on any repayment
or conversion (on the amount repaid or converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Agent shall determine
the Quoted Rate for the Interest Period applicable to Eurodollar Loans to which
such Interest Determination Date relates and shall promptly notify the Borrower
and the Banks thereof. Each such determination shall, absent manifest error, be
final and conclusive and binding on all parties hereto.
1.09 INTEREST PERIODS. At the time it gives any Notice of Borrowing
or Notice of Conversion in respect of the making of, or conversion into, a
Eurodollar Loan (in the case of the initial Interest Period applicable thereto)
or prior to 11:00 a.m. (New York time) on the third Business Day prior to the
expiration of an Interest Period applicable to such Eurodollar Loan (in the case
of any subsequent Interest Period), the Borrower shall have the right to elect,
by giving the Agent notice thereof, the interest period (each an
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"Interest Period") applicable to such Eurodollar Loan, which Interest Period
shall, at the option of the Borrower, be a one, three or six-month period;
PROVIDED that:
(i) all Eurodollar Loans comprising a single Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Loan (including the date of any
conversion thereto from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Loan shall commence on the
day on which the next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end on
the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED, HOWEVER, that if any Interest Period for
a Eurodollar Loan would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(v) no Interest Period shall be selected which extends beyond (x) the
A Term Loan Maturity Date, in the case of A Term Loans, (y) the B Term Loan
Maturity Date, in the case of B Term Loans and (z) the Revolving Loan
Maturity Date, in the case of Revolving Loans;
(vi) no Interest Period may be selected at any time when any Default
or Event of Default is then in existence; and
(vii) no Interest Period in respect of any Borrowing of A Term Loans or
B Term Loans shall be selected which extends beyond any date upon which a
Scheduled A Term Loan Repayment or Scheduled B Term Loan Repayment is
required to be made if, after giving effect to the selection of such
Interest Period, the aggregate principal amount of such A Term Loans or B
Term Loans, as the case may be, maintained as Eurodollar Loans which have
Interest Periods expiring after such date would exceed the aggregate
principal amount of such A Term Loans or B Term Loans, as the case may be,
permitted to be outstanding after giving effect to such Scheduled
Repayment.
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If upon the expiration of any Interest Period applicable to a Borrowing of
Eurodollar Loans, the Borrower has failed to elect, or is not permitted to
elect, a new Interest Period to be applicable to such Eurodollar Loans as
provided above, the Borrower shall be deemed to have elected to convert such
Eurodollar Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that any
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Agent):
(i) on any Interest Determination Date that, by reason of any changes
arising after the date of this Agreement affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Quoted Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation of payments to any Bank of the principal of or interest on the
Notes or any other amounts payable hereunder (except for changes in the
rate of tax on, or determined by reference to, the net income or profits of
such Bank imposed by the jurisdiction in which its principal office or
applicable lending office is located) or (B) a change in official reserve
requirements (but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the Quoted Rate)
and/or (y) other circumstances since the date of this Agreement affecting
such Bank or the interbank Eurodollar market or the position of such Bank
in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having the force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Agent, in the case of clause (i)
above) shall promptly give notice (if by telephone, promptly confirmed in
writing) to the Borrower and,
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except in the case of clause (i) above, to the Agent of such determination
(which notice the Agent shall promptly transmit to each of the other Banks).
Thereafter: (x) in the case of clause (i) above, Eurodollar Loans shall no
longer be available until such time as the Agent notifies the Borrower and the
Banks that the circumstances giving rise to such notice by the Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by the Borrower; (y) in the case of
clause (ii) above, the Borrower shall pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank, acting
reasonably and in good faith, in its sole discretion shall determine) as shall
be required to compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the additional
amounts owed to such Bank, showing in reasonable detail the basis for the
calculation thereof, submitted to the Borrower by such Bank shall, absent
manifest error, be final and conclusive and binding on all the parties hereto);
and (z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 1.10(b) as promptly as possible and, in any event,
within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (i) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, by giving the Agent telephonic
notice (confirmed in writing) on the same date that the Borrower was notified by
the affected Bank or the Agent pursuant to Section 1.10(a)(ii) or (iii), cancel
the respective Borrowing or conversion, or (ii) if the affected Eurodollar Loan
is then outstanding, upon at least three Business Days' written notice to the
Agent, require the affected Bank to convert such Eurodollar Loan into a Base
Rate Loan; PROVIDED that if more than one Bank is affected at any time, then all
affected Banks must be treated the same pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the date hereof, the
adoption or effectiveness of any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the force of law)
concerning capital adequacy, or any change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency, will
have the effect of increasing the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank based on the
existence of such Bank's Commitments hereunder or its obligations hereunder,
then the Borrower shall pay to such Bank such additional amounts as shall be
required to compensate such Bank for the increased cost to such Bank or such
other corporation or the reduction in the rate of return to such Bank or such
other corporation as a result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good faith and will use
averaging and attribution methods which are
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reasonable; PROVIDED that such Bank's determination of compensation owing under
this Section 1.10(c) shall, absent manifest error, be final and conclusive and
binding on all the parties hereto. Each Bank, upon determining that any
additional amounts will be payable pursuant to this Section 1.10(c), will give
prompt written notice thereof to the Borrower, which notice shall show in
reasonable detail the basis for calculation of such additional amounts, although
the failure to give any such notice shall not release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c).
1.11 COMPENSATION. The Borrower shall compensate each Bank, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation), for all losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans) which such Bank may sustain: (i) if for
any reason (other than a default by such Bank or the Agent) a Borrowing of, or
conversion from or into, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii)
if any repayment (including any repayment made pursuant to Section 4.02 or as a
result of an acceleration of the Loans pursuant to Section 10) or conversion of
any of its Eurodollar Loans occurs on a date which is not the last day of an
Interest Period with respect thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay its Loans when required by the terms of this Agreement or any
Note held by such Bank or (y) any election made pursuant to Section 1.10(b). A
Bank's basis for requesting compensation pursuant to this Section, and a Bank's
calculations of the amount thereof, shall, absent manifest error, be final and
conclusive and binding on all the parties hereto.
1.12 REPLACEMENT OF BANKS. (x) If any Bank becomes a Defaulting
Bank or otherwise defaults in its obligations to make Loans or fund Unpaid
Drawings or (y) if any Bank (other than the Agent) refuses to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
13.12(b), then the Borrower shall have the right, if no Default or Event of
Default then exists, to replace such Bank (the "Replaced Bank") with any other
Bank or with one or more Eligible Transferee or Transferees, none of whom shall
constitute a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank") reasonably acceptable to the Agent and the Issuing Bank with
outstanding Letters of Credit (unless the respective Replacement Bank is not
acquiring any participations in outstanding Letters of Credit); PROVIDED that:
(i) at the time of any replacement pursuant to this Section 1.12, the
Replacement Bank shall enter into one or more assignment agreements
pursuant to
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Section 13.04(b) (and with all fees payable pursuant to said Section
13.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans
of, and participations in Letters of Credit by, the Replaced Bank and, in
connection therewith, shall pay to (x) the Replaced Bank in respect thereof
an amount equal to the sum of (A) an amount equal to the principal of, and
all accrued interest on, all outstanding Loans of the Replaced Bank, (B) an
amount equal to such Replaced Bank's Percentage of all Unpaid Drawings that
have been funded by (and not reimbursed to) such Replaced Bank, together
with all then unpaid interest with respect thereto at such time and (C) an
amount equal to all accrued, but theretofore unpaid, Fees owing to the
Replaced Bank pursuant to Section 3.01 hereof and (y) the Issuing Bank or
Banks an amount equal to such Replaced Bank's Percentage of any Unpaid
Drawing (which at such time remains an Unpaid Drawing) to the extent such
amount was not theretofore funded by such Replaced Bank; and
(ii) all obligations of the Borrower owing to the Replaced Bank (other
than those specifically described in clause (i) above in respect of which
the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full by the Borrower to such Replaced Bank concurrently
with such replacement.
Upon the execution of the respective assignment documentation, the payment of
amounts referred to in clauses (i) and (ii) above, recordation of the assignment
on the Register by the Agent pursuant to Section 8.15 and, if so requested by
the Replacement Bank, delivery to the Replacement Bank of the appropriate Notes
executed by the Borrower, the Replacement Bank shall become a Bank hereunder and
the Replaced Bank shall cease to constitute a Bank hereunder with respect to the
Loans and Commitments so transferred, except with respect to indemnification
provisions under this Agreement, which shall survive as to such Replaced Bank,
and the Percentages of the Banks shall be automatically adjusted at such time to
give effect to such replacement.
Section 2. LETTERS OF CREDIT.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request the Issuing Bank at any
time and from time to time after the Initial Borrowing Date and prior to the
date that is three Business Days prior to the Revolving Loan Maturity Date to
issue, for the account of the Borrower and for the benefit of any holder (or any
trustee, agent or other similar representative for any such holders) of L/C
Supportable Indebtedness, an irrevocable standby letter of credit in a form
customarily used by the Issuing Bank or in such other form as has been approved
by the Issuing Bank in support of said L/C Supportable Indebtedness (each such
letter of credit, a "Letter of Credit" and, collectively, the "Letters of
Credit"). All Letters of Credit shall be denominated in Dollars.
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(b) The Issuing Bank hereby agrees that it will (subject to the terms
and conditions contained herein), at any time and from time to time after the
Initial Borrowing Date and prior to the date that is three Business Days prior
to the Revolving Loan Maturity Date, following its receipt of the respective
Letter of Credit Request, issue for the account of the Borrower one or more
Letters of Credit in support of such L/C Supportable Indebtedness as is
permitted to remain outstanding without giving rise to a Default or Event of
Default hereunder; PROVIDED, that the Issuing Bank shall be under no obligation
to issue any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
the Letter of Credit any restriction or reserve or capital requirement (for
which the Issuing Bank is not otherwise compensated) not in effect on the
date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to the Issuing Bank as of the date hereof
and which the Issuing Bank in good faith deems material to it;
(ii) the Issuing Bank shall have received a notice of the type
described in the second sentence of Section 2.03(b) from any Bank prior to
the issuance of such Letter of Credit; or
(iii) a Bank Default exists, unless the Issuing Bank has entered into
arrangements satisfactory to it and the Borrower to eliminate the Issuing
Bank's risk with respect to the Bank which is the subject of the Bank
Default, including by cash collateralizing such Bank's Percentage of the
Letter of Credit Outstandings.
(c) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of,
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $2,000,000 or (y) when added to the aggregate principal amount
of all Revolving Loans then outstanding, an amount equal to the lesser of (A)
the Total Revolving Loan Commitment then in effect (after giving effect to any
reductions to the Total Revolving Loan Commitment on such date) less the Blocked
Commitment then in effect or (B) the Borrowing Base then in effect, and (ii)
each Letter of Credit shall by its terms terminate on or before the earlier of
(x) the date which occurs 12 months after the date of the issuance thereof
(although any such Letter of Credit may be renewable for successive periods of
up to 12 months, but not beyond the date that is
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three Business Days prior to the Revolving Loan Maturity Date, on terms
acceptable to the Issuing Bank) and (y) the date that is three Business Days
prior to the Revolving Loan Maturity Date.
2.02 MINIMUM STATED AMOUNT. The Stated Amount of each Letter of
Credit shall be not less than $50,000 or such lesser amount as is acceptable to
the Issuing Bank and at no time shall there be outstanding more than five
Letters of Credit.
2.03 LETTER OF CREDIT REQUESTS. (a) Whenever the Borrower desires
that a Letter of Credit be issued for its account, the Borrower shall give the
Agent and the Issuing Bank at least 10 Business Days' (or such shorter period as
is acceptable to the Issuing Bank in any given case) written notice prior to the
proposed date of issuance (which shall be a Business Day). Each notice shall be
in the form of Exhibit C (each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.01(c). Unless the Issuing Bank has received notice from any Bank before it
issues a Letter of Credit that one or more of the conditions specified in
Section 5 or 6, as the case may be, are not then satisfied, or that the issuance
of such Letter of Credit would violate Section 2.01(c), then the Issuing Bank
may issue the requested Letter of Credit for the account of the Borrower in
accordance with the Issuing Bank's usual and customary practices.
2.04 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by the Issuing Bank of any Letter of Credit, the Issuing Bank shall be
deemed to have sold and transferred to each Bank with a Revolving Loan
Commitment, other than the Issuing Bank (each such Bank, in its capacity under
this Section 2.04, a "Participant"), and each such Participant shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Participant's Percentage in such Letter of Credit, each
substitute letter of credit, each drawing made thereunder and the obligations of
the Borrower under this Agreement with respect thereto, and any security
therefor or guaranty pertaining thereto. Upon any change in the Revolving Loan
Commitments of the Banks pursuant to Section 1.12 or 13.04, it is hereby agreed
that, with respect to all outstanding Letters of Credit and Unpaid Drawings,
there shall be an automatic adjustment to the participations pursuant to this
Section 2.04 to reflect the new Percentages of the assignor and assignee Bank or
of all Banks with Revolving Loan Commitments, as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall not have any obligation relative to the other Banks other
than to confirm that any documents required to be delivered under such Letter of
Credit appear to have been deliv-
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ered and that they appear to comply on their face with the requirements of such
Letter of Credit. Any action taken or omitted to be taken by the Issuing Bank
under or in connection with any Letter of Credit if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for the
Issuing Bank any resulting liability to the Borrower or any Bank.
(c) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to the Issuing Bank pursuant to Section 2.05(a), the Issuing Bank shall promptly
notify the Agent, which shall promptly notify each Participant of such failure,
and each Participant shall promptly and unconditionally pay to the Agent for the
account of the Issuing Bank the amount of such Participant's Percentage of such
unreimbursed payment in Dollars and in same day funds. If the Agent so
notifies, prior to 11:00 A.M. (New York time) on any Business Day, any
Participant required to fund a payment under a Letter of Credit, such
Participant shall make available to the Agent at the Payment Office of the Agent
for the account of the Issuing Bank in Dollars such Participant's Percentage of
the amount of such payment on such Business Day in same day funds. If and to
the extent such Participant shall not have so made its Percentage of the amount
of such payment available to the Agent for the account of the Issuing Bank, such
Participant agrees to pay to the Agent for the account of the Issuing Bank,
forthwith on demand such amount, together with interest thereon, for each day
from such date until the date such amount is paid to the Agent for the account
of the Issuing Bank at the overnight Federal Funds Rate. The failure of any
Participant to make available to the Agent for the account of the Issuing Bank
its Percentage of any payment under any Letter of Credit shall not relieve any
other Participant of its obligation hereunder to make available to the Agent for
the account of the Issuing Bank its Percentage of any Letter of Credit on the
date required, as specified above, but no Participant shall be responsible for
the failure of any other Participant to make available to the Agent for the
account of the Issuing Bank such other Participant's Percentage of any such
payment.
(d) Whenever the Issuing Bank receives a payment of a reimbursement
obligation as to which the Agent has received for the account of the Issuing
Bank any payments from the Participants pursuant to clause (c) above, the
Issuing Bank shall pay to the Agent and the Agent shall promptly pay each
Participant which has paid its Percentage thereof, in Dollars and in same day
funds, an amount equal to such Participant's share (based on the proportionate
aggregate amount funded by such Participant to the aggregate amount funded by
all Participants and the Issuing Bank) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of the
respective participations.
(e) Upon the request of any Participant, the Issuing Bank shall
furnish to such Participant copies of any Letter of Credit issued by it and such
other related documentation as may reasonably be requested by such Participant.
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<PAGE>
(f) The obligations of the Participants to make payments to the Agent
for the account of the Issuing Bank with respect to Letters of Credit issued
shall be irrevocable and not subject to any qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the Credit Documents;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against a beneficiary named in a Letter
of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Agent, the Issuing Bank, any
Participant, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transaction between
the Borrower and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse the Issuing Bank, by making payment to the Agent in
immediately available funds at the Payment Office (or by making the payment
directly to the Issuing Bank at such location as may otherwise have been agreed
upon by the Borrower and the Issuing Bank), for any payment or disbursement made
by the Issuing Bank under any Letter of Credit (each such amount so paid until
reimbursed, an "Unpaid Drawing"), immediately after, and in any event on the
date of, such payment or disbursement, with interest on the amount so paid or
disbursed by the Issuing Bank, to the extent not reimbursed prior to 12:00 Noon
(New York time) on the date of such payment or disbursement, from and including
the date paid or disbursed to but excluding the date the Issuing Bank is
reimbursed by the Borrower therefor at a rate per annum which shall be (x)
unless a Bankruptcy Default exists on the date of the respective payment or
disbursement, for the period from and including the date of the respective
payment or disbursement until the earlier to occur of a Bankruptcy Default or
the date of receipt by the Borrower from the Issuing Bank or the Agent of
written or telephonic notice of such payment or disbursement,
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the Base Rate in effect from time to time plus the Applicable Margin for
Revolving Loans maintained as Base Rate Loans at the time of such payment or
disbursement, and (y) from and including the date of the respective payment or
disbursement if a Bankruptcy Default then exists or, if a Bankruptcy Default
does not exist on the date of the respective payment or disbursement, from and
including the earlier to occur of the date upon which a Bankruptcy Default
subsequently occurs or the date of receipt by the Borrower from the Issuing Bank
or the Agent of written or telephonic notice of such payment or disbursement to
but excluding the date the Issuing Bank was reimbursed by the Borrower therefor,
the Base Rate in effect from time to time plus the Applicable Margin for
Revolving Loans maintained as Base Rate Loans plus 2%, in each case with such
interest to be payable on demand. The Issuing Bank shall give the Borrower
prompt notice of each Drawing under any Letter of Credit; PROVIDED, that the
failure to give any such notice shall in no way affect, impair or diminish the
Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the Issuing Bank with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against any Bank (including in its
capacity as Issuing Bank or as Participant), including, without limitation, any
defense based upon the failure of any drawing under a Letter of Credit (each a
"Drawing") to conform to the terms of the Letter of Credit or any nonapplication
or misapplication by the beneficiary of the proceeds of such Drawing; PROVIDED,
HOWEVER, that the Borrower shall not be obligated to reimburse the Issuing Bank
for any wrongful payment made by the Issuing Bank under a Letter of Credit as a
result of acts or omissions constituting willful misconduct or gross negligence
on the part of the Issuing Bank.
2.06 INCREASED COSTS. If at any time after the date hereof the
Issuing Bank or any Participant determines that the introduction of or any
change in any applicable law, rule, regulation, order, guideline or request or
in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by the
Issuing Bank or any Participant, or any corporation controlling such Person,
with any request or directive by any such authority (whether or not having the
force of law), shall either (i) impose, modify or make applicable any reserve,
deposit, capital adequacy or similar requirement against letters of credit
issued by the Issuing Bank or participated in by any Participant, or (ii) impose
on the Issuing Bank or any Participant, or any corporation controlling such
Person, any other conditions relating, directly or indirectly, to this Agreement
or any Letter of Credit; and the result of any of the foregoing is to increase
the cost to the Issuing Bank or any Participant of issuing, maintaining or
participating in any Letter of Credit, or reduce the amount of any sum received
or receivable by the Issuing Bank or any Participant hereunder or reduce the
rate of return on its capital with respect to Letters of Credit, then, upon
demand to the Borrower by the Issuing Bank or any
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Participant (a copy of which demand shall be sent by the Issuing Bank or such
Participant to the Agent), the Borrower shall pay to the Issuing Bank or such
Participant such additional amount or amounts as will compensate such Bank for
such increased cost or reduction in the amount receivable or reduction on the
rate of return on its capital. The Issuing Bank or any Participant, upon
determining that any additional amounts will be payable pursuant to this Section
2.06, will give prompt written notice thereof to the Borrower, which notice
shall include a certificate submitted to the Borrower by the Issuing Bank or
such Participant (a copy of which certificate shall be sent by the Issuing Bank
or such Participant to the Agent), setting forth in reasonable detail the basis
for the calculation of such additional amount or amounts necessary to compensate
the Issuing Bank or such Participant, although failure to give any such notice
shall not release or diminish the Borrower's obligations to pay additional
amounts pursuant to this Section 2.06. The certificate required to be delivered
pursuant to this Section 2.06 shall, absent manifest error, be final, conclusive
and binding on the Borrower.
Section 3. COMMITMENT COMMISSION; FEES; REDUCTIONS OF COMMITMENT.
3.01 FEES. (a) The Borrower agrees to pay to the Agent for
distribution to each Bank with a Revolving Loan Commitment a commitment
commission (the "Commitment Commission") for the period from and including the
Initial Borrowing Date to and excluding the Revolving Loan Maturity Date (or
such earlier date as the Total Revolving Loan Commitment shall have been
terminated) computed at a rate for each day equal to 1/2 of 1% per annum on the
daily Unutilized Revolving Loan Commitment of such Bank. Accrued Commitment
Commission shall be due and payable quarterly in arrears on each Quarterly
Payment Date and on the Revolving Loan Maturity Date or such earlier date upon
which the Total Revolving Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Issuing Bank, for its own
account, a facing fee in respect of each Letter of Credit issued by the Issuing
Bank hereunder (the "Facing Fee"), for the period from and including the date of
issuance of such Letter of Credit to and including the date of termination of
such Letter of Credit, equal to 1/4 of 1% per annum of the daily Stated Amount
of such Letter of Credit; PROVIDED, that in no event shall the annual Facing Fee
with respect to each Letter of Credit be less than $500. Accrued Facing Fees
shall be due and payable in arrears to the Issuing Bank in respect of each
Letter of Credit issued by it on each Quarterly Payment Date and upon the first
day after the termination of the Total Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to the Agent for distribution to each
Bank with a Revolving Loan Commitment a fee in respect of each Letter of Credit
issued hereunder (the "Letter of Credit Fee"), for the period from and including
the date of issuance of such Letter of Credit to and including the date of
termination of such Letter of Credit,
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computed at a rate per annum equal to 3-1/4% of the daily Stated Amount of such
Letter of Credit. Letter of Credit Fees shall be distributed by the Agent to
the Banks on the basis of the respective Percentages as in effect from time to
time. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first day after the
termination of the Total Revolving Loan Commitment upon which no Letters of
Credit remain outstanding.
(d) The Borrower hereby agrees to pay in immediately available funds
directly to the Issuing Bank upon each issuance of, drawing under, and/or
amendment of, a Letter of Credit issued by the Issuing Bank the amount as shall
at the time of such issuance, drawing or amendment be the administrative charge
which the Issuing Bank is customarily charging for issuances of, drawings under
(including wire charges) or amendments of, letters of credit issued by it or
such alternative amounts as may have been agreed upon in writing by the Borrower
and the Issuing Bank.
(e) The Borrower shall pay to the Agent, for its account, such other
fees as have been agreed to in writing by the Borrower or any of its Affiliates
and the Agent.
3.02 VOLUNTARY TERMINATION OF UNUTILIZED COMMITMENTS. (a) Upon at
least three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) to the Agent at its Notice Office (which notice the Agent
shall promptly transmit to each of the Banks), the Borrower shall have the
right, without premium or penalty, to terminate the Total Unutilized Revolving
Loan Commitment, in whole or in part; PROVIDED, that (i) each such reduction
shall apply proportionately to reduce the Revolving Loan Commitment of each Bank
with such a Commitment, (ii) any partial reduction pursuant to this Section 3.02
shall be in integral multiples of at least $100,000 and (iii) the Total
Unutilized Revolving Loan Commitment shall not be reduced to an amount below the
Blocked Commitment, if any, at such time.
(b) In the event of certain refusals by a Bank as provided in Section
13.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrower may, upon five Business Days' written notice to the
Agent at its Notice Office (which notice the Agent shall promptly transmit to
each of the Banks) terminate all of the Revolving Loan Commitment of such Bank
so long as all Loans, together with accrued and unpaid interest, Fees and all
other amounts, owing to such Bank are repaid concurrently with the effectiveness
of such termination and the Borrower shall have paid to the Agent at such time
an amount of cash and/or Cash Equivalents equal to such Bank's applicable
Percentage of the Letter of Credit Outstandings (which cash and/or Cash
Equivalent shall be held by the Agent as security for the obligations of the
Borrower hereunder and in respect to the outstanding Letters of Credit pursuant
to a cash collateral agreement to be entered into in form and substance
reasonably satisfactory to the Agent) (at which time
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Schedule I shall be deemed modified to reflect such changed amounts), and at
such time, unless the respective Bank continues to have outstanding Term Loans
hereunder, such Bank shall no longer constitute a "Bank" for purposes of this
Agreement, except with respect to indemnification and clawback provisions, under
this Agreement (including, without limitation, Sections 1.10, 1.11, 2.06, 4.04,
13.01 and 13.06), which shall survive as to such repaid Bank.
3.03 MANDATORY REDUCTION OF COMMITMENTS. (a) The Total Commitment
(and the A Term Loan Commitment, the B Term Loan Commitment and the Revolving
Loan Commitment of each Bank with such a Commitment) shall terminate on August
14, 1996 unless the Initial Borrowing Date has occurred on or before such date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total A Term Loan Commitment (and the A Term Loan
Commitment of each Bank with such a Commitment) shall (i) terminate in its
entirety on the Initial Borrowing Date (after giving effect to the making of the
A Term Loans on such date) and (ii) prior to the termination of the Total A Term
Loan Commitment as provided in clause (i) above, be reduced from time to time to
the extent required by Section 4.02.
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total B Term Loan Commitment (and the B Term Loan
Commitment of each Bank with such a Commitment) shall (i) terminate in its
entirety on the Initial Borrowing Date (after giving effect to the making of the
B Term Loans on such date) and (ii) prior to the termination of the Total B Term
Loan Commitment as provided in clause (i) above, be reduced from time to time to
the extent required by Section 4.02.
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank with such a Commitment) shall be reduced at the
time any payment is required to be made on the principal amount of Revolving
Loans (or would be required to be made if Revolving Loans were then outstanding)
pursuant to Section 4.02(B)(a), by an amount equal to the maximum amount of
Revolving Loans that would be required to be repaid pursuant to
Section 4.02(B)(a) assuming that Revolving Loans were outstanding in an
aggregate principal amount equal to the Total Revolving Loan Commitment.
(e) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate on the Revolving Loan Maturity
Date.
(f) Each reduction to the Total A Term Loan Commitment, the Total B
Term Loan Commitment and the Total Revolving Loan Commitment pursuant to this
Section 3.03 shall be applied proportionately to reduce the A Term Loan
Commitment, the
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B Term Loan Commitment and the Revolving Loan Commitment, as the case may be, of
each Bank with such a Commitment
Section 4. PREPAYMENTS; PAYMENTS; TAXES.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans, without premium or penalty, in whole or in part from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent
prior to 11:00 a.m. (New York time) at its Notice Office at least three Business
Days' prior written notice in the case of Eurodollar Loans and one Business
Day's prior written notice in the case of Base Rate Loans of the Borrower's
intent to prepay the Loans, whether such Loans are A Term Loans, B Term Loans or
Revolving Loans, the amount of such prepayment and the Types of Loans to be
prepaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice the Agent shall promptly
transmit to each of the Banks; (ii) in the case of prepayments of less than all
of the outstanding Loans of a Tranche, each prepayment shall be in an aggregate
principal amount of at least the applicable Minimum Borrowing Amount and, if
greater, in integral multiples of $100,000; PROVIDED, that no partial prepayment
of Eurodollar Loans made pursuant to any Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto; (iii) prepayments of Eurodollar
Loans made pursuant to this Section 4.01 may only be made on the last day of an
Interest Period applicable thereto; (iv) except as provided in clauses (v) and
(vi) below, each prepayment in respect of any Loans made pursuant to a Borrowing
shall be applied PRO RATA among such Loans; (v) in the event of certain refusals
by a Bank as provided in Section 13.12(b) to consent to certain proposed
changes, waivers, discharges or terminations with respect to this Agreement
which have been approved by the Required Banks, the Borrower may, upon 5
Business Days' written notice to the Agent at its Notice Office (which notice
the Agent shall promptly transmit to each of the Banks) repay all Loans,
together with accrued and unpaid interest, Fees, and other amounts owing to such
Bank (or owing to such Bank with respect to each Tranche which gave rise to the
need to obtain such Bank's individual consent) in accordance with said Section
13.12(b) so long as (A) in the case of the repayment of Revolving Loans of any
Bank pursuant to this clause (v) the Revolving Loan Commitment of such Bank is
terminated concurrently with such repayment (at which time Schedule I shall be
deemed modified to reflect the changed Revolving Loan Commitments) and (B) the
consents required by Section 13.12(b) in connection with the repayment pursuant
to this clause (v) have been obtained; (vi) each prepayment of Term Loans
pursuant to this Section 4.01 (except pursuant to the preceding clause (v)) must
consist of a PRO RATA prepayment of A Term Loans (in an amount equal to the A TL
Percentage of such prepayment) and B Term Loans (in an amount equal to the B TL
Percentage of such prepayment) and (vii) each prepayment of A Term Loans and B
Term Loans pursuant to this Section 4.01 shall be applied to reduce the then
remaining Scheduled Repayments of the respective Tranche being repaid in inverse
order of maturity; PROVIDED,
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that repayments of Term Loans pursuant to clause (v) of this Section 4.01 shall
apply to reduce the then remaining Scheduled Repayments of the respective
Tranche being repaid to the extent such Term Loans so repaid are not replaced
pursuant to Section 13.12(b), with any such reductions to reduce the then
remaining Scheduled Repayments on a PRO RATA basis.
4.02 MANDATORY REPAYMENTS AND COMMITMENT REDUCTIONS.
(A) REQUIREMENTS:
(a) On any day on which the sum of the aggregate outstanding
principal amount of the Revolving Loans and Letter of Credit Outstandings at
such time, exceeds the Total Revolving Loan Commitment as then in effect less
the Blocked Commitment at such time, the Borrower shall prepay the principal of
Revolving Loans in an amount equal to such excess. If, after giving effect to
the prepayment of all outstanding Revolving Loans, the aggregate amount of the
Letter of Credit Outstandings exceeds the Total Revolving Loan Commitment as
then in effect (the "Excess Condition"), the Borrower shall pay to the Agent at
its Payment Office on such date an amount of cash or Cash Equivalents equal to
the amount of such excess, such cash or Cash Equivalents to be held as security
for all Obligations of the Borrower hereunder in a cash collateral account to be
established and maintained (including the investments made pursuant thereto) by
the Agent pursuant to a cash collateral agreement in form and substance
reasonably satisfactory to the Agent until the Excess Condition shall have
terminated, whereupon the Agent shall return to the Borrower all amounts then
held as collateral under such agreement.
(b) If any Borrowing Base Certificate shall disclose the existence of
a Borrowing Base Deficiency, the Borrower shall on the date of the delivery
thereof in accordance with Section 8.01(k), repay the principal of Revolving
Loans in an amount equal to such Borrowing Base Deficiency and, to the extent
such Borrowing Base Deficiency exceeds the principal amount of then outstanding
Revolving Loans required to be prepaid (the "Deficiency Condition"), the
Borrower shall, pay an amount of cash or Cash Equivalents equal to such excess
to the Agent at the Payment Office, such cash or Cash Equivalents to be held as
security for all Obligations of the Borrower hereunder in a cash collateral
account established and maintained (including the investments made pursuant
thereto) by the Agent pursuant to a cash collateral agreement in form and
substance reasonably satisfactory to the Agent until the Deficiency Condition
shall have terminated whereupon the Agent shall return to the Borrower all
amounts then held as collateral under such agreement.
(c) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, the Borrower shall be required to
repay on each date set forth below the principal amount of A Term Loans, to the
extent then outstanding, set
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forth below opposite such date (each such repayment as the same may be reduced
as provided in Sections 4.01 and 4.02(B), a "Scheduled A Term Loan Repayment"):
Scheduled Repayment Date Amount
------------------------ ------
September 30 and December 31, 1996 $ 750,000
March 31, June 30, September 30 875,000
and December 31, 1997
March 31, June 30, September 30 1,000,000
and December 31, 1998
March 31, June 30, September 30 1,000,000
and December 31, 1999
A Term Loan Maturity Date 1,000,000
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, the Borrower shall be required to
repay on each date set forth below the principal amount of B Term Loans, to the
extent then outstanding, set forth below opposite such date (each such repayment
as the same may be reduced as provided in Sections 4.01 and 4.02(B), a
"Scheduled B Term Loan Repayment" and together with the Scheduled A Term Loan
Repayments, the "Scheduled Repayments"):
Scheduled Repayment Date Amount
------------------------ ------
September 30 and December 31, 1996 $ 75,000
March 31, June 30, September 30 75,000
and December 31, 1997
March 31, June 30, September 30 75,000
and December 31, 1998
March 31, June 30, September 30 125,000
and December 31, 1999
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March 31, June 30, September 30 968,750
and December 31, 2000
March 31, June 30, September 30 1,362,500
and December 31, 2001
B Term Loan Maturity Date 1,425,000
(e) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on the date of the receipt thereof by
the Borrower or any of its Subsidiaries, an amount equal to:
(i) 100% of the cash proceeds (net of underwriting discounts and
commissions and all other reasonable costs associated with such
transaction) (the "Net Cash Proceeds") from any sale or issuance after the
Effective Date of equity of the Borrower or any Subsidiary of the Borrower
(other than equity (x) permitted to be issued in connection with the Newco
Capital Contribution, (y) issued upon the exercise of employee stock
options under the Borrower's option plan as in effect on the Effective Date
or (z) issued upon the exercise of warrants outstanding on the Effective
Date, provided that the aggregate Net Cash Proceeds in the case of any
issuance pursuant to clause (z) shall not exceed $50,000 or $100,000 for
all such issuances), and
(ii) 100% of the cash proceeds (net of underwriting discounts and
commissions, loan fees and all other reasonable costs associated with such
transaction) from any incurrence of any Indebtedness by the Borrower or any
Subsidiary of the Borrower (other than Indebtedness permitted to be
incurred pursuant to Section 9.05 as said Section is in effect on the
Effective Date),
shall be applied as provided in Section 4.02(B).
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, no later than 90 days after the last
day of each fiscal year of the Borrower, an amount equal to 75% of Excess Cash
Flow of the Borrower and its Subsidiaries for the relevant Excess Cash Flow
Payment Period shall be applied as provided in Section 4.02(B).
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Effective Date
on which the Borrower or any Subsidiary of the Borrower receives cash proceeds
from any sale of assets (including capital stock and securities other than
capital stock or securities the proceeds from the sale of which are recaptured
under Section 4.02(A)(e) (or would be recaptured
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under Section 4.02(A)(e) but for the exclusions set forth in the parenthetical
contained in clause (i) thereof), but excluding (i) sales of inventory in the
ordinary course of business and (ii) sales of equipment which, in the reasonable
judgment of the Borrower has become obsolete, worn out or uneconomic, in the
ordinary course of business, the proceeds of which are used, or irrevocably
committed, to purchase replacement equipment within 180 days from the date of
sale so long as the aggregate amount of Net Sale Proceeds excluded pursuant to
this clause (ii) does not exceed $300,000 in the aggregate in any fiscal year of
the Borrower), an amount equal to 100% of the Net Sale Proceeds thereof shall be
applied as provided in Section 4.02(B).
(h) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Effective Date
of the receipt thereof by the Borrower or any Subsidiary of the Borrower, an
amount equal to 100% of the cash proceeds of any Recovery Event (net of
reasonable costs incurred in connection with such Recovery Event (including the
estimated marginal increase in income taxes which will be payable as a result of
such Recovery Event by the Borrower or any Subsidiary of the Borrower and
repayments of Indebtedness which are required to be made with the proceeds of
such Recovery Event)) shall be applied as provided in Section 4.02(B); PROVIDED,
that (x) so long as no Default or Event of Default then exists and such proceeds
are not in excess of $250,000 for any one occurrence and $1,000,000 for all
occurrences, such proceeds shall not be required to be so applied on such date
to the extent that the Borrower delivers a certificate to the Agent on or prior
to such date stating that such proceeds shall be (or are committed to be) used
to replace or restore any properties or assets in respect of which such proceeds
were paid within a period specified in such certificate not to exceed 120 days
after the date of receipt of such proceeds (which certificate shall set forth
estimates of the proceeds to be so expended), and (y) (i) if the amount of such
proceeds from any such Recovery Event exceeds $250,000 then the entire amount of
proceeds from such Recovery Event shall be applied as provided in Section
4.02(B) and if the amount of such proceeds from any such Recovery Event, when
aggregated with the total amount of all such proceeds from all Recovery Events
occurring prior to such Recovery Event, exceeds $1,000,000 (excluding any
amounts from any Recovery Events previously applied pursuant to Section
4.02(B)), then the amount by which the amount of proceeds from all Recovery
Events (including the Recovery Event for which the determination is being made)
exceeds $1,000,000 shall be applied as provided in Section 4.02(B), and (ii) if
all or any portion of such proceeds not so applied pursuant to Section 4.02(B)
are not so used (or committed to be used) within the period specified in the
relevant certificate furnished pursuant to the preceding clause (x), such
remaining portion shall be applied on the last day of such specified period as
provided in Section 4.02(B); PROVIDED, FURTHER that with respect to cash
proceeds received by the Borrower or any of its Subsidiaries in connection with
(1) Recovery Events with respect to the IRB Property, such proceeds shall only
be required to be applied pursuant to this Agreement to the extent not required
to be applied otherwise by the Gilford IRB Mortgage and (2) Recovery Events with
respect to a leasehold
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interest, such proceeds shall only be required to be applied pursuant to this
Agreement to the extent not required to be applied otherwise by the applicable
lease.
(B) APPLICATION:
(a) Each mandatory repayment of Loans pursuant to Section 4.02(A)(e)
through (h), inclusive, shall be applied:
(i) first, to prepay the principal of outstanding A Term Loans and B
Term Loans, on a PRO RATA basis, with the A Term Loans to receive the A TL
Percentage and the B Term Loans to receive the B TL Percentage, in each
case of the total amount to be applied as a mandatory repayment of Term
Loans pursuant to this Section 4.02(B)(a)(i), and which prepayments of such
Tranche of Term Loans shall be applied to reduce the then remaining
Scheduled A Term Loan Repayments and Scheduled B Term Loan Repayments, as
the case may be, in inverse order of maturity after giving effect to all
prior reductions thereto;
(ii) second, to prepay the principal of outstanding Revolving Loans
(with a corresponding reduction to the Total Revolving Loan Commitment);
(iii) third, to cash collateralize Letter of Credit Outstandings by
depositing cash in a cash collateral account to be established and
maintained by the Agent pursuant to a cash collateral agreement in form and
substance reasonably satisfactory to the Agent in an amount equal to such
Letter of Credit Outstandings (it being understood that the Total Revolving
Loan Commitment shall be reduced by the amount of cash collateral required
to be deposited pursuant to this clause (iii)); and
(iv) fourth, to reduce the remaining (I.E., after giving effect to all
prior reductions thereto, including, without limitation, to the reductions
theretofore effected pursuant to the preceding clauses (ii) and (iii))
Total Revolving Loan Commitment (it being understood and agreed that the
amount of such reduction shall be deemed to be an application of proceeds
for purposes of this Section 4.02(B)(a)(iv) even though cash is not
actually applied).
(b) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans which are to be repaid and,
in the case of Eurodollar Loans, the specific Borrowing or Borrowings of the
respective Tranche pursuant to which made; PROVIDED, that: (i) repayments of
Eurodollar Loans pursuant to this Section 4.02 may only be made on the last day
of an Interest Period applicable thereto unless all Eurodollar Loans of the
respective Tranche with Interest Periods ending on such date of required
repayment and all Base Rate Loans of the respective Tranche have been paid in
full; (ii) if any repayment of Eurodollar Loans made pursuant to a single
Borrowing shall reduce
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the outstanding Eurodollar Loans made pursuant to such Borrowing to an amount
less than the applicable Minimum Borrowing Amount, such Borrowing shall
immediately be converted into Base Rate Loans; and (iii) each repayment of any
Loans made pursuant to a single Borrowing shall be applied PRO rata among such
Loans. In the absence of a designation by the Borrower as described in the
preceding sentence, the Agent shall, subject to the above, make such designation
in its sole discretion.
(c) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, all then outstanding Loans under each Tranche shall be repaid in
full on the Maturity Date applicable to such Tranche.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
the Agent for the account of the Bank or Banks entitled thereto not later than
12:00 Noon (New York time) on the date when due and shall be made in Dollars in
immediately available funds at the Payment Office of the Agent. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower hereunder
or under any Note, will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income of a Bank pursuant to the laws of the
jurisdiction or any political subdivision or taxing authority thereof or therein
in which the principal office or applicable lending office of such Bank is
located) and all interest, penalties or similar liabilities with respect thereto
(all such non-excluded taxes, levies, imposts, duties, fees, assessments or
other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due hereunder or under any Note, after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein or in
such Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, then the Borrower shall be obligated to reimburse each Bank,
upon the written request of such Bank, for taxes imposed on or measured by the
net income of such Bank pursuant to the laws of the jurisdiction or any
political subdivision or taxing authority thereof or therein in which the
principal office or applicable lending office of such Bank is located as such
Bank shall determine are payable by, or withheld from, such Bank in respect of
such amounts so paid
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to or on behalf of such Bank pursuant to the preceding sentence and in respect
of any amounts paid to or on behalf of such Bank pursuant to this sentence. The
Borrower will furnish to the Agent within 45 days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Bank, and reimburse such Bank upon its written request, for
the amount of any Taxes so levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the Borrower and the Agent on or prior to the Effective
Date, or in the case of a Bank that is an assignee or transferee of an interest
under this Agreement pursuant to Section 13.04 (unless the respective Bank was
already a Bank hereunder immediately prior to such assignment or transfer), on
the date of such assignment or transfer to such Bank, (i) two accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001
(or successor forms) certifying to such Bank's entitlement to a complete
exemption from United States withholding tax with respect to payments to be made
under this Agreement and under any Note, or (ii) if the Bank is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit K (any such certificate, a
"Section 4.04(b)(ii) Certificate") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments of interest to be made under this
Agreement and under any Note. In addition, each Bank agrees that from time to
time after the Effective Date, when a lapse in time or change in circumstances
renders the previous certification obsolete or inaccurate in any material
respect, it will deliver to the Borrower and the Agent two new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001,
or Form W-8 and a Section 4.04(b)(ii) Certificate, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Bank to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Borrower and the Agent of its inability to
deliver any such Form or Certificate, in which case such Bank shall not be
required to deliver any such Form or Certificate pursuant to this Section
4.04(b). Notwithstanding anything to the contrary contained in Section 4.04(a),
but subject to the immediately succeeding sentence, (x) the Borrower shall be
entitled, to the extent it is required to do so by law, to deduct or withhold
income or similar taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Bank which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes to the extent that such Bank has not provided
to the Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption
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from such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to Section 4.04(a) hereof to gross-up payments to be made to a Bank in
respect of income or similar taxes imposed by the United States if (I) such Bank
is not a United States person (defined as provided above) and has not provided
to the Borrower the Internal Revenue Service Forms required to be provided to
the Borrower pursuant to this Section 4.04(b) or (II) in the case of a payment,
other than interest, to a Bank described in clause (ii) above, to the extent
that such forms do not establish a complete exemption from withholding of such
taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 4.04, the Borrower agrees to pay any
additional amounts and to indemnify each Bank in the manner set forth in Section
4.04(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any amounts deducted or withheld by it
as described in the immediately preceding sentence as a result of any changes
after the Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
Section 5. CONDITIONS PRECEDENT TO LOANS ON THE INITIAL BORROWING
DATE. The obligation of each Bank to make Loans on the Initial Borrowing Date
is subject at the time of such Loans to the satisfaction of the following
conditions:
5.01 EXECUTION OF AGREEMENT; NOTES. On or prior to the Initial
Borrowing Date (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Agent for the account of each of the Banks the
appropriate A Term Loan, B Term Note or Revolving Note executed by the Borrower,
in each case in the amount, maturity and as otherwise provided herein.
5.02 OFFICER'S CERTIFICATE. On the Initial Borrowing Date, the Agent
shall have received a certificate dated the Initial Borrowing Date signed on
behalf of the Borrower by the President, any Executive Vice President or any
Vice President of the Borrower stating that all of the conditions in Sections
5.06, 5.07, 5.11, 5.12, 5.16, 6.01, 6.02 and 6.03 have been satisfied on such
date.
5.03 OPINIONS OF COUNSEL. On the Initial Borrowing Date, the Agent
shall have received (i) from Elliot N. Konopko, general counsel to the Borrower
and its Subsidiaries, an opinion addressed to the Agent, the Collateral Agent
and each of the Banks and dated the Initial Borrowing Date covering the matters
set forth in Exhibit D, (ii) from counsel rendering such opinions, reliance
letters with respect to all legal opinions delivered in connection with the
Acquisition which shall be addressed to the Agent and each of the Banks and
dated the Initial Borrowing Date, and be in form and substance satisfactory to
the Agent and the Required Banks and (iii) from local counsel satisfactory to
the Agent, opinions each of which shall be in form and substance satisfactory to
the Agent and the Required Banks and shall cover the perfection of the security
interests granted pursuant to
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the Security Agreement and the Mortgages and such other matters incidental to
the transactions contemplated herein as the Agent shall reasonably request.
5.04 CORPORATE DOCUMENTS; PROCEEDINGS. (a) On the Initial Borrowing
Date, the Agent shall have received from each Credit Party a certificate, dated
the Initial Borrowing Date, signed by the President or any Vice President of
such Credit Party, and attested to by the Secretary or any Assistant Secretary
of such Credit Party, in the form of Exhibit E with appropriate insertions,
together with copies of the Certificate of Incorporation and By-Laws of such
Credit Party and the resolutions of such Credit Party referred to in such
certificate, and the foregoing shall be acceptable to the Agent and the Required
Banks in their sole discretion.
(b) All corporate and legal proceedings and all instruments and
agreements relating to the transactions contemplated by this Agreement and the
other Documents shall be reasonably satisfactory in form and substance to the
Agent and the Required Banks, and the Agent shall have received all information
and copies of all documents and papers, including records of corporate
proceedings, governmental approvals, good standing certificates and bring-down
telegrams, if any, which the Agent or the Required Banks may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
5.05 EMPLOYEE BENEFIT PLANS; SHAREHOLDERS' AGREEMENTS; MANAGEMENT
AGREEMENTS; EMPLOYMENT AGREEMENTS; COLLECTIVE BARGAINING AGREEMENTS; DEBT
AGREEMENTS; TAX SHARING AGREEMENTS; MATERIAL CONTRACTS. On or prior to the
Initial Borrowing Date, there shall have been delivered to the Agent true and
correct copies, certified as true and complete by an appropriate officer of the
Borrower, of:
(i) all 401(K) plans of the Borrower or any Subsidiary of the
Borrower;
(ii) all agreements entered into by the Borrower or any Subsidiary of
the Borrower governing the terms and relative rights of its capital stock
and any agreements entered into by shareholders relating to any such entity
with respect to their capital stock (collectively, the "Shareholders'
Agreements");
(iii) all agreements with members of, or with respect to the, senior
management of the Borrower or any Subsidiary of the Borrower other than
Employment Agreements (collectively, the "Management Agreements");
(iv) any employment agreements entered into by the Borrower or any
Subsidiary of the Borrower (collectively, the "Employment Agreements");
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(v) all collective bargaining agreements applying or relating to any
employee of the Borrower or any Subsidiary of the Borrower (collectively,
the "Collective Bargaining Agreements");
(vi) all agreements evidencing or relating to Indebtedness of the
Borrower or any Subsidiary of the Borrower for borrowed money
(collectively, the "Debt Agreements");
(vii) all tax sharing, tax allocation and other similar agreements
entered into by the Borrower or any Subsidiary of the Borrower
(collectively, the "Tax Sharing Agreements");
(viii) all material contracts and licenses of the Borrower or any of its
Subsidiaries (collectively, the "Material Contracts"); and
(ix) all contracts, agreements or understandings entered into between
the Borrower or any of its Subsidiaries, on the one hand, and any of its
Affiliates on the other hand (collectively, the "Affiliate Contracts");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Employment Agreements, Collective Bargaining Agreements, Debt
Agreements, Tax Sharing Agreements, Material Contracts and Affiliate Contracts
shall be in form and substance reasonably satisfactory to the Agent and the
Required Banks and shall be in full force and effect on the Initial Borrowing
Date.
5.06 CONSUMMATION OF THE ACQUISITION; CONSUMMATION OF THE MERGER.
(a) On or prior to the Initial Borrowing Date, there shall have been delivered
to the Banks true and correct copies of all Acquisition Documents and Merger
Documents, and all terms and provisions of such Acquisition Documents and Merger
Documents shall be in form and substance satisfactory to the Agent and the
Required Banks and shall not have been amended without the consent of the Agent
and the Required Banks. The Acquisition and the Merger, including all of the
terms and conditions thereof, shall have been duly approved by the board of
directors and (if required by applicable law) the shareholders of the parties
thereto, and all Acquisition Documents and Merger Documents shall have been duly
executed and delivered by the parties thereto and shall be in full force and
effect. The representations and warranties set forth in the Acquisition
Documents and Merger Documents shall be true and correct in all material
respects as if made on and as of the Initial Borrowing Date. Each of the
conditions precedent to the consummation of the Acquisition and the Merger as
set forth in the Acquisition Documents and Merger Documents shall have been
satisfied to the satisfaction of the Agent and the Required Banks or waived with
the consent of the Agent and the Required Banks, and the Acquisition shall have
been consummated in accordance with all applicable law and the Acquisition
Documents (without giving effect
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to any amendment or modification thereof or waiver with respect thereto unless
consented to by the Agent or the Required Banks). The total consideration paid
in connection with the Acquisition (including, without limitation, all payments
arising from change of control provisions and severance provisions and all
payments in connection with options and similar securities) shall not exceed
$4,850,000.
(b) Promptly following the consummation of the Acquisition, but in
any event on or prior to the initial Credit Event, Newco shall consummate the
Merger in accordance with the Merger Documents and all applicable laws.
Additionally, on or prior to the Initial Borrowing Date, the certificate of
ownership and merger or the certificate of merger, as the case may be, with
respect to the Merger shall have been filed with the Secretary of State of the
State of Delaware and a copy thereof shall be delivered to the Banks.
5.07 PLEDGE AGREEMENT. On the Initial Borrowing Date, each Credit
Party shall have duly authorized, executed and delivered a Pledge Agreement
substantially in the form of Exhibit F (as modified, supplemented or amended
from time to time, the "Pledge Agreement") and shall have delivered to the
Collateral Agent, as pledgee thereunder, all of the Pledged Securities referred
to therein then owned by each such Credit Party (x) endorsed in blank in the
case of promissory notes constituting Pledged Securities and (y) together with
executed and undated irrevocable stock powers, in the case of capital stock
constituting Pledged Securities, and the Pledge Agreement and such other
documents shall be in full force and effect.
5.08 SECURITY AGREEMENT; BANKING ARRANGEMENTS. (a) On the Initial
Borrowing Date, each Credit Party shall have duly authorized, executed and
delivered a Security Agreement in the form of Exhibit G-1 (as modified,
supplemented or amended from time to time, the "Security Agreement") covering
all of such Credit Party's present and future Security Agreement Collateral, in
each case together with:
(i) proper Financing Statements (Form UCC-1 or such other financing
statements or similar notices as shall be required by local law) fully
executed for filing under the UCC or other appropriate filing offices of
each jurisdiction as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be created
by the Security Agreement;
(ii) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, listing all judgment liens, tax liens or
effective financing statements that name the Borrower or any of its
Subsidiaries (including PAI), or a division or other operating unit of any
such Person, as debtor and that are filed in the jurisdictions referred to
in said clause (i), together with copies of such other financing statements
(none of which shall cover the Collateral except to the extent evidencing
Permitted Liens or for which the Collateral Agent shall receive termina-
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tion statements (Form UCC-3 or such other termination statements as shall
be required by local law) fully executed for filing);
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the opinion of the Collateral Agent, desirable to perfect the security
interests intended to be created by such Security Agreement; and
(iv) evidence that all other actions necessary or, in the opinion of
the Collateral Agent, desirable to perfect and protect the security
interests purported to be created by the Security Agreement have been
taken;
and the Security Agreement and such other documents shall be in full force and
effect.
(b) On the Initial Borrowing Date, the Borrower and each of its
Material Subsidiaries shall have duly authorized, executed and delivered a Bank
Deposit Account Consent Letter substantially in the form of Exhibit G-2 hereto,
with such changes, if any, as may be approved by the Collateral Agent (each as
modified, amended or supplemented from time to time in accordance with the terms
thereof and hereof, a "Bank Deposit Account Consent Letter") with the Collateral
Agent and the banking institutions listed on Part A of Schedule IV hereto (each
a "Deposit Bank"), acknowledging that each checking, savings or other deposit
account listed on Part A of Schedule IV maintained at such Deposit Bank (each a
"Bank Deposit Account") is under the exclusive dominion and control of the
Collateral Agent and that all moneys, instruments and other securities deposited
in such Bank Deposit Account are to be held by the Deposit Bank for the benefit
of the Collateral Agent.
(c) On the Initial Borrowing Date, the Borrower and each of its
Material Subsidiaries shall have duly authorized, executed and delivered a
Concentration Account Consent Letter substantially in the form of Exhibit G-3
hereto, with such changes, if any, as may be approved by the Collateral Agent
(each as modified, amended or supplemented from time to time in accordance with
the terms thereof and hereof, a "Concentration Account Consent Letter") with the
Collateral Agent and the Concentration Account Bank, acknowledging that the
Concentration Account listed on Part B of Schedule IV maintained at the
Concentration Account Bank is under the exclusive dominion and control of the
Collateral Agent and that all moneys, instruments and other securities deposited
in such Concentration Account are to be held by the Concentration Account Bank
for the benefit of the Collateral Agent.
5.09 MORTGAGE; TITLE INSURANCE; SURVEYS; ETC. On the Initial
Borrowing Date, the Collateral Agent shall have received:
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(a) fully executed counterparts of a mortgage or deed to secure debt
or similar documents in form and substance satisfactory to the Agent (as
may be amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof, each, a "Mortgage" and collectively,
"Mortgages"), which Mortgages shall cover such of the Real Property owned
by the Borrower or any of its Subsidiaries (after giving effect to the
Transaction) as designated on Schedule II (each, a "Mortgaged Property" and
collectively, the "Mortgaged Properties"), together with evidence that
counterparts of the Mortgages have been delivered to the title insurance
company insuring the Lien of the Mortgages for recording in all places to
the extent necessary or, in the opinion of the Collateral Agent, desirable
to effectively create a valid and enforceable first priority mortgage lien
on each Mortgaged Property in favor of the Collateral Agent (or such other
trustee as may be required or desired under local law) for the benefit of
the Secured Creditors;
(b) mortgagee title insurance policies in connection with the
Mortgaged Properties issued by title insurers satisfactory to the Agent and
the Required Banks, (the "Mortgage Policies") in amounts satisfactory to
the Agent and the Required Banks assuring the Collateral Agent that the
respective Mortgages on such Mortgaged Properties are valid and enforceable
first priority mortgage liens on the respective Mortgaged Properties, free
and clear of all defects and encumbrances except Permitted Encumbrances and
such Mortgage Policies shall otherwise be in form and substance
satisfactory to the Agent and the Required Banks and shall include, as
appropriate, an endorsement for future advances under this Agreement, the
Notes and the Mortgages and for any other matter that the Agent or the
Required Banks in their discretion may reasonably request, shall not
include an exception for mechanics' liens, and shall provide for
affirmative insurance and such reinsurance (including direct access
agreements) as the Agent or the Required Banks in their discretion may
reasonably request; and
(c) surveys in form and substance reasonably satisfactory to the
Collateral Agent of each Mortgaged Property dated a recent date acceptable
to the Collateral Agent, certified in a manner satisfactory to the
Collateral Agent by a licensed professional surveyor satisfactory to the
Collateral Agent.
5.10 SUBSIDIARIES GUARANTY. On the Initial Borrowing Date, each
Material Subsidiary of the Borrower shall have duly authorized, executed and
delivered a guaranty in the form of Exhibit H (as modified, supplemented or
amended from time to time, the "Subsidiaries Guaranty") and the Subsidiaries
Guaranty shall be in full force and effect.
5.11 MATERIAL ADVERSE CHANGE, ETC. Since April 30, 1995, nothing
shall have occurred (and the Banks shall have become aware of no facts or
conditions not previously known) which the Agent or the Required Banks shall
determine (a) could reasonably
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be expected to have a material adverse effect on the rights or remedies of the
Banks or the Agent, or on the ability of the Borrower or any of its Subsidiaries
to perform their obligations to the Agent and the Banks under this Agreement or
any other Credit Document, (b) could reasonably be expected to have a materially
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (c) indicates
the inaccuracy in any material respect of the information previously provided to
the Agent or the Banks (taken as a whole) in connection with their analysis of
the transactions contemplated hereby or indicates that the information
previously provided omitted to disclose any material information.
5.12 LITIGATION. On the Initial Borrowing Date, no litigation by any
entity (private or governmental) shall be pending or threatened with respect to
this Agreement, any other Document or any documentation executed in connection
herewith or with respect to the transactions contemplated hereby, or which the
Agent or Required Banks shall determine could reasonably be expected to have a
materially adverse effect on the Transaction or on the performance, business,
assets, nature of assets, liabilities, operations, properties, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
5.13 FEES, ETC. On the Initial Borrowing Date, the Borrower shall
have paid in full to the Agent and the Banks all costs, fees and expenses
(including, without limitation, all legal fees and expenses) payable to the
Agent and the Banks to the extent then due pursuant hereto or as otherwise
agreed between the Borrower or any Affiliate of the Borrower and the Agent.
5.14 SOLVENCY CERTIFICATE; ENVIRONMENTAL ANALYSES. On the Initial
Borrowing Date, the Borrower shall cause to be delivered to the Agent:
(i) a solvency certificate from Raymond F. Kunzmann, in the form of
Exhibit I hereto, which shall be addressed to the Agent and each of the
Banks and dated the Initial Borrowing Date and in form and substance
satisfactory to the Agent and the Required Banks, setting forth the
conclusion that, after giving effect to the Transaction and the incurrence
of all financings contemplated herein, the Borrower and its Subsidiaries
(on a consolidated basis) and PAI and its Subsidiaries (on a consolidated
basis), are not insolvent and will not be rendered insolvent by the
Indebtedness incurred in connection herewith, will not be left with
unreasonably small capital with which to engage in their respective
businesses and will not have incurred debts beyond their ability to pay
such debts as they mature and become due; and
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(ii) (1) environmental and hazardous substance analyses reports from
Enviro-Sciences, Inc., dated April 1996, and (2) an environmental study and
report performed by the National Jewish Center of Colorado, dated April 25,
1995, as supplemented on January 24, 1996, each of which shall be in scope,
and in form and substance, acceptable to the Agent and the Required Banks,
together with reliance letters in form and substance satisfactory to the
Agent and the Required Banks.
5.15 INSURANCE POLICIES. On the Initial Borrowing Date, the Agent
shall have received analyses and evidence (including, without limitation,
certificates with respect to each insurance policy listed in Schedule V and,
with respect to all casualty insurance, naming the Collateral Agent on behalf of
the Secured Creditors, as mortgagee/secured party and loss payee, and with
respect to all liability policies, naming the Collateral Agent, the Agent and
each Bank as an additional insured, and in all cases stating that such insurance
shall not be cancelled or revised without 30 days' prior written notice by the
insurer to the Agent) of insurance complying with the requirements of Section
8.03 for the business and properties of the Borrower and each Subsidiary of the
Borrower (including, without limitation, PAI), in form and substance
satisfactory to the Agent and the Required Banks.
5.16 APPROVALS. All necessary governmental and third party approvals
in connection with the Transaction and the transactions contemplated by the
Documents and otherwise referred to herein or therein (including, but not
limited to, those approvals required in respect of existing permits, landlord
consents and transfers of contract rights) shall have been obtained and remain
in effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes, in the sole judgment of the Agent or the Required Banks, adverse
conditions upon the consummation of the Transaction or the other transactions
contemplated by the Documents and otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunction relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Transaction, the transactions
contemplated by the Documents, the making of the Loans or the issuance of
Letters of Credit.
5.17 CAPITAL CONTRIBUTION, INTERCOMPANY LOAN. (a) On the Initial
Borrowing Date, Newco shall have received (or shall concurrently with the
initial Credit Event have received) from the Borrower (i) cash in an amount of
at least $1,000 in return for the issuance of Newco Common Stock and (ii) cash
in an amount of at least $16,895,353.34 in return for the issuance by Newco of
an intercompany promissory note in the form of Exhibit N hereto (clauses (i) and
(ii) being referred to, collectively, as the "Newco Capital Contribution"),
which Newco Common Stock and intercompany promissory note shall be pledged by
the Borrower as Collateral pursuant to the Pledge Agreement. On or prior to the
Initial Borrowing Date, each Bank shall have received copies of Newco's
Certificate of
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Incorporation and all agreements entered into, or proposed to be entered into,
in respect of the issuance of the Newco Common Stock, duly authorized, executed
and delivered by the parties thereto and shall be in full force and effect and
in form and substance satisfactory to the Agent and the Required Banks.
(b) On the Initial Borrowing Date, Newco shall have used the proceeds
in Section 5.17(a) to make payments owing in connection with the Transaction.
5.18 FINANCIAL STATEMENTS; PROJECTIONS; MANAGEMENT LETTERS. (a) On
or prior to the Initial Borrowing Date, the Banks shall have received (i) the
consolidated balance sheet of PAI as at April 30, 1995, 1994 and 1993, and the
related statements of earnings and cash flows of PAI for the fiscal periods
ended as of said dates, which have been examined by McGladrey & Pullen LLP, who
delivered unqualified opinions in respect thereto, (ii) the consolidated balance
sheet of the Borrower as at December 31, 1995, 1994 and 1993, and the related
statements of earnings and cash flows for the fiscal periods ended as of said
dates, which have been examined by Arthur Andersen LLP, who delivered
unqualified opinions in respect thereto and (iii) the pro forma (after giving
effect to the Transaction and the related financing thereof) consolidated
balance sheet of the Borrower as at February 29, 1996, which financial
statements shall be prepared in accordance with United States generally accepted
accounting principles (except as provided in the notes thereto) and shall be in
form and substance satisfactory to the Agent and the Required Banks, and shall
not disclose any material adverse differences in the business, properties,
assets, liabilities, results of operations, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole from that
previously disclosed to the Agent and the Required Banks.
(b) On the Initial Borrowing Date, the Banks shall have received
detailed consolidated financial projections, certified by (i) the President or a
Vice-President of the Borrower and (ii) the chief financial officer or
controller of the Borrower, for the Borrower and its Subsidiaries, which include
the projected results of PAI, after giving effect to the Transaction and the
other transactions contemplated herein, for at least six years ended after the
Initial Borrowing Date (the "Projections"), which Projections, and the
supporting assumptions and explanations thereto, and the accounting practices
and procedures to be utilized by the Borrower following the Initial Borrowing
Date, shall be satisfactory in form and substance to the Agent and the Required
Banks.
(c) On or prior to the Initial Borrowing Date, the Agent shall have
received a copy of any "management letter" received by PAI or any of its
Subsidiaries from its certified public accountants on or after April 30, 1991.
5.19 CONSENT LETTER. The Agent shall have received a letter from CT
Corporation System, presently located at 1633 Broadway, New York, New York
10019,
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substantially in the form of Exhibit J hereto, indicating its consent to its
appointment by the Borrower and each other Credit Party as their agent to
receive service of process as specified in Section 13.08 of this Agreement.
5.20 DUE DILIGENCE. The Agent shall have completed, and be satisfied
with the results of, its business and legal due diligence review with respect to
the Borrower and its Subsidiaries (including PAI), the Transaction and the other
transactions contemplated by the Documents, including, without limitation, a due
diligence review of the financials of the Borrower and PAI, the tax status of
the Borrower and PAI, and an environmental, litigation, employee benefits and
insurance due diligence review and the Agent and the Required Banks shall be
satisfied with the nature and status of all contract, securities, labor, tax,
ERISA and employee benefits (including, without limitation, satisfaction with
the amounts and status of the pension plans and post-retirement health and life
insurance benefit plans), environmental, health and safety matters involving or
affecting the Borrower or any Subsidiary of the Borrower.
5.21 INITIAL BORROWING BASE CERTIFICATE. On the Initial Borrowing
Date, the Borrower shall have delivered to the Agent the initial Borrowing Base
Certificate meeting the requirements of Section 8.01(k).
5.22 REFINANCING. On the Initial Borrowing Date and after giving
effect to the Merger and the Loans incurred on the Initial Borrowing Date
neither the Borrower nor any of its Subsidiaries shall have any Indebtedness
outstanding except for the Loans and the Existing Indebtedness, which Existing
Indebtedness shall not exceed $5,500,000. All of the Existing Indebtedness
shall remain outstanding after the Acquisition and the other transactions
contemplated hereby without any default or events of default existing thereunder
or arising as a result of the Acquisition and the other transactions
contemplated hereby (except to the extent amended or waived by the parties
thereto on terms and conditions satisfactory to the Agent and the Required
Banks), and there shall not be any amendments or modifications to the Existing
Indebtedness Agreements other than as requested or approved by the Agent or the
Required Banks. All Indebtedness of the Borrower and its Subsidiaries other
than the Existing Indebtedness shall have been repaid in full in connection with
the Transaction. The Agent and the Required Banks shall be satisfied with the
amount of and the terms and conditions of (i) all Existing Indebtedness and (ii)
the repayment of all Indebtedness repaid in connection with the transactions
contemplated hereby (collectively, the "Refinanced Indebtedness") and the amount
of all accrued interest, premiums, fees, commissions and expenses owing in
connection with the repayment of such Refinanced Indebtedness and all Liens in
connection with such Refinanced Indebtedness shall have been terminated (and all
appropriate releases, termination statements or other instruments of assignment
with respect thereto shall have been obtained) to the satisfaction of the Agent
and the Required Banks and the Banks shall have received a satisfactory legal
opinion to such effect. The Agent shall have received copies, certified as true
and complete
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by an appropriate officer of the Borrower of all documents executed in
connection with the repayment of the Refinanced Indebtedness and the release of
the Liens thereunder.
Section 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligation
of each Bank to make Loans (including Loans made on the Initial Borrowing Date)
and the obligation of the Issuing Bank to issue any Letter of Credit, is
subject, at the time of each such Credit Event (except as hereinafter
indicated), to the satisfaction of the following conditions:
6.01 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of the making of such Credit Event.
6.02 MATERIAL ADVERSE CHANGE, ETC. Nothing shall have occurred since
April 30, 1995 (and the Banks shall have become aware of no facts or conditions
not previously known) which the Agent or the Required Banks shall determine (i)
could reasonably be expected to have a material adverse effect on the rights or
remedies of the Banks or the Agent, or on the ability of the Borrower or any
other Credit Party to perform its obligations to the Banks under this Agreement
or any other Credit Document or (ii) which could reasonably be expected to have
a materially adverse effect on the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole.
6.03 LITIGATION. At the time of each such Credit Event and also
after giving effect thereto, no litigation by any entity (private or
governmental) shall be pending or threatened with respect to this Agreement or
any other Credit Document executed in connection herewith or the transactions
contemplated hereby or which the Required Banks shall determine could reasonably
be expected to have a materially adverse effect on the performance, business,
assets, nature of assets, liabilities, operations, properties, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
6.04 NOTICE OF BORROWING; LETTER OF CREDIT REQUEST. (a) Prior to
the making of each Loan, the Agent shall have received a Notice of Borrowing
meeting the requirements of Section 1.03.
(b) Prior to the issuance of each Letter of Credit, the Issuing Bank
shall have received a Letter of Credit Request meeting the requirements of
Section 2.03.
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The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to each of the Banks that all the
conditions specified in Section 5 and in this Section 6 and applicable to such
Credit Event exist as of that time. All of the Notes, certificates, legal
opinions and other documents and papers referred to in Section 5 and in this
Section 6, unless otherwise specified, shall be delivered to the Agent at the
Notice Office for the account of each of the Banks and, except for the Notes, in
sufficient counterparts for each of the Banks and, unless otherwise specified,
shall be in form and substance satisfactory to the Banks.
Section 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Banks to enter into this Agreement and to make the Loans, and issue
(or participate in) the Letters of Credit as provided herein, the Borrower makes
the following representations, warranties and agreements as to itself and as to
each of its Subsidiaries, as of the Initial Borrowing Date (both before and
after giving effect to the Credit Events occurring on such date, the Transaction
and the other transactions contemplated by the Documents, and all references to
the Borrower herein and elsewhere in this Agreement, shall, unless otherwise
specifically indicated, be references to the Borrower after giving effect to the
Transaction) and as of the date of each subsequent Credit Event which
representations, warranties and agreements shall survive the execution and
delivery of this Agreement and the Notes and any subsequent Credit Event, with
the occurrence of each Credit Event on or after the Initial Borrowing Date being
deemed to constitute a representation and warranty that the matters specified in
this Section 7 are true and correct on and as of the Initial Borrowing Date and
on the date of each such Credit Event:
7.01 CORPORATE STATUS. Each of the Borrower and its Subsidiaries (i)
is a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its organization, (ii) has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage and (iii) is duly qualified and
is authorized to do business and is in good standing in each jurisdiction where
the ownership, leasing or operation of property or the conduct of its business
requires such qualifications except for failures to be so qualified which, in
the aggregate, would not have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
7.02 CORPORATE POWER AND AUTHORITY. Each of the Borrower and its
Subsidiaries has the corporate power to execute, deliver and perform the terms
and provisions of each of the Documents to which it is party and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of each of such Documents. Each of the Borrower and its Subsidiaries has
duly executed and delivered each of the Documents to which it is party, and each
of such Documents constitutes its legal, valid and binding obligation
enforceable in accordance with its terms, except as the enforceability
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thereof may be limited by bankruptcy, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by general equitable
principles (regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law).
7.03 NO VIOLATION. Neither the execution, delivery or performance by
the Borrower or any of its Subsidiaries of the Documents to which it is a party,
nor compliance by it with the terms and provisions thereof, (i) will contravene
any provision of any applicable law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality
applicable to it, (ii) will conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien (except pursuant to the Security Documents) upon any of the property or
assets of the Borrower or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan agreement, or any
other agreement, contract or instrument to which the Borrower or its
Subsidiaries is a party or by which it or any of its property or assets is bound
or to which it may be subject, except for such conflicts, breaches, defaults or
the creation or imposition of any Lien, arising from the execution, delivery or
performance by the Borrower or any of its Subsidiaries of the Acquisition
Documents or Merger Documents, which, singularly or in the aggregate, would not
have a material adverse effect on the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole or (iii) will
violate any provision of the Certificate of Incorporation or By-Laws (or similar
organizational documents) of the Borrower or any of its Subsidiaries.
7.04 GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made on or prior to the Initial Borrowing Date
and are in full force and effect), or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or is
required in connection with (i) the Transaction, (ii) the legality, validity,
binding effect or enforceability of any Document or (iii) the execution,
delivery and performance of any such Document, except in the case of any
Acquisition Document or any Merger Document for orders, consents, approvals,
licenses, authorizations and validations which individually and in the aggregate
are immaterial.
7.05 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED
LIABILITIES; PROJECTIONS; ETC. (a) (i) The consolidated balance sheets of PAI
at April 30, 1995, 1994 and 1993 and the related statements of earnings and cash
flows of PAI for the fiscal periods ended as of said dates, (ii) the
consolidated balance sheets of the Borrower at December 31, 1995, 1994 and 1993
and the related statements of earnings and cash flows of the Borrower for the
fiscal periods ended as of said dates and (iii) the pro forma (after giving
effect to the Transaction and the related financing thereof) consolidated
balance sheet of the Bor-
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rower referred to in Section 5.18 of this Agreement, copies of all of which
financial statements referred to in the preceding clauses (i), (ii) and (iii)
have heretofore been furnished to each Bank, present fairly the financial
position of the respective entities at the dates of said statements and the
results of operations for the period covered thereby (or, in the case of the pro
forma balance sheet, present a good faith estimate of the pro forma financial
condition of the Borrower and its Subsidiaries (after giving effect to the
Transaction) on a consolidated basis at the date thereof). The annual financial
statements of the Borrower and PAI have been audited by Arthur Andersen LLP and
McGladrey & Pullen LLP, respectively, who delivered unqualified opinions with
respect thereto. All such audited and unaudited financial statements (other
than pro forma statements) have been prepared in accordance with United States
generally accepted accounting principles and practices consistently applied
except to the extent provided in the notes to said financial statements and with
respect to interim financial statements, subject to normal year end adjustments.
Since April 30, 1995, there has been no material adverse change in the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
(b) On and as of the Initial Borrowing Date, on a pro forma basis
after giving effect to the Transaction and all other transactions contemplated
by the Documents and to all Indebtedness (including the Loans) being incurred in
connection with the Transaction, and Liens created, and to be created, by each
Credit Party in connection therewith: (a) the sum of the assets (including all
intangible assets), at a fair valuation, of each Credit Party will exceed its
debts; (b) no Credit Party has incurred or intends to, or believes that it will,
incur debts beyond its ability to pay such debts as such debts mature; and (c)
each Credit Party will have sufficient capital with which to conduct its
business. For purposes of this Section 7.05(b) "debt" means any liability on a
claim, and "claim" means (i) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(c) Except as fully reflected in the financial statements or the
notes related thereto described in Section 7.05(a), there were as of the Initial
Borrowing Date (and after giving effect to the Transaction and the other
transactions contemplated hereby and by the Documents) no liabilities or
obligations with respect to the Borrower or any of its Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, could reasonably
be expected to be material to the Borrower and its Subsidiaries taken as a
whole. As of the Initial Borrowing Date, neither the Borrower nor any of its
Subsidiaries knows of any basis for the assertion against the Borrower or any of
its Subsidiaries of any liability or obligation of any nature whatsoever that is
not fully reflected in the financial statements or the notes
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related thereto described in Section 7.05(a) which, either individually or in
the aggregate, could reasonably be expected to be material to the Borrower and
its Subsidiaries taken as a whole. As of the Initial Borrowing Date (and after
giving effect to the Transaction) none of the Borrower or any of its
Subsidiaries will have any outstanding Indebtedness other than (i) the Loans,
(ii) Capitalized Lease Obligations and (iii) the Existing Indebtedness.
(d) On and as of the Initial Borrowing Date, the Projections have
been prepared in good faith by the Borrower with the participation of management
of PAI and there are no statements or conclusions in any of the Projections
which are based upon or include information known to the Borrower to be
misleading or which fail to take into account material information regarding the
matters reported therein. On the Initial Borrowing Date, the Borrower believes
that the Projections are based on estimates and assumptions which are reasonable
under the circumstances and, subject to the foregoing, the Borrower believes the
Projections are attainable (although actual results may differ from the
Projections and no representation is made that the Projections will in fact be
attained).
7.06 LITIGATION. There are no actions, suits or proceedings pending
or, to the best knowledge of the Borrower or any of its Subsidiaries, threatened
(i) with respect to any Credit Document or the transaction contemplated thereby,
(ii) with respect to any Indebtedness of the Borrower or any of its
Subsidiaries, other than actions, suits or proceedings with respect to
Indebtedness (other than Indebtedness created by any Credit Document) that could
not reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole or (iii) that are reasonably likely to materially
and adversely affect the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
7.07 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower or any Subsidiary of the Borrower in writing to any Bank (including,
without limitation, all information contained in the Documents) for purposes of
or in connection with this Agreement or any transaction contemplated herein is,
and all other such factual information (taken as a whole with all information
previously furnished) hereafter furnished by or on behalf of the Borrower or any
Subsidiary of the Borrower in writing to any Bank will be, true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact.
7.08 USE OF PROCEEDS; MARGIN REGULATIONS. (a) All proceeds of the
Term Loans and Revolving Loans incurred on the Initial Borrowing Date shall be
used by the Borrower (i) to make the Newco Capital Contribution, (ii) to
consummate the Acquisition, (iii) to repay the Refinanced Indebtedness and (iv)
to pay Transaction Fees and Expenses.
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(b) All proceeds of Revolving Loans incurred after the Initial
Borrowing Date shall be used by the Borrower (i) for its general corporate and
working capital purposes and (ii) to make intercompany loans to PAI and its
Wholly-Owned Subsidiaries (other than any Immaterial Subsidiary) for general
corporate and working capital purposes of PAI and its Wholly-Owned Subsidiaries
(other than any Immaterial Subsidiary), PROVIDED that proceeds of Revolving
Loans in an aggregate amount not to exceed the Blocked Commitment as from time
to time in effect, drawn down for the purpose of making the Tax Payment as set
forth in the applicable Notice of Borrowing, may only be used after the Initial
Borrowing Date to make the Tax Payments.
(c) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof nor the occurrence of any other Credit Event will violate or be
inconsistent with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
7.09 TAX RETURNS AND PAYMENTS. Each of the Borrower and its
Subsidiaries has timely filed or caused to be timely filed (including pursuant
to any valid extensions of time for filing) with the appropriate taxing
authority, all returns, statements, forms and reports for taxes (the "Returns")
required to be filed by or with respect to the income, properties or operations
of the Borrower and/or any of its Subsidiaries. Except as may be the case with
respect to the Tax Liability (including, without limitation, the Disputed
Alabama Taxes), the Returns accurately reflect in all material respects all
liability for taxes of the Borrower and its Subsidiaries for the periods covered
thereby. Each of the Borrower and each of its Subsidiaries have paid all
material taxes payable by them which have become due other than those contested
in good faith and, except as may be the case with respect to the Disputed
Alabama Taxes, for which adequate reserves have been established in accordance
with generally accepted accounting principles. Except for proceedings in
connection with the Tax Liability (including, without limitation, the Disputed
Alabama Taxes), there is no material action, suit, proceeding, investigation,
audit, or claim now pending or, to the best knowledge of the Borrower or any of
its Subsidiaries, threatened by any authority regarding any taxes relating to
the Borrower or any of its Subsidiaries. Except with respect to the Tax
Liability (including, without limitation, the Disputed Alabama Taxes), neither
the Borrower nor any of its Subsidiaries has entered into an agreement or waiver
or been requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of the Borrower or
any of its Subsidiaries, or is aware of any circumstances that would cause the
taxable years or other taxable periods of the Borrower or any of its
Subsidiaries not to be subject to the normally applicable statute of
limitations. Neither the Borrower nor any of its Subsidiaries has provided,
with respect to themselves or property held by them, any consent under Section
341 of the Code. None of the Borrower or any of its Subsidiaries has incurred,
or will incur, any material tax liability in connection with the Transaction or
any other
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transactions contemplated hereby. On December 31, 1995, the Borrower had
available to it not less than $13,300,000 in net operating loss carry forwards
which can be applied to reduce taxable income for Federal income tax purposes
without limitations (other than potential limitations resulting from
calculations of alternative minimum tax amounts).
7.10 COMPLIANCE WITH ERISA. Each Plan is in substantial compliance
with ERISA and the Code; except as disclosed on Schedule X, no Reportable Event
has occurred with respect to a Plan; no Plan is insolvent or in reorganization;
no Plan has an Unfunded Current Liability which, when added to the aggregate
amount of Unfunded Current Liabilities with respect to all other Plans, exceeds
$450,000; no Plan has an accumulated or waived funding deficiency or has applied
for an extension of any amortization period within the meaning of Section 412 of
the Code; all contributions required to be made with respect to a Plan have been
timely made; neither the Borrower nor any of its Subsidiaries nor any ERISA
Affiliate has incurred any material liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or
expects to incur any material liability under any of the foregoing Sections with
respect to any Plan; no proceedings have been instituted to terminate or appoint
a trustee to administer any Plan; no condition exists which presents a material
risk to the Borrower or any of its Subsidiaries or any ERISA Affiliate of
incurring a material liability to or on account of a Plan pursuant to the
foregoing provisions of ERISA and the Code; using actuarial assumptions and
computation methods consistent with Part 1 of subtitle E of Title IV of ERISA,
the Borrower and its Subsidiaries and their ERISA Affiliates would not have any
material liability to any plan which is a multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as
of the close of the most recent fiscal year of each such Plan ended prior to the
date of the most recent Credit Event; no lien imposed under the Code or ERISA on
the assets of the Borrower or any of its Subsidiaries or any ERISA Affiliate
exists or is likely to arise on account of any Plan; and the Borrower and its
Subsidiaries may cease contributions to or terminate any employee benefit plan
maintained by any of them without incurring any material liability.
7.11 THE SECURITY DOCUMENTS. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the respective Credit Parties in
the Collateral described therein and the Collateral Agent, for the benefit of
the Secured Creditors, has a fully perfected first Lien on, and security
interest in, all right, title and interest of the respective Credit Parties, in
all of the Collateral described therein, subject to no other Liens other than
Permitted Liens. The recordation of the Security Agreement in the United States
Patent and Trademark Office together with filings on Form UCC-1 made pursuant to
the Security Agreement will be effective, under federal and state law, to
perfect the security interest granted to the Collateral Agent in the trademarks
and patents covered by the Security Agreement and the filing
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of the Security Agreement with the United States Copyright Office together with
filings on Form UCC-1 made pursuant to the Security Agreement will be effective
under federal and state law to perfect the security interest granted to the
Collateral Agent in the copyrights covered by the Security Agreement. Each of
the Credit Parties party to the Security Agreement has good and merchantable
title to all Collateral described therein, free and clear of all Liens other
than Permitted Liens.
(b) The security interests created in favor of the Collateral Agent,
as pledgee for the benefit of the Secured Creditors, under the Pledge Agreement
constitute first perfected security interests in the Pledged Securities
described in the Pledge Agreement, subject to no security interests of any other
Person. No filings or recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests created in the Pledged
Securities and the proceeds thereof under the Pledge Agreement.
(c) The Mortgages create, as security for the obligations purported
to be secured thereby, a valid and enforceable perfected security interest in
and Lien on all of the Mortgaged Properties in favor of the Collateral Agent (or
such other trustee as may be required or desired under local law) for the
benefit of the Secured Creditors, superior to and prior to the rights of all
third persons (except that the security interest created in the Mortgaged
Properties may be subject to the Permitted Encumbrances related thereto) and
subject to no other Liens (other than Permitted Liens). Schedule II contains a
true and complete list of each parcel of Real Property owned or leased by the
Borrower and each of its Subsidiaries on the Initial Borrowing Date, and the
type of interest therein held by the Borrower and/or its Subsidiaries. Each of
the Borrower and its Subsidiaries has good and marketable title at the time of
the grant thereof and at all times thereafter to all Mortgaged Properties free
and clear of all Liens except those described in the first sentence of this
subsection (c).
(d) The Borrower represents and warrants that neither it nor any of
its Subsidiaries maintains, nor will it in the future maintain, any Bank Deposit
Account with any Deposit Bank other than the applicable Bank Deposit Account;
PROVIDED, HOWEVER, that each such Credit Party shall be permitted to establish
new Bank Deposit Accounts pursuant to the terms of the Security Agreement.
7.12 REPRESENTATIONS AND WARRANTIES IN DOCUMENTS. All
representations and warranties set forth in the Documents are true and correct
in all material respects at the time as of which such representations and
warranties were made and on the Initial Borrowing Date.
7.13 PROPERTIES. Each of the Borrower and its Subsidiaries has good
and merchantable title to all properties owned by them, including all property
reflected in the consolidated pro forma balance sheet (after giving effect to
the Transaction) referred to in
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Section 7.05(a) (except as sold or otherwise disposed of since the date of such
balance sheet in the ordinary course of business or as permitted by Section
9.02), free and clear of all Liens, other than (i) as referred to in the
consolidated balance sheet or in the notes thereto or in the pro forma balance
sheet or (ii) otherwise permitted by Section 9.01.
7.14 CAPITALIZATION. On the Initial Borrowing Date, the authorized
capital stock of (i) the Borrower consists of (x) 20,000,000 shares of common
stock, $.01 par value, 12,659,957 of which shares are issued and outstanding,
and (y) 4,000,000 shares of preferred stock, $.01 par value, 738,584 of which
shares are issued and outstanding and (ii) PAI consists of (x) 100 shares of
common stock, $.01 par value, 10 of which shares are issued and outstanding, and
(y) no shares of preferred stock. All of such outstanding shares have been duly
and validly issued, are fully paid and nonassessable and are free of preemptive
rights. Except as set forth on Schedule VII, on the Effective Date, neither the
Borrower nor any of its Subsidiaries has outstanding any securities convertible
into or exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock.
7.15 SUBSIDIARIES. On the Initial Borrowing Date, the corporations
listed on Schedule III are the only Subsidiaries of the Borrower. Schedule III
correctly sets forth, as of the Initial Borrowing Date, (a) the percentage
ownership (direct and indirect) of the Borrower in each class of capital stock
of each of its Subsidiaries and also identifies the direct owner thereof and (b)
all other equity ownership interests of the Borrower or any of its Subsidiaries
in any Person.
7.16 COMPLIANCE WITH STATUTES, ETC. Each of the Borrower and its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except with respect to each of the foregoing such noncompliance
as could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
7.17 INVESTMENT COMPANY ACT. None of the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7.18 PUBLIC UTILITY HOLDING COMPANY ACT. None of the Borrower nor
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a
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"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
7.19 ENVIRONMENTAL MATTERS. (a) The Borrower and each of its
Subsidiaries have complied with, and on the date of each Credit Event shall be
in compliance with, in all respects, all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws except such
noncompliances which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
There are no past, pending or, to the best knowledge of the Borrower, threatened
Environmental Claims against the Borrower or any of its Subsidiaries or any Real
Property currently owned or operated by the Borrower or any of its Subsidiaries
except such Environmental Claims which, individually or in the aggregate, could
not reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole. There are no facts, circumstances, conditions or
occurrences regarding the Borrower, its operations or any of its Subsidiaries or
any Real Property at any time owned or operated by the Borrower or any of its
Subsidiaries or any property adjoining any such Real Property, that could
reasonably be expected (i) to form the basis of an Environmental Claim against
the Borrower or any of its Subsidiaries or any Real Property currently owned or
operated by the Borrower, or any of its Subsidiaries or (ii) to cause any such
currently owned Real Property to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Real Property under any
Environmental Law, except such Environmental Claims and restrictions which
individually or in the aggregate could not reasonably be expected to have a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
(b) Neither the Borrower nor any of its Subsidiaries has, at any
time, generated, used, treated, stored, transported or released Hazardous
Materials on, to or from any Real Property owned, leased or at any time operated
by the Borrower or any of its Subsidiaries in any manner which constitutes a
violation in any material respect of any Environmental Laws except for any such
violations which have been settled or singly or in the aggregate could not be
reasonably expected to have a material adverse effect on the performance,
business, assets, nature of assets, contracts, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
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(c) To the best knowledge of the Borrower, there are not now and
never have been any underground storage tanks located on any Real Property owned
or operated by the Borrower or any of its Subsidiaries.
(d) No Real Property currently owned or operated by the Borrower or
any of its Subsidiaries is located on any site listed on, or proposed in the
Federal Register for listing on, the Superfund National Priorities List, or
listed on the Comprehensive Environmental Response Compensation and Liability
Information System or their state equivalents. To the best knowledge of the
Borrower, no Real Property at any time owned or operated by the Borrower or any
of its Subsidiaries is located on any site listed on, or proposed in the Federal
Register for listing on, the Superfund National Priorities List, or listed on
the Comprehensive Environmental Response Compensation and Liability Information
System or their state equivalents.
7.20 LABOR RELATIONS. None of the Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on the Borrower and its Subsidiaries
taken as a whole. There is (i) no significant unfair labor practice complaint
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened against any of them, before the National
Labor Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened against any of them, (ii) no significant
strike, labor dispute, slowdown or stoppage pending against the Borrower or any
of its Subsidiaries or, to the best knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries and (iii) no union
representation question existing with respect to the employees of the Borrower
or any of its Subsidiaries, except (with respect to any matter specified in
clause (i), (ii) or (iii) above, either individually or in the aggregate) those
matters which could not reasonably be expected to have a material adverse effect
on the performance, business, assets, nature of assets, contracts, liabilities,
operations, properties, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole.
7.21 PATENTS, LICENSES, FRANCHISES AND FORMULAS. (a) The Borrower,
together with its Subsidiaries, has a license to use or otherwise has the right
to use, free and clear of pending or, to the best knowledge of the Borrower,
threatened material Liens, all the material patents, patent applications,
trademarks, service marks, trade names, trade secrets, copyrights, proprietary
information, computer programs, data bases, licenses, franchises and formulas,
or rights with respect to the foregoing (collectively, "Intellectual Property"),
and has obtained all licenses and other rights of whatever nature, necessary for
the present conduct of its business, without any known conflict with the rights
of others which, or the failure to obtain which, as the case may be, could
reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets,
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liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
(b) Neither the Borrower nor any of its Subsidiaries has knowledge of
any claim by any third party contesting the validity, enforceability, use or
ownership of the Intellectual Property, or of any existing state of facts that
would support a claim that use by the Borrower or any of its Subsidiaries of any
such Intellectual Property has infringed or otherwise violated any Intellectual
Property right of any other Person or that any such claim is threatened, except
for such claims that could not individually or in the aggregate reasonably be
expected to have a material adverse affect on the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
7.22 INDEBTEDNESS. Schedule VIII sets forth a true and complete list
of any Indebtedness (other than the Loans and the Letters of Credit) of the
Borrower and each of its Subsidiaries as of the Initial Borrowing Date after
giving effect to the Acquisition and the other transactions contemplated hereby
(the "Existing Indebtedness"), in each case showing the aggregate amount thereof
and the name of the respective obligor and any other entity which directly or
indirectly guaranteed such debt. None of the Existing Indebtedness was incurred
in connection with, or in contemplation of, the Transaction or the other
transactions contemplated hereby.
7.23 RESTRICTIONS ON OR RELATING TO SUBSIDIARIES. There does not
exist any encumbrance or restriction on the ability of (i) any Subsidiary of the
Borrower to pay dividends or make any other distributions on its capital stock
or any other interest or participation in its profits to the Borrower or any
Subsidiary of the Borrower, or to pay any Indebtedness to the Borrower or a
Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower to make loans or
advances to the Borrower or any of the Borrower's Subsidiaries or (iii) the
Borrower or any Subsidiary of the Borrower to transfer any of its properties or
assets to the Borrower or any Subsidiary of the Borrower, except for such
encumbrances or restrictions existing under or by reason of (t) applicable law,
(u) this Agreement and the other Credit Documents, (v) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of the Borrower or a Subsidiary of the Borrower, (w) customary provisions
restricting the assignment of contracts, permits and/or licenses, (x)
restrictions existing in the documents governing the terms of the Gilford IRBs,
(y) by reason of any Permitted Lien or (z) as contemplated by clause (2) of the
second proviso of Section 4.02(A)(h).
7.24 SPECIAL PURPOSE CORPORATION; IMMATERIAL SUBSIDIARIES. (a) Newco
was formed to effect the Acquisition and the Merger, and except in connection
therewith (and as contemplated by this Agreement), Newco does not engage in
business activities and has no significant assets or liabilities.
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(b) No Immaterial Subsidiary of the Borrower engages in any business
activities or has any assets or liabilities.
7.25 THE TRANSACTION. All aspects of the Transaction have been
effected in accordance with the Documents and all applicable law in all material
respects. At the time of consummation thereof, all material consents and
approvals of, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities and
third parties required in order to consummate the Transaction shall have been
obtained, given, filed or taken and are in full force and effect (or effective
judicial relief with respect thereto has been obtained). All applicable waiting
periods with respect thereto have or, prior to the time when required, will
have, expired without, in all such cases, any action being taken by any
competent authority which restrains, prevents or imposes material adverse
conditions upon the consummation of the Transaction. Additionally, at the time
of consummation thereof, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the consummation of the
Transaction, and there does not exist any judgment, order or injunction
prohibiting or imposing any material adverse condition upon the occurrence of
any Credit Event or the performance by the Borrower or any of its Subsidiaries
of their obligations under the Documents. All actions taken by the Borrower or
any of its Subsidiaries pursuant to or in furtherance of the Transaction have
been taken in compliance in all material respects with the respective Documents
and all applicable law. No shareholder of PAI is entitled to receive a proxy
statement or information statement in connection with the Merger other than an
information statement under Delaware law following the effective time of the
Merger. No state takeover statute is applicable to the Merger.
7.26 CONCENTRATION ACCOUNT AND BANK DEPOSIT ACCOUNTS. Schedule IV
sets forth a true and complete list of each Bank Deposit Account maintained with
each Deposit Bank by the Borrower and each of its Subsidiaries and the
Concentration Account maintained with the Concentration Account Bank by the
Borrower and each of its Subsidiaries.
Section 8. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that on and after the Effective Date and until the Total Commitment and all
Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings,
together with interest, Fees and all other Obligations are paid in full:
8.01 INFORMATION COVENANTS. The Borrower will furnish to each Bank:
MONTHLY REPORTS. Within 30 days after the end of each fiscal
month other than the last such month of any fiscal quarter of the Borrower,
the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of income, retained earnings and cash flows for
such month and for the elapsed por-
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tion of the fiscal year ended with the last day of such month, in each case
setting forth comparative figures for the corresponding month and elapsed
portion of such fiscal year for the prior fiscal year and comparable
budgeted figures for such period, all of which shall be certified by the
chief financial officer or controller of the Borrower, subject to normal
year-end audit adjustments.
(b) QUARTERLY FINANCIAL STATEMENTS. Within 45 days after the close
of the first three quarterly accounting periods in each fiscal year of the
Borrower, the consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries as at the end of such quarterly period and the related
consolidated and consolidating statements of income, retained earnings and
cash flows, in each case for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
period, in each case setting forth comparative figures for the
corresponding periods in the prior fiscal year and comparable budgeted
figures for such period, all of which shall be certified by the chief
financial officer or controller of the Borrower, subject to normal year-end
audit adjustments.
(c) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such
fiscal year and the related consolidated and consolidating statements of
income, retained earnings and cash flows for such fiscal year and setting
forth comparative figures for the preceding fiscal year and comparable
budgeted figures for such period and certified, (x) in the case of the
consolidating statements, by the chief financial officer or controller of
the Borrower and (y) in the case of the consolidated financial statements
of the Borrower and its Subsidiaries, by any of the "big six" or other
independent certified public accountants of recognized national standing
reasonably acceptable to the Required Banks, together with a signed opinion
of such accounting firm (which opinion shall not be qualified in any
respect) stating that it has read this Agreement and that, in the course of
its regular audit of the financial statements of the Borrower which audit
was conducted in accordance with generally accepted auditing standards,
such accounting firm obtained no knowledge of any Default or Event of
Default which has occurred 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.
(d) MANAGEMENT LETTERS. Promptly after the receipt thereof by the
Borrower or any of its Subsidiaries, a copy of any "management letter"
received by the Borrower or any of its Subsidiaries from its certified
public accountants.
(e) BUDGETS. As soon as available but in no event later than 30 days
after the first day of each fiscal year of the Borrower, a budget for the
Borrower and its
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Subsidiaries in form reasonably satisfactory to the Agent and the Required
Banks (including budgeted statements of income and sources and uses of cash
and balance sheets) prepared by the Borrower (and approved by the Board of
Directors of the Borrower) for each calendar month of such fiscal year
prepared in reasonable detail with appropriate presentation and discussion
of the principal assumptions upon which such budgets are based, accompanied
by the statement of the chief financial officer or controller of the
Borrower to the effect that, to the best of his knowledge, the budget is a
reasonable estimate for the period covered thereby.
(f) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Section 8.01(a), (b) and (c), a
certificate of the chief financial officer of the Borrower to the effect
that no Default or Event of Default has occurred and is continuing or, if
any Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof, which certificate, (x) in the case of
certificates delivered pursuant to Section 8.01(b) or (c), shall set forth
the calculations required to establish whether the Borrower was in
compliance with the provisions of Sections 3.03, 4.02, 9.02, 9.04, 9.05 and
9.08 through 9.15, inclusive, and 9.22, at the end of such fiscal quarter
or year, as the case may be and (y) in the case of certificates delivered
pursuant to Section 8.01(c), shall set forth the amount of Excess Cash Flow
for the relevant Excess Cash Flow Payment Period.
(g) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after an officer of the Borrower or PAI obtains
knowledge thereof, notice of (i) the occurrence of any event which
constitutes a Default or Event of Default, (ii) any litigation or
governmental investigation or proceeding pending (x) against the Borrower
or its Subsidiaries which could reasonably be expected to materially and
adversely affect the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (y) with
respect to any Credit Document and (iii) any other event which could
reasonably be expected to materially and adversely affect the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
(h) OTHER REPORTS AND FILINGS. Promptly upon transmission thereof,
copies of any financial information, proxy materials and other information
and reports, if any, which any Credit Party or any of its Subsidiaries (x)
has filed with, the Securities and Exchange Commission or any successor
thereto (the "SEC") or (y) has delivered to holders of, or any agent or
trustee with respect to, Indebtedness of any Credit Party or any of its
Subsidiaries in its capacity as such a holder, agent, or trustee (other
than Indebtedness constituting Capitalized Lease Obligations).
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(i) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within
three Business Days after an officer of the Borrower or PAI obtains
knowledge thereof, notice of any of the following environmental matters:
(i) any pending or threatened material Environmental Claim against the
Borrower or any of its Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Subsidiaries; (ii) any condition or
occurrence on or arising from any Real Property at any time owned or
operated by the Borrower or any of its Subsidiaries that (a) could
reasonably be anticipated to result in a material noncompliance by the
Borrower or any of its Subsidiaries with any applicable Environmental Law,
or (b) could reasonably be anticipated to form the basis of a material
Environmental Claim against the Borrower or any of its Subsidiaries or any
Real Property owned or operated by the Borrower or any of its Subsidiaries;
(iii) any condition or occurrence on any Real Property owned or operated by
the Borrower or any of its Subsidiaries or any property adjoining such Real
Property that could reasonably be anticipated to cause such Real Property
to be subject to any material restrictions on the ownership, occupancy, use
or transferability of such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to a Release
or threatened Release or the actual or alleged presence of any Hazardous
Material on or from any Real Property at any time owned or operated by the
Borrower or any of its Subsidiaries in each case as required by any
Environmental Law or any governmental or other administrative agency. All
such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower or such Subsidiary's response thereto. In addition, the Borrower
will provide the Banks with copies of all material communications with any
government or governmental agency relating to material Environmental
Claims, all material communications with any person relating to material
Environmental Claims, and such detailed reports of any Environmental Claim
as may reasonably be requested by the Required Banks.
(j) ANNUAL MEETINGS WITH BANKS. Within 120 days after the close of
each fiscal year of the Borrower, the Borrower shall, at the request of the
Agent or Required Banks, hold a meeting at its offices with all Banks who
choose to attend such meeting at which meeting shall be reviewed the
financial results of the previous fiscal year and the financial condition
of the Borrower and its Subsidiaries and the budgets presented for the
current fiscal year of the Borrower and its Subsidiaries.
(k) BORROWING BASE CERTIFICATE. (i) On the Initial Borrowing Date
and (ii) thereafter, not later than 12:00 Noon (New York time) on the
thirtieth day after the end of each fiscal month, a borrowing base
certificate substantially in the form of Exhibit M (each, a "Borrowing Base
Certificate"), with respect to the Eligible Receivables and the Eligible
Inventory of the Borrower as of (x) in the case of
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clause (i), February 29, 1996 and (y) in the case of clause (ii), the last
day of the immediately preceding fiscal month, and in each case, certified
by the chief financial officer of the Borrower.
(l) OTHER INFORMATION. From time to time, such other information or
documents (financial or otherwise) with respect to any Credit Party or any
of its Subsidiaries, as the Agent, or the Required Banks may reasonably
request.
8.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries, in conformity with United States generally
accepted accounting principles and all requirements of law, shall be made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Agent or any Bank to visit and inspect, under
guidance of officers of the Borrower or of such Subsidiary, any of the
properties of the Borrower or such Subsidiary, and to examine the books of
account of the Borrower or such Subsidiary and discuss the affairs, finances and
accounts of the Borrower or of such Subsidiary with, and be advised as to the
same by, its and their officers, all at such reasonable times and intervals and
to such reasonable extent as the Agent or such Bank may request.
8.03 MAINTENANCE OF PROPERTY, INSURANCE. (a) Schedule V sets forth
a true and complete listing of all insurance maintained by the Borrower and each
of its Subsidiaries as of the Effective Date. The Borrower will, and will cause
each of its Subsidiaries to, (i) keep all material property useful and necessary
in its business in good working order and condition (ordinary wear and tear
excepted), (ii) maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are described on Schedule V, and (iii) furnish to each Bank,
upon written request, full information as to the insurance carried. The
provisions of this Section 8.03 shall be deemed to be supplemental to, but not
duplicative of, the provisions of any of the Security Documents that require the
maintenance of insurance.
(b) The Borrower will at all times keep, and will cause each of its
Subsidiaries to keep, its property insured in favor of the Collateral Agent, and
all policies (including mortgage policies) or certificates (or certified copies
thereof) with respect to such insurance (and any other insurance maintained by
the Borrower or its Subsidiaries) (i) shall be endorsed to the Collateral
Agent's satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as loss payee and naming the
Collateral Agent, the Agent and each Bank as an additional insured) with respect
to Collateral, (ii) shall state that such insurance policies shall not be
cancelled or revised without 30 days' prior written notice thereof by the
respective insurer to the Collateral Agent, (iii) shall provide that the
respective insurers irrevocably waive any and all rights of sub-
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rogation with respect to the Collateral Agent, (iv) shall contain the standard
noncontributory mortgagee clause endorsement in favor of the Collateral Agent
with respect to hazard insurance coverage, (v) shall provide that any losses
shall be payable notwithstanding (A) any act or neglect of the Borrower or any
of its Subsidiaries, (B) the occupation or use of the properties for purposes
more hazardous than those permitted by the terms of the respective policy if
such coverage is obtainable at commercially reasonable rates and is of the kind
from time to time customarily insured against by Persons owning or using similar
property and in such amounts as are customary, (C) any foreclosure or other
proceeding relating to the insured properties or (D) any change in the title to
or ownership or possession of the insured properties and (vi) shall be deposited
with the Collateral Agent. If the Borrower or any of its Subsidiaries shall
fail to insure its property in accordance with this Section 8.03, or if the
Borrower or any of its Subsidiaries shall fail to endorse and deposit all
policies or certificates with respect thereto, the Collateral Agent shall have
the right (but shall be under no obligation) to procure such insurance and the
Borrower agrees to reimburse the Collateral Agent for all reasonable costs and
expenses of procuring such insurance.
8.04 CORPORATE FRANCHISES. The Borrower will do, and will cause each
of its Subsidiaries to do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its rights, franchises,
licenses and patents useful and necessary for the operation of their respective
businesses; PROVIDED, HOWEVER, that nothing in this Section 8.04 shall prevent
the withdrawal by the Borrower or any Subsidiary of the Borrower of its
qualification as a foreign corporation in any jurisdiction or the taking of any
other action or failure to take any action by the Borrower or any Subsidiary
where such withdrawal, action or omission could not reasonably be expected to
have a material adverse effect on the performance, business, assets, nature of
assets, liabilities, properties, operations, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole.
8.05 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property except such noncompliances as could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
8.06 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) The Borrower will
comply, and will cause each of its Subsidiaries to comply, in all material
respects with all Environmental Laws applicable to the operation of its business
and the ownership or use of all Real Property now or hereafter owned or operated
by the Borrower and each of its
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Subsidiaries, will promptly pay or cause any of its Subsidiaries to pay all
costs and expenses incurred in such compliance, and will keep or cause to be
kept all owned Real Properties free and clear of any Liens (other than Liens
permitted by Section 9.01(xiii)) imposed pursuant to such Environmental Laws.
Neither the Borrower nor any Subsidiary of the Borrower will generate, use,
treat, store, release or dispose of, or permit the generation, use, treatment,
storage, Release or disposal of Hazardous Materials on any Real Property, or
transport or permit the transportation of Hazardous Materials to or from any
Real Property in any manner which constitutes a violation in any material
respect of any Environmental Laws.
(b) At the request of the Agent or the Required Banks at any time and
from time to time during the existence of this Agreement: (i) if a Default or
Event of Default exists under this Agreement, (ii) upon the reasonable belief by
the Agent that the Borrower or any of its Subsidiaries has breached any
representation or covenant herein with respect to any environmental matters and
such breach is continuing, or (iii) in the event notice is provided under
Section 8.01(i) herein, the Borrower will provide, at its sole cost and expense
(or will cause any of its Subsidiaries to provide at its sole cost and expense),
an environmental site assessment report reasonable in scope concerning, in the
case of (i) above, any Real Property of the Borrower or its Subsidiaries, and in
the case of clause (ii) or (iii) above, the Real Property(s) that is (are) the
subject of the breach or the notice provided, respectively, prepared by an
environmental consulting firm approved by the Agent and the Required Banks,
addressing the presence or Release of Hazardous Materials on or from any of the
Real Property and the potential cost of any removal or remedial action in
connection with any Hazardous Materials on such Real Property. If the Borrower
fails to provide the same after thirty days' notice, the Agent may order the
same, and the Borrower shall grant and hereby grants to the Agent and its agents
access to such Real Property and specifically grants the Agent an irrevocable
non-exclusive license to undertake such an assessment all at the Borrower's or
its Subsidiary's expense, as the case may be (but the Borrower or Subsidiary, as
the case may be, shall be responsible only for such expenses as are reasonably
incurred by the Agent).
8.07 ERISA. As soon as possible and, in any event, within 10
Business Days after the Borrower or PAI or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth details as to such occurrence and the action, if any,
which the Borrower, any Subsidiary of the Borrower or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by the Borrower, the Subsidiary, the ERISA
Affiliate, the PBGC, a Plan participant or the Plan administrator with respect
thereto: that a Reportable Event has occurred; that an accumulated funding
deficiency has been incurred or an application may be or has been made to the
Secretary of the Treasury for a waiver or modification of the minimum funding
standard (including any required installment pay-
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ments) or an extension of any amortization period under Section 412 of the Code
with respect to a Plan; that a contribution required to be made to a Plan has
not been timely made; that a Plan has been or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA; that a Plan has an
Unfunded Current Liability giving rise to a lien under ERISA or the Code; that
proceedings may be or have been instituted to terminate or appoint a trustee to
administer a Plan; that a proceeding has been instituted pursuant to Section 515
of ERISA to collect a delinquent contribution to a Plan; that the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate will or may incur any
liability (including any indirect, contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or
502(l) of ERISA; or that the Borrower, or any Subsidiary of the Borrower may
incur any material liability pursuant to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). The
Borrower will deliver to each of the Banks a complete copy of the annual report
(Form 5500) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and other information) required to be filed with the
Internal Revenue Service. In addition to any certificates or notices delivered
to the Banks pursuant to the first sentence hereof, copies of annual reports and
any material notices received by the Borrower or any Subsidiary of the Borrower
or any ERISA Affiliate with respect to any Plan shall be delivered to the Banks
no later than 10 Business Days after the date such report has been filed with
the Internal Revenue Service or such notice has been received by the Borrower or
the Subsidiary or the ERISA Affiliate, as applicable.
8.08 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will cause
its, and each of its Subsidiaries', fiscal years to end on December 31 and each
of its, and each of its Subsidiaries', first three fiscal quarters to end on
March 31, June 30 and September 30, or within four calendar days of any such
dates.
8.09 PERFORMANCE OF OBLIGATIONS. The Borrower will, and will cause
each of its Subsidiaries to, perform all of its obligations under the terms of
each mortgage, indenture, security agreement and other debt instrument by which
it is bound, except such non-performances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
8.10 PAYMENT OF TAXES. The Borrower will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and
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governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties would
otherwise attach thereto, and all lawful claims which, if unpaid, might become a
material lien or charge upon any properties of the Borrower or any of its
Subsidiaries; PROVIDED, that neither the Borrower nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained,
except as may be the case with respect to the Disputed Alabama Taxes, adequate
reserves with respect thereto in accordance with generally accepted accounting
principles.
8.11 INTEREST RATE PROTECTION. The Borrower shall no later than 60
days following the Initial Borrowing Date enter into arrangements acceptable to
the Agent establishing a fixed or maximum interest rate acceptable to the Agent
for at least 50% of the outstanding Term Loans for a period of at least three
years.
8.12 USE OF PROCEEDS. All proceeds of the Loans shall be used as
provided in Section 7.08.
8.13 UCC SEARCHES. On or prior to the 60th day following the Initial
Borrowing Date, the Credit Parties shall deliver to the Agent (at each such
Credit Party's own cost) copies of Request for Information or Copies (UCC-11),
or equivalent reports for the purpose of verifying that all financing statements
necessary or, in the reasonable opinion of the Collateral Agent desirable, to
perfect the security interests purported to be created by the Security Agreement
shall have been properly recorded and filed.
8.14 INTELLECTUAL PROPERTY RIGHTS. The Borrower will, and will cause
each of its Subsidiaries to, make all filings required in connection with the
transfer of the Intellectual Property rights in the Acquisition. The Borrower
will, and will cause each of its Subsidiaries to, maintain in full force and
effect all Intellectual Property rights necessary or appropriate to the business
of the Borrower or any Subsidiary of the Borrower and take no action (including,
without limitation, the licensing of Intellectual Property), or fail to take an
action, as the case may be, in connection with such Intellectual Property rights
which could reasonably be expected to result in a material adverse effect on the
performance, business, assets, nature of assets, liabilities, properties,
operations, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole. The Borrower will, and will cause each of
its Subsidiaries to, diligently prosecute all pending applications filed in
connection with perfecting or seeking to perfect the Intellectual Property
rights and take all other reasonable actions necessary for the protection and
maintenance of the material Intellectual Property rights necessary or
appropriate to the business of the Borrower or any Subsidiary of the Borrower at
all times from and after the Initial Borrowing Date.
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8.15 REGISTRY. The Borrower hereby designates the Agent to serve as
the Borrower's agent, solely for purposes of this Section 8.15, to maintain a
register (the "Register") on which it will record the Commitments from time to
time of each of the Banks, the Loans made by each of the Banks and each
repayment in respect of the principal amount of the Loans of each Bank. Failure
to make any such recordation, or any error in such recordation shall not affect
the Borrower's obligations in respect of such Loans. With respect to any Bank,
the transfer of the Commitments of such Bank and the rights to the principal of,
and interest on, any Loan made pursuant to such Commitments shall not be
effective until such transfer is recorded on the Register maintained by the
Agent with respect to ownership of such Commitments and Loans and prior to such
recordation all amounts owing to the transferor with respect to such Commitments
and Loans shall remain owing to the transferor. The registration of an
assignment or transfer of all or part of any Commitments and Loans shall be
recorded by the Agent on the Register only upon the acceptance by the Agent of a
properly executed and delivered assignment and assumption agreement pursuant to
Section 13.04(b). Coincident with the delivery of such an assignment and
assumption agreement to the Agent for acceptance and registration of assignment
or transfer of all or part of a Loan, or as soon thereafter as practicable, the
assigning or transferor Bank shall surrender the Note evidencing such Loan, and
thereupon one or more new Notes in the same aggregate principal amount shall be
issued to the assigning or transferor Bank and/or the new Bank. The Borrower
agrees to indemnify the Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed on, asserted
against or incurred by the Agent in performing its duties under this Section
8.15.
8.16 OWNERSHIP OF SUBSIDIARIES. The Borrower shall at all times own
directly or through one or more of its Wholly-Owned Subsidiaries, 100% of the
capital stock of each of its Subsidiaries.
8.17 FURTHER ACTIONS. (a) Each Credit Party shall grant to the
Collateral Agent, for the benefit of the Secured Creditors, at the request of
the Agent or the Required Banks, at any time, a security interest in any Real
Property (other than a mortgage on the IRB Property so long as the Gilford IRBs
(or any Indebtedness refinancing the Gilford IRBs permitted hereunder) are
outstanding), vehicles or other assets or property of any type owned by any such
Credit Party and not already subject to a Mortgage or other security interest
and shall take all actions reasonably requested by the Agent or the Required
Banks (including, without limitation, the obtaining of mortgage policies, title
surveys and real estate appraisals satisfying the requirements of all applicable
laws) in connection with the granting of such security interest; PROVIDED that
if the Agent requests a mortgage on the IRB Property otherwise permitted by this
Section 8.17 which is not permitted by the terms of the Gilford IRBs (or any
Indebtedness refinancing such IRBs), the Borrower shall use its reasonable
efforts to obtain any required consents with respect thereto.
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(b) The security interests required to be granted pursuant to clause
(a) above shall be granted pursuant to mortgages, deeds of trust and security
agreements, in each case reasonably satisfactory in form and substance to the
Agent and the Required Banks, which mortgages and security agreements shall
create valid and enforceable perfected security interests prior to the rights of
all third Persons and subject to no other Liens except such Liens as are
permitted by Section 9.01. The mortgages and other instruments related thereto
and security agreements shall be duly recorded or filed in such manner and in
such places and at such times as are required by law to establish, perfect,
preserve and protect the Liens, in favor of the Collateral Agent for the benefit
of the Secured Creditors, required to be granted pursuant to such documents and
all taxes, fees and other charges payable in connection therewith shall be paid
in full by the Borrower. At the time of the execution and delivery of the
additional documents, the Borrower shall cause to be delivered to the Collateral
Agent such opinions of counsel, mortgage policies, title surveys, real estate
appraisals to the extent required by law, certificates of title and other
related documents as may be reasonably requested by the Agent or the Required
Banks to assure themselves that this Section 8.17 has been complied with.
(c) The Borrower shall, and shall cause each of its Subsidiaries to,
at its own expense, make, execute, endorse, acknowledge, file and/or deliver to
the Collateral Agent from time to time such vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to perfecting the security
interest of the Secured Creditors in the Collateral as the Collateral Agent may
reasonably require. Furthermore, at the time of any request by the Agent or the
Required Banks pursuant to this clause (c) or preceding clauses (a) or (b) the
Borrower shall cause to be delivered to the Collateral Agent such opinions of
counsel and other documents as may be reasonably requested by the Agent or the
Required Banks to assure themselves that Section 8.17 has been complied with.
(d) At any time and from time to time to the extent that the Banks,
the Agent or the Collateral Agent request, in order to fulfill the requirements
of any applicable statute, regulation or order of any governmental body, to
preserve, protect, enforce or realize upon the security interests granted to the
Secured Creditors pursuant to the Security Documents, each Credit Party will,
and will cause each of its Subsidiaries to, cooperate with and promptly take all
actions reasonably necessary to assist the Banks, the Agent and the Collateral
Agent, including, without limitation, to make, execute, acknowledge, file and/or
deliver to the Banks, the Agent or the Collateral Agent, as the case may be,
such information, documents, certificates, reports and other assurances or
instruments, which the Banks, the Agent or the Collateral Agent, as the case may
be, deems reasonably appropriate or advisable to comply with such statutes,
regulations or orders so as to preserve, protect, enforce or realize upon such
security interests granted to the Secured Creditors.
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(e) Each Credit Party agrees that each action required by Section
8.17(a), (b), (c) or (d) shall be completed within 60 days of the date such
action is requested to be taken.
Section 9. NEGATIVE COVENANTS. The Borrower hereby covenants that on
and after the Effective Date and until the Total Commitment and all Letters of
Credit have terminated and the Loans, Notes and Unpaid Drawings, together with
interest, Fees and all other Obligations have been paid in full:
9.01 LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real or personal, tangible or intangible) of
the Borrower or any of its Subsidiaries, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to the Borrower or any of
its Subsidiaries), or assign any right to receive income or permit the filing of
any financing statement under the UCC or any other similar notice of Lien under
any similar recording or notice statute; PROVIDED that the provisions of this
Section 9.01 shall not prevent the Borrower or any of its Subsidiaries from
creating, incurring, assuming or permitting the existence of the following
(liens described below are herein referred to as "Permitted Liens"):
(i) inchoate Liens with respect to the Borrower or any of its
Subsidiaries for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves have
been established in accordance with generally accepted accounting
principles or Liens for the Disputed Alabama Taxes;
(ii) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's, mechanics' and landlords' liens
and other similar Liens arising in the ordinary course of business, and
(x) which do not in the aggregate materially detract from the value of the
Borrower's or any of its Subsidiaries' property or assets or materially
impair the use thereof in the operation of the business of the Borrower or
its Subsidiaries or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property or assets subject to any such Lien,
PROVIDED that in the event a reserve is required by generally accepted
accounting principles for Liens subject to this clause (y), the Borrower
shall have established such reserve;
(iii) Liens of the Borrower or its Subsidiaries in existence on the
Effective Date which are listed, and the property subject thereto
described, on Schedule VI,
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but only to the respective date, if any, set forth in such Schedule VI for
the removal and termination of any such Liens;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances on the property of the Borrower or any of
its Subsidiaries arising in the ordinary course of business and not
materially interfering with the conduct of the business of the Borrower or
any of its Subsidiaries;
(vii) Liens on property of the Borrower and its Subsidiaries subject
to, and securing only, Capitalized Lease Obligations to the extent such
Capitalized Lease Obligations are permitted by Section 9.05(iv), PROVIDED
that such Liens only serve to secure the payment of Indebtedness arising
under such Capitalized Lease Obligation and the Lien encumbering the asset
giving rise to the Capitalized Lease Obligation does not encumber any other
asset of the Borrower or any of its Subsidiaries;
(viii) Liens (other than any Lien imposed by ERISA) on property of the
Borrower or any of its Subsidiaries incurred or deposits made in the
ordinary course of business in connection with (x) workers' compensation,
unemployment insurance and other types of social security or public
liability laws or (y) securing the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money),
PROVIDED that the aggregate amount of cash and the fair market value of the
property encumbered by Liens described in this clause (viii) shall not
exceed $100,000 for all matters;
(ix) Liens placed upon equipment or machinery used in the ordinary
course of the business of the Borrower or any of its Subsidiaries at or
within 60 days following the time of purchase thereof by the Borrower or
any of its Subsidiaries to secure Indebtedness representing the purchase
price thereof, PROVIDED that (x) the Indebtedness secured by Liens
permitted by this clause (ix) is permitted under Section 9.05(iv), (y) in
all events, the Lien encumbering the equipment or machinery so acquired
does not encumber any other asset of the Borrower or any of its
Subsidiaries and (z) Indebtedness secured by any Lien does not exceed 100%
of the purchase price of the equipment or machinery being purchased;
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(x) Liens arising from precautionary UCC-1 financing statement
filings regarding operating leases entered into by the Borrower or any of
its Subsidiaries in the ordinary course of business;
(xi) inchoate Liens (where there has been no execution or levy and no
pledge or delivery of collateral) arising from and out of judgments or
decrees in existence at such time not constituting an Event of Default; and
(xiii) other Liens that, individually or in the aggregate, do not exceed
$300,000.
9.02 CONSOLIDATION, MERGER, PURCHASE OR SALE OF ASSETS, ETC. The
Borrower will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets, or enter into any partnerships, joint ventures or sale-leaseback
transactions, or purchase or otherwise acquire (in one or a series of related
transactions) any part of the property or assets (other than purchases or other
acquisitions by the Borrower or any of its Subsidiaries of inventory, materials
and equipment in the ordinary course of business) of any Person, except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries shall
be permitted to the extent not in violation of Section 9.08;
(ii) each of the Borrower and its Subsidiaries may in the ordinary
course of business, sell equipment which, in the reasonable judgment of the
Borrower have become obsolete, worn out or uneconomic, the proceeds of
which (I) are applied in accordance with Section 4.02(A)(g), or (II) are
used, or irrevocably committed, to purchase replacement equipment within
180 days from the date of such sale so long as the aggregate amount of
proceeds from such sales in any one fiscal year do not exceed $300,000;
(iii) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business to the extent
permitted by Section 9.04 (so long as such lease does not create
Capitalized Lease Obligations except to the extent permitted by 9.02(i));
(iv) investments may be made to the extent permitted by Section 9.06;
(v) each of the Borrower and its Subsidiaries may make sales of
inventory in the ordinary course of business;
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(vi) the Transaction shall be permitted;
(vii) Dividends may be paid to the extent permitted by Section 9.03;
(viii) the Borrower and its Subsidiaries may purchase assets not
otherwise permitted by this Section 9.02 so long as (x) no Default or Event
of Default exists (before and after giving effect to such purchase), (y)
the aggregate purchase price for all such purchases does not exceed
$500,000 in cash and (z) no liabilities in connection with such purchased
assets are assumed by the Borrower or any of its Subsidiaries; and
(ix) the Borrower and its Subsidiaries may make sales of assets not
otherwise permitted by this Section 9.02 for cash so long as (w) no Default
or Event of Default exists (both before and after giving effect to such
sale), (x) such sales are for fair market value, (y) the aggregate amount
of gross proceeds from all such sales does not exceed $2,000,000 and (z)
100% of the Net Sale Proceeds from such sale are applied in accordance with
Sections 4.02(A)(g) and 4.02(B).
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral (to the extent the Required Banks are
permitted to waive such provisions in accordance with Section 13.12), or any
Collateral is sold as permitted by this Section 9.02, (A) such Collateral shall
be sold free and clear of the Liens created by the Security Documents and (B) if
such Collateral includes all the capital stock in a Subsidiary Guarantor, such
capital stock shall be released from the Pledge Agreement and such Subsidiary
Guarantor shall be released from the Subsidiary Guaranty, and the Agent and
Collateral Agent shall be authorized to take any actions deemed appropriate in
order to effect the foregoing.
9.03 DIVIDENDS. The Borrower will not, and will not permit any of
its Subsidiaries to, declare or pay any Dividends with respect to the Borrower
or any of its Subsidiaries, except that any Subsidiary of the Borrower may pay
Dividends to the Borrower or any Wholly-Owned Subsidiary (other than an
Immaterial Subsidiary) of the Borrower.
9.04 OPERATING LEASES. The Borrower will not permit the aggregate
payments (including, without limitation, any property taxes paid as additional
rent or lease payments) made by the Borrower and its Subsidiaries on a
consolidated basis under any agreement to rent or lease any real or personal
property (or any extension or renewal thereof) (excluding Capitalized Lease
Obligations) to exceed at any time during the period commencing on the Initial
Borrowing Date and ending December 31, 1996 - $1,650,000, and at any time during
the following fiscal years the amounts set forth opposite said fiscal
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years: 1997 - $2,425,000; 1998 - $2,550,000; 1999 - $2,675,000; 2000 -
$2,800,000; 2001 - $2,950,000 and 2002 - $3,000,000.
9.05 INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) intercompany indebtedness of PAI and its Wholly-Owned
Subsidiaries (other than any Immaterial Subsidiary) owing to the Borrower
to the extent arising in connection with intercompany loans (x) not to
exceed $3,000,000 in aggregate principal amount outstanding made for the
general corporate and working capital needs of PAI and its Wholly-Owned
Subsidiaries (other than any Immaterial Subsidiary) or (y) pursuant to the
Newco Capital Contribution, in each case, so long as such intercompany
loans are evidenced by an intercompany promissory note in the form of
Exhibit N hereto, which note is pledged by the Borrower as Collateral
pursuant to the Pledge Agreement;
(iii) Indebtedness of the Borrower under any Interest Rate Protection
or Other Hedging Agreement and under any similar type of agreement, in each
case, entered into pursuant to Section 8.11;
(iv) Indebtedness of the Borrower evidenced by Capitalized Lease
Obligations to the extent permitted pursuant to Section 9.08 and
Indebtedness of the Borrower incurred pursuant to purchase money Liens
permitted under Section 9.01(ix);
(v) Existing Indebtedness listed on Schedule VIII but without giving
effect to any refinancings, renewals or increases in the principal amount
thereof other than any refinancings or renewals which do not result in any
increase in any amount payable at any time thereunder while the Obligations
are outstanding and which do not result in terms and conditions of such
Indebtedness which would be more adverse to the Banks in any material
respect than the terms and conditions of such Indebtedness immediately
prior to such refinancing or renewal; and
(vi) Indebtedness consisting of reimbursement obligations of the
Borrower to a surety who provides a surety bond with respect to the
Disputed Alabama Taxes which reimbursement obligations shall not exceed an
amount equal to twice the amount of the Disputed Alabama Taxes at the time
such surety bond is issued, PROVIDED that such obligations are unsecured
and unguaranteed.
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9.06 ADVANCES, INVESTMENTS AND LOANS. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents, except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
receivables owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary terms;
(ii) the Borrower may acquire and hold cash and Cash Equivalents,
PROVIDED that all such cash or Cash Equivalents shall be held by the
Borrower in the Concentration Account or a Bank Deposit Account in
accordance with the terms of the Concentration Account Consent Letter or
the relevant Bank Deposit Account Consent Letter, and PROVIDED FURTHER,
that at any time that any Revolving Loans are outstanding, the aggregate
amount of cash (which for purposes of this calculation shall be deemed to
exclude any uncollected funds on deposit in accounts as permitted by
Section 9.21) and Cash Equivalents permitted to be held by the Borrower and
its Subsidiaries shall not exceed $500,000 for any period of three
consecutive Business Days;
(iii) the Borrower may enter into Interest Rate Protection or Other
Hedging Agreements or any similar type of agreement, in each case, entered
into pursuant to Section 8.11;
(iv) the Borrower may make Capital Expenditures to the extent
permitted by Section 9.08;
(v) the Transaction shall be permitted;
(vi) the Borrower and its Subsidiaries may make loans and advances in
the ordinary course of business to their respective employees for moving,
travel and emergency expenses and other similar expenses, so long as the
aggregate principal amount thereof at any one time outstanding (determined
without regard to any write-downs or write-offs of such loans and advances)
shall not exceed $250,000;
(vii) intercompany loans (x) not to exceed $3,000,000 in aggregate
principal amount outstanding made by the Borrower to PAI and its Wholly-
Owned Subsidiaries (other than Immaterial Subsidiaries) for the general
corporate and working capital needs of PAI and its Wholly-Owned
Subsidiaries (other than
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Immaterial Subsidiaries) or (y) made pursuant to the Newco Capital
Contribution, in each case, to the extent permitted by Section 9.05(ii);
and
(viii) the Borrower or any of its Wholly-Owned Subsidiaries may make
capital contributions to any other Material Subsidiary so long as the
aggregate amount thereof does not exceed $300,000.
9.07 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any Affiliate of the Borrower's Subsidiaries,
other than transactions by the Borrower or any of its Subsidiaries in the
ordinary course of business and on terms and conditions substantially as
favorable to the Borrower or such Subsidiary, as the case may be, as would be
obtainable by the Borrower or such Subsidiary, as the case may be, at that time
in a comparable arm's-length transaction with a Person other than an Affiliate,
except that (i) the Borrower and its Subsidiaries may effect the Transaction,
(ii) loans, capital contributions, investments and advances made in accordance
with Section 9.06 shall be permitted and (iii) the Borrower may pay customary
fees to non-officer directors of the Borrower. In no event may any management
or similar fees be paid or payable by the Borrower or any of its Subsidiaries to
any Person other than the Borrower.
9.08 CAPITAL EXPENDITURES. (a) The Borrower will not and will not
permit any of its Subsidiaries to, make any expenditure which should be
capitalized in accordance with generally accepted accounting principles,
including all such expenditures with respect to fixed or capital assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with generally accepted accounting
principles and including Capitalized Lease Obligations) (collectively, "Capital
Expenditures"), except that (x) during the period (taken as one accounting
period) commencing on the Initial Borrowing Date and ending on December 31,
1996, the Borrower and its Subsidiaries may make Capital Expenditures so long as
the aggregate amount thereof does not exceed $2,900,000 during such period and
(y) during any calendar year thereafter the Borrower and its Subsidiaries may
make Capital Expenditures so long as the aggregate amount thereof does not
exceed the amount set forth opposite such fiscal year below:
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Fiscal Year Amount
----------- ------
1997 $3,350,000
1998 $3,475,000
1999 $3,525,000
2000 $3,675,000
2001 $3,795,000
2002 $3,795,000
For purposes of this Section 9.08, asset purchases made in accordance with
Section 9.02(viii) shall not constitute Capital Expenditures for purposes of
this Section 9.08 and refinancings of existing Capitalized Lease Obligations
effected in accordance with Section 9.05(v) shall not constitute Capital
Expenditures for purposes of this Section 9.08.
(b) Notwithstanding anything to the contrary contained above, to the
extent that Capital Expenditures made by the Borrower and its Subsidiaries
pursuant to Section 9.08(a) during any fiscal year are less than the amount
permitted for such fiscal year, such excess may be carried forward and used by
the Borrower and its Subsidiaries to make additional Capital Expenditures during
subsequent fiscal years; PROVIDED that the maximum amount carried forward
pursuant to this clause (b) into any fiscal year shall be $750,000, with any
amounts otherwise permitted to be carried forward, if any, to lapse and
terminate at such time, as they are not permitted to be carried forward into a
subsequent fiscal year by virtue of this proviso.
9.09 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
Fixed Charge Coverage Ratio for any Test Period ended on the last day of a
fiscal quarter set forth below to be less than the ratio set forth below
opposite such date.
Fiscal Quarter
Ended Ratio
-------------- -----
June 30, 1996 1.15:1.00
September 30, 1996 1.15:1.00
December 31, 1996 1.15:1.00
March 31, 1997 1.15:1.00
June 30, 1997 1.15:1.00
September 30, 1997 1.20:1.00
December 31, 1997 1.30:1.00
March 31, 1998 1.30:1.00
June 30, 1998 1.30:1.00
September 30, 1998 1.30:1.00
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December 31, 1998 1.30:1.00
March 31, 1999 1.30:1.00
June 30, 1999 and
each fiscal quarter thereafter 1.20:1:00
9.10 INTEREST COVERAGE RATIO. The Borrower will not permit the ratio
of its Consolidated EBITDA to its Consolidated Cash Interest Expense for any
Test Period ended on the last day of a fiscal quarter set forth below to be less
than the ratio set forth below opposite such date:
Fiscal Quarter
Ended Ratio
-------------- -----
June 30, 1996 2.85:1.00
September 30, 1996 2.85:1.00
December 31, 1996 3.25:1.00
March 31, 1997 3.10:1.00
June 30, 1997 3.30:1.00
September 30, 1997 3.65:1.00
December 31, 1997 4.10:1.00
March 31, 1998 4.25:1.00
June 30, 1998 4.45:1.00
September 30, 1998 4.65:1.00
December 31, 1998 5.00:1.00
March 31, 1999 5.25:1.00
June 30, 1999 5.70:1.00
September 30, 1999 and each
fiscal quarter thereafter 6.00:1.00
9.11 CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA. The Borrower
will not permit on any date set forth below the ratio of (x) Consolidated
Indebtedness at such time to (y) Consolidated EBITDA for the Test Period then
ended to be greater than the ratio set forth below opposite such date:
Fiscal Quarter
Ended Ratio
-------------- -----
June 30, 1996 3.50:1.00
September 30, 1996 3.50:1.00
December 31, 1996 3.00:1.00
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March 31, 1997 3.20:1.00
June 30, 1997 3.00:1.00
September 30, 1997 2.75:1.00
December 31, 1997 2.50:1.00
March 31, 1998 2.40:1.00
June 30, 1998 2.25:1.00
September 30, 1998 2.00:1.00
December 31, 1998 1.75:1.00
March 31, 1999 1.65:1.00
June 30, 1999 1.50:1.00
September 30, 1999 1.35:1.00
December 31, 1999 1.25:1.00
March 31, 2000 1.20:1.00
June 30, 2000 and each
fiscal quarter thereafter 1.00:1.00
9.12 MINIMUM CONSOLIDATED EBITDA. The Borrower will not permit its
Consolidated EBITDA for any Test Period ended on the last day of a fiscal
quarter set forth below to be less than the amount set forth below opposite such
date:
Fiscal Quarter Minimum
Ended Amount
-------------- -------
June 30, 1996 $ 1,700,000
September 30, 1996 $ 4,250,000
December 31, 1996 $ 7,800,000
March 31, 1997 $ 9,600,000
June 30, 1997 $10,900,000
September 30, 1997 $11,500,000
December 31, 1997 $12,250,000
March 31, 1998 $12,500,000
June 30, 1998 $12,750,000
September 30, 1998 $13,000,000
December 31, 1998 $13,500,000
March 31, 1999 $13,700,000
June 30, 1999 $14,000,000
September 30, 1999 $14,500,000
December 31, 1999 $14,800,000
March 31, 2000 and each
fiscal quarter thereafter $15,000,000
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9.13 MINIMUM CONSOLIDATED NET WORTH. The Borrower will not permit
its Consolidated Net Worth during any Test Period ended on the last day of a
fiscal quarter set forth below to be less than the amount set forth opposite
such date:
Minimum
Period Consolidated
Ended Net Worth
----- ------------
June 30, 1996 $14,800,000
September 30, 1996 $15,250,000
December 31, 1996 $16,250,000
March 31, 1997 $16,750,000
June 30, 1997 $17,750,000
September 30, 1997 $18,750,000
December 31, 1997 $20,000,000
March 31, 1998 $20,750,000
June 30, 1998 $21,500,000
September 30, 1998 $22,500,000
December 31, 1998 $24,000,000
March 31, 1999 $24,500,000
June 30, 1999 $25,500,000
September 30, 1999 $26,500,000
December 31, 1999 $28,000,000
March 31, 2000 $28,500,000
June 30, 2000 $30,000,000
September 30, 2000 $30,500,000
December 31, 2000 $32,000,000
March 31, 2001 $32,500,000
June 30, 2001 $33,500,000
September 30, 2001 $34,500,000
December 31, 2001 $36,000,000
March 31, 2002 $36,500,000
June 30, 2002 $37,500,000
9.14 MAXIMUM LEVERAGE. The Borrower will not permit the ratio of
Consolidated Indebtedness to Consolidated Net Worth at any time during any
quarter ended on a date set forth below to be greater than the ratio set forth
opposite such date set forth below :
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Fiscal Quarter
Ended Ratio
-------------- -----
June 30, 1996 2.70:1.00
September 30, 1996 2.50:1.00
December 31, 1996 2.30:1.00
March 31, 1997 2.25:1.00
June 30, 1997 2.00:1.00
September 30, 1997 1.85:1.00
December 31, 1997 1.60:1.00
March 31, 1998 1.55:1.00
June 30, 1998 1.40:1.00
September 30, 1998 1.25:1.00
December 31, 1998 1.10:1.00
March 31, 1999 1.05:1.00
June 30, 1999 0.95:1.00
September 30, 1999 0.80:1.00
December 31, 1999 0.70:1.00
March 31, 2000 and each
fiscal quarter thereafter 0.50:1.00
9.15 MINIMUM WORKING CAPITAL RATIO. The Borrower will not permit the
ratio of Consolidated Current Assets to Consolidated Current Liabilities at any
time to be less than 2.00:1.00.
9.16 LIMITATION ON MODIFICATIONS OF INDEBTEDNESS, CERTIFICATE OF
INCORPORATION, BY-LAWS AND CERTAIN OTHER AGREEMENTS; ETC. The Borrower will
not, and will not permit any of its Subsidiaries to:
(i) make (or give any notice in respect of) any exchange of any of
the Borrower's Cumulative Exchangeable Redeemable Preferred Stock or any
voluntary or optional payment or prepayment on or redemption (including
pursuant to any change of control provision) or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) any Existing Indebtedness, other than, so long as no Default or
Event of Default exists, (x) any optional redemptions at par and open
market purchases at par or less of Gilford IRBs in an aggregate amount not
to exceed $250,000, plus accrued interest to the date of redemption in the
case of an optional redemption at par, during any calendar year or (y) in
connection with the refinancing or renewal of Existing Indebtedness
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permitted by Section 9.05(v) if the proceeds thereof are applied to effect
such prepayment, redemption or acquisition for value;
(ii) amend or modify, or permit the amendment or modification of, any
provision of the Existing Indebtedness (except to accomplish a refinancing
or renewal permitted by Section 9.05(v)), the Acquisition Documents or the
Merger Documents except for such amendments to any Existing Indebtedness,
the Acquisition Documents or the Merger Documents which do not relate to
the terms of any preferred stock and, in the aggregate or individually,
could not reasonably be likely to be adverse to any Bank in its capacity as
such;
(iii) amend, modify or change its Certificate of Incorporation
(including, without limitation, by the filing or modification of any
certificate of designation) (other than the certificate of merger with
respect to the Merger) or By-Laws, except for such amendments to the
Certificate of Incorporation or By-Laws of the Borrower or any of its
Subsidiaries which do not relate to the terms of any preferred stock and,
in the aggregate or individually, could not reasonably be likely to be
adverse to any Bank in its capacity as such, and except for any amendment,
modification or change to its Certificate of Incorporation to increase the
authorized capital of the Borrower or to effect a reverse split of the
Borrower's common stock, provided that the Borrower shall not make cash
payments in respect of the cash out of fractional shares created thereby in
an aggregate amount in excess of $50,000;
(iv) amend, modify or change, terminate, or enter into any new
Shareholders' Agreement or any other agreement with respect to its capital
stock, except amendments, modifications, changes or such new agreements
which are not materially adverse to any Bank, do not violate or breach, or
are not inconsistent with, any of the terms of this Agreement and which do
not, and will not, involve the payment by the Borrower or any of its
Subsidiaries of any amounts and do not result in the Borrower or any of its
Subsidiaries incurring then or any time in the future any liability or
monetary obligation;
(v) amend, modify or change, terminate or enter into any new Tax
Sharing Agreement; or
(vi) amend, modify or change, or enter into any new Management
Agreement, Employee Benefit Plan or Employment Agreement, except in the
case of this clause (vi) if the aggregate cost to the Borrower and its
Subsidiaries as a result of such amendments, modifications, changes to such
plans and agreements and new plans and agreements is not reasonably likely
to have a material adverse effect on the performance, business, property,
assets, nature of assets, liabilities,
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condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
9.17 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. The
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary of the Borrower to
(i) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits to the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (ii) make loans or advances to the Borrower or any of the
Borrower's Subsidiaries or (iii) transfer any of its properties or assets to the
Borrower, except for such encumbrances or restrictions existing under or by
reason of (t) applicable law, (u) this Agreement and the other Credit Documents,
(v) customary provisions restricting subletting or assignments of any lease
governing a leasehold interest of the Borrower or a Subsidiary of the Borrower,
(w) customary provisions restricting the assignment of contracts, permits and/or
licenses, (x) restrictions existing in the documents governing the terms of the
Gilford IRBs, (y) by reason of any Permitted Lien or (z) as contemplated by
clause (2) of the second proviso of Section 4.02(A)(h).
9.18 LIMITATION ON ISSUANCE OF CAPITAL STOCK. The Borrower will not,
and will not permit any of its Subsidiaries to, issue any capital stock
(including by way of sales of treasury stock) or any options or warrants to
purchase (other than grants of options under the Borrower's long-term stock
incentive plan as in effect on the Effective Date (the "Stock Option Plan")), or
securities convertible into, capital stock, except (i) for transfers and
replacements of then outstanding shares and (ii) for stock splits, stock
dividends and similar issuances which do not decrease the percentage ownership
of any person in the Borrower or any Subsidiary of the Borrower in any class of
the capital stock of the Borrower or such Subsidiary (except for immaterial
decreases in connection with a reverse stock split), (iii) shares of common
stock issued by the Borrower for cash (including, without limitation, shares
issued upon the exercise of employee stock options granted under the Stock
Option Plan or warrants outstanding on the Effective Date) if, after giving
effect to such issuance, no Event of Default will exist under Section 10.10 and
immediately after such issuance, to the extent so required, the Borrower
complies with Section 4.02(A)(e)(i) and (iv) shares issued to the Borrower's or
PAI's 401(K) (or successor) plan to make a 3% match in respect of contributions
by covered employees if, after giving effect to such issuance, no Event of
Default will exist under Section 10.10. Any stock issued as permitted by this
Section 9.18, if owned by the Borrower or any of the Borrower's Subsidiaries,
shall be immediately pledged as Collateral and delivered pursuant to the Pledge
Agreement.
9.19 BUSINESS. The Borrower will not, and will not permit any of its
Subsidiaries, to engage (directly or indirectly) in any line of business other
than the lines
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of business in which the Borrower and its Subsidiaries is engaged on the Initial
Borrowing Date after giving effect to the Transaction, and reasonably related
extensions thereof.
9.20 LIMITATION ON CREATION OF SUBSIDIARIES. The Borrower will not,
and will not permit any of its Subsidiaries to, establish, create or acquire any
new Subsidiary.
9.21 CONCENTRATION ACCOUNT AND BANK DEPOSIT ACCOUNTS. The Borrower
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, open, maintain or otherwise have any checking, savings or other
deposit accounts at any bank or other financial institution where cash or Cash
Equivalents is or may be deposited or maintained with any Person, other than (i)
the Bank Deposit Accounts listed on Schedule IV hereto, or such other account as
may be acceptable to the Agent, (ii) the Concentration Account or (iii) as
required by the terms of the Security Agreement.
9.22 ACCOUNT RECEIVABLE DAYS. The Borrower will not permit the
number of Account Receivable Days on the last day of any fiscal quarter of the
Borrower to be greater than 55.
Section 10. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
10.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of any Loan or any Note or any Unpaid Drawing or (ii)
default, and such default shall continue unremedied for two or more Business
Days, in the payment when due of any interest on any Loan or Note or Unpaid
Drawing, or any Fees or any other amounts owing by it hereunder or under any
other Credit Document; or
10.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
10.03 COVENANTS. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(g)(i), 8.08, 8.11, 8.16, 8.17 or 9 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default of the kinds referred to in this
clause (ii) shall continue unremedied for a period of 30 days after written
notice to the Borrower by the Agent or the Required Banks; or
10.04 DEFAULT UNDER OTHER AGREEMENTS. The Borrower or any of its
Subsidiaries shall (i) default in any payment of any Indebtedness (other than
the Indebtedness referred to in Section 10.01) beyond the period of grace (not
to exceed 20 days), if
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any, provided in the instrument or agreement under which such Indebtedness was
created, (ii) default in the observance or performance of any agreement or
condition relating to any Indebtedness (other than the Indebtedness referred to
in Section 10.01) or contained in any instrument or agreement (other than the
Indebtedness referred to in Section 10.01) evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any notice is required),
any Indebtedness to become due prior to its stated maturity and such default
shall not have been cured or waived, or (iii) any Indebtedness (other than the
Indebtedness referred to in Section 10.01) of the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof; PROVIDED that it shall not constitute an Event of Default
pursuant to this Section 10.04 unless the aggregate amount of all Indebtedness
referred to in the preceding clauses (i) through (iii) above exceeds $500,000 at
any one time; or
10.05 BANKRUPTCY, ETC. The Borrower or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Borrower or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed or discharged, within 60 days, after commencement
of the case; or a custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of, all or substantially all of the property of the
Borrower or any of its Subsidiaries, or the Borrower or any of its Subsidiaries
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the
Borrower or any of its Subsidiaries, or there is commenced against the Borrower
or any of its Subsidiaries any such proceeding which remains undismissed or
undischarged for a period of 60 days, or the Borrower or any of its Subsidiaries
is adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Borrower or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or the Borrower or any of its Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by the
Borrower or any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan shall have had or is likely to have a trustee appointed to
administer such Plan, a contribution required to be made to a Plan has not been
timely made, any Plan is, shall have
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been or is likely to be terminated or the subject of termination proceedings
under ERISA, any Plan shall have an Unfunded Current Liability, the Borrower, or
any Subsidiary of the Borrower or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971, 4975 or 4980 of the Code, or the Borrower or any Subsidiary of
the Borrower has incurred or is likely to incur liabilities pursuant to one or
more employee welfare benefit plans (as defined in Section 3(l) of ERISA) which
provide benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or employee pension benefit plans (as defined
in Section 3(2) of ERISA); (b) there shall result from any such event or events
or liabilities the imposition of a lien, the granting of a security interest, or
a liability or a material risk of incurring a liability; and (c) which lien,
security interest or liability, individually, and/or in the aggregate, in the
opinion of the Required Banks, will have a material adverse effect upon the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole; or
10.07 SECURITY DOCUMENTS. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral), in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons (except in connection
with Permitted Liens), and subject to no other Liens (other than Permitted
Liens), or any Credit Party shall default in the due performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant to any of the Security Documents and such default shall continue beyond
any grace period specifically applicable thereto pursuant to the terms of such
Security Document; or
10.08 SUBSIDIARIES GUARANTY. At any time after the execution and
delivery thereof, the Subsidiaries Guaranty or any provision thereof shall cease
to be in full force or effect as to any Subsidiary Guarantor, or any Subsidiary
Guarantor or any Person acting by or on behalf of any Subsidiary Guarantor shall
deny or disaffirm such Subsidiary Guarantor's obligations under the Subsidiaries
Guaranty, or any Subsidiary Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to the Subsidiaries Guaranty and such default shall continue
beyond any grace period specifically applicable thereto; or
10.09 JUDGMENTS. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving in the aggregate for
the Borrower and its Subsidiaries a liability (not paid or fully covered by a
reputable insurance company)
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of $500,000 or more and all such judgments or decrees shall not be satisfied,
vacated, discharged or stayed or bonded pending appeal for any period of 30
consecutive days; or
10.10 CHANGE OF CONTROL. There shall be a Change of Control;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent, upon the written request of the Required
Banks, shall by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of the Agent, any Bank or the holder of
any Note to enforce its claims against any Credit Party (PROVIDED that, if an
Event of Default specified in Section 10.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Agent to the Borrower as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon all Commitments of each Bank shall forthwith
terminate immediately and any Commitment Commission and other Fees shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Loans and
the Notes and all Obligations owing hereunder and thereunder to be, whereupon
the same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit Party; (iii) terminate any Letter of Credit which may be terminated in
accordance with its terms; (iv) direct the Borrower to pay (and the Borrower
agrees that upon receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 10.05, it will pay) to the Collateral Agent at the
Payment Office such additional amount of cash, to be held as security by the
Collateral Agent for the benefit of the Banks in a cash collateral account
established and maintained by the Collateral Agent pursuant to a cash collateral
agreement in form and substance satisfactory to the Collateral Agent, as is
equal to the aggregate Letters of Credit Outstandings; (v) exercise any rights
or remedies under any of the Subsidiaries Guaranty; and (vi) enforce, as
Collateral Agent, all of the Liens and security interests created pursuant to
the Security Documents.
Section 11. DEFINITIONS AND ACCOUNTING TERMS.
11.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"A Term Loan" shall have the meaning provided in Section 1.01(a).
"A Term Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Schedule I directly below the
column entitled "A Term Loan Commitment," as the same may be reduced or
terminated pursuant to Section 3.03, 4.02 and/or 10.
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"A Term Loan Facility" shall mean the facility evidenced by Total A
Term Loan Commitment.
"A Term Loan Maturity Date" shall mean the fourth anniversary of the
Initial Borrowing Date.
"A Term Note" shall have the meaning provided in Section 1.05(a)(i).
"A TL Percentage" shall mean, at any time, a fraction (expressed as a
percentage) the numerator of which is equal to the aggregate principal amount of
all A Term Loans outstanding at such time and the Total A Term Loan Commitment
then in effect and the denominator of which is equal to the aggregate principal
amount of all Term Loans outstanding at such time and the Total Term Loan
Commitment then in effect.
"Account Receivable Days" shall mean, as of the last day of any fiscal
quarter, the number of account receivable days determined by multiplying (i) the
quotient obtained by dividing (x) the total face amount of the net account
receivables balance of the Borrower and its Subsidiaries as of such last day by
(y) the net revenue of the Borrower and its Subsidiaries for such quarter by
(ii) 90 days.
"Acquisition" shall mean the acquisition by Newco of 100% of the
capital stock of PAI pursuant to the Acquisition Documents and the Merger
Documents.
"Acquisition Agreement" shall mean the Shareholders Agreement, dated
as of February 16, 1996, between the Borrower, Newco and the sellers listed on
Schedule I thereto, as in effect on the date hereof.
"Acquisition Documents" shall mean the Acquisition Agreement and all
other documents entered into in connection with the Acquisition Agreement or the
Acquisition.
"Additional Collateral" shall mean all property (whether real or
personal) in which security interests are granted (or purported to be granted)
(and continue to be in effect at the time of determination) pursuant to 8.17.
"Additional Security Documents" shall mean all mortgages, pledge
agreements, security agreements and other security documents entered into
pursuant to 8.17 with respect to Additional Collateral.
"Adjusted Consolidated Net Income" for any period shall mean
Consolidated Net Income for such period plus the sum of the amount of all net
non-cash charges (including, without limitation, depreciation, amortization,
deferred tax expense, non-cash
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interest expense and other non-cash charges (including non-cash charges arising
from purchase accounting adjustments relating to the Transaction)) included in
arriving at Consolidated Net Income for such period less the sum of the amount
of all net non-cash gains or losses and gains or losses from sales of assets
(other than sales of inventory in the ordinary course of business) and Recovery
Events included in arriving at Consolidated Net Income for such period.
"Adjusted Consolidated Working Capital" shall mean Consolidated
Current Assets (excluding (i) cash, (ii) Cash Equivalents and (iii) the amount
of the Total Unutilized Revolving Loan Commitment at such time) less
Consolidated Current Liabilities.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person; PROVIDED, HOWEVER, that for purposes of Section 9.07,
an Affiliate of the Borrower shall include any Person that directly or
indirectly (including through limited partner or general partner interests) owns
more than 5% of any class of the capital stock of the Borrower and for all
purposes of this Agreement, neither the Agent, the Collateral Agent, any Bank or
any of their respective Affiliates, shall be considered an Affiliate of the
Borrower or any of its Subsidiaries. A Person shall be deemed to control
another Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Affiliate Contracts" shall have the meaning provided in Section 5.05.
"Agent" shall mean Banque Paribas in its capacity as Agent for the
Banks hereunder, and shall include any successor to the Agent appointed pursuant
to Section 12.09.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented or amended from time to time.
"Applicable Margin" shall mean a percentage per annum equal to (i) (A)
in the case of A Term Loans and Revolving Loans which are maintained as Base
Rate Loans, 1.75% and (B) in the case of B Term Loans which are maintained as
Base Rate Loans, 2.25% and (ii) (A) in the case of A Term Loans and Revolving
Loans which are maintained as Eurodollar Loans, 3.25% and (B) in the case of B
Term Loans which are maintained as Eurodollar Loans, 3.75%.
"B Term Loan" shall have the meaning provided in Section 1.01(b).
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"B Term Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Schedule I directly below the
column entitled "B Term Loan Commitment," as the same may be terminated pursuant
to Section 3.03, 4.02 and/or 10.
"B Term Loan Facility" shall mean the facility evidenced by the Total
B Term Loan Commitment.
"B Term Loan Maturity Date" shall mean the sixth anniversary of the
Initial Borrowing Date.
"B Term Note" shall have the meaning provided in Section 1.05(a)(ii).
"B TL Percentage" shall mean, at any time, a fraction (expressed as a
percentage) the numerator of which is equal to the aggregate principal amount of
all B Term Loans outstanding at such time and the Total B Term Loan Commitment
then in effect and the denominator of which is equal to the aggregate principal
amount of all Term Loans outstanding at such time and the Total Term Loan
Commitment then in effect.
"Bank" shall mean each financial institution listed on Schedule I, as
well as any institution which becomes a "Bank" hereunder pursuant to Section
13.04.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or to fund
its portion of any unreimbursed payment under Section 2.04(c) or (ii) a Bank
having notified in writing the Borrower and/or the Agent that it does not intend
to comply with its obligations under Section 1.01 or 2, including in either case
as a result of any takeover of such Bank by any regulatory authority or agency.
"Bank Deposit Account" shall have the meaning provided in Section
5.08(b).
"Bank Deposit Account Consent Letter" shall have the meaning provided
in Section 5.08(b).
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Bankruptcy Default" shall mean any Default or Event of Default
existing with respect to the Borrower pursuant to Section 10.05.
"Banque Paribas" shall mean Banque Paribas, a French banking
organization acting through its New York Branch.
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"Base Rate" shall mean the higher of (i) 1/2 of 1% in excess of the
Federal Funds Rate and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean any Loan designated or deemed designated
as such by the Borrower at the time of the incurrence thereof or conversion
thereto.
"Blocked Commitment" shall mean (i) an amount equal to $1,200,000 and,
in the event the Agent reasonably determines that the Tax Liability is less than
$1,200,000, the Blocked Commitment shall be reduced by the amount by which the
Tax Liability is less than $1,200,000 and (ii) at any time after the date on
which the Agent and the Required Banks have been satisfied that the Tax Payment
has been paid in full or that the Borrower and its Subsidiaries do not have any
remaining liability with respect to the Tax Liability, zero.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments with respect to such Tranche on a
PRO RATA basis on a given date (or resulting from a conversion or conversions on
such date) having in the case of Eurodollar Loans the same Interest Period;
PROVIDED, that Base Rate Loans incurred pursuant to Section 1.10(b) shall be
considered part of the related Borrowing of Eurodollar Loans.
"Borrowing Base" shall mean, as at any date on which the amount
thereof is being determined, an amount equal to the sum of 85% of Eligible
Receivables and 50% of Eligible Inventory.
"Borrowing Base Certificate" shall have the meaning provided in
Section 8.01(k).
"Borrowing Base Deficiency" shall mean, at any time, the amount, if
any, by which the sum of the aggregate principal amount of Revolving Loans then
outstanding plus the Letter of Credit Outstandings at such time exceeds the
Borrowing Base then in effect.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any
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day which is a Business Day described in clause (i) above and which is also a
day for trading by and between banks in the New York interbank Eurodollar
market.
"Capital Expenditures" shall have the meaning provided in Section
9.08.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with generally accepted accounting principles, is accounted for as a
capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations under Capital Leases, in each case taken at the amount thereof
accounted for as Indebtedness in accordance with generally accepted accounting
principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (PROVIDED that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
twelve months from the date of acquisition, (ii) time deposits and certificates
of deposit of any commercial bank organized under the laws of the United States,
any State thereof or the District of Columbia having, or which is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States, any State thereof, or the District of Columbia having, capital,
surplus and undivided profits aggregating in excess of $200,000,000 and having a
long-term unsecured debt rating of at least "A" or the equivalent thereof from
Standard & Poor's Ratings Services ("S&P") or "A2" or the equivalent thereof
from Moody's Investors Service, Inc. ("Moody's"), with maturities of not more
than twelve months from the date of acquisition by such Person, (iii) 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 (ii) above, (iv) commercial paper issued by
any Person incorporated in the United States rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's
and in each case maturing not more than twelve months after the date of
acquisition by such Person, (v) investments in money market funds substantially
all of whose assets are comprised of securities of the types described in
clauses (i) through (iv) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 "U.S.C. Section 9601 ET SEQ.
"Change of Control" shall mean (i) the direct or indirect acquisition
by any Person or group (as such term is defined in Section 13(d)(3) of the
Securities Exchange Act) of the beneficial ownership (as such term is defined in
Rule 13D-3 promulgated under
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the Securities Exchange Act) of 20% or more of the outstanding shares of the
common stock of the Borrower, PROVIDED that Lehman Brothers Group, Inc. or any
transferees of Lehman Brothers Group, Inc. shall be permitted to collectively
own up to 25% of the combined voting power attributable to all classes of
capital stock of the Borrower entitled to vote in the election of directors
generally (the "Voting Securities") so long as Mr. Stephen W. Bershad controls
at least 30% of the combined voting power of the Voting Securities outstanding
at such time, (ii) Mr. Stephen W. Bershad shall at any time fail to control
shares of capital stock of the Borrower entitling him to exercise at least 40%
of the combined voting power of the Voting Securities outstanding at such time
except as such 40% ownership interest may be diluted through the issuance of
capital stock after the Effective Date pursuant to the exercise of options or
warrants outstanding on the Effective Date, (iii) the Board of Directors of the
Borrower shall not consist of a majority of Continuing Directors, (iv) Mr.
Bershad shall cease to be Chairman and Chief Executive Officer of the Borrower
unless within six months of the date on which Mr. Bershad ceases to be Chairman
and Chief Executive Officer of the Borrower (or to have such responsibilities),
the Borrower shall have employed a replacement Chairman and Chief Executive
Officer acceptable to the Required Banks or (v) an "ownership change" within
Section 382 of the Code shall have occurred.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provision of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purport to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged
Properties, all Additional Collateral and all cash and Cash Equivalents
delivered as collateral pursuant to this Agreement or any other Credit Document.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Secured Creditors pursuant to the Security Documents.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.05.
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"Commitment" shall mean, with respect to each Bank, such Bank's A Term
Loan Commitment, B Term Loan Commitment and Revolving Loan Commitment, if any.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Concentration Account" shall mean a separate account established and
maintained with and in the name of the Concentration Account Bank for the
benefit of the Secured Creditors by the Borrower and each of its Subsidiaries
and in which the Collateral Agent has a security interest pursuant to the
Concentration Account Consent Letter.
"Concentration Account Bank" shall mean Republic National Bank of New
York and such other bank that may become a Concentration Account Bank in
accordance with the Security Agreement.
"Concentration Account Consent Letter" shall have the meaning provided
in Section 5.08(c).
"Consolidated Cash Interest Expense" shall mean, for any period, the
total consolidated interest expense of the Borrower and its Subsidiaries for
such period (calculated without regard to any limitations on the payment
thereof) payable during such period in respect of all Indebtedness of the
Borrower and its Subsidiaries, on a consolidated basis, for such period
(including, without duplication, the cash portion of Capitalized Lease
Obligations representing the interest factor for such period but excluding (i)
interest accrued on liabilities listed on Schedule IX, established at their net
present value and (ii) amortization of deferred financing fees).
"Consolidated Current Assets" shall mean, at any time, the
consolidated current assets of the Borrower, and its Subsidiaries at such time
determined on a consolidated basis plus the Total Unutilized Revolving Loan
Commitment.
"Consolidated Current Liabilities" shall mean the consolidated current
liabilities of the Borrower and its Subsidiaries, but excluding the current
portion of any long-term Indebtedness which would otherwise be included therein
(including, without limitation, all Revolving Loans).
"Consolidated EBIT" shall mean, for any period, the Consolidated Net
Income before interest income, consolidated interest expense and provision for
taxes and without giving effect to any net extraordinary gains or losses or
gains or losses from sales of assets other than inventory sold in the ordinary
course of business.
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"Consolidated EBITDA" for any period shall mean Consolidated EBIT,
adjusted by adding thereto the amount of all amortization of intangibles and
depreciation that were deducted in arriving at Consolidated Net Income for such
period, PROVIDED, that to the extent Consolidated EBITDA is being determined for
any period of less than four consecutive fiscal quarters, the amount of
Consolidated EBITDA to be used for purposes of calculations being made pursuant
to Section 9.11 for the period of determination shall be equal to the product of
the amount of Consolidated EBITDA for such period and a fraction, the numerator
of which is 365 and the denominator of which is the number of days elapsed
during such period.
"Consolidated Indebtedness" shall mean, at any time, all Indebtedness
of the Borrower and its Subsidiaries determined on a consolidated basis
(excluding (x) the stated amount of any surety bond issued in connection with
the Disputed Alabama Taxes and (y) all Indebtedness of the type described in
clause (vii) of the definition thereof, except to the extent amounts are owing
with respect thereto upon the termination of the respective agreement
constituting such Indebtedness).
"Consolidated Net Income" shall mean, for any period, net income of
the Borrower and its Subsidiaries for such period determined on a consolidated
basis (after provision for taxes); PROVIDED, HOWEVER, the net income of any
Subsidiary of the Borrower, which is not a Wholly-Owned Subsidiary of the
Borrower and for which the investment of the Borrower therein is accounted for
by the equity method of accounting, shall have its net income included in the
Consolidated Net Income of such Person and its Subsidiaries only to the Extent
of the amount of cash dividends or distributions paid by such Subsidiary to the
Borrower.
"Consolidated Net Worth" shall mean, as to any Person and its
Subsidiaries determined on a consolidated basis, the sum of their capital stock,
capital in excess of par or stated value of shares of its capital stock,
retained earnings and any other account which, in accordance with generally
accepted accounting principles in the United States, constitutes stockholders
equity, excluding any treasury stock.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary
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obligor to make payment of such primary obligation or (iv) otherwise to assure
or hold harmless the holder of such primary obligation against loss in respect
thereof; PROVIDED, HOWEVER, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Continuing Directors" shall mean the directors of a Person on the
Effective Date and each other director, if such other director's nomination for
election to the Board of Directors of such Person is recommended by a majority
of the then Continuing Directors.
"Credit Documents" shall mean this Agreement, each Note, each Notice
of Borrowing, each Notice of Conversion, each Letter of Credit, each Letter of
Credit Request, the Subsidiaries Guaranty and each Security Document.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit.
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
"Debt Agreements" shall have the meaning provided in Section 5.05.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is then in effect.
"Deficiency Condition" shall have the meaning provided in Section
4.02(A)(b).
"Deposit Bank" shall have the meaning provided in Section 5.08(b).
"Disputed Alabama Taxes" shall mean franchise taxes and interest and
penalties thereon, in an amount not to exceed $585,000 plus the statutorily
mandated rate of interest, payable to the State of Alabama, Department of
Revenue, in connection with a dispute which is the subject of SPEEDRING, INC.,
TAXPAYER, V. STATE OF ALABAMA DEPARTMENT OF REVENUE. (Docket Number F.95-237,
F.95-288).
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"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other distribution, payment or delivery of property
(other than common stock of such Person) or cash to its stockholders in their
capacity as stockholders, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any shares of any class of its
capital stock outstanding on or after the Effective Date (or any options or
warrants issued by such Person with respect to its capital stock), or set aside
any funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding on or after the
Effective Date (or any options or warrants issued by such Person with respect to
its capital stock). Without limiting the foregoing, "Dividends" with respect to
any Person shall also include all cash payments made or required to be made by
such Person with respect to any stock appreciation rights, equity incentive
plans (other than cash contributions to the Borrower's or PAI's 401(K) plan (or
any successor plan) to fund a 3% matching contribution paid in stock) or any
similar plans or setting aside of any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents, the Acquisition Documents
and the Merger Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Effective Date" shall have the meaning provided in Section 13.10.
"Eligible Inventory" shall mean the gross dollar value (valued at the
lower of cost (determined on a first in-first out basis) or market value) of the
inventory of the Borrower, which conforms to the representations and warranties
contained in the Security Agreement including, without limitation, that the
Collateral Agent shall have and maintain a first priority perfected security
interest in all such inventory, which inventory constitutes raw materials, work-
in-progress or finished goods and which is not, in the Borrower's good faith
opinion and consistent with past practice, excess, obsolete or unmerchantable,
less (i) any supplies (other than raw materials), spare parts, goods returned or
rejected by customers and goods to be returned to suppliers, (ii) inventory
subject to any Lien other than the Liens created under the Security Documents or
(iii) any market reserves maintained by the Borrower and its Subsidiaries.
"Eligible Receivables" shall mean the total face amount of the
receivables of the Borrower which conform to the representations and warranties
contained in the Security Agreement (including, without limitation, that the
Collateral Agent shall have and
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maintain a first priority perfected security interest in all such receivables),
and at all times continue to be acceptable to the Collateral Agent in its
reasonable judgment less any returns, discounts, claims, credits and allowances
of any nature (whether issued, owing, granted or outstanding) and less reserves
for any other matter affecting the creditworthiness of account debtors with
respect to the receivables and excluding (i) bill and hold (deferred shipment)
transactions and progress billings, (ii) contracts or sales to any Affiliate,
(iii) all receivables which have not been paid in full within 90 days after the
invoice date thereof or which have been disputed by the account debtor, (iv)
sales to account debtors residing or located outside the United States, (v)
receivables of any account debtor with respect to which any action or event of
the types described in Section 10.05 has occurred, (vi) receivables of any
account debtor of which 50% or more of the aggregate outstanding receivables of
such account debtor owed to the Borrower would be excluded pursuant to clause
(iii) hereof, (vii) to the extent that the receivables of any account debtor
exceed 10% of the total outstanding receivables of all account debtors owed to
the Borrower, all receivables of such account debtor in excess of such 10%,
(viii) receivables with respect to which the Collateral Agent does not have a
valid, first priority and perfected security interest (it being understood that
until such time as, and to the extent that, Assignment of Claims Act Notices are
filed in accordance with the Security Agreement, receivables arising under the
applicable Government Contract shall not be included in the calculation of the
Borrowing Base) and (ix) any receivable subject to a Lien (other than Liens
granted to the Collateral Agent as contemplated hereunder).
"Eligible Transferee" shall mean and include a commercial bank,
financial institution, other "accredited investor" (as defined in Regulation D
of the Securities Act) other than individuals, or a "qualified institutional
buyer" as defined in Rule 144A of the Securities Act.
"Employee Benefit Plans" shall mean all Plans, or any other similar
plans or arrangements for the benefit of the employees of the Borrower or any
Subsidiary of the Borrower, and any profit sharing plans and deferred
compensation plans of the Borrower or any Subsidiary of the Borrower.
"Employment Agreements" shall have the meaning provided in Section
5.05.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any violation of, or liability under, any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemni-
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fication, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials arising from alleged injury or threat of injury to health,
safety or the environment.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, policy and rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 ET SEQ.; the
Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ.; the Clean Air Act,
42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section
300f ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ.; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 ET SEQ.; and any
applicable state and local or foreign counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement, and to any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower or any Subsidiary of the Borrower
would be deemed to be a "single employer" (i) within the meaning of Section
414(b), (c), (m) or (o) of the Code or (ii) as a result of the Borrower or a
Subsidiary of the Borrower being or having been a general partner of such
person.
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of
(without duplication) (i) the sum of (a) Adjusted Consolidated Net Income for
such period and (b) the decrease, if any, in Adjusted Consolidated Working
Capital from the first day to the last day of such period, minus (ii) the sum of
(a) the amount of cash Capital Expenditures (to the extent not financed with
Indebtedness (but not in excess of the amounts permitted pursuant to Section
9.08)), and the amount of asset purchases permitted by Section 9.02(viii), made
by the Borrower and its Subsidiaries on a consolidated basis during such period,
(b) the amount of permanent principal payments of Indebtedness for borrowed
money of the Borrower and its Subsidiaries (other than (1) payments made in
respect of the Refinanced
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Indebtedness and (2) repayments of Loans), PROVIDED that repayments of Loans
shall be deducted in determining Excess Cash Flow if such repayments were
applied to Scheduled Repayments required to be made during such period or were
made as a voluntary prepayment with internally generated funds (but in the case
of a voluntary prepayment of Revolving Loans, only to the extent accompanied by
a voluntary reduction to the Total Revolving Loan Commitment) during such
period, (c) the increase, if any, in Adjusted Consolidated Working Capital from
the first day to the last day of such period, (d) the increase, if any, during
such period in current liabilities due to any accrued dividends on preferred
stock of the Borrower. Notwithstanding the foregoing, Excess Cash Flow shall
not be increased by the reclassification of any Other Long Term Liability into a
current liability.
"Excess Cash Flow Payment Period" shall mean (a) the period commencing
on the Initial Borrowing Date and ending on December 31, 1996 and (b) each
calendar year thereafter.
"Excess Condition" shall have the meaning provided in Section
4.02(A)(a).
"Existing Indebtedness" shall have the meaning provided in Section
7.22.
"Facility" shall mean any of the credit facilities established under
this Agreement, I.E., the Term Loan Facility or the Revolving Loan Facility.
"Facing Fee" shall have the meaning provided in Section 3.01(b).
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds Brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Fixed Charge Coverage Ratio" for any period shall mean the ratio of
(x) Consolidated EBITDA less the amount of Capital Expenditures made in cash,
and less the amount of asset purchases permitted by Section 9.02(viii), by the
Borrower or any of its Subsidiaries for such period to (y) Fixed Charages for
such period.
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"Fixed Charges" for any period shall mean the sum of (i) Consolidated
Cash Interest Expense for such period, (ii) the aggregate principal amount of
all scheduled Term Loan payments, (iii) the portion of payments with respect to
Capitalized Lease Obligations representing the principal factor for such period,
(iv) all taxes payable by the Borrower and its Subsidiaries for such period
(other than payments in respect of the Tax Liability), (v) payments made as an
optional redemption or an open market purchase of the Gilford IRBs permitted in
accordance with Section 9.16(i)(x) and (vi) cash payments in respect of the cash
out of fractional shares created by a reverse split of the Borrower's common
stock permitted in accordance with Section 9.16(iii).
"Gilford IRBs" shall mean the $1,870,000 principal amount Industrial
Development Authority of the State of New Hampshire Floating/Fixed Rate
Industrial Facility Revenue Bonds (V Land Corporation-1985 Laconia Series) due
2005.
"Gilford IRB Mortgage" shall mean the Leasehold Mortgage, Assignment
and Security Agreement, dated as of October 1, 1987, among V Land Corporation,
the Borrower and Laconia Peoples National Bank and Trust Company, as Trustee, as
amended from time to time in accordance with the terms hereof and thereof.
"Hazardous Materials" means (a) petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain,
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of similar meaning
and regulatory effect, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated under applicable Environmental Laws.
"Immaterial Subsidiary" shall mean any Subsidiary that owns no assets
as indicated on Schedule III.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services other than trade payables and accrued expenses arising in the ordinary
course of business in accordance with customary trade terms, (ii) the maximum
amount available to be drawn under all letters of credit issued for the account
of such Person and all unpaid drawings in respect of such letters of credit,
(iii) all Indebtedness of another Person of the types described in clause (i),
(ii), (iv), (v), (vi) or (vii) of this definition secured by any Lien (other
than Permitted Liens) on any property owned by the Borrower or any of its
Subsidiaries, whether or not
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such Indebtedness has been assumed by the Borrower or any its Subsidiaries, (iv)
all Capitalized Lease Obligations of such Person, (v) all obligations of such
Person to pay a specified purchase price for goods or services, whether or not
delivered or accepted, I.E., take-or-pay and similar obligations, (vi) all
Contingent Obligations of such Person, (vii) all obligations under any Interest
Rate Protection or Other Hedging Agreement or under any similar types of
agreements entered into with a Person not a Bank or financial institution, as
the case may be and (viii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money.
"Indemnified Matters" shall have the meaning provided in Section
13.01.
"Indemnitees" shall have the meaning provided in Section 13.01.
"Initial Borrowing Date" shall mean the date on which the initial
Credit Event occurs.
"Intellectual Property" shall have the meaning provided in Section
7.21.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection or Other Hedging Agreements" shall have the
meaning provided in the Security Documents.
"IRB Property" shall mean the Borrower's real property located in
Gilford, New Hampshire that is subject to the Gilford IRBs.
"Issuing Bank" shall mean Banque Paribas.
"L/C Supportable Indebtedness" shall mean (i) obligations of the
Borrower or any of its Subsidiaries incurred in the ordinary course of business
with respect to workers compensation, surety bonds and other similar statutory
obligations and (ii) such other obligations of the Borrower or any of its
Subsidiaries as are reasonably acceptable to the Issuing Bank and otherwise
permitted to exist pursuant to the terms of this Agreement.
"Leaseholds" of any Person means all the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures to the extent constituting real property under
applicable law.
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"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(c).
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Term Loan and each Revolving Loan.
"Management Agreements" shall have the meaning provided in Section
5.05.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Contracts" shall have the meaning provided in Section 5.05.
"Material Subsidiary" shall mean any Subsidiary that is not an
Immaterial Subsidiary.
"Maturity Date" with respect to a Tranche shall mean either the A Term
Loan Maturity Date, the B Term Loan Maturity Date or the Revolving Loan Maturity
Date, as the case may be.
"Merger" shall mean the merger of Newco with, and into, PAI pursuant
to the Merger Documents, with PAI as the surviving corporation of the Merger, as
a direct Wholly-Owned Subsidiary of the Borrower.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated
as of February 16, 1996, among the Borrower, Newco and PAI, as in effect on the
date hereof.
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"Merger Documents" shall mean the Merger Agreement and all other
documents entered into in connection with the Merger Agreement or the Merger.
"Minimum Borrowing Amount" shall mean (i) for Base Rate Loans,
$100,000 and (ii) for Eurodollar Loans, $250,000.
"Mortgages" shall have the meaning provided in Section 5.09.
"Mortgage Policies" shall have the meaning provided for in Section
5.09.
"Mortgaged Properties" shall have the meaning provided in Section
5.09.
"Net Cash Proceeds" shall have the meaning provided in Section
4.02(A)(e)(i).
"Net Sale Proceeds" shall mean for any sale of assets, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale, net of reasonable transaction costs (including, without
limitation, attorneys' fees), the amount of such gross cash proceeds required to
be used to permanently repay any Indebtedness which is secured by the respective
assets which were sold, and the estimated marginal increase in income taxes
which will be payable by the Borrower's consolidated group as a result of such
sale.
"Newco" shall mean PA Acquisition Corporation, a Delaware corporation.
"Newco Capital Contribution" shall have the meaning provided in
Section 5.17.
"Note" shall mean each A Term Note, each B Term Note and each
Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent located at 787
Seventh Avenue, New York, New York 10019, Attention: Donald Ercole or such
other office as the Agent may hereafter designate in writing as such to the
other parties hereto.
"Obligations" shall mean all amounts owing to the Agent, the
Collateral Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.
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"Other Long Term Liabilities" shall mean consolidated noncurrent
liabilities of the Borrower and its Subsidiaries but excluding any Borrowings
under the Credit Agreement and the Gilford IRBs.
"PAI" shall mean Precision Aerotech, Inc., a Delaware corporation.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Agent located at 787
Seventh Avenue, New York, New York 10019, Attention: Donald Ercole or such
other office as the Agent may hereafter designate in writing as such to the
other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction (expressed
as a percentage) the numerator of which is the Revolving Loan Commitment of such
Bank at such time and the denominator of which is the Total Revolving Loan
Commitment at such time; PROVIDED, that if the Percentage of any Bank is to be
determined after the Total Revolving Loan Commitment has been terminated, then
the Percentages of the Banks shall be determined immediately prior (and without
giving effect) to such termination.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be acceptable, on the date of delivery of such title insurance
policy, to the Agent and the Required Banks.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) the Borrower, a Subsidiary of
the Borrower or an ERISA Affiliate, and each such Plan for the five year period
immediately following the latest date on which the Borrower, a Subsidiary of the
Borrower or an ERISA Affiliate maintained, contributed to or had an obligation
to contribute to such Plan.
"Pledge Agreement" shall have the meaning provided in Section 5.07.
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"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in the Pledge Agreement.
"Pledged Securities" shall have the meaning assigned that term in the
Pledge Agreement.
"Pledged Stock" shall have the meaning assigned that term in the
Pledge Agreement.
"Prime Lending Rate" shall mean the rate which The Chase Manhattan
Bank, N.A. announces from time to time as its prime lending rate, the Prime
Lending Rate to change when and as such prime lending rate changes. The Prime
Lending Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer by Banque Paribas or The Chase
Manhattan Bank, N.A., who may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Projections" shall have the meaning provided in Section 5.18(b).
"Quarterly Payment Date" shall mean the last Business Day of each
March, June, September and December of each calendar year.
"Quoted Rate" shall mean (a) the offered quotation to first-class
banks in the New York interbank Eurodollar market by the Agent for U.S. dollar
deposits of amounts in immediately available funds comparable to the outstanding
principal amount of the Eurodollar Loan of the Agent for which an interest rate
is then being determined with maturities comparable to the Interest Period
applicable to such Eurodollar Loan determined as of 10:00 A.M. (New York time)
on the date which is two Business Days prior to the commencement of such
Interest Period, divided (and rounded upward to the next whole multiple of 1/16
of 1%) by (b) a percentage equal to 100% minus the then stated maximum rate of
all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency funding or
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D).
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
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"Recovery Event" shall mean the receipt by the Borrower or any of its
Subsidiaries of any cash insurance or condemnation proceeds (including, without
limitation, errors and omissions policies), payable (i) by reason of theft,
physical destruction or damage or any other similar event with respect to any
properties or assets of the Borrower or any of its Subsidiaries, (ii) by reason
of any condemnation, taking or seizing or similar event with respect to any
properties or assets of the Borrower or any of its Subsidiaries and (iii) under
any other policy of insurance required to be maintained under Section 8.03
(including key-man life insurance and business interruption insurance).
"Refinanced Indebtedness" shall have the meaning provided in Section
5.22.
"Register" shall have the meaning provided in Section 8.15.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Release" means disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing,
pouring and the like, into or upon any land or water or air, or otherwise
entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.12.
"Replacement Bank" shall have the meaning provided in Section 1.12.
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"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.
"Required A Facility Banks" shall mean Banks the sum of whose
outstanding A Term Loans represent an amount greater than 50% of all outstanding
A Term Loans made by all Banks.
"Required B Facility Banks" shall mean Banks the sum of whose
outstanding B Term Loans represent an amount greater than 50% of the sum of all
outstanding B Term Loans made by all Banks.
"Required Banks" shall mean Banks the sum of whose outstanding Term
Loans, Term Loan Commitments (to the extent not theretofore terminated) and
Revolving Loan Commitments (or after the termination thereof, the sum of
outstanding Revolving Loans and Letter of Credit Outstandings), represent an
amount greater than 50% of the sum of all outstanding Term Loans, the then Total
Term Loan Commitments (to the extent not theretofore terminated) and the Total
Revolving Loan Commitment (or after the termination thereof, the sum of the then
total outstanding Revolving Loans and Letter of Credit Outstandings).
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name on Schedule I hereto directly below the column
entitled "Revolving Loan Commitment," as same may be (x) reduced or terminated
from time to time pursuant to Section 3.02, 3.03, 4.02 and/or 10 or (y) adjusted
from time to time as a result of assignments to or from such Bank pursuant to
Section 1.12 or 13.04.
"Revolving Loan Facility" shall mean the facility evidenced by the
Total Revolving Loan Commitment.
"Revolving Loan Maturity Date" shall mean the fourth anniversary of
the Initial Borrowing Date.
"Revolving Loans" shall have the meaning provided in Section 1.01(c).
"Revolving Note" shall have the meaning provided in Section
1.05(a)(iii).
"Scheduled A Term Loan Repayment" shall have the meaning provided in
Section 4.02(A)(c).
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"Scheduled B Term Loan Repayment" shall have the meaning provided in
Section 4.02(A)(d).
"Scheduled Repayments" shall have the meaning provided in Section
4.02(A)(d).
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall mean (x) the Banks, the Agent, the
Collateral Agent and (y) any Bank or Affiliate of any Bank which on the date
hereof is, or subsequently becomes, party to any Interest Rate Protection or
Other Hedging Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section 5.08.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement, each Bank Deposit Account Consent Letter, each Concentration Account
Consent Letter, each Additional Security Document and each Mortgage.
"Shareholders' Agreements" shall have the meaning provided in Section
5.05.
"Stated Amount" of each Letter of Credit shall, at any time, mean the
maximum amount available to be drawn thereunder at such time (in each case
determined without regard to whether any conditions to drawing could then be
met).
"Stock Option Plan" shall have the meaning provided in Section 9.18.
"Subsidiaries Guaranty" shall have the meaning provided in Section
5.10.
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"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Material Subsidiary of the
Borrower.
"Syndication Termination Date" shall mean the date which is the
earlier of (i) the 120th day after the Initial Borrowing Date or (ii) a date on
which the Agent, in its sole discretion, determines (and notifies the Borrower)
that the primary syndication (and the resultant addition of institutions as
Banks pursuant to Section 13.04) has been completed.
"Tax Liability" shall mean a liability of the Borrower (or Speeding,
Inc., in the case of the Disputed Alabama Taxes) with respect to taxes and
accrued interest and penalties payable by the Borrower to the Federal government
and certain states resulting from the disallowance of certain deductions taken
by the Borrower during the Borrower's tax years 1981 - 1987 not to exceed
$1,200,000 plus interest accruing thereon at the statutorily mandated rate of
interest and with respect to the Disputed Alabama Taxes not to exceed $585,000
plus interest accruing thereon at the statutorily mandated rate of interest.
"Tax Payment" shall mean a payment to the Federal government of the
United States or to a state government with respect to the Tax Liability; the
aggregate amount of all Tax Payments with respect to the Tax Liability relating
to the disallowance of certain deductions shall not exceed $1,200,000 and the
aggregate amount of all Tax Payments with respect to the Disputed Alabama Taxes
shall not exceed $585,000, plus, in each case, the statutorily mandated rate of
interest.
"Tax Sharing Agreements" shall have the meaning provided in Section
5.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loans" shall mean the A Term Loans and the B Term Loans.
"Term Loan Commitment" shall mean each A Term Loan Commitment and each
B Term Loan Commitment, with the Term Loan Commitment of any Bank at any time
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to equal the sum of its A Term Loan Commitment and B Term Loan Commitment as
then in effect.
"Term Loan Facility" shall mean the facility evidenced by Total Term
Loan Commitment.
"Test Period" shall mean each of the following (each taken as one
accounting period): (i) the period beginning on April 1, 1996 and ending on
June 30, 1996, (ii) the period beginning on April 1, 1996 and ending on
September 30, 1996, (iii) the period beginning on April 1, 1996 and ending on
December 31, 1996 and (iv) for each other period ending on or after March 31,
1996, the four consecutive fiscal quarterly periods of the Borrower then ended.
"Total A Term Loan Commitment" shall mean, at any time, the sum of the
A Term Loan Commitments of each of the Banks.
"Total B Term Loan Commitment" shall mean, at any time, the sum of the
B Term Loan Commitments of each of the Banks.
"Total Commitment" shall mean, at any time, the sum of the Commitments
of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean, at any time, the sum of the
Total A Term Loan Commitment and the Total B Term Loan Commitment.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment, less (y) the sum of the aggregate principal amount of Revolving
Loans then outstanding plus the then aggregate amount of Letter of Credit
Outstandings.
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being three separate Tranches, I.E.,
whether A Term Loans, B Term Loans or Revolving Loans.
"Transaction" shall mean collectively, (i) the incurrence of Loans
hereunder on the Initial Borrowing Date, (ii) the making of the Newco Capital
Contribution, (iii) the consummation of the Acquisition, (iii) the consummation
of the Merger, (iv) the repayment of all Refinanced Indebtedness, together with
all accrued interest, premiums, fees, commissions and expenses owing in
connection therewith, and the termination of all
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commitments owing thereunder and (v) the payment of the Transaction Fees and
Expenses in connection therewith.
"Transaction Fees and Expenses" shall mean all fees and expenses
incurred in connection with and arising out of the Transaction and the
transactions contemplated thereby and hereby; PROVIDED, HOWEVER, that the
aggregate amount of such fees and expenses shall not exceed $3,400,000 in the
aggregate.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, I.E., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if any, by
which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unutilized Revolving Loan Commitment" for any Bank, at any time,
shall mean the Revolving Loan Commitment of such Bank at such time less the sum
of (i) the aggregate principal amount of Revolving Loans made by such Bank and
then outstanding and (ii) such Bank's Percentage of the Letter of Credit
Outstandings in respect of Letters of Credit.
"Voting Securities" shall have the meaning provided in the definition
of "Change of Control".
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
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Section 12. THE AGENT.
12.01 APPOINTMENT. The Banks hereby designate Banque Paribas as
Agent (for purposes of this Section 12, the term "Agent" shall include Banque
Paribas in its capacity as Collateral Agent pursuant to the Security Documents)
to act as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Agent to take such action on
its behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its officers, directors,
agents or employees.
12.02 NATURE OF DUTIES. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. Neither the Agent nor any of its officers, directors,
agents or employees shall be liable for any action taken or omitted by it or
them hereunder or under any other Credit Document or in connection herewith or
therewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Agent shall be mechanical and administrative in nature; the
Agent shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Bank or the holder of any Note; and
nothing in this Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
in respect of this Agreement or any other Credit Document except as expressly
set forth herein.
12.03 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Borrower and its
Subsidiaries in connection with the making and the continuance of the Loans and
the participation in Letters of Credit and the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the creditworthiness
of the Borrower and its Subsidiaries and, except as expressly provided in this
Agreement, the Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Bank or the holder of any Note with any
credit or other information with respect thereto, whether coming into its
possession before the making of the Loans, the participation in the Letters of
Credit or at any time or times thereafter. The Agent shall not be responsible
to any Bank or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, priority or sufficiency of
this Agreement or any other Credit Document or the financial condition of the
Borrower or its Subsidiaries or be required to
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make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any other Credit Document,
or the financial condition of the Borrower or its Subsidiaries or the existence
or possible existence of any Default or Event of Default. In no event shall the
Agent be required to take any action in contravention of applicable law or if
such action would cause it, in its sole determination, to incur any risk or
liability for which it is not adequately indemnified for to its sole
satisfaction.
12.04 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, the Agent shall be entitled to refrain from such act or taking such
action unless and until the Agent shall have received instructions from the
Required Banks; and the Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Bank or the holder of any
Note shall have any right of action whatsoever against the Agent as a result of
the Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
12.05 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or facsimile message, cablegram,
radiogram, legal opinion, order or other document or telephone message signed,
sent or made by any Person that the Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon advice of counsel
selected by it.
12.06 INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and indemnify the Agent,
in proportion to their respective "percentages" as used in determining the
Required Banks, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its duties hereunder or under any
other Credit Document, in any way relating to or arising out of this Agreement
or any other Credit Document; PROVIDED, that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
12.07 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "holders
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of Notes" or any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of banking, trust
or other business with any Credit Party or any Affiliate of any Credit Party as
if it were not performing the duties specified herein, and may accept fees and
other consideration from the Borrower or any other Credit Party for services in
connection with this Agreement and otherwise without having to account for the
same to the Banks.
12.08 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
12.09 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Agent hereunder or thereunder who shall be a commercial bank
or trust company reasonably acceptable to the Borrower (it being understood and
agreed that any Bank is deemed to be acceptable to the Borrower).
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower, shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Banks shall thereafter perform all the duties of the Agent hereunder and/or
under any other Credit Document until such time, if any, as the Banks appoint a
successor Agent as provided above.
Section 13. MISCELLANEOUS.
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13.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent and Collateral Agent (including,
without limitation, the reasonable fees and disbursements of White & Case and
local counsel) in connection with the preparation, execution and delivery of
this Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto, of the Agent in connection with its syndication efforts with
respect to this Agreement (including, without limitation, the reasonable fees
and disbursements of White & Case) and of the Agent, the Collateral Agent and
each of the Banks in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred to herein and
therein (including, without limitation, the reasonable fees and disbursements of
counsel for the Agent and for each of the Banks); (ii) pay and hold each of the
Banks and the Collateral Agent harmless from and against any and all present and
future stamp, excise and other similar taxes with respect to the foregoing
matters and save each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Bank) to pay such taxes; and (iii) defend,
protect, indemnify and hold harmless the Agent, the Collateral Agent and each
Bank, and each of their respective officers, directors, employees,
representatives, attorneys and agents (collectively called the "Indemnitees")
from and against any and all liabilities, obligations (including removal or
remedial actions), losses, damages (including foreseeable and unforeseeable
consequential damages and punitive damages), penalties, claims, actions,
judgments, suits, costs, expenses and disbursements (including reasonable
attorneys' and consultants fees and disbursements) of any kind or nature
whatsoever that may at any time be incurred by, imposed on or assessed against
the Indemnitees directly or indirectly based on, or arising or resulting from,
or in any way related to, or by reason of (a) any investigation, litigation or
other proceeding (whether or not the Agent, the Collateral Agent or any Bank is
a party thereto and whether or not any such investigation, litigation or other
proceeding is between or among the Agent, the Collateral Agent, any Bank, any
Credit Party or any third Person or otherwise) related to the entering into
and/or performance of this Agreement or any other Document or the use of any
Letter of Credit or the proceeds of any Loans hereunder or the consummation of
any transactions contemplated herein (including, without limitation, the
Transaction) or in any other Document or the exercise of any of their rights or
remedies provided herein or in the other Credit Documents; or, (b) the actual or
alleged generation, presence or Release of Hazardous Materials on or from, or
the transportation of Hazardous Materials to or from, any Real Property at any
time owned or operated by the Borrower or any of its Subsidiaries or; (c) any
Environmental Claim relating to the Borrower or any of its Subsidiaries or any
Real Property at any time owned or operated by the Borrower or any of its
Subsidiaries or; (d) the exercise of the rights of the Agent, the Collateral
Agent and of any Bank under any of the provisions of this Agreement, any
Security Document, or any other Document or any Letter of Credit or any Loans
hereunder; or (e) the consummation of any transaction contemplated herein
(including, without limitation, the
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Transaction) or in any other Credit Document (the "Indemnified Matters")
regardless of when such Indemnified Matter arises, but excluding any such
Indemnified Matter based on the gross negligence or willful misconduct of any
Indemnitee.
13.02 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such Bank (including,
without limitation, by branches and agencies of such Bank wherever located) to
or for the credit or the account of each Credit Party against and on account of
the Obligations and liabilities of such Credit Party to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Bank pursuant to
Section 13.06(b), and all other claims of any nature or description arising out
of or connected with this Agreement or any other Document, irrespective of
whether or not such Bank shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
13.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
its address specified opposite its signature below; if to any Bank, at its
address specified opposite its name below; and if to the Agent, at its Notice
Office; or, as to any Credit Party or the Agent, at such other address as shall
be designated by such party in a written notice to the other parties hereto and,
as to each Bank, at such other address as shall be designated by such Bank in a
written notice to the Borrower and the Agent. All such notices and
communications shall, when mailed, telegraphed, telexed, facsimiled, or cabled
or sent by overnight courier, be effective 3 Business Days after deposited in
the mails, certified, return receipt requested, when delivered to the telegraph
company, cable company or one day following delivery to an overnight courier, as
the case may be, or sent by telex or facsimile device, except that notices and
communications to the Agent shall not be effective until received by the Agent.
13.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; PROVIDED, HOWEVER, no Credit Party may assign
or transfer any of its rights, obligations or interest hereunder or under any
other Credit Document without the prior written consent of the Banks; and
PROVIDED FURTHER, that although any Bank may grant participations in its rights
hereunder, such Bank shall remain a "Bank" for all purposes hereunder (and may
not transfer or assign all or any portion of its Commitments or Loans
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hereunder except as provided in Section 13.04(b)) and the participant shall not
constitute a "Bank" hereunder; and PROVIDED FURTHER, that no Bank shall grant
any participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would: (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Loan Maturity Date) in which such participant
is participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount thereof,
or increase the Commitments in which such participant is participating over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Total Commitment or of a
mandatory prepayment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment shall be permitted without
the consent of any participant if the participant's participation is not
increased as a result thereof), (ii) consent to the assignment or transfer by
any Credit Party of any of its rights and obligations under this Agreement or
(iii) release all or substantially all of the Collateral under all of the
Security Documents (except as expressly provided in the Credit Documents)
supporting the Loans hereunder in which such participant is participating. In
the case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the participant's
rights against such Bank in respect of such participation to be those set forth
in the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall be determined
as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) (A) pledge its Loans and/or Notes
hereunder to a Federal Reserve Bank in support of borrowings made by such Bank
from such Federal Reserve Bank or (B) assign all or a portion of its Loans or
Commitments and related outstanding Obligations hereunder to its parent company
and/or any Affiliate of such Bank which is at least 50% owned by such Bank or
its parent company or one or more other Banks or (y) assign all or a portion
equal to at least $2,500,000 in the aggregate for the assigning Bank or
assigning Banks (PROVIDED, that the $2,500,000 limitation shall not apply to
assignments to an assignee who was a Bank immediately prior to the assignment),
of such Loans or Commitments and related outstanding Obligations hereunder to
one or more Eligible Transferees each of which assignees shall become a party to
this Agreement as a Bank by execution of an assignment and assumption agreement
substantially in the form of Exhibit L (appropriately completed); PROVIDED,
that: (i) at such time Schedule I shall be deemed modified to reflect the
Commitments of such new Bank and of the existing Banks; (ii) new Notes will be
issued to such new Bank and to the assigning Bank upon the request of such new
Bank or assigning Bank, such new Notes to be in conformity with the requirements
of Section 1.05 to the extent needed to reflect the revised Commitments; (iii)
the
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consent (which shall not be unreasonably withheld) of the Agent, and, with
respect to assignments of Revolving Loans and/or Revolving Commitments, the
Issuing Bank shall be required in connection with any assignment; and (iv) the
Agent shall receive at the time of each such assignment, from the assigning
Bank, the payment of a non-refundable assignment fee of $3,000. To the extent
of any assignment pursuant to this Section 13.04(b), the assigning Bank shall be
relieved of its obligations hereunder. No transfer or assignment under this
Section 13.04(b) will be effective until recorded by the Agent on the Register
pursuant to Section 8.15. At the time of each assignment pursuant to this
Section 13.04(b) to a Person which is not already a Bank hereunder and which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for Federal income tax purposes, the respective assignee Bank shall
provide to the Borrower and the Agent the appropriate Internal Revenue Service
Forms (and, if applicable, a Section 4.04(b)(ii) Certificate) required by
Section 4.04(b). The Agent shall provide notice to the Borrower of any such
assignment effected pursuant to this Section 13.04(b); PROVIDED, that the
failure to give such notice shall not prohibit, affect or otherwise impair any
such assignment.
13.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent, the Collateral Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit Party
and the Agent, the Collateral Agent or any Bank or the holder of any Note shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights, powers and remedies herein or
in any other Credit Document expressly provided are cumulative and not exclusive
of any rights, powers or remedies which the Agent, the Collateral Agent or any
Bank or the holder of any Note would otherwise have. No notice to or demand on
any Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent, the Collateral Agent or any Bank or the
holder of any Note to any other or further action in any circumstances without
notice or demand.
13.06 PAYMENTS PRO RATA. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks PRO RATA
based upon their respective shares, if any, of the Obligations with respect to
which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Fees,
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of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; PROVIDED, that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
13.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Banks); PROVIDED, that except as otherwise specifically provided herein, all
computations of Excess Cash Flow and all computations determining compliance
with Sections 9.04 and 9.08 through 9.15, inclusive, and 9.22, including the
definitions used therein, shall utilize accounting principles and policies in
conformity with those used to prepare the historical financial statements of the
Borrower for the fiscal year ended December 31, 1995, and of PAI for the fiscal
year ended April 30, 1995, in each case, delivered to the Banks pursuant to
Section 7.05(a).
(b) All computations of interest, Commitment Commission and Fees
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first day but excluding the last day) occurring in the
period for which such interest, Commitment Commission or Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS
OTHERWISE PROVIDED IN THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT 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, THE
BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS. THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION SYSTEMS, INC. WITH OFFICES ON THE
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DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK, AS ITS DESIGNEE, APPOINTEE AND
AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT
OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS
SUCH, THE BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON
THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER
THIS AGREEMENT. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT UNDER THIS AGREEMENT, ANY BANK OR THE HOLDER
OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER
JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES 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
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together
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constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Agent.
13.10 EFFECTIVENESS. This Agreement shall become effective on the
date (the "Effective Date") on which the Borrower and each of the Banks shall
have signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Agent at its Notice Office or, in the case of the
Banks, shall have given to the Agent telephonic (confirmed in writing), written
or facsimile transmission notice (actually received) in accordance with Section
13.03 at such office that the same has been signed and mailed to it.
13.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
13.12 AMENDMENT OR WAIVER. (a) Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be amended, changed, waived,
discharged or terminated unless such amendment, change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party thereto
and the Required Banks; PROVIDED that no such amendment, change, waiver,
discharge or termination shall, without the consent of each Bank (with
Obligations of the respective types being directly affected thereby): (i)
extend the final scheduled maturity of any Loan or Note or extend the stated
maturity of any Letter of Credit beyond the Revolving Loan Maturity Date, or
reduce the rate or extend the time of payment of interest or Fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest rates), or reduce the principal amount thereof, or increase
the Commitments of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment shall not constitute an increase of the
Commitment of any Bank, and that an increase in the available portion of any
Commitment of any Bank shall not constitute an increase in the Commitment of
such Bank); (ii) release all or substantially all of the Collateral (except as
expressly provided in the respective Credit Document); (iii) amend, modify or
waive any provision of this Section 13.12; (iv) reduce the percentage specified
in, or otherwise modify, the definition of Required Banks (it being understood
that, with the consent of the Required Banks, additional extensions of credit
permitted pursuant to this Agreement may be included in the determination of the
Required Banks on substantially the same basis as the extensions of Term Loans
and Revolving Loan Commitments are included on the Effective Date); or (v)
consent to the assignment or transfer by the Borrower of any of their rights and
obligations under this Agreement; PROVIDED FURTHER, that no such change, waiver,
discharge or termination shall: (u) increase the Commitments of any Bank over
the amount thereof then in effect (it being understood that a waiver of any
conditions precedent, covenants, Defaults or Events of Default or of a mandatory
reduction in the Total Commitment or of a mandatory
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prepayment shall not constitute an increase of the Commitment of any Bank, and
that an increase in the available portion of any Commitment of any Bank shall
not constitute an increase in the Commitment of such Bank) without the consent
of such Bank; or (v) without the consent of the Issuing Bank, amend, modify or
waive any provision of Section 2 or alter its rights or obligations with respect
to Letters of Credit; or (w) without the consent of the Agent, amend, modify or
waive any provision of Section 12 or any other provision relating to the rights
or obligations of the Agent; or (x) without the consent of the Required A
Facility Banks (A) amend, modify or waive any of the terms contained in Sections
4.01(vi) or 4.02(B)(a)(i) to the extent that, in any such case, such amendment,
modification or waiver would alter the application of prepayments or repayments
as between A Term Loans and B Term Loans in a manner adverse to the A Term
Loans; or (y) without the consent of the Required B Facility Banks (A) amend,
modify or waive any of the terms contained in Sections 4.01(vi) or 4.02(B)(a)(i)
to the extent that, in any such case, such amendment, modification or waiver
would alter the application of prepayments or repayments as between A Term Loans
and B Term Loans in a manner adverse to the B Term Loans or (z) without the
consent of the Collateral Agent, amend, modify or waive any provision of Section
12 or any other provision relating to the rights or obligations of the
Collateral Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by clause
(a)(i) through (v), inclusive, of the first proviso to Section 13.12(a), the
consent of the Required Banks is obtained but the consent of one or more of such
other Banks whose consent is required is not obtained, then the Borrower shall
have the right to replace each such non-consenting Bank or Banks (so long as all
non-consenting Banks are so replaced) with one or more Replacement Banks
pursuant to Section 1.12 so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver, discharge or
termination, PROVIDED that the Borrower shall not have the right to replace a
Bank solely as a result of the exercise of such Bank's rights (and the
withholding of any required consent by such Bank) pursuant to clauses (u)-(z) of
the second proviso to Section 13.12(a).
(c) Notwithstanding anything to the contrary contained above in this
Section 13.12, the Collateral Agent may (i) enter into amendments to the
Subsidiaries Guaranty and the Security Documents for the purpose of adding
additional Subsidiaries of the Borrower (or other Credit Parties) as parties
thereto and (ii) enter into security documents to satisfy the requirements of
Section 8.17 without the consent of the Required Banks.
13.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01 shall survive
the execution and delivery of this Agreement and the Notes and the making and
repayment of the Loans and Letters of Credit.
-115-
<PAGE>
13.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any office, Subsidiary or Affiliate of such Bank.
13.15 CONFIDENTIALITY. (a) Subject to the provisions of clause (b)
of this Section 13.15, each Bank agrees that it will use its best efforts not to
disclose without the prior consent of the Borrower (other than to its employees,
auditors, advisors or counsel or to another Bank if the Bank or such Bank's
holding or parent company in its sole discretion determines that any such party
should have access to such information, provided such Persons shall be subject
to the provisions of this Section 13.15 to the same extent as such Bank) any
information with respect to the Borrower or any of its Subsidiaries which is now
or in the future furnished pursuant to this Agreement or any other Credit
Document and which is designated by the Borrower to the Banks in writing as
confidential, PROVIDED that any Bank may disclose any such information (a) as
has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
such Bank or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or elsewhere)
or their successors, (c) as may be required or appropriate in respect to any
summons or subpoena or in connection with any litigation, (d) in order to comply
with any law, order, regulation or ruling applicable to such Bank, (e) to the
Agent or the Collateral Agent and (f) to any prospective or actual transferee or
participant in connection with any contemplated transfer or participation of any
of the Loans or Commitments or any interest therein by such Bank, PROVIDED, that
such prospective transferee executes an agreement with such Bank containing
provisions substantially the same as to those contained in this Section.
(b) The Borrower hereby acknowledges and agrees that each Bank may
share with any of its affiliates any information related to the Borrower or any
of its Subsidiaries (including, without limitation, any non-public customer
information regarding the creditworthiness of the Borrower and its Subsidiaries,
provided such Persons shall be subject to the provisions of this Section 13.15
to the same extent as such Bank).
13.16 POST-CLOSING ACTIONS. Notwithstanding anything to the contrary
contained in this Agreement or the other Credit Documents, the parties hereto
acknowledge and agree that (a) within 60 days after the Effective Date, the
Collateral Agent shall have received surveys, as described in Section 5.09(c),
with respect to each Mortgaged Property located in Cullman, Alabama and Wichita,
Kansas and (b) within 60 days after the Effective Date, the Borrower shall have
authorized, executed and delivered Bank Deposit Account Consent Letters and
Concentration Account Consent Letters, as described in Sections 5.08(b) and (c),
respectively. The representations and warranties made in each of the Credit
Documents with respect to such surveys, Bank Deposit Account Consent Letters and
Concentration Account Consent Letters and any defaults arising therefrom, shall
be waived for such 60-day period.
-116-
<PAGE>
13.17 NO ORAL AGREEMENT. The Borrower and the Agent, on behalf of
the Banks, confirm that no unwritten oral agreements exist between or among the
Borrower, the Banks and/or the Agent.
(Initial) ________________ ________________
Borrower Agent
* * *
-117-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
ADDRESS: VERNITRON CORPORATION
645 Madison Avenue
New York, New York 10022
Attention: Stephen Bershad
Tel: (212) 593-7900 By
Fax: (212) 754-6348 ---------------------------
Title:
787 Seventh Avenue BANQUE PARIBAS,
New York, New York 10019 Individually and as Agent
Attention: Donald Ercole
Telephone: (212) 841-2540
Facsimile: (212) 841-2363 By
---------------------------
Title:
By
---------------------------
Title:
c/o Dean Witter Intercapital, Inc. PRIME INCOME TRUST
2 World Trade Center
New York, New York 10048
Attention: Raphael Scolari
Telephone: (212) 392-5686 By
Facsimile: (212) 392-5345 ----------------------------
Title:
2850 West Golf Road FIRST SOURCE FINANCIAL LLP,
Fifth Floor By First Source Financial, Inc.,
Rolling Meadows, Illinois 60008 its Agent/Manager
Attention: Tom Thompson
Telephone: (847) 734-2036
Facsimile: (847) 734-7910 By
----------------------------
Title:
-118-
<PAGE>
One State Street IBJ SCHRODER BANK & TRUST
New York, New York 10004 COMPANY
Attention: Allan Pagnotta
Telephone: (212) 858-2269
Facsimile: (212) 858-2768 By
----------------------------
Title:
153 West 51st Street THE FIRST NATIONAL BANK OF
New York, New York 10019 CHICAGO
Attention: Stephen McDonald
Telephone: (212) 373-1480
Facsimile: (212) 373-1180 By
----------------------------
Title:
with a copy to:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Joseph Tully
Telephone: (313) 225-3707
Facsimile: (313) 225-4642
-119-
<PAGE>
SCHEDULE I
COMMITMENTS
A Term Loan B Term Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- ----------- ----------- --------------
Banque Paribas $ 4,700,000 $ 0 $ 3,300,000
Prime Income Trust 0 4,000,000 0
First Source 3,500,000 3,000,000 2,500,000
Financial LLP
IBJ Schroder Bank & 2,900,000 2,500,000 2,100,000
Trust Company
The First National 2,900,000 2,500,000 2,100,000
Bank of Chicago
----------- ----------- -----------
Totals: $14,000,000 $12,000,000 $10,000,000
<PAGE>
EXHIBIT 10.2
SECURITY AGREEMENT
among
VERNITRON CORPORATION,
VARIOUS SUBSIDIARIES
and
BANQUE PARIBAS,
as Collateral Agent
Dated as of April 25, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
SECURITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1. Grant of Security Interests . . . . . . . . . . . . . . . . . . . 3
1.2. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS. . . . . . . . . . . . . . 4
2.1. Necessary Filings . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2. No Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3. Other Financing Statements. . . . . . . . . . . . . . . . . . . . 5
2.4. Chief Executive Office; Records . . . . . . . . . . . . . . . . . 5
2.5. Location of Inventory and Equipment . . . . . . . . . . . . . . . 6
2.6. Trade Names; Change of Name . . . . . . . . . . . . . . . . . . . 6
2.7. Recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS; BANK
DEPOSIT ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1. Additional Representations and Warranties . . . . . . . . . . . . 7
3.2. Maintenance of Records. . . . . . . . . . . . . . . . . . . . . . 7
3.3. Direction to Account Debtors; Contracting Parties; etc. . . . . . 8
3.4. Modification of Terms; etc. . . . . . . . . . . . . . . . . . . . 8
3.5. Collection. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6. Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7. Bank Deposit Accounts . . . . . . . . . . . . . . . . . . . . . . 9
3.8. Concentration Accounts. . . . . . . . . . . . . . . . . . . . . . 10
3.9. Government Contracts. . . . . . . . . . . . . . . . . . . . . . . 12
3.10. Assignment of Claims Act Notices . . . . . . . . . . . . . . . . 12
3.11. Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . 13
(i)
<PAGE>
Page
----
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS . . . . . . . . . . . . . . . . . . 13
4.1. Additional Representations and Warranties . . . . . . . . . . . . 13
4.2. Licenses and Assignments. . . . . . . . . . . . . . . . . . . . . 14
4.3. Infringements . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4. Preservation of Marks . . . . . . . . . . . . . . . . . . . . . . 14
4.5. Maintenance of Registration . . . . . . . . . . . . . . . . . . . 14
4.6. Future Registered Marks . . . . . . . . . . . . . . . . . . . . . 15
4.7. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V
SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS. . . . . 15
5.1. Additional Representations and Warranties . . . . . . . . . . . . 15
5.2. Licenses and Assignments. . . . . . . . . . . . . . . . . . . . . 16
5.3. Infringements . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4. Maintenance of Patents and Copyrights . . . . . . . . . . . . . . 16
5.5. Prosecution of Patent Application . . . . . . . . . . . . . . . . 16
5.6. Other Patents and Copyrights. . . . . . . . . . . . . . . . . . . 17
5.7. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL . . . . . . . . . . . . . . . . . . . . 17
6.1. Protection of Collateral Agent's Security . . . . . . . . . . . . 17
6.2. Warehouse Receipts Non-negotiable . . . . . . . . . . . . . . . . 18
6.3. Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4. Financing Statements. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT . . . . . . . . . . . . . . . . 19
7.1. Remedies; Obtaining the Collateral Upon Default . . . . . . . . . 19
7.2. Remedies; Disposition of the Collateral . . . . . . . . . . . . . 20
7.3. Waiver of Claims. . . . . . . . . . . . . . . . . . . . . . . . . 21
7.4. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . 22
7.5. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . 25
7.6. Discontinuance of Proceedings . . . . . . . . . . . . . . . . . . 25
(ii)
<PAGE>
Page
----
ARTICLE VIII
INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.1. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.2. Indemnity Obligations Secured by Collateral; Survival . . . . . . 27
ARTICLE IX
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.2. Waiver; Amendment. . . . . . . . . . . . . . . . . . . . . . . . 34
10.3. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . 34
10.4. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 34
10.5. Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . 35
10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.8. Assignor's Duties. . . . . . . . . . . . . . . . . . . . . . . . 35
10.9. Termination; Release . . . . . . . . . . . . . . . . . . . . . . 35
10.10. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.11. The Collateral Agent. . . . . . . . . . . . . . . . . . . . . . 36
ANNEX A Schedule of Chief Executive
Offices/Record Locations
ANNEX B Schedule of Receivables and
Contract Rights Locations
ANNEX C Schedule of Inventory and Equipment Locations
ANNEX D Schedule of Trade and Fictitious Names
ANNEX E Schedule of Government Contracts
ANNEX F Schedule of Marks
ANNEX G Schedule of Patents and Applications
ANNEX H Schedule of Copyrights and Applications
ANNEX I Grant of Security Interest in and Mortgage of
United States Trademarks and Patents
ANNEX J Grant of Security Interest and Mortgage in
United States Copyrights
(iii)
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 25, 1996 (as amended, modified
or supplemented from time to time, the "Agreement"), among each of the
undersigned (each an "Assignor" and collectively, the "Assignors") and BANQUE
PARIBAS, as Collateral Agent (the "Collateral Agent"), for the benefit of (x)
the Banks (as defined below) and the Agent (as defined below) under, and any
other lender from time to time party to the Credit Agreement hereinafter
referred to (such Banks, the Agent and the other lenders, if any, are
hereinafter called the "Bank Creditors") and (y) if Banque Paribas in its
individual capacity, any Bank or a syndicate of financial institutions organized
by Banque Paribas or any such Bank or an affiliate of Banque Paribas or such
Bank enter into one or more (i) interest rate protection agreements (including,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect against the fluctuations
in currency values and/or (iii) other types of hedging agreements from time to
time (collectively, the "Interest Rate Protection or Other Hedging Agreements"),
with, or guaranteed by, the Borrower (as defined below) or any of its
Subsidiaries, Banque Paribas, any such Bank or an affiliate of Banque Paribas or
such Bank (even if Banque Paribas or any such Bank ceases to be a Bank under the
Credit Agreement for any reason) and any such institution that participates in
such Interest Rate Protection or Other Hedging Agreements and their subsequent
assigns (collectively, the "Other Creditors" and, together with the Bank
Creditors, are herein called the "Secured Creditors"). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement shall be
used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Vernitron Corporation (the "Borrower"), the financial
institutions from time to time party thereto (the "Banks") and Banque Paribas,
as Agent (the "Agent"), have entered into a Credit Agreement, dated as of
April 25, 1996, providing for the making of Loans and the issuance of, and
participation in, Letters of Credit as contemplated therein (as the used herein,
the term "Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced,
restated, supplemented, restructured or refinanced from time to time, and
including any agreement extending the maturity of, refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers thereunder
that are Subsidiaries of the Borrower and whose obligations are guaranteed by
the Borrower thereunder or any increase in the amount borrowed) all or any
portion of, the Indebtedness under such agreement or any successor agreements;
PROVIDED, that with respect to any agreement
<PAGE>
providing for the refinancing of Indebtedness under the Credit Agreement, such
agreement shall only be treated as, or as part of, the Credit Agreement
hereunder if (i) either (A) all obligations under the Credit Agreement being
refinanced shall be paid in full at the time of such refinancing, and all
commitments and letters of credit issued pursuant to the refinanced Credit
Agreement shall have terminated in accordance with their terms or (B) the
Required Banks shall have consented in writing to the refinancing Indebtedness
being treated, along with their Indebtedness, as Indebtedness pursuant to the
Credit Agreement, (ii) the refinancing Indebtedness shall be permitted to be
incurred under the Credit Agreement being refinanced (if such Credit Agreement
is to remain outstanding) and (iii) a notice to the effect that the refinancing
Indebtedness shall be treated as issued under the Credit Agreement shall be
delivered by the Borrower to the Collateral Agent;
WHEREAS, pursuant to the Subsidiaries Guaranty (as amended, modified
or supplemented from time to time, the "Subsidiaries Guaranty"), Subsidiaries of
the Borrower may from time to time jointly and severally guarantee to the
Secured Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and each Interest Rate
Protection Agreement or Other Hedging Agreement with one or more Other
Creditors;
WHEREAS, the Borrower desires to incur Loans and to have Letters of
Credit issued for its account pursuant to the Credit Agreement;
WHEREAS, the Borrower may at any time and from time to time enter into
one or more Interest Rate Protection or Other Hedging Agreements with one or
more Other Creditors;
WHEREAS, it is a condition precedent to the above-described extensions
of credit that each of the Assignors shall have executed and delivered this
Agreement to the Collateral Agent;
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
-2-
<PAGE>
ARTICLE I
SECURITY INTERESTS
1.1. GRANT OF SECURITY INTERESTS. (a) As security for the prompt
and complete payment and performance when due of all of the Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby grant to the Collateral Agent for the benefit of the Secured Creditors, a
continuing security interest of first priority (subject only to Permitted Liens)
in all of the right, title and interest of such Assignor in, to and under all of
the following, whether now existing or hereafter from time to time acquired:
(i) each and every Receivable, (ii) all Contracts, together with all Contract
Rights arising thereunder, (iii) all Inventory, (iv) the Cash Collateral Account
and any other cash collateral account established for any Assignor in accordance
with the provisions of this Agreement and all moneys, securities and instruments
deposited or required to be deposited in such Cash Collateral Account and any
such other cash collateral account, (v) all Equipment, (vi) all Marks, together
with the registrations and right to all renewals thereof, and the goodwill of
the business of such Assignor symbolized by the Marks, (vii) all Patents and
Copyrights, (viii) all computer programs of such Assignor and all intellectual
property rights therein and all other proprietary information of such Assignor,
including, but not limited to, trade secrets, (ix) (1) each Bank Deposit Account
and each Concentration Account, (2) all moneys, checks, drafts, securities and
instruments deposited or required to be deposited in each Bank Deposit Account
and each Concentration Account, (3) all investments and all certificates and
instruments, if any, from time to time representing or evidencing such
investments and (4) all interest, dividends, cash, investments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing items listed under
subclauses (1) through (3), (x) (1) each Bank Deposit Account Consent Letter and
each other agreement from time to time entered into by any Assignor with any
Deposit Bank and all rights of such Assignor under each such Bank Deposit
Account Consent Letter and (2) each Concentration Account Consent Letter and
each other agreement from time to time entered into by any Assignor with the
Concentration Account Bank with respect to the Concentration Account and all
rights of such Assignor under the Concentration Account Consent Letter, (xi) all
other Goods, General Intangibles, Chattel Paper, Documents and Instruments
(other than the Pledged Securities), (xii) all insurance policies and (xiii) all
Proceeds and products of any and all of the foregoing (all of the above,
collectively, the "Collateral"), PROVIDED, HOWEVER that if any Contract
prohibits, or requires the consent for (in accordance with the terms thereof
after giving effect to any applicable laws), the granting of a security interest
therein, or in the event the granting of a security interest in any Contract
shall violate applicable law, then the security interest granted hereby shall be
limited to the extent (and only to the extent) necessary so that such Contract
may not be so violated or no such violation of law shall exist, as the case may
be.
-3-
<PAGE>
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. POWER OF ATTORNEY. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all moneys and claims for
moneys due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable to protect the
interests of the Secured Creditors, which appointment as attorney is coupled
with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. NECESSARY FILINGS. All filings, registrations and recordings
necessary to create, preserve, protect and perfect the security interest granted
by such Assignor to the Collateral Agent hereby in respect of the Collateral
have been accomplished and the security interest granted to the Collateral Agent
pursuant to this Agreement in and to the Collateral constitutes a perfected
security interest therein, to the extent permitted by law, prior to the rights
of all other Persons therein (other than holders of Permitted Liens) and subject
to no other Liens (other than Permitted Liens) and is entitled to all the
rights, priorities and benefits afforded by the Uniform Commercial Code or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests.
2.2. NO LIENS. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of or
holder of leasehold interest in all Collateral free from any Lien, security
interest, encumbrance or other right, title or interest of any Person (other
than Permitted Liens), and such Assignor shall defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to the Collateral Agent if such claims or demands would have a
material adverse effect on the performance, business, assets, nature of assets,
-4-
<PAGE>
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
2.3. OTHER FINANCING STATEMENTS. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than Permitted Liens and the security interests
granted hereby), and so long as the Total Commitment has not been terminated or
any Letter of Credit or Note remains outstanding or any of the Obligations
remain unpaid or any Interest Rate Protection or Other Hedging Agreement remains
in effect or any Obligations are owed with respect thereto, such Assignor will
not execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by such Assignor or as permitted by the Credit
Agreement.
2.4. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive office of
each Assignor is located at the address or addresses indicated on Annex A
hereto. No Assignor will move its chief executive office except to such new
location as such Assignor may establish in accordance with the last sentence of
this Section 2.4. The originals of all documents evidencing all Receivables and
Contract Rights of each Assignor and the only original books of account and
records of such Assignor relating thereto are, and will continue to be, kept at
such chief executive office or at such other locations as are set forth on Annex
B hereto or at such other locations as such Assignor may establish in accordance
with the last sentence of this Section 2.4. All Receivables and Contract Rights
of each Assignor are, and will continue to be, maintained at, and controlled and
directed (including, without limitation, for general accounting purposes) from,
the office locations described above or such new location established in
accordance with the last sentence of this Section 2.4. No Assignor shall
establish new locations for such offices until (i) it shall have given to the
Collateral Agent not less than 30 days' prior written notice of its intention to
do so, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may reasonably request,
(ii) with respect to such new location, it shall have taken all action,
satisfactory to the Collateral Agent, to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby at all times
fully perfected and in full force and effect, (iii) at the request of the
Collateral Agent, it shall have furnished an opinion of counsel reasonably
acceptable to the Collateral Agent to the effect that all financing or
continuation statements and amendments or supplements thereto have been filed in
the appropriate filing office or offices, and (iv) the Collateral Agent shall
have received evidence that all other actions (including, without limitation,
the payment of all filing fees and taxes, if any, payable in connection with
such
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<PAGE>
filings) have been taken, in order to perfect (and maintain the perfection and
priority of) the security interest granted hereby.
2.5. LOCATION OF INVENTORY AND EQUIPMENT. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex C hereto. Each Assignor agrees that all Inventory and
Equipment now held or subsequently acquired by it shall be kept at (or shall be
in transport to) any one of the locations shown on Annex C hereto or such new
location as such Assignor may establish in accordance with the last sentence of
this Section 2.5. Any Assignor may establish a new location for Inventory and
Equipment only if (i) it shall have given to the Collateral Agent not less than
30 days prior written notice of its intention so to do, clearly describing such
new location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, (ii) with respect to such new location,
it shall have taken all action satisfactory to the Collateral Agent to maintain
the security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect, (iii)
at the request of the Collateral Agent, it shall have furnished an opinion of
counsel reasonably acceptable to the Collateral Agent to the effect that all
financing or continuation statements and amendments or supplements thereto have
been filed in the appropriate filing office or offices, and (iv) the Collateral
Agent shall have received evidence that all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and maintain
the perfection and priority of) the security interest granted hereby.
2.6. TRADE NAMES; CHANGE OF NAME. No Assignor has or operates in any
jurisdiction under, or previously has had or has operated in any jurisdiction
within the one year period preceding the date of this Agreement under, any trade
names, fictitious names or other names except its legal name and such other
trade or fictitious names as are listed on Annex D hereto. No Assignor shall
change its legal name or assume or operate in any jurisdiction under any trade,
fictitious or other name except its legal name, names listed on Annex D and new
names established in accordance with the last sentence of this Section 2.6. No
Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Collateral Agent
not less than 30 days' prior written notice of its intention so to do, clearly
describing such new name and the jurisdictions in which such new name shall be
used and providing such other information in connection therewith as the
Collateral Agent may reasonably request, (ii) with respect to such new name, it
shall have taken all necessary action reasonably requested by the Collateral
Agent, to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect, (iii) at the request of the Collateral Agent, it shall
have furnished an opinion of counsel reasonably acceptable to the Collateral
Agent to the effect that all financing or
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continuation statements and amendments or supplements thereto have been filed in
the appropriate filing office or offices, and (iv) the Collateral Agent shall
have received evidence that all other actions (including, without limitation,
the payment of all filing fees and taxes, if any, payable in connection with
such filings) have been taken, in order to perfect (and maintain the perfection
and priority of) the security interest granted hereby.
2.7. RECOURSE. This Agreement is made with full recourse to the
Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of such Assignor contained herein, in the other
Credit Documents, in the Interest Rate Protection or Other Hedging Agreements
and otherwise in writing in connection herewith or therewith.
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; BANK DEPOSIT ACCOUNTS
3.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. As of the time when
each of its Receivables arises, the relevant Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto are genuine and in all respects what they purport to
be, and that all papers and documents relating thereto (i) will represent the
genuine, legal, valid and binding obligation of the account debtor evidencing
indebtedness unpaid and owed by the respective account debtor arising out of the
performance of labor or services or the sale or lease and delivery of the
inventory, materials, equipment or merchandise listed therein, or both,
(ii) will be the only original writings evidencing and embodying such obligation
of the account debtor named therein (other than copies created for general
accounting purposes), (iii) will evidence true and valid obligations,
enforceable in accordance with their respective terms, except to the extent that
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by equity principles (regardless of whether enforcement is sought in equity or
at law), and (iv) will be in compliance and will conform in all material
respects with all applicable federal, state and local laws and applicable laws
of any relevant foreign jurisdiction.
3.2. MAINTENANCE OF RECORDS. Each Assignor will keep and maintain at
its own cost and expense satisfactory and complete records of its Receivables
and Contracts, including, but not limited to, originals or copies of all
documentation (including each Contract) with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and all
other dealings therewith, and such Assignor will make the same available on such
Assignor's premises to the Collateral Agent for inspection, at such
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Assignor's own cost and expense, and at any and all reasonable times and
intervals. Upon the occurrence and during the continuance of an Event of
Default and at the request of the Collateral Agent, such Assignor shall, at its
own cost and expense, deliver all tangible evidence of its Receivables and
Contract Rights (including, without limitation, all documents evidencing the
Receivables and all Contracts) and such books and records to the Collateral
Agent or to its representatives (copies of which evidence and books and records
may be retained by such Assignor). Upon the occurrence and during the
continuance of an Event of Default, if the Collateral Agent so directs, such
Assignor shall legend, in form and manner satisfactory to the Collateral Agent,
the Receivables and the Contracts, as well as books, records and documents of
such Assignor evidencing or pertaining to such Receivables and Contracts with an
appropriate reference to the fact that such Receivables and Contracts have been
assigned to the Collateral Agent and that the Collateral Agent has a security
interest therein.
3.3. DIRECTION TO ACCOUNT DEBTORS; CONTRACTING PARTIES; ETC. Upon
the occurrence and during the continuance of an Event of Default, and if the
Collateral Agent so directs any Assignor, to the extent permitted by applicable
law, such Assignor agrees (x) to cause all payments on account of the
Receivables and Contracts to be made directly to the Cash Collateral Account,
(y) that the Collateral Agent may, at its option, directly notify the obligors
with respect to any Receivables and/or under any Contracts to make payments with
respect thereto as provided in preceding clause (x), and (z) that the Collateral
Agent may enforce collection of any such Receivables and Contracts and may
adjust, settle or compromise the amount of payment thereof, in the same manner
and to the same extent as such Assignor. Upon the occurrence and during the
continuance of an Event of Default, and without notice to or assent by any
Assignor, the Collateral Agent may apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account which application shall be
effected in the manner provided in Section 7.4 of this Agreement. The costs and
expenses (including attorneys' fees) of collection, whether incurred by an
Assignor or the Collateral Agent, shall be borne by the Assignors.
3.4. MODIFICATION OF TERMS; ETC. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or under any Contract, or modify
any term thereof or make any adjustment with respect thereto, or extend or renew
the same, or compromise or settle any material dispute, claim, suit or legal
proceeding relating thereto, or sell any Receivable or Contract, or interest
therein, without the prior written consent of the Collateral Agent, except as
permitted by Section 3.5. Each Assignor will duly fulfill all obligations on
its part to be fulfilled under or in connection with the Receivables and
Contracts and will do nothing to impair the rights of the Collateral Agent in
the Receivables or Contracts, except as permitted by Section 3.5.
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3.5. COLLECTION. Each Assignor shall use its best efforts to cause
to be collected from the account debtor named in each of its Receivables or
obligor under any of its Contracts, as and when due (including, without
limitation, amounts, services or products which are delinquent, such amounts,
services or products to be collected in accordance with generally accepted
lawful collection procedures) any and all amounts, services or products owing
under or on account of such Receivable or Contract, and apply forthwith upon
receipt thereof all such amounts, services or products as are so collected to
the outstanding balance of such Receivable or under such Contract, except that,
prior to the occurrence and continuance of an Event of Default, any Assignor may
allow in the ordinary course of business as adjustments to amounts, services or
products owing under its Receivables and Contracts (i) an extension or renewal
of the time or times of payment or exchange, or settlement for less than the
total unpaid balance, which such Assignor finds appropriate in accordance with
reasonable business judgment and (ii) a refund or credit due as a result of
returned or damaged merchandise or improperly performed services. The costs and
expenses (including, without limitation, attorneys' fees) of collection, whether
incurred by an Assignor or the Collateral Agent, shall be borne by the
Assignors.
3.6. INSTRUMENTS. If any Assignor owns or acquires any Instrument
constituting Collateral, such Assignor will within 10 Business Days notify the
Collateral Agent thereof, and upon request by the Collateral Agent will promptly
deliver such Instrument to the Collateral Agent appropriately endorsed to the
order of the Collateral Agent as further security hereunder.
3.7. BANK DEPOSIT ACCOUNTS. (a) On or before the Initial Borrowing
Date, the Assignors have established the Bank Deposit Accounts with one or more
Deposit Banks as referenced in Section 7.26 of the Credit Agreement. On or
before the Initial Borrowing Date, each Assignor hereby agrees that it shall
notify each such Deposit Bank that any Bank Deposit Account maintained with such
Deposit Bank by such Assignor is under the exclusive dominion and control of the
Collateral Agent and that all moneys, instruments and other securities deposited
in such Bank Deposit Account are to be held by such Deposit Bank for the benefit
of the Collateral Agent. Furthermore, on or before the Initial Borrowing Date,
each Assignor shall cause each Deposit Bank to execute and deliver to the
Collateral Agent a Bank Deposit Account Consent Letter substantially in the form
of Exhibit G-2 to the Credit Agreement acknowledging the security interest and
exclusive dominion and control of the Collateral Agent in all moneys,
instruments and other securities deposited in the Bank Deposit Account
established with such Deposit Bank by such Assignor. Each Assignor hereby
represents and warrants that it does not now maintain, and will not in the
future maintain, any other account with any Deposit Bank or any other banking or
financial institution; PROVIDED, HOWEVER, that any Assignor may establish and
maintain additional Bank Deposit Accounts with any such Deposit Bank or any new
Deposit Bank if (x) in the case of an existing Deposit Bank, such Assignor, the
Deposit Bank and
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the Collateral Agent shall have entered into an amendment to the relevant Bank
Deposit Account Consent Letter to include such new Bank Deposit Account under
such Bank Deposit Account Consent Letter, such amendment to be in form and
substance reasonably satisfactory to the Collateral Agent, and (y) in the case
of a new Deposit Bank (i) the Assignor shall have given the Collateral Agent 30
days' prior written notice of its intention to establish a new Bank Deposit
Account with a new Deposit Bank, (ii) such new Deposit Bank shall be reasonably
acceptable to the Collateral Agent, and (iii) such new Deposit Bank shall enter
into a Bank Deposit Account Consent Letter.
(b) Each Assignor hereby transfers to the Collateral Agent the
exclusive dominion and control over the Bank Deposit Accounts of such Assignor.
Each Assignor shall, within one Business Day of actual receipt thereof, deposit
any payment received in respect of any Receivables, Contracts or any other asset
listed in Section 1.1 into a Bank Deposit Account.
(c) Until an Event of Default shall have occurred and be continuing,
each Assignor is hereby authorized by the Collateral Agent to direct the
disposition of any and all moneys, instruments and other securities deposited in
the Bank Deposit Accounts for use by the Assignor in a manner permitted by the
Credit Agreement.
(d) Upon the occurrence and during the continuance of an Event of
Default, the authorization of the Assignor under Section 3.7(c) shall be revoked
and all deposits contained in the Bank Deposit Accounts, and any additional
moneys, instruments and other securities subsequently deposited in any Bank
Deposit Account shall be transferred to the Cash Collateral Account, to be held
by the Collateral Agent as Collateral for the Obligations or applied to the
Obligations in accordance with this Agreement (all such deposits in any such
Cash Collateral Account shall constitute "Collateral" for all purposes of this
Agreement). Upon the occurrence and during the continuance of an Event of
Default, without notice to or assent by any Assignor, the Collateral Agent may
apply any or all amounts then in, or thereafter deposited in, the Cash
Collateral Account in the manner provided in Section 7.4 of this Agreement. The
costs and expenses (including attorney's fees) of collection, whether incurred
by an Assignor or the Collateral Agent, shall be borne by the Assignors.
3.8. CONCENTRATION ACCOUNTS. (a) On or before the Initial Borrowing
Date, the Assignors have established the Concentration Account with the
Concentration Account Bank as referenced in Section 7.26 of the Credit
Agreement. On or before the Initial Borrowing Date, each Assignor hereby agrees
that it shall notify the Concentration Account Bank that the Concentration
Account maintained with such Concentration Account Bank by such Assignor is
under the exclusive dominion and control of the Collateral Agent and that all
moneys, instruments and other securities deposited in such Concentration Account
are
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to be held by such Concentration Account Bank for the benefit of the Collateral
Agent. Furthermore, on or before the Initial Borrowing Date, each Assignor
shall cause the Concentration Account Bank to execute and deliver to the
Collateral Agent a Concentration Account Consent Letter substantially in the
form of Exhibit G-3 to the Credit Agreement acknowledging the security interest
and exclusive dominion and control of the Collateral Agent in all moneys,
instruments and other securities deposited in the Concentration Account
established with such Concentration Account Bank by such Assignor. Each
Assignor hereby represents and warrants that it does not now maintain, and will
not in the future maintain, any other account with the Concentration Account
Bank other than the applicable Concentration Account; PROVIDED, HOWEVER, that
any Assignor may establish and maintain additional Concentration Accounts with
any such Concentration Account Bank or any new Concentration Account Bank if (x)
in the case of the existing Concentration Account Bank, such Assignor, the
Concentration Account Bank and the Collateral Agent shall have entered into an
amendment to the relevant Concentration Account Consent Letter to include such
new Concentration Account under such Concentration Account Consent Letter, such
amendment to be in form and substance reasonably satisfactory to the Collateral
Agent, and (y) in the case of a new Concentration Account Bank (i) the Assignor
shall have given the Collateral Agent 30 days' prior written notice of its
intention to establish a new Concentration Account with a new Concentration
Account Bank, (ii) such new Concentration Account Bank shall be reasonably
acceptable to the Collateral Agent, and (iii) such new Concentration Account
Bank shall enter into a Concentration Account Consent Letter.
(b) Each Assignor hereby transfers to the Collateral Agent the
exclusive dominion and control over the Concentration Account of such Assignor.
(c) Until an Event of Default shall have occurred and be continuing,
each Assignor is hereby authorized by the Collateral Agent to direct the
disposition of any and all moneys, instruments and other securities deposited in
the Concentration Account for use by the Assignor in a manner permitted by the
Credit Agreement.
(d) Upon the occurrence and during the continuance of an Event of
Default, the authorization of the Assignor under Section 3.8(c) shall be revoked
and all deposits contained in the Concentration Account, and any additional
moneys, instruments and other securities subsequently deposited in any
Concentration Account shall be transferred to the Cash Collateral Account, to be
held by the Collateral Agent as Collateral for the Obligations or applied to the
Obligations in accordance with this Agreement (all such deposits in any such
Cash Collateral Account shall constitute "Collateral" for all purposes of this
Agreement). Upon the occurrence and during the continuance of an Event of
Default, without notice to or assent by any Assignor, the Collateral Agent may
apply any or all amounts then in, or thereafter deposited in, the Cash
Collateral Account in the
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manner provided in Section 7.4 of this Agreement. The costs and expenses
(including attorney's fees) of collection, whether incurred by an Assignor or
the Collateral Agent, shall be borne by the Assignors.
3.9. GOVERNMENT CONTRACTS. (a) Each Assignor represents and
warrants that (i) the Government Contracts listed in Annex E constitute all
Government Contracts with respect to which such Assignor reasonably expects to
receive payments or other consideration with a value in excess of $250,000 to
which such Assignor is a party on the date hereof, and (ii) set forth in Annex
E, with respect to each Government Contract referred to in clause (i) above, is
(a) the true and correct GC Notice Recipient and (b) the anticipated annual
gross revenue under such Government Contract.
(b) Each Assignor hereby covenants and agrees that as promptly as
practicable and in any event within 60 days following its entering into of any
Government Contract (other than a Restricted Government Contract) with respect
to which such Assignor reasonably expects to receive payments or other
consideration with a value in excess of $250,000 after the date hereof, such
Assignor shall notify the Collateral Agent thereof, which notice shall set forth
(i) each GC Notice Recipient with respect to such Government Contract and (ii)
the anticipated gross revenue under such Government Contract.
(c) Each Assignor agrees that promptly upon obtaining knowledge that
any of the information provided pursuant to Section 3.9(a) or (b) has changed,
it shall give written notice of such change to the Collateral Agent.
(d) Each Assignor hereby covenants and agrees that it will not enter
into any Restricted Government Contract unless such Assignor (i) determines in
good faith that it must agree to a prohibition on the assignment of Receivables
arising under such Government Contract in order to obtain such Government
Contract and (ii) gives the Collateral Agent at least 10 Business Days' prior
written notice of its intention to enter into such Restricted Government
Contract.
3.10. ASSIGNMENT OF CLAIMS ACT NOTICES. (a) Upon the occurrence and
during the continuance of an Event of Default, and if the Collateral Agent so
directs any Assignor, such Assignor shall prepare and deliver to the Collateral
Agent, with respect to each Government Contract to which such Assignor is a
party on the date of such request, (i) a written notice of the assignment
contained herein, each of which notices shall be in form and substance
satisfactory to the Collateral Agent (each such notice, an "Assignment of Claims
Act Notice") and (ii) an executed, attested and sealed (but undated) instrument
of assignment, each of which instruments shall be in form and substance
satisfactory to the Collateral Agent (each such instrument, an "Instrument of
Assignment"). Upon the occur-
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rence and during the continuance of an Event of Default, each Assignor shall,
upon five Business Days' notice from the Collateral Agent, file on behalf of the
Collateral Agent an Assignment of Claims Act Notice (by certified mail, return
receipt requested, or in such other manner acceptable to the Collateral Agent),
together with three copies thereof and a true copy of the corresponding
Instrument of Assignment, with each GC Notice Recipient with respect to each
Government Contract of such Assignor as shall be designated from time to time by
the Collateral Agent. Each Assignor hereby further agrees that the Collateral
Agent may, upon the occurrence and during the continuance of an Event of
Default, directly file the notices and instruments of assignment described in
this Section 3.10.
(b) Each Assignor acknowledges and agrees that each Instrument of
Assignment is supplemental to, and not in substitution for, the terms and
provisions of this Agreement.
3.11. FURTHER ACTIONS. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent, or
the GC Notice Recipients with respect to any Government Contract, from time to
time such vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further steps relating
to its Receivables, Contracts, Instruments and other property or rights covered
by the security interest hereby granted, as the Collateral Agent may reasonably
require to implement the provisions of this Agreement.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. Each Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use the Marks listed in Annex F hereto and that said listed Marks
constitute all the Marks that such Assignor presently owns or uses in connection
with its business. Except as set forth on Annex F, each Assignor represents and
warrants that it owns, is licensed to use or otherwise has the right to use all
Marks that it uses. Other than as set forth on Annex F, each Assignor further
warrants that it has no knowledge as of the date hereof, of any third party
claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any rights of any third party in any
trademark, service mark or trade name. Each Assignor represents and warrants
that it is the beneficial and record owner of all U.S. and foreign trademark
registrations and applications listed in Annex F hereto and that said
registrations are valid, subsisting and have not been cancelled and that,
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such Assignor is not aware of any third-party claim that any of said
registrations is invalid or unenforceable, or that there is any reason that any
of said applications will not pass to registration. Each Assignor hereby grants
to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of an Event of Default, any document which
may be required by the U.S. Patent and Trademark Office or secretary of state or
equivalent governmental agency of any State of the United States or in any
foreign jurisdiction in order to effect an absolute assignment of all right,
title and interest in each Mark and the goodwill of such Assignor's business
symbolized by said Marks to the Collateral Agent, and record the same.
4.2. LICENSES AND ASSIGNMENTS. Each Assignor hereby agrees not to
divest itself of any right under any Mark absent prior written approval of the
Collateral Agent.
4.3. INFRINGEMENTS. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to
(i) any party who such Assignor believes is infringing or diluting or otherwise
violating in any material respect any of such Assignor's rights in and to any
Mark, or (ii) any party claiming that such Assignor's use of any Mark violates
in any material respect any property right of that party. Each Assignor further
agrees, unless otherwise agreed by the Collateral Agent, to diligently prosecute
any Person materially infringing or diluting or otherwise violating any of such
Assignor's rights in and to any Mark.
4.4. PRESERVATION OF MARKS. Each Assignor agrees to use its Marks in
interstate or foreign commerce during the time in which this Agreement is in
effect, sufficiently to preserve such Marks as valid and subsisting trademarks
or service marks under the laws of the United States or the relevant foreign
jurisdictions, except if the failure to preserve the Mark in question could not
reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
4.5. MAINTENANCE OF REGISTRATION. Each Assignor shall, at its own
expense, diligently process all documents required by the Trademark Act of 1946,
as amended, 15 U.S.C. Sections 1051 ET SEQ. and any foreign equivalent thereof
to maintain trademark registrations, including but not limited to affidavits of
continued use and applications for renewals of registration in the United States
Patent and Trademark Office or equivalent governmental agency in any foreign
jurisdiction for all of its registered Marks pursuant to 15 U.S.C. Sections
1058, 1059 and 1065 and any foreign equivalent thereof, and shall pay all fees
and disbursements in connection therewith and shall not abandon any such filing
of
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affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
Collateral Agent.
4.6. FUTURE REGISTERED MARKS. If any registration for any Mark
issues hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office or any equivalent
governmental agency in any foreign jurisdiction, within 30 days of receipt of
such certificate, such Assignor shall deliver to the Collateral Agent a copy of
such certificate and grant a security interest in such Mark to the Collateral
Agent and at the expense of such Assignor, the form of such grant of security
interest to be reasonably substantially in the form attached hereto as Annex I
hereto or in such other form as may be satisfactory to the Collateral Agent.
4.7. REMEDIES. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same and the goodwill of such
Assignor's business symbolized by said Marks and the right to recover for past
infringements thereof, vested in the Collateral Agent for the benefit of the
Secured Creditors, in which event such rights, title and interest shall
immediately vest in the Collateral Agent for the benefit of the Secured
Creditors, and the Collateral Agent shall be entitled to exercise the power of
attorney referred to in Section 4.1 to execute, cause to be acknowledged and
notarized and to record said absolute assignment with the applicable agency;
(ii) take and use or, subject to the provisions of Section 7.2, sell the Marks
and the goodwill of such Assignor's business symbolized by the Marks; and (iii)
direct such Assignor to refrain, in which event such Assignor shall refrain,
from using the Marks in any manner whatsoever, directly or indirectly, and, if
requested by the Collateral Agent, change such Assignor's corporate name to
eliminate therefrom any use of any Mark and execute such other and further
documents that the Collateral Agent may request to further confirm this and to
transfer ownership of the Marks and registrations and any pending trademark
applications therefor in the United States Patent and Trademark Office or any
equivalent governmental agency in any foreign jurisdiction to the Collateral
Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. Each Assignor
represents and warrants that it is the true and lawful owner of (i) all trade
secrets and proprietary information necessary to operate the business of such
Assignor (the "Trade Secret Rights"),
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(ii) the Patents listed in Annex G hereto and (iii) the Copyrights listed in
Annex H hereto, that said Patents constitute all the patents and applications
for patents that such Assignor now owns and that such Copyrights constitute all
registrations of copyrights and applications for copyright registrations that
such Assignor now owns. Each Assignor further represents and warrants that it
has the exclusive right to use and practice under all such Patents and
Copyrights that it owns, uses or practices under. Each Assignor further
warrants that it is aware of no claim that any aspect of such Assignor's present
or contemplated business operations infringes or will infringe any rights of any
third party in any patent or copyright or such Assignor has misappropriated any
trade secret or proprietary information. Each Assignor hereby grants to the
Collateral Agent an absolute power of attorney to sign, upon the occurrence and
during the continuance of any Event of Default, any document which may be
required by the U.S. Patent and Trademark Office or equivalent governmental
agency in any foreign jurisdiction or the U.S. Copyright Office or equivalent
governmental agency in any foreign jurisdiction in order to effect an absolute
assignment of all right, title and interest in each Patent and Copyright to the
Collateral Agent, and to record the same.
5.2. LICENSES AND ASSIGNMENTS. Each Assignor hereby agrees not to
divest itself of any right under any Patent or Copyright absent prior written
approval of the Collateral Agent.
5.3. INFRINGEMENTS. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to infringement,
contributing infringement or active inducement to infringe in any Patent or
Copyright or to any claim that the practice of any Patent or the use of any
Copyright violates any property right of a third party, or with respect to any
misappropriation of any Trade Secret Right or any claim that practice of any
Trade Secret Right violates any property right of a third party. Each Assignor
further agrees, unless otherwise agreed by the Collateral Agent, to diligently
prosecute any Person materially infringing any Patent or Copyright or any Person
materially misappropriating any Trade Secret Right.
5.4. MAINTENANCE OF PATENTS AND COPYRIGHTS. Each Assignor shall, at
its own expense, make timely payment of all post-issuance fees required pursuant
to 35 U.S.C. Section 41 and any foreign equivalent thereof to maintain in full
force rights under each Patent, and to apply as permitted pursuant to applicable
law for any renewal of each Copyright absent prior written consent of the
Collateral Agent.
5.5. PROSECUTION OF PATENT APPLICATION. Each Assignor shall, at its
own expense, diligently prosecute all applications for Patents listed in Annex G
hereto and shall
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not abandon any such application prior to exhaustion of all administrative and
judicial remedies, absent written consent of the Collateral Agent.
5.6. OTHER PATENTS AND COPYRIGHTS. Within 30 days of the acquisition
or issuance of a Patent or of a Copyright registration, or of filing of an
application for a Patent or Copyright registration, the relevant Assignor shall
notify the Collateral Agent of the acquisition or any new issuance of a Patent
or of a Copyright registration or of the filing of an application for a Patent
or Copyright registration and the relevant Assignor shall deliver to the
Collateral Agent a copy of said Copyright registration or Patent or certificate
or registration of, or application therefor, as the case may be, and grant a
security interest in such Patent or Copyright, as the case may be, to the
Collateral Agent and at the expense of such Assignor, the form of such grant of
security interest to be substantially in the form attached hereto as Annex J
hereto or in such other form as may be reasonably satisfactory to the Collateral
Agent.
5.7. REMEDIES. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignors take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell, subject
to Section 7.2, the Patents and Copyrights; and (iii) direct such Assignor to
refrain, in which event such Assignor shall refrain, from practicing the Patents
and using the Copyrights directly or indirectly, and such Assignor shall execute
such other and further documents as the Collateral Agent may request further to
confirm this and to transfer ownership of the Patents and Copyrights to the
Collateral Agent for the benefit of the Secured Creditors on the terms provided
herein.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. PROTECTION OF COLLATERAL AGENT'S SECURITY. Each Assignor will
do nothing to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep its Inventory and Equipment insured in favor of
the Collateral Agent, at such Assignor's own expense to the extent and in the
manner provided in the Credit Agreement; all policies or certificates with
respect to such insurance (and any other insurance (other than employee benefit
insurance and directors and officers liability insurance) maintained
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by such Assignor): (i) shall be endorsed to the Collateral Agent's satisfaction
for the benefit of the Collateral Agent (including, without limitation, by
naming the Collateral Agent as loss payee and naming each of the Banks, the
Agent and the Collateral Agent as additional insureds, as appropriate); and (ii)
shall state that such insurance policies shall not be cancelled or revised
without 30 days' prior written notice thereof by the insurer to the Collateral
Agent; and, at the request of the Collateral Agent, certified copies of such
policies shall be deposited with the Collateral Agent. If any Assignor shall
fail to insure its Inventory and Equipment in accordance with the preceding
sentence, or if any Assignor shall fail to so endorse and deposit all policies
with respect thereto, the Collateral Agent shall have the right (but shall be
under no obligation) to procure such insurance and such Assignor agrees to
promptly reimburse the Collateral Agent for all costs and expenses of procuring
such insurance. All proceeds of any insurance shall be deposited in the Cash
Collateral Account pending application thereof pursuant to the Credit Agreement
or pursuant hereto, subject to the right of the relevant Assignor to retain and
apply such proceeds to replace or restore any assets or properties in respect of
which such proceeds were paid, or otherwise apply such proceeds, as and to the
extent permitted by the Credit Agreement. The Collateral Agent shall, at any
time such proceeds of such insurance are distributed to the Secured Creditors,
apply such proceeds in accordance with Section 7.4 and the provisions of the
Credit Agreement, provided such proceeds may be distributed to the Secured
Creditors only to the extent permitted by this Agreement or the Credit
Agreement. Each Assignor assumes all liability and responsibility in connection
with the Collateral acquired by it and the liability of such Assignor to pay the
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Assignor.
6.2. WAREHOUSE RECEIPTS NON-NEGOTIABLE. Each Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law).
6.3. FURTHER ACTIONS. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
requests as appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
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6.4. FINANCING STATEMENTS. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form acceptable to
the Collateral Agent, as the Collateral Agent may from time to time request or
as are necessary or desirable in the opinion of the Collateral Agent to
establish and maintain a valid, enforceable, first priority perfected security
interest in the Collateral as provided herein and the other rights and security
contemplated hereby all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law. Each
Assignor will pay any applicable filing fees, recordation taxes and related
expenses relating to its Collateral. Each Assignor hereby authorizes the
Collateral Agent to file any such financing statements without the signature of
such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and
may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or any
other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the
terms of such agreement, instrument or other obligation directly to the
Collateral Agent and may exercise any and all remedies of such Assignor in
respect of such Collateral;
(iii) withdraw all moneys, instruments and other securities in any
Bank Deposit Account and/or the Cash Collateral Account and/or in any other
cash collateral account for application to the Obligations in accordance
with Section 7.4;
(iv) sell, assign or otherwise liquidate any or all of the Collateral
or any part thereof in accordance with Section 7.2, or direct the relevant
Assignor to sell,
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assign or otherwise liquidate any or all of the Collateral or any part
thereof, and, in each case, take possession of the proceeds of any such
sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral Agent,
in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places
so designated by the Collateral Agent and there delivered to the
Collateral Agent;
(y) store and keep any Collateral so delivered to the Collateral
Agent at such place or places pending further action by the Collateral
Agent as provided in Section 7.2; and
(z) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition; and
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for such
term and on such conditions and in such manner as the Collateral Agent
shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation.
7.2. REMEDIES; DISPOSITION OF THE COLLATERAL. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 and any
other Collateral whether or not so repossessed by the Collateral Agent, may be
sold, assigned, leased or otherwise disposed of under one or more contracts or
as an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private
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sale or other private proceedings permitted by such requirements shall be made
upon not less than 10 days' written notice to the relevant Assignor specifying
the time at which such disposition is to be made and the intended sale price or
other consideration therefor, and shall be subject, for the 10 days after the
giving of such notice, to the right of the relevant Assignor or any nominee of
such Assignor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified. Any such disposition which shall be a public sale permitted by
such requirements shall be made upon not less than 10 days' written notice to
the relevant Assignor specifying the time and place of such sale and, in the
absence of applicable requirements of law, shall be by public auction (which
may, at the Collateral Agent's option, be subject to reserve), after publication
of notice of such auction not less than 10 days prior thereto in two newspapers
in general circulation in the City of New York. To the extent permitted by any
such requirement of law, the Collateral Agent may bid for and become the
purchaser of the Collateral or any item thereof, offered for sale in accordance
with this Section without accountability to the relevant Assignor. If, under
mandatory requirements of applicable law, the Collateral Agent shall be required
to make disposition of the Collateral within a period of time which does not
permit the giving of notice to the relevant Assignor as hereinabove specified,
the Collateral Agent need give such Assignor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law. Each Assignor agrees to do or cause to be done all such other
acts and things as may be reasonably necessary to make such sale or sales of all
or any portion of the Collateral valid and binding and in compliance with any
and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at
such Assignor's expense.
7.3. WAIVER OF CLAIMS. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and, except as otherwise provided in this Agreement, the
Assignor hereby further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
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(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
7.4. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Collateral Agent (or, to the extent any Mortgage to which the Assignor is a
party requires proceeds of Collateral under such agreement to be applied in
accordance with the provisions of this Agreement, the Mortgagee under such other
agreement) upon any sale or other disposition of the Collateral, together with
all other moneys received by the Collateral Agent hereunder, shall be applied as
follows:
(i) first, to the payment of all Obligations owing the Collateral
Agent (or any other Indemnitee, in the case of clause (v) referenced below)
of the type provided in clauses (iii), (iv) and (v) of the definition of
Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations shall be paid to the Secured Creditors as provided in
Section 7.4(f), with each Secured Creditor receiving an amount equal to its
outstanding Primary Obligations or, if the proceeds are insufficient to pay
in full all such Primary Obligations, its Pro Rata Share of the amount
remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors as
provided in Section 7.4(f), with each Secured Creditor receiving an amount
equal to its outstanding Secondary
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Obligations or, if the proceeds are insufficient to pay in full all such
Secondary Obligations, its Pro Rata Share of the amount remaining to be
distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i), (ii) and (iii), to the relevant
Assignor or as required by applicable law.
(b) Notwithstanding anything to the contrary contained herein, it is
acknowledged and agreed that the Credit Document Revolving Obligations are not
secured by the Alabama Mortgage. At any time when any amounts received pursuant
to the Alabama Mortgage are distributed, the Pro Rata Shares of the Bank
Creditors based upon their Credit Document Revolving Obligations shall be
separately calculated from the Pro Rata Shares of the Bank Creditors based on
their Alabama Mortgage Secured Credit Document Obligations, with each Bank
Creditor to receive distributions pursuant to Section 7.4(a) hereof representing
amounts received pursuant to the Alabama Mortgage as fully as if the Credit
Document Revolving Obligations were secured by the Alabama Mortgage, except that
the Pro Rata Shares of the Bank Creditors based on their Credit Document
Revolving Obligations shall instead be distributed to the Bank Creditors (on a
pro rata basis) in respect of their Alabama Mortgage Secured Credit Document
Obligations (with all amounts applied as provided in this clause (b), less any
distributions made to the Bank Creditors in respect of the Credit Document
Revolving Obligations pursuant to the next sentence, to constitute the "Inter-
Bank Revolving Credit Amount"). Following the application of any amounts
pursuant to the immediately preceding sentence, all subsequent distributions
which would have been made to the Bank Creditors pursuant to Section 7.4(a)
hereof in respect of their Alabama Mortgage Secured Credit Document Obligations
shall instead be applied to Bank Creditors in respect of their Credit Document
Revolving Obligations until the Inter-Bank Revolving Credit Amount has been
reduced to zero.
(c) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (y) "Primary Obligations" shall mean (i) in the case of the
Credit Document Obligations, all principal of, and interest on, all Loans, all
Unpaid Drawings theretofore made (together with all interest accrued thereon),
the aggregate Stated Amounts of all Letters of Credit issued under the Credit
Agreement, and all Fees and (ii) in the case of the Interest Rate Protection
Obligations, all amounts due under the Interest Rate Protection or Other Hedging
Agreements (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and
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liabilities) and (z) "Secondary Obligations" shall mean all Obligations other
than Primary Obligations.
(d) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (i) first, to their Primary Obligations and (ii)
second, to their Secondary Obligations. If any payment to any Secured Creditor
of its Pro Rata Share of any distribution would result in overpayment to such
Secured Creditor, such excess amount shall instead be distributed in respect of
the unpaid Primary Obligations or Secondary Obligations, as the case may be, of
the other Secured Creditors, with each Secured Creditor whose Primary
Obligations or Secondary Obligations, as the case may be, have not been paid in
full to receive an amount equal to such excess amount multiplied by a fraction
the numerator of which is the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of such Secured Creditor and the denominator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of all Secured Creditors entitled to such distribution.
(e) Each of the Secured Creditors agrees and acknowledges that if the
Bank Creditors are to receive a distribution on account of undrawn amounts with
respect to Letters of Credit issued under the Credit Agreement (which shall only
occur after all outstanding Loans and Unpaid Drawings with respect to such
Letters of Credit have been paid in full), such amounts shall be paid to the
Agent under the Credit Agreement and held by it, for the equal and ratable
benefit of the Bank Creditors, as cash security for the repayment of Obligations
owing to the Bank Creditors as such. If any amounts are held as cash security
pursuant to the immediately preceding sentence, then upon the termination of all
outstanding Letters of Credit, and after the application of all such cash
security to the repayment of all Obligations owing to the Bank Creditors after
giving effect to the termination of all such Letters of Credit, if there remains
any excess cash, such excess cash shall be returned by the Agent to the
Collateral Agent for distribution in accordance with Section 7.4(a) hereof.
(f) Except as set forth in Section 7.4(e) hereof, all payments
required to be made hereunder shall be made (i) if to the Bank Creditors, to the
Agent under the Credit Agreement for the account of the Bank Creditors, and (ii)
if to the Other Creditors, to the trustee, paying agent or other similar
representative (each a "Representative") for the Other Creditors or, in the
absence of such a Representative, directly to the Other Creditors.
(g) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Agent under the Credit Agreement and (ii) the Representative for the Other
Creditors or, in the absence of such a Representative, upon the Other Creditors
for a determination (which the Agent, each
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Representative for any Secured Creditors and the Secured Creditors agree (or
shall agree) to provide upon request of the Collateral Agent) of the outstanding
Primary Obligations and Secondary Obligations owed to the Bank Creditors or the
Other Creditors, as the case may be. Unless it has actual knowledge (including
by way of written notice from a Bank Creditor or an Other Creditor) to the
contrary, the Agent and each Representative, in furnishing information pursuant
to the preceding sentence, and the Collateral Agent, in acting hereunder, shall
be entitled to assume that no Secondary Obligations are outstanding. Unless it
has actual knowledge (including by way of written notice from an Other Creditor)
to the contrary, the Collateral Agent, in acting hereunder, shall be entitled to
assume that no Interest Rate Protection or Other Hedging Agreements are in
existence.
(h) It is understood that each Assignor shall remain liable to the
extent of any deficiency between the amount of the proceeds of the Collateral
and the aggregate amount of the sums referred to in clauses (i), (ii) and (iii)
of Section 7.4(a) with respect to the relevant Assignor.
7.5. REMEDIES CUMULATIVE. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection or Other Hedging Agreements, the other Credit Documents
now or hereafter existing at law, in equity or by statute and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time or simultaneously and as often and in such
order as may be deemed expedient by the Collateral Agent. All such rights,
powers and remedies shall be cumulative and the exercise or the beginning of the
exercise of one shall not be deemed a waiver of the right to exercise any other
or others. No delay or omission of the Collateral Agent in the exercise of any
such right, power or remedy and no renewal or extension of any of the
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein.
No notice to or demand on any Assignor in any case shall entitle it to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Collateral Agent to any other or further
action in any circumstances without notice or demand. In the event that the
Collateral Agent shall bring any suit to enforce any of its rights hereunder and
shall be entitled to judgment, then in such suit the Collateral Agent may
recover its expenses, including attorneys' fees, and the amounts thereof shall
be included in such judgment.
7.6. DISCONTINUANCE OF PROCEEDINGS. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of
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any of the Obligations shall be restored to their former positions and rights
hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the
Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. INDEMNITY. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each Secured Creditor and
their respective successors, permitted assigns, employees, agents and servants
(hereinafter in this Section 8.1 referred to individually as "Indemnitee," and
collectively as "Indemnitees") harmless from any and all liabilities,
obligations, damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all costs, expenses or disbursements (including reasonable
attorneys' fees and expenses) (for the purposes of this Section 8.1 the
foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Interest Rate Protection or
Other Hedging Agreement, any other Credit Document or any other document
executed in connection herewith or therewith or in any other way connected with
the administration of the transactions contemplated hereby or thereby or the
enforcement of any of the terms of, or the preservation of any rights under any
thereof, or in any way relating to or arising out of the manufacture, ownership,
ordering, purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including, without limitation, latent or other defects, whether or
not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee. Each
Assignor agrees that upon written notice by any Indemnitee of the assertion of
such a liability, obligation, damage, injury, penalty, claim, demand, action,
suit or judgment, the relevant Assignor shall assume full responsibility for the
defense thereof. Each Indemnitee agrees to use its best efforts to promptly
notify the relevant Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 8.1(a), each Assignor
agrees, jointly and severally, to pay, or reimburse the Collateral Agent for any
and all reasonable fees, costs and expenses of whatever kind or nature incurred
in connection with the crea-
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tion, preservation or protection of the Collateral Agent's Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon or
in respect of the Collateral (other than Liens permitted under this Agreement or
the Credit Agreement so long as no Event of Default has occurred and is
continuing), premiums for insurance with respect to the Collateral and all other
reasonable fees, costs and expenses in connection with protecting, maintaining
or preserving the Collateral and the Collateral Agent's interest therein,
whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.
(c) Without limiting the application of Section 8.1(a) or (b), each
Assignor agrees, jointly and severally, to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses which
such Indemnitee may suffer, expend or incur in consequence of or growing out of
any misrepresentation by any Assignor in this Agreement, any Interest Rate
Protection or Other Hedging Agreement, any other Credit Document or in any
writing contemplated by or made or delivered pursuant to or in connection with
this Agreement, any Interest Rate Protection or Other Hedging Agreement or any
other Credit Document.
(d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Letters of
Credit and all Interest Rate Protection or Other Hedging Agreements and the
payment of all other Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
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"Agent" shall have the meaning provided in the recitals to this
Agreement.
"Agreement" shall have the meaning provided in the preamble to this
Agreement.
"Alabama Mortgage" shall mean any Mortgage with respect to Real
Property located in the State of Alabama.
"Alabama Mortgage Secured Credit Document Obligations" shall mean the
"Credit Document Obligations" as defined in the Alabama Mortgage.
"Assignment of Claims Act Notice" shall have the meaning provided in
Section 3.10.
"Assignor" shall have the meaning provided in the preamble to this
Agreement.
"Bank Creditors" shall have the meaning provided in the preamble to
this Agreement.
"Banks" shall have the meaning provided in the recitals to this
Agreement.
"Cash Collateral Account" shall mean a non-interest bearing account
maintained with, and in the sole dominion and control of, the Collateral Agent
for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2.
"Collateral" shall have the meaning provided in Section 1.1(a).
"Collateral Agent" shall have the meaning provided in the preamble to
this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
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"Contracts" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, (i) any Interest Rate
Protection or Other Hedging Agreements and (ii) any Government Contract).
"Copyrights" shall mean any U.S. or foreign copyright owned by any
Assignor, including any registrations of any Copyrights in the U.S. Copyright
Office or the equivalent thereof in any foreign jurisdiction, as well as any
application for a U.S. or foreign copyright registration now or hereafter made
with the U.S. Copyright Office or the equivalent thereof in any foreign
jurisdiction by any Assignor.
"Credit Agreement" shall have the meaning provided in the recitals to
this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Credit Document Revolving Obligations" shall mean all Credit Document
Obligations which do not constitute Alabama Mortgage Secured Credit Document
Obligations.
"Default" shall mean any event which, with notice or lapse of time, or
both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, movable
trade fixtures and vehicles now or hereafter owned by any Assignor and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement or any payment default under any Interest Rate
Protection or Other Hedging Agreement after the expiration of any applicable
grace period and shall in any event, without limitation, include any payment
default on any of the Obligations after the expiration of any applicable grace
period.
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"GC Notice Recipient" shall mean each (i) contracting officer, or the
head of the respective U.S. government department or agency relating to such
Government Contract, (ii) surety or sureties upon the bond or bonds, if any,
relating to such Government Contract, and (iii) disbursing officer, if any,
designated in such Government Contract to make payment.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Goods" shall have the meaning provided in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.
"Government Contract" shall mean all Contracts between the Assignor
and the United States of America or any agency or department thereof.
"Indemnitee" shall have the meaning provided in Section 8.1.
"Instrument of Assignment" shall have the meaning provided in Section
3.10.
"Instrument" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Inter-Bank Revolving Credit Amount" shall have the meaning provided
in Section 7.4(b) of this Agreement.
"Interest Rate Protection or Other Hedging Agreements" shall have the
meaning provided in the preamble to this Agreement.
"Interest Rate Protection Obligations" shall have the meaning provided
in the definition of "Obligations" in this Article IX.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through work-
in-process to finished goods -- and all products and proceeds of whatever sort
and wherever located and any portion thereof which may be returned, rejected,
reclaimed or repossessed by the Collateral Agent from any Assignor's customers,
and shall specifically include all "inventory" as such term is defined in the
Uniform
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Commercial Code as in effect on the date hereof in the State of New York, now or
hereafter owned by any Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any U.S. or
foreign trademarks, service marks and trade names now held or hereafter acquired
by any Assignor, including any registration or application for registration of
any trademarks and service marks in the United States Patent and Trademark
Office, or the equivalent thereof in any State of the United States or in any
foreign country, and any trade dress including logos and/or designs used by any
Assignor in the United States or any foreign country.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, fees
and interest thereon) of each Assignor owing to the Bank Creditors, now existing
or hereafter incurred under, arising out of or in connection with any Credit
Document and the due performance and compliance by each Assignor with the terms
of each such Credit Document (all such obligations and indebtedness under this
clause (i), except to the extent consisting of obligations or indebtedness with
respect to Interest Rate Protection or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations"); (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations and indebtedness (including, without limitation, indemnities,
fees and interest thereon) of each Assignor owing to the Other Creditors now
existing or hereafter incurred under, arising out of or in connection with any
Interest Rate Protection or Other Hedging Agreement (all such obligations and
indebtedness under this clause (ii) being herein collectively called the
"Interest Rate Protection Obligations"); (iii) any and all sums advanced by the
Collateral Agent in accordance with the provisions of this Agreement in order to
preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities referred to in clauses (i), (ii) and
(iii) above, after an Event of Default shall have occurred and be continuing,
the reasonable expenses of re-taking, holding, preparing for sale or lease,
selling or otherwise disposing of or realizing on the Collateral, or of any
exercise by the Collateral Agent of its rights hereunder, together with
attorneys' fees and court costs; and (v) all amounts paid by any Indemnitee as
to which such Indemnitee has the right to reimbursement under Section 8.1 of
this Agreement.
"Other Creditors" shall have the meaning provided in the preamble to
this Agreement.
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"Patents" shall mean any U.S. or foreign patent to which any Assignor
now or hereafter has title or right to use and any divisions or continuations
thereof, as well as any application for a U.S. or foreign patent now or
hereafter made by any Assignor.
"Primary Obligation" shall have the meaning provided in Section
7.4(c).
"Pro Rata Share" shall have the meaning provided in Section 7.4(c).
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or any Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods or services, the sale of which gave rise thereto, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith, (e) all books, records, ledger cards,
and invoices relating thereto, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h) all
other writings related in any way to the foregoing.
"Representative" shall have the meaning provided in Section 7.4(f).
"Restricted Government Contract" shall mean any Government Contract
which by its terms prohibits the assignment of Receivables arising thereunder.
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"Requisite Creditors" shall have the meaning provided in Section 10.2.
"Secondary Obligation" shall have the meaning provided in Section
7.4(c).
"Secured Creditors" shall have the meaning provided in the preamble to
this Agreement.
"Termination Date" shall have the meaning provided in Section 10.9.
"Trade Secret Rights" shall have the meaning provided in Section 5.1.
ARTICLE X
MISCELLANEOUS
10.1. NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be in writing (including telegraphic, telex, facsimile transmission
or cable communication) and shall be delivered, mailed, telegraphed, telexed,
facsimile transmitted or cabled, addressed:
(a) if to any Assignor, at its address set forth opposite its
signature below:
(b) if to the Collateral Agent:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Attention: Donald Ercole
Telephone No.: (212) 841-2540
Facsimile No.: (212) 841-2363
(c) if to any Bank Creditor, either (x) to the Agent, at the address
of the Agent specified in the Credit Agreement or (y) at such address as
such Bank Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor to the Representative for the Other
Creditors, at such address as such Representative may have provided to the
Borrower and the Collateral Agent from time to time, or, in the absence of
a Representative, directly to the Other Creditors at such address as the
Other Creditors shall have specified in writing to the Borrower and the
Collateral Agent;
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or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. All such
notices and communications shall, when mailed, telegraphed, telexed, facsimile
transmitted or cabled or sent by overnight courier, be effective on the third
Business Day following deposit in the U.S. mails, certified, return receipt
requested, when delivered to the telegraph company, cable company or on the day
following delivery to an overnight courier, as the case may be, or sent by telex
or facsimile device, except that notices and communications to the Collateral
Agent shall not be effective until received by the Collateral Agent.
10.2. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be amended, changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Assignor and the Collateral
Agent (with the consent of the Required Banks or, to the extent required by
Section 13.12 of the Credit Agreement, all of the Banks); PROVIDED, that any
amendment, change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Secured Creditors (and not all
Secured Creditors in a like or similar manner) shall require the written consent
of the Requisite Creditors of such Class of Secured Creditors. For the purpose
of this Agreement the term "Class" shall mean each class of Secured Creditors,
I.E., whether (x) the Bank Creditors as holders of the Credit Document
Obligations or (y) the Other Creditors as the holders of the Interest Rate
Protection Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks and (y) with respect to the Interest
Rate Protection Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate Protection or
Other Hedging Agreements.
10.3. OBLIGATIONS ABSOLUTE. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor, except to
the extent that the enforceability thereof may be limited by any such event; (b)
any exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document or
any Interest Rate Protection or Other Hedging Agreement, except as specifically
set forth in a waiver granted pursuant to Section 10.2; or (c) any amendment to
or modification of any Credit Document or any Interest Rate Protection or Other
Hedging Agreement or any security for any of the Obligations, whether or not any
Assignor shall have notice or knowledge of any of the foregoing, except as
specifically set forth in an amendment or modification executed pursuant to
Section 10.2.
10.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent
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and each Secured Creditor and their respective successors and assigns; PROVIDED,
that no Assignor may transfer or assign any or all of its rights or obligations
hereunder without the prior written consent of the Collateral Agent. All
agreements, statements, representations and warranties made by each Assignor
herein or in any certificate or other instrument delivered by such Assignor or
on its behalf under this Agreement shall be considered to have been relied upon
by the Secured Creditors and shall survive the execution and delivery of this
Agreement, the other Credit Documents and the Interest Rate Protection or Other
Hedging Agreements regardless of any investigation made by the Secured Creditors
or on their behalf.
10.5. HEADINGS DESCRIPTIVE. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6. 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.
10.7. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
10.8. ASSIGNOR'S DUTIES. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of each Assignor under or with
respect to any Collateral.
10.9. TERMINATION; RELEASE. (a) After the Termination Date, this
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor such
statements, documents or instruments (including Uniform Commercial Code
termination statements on form UCC-3 and releases or terminations of any
Assignment of Claims Act Notices and/or Instruments of Assignment previously
delivered to any GC Notice Recipient) as may be reasonably requested by such
Assignor
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acknowledging the satisfaction and termination of this Agreement and the
security interests created hereby, and will duly assign, transfer and deliver to
such Assignor (without recourse and without any representation or warranty) such
of its Collateral as may be in the possession of the Collateral Agent and as has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement. As used in this Agreement, "Termination Date" shall mean the date
upon which the Total Commitment and all Interest Rate Protection or Other
Hedging Agreements have been terminated, no Note is outstanding (and all Loans
have been paid in full), all Letters of Credit have been terminated (or cash
collateralized to the Collateral Agent's satisfaction), and all other
Obligations then owing have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement or is otherwise
released at the direction of the Required Banks (or all the Banks if required by
Section 13.12 of the Credit Agreement) and the proceeds of such sale or sales or
from such release are applied in accordance with the terms of the Credit
Agreement, such Collateral will be sold free and clear of the Liens created by
this Agreement. The Collateral Agent, at the request and expense of the
respective Assignor, will duly assign, transfer and deliver to such Assignor
(without recourse and without any representation or warranty) such of the
Collateral of such Assignor as is then being (or has been) so sold or released
and as may be in the possession of the Collateral Agent and has not theretofore
been released pursuant to this Agreement.
(c) At any time that an Assignor desires that Collateral be released
as provided in the foregoing Section 10.9(a) or (b), it shall deliver to the
Collateral Agent a certificate signed by its chief financial officer or another
authorized senior officer stating that the release of the respective Collateral
is permitted pursuant to Section 10.9(a) or (b). If requested by the Collateral
Agent (although the Collateral Agent shall have no obligation to make any such
request), the relevant Assignor shall furnish appropriate legal opinions (from
counsel, which may be in-house counsel, reasonably acceptable to the Collateral
Agent) to the effect set forth in the immediately preceding sentence. The
Collateral Agent shall have no liability whatsoever to any Secured Creditor as
the result of any release of Collateral by it as permitted by this Section 10.
10.10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Collateral Agent.
10.11. THE COLLATERAL AGENT. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement.
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It is expressly understood and agreed by the parties hereto and each Secured
Creditor, by accepting the benefits of this Agreement, acknowledges and agrees
that the obligations of the Collateral Agent as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement. The
Collateral Agent shall act hereunder on the terms and conditions set forth in
Section 12 of the Credit Agreement.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
ADDRESS:
645 Madison Avenue VERNITRON CORPORATION,
New York, NY 10022 as a Pledgor
Attention: President
Tel: (212) 593-7900
Fax: (212) 754-6348 By
---------------------------
Title:
*7777 Fay Avenue PRECISION AEROTECH, INC.,
Suite 200 as a Pledgor
La Jolla, CA 92037
Attention: President
Fax: (619) 456-3809 By
Tel: (619) 456-2992 ---------------------------
Title:
c/o L&S Machine Co., Inc. L&S AEROTECH, INC.,
*2019 Southwest Boulevard as a Pledgor
Wichita, KS 67277
Attention: President
Tel: (316) 942-0181 By
Fax: (316) 942-6082 ---------------------------
Title:
- -----------------
* With a copy to:
Vernitron Corporation
645 Madison Avenue
New York, NY 10022
Attention: President
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<PAGE>
*6717 Alabama Highway 157 SPEEDRING, INC.,
Cullman, AL 35057 as a Pledgor
Attention: President
Tel: (205) 737-5200
Fax: (205) 737-5203 By
---------------------------
Title:
*2909 Waterview Drive SPEEDRING SYSTEMS, INC.,
Rochester Hills, MI 48309-4600 as a Pledgor
Attention: President
Tel: (810) 853-2540
Fax: (810) 853-2808 By
---------------------------
Title:
BANQUE PARIBAS,
as Collateral Agent,
Assignee
By
---------------------------
Title:
By
---------------------------
Title:
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EXHIBIT 10.3
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated as of April 25, 1996 (as amended, modified or
supplemented from time to time, the "Agreement"), made by each of the
undersigned (each, a "Pledgor" and collectively the "Pledgors"), in favor of
BANQUE PARIBAS, as Collateral Agent (the "Pledgee"), for the benefit of (x) the
Banks (as defined below) and the Agent (as defined below) under, and any other
lender from time to time party to the Credit Agreement hereinafter referred to
(such Banks, the Agent and the other lenders, if any, are hereinafter called the
"Bank Creditors") and (y) if Banque Paribas in its individual capacity, any Bank
or a syndicate of financial institutions organized by Banque Paribas or any such
Bank or an affiliate of Banque Paribas or such Bank enter into one or more
(i) interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar agreements), (ii) foreign exchange
contracts, currency swap agreements or other similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (collectively, the "Interest
Rate Protection or Other Hedging Agreements"), with, or guaranteed by, the
Borrower (as defined below) or any of its Subsidiaries, Banque Paribas, any such
Bank or an affiliate of Banque Paribas or such Bank (even if Banque Paribas or
any such Bank ceases to be a Bank under the Credit Agreement for any reason) and
any such institution that participates in such Interest Rate Protection or Other
Hedging Agreements and their subsequent assigns (collectively, the "Other
Creditors" and, together with the Bank Creditors, are herein called the "Secured
Creditors"). Except as otherwise defined herein, terms used herein and defined
in the Credit Agreement shall be used herein as therein defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Vernitron Corporation (the "Borrower"), the financial
institutions from time to time party thereto (the "Banks") and Banque Paribas,
as Agent (the "Agent"), have entered into a Credit Agreement, dated as of April
25, 1996, providing for the making of Loans and the issuance of, and
participation in, Letters of Credit as contemplated therein (as used herein, the
term "Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced,
restated, supplemented, restructured or refinanced from time to time, and
including any agreement extending the maturity of, refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers thereunder
that are
<PAGE>
Subsidiaries of the Borrower and whose obligations are guaranteed by the
Borrower thereunder or any increase in the amount borrowed) all or any portion
of, the Indebtedness under such agreement or any successor agreements; PROVIDED,
that with respect to any agreement providing for the refinancing of Indebtedness
under the Credit Agreement, such agreement shall only be treated as, or as part
of, the Credit Agreement hereunder if (i) either (A) all obligations under the
Credit Agreement being refinanced shall be paid in full at the time of such
refinancing, and all commitments and letters of credit issued pursuant to the
refinanced Credit Agreement shall have terminated in accordance with their terms
or (B) the Required Banks shall have consented in writing to the refinancing
Indebtedness being treated, along with their Indebtedness, as Indebtedness
pursuant to the Credit Agreement, (ii) the refinancing Indebtedness shall be
permitted to be incurred under the Credit Agreement being refinanced (if such
Credit Agreement is to remain outstanding) and (iii) a notice to the effect that
the refinancing Indebtedness shall be treated as issued under the Credit
Agreement shall be delivered by the Borrower to the Collateral Agent);
WHEREAS, pursuant to the Subsidiaries Guaranty (as amended, modified
or supplemented from time to time, the "Subsidiaries Guaranty"), Subsidiaries of
the Borrower may from time to time jointly and severally guarantee to the
Secured Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and each Interest Rate
Protection Agreement or Other Hedging Agreement with one or more Other
Creditors;
WHEREAS, the Borrower desires to incur Loans and to have Letters of
Credit issued for its account pursuant to the Credit Agreement;
WHEREAS, the Borrower may at any time and from time to time enter into
one or more Interest Rate Protection or Other Hedging Agreements with one or
more Other Creditors;
WHEREAS, it is a condition to each of the above-described extensions
of credit to the Borrower that each Pledgor shall have executed and delivered
this Agreement to the Pledgee;
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor
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hereby makes the following representations and warranties to the Pledgee for the
benefit of the Secured Creditors and hereby covenants and agrees with the
Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and indebtedness
(including, without limitation, indemnitees, fees and interest thereon) of
such Pledgor owing to the Bank Creditors, now existing or hereafter
incurred under, arising out of or in connection with any Credit Document
and the due performance and compliance by such Pledgor with the terms of
each such Credit Document (all such obligations and liabilities under this
clause (i), except to the extent consisting of obligations or indebtedness
with respect to Interest Rate Protection or Other Hedging Agreements, being
herein collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and indebtedness
(including, without limitation, indemnitees, fees and interest thereon) of
such Pledgor owing to the Other Creditors, now existing or hereafter
incurred under, arising out of or in connection with any Interest Rate
Protection or Other Hedging Agreement (all such obligations and
indebtedness under this clause (ii) being herein collectively called the
"Interest Rate Protection Obligations");
(iii) any and all sums advanced by the Pledgee in accordance with the
terms of this Agreement in order to preserve the Collateral (as defined in
Section 3.4 herein) or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations, or liabilities referred to in clauses (i),
(ii) and (iii) above, after an Event of Default (such term, as used in this
Agreement, shall mean any Event of Default under, and as defined in, the
Credit Agreement, or any payment default under any Interest Rate Protection
or Other Hedging Agreement after the expiration of any applicable grace
period and shall in any event include, without limitation, any payment
default on any of the Obligations (as hereinafter defined) after the
expiration of any applicable grace period) shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by
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the Pledgee of its rights hereunder, together with reasonable attorneys'
fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has
the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations"; PROVIDED, that it is acknowledged and agreed that the
"Obligations" shall include extensions of credit of the types described above,
whether outstanding on the date of this Agreement or extended from time to time
after the date of this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein, (i)
the term "Stock" shall mean (x) with respect to corporations incorporated under
the laws of the United States or any State or territory thereof (each a
"Domestic Corporation"), all of the issued and outstanding shares of capital
stock at any time owned by the Pledgor of any Domestic Corporation and (y) with
respect to corporations not Domestic Corporations (each a "Foreign
Corporation"), all of the issued and outstanding shares of capital stock at any
time owned by the Pledgor of any Foreign Corporation, PROVIDED that, except as
provided in the last sentence of this Section 2, the Pledgor shall not be
required to pledge hereunder more than 65% of the total combined voting power of
all classes of capital stock of any Foreign Corporation entitled to vote and
(ii) the term "Notes" shall mean all promissory notes at any time issued to the
Pledgor by any of its Subsidiaries, Affiliates or any other Person. If and to
the extent that the Pledgee receives or holds stock certificates representing
more than 65% of the total combined voting power of all classes of capital stock
of any Foreign Corporation entitled to vote, the Pledgee agrees to act as bailee
and custodian for the benefit of the Pledgor with respect to any portion of such
capital stock representing more than 65% of the total combined voting power of
all classes of capital stock of any Foreign Corporation entitled to vote except
as otherwise provided in the last sentence of this Section 2. As used herein,
the term "Securities" shall mean all of the Stock and Notes. The Pledgor
represents and warrants, as to the Stock of corporations and promissory notes
owned by the Pledgor, that on the date hereof (a) the Stock consists of the
number and type of shares of the stock of the corporations as described in Annex
A hereto; (b) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex A
hereto; (c) the Notes consist of the promissory notes described in Annex B
hereto; and (d) the Pledgor is the holder of record and sole beneficial owner of
the Stock and the Notes and there exist no options or preemption rights in
respect of any of the Stock. If following a change in the relevant sections of
the Code or the regulations, rules, rulings, notices or other official pro-
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nouncements issued or promulgated thereunder which would permit a pledge of
66-2/3% or more of the total combined voting power of all classes of capital
stock of any Foreign Corporation entitled to vote without causing the
undistributed earnings of such Foreign Corporation as determined for Federal
income taxes to be treated as a deemed dividend to the Pledgor for Federal
income tax purposes, then the 65% limitation set forth in clause (i)(y) of
this Section 2, shall no longer be applicable and the Pledgor shall duly
pledge and deliver to the Pledgee such of the Securities not theretofore
required to be pledged hereunder up to the maximum amount of Securities that
may be so pledged without causing the undistributed earnings of such Foreign
Corporation as determined for Federal income tax purposes to be treated as a
deemed dividend to a Pledgor for Federal income tax purposes.
3. PLEDGE OF SECURITIES, ETC.
3.1. PLEDGE. To secure the Obligations and for the purposes set
forth in Section 1, each Pledgor hereby: (i) grants to the Pledgee a security
interest in all of the Collateral owned by the Pledgor; (ii) pledges and
deposits as security with the Pledgee the Securities owned by such Pledgor on
the date hereof, and delivers to the Pledgee certificates or instruments
therefor, duly endorsed in blank in the case of Notes and accompanied by undated
stock powers duly executed in blank by such Pledgor in the case of Stock, or
such other instruments of transfer as are reasonably acceptable to the Pledgee;
and (iii) assigns, transfers, hypothecates, mortgages, charges and sets over to
the Pledgee all of such Pledgor's right, title and interest in and to such
Securities (and in and to all certificates or instruments evidencing such
Securities), in each case to be held by the Pledgee, upon the terms and
conditions set forth in this Agreement.
3.2. SUBSEQUENTLY ACQUIRED SECURITIES. If any Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Securities at any time
or from time to time after the date hereof, the Pledgor will forthwith pledge
and deposit such Securities (or certificates or instruments representing such
Securities) as security with the Pledgee and deliver to the Pledgee certificates
therefor or instruments thereof, duly endorsed in blank in the case of Notes and
accompanied by undated stock powers duly executed in blank in the case of Stock,
or such other instruments of transfer as are reasonably acceptable to the
Pledgee, to secure the Obligations and for the purposes set forth in Section 1,
and will promptly thereafter deliver to the Pledgee a certificate executed by
any of the Chairman of the Board, the Chief Financial Officer, the President, a
Vice Chairman, any Vice President or the Treasurer of such Pledgor describing
such Securities and certifying that the same have been duly pledged with the
Pledgee hereunder. Subject to the last sentence of Section 2, the Pledgor shall
not be required at any time to pledge hereunder more than 65% of the
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total combined voting power of all classes of capital stock of any Foreign
Corporation entitled to vote.
3.3. UNCERTIFICATED SECURITIES. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2 (other than the last sentence of
Section 3.2), if any Securities (whether now owned or hereafter acquired) are
uncertificated securities, the respective Pledgor shall promptly notify the
Pledgee thereof, and shall promptly take all actions required to perfect the
security interest of the Pledgee under applicable law (including, in any event,
under Sections 8-313 and 8-321 of the New York UCC, if applicable). Each
Pledgor further agrees to take such actions as the Pledgee reasonably deems
necessary or desirable to effect the foregoing and to permit the Pledgee to
exercise any of its rights and remedies hereunder, and agrees to provide an
opinion of counsel satisfactory to the Pledgee with respect to any such pledge
of uncertificated Securities promptly upon request of the Pledgee.
3.4 DEFINITION OF PLEDGED STOCK, PLEDGED NOTES, PLEDGED SECURITIES
AND COLLATERAL. All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock," all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes," all of the Pledged Stock and Pledged Notes together are hereinafter
called the "Pledged Securities," which together with all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, is hereinafter called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until an
Event of Default shall have occurred and be continuing, each Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Pledged Securities owned by it and to give consents, waivers or
ratifications in respect thereof; PROVIDED, that no vote shall be cast or any
consent, waiver or ratification given or any action taken which would violate or
be inconsistent with any of the terms of this Agreement, any other Credit
Document or any Interest Rate Protection or Other Hedging Agreement
(collectively, the "Secured Debt Agreements"), or which would have the effect of
impairing the position or interests of the Pledgee or any Secured Creditor. All
such rights of such Pledgor to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default shall occur and be
continuing, and Section 7 hereof shall become applicable.
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6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing (or would occur as a result thereof), all
cash dividends payable in respect of the Pledged Stock and all payments in
respect of the Pledged Notes shall be paid to the respective Pledgor free and
clear of the security interests created under this Agreement or any other Credit
Document; PROVIDED, that all cash dividends payable in respect of the Pledged
Stock which are reasonably determined by the Pledgee, in its sole discretion, to
represent in whole or in part an extraordinary, liquidating or other
distribution in return of capital shall be paid, to the extent so determined to
represent an extraordinary, liquidating or other distribution in return of
capital, to the Pledgee and retained by it as part of the Collateral. The
Pledgee shall also be entitled to receive directly, and to retain as part of the
Collateral:
(i) all other or additional stock or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock;
(ii) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Stock by way
of stock-split, spin-off, split-up, reclassification, combination of shares
or similar rearrangement; and
(iii) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. All dividends, distributions or other
payments which are received by any Pledgor contrary to the provisions of this
Section 6 and Section 7 shall be received in trust for the benefit of the
Pledgee, shall be segregated from other property or funds of such Pledgor and
shall be forthwith paid over to the Pledgee as Collateral in the same form as so
received (with any necessary endorsement).
7. REMEDIES IN CASE OF EVENT OF DEFAULT. (a) In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement or by any other Secured Debt Agreement or by law) for the protection
and enforcement of its rights in respect of the Collateral, and the Pledgee
shall be entitled, without limitation, to
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exercise the following rights, which each Pledgor hereby agrees to be
commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral payable
to such Pledgor under Section 6;
(ii) to transfer all or any part of the Pledged Securities into the
Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other action to collect upon any
Pledged Note (including, without limitation, to make any demand for payment
of amounts then due and payable thereon);
(iv) to vote all or any part of the Pledged Securities (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do
so); and
(v) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor to the extent permitted by
applicable law), for cash, on credit or for other property, for immediate
or future delivery without any assumption of credit risk, and for such
price or prices and on such terms as the Pledgee may, in compliance with
any mandatory requirements of applicable law, determine to be commercially
reasonable; PROVIDED, that at least 10 days' notice of the time and place
of any such sale shall be given to such Pledgor. Each Pledgor hereby
waives and releases to the fullest extent permitted by law any right or
equity of redemption with respect to the Collateral, whether before or
after sale hereunder, and all rights, if any, of marshalling the Collateral
and any other security for the Obligations or otherwise. At any such sale,
unless prohibited by applicable law, the Pledgee on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so
sold free from any such right or equity of redemption. Neither the Pledgee
nor any Secured Creditor shall be liable for failure to collect or realize
upon any or all of the Collateral or for any
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delay in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto.
(b) In case the Pledgee shall have instituted any proceeding to
enforce any right, power or remedy under this Agreement by foreclosure, sale,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Pledgee,
then and in such case the relevant Pledgor, the Pledgee and each holder of any
of the Obligations shall be restored to their former positions and rights
hereunder with respect to the Collateral subject to the security interests
created under this Agreement, and all rights, remedies and powers of the Pledgee
shall continue as if no such proceeding had been instituted.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or any other Secured Debt Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any Secured Creditor of all
such other rights, powers or remedies, and no failure or delay on the part of
the Pledgee or any Secured Creditor to exercise any such right, power or remedy
shall operate as a waiver thereof.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral pursuant to the terms of
this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Pledgee (or
any Indemnitee, in the case of clause (v) of Section 1 of this Agreement)
of the type described in clauses (iii), (iv) and (v) of Section 1 of this
Agreement;
(ii) second, to the extent moneys remain after the application pursuant
to the preceding clause (i), an amount equal to the outstanding Primary
Obligations shall be paid to the Secured Creditors as provided in Section
9(e), with each Secured Creditor receiving an amount equal to its
outstanding Primary Obligations or, if the proceeds are insufficient to pay
in full all such Primary Obligations, its Pro Rata Share of the amount
remaining to be distributed;
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(iii) third, to the extent proceeds remain after the application pursuant
to the preceding clauses (i) and (ii), an amount equal to the outstanding
Secondary Obligations shall be paid to the Secured Creditors as provided in
Section 9(e), with each Secured Creditor receiving an amount equal to its
outstanding Secondary Obligations or, if the proceeds are insufficient to
pay in full all such Secondary Obligations, its Pro Rata Share of the
amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i), (ii) and (iii), to the relevant
Pledgor or as required by applicable law.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (y) "Primary Obligations" shall mean (i) in the case of the
Credit Document Obligations, all principal of, and interest on, all Loans, all
Unpaid Drawings theretofore made (together with all interest accrued thereon),
the aggregate Stated Amounts of all Letters of Credit issued under the Credit
Agreement, and all Fees and (ii) in the case of the Interest Rate Protection
Obligations, all amounts due under the Interest Rate Protection or Other Hedging
Agreements (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and liabilities) and (z) "Secondary
Obligations" shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (i) first, to their Primary Obligations and (ii)
second, to their Secondary Obligations. If any payment to any Secured Creditor
of its Pro Rata Share of any distribution would result in overpayment to such
Secured Creditor, such excess amount shall instead be distributed in respect of
the unpaid Primary Obligations or Secondary Obligations, as the case may be, of
the other Secured Creditors, with each Secured Creditor whose Primary
Obligations or Secondary Obligations, as the case may be, have not been paid in
full to receive an amount equal to such excess amount multiplied by a fraction
the numerator of which is the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of such Secured Creditor and the denominator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of all Secured Creditors entitled to such distribution.
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(d) Each of the Secured Creditors agrees and acknowledges that if the
Bank Creditors are to receive a distribution on account of undrawn amounts with
respect to Letters of Credit issued under the Credit Agreement (which shall only
occur after all outstanding Loans and Unpaid Drawings with respect to such
Letters of Credit have been paid in full), such amounts shall be paid to the
Agent under the Credit Agreement and held by it, for the equal and ratable
benefit of the Bank Creditors, as cash security for the repayment of Obligations
owing to the Bank Creditors as such. If any amounts are held as cash security
pursuant to the immediately preceding sentence, then upon the termination of all
outstanding Letters of Credit, and after the application of all such cash
security to the repayment of all Obligations owing to the Bank Creditors after
giving effect to the termination of all such Letters of Credit, if there remains
any excess cash, such excess cash shall be returned by the Agent to the
Collateral Agent for distribution in accordance with Section 9(a) hereof.
(e) Except as set forth in Section 9(d) hereof, all payments required
to be made hereunder shall be made (i) if to the Bank Creditors, to the Agent
under the Credit Agreement for the account of the Bank Creditors, and (ii) if to
the Other Creditors, to the trustee, paying agent or other similar
representative (each a "Representative") for the Other Creditors or, in the
absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with
this Section 9, the Collateral Agent shall be entitled to rely upon (i) the
Agent under the Credit Agreement and (ii) the Representative for the Other
Creditors or, in the absence of such a Representative, upon the Other Creditors
for a determination (which the Agent, each Representative for any Secured
Creditors and the Secured Creditors agree (or shall agree) to provide upon
request of the Collateral Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Bank Creditors or the Other Creditors, as the
case may be. Unless it has actual knowledge (including by way of written notice
from a Bank Creditor or an Other Creditor) to the contrary, the Agent and each
Representative, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume that
no Secondary Obligations are outstanding. Unless it has actual knowledge
(including by way of written notice from an Other Creditor) to the contrary, the
Collateral Agent, in acting hereunder, shall be entitled to assume that no
Interest Rate Protection or Other Hedging Agreements are in existence.
(g) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of the proceeds of the Collateral hereunder and the aggregate amount of the sums
referred to in clauses (i), (ii) and (iii) of Section 9(a).
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10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY.
11.1 INDEMNITY. (a) Each Pledgor jointly and severally agrees to
indemnify, reimburse and hold the Pledgee, each Secured Creditor and their
respective successors, permitted assigns, employees, agents and servants
(hereinafter in this Section 11.1 referred to individually as "Indemnitee," and
collectively as "Indemnities") harmless from any and all liabilities,
obligations, damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all costs, expenses or disbursements (including attorneys'
fees and expenses) (for the purposes of this Section 11.1 the foregoing are
collectively called "expenses") of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnities in any way relating to or
arising out of this Agreement, any other Secured Debt Agreement or any other
document executed in connection herewith and therewith or in any other way
connected with the administration of the transactions contemplated hereby and
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, the violation of the laws of any country, state or
other governmental body or unit, any tort or contract claim; provided, that no
Indemnitee shall be indemnified pursuant to this Section 11.1(a) for losses,
damages or liabilities to the extent caused by the gross negligence or willful
misconduct of such Indemnitee. In no event shall any Indemnitee be liable for
any matter or thing in connection with this Agreement other than to account for
moneys actually received by it in connection with the terms hereof. Each
Pledgor agrees that upon written notice by any Indemnitee of the assertion of
such a liability, obligation, damage, injury, penalty, claims, demand, action,
judgment or suit, such Pledgor shall assume full responsibility for the defense
thereof. Each Indemnitee agrees to use its best efforts to promptly notify the
relevant Pledgor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 11.1(a), each Pledgor
jointly and severally agrees to pay or reimburse the Pledgee for any and all
fees, costs and expenses of whatever kind or nature reasonably incurred in
connection with the creation, preservation or protection of the Pledgee's Liens
on, and security interest in, the Collateral, including, without limitation, all
fees and taxes in connection with the recording or filing
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of instruments and documents in public offices, payment or discharge of any
taxes or Liens upon or in respect of the Collateral (other than Liens permitted
under this Agreement or the Credit Agreement so long as no Event of Default has
occurred and is continuing) and all other reasonable fees, costs and expenses in
connection with protecting, maintaining or preserving the Collateral and the
Pledgee's interest therein, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions, suits or proceedings arising out of
or relating to the Collateral.
(c) If and to the extent that the obligations of any Pledgor under
this Section 11 are unenforceable for any reason, such Pledgor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
11.2. INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Pledgor contained in this Section 11 shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Letters of
Credit and all Interest Rate Protection or Other Hedging Agreements and the
payment of all other Obligations and notwithstanding the discharge thereof.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees
that it will join with the Pledgee in executing and, at such Pledgor's own
expense, file and refile under the UCC such financing statements, continuation
statements and other documents in such offices as the Pledgee may deem necessary
or appropriate and wherever required or permitted by law in order to perfect and
preserve the Pledgee's security interest in the Collateral and hereby authorizes
the Pledgee to file financing statements and amendments thereto relative to all
or any part of the Collateral without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem advisable to carry
into effect the purposes of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee as its 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 after the occurrence and during the
continuance of an Event of Default, in the Pledgee's discretion to take any
action and to execute any instrument
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which the Pledgee may deem necessary or advisable to accomplish the purposes of
this Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed by the parties hereto and each
Secured Creditor, by accepting the benefits of this Agreement, acknowledges and
agrees that the obligations of the Pledgee as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement. The
Pledgee shall act hereunder on the terms and conditions set forth herein and in
Section 12 of the Credit Agreement.
14. TRANSFER BY PLEDGORS. No Pledgor will sell or otherwise dispose
of, grant any option with respect to, or mortgage, pledge or otherwise encumber
any of the Collateral or any interest therein (except as may be permitted in
accordance with the terms of the Credit Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR. Each
Pledgor represents, warrants and covenants that: (i) it is the legal, record
and beneficial owner of, and has good and marketable title to, all Securities
pledged by it hereunder, subject to no pledge, lien, mortgage, hypothecation,
security interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by the Credit Agreement and this Agreement;
(ii) it has the requisite corporate power, authority and legal right to pledge
all the Securities pledged by it pursuant to this Agreement; (iii) this
Agreement has been duly authorized, executed and delivered by such Pledgor and
constitutes a legal, valid and binding obligation of such Pledgor enforceable in
accordance with its terms, except to the extent that the enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and by equitable
principles (regardless of whether enforcement is sought in equity or at law);
(iv) no consent of any other party (including, without limitation, any
stockholder, limited or general partner or creditor of such Pledgor or any of
its Subsidiaries) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required to be obtained by such Pledgor in
connection with the execution, delivery or performance of this Agreement, except
as obtained on or before the date hereof or as permitted to be obtained after
the date hereof by Section 3.1 of this Agreement; (v) the execution, delivery
and performance of this Agreement does not violate any provision of any
applicable law or regulation or of any order, judgment, writ, award or decree of
any court, arbitrator or governmental authority, domestic or foreign, applicable
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to such Pledgor or of the certificate of incorporation or by-laws of such
Pledgor or of any securities issued by such Pledgor or any of its Subsidiaries,
or of any mortgage, indenture, lease, deed of trust, agreement, instrument or
undertaking to which such Pledgor or any of its Subsidiaries is a party or which
purports to be binding upon such Pledgor or any of its Subsidiaries or upon any
of their respective assets and will not result in the creation or imposition of
any lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement; (vi) all the shares of
Stock have been duly and validly issued, are fully paid and nonassessable; (vii)
to the best knowledge of Pledgor, each of its Pledged Notes, when executed by
the obligor thereof, will be the legal, valid and binding obligation of such
obligor, enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by equitable principles (regardless of whether enforcement is sought in
equity or at law); and (viii) the pledge and assignment of the Securities by it
pursuant to this Agreement, together with the delivery of the Securities by it
pursuant to this Agreement, creates a valid and perfected first priority
security interest in such Securities and the proceeds thereof (except to the
extent further action may be required to maintain a perfected security interest
in proceeds after the actual receipt thereof by the Pledgee), subject to no
prior lien or encumbrance or to any agreement (other than as may be created by
any other Credit Document) purporting to grant to any third party a lien or
encumbrance on the property or assets of such Pledgor which would include such
Securities. Each Pledgor covenants and agrees that it will defend the Pledgee's
right, title and security interest in and to the Securities pledged by it
pursuant to this Agreement and the proceeds thereof against the claims and
demands of all persons whomsoever, and such Pledgor covenants and agrees that it
will have like title to and right to pledge any other property at any time
hereafter pledged to the Pledgee as Collateral hereunder and will likewise
defend the right thereto and security interest therein of the Pledgee and the
Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor hereunder shall remain in full force and effect without regard to, and
shall not be impaired by:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Pledgor, except to
the extent that the enforceability thereof may be limited by such event; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under in respect of this Agreement, any other Credit Document or any
Interest Rate Protection or Other Hedging Agreement, except as specifically set
forth in a waiver granted pursuant to Section 20; or (c) any amendment to or
modification of any Credit Document, or any Interest Rate Protection or Other
Hedg-
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<PAGE>
ing Agreement or any security for any of the Obligations; whether or not any
Pledgor shall have notice or knowledge of any of the foregoing, except as
specifically set forth in an amendment or modification executed pursuant to
Section 20.
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any federal or state securities law or laws to
be effected with respect to all or any part of its Pledged Stock, such Pledgor
as soon as practicable and at its expense shall cause such registration to be
effected (and be kept effective), and shall cause such qualification and
compliance to be effected (and be kept effective) as may be so requested and
shall permit or facilitate the sale and distribution of such Pledged Stock,
including, without limitation, registration under the Securities Act of 1933 as
then in effect (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with any other government requirements; PROVIDED, that
the Pledgee shall furnish to such Pledgor such information regarding the Pledgee
as such Pledgor may request in writing and as shall be required in connection
with any such registration, qualification or compliance. Such Pledgor will
cause the Pledgee to be kept reasonably advised in writing as to the progress of
each such registration, qualification or compliance and as to the completion
thereof, will furnish to the Pledgee such number of prospectuses, offering
circulars or other documents incident thereto as the Pledgee from time to time
may reasonably request, and will indemnify the Pledgee and all others
participating in the distribution of the Pledged Stock against all claims,
losses, damages and liabilities caused by any untrue statement (or alleged
untrue statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or alleged
omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to such Pledgor by the Pledgee expressly for
use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7,
such Pledged Securities or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act of 1933, as then
in effect, the Pledgee may, in its sole and absolute discretion, sell such
Pledged Securities or part thereof by private sale in such manner and under such
circumstances as the Pledgee may deem necessary or advisable in order that such
sale may legally be effected without such registration. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion: (i) may
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<PAGE>
proceed to make such private sale notwithstanding that a registration statement
for the purpose of registering such Pledged Securities or part thereof shall
have been filed under such Securities Act; (ii) may approach and negotiate with
a single possible purchaser to effect such sale; and (iii) may restrict such
sale to a purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment, and not with a view to the
distribution or sale of such Pledged Securities or part thereof. In the event
of any such sale, the Pledgee shall incur no responsibility or liability for
selling all or any part of the Pledged Securities at a price which the Pledgee,
in its sole and absolute discretion, may in good faith deem commercially
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration of such Pledged Securities for public sale.
18. TERMINATION, RELEASE. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of the
respective Pledgor, will promptly execute and deliver to such Pledgor such
statements, documents or other instruments as may be reasonably requested by
such Pledgor acknowledging the satisfaction and termination of this Agreement
and the security interests created hereby, and will duly assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral of such Pledgor as may be in the possession of
the Pledgee and as has not theretofore been sold or otherwise applied or
released pursuant to this Agreement. As used in this Agreement, "Termination
Date" shall mean the date upon which the Total Commitment and all Interest Rate
Protection and Other Hedging Agreements have been terminated, no Note is
outstanding (and all Loans have been paid in full), all Letters of Credit have
been terminated (or cash collateralized to the Pledgee's satisfaction) and all
other Obligations then owing have been paid in full and there shall exist no
unsatisfied claim for reimbursement by any Indemnitee pursuant to Section 11.2.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement or is otherwise
released at the direction of the Required Banks (or all the Banks if required by
Section 13.12 of the Credit Agreement), and the proceeds of such sale or sales
or from such release are applied in accordance with the terms of the Credit
Agreement, such Collateral will be sold free and clear of the Liens created by
this Agreement and the Pledgee, at the request and expense of the respective
Pledgor, will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral of
such Pledgor as is then being (or has been) so sold or released and as may be in
possession of the Pledgee and has not theretofore been released pursuant to this
Agreement.
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<PAGE>
(c) At any time that a Pledgor desires that Collateral be released as
provided in the foregoing Section 18(a) or (b), it shall deliver to the Pledgee
a certificate signed by its chief financial officer or another authorized senior
officer stating that the release of the respective Collateral is permitted
pursuant to Section 18(a) or (b). If requested by the Pledgee (although the
Pledgee shall have no obligation to make any such request), the relevant Pledgor
shall furnish appropriate legal opinions (from counsel, which may be in-house
counsel, reasonably acceptable to the Pledgee) to the effect set forth in the
immediately preceding sentence. The Pledgee shall have no liability whatsoever
to any Secured Creditor as the result of any release of Collateral by it as
permitted by this Section 18.
19. NOTICES, ETC. All notices and other communications hereunder
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and shall be delivered, mailed, telegraphed, telexed,
facsimile transmitted or cabled, addressed:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Attention: Donald Ercole
Telephone No.: (212) 841-2540
Facsimile No.: (212) 841-2363
(c) if to any Bank Creditor (other than the Pledgee), either (x) to
the Agent, at the address of the Agent specified in the Credit Agreement or
(y) at such address as such Bank Creditor shall have specified in the
Credit Agreement;
(d) if to any Other Creditor to the Representative for the Other
Creditors, at such address as such Representative may have provided to the
Borrower and the Pledgee from time to time, or, in the absence of a
Representative, directly to the Other Creditors at such address as the
Other Creditors shall have specified in writing to the Borrower and the
Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. All such
notices and communications
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<PAGE>
shall, when mailed, telegraphed, telexed, facsimile transmitted or cabled or
sent by overnight courier, be effective on the third Business Day following
deposit in the mails, certified, return receipt requested, when delivered to the
telegraph company, cable company or on the day following delivery to an
overnight courier, as the case may be, or sent by telex or facsimile device,
except that notices and communications to the Collateral Agent shall not be
effective until received by the Collateral Agent.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be amended, changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor and the Pledgee (with
the written consent of the Required Banks (or all the Banks if required by
Section 13.12 of the Credit Agreement)); PROVIDED, that any amendment, change,
waiver, modification or variance affecting the rights and benefits of a single
Class (as defined below) of Secured Creditors (and not all Secured Creditors in
a like or similar manner) shall require the written consent of the Requisite
Creditors (as defined below) of such Class. For the purpose of this Agreement,
the term "Class" shall mean each class of Secured Creditors, I.E., whether (i)
the Bank Creditors as holders of the Credit Document Obligations or (ii) the
Other Creditors as holders of the Interest Rate Protection Obligations. For the
purpose of this Agreement, the term "Requisite Creditors" of any Class shall
mean each of (i) with respect to the Credit Document Obligations, the Required
Banks and (ii) with respect to the Interest Rate Protection Obligations, the
holders of at least a majority of all obligations outstanding from time to time
under the Interest Rate Protection or Other Hedging Agreements.
21. MISCELLANEOUS. (a) This Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee and each Secured Creditor and their respective
successors and assigns.
(b) THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
(c) The headings in this Agreement are for purposes of reference only
and shall not limit or define the meaning hereof.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument.
22. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent
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<PAGE>
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.
* * *
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<PAGE>
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
ADDRESS:
645 Madison Avenue VERNITRON CORPORATION,
New York, NY 10022 as a Pledgor
Attention: President
Tel: (212) 593-7900
Fax: (212) 754-6348 By
------------------------------
Title:
7777 Fay Avenue PRECISION AEROTECH, INC.,
Suite 200 as a Pledgor
La Jolla, CA 92037
Attention: President
Tel: (619) 456-2992 By
Fax: (619) 456-3809 ------------------------------
Title:
c/o L&S Machine Co., Inc. L&S AEROTECH, INC.,
*2019 Southwest Boulevard as a Pledgor
Wichita, KS 67277
Attention: President
Tel: (316) 942-0181 By
Fax: (316) 942-6082 ------------------------------
Title:
- -----------------------
*With a copy to:
Vernitron Corporation
645 Madison Avenue
New York, NY 10022
Attention: President
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<PAGE>
*6717 Alabama Highway 157 SPEEDRING, INC.,
Cullman, AL 35057 as a Pledgor
Attention: President
Tel: (205) 737-5200
Fax: (205) 737-5203 By
------------------------------
Title:
*2909 Waterview Drive SPEEDRING SYSTEMS, INC.,
Rochester Hills, MI 48309-4600 as a Pledgor
Attention: President
Tel: (810) 853-2540
Fax: (810) 853-2808 By
------------------------------
Title:
BANQUE PARIBAS,
as Pledgee
By
------------------------------
Title:
By
------------------------------
Title:
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<PAGE>
EXHIBIT 10.4
SUBSIDIARIES GUARANTY
GUARANTY, dated as of April 25, 1996, made by each of the undersigned
(each a "Guarantor" and collectively, the "Guarantors"). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement (as
hereinafter defined) shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, Vernitron Corporation (the "Borrower"), certain financial
institutions from time to time party thereto (the "Banks") and Banque Paribas,
as Agent (the "Agent"), have entered into a Credit Agreement, dated as of April
25, 1996 (as modified, supplemented or amended from time to time, the "Credit
Agreement"), providing for the making of Loans to the Borrower and the issuance
of, and participation in, Letters of Credit issued for the account of the
Borrower as contemplated therein (the Banks and the Agent being herein called
the "Bank Creditors");
WHEREAS, the Borrower or any of its Subsidiaries may from time to time
enter into, or guaranty, one or more (i) interest rate protection agreements
(including, without limitation, interest rate swaps, caps, floors, collars and
similar agreements), (ii) foreign exchange contracts, currency swap agreements
or other similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging agreements
from time to time (collectively, the "Interest Rate Protection or Other Hedging
Agreements"), with Banque Paribas in its individual capacity, any Bank or a
syndicate of financial institutions organized by Banque Paribas or any such Bank
or an affiliate of Banque Paribas or such Bank (even if Banque Paribas or any
such Bank ceases to be a Bank under the Credit Agreement for any reason) and any
such institution that participates in such Interest Rate Protection or Other
Hedging Agreements and their subsequent assigns (collectively, the "Other
Creditors" and, together with the Bank Creditors, are herein called the
"Creditors");
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the
Borrower;
WHEREAS, it is a condition to the making of Loans and the issuance of,
and participation in, Letters of Credit under the Credit Agreement and to the
Other
<PAGE>
Creditors entering into the Interest Rate Protection or Other Hedging Agreements
that each Guarantor shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of
Loans by the Borrower and the issuance of Letters of Credit for the account of
the Borrower under the Credit Agreement and the entering into of the Interest
Rate Protection or Other Hedging Agreements and, accordingly, desires to execute
this Guaranty in order to satisfy the conditions described in the preceding
paragraph;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:
1. Each Guarantor irrevocably and unconditionally, and jointly and
severally, guarantees (i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of (x) the principal of and
interest on the Notes issued by, and Loans made to, the Borrower under the
Credit Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit issued under the Credit Agreement, and (y) all
other obligations and indebtedness (including, without limitation, indemnities,
Fees and interest thereon) of the Borrower owing to the Bank Creditors now
existing or hereafter incurred under, arising out of or in connection with the
Credit Agreement and the other Credit Documents and the due performance and
compliance by the Borrower with the terms, conditions and agreements contained
in the Credit Documents (all such principal, interest, obligations and
liabilities being herein collectively referred to as the "Credit Document
Obligations") and (ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, indemnities, fees and interest
thereon) owing by the Borrower to the Other Creditors under any Interest Rate
Protection or Other Hedging Agreement, whether such Interest Rate Protection or
Other Hedging Agreement is now in existence or hereafter arising, and the due
performance and compliance by the Borrower with the terms, conditions and
agreements contained therein (all such obligations and indebtedness being herein
collectively called the "Interest Rate Protection Obligations"; and together
with the Credit Document Obligations are herein collectively called the
"Guaranteed Obligations"); PROVIDED, that the maximum amount payable by each
Guarantor hereunder shall at no time exceed the Maximum Amount (as hereinafter
defined) of such Guarantor. As used herein, "Maximum Amount" of each Guarantor
means an amount equal to 95% of the amount by which (i) the present fair
saleable value of such Guarantor's
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<PAGE>
assets exceeds (ii) the total liabilities of such Guarantor (including the
maximum amount reasonably expected to come due in respect of contingent
liabilities, other than contingent liabilities of such Guarantor hereunder) in
each case determined on the Initial Borrowing Date or on the day any demand is
made under this Guaranty, whichever date results in the higher Maximum Amount.
Subject to the proviso in the second preceding sentence, each Guarantor
understands, agrees and confirms that the Creditors may enforce this Guaranty up
to the full amount of the Guaranteed Obligations against such Guarantor without
proceeding against the Borrower, against any security for the Guaranteed
Obligations, against any other Guarantor, or against any other guarantor under
any other guaranty covering the Guaranteed Obligations. This Guaranty shall
constitute a guaranty of payment and not of collection. All payments by each
Guarantor under this Guaranty shall be made on the same basis as payments by the
Borrower under Sections 4.03 and 4.04 of the Credit Agreement.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations of the Borrower to the Creditors whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of
the events specified in Section 10.05 of the Credit Agreement, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Creditors, or order, on demand, in lawful money of
the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of the
Borrower whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other party, and the liability of such Guarantor hereunder
shall not be affected or impaired by: (i) any direction as to application of
payment by the Borrower; (ii) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower; (iii) any payment on or in reduction of any such
other guaranty or undertaking; (iv) any dissolution, termination or increase,
decrease or change in personnel by the Borrower; or (v) any payment made to any
Creditor on the indebtedness which any Creditor repays the Borrower pursuant to
court order in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
4. The obligations of each Guarantor hereunder are independent of
the obligations of any other Guarantor, any other guarantor or the Borrower, and
a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower, and whether or
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<PAGE>
not any other Guarantor, any other guarantor or the Borrower be joined in any
such action or actions. Each Guarantor waives, to the fullest extent permitted
by law, the benefit of any statute of limitations affecting its liability
hereunder or the enforcement thereof. Any payment by the Borrower or other
circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
taken by the Agent or any other Creditors against, and any other notice to, any
party liable thereon (including such Guarantor or any other Guarantor or
guarantor).
6. Any Creditor may at any time and from time to time (but only upon
the agreement and consent of the Borrower or its Subsidiaries to the extent
otherwise required by the relevant agreement) without the consent of, or notice
to, any Guarantor, without incurring responsibility to any Guarantor, without
impairing or releasing the obligations of any Guarantor hereunder, upon or
without any terms or conditions and in whole or in part (and each Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to any and all of the following):
(i) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(ii) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(iii) exercise or refrain from exercising any rights against the
Borrower, any Guarantor or others or otherwise act or refrain from acting;
(iv) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or
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<PAGE>
any part thereof to the payment of any liability (whether due or not) of
the Borrower to creditors of the Borrower;
(v) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Creditors regardless of
what liabilities of the Borrower remain unpaid;
(vi) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection or Other Hedging
Agreements or any of the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or supplement
any of the Interest Rate Protection or Other Hedging Agreements or any of
the Credit Documents or any of such other instruments or agreements; and/or
(vii) act or fail to act in any manner referred to in this
Guaranty which may deprive any Guarantor of its right to subrogation
against the Borrower to recover full indemnity for any payments made
pursuant to this Guaranty.
7. No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder and no course of
dealing between any Guarantor and any Creditor shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Creditor to any other or further action in any circumstances without
notice or demand.
-5-
<PAGE>
9. Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to any Guarantor, if the Agent,
after an Event of Default has occurred, so requests, shall be collected,
enforced and received by such Guarantor as trustee for the Creditors and be paid
over to the Creditors on account of the indebtedness of the Borrower to the
Creditors, but without affecting or impairing in any manner the liability of
such Guarantor under the other provisions of this Guaranty. Prior to the
transfer by such Guarantor of any note or negotiable instrument evidencing any
indebtedness of the Borrower to such Guarantor, such Guarantor shall mark such
note or negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, each Guarantor
hereby agrees with the Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under Section 5.09 of the Bankruptcy Code, or otherwise)
until all Guaranteed Obligations have been paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be required
by applicable statute and cannot be waived) to require the Creditors to (i)
proceed against the Borrower, any other Guarantor, any other guarantor or any
other party, (ii) proceed against or exhaust any security held from the
Borrower, any other Guarantor, any other guarantor or any other party or (iii)
pursue any other remedy in the Creditors' power whatsoever. Each Guarantor
waives any defense based on or arising out of any defense of the Borrower, any
other Guarantor, any other guarantor or any other party other than payment in
full of the Guaranteed Obligations, including without limitation any defense
based on or arising out of the disability of the Borrower, any other Guarantor,
any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Creditors may, at their election, foreclose on any
security held by the Agent, the Collateral Agent or the other Creditors by one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Creditors may have
against the Borrower or any other party, or any security, without affecting or
impairing in any way the liability of any Guarantor hereunder except to the
extent the Guaranteed Obligations have been paid in full. Each Guarantor waives
any defense arising out of any such election by the Creditors, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrower or
any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest,
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<PAGE>
notices of dishonor, notices of acceptance of this Guaranty, and notices of the
existence, creation or incurring of new or additional indebtedness. Each
Guarantor assumes all responsibility for being and keeping itself informed of
the Borrower's financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks which such Guarantor assumes and incurs
hereunder, and agrees that the Creditors shall have no duty to advise any
Guarantor of information known to them regarding such circumstances or risks.
11. In order to induce the Banks to make Loans to the Borrower, and
to issue, and participate in, Letters of Credit for the account of the Borrower,
pursuant to the Credit Agreement and to induce the Other Creditors to execute,
deliver and perform the Interest Rate Protection and Other Hedging Agreements,
each Guarantor hereby represents, warrants and covenants that:
(i) Such Guarantor and each of its Subsidiaries (x) is a duly
organized and validly existing corporation in good standing under the laws
of the jurisdiction of its incorporation, (y) has the corporate power and
authority to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (z) is duly
qualified and is authorized to do business and is in good standing in each
jurisdiction where the ownership, leasing or operation of property or the
conduct of its business requires such qualification except for failures to
be so qualified which, in the aggregate, would not have a material adverse
effect on the performance, business, assets, nature of assets, liabilities,
operations, properties, condition (financial or otherwise) or prospects of
such Guarantor or of such Guarantor and its Subsidiaries taken as a whole.
(ii) Such Guarantor has the corporate power to execute, deliver and
perform the terms and provisions of this Guaranty and has taken all
necessary corporate action to authorize the execution, delivery and
performance by it of this Guaranty. Such Guarantor has duly executed and
delivered this Guaranty, and this Guaranty constitutes its legal, valid and
binding obligation enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, reorganization,
moratorium or similar laws relating to or limiting creditors' rights
generally or by general equitable principles (regardless of whether the
issue of enforceability is considered in a proceeding in equity or at law).
(iii) Neither the execution, delivery or performance by such
Guarantor of this Guaranty, nor compliance by it with the terms and
provisions hereof, (x) will contravene any provision of any law, statute,
rule or regulation or any order, writ,
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injunction or decree of any court or governmental instrumentality, (y) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents) upon any of the property or assets of such Guarantor
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement or loan agreement, or any other agreement, contract or instrument to
which such Guarantor is a party or by which it or any of its property or assets
is bound or to which it may be subject or (z) will violate any provision of the
Certificate of Incorporation or By-Laws (or similar organizational documents) of
such Guarantor or any of its Subsidiaries.
(iv) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with (except as have been obtained
or made prior to the Initial Borrowing Date and are in full force and
effect), or exemption by, any governmental or public body or authority, or
any subdivision thereof, is required to authorize, or is required in
connection with, (x) the execution, delivery and performance of this
Guaranty or (y) the legality, validity, binding effect or enforceability of
this Guaranty.
(v) There are no actions, suits or proceedings pending or, to the
best knowledge of any Guarantor, threatened (x) with respect to this
Guaranty, (y) with respect to any Indebtedness of the Guarantor or any of
its Subsidiaries or (z) that are reasonably likely to materially and
adversely affect the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of such Guarantor and its Subsidiaries taken as a whole.
(vi) On the date hereof and after giving effect to the incurrence by
such Guarantor of the Contingent Obligations evidenced by this Guaranty,
(x) the assets of such Guarantor, at a fair valuation, will exceed its
debts, (y) the Guarantor will have sufficient capital to conduct its
business and (z) such Guarantor will not have incurred debts, and does not
intend to incur debts, beyond its ability to pay such debts as they mature.
For purposes of this clause (vi), "debt" means any liability on a claim,
and "claim" means (x) right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured;
or (y) right to an equitable remedy for breach of performance if such
breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, or unsecured.
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12. Each Guarantor covenants and agrees that on and after the date
hereof and until the Total Commitment and all Letters of Credit have terminated
and all Guaranteed Obligations have been paid in full, such Guarantor shall
take, or will refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken so that no violation of any provision,
covenant or agreement contained in Section 8 or 9 of the Credit Agreement, and
so that no Default or Event of Default, is caused by the actions of such
Guarantor or any of its Subsidiaries.
13. Each Guarantor hereby jointly and severally agrees to pay all
reasonable out-of-pocket costs and expenses of each Creditor in connection with
the enforcement of this Guaranty and the protection of such Creditor's rights
hereunder, and in connection with any amendment, waiver or consent relating
hereto (including, without limitation, the reasonable fees and disbursements of
counsel (including in-house counsel) employed by any of the Creditors).
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated in any manner whatsoever unless in writing duly
signed by the Agent (with, except as provided in Section 13.12 of the Credit
Agreement, the consent of the Required Banks) and each Guarantor directly
affected thereby (it being understood that the release or addition of any
Guarantor hereunder shall not constitute a change or waiver affecting any
Guarantor other than the Guarantor so released or added); PROVIDED, HOWEVER,
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Creditors (and not all
Creditors in a like or similar manner) shall require the written consent of the
Requisite Creditors (as defined below) of such Class of Creditors. For the
purpose of this Guaranty, the term "Class" shall mean each class of Creditors,
I.E., whether (x) the Bank Creditors as holders of the Credit Document
Obligations or (y) the Other Creditors as holders of the Interest Rate
Protection Obligations. For the purpose of this Guaranty, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks and (y) with respect to the Interest
Rate Protection Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate Protection or
Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or conformed) copy
of the Credit Agreement has been made available to its principal executive
officers and such officers are familiar with its contents.
17. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an
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Event of Default (such term to mean and include any "Event of Default" under,
and as defined in, the Credit Agreement or any payment default (after giving
effect to any grace period applicable thereto) under any Interest Rate
Protection or Other Hedging Agreement and shall in any event, include without
limitation any payment default on any of the Guaranteed Obligations after giving
effect to any grace period applicable thereto), each Creditor is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Guarantor or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by such Creditor (including, without limitation, by
branches and agencies of such Creditor wherever located) to or for the credit or
the account of such Guarantor, against and on account of the obligations and
liabilities of such Guarantor to such Creditor under this Guaranty, irrespective
of whether or not such Creditor shall have made any demand hereunder and
although said obligations, liabilities, deposits or claims, or any of them,
shall be contingent or unmatured.
18. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the Credit Agreement, (ii)
in the case of any Guarantor, at its address set forth opposite its signature
below, and (iii) in the case of any Other Creditor, as provided in the Security
Agreement; or in any case at such other address as any of the Persons listed
above may hereafter notify the others in writing.
19. If claim is ever made upon any Creditor for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (b) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon it, notwithstanding any revocation hereof or the
cancellation of any Note or any Interest Rate Protection or Other Hedging
Agreement or other instrument evidencing any liability of the Borrower, and such
Guarantor shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such payee.
20. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by the Borrower or other Persons
liable in respect of the Guaranteed Obligations (including any Guarantor), with
respect to any of the Guaranteed Obligations shall, if the statute of
limitations in favor of any Guarantor against any Creditor
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<PAGE>
shall have commenced to run, toll the running of such statute of limitations,
and if the period of such statute of limitations shall have expired, prevent the
operation of such statute of limitations.
21. (A) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
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 GUARANTY, EACH GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO SUCH ACTIONS OR
PROCEEDINGS. EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS CT CORPORATION SYSTEMS, INC. WITH OFFICES ON THE DATE HEREOF AT 1633
BROADWAY, NEW YORK, NEW YORK, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE,
ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY,
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY
BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE,
APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH GUARANTOR
AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON THE TERMS AND FOR THE
PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT FOR THE BANKS UNDER THIS
GUARANTY. EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
EACH GUARANTOR AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY OF THE CREDITORS TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY GUARANTOR IN ANY OTHER JURISDICTION.
(B) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES 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 GUARANTY OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE
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AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
22. (a) It is the desire and intent of each Guarantor and the
Creditors that this Guaranty shall be enforced against each Guarantor to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. In furtherance of the foregoing,
it is noted that the obligations of each Guarantor has been limited as provided
in Section 1 hereof.
(b) If, however, and to the extent, that the obligations of any
Guarantor under this Guaranty shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guaranteed Obligations of such Guarantor (but
not the Guaranteed Obligations of any other Guarantor unless such other
Guarantor or Guarantors are individually subject to the circumstances covered by
this Section 22) shall be deemed to be reduced and the affected Guarantor shall
pay the maximum amount of the Guaranteed Obligations which would be permissible
under applicable law.
23. This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Agent.
24. In the event that all of the capital stock of one or more
Guarantors is sold in connection with a sale permitted by Section 9.02 of the
Credit Agreement and the proceeds of such sale or sales are applied in
accordance with the provisions of Section 4.02 of the Credit Agreement, to the
extent applicable, each Guarantor (x) all of the capital stock of which is so
sold or (y) which is a Subsidiary of a Guarantor all of the capital stock of
which is so sold, shall be released from this Guaranty and this Guaranty shall,
as to each Guarantor or Guarantors, terminate, and have no further force or
effect.
25. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
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26. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense.
* * *
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
ADDRESS:
*7777 Fay Avenue PRECISION AEROTECH, INC.,
Suite 200 as a Pledgor
La Jolla, CA 92037
Attention: President
Tel: (619) 456-2992 By
Fax: (619) 456-3809 -------------------------------
Title:
c/o L&S Machine Co., Inc. L&S AEROTECH, INC.,
*2019 Southwest Boulevard as a Pledgor
Wichita, KS 67277
Attention: President
Tel: (316) 942-0181 By
Fax: (316) 942-6082 -------------------------------
Title:
*6717 Alabama Highway 157 SPEEDRING, INC.,
Cullman, AL 35057 as a Pledgor
Attention: President
Tel: (205) 737-5200
Fax: (205) 737-5203 By
-------------------------------
Title:
*2909 Waterview Drive SPEEDRING SYSTEMS, INC.,
Rochester Hills, MI 48309-4600 as a Pledgor
Attention: President
Tel: (810) 853-2540
Fax: (810) 853-2808 By
-------------------------------
Title:
- -----------------------------
*/ With a copy to:
Vernitron Corporation
645 Madison Avenue
New York, NY 10022
Attention: President
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<PAGE>
Accepted and Agreed to:
Banque Paribas,
as Agent for the Banks
By_________________________
Title:
By_________________________
Title:
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