<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 6, 1995
CPT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-7462 41-0972129
(State or other (Commission (IRS Employer
jurisdiction) File Number) Identification No.)
1430 Broadway, 13th Floor, New York, NY 10018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212)382-1313
Page 1
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF A BUSINESS
On April 6, 1995, J&L Acquisition Corp., a Delaware corporation ("JLA"), a
newly incorporated, indirect, majority-owned subsidiary of CPT Holdings, Inc.
(the "Company"), acquired substantially all of the assets of J&L Structural,
Inc. ("JLS") and Trailer Components, Inc. ("TCI"), Pennsylvania corporations
based in Aliquippa, Pennsylvania, for $50 Million plus the assumption of
certain liabilities which were satisfied at closing (the "Acquisition").
Simultaneously with the closing, JLA changed its name to J&L Structural, Inc.
JLS is a nationwide independent producer of high quality lightweight structural
steel shapes used primarily in the manufactured housing, truck trailer and
highway safety systems industries. TCI provides secondary services to JLS.
Current management of JLS will remain with JLA under long term employment
agreements.
As part of the Acquisition, the asset's of Brighton Electric Steel Casting
Company ("Brighton"), an existing subsidiary of the Company and the direct
parent of JLA, were contributed to JLA and Brighton changed its name to J & L
Holdings, Inc.("JLH"). Prior to the closing of the Acquisition, Brighton
redeemed its preferred stock from the holder thereof in consideration for the
issuance by the Company of a Deferred Purchase Money Note in the approximate
amount of $475,000, said amount equal to the stated value for the preferred
stock and the accrued dividends thereon, bearing interest at 11 percent and due
December 15, 2002.
The purchase price and related expenses were funded as follows: (1) a $22
Million 6-year Senior Term Loan from Finova Capital Corporation ("Finova"),
bearing interest at prime plus 2 percent and secured by a first lien on the
assets of JLA; (2) $23 Million of Subordinated Secured Notes from The Paul
Revere Investment Management Corporation, as agent for The Paul Revere Life
Insurance Company, The Paul Revere Variable Annuity Insurance Company, The Paul
Revere Protective Life Insurance Company and Rhode Island Hospital Trust
National Bank, as trustee, each bearing interest at 13 percent, secured by a
junior lien on the assets of JLA and including a grant of warrants equal in
the aggregate to 15.3 percent of the common stock ownership of JLA, subject to
certain exercise restrictions; (3) a $15 Million Revolving Line of Credit
provided by Finova and bearing interest at prime plus 1.5 percent having an
initial term of 5 years followed by a 1 year right of renewal at Finova's
discretion; (4) a capital contribution of approximately $2.5 Million by the
shareholders of JLS in return for the issuance of common stock representing
19.8 percent of JLH, which was in turn contributed to JLA ; and (5) a $5
Million capital contribution from the Company to JLH which was, in turn,
contributed by JLH to JLA.
The $5 Million equity capital infusion from the Company was loaned to the
Company by Trinity Investment Corp. as part of a larger borrowing in the
approximate total amount of $6.7 Million (the "Credit Agreement"), the
additional borrowings being used to retire the existing Variable Rate Debenture
of the Company to Trinity in the amount of $ 900,000 dated February 5, 1993 and
certain other short-term obligations of the Company. The Credit Agreement is
evidenced by a Debenture of the Company to Trinity bearing interest at the
fixed rate of 13% per annum and due December 15, 2002. As additional
consideration for the Credit Agreement, the Company granted Trinity Warrants to
purchase up to 2,000,000 shares of the common stock of the Company at an
exercise price of $ 1.00 per share.
2
<PAGE> 3
ITEM 7. HISTORICAL FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS:
<TABLE>
<S> <C>
Pro Forma Financial Information.......................................... [ ]
Unaudited Interim Financial Statements of J&L Structural, Inc............ [ ]
Audited Historical Financial Statements of J&L Structural,Inc............ [ ]
Exhibit 23 Independent Accounts Consent............................... [ ]
Exhibit 99.1 Press Release issued by the Registrant on April 6, 1995.... [ ]
Exhibit 99.2 Asset Purchase Agreement................................... [ ]
Exhibit 99.3 Loan and Security Agreement................................ [ ]
Exhibit 99.4 Note and Warrant Purchase Agreement........................ [ ]
Exhibit 99.5 Mortgage between the Paul Revere Investment Management..... [ ]
Corporation, as Agent and J&L Structural, Inc.
Exhibit 99.6 Management Subordination Agreement......................... [ ]
Exhibit 99.7 Pledge Agreement........................................... [ ]
Exhibit 99.8 Collateral Assignment of Trademarks and Security Agreement. [ ]
</TABLE>
3
<PAGE> 4
SIGNATURE
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.
CPT HOLDINGS, INC.
(Registrant)
By /s/William L. Remley
---------------------
William L. Remley
President
April 21, 1995
4
<PAGE> 5
CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following consolidated pro forma financial information (the "Pro Forma
Financial Information") have been derived by the application of pro forma
adjustments to the Historical Financial Statements included as part of this
item beginning on page 11 and the Registrant's previously filed Forms 10-K
and 10-Q. Certain adjustments have been made to the Registrant's historical
results for the fiscal year ended June 30, 1994 in order to eliminate the
effects of certain discontinued operations as explained more fully in the
accompanying notes and Form 8-K filed on October 27, 1994. J&L Structural,
Inc. (J&L) has a fiscal year end as of September 30 which differs from that of
the Registrant's. For purposes of the Pro Forma Financial Information, the
year ended June 30, 1994 results incorporate the fiscal year results ended
September 30, 1994 for J&L, and for the six months ended December 31, 1994
results, J&L added its three months ended September 30, 1994 results with its
three months ended December 31, 1994 results. The pro forma statements of
operations give effect to the Acquisition as if it were consummated on July 1,
1993. The pro forma balance sheet gives effect to the Acquisition as if it had
occurred on December 31, 1994. The pro forma adjustments are described in the
accompanying notes. The Pro Forma Financial Information should not be
considered indicative of actual results that would have been achieved had the
Acquisition been consummated on the dates or for the periods indicated and do
not purport to indicate results of operations as of any future date or for any
future period. The Pro Forma Financial Information should be read in
conjunction with the Historical Financial Statements and the notes thereto
included in this item beginning on page 11 and in the Registrant's
previously filed Forms 10-K and 10-Q.
The pro forma adjustments were applied to the respective Historical Financial
Statements to reflect the new capitalization of the Registrant and to account
for the Acquisition as a purchase. Under purchase accounting, the respective
purchase cost will be allocated to the acquired assets and liabilities based on
their relative fair values as of the closing date, based on valuations and
other studies which are not yet complete. The Registrant does not expect that
the effects of the final allocation will differ materially from those set forth
herein.
5
<PAGE> 6
CPT HOLDINGS, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
12 MONTHS ENDED JUNE 30, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Elimination of
CPT Discontinued J&L
Holdings Operations(a) CPT Holdings Structural Pro Forma Pro Forma
Historical ------------- Adjusted Historical Adjustments ---------
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sales, net $15,432 $9,455 $5,977 $74,351 $80,328
Cost of sales excluding depreciation 11,923 7,721 4,202 61,233 $1,385 (b) 66,820
Depreciation 36 36 1,893 3,150 (b) 5,079
-------- -------- ------ ------- -------- --------
Gross profit 3,473 1,734 1,739 11,225 (4,535) 8,429
Selling, general and administrative 4,427 3,114 1,313 3,921 (600) (b) 4,634
Depreciation & amortization 156 156
Interest expense 444 427 17 219 7,226 (c) 7,462
Other expense (income) (169) (169) (7) 169 (d) (7)
-------- -------- ------ ------- -------- --------
Income (loss) before taxes (1,229) (1,807) 578 6,936 (11,330) ($3,816)
Provision for income taxes
-------- -------- ------ ------- -------- --------
Net income (loss) from operations ($1,229) ($1,807) $578 $6,936 $11,330 ($3,816)
======== ======== ====== ======= ======== ========
</TABLE>
6 MONTHS ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
J&L
CPT Holdings Structural Pro Forma
Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales, net $2,884 $40,920 $43,804
Cost of sales excluding depreciation 2,179 33,684 35,863
Depreciation 18 920 $1,275 (b) 2,213
------- ------- -------- -------
Gross profit 687 6,316 (1,275) 5,728
Selling, general and administrative 602 2,091 (300) (b) 2,393
Depreciation & amortization 71 71
Interest expense 77 154 3,473 (c) 3,704
Other expense (income) 70 4 (73) (d) 1
------- ------- -------- -------
Income (loss) before taxes (62) 3,996 (4,375) (441)
Provision (benefit) for income taxes 61 (61) (e)
------- ------- -------- -------
Net income (loss) from operations ($123) $3,996 ($4,314) ($441)
====== ======= ======== =======
</TABLE>
6
<PAGE> 7
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(a) The pro forma adjustments to CPT Holdings, Inc.'s historical results for
the fiscal year ended June 30, 1994 result from the discontinuance of
operations of a subsidiary. On October 27, 1994, the Company joined with
the primary secured lender of its subsidiary, Hupp Industries, Inc.
("Hupp"), to consummate a secured party sale with respect to
substantially all of the assets of Hupp to DH Acquisition Corp. as
nominee for Dreison International, Inc. As a result, the pro forma
statement of operations for the twelve months ended June 30, 1994 has
been adjusted to exclude the operations of Hupp as previously reported in
the Registrant's Form 10-K as of the same date.
(b) The pro forma adjustments to costs of sales and selling, general and
administrative expenses include the increase in depreciation expense
resulting from the revaluation of fixed assets (computed using an average
useful life of 12 years), the realization of additional inventory costs
resulting from the elimination of existing LIFO reserves and recognition
of manufacturing profits in existing finished goods and the reduction in
the hourly employee profit sharing plan expense as a result of the
impact of the Acquisition on the computation of the benefit. Such
amounts are as follows (in thousands):
<TABLE>
<CAPTION>
Twelve Months Six Months
Ended Ended
COSTS OF SALES: June 30, 1994 December 31, 1994
------------- -----------------
<S> <C> <C>
Additional depreciation due to fixed asset revaluation $3,150 $1,575
(using 12 yr. life)
Realization of effects of purchase accounting 1,385 --
adjustments to inventory ----- ------
$4,535 $1,575
====== ======
SELLING, GENERAL AND ADMINISTRATIVE:
Reduction in hourly employee profit sharing plan expense ($600) ($300)
====== ======
</TABLE>
(c) The pro forma adjustment to interest expense and amortization of
deferred financing costs reflects the following (in thousands):
<TABLE>
<CAPTION>
Twelve Months Six Months
Ended Ended
June 30, 1994 December 31, 1994
------------------ -----------------
<S> <C> <C>
Elimination of interest on existing indebtedness ($219) ($154)
Interest expense on the Senior Loan and the Revolving Line of Credit 3,014 1,410
Interest expense on the Subordinated Secured Notes 2,998 1,500
Interest expense on the Trinity Credit Agreement 858 429
Interest expense on the Deferred Purchase Money Promissory Note 51 26
Amortization of deferred financing costs 524 262
--- ---
$7,226 $3,473
====== ======
</TABLE>
(d) Reflects the elimination of the minority ownership held in Brighton.
(e) Reflects the effect of the Acquisition on the provision for income
taxes.
7
<PAGE> 8
CPT HOLDINGS, INC.
CONSOLIDATED PRO FORMA BALANCE SHEET
DECEMBER 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
CPT J&L
Holdings Structural Pro Forma
Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash $87 $202 $289
Accounts receivable 575 6,477 7,052
Inventory 716 7,292 $1,385 (a) 9,393
Prepaid expenses 23 33 56
----- ------ ------ ------
Total current assets 1,401 14,004 1,385 16,790
----- ------ ------ ------
Property and equipment, net 358 6,356 37,796 (a) 44,510
Deferred financing costs 3,825 (a) 3,825
Other assets 50 468 518
Intangibles, net 1,601 8 (8) (a) 1,601
----- ------ ------ ------
Total assets $3,410 $20,836 $42,998 $67,244
===== ====== ====== ======
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $2,501 $4,121 ($543) (b) $6,079
Accrued expenses 1,090 1,863 2,953
Short term borrowings 3,318 (150) (b) 3,168
Current portion of long term debt 189 1, 491 (b)(c) 1,680
----- ----- ------ -----
Total current liabilities 6,909 6,173 798 13,880
Existing debt /Credit Agreement 900 8,382 (2,845) (a)(b)(c) 6,437
Deferred purchase money promissory note 466 (b) 466
Revolving line of credit 5,590 (c) 5,590
Senior loan 20,320 (c) 20,320
Subordinated secured notes 22,847 (c) 22,847
----- ------ ------ ------
Total liabilities 7,809 14,555 47,176 69,540
Minority interest in subsidiaries 269 2,353 (c) 2,622
Redeemable preferred stock 350 (350) (b)
STOCKHOLDERS' EQUITY
Common Stock 76 76
Additional paid-in capital 4.368 363 (263) (a)(c) 4,468
Retained earnings (9,462) 5,918 (5,918) (a) (9,462)
------ ------ ------ -------
Total stockholders' equity (5,018) 6,281 (6,181) (4,918)
------ ------ ------ ------
Total liabilities $3,410 $20,836 $42,998 $67,244
and stockholders' equity ====== ====== ====== ======
</TABLE>
8
<PAGE> 9
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(a) The acquisition of J&L will be accounted for as a purchase applying the
provisions of Accounting Principles Board Opinion No. 16 (APB 16).
The respective purchase cost will be allocated to acquired assets and
liabilities based on their relative fair values as of the closing
dates, based on valuations and other studies which are not yet
complete. However, the Company believes that the effects of the final
allocation will not differ materially from those set forth herein.
The purchase cost and preliminary allocation of the excess of cost over
the net book value of assets acquired is as follows (in thousands):
<TABLE>
<S> <C>
Purchase cost:
Purchase of assets of J&L Structural, Inc. $ 47,500
Purchase of assets of Trailer Components, Inc. 2,500
Fees and expenses 4,250
-----
Total purchase cost 54,250
Pro forma book value of assets acquired:
Book value of J&L per the historical financial statements 6,281
Debt not assumed (current - $ 189; long term - $ 4,782) 4,971
-----
Total pro forma book value of assets acquired 11,252
Excess of purchase cost over net book value of assets acquired 42,998
Allocated to:
Property and equipment 37,796
Inventory ( comprised of elimination of the LIFO reserve - $768;
and the recognition of manufacturing profit in finished goods-$617) 1,385
Deferred financing costs 3,825
Elimination of intangible assets (8)
---
Remaining excess of purchase cost over net assets acquired $ 0
=========
</TABLE>
(b) Reflects the repayment/restructuring of existing indebtedness as
follows (in thousands):
<TABLE>
<CAPTION>
Repayment of Repayment of Redemption of
Credit Note to Ascott Existing Preferred
Agreement Wing, Inc Indebtedness Stock Total
--------- -------------- ------------ -------------- -----
<S> <C> <C> <C> <C> <C>
Accounts payable $ ( 543) $ (543)
Short-term borrowings (150) (150)
Current portion of long-term (189) (189)
debt
Existing debt 637 (8,382) (7,745)
Deferred purchase money note 466 466
Minority interest in subsidiaries (269) (269)
Redeemable preferred stock (350) (350)
</TABLE>
9
<PAGE> 10
(c) Reflects the Acquisition capitalization as follows (in thousands):
<TABLE>
<S> <C>
Revolving Line of Credit Agreement $ 5,590
Senior Loan excluding current portion 20,320
Current portion of Senior Loan 1,680
Subordinated Secured Notes, including
warrants 23,000 (i)
Credit Agreement, including warrants 5,000 (ii)
Management equity in subsidiary 2,469
-----
Total $ 58,059
======
</TABLE>
(i) The Subordinated Secured Notes is shown as the gross proceeds amount
which includes common stock purchase warrants valued at $153,000 as of
the Acquisition date. The value of these warrants has been credited to
minority interest in subsidiaries.
(ii) The Credit Agreement is shown as the gross proceeds amount which
includes common stock purchase warrants valued at $100,000 as of the
Acquisition date. The value of these warrants has been credited to
additional paid-in capital.
10
<PAGE> 11
J&L STRUCTURAL, INC.
Unaudited Interim Combined Balance Sheet
(dollars in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1994 1994
---- ----
<S> <C> <C>
ASSETS
Cash $ 202 $ 286
Accounts Receivable, net 6,477 6,727
Inventory 7,292 8,583
Prepaid expenses 33 83
-------- --------
Total current assets 14,004 15,679
Property and equipment, net 6,356 6,383
Other assets 468 468
Intangibles, net 8 8
-------- --------
Total assets $20,836 $22,538
-------- --------
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable $4,121 $5,778
Accrued expenses 1,863 2,389
Short term borrowings 3,600 2,890
Current portion of long term debt 189 189
-------- --------
Total current liabilities 9,773 11,246
Long-term debt 4,782 4,828
-------- --------
Total liabilities 14,555 16,074
-------- --------
SHAREHOLDERS' EQUITY
Common stock and
additional paid-in capital 363 363
Retained earnings 5,918 6,101
-------- --------
Total shareholders' equity 6,281 6,464
-------- --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $20,836 $22,538
======== ========
</TABLE>
See notes to the unaudited interim combined financial statements.
11
<PAGE> 12
J&L STRUCTURAL, INC.
Unaudited Interim Combined Statements of Income
For the Three Months Ended December 31, 1994 and 1993
(dollars in thousands)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Net sales $20,870 $16,286
Cost of goods sold 17,897 13,857
------ ------
Gross profit 2,973 2,429
Selling, general and administrative expenses 1,227 1,121
------ ------
Income from operations 1,746 1,308
Interest expense, net 83 52
Other expense 4 6
------ ------
Net income $1,659 $1,250
====== ======
</TABLE>
See notes to the unaudited interim combined financial statements.
12
<PAGE> 13
J&L STRUCTURAL, INC.
Unaudited Interim Combined Statements Of Cash Flows
For the Three Months Ended December 31, 1994 and 1993
(dollars in thousands)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $1,659 $1,250
Adjustments to reconcile net income
to net cash provided by operating activities -
Depreciation and amortization 484 528
Change in assets and liabilities -
Accounts receivable 250 (88)
Inventories 1,091 404
Prepaid expenses 98 28
Accounts payable (1,291) (872)
Accrued expenses 439 (414)
------- ------
Total adjustments 1,071 (414)
Net cash provided by operating activities 2,730 836
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (556) (268)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 900 900
Principal repayments on long-term debt (46) (332)
Distributions paid to shareholders (3,112) (806)
------- ------
Net cash used for financing activities (2,258) (238)
------- ------
NET INCREASE (DECREASE) IN CASH (84) 330
CASH, beginning of year 286 186
------- ------
CASH, end of year $202 $516
======= ======
</TABLE>
See notes to the unaudited interim combined financial statements.
13
<PAGE> 14
J&L STRUCTURAL, INC.
Notes to the Unaudited Interim Combined Financial Statements
For the Three Months Ended December 31, 1994 and 1993
(dollars in thousands)
(1) Summary of Significant Accounting Policies
The accompanying combined financial statements of J&L Structural, Inc. ("J&L")
has been prepared in accordance with the instructions for Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The accounts of
Trailer Components, Inc. ("TCI"), an entity under common control, have been
combined with those of J&L after elimination of all significant intercompany
balances and transactions. The financial information included herein is
unaudited; however, the information reflects all adjustments (consisting solely
of normal recurring adjustments) that are, in the opinion of management,
necessary for a fair presentation of the financial position, results of
operations, and cash flows for the interim periods.
Operating results for the three month period are not necessarily indicative of
the results that may be expected for the entire fiscal year.
(2) Inventories
Inventories at December 31, 1994 and September 30, 1994, consist of the
following (in thousands):
<TABLE>
<CAPTION>
December September
-------- ---------
<S> <C> <C>
Raw materials $2,503 $3,218
Finished goods 5,557 5,954
----- -----
8,060 9,172
LIFO reserve (768) (589)
----- -----
Total $7,292 $8,583
====== ======
</TABLE>
(3) Subsequent Event
On April 6, 1995, J&L sold substantially all of its assets and certain
liabilities together with those of TCI to J&L Acquisition Corp., an indirect,
majority-owned subsidiary of CPT Holdings, Inc., for $50 million in cash plus
the assumption of certain outstanding debt.
14
<PAGE> 15
J&L STRUCTURAL, INC.
FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1994 AND 1993
TOGETHER WITH REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 16
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
J&L Structural, Inc.:
We have audited the accompanying balance sheets of J&L Structural, Inc. (a
Pennsylvania corporation) as of September 30, 1994 and 1993, and the related
statements of income and retained earnings and cash flows for the years ended
September 30, 1994, 1993 and 1992. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of J&L Structural, Inc. as of
September 30, 1994 and 1993, and the results of its operations and its cash
flows for the years ended September 30, 1994, 1993 and 1992, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
October 28, 1994
<PAGE> 17
J&L STRUCTURAL, INC.
BALANCE SHEETS
SEPTEMBER 30, 1994 AND 1993
A S S E T S
-----------
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 286,393 $ 186,110
Accounts receivable, net 6,727,035 4,921,713
Inventories 8,582,971 5,706,174
Prepaid expenses 82,891 78,387
----------- -----------
Total current assets 15,679,290 10,892,384
----------- -----------
PROPERTY, PLANT AND EQUIPMENT 15,306,766 15,019,676
Less- Accumulated depreciation 8,923,654 7,655,456
----------- -----------
Net property, plant and equipment 6,383,112 7,364,220
----------- -----------
OTHER ASSETS 475,311 35,218
----------- -----------
$22,537,713 $18,291,822
=========== ===========
</TABLE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- - ----------------------------------------
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Debt payable $ 2,889,496 $ 1,481,223
Accounts payable 5,778,075 4,435,607
Accrued expenses 1,474,269 1,063,202
Accrued distributions to shareholders 1,103,678 1,089,390
----------- -----------
Total current liabilities 11,245,518 8,069,422
----------- -----------
LONG-TERM DEBT 4,828,143 5,017,279
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' INVESTMENT:
Common stock 600 600
Paid-in capital 362,926 362,926
Retained earnings 6,100,526 4,841,595
----------- -----------
Total shareholders' investment 6,464,052 5,205,121
----------- -----------
$22,537,713 $18,291,822
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE> 18
J&L STRUCTURAL, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
NET SALES $74,350,614 $52,082,226 $43,975,513
COST OF GOODS SOLD 63,125,605 43,523,063 36,513,836
----------- ----------- -----------
Gross profit 11,225,009 8,559,163 7,461,677
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 4,076,951 3,496,393 2,939,624
----------- ----------- -----------
Income from operations 7,148,058 5,062,770 4,522,053
INTEREST EXPENSE, net (219,356) (251,303) (259,888)
OTHER INCOME (EXPENSE) 7,580 38,478 (6,583)
----------- ----------- -----------
NET INCOME 6,936,282 4,849,945 4,255,582
RETAINED EARNINGS, beginning
of year 4,841,595 6,366,337 5,677,214
LESS- DISTRIBUTIONS TO SHAREHOLDERS (5,677,351) (6,374,687) (3,566,459)
----------- ----------- -----------
RETAINED EARNINGS, end of year $ 6,100,526 $ 4,841,595 $ 6,366,337
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
-3-
<PAGE> 19
J&L STRUCTURAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,936,282 $ 4,849,945 $ 4,255,582
----------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by
operating activities-
Depreciation and amortization 2,048,668 2,191,045 2,171,294
Change in assets and liabilities-
Accounts receivable (1,805,322) (573,816) (785,596)
Inventories (2,876,797) (236,512) (1,121,428)
Prepaid expenses (4,504) (36,122) (40,489)
Other assets (440,342) 264,646 (19,413)
Accounts payable 1,342,468 1,140,011 (339,189)
Accrued expenses 411,067 205,668 438,175
----------- ----------- -----------
Total adjustments (1,324,762) 2,954,920 303,354
----------- ----------- -----------
Net cash provided by
operating activities 5,611,520 7,804,865 4,558,936
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (1,067,311) (871,322) (1,255,726)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 1,400,000 680,000 255,000
Principal repayments on long-term debt (180,863) (1,570,161) (591,804)
Distributions paid to shareholders (5,663,063) (6,012,977) (2,962,629)
----------- ----------- -----------
Net cash used for
financing activities (4,443,926) (6,903,138) (3,299,433)
----------- ----------- -----------
NET INCREASE IN CASH 100,283 30,405 3,777
CASH, beginning of year 186,110 155,705 151,928
----------- ----------- -----------
CASH, end of year $ 286,393 $ 186,110 $ 155,705
=========== =========== ===========
SUPPLEMENTAL DATA:
Cash payments for interest $ 230,000 $ 241,000 $ 261,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 20
J&L STRUCTURAL, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994 AND 1993
1. DESCRIPTION OF BUSINESS:
J&L Structural, Inc. (the Company or J&L) was formed in 1987 to purchase certain
previously idle plant and operating equipment from LTV Steel Corporation. The
Company is engaged in the business of manufacturing and fabricating lightweight
structural steel shapes. The Company's products are distributed throughout the
United States and Canada to customers principally in the manufactured housing,
tractor trailer, highway guard rails, construction and shipbuilding industries.
Trailer Components, Inc. (TCI) fabricates certain of the Company's products to
meet the requirements of some customers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements reflect the application of the following
significant accounting policies:
Basis of Presentation
TCI was established effective October 1, 1992 (Note 10). The accounts of TCI
have been combined with those of the Company, after elimination of all
significant intercompany balances and transactions, in the accompanying
financial statements for fiscal 1993 and subsequent periods. TCI is an entity
under common control by the shareholders of the Company and is included in the
transaction discussed in Note 11. The assets and results of operations of TCI
are not significant to the Company.
Fiscal Year
Effective October 1, 1993, the Company changed its fiscal year-end to December
31. Prior to October 1, 1993, the Company had a fiscal year-end of September 30.
The accompanying financial statements have been prepared as of September 30,
1994 and 1993, to comply with the contractual requirements of a sale agreement
with a third party as described in Note 11.
Inventories
Inventories (consisting primarily of raw steel billets and finished structural
steel) include material, labor and overhead and are primarily stated at the
lower of last-in, first-out (LIFO) cost or market. The Company's LIFO method is
based on raw material costs only.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided
using the straight-line method by making periodic charges to income over the
estimated useful lives of the assets, which are as follows:
<TABLE>
<S> <C>
Land Improvements 5-10 years
Buildings and Improvements 20 years
Machinery and Equipment 5-7 years
Rolls 3 years
</TABLE>
-5-
<PAGE> 21
Office Furniture and Equipment 5 years
Maintenance and repairs are charged to expense as incurred, while major
replacements and improvements are capitalized. The net cost of items sold or
retired are removed from the property accounts and any gain or loss is recorded
currently in the statements of income and retained earnings.
During the year ended September 30, 1994, the Company removed from the property
accounts certain idle equipment with a cost of approximately $681,000 that was
fully depreciated.
Included in other assets is a refundable deposit of approximately $368,000
related to the pending purchase of land adjacent to the Company's operating
facilities.
Insurance
The Company provides health insurance and workers' compensation coverage to its
employees under separate self-insurance programs that include certain stop-loss
coverages. Insurance expense is recognized based on estimated losses under the
programs. Components of insurance expense include paid claims, incurred but not
paid claims and estimated incurred but not reported claims.
Income Taxes
The shareholders of the Company and TCI have elected Subchapter S status for
both federal and state income tax purposes. Accordingly, the companies are not
liable for either federal or state income taxes and no provision for such taxes
has been made in these financial statements. It is the companies' general policy
to make distributions to their shareholders, as required, in order for them to
make payments of their personal income taxes resulting from the companyies'
operations.
Shareholder Distributions
Effective for fiscal 1993, the Company recognized shareholder distributions on a
full accrual basis. Prior to 1993, shareholder distributions were recognized on
a partial accrual basis (based on specific distribution limitations under its
borrowing agreements).
3. ACCOUNTS RECEIVABLE:
Accounts receivable as of September 30, 1994 and 1993, consist of the following:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Trade receivables $6,668,674 $4,990,402
Other 318,838 129,117
---------- ----------
6,987,512 5,119,519
Less- Reserve for doubtful accounts (260,477) (197,806)
---------- ----------
Accounts receivable, net $6,727,035 $4,921,713
========== ==========
</TABLE>
The Company grants credit to customers based upon management's assessment of
their creditworthiness. Sales to domestic and Canadian manufacturers of
manufactured homes, truck trailers, ships and highway guardrail systems, along
with customers in the construction industry, account for virtually all of the
Company's trade receivables.
-6-
<PAGE> 22
No one customer accounted for greater than 10% of net sales for the years ended
September 30, 1994 and 1993. One customer accounted for 11% of net sales for
the year ended September 30, 1992.
-7-
<PAGE> 23
4. INVENTORIES:
Inventories at September 30, 1994 and 1993, consist of the following:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Raw materials $3,217,712 $1,797,645
Finished goods 5,953,921 4,246,857
---------- ----------
9,171,633 6,044,502
LIFO reserve (588,662) (338,328)
---------- ----------
Total inventories $8,582,971 $5,706,174
========== ==========
</TABLE>
5. LONG-TERM DEBT:
As of September 30, 1994 and 1993, the Company had the following long-term debt
obligations outstanding:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Pennsylvania Department of Community Affairs Note Payable, interest at 3%, no
interest accruing and no principal or interest payments due until August 1995,
payable in monthly installments of $7,500, including interest, from August 1995
through July 1998 and increasing to $20,717 from August 1998 through July 2003,
secured by the real property of the Company and equipment financed under the
terms of the installment sales agreement between the Company and the Beaver
County Corporation for Economic Development (BCCED). $3,000,000 $3,000,000
Pennsylvania Bureau of Infrastructure Development Note Payable, interest at
4.5%, payable in monthly installments of $11,475, including interest, secured by
the real property of the Company and the equipment financed under the terms of
the installment sales agreement between the Company and BCCED. 1,047,848 1,136,224
Pennsylvania Industrial Development Authority Note Payable, interest at 3% with
an additional 3/4% payable to BCCED, payable in monthly installments of $10,257,
including interest, through October 2003, secured by the real property of the
Company and equipment financed under the terms of the installment sales
agreement between the Company and BCCED. 969,791 1,062,278
---------- ----------
Total 5,017,639 5,198,502
Less- Current maturities 189,496 181,223
---------- ----------
$4,828,143 $5,017,279
========== ==========
</TABLE>
-8-
<PAGE> 24
Under an installment sales agreement between BCCED and the Company, BCCED
administers the loans due the Pennsylvania Department of Community Affairs, the
Pennsylvania Bureau of Infrastructure Development and the Pennsylvania
Industrial Development Authority, and holds title to the Company's property
until the loans are repaid. The Company is responsible for making all scheduled
payments under these obligations and complying with all of the covenants
included in the agreements.
6. LINE OF CREDIT:
The Company maintains a line of credit under which borrowings are limited to the
lesser of (a) 80% of eligible accounts receivable and 50% of eligible inventory
or (b) $4,500,000 (Note 9). Borrowings bear interest ranging from the prime rate
to prime plus 1% (7.75% as of September 30, 1994) and are secured by receivables
and inventory. This agreement has been extended through the closing date of the
transaction described in Note 11, increasing the borrowing limit to $6,000,000.
This agreement includes certain provisions which, among other things, provide
the following: (a) the Company will maintain ratios of liabilities to tangible
net worth and cash flow to debt service, as defined, and a specified minimum
current ratio, (b) limit the amount of capital expenditures the Company can make
and (c) limit the amount of dividends paid with respect to the Company's common
stock.
Information regarding the Company's borrowings under the line of credit is as
follows:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Outstanding borrowings, end of year $2,700,000 $1,300,000
========== ==========
Approximate average outstanding balance $1,836,000 $1,933,000
========== ==========
Approximate maximum outstanding balance $4,100,000 $3,900,000
========== ==========
Weighted average interest rate for
the year 6.64% 6.00%
========== ==========
</TABLE>
7. EMPLOYEE BENEFIT PLANS:
In accordance with the labor agreement with the United Steelworkers of America,
the Company maintains a defined contribution (money purchase) plan whereby the
Company makes contributions, at designated rates, based on hours worked. All
contributions required under the plan have been funded as of September 30, 1994.
Pension expense for the years ended September 30, 1994, 1993 and 1992, was
approximately $204,000, $109,000 and $115,000, respectively.
A profit sharing plan is also provided for substantially all employees. The
amount available for profit sharing is based on a return on sales formula using
defined levels of pretax income. Under the provisions of the labor agreement,
distributions due are calculated and paid quarterly. Such amounts have been
reflected as current liabilities in the accompanying balance sheets. Profit
sharing expense for the years ended September 30, 1994, 1993 and 1992, was
approximately $1,832,000, $1,380,000 and $1,241,000, respectively.
-9-
<PAGE> 25
8. RELATED PARTY TRANSACTIONS:
The Company provides accounting and data processing services to Precision
Galvanizing Inc. (PGI) and Fourteenth Street Corporation (FSC), companies that
could be deemed to be related parties. Fees for such services approximated
$62,000, $57,000 and $74,000 for the years ended September 30, 1994, 1993 and
1992, respectively. As of September 30, 1994 and 1993, approximately $186,000
and $119,000, respectively, of these fees were unpaid and included in other
accounts receivable.
TCI rents a portion of a building owned by FSC. Rental payments were
approximately $149,000, $17,000 and $48,000 (which were based on estimated
market rental rates) for the years ended September 30, 1994, 1993 and 1992,
respectively.
9. COMMITMENTS AND CONTINGENCIES:
In November 1993, the Company entered into a workers' compensation insurance
program that provides for self-insurance with stop-loss protection. This
arrangement required the Company to issue a $390,000 letter of credit in the
name of the related insurance company. The Company is financially responsible
for the face value of this letter of credit. The face value of the letter of
credit reduces the availability under the line of credit facility described in
Note 6.
10. SHAREHOLDERS' INVESTMENT:
The capital stock structures of the Company and TCI are identical and are as
follows:
<TABLE>
<CAPTION>
Common Stock
-------------------
Class A Class B
<S> <C> <C>
Par value per share $1 $1
Authorized 10,000 10,000
Issued 300 -
Outstanding 300 -
Voting privileges Yes No
</TABLE>
Pursuant to a Shareholders' Agreement dated November 6, 1987, the Company has
the option to purchase shares of its stock whenever a shareholder intends to
sell the shares. The shares must be offered to the remaining shareholders if
the Company elects not to purchase the shares.
All of the outstanding stock of the Company is held pursuant to an Amended
Voting Trust Agreement. This agreement allows the Trustee to vote shares
included in the Agreement for all matters except those specifically prohibited,
and authorizes the Trustee to enter into certain agreements on behalf of the
Company. This agreement is effective through the earlier of (a) September 1,
1997, (b) the date at which no person, firm or corporation owns beneficially
more than 20% of the then outstanding voting stock or (c) when no voting stock
of the Company is beneficially owned by the majority shareholder or his
beneficiaries.
In connection with the establishment of TCI (Note 2), a property dividend of
approximately $64,000 was distributed to the shareholders, which in turn,
represented the initial investment in the new company.
-10-
<PAGE> 26
11. SUBSEQUENT EVENT:
The shareholders had previously authorized the management of the Company to
negotiate the sale of substantially all the assets of the Company together with
the assets of TCI. Management has finalized and agreed to the terms of a
purchase agreement with a third party. The closing is expected to take place in
the first quarter of 1995.
Management of J&L intends to liquidate the operations of the companies which are
not sold. Substantially all of the Company's assets will be sold except for
certain cash distributions to the shareholders permitted under the purchase
agreement. Under the purchase agreement, the buyer will assume all of the
Company's liabilities other than the amounts outstanding under the Company's
borrowing agreements (see Notes 5 and 6), which will be paid off concurrent with
such sale; and certain pending or threatened litigation, which management does
not believe is material to the Company's financial position or results of
operations. The accompanying financial statements do not include any adjustments
that will result from the sale of substantially all of the companies' assets.
Included in other assets in the accompanying balance sheet at September 30,
1994, is approximately $100,000 in fees incurred in connection with this
transaction.
-11-
<PAGE> 27
EXHIBIT INDEX
Exhibit No. Description Page No.
- - ---------- ----------------- --------
EX-23 Consent of Public Accountant
EX-99.1 Press Release issued by the Registrant on April 6, 1995
EX-99.2 Asset Purchase Agreement
EX-99.3 Loan and Security Agreement
EX-99.4 Note and Warrant Purchase Agreement
EX-99.5 Mortgage between the Paul Revere Investment Management
Corporation, as Agent, and J&L Structural, Inc.
EX-99.6 Management Subordination Agreement
EX-99.7 Pledge Agreement
EX-99.8 Collateral Assignment of Trademarks and Security Agreement
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated October 18, 1994,
in the financial statements of J&L Structural, Inc. for the year ended
September 30, 1994, included in the CPT Holdings, Inc. Form 8-K dated April 6,
1995, and to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
April 21, 1995
<PAGE> 1
[LOGO] CPT Holdings, Inc.
1430 Broadway
13th Floor
New York, NY
10018-3308
Telephone: 212/382-1313
NEWS RELEASE Facsimile: 212/391-1393
Contact: Richard C. Hoffman
TO: THE EDITOR
FOR: IMMEDIATE RELEASE
CPT HOLDINGS, INC. SUBSIDIARY ACQUIRES THE ASSETS
OF J&L STRUCTURAL, INC.
New York, New York, April 6, 1995 -- CPT Holdings, Inc. announced today that its
indirect subsidiary, J&L Acquisition Corp., has acquired the business and
substantially all of the assets of J&L Structural, Inc. and Trailer Components,
Inc., of Aliquippa, Pennsylvania. J&L Structural, Inc. is a nationwide
independent producer of high quality lightweight structural steel shapes, with a
leading market share in the Northeast, Southeast and Mid-Atlantic regions of the
United States. J&L Structural, Inc.'s structural steel products are used
primarily in the manufactured housing, truck trailer and highway safety systems
industries. Trailer Components, Inc. provides secondary services for J&L
Structural, Inc. As part of the purchase transaction the assets of CPT's other
subsidiary, Brighton Electric Steel Casting Company, which has an 80% share of
the small steel piercer point market in the U.S., will be transferred and
contributed to the acquisition entity. The combined entities had sales of
approximately $85 Million for the year ended December 31, 1994. Current
management of J&L Structural, Inc. will remain with the acquiring entity under
long term employment agreements.
CPT Holdings, Inc. is a public company traded on the NASDAQ broker quotation
system.
<PAGE> 1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
among
J&L STRUCTURAL, INC.,
TRAILER COMPONENTS, INC.,
THE SHAREHOLDERS NAMED HEREIN,
J&L ACQUISITION CORP.
and
CPT HOLDINGS, INC.
November 10, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGES
-----
<S> <C> <C>
ARTICLE I CERTAIN DEFINITIONS...................................... 1
ARTICLE II PURCHASE AND SALE OF ASSETS............................. 5
2.01. Purchase and Sale of Assets............................... 5
2.02. Excluded Assets........................................... 7
2.03. Assumption of Liabilities................................. 7
2.04. Purchase Price............................................ 7
2.05. Assignment of Value....................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANIES AND THE SHAREHOLDERS......................... 7
3.01. Organization and Qualification............................ 7
3.02. Authority and Authorization............................... 8
3.03. Execution and Binding Effect.............................. 8
3.04. No Breach or Default...................................... 8
3.05. No Violation of Law....................................... 8
3.06. No Consent................................................ 9
3.07. Financial Statements...................................... 9
3.08. Tax Matters............................................... 10
3.09. Litigation................................................ 10
3.10. Absence of Certain Changes and Events..................... 11
3.11. Directors and Executives.................................. 12
3.12. Customers and Suppliers................................... 12
3.13. Constituent Documents and Governmental Rules.............. 12
3.14. Governmental Orders....................................... 12
3.15. Governmental Permits...................................... 13
3.16. Environmental Matters..................................... 13
3.17. Real Property............................................. 14
3.18. Personal Property......................................... 15
3.19. Intellectual Property..................................... 15
3.20. Title to Assets; Sufficiency of Assets.................... 16
3.21. Pension Plans............................................. 16
3.22. Welfare Plans............................................. 17
3.23. Employee Matters.......................................... 17
3.24. Insurance................................................. 18
3.25. Indebtedness.............................................. 18
3.26. Other Material Contracts.................................. 19
3.27. Material Agreements....................................... 19
3.28. Transactions with Affiliates.............................. 19
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.29. Warranty and Product Liability............................ 20
3.30. Brokers................................................... 20
3.31. Accounts and Investments.................................. 20
3.32. Other Liabilities......................................... 21
3.33. Delivery of Documents..................................... 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE PARENT.......................................... 21
4.01. Organization.............................................. 21
4.02. Authority and Authorization............................... 21
4.03. Execution and Binding Effect.............................. 22
4.04. No Breach or Default...................................... 22
4.05. No Violation of Law....................................... 22
4.06. No Consent................................................ 22
4.07. Buyer Financial Information............................... 23
4.08. Financing................................................. 24
4.09. Brokers................................................... 24
4.10. Delivery of Documents..................................... 24
ARTICLE V TRANSACTIONS PRIOR TO CLOSING............................ 25
5.01. Conduct of Business Prior to Closing...................... 25
5.02. Access to Information..................................... 26
5.03. Best Efforts.............................................. 27
5.04. Notice of Developments.................................... 28
5.05. Permitted Shareholder Distributions....................... 29
5.06. Due Diligence Contingency................................. 29
ARTICLE VI CLOSING AND CLOSING CONDITIONS.......................... 30
6.01. Closing................................................... 30
6.02. Conditions Precedent to Obligations
of the Buyer.............................................. 31
6.03. Conditions Precedent to Obligations
of the Companies.......................................... 33
ARTICLE VII INDEMNIFICATION........................................ 35
7.01. Indemnification by the Companies
and the Shareholders...................................... 35
7.02. Indemnification by the Buyer.............................. 35
7.03. Indemnification by the Parent............................. 36
7.04. Representation, Settlement and Cooperation................ 36
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
7.05. Notice and Satisfaction of
Indemnification Claims.................................... 37
7.06. Duration of Indemnification Obligations;
Exclusive Remedy.......................................... 37
7.07. Indemnification Threshold................................. 37
7.08. Indemnification Liability of the Companies and
the Shareholders.......................................... 38
7.09. Indemnification Liability of the Buyer and the
Parent.................................................... 38
ARTICLE VIIIII MISCELLANEOUS PROVISIONS.............................. 38
8.01. Amendments................................................ 38
8.02. Assignment................................................ 38
8.03. Confidentiality........................................... 39
8.04. Consent to Jurisdiction and Service of
Process................................................... 40
8.05. Counterparts; Telefacsimile Execution..................... 41
8.06. Exhibits and Schedules.................................... 41
8.07. Expenses.................................................. 41
8.08. Further Assurances........................................ 42
8.09. Gender and Number......................................... 42
8.10. Governing Law; Construction............................... 42
8.11. Headings.................................................. 42
8.12. Notices................................................... 42
8.13. Publicity................................................. 44
8.14. Severability.............................................. 44
8.15. Successors and Assigns.................................... 44
8.16. Survival; Duration........................................ 44
8.17. Representations as to Knowledge........................... 44
8.18. Termination............................................... 45
8.19. Waivers................................................... 45
8.20 Change of Name............................................ 46
8.21. Coal Notice............................................... 46
</TABLE>
SCHEDULES
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Stock Purchase Agreement
Exhibit B Employment Agreement (Breedlove)
Exhibit C Employment Agreement (Howe)
Exhibit D Employment Agreement (Snyder)
Exhibit E Exhibit intentionally omitted
</TABLE>
-iii-
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of
November 10, 1994, among J&L ACQUISITION CORP., a Delaware corporation (the
"Buyer"), CPT HOLDINGS, INC., a Minnesota corporation (the "Parent"), J&L
STRUCTURAL, INC., a Pennsylvania corporation ("J&L"), and TRAILER COMPONENTS,
INC., a Pennsylvania corporation ("TCI" and together with J&L, each a "Company"
and collectively the "Companies"), and HOWELL A. BREEDLOVE, JAMES E. HOWE and
CARL A. SNYDER (each a "Shareholder" and collectively the "Shareholders").
PREAMBLE
The Companies are engaged in the business of manufacturing and
fabricating structural steel products ("the "Business"). The Shareholders are
the principal shareholders of the Companies. The Buyer is an Affiliate (as
hereinafter defined) of the Parent. The Companies desire to sell to the Buyer,
and the Buyer desires to purchase from the Companies, substantially all of the
Companies' assets used or useful in connection with, or otherwise relating to,
the Business, all upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set
forth herein and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Capitalized terms used herein and not otherwise defined shall
have the following meanings:
"Affiliate" shall mean, with respect to any Person, (a) any
director, officer, employee, partner or principal of such Person, (b) any other
Person of which such Person is a director, officer, employee, partner or
principal, (c) any Person who directly or indirectly controls or is controlled
by, or is under common control with, such Person and (d) with respect to any
Person described above who is a natural person, any spouse and any relative (by
blood, adoption or marriage) within the third
<PAGE> 6
degree of consanguinity of such Person. As used in this definition, the term
"control" shall mean, with respect to any Person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through ownership of voting securities, by
contract or otherwise.
"Assets" shall have the meaning assigned to that term in
Section 2.01.
"Assumed Liabilities" shall have the meaning assigned to that
term in Section 2.03.
"Brighton" shall mean Brighton Electric Steel Casting Company,
a Delaware corporation and a subsidiary of the Parent.
"Business Day" shall mean any day other than a Saturday,
Sunday or legal holiday in Pittsburgh, Pennsylvania.
"Closing" and "Closing Date" shall have the meanings assigned
to those terms in Section 6.01.
"Code" shall mean the Internal Revenue Code of 1986 and all
rules, regulations and orders issued thereunder, as any of the same may be
amended.
"Current Financial Statements" shall have the meaning assigned
to such term in Section 3.07.
"Employment Agreement" shall have the meaning assigned to that
term in Section 3.23.
"Environmental Assessment" shall have the meaning assigned to
that term in Section 5.02.
"Environmental Rule" shall mean any Governmental Rule which
relates to Hazardous Substances, pollution or protection of the environment,
natural resources or public health or safety, including without limitation any
Governmental Rule relating to the generation, use, processing, treatment,
storage, release, transport or disposal of Hazardous Substances and any common
laws of nuisance, negligence and strict liability relating thereto, together
with all rules, regulations, guidances, interpretations,
-2-
<PAGE> 7
policies and orders issued thereunder, as any of the same may be amended.
"Equipment" shall have the meaning assigned to that term in
Section 2.01.
"Equipment Lease" shall have the meaning assigned to that term
in Section 3.18.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 and all rules, regulations and orders issued thereunder, as any of the
same may be amended.
"ERISA Affiliate" shall mean any trade or business which,
together with either Company, is treated as a single employer under Section
4001(b)(1) of ERISA or Sections 414(b), (c), (m) or (o) of the Code.
"Excluded Assets" shall have the meaning assigned to that term
in Section 2.02.
"Excluded Liabilities" shall have the meaning assigned to that
term in Section 2.03.
"Financial Statement Date" shall have the meaning assigned to
that term in Section 3.10.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Order" shall mean any order, writ, judgment,
injunction or decree issued by a Governmental Person or arbitrator.
"Governmental Permit" shall have the meaning assigned to that
term in Section 2.01.
"Governmental Person" shall mean any governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
agency, bureau, body or entity of the United States of America or of any state,
county, municipality or other political subdivision located therein.
-3-
<PAGE> 8
"Governmental Rule" shall mean any law (including common law),
statute, rule, regulation, ordinance, code, order, writ, judgment, injunction,
decree, guideline, directive or decision of any Governmental Person, as any of
the same may be amended.
"Hazardous Substance" shall mean any substance which
constitutes, in whole or in part, a pollutant, contaminant or toxic or hazardous
substance or waste under, or the generation, manufacture, import, use,
processing, treatment, storage, release, transport or disposal of which is
regulated by, any Governmental Rule, and shall specifically include without
limitation any substance which (a) constitutes a "hazardous substance" under
the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., or a "hazardous waste" under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., (b) exhibits any
of the hazardous characteristics enumerated in 40 C.F.R. Sections
261.20-261.24, inclusive, (c) constitutes any of those extremely hazardous
substances referred to in Section 302 of the Superfund Amendments and
Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613, at 42 U.S.C.
Section 11002, (d) constitutes a hazardous material which, when transported, is
subject to regulation by the United States Department of Transportation at 49
C.F.R. Parts 171-199, (e) constitutes a "hazardous chemical" under the
Occupational Safety and Health Administration Hazard Communication Standard, 29
C.F.R. Section 1910.120 et seq., (f) constitutes a "chemical substance"
regulated under the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq., (g) constitutes a "source material", a "special nuclear material" or a
"byproduct material" as defined in the Atomic Energy Act of 1954, 42 U.S.C.
Section 2011 et seq. and regulations issued thereunder, or (h) constitutes
asbestos, urea formaldehyde, chlorinated biphenyls (polychlorinated or
monochlorinated) or crude oil or petroleum products produced from the fractions
thereof.
"Indebtedness Document" shall have the meaning assigned to
that term in Section 3.25.
"Insurance Policy" shall have the meaning assigned to that
term in Section 3.24.
"Intellectual Property" shall have the meaning assigned to
that term in Section 2.01.
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"IRS" shall mean the Internal Revenue Service and its
successors.
"Labor Agreement" shall have the meaning assigned to that term
in Section 3.23.
"License" shall have the meaning assigned to that term in
Section 3.19.
"Lien" shall mean (a) any security arrangement, including
without limitation any mortgage, deed of trust, pledge, collateral assignment,
security interest, deposit, conditional sale agreement or title retention
agreement, (b) any agreement of sale, assignment or other transfer and (c) any
lien, easement, restrictive covenant, encroachment or other encumbrance or title
defect.
"Material Adverse Change" shall mean a material and adverse
change with respect to the Companies which would materially and adversely impact
the willingness of a reasonable buyer or investor to enter into and perform the
transactions contemplated hereby, including without limitation a material
adverse change in the Assets or the Business or in the operations, financial
condition or prospects of the Companies collectively.
"Material Agreement" shall have the meaning assigned to that
term in Section 3.27.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which either Company or any ERISA
Affiliate has or had an obligation to contribute.
"Other Material Contract" shall have the meaning assigned to
that term in Section 3.26.
"Pension Plan" shall mean any "employee pension benefit plan"
as defined in Section 3(2) of ERISA (a) which is maintained for past or present
employees of either Company or any ERISA Affiliate or (b) to which either
Company or any ERISA Affiliate has made, or has been required to make,
contributions.
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"Permitted Lien" shall have the meaning assigned to that term
in Section 3.20.
"Person" shall mean any individual, partnership, corporation,
trust, joint venture, unincorporated organization or other entity, including
without limitation any Governmental Person.
"Purchase Price" shall have the meaning assigned to that term
in Section 2.04.
"Real Property" shall have the meaning assigned to that term
in Section 2.01.
"Real Property Lease" shall have the meaning assigned to that
term in Section 3.17.
"Related Documents" shall mean the documents referred to in
Sections 6.02(j) and 6.03(h).
"Third Party Real Property Lease" shall have the meaning
assigned to that term in Section 3.17.
"Welfare Plan" shall mean, at any time, any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA which is maintained for past
or present employees of either Company or any ERISA Affiliate.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.01. Purchase and Sale of Assets. On the Closing Date the
Companies shall sell to the Buyer, and the Buyer shall purchase from the
Companies, all of the Companies' rights, title and interest in and to the
following assets of the Companies (collectively, the "Assets"):
(a) all of the real property owned by either Company,
including without limitation any real property which either Company has the
right to acquire pursuant to any land contract or similar arrangement, together
with all easements, rights and
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appurtenances thereunto belonging or appertaining, all buildings and other
improvements erected thereon and all fixtures which are affixed or attached to
or installed in such real property or improvements (collectively, the "Real
Property");
(b) all equipment, machinery, fixtures, vehicles, railcars,
watercraft, computer hardware and software and furniture used or useful in
connection with the Business (collectively, the "Equipment"), and all supplies,
spare parts and warranties relating to any of the Equipment;
(c) all raw material, work-in-process and finished goods
inventory of the Business (collectively, the "Inventory") and all supplies and
packing and shipping materials, including in each case any of such items which
have been ordered but not received;
(d) all patents, registered and unregistered trademarks,
service marks, logos, corporate and trade names and registered and common law
copyrights, and all applications therefor, used or useful in connection with the
Business (collectively, the "Intellectual Property");
(e) all inventions, discoveries, techniques, processes,
methods, formulae, designs, trade secrets, proprietary information, confidential
information, know-how and ideas used or useful in connection with the Business;
(f) all accounts and notes receivable of the Business (the
"Receivables") and all other claims, causes of action, choses in action and
rights of recovery and setoff relating to the Business or any of the Assets,
including without limitation the right to receive any insurance proceeds;
(g) all bids, offers, leases, licenses, contracts, agreements
and business arrangements relating to the Business or any of the Assets,
including without limitation all Material Agreements;
(h) all permits, licenses, franchises, certificates,
authorizations, approvals and consents obtained from or issued by any
Governmental Person which are necessary, desirable or required by any
Governmental Rule for the ownership or operation of the Business or the
ownership, operation or use of any of the
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Assets and any applications therefor (collectively, the "Governmental Permits");
(i) all books, records, files, ledgers, drawings,
specifications and manuals relating to the Business or any of the Assets, all
advertising materials relating to the Business, all lists of customers,
suppliers and distributors and all other information relating to the Business or
any of the Assets, regardless of the form in which such information appears;
(j) all cash, cash equivalents, bank deposits, certificates of
deposit and other investments;
(k) all prepaid expenses, deposits and similar items,
including without limitation amounts paid to suppliers for inventory not yet
delivered, deferred charges and advance payments;
(l) all rights to use the names "J&L Structural, Inc." and
"Trailer Components, Inc.";
(m) all goodwill of the Business or associated with any of the
Assets; and
(n) all other assets of the Companies, tangible or intangible.
2.02. Excluded Assets. Notwithstanding any other provision
hereof, the Assets shall not include the items listed on Schedule 2.02 (the
"Excluded Assets").
2.03 Assumption of Liabilities. The Companies shall remain
liable only for the liabilities listed on Schedule 2.03 (collectively, the
"Excluded Liabilities"). The Buyer shall assume and become liable for all other
liabilities of the Companies, whether fixed or contingent, existing on the
Closing Date, and such additional liabilities as arise out of or relate to the
Assets or the Business as conducted after the Closing Date (collectively, the
"Assumed Liabilities").
2.04. Purchase Price. The purchase price for the Assets (the
"Purchase Price") shall be Fifty Million U.S. Dollars ($50,000,000), which
Purchase Price shall be payable by the Buyer
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to the Companies in immediately available funds on the Closing Date.
2.05. Assignment of Value. The Buyer and Companies shall
comply with the applicable requirements of the Code by preparing a schedule to
be executed by them at the Closing reflecting the allocation of the Purchase
Price to the respective Assets, which allocation shall be used by them in
preparing their respective income tax returns.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE SHAREHOLDERS
Each Company and the Shareholders represent and warrant to the
Buyer and the Parent as follows:
3.01. Organization and Qualification. Each Company is a
corporation duly organized, validly existing and in good standing in the
Commonwealth of Pennsylvania. Except as otherwise disclosed on Schedule 3.01,
each Company is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions in which the ownership of its properties or
the nature of its business makes such qualification necessary.
3.02. Authority and Authorization. Each Company has the
corporate power and authority to own its properties and assets, to conduct its
business as presently conducted, to execute and deliver this Agreement and the
Related Documents to which it is a party, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution and delivery by each Company of this Agreement and the
Related Documents to which it is a party, the consummation of the transactions
contemplated hereby and thereby and the performance by each Company of its
obligations hereunder and thereunder have been duly and validly authorized by
all necessary corporate proceedings on its part.
3.03. Execution and Binding Effect. This Agreement has been,
and on the Closing Date the Related Documents to which any of them is a party
will be, duly and validly executed and
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delivered by each Company and the Shareholders and constitute (or upon such
execution and delivery will constitute) legal, valid and binding obligations of
each Company and the Shareholders enforceable against each Company and the
Shareholders in accordance with their respective terms.
3.04. No Breach or Default. The execution and delivery by each
Company and the Shareholders of this Agreement and the Related Documents to
which any of them is a party, the consummation of the transactions contemplated
hereby and thereby and the performance by each Company and the Shareholders of
their respective obligations hereunder and thereunder do not and will not:
(a) violate either Company's Articles of Incorporation or
By-Laws;
(b) except as otherwise disclosed on Schedule 3.04, breach or
result in a default (or an event which, with the giving of notice or the passage
of time, or both, would constitute a default) under, require any consent under
or give to others any rights of termination, acceleration, suspension,
revocation, cancellation or amendment of any Material Agreement or any contract,
agreement, document or instrument to which any Shareholder is a party or by
which any Shareholder or any of his properties or assets are bound; or
(c) except as otherwise disclosed on Schedule 3.04, breach or
otherwise violate any Governmental Permit or any Governmental Order which names
either Company or any Shareholder or is directed to either Company or any
Shareholder or any of their respective properties or assets.
3.05. No Violation of Law. The execution and delivery by each
Company and the Shareholders of this Agreement and the Related Documents to
which any of them is a party, the consummation of the transactions contemplated
hereby and thereby and the performance by each Company and the Shareholders of
their respective obligations hereunder and thereunder are not prohibited by, and
do not and will not subject either Company or any Shareholder to any fine,
penalty or similar sanction under, any Governmental Rule.
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3.06. No Consent. Except as otherwise disclosed on Schedules
3.04 and 3.06, no consent, authorization, approval, exemption or other action
by, and no filing, registration or qualification with, any Person (including
without limitation and Governmental Person) is or will be necessary in
connection with the execution and delivery by each Company and the Shareholders
of this Agreement and the Related Documents to which any of them is a party, the
consummation of the transactions contemplated hereby and thereby or the
performance by each Company and the Shareholders of their respective obligations
hereunder or thereunder.
3.07. Financial Statements.
(a) J&L has previously delivered to the Buyer correct and
complete copies of (i) its audited balance sheets, statements of operations and
retained earnings and statements of cash flows as of and for its 15-month fiscal
period ended December 31, 1993 and its 12-month fiscal period ended September
31, 1992 and (ii) its unaudited balance sheet and statement of operations as of
and for its six-month fiscal period ended June 30, 1994 (the "Current J&L
Financial Statements" and, together with the items described in clause (i)
above, the "J&L Financial Statements").
(b) TCI has previously delivered to the Buyer correct and
complete copies of (i) its unaudited balance sheets and income statements as of
and for its fiscal periods ended December 31, 1993 and September 30, 1993 and
(ii) its unaudited balance sheet and income statement for its six-month fiscal
period ended June 30, 1994 (the "Current TCI Financial Statements" and, together
with the items described in clause (i) above, the "TCI Financial Statements").
(c) The J&L Financial Statements and the TCI Financial
Statements are complete in all material respects, are in accordance with each
Company's books and records, present fairly the financial condition of each
Company as at the end of the periods covered thereby and the results of their
operations and, in the case of J&L, the changes in its cash flow for the periods
covered thereby, and were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby subject, in the case of
the J&L Current Financial Statements and the TCI Current Financial Statements
(collectively, the "Current Financial Statements"), to year-end
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audit adjustments (which will not be material) and the lack of footnotes and
other presentation items, and in the case of all other TCI Financial Statements,
to the lack of footnotes and other presentation items.
3.08. Tax Matters. Each Company has been a subchapter S
corporation (as defined in the Code) for United States and Pennsylvania income
tax purposes since its incorporation. Except as otherwise disclosed on Schedule
3.08:
(a) all tax returns and reports required to be filed by each
Company have been properly prepared and filed on a timely basis;
(b) each Company has paid, or has made adequate reserves on
its books for the payment of, all taxes, interest, penalties, assessments and
deficiencies shown to be due on such tax returns and reports or claimed to be
due by any Governmental Person or which such Company is required to withhold on
behalf of any other Person;
(c) the reserves and provisions for taxes on the books of each
Company are adequate for all open years and for its current fiscal period;
(d) neither Company has received notice from any Governmental
Person of any proposed assessment of any additional taxes by any Governmental
Person and, to the best of the Companies' and the Shareholders' knowledge, there
is no basis for any such assessment (in each case whether or not reserved
against);
(e) neither Company is currently being audited by any
Governmental Person, and no such audit is pending or, to the best of the
Companies' and the Shareholders' knowledge, threatened; and
(f) neither Company has given any waiver or extension of any
period of limitation governing the time of assessment or collection of any tax.
3.09. Litigation. Except as otherwise disclosed on Schedule
3.09, there is no pending or, to the best of the Companies' and the
Shareholders' knowledge, threatened action,
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proceeding, investigation or claim by or before any Governmental Person or
arbitrator which names either Company or any Shareholder or is directed to
either Company or any Shareholder or any of their respective properties or
assets (including without limitation the Business and the Assets) and, to the
best of the Companies' and the Shareholders' knowledge, no basis exists for any
such action, proceeding, investigation or claim. Schedule 3.09 hereto sets forth
a correct and complete list of (a) each action, proceeding, investigation and
claim described in the preceding sentence, together with the parties thereto,
the alleged basis therefor, the relief sought therein and the current status
thereof, and (b) each action, proceeding, investigation and claim of the type
described above which (i) was pending as of or commenced on or after October 1,
1990 and concluded prior to the date hereof, (ii) represented maximum potential
loss exposure of more than $10,000 and (iii) is not described in the responses
to auditors' request letters sent by Cohen & Grigsby, P.C. or Reed Smith Shaw &
McClay to Arthur Andersen & Co. in respect of J&L's fiscal years ended September
30, 1991, September 30, 1992 and December 31, 1993 (correct and complete copies
of which have previously been delivered to the Buyer), together with the parties
thereto, the alleged basis therefor and the relief sought or obtained therein.
3.10. Absence of Certain Changes and Events. Except as
otherwise disclosed on Schedule 3.10, since June 30, 1994 (the "Financial
Statement Date"):
(a) neither Company has incurred any material obligation or
liability except for obligations incurred in the ordinary course of business;
(b) no casualty, loss or damage has occurred with respect to
any Assets having a value, individually or in the aggregate, of $50,000 or more;
(c) neither Company has sold, transferred or otherwise
disposed of any of its properties or assets or any interest therein, or agreed
to do any of the foregoing, except in the ordinary course of business and except
for shareholder distributions permitted by Section 5.05;
(d) neither Company has terminated, assigned or otherwise
transferred any contract, agreement, document or
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instrument which would have been a "Material Agreement" as defined herein but
for such action;
(e) neither Company has written off as uncollectible any of
its accounts receivable, or written down the value of any of the Assets;
(f) neither Company has granted, or committed to grant, any
salary or wage increases or any bonuses to any of its employees;
(g) neither Company has made, or committed to make, any
capital expenditures (i) having an individual cost (exclusive of items
constituting a single project) of $5,000 or more or (ii) having an individual
cost of less than $5,000 which exceed $50,000 in the aggregate;
(h) neither Company has changed its accounting practices or
procedures;
(i) there has been no payment, discharge or other satisfaction
of any liabilities of either Company, whether direct or indirect, fixed or
contingent or otherwise, other than the satisfaction, in the ordinary course of
business, of liabilities reflected on the Current Financial Statements or
incurred in the ordinary course of business since the Financial Statement Date;
and
(j) no Material Adverse Change, and, to the best of the
Companies' and the Shareholders' knowledge, no event which is likely to result
in a Material Adverse Change, has occurred.
3.11. Directors and Executives. Schedule 3.11 sets forth a
correct and complete list of (a) all directors and executive officers of each
Company, (b) all other employees of or consultants to each Company whose annual
compensation (including bonuses and commissions) during the 12-month period
ended December 31, 1993 was $78,500 or more, (c) the current job title or
relationship to each Company of each such Person and (d) the amount of
director's or consultant's fees, salary, bonuses, commissions and other amounts
paid to each such Person during the 12-month period ended December 31, 1993 and
which each of them is expected to receive in each Company's current fiscal year.
Each Company has previously delivered to the Buyer the information
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described above with respect to each of its other salaried employees.
3.12. Customers and Suppliers. Schedule 3.12 sets forth a
correct and complete list of each of the customers and suppliers of each Company
whose purchases from or sales to such Company constituted five percent or more
of such Company's net sales or net purchases, respectively, during the 12-month
period ended December 31, 1993 or during the six-month period ending on the
Financial Statement Date, and indicates with respect to each the name and
address, dollar volume and nature of the relationship (including the principal
categories of products bought or sold). Each Company's relationship with its
customers and suppliers is generally good. Neither Company is required to
provide any material bonding or other financial security arrangements in
connection with any of its transactions with any such customer or supplier.
Since January 1, 1993, no such customer or supplier has terminated its
relationship with, or materially reduced its purchases from or sales to, either
Company.
3.13. Constituent Documents and Governmental Rules. Each
Company is in compliance with its Articles of Incorporation and By-Laws. Except
as otherwise disclosed on Schedule 3.13, (a) each Company is in compliance with
all Governmental Rules applicable to such Company, the Business or the Assets,
except for such non-compliance as, individually or in the aggregate, has not
resulted in, and is not likely to result in, a Material Adverse Change, and (b)
neither Company has received any notice from any Governmental Person regarding
any purported violation of any Governmental Rule, except for such violations as
have been cured prior to the date hereof.
3.14. Governmental Orders. Schedule 3.14 sets forth a correct
and complete list of all Governmental Orders which name either Company or any
Shareholder or are directed to either Company or any Shareholder or any of their
respective properties or assets, together with the Governmental Person who
issued the same and the subject matter thereof. Each Company and Shareholder is
in compliance with all such Governmental Orders.
3.15. Governmental Permits. Schedule 3.15 sets forth a correct
and complete list of all Governmental Permits. Except as otherwise disclosed on
Schedule 3.15, such Governmental
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Permits have been validly acquired, are in full force and effect and represent
all Governmental Permits necessary under applicable Governmental Rules for each
Company to carry on the Business as now being conducted and to own, occupy or
use the Assets. Except as otherwise disclosed on Schedule 3.15, no violations
have been recorded against any such Governmental Permit, no citation, notice or
warning has been issued by any Governmental Person with respect to any such
Governmental Permit, no investigation or hearing has been held by or before any
Governmental Person with respect to any such Governmental Permit, neither
Company has received any notice from any Governmental Person that it intends to
cancel, revoke, terminate, suspend or not renew any such Governmental Permit and
neither the Companies nor the Shareholders have any knowledge of any basis for
any of the foregoing. Each Company is in compliance with all such Governmental
Permits, except for such non-compliance as, individually or in the aggregate,
has not resulted in, and is not likely to result in, a Material Adverse Change.
3.16. Environmental Matters. Except as otherwise disclosed on
Schedule 3.16:
(a) no Hazardous Substances have been or are being generated,
used, processed, treated, stored, released, transported or disposed of by either
Company, including without limitation on the Real Property or any real property
subject to the Real Property Leases, except in compliance with applicable
Environmental Rules;
(b) neither Company nor, to the best of the Companies' and the
Shareholders' knowledge, any other Person, has used any of the Real Property or
any real property subject to the Real Property Leases for the burial or other
disposal of Hazardous Substances;
(c) neither Company nor, to the best of the Companies' and the
Shareholders' knowledge, any other Person, has installed any underground storage
tank on the Real Property or any real property subject to the Real Property
Leases;
(d) to the best of the Companies' and the Shareholders'
knowledge, no Hazardous Substances are present on or under the Real Property or
any real property subject to the Real Property Leases, or in any improvement
located thereon, in
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quantities or at levels which require reporting or remediation under any
applicable Environmental Rule;
(e) to the best of the Companies' and the Shareholders'
knowledge, no event has occurred and no condition exists with respect to either
Company, the Business or the Assets which has resulted in, or is likely to
result in, (i) any material liability, cost or expense to such Company under any
Environmental Rule or (ii) any action, proceeding, investigation or claim being
instituted against either Company under any Environmental Rule, and neither the
Companies nor the Shareholders have received any notice from any Governmental
Person of its intention to impose any such liability, cost or expense or to
institute any such action, proceeding, investigation or claim;
(f) no Environmental Rule imposes any obligation upon the
Companies or, to the best of the Companies' and the Shareholders' knowledge, the
Buyer as a condition to any transaction described in this Agreement, including
without limitation any requirement to (i) obtain, modify or transfer any
Governmental Permit, (ii) disclose information concerning the Buyer or any of
its officers, directors, shareholders or Affiliates, (iii) make any filings with
any Governmental Person, (iv) place any notice, acknowledgment or covenant in
any land records or (v) modify or curtail any element of the Business; and
(g) there is no current or potential liability relating to or
arising out of the off-site disposal by either Company of any Hazardous
Substance or solid or residual waste which could result in a claim against the
Buyer by any Governmental Person or any third party for (i) investigation,
compliance, remediation, removal or corrective action costs, (ii) damages for
personal injury or diminution of the value of property or (iii) natural
resources damages.
3.17. Real Property.
(a) Schedule 3.17 sets forth a correct and complete list of
all Real Property. Except as otherwise disclosed on Schedule 3.17, all buildings
and other improvements located on such property are in good repair and operating
condition.
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(b) Schedule 3.17 sets forth a correct and complete list of
all leases, subleases, easements, licenses and other material agreements or
rights pursuant to which any Person has the right to occupy or use any real
property owned by either Company (collectively, "Third Party Real Property
Leases"), together with the names of the lessees or other grantees thereunder,
the portion of such property covered thereby, the annual rental or other
consideration payable thereunder and the duration thereof, including any renewal
options.
(c) Schedule 3.17 sets forth a correct and complete list of
all leases, subleases, easements, licenses and other material agreements or
rights pursuant to which either Company has the right to occupy or use any real
property owned by others (collectively, "Real Property Leases"), together with
the names of the lessors or other grantors thereunder, the location of the
property covered thereby, the annual rental or other consideration payable
thereunder and the duration thereof, including any renewal options.
(d) The Companies' use of the real property owned or used by
either of them is in compliance with applicable Governmental Rules relating to
zoning, and the Companies title to such real property is as specified in Section
3.20. The Companies have the right to occupy all real property which is used but
not owned by them.
3.18. Personal Property.
(a) Schedule 3.18 sets forth a correct and complete list of
all leases and other agreements pursuant to which either Company leases or
otherwise has the right to use any of the Equipment (collectively, "Equipment
Leases"), together with the names of the lessors thereunder, the personal
property covered thereby, the annual rental thereunder and the duration thereof,
including any renewal options.
(b) Except as otherwise disclosed on Schedule 3.18, all
Equipment is in good repair and operating condition and is suitable for the
purposes for which it is used.
(c) Except as otherwise disclosed on Schedule 3.18, all
Inventory is in all material respects of a quantity and quality usable and
salable in the ordinary course of business.
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(d) Except as otherwise disclosed on Schedule 3.18, all
Receivables (i) represent amounts receivable for goods actually delivered or
services actually provided (or, in the case of non-trade receivables, represent
amounts receivable in respect of other bona fide business transactions) in the
ordinary course of business, (ii) are not subject to any defenses, counterclaims
or rights of setoff other than cash discounts, returns and allowances and
credits for freight granted in the ordinary course of business, (iii) are
generally due and payable within 30 days after billing and (iv) are either fully
collectible in the ordinary course of business or covered by credit insurance
maintained by J&L (subject to any deductibles contained in the policies for such
credit insurance).
3.19. Intellectual Property. Schedule 3.19 sets forth a
correct and complete list of (a) all Intellectual Property, and (b) all licenses
or other agreements pursuant to which either Company has the right to use any
Intellectual Property owned by others (collectively, "Licenses"), together with
the names of the licensors thereunder, the Intellectual Property covered
thereby, the annual fee or other consideration payable thereunder and the
duration thereof, including any renewal options. Each Company has the lawful
right to use all Intellectual Property used by it, and no such use infringes
upon the lawful rights of any other Person. No Person is using any Intellectual
Property owned by either Company pursuant to any license or similar agreement
and, to the best of the Companies' knowledge, no Person is using any
Intellectual Property in a manner which infringes upon the lawful rights of
either Company.
3.20. Title to Assets; Sufficiency of Assets. Except as
otherwise disclosed on Schedule 3.20, each Company has (a) good and marketable
title to all Assets purported to be owned by it (which, in the case of the Real
Property, is fee simple title) and (b) good leasehold title to all Assets
purported to be leased by it. The title to the Assets to be conveyed to the
Buyer on the Closing Date will be free and clear of all Liens other than such
Liens as are identified as "Permitted Liens" on Schedule 3.20. The Assets are
sufficient for the Buyer to conduct the Business in the manner in which it is
presently conducted by the Companies, without taking into account any working
capital needs.
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3.21. Pension Plans. Schedule 3.21 sets forth a true, correct
and complete list of all Pension Plans. Except as otherwise disclosed on
Schedule 3.21:
(a) the IRS has issued favorable determination letters to the
effect that each Pension Plan is qualified within the meaning of Section 401 of
the Code and that each related trust is exempt under Section 501 of the Code;
(b) each Pension Plan and each related trust has been
established, maintained and administered in all material respects in compliance
with ERISA, the Code and all other applicable Governmental Rules;
(c) none of the transactions described in Section 406 of ERISA
or Section 4975 of the Code, and none of the events described in Section 4043 of
ERISA , have occurred with respect to any Pension Plan;
(d) no "unfunded benefit liability" within the meaning of
Section 4001(a)(16) of ERISA, and no "accumulated funding deficiency" within the
meaning of Section 302 of ERISA or Section 412(a) of the Code, exists with
respect to any Pension Plan;
(e) no Pension Plan has been terminated in whole or in part,
neither Company and no ERISA Affiliate presently intends to terminate any
Pension Plan in whole or in part, no proceeding has been commenced by the
Pension Benefit Guaranty Corporation (the "PBGC") or the IRS to terminate any
Pension Plan in whole or in part or to appoint a trustee to administer any
Pension Plan and neither Company and no ERISA Affiliate has received any notice
of any such proceeding;
(f) neither Company and no ERISA Affiliate owes any amount to
the PBGC;
(g) neither Company and no ERISA Affiliate has contributed to,
or is or has been under any obligation to contribute to, any Multiemployer Plan;
(i) there are no actions, suits, investigations or other
proceedings pending or, to the best of the Companies' and the Shareholders'
knowledge, threatened against any Pension Plan or related trust or any fiduciary
thereof and, to the best of the
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Companies' and the Shareholders' knowledge, no basis exists for any such action,
suit, investigation or proceeding; and
(j) there are no outstanding Governmental Orders which name
any Pension Plan or its fiduciaries or are directed to any Pension Plan or its
fiduciaries or assets.
3.22. Welfare Plans. Schedule 3.22 sets forth a correct and
complete list of all Welfare Plans. Except as otherwise disclosed on Schedule
3.22:
(a) each Welfare Plan has been established, maintained and
administered in all material respects in compliance with ERISA, the Code and all
other applicable Governmental Rules;
(b) all payments which either Company is required to make in
respect of any Welfare Plan on or prior to the date hereof have been made;
(c) neither Company is paying or providing, or is obligated to
pay or provide, any severance pay or other benefits to any of its employees upon
the termination of their employment with such Company; and
(d) neither Companies' employees are permitted to accrue
vacation or sick leave from year to year.
3.23. Employee Matters.
(a) Except as otherwise disclosed on Schedule 3.23, neither
Company is a party to any employment, consulting or similar agreement, written
or oral, with any other Person (each an "Employment Agreement").
(b) Except as otherwise disclosed on Schedule 3.23, (i) no
employees of either Company are represented by any labor union or similar
organization, (ii) neither Company is a party to any collective bargaining or
similar agreement covering any of its employees (each a "Labor Agreement") and
(iii) no labor union or similar organization or group of employees has made a
demand for recognition, filed a petition seeking a representation proceeding or
given either Company notice of any intention to hold an election of a collective
bargaining representative at any time during the past three years.
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(c) Except as otherwise disclosed on Schedule 3.23, (i) no
strike, work stoppage, contract dispute or other labor disturbance involving any
employees of either Company currently exists or, to the best of the Companies'
and the Shareholders' knowledge, is threatened, (ii) no investigation, action or
proceeding by or before any Governmental Person which relates to allegedly
unfair or discriminatory employment or labor practices or the violation of any
Governmental Rule relating to employment or labor practices is pending or, to
the best of the Companies' and the Shareholders' knowledge, threatened and (iii)
no grievance proceeding involving arbitration between either Company and any of
their employees is pending or, to the best of the Companies' and the
Shareholders' knowledge, threatened. The Companies' relations with their
employees are generally good.
3.24. Insurance.
(a) Schedule 3.24 sets forth a correct and complete list of
all insurance policies of which either Company is the owner, insured, loss payee
or beneficiary (collectively, the "Insurance Policies") and indicates for each
such policy the carrier, the risks insured against, the amounts of coverage and
deductibles, the annual premium, the cash surrender value, if any, the
expiration date and any pending claims thereunder.
(b) Except as otherwise disclosed on Schedule 3.24:
(i) all premiums under such policies which were due
and payable on or prior to the date hereof have been paid in full;
(ii) no such policy provides for retrospective or
retroactive premium adjustments; and
(iii) neither Company has received notice of any
material increase in the premium under, cancellation or non-renewal of or
disallowance of any claim under any such policy.
3.25. Indebtedness. Schedule 3.25 sets forth a complete list
of all agreements, documents, instruments and securities which are currently in
effect and which create, evidence or secure any indebtedness of either Company
(exclusive of trade payables but including any intercompany loans) or
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pursuant to which either Company has guaranteed any indebtedness or other
obligations of any other Person (collectively, the "Indebtedness Documents"),
together with the names of the creditors thereunder or beneficiaries thereof,
the principal amount owing thereunder or secured or guaranteed thereby, the
interest rates payable thereunder and the amortization and maturity thereof.
3.26. Other Material Contracts. Schedule 3.26 sets forth a
correct and complete list of all contracts, agreements, instruments and
documents to which either Company is a party or by which either Company or any
of their respective properties or assets is bound, other than (a) Real Property
Leases, Third Party Real Property Leases, Equipment Leases, Licenses, Pension
Plans, Welfare Plans, Employment Agreements, Labor Agreements, Insurance
Policies and Indebtedness Documents, (b) contracts, agreements, instruments and
documents involving the payment by or to either Company, or creating any
liability of either Company (whether direct or indirect, fixed or contingent),
of less than $5,000 over the term thereof and (c) contracts, agreements,
instruments and documents which are cancelable by the Company party thereto on
30 days' notice or less without any material liability to such Company
(collectively, "Other Material Contracts"), together with descriptions of the
subject matter thereof, the names of the other parties thereto, the amount of
any payments or liabilities thereunder and the duration thereof, including any
renewal options; provided, that Schedule 3.26 does not list any orders placed by
either Company with its suppliers, or any orders placed by the customers of
either Company (even though such orders may come within the definition of "Other
Material Contracts"), unless such orders (i) are not expected to be filled
within two months after the same were placed, (ii) constitute a requirements or
supply contract or (iii) are not in the ordinary course of business.
3.27. Material Agreements. Except as otherwise disclosed on
Schedule 3.27, each Real Property Lease, Third Party Real Property Lease,
Equipment Lease, License, Pension Plan, Welfare Plan, Employment Agreement,
Labor Agreement, Insurance Policy, Indebtedness Document and Other Material
Contract (each a "Material Agreement") is in full force and effect and is
enforceable in accordance with its terms. Except as otherwise disclosed on
Schedule 3.27, each Company is in compliance with each Material Agreement to
which it is a party. All other
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parties to the Material Agreements are in substantial compliance with the terms
thereof and no event has occurred and no condition exists which, with the giving
of notice or the passage of time, or both, would constitute a default by any
such other party thereunder.
3.28. Transactions with Affiliates. Except as otherwise
disclosed on Schedule 3.28:
(a) none of the customers, suppliers, distributors or sales
representatives of either Company are Affiliates of either Company;
(b) none of the properties or assets of either Company are
owned or used by or leased to any Affiliate of either Company;
(c) no Affiliate of either Company is a party to any agreement
with either Company (other than Employment Agreements); and
(d) no Affiliate of either Company provides any legal,
accounting or other services to either Company.
3.29. Warranty and Product Liability. The Companies have
previously delivered to the Buyer a correct and complete copy of each express
warranty under which either of them have any warranty obligations. Schedule 3.29
sets forth:
(a) a correct and complete list of all product lines
manufactured or sold, and all services performed, by each Company with respect
to which either Company may have any liability, whether on account of warranty
obligations, product liability claims or otherwise;
(b) the number of warranty claims which have been made against
each Company on account of such products and services during the five-year
period ended June 30, 1994, together with the number of such claims outstanding
on the date hereof and the amount which each Company reasonably believes will be
necessary to satisfy such outstanding claims; and
(c) the number of product liability claims which have been
made against each Company on account of such products during
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the five-year period ended June 30, 1994, together with the number of such
claims outstanding on the date hereof and the amount which each Company
reasonably believes will be necessary to defend against and/or satisfy such
outstanding claims.
3.30. Brokers. With the exception of Berenson Minella &
Company, neither Company and no Shareholder has employed or retained, and
neither the Companies nor the Shareholders have any liability to, any broker,
agent or finder on account of this Agreement or the Related Documents or the
transactions contemplated hereby or thereby. The Companies and the Shareholders
shall be solely responsible for all amounts owed to Berenson Minella & Company
to the extent that such amounts are not included in the expenses for which the
Buyer is liable under Section 8.07.
3.31. Accounts and Investments. Schedule 3.31 sets forth a
correct and complete list of (a) the names and locations of all financial
institutions at which either Company maintains accounts of any nature, the
numbers of such accounts and the names of all persons authorized to draw thereon
or make withdrawals therefrom and (b) all certificates of deposit, partnership
interests, securities and other investments owned by either Company.
3.32. Other Liabilities. To the best of the Companies' and the
Shareholders' knowledge, neither Company has any material liability other than
(a) liabilities reflected in the Current Financial Statements, (b) liabilities
incurred by either Company in the ordinary course of business since the
Financial Statement Date and (c) liabilities disclosed on any Schedule hereto or
otherwise disclosed to the Buyer in writing.
3.33. Delivery of Documents. Each Company and the Shareholders
have previously delivered (or otherwise made available) to the Buyer or its
agents correct and complete copies of each Material Agreement and each other
agreement, document and instrument, and such other information, which the Buyer
or any of its agents has requested in writing. None of the information furnished
or to be furnished by either Company or the Shareholders to the Buyer or its
agents in connection with this Agreement and the Related Documents, and none of
the representations and warranties of either Company or the Shareholders set
forth herein, in any Related Document or in any
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certificate delivered in connection herewith or therewith, (a) is or will be
false or misleading, (b) contains or will contain any untrue statement of a
material fact or (c) omits or will omit any statement of material fact necessary
to make the same not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE PARENT
The Buyer and the Parent hereby represent and warrant to each
Company and the Shareholders as follows:
4.01. Organization. The Buyer is a corporation duly organized,
validly existing and in good standing in the State of Delaware. The Buyer is
duly qualified to do business as a foreign corporation and is in good standing
in all jurisdictions in which the ownership of its properties or the nature of
its business makes such qualification necessary. The Parent is a corporation
duly organized, validly existing and in good standing in the State of Minnesota.
4.02. Authority and Authorization. Each of the Buyer and the
Parent has the corporate power and authority to own its properties and assets,
to conduct its business as presently conducted, to execute and deliver this
Agreement and the Related Documents to which it is a party, to consummate the
transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The execution and delivery by the Buyer and the Parent
of this Agreement and the Related Documents to which either of them is a party,
the consummation of the transactions contemplated hereby and thereby and the
performance by the Buyer and the Parent of their respective obligations
hereunder and thereunder have been duly and validly authorized by all necessary
corporate proceedings on their parts.
4.03. Execution and Binding Effect. This Agreement has been,
and on the Closing Date the Related Documents to which either of them is a party
will be, duly and validly executed and delivered by the Buyer or the Parent and
constitute (or upon such execution and delivery will constitute) legal, valid
and binding obligations of the Buyer or the Parent enforceable against the Buyer
or the Parent in accordance with their respective terms.
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4.04. No Breach or Default. The execution and delivery by the
Buyer and the Parent of this Agreement and the Related Documents to which either
of them is a party, the consummation of the transactions contemplated hereby and
thereby and the performance by the Buyer and the Parent of their respective
obligations hereunder and thereunder do not and will not:
(a) violate the Buyer's or the Parent's Charter or By-Laws;
(b) except as otherwise disclosed on Schedule 4.04, breach or
result in a default (or an event which, with the giving of notice or the passage
of time, or both, would constitute a default) under, require any consent under
or give to others any rights of termination, acceleration, suspension,
revocation, cancellation or amendment of any contract, agreement, instrument or
document to which the Buyer or the Parent is a party or by which the Buyer or
the Parent or any of their respective properties or assets is bound; or
(c) except as otherwise disclosed on Schedule 4.04, breach or
otherwise violate any Governmental Order which names the Buyer or the Parent or
is directed to the Buyer or the Parent or any of their respective properties or
assets.
4.05. No Violation of Law. The execution and delivery by the
Buyer and the Parent of this Agreement and the Related Documents to which either
of them is a party, the consummation of the transactions contemplated hereby and
thereby and the performance by the Buyer and the Parent of their respective
obligations hereunder and thereunder are not prohibited by, and do not and will
not subject the Buyer or the Parent to any fine, penalty or similar sanction
under, any Governmental Rule.
4.06. No Consent. Except as otherwise disclosed on Schedules
4.04 and 4.06, no consent, authorization, approval, exemption or other action
by, and no filing, registration or qualification with, any Person (including
without limitation any Governmental Person) is or will be necessary in
connection with the execution and delivery by the Buyer and the Parent of this
Agreement and the Related Documents to which either of them is a party, the
consummation of the transactions contemplated hereby
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and thereby or the performance by the Buyer and the Parent of their respective
obligations hereunder or thereunder.
4.07. Buyer Financial Information.
(a) The Parent has previously delivered to the Companies
correct and complete copies of (i) its annual report on Form 10-K as filed with
the Securities and Exchange Commission (the "SEC") for each of its fiscal years
ended June 30, 1992 and June 30, 1993, (ii) all filings made by the Parent with
the SEC since June 30, 1993 and (iii) its unaudited consolidated balance sheet
and statements of income, retained earnings and changes in financial position as
of and for its fiscal year ended June 30, 1994 (the "Parent Current Financial
Statements" and, together with the items described in clauses (i) and (ii)
above, the "Parent Financial Information"). The Parent Financial Information
presents fairly the financial condition of the Parent and its consolidated
subsidiaries as at the end of the periods covered thereby and the results of its
and their operations and the changes in its and their financial position for the
periods covered thereby, and were prepared in accordance with applicable
Governmental Rules and in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby subject, in the case of the Parent
Current Financial Statements, to year-end audit adjustments (which will not be
material) and the lack of footnotes and other presentation items.
(b) The Parent has previously delivered to the Companies
correct and complete copies of (i) the audited balance sheets and statements of
income, retained earnings and changes in financial position as of and for
Brighton's fiscal years ended December 31, 1991 and June 30, 1993, including the
footnotes thereto, (ii) unaudited balance sheet and statements of income,
retained earnings and changes in financial position as of and for Brighton's
six-month fiscal period ended June 30, 1992 and (iii) unaudited balance sheet
and statements of income, retained earnings and changes in financial position as
of and for Brighton's fiscal year ended June 30, 1994 (the "Brighton Current
Financial Statements" and, together with the items described in clauses (i) and
(ii) above, the "Brighton Financial Statements"). The Brighton Financial
Statements present fairly the financial condition of Brighton as at the end of
the periods covered thereby and the results of its operations and the changes in
its financial position for the periods covered thereby, and were
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prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby subject, in the case of the items described in clause
(ii) above and the Brighton Current Financial Statements, to year-end audit
adjustments (which will not be material) and the lack of footnotes and other
presentation items.
(c) The Buyer has reviewed that certain letter dated October
14, 1994 from Grant Thornton to the Parent (the "Grant Thornton Letter")
regarding net operating loss carryovers (the "NOLs") available to the Parent,
and has delivered to the Companies a correct and complete copy of the same. To
the best of the Parent's and the Buyer's knowledge, all of the facts assumed in
the Grant Thornton Letter are accurate. The Parent has available to it the NOLs
as described in the Grant Thornton Letter.
4.08 Financing. The Buyer and the Parent have disclosed to the
Companies their intended means and sources of financing the Purchase Price and
all fees and expenses which either of them is required to pay hereunder or
otherwise in connection with the transactions contemplated hereby. Without
limiting the generality of the foregoing, (a) to the extent that any of such
funds are to be obtained through the sale of securities, the Parent has obtained
a "highly confident" letter from BT Securities Corporation as to the ability to
sell such securities as are necessary to provide such funds and has delivered to
the Companies a correct and complete copy of such letter and all modifications
thereto, (b) to the extent that any of such funds are to be obtained through
borrowing, the Parent has received a proposal letter from BT Commercial
Corporation as to the amount and principal terms of such borrowing and has
delivered to the Companies a correct and complete copy of such letter and all
modifications thereto and (c) to the extent that any of such funds are to come
from cash reserves of the Parent or any other source, the Buyer or the Parent
has provided the Companies with satisfactory evidence of such cash reserves or
other sources.
4.09. Brokers. Neither the Buyer nor the Parent has employed
or retained, and neither of them have any liability to, any broker, agent or
finder on account of this Agreement or the Related Documents or the transactions
contemplated hereby or thereby.
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4.10. Delivery of Documents. The Buyer and the Parent have
previously delivered (or otherwise made available) to the Companies or their
agents correct and complete copies of each agreement, document and instrument
relating to the Buyer, the Parent or Brighton which either Company or any of
their agents have requested in writing. None of the information furnished or to
be furnished by the Buyer or the Parent to either Company or their agents in
connection with this Agreement and the Related Documents, and none of the
representations and warranties of the Buyer or the Parent set forth herein, in
any Related Document or in any certificate delivered in connection herewith or
therewith, (a) is or will be false or misleading, (b) contains or will contain
any untrue statement of a material fact or (c) omits or will omit any statement
of material fact necessary to make the same not misleading.
ARTICLE V
TRANSACTIONS PRIOR TO CLOSING
5.01. Conduct of Business Prior to Closing. At all times prior
to the Closing Date each Company shall:
(a) operate the Business only in the ordinary course and
consistent with past practice;
(b) use its best efforts to preserve its business organization
intact, to keep available to the Buyer the services of its present officers and
employees and to preserve for the Buyer the goodwill of customers, suppliers and
others having business relations with such Company;
(c) maintain the Equipment in good repair and operating
condition, ordinary wear and tear excepted;
(d) maintain in full force and effect all Governmental Permits
and Insurance Policies (or insurance policies providing comparable coverage) and
diligently prosecute any pending applications therefor;
(e) not enter into any employment, consulting or similar
contract, and not enter into any other contract or commitment except those made
in the ordinary course of business
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the terms of which are consistent with past practice and reasonable in light of
current conditions;
(f) not terminate, cause the termination of, amend, renew or
extend any Material Agreement unless in each case such action is, in the
reasonable judgment of such Company's management, in the best interest of such
Company;
(g) not waive or release any of its rights or permit any of
such rights to lapse;
(h) not sell, transfer or otherwise dispose of any of the
Assets or any interest therein or agree to do any of the foregoing, except for
sales of Inventory in the ordinary course of business and except for shareholder
distributions permitted by Section 5.05;
(i) not incur, assume or suffer to exist any Lien (other than
Permitted Liens) or tenancy affecting title to any of its properties or assets;
(j) not grant or commit itself to grant any salary or wage
increases or any bonuses to any of its employees other than increases and
bonuses which are set forth on Schedule 3.10;
(k) not make or commit itself to make any dividend or other
distribution to any of its shareholders except as otherwise permitted by Section
5.05;
(l) not make or commit itself to make any capital expenditures
other than capital expenditures set forth on Schedule 3.10 and capital
expenditures having an individual cost (exclusive of items constituting a single
project) of less than $5,000 and an aggregate cost of not more than $50,000; and
(m) comply with applicable Governmental Rules in all material
respects.
5.02. Access to Information.
(a) At all times prior to the Closing Date the Companies shall
furnish to the Buyer and its employees, agents and contractors (i) reasonable
access during normal business hours to the properties, books and records and
personnel of each
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Company and (ii) all such information concerning each Company as any of them may
reasonably request.
(b) The Buyer shall have the right to make, or cause to be
made, at the Buyer's sole expense, such environmental investigations,
inspections, audits or assessments of the Business, the Assets or any of the
properties subject to the Real Property Leases as the Buyer in its sole
discretion shall deem appropriate. The Buyer and its agents and contractors may,
at the Buyer's sole expense, enter any portion of the Real Property or any of
the properties subject to the Real Property Leases and inspect any of the Assets
and conduct such tests, examinations, investigations and studies as the Buyer
determines to be prudent to evaluate the environmental condition of any such
property and the compliance by the Companies and the Business with Environmental
Rules (the "Environmental Assessment"). The Companies and the Shareholders agree
to cooperate fully with the Buyer in this regard. The Companies and the
Shareholders shall use their reasonable best efforts to make available to the
Buyer as soon as possible all information, reports, correspondence, permits and
related materials in their possession or control (or in the possession or
control of their contractors and agents) relating to the environmental condition
of the Assets, the presence or absence at any time of any Hazardous Substance or
other waste material on, beneath the surface of, within or emanating from any
portion of the Real Property or any of the properties subject to the Real
Property Leases, the compliance of the Companies and the Business with any
Environmental Rule and the status of any permit or permit application. The
Shareholders and the Companies hereby acknowledge that the Buyer intends to
retain the services of Killam Associates, Consulting Engineers ("Killam"),
which, together with its predecessors, has previously rendered environmental
services to the Companies, to assist the Buyer in the conduct of the
Environmental Assessment. The Shareholders and the Companies hereby waive any
claim of confidentiality as to the Buyer relating to the results of any such
prior environmental services by Killam and hereby authorize and direct Killam to
disclose to the Buyer all relevant information in its possession relating to the
Companies and the Assets. The Shareholders and the Companies hereby acknowledge
and agree that, with respect to the performance of the Environmental Assessment,
Killam will be acting solely as the Buyer's agent. The Buyer shall indemnify the
Companies and the directors and officers thereof from and against any and all
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claims, damages, losses, liabilities, costs and expenses (including without
limitation attorneys' fees and court costs) which arise out of any act or
omission of any of the Buyer's employees, agents or contractors while conducting
the Environmental Assessment.
(c) At all times prior to the Closing Date the Buyer shall
furnish to the Companies and their employees, agents and contractors all such
information concerning the Buyer, the Parent and Brighton as any of them may
reasonably request.
5.03. Best Efforts. The parties agree to use their reasonable
best efforts to take or cause to be taken and to do or cause to be done all such
actions and things as shall be reasonably necessary or advisable, or as shall be
reasonably requested by any other party, in order to consummate the transactions
contemplated hereby and by the Related Documents in a timely manner. Without
limiting the generality of the foregoing:
(a) The parties agree to make such filings with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice as shall be necessary or desirable under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and to use their best efforts to obtain a
waiver or early termination of the applicable waiting period under such Act, it
being understood that the Buyer shall be primarily responsible for preparing and
making such filing and solely responsible for paying any filing fees payable in
connection therewith.
(b) The Companies and the Shareholders shall have the
responsibility for obtaining all consents listed on Schedule 3.04 and Schedule
3.06, and the Companies and the Shareholders shall use their reasonable best
efforts to attempt to obtain such consents. The Buyer shall reasonably cooperate
with the efforts of the Companies in obtaining such consents, but such
cooperation shall not include the payment of any money or other consideration.
If the consent of a third party is required in order to assign any Material
Agreement or Governmental Permit or to transfer any other Asset to the Buyer,
and such a consent is not obtained prior to the Closing, or if an attempted
assignment would be ineffective or would adversely affect the Companies' ability
to convey the benefit of any Material Agreement or
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Governmental Permit to the Buyer, then the Companies and the Shareholders will
cooperate with the Buyer in any lawful and economically feasible arrangement so
that the Buyer shall receive the Companies' interest in the benefits under any
such Material Agreement, Governmental Permit or other Asset, including
performance by the Companies or the Buyer as agent for the other, if
economically feasible; provided, that if any required consent is not obtained or
such an arrangement is not reasonably satisfactory to the Buyer, then the Buyer
shall have the right to terminate this Agreement.
(c) The Companies and the Shareholders shall provide to the
Buyer, promptly after the Buyer's written request therefor, such information
concerning the Business and the Companies' financial condition and affairs as
may be required or appropriate for inclusion in a registration statement,
prospectus, offering memorandum or other document used to sell securities of the
Buyer in connection with the transactions contemplated by this Agreement
(collectively, the "Securities Offering Materials") and to cause its counsel and
auditors to cooperate with the Buyer's counsel and auditors in the preparation
of such Securities Offering Materials. The information provided by the Companies
and the Shareholders for the Securities Offering Materials shall not contain any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading.
The Companies and the Shareholders agree that, between the date of the
Securities Offering Materials and the Closing, they will keep the Buyer advised
on a current basis of material developments concerning their respective
businesses, including any event which would cause the Securities Offering
Materials to contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. On the date that any of the Securities Offering
Materials become effective, and on the Closing Date, each of the Companies and
the Shareholders shall deliver to the Buyer a certificate signed by their
principal executive officers and their principal financial officers to the
effect that the information contained in the Securities Offering Materials
relating to the Business and the financial condition and affairs of the
Companies does not, to the best of their knowledge, contain any untrue statement
of a material fact or omit to state any material fact required to be
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stated therein or necessary to make the statements therein not misleading.
5.04. Notice of Developments. The Companies and the
Shareholders or the Buyer and the Parent, as applicable, shall give notice to
the others of any event or condition which, in its or their reasonable judgment,
(a) causes any of the representations or warranties of such party or parties set
forth herein to be false or misleading in any material respect or (b) materially
and adversely affects the ability of such party or parties to consummate the
transactions contemplated hereby. If such a notice is given, then the parties
shall negotiate in good faith regarding the manner in which the transactions
contemplated hereby can be consummated notwithstanding the occurrence of the
event or condition described in such notice. If, following such negotiations,
the parties are unable to agree on a course of action which does not impose on
any party a material obligation or liability which would not otherwise be
imposed upon such party or materially increase the costs payable by or
materially decrease the consideration receivable by any party hereunder, then
any party shall have the right to terminate this Agreement by giving notice to
the others to such effect.
5.05. Permitted Shareholder Distributions.
(a) Commencing October 15, 1994 and on the fifteenth day of
each month thereafter which occurs prior to the Closing Date, the Companies
shall be permitted to distribute to their shareholders an amount which, together
with all other distributions made to their shareholders since the Financial
Statement Date, reduces their respective retained earnings (as defined and
determined in accordance with GAAP) as of the last day of the immediately
preceding month to (i) $6,250,000, in the case of J&L, and (ii) $0, in the case
of TCI.
(b) On the Closing Date, the Companies shall be permitted to
make distributions to their shareholders as described in subsection (a) above,
except that the date of determination shall be the Closing Date.
(c) The distributions described above which are payable on
October 15, 1994 shall be based upon the Companies' unaudited balance sheet for
its fiscal quarter ended September 30, 1994, and the other distributions shall
be based
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upon the Companies' unaudited balance sheets as of the end of each month or as
of the Closing Date, as applicable. The Companies and the Shareholders shall
deliver to the Buyer the Companies' audited financial statements for their
fiscal years ending December 31, 1994 promptly after the same are prepared and,
if such financial statements disclose any overpayment or underpayment of any
such distributions, the Buyer or the Shareholders, as applicable, shall promptly
pay to the other(s) an amount equal to such overpayment or underpayment. All
calculations described in this Section shall be made as if (i) the Companies
LIFO reserves are fixed at the level set forth in their financial statements as
of December 31, 1993, (ii) the Receivable owed by Precision Galvanizing, Inc. to
J&L in the amount of $131,467 had been written off prior to the Closing and
(iii) the bad debt reserve on J&L's books is fixed at $100,000.
5.06. Due Diligence Contingency. The Buyer shall have the
right, at any time prior to the Closing, to terminate this Agreement if the
results of the Buyer's due diligence review of the Company are not satisfactory
to the Buyer in its sole discretion; provided, that such right to terminate
shall expire as to the subject matter of any representation and warranty of the
Companies and the Shareholders set forth in Article III at the end of the
applicable Due Diligence Period (as hereinafter defined) unless, prior to the
end of such Due Diligence Period, the Buyer gives notice to the Companies and
the Shareholders which (a) states that, after diligently prosecuting such due
diligence, the Buyer has made a good faith determination that an issue covered
by such representation and warranty remains unresolved and that such issue, if
resolved adversely, would materially and adversely impact the willingness of a
reasonable buyer or investor to enter into and perform the transactions
contemplated hereby and (b) sets forth the additional due diligence which the
Buyer anticipates that it will need to perform in order to resolve such issue
and a good faith estimate of the time required to perform such additional due
diligence. If the Buyer gives such a notice and it diligently prosecutes such
additional due diligence then its right to terminate this Agreement by reason of
such issue (or any related issues which arise out of such additional due
diligence) shall be extended until the date which is five days after the date
when the Buyer has received the information necessary to resolve such issue, but
in no event later than the time estimated in the Buyer's notice unless the
failure to provide such information is the fault of
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the Companies or the Shareholders. Any such termination of this Agreement shall
be by a notice from the Buyer to the Companies and the Shareholders which sets
out with particularity the reason(s) for such termination. The Buyer
acknowledges and agrees that, as of the date hereof, the only representations
and warranties or issues with respect to which it has rights under this Section,
and the remaining Due Diligence Periods for the same, are as set forth on
Schedule 5.06. As used in this Section, the term "Due Diligence Period" shall
mean (i) 28 days from the date when the Buyer receives the final Schedules 3.15
and 3.16, in the case of the representations and warranties set forth in
Sections 3.15 and 3.16, (ii) 14 days from the date when the Buyer receives any
other final Schedule, in the case of the representations and warranties which
correspond to such Schedule, and (iii) the date hereof, in the case of
representations and warranties which have no corresponding Schedule. A Schedule
shall be final when the Companies have designated it as such by notice to the
Buyer to such effect.
ARTICLE VI
CLOSING AND CLOSING CONDITIONS
6.01. Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at such time or place, and on such date
not later than 120 days after the date hereof, as the parties may mutually agree
upon. The date on which the Closing occurs is referred to herein as the "Closing
Date", and the Closing shall be deemed to have occurred at 12:01 a.m. on the
Closing Date.
6.02. Conditions Precedent to Obligations of the Buyer. The
obligations of the Buyer hereunder to proceed with the Closing shall be subject
to the satisfaction by each Company and the Shareholders on or prior to the
Closing Date of each of the following conditions precedent:
(a) Accuracy of Representations and Warranties. The
representations and warranties of each Company and the Shareholders set forth
herein shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of such
date; provided, that if the inaccuracy of any such representation or warranty
can
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be cured by the payment of money, then the Companies and the Shareholders shall
have the right to cure such inaccuracy by payment of the appropriate amount out
of the Purchase Price.
(b) Performance and Compliance. Each Company and the
Shareholders shall have performed or complied in all material respects with each
covenant and agreement to be performed or complied with by it hereunder on or
prior to the Closing Date; provided, that if the failure to conform or comply
with any such covenant or agreement can be cured by the payment of money, then
the Companies shall have the right to cure such failure by payment of the
appropriate amount out of the Purchase Price.
(c) Consents and Approvals. The Companies and the Shareholders
shall have obtained or made each consent, authorization, approval, exemption,
filing, registration or qualification, if any, listed on Schedule 3.04 and
Schedule 3.06, or which are otherwise necessary to transfer any Asset to the
Buyer or for the Companies or the Shareholders to perform their respective
obligations hereunder, or an arrangement regarding the same shall have been
entered into pursuant to Section 5.03(b), and the Companies and the Buyer shall
have obtained such consents or approvals, if any, as are necessary under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
(d) Litigation. There shall be no action pending, and no
action which has been overtly threatened in a writing received by any party
hereto, by or before any Governmental Person or arbitrator seeking to restrain,
prohibit or invalidate any of the transactions contemplated hereby or by any of
the Related Documents or seeking monetary relief against the Buyer by reason of
the consummation of such transactions, and there shall not be in effect any
Governmental Order which has such effect.
(e) Title to Assets. Title to the Assets shall be free and
clear of all Liens other than Permitted Liens.
(f) Material Adverse Change. No event shall have occurred and
no condition shall exist which constitutes a Material Adverse Change.
(g) Officer's Certificates. Each Company shall have delivered
to the Buyer a certificate of its President dated the Closing Date and
certifying that each of the conditions specified
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in subsections (a), (b), (c), (d), (e) and (f) above have been met and such
additional certificates as may be required by Section 5.03(c).
(h) Secretary's Certificate. Each Company shall have delivered
to the Buyer a certificate of its Secretary dated the Closing Date and
certifying (i) that correct and complete copies of its Articles of Incorporation
and By-Laws are attached thereto, (ii) that correct and complete copies of each
resolution of its board of directors and shareholders approving this Agreement
and the Related Documents to which it is a party and authorizing the execution
hereof and thereof and the consummation of the transactions contemplated hereby
and thereby are attached thereto and (iii) the incumbency and signatures of the
officers of such Company authorized to execute and deliver this Agreement and
the Related Documents to which such Company is a party on behalf of such
Company.
(i) Opinion of Counsel. The Companies shall have delivered to
the Buyer an opinion of the Companies' counsel dated the Closing Date as to the
matters specified in Sections 3.01, 3.02, 3.03, 3.04, 3.05, 3.06 and 3.09 and
such other matters as the Buyer and its counsel may reasonably request.
(j) Related Documents. The Companies, the Shareholders and any
other parties thereto (other than the Buyer, the Parent and Brighton) shall have
executed and delivered to the Buyer the following documents and such other
documents and instruments, in form and substance satisfactory to the Buyer and
its counsel, as shall be necessary or desirable in order to consummate the
transactions contemplated hereby, each dated the Closing Date:
(i) Special Warranty Deeds for each parcel of Real
Property;
(ii) Bill of Sale for all other Assets to be conveyed
to the Buyer hereunder;
(iii) an assignment of all Material Agreements;
(iv) such other instruments of conveyance or
assignment as the Buyer may reasonably request which, in the case
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of instruments relating to rights in real property, shall be in recordable form;
(v) the allocation of the Purchase Price referred to
in Section 2.05;
(vi) Stock Purchase Agreement among Brighton, the
Buyer, the Parent and the Shareholders in substantially the form of Exhibit A;
and
(vii) Employment Agreements between the Buyer and
each of the Shareholders in substantially the form of Exhibits B, C and D.
(k) Financing. The Buyer shall have obtained financing for the
transactions contemplated hereby in an aggregate amount of not less than
$55,000,000, which financing shall be on terms satisfactory to the Buyer in its
sole discretion.
(l) Payment for Stock. The Shareholders shall have paid to the
Buyer the purchase price for the stock to be purchased by them under the Stock
Purchase Agreement referred to in subsection (j) above.
6.03. Conditions Precedent to Obligations of the Companies.
The obligations of the Companies hereunder to proceed with the Closing shall be
subject to the satisfaction by the Buyer and the Parent on or prior to the
Closing Date of each of the following conditions precedent:
(a) Accuracy of Representations and Warranties. The
representations and warranties of the Buyer and the Parent set forth herein and
in the Related Documents shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as though made on and
as of such date.
(b) Performance and Compliance. The Buyer and the Parent shall
have performed or complied in all material respects with each covenant and
agreement to be performed or complied with by them hereunder or under the
Related Documents on or prior to the Closing Date.
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(c) Consents and Approvals. The Buyer and the Parent shall
have obtained or made each consent, authorization, approval, exemption, filing,
registration or qualification, if any, listed on Schedule 4.04 and Schedule
4.06.
(d) Litigation. There shall be no action pending, and no
action which has been overtly threatened in a writing received by any party
hereto, by or before any Governmental Person or arbitrator seeking to restrain,
prohibit or invalidate any of the transactions contemplated hereby or by any of
the Related Documents or seeking monetary relief against either Company by
reason of the consummation of such transactions, and there shall not be in
effect any Governmental Order which has such effect.
(e) Officer's Certificate. The Buyer and the Parent shall have
delivered to the Companies certificates of their President dated the Closing
Date and certifying that each of the conditions specified in subsections (a),
(b), (c) and (d) above have been met.
(f) Secretary's Certificate. The Buyer and the Parent shall
have delivered to the Companies certificates of their Secretaries dated the
Closing Date and certifying (i) that correct and complete copies of their
Charters and By-Laws are attached thereto, (ii) that correct and complete copies
of each resolution of their boards of directors and shareholders approving this
Agreement and the Related Documents to which either of them is a party and
authorizing the execution hereof and thereof and the consummation of the
transactions contemplated hereby and thereby are attached thereto and (iii) the
incumbency and signatures of the officers of the Buyer and the Parent authorized
to execute and deliver this Agreement and the Related Documents to which the
Buyer or the Parent is a party on behalf of the Buyer or the Parent.
(g) Opinion of Counsel. The Buyer shall have delivered to the
Shareholders an opinion of the Buyer's counsel dated the Closing Date as to
matters specified in Sections 4.01, 4.02, 4.03, 4.04, 4.06 and 4.06 and such
other matters as the Companies or the Shareholders and their counsel may
reasonably request.
(h) Related Documents. The Buyer, the Parent, Brighton and any
other parties thereto (other than the Companies
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and Shareholders) shall have executed and delivered to the Companies or the
Shareholders, as applicable, the following documents and such other documents
and instruments, in form and substance satisfactory to the Companies, the
Shareholders and their respective counsel, as shall be necessary or desirable in
order to consummate the transactions contemplated hereby, each dated the Closing
Date:
(i) such instruments of assumption as the Companies
may reasonably request;
(ii) the allocation of the Purchase Price referred to
in Section 2.05;
(iii) the Stock Purchase Agreement and the Employment
Agreements referred to in Section 6.02(j); and
(iv) letter agreement from William Remley and Richard
Kramer regarding steel-related acquisitions and net operating losses in
substantially the form of Exhibit E.
(i) Purchase Price and Delivery of Stock. The Buyer (a) shall
have paid the Purchase Price to the Companies and shall have paid any fees or
expenses which it is required to pay on behalf of the Companies to the
appropriate parties and (b) shall have delivered to the Shareholders
certificates evidencing the stock to be purchased by them under the Stock
Purchase Agreement referred to in Section 6.02(j).
ARTICLE VII
INDEMNIFICATION
7.01. Indemnification by the Companies and the Shareholders.
The Companies and the Shareholders shall defend, indemnify and hold harmless the
Buyer, the Parent, Brighton and their respective directors, officers,
shareholders and agents (each a "Company Indemnitee") from and against any and
all claims, damages, losses, liabilities, costs and expenses (including without
limitation reasonable attorneys' fees, litigation expenses and court costs) that
arise out of or in connection with:
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(a) any representation or warranty of either Company or the
Shareholders set forth herein, in any Related Document or in any certificate
delivered in connection herewith or therewith having been false or misleading in
any material respect as of the time when made (including by omission of material
information necessary to make such representation or warranty not misleading);
(b) any default by either Company or the Shareholders in the
performance or observance of any of their covenants or agreements hereunder or
under any Related Document;
(c) any Excluded Liability; or
(d) the involvement by any Company Indemnitee in any
investigation, action or other proceeding incident to any of the matters
indemnified against under paragraph (a), (b) or (c) above.
7.02. Indemnification by the Buyer. The Buyer shall defend,
indemnify and hold harmless each Company and their directors, officers and
agents and all shareholders of each Company and their trustees, if any (each a
"Buyer Indemnitee"), from and against any and all claims, damages, losses,
liabilities, costs and expenses (including without limitation reasonable
attorneys' fees, litigation expenses and court costs) that arise out of or in
connection with:
(a) any representation or warranty of the Buyer set forth
herein, in any Related Document or in any certificate delivered in connection
herewith or therewith having been false or misleading in any material respect as
of the time when made (including by omission of material information necessary
to make such representation or warranty not misleading);
(b) any default by the Buyer in the performance or observance
of any of its covenants or agreements hereunder or under any Related Document;
or
(c) the involvement by any Buyer Indemnitee in any
investigation, action or other proceeding incident to any of the matters
indemnified against under paragraph (a) or (b) above.
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7.03. Indemnification by the Parent. The Parent shall defend,
indemnify and hold harmless each Company and their directors, officers and
agents and all shareholders of each Company and their trustees, if any (each a
"Parent Indemnitee"), from and against any and all claims, damages, losses,
liabilities, costs and expenses (including without limitation reasonable
attorneys' fees, litigation expenses and court costs) that arise out of or in
connection with:
(a) any representation or warranty of the Parent set forth
herein, in any Related Document or in any certificate delivered in connection
herewith or therewith having been false or misleading in any material respect as
of the time when made (including by omission of material information necessary
to make such representation or warranty not misleading);
(b) any default by the Parent in the performance or observance
of any of its covenants or agreements hereunder or under any Related Document;
or
(c) the involvement by any Parent Indemnitee in any
investigation, action or other proceeding incident to any of the matters
indemnified against under paragraph (a) or (b) above.
7.04. Representation, Settlement and Cooperation. If any
investigation, action or other proceeding described in Section 7.01(d), 7.02(c)
or 7.03(c) (each a "Proceeding") is threatened or initiated against any Company
Indemnitee, Buyer Indemnitee or Parent Indemnitee (each an "Indemnitee"), and
such Indemnitee intends to seek indemnification from the Companies, the
Shareholders, the Buyer or the Parent (each an "Indemnitor"), as applicable,
under this Article, on account of its involvement in such Proceeding, then such
Indemnitee shall give prompt notice to the applicable Indemnitor of such
Proceeding; provided, that the failure to so notify such Indemnitor shall not
relieve such Indemnitor of its obligations under this Article, but shall reduce
such obligations by the amount of damages or increased costs and expenses
attributable to such failure to give notice. Upon receipt of such notice, such
Indemnitor shall diligently defend against such Proceeding on behalf of such
Indemnitee at its own expense using counsel reasonably acceptable to such
Indemnitee; provided, that if such Indemnitor shall fail or refuse to conduct
such defense, then such Indemnitee may defend against such Proceeding at such
Indemnitor's expense. Such
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Indemnitor or Indemnitee, as applicable, may participate, at its own expense, in
any Proceeding being defended against by the other. No Indemnitor or Indemnitee
shall settle any Proceeding without the prior consent of the other, which
consent shall not be unreasonably withheld. Each Indemnitor and Indemnitee shall
cooperate with the other in the conduct of any Proceeding.
7.05. Notice and Satisfaction of Indemnification Claims. No
indemnification claim shall be deemed to have been asserted until the applicable
Indemnitor has been given notice by the Indemnitee of the amount of such claim
(or a reasonable estimate thereof) and the facts on which such claim is based.
If a Company Indemnitee is not the Buyer, then such notice shall be given on
behalf of such Indemnitee by the Buyer, and if a Buyer Indemnitee or a Parent
Indemnitee is not a Company or a Shareholder, then such notice shall be given on
behalf of such Indemnitee by a Company or any Shareholder. Indemnification
claims shall be paid within 30 days after the Indemnitor's receipt of such
notice (or, in the case of an indemnification claim under Section 7.01(d),
7.02(c) or 7.03(c), within 30 days after the Indemnitor's receipt of notice that
such claim has been finally adjudicated or settled) and such evidence of the
amount of such claim and the Indemnitor's liability therefor as the Indemnitor
may reasonably request.
7.06. Duration of Indemnification Obligations; Exclusive
Remedy. Claims for indemnification under this Article may only be asserted
within the following time periods:
(a) claims arising out of any Excluded Liability, or any
Proceeding under and as defined in Section 7.04 relating thereto (collectively,
"Excluded Liability Claims"), may be asserted at any time;
(b) claims arising out of or in connection with any other
Proceeding under and as defined in Section 7.04 may be asserted at any time
during the period specified in subsection (c) and, with respect to Proceedings
as to which a claim has been asserted, but which have not been concluded, during
such time period, until 30 days after the conclusion of any such Proceeding
(including any appeals resulting therefrom); and
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(c) all other claims may be asserted until the second
anniversary of the Closing Date (or, if the Closing does not occur, until the
second anniversary of the date hereof).
Indemnification under this Article shall be the sole and exclusive remedy for
claims arising out of or related to this Agreement.
7.07. Indemnification Threshold. Notwithstanding any other
provision hereof, if the Closing occurs, no Indemnitor shall have any
indemnification obligations under this Article (other than indemnification
obligations arising out of Excluded Liability Claims) unless and until the
claims asserted against such Indemnitor exceed $200,000 in the aggregate (the
"Threshold Amount"); thereafter, such Indemnitor shall be liable for all
indemnification claims properly asserted against it, including for those
comprising the Threshold Amount.
7.08. Indemnification Liability of the Companies and the
Shareholders. Notwithstanding any other provision hereof:
(a) if the Closing does not occur, the Shareholders shall have
no liability for the indemnification obligations of the Companies and the
Shareholders under this Article, and the Company Indemnitees shall look solely
to the Companies for satisfaction of the same;
(b) in all other cases, both the Companies and the
Shareholders shall be jointly and severally liable for the indemnification
obligations of the Companies and the Shareholders under this Article; and
(c) the total aggregate indemnification liability of the
Companies and the Shareholders hereunder shall be limited to $4,000,000;
provided, that such restriction shall not apply to Excluded Liability Claims.
7.09. Indemnification Liability of the Buyer and the Parent.
Notwithstanding any other provisions hereof:
(a) if the Closing does not occur, the Buyer and the Parent
shall be jointly and severally liable for all of the indemnification obligations
of the Buyer and the Parent under this Article;
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(b) if the Closing occurs, each of the Buyer and the Parent
shall be liable for their own indemnification obligations under this Article;
and
(c) the total aggregate indemnification liability of the Buyer
and the Parent hereunder shall be limited to $4,000,000.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01. Amendments. This Agreement may be amended only by a
writing signed by each of the parties, and any such amendment shall be effective
only to the extent specifically set forth in such writing.
8.02. Assignment. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned, pledged or otherwise
transferred by any party, whether by operation of law or otherwise, without the
prior consent of the other party or parties.
8.03. Confidentiality.
(a) As used in this Section, the "Confidential Information" of
a party shall mean all information concerning or related to the business,
operations, financial condition or prospects of such party or any of its
Affiliates, regardless of the form in which such information appears and whether
or not such information has been reduced to a tangible form, and shall
specifically include (i) all information regarding the officers, directors,
employees, equity holders, customers, suppliers, distributors, sales
representatives and licensees of such party and its Affiliates, in each case
whether present or prospective, (ii) all inventions, discoveries, trade secrets,
processes, techniques, methods, formulae, ideas and know-how of such party and
its Affiliates and (iii) all financial statements, audit reports, budgets and
business plans or forecasts of such party and its Affiliates; provided, that the
Confidential Information of a party shall not include (A) information which is
or becomes generally known to the public through no act or omission of the
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other party or parties and (B) information which has been or hereafter is
lawfully obtained by the other party or parties from a source other than the
party to whom such Confidential Information belongs (or any of its Affiliates or
their respective officers, directors, employees, equity holders or agents) so
long as, in the case of information obtained from a third party, such third
party was or is not, directly or indirectly, subject to an obligation of
confidentiality owed to the party to whom such Confidential Information belongs
or any of its Affiliates at the time such Confidential Information was or is
disclosed to the other party.
(b) Except as otherwise permitted by paragraph (c) below, each
party agrees that it will not, without the prior written consent of the other
party, disclose or use for its own benefit any Confidential Information of any
other party.
(c) Notwithstanding paragraph (b) above, each of the parties
shall be permitted to:
(i) disclose Confidential Information of the other
parties to its officers, directors, employees, equity holders, lenders, agents
and Affiliates, but only to the extent reasonably necessary in order for such
party to perform its obligations and exercise its rights and remedies under this
Agreement and the Related Documents, and such party shall take all such action
as shall be necessary or desirable in order to ensure that each of such Persons
maintains the confidentiality of any Confidential Information that is so
disclosed;
(ii) make additional disclosures of or use for its
own benefit Confidential Information of the other parties, but only if and to
the extent that such disclosures or use are specifically contemplated by this
Agreement or the Related Documents; and
(iii) disclose Confidential Information of the other
parties to the extent, but only to the extent, required by Governmental Rules or
any Governmental Order; provided, that prior to making any disclosure pursuant
to this subparagraph, the party required to make such disclosure (the
"Disclosing Party") shall notify the other party or parties (each an "Affected
Party") of the same, and the Affected Party or Parties shall have the right to
participate with the Disclosing Party in determining
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the amount and type of Confidential Information of the Affected Party or
Parties, if any, which must be disclosed in order to comply with Governmental
Rules or such Governmental Order.
(d) If this Agreement is terminated for any reason without the
transactions contemplated hereby being consummated then, promptly after the
written request of any party, the other parties shall return to the requesting
party all Confidential Information of the requesting party which is in tangible
form and which is then in the other parties' possession (or in the possession of
any of their officers, directors, employees, equity holders or agents).
8.04. Consent to Jurisdiction and Service of Process.
(a) Each of the parties hereby:
(i) irrevocably submits to the jurisdiction of the
Court of Common Pleas of Allegheny County, Pennsylvania and to the jurisdiction
of the United States District Court for the Western District of Pennsylvania for
the purposes of any action or proceeding arising out of or relating to this
Agreement or the Related Documents or the subject matter hereof or thereof and
brought by any other party;
(ii) waives and agrees not to assert, by way of
motion, as a defense or otherwise, in any such action or proceeding, any claim
that (A) it is not personally subject to the jurisdiction of such courts, (B)
the action or proceeding is brought in an inconvenient forum or (C) the venue of
the action or proceeding is improper; and
(iii) agrees that, notwithstanding any right or
privilege it may possess at any time, such party and its property are and shall
be generally subject to suit on account of the obligations assumed by it
hereunder.
(b) Each party agrees that service in person or by certified
or registered U.S. mail to its address set forth in Section 8.12 shall
constitute valid in personam service upon such party and its successors and
assigns in any action or proceeding with respect to any matter as to which it
has submitted to jurisdiction hereunder.
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(c) Each party hereby acknowledges that this is a commercial
transaction, that the foregoing provisions for consent to jurisdiction and
service of process have been read, understood and voluntarily agreed to by each
party and that by agreeing to such provisions each party is waiving important
legal rights.
8.05. Counterparts; Telefacsimile Execution. This Agreement
may be executed in any number of counterparts, and by each of the parties on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all of which shall constitute but one and the same instrument.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver a manually executed counterpart of this
Agreement, but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability or binding effect of this Agreement.
8.06. Exhibits and Schedules. The Exhibits and Schedules
attached hereto and to the Related Documents are true and correct and are an
integral part hereof and thereof and all references herein to this Agreement and
to the Related Documents shall include such Exhibits and Schedules.
8.07. Expenses. Except as otherwise specifically provided
herein or in any Related Document, each party shall be responsible for such
expenses as it may incur in connection with the negotiation, preparation,
execution, delivery, performance and enforcement of this Agreement and the
Related Documents, except that, if the Closing occurs, (a) the Buyer shall be
liable for $500,000 of the bona fide, reasonable fees and expenses incurred by
the Companies in connection with the negotiation, preparation, execution and
delivery of this Agreement and the Related Documents and the transactions
contemplated hereby up to and including the Closing Date, including without
limitation any fees and expenses owed to Berenson Minella & Company, (b) the
Companies and the Shareholders shall be liable, out of the Purchase Price, for
one-half of the cost of title searches and title insurance for the Buyer and its
lender(s), UCC searches, real estate transfer taxes and other costs associated
with the transfer of the Assets to the Buyer and (c) the Companies and the
Shareholders shall be liable, out of the Purchase Price, for
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$35,000 of the fees and expenses of Arthur Andersen LLP incurred in connection
with any audits of the Companies prepared in connection with the transactions
contemplated hereby or in connection with the Buyer's financing arrangements,
and the Buyer shall be liable for the balance of such fees and expenses. The
costs to be paid pursuant to clauses (a), (b) and (c) above shall be paid at the
Closing, subject to such verification of the incurrence of such costs as the
party or parties responsible for the same may reasonably request.
8.08. Further Assurances. The parties shall from time to time
do and perform such additional acts and execute and deliver such additional
documents and instruments as may be required by applicable Governmental Rules or
reasonably requested by any party to establish, maintain or protect its rights
and remedies or to effect the intents and purposes of this Agreement and the
Related Documents. Without limiting the generality of the foregoing, each party
agrees to endorse (if necessary) and deliver to the other, promptly after its
receipt thereof, any payment or document which it receives after the Closing
Date and which is the property of another party.
8.09. Gender and Number. As used in this Agreement and the
Related Documents, the masculine, feminine or neuter gender, and the singular or
plural number, shall include the others whenever appropriate in the context.
8.10. Governing Law; Construction. This Agreement shall be a
contract under the laws of the Commonwealth of Pennsylvania and for all purposes
shall be governed by and construed and enforced in accordance with the laws of
said Commonwealth. The language used in this Agreement shall be deemed to be
language chosen by each of the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party.
8.11. Headings. All titles and headings in this Agreement and
the Related Documents are intended solely for convenience of reference and shall
in no way limit or otherwise affect the interpretation of any of the
provisions hereof.
8.12. Notices. Unless otherwise specifically provided herein,
all notices, consents, requests, demands and other communications required or
permitted hereunder:
-51-
<PAGE> 56
(a) shall be in writing;
(b) shall be sent by messenger, certified or registered U.S.
mail, a reliable express delivery service or telecopier (with a copy sent by one
of the foregoing means), charges prepaid as applicable, to the appropriate
address(es) or telecopier number(s) set forth below; and
(c) shall be deemed to have been given on the date of receipt
by the addressee (or, if the date of receipt is not a Business Day, on the first
Business Day after the date of receipt), as evidenced by (i) a receipt executed
by the addressee (or a responsible person in his or her office or residence, as
applicable) or the records of the Person delivering such communication, if sent
by messenger, U.S. mail or express delivery service, or (ii) a receipt generated
by the sender's telecopier showing that such communication was sent to the
appropriate telecopier number on a specified date, if sent by telecopier.
All such communications shall be sent to the following addresses or telecopier
numbers, or to such other addresses or telecopier numbers of which any party may
inform the others by giving five Business Days' prior notice:
If to the Companies: With a copy to:
J&L Structural, Inc. Cohen & Grigsby, P.C.
111 Station Street 2900 CNG Tower
Aliquippa, PA 15001 625 Liberty Avenue
Attn: Howell A. Breedlove Pittsburgh, PA 15222
Telecopier No.: (412) 438-6388 Attn: Richard D. Rosen
Telecopier No.: (412) 391-3382
-52-
<PAGE> 57
If to the Shareholders: With a copy to:
Howell A. Breedlove Cohen & Grigsby, P.C.
2015 Blairmont Drive 2900 CNG Tower
Pittsburgh, PA 15241 625 Liberty Avenue
Telecopier No.: (412) 831-7044 Pittsburgh, PA 15222
Attn: Richard D. Rosen
James E. Howe Telecopier No.: (412) 391-3382
871 Osage Road
Pittsburgh, PA 15243
Carl A. Snyder
103 Nancy Drive
McMurray, PA 15317
Telecopier No.: (412) 941-1379
If to the Buyer: With a copy to:
J&L Acquisition Corp. Kelley, McCann & Livingstone
c/o CPT Holdings, BP America Building, 35th Floor
Inc. 200 Public Square
1430 Broadway, 13th Floor Cleveland, OH 44114-2302
New York, NY 10018-3308 Attn: Michael Schenker
Attn: William L. Remley Telecopier No.: (216) 241-3707
Telecopier No.: (212) 391-1393
If to the Parent: With a copy to:
CPT Holdings, Inc. Kelley, McCann & Livingstone
1430 Broadway, 13th Floor BP America Building, 35th Floor
New York, NY 10018-3308 200 Public Square
Attn: William L. Remley Cleveland, OH 44114-2302
Telecopier No.: (212) 391-1393 Attn: Michael Schenker
Telecopier No.: (216) 241-3707
8.13. Publicity. No party shall make any press release or
other public announcement regarding this Agreement or the Related Documents or
any transaction contemplated hereby or thereby until the text of such release or
announcement has been submitted to the other party or parties and the other
party or
-53-
<PAGE> 58
parties has approved the same and the timing of its release; provided, that such
approval rights shall be subject to the requirements of any Governmental Rules
applicable to the content or timing of such release or announcement.
8.14. 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 portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.15. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their respective
heirs, successors and permitted assigns.
8.16. Survival; Duration. All representations and warranties
of each party contained herein and in any of the Related Documents or made in
connection herewith or therewith shall survive the Closing Date (or, if the
Closing does not occur, the date hereof), and all covenants and agreements of
the parties set forth herein shall continue in full force and effect from and
after the date hereof until such date as all of such covenants and agreements
have been satisfied in full or waived or this Agreement has otherwise been
terminated, in each case subject to the limitations on liability in respect
thereof set forth in Article VII hereof.
8.17. Representations as to Knowledge. Whenever a
representation or warranty is made herein as being "to the best of knowledge of"
a Person, it is understood that the Person or (in the case of a corporation) the
shareholders, officers and/or directors of such Person have made or caused to be
made (and the results thereof reported to them) such internal investigation or
inquiry as is appropriate to determine the accuracy of such representation or
warranty by personnel or representatives competent to determine the accuracy
thereof; provided, that in no event shall this provision require the Persons
subject thereto to engage any third parties to perform any environmental
assessments or appraisals.
8.18. Termination.
-54-
<PAGE> 59
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by mutual agreement of the Buyer and the
Companies;
(ii) by the Buyer as permitted under Section 5.06 or
if any of the conditions specified in Section 6.02 shall not have been fulfilled
within the time required and shall not have been waived by the Buyer;
(iii) by the Companies if any of the conditions
specified in Section 6.03 shall not have been fulfilled within the time required
and shall not have been waived by the Companies and the Shareholders; or
(iv) by the Buyer or the Companies, as applicable, if
the Closing shall not have occurred within 120 days after the date hereof.
(b) If this Agreement is terminated by either the Companies or
the Buyer as provided above, then no party shall have any further obligations or
liabilities hereunder except for obligations or liabilities arising from a
breach of this Agreement prior to such termination or which survive such
termination by their own terms. No party shall have any liability to the other
parties in connection with any termination of this Agreement unless (i) in the
case of a representation or warranty which is false or misleading the party or
parties making the same knew or reasonably should have known that it was false
or misleading at the time when it was made and (ii) in the case of the failure
to perform or comply with any covenant or agreement or to satisfy any Closing
condition, the failure was due to events or conditions which were within the
control of the party or parties responsible for such performance, compliance or
satisfaction.
8.19. Waivers. The due performance or observance by the
parties of their respective obligations hereunder and under the Related
Documents shall not be waived, and the rights and remedies of the parties
hereunder and under the Related Documents shall not be affected, by any course
of dealing or performance or by any delay or failure of any party in exercising
any such right or remedy. The due performance or observance by a party of any
-55-
<PAGE> 60
of its obligations hereunder or under any Related Document may be waived only by
a writing signed by the party against whom enforcement of such waiver is sought,
and any such waiver shall be effective only to the extent specifically set forth
in such writing.
8.20 Change of Name. Promptly after the Closing each of the
Companies shall change their corporate names and shall take such action as the
Buyer shall reasonably request in order to preserve such names for the Buyer's
use and otherwise make them available to the Buyer The Buyer covenants and
agrees to change its corporate name to "J&L Structural, Inc." promptly after the
Closing and, for so long as the Parent and/or any of its Affiliates own more
than 50% of the voting securities of the Buyer, not to change such corporate
name.
8.21. Coal Notice. NOTICE -- THIS DOCUMENT MAY NOT SELL,
CONVEY, TRANSFER, INCLUDE OR INSURE THE TITLE TO THE COAL AND RIGHT OF SUPPORT
UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED TO HEREIN, AND THE OWNER OR
OWNERS OF SUCH COAL MAY HAVE THE COMPLETE LEGAL RIGHT TO REMOVE ALL OF SUCH COAL
AND, IN THAT CONNECTION, DAMAGE MAY RESULT TO THE SURFACE OF THE LAND AND ANY
HOUSE, BUILDING OR OTHER STRUCTURE ON OR IN SUCH LAND. THE INCLUSION OF THIS
NOTICE DOES NOT ENLARGE, RESTRICT OR MODIFY ANY LEGAL RIGHTS OR ESTATES
OTHERWISE CREATED, TRANSFERRED, EXCEPTED OR RESERVED BY THIS INSTRUMENT. (This
notice is set forth in the manner provided in Section 1 of the Act of July 17,
1957, P.L. 984, as amended, and is not intended as notice of unrecorded
instruments, if any.)
Unless the foregoing notice is stricken, the deeds shall contain the
notice as above set forth and shall also contain, and the Buyer shall sign, the
notice specified in the Bituminous Mine Subsidence and Land Conservation Act of
1966.
-56-
<PAGE> 61
SIGNATURE PAGE
WITNESS the due execution hereof as of the date first written
above.
COMPANIES
ATTEST: J&L STRUCTURAL, INC.
By: /s/ James E. Howe By: /s/ Howell A. Breedlove
------------------------------- ---------------------------
Title: Vice President & Sec. Title: President
---------------------------- ------------------------
[Corporate Seal]
ATTEST: TRAILER COMPONENTS, INC.
By: /s/ James E. Howe By: /s/ Howell A. Breedlove
------------------------------- ---------------------------
Title: Vice President & Sec. Title: President
---------------------------- ------------------------
[Corporate Seal]
SHAREHOLDERS
/s/ Joanne Agich /s/ Howell A. Breedlove
- - ---------------------------------- ---------------------------------
Witness Howell A. Breedlove
/s/ Carl A. Snyder /s/ James E. Howe
- - ---------------------------------- ---------------------------------
Witness James E. Howe
/s/ James E. Howe /s/ Carl A. Snyder
- - ---------------------------------- ---------------------------------
Witness Carl A. Snyder
-57-
<PAGE> 62
BUYER
ATTEST: J&L ACQUISITION CORP.
By: By:
------------------------------- ---------------------------
Title: Title: President
---------------------------- ------------------------
[Corporate Seal]
PARENT
ATTEST: CPT HOLDINGS, INC.
By: By:
------------------------------- ---------------------------
Title: Title: President
---------------------------- ------------------------
[Corporate Seal]
-58-
<PAGE> 63
INDEX TO SCHEDULES
Schedule 2.02 Excluded Assets
Schedule 2.03 Excluded Liabilities
Schedule 3.01 Organization and Qualification
Schedule 3.04 No Breach or Default (Companies)
Schedule 3.06 No Consent (Companies)
Schedule 3.08 Tax Matters
Schedule 3.09 Litigation
Schedule 3.10 Absence of Certain Changes and
Events
Schedule 3.11 Directors and Executives
Schedule 3.12 Customers and Suppliers
Schedule 3.13 Governmental Rules
Schedule 3.14 Governmental Orders
Schedule 3.15 Governmental Permits
Schedule 3.16 Environmental Matters
Schedule 3.17 Real Property
Schedule 3.18 Personal Property
Schedule 3.19 Intellectual Property
Schedule 3.20 Title to Assets
Schedule 3.21 Pension Plans
Schedule 3.22 Welfare Plans
Schedule 3.23 Employee Matters
Schedule 3.24 Insurance
Schedule 3.25 Indebtedness
Schedule 3.26 Other Material Contracts
Schedule 3.27 Material Agreements
Schedule 3.28 Transactions with Affiliates
Schedule 3.29 Warranty and Product Liability
Schedule 3.31 Accounts and Investments
Schedule 4.04 No Breach or Default (Buyer and
Parent)
Schedule 4.06 No Consent (Buyer and Parent)
Schedule 5.06 Due Diligence Contingency
<PAGE> 64
SCHEDULE 2.02
EXCLUDED ASSETS
1. Cash permitted to be distributed to shareholders under Section 5.05.
<PAGE> 65
SCHEDULE 2.03
EXCLUDED LIABILITIES
1. All liabilities associated with the BID, PDCA and PIDA Financings
referred to on Schedule 3.25. Such financings will be satisfied in full
by the Companies at the Closing out of the Purchase Price and the real
property subject to the Installment Sale Contract referenced on
Schedule 3.25 shall be conveyed to the Buyer.
2. All liabilities arising out of the litigation referred to in item 3 on
Schedule 3.09.
<PAGE> 66
SCHEDULE 3.01
ORGANIZATION AND QUALIFICATION
1. J&L ships some of its product by barge to Yellow Creek Port in Iuka,
Mississippi where it is unloaded, stored and shipped by commercial
carrier or customer truck to its customers. J&L also has billets
delivered to Yellow Creek Port from a supplier in Jackson, Mississippi
where they are loaded onto barges and shipped to J&L. J&L is not
qualified to do business in Mississippi and it is not known whether
these activities require J&L to be so qualified.
2. One of J&L's regional sales managers (a J&L employee) resides and works
out of his home in Tennessee. J&L is not qualified to do business in
Tennessee and it is not known whether such contact requires J&L to be
so qualified.
<PAGE> 67
SCHEDULE 3.04
NO BREACH OR DEFAULT
(Companies)
1. The transactions contemplated by the Agreement would constitute a
default under the documents listed on Schedule 3.25 which create,
evidence or secure the BID, PDCA and PIDA Financings. Such financings
will be satisfied in full by the Companies at the Closing out of the
Purchase Price, the real property subject to the Installment Sale
Contract referenced on Schedule 3.25 shall be conveyed to the Buyer and
all Liens which secure any of such financings shall be released.
2. The transactions contemplated by the Agreement would constitute a
default under the documents listed on Schedule 3.25 which create,
evidence or secure the PNC Financing. Such financing will be satisfied
in full by the Buyer at the Closing.
3. Product Supply Agreement dated 7/6/92 between J&L and AGA Gas, Inc.
Section 12F requires the prior written consent of the other party for
assignment.
4. Transportation Contract ICC-ALQS-C-0001 dated 1/1/91 between J&L and
Aliquippa & Southern Railroad Company, as amended by letter from D.C.
Curtis to D.R. Innocenti dated 6/29/94 (raising rates). Section 6
requires the prior written consent of the other party for assignment.
5. Transportation Contract ICC-ALQS-C-0002 dated 1/1/92 between J&L and
Aliquippa & Southern Railroad Company, as amended by letter from D.C.
Curtis to D.R. Innocenti dated 6/29/94 (raising rates). Section 6
requires the prior written consent of the other party for assignment.
6. Payroll Processing Agreement dated 12/1/92 between J&L and LTV Steel
Company, Inc. ("LTV"). Section 6 requires the written consent of the
other party for assignment.
7. Asset Purchase Agreement dated as of 10/6/87 between LTV as seller and
Breedlove Enterprises, Inc. (now J&L) as buyer, as amended by Amendment
No. 1 dated 11/6/87. Section 12.4 requires consent of other party for
assignment.
8. Software License Agreement commencing 11/16/87 between VAS Software,
Inc. as licensor and J&L as licensee (accounting software). Requires
consent of licensor for assignment.
9. Order Agreements dated 9/29/89 and 1/20/88 between Cognos Corporation
as licensor and J&L as licensee. Section 1 grants a non-exclusive,
non-transferable limited license to use the software purchased pursuant
to the Order Agreement; Section 12 provides that licensor has no right
to assign or sublicense the license.
10. On the Job Training Contract No. PY3*576 dated 5/18/94 between Job
Training for Beaver County, Inc. and J&L, as amended by On-The-Job
Training Contract Amendment No. 1 dated 5/11/94, and as extended by an
Addendum dated 7/19/94. Section J requires prior written consent of
Subcontractor for assignment.
11. Wireline Crossing Agreement dated as of 3/30/94 (unexecuted) between
CSX Transportation, Inc. as licensor and J & L as licensee. -- Section
16 requires the prior written consent of licensor for assignment.
<PAGE> 68
12. Labor Agreement dated April 1, 1992 between J&L and the United
Steelworkers of America, as amended by memoranda dated 9/27/92,
11/26/93, 12/3/93, 2/7/94, 2/21/94 and 3/10/94. Section XXI provides
that the Company will not sell, convey, assign or otherwise transfer
its plant covered by the Labor Agreement that the Company has not
declared permanently shutdown to any other party (Buyer) who intends to
continue to operate the business as the Company had, unless the
following conditions have been satisfied prior to the closing date of
the sale:
(a) the Buyer shall have entered into an Agreement with the Union
recognizing it as the bargaining representative for the
employees within the existing bargaining unit;
(b) the Buyer shall have entered into an Agreement with the Union
establishing the terms and conditions of employment to be
effective as of the closing date; and
(c) if requested by the Company, the Union will enter into
negotiations with the Company on the subject of releasing and
discharging the Company from any obligations, responsibilities
and liabilities to the Union and the employees, except as the
parties otherwise mutually agree.
13. The insurance policies listed as items 1, 3, 7, 10, 12 and 13 on
Schedule 3.24 provide that the insured's rights and duties provided
thereunder may not be transferred without the written consent of the
insurer.
14. The insurance policy listed as item 4 on Schedule 3.24 provides that
the insurance provided thereunder is not assignable, but benefits are.
15. The insurance policies listed as items 6 and 8 on Schedule 3.24 provide
that the such policies are not assignable without the consent of the
insurer.
16. Each of the Governmental Permits listed in items 1(a) through 1(h) on
Schedule 3.15 require the consent or approval of the issuing authority
in order to transfer the same without violation.
17. Equipment Lease (including maintenance agreements) dated 3/2/94 between
Pitney Bowes Credit Corporation and J&L. Section 19 provides that it
may not be assigned without the lessor's consent.
18. Lease Agreement No. 488042 dated 5/11/94 between GE Capital Modular
Space and J&L. Section 16 provides that it may not be assigned without
the lessor's consent.
19. Agreement of Sale dated December 28, 1993 between J&L and Beaver County
Corporation for Economic Development. Section 21 provides that it may
not be assigned without the Seller's consent.
20. Blanket Purchase Order dated 1/28/94 between Redman Homes, Inc. and
J&L, as amended. Paragraph 8 provides that it cannot be assigned
without the Purchaser's prior written approval.
-2-
<PAGE> 69
21. Main Base Gas Sales Contract dated September 1, 1994 and Limited Term
Sales Agreement (undated) between Eastern Marketing Corporation and
J&L. Article XIII, Section 3 provides that it cannot be assigned
without the consent of the other party.
-3-
<PAGE> 70
SCHEDULE 3.06
NO CONSENT
(Companies)
1. The Material Agreements listed on Schedule 3.04 require the consent of
the other party or parties thereto in order for the same to be assigned
to and assumed by the Buyer.
2. The Governmental Permits listed in items 1(a) through 1(h) on Schedule
3.15 require the consent or approval of the issuing authorities in
order for the same to be transferred to the Buyer. In addition, it is a
condition to the obligations of the Buyer hereunder that, on or prior
to the Closing Date, either (i) the "Section 10 Permit" referred to in
item 2(a) on Schedule 3.15 shall be obtained and properly transferred
to the Buyer or (ii) J&L obtain assurances from the Army Corps of
Engineers reasonably satisfactory to the Buyer to the effect such
permit will be forthcoming and that the failure to obtain the same on
or prior to the Closing Date will not impose any liability on the Buyer
or interfere with its operation of the Business.
3. It is a condition to the obligations of the Buyer hereunder that, on or
prior to the Closing Date, J&L satisfy the conditions specified in the
notes to items 1(c), 3(a), 3(b) and 3(c) on Schedule 3.17.
4. A filing with the U.S. Patent Office will be required to transfer the
trademark listed on Schedule 3.19 to the Buyer. In addition, the
consent of J&L Specialty Products Corporation may be required in order
for the Buyer to use the name "J&L Structural".
5. The Letter of Credit listed on Schedule 3.25 requires the consent of
PNC Bank in order for the same to be assigned to and assumed by the
Buyer.
6. The Pension Plans listed on Schedule 3.21 must be amended to redefine
the sponsoring employer as the Buyer.
7. The providers of the Welfare Plans listed on Schedule 3.22 must be
notified that the Buyer will be the sponsoring employer. It is a
condition to the obligations of the Buyer hereunder that, on or prior
to the Closing Date, such providers confirm in writing to the Buyer
that the transfer of each such plan to the Buyer will not result in any
change in the respective premiums, coverage limits or eligible covered
employees under such plans.
-4-
<PAGE> 71
SCHEDULE 3.08
TAX MATTERS
None
<PAGE> 72
SCHEDULE 3.09
LITIGATION
1. Henry McLaughlin v. J&L Structural, Civil Action No. 10960, Court of
Common Pleas of Beaver County, Pennsylvania
- Wrongful discharge action (breach of express and implied
contract, detrimental reliance).
- Complaint filed 5/25/94, answer filed 8/11/94.
- Damages sought are unknown, but are in excess of $20,000 and
include necessary and consequential damages and costs and
expenses of litigation.
- This action is currently in discovery. J&L has offered to
settle for $25,000, the plaintiff has made a $88,000
counter-offer.
2. Henry McLaughlin v. J&L Structural, PHRC Docket No. E-67194-AH,
Pennsylvania Human Relations Commission.
- Charge of employment discrimination under the Age
Discrimination in Employment Act of 1967 and the Americans with
Disabilities Act.
- Complaint filed 3/16/94, answer filed 4/11/94. No further
action has been taken.
- Damages sought are unknown, presumably include reinstatement.
- This action arises out of the same circumstances as the action
described in item 1 above.
3. Robertson Ceco Corporation v. Fourteenth Street Corporation and
Precision Galvanizing, Inc., Civil Action No. 94-1319, U.S. District
Court for the Western District of Pennsylvania.
- Action for breach of contract, declaratory judgment, tortious
interference in contractual relations, loss of business
reputation.
- Complaint filed 8/8/94, answer filed 9/26/94.
- Damages sought are unknown, but are in excess of $377,150 plus
additional amounts due under a note from Precision Galvanizing,
Inc. ("PGI") to Robertson Ceco Corporation ("RCC") and include
punitive damages, counsel fees, costs and expenses.
- PGI and Fourteenth Street Corporation ("FSC") are Affiliates of
J&L and TCI, and each of FSC and PGI lease space to TCI as
described on Schedule 3.17. Although none of J&L, TCI or the
Shareholders have been named in this action:
(a) this action could cause FSC to declare bankruptcy or
to give a deed in lieu of foreclosure to its
mortgagee, which could have an adverse impact on TCI's
lease with FSC;
<PAGE> 73
(b) this action could cause PGI (which is already in
liquidation) to declare bankruptcy, which could have
an adverse impact on TCI's lease arrangement with PGI;
and
(c) Robertson's counsel has verbally threatened counsel
for FSC and PGI that it may decide to pursue its
action against J&L, TCI and/or the Shareholders on a
"piercing the corporate veil" or similar theory.
-2-
<PAGE> 74
SCHEDULE 3.10
ABSENCE OF CERTAIN CHANGES AND EVENTS
(a) - J&L intends to hire a computer programmer from Sun Systems, Inc. for
the two-month period commencing 11/1/94 at an estimated cost of
$13,000. This programmer will be developing manufacturing software.
- J&L has committed to make a charitable contribution in the amount of
$18,000 to Beaver County Educational Trust. Of such amount, $10,000 is
payable in 1994 and $4,000 is payable in each of 1995 and 1996.
(f) - J&L has made or committed to make the salary increases set forth on
Annex A hereto and in the TCI Labor Agreement listed on Schedule 3.23.
- In July and October of 1994 J&L paid the amounts specified on Annex B
hereto in accordance with its Special Award Program. Although J&L is
not committed to pay any amounts under such program, J&L intends to
make payments under such program in respect of the fourth quarter of
1994 in amounts consistent with past practice.
- TCI intends to pay a bonus to George Michaels on or prior to 12/31/94
in the amount of $6,000.
(g) Annex C hereto sets forth a list of capital expenditures which the
Companies have made or committed to make since June 30, 1994, to the
extent that the same are required to be disclosed by Section 3.10(g) of
the Asset Purchase Agreement.
<PAGE> 75
ANNEX A
(Schedule 3.10)
SALARY ADJUSTMENT PROGRAM
3RD QUARTER 1994 SCHEDULED ADJUSTMENTS
Adjusted
Individual Effective Date Monthly Increase Salary/Mo.
---------- -------------- ---------------- ----------
1. R. Roenn 7/1/94 $100 $2,375
------------------- -------------- ---------------- ----------
2. C.J. Wahl 7/1/94 200 4,986
------------------- -------------- ---------------- ----------
3.
------------------- -------------- ---------------- ----------
4.
------------------- -------------- ---------------- ----------
5.
------------------- -------------- ---------------- ----------
6.
------------------- -------------- ---------------- ----------
7.
------------------- -------------- ---------------- ----------
8.
------------------- -------------- ---------------- ----------
9.
------------------- -------------- ---------------- ----------
10.
------------------- -------------- ---------------- ----------
H. A. Breedlove
-----------------------
H. A. Breedlove
6/30/94
HAB/jma
CC: K. W. Bixby
J. E. Howe
C. A. Snyder
0002A
<PAGE> 76
SALARY ADJUSTMENT PROGRAM
3RD QUARTER 1994 SCHEDULED ADJUSTMENTS
Adjusted
Individual Effective Date Monthly Increase Salary/Mo.
---------- -------------- ---------------- ----------
1. K. Bixby 8/1/94 $235 $5,150
------------------- -------------- ---------------- ----------
2. M. Comca 8/1/94 80 2,835
------------------- -------------- ---------------- ----------
3. W. Keans 8/1/94 225 6,460
------------------- -------------- ---------------- ----------
4.
------------------- -------------- ---------------- ----------
5.
------------------- -------------- ---------------- ----------
6.
------------------- -------------- ---------------- ----------
7.
------------------- -------------- ---------------- ----------
8.
------------------- -------------- ---------------- ----------
9.
------------------- -------------- ---------------- ----------
10.
------------------- -------------- ---------------- ----------
H. A. Breedlove
-----------------------
H. A. Breedlove
8/21/94
HAB/jma
CC: K. W. Bixby
J. E. Howe
C. A. Snyder
0002A
<PAGE> 77
SALARY ADJUSTMENT PROGRAM
3RD QUARTER 1994 SCHEDULED ADJUSTMENTS
Adjusted
Individual Effective Date Monthly Increase Salary/Mo.
---------- -------------- ---------------- ----------
1. J. Agien 9/1/94 $ 95 $2,450
------------------- -------------- ---------------- ----------
2. K. Gurchar 9/1/94 200 3,367
------------------- -------------- ---------------- ----------
3. M. Karczewski 9/1/94 250 4,955
------------------- -------------- ---------------- ----------
4. L. Musante 9/1/94 130 3,452
------------------- -------------- ---------------- ----------
5. F. Pendil 9/1/94 95 2,390
------------------- -------------- ---------------- ----------
6. J. Shoop 9/1/94 105 2,758
------------------- -------------- ---------------- ----------
7.
------------------- -------------- ---------------- ----------
8.
------------------- -------------- ---------------- ----------
9.
------------------- -------------- ---------------- ----------
10.
------------------- -------------- ---------------- ----------
H. A. Breedlove
-----------------------
H. A. Breedlove
8/30/94
Revised 9/20/94
HAB/jma
CC: K. W. Bixby
J. E. Howe
C. A. Snyder
0002A
<PAGE> 78
SALARY ADJUSTMENT PROGRAM
4TH QUARTER 1994 SCHEDULED ADJUSTMENTS
Adjusted
Individual Effective Date Monthly Increase Salary/Mo.
---------- -------------- ---------------- ----------
1. R. Balentine 10/1/94 $200 $4,310
------------------- -------------- ---------------- ----------
2. W. Nicklaus 10/1/94 150 3,055
------------------- -------------- ---------------- ----------
3. W. Ross 10/1/94 170 5,005
------------------- -------------- ---------------- ----------
4. W. Watkins 10/1/94 135 3,480
------------------- -------------- ---------------- ----------
5. E. E. Kaunert 11/1/94 200 5,050
------------------- -------------- ---------------- ----------
6. S. Mayconich 11/1/94 150 3,025
------------------- -------------- ---------------- ----------
7. D. Cook 12/1/94 175 3,825
------------------- -------------- ---------------- ----------
8.
------------------- -------------- ---------------- ----------
9.
------------------- -------------- ---------------- ----------
10.
------------------- -------------- ---------------- ----------
H. A. Breedlove
-----------------------
H. A. Breedlove
8/30/94
HAB/jma
CC: K. W. Bixby
J. E. Howe
C. A. Snyder
0002A
<PAGE> 79
(Schedule 3.10)
SPECIAL AWARD PROGRAM
Period: April - June 1994
----------------------------
<TABLE>
<CAPTION>
Awardee Award Amount
------- ------------
<S> <C>
1. H. Fleming $1,100
------------------------ -----------
2. B. Cox 1,000
------------------------ -----------
3. W. Nicklaus 1,250
------------------------ -----------
4. ------------------------ -----------
5. ------------------------ -----------
6. ------------------------ -----------
</TABLE>
NOTES:
(1) Special Awards are limited to mill supervisory personnel
for extra shift or heavy routine overtime activity.
Participants in Management Award Program are ineligible.
(2)
/s/ Howell A. Breedlove
-----------------------
Howell A. Breedlove
President
HAB/jma
CC: K.W. Bixby
J.E. Howe
C.A. Snyder
<PAGE> 80
SPECIAL AWARD PROGRAM
Period: July - September 1994
--------------------------------
<TABLE>
<CAPTION>
Awardee Award Amount
------- ------------
<S> <C>
1. B. Cox $ 850
------------------------ -----------
2. W. Nicklaus 1,400
------------------------ -----------
3. H. Fleming 1,000
------------------------ -----------
4. M. White 1,100
------------------------ -----------
5. ------------------------ -----------
6. ------------------------ -----------
</TABLE>
NOTES:
(1) Special Awards are limited to mill supervisory personnel
for extra shift or heavy routine overtime activity.
Participants in Management Award Program are ineligible.
(2)
/s/ Howell A. Breedlove
------------------------
Howell A. Breedlove
President
HAB/jma
CC: K.W. Bixby
J.E. Howe
C.A. Snyder
<PAGE> 81
ANNEX C
(Schedule 3.10)
CAPITAL EXPENDITURES
1. J&L
---
<TABLE>
<CAPTION>
Supplier Cost Purpose
-------- ---- -------
<S> <C> <C>
Giffin Interiors $ 5,500 Cabinets, Display Case
Ragon Electric $ 32,470 6000 KVA Auto Transformer
Foerster Instruments $ 6,465 Hardness Tester
CDS $ 8,362 Makeup Well/Pump
Hajoca Corp. $ 5,645 Makeup Well/Pump
Beaver Concrete $ 307 Makeup Well/Pump
B.M. Kramer & Co. $ 231 Makeup Well/Pump
M.S. Jacobs $ 1,158 Makeup Well/Pump
James M. Cox Corp. $ 381 Makeup Well/Pump
Dan Snyder $ 2,800 Rougher's Pulpit
Dan Snyder $ 1,120 Rougher's Pulpit
Cross Electronics $ 33,400 Rougher's Pulpit
Precision Galvanizing, Inc. $ 16,650 Machine Shop Equipment
Robert S. Bernstein $ 19,700 P.M. Moore Land Purchase
Mesta Co., Inc. $ 11,900 Roof Replacement
*** $ 1,100 Roof Replacement
--------
Hollteck Co. $ 30,035 Roller Guides/Channel
--------
*** $ $9,965 Roller Guides/Channel
--------
Reliable Source of Met $ 19,993 Rougher's Pulpit
--------
*** $ 10,007 Rougher's Pulpit
--------
*** $ 50,000 Phone System Upgrade
--------
Wesco 338 Breaker Upgrade
--------
Camco $ 38,750 Breaker Upgrade
--------
*** $ 912 Breaker Upgrade
--------
*** $170,000 Fire Protection Upgrade
--------
R.A. Burgess $ 36,300 Tracer for Roll Lathe
--------
*** $ 13,700 Tracer for Roll Lathe
--------
Ragon $ 26,332 Critical Electrical Protection
--------
</TABLE>
2. TCI
<TABLE>
<S> <C> <C>
H.B. Parke Corp. $ 3,481 Paint Line Upgrade
</TABLE>
<PAGE> 82
SCHEDULE 3.11
DIRECTORS AND EXECUTIVES
Directors (J&L and TCI)
-----------------------
Howell A. Breedlove
James E. Howe
Carl A. Snyder
Officers (J&L and TCI)
----------------------
Howell A. Breedlove -- President and CEO
James E. Howe -- Vice President and Secretary
Carl A. Snyder -- Vice President and Treasurer
Annual Compensation of $78,500 or Greater
-----------------------------------------
<TABLE>
<CAPTION>
'93 Bonus/ '94 Bonus/ '95 Bonus/
Profit '93 Profit '94 Profit
'93 Salary Sharing Insurance '94 Salary Sharing Insurance Sharing
<S> <C> <C> <C> <C> <C> <C> <C>
Howell A. Breedlove $311,040 $109,056 $ 7,135 $326,592 $108,136 $ 7,135 ---
James E. Howe $166,320 $ 46,722 $17,740 $174,636 $ 57,182 $17,740 ---
Carl A. Snyder $166,320 $ 46,722 $18,516 $174,636 $ 57,182 $18,516 ---
William E. Kerns $ 73,820 $ 61,926 --- $ 75,445 $ 15,342 --- $62,545
(J&L General Manager/Operations)
Karl W. Shurskis $ 64,060 $ 22,786 --- $ 71,560 $ 5,577 --- $24,014
(J&L General Mgr./Technical)
Kenneth W. Bixby $ 59,976 $ 21,823 --- $ 59,012 $ 5,365 --- $22,402
(J&L Controller)
</TABLE>
Notes:
(a) '93 Bonus/Profit Sharing payments for Messrs. Kerns, Shurskis and Bixby
are based on the 12-month period ended 9/30/93.
(b) '94 Bonus/Profit Sharing payments for Messrs. Kerns, Shurskis and Bixby
are based on the three-month period ended 12/31/93.
(c) '94 Bonus/Profit Sharing payments for Messrs. Breedlove, Howe and
Snyder, and '95 Bonus/Profit Sharing payments for Messrs. Kerns,
Shurskis and Bixby, are estimated and are based on the 12-month period
ended 12/31/94.
(d) All payments to the above persons are in respect of their services
rendered to J&L and TCI, but such persons are paid only by J&L;
services rendered to TCI are billed by J&L to TCI.
<PAGE> 83
SCHEDULE 3.12
CUSTOMERS AND SUPPLIERS
1. J&L Customers.
(a) 1993
(i) Lippert Components, Inc.
608 Wright Avenue
Alma, MI 48801-1617
Sales: $4,637,272.22
Relationship: Generally good, supply Junior
Beams to six of its plants on a sole source
basis.
(ii) Clayton Manufactured Homes, Inc.
P.O. Box 15168
Knoxville, TN 37901-5169
Sales: $4,200,606.06
Relationship: Generally good, supply Junior
Beams to six of its plants, five on a sole source
basis.
(iii) Oakwood Homes Corp.
225 South Holden Road
Greensboro, NC 27407
Sales: $3,242,138.38
Relationship: Generally good, supply all of its
Junior Beam requirements. J&L was selected as its
National Supplier of the Year in 1993.
(iv) Redman Homes, Inc.
2550 Walnut Hill Lane
Dallas, TX 75339-5613
Sales: $3,058,477.81
Relationship: Generally good, sole source of
Junior Beam requirements east of the Mississippi
(except for one location)
(b) 1994 (6 months ending 6/30/94)
(i) Lippert Components, Inc.
Sales: $2,632,379.19
Relationship: see above
(ii) Oakwood Homes Corp.
Sales: $2,178,740.75
Relationship: see above
(iii) Pines Trailer, Inc.
2555 South Blue Island Avenue
Chicago, IL 60608
Sales: $1,955,140.67
Relationship: Generally good, supply over 75% of
its cross member requirements
(iv) Clayton Manufactured Homes, Inc.
<PAGE> 84
Sales: $1,936,441.14
Relationship: see above
(v) Redman Homes, Inc.
Sales: $1,871,183.34
Relationship: see above
2. TCI Customers. J&L is TCI's only customer.
3. J&L Suppliers.
(a) 1993
(i) Roanoke Electric Steel Corporation
P.O. Box 13948
Roanoke, VA 24038
Purchases: $17,255,102.03
Relationship: Generally good, primary raw
material supplier
(ii) Florida Steel Corp.
P.O. Box 65322
Charlotte, NC 28265
Purchases: $7,609,630.44
Relationship: Generally good, raw material
supplier
(iii) Bayou Steel Corp.
P.O. Box 10518
Newark, NJ 07193-0518
Purchases: $6,100,167.59
Relationship: Generally good, raw material
supplier
(iv) Duquesne Light Company
P.O. Box 371180
Pittsburgh, PA 15251-7180
Purchases: $1,750,677.98
Relationship: Generally good, electricity
supplier
(v) Steel Company of West Virginia
P.O. Box 872
Huntington, WV 25712
Purchases: $1,477,642.35
Relationship: Generally good, raw material
supplier
(b) 1994 (6 months ending 6/30/94)
(i) Roanoke Electric Steel Corporation
Purchases: $16,826,622.29
Relationship: see above
(ii) Florida Steel Corp.
Purchases: $4,991,196.18
Relationship: see above
(iii) Bayou Steel Corp.
-2-
<PAGE> 85
Purchases: $2,515,382.18
Relationship: see above
(iv) Duquesne Light Company
Purchases: $931,916.31
Relationship: see above
(v) Eastern Marketing Corp.
P.O. Box 71478
Chicago, IL 60694-1478
Purchases: $537,919.19
Relationship: Generally good, supplier of natural
gas
4. TCI Suppliers.
(a) 1993
(i) Personnel Plus, Inc.
Dept. 8868
Pittsburgh, PA 15278-8868
Purchases: $158,960.01
Relationship: Generally good, supply temporary
manpower requirements
(ii) Patriot Paint Co.
201 South Middle St.
Portland, IN 47371
Purchases: $119,316.05
Relationship: Generally good, supply paint for
paint line
(iii) Liken Services, Inc. (J.T.A. Factoring)
400 Penn Center Blvd., Suite 501
Pittsburgh, PA 15235
Purchases: $79,724.01
Relationship: Generally good, provided temporary
manpower requirements prior to Personnel Plus,
Inc.
(iv) Hilb, Rogal & Hamilton Co.
Warner Centre
333 Forbes Avenue
Pittsburgh, PA 15222
Purchases: $29,895.00
Relationship: Generally good, workers
compensation and equipment insurance
(v) Safety-Kleen Corp.
Box 1800
Elgin, IL 60121
Purchases: $21,759.64
Purchases: Generally good, provide disposal of
waste paint drums
(b) 1994 (6 months ending 6/30/94)
-3-
<PAGE> 86
(i) Personnel Plus, Inc.
Purchases: $392,907.50
Relationship: see above
(ii) Patriot Paint Co.
Purchases: $117,789.05
Relationship: see above
(iii) Hilb, Rogal & Hamilton Co.
Purchases: $44,525.00
Relationship: see above
(iv) Concord Industries
1651 Highwood East
Pontiac, MI 48340
Purchases: $29,500.00
Relationship: One-time purchase of used 125 ton
press
(v) Allegheny Clarklift, Inc.
RD #6, Box 510
Greensburg, PA 15601
Purchases: $26,776.36
Relationship: Generally good, mobile equipment
provider (rent, purchase, maintenance)
5. Material Reductions of Business.
Since June 30, 1993, Clayton Manufactured Homes, Inc. has reduced its
purchases of Junior Beams from J&L from approximately 80% of its
requirements to approximately 70% of its requirements. J&L does not
expect any further reduction in such business.
-4-
<PAGE> 87
SCHEDULE 3.13
GOVERNMENTAL RULES
Matters disclosed in items 2 and 3 on Schedule 3.15 and items 1, 4 and 5 on
Schedule 3.16; provided, that the foregoing listing shall in no event alleviate
J&L from its obligations set forth in the second sentence of item 2 on Schedule
3.06.
<PAGE> 88
SCHEDULE 3.14
GOVERNMENTAL ORDERS
None
<PAGE> 89
SCHEDULE 3.15
GOVERNMENTAL PERMITS
1. Existing Permits.
(a) Department of Transportation, U.S. Coast Guard, Private Aids
to Navigation Permit.
- Permit for lights to mark barge facility
- Approved 4/19/93
(b) Operating Permit No. 04-307-037 (and application and
transmittal letters relating to the same) for an air emission
source described as the 14" Mill Reheat Furnace; issued on
11/7/93 by the Pennsylvania Department of Environmental
Resources ("DER") to J&L Structural, Inc., Aliquippa, PA;
expires 6/30/98.
(c) Plan Approval No. 04-318-010 (and application and transmittal
letters relating to the same) for an air emission source
described as the Surface Coating of Lightweight Structural
Members; issued by DER to Trailer Components, Inc., Aliquippa,
PA; expires 12/31/94. Note: This is a construction permit; an
operating permit will be issued upon completion of
construction and DER inspection and approval.
(d) NPDES Permit No. PA0204315 (and application and transmittal
letters relating to the same) for the discharge from a
facility located at 14" Product Mill, Aliquippa Borough,
Beaver County; issued on 3/30/90 by DER to J&L Structural,
Inc., Aliquippa, PA; expires 3/30/95. Renewal application
filed 9/23/94.
(e) Water Quality Management Part II Permit No. 0471206-A1 (and
application and transmittal letters relating to the same) for
the 14" Product Mill; issued on 8/31/90 by DER to J&L
Structural, Inc., Aliquippa, PA; no expiration date.
(f) Hazardous waste generator I.D. Nos. PA987284353 issued by the
United States EPA to J&L Structural, Inc., Aliquippa, PA, and
PA987393857 issued by the United States EPA to Trailer
Components, Inc., Aliquippa, PA (and applications and
transmittal letters relating to the same); no expiration
dates.
(g) Tank Registration nos. 04-83464-001A to 013A relating to 13
aboveground storage tanks issued by DER to J&L Structural,
Inc., Aliquippa, PA; expire 10/4/95.
(h) J&L Structural, Inc. letter to DER dated 6/28/94 submitting a
RACT proposal for the 14" mill reheat furnace.
(i) DER letter to J&L Structural, Inc. dated 1/5/93 approving the
use of a dewatering box as a substitute for the sludge
settling pond which had been part of the wastewater treatment
system.
(j) DER letter to J&L Structural, Inc. dated 10/7/93 approving
closure of the
<PAGE> 90
sludge settling pond which had been part of the wastewater
treatment system.
(k) J&L Structural, Inc. letter to DER dated 4/13/94 identifying
the facility located at 111 Station Street, Aliquippa, PA as a
major NOx emitting facility.
(l) DER letter to J&L Structural, Inc. dated 10/20/87 stating
DER's determination that air contaminants emitted from a
cyclone separator at the 14" Mill are of minor significance,
thereby avoiding the need for a plan approval or operating
permit.
(m) State fire marshal approval No. 207,899 dated 4/9/93 for a
change of the location of flammable liquid tanks at J&L.
2. Other Necessary Permits.
(a) On September 22, 1994 J&L was informed that it should have a
"Section 10 Permit" from the U.S. Army Corps of Engineers for
its barge facility. It is believed that such a permit (No.
21014) was issued to Jones & Laughlin Steel Corporation in
1921, but that such permit was not transferred to LTV Steel
Company, Inc. or to J&L. J&L is in contact with the Army Corps
of Engineers regarding such permit.
(b) J&L has two aboveground tanks containing flammable liquids
which require written approval of the State Fire Marshal under
37 Pa. Code ss. 11.3. J&L is currently preparing such tanks to
qualify for such approvals
3. Violations, Investigations, Etc.
(a) DER letter to J&L Structural, Inc. dated 8/29/94 requesting
submission of fees and compliance history in support of J&L
Structural, Inc.'s RACT proposal.
(b) Three exceedances of oil and grease instantaneous maximum
effluent limits of NPDES Permit No. PA0204315 which occurred
in October 1991, November 1992, and May 1993.
(c) J&L Structural, Inc.'s request to DER for increased production
rate at TCI in connection with then pending plan approval
application.
(d) Unpermitted process water discharges from J&L Structural Pump
Station No. 10 caused by overflows on January 15, 1991, May
14, 1991, December 17, 1991, September 4, 1992 and February
22, 1993.
-2-
<PAGE> 91
SCHEDULE 3.16
ENVIRONMENTAL MATTERS
1. Use, Generation, Etc. of Hazardous Substances.
(a) Matters disclosed in the environmental audits, assessments,
evaluations and investigations referenced on Annex A hereto
(collectively, the "Environmental Audits").
(b) U.S. Environmental Protection Agency ("EPA") Complaint against
J&L for administrative penalties for alleged violations of
SARA Title III at EPA Docket No. EPCRA III-084; and Consent
Agreement and Order dated 7/20/93.
(c) The operation by TCI of an air emission source prior to the
issuance of the Plan Approval referred to in item 1(c) on
Schedule 3.15.
(d) The exceedances of NPDES effluent limits by J&L referred to in
item 3(b) on Schedule 3.15.
(e) The unpermitted process water discharges referred to in item
3(d) on Schedule 3.15.
(f) Potential PCB contamination from one transformer owned by J&L
and three transformers owned by LTV Steel Company, Inc.
("LTV"). Such transformers are located in the transformer yard
of the mill, which is located on the east side of the mill
near the motor room.
(g) TSCA recordkeeping requirements relating to a PCB transformer
in the J&L motor room (such transformer was removed from
service and disposed of off-site on 6/22/92).
(h) One former and two current aboveground flammable liquid
storage tanks at J&L do not have the written approval of the
State Fire Marshal referred to in item 2(b) on Schedule 3.15.
2. Disposal of Hazardous Substances.
(a) Matters disclosed in the Environmental Audits.
(b) PCB spill of 6/13/92 at J&L.
(c) Potential PCB contamination as described in item 1(f) above.
(d) Closed sludge settling pond at J&L.
(e) The underground storage tanks referred to in item 3 below.
<PAGE> 92
3. Underground Storage Tanks.
Three abandoned underground storage tanks reportedly exist on property
owned by Fourteenth Street Corporation and which is adjacent to
property leased to TCI. See: "Environmental Assessment of H.H.
Robertson Company/Ambridge Coating Division, Ambridge, Pennsylvania" by
Killam Associates (July, 1990), p. 35. It is believed that such tanks
are under the building in which TCI leases space, but not under the
portion of such building that TCI leases.
4. Hazardous Substances Which May Require Reporting or Remediation.
(a) Matters disclosed in the Environmental Audits.
(b) Potential PCB contamination as described in item 1(f) above.
(c) Matters disclosed in letter dated 10/7/94 from DER to J&L
concerning remediation of 38-acre parcel.
(d) The two current aboveground flammable liquid storage tanks
referred to in item 1(h) above.
(e) Hazardous Substances which are or may be present at levels
which require reporting:
(i) The Companies must file SARA Title III reports
annually in connection with certain Hazardous
Substances.
(ii) The Companies must disclose air emission rates in
applications for the Governmental Permits
referred to in items 1(b), 1(c), 1(h) and 1(k) on
Schedule 3.15.
(iii) J&L must file discharge monitoring reports in
connection with the Governmental Permit referred
to in item 1(d) on Schedule 3.15.
(iv) J&L and/or TCI have filed, or are required to
file, the following with the Pennsylvania
Department of Environmental Resources ("DER"):
residual waste source reduction strategy;
residual waste analysis; residual waste biennial
generator report.
5. Liabilities, Etc. Under Environmental Rules.
(a) Matters disclosed in the Environmental Audits.
(b) The SARA Title III Complaint referenced in item 1(b) above.
(c) Letter from Robertson Ceco Corporation dated 4/29/92 notifying
the Companies of alleged vapor and mist problems.
(d) Informal oral notice by a representative of DER that it is
investigating benzene contamination of an Aliquippa municipal
water well.
(e) DER has informally requested that J&L investigate the
feasibility of low NOx burners at its 14" mill.
(f) Matters disclosed in Remedial Action Plan for Soil Remediation
and
-2-
<PAGE> 93
Groundwater Protection, Former Blast Furnace (A-4 an A-5)
Complex, of LTV Steel Company, Inc. by L. Robert Kimball &
Associates, Environmental Sciences Division, Inc.,
December, 1993.
6. Obligations Resulting from Transactions.
(a) Transfer of the operating permit and plan approval referred to
in items 1(b) and 1(c) on Schedule 3.15 is authorized by 25
Pa. Code Section 127.32. The transfer requires submission of
a fee of $200, change of ownership form and a compliance
history form requiring identity of applicant and related
parties and compliance history of applicant's Pennsylvania
facilities from July 1992 to date. DER generally acts within
30 days of receipt.
(b) There is no regulation under the Pennsylvania Clean Streams
Law, 35 P.S. Section 691.1 et seq., expressly authorizing
transfer of the NPDES permit (Part I) or the water quality
management permit (Part II) referred to in items 1(d) and
1(e) on Schedule 3.15. The NPDES permit requires in part B,
paragraph 2(b), notice by the permitee to DER at least 30
days prior to change of ownership, submission of application
for transfer of permit and a written agreement between
permitee and new owner governing liability for permit
violations after the transfer date. There is no transfer fee.
(c) The hazardous waste generator I.D. Nos. referred to in item
1(f) on Schedule 3.15 may be transferred by submitting a
notification of hazardous waste activity and supplemental
information forms to DER. There is no transfer fee.
(d) The registration numbers for storage tanks referred to in item
1(g) on Schedule 3.15 may be transferred by submitting to DER
a registration form which identifies the new owner and a
letter requesting the registration numbers be assigned to the
new owner. There is no transfer fee.
(e) Disclosure of "disposal" of Hazardous Substances in real
estate deeds, as required by the Pennsylvania Hazardous Sites
Cleanup Act, including:
(i) PCB spill of 6/13/92 at J&L Structural, Inc.
(ii) Closed sludge settling pond at J&L Structural,
Inc.
(iii) Prior disposal of Hazardous Substances, if any,
identified in the Environmental Audits listed on
Annex A.
Note: The actual disclosure language to be contained in the
deeds for real property shall be mutually satisfactory to the
Companies and the Buyer, subject to the requirements of
applicable Governmental Rules.
-3-
<PAGE> 94
ANNEX A
(Schedule 3.16)
ENVIRONMENTAL AUDITS
1. "Environmental Evaluation of the LTV Steel Company 14-inch Mill at
Aliquippa, Pennsylvania"/Oct. 1987/Duncan, Lagnese & Assoc.
2. "J&L Structural, Inc. - Environmental Liabilities Investigation,"
letter report dated 12/6/89 by Killam Associates.
3. "Report of 1991 Environmental Compliance Audit and Procedures for
Future Auditing"/August 1992/Killam Associates.
4. "Phase I Environmental Site Assessment Report for the former Blast
Furnace (A-4 and A-5) Complex and Seamless Tube Mill Complex LTV Steel
Aliquippa Works" by L. Robert Kimball & Associates, dated
_________________.
5. "Draft, Phase II Environmental Site Assessment Report for the former
Blast Furnace (A-4 and A-5) Complex and Seamless Tube Mill Complex, LTV
Steel Aliquippa Works" by L. Robert Kimball & Associates, dated March
1993.
6. "Addendum to Draft, Phase II Environmental Site Assessment Report for
the Former Blast Furnace (A-4 and A-5) Complex and Seamless Tube
Complex, LTV Steel Aliquippa Works" by L. Robert Kimball & Associates,
Environmental Sciences Division, Inc., April, 1993.
7. "Final Report Environmental Assessment of H.H. Robertson Company
Ambridge Coating Division, Ambridge, PA, July 1990" (p. 13, CMP
Department; p. 35, closed USTS).
8. "Phase I Environmental Site Assessment Report of a Portion of the
Former Aliquippa Works, LTV Steel Company, Inc." by L. Robert Kimball &
Associates, Environmental Sciences Division, Inc., April, 1992.
9. "Draft, Phase II Environmental Site Assessment Report for Welded Tube
Complex, LTV Steel Aliquippa Works" by L. Robert Kimball & Associates,
Environmental Sciences Division, Inc., October, 1992.
10. Any environmental audit, assessment, evaluation or investigation
prepared for the Buyer (including without limitation any drafts
thereof) which are received by the Buyer prior to the date hereof.
<PAGE> 95
SCHEDULE 3.17
REAL PROPERTY
1. Owned Real Property
(a) J&L has the right to acquire the properties described as
"First Described", "Second Described", "Third Described" and
"Fourth Described" on Schedule A of Annex A to Schedule 3.20
hereto pursuant to an Installment Sale Agreement dated
September 29, 1988 between J&L and Beaver County Corporation
for Economic Development ("BCCED"). Additionally, please see
"Ninth Described" and the Note following that description. Fee
simple title to these parcels will be transferred to the Buyer
on the Closing Date.
(b) J&L owns the properties described as "Fifth Described", "Sixth
Described" and "Seventh Described" on Schedule A of Annex A to
Schedule 3.20 hereto in fee simple.
(c) J&L has the right to acquire the property described as "Eighth
Described" on Schedule A of Annex A to Schedule 3.20 hereto
pursuant to an Agreement of Sale dated December 28, 1993
between J&L and BCCED. A deed for such property dated June 30,
1994 has been executed by BCCED and, together with the
purchase price of $348,255, is being held in escrow pursuant
to an Escrow Agreement dated June 30, 1994 among J&L, BCCED
and Lawyers Title Insurance Corporation pending a satisfactory
agreement between J&L and the Pennsylvania Department of
Environmental Resources regarding remediation of certain
environmental conditions on such property.
Note: As a condition to the Buyer's obligations hereunder, on
or prior to the Closing Date (i) the Agreement of Sale
referenced above shall be amended as referenced in the letter
attached hereto as Annex A, (ii) the deed referenced above
will be amended to add language substantially similar to that
attached hereto as Annex B and (iii) if the closing of the
purchase of such property does not occur prior to the Closing
Date, the Escrow Agreement referenced above shall be extended
until at least 12/31/94 and said Agreement of Sale and Escrow
Agreement, together with all monies in escrow thereunder,
shall be assigned to the Buyer.
(d) J&L owns the properties described on Schedule A of Annex B to
Schedule 3.20 hereto in fee simple. Although J&L is not aware
of any major problems regarding the condition of the building
located on such property, such building is currently vacant
and J&L intends to tear it down.
2. Third Party Real Property Leases.
Reference is made to the easements, reservations, rights of way,
licenses, leases and other rights which are created or evidenced by the
documents and instruments listed in item 1(b) on Schedule 3.20 and on
Annex E to Schedule 3.20 (Permitted Liens).
<PAGE> 96
3. Real Property Leases
(a) Lease Agreement dated May 1, 1992 between Fourteenth Street
Corporation ("FSC") and J&L
- Lease of 30,464 square feet of space (used by TCI) in
Ambridge, PA.
- Sixty-one month term commencing May 1, 1992.
- Rent is $5,490 per month for the entire term.
- TCI also rents additional space from FSC on a
month-to-month, as needed basis. TCI is currently
leasing 19,900 square feet for a monthly rental of
$2,487.50. Such month-to-month lease is not
documented.
Note: As a condition to the Buyer's obligations hereunder, on
or prior to the Closing Date (i) such lease will be terminated
and FSC and the Buyer will enter into a triple-net lease for
such space, which lease will be for the same space, have the
same rent and term and contain such other terms and conditions
as FSC and the Buyer shall mutually agree upon, (ii) the Buyer
and FSC shall execute and deliver a memorandum of such Lease
which is in recordable form and reasonably satisfactory to
each of them in form and content, and (iii) FSC, the Buyer and
BCCED (FSC's mortgagee) shall enter into a Subordination,
Non-Disturbance and Attornment Agreement which is reasonably
satisfactory to each of them in form and content. As a further
condition to the Buyer's obligations hereunder, on or prior to
the Closing Date TCI shall provide to Buyer (A) evidence of
FSC's title to the property being leased, (B) liens existing
with respect to such property and (c) an accurate legal
description of the parcel owned by FSC of which such property
is a part, in each case reasonably satisfactory to the Buyer.
(b) Sublease (undocumented) between Precision Galvanizing, Inc.
("PGI") and J&L
- Sublease of 21,775 sq. feet of warehouse space in
Ambridge, PA. PGI leases such space from FSC pursuant
to a Lease and License Agreement dated as of November
5, 1990.
- Month-to-month term.
- Rent is $4,536.46 per month.
Note: As a condition to the Buyer's obligations hereunder, on
or prior to the Closing Date (i) PGI and the Buyer will enter
into a sublease for such space, which sublease shall be for
the same space, have the same rent and term and otherwise be
subject to the terms of the PGI Lease and License Agreement
referenced above and be reasonably satisfactory to each of
them in form and content, and (ii) FSC, BCCED (FSC's
mortgagee) and PNC Bank (PGI's leasehold mortgagee) shall have
consented to such sublease.
-2-
<PAGE> 97
(c) Road and Utilities Agreement dated November 6, 1987 between
Breedlove Enterprises, Inc. (now J&L) and LTV Steel Company,
Inc., as amended by Amendment to Asset Sale and Purchase
Agreement and Amendment to Road and Utilities Agreement dated
June 8, 1989
- Contains grants of certain temporary licenses and
perpetual easements from LTV to BEI.
- J&L is required to reimburse LTV for certain road
repairs as the same are performed.
Note: As a condition to the Buyer's obligations hereunder, on
or prior to the Closing Date (i) the rights of J&L under such
Road and Utilities Agreement shall be assigned to the Buyer by
an instrument in recordable form and (ii) LTV shall have
consented to such assignment and shall have undertaken to
negotiate in good faith with the Buyer regarding the revision
of such agreement in the manner contemplated in the proposed
Access and Easement Agreement (draft of 8/19/94) between LTV
and J&L.
(d) Wireline Crossing Agreement (unexecuted) dated March 30, 1994
between CSX Transportation, Inc. and J&L
- Grants license (no specified term) for communications
lines to cross railroad tracks.
- Requires one-time payment by J&L of $875.
(e) Easement Agreement (unexecuted) among J&L, BCCED and CJ
Betters Corporation
- Grants perpetual easement for communications lines to
cross property.
Note: Items (d) and (e) above relate to a private communications line
which J&L intends to install between its offices and the mill. Item (d)
has been finalized and will be executed upon the finalization of Item
(e). Item (e) is being reviewed by the grantor.
-3-
<PAGE> 98
ANNEX A
(Schedule 3.17)
KELLEY, MCCANN & LIVINGSTONE
ATTORNEYS & COUNSELORS AT LAW
<TABLE>
<S> <C> <C>
FRED J. LIVINGSTONE 35TH FLOOR, BF AMERICA BUILDING SANDRA E. HUNTER
STEPHEN O'BRYAN 200 PUBLIC SQUARE JOANNE GROSS
KEVIN D. BROWN CLEVELAND, OHIO 44114-2302 KURT D. WEAVER
JOEL A. MAKES ------------- SYLVESTER SUMMERS, JR.
MARGARET ANNE CANNON TELEPHONE (216) 241-3141 ROBERT A. BRINDZA, II
MICHAEL D. SCHEINER FAX (216) 241-3707 PETER M. POULUS
MARK J. VALPONS COLLEEN THREML
THOMAS J. LEE OCTOBER 11, 1994 PETER K. SHELTON
M. PATRICIA OLIVER HALLE FINE TERRION
BRUCE L. WATERHOUSE, JR.
CARL A. MURRAY OF COUNSEL
STEVEN A. GOLDFARS WALTER C. KELLEY
DAVID M. WALLACE DAVID E. BLUTH
</TABLE>
VIA FACSIMILE
Jeffrey D. Peters, Esq.
Cohen & Grigsby, P.C.
2900 CNG Towner
625 Liberty Avenue
Pittsburgh, PA 15222
Re: Proposed Modification to Deed for 38 Acre Parcel from BCCED to J&L
Dear Jeff:
I am in receipt of your October 7, 1994 telefax memorandum to Nick
Francalancia regarding proposed repurchase language for inclusion in the
referenced deed.
While my client and I have not had an opportunity to fully review and
discuss the language which you propose, or other matters relative to the 38 acre
purchase, I do wish to immediately bring to your attention a few issues
regarding the terms of the Agreement of Sale entered into between J&L and the
BCCED on December 28, 1993.
You previously indicated that J&L and BCCED would be executing an
amendment or modification to the June 30, 1994 Escrow Agreement, extending the
"drop-dead" date under the Escrow Agreement to at least December 31, 1994. I
trust that you will be addressing this matter immediately to preserve the
benefit of the Agreement of Sale. Further, it was noted during our last
meeting in Pittsburgh that you expected DER approval shortly. Please advise
us if that approval has been obtained, as it could trigger an obligation to
close under the Agreement of Sale before the outstanding issues are resolved.
With respect to the Agreement of Sale itself, we believe that an
amendment needs to be prepared, superseding Paragraph 7(a) in its entirety. The
second and third paragraphs of Paragraph 7(a) should be deleted as unnecessary
or replaced with
<PAGE> 99
Jeffrey D. Peters, Esq.
Cohen & Grigsby, P.C.
October 11, 1994
Page 2
a provision mirroring your new deed language. I do not believe that we should
close on the Agreement and rely upon an argument that the contractual
provisions are merged in the deed and do not survive the closing. Further, I
would mention that the provisions of Paragraph 7(a), referencing estimated cost
and projected job creation figures, may need to be revisited in light of the
R.T. Patterson study.
Finally, Paragraph 21, restricting transfer of rights under the Agreement
of Sale, needs to be amended to permit or consent to the transactions
contemplated between our clients.
I mention these issues to you at this time so that they may, as a
minimum, be raised by BCCED counsel promptly. However, I have yet to have a
full discussion with my client regarding the terms of the Agreement of Sale or
your proposed modifications in light of the cost issues raised by the R.T.
Patterson study. Therefore, we reserve further comment on this matter pending
additional study.
Should you have any questions, please do not hesitate to call.
Very truly yours,
/s/ Michael D. Schenker
-------------------------
Michael D. Schenker
MDS/nes
cc: William L. Romley (via facsimile)
<PAGE> 100
ANNEX B
(Schedule 3.17)
DEED RIDER
PROVIDED, that the conveyance effected hereby is made subject to the
condition that if, on or prior to January 1, 1996, Grantee, its successors and
assigns, have not placed orders for equipment which is to be used in connection
with the construction of a melt shop and continuous caster on the property
hereby conveyed, then Grantor shall have the right, until January 31, 1996, to
repurchase such property for a purchase price of $330,842.25 plus the amount of
all Environmental Costs (as hereinafter defined). If Grantor desires to exercise
such right it shall give written notice to such effect to Grantee at its address
set forth above by registered or certified mail, which notice shall fix a
closing date which is not less than 15 and not more than 30 days after said
notice is given. On the date specified in such notice Grantee shall convey such
property to Grantor by quit-claim deed, free and clear of all liens and
encumbrances other than those existing on the date hereof, and Grantor shall pay
the purchase price to Grantee in immediately available funds. If Grantor shall
not exercise such right within such time period then such right shall terminate
and be of no further force and effect. Notwithstanding the foregoing, if Grantee
is prevented from placing such equipment orders within such time period due to
strikes, governmental restrictions, civil commotion, war, fire or other
casualty, acts of God or other matters not within the control of Grantee, then
Grantee may extend the period for placing such orders by a period equal to the
period of delay caused by such events by giving written notice to such effect to
Grantor at its address set forth above by registered or certified mail. If
Grantee obtains such an extension then Grantor's repurchase right shall extend
for 30 days beyond Grantee's extended date of performance. As used herein,
"Environmental Costs" shall mean all costs, fees and expenses incurred by
Grantee, its successors and assigns, from and after June 30, 1994 in connection
with the investigation or remediation of any environmental condition existing on
or with respect to the property being conveyed hereby on June 30, 1994,
including without limitation the cost of all environmental audits, assessments,
investigations, testing and monitoring performed in order to establish the
existence and levels of hazardous substances on such property (both before and
after remediation), out-of-pocket costs (including legal fees and expenses)
incurred in reaching a satisfactory agreement with the Pennsylvania Department
of Environmental Resources regarding the remediation of such property and the
cost of remediating any environmental conditions existing on such property and
disposing of any hazardous substances, contaminated soil and similar items in
connection therewith.
<PAGE> 101
FURTHER PROVIDED, that the conveyance effected hereby is made subject
to the condition that if Grantee, its successors and assigns, desires to
transfer the property hereby conveyed or any part thereof, then Grantee shall
give notice to Grantor at its address set forth above by registered or certified
mail, which notice shall identify the proposed transferee and specify the
purchase price for such property and the proposed use of such property. Grantor
shall have a period of 30 days after its receipt of such notice to elect to
purchase such property for the purchase price set forth in such notice by giving
notice to such effect to Grantee at its address set forth above by registered or
certified mail. If Grantor elects to purchase such property, then the closing of
such transfer to Grantor shall occur within 30 days after Grantee receives such
notice. At such closing, Grantee shall convey such property to Grantor by
quit-claim deed, free and clear of all liens and encumbrances other than those
existing on the date hereof, and Grantor shall pay the purchase price in
immediately available funds. If Grantor does not so elect to purchase such
property, then Grantee shall have the right to transfer such property to the
transferee, and for the purchase price, specified in such notice.
Notwithstanding the foregoing, Grantee, its successors and assigns, shall have
the right to transfer such property to (a) any person or entity which controls,
is controlled by or is under common control with Grantee, its successors and
assigns and (b) any person or entity which purchases the 14" mill (or any
successor manufacturing operation) located on the parcel adjacent to such
property and which was conveyed to Grantee by LTV Steel Company, Inc. by a deed
recorded in the office of the Beaver County Recorder of Deeds at Deed Book
Volume ____, page ____ (the "Related Parcel"); provided, that any further
transfer (other than a transfer described in this sentence) shall be subject to
the foregoing rights of Grantor. The rights of Grantor under this paragraph
shall terminate and be of no further force and effect on the date which is the
earlier to occur of (i) the date when Grantee, its successors and assigns,
commences construction of a melt shop, continuous caster or other facility on
such property which is related to its activities conducted on the Related Parcel
or (ii) the end of the 30-day period following receipt by Grantor of notice from
Grantee as described above, if Grantor does not elect to purchase such property
during such 30-day period.
-2-
<PAGE> 102
SCHEDULE 3.18
PERSONAL PROPERTY
1. Equipment Leases.
-----------------
(a) Road and Utilities Agreement dated 11/4/87 between LTV Steel
Company, Inc. and Breedlove Enterprises, Inc. Contains lease
of electrical transmission facilities for a perpetual term;
requires payment of $417/mo. plus reimbursement for
maintenance of towers.
(b) Equipment Lease #2351682-303 (including maintenance
agreements) dated 3/2/94 between Pitney Bowes Credit
Corporation and J&L (lease of copy machine).
lease term: 39 months
rental fee: 13 payments of $3,078.24 plus maintenance
charges totaling $516 per month
(c) Lease Agreement No. 488042 dated 5/11/94 between GE Capital
Modular Space and J&L (lease of women's locker room facility).
lease term: 12 months
rental fee: $13.00/day, $64.00/wk., $350.00/mo.
other charges: delivery, $150; installation, $100;
modification, $300; dismantling, $45;
return delivery, $150
(d) The Product Supply Agreement with AGA Gas referenced on
Schedule 3.26 includes the use by J&L of a gas storage tank.
2. Condition of Equipment.
-----------------------
The following equipment is not in good repair or operating condition:
(a) clarifier rake drive gear boxes (2)
(b) rim shear
(c) push out machines (2)
(d) polymer injection system
(e) old 14" pinion gears
(f) #4 69KV/6.9KV transformer
(g) spare #1 billet yard crane
3. Inventory.
----------
- As of 9/30/94, J&L had on its books approximately 600 tons of
secondary universal mill plate inventory at $160 per ton. J&L
expects to sell such inventory for between $140 and $220 per
ton.
4. Receivables.
------------
- J&L presently carries on its books a receivable owed by
Precision Galvanizing, Inc. in the amount of $131,467.
Although J&L has not determined whether to write off this
receivable it does not believe that such receivable is
collectible in the ordinary course of business.
- J&L presently carries on its books a receivable owed by
Fourteenth Street Corporation ("FSC") in the amount of
$55,391. Although J&L has no
<PAGE> 103
present intention to write off such receivable, J&L believes
that such receivable may not be collectible in the ordinary
course of business.
- TCI presently carries on its books a receivable owed by FSC in
the amount of $9,216. Although TCI has no present intention to
write off such receivable, TCI believes that such receivable
may not be collectible in the ordinary course of business.
-2-
<PAGE> 104
SCHEDULE 3.19
INTELLECTUAL PROPERTY
1. Intellectual Property
- U.S. Trademark, "JUNIOR"
2. Licenses.
(a) Software License Agreement commencing 11/16/87 between VAS
Software, Inc. as licensor and J&L as licensee (accounting
software).
<TABLE>
<CAPTION>
licensed products and fee:
<S> <C>
VAS General Ledger $3,500
VAS Accounts Payable $3,500
VAS Accounts Receivable $3,500
VAS Order Management $5,000
VAS Purchasing/Receiving $3,500
duration: 30 years
</TABLE>
(b) Order Agreement dated 9/29/89 between Cognos Corporation as
licensor and J&L as licensee.
<TABLE>
<CAPTION>
licensed products and fee:
<S> <C>
DEPHRWPD-LC-40
Run-time w/reporting $12,000
duration: not specified
</TABLE>
(c) Order Agreement dated 1/20/88 between Cognos Corporation as
licensor and J&L as licensee.
<TABLE>
<CAPTION>
licensed products and fee:
<S> <C>
PHVX-SS-S1-20
Powerhouse Development Full
Support Level 1 $2,305.50
duration: not specified
</TABLE>
(d) Pursuant to the Asset Sale and Purchase Agreement dated October
6, 1987 between LTV Steel Company, Inc. ("LTV") and Breedlove
Enterprises, Inc. (now J&L), J&L acquired all rights of LTV
with respect to the name "J&L Structural". Pursuant to a letter
dated September 23, 1987 from J&L Specialty Products
Corporation ("Specialty") to James E. Howe, Specialty agreed to
let J&L use the name "J&L Structural" subject to certain
conditions.
<PAGE> 105
SCHEDULE 3.20
TITLE TO ASSETS
1. Matters Affecting Title to Real Property.
-----------------------------------------
(a) Title to the Real Property is currently subject to the Liens
and other matters disclosed on Schedule B, Section 1(g) and
Section 2, to the Commitment for Title Insurance from Lawyers
Title Insurance Corporation attached hereto as Annex A and on
Schedule B, Section 2, to the Title Insurance Policy from
Lawyers Title Insurance Company attached hereto as Annex B. As
a condition to the obligations of the Buyer hereunder, on the
Closing Date J&L will (i) transfer, or cause to be transferred,
to the Buyer fee simple title to the Real Property subject only
to Permitted Liens and (ii) cause to be issued to the Buyer and
its mortgagee(s) one or more title policies insuring title to
the Real Property, which policies shall be in substantially the
form of Annexes A and B but shall have as exceptions thereto
only Permitted Liens and other standard title exceptions.
(b) Title to the Real Property is also subject to the following
matters:
(i) Rail Agreement dated November 6, 1987 among
Breedlove Enterprises, Inc. (now J&L), LTV Steel
Company, Inc. and The Aliquippa and Southern
Railroad Company ("A&S"), which contains grants
of certain perpetual easements from J&L to A&S.
As a condition to the obligations of the Buyer
hereunder, on or prior to the Closing Date the
rights of J&L under such Rail Agreement shall be
assigned to the Buyer by an instrument in
recordable form.
(ii) Letter from J&L to Robert S. Bernstein, which
permits the former owner of the Real Property
described on Annex B (or its assignee for the
benefit of creditors) to continue to keep certain
records in the basement of the building located
on such property until January 31, 1995.
(iii) Pursuant to an Agreement of Sale dated December
28, 1993 between J&L and Beaver County
Corporation for Economic Development ("BCCED"),
which agreement relates to the acquisition by J&L
of Parcel 11-B1 in the LTV Steel Company, Inc.
Subdivision Plan No. 4, BCCED has the right to
repurchase such parcel for 95% of the sale price
if:
(A) J&L does not commence to order equipment
for a melt shop and continuous caster by
January 1, 1995, which right must be
exercised on or before January 30, 1995;
and
(B) J&L desires to sell such parcel prior to
commencing the construction of such melt
shop and continuous caster (unless such
sale is in furtherance of such project),
which right must be exercised within 30
days after J&L gives BCCED notice of the
proposed sale.
Note: Said Agreement of Sale is to be amended as provided in
the note to
<PAGE> 106
item 1(c) on Schedule 3.17. Upon the closing of the purchase
of such property, such property will be subject to the
restriction to be added to the deed for such property, as
provided in the note to item 1(c) on Schedule 3.17.
2. Matters Affecting Title to Personal Property.
---------------------------------------------
(a) Beaver County has a security interest in certain equipment of
J&L in connection with the BID Financing described on Schedule
3.25; however, based upon UCC searches performed by Pittsburgh
Information and Research Company through July 21, 1994 and
Capitol Paralegal Services through July 28, 1994, it does not
appear that such security interest is perfected.
(b) BCCED has a security interest in certain equipment of J&L in
connection with the PDCA Financing described on Schedule 3.25;
however, based upon UCC searches performed by Pittsburgh
Information and Research Company through July 21, 1994 and
Capitol Paralegal Services through July 28, 1994, it does not
appear that such security interest is perfected.
(c) PNC Bank (formerly Pittsburgh National Bank) has a perfected
security interest in all accounts and inventory of J&L (as
those terms are defined in the Pennsylvania Uniform Commercial
Code).
(d) Pitney Bowes Credit Corporation has a perfected security
interest in the equipment leased to J&L pursuant to its Leases
# 2351682-302 and 2351682-303.
(e) Pursuant to an Omnibus Agreement dated as of November 5, 1990
(the "Omnibus Agreement") between H.H. Robertson Company (now
Robertson-Ceco Corporation, "RCC") and Precision Galvanizing,
Inc. ("PGI"), RCC gave PGI the option to purchase certain
equipment of RCC's upon the sale of its painting operation.
Pursuant to an Agreement dated as of January 31, 1992 among
RCC, PGI and Fourteenth Street Corporation ("FSC"), PGI
exercised its option to purchase such equipment, subject to the
rights of United Dominion Industries, Inc. ("UDI"), the
purchaser of the painting operation and the sublessee under a
lease between FSC and RCC, to use such equipment as if it
continued to be "Shared Equipment" as defined in the Omnibus
Agreement. On July 13, 1994 TCI purchased from PGI the portion
of such equipment listed on Annex C hereto for $16,650.
Although there is no documentation to such effect, presumably
such purchase was made subject to UDI's rights as described
above. As a condition to the obligations of the Buyer
hereunder, on or prior to the Closing Date TCI shall deliver to
the Buyer a writing signed by UDI and reasonably satisfactory
to the Buyer, pursuant to which (i) UDI agrees that it has no
ownership interest in such property and (ii) UDI's rights to
use such equipment are quantified.
(f) The equipment described on Annex D hereto is owned by LTV Steel
Company, Inc. ("LTV") but is located on property owned by J&L.
Such equipment is used by J&L in its operations except as
otherwise indicated on Annex D. Pursuant to a letter from The
Galbreath Company to J&L dated August 19, 1994, LTV proposes to
abandon such equipment in place.
(g) Pursuant to a Road and Utilities Agreement dated November 6,
1987 between LTV and Breedlove Enterprises, Inc. (now J&L), LTV
has the right to use
-2-
<PAGE> 107
certain assets of J&L.
3. Permitted Liens.
----------------
(a) The Real Property will be transferred to the Buyer subject to
the Liens listed on Annex E hereto and the Liens listed in
item 1(b) above.
(b) The Assets consisting of personal property will be transferred
to the Buyer subject to the Liens listed on Annex F hereto. As
a condition to the obligations of the Buyer hereunder the
Companies shall deliver to the Buyer UCC searches in the names
of the Companies with as-of or through dates as near to the
Closing Date as reasonably possible. The Companies also
undertake to deliver to the Buyer UCC searches in the names of
the Companies performed after the Closing. Such searches shall
be performed in the offices of the Pennsylvania Secretary of
State and the Prothonotary and Recorder of Deeds of Beaver
County, Pennsylvania and shall disclose only Liens which are
either Permitted Liens or, in the case of the pre-Closing
searches, which are to be satisfied on or prior to the Closing
Date.
-3-
<PAGE> 108
ANNEX A
(Schedule 3.20)
LAWYERS TITLE
INSURANCE CORPORATION
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
COMMITMENT FOR TITLE INSURANCE
SCHEDULE A
1. EFFECTIVE DATE: August 15, 1994 CASE NO. 179364
THIRD REVISED
2. POLICY OR POLICIES TO BE ISSUED:
(a)
AMOUNT $
To Be Determined
X ALTA OWNER'S POLICY-Form B-1970 (Rev. 10-17-70 and 10-17-1984)
ALTA RESIDENTIAL TITLE INSURANCE POLICY-1979 (Rev. 10-17-1984)
PROPOSED INSURED:
To Be Determined
AMOUNT $
n/a
(b) ALTA LOAN POLICY, 1970 (Rev. 10-17-70 and 10-17-1984)
PROPOSED INSURED:
n/a
(c) AMOUNT $
PROPOSED INSURED: n/a
n/a
3. TITLE TO THE FEE SIMPLE ESTATE OR INTEREST IN THE LAND DESCRIBED OR REFERRED
TO IN THIS COMMITMENT IS AT THE EFFECTIVE DATE HEREOF VESTED IN:
Parcels First Described through Fourth Described and Parcels Eighth
Described and Ninth Described: Beaver County Corporation for Economic
Development Parcels Fifth Described through Seventh Described: J&L
Structural, Inc.
4. THE LAND REFERRED TO IN THIS COMMITMENT IS DESCRIBED AS FOLLOWS:
SEE SCHEDULE "A", PAGE TWO, ATTACHED.
Pittsburgh Branch Office
Robert M. Wilson, Branch Counsel THIRD REVISED
COUNTERSIGNED AT Pittsburgh, Pennsylvania Commitment No. 179364
Scheduled A-Page 1 /lws
/s/ Robert M. White
- - ----------------------------
Authorized Officer or Agent This commitment is invalid
Form No. 91-88 (SCH. A) unless the insuring
035-1-088-0001/7 Provisions and Schedules A
and B are attached
<PAGE> 109
LAWYERS TITLE
INSURANCE CORPORATION
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A" CONTINUED
FIRST DESCRIBED:
ALL THAT CERTAIN piece or parcel of land situate in the City of Aliquippa,
formerly known as the Borough of Aliquippe, County of Beaver and Commonwealth
of Pennsylvania, being known and designated as Parcel No. 1 in the Beaver
County Corporation for Economic Development Subdivision Plan No. 1, as recorded
in Plan Book Volume 26, Pages 268-269, more particularly bounded and described
as follows:
BEGINNING at a point on the monumented centerline of the Pittsburgh and Lake
Erie Railroad, said point being at Railroad Centerline Station 1119 + 24.169,
and being located on the LTV plant grid as X=45,752.205, Y=49,364.163; thence
by the centerline of said monumented centerline North 01 degrees 45' 03.1"
East, a distance of 425.56 feet to Railroad Centerline Station 1123 + 49.73;
thence through the lands of LTV Steel Company, Inc., by a line perpendicular to
said railroad centerline, bearing North 88 degrees 14' 56.9" East for a
distance of 624.95 feet to a point located on the LTV plant grid as
X=46,196.665, Y=-48,752.512, and being an iron pin, located North 74 degrees
17' 10" West, 51.33 feet from the southwest corner of a brick shed, said iron
pin being the southwest corner and the true point of beginning of that
designated as Parcel No. 1; thence along a line common to Parcel No. 1 and
lands to be retained by LTV Steel Company, Inc., the following courses: North
28 degrees 35' 11" East, 490.54 feet to an iron pin, North 10 degrees 07' 14"
East, 458.71 feet to an iron pin, North 00 degrees 53' 25" West, 158.55 feet to
an iron pin, North 10 degrees 57' 09" East, 112.78 feet to an iron pin, North
01 degrees 36' 12" West, 887.83 feet to an iron pin, being at the northwest
corner of Parcel No. 1; thence along a line common to Parcel No. 1 and lands to
be retained by LTV Steel Company, Inc., and projected along the face of a
building, North 88 degrees 16' 33" East, 118.97 feet to a building corner;
thence along the east face of a building, South 02 degrees 03' 40" East, 10.16
feet to a point; thence leaving said building North 87 degrees 55' 01" East,
59.50 feet to an iron pin; thence South 00 degrees 58' 09" East, 10.00 feet to
an iron pin; thence North 89 degrees 42' 18" East, 69.38 feet to an iron pin;
thence along a projection of the west face of a building, South 03 degrees 16'
13" East, 55.76 feet to a building corner, thence along a line projected along
the south face of the building, North 88 degrees 19' 07" East, 237.39 feet to
an iron pin at the northeast corner of the herein described parcel; thence
South 00 degrees 53' 19" East, 167.30 feet to an iron pin; thence South 05
degrees 19' 23" West, 1071.12 feet to an iron pin; thence South 16 degrees 35'
47" West, 285.57 feet to an iron pin; thence South 01 degrees 59' 41" East,
637.25 feet to an iron pin, a common corner of Parcel Nos. 1 and 4; thence
along Parcel No. 4 North 73 degrees 14' 06" West, 105.15 feet to an iron pin,
corner of Parcel No. 4 and lands to be retained by LTV Steel Company, Inc.;
thence along a line projected by the south face of a brick shed and the lands
to be retained by LTV Steel Company, Inc., North 74 degrees 15' 11" West,
252.18 feet to a building corner; thence South 15 degrees 35' 55" West, 14.22
feet to a building corner; thence continuing along said building projection,
North 74 degrees 17' 10" West, 306.27 feet to an iron pin at the place of
BEGINNING. As shown on Michael Baker, Jr., Inc. Drawing Number 2-10-4910, dated
March 16, 1987, revised October 2, 1987.
SECOND DESCRIBED:
(Continued)
Case Number 179364 THIRD REVISED
<PAGE> 110
LAWYERS TITLE
INSURANCE CORPORATION
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A" CONTINUED
ALL THAT CERTAIN piece or parcel of land situate in the City of Aliquippa,
formerly known as the Borough of Aliquippa, County of Beaver and Commonwealth of
Pennsylvania, being known and designated as Parcel No. 2 in the Beaver County
Corporation for Economic Development Subdivision Plan No. 1, as recorded in
Plan Book Volume 26, Pages 268-269, more particularly bounded and described as
follows:
BEGINNING at an iron pin at the northeast corner of Parcel 1; thence through
lands to be retained by LTV Steel Corporation, Inc., South 52 degrees 50' 57"
East, 190.40 feet to an iron pin at the northwest corner of Parcel 2, said
point being located on the LTV plant grid X=48,057.980, Y=-47,802.556, and also
being the true point of beginning for Parcel 2, thence South 84 degrees 48' 36"
East, 46.95 feet to an iron pin, South 84 degrees 48' 36" East, 29.58 feet to a
point, being a total distance of 76.53 feet; thence, South 05 degrees 32' 54"
West, 79.95 feet to the southeast corner of Parcel 2; thence, North 84 degrees
48' 36" West, 29.08 feet to an iron pin, North 84 degrees 48' 36" West, 46.95
feet, being a total distance of 76.03 feet to an iron pin, thence North 05
degrees 11' 24" East, 79.95 feet to the point of BEGINNING. As shown on Michael
Baker, Jr., Inc. Drawing Number 2-10-4910, dated March 16, 1987, revised
October 2, 1987.
THIRD DESCRIBED:
ALL THAT CERTAIN piece or parcel of land situate in the City of Aliquippa,
formerly known as the Borough of Aliquippa, County of Beaver and Commonwealth of
Pennsylvania, being known and designated as Parcel No. 3 in the Beaver County
Corporation for Economic Development Subdivision Plan No. 1, as recorded in
Plan Book Volume 26, Pages 268-269, more particularly bounded and described as
follows:
BEGINNING at a P.C. of a curve, being Station 1026 + 60.248 on the monumented
centerline of the Pittsburgh and Lake Erie Railroad, and being located on LTV
plant grid as X=36,516.86, Y=-48,837.998; thence along said monumented
centerline, South 13 degrees 35' 22" East, 456.01 feet to Railroad Centerline
Station 1022 + 04.24; thence leaving said centerline and through lands to be
retained by LTV Steel Company, Inc., North 82 degrees 32' 39" East, 83.63 feet
to an iron pin, the true point of beginning and the northwest corner of lands
herein described and being located on LTV plant grid as X=36,084.47,
Y=-48,647.93; thence still along lands of LTV Steel Company, Inc., North 82
degrees 32' 39" East, 310.56 feet to a point on the U.S. Harbor Line at the
Ohio River; thence in a southeasterly direction along the U.S. Harbor Line on a
curve to the left, with a radius of 7800 feet and an arc length of 1765.68
feet to a point; thence, still along the U.S. Harbor Line, South 14 degrees,
29' 21" East, 879.24 feet to a point; thence leaving said Harbor Line and along
lands to be retained by LTV Steel Company, Inc., North 88 degrees 22' 19" West,
69.95 feet to an iron pin, 13.15 from the centerline of a stone chip road;
thence along said road, North 18 degrees 58' 50" West, 275.14 feet to an iron
pin; thence North 16 degrees 33' 42" West, 629.13 feet to an iron pin; thence
North 14 degrees 56' 17" West, 838.80 feet to an iron pin; thence North 13
degrees 56' 32"
(Continued)
Case Number 179364 THIRD REVISED
<PAGE> 111
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A" CONTINUED
West, 905.96 feet to an iron pin at the place of BEGINNING. As shown on Michael
Baker, Jr., Inc. Drawing Number 2-10-4910, dated March 16, 1987, revised
October 2, 1987.
FOURTH DESCRIBED:
ALL THAT CERTAIN piece or parcel of land situated in the City of Aliquippa,
formerly known as the Borough of Aliquippa, County of Beaver and Commonwealth
of Pennsylvania, being known and designated as Parcel No. 4 in the Beaver
County Corporation for Economic Development Subdivision Plan No. 1, as recorded
in Plan Book Volume 26, Pages 268-269, more particularly bounded and described
as follows:
BEGINNING at a corner point common to the lands of the P&LE Railroad Company
and the land of P.M. Moore Company, said point being 50 feet southwestardly
from the Monumented Base Line of the P&LE Railroad Company's railroad as
measured in a line at right angles there from a point at Survey Station 1120+60
thereof; thence South 88 degrees 14' West, a distance of 96.60 feet to a corner
point common to the lands of the P&LE Railroad and the lands of Jones &
Laughlin Steel Corporation; thence in the dividing line between the lands of
the P&LE Railroad and the lands of the Jones & Laughlin Steel Corporation, the
following three courses and distances: First, in an arc of a curved line to the
left, having a radius of 128.40 feet, a distance of 33.15 feet to a point;
Second, North 25 degrees 31' West, a distance 82.64 feet to a point; and Third,
in an arc of a curved line to the right, having a radius of 128.40 feet, a
distance of 53.22 feet to a point in the East line of Station Street; thence
North 1 degree 46' West, in said East line of Station Street, a distance of
196.75 feet to a point common to the lands of the P&LE Railroad and the land of
Jones & Laughlin Steel Corporation; thence in an arc of a curved line to the
right, having a radius of 53.38 feet, a distance of 59.65 feet; thence North 38
degrees 14' East, a distance of 88.62 feet to a point, said point being 58 feet
southwestwardly from the Monumented Base Line of the P&LE Railroad as measured
in a line at right angles thereto from a point at Survey Station 1124+63.75
thereof; thence South 2 degrees 54' 09" East, a distance of 403.83 feet to the
point of beginning. The within description is in accordance with a survey of
James E. Puskar, Registered Surveyor No. 2601-E, dated June 24, 1974.
TOGETHER with easements rights set forth in the following: (a) Road and
Utilities Agreement dated November 6, 1987 by and between LTV Steel Company,
Inc. and Breedlove Enterprises, Inc. (now J&L Structural, Inc. by name change
effective October 29, 1987) which Agreement is recorded in Deed Book Volume
1320, Page 520; (b) Rail Agreement of same date, by and between same said
Parties and recorded in Deed Book Volume 1320, Page 644.
BEING the same premises which J&L Structural, Inc., successor by name change to
Breedlove Enterprises, Inc. effective October 29, 1987 by deed dated September
29, 1988 and recorded September 29, 1988 in the Recorder's Office of Beaver
County, Pennsylvania in Deed Book Volume 1351, Page 93 granted and conveyed to
Beaver County Corporation for Economic Development.
(Continued)
Case Number 179364 THIRD REVISED
<PAGE> 112
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A" CONTINUED
FIFTH DESCRIBED:
ALL THAT CERTAIN tract or parcel of land situate in Beaver County,
Pennsylvania, identified as Tax Parcel No. 08-004-0101.005, and being more
particularly bounded and described as follows:
BEGINNING at a point on the monumented centerline of the Pittsburgh and Lake
Erie Railroad, said point being at Raliroad Centerline Station 1119 + 24.169,
and being located on the LTV plant grid as X=45,752.205, Y=49,364.163; thence,
by the centerline of said monumented centerline, North 01 degree 45' 03.1"
East, a distance of 425.56 feet to Railroad Centerline Station 1123 + 49.73;
thence, through the lands of LTV Steel Company, Inc., by a line perpendicular
to said railroad centerline, bearing North 88 degrees 14' 56.9" East for a
distance of 624.95 feet to a point located on the LTV plant grid as
X=46,196.665, Y=48,752.512, and being an iron pin (located) North 74" 17'10"
West, 51.33 feet from the southwest corner of a brick shed, said iron pin being
the southwest corner and the true point of beginning of Parcel 1 of Subdivision
Plan Number 1 of the LTV Steel Company, In recorded in the Recorder's Office of
Beaver County, Pennsylvania (the "Recorder's Office in Plan Book Volume 22,
Page 231, and also being the true point of beginning for the 0.7239 acre parcel
herein described; thence, by a line common to the parcel herein described, and
lands to be retained by LTV Steel Company, Inc., the following courses: North
20 degrees 24' 41" East, 673.00 feet to an iron pin; North 17 degrees 45' 57"
East, 264.17 feet an iron pin on the lands of the above-mentioned Parcel 1;
thence, by the parcel herein conveyed and said Parcel 1, the following courses:
South 10 degrees 07' 14" West, 458.71 feet; South 28 degrees 35' 11" West,
490.54 feet to an iron pin at the place of BEGINNING; the 0.7239 acre parcel
described herein, together with Parcel 1 in said Subdivision Plan Number 1
recorded in the Recorder's Office in Plan Book Volume 22, Page 231, being
reflected as Parcel 1 of Subdivision Plan Number 1 of the LTV Steel Company,
Inc. to be recorded in the Recorder's Office.
SIXTH DESCRIBED:
ALL THAT CERTAIN piece or parcel of land being situated in the Borough of
Aliquippa, County of Beaver, Commonwealth of Pennsylvania, bounded and
described as follows:
BEGINNING at an iron pin located at a point of curve on the east right of way
line of Station Street, a public street having a legal right of way width of
50.00 feet, and at a corner common to the land herein described and land of the
J&L Structural Inc., said iron pin also being located South 01 degree 46' 00"
East a distance of 279.59 feet from an iron pin located at the intersection of
the southeast corner of Franklin Avenue and Station Street said southeast
corner is also located 35.00 feet south of the center line of the said Franklin
Avenue, said center line also being the Aliquippa Borough Monumented Survey
Base Line for Franklin Avenue and the said southeastern corner is also located
45.00 feet east
(Continued)
Case Number 179364 THIRD REVISED
<PAGE> 113
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A" CONTINUED
of the Aliquippa Borough Monumented Survey Base Line for the said Station
Street; thence from said beginning iron pin by land of the J&L Structural Inc.
and in a southeasterly direction by a curve to the left having a radius of
128.14 feet and a central angle of 2 degrees 45' 00" for an arc distance of
53.12 feet to an iron pin at point of tangent, said curve having a chord
bearing of South 13 degrees 38' 30" East and a chord distance of 52.74 feet;
thence by the same South 25 degrees 31' 00" East for a distance of 82.64 feet
to an iron pin at point of curve; thence by the same in a southeasterly
direction by a curve to the right having a radius of 128.14 feet and a central
angle of 14 degrees 49' 21" for an arc distance 33.15 feet to an iron pin
located at the southwest corner of land of the said J&L Structural Inc. and on
line of land of the P.M. Moore Company; thence by land of the said P.M. Moore
Company South 88 degrees 14' 00" West for a distance of 10.35 feet to an iron
pin located at a corner common to the herein described parcel and land of the
said P.M. Moore Company and on the east right of way line of the said Station
Street; thence by the eastern right of way line of the said Station Street, a
public street having a right of way width of 50.00 feet, North 31 degrees 46'
00" West for a distance of 86.10 feet to a drill hole in a concrete sidewalk;
thence by the same North 01 degree 46' 00" West for a distance of 84.41 feet to
the point of BEGINNING. Said description prepared in accordance with a survey
prepared by Daniel C. Baker Associates, Inc., Beaver, Pennsylvania dated
March 3, 1988.
SEVENTH DESCRIBED:
ALLL THAT CERTAIN piece or parcel of land being situated in the Borough of
Aliquippa, County of Beaver and Commonwealth of Pennsylvania, bounded and
described as follows:
BEGINNING at an iron pin located at the intersection of the southeast corner of
Franklin Avenue and Station Street, said iron pin also being located 35.00
feet south of the center line of the said Franklin Avenue, said center line
also being the Aliquippa Borough Monumented Survey Base Line for Franklin
Avenue, said iron pin also being located 45.00 feet east of the Aliquippa
Borough Monumented Survey Base Line for the said Station Street; thence by the
south right of way line of the said Franklin Avenue a public avenue having a
legal right of way width of 70.00 feet North 88 degrees 14' 00" East for a
distance of 120.00 feet to a drill hole set in concrete steps and on the line
of land of the Pittsburgh & Lake Erie Railroad Company; thence by line of land
of the said Pittsburgh & Lake Erie Railroad Company South 01 degree 46' 00"
East for a distance of 34.82 feet to an iron pin at corner of land of the said
Pittsburgh & Lake Erie Railroad Company and on line of land of the J&L
Structural Inc., a Pennsylvania Corporation, said iron pin also being located
South 88 degrees 14' 00" West a distance of 80.00 feet thereto from the
Pittsburgh & Lake Erie Railroad Company Monumented Base Line at Center Line
Survey Station 1124+63.75,
Case Number 179364 THIRD REVISED
<PAGE> 114
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A"
thence by line of land of the said J&L Structural Inc. South 88 degrees 14' 00"
West for a distance of 90.00 feet to an iron pin at a point of nontangential
curve; thence by the same and by a curve to the left having a radius of 53.38
feet and a central angle of 64 degrees 01' 33" for an arc distance of 59.65
feet to a drill hole located in a concrete sidewalk, at point of tangent which
is located on the east legal right of way line of Station Street, a public
street having a legal right of way width of 50.00 feet, said curve having a
chord bearing of South 30 degrees 14' 47" West and a chord distance of 56.59
feet; thence by the east legal right of way line of the said Station Street
North 01 degree 46' 00" West for a distance of 82.80 feet to the place of
BEGINNING at the southeast corner of Station Street and Franklin Avenue. Said
parcel described in accordance with the survey of Daniel C. Baker Associates,
Inc., Beaver, Pennsylvania dated March 3, 1988.
EIGHTH DESCRIBED:
ALL THAT CERTAIN piece, parcel or lot of ground known as Parcel No. 11B1 in the
Beaver County Corporation For Economic Development Subdivision Plan No. 1 dated
May 27, 1994 and recorded on June 30, 1994 in Plan Book Volume 26, Pages 268,
269, more particularly bounded and described as follows:
BEGINNING at an iron pin at the northwest corner of property herein conveyed
also being on the dividing line between Parcel 11B1 and Parcel No. 11B2; thence
along the dividing line between Parcel 11B1, herein conveyed, and Parcel No.
11B2 North 88 degrees 13' 51" East, 879.62 feet to an iron pin on the dividing
line between Parcel 11B1 and land of Bet-Tech International, Inc.; thence,
along the dividing line between Parcel 11B1, herein conveyed, and lands of
Bet-Tech International, Inc. and also Parcel No. 1 in the LTV Steel Co. Plan
No. 1 (Plan Book Volume 22, Page 231), South 1 degree 40' 29" East, 1012.31
feet to an aluminum monument; thence continuing along the same South 10 degrees
53' 12" West 112.77 feet to an iron pin; thence from said iron pin along the
same dividing line, South 0 degrees 56' 47" East, 158.63 feet to an iron pin;
thence from said iron pin along the same dividing line South 17 degrees 41' 35"
West, 264.17 to an iron pin; thence from said iron pin along the dividing line
between Parcel 11B1, herein conveyed, and Parcel No. 1 in the LTV Steel Co.
Plan No. 1 (Plan Book Volume 22, Page 231), and also land of J&L Structural
Inc. as described in Deed Book Volume 1391, Page 834, South 20 degrees 20' 19"
West, 673.00 feet to an aluminum monument; thence from said aluminum monument
along the dividing line between Parcel 11B1, herein conveyed and Parcel No. 5
in the LTV Plan No. 2 (Plan Book Volume 24, Page 62) South 6 degrees 42' 44"
West, 282.06 feet to a set railroad spike; thence from said railroad spike
North 81 degrees 52' 00" West 260.96 feet to a set railroad spike; thence by a
curve to the right having a radius of 60.00 feet an arc distance of 73.74 feet
to a set railroad spike; thence from said set railroad spike along the dividing
line between Parcel 11B1, herein conveyed, and Parcel R-1 the following courses
and distances: North 11 degrees 27' 05" West 394.71 feet and North 26 degrees
51' 28" West 71.80 feet to an iron pin on the dividing line between Parcel 11B1
herein conveyed and Parcel 8B in the LTV Plan No. 3 (Plan Book Volume 25, Page
41); thence along the dividing lines between Parcel 11B1 and Parcel 8B, LTV
Plan No. 3 the following courses and distances: North 88 degrees 13' 51" East
92.96 feet to an iron pin; North 01 degree 46' 09" West 266.77 feet to an iron
pin; North 81 degrees 48' 38" East, 129.58 feet to an iron pin; North
(Continued)
<PAGE> 115
[Lawyers Title Insurance Corporation Letterhead]
NATIONAL HEADQUARTERS
RICHMOND VIRGINIA
SCHEDULE "A" CONTINUED
42 degrees 12' 38" East 72.44 feet to an iron pin; North 2 degrees 55' 01" East
81.18 feet to an iron pin; South 88 degrees 13' 51" West 343.99 feet to a set
railroad spike; thence from said railroad spike along the dividing line between
Parcel 11B1 herein conveyed and Woodlawn Road and Parcel R-2, North 01 degree
46' 09" West, 1470.22 feet to an iron pin the point of BEGINNING.
Parcel Eighth being part of the same premises which LTV Steel Company, Inc. (a
New Jersey corporation), by Quit Claim Deed dated May 18, 1993, and recorded on
May 25, 1993, in the Recorder's Office of Beaver County, Pennsylvania in Deed
Book Volume 1538, Page 208, granted and conveyed to Beaver County Corporation
for Economic Development (a Pennsylvania corporation).
NINTH DESCRIBED:
ALL THAT CERTAIN piece or parcel of land situate in the Borough of Aliquippa,
County of Beaver and Commonwealth of Pennsylvania, bounded and described as
follows:
BEGINNING at a corner point common to the lands of the P&LE Railroad Company
and the land of P.M. Moore Company, said point being 50 feet southwestwardly
from the Monumented Base Line of the P&LE Railroad Company's railroad as
measured in a line at right angles thereto from a point at Survey Station
1120+60 thereof; thence South 88 degrees 14' West, a distance of 96.60 feet to
a corner point common to the lands of the P&LE Railroad and the lands of Jones
& Laughlin Steel Corporation; thence in the dividing line between the lands of
the P&LE Railroad and the lands of the Jones & Laughlin Steel Corporation, the
following three courses and distances: First, in an arc of a curved line to the
left, having a radius of 128.14 feet, a distance of 33.15 feet to a point;
Second, North 25 degrees 31' West, a distance of 82.64 feet to a point; and
Third, in an arc of a curved line to the right, having a radius of 128.14 feet,
a distance of 53.12 feet to a point in the East line of Station Street; thence
North 1 degree 46' West, in said East line of Station Street, a distance of
196.79 feet to a point common to the lands of the P&LE Railroad and the land of
Jones & Laughlin Steel Corporation; thence in an arc of a curved line to the
right, having a radius of 53.38 feet, a distance of 59.65 feet, thence North 88
degrees 14' East, a distance of 112 feet to a point, said point being 58 feet
southwestwardly from the Monumented Base Line of the P&LE Railroad as measured
in a line at right angles thereto from a point at Survey Station 1124+63.75
thereof; thence South 2 degrees 54' 06" East, a distance of 403.83 feet to the
point of beginning. The within description is in accordance with a survey of
Daniel C. Baker Associates, Inc., Registered Surveyor No. SU-006290-E, dated
March 3, 1988.
TOGETHER with easements rights set forth in the following: (a) Road and
Utilities Agreement dated November 6, 1987 by and between LTV Steel Company,
Inc. and Breedlove Enterprises, Inc. (now J&L Structural, Inc. by name change
effective October 29, 1987) which Agreement is recorded in Deed Book Volume
1320, Page 520; (b) Rail Agreement of same date, by and between same said
Parties and recorded in Deed Book Volume 1320, Page 644.
(Continued)
Case Number 179364
<PAGE> 116
[LAWYERS INSURANCE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A" CONTINUED
Parcels Fifth, Sixth, Seventh and Ninth being the same premises conveyed by LTV
Steel Company, Inc., a New Jersey corporation (the successor in merger of Jones
& Laughlin Steel Incorporated with and into Republic Steel Corporation and which
Jones & Laughlin Steel Corporation and Youngstown Sheet and Tube Company with
and into New J&L Corporation) by deed dated June 8, 1989 and recorded June 29,
1990 in the Recorder's Office of Beaver County, Pennsylvania in Deed Book
Volume 1391, page 834 to J&L Structural, Inc., a Pennsylvania corporation
(formerly known as Breedlove Enterprises, Inc.
NOTE: Parcel Ninth Described is simply an amended/corrected description for
Parcel Four Described herein. However, said Parcel Fourth was conveyed by J&L
Sructural, Inc. to Beaver County Corporation for Economic Development, by deed
recorded September 29, 1988; whereas the Corrective Deed, inter alia correcting
the description for said parcel from LTV Steel Company to J&L Structural, Inc.
was not recorded until January 29, 1990 - Hence the necessity of the quit-claim
deed for said parcel from J&L Structural, Inc. to the new Buyer.
Case Number 179364
<PAGE> 117
[LAWYERS INSURANCE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE B -- SECTION 1
Requirements
The following are the requirements to be complied with:
Item (a) Payment to or for the account of the grantors or mortgagors of the
full consideration for the estate or interest to be insured.
Item (b) Proper instrument(s) creating the estate or interest to be insured
must be executed and duly filed of record to-wit:
1) DEED for Parcels First through Fourth Described from Beaver County
Corporation for Economic Development, a Pennsylvania corporation to To
Be Determined.
Consideration: To Be Determined
2) DEED for Parcel Eighth Described from Beaver County Corporation for
Economic Development to J&L Structural, Inc.
Consideration: $348,255.00 (Also see Lawyers Title Insurance
Corporation Case No. 179163 as to this conveyance)
3) DEED for Parcels Fifth Described through Seventh Described from J&L
Structural, Inc. to To Be Determined.
4) QUIT-CLAIM deed for Parcel Ninth Described from J&L Structural,
Inc. to To Be Determined.
c. Tax receipts for the years 1991, 1992, 1993 and 1994 must be submitted
for inspection at time of closing.
d. Satisfactory evidence must be furnished or certificates produced from
municipal authorities to the effect that there are no street, sidewalk,
sewer or water line improvements made or under way for which liens have
not been placed of record.
e. If water and/or sewer rentals are payable to the municipality, proof
must be furnished of payment of all rentals which are not due and
payable.
f. If any improvements have been made within the past four months, all
unfiled claims of mechanics and materialmen will be excepted.
g. Satisfaction, Termination or Release of the following:
(Continued)
Commitment No. 179634 THIRD REVISED
This commitment is invalid unless Schedule B-Section 1-Page 1
the Insuring Provisions and Form No. 91-88 (B-1)
Schedules A and B are attached. 035-1-088-0001/7
<PAGE> 118
LAWRENCE TITLE
INSURANCE CORPORATION
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE B -- SECTION 1
THIRD REVISED REQUIREMENTS CONTINUED
1) Mortgage from Beaver County Corporation for Economic Development to The
Pennsylvania Industrial Development Authority dated September 29, 1988 and
recorded September 29, 1988 in Mortgage Book Volume 1101, Page 807 in the
amount of $1,485,333.00. See also Consent, Subordination and Assumption
Agreement by and between Beaver County Corporation for Economic Development,
J & L Structural, Inc. and The Pennsylvania Industrial Development Authority
dated September 29, 1988 and recorded September 29, 1988 in Miscellaneous
Book Volume 1350, Page 531.
2) Financing Statement from J & L Structural, Inc., (Debtor) to Beaver
County Corporation for Economic Development, (Secured Party), filed in the
Recorder's Officer at No. 287 of 1987 on November 6, 1987; Assigned to
County of Beaver on April 6, 1988; Amendment filed subordinating rights
in favor of Pittsburgh National Bank on November 22, 1989.
3) Assignment of Installment Sale Agreement by and between Beaver County
Corporation for Economic Development, J & L Structural, Inc., and The
Pennsylvania Industrial Development Authority dated September 29, 1988 and
recorded September 29, 1988 in Miscellaneous Book Volume 1350, Page 521.
4) Financing Statement from J & L Structural, Inc., (Debtor) to Beaver
County Corporation for Economic Development, (Secured Party), filed in the
Prothonotary's Office at No. 1979 of 1987 on November 6, 1987; Assigned to
County of Beaver on April 6, 1988; Amendment filed Subordinating rights in
favor of Pittsburgh National Bank on November 13, 1989.
5) Financing Statement from J & L Structural, Inc., (Debtor) to P N C
Leasing Corp. (Secured Party), filed in the Prothonotary's Office at No.
1545 of 1989 on November 8, 1989.
h. As to Beaver County Corporation for Economic Development, proof must be
furnished:
1) Of proper resolution by its Board of Directors authorizing the proposed
conveyance.
2) That all corporate taxes, if any, owed the Commonwealth of Pennsylvania
have been paid to date.
i. The following must be terminated by recorded release or expressly stated
in the proposed deed to be merged by the proposed transaction:
Memorandum of Installment Sale Agreement by and between Beaver County
Corporation
(Continued)
Case Number 179364 THIRD REVISED
<PAGE> 119
[LAWYERS TITLE INSURANCE CORPORATION LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE B - SECTION 1
THIRD REVISED REQUIREDMENTS CONTINUED
for Economic Development and J & L Structural, Inc. dated September 29, 1988
and recorded September 29, 1988 in Miscellaneous Book Volume 1350, Page 514.
j. As to J&L Structural, Inc., proof must be furnished:
1) Of proper resolution by its Board of Directors authorizing the proposed
conveyance.
2) That all corporate taxes owed the Commonwealth of Pennsylvania have been
paid to date.
3) Compliance with the provisions of the Bulk Sales Act (72 P.S. 1403) if
the proposed sale constitutes a sale of 51% or more of its total
Pennsylvania real estate.
4) Stockholder approval of the proposed conveyance if the proposed sale
constitutes a sale of all or substantially all of the property of said
corporation.
5) Incumbency Certificate must be furnished.
6) Certificate of Good Standing must be furnished.
k. The following items will be deleted from policy to be issued, upon receipt
of affidavit satisfactory to Lawyers Title Insurance Corporation:
1) Agreement (That Property Which Might Otherwise Be a Part of Realty Shall
Be Personal Property) by and between Air Products, Incorporated and Jones &
Laughlin Steel Corporation recorded May 6, 1957 in Deed Book Volume 713,
Page 269.
2) Deed from Jones & Laughlin Steel Corporation to Defense Plant
Corporation dated March 11, 1943 and recorded in Deed Book Volume 506,
Page 144.
3) Deed from Jones & Laughlin Steel Corporation to Defense Plant
Corporation dated March 11, 1943 and recorded in Deed Book Volume 506, Page
146.
(4) Lease by and between Jones & Laughlin Steel Corporation and Air
Products and Chemicals, Inc. dated March 1, 1961 and recorded in Deed Book
Volume 807, Page 325.
(5) Lease by and between Jones & Laughlin Steel Corporation and Air
Products and Chemicals, Inc. dated March 1, 1961 and recorded in Deed Book
Volume 807, Page 328.
(Continued)
Case Number 179364 THIRD REVISED
<PAGE> 120
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE B - SECTION 1
THIRD REVISED REQUIREMENTS CONTINUED
1. The Company may make other requirements or exceptions upon its review of the
proposed documents creating the estate or interest to be insured or
otherwise ascertaining details of the transaction.
REISSUE RATE: A purchaser or mortgagor of real estate or an assignee of a
lease from one whose ownership or leasehold interest has been insured within
ten (10) years immediately prior to the date of the closing of the new
transaction, shall be entitled to a reissue rate. Proof of past insurance
is required.
Case Number 179364 THIRD REVISED
<PAGE> 121
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE B--SECTION 2
Exceptions
The policy or policies to be issued will contain an exception to the following
unless the same is disposed of to the satisfaction of the Company:
1. Defects, liens, encumbrances, adverse claims or other matters, if any,
created, first apearing in the public records or attaching subsequent to the
effective date hereof but prior to the date the proposed insured acquires
for value of record the estate or interest or mortgage thereon convered by
this Commitment.
2. Easements or servitudes apparent from an inspection of the premises and any
variation in location or dimensions, conflict with lines of adjoining
property, encroachments, projections or other matters which might be
disclosed by an accurate survey of the premises.
NOTE: Upon receipt of current certified plat of survey satisfactory to
Company, and payment of the applicable premium, this exception will be
deleted or amended by policy endorsement in accordance with the facts
disclosed thereby.
3. All rights or claims of parties in possession.
4. Any reservations, restrictions, limitations, conditions or agreements set
forth in the instrument by which title is vested in the insured owner.
5. Any taxes for the current year which may be hereafter assessed or levied by
virtue of new construction completed or partially completed during the
current year.
6. All coal and mining rights and all rights relating thereto.
THIS DOCUMENT DOES NOT INCLUDE OR INSURE THE TITLE TO THE COAL AND THE
RIGHT OF SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED TO
HEREIN AND THE OWNER OR OWNERS OF SUCH COAL MAY HAVE THE COMPLETE LEGAL
RIGHT TO REMOVE ALL OF SUCH COAL AND, IN THAT CONNECTION, DAMAGE MAY RESULT
TO THE SURFACE OF THE LAND AND ANY HOUSE, BUILDING OR OTHER STRUCTURE ON OR
IN SUCH LAND. THE INCLUSION OF THIS NOTICE DOES NOT ENLARGE, RESTRICT OR
MODIFY AND LEGAL RIGHTS OR ESTATES OTHERWISE CREATED, TRANSFERRED, EXCEPTED
OR RESERVED BY THIS INSTRUMENT.
7. Easements or claims of easements not shown by the public records.
8. Terms and conditions of Access and Easement Agreement by and between LTV
Steel Company, Inc. and Beaver County Corporation for Economic Development
dated as of May 25, 1993 and recorded in Miscellaneous Book Volume 1539,
Page 136.
(Continued)
This commitment is invalid unless Commitment No. 179364 THIRD REVISED
the Insuring Provisions and Schedule B Section 2 Page 1
Schedules A and B are attached. Form No. 91-88 (B-2) 035-1-088-0001/7
<PAGE> 122
[LAWYERS TITLE INSURANCE CORPORATION LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE B-2
THIRD REVISED EXCEPTIONS CONTINUED
9. The reservations for right of entry for maintaining and renewing poles,
sigal and communication lines, wire fence, underground tunnel and other
necessary railroad work; and for the right of make slopes of cut or fill
for railroad purposes, and waiver of damages relative thereto; as well as
the grantee's covenant not to alter or change the contour or surface such
as to affect grade or drainage conditions, all as more particularly set
forth in the deed from The Pittsburgh and Lake Erie Railroad Company to
The Borough of Aliquippa dated April 26, 1971 and recorded in Deed Book
Volume 1031, Page 188. (Limited to Parcels Fourth, Sixth, Seventh and
Ninth)
10. Easement Quit-Claim from the The Pittsburgh and Lake Erie Railroad
Company, to The Municipal Water Authority of the Borough of Aliquippa,
dated February 25, 1959 and recorded July 9, 1959 in Deed Book Volume 760,
Page 182.
11. Policy does not insure frontage on a public road, but does insure access
thereto. (Limited to Parcels First, Second, Third, Fifth and Eight)
12. The following rights of way and easements as set forth in the deed to
Jones & Laughlin Steel Corporation dated December 30, 1922 and recorded in
Deed Book Volume 311, Page 128:
a) Rights of way and easements of the Aliquippa and Southern Railroad
Company.
b) The right reserved by the Pittsburgh and Lake Erie Railroad Company
in its deeds to the party of the first part recited therein, to make, upon
certain of the tracts or parcels of land conveyed to the party of the
first part by said Pittsburgh and Lake Erie Railroad Company as aforesaid,
such slopes of cut and fill from the established grade of the Railroad of
said Pittsburgh and Lake Erie Railroad Company, as will enable it to fully
use and enjoy its property adjacent to said tracts or parcels of land for
the construction, operating and maintenances of its railroad.
13. Rights of the United States of America, the Commonwealth of Pennsylvania,
and the public between the high and low water marks of the Ohio River.
(Limited to Third described)
NOTE: Policy does not insure title to any land beyond the high water mark
of the Ohio River.
14. Rights of the United States of America and the Commonwealth of
Pennsylvania in and to the United States Harbor Line. (Limited to Third
described)
(Continued)
Case Number 179364 THIRD REVISED
<PAGE> 123
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE B-2
THIRD REVISED EXCEPTIONS CONTINUED
15. The following rights of way:
a) From Jones & Laughlin Steel Corporation to Duquesne Light Company dated
July 30, 1952 and recorded September 24, 1952 in Deed Book Volume
644, Page 382.
b) From Jones & Laughlin Steel Corporation to Municipal Water Authority of
Aliquippa dated November 18, 1954 and recorded November 19, 1954 in Deed
Book Volume 676, Page 269.
c) From Jones & Laughlin Steel Corporation to Municipal Water Authority of
Aliquippa dated June 9, 1955 and recorded July 19, 1955 in Deed Book Volume
686, Page 272.
d) The "Lease and Right of Way" from Jones & Laughlin Steel Corporation to
The Manufacturer's Light and Heat Company dated May 12, 1958 and recorded
July 3, 1958 in Deed Book Volume 731, Page 475; and the pipeline right of
way of National Transit Company referenced therein.
e) From The Borough of Aliquippa with consent of Jones & Laughlin Steel
Corporation to The Peoples Natural Gas Company dated August 8, 1960 and
recorded September 13, 1960 in Deed Book Volume 785, Page 278.
f) For pipeline from Jones & Laughlin Steel Corporation to Columbia Gas of
Pennsylvania Inc. dated December 10, 1962 and recorded February 5, 1963 in
Deed Book Volume 830, Page 343.
g) From Jones & Laughlin Steel Corporation to Columbia Gas of Pennsylvania
dated June 11, 1969 and recorded in Deed Book Volume 952, Page 388.
h) From L.T.V. Steel Company, Inc. to Columbia Gas of Pennsylvania, Inc.
dated September 23, 1988 and recorded in Deed Book Volume 1353, Page 512.
(Limited to, in and along Woodlawn Road.)
i) Right of way from J & L Structural, Inc. to Columbia Gas of
Pennsylvania, Inc., dated December 5, 1988, recorded in Deed Book
Volume 1356, Page 735.
j) Easement Agreement between J & L Structural, Inc. and Mechanical
Services Company, Inc., dated May 18, 1990, recorded in Deed Book Volume
1403, Page 428. (Limited to Parcels First, Fifth and Eight).
k) Right of way from J & L Structural, Inc., to The Bell Telephone
Company of
(Continued)
Case Number 179364 THIRD REVISED
<PAGE> 124
[LAWYER'S TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE B-2
THIRD REVISED EXCEPTIONS CONTINUED
Pennsylvania, dated August 28, 1991, recorded in Deed Book Volume 1458,
Page 204.
1) Rights of way from LTV Steel Company, Inc. to Duquesne Light Company
dated July 16, 1992 and recorded November 9, 1992 in Deed Book Volume 1512,
Page 365.
16. All matters shown on the Beaver County Corporation For Economic Development
Subdivision Plan No. 1 recorded on June 30, 1994 at Plan Book Volume 26,
Pages 268-269.
17. Terms and Conditions set forth in Road and Utilities Agreement by and
between L.T.V. Steel Company, Inc. and Breedlove Enterprises, Inc. dated
November 6, 1987 and recorded in Deed Book Volume 1320, Page 520, as
amended by Amendment to Asset Sale and Purchase Agreement between LTV Steel
Company, Inc., and J & L Structural, Inc. and Amendment to Road and
Utilities Agreement dated as of October 6, 1987, dated June 8, 1989,
recorded June 26, 1989 in Deed Book Volume 1372, Page 505.
18. Terms and conditions of Rail Agreement by and between L.T.V. Steel Company,
Inc. and Breedlove Enterprises, Inc. recorded in Deed Book Volume 1320,
Page 644.
19. License Agreement from Aliquippa and Southern Railroad Company to Columbia
Gas of Pennsylvania, Inc. dated October 3, 1988 and recorded October 26,
1988 in Deed Book Volume 1353, Page 503.
THIS PAGE CONSTITUTES THE LAST PAGE OF SCHEDULE B.
Case Number 179364 THIRD REVISED
<PAGE> 125
[LAWYERS INSURANCE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
------------------
Policy Number
85-01-458079
------------------
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS CONTAINED IN SCHEDULE B
AND THE PROVISIONS OF THE CONDITIONS AND STIPULATIONS HEREOF, LAWYERS TITLE
INSURANCE CORPORATION, a Virginia corporation, herein called the Company,
insures, as of Date of Policy shown in Schedule A, against loss or damage, not
exceeding the amount of insurance stated in Schedule A, and costs, attorneys'
fees and expenses which the Company may become obligated to pay hereunder,
sustained or incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being
vested otherwise than as stated therein;
2. Any defect in or lien or encumbrance on such title;
3. Lack of a right of access to and from the land; or
4. Unmarketability of such title.
IN WITNESS WHEREOF the Company has caused this policy to be signed and sealed,
to be valid when Schedule A is countersigned by an authorized officer or agent
of the Company, all in accordance with its By-Laws
Lawyers Title Insurance Corporation
By: Marvin C. Bowling, Jr.
-------------------------------------------
Marvin C. Bowling, Jr.
President
Attest: I.W. Jackson III
--------------------------------------
I.W. Jackson III
Secretary
<PAGE> 126
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy:
1. (a) Governmental police power.
(b) Any law, ordinance or governmental regulation relating to
environmental protection.
(c) Any law, ordinance or governmental regulation (including but not
limited to building and zoning ordinances) restricting or regulating or
prohibiting the occupancy, use or enjoyment of the land, of regulating the
character, dimensions or location of any improvement now or hereafter
erected on the land, or prohibiting a separation in ownership or a change
in the dimensions or area of the land or any parcel of which the land is or
was a part.
(d) The effect of any violation of the matters excluded under (a), (b), or
(c) above, unless notice of a defect, lien or encumbrance resulting from a
violation has been recorded at Date of Policy in those records in which
under state statutes deeds, mortgages, lis pendens, liens or other title
emcumbrances must be recorded in order to impart constructive notice to
purchasers of the land for value and without knowledge; provided, however,
that without limitation, such records shall not be construed to include
records in any of the offices of federal, state or local environmental
protection, zoning, building, health or public safety authorities.
2. Rights of eminent domain unless notice of the exercise of such rights
appears in the public records at Date of Policy.
3. Defects, liens, encumbrances, adverse claims, or other matters (a) created,
suffered, assumed or agreed to by the insured claimant; (b) not known to
the Company and not shown by the public records but known to the insured
claimant either at Date of Policy or at the date such claimant acquired an
estate or interest insured by this policy and not disclosed in writing by
the insured claimant to the Company prior to the date such insured claimant
became an insured hereunder; (c) resulting in no loss or damage to the
insured claimant; (d) attaching or created subsequent to Date of Policy; or
(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the estate or interest insured by this
policy.
CONDITIONS AND STIPULATIONS
1. DEFINITION OF TERMS
The following terms when used in this policy mean:
(a) "insured": the insured named in Schedule A, and, subject to any rights
or defenses the Company may have had against the named insured, those who
succeed to the interest of such insured by operation of law as distinguished
from purchase including, but not limited to, heirs, distributees, devisees,
survivors, personal representatives, next of kin, or corporate or fiduciary
successors.
(b) "insured claimant": an insured claiming loss or damage hereunder.
(c) "knowledge": actual knowledge, not constructive knowledge or notice
which may be imputed to an insured by reason of any public records.
(d) "land": the land described, specifically or by reference in Schedule
A, and improvements affixed thereto which by law constitute real property;
provided, however, the term "land" does not include any property beyond the
lines of the area specifically described or referred to in Schedule A, nor any
right, title, interest, estate or easement in abutting streets, roads, avenues,
alleys, lanes, ways or waterways, but nothing herein shall modify or limit the
extent to which a right of access to and from the land is insured by this
policy.
(e) "mortgage": mortgage, deed or trust, trust deed, or other security
instrument.
(f) "public records": those records which by law impart constructive
notice of matters relating to said land.
2. CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE
The Coverage of this policy shall continue in force as of Date of Policy in
favor of an insured so long as such insured retains an estate or interest in
the land, or holds an indebtedness secured by a purchase money mortgage given
by a purchaser from such insured, or so long as such insured shall have
liability by reason of covenants of warranty made by such insured in any
transfer or conveyance of such estate or interest, provided, however, this
policy shall not continue in force in favor of any purchaser from such insured
of either said estate or interest or the indebtedness secured by a purchase
money mortgage given to such insured.
3. DEFENSE AND PROSECUTION OF ACTIONS -- NOTICE OF CLAIM TO BE GIVEN BY AN
INSURED CLAIMANT
(a) The Company, at its own cost and without undue delay, shall provide
for the defense of an insured in all litigation consisting of actions or
proceedings commenced against such insured or a defense interposed against an
insured in an action to enforce a contract for a sale of the estate or interest
in said land, to the extent that such litigation is founded upon an alleged
defect, lien, encumbrance or other matter insured against by this policy.
(b) The insured shall notify the Company promptly in writing (i) in case
any action or proceeding is begun or defense is interposed as set forth in (a)
above, (ii) in case knowledge shall come to an insured hereunder of any claim
of title or interest which is adverse to the title to the estate or interest,
as insured, and which might cause loss or damage for which the Company may be
liable by virtue of this policy, or (iii) if title to the estate or interest, as
insured is rejected as unmarketable. If such prompt notice shall not be given
to the Company, then as to such insured all liability of the Company shall
cease and terminate in regard to the matter or matters for which such prompt
notice is required, provided, however, that failure to notify shall in no case
prejudice the rights of any such insured under this policy unless the Company
shall be prejudiced by such failure and then only to the extent????
(c) The Company shall have the right at its own cost to institute and
without undue delay prosecute any action or proceeding or to do any other act
which in its opinion may be necessary or desirable to establish the title of
the estate or interst as insured, and the Company may take any appropriate
action under the terms of this policy, whether or not it shall be liable
thereunder, and shall not thereby concede liability or waive any provision of
this policy.
(d) Whenever the Company, shall have brought any action or interposed a
defense as required or permitted by the provision of this policy, the Company
may pursue any such litigation to final determination by a court of competent
jurisdiction and expressly reserves the right, in its sole discretion, to
appeal from any adverse judgment or order.
(e) In all cases where this policy permits or requires the Company to
prosecute or provide for the defense of any action of proceeding, the insured
hereunder shall secure to the Company the right to so prosecute or provide
defense in such action or proceeding, and all appeals therein, and permit the
Company to use, at its option, the name of such insured for such purpose.
Whenever requested by the Company, such insured shall give the Company all
reasonable aid in any such action or proceeding, in effecting settlement,
securing evidence, obtaining witnesses, or prosecuting or defending such action
or proceeding, and the Company shall reimburse such insured for any expense so
incurred.
4. NOTICE OF LOSS -- LIMITATION OF ACTION
In addition to the notices required under paragraph 3(b) of these
Conditions and Stipulations, a statement in writing of any loss or damage for
which it is claimed the Company is liable under this policy shall be furnished
to the Company within 90 days after such loss or damage shall have been
determined and no right of action shall accrue to an insured claimant until 30
days after such statement shall have been furnished. Failure to furnish such
statement of loss or damage shall terminate any liability of the Company under
this policy as to such loss or damage.
5. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS
The Company shall have the option to pay or otherwise settle for or in the
name of an insured claimant any claim insured against or to terminate all
liability and obligations of the Company hereunder by paying or tendering
payment of the amount of insurance under this policy together with any costs,
attorneys' fees and expenses incurred up to the time of such payment or tender
of payment, by the insured claimant and authorized by the Company.
6. DETERMINATION AND PAYMENT OF LOSS
(a) The liability of the Company under this policy shall in no case exceed
the least of
(i) the actual loss of the insured claimant; or
(ii) the amount of insurance stated in Schedule A.
(b) The Company will pay, in addition to any loss insured against by this
policy, all costs imposed upon an insured in litigation carried on by the
Company for such insured, and all costs, attorneys' fees and expenses in
litigation carried on by such insured with the written authorization of the
Company.
(c) When liability has been definitely fixed in accordance with the
conditions of this policy, the loss or damage shall be payable within 30 days
thereafter.
<PAGE> 127
CONDITIONS AND STIPULATIONS--CONTINUED
7. LIMITATION OF LIABILITY
No claim shall arise or be maintainable under this policy (a) if the
Company, after having received notice of an alleged defect, lien or encumbrance
insured against hereunder, by litigation or otherwise removes such defect, lien
or encumbrance or establishes the title, as insured, within a reasonable time
after receipt of such notice, (b) in the event of litigation until there has
been a final determination by a court of competent jurisdiction, and disposition
of all appeals therefrom, adverse to the title, as insured, as provided in
paragraph 3 hereof, or (c) for liability voluntarily assumed by an insured in
settling any claim or suit without prior written consent of the Company.
8. REDUCTION OF LIABILITY
All payments under this policy, except payments made for costs,
attorneys' fees and expenses, shall reduce the amount of the insurance pro
tanto. No payment shall be made without producing this policy for endorsement
of such payment unless the policy be lost or destroyed, in which case proof of
such loss or destruction shall be furnished to the satisfaction of the Company.
9. LIABILITY NONCUMULATIVE
It is expressly understood that the amount of insurance under this
policy shall be reduced by any amount the Company may pay under any policy
insuring either (a) a mortgage shown or referred to in Schedule B hereof which
is a lien on the estate or interest covered by this policy, or (b) a mortgage
hereafter executed by an insured which is a charge or lien on the estate or
interest described or referred to in Schedule A, and the amount so paid shall be
deemed a payment under this policy. The Company shall have the option to apply
to the payment of any such mortgages any amount that otherwise would be payable
hereunder to the insured owner of the estate or interest covered by this policy
and the amount so paid shall be deemed a payment under this policy to said
insured owner.
10. APPORTIONMENT
If the land described in Schedule A consists of two or more parcels
which are not used as a single site, and a loss is established affecting one or
more of said parcels but not all, the loss shall be computed and settled on a
pro rata basis as if the amount of insurance under this policy was divided pro
rata as to the value on Date of Policy of each separate parcel to the whole,
exclusive of any improvements made subsequent to Date of Policy, unless a
liability or value has otherwise been agreed upon as to each such parcel by the
Company and the insured at the time of the issuance of this policy and shown
by an express statement herein or by an ensdorsement attached hereto.
11. SUBROGATION UPON PAYMENT OR SETTLEMENT
Whenever the Company shall have settled a claim under this policy, all
right of subrogation shall vest in the Company unaffected by any act of the
insured claimant. The Company shall be subrogated to and be entitled to all
rights and remedies which such insured claimant would have had against any
person or property in respect to such claim had this policy not been issued,
and if requested by the Company, such insured claimant shall transfer to the
Company all rights and remedies against any person or property necessary in
order to perfect such right of subrogation and shall permit the Company to use
the name of such insured claimant in any transaction or litigation involving
such rights or remedies. If the payment does not cover the loss of such insured
claimant, the Company shall be subrogated to such rights and remedies in the
proportion which said payment bears to the amount of said loss. If loss should
result from any act of such insured claimant, such act shall not void this
policy, but the Company, in that event, shall be required to pay only that part
of any losses insured against hereunder which shall exceed the amount, if any,
lost to the Company be reason of the impairment of the right of subrogation.
12. LIABILITY LIMITED TO THIS POLICY
This instrument together with all endorsements and other instruments,
if any, attached hereto by the Company is the entire policy and contract
between the insured and the Company.
Any claim of loss or damage, whether or not based on negligence, and
which arises out of the status of the title to the estate or interest covered
hereby or any action asserting such claim, shall be restricted to the
provisions and conditions and stipulations of this policy.
No amendment of or endorsement to this policy can be made except by
writing endorsed hereon or attached hereto signed by either the President, a
Vice President, the Secretary, an Assistant Secretary, or validating officer or
authorized signatory of the Company.
13. NOTICES, WHERE SENT
All notices required to be given the Company and any statement in
writing required to be furnished the Company shall include the number of this
policy and shall be addressed to its Corporate Headquarters, 6630 West Broad
Street, Richmond, Virginia, mailing address P.O. Box 27567, Richmond, Virginia
23261.
LAWYERS TITLE INSURANCE CORPORATION
NATIONAL HEADQUARTERS--RICHMOND, VIRGINA
<PAGE> 128
[Lawyers Title Letterhead]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
--------------------
Policy Number
85-01-458079
--------------------
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS CONTAINED IN SCHEDULE B
AND THE PROVISIONS OF THE CONDITIONS AND STIPULATIONS HEREOF, LAWYERS TITLE
INSURANCE CORPORATION, a Virginia corporation, herein called the Company,
insures, as of Date of Policy shown in Schedule A, against loss or damage, not
exceeding the amount of insurance stated in Schedule A, and costs, attorneys'
fees and expenses which the Company may become obligated to pay hereunder,
sustained or incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested
otherwise than as stated therein;
2. Any defect in or lien or encumbrance on such title;
3. Lack of a right of access to and from the land; or
4. Unmarketability of such title.
IN WITNESS WHEREOF the Company has caused this policy to be signed and sealed,
to be valid when Schedule A is countersigned by an authorized officer or agent
of the Company, all in accordance with its By-Laws.
[Lawyers Title Logo]
By
Marvin C. Bowling, Jr.
----------------------------
Marvin C. Bowling, Jr.
President
Attest
Iw. Jackson III
----------------------------
Iw. Jackson III
Secretary
<PAGE> 129
(LAWYERS TITLE LETTERHEAD)
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
OWNER'S POLICY
SCHEDULE A
<TABLE>
<S> <C> <C>
CASE NUMBER DATE OF POLICY AMOUNT OF INSURANCE POLICY NUMBER
179365 September 14, 1994 $19,700.00 85-01-458079
The policy number shown
on this Schedule must
agree with the preprinted
number on the cover sheet
</TABLE>
1. NAME OF INSURED:
J & L Structural, Inc.
2. THE ESTATE OR INTEREST IN THE LAND DESCRIBED HEREIN AND WHICH IS COVERED BY
THIS POLICY IS:
FEE SIMPLE
3. THE ESTATE OR INTEREST REFERRED TO HEREIN IS AT DATE OF POLICY VESTED IN:
J & L Structural, Inc.
4. THE LAND REFERRED TO IN THIS POLICY IS DESCRIBED AS FOLLOWS:
Part One:
ALL THAT certain lot of land situate in the City of Aliquippa (formerly
the Borough of Aliquippa), County of Beaver, Pennsylvania, known as Lot
No. 94 in Woodlawn Land Company's Plan No. 4, as recorded in the
Recorder's Office of Beaver County, Pennsylvania in Plan Book Volume 2,
Page 98, and further bounded and described as follows, to-wit:
HAVING a frontage of 25 feet on the westerly side of Station Street and
extending back therefrom westwardly between Lots Nos. 93 and 95 in the
said plan for a distance of 80 feet to the eastwardly line of Poplar
Alley as shown on said plan.
(Continued)
<TABLE>
<S> <C>
Pittsburgh Branch Office Pittsburgh, Pennsylvania
- - -------------------------------------------- ---------------------------------
Countersignature Authorized Officer or Agent Issued at (Location)
</TABLE>
/jes
<TABLE>
<S> <C> <C>
Policy 85 (Rev.2/79) This Policy is invalid unless the ALTA Owner's Policy Form B 1970
Form No. 035-0-085-0000/3 cover sheet and Schedule B are (Rev. 10-17-70 and 10-17-84)
attached. Copyright 1969
</TABLE>
<PAGE> 130
[LAWYER'S TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A" CONTINUED
ALSO, all that certain lot or piece of ground situate in the City of
Aliquippa (formerly the Borough of Aliquippa), County of Beaver,
Pennsylvania, being a part of Lot No. 95 in Woodlawn Land Company's Plan of
Lots No. 4, as recorded in the Recorder's Office of Beaver County,
Pennsylvania, in Plan Book Volume 2, Page 98, said part of said lot being
bounded and described as follows, to-wit:
BEGINNING at a point on the westerly line of Station Street at the dividing
line between Lots Nos. 94 and 95 in the plan aforesaid; thence by said
dividing line in a westerly direction 80 feet to a point on Poplar Avenue;
thence by the easterly line of said Poplar Alley in a northerly direction,
for a distance of 3 inches to a point; thence by a line parallel to the
dividing line between Lots Nos. 94 and 95 in the plan aforesaid, and distant
northwardly 3 inches therefrom, in an easterly direction for a distance of 80
feet to a point on the westerly line of Station Street; thence by the
westerly line of said Station Street, in a southerly direction, for a
distance of 3 inches to a point, the place of BEGINNING.
TAX PARCEL NO. 08-10-109.
EXCEPTING AND RESERVING therefrom and thereout, that portion of the above
tracts taken by the Commonwealth of Pennsylvania, Department of Highways, as
recorded in Highway Book IV, Volume 1, Pages 63-94 and entered in the
Recorder's Office of Beaver County, Pennsylvania, on February 23, 1961.
Part Two:
No. 1:
ALL THOSE certain lots or pieces of ground situate in the City of Aliquippa
(formerly the Borough of Aliquippa, formerly the Borough of Woodlawn), County
of Beaver and Commonwealth of Pennsylvania, being Lots No. 98, 99 and 100 in
the Woodlawn Land Company's Plan No. 4, as the said plan is recorded in the
Recorder's Office of Beaver County, Pennsylvania, in Plan Book Volume 2, Page
98.
TAX PARCEL NO. 08-10-108.
No. 2:
ALSO, all that certain lot or piece of ground situate in the City of
Aliquippa (formerly the Borough of Aliquippa, formerly the Borough of
Woodlawn), County of Beaver and Commonwealth of Pennsylvania, being Lot. No.
101 in the Woodlawn Land Company's Plan No. 4, as the said plan is recorded
in the Recorder's Office of Beaver County,
(Continued)
Case Number 179365
Policy Number 85-01-458079
<PAGE> 131
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
SCHEDULE "A" CONTINUED
Pennsylvania, in Plan Book Volume 2, Page 98.
No. 3:
ALSO, all that certain lot or piece of land situate in the City of Aliquippa
(formerly the Borough of Aliquippa, formerly the Borough of Woodlawn), Beaver
County, Pennsylvania, being Lot No. 93 in Woodlawn Land Company's Plan No. 4,
as the said plan is recorded in the Recorder's Office of Beaver County,
Pennsylvania, in Plan Book Volume 2, Page 98.
NO. 2 AND NO. 3 ABOVE, TOGETHER BEING TAX PARCEL NO. 08-10-113.
EXCEPTING from the aforesaid Lot No. 93 in Woodlawn Land Company's Plan No. 4,
that portion thereof which was condemned by the Commonwealth of Pennsylvania as
shown on Sheet No. 11 of Right of Way Plan for Route No. 3955, Section No. 4,
Beaver County, as approved by the Governor of the Commonwealth of Pennsylvania
on October 11, 1960.
Case Number 179365
Policy Number 85-01-458079
<PAGE> 132
[LAWYERS TITLE LETTERHEAD]
NATIONAL HEADQUARTERS
RICHMOND, VIRGINIA
OWNER'S POLICY
DATE OF POLICY THE POLICY NUMBER SHOWN ON THIS POLICY NUMBER
September 14, 1994 SCHEDULE MUST AGREE WITH THE PRE- 85-01-458079
PRINTED NUMBER ON THE COVER SHEET.
SCHEDULE B
This policy does not insure against loss or damage by reason of the following:
1. Easements or servitudes apparent from an inspection of the premises and any
variation in location or dimensions, conflict with lines of adjoining
property, encroachments, projections or other matters which might be
disclosed by an accurate survey of the premises.
2. Any taxes for the current year which may be hereafter assessed or levied by
virtue of new construction completed or partially completed during the
current year, not yet due or payable.
3. All coal and mining rights and all rights relating thereto.
THIS DOCUMENT DOES NOT INCLUDE OR INSURE THE TITLE TO THE COAL AND THE
RIGHT OF SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED TO
HEREIN AND THE OWNER OR OWNERS OF SUCH COAL MAY HAVE THE COMPLETE LEGAL
RIGHT TO REMOVE ALL OF SUCH COAL AND, IN THAT CONNECTION, DAMAGE MAY RESULT
TO THE SURFACE OF THE LAND AND ANY HOUSE, BUILDING OR OTHER STRUCTURE ON OR
IN SUCH LAND. THE INCLUSION OF THIS NOTICE DOES NOT ENLARGE, RESTRICT OR
MODIFY ANY LEGAL RIGHTS OR ESTATES OTHERWISE CREATED, TRANSFERRED, EXCEPTED
OR RESERVED BY THIS INSTRUMENT.
NOTE: Policy insures against future surface operations on the premises
insured.
THIS PAGE CONSTITUTES THE LAST PAGE OF SCHEDULE B.
Case Number 179365
Policy Number 85-01-458079
ALTA Owner's Policy-Form B 1970
Policy 85 PA (Rev. 2-79) (Rev. 10-17-70 and 10-17-84
Form No. 035-0-085-3702/2 Copyright 1969
<PAGE> 133
(Schedule 5.2c)
ANNEX C
Machine Shop Equipment
<TABLE>
<CAPTION>
Quantity Manufacturer Description
- - -------- ------------ -----------
<S> <C> <C>
1 Grand Rapids Auto Surface Grinder, Model 560,
Serial Number 500159
1 Grand Rapids Manual Surface Grinder
Serial Number 515600
1 Mitts & Merrill Keyseater
Model SK17
Serial Number 20731
2 Cincinnati Drill Press, Lot #30
Make No. 5240
1 Beaver Bolt Threader
2 Std. Electric Table Top Grinder
Tool
1 Peerless 14" Hacksaw
1 Delta Floor Type Drill Press
1 Sears Floor Type Drill Press,
Model 113-21371
1 American Lathe
Pacemaker Model 69201-45
1 Monarch Lathe
Mfg. No. 28932
1 Lodge & Shipley Lathe
1 South Bend Lathe
Cat. No. 8199-A
1 Gallmeyer & Grinder
Livingston Serial Number: D-7064
1 Cincinnati Grinder
Model 102
1 Famco Press
Model 81
1 Canedy-Otto Drill Press
No. 18 Royal
1 Cincinnati Shaper
</TABLE>
<PAGE> 134
Page 2
<TABLE>
<CAPTION>
Quantity Manufacturer Description
- - -------- ------------ -----------
<S> <C> <C>
1 Niagara Shear
Model - Queen City
1 Milwaukee Milling Machine
Serial Number: 12-5233
Model - K
1 ? Grinder (12")
1 Shaw Chain Hoist (2 ton)
1 Coffing Chain Hoist (3 ton)
1 Ingersoll Rand Chain Hoist (2 ton)
1 Yale Chain Hoist (1/2 ton)
1 Westinghouse Pedestal Fan
8 Bench Vises
5 Lazy Susan, Parts Bins
1 Chain Hoist
M. E. Muphy
5/25/94
</TABLE>
<PAGE> 135
ANNEX C
(Schedule 3.20)
1. 69/6.9KV transformer yard switchrack, complete with foundations,
structure, S & C Switchers, interconnecting cables, etc.
2. Three 20,000 KVA, 69/6.9 KVA, 69/6.9KV Transformers, Nos. 1, 2 and 3,
complete with foundations, fans, grounding resistance, protective relays,
cables, bus and associated controls.
3. 14" mill substation extension (top floor, South) 6.9KV switchgear (Unit
Nos. 10 through 20).
4. "No. 6 Boiler House/10,000 KVA Frequency Set" Switchgear Unit. Tie
Breaker No. 22 located in 14" mill substation (first floor, South).
5. 14" mill substation extension complete with all buildings foundations,
facilities, switchgear, lighting, power and control cables, conduits,
hardware and all other equipment related to the 6.9KV, 60 Hz system.
6. 250V DC battery charger and batteries located in J&L Structural's motor
room and motor room basement which provide power to actuate close and
trip circuits for both LTV and J&L Structural 6.9KV, 25 Hz and 60 Hz
power switchgear.
7. Two (2) alarm cables in a 1-1/2" conduit from the Polymer Building at the
No. 10 Pump House to the Water Treatment Building. This conduit runs
embedded from the Polymer Building to the riverbank where it stubs-up and
continues south attached to the 42" service water pipe supports (see
Drawing No. AW-5090). The cable leaves the conduit at a wooden pole and
continues (via aerial messenger) to a pipe support for the 30" force main
at Clarifier No. 2 and continues to the Treatment Building via conduit
(see Drawing No. AW-5091).
8. 69KV Transmission Tower "A" and No. 10 complete with foundation and
structures.
9. The 6.9KV, 60 Hz underground duct system, that of which is located on
J&L Structural property as described below:
It begins South of Transformer No. 3, proceeds east, then turns north
and continues to Manhole No. 6. From Manhole No. 6, the system continues
west to J&L Structural's 14" Mill Motor Room and North to Manhole No. 5
then beyond to the North property line.
<PAGE> 136
ANNEX E
(Schedule 3.20)
PERMITTED LIENS
(Real Property)
1. All coal and mining rights and all rights relating thereto.
THIS DOCUMENT DOES NOT INCLUDE OR INSURE THE TITLE TO THE COAL AND THE RIGHT
OF SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED TO HEREIN AND
THE OWNER OR OWNERS OF SUCH COAL MAY HAVE THE COMPLETE LEGAL RIGHT TO REMOVE
ALL OF SUCH COAL AND, IN THAT CONNECTION, DAMAGE MAY RESULT TO THE SURFACE
OF THE LAND AND ANY HOUSE, BUILDING OR OTHER STRUCTURE ON OR IN SUCH LAND.
THE INCLUSION OF THIS NOTICE DOES NOT ENLARGE, RESTRICT OR MODIFY ANY LEGAL
RIGHTS OR ESTATES OTHERWISE CREATED, TRANSFERRED, EXCEPTED OR RESERVED BY
THIS INSTRUMENT.
2. Terms and conditions of Access and Easement Agreement by and between LTV
Steel Company, Inc. and Beaver County Corporation for Economic Development
dated as of May 25, 1993 and recorded in Miscellaneous Book Volume 1539,
Page 136.
<PAGE> 137
3. The reservations for right of entry for maintaining and renewing poles,
signal and communication lines, wire fence, underground tunnel and other
necessary railroad work; and for right of make slopes of cut or fill for
railroad purposes, and waiver of damages relative thereto; as well as the
grantee's covenant not to alter or change the contour or surface such as to
affect grade or drainage conditions, all as more particularly set forth in
the deed from The Pittsburgh and Lake Erie Railroad Company to The Borough
of Aliquippa dated April 26, 1971 and recorded in Deed Book Volume 1031,
Page 188. (Limited to Parcels Fourth, Sixth, Seventh and Ninth)
4. Easement Quit-Claim from The Pittsburgh and Lake Erie Railroad Company,
to The Municipal Water Authority of the Borough of Aliquippa, dated
February 25, 1959 and recorded July 9, 1959 in Deed Book Volume 760, Page
182.
5. The following rights of way and easements as set forth in the deed to Jones
& Laughlin Steel Corporation dated December 30, 1922 and recorded in Deed
Book Volume 311, Page 128:
a) Rights of way and easements of the Aliquippa and Southern Railroad
Company.
b) The right reserved by the Pittsburgh and Lake Erie Railroad Company in
its deeds to the party of the first part recited therein, to make, upon
certain of the tracts or parcels of land conveyed to the party of the first
part by said Pittsburgh and Lake Erie Railroad Company as aforesaid, such
slopes of cut and fill from the established grade of the Railroad of said
Pittsburgh and Lake Erie Railroad Company, as will enable it to fully use
and enjoy its property adjacent to said tracts or parcels of land for the
construction, operating and maintenances of its railroad.
6. Rights of the United States of America, the Commonwealth of Pennsylvania,
and the public between the high and low water marks of the Ohio River.
(Limited to Third described)
NOTE: Policy does not insure title to any land beyond the high water mark
of the Ohio River.
7. Rights of the United States of America and the Commonwealth of Pennsylvania
in and to the United States Harbor Line. (Limited to Third described)
<PAGE> 138
8. The following rights of way:
a) From Jones & Laughlin Steel Corporation to Duquesne Light Company dated
July 3, 1952 and recorded September 24, 1952 in Deed Book Volume 644,
Page 382.
b) From Jones & Laughlin Steel Corporation to Municipal Water Authority of
Aliquippa dated November 18, 1954 and recorded November 19, 1954 in Deed
Book Volume 676, Page 269.
c) From Jones & Laughlin Steel Corporation to Municipal Water Authority
of Aliquippa dated June 9, 1955 and recorded July 19, 1955 in Deed Book
Volume 686, Page 272.
d) The "Lease and Right of Way" from Jones & Laughlin Steel Corporation
to The Manufacturer's Light and Heat Company dated May 12, 1958 and
recorded July 3, 1958 in Deed Book Volume 731, Page 475; and the pipeline
right of way of National Trans Company referenced therein.
e) From The Borough of Aliquippa with consent of Jones & Laughlin Steel
Corporation to The Peoples Natural Gas Company dated August 8, 1960 and
recorded September 13, 1960 in Deed Book Volume 785, Page 278.
f) For pipeline from Jones & Laughlin Steel Corporation to Columbia Gas
of Pennsylvania, Inc. dated December 10, 1962 and recorded February 5,
1963 in Deed Book Volume 830, Page 343.
g) From Jones & Laughlin Steel Corporation to Columbia Gas of Pennsylvania
dated June 11, 1969 and recorded in Deed Book Volume 952, Page 388.
h) From L.T.V. Steel Company, Inc. to Columbia Gas of Pennsylvania, Inc.
dated September 23, 1988 and recorded in Deed Book Volume 1353, Page 512.
(Limited to, in and along Woodlawn Road.)
i) Right of way from J & L Structural, Inc. to Columbia Gas of
Pennsylvania, Inc., dated December 5, 1988, recorded in Deed Book Volume
1356, Page 735.
j) Easement Agreement between J & L Structural, Inc. and Mechanical
Services Company, Inc., dated May 18, 1990, recorded in Deed Book Volume
1403, Page 428. (Limited to Parcels First, Fifth and Eight.)
k) Right of way from J & L Structural, Inc., to The Bell Telephone
Company of
<PAGE> 139
Pennsylvania, dated August 28, 1991, recorded in Deed Book Volume 1458,
Page 204.
1) Rights of way from L.T.V. Steel Company, Inc. to Dequesne Light Company
dated July 16, 1992 and recorded November 9, 1992 in Deed Book Volume
1512, Page 365.
9. All matters shown on the Beaver County Corporation For Economic
Development Subdivision Plan No. 1 recorded on June 30, 1994 at Plan
Book Volume 26, Pages 268-269.
10. Terms and Conditions set forth in Road and Utilities Agreement by and
between L.T.V. Steel Company, Inc. and Breedlove Enterprises, Inc. dated
November 6, 1987 and recorded in Deed Book Volume 1320, Page 520, as
amended by Amendment to Asset Sale and Purchase Agreement between L.T.V.
Steel Company, Inc., and J & L Structural, Inc. and Amendment to Road and
Utilities Agreement dated as of October 6, 1987, dated June 8, 1989,
recorded June 26, 1989 in Deed Book Volume 1372, Page 505.
11. Terms and conditions of Rail Agreement by and between L.T.V. Steel Company,
Inc. and Breedlove Enterprises, Inc. recorded in Deed Book Volume 1320,
Page 644.
12. License Agreement from Aliquippa and Southern Railroad Company to Columbia
Gas of Pennsylvania, Inc. dated October 3, 1988 and recorded October 26,
1988 in Deed Book Volume 1353, Page 512.
<PAGE> 140
ANNEX F
(Schedule 3.20)
PERMITTED LIENS
(PERSONAL PROPERTY)
1. It is expected that the security interest in favor of PNC Bank
referenced in item 2(c) on Schedule 3.20 will be released in connection
with the Buyer's satisfaction of the indebtedness secured thereby at
the Closing.
2. The security interest in favor of Pitney Bowes Credit Corporation
referenced in item 2(d) on Schedule 3.20 which relates to its Lease
#2351682-303.
3. The rights of UDI referenced in item 2(e) on Schedule 3.20.
4. The rights of LTV referenced in item 2(f) on Schedule 3.20.
5. The rights of LTV referenced in item 2(g) on Schedule 3.20.
<PAGE> 141
SCHEDULE 3.21
PENSION PLANS
1. J&L Structural, Inc. Defined Contribution Pension Plan
2. J&L Structural, Inc. USWA 401(k) Plan
3. J&L Structural, Inc. Salary 401(k) Plan
Notes:
(a) All three plans include employees of Precision Galvanizing,
Inc. ("PGI"); however, PGI currently has no employees.
(b) The plans referenced in items 2 and 3 above include employees
of TCI.
(c) J&L did not apply for a separate determination letter for the
plan referenced in item 3 above as it is a General American
Life Insurance Company Standardized 401(k) Profit Sharing Plan
and Trust Agreement which was approved by the IRS on March 6,
1991.
(d) Each of these plans should be amended to comply with changes in
the law over the last several years. The remedial amendment
period is available until December 31, 1994.
<PAGE> 142
SCHEDULE 3.22
WELFARE PLANS
J&L
1. Officers' Bonus Plan
2. W. E. Kerns Bonus Plan
3. Management Bonus Plan
4. Salaried Profit Sharing Plan
5. Hourly Profit Sharing Plan
6. Health Insurance -- Blue Cross/Blue Shield of Western PA, Family Plan
7. Stop Loss Insurance -- Trans-General Casualty Insurance
8. Group Term Life Insurance -- Trans-General Life Insurance Company
("TGLIC")
9. Supplemental Life Insurance (optional) -- TGLIC
10. Accidental Death and Dismemberment -- TGLIC
11. Short Term Disability -- TGLIC
12. Long Term Disability (salary option) -- TGLIC
13. Dental (salary option) -- Guardian Life Insurance Company
TCI
1. Hourly Profit Sharing Plan
2. Health Insurance -- Blue Cross/Blue Shield of Western PA, Individual
Plan
3. Stop Loss Insurance -- Trans-General Casualty Insurance
4. Group Term Life Insurance -- Trans-General Life Insurance Company
("TGLIC")
5. Supplemental Life Insurance (optional) -- TGLIC
6. Accidental Death and Dismemberment -- TGLIC
7. Short Term Disability -- TGLIC
8. Long Term Disability (salary option) -- TGLIC
9. Dental (salary option) -- Guardian Life Insurance Company
<PAGE> 143
SCHEDULE 3.23
EMPLOYEE MATTERS
Employment Agreements
1. Employment Agreement dated as of November 6, 1987 between J&L and Howell
A. Breedlove, to be terminated as of the Closing Date.
2. Employment Agreement dated as of November 6, 1987 between J&L and James
E. Howe, to be terminated as of the Closing Date.
3. Employment Agreement dated as of November 6, 1987 between J&L and Carl
A. Snyder, to be terminated as of the Closing Date.
4. Independent Contractor Agreement dated September 9, 1994 between J&L and
Daniel D. Snyder.
5. Agreement dated April 28, 1994 among J&L, W.G. Baird and Associates,
Inc. and Joseph Ferenczy.
6. Time Bank Agreement dated 12/5/89 between SG&C Associates ("SG&C") and
J&L, as extended and amended by letter agreement dated 5/31/94 from SC&G
to J&L.
7. On the Job Training Contract No. PY3*576 dated 5/18/94 between Job
Training for Beaver County, Inc. and J&L, as amended by On-The-Job
Training Contract Amendment No. 1 dated 5/11/94, and as extended by an
Addendum dated 7/19/94.
Labor Agreements
1. Labor Agreement dated April 1, 1992 between J&L and the United
Steelworkers of America, as amended by memoranda dated 9/27/92,
11/26/93, 12/3/93, 2/7/94, 2/21/94 and 3/10/94.
2. Labor Agreement between Trailer Components, Inc. and the United
Steelworkers of American dated October 9, 1994 and three Memoranda of
Agreement thereto (undated).
Other Employee Matters
An age and handicap discrimination complaint has been filed with the
Pennsylvania Human Relations Commission by one Henry McLaughlin, as more
particularly described in item 2 on Schedule 3.09.
<PAGE> 144
SCHEDULE 3.24
INSURANCE
1. Travelers CGL Insurance Policy No. UJ-660-465K2229-TIL-93. named
insured: Trailer Components, Inc. ("TCI") and Fourteenth Street
Corporation ("FSC")
<TABLE>
<S> <C>
annual premium: $15,000
coverages:
general aggregate $3,000,000
products-completed aggregate $1,000,000
personal & advertising injury $1,000,000
each occurrence limit $1,000,000
fire damage limit $ 50,000
medical expense limit $ 5,000
deductible: none
claims: none
exp. date: 11/06/95 12:01 A.M.
</TABLE>
2. Travelers Umbrella Insurance Policy No. USMJ-CUP-465K224-2-TIL-93. named
insured: TCI and FSC
<TABLE>
<S> <C>
annual premium: $6,000
coverages:
each occurrence $5,000,000
products/completed oper. agg. $5,000,000
general aggregate $5,000,000
retained limit $ 10,000
deductible: none
claims: none
exp. date: 11/06/95 12:01 A.M.
</TABLE>
3. Travelers Commercial Auto Insurance Policy No. UJ-CAP-465K2346-TIL-93
named insured: TCI and FSC
<TABLE>
<S> <C>
annual premium: included in GL
coverages:
liability $1,000,000 each accident
deductible: none
claims: none
exp. date: 11/06/95 12:01 A.M.
</TABLE>
<PAGE> 145
4. Travelers Workers Compensation and Employers Liability Policy No.
UJ-UB-465K095-5-94 named insured: TCI
<TABLE>
<S> <C>
annual premium: $139,289
coverages:
Workers' Compensation: Statutory
Employer's Liability:
bodily injury by accident: $100,000 each accident
bodily injury by disease: $500,000 policy limit
bodily injury by disease: $100,000 each employee
deductible: none
claims: none
exp. date: 11/06/95 12:01 A.M.
</TABLE>
5. AIG Life Insurance Company Group Accident Insurance Policy No.
GTP8037260 named insured: J&L Structural, Inc. ("J&L")
<TABLE>
<S> <C>
annual premium: $950.00
coverages:
aggregate limit of indemnity: $2,500,000 per accident
deductible: none
claims: none
exp. date: 2/9/95
</TABLE>
6. Hartford Steam Boiler Inspection and Insurance Company Property
Insurance Policy No. UNI-PT-8887000-03 named insured: J&L, Pittsburgh
National Bank (now "PNC"), Beaver County Corporation for Economic
Development, Precision Galvanizing, Inc., TCI and FSC additional
insured/loss payee/mortgagee:
PNC; BCCED; Pitney Bowes Corp.; Pennsylvania Industrial
Development Authority ("PIDA")
<TABLE>
<S> <C>
annual premium: $98,136
coverages:
blanket property and
business interruption $55,883,412
</TABLE>
-2-
<PAGE> 146
<TABLE>
<S> <C>
deductible:
Prop & Bus. Int. $ 10,000
Earthquake $ 25,000
Flood $ 25,000
Boiler & Mach. (Ambridge) $ 10,000
Boiler & Mach. (other locations) 50,000
Bus. Int. (Ambridge) 3x daily value
Bus. Int. (other locations) 5x daily value
Fire & Lightning (Ambridge) $1,000,000
claims: none
exp. date: 11/06/95
</TABLE>
7. Travelers Commercial Auto Insurance Policy No. UJ-CAP-465K2322-TIL-93
<TABLE>
<S> <C>
named insured: J&L.
annual premium: included in GL
coverages:
liability $1,000,000 each accident
deductible: none
claims: none
exp. date: 11/06/95
</TABLE>
8. St. Paul Fire and Marine Policy No. 315JC0770
named insured: J&L
<TABLE>
<S> <C>
annual premium: $ 8,500
coverages:
Liability:
per occurrence: $1,000,000
aggregate: $1,000,000
deductible:
Hull
physical damage only $2,500 per vessel
Liability
protection, indemnity & coll. $5,000 bodily injury
$5,000 per
occurrence
land owners $5,000 per occurrence
stevedores $5,000 per occurrence
claims: none
exp. date: 11/06/95
</TABLE>
-3-
<PAGE> 147
9. Crum & Forster Insurance Organization Commercial Umbrella Policy No.
5530065804 named insured: J&L
<TABLE>
<S> <C>
annual premium: $ 15,500
coverages:
each occurrence $ 5,000,000
general aggregate limit $10,000,000
products/completed oper. agg. $ 5,000,000
retained limit n/a
deductible: none
claims: none
exp. date: 11/06/95
</TABLE>
10. Crum & Forster Commercial Insurance Inland Marine Policy No.
320-492257-2 named insured: J&L
<TABLE>
<S> <C>
annual premium $ 1,325
coverages:
Replacement Cost
equipment $565,433
data and media $100,000
deductible: $ 250
claims: none
exp. date: 11/19/94 12:01 A.M.
</TABLE>
11. Travelers Workers Compensation and Employers Liability Policy No.
UC2J-UB-586K366-9-93
named insured: J&L
<TABLE>
<S> <C>
annual premium: $263,654
coverages:
Workers' Compensation: Statutory
Employer's Liability:
bodily injury by accident: $500,000 each accident
bodily injury by disease: $500,000 policy limit
bodily injury by disease: $500,000 each employee
deductible: none
claims: none
exp. date: 11/06/95
</TABLE>
Note: J&L is required to provide cash collateral in connection with
such policy in the initial amount of $330,000, which amount is to be
paid in 10 equal monthly installments commencing in December, 1994.
Paid claims are deducted from the cash collateral. J&L is also required
to cause the letter of credit referenced on Schedule 3.25 to remain in
effect in respect of claims during the prior policy year.
-4-
<PAGE> 148
12. Travelers CGL Insurance Policy No. UJ-660-465K2217-TIL-93
named insured: J&L
<TABLE>
<S> <C>
annual premium: $ 67,500
coverages:
general aggregate $3,000,000
products-completed aggregate $1,000,000
personal & advertising injury $1,000,000
each occurrence limit $1,000,000
fire damage limit $ 50,000
medical expense limit $ 5,000
deductible: none
claims: none
exp. date: 11/06/95 12:01 A.M.
</TABLE>
13. Crum & Forster Commercial Insurance Bond No. 6010579404
named insured: J&L Structural Salary 401K Plan; J&L Structural
Pension Plan; J&L Structural Profit Sharing Plan; J&L Structural Gain
Sharing Plan
<TABLE>
<S> <C>
three-year prepaid premium: $ 294.00
coverages:
employee dishonesty $250,000
deductible: none
claims: none
exp. date: 1/10/97
</TABLE>
14. American Credit Insurance Policy No. A-263,547-9
<TABLE>
<S> <C>
insured: J&L
policy period: May 1, 1994 through April 30, 1995
policy amount: $3,000,000
premium: $54,000
products covered: structural rolling steel mill
primary loss percentage: 6.66/100ths of 1%
minimum primary loss: $40,000
</TABLE>
15. St. Paul Excess Credit Insurance Policy No. 966-CA-1632
<TABLE>
<S> <C>
insured: J&L
premium: $4,987
coverages: $150,000
deductible amount: $7,500
policy period: May 1, 1994 through April 30, 1995
</TABLE>
16. Lexington Ins. Co. Policy No. 8691434
<TABLE>
<S> <C>
named insured: FSC, TCI, PGI
annual premium: $23,175
coverages: $1,000,000 fire and lightning limit
deductible amount: $10,000
exp. date: November 5, 1995
</TABLE>
17. Travelers Foreign Workers' Compensation and Employers Liability Policy
No. ULF-UB-465K2205-93
-5-
<PAGE> 149
Named Insured: J&L
Annual Premium: included in workers' compensation
Coverages:
<TABLE>
<S> <C>
Employers Liability:
Each Accident/Bodily Injury $ 500,000
Each Disease/Bodily Injury Policy Limit 500,000
Each Disease/Bodily Injury Ea. Employee 500,000
Foreign Reimbursement:
Each Accident/Bodily Injury $ 500,000
Each Disease/Bodily Injury Policy Limit 500,000
Each Disease/Bodily Injury Ea. Employee 500,000
Repatriation Expense
Each Employee 1,000
</TABLE>
18. St. Paul Fire & Marine Medical Professional Policy No. EM06679644
Named Insured: Patricia E. Brzoza
Additional Insured: J&L
Annual Premium: $134
Coverages:
Medical Professional Liability for Nurse
<TABLE>
<S> <C>
Each Person Limit $1,000,000
Total Limit 1,000,000
Deductible: none
Claims
Expiration Date: 04/01/95 12:01 A.M.
</TABLE>
Note: The premiums payable under the policies listed in items 1 and 12 above are
based upon sales, and the premiums payable under the policies listed in items 4
and 11 above are based upon payroll. An annual audit is performed by the
insurers to determine the premium payable during the next year; if sales or
payroll have increased such premiums will increase. The Companies and the
Shareholders are not aware of any other increases in the premiums payable under
any of their insurance policies other than customary annual increases.
-6-
<PAGE> 150
SCHEDULE 3.25
INDEBTEDNESS
1. BID Financing.
Original Principal Amount: $1,500,000
Principal Amount as of September 30, 1994: $1,047,847.61
Interest Rate: 4.5% per annum
Term: 15 years
<TABLE>
<S> <C>
Amortization: 180 monthly installments of $11,474.90 commencing
8/1/89
Documentation: (a) Loan Agreement dated February 17, 1988 among J&L,
Beaver County and Beaver County Corporation for
Economic Development ("BCCED").
(b) Note date November 6, 987 from J&L to BCCED.
(c) Security Agreement dated as of February 17, 1988
between J&L and Beaver County (grants security
interest in scheduled equipment).
</TABLE>
Note: This loan was originally made by BCCED to J&L pursuant to a Loan
Agreement dated November 6, 1987. As per James Palmer of BCCED, the
switch to Beaver County as the lender occurred because the state grant
which funded this loan had to be made to a public entity (BCCED is a
nonprofit corporation). It is not known whether a new note in favor of
Beaver County was issued or whether the note listed above was formally
assigned. The indebtedness described above is included as part of the
purchase price in the Installment Sale Agreement described below.
2. PDCA Financing.
Original Principal Amount: $3,000,000
Principal Amount as of September 30, 1994: $3,000,000
Interest Rate: 3% per annum
Term: 15 years with 15 year renewal option
<TABLE>
<S> <C>
Amortization: No payments of principal or interest until 7/1/95;
monthly payments of $7,500 (interest only) through
7/1/98; monthly installments of $20,717.45 (principal
and interest) through 6/1/03; balloon at 7/1/03
(unless renewed)
Documentation: (a) Loan Agreement dated November 6, 1987 between J&L
and BCCED.
(b) Note dated November 6, 1987 from J&L to BCCED.
(c) Security Agreement dated November 6, 1987 between
J&L and BCCED (grants security interest in scheduled
equipment).
</TABLE>
Note: The indebtedness described above is included as part of the
Purchase Price in the Installment Sale Agreement described below.
3. PIDA Financing.
Original Principal Amount: $1,485,333
Principal Amount as of September 30, 1994: $969,791.44
Interest Rate: 3% per annum
Term: 15 years
<TABLE>
<S> <C>
Amortization: 180 equal monthly installments of principal and
interest
Documentation: (a) Loan Agreement dated September 29, 1988 between
BCCED and Pennsylvania Industrial Development
Authority ("PIDA").
</TABLE>
<PAGE> 151
<TABLE>
<S> <C>
(b) Note dated September 29, 1988 from BCCED to PIDA.
(c) Mortgage dated September 29, 1988 between BCCED
and PIDA.
(d) Consent, Subordination and Assumption Agreement
dated September 29, 1988 from J&L to PIDA.
(e) Installment Sale Agreement dated September 29,
1988 between J&L and BCCED.
(f) Memorandum of Installment Sale Agreement dated
September 29, 1988 between J&L and BCCED.
(g) Assignment of Installment Sale Agreement dated
September 29, 1988 among J&L, BCCED and PIDA.
</TABLE>
4. PNC Financing.
Original Principal Amount (Revolver): $4,500,000
Principal Amount as of September 30, 1994 (Revolver): $2,700,000
Interest Rate (Revolver): Prime plus 0 to 100 basis points
(depending upon Tangible Net Worth)
Term (Revolver): 62 months (may be extended by Bank)
Amortization (Revolver): Quarterly interest payments; balloon
at 9/30/94 (unless extended)
<TABLE>
<S> <C>
Documentation: (a) Credit Agreement dated as of November 2, 1989
between J&L and Pittsburgh National Bank (now PNC
Bank, "PNC").
(b) First Amendment to Credit Agreement dated
November 3, 1989.
(c) Second Amendment to Credit Agreement dated
January 31, 1992.
(d) Third Amendment to Credit Agreement and Amendment
to Security Agreement dated November 6, 1992.
(e) Letter Agreement (extending term) dated September
23, 1994 from PNC to J&L.
(f) Fourth Amendment to Credit Agreement dated
November 1, 1994.
(g) Revolving Credit Note dated November 2, 1989 from
J&L to PNC.
(h) Amended and Restated Revolving Credit Note dated
November 1, 1994 from J&L to PNC.
(i) Security Agreement and Collateral Assignment
dated November 2, 1989 between J&L and PNC (grants
security interest in accounts and inventory).
(j) Subordination and Standby Agreement dated as of
November 2, 1989 among J&L, PIDA and PNC.
(k) Subordination and Standby Agreement dated as of
November 2, 1989 among J&L, BCCED, Beaver County and
PNC.
(l) Waiver of Bailee's Lien dated November 2, 1989
from Winco Products, Inc. and J&L to PNC.
(m) Waiver of Bailee's Lien dated November 7, 1989
from Yellow Creek State Inland Port Authority and J&L
to PNC.
</TABLE>
Note: This facility originally provided for a term loan which has been
satisfied in full. As a condition to the obligations of the Buyer
hereunder, on the Closing Date the principal balance due under the
Amended and Restated Revolving Credit Note referenced above shall not
be greater than $4,500,000.
-2-
<PAGE> 152
5. Letter of Credit. No. A-305378 issued 11/9/93 by PNC Bank in favor of
The Travelers Companies (providers of J&L/TCI worker's compensation
insurance) for the account of J&L in the amount of $390,000, as
extended to 11/6/95 by letter dated 7/1/94 from PNC to J&L. The fee for
such letter of credit is 1.5% per month. There are currently no
outstanding draws on such letter of credit.
6. TCI Advance. TCI owes J&L $150,000 on account of advances made by J&L
to TCI for working capital purposes.
-3-
<PAGE> 153
SCHEDULE 3.26
OTHER MATERIAL CONTRACTS
1. Payroll Processing Agreement dated 12/1/92 between J&L and LTV Steel
Company, Inc. ("LTV")
<TABLE>
<S> <C>
subject matter: provision of payroll services by LTV
initial term: five years beginning 1/1/93
renewal: continues for successive twelve month terms
until terminated by either party upon sixty
days written notice
base charge: $1,350 per month (add'l services extra)
</TABLE>
2. Product Supply Agreement dated 7/6/92 between J&L and AGA Gas, Inc., as
modified by an undated Addendum.
<TABLE>
<S> <C>
subject matter: oxygen requirements contract
initial term: five years
renewal: continues for successive twelve month terms
until either party gives written notice of
termination at least twelve months prior to
the expiration of the initial term or any
succeeding twelve month term
product price: $ 0.267 per 100 standard cubic feet (as
adjusted) annually pursuant to Paragraph 1
of the Addendum)
service charge: $1,350.00 per month
</TABLE>
3. Indemnity Agreement dated as of 11/6/87 between LTV and J&L.
<TABLE>
<S> <C>
subject matter: LTV agrees to indemnify and hold harmless
J&L from any claims arising out of any
undischarged lien of the Commonwealth of PA
or any of its agencies or authorities other
than permitted liens.
</TABLE>
4. Asset Purchase Agreement dated as of 10/6/87 between LTV as seller and
Breedlove Enterprises, Inc. (now J&L) as purchaser, as amended by
Amendment No. 1 dated 11/6/87. Section 11.2 provides that the following
provisions shall survive closing: (i) the provisions contained in
Section 1.7(e) (relating to indemnification obligations of Seller) and
Section 1.7(f) (relating to indemnification obligations of Purchaser),
(ii) the provisions relating to plant separation in Article VIII, (iii)
the provisions of the Road, Rail and Utilities Agreement, (iv) the
matters contained in Section 1.8 (relating to use of the name "J&L
Structural, Inc."), (v) the provisions of Section 3.4 (relating to
infringement of patents and trademarks), and (vi) the provisions of
Section 10.3(e) (relating to consent to assignment or subleases and
transfers of licenses regarding the matters set forth in Section 1.1(e)
(relating to intellectual property).
5. Transportation Contract ICC-ALQS-C-0001 dated 1/1/91 between J&L and
Aliquippa & Southern Railroad Company ("A&S"), as amended by letter
from D.C. Curtis to D.R. Innocenti dated 6/29/94 (raising rates). --
<TABLE>
<S> <C>
subject matter: intra-plant rail transportation contract
initial term: 1/1/91 - 1/31/91
renewal: continues for successive thirty day periods
until terminated by either party upon thirty
days' written notice
rate: $1.00 per net ton. Finished Steel $2.39 per
</TABLE>
<PAGE> 154
<TABLE>
<S> <C>
net ton (ICC-ALQS-C-0001)
</TABLE>
6. Transportation Contract ICC-ALQS-C-0002 dated 1/1/92 between J&L and
Aliquippa & Southern Railroad Company, as amended by letter from D.C.
Curtis to D.R. Innocenti dated 6/29/94 (raising rates). --
<TABLE>
<S> <C>
subject matter: intra-plant rail transportation contract
initial term: 1/1/92 - 12/31/92 (ICC-ALQS-C-0002)
renewal: continues for successive thirty day periods
until terminated by either party upon thirty
days' written notice
rate: $114 per car (ICC-ALQS-C-0002)
</TABLE>
7. TEC Systems, Inc. Purchase Order No. 10619 dated 4/13/94. --
<TABLE>
<S> <C>
subject matter: established service contract for furnace
controls
term: not specified
renewal: not specified
rate: $2,100/mo.
</TABLE>
8. Blanket Purchase Order dated 1/28/94 between Redman Homes, Inc. and J&L
Structural, as extended and amended by letter dated November 29, 1993
from James E. Howe of J&L to Ralph Graybill of Redman Homes, letter
dated December 10, 1993 from James E. Howe to Ralph Graybill, and
letter dated July 7, 1994 from James E. Howe to Ralph Graybill.
<TABLE>
<S> <C>
subject matter: requirements contract for steel I-beam
term: February 1, 1994 through January 31, 1995
renewal: none specified
base charge: varies by plant and product; J&L agrees to
match lower prices or release Redman from
such agreement
</TABLE>
9. Scrap pricing adjustment formula dated September 16, 1988 between
Roanoke Electric Steel and J&L
<TABLE>
<S> <C>
subject matter: billet sales
initial term: not specified
renewal: not specified
base price: the average of the American Metal Market
Weekly Scrap Composite reported for the
weeks ended with the last two Fridays of
each month and the first two Fridays of the
following month equals the base price for
the succeeding month
</TABLE>
10. Rate Agreement dated December 19, 1988 between Yellow Creek Port and
J&L, as amended by letter dated July 27, 1994 from Eugene Bishop of
Yellow Creek Port to J&L.
<TABLE>
<S> <C>
subject matter: beam port service
initial term: not specified
renewal: not specified
rates: vary by product and service
</TABLE>
11. Transportation Agreement No. 99735 dated August 9, 1994 between J&L and
National Marine, Inc.
<TABLE>
<S> <C>
subject matter: transportation of billets between Lemont,
Illinois and Aliquippa, PA
initial term: August 1, 1994 through August 31, 1995
</TABLE>
-2-
<PAGE> 155
<TABLE>
<S> <C>
renewal: none specified
freight rate: $7.90 per NT
demurrage: first five days at $125/day thereafter
$250/day
</TABLE>
12. Transportation Agreement No. 91256 dated January 21, 1993 between
Vectura Group, Inc. and J&L.
<TABLE>
<S> <C>
subject matter: transportation of steel beams or billets
between Aliquippa, PA and Iuka, MS
initial term: January 15, 1993 through December 31, 1993
renewal: automatically renewed from year to year
thereafter unless renegotiated or terminated
by either party upon 90 days' advance notice
to the other
rates per net ton:
</TABLE>
<TABLE>
<CAPTION>
From Aliquippa, PA to Iuka, MS
------------------------------
<S> <C> <C> <C>
1,400 1,200 1,000 800
$7.05 $8.18 $9.79 $12.20
</TABLE>
From Iuka, MS to Aliquippa, PA
------------------------------
$5.43 per NT per 1,400 NT all subject to adjustment
13. Transportation Contract dated December 28, 1993 between The Ohio River
Company and J&L.
<TABLE>
<S> <C>
subject matter: transportation of billets from Huntington,
WV to Aliquippa, PA
initial term: January 1, 1994 through December 31, 1994
renewal: none specified
rate per net ton: $3.00
demurrage: $175 per barge per day after expiration of
free time
</TABLE>
14. Lease Agreement dated January 14, 1991 between A&S and J&L.
<TABLE>
<S> <C>
subject matter: lease of barge gondolas
initial term: January 1, 1991 through January 31, 1991
renewal: automatically extended for additional
successive 30-day periods unless terminated
upon 30 days' written notice or written
mutual consent
rental: $4.00 per day
</TABLE>
15. J&L and Lippert Components, Inc. establish the pricing for J&L's
products at six-month intervals. J&L's current pricing level is
guaranteed through 12/31/94.
16. Main Base Gas Sales Contract dated September 1, 1994 (effective October
1, 1993) and Limited Term Sales Agreement (undated) between Eastern
Marketing Corporation and J&L.
<TABLE>
<S> <C>
subject matter: supply of natural gas
initial term: October 1, 1993 through September 30, 1994
renewal: automatically extended on a month-to-month
basis unless terminated upon 30 days' prior
written notice given by either party;
provided, that there is no such termination
during the term of any Limited Term Sales
Agreement (the current one expires 5/31/95)
rate: varies with time, volume and external
factors; J&L is also required to pay gas
transportation costs
</TABLE>
-3-
<PAGE> 156
SCHEDULE 3.27
MATERIAL AGREEMENTS
The Escrow Agreement referred to in item 1(c) on Schedule 3.17 has expired on
its own terms; however, the parties are still abiding by the terms of such
agreement and such agreement will be dealt with as provided in item 1(c) on
Schedule 3.17.
<PAGE> 157
SCHEDULE 3.28
TRANSACTIONS WITH AFFILIATES
(a) J&L is TCI's only customer.
(b) As more particularly described on Schedule 3.17, J&L leases certain real
property (used by TCI) from Fourteenth Street Corporation ("FSC") and
TCI subleases certain real property from Precision Galvanizing, Inc.
("PGI").
(c) Lease Agreement between J&L and FSC and Sublease (undocumented) between
TCI and PGI, as more particularly described on Schedule 3.17.
(d) J&L provides accounting and other management services, as well as use of
computer hardware and software, to TCI.
<PAGE> 158
SCHEDULE 3.29
WARRANTY AND PRODUCT LIABILITY
1. Product Lines.
(a) J&L - J&L produces four product lines of structurals: Junior Beams,
Junior Channels, Wide Flange Beams and Standard I-Beams. Since 1991
J&L has also produced a line of U.M. Plates.
(b) TCI - TCI has no products of its own, but merely processes J&L
products.
2. Summary of Warranty Claims.
(a) U.M. Plates
<TABLE>
<CAPTION>
FISCAL YEAR WEIGHT REJECTIONS TOTAL AMOUNT*
----------- ----------------- ------------
<S> <C> <C>
1991 149 Tons $82,044
1992 502 Tons $275,911
1993 (15 mos) 544 Tons $299,383
1994 (through 6/30) 0 $0
</TABLE>
*Approx. - based on $550/Ton.
(b) Structurals
<TABLE>
<CAPTION>
FISCAL YEAR NO. OF CLAIMS TOTAL AMOUNT
----------- ------------- ------------
<S> <C> <C>
1988 2 $ 2,316
1989 5 $ 6,041
1990 13 $15,336
1991 11 $18,034
1992 24 $34,887
1993 (15 Mos.) 24 $36,023
1994 (through 6/30) 11 $76,815
</TABLE>
3. Summary of Product Liability Claims.
None
Note:(Effective January 1, 1994, J&L changed its method of
determining and valuing claims to include all returns and
allowances.
<PAGE> 159
SCHEDULE 3.31
ACCOUNTS AND INVESTMENTS
J&L Structural, Inc.
<TABLE>
<CAPTION>
ACCOUNT
PNC BANK ACCOUNT TYPE NO SIGNATORIES
- - -------- ------------ -- -----------
<S> <C> <C> <C>
1. Payables Checking 1924221 Kenneth W. Bixby
Howell A. Breedlove
James E. Howe
Carl A. Snyder
2. Payroll Checking 2442937 Kenneth W. Bixby
Howell A. Breedlove
James E. Howe
Carl A. Snyder
3. Lockbox Concentration 2167146 Kenneth W. Bixby
Howell A. Breedlove
James E. Howe
Carl A. Snyder
</TABLE>
Trailer Components, Inc.
<TABLE>
<CAPTION>
ACCOUNT
PNC BANK ACCOUNT TYPE NO SIGNATORIES
- - -------- ------------ -- -----------
<S> <C> <C> <C>
1. Payables Checking 2147348 Kenneth W. Bixby
Howell A. Breedlove
James E. Howe
Carl A. Snyder
2. Payroll Checking 2147735 Kenneth W. Bixby
Howell A. Breedlove
James E. Howe
Carl A. Snyder
</TABLE>
<PAGE> 160
SCHEDULE 4.04
NO BREACH OR DEFAULT
(BUYER AND PARENT)
1. The transactions contemplated by this Agreement may constitute a
default under the following documents creating, evidencing or securing
financing of Brighton by PNC Bank (the "PNC Financing"):
(a) Security Agreement - (Accounts, Chattel Paper, General
Intangibles) by and between PNC Bank as Secured Party and
Brighton as Debtor dated September 20, 1993;
(b) Security Agreement - (Inventory) by and between PNC Bank as
Secured Party and Brighton as Debtor dated September 20, 1993;
(c) Security Agreement - (Goods) by and between PNC Bank as
Secured Party and Brighton as Debtor dated September 20, 1993;
(d) Judgment Note given by Brighton to PNC Bank in the amount
$350,000 dated September 20, 1993.
2. The transactions contemplated by this Agreement may constitute a
default under the GMAC Financial Services Lease Agreement between GMAC
Financial Services as Assignee of Lessor and Brighton as Lessee,
covering a leased vehicle used by Brighton's President.
3. This Schedule excludes contracts, agreements, instruments and documents
with Affiliates of the Buyer or the Parent which may require a consent
for the transactions contemplated by this Agreement but with respect to
which consents have been or will by the Closing be obtained by the
Buyer.
<PAGE> 161
SCHEDULE 4.06
NO CONSENT
(BUYER AND PARENT)
1. The GMAC Financial Services Lease Agreement listed on Schedule 4.04
requires the consent of the other party thereto in order for the same
to be assigned to and assumed by the Buyer.
2. The following governmental permits held by Brighton may require the
consent or approval of the issuing authorities in order for same to be
transferred to the Buyer:
(a) Operating Permit No. 04-307-069 (Mold Shakeout Sand
Reclamation Unit Bag House) (and application and transmittal
letters relating to same) from the Commonwealth of
Pennsylvania Department of Environmental Resources, Bureau of
Air Quality Control ("DER") issued on November 18, 1993 and
expiring June 30, 1998;
(b) Request for Determination, submitted to DER on March 11, 1994,
and Application for Permit Modification, submitted to DER on
June 15, 1994, to install a sand reclamation unit, exhausted
to an existing baghouse, relating to Operating Permit No.
04-307-069;
(c) Operating Permit No. 04-307-074 (Electric Induction Furnace)
from DER issued on November 18, 1993 and expiring June 30,
1998;
(d) Storage Tank Registration No. 273141 for one 550 gallon
gasoline storage tank, expiring October 4, 1995.
3. The National Industrial Group Pension Plan for Labor-Management Groups
("NIGPP") of which Brighton is a party may require an acknowledgment of
the Buyer's obligation to contribute the same number of hours as
Brighton has to NIGPP, the execution of a Request for Variance from
Purchaser's Bond Requirement and a Supplemental Participation Agreement
and approval of NIGPP in connection with the consummation of the
transactions contemplated by this Agreement and/or the Related
Documents.
4. A filing must be made with the Pennsylvania Securities Commission and
other filings may have to be made under state or federal securities
laws in connection with the transactions contemplated by this Agreement
and/or the Related Documents.
5. It is anticipated that the Buyer's Certificate of Incorporation may be
amended to add another class or classes of securities in connection
with the financing of the transactions contemplated hereby and said
amendment must be filed with the Secretary of State of Delaware.
6. The Buyer's Certificate of Incorporation must be amended to change the
name of the Buyer to "J&L Structural, Inc." as contemplated by this
Agreement and said amendment must be filed with the Secretary of State
of Delaware.
7. This Schedule excludes contracts, agreements, instruments and documents
with Affiliates of the Buyer or the Parent which may require a consent
for the transactions contemplated by this Agreement and/or the Related
Documents but
<PAGE> 162
with respect to which consents have been or will by the Closing be
obtained.
8. The Working Agreement, Insurance Agreement and Pension Agreement
between Brighton and the United Steel Workers of America, Local 14766,
dated January 1, 1992, may require consent for the transactions
contemplated by this Agreement and the Related Documents.
- 2 -
<PAGE> 163
SCHEDULE 5.06
DUE DILIGENCE CONTINGENCY
<TABLE>
<CAPTION>
REP/WARRANTY DUE DILIGENCE PERIOD EXPIRES
- - ------------ ----------------------------
<S> <C>
Section 3.01 11/10/94
Section 3.04 11/10/94
Section 3.06 11/10/94
Section 3.08 11/10/94
Section 3.09 11/10/94
Section 3.10 11/10/94
Section 3.11 11/10/94
Section 3.12 11/10/94
Section 3.13 11/10/94
Section 3.14 11/10/94
Section 3.15 11/11/94
Section 3.16 11/11/94
Section 3.17 11/10/94
Section 3.18 11/10/94
Section 3.19 11/10/94
Section 3.20 11/10/94
Section 3.21 *Item 1, solely for the purpose of
investigating the circumstances surrounding the
retroactive addition thereto of the employees of
Precision Galvanizing, Inc., 11/24/94
*All other matters, 11/10/94
Section 3.22 11/10/94
Section 3.23 *Solely for the purpose of
investigating the TCI Labor Agreement, 11/24/94
Section 3.24 *Solely for the purpose of
investigating the insurance policies listed in
items 1, 2, 3, 4, 6, 7, 8, 9, 11, 12 and 16,
11/24/94
*All other matters, 11/10/94
Section 3.25 11/10/94
Section 3.26 11/10/94
11/10/94
Section 3.27 11/10/94
Section 3.28 11/10/94
Section 3.29 11/10/94
Section 3.31 11/10/94
</TABLE>
<PAGE> 164
EXHIBIT A
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of March
31, 1995 among J&L HOLDINGS CORP., a Delaware corporation formerly known as
Brighton Electric Steel Casting Company (the "Company"), J&L STRUCTURAL, INC.,
a Delaware corporation formerly known as J&L Acquisition Corp. (the
"Subsidiary"), CPT HOLDINGS, INC., a Minnesota corporation the "Parent"),
CONTINUOUS CASTER CORPORATION, a Delaware corporation ("CCC"), and HOWELL A.
BREEDLOVE, JAMES E. HOWE and CARL A. SNYDER (collectively, the "Buyers").
PREAMBLE
The Subsidiary, the Parent, the Buyers and J&L Structural, Inc., a
Pennsylvania corporation, and Trailer Components, Inc. (the "Acquired
Companies") have entered into an Asset Purchase Agreement dated as of November
10, 1994, as amended (the "Purchase Agreement"), pursuant to which the
Subsidiary will purchase substantially all of the assets of the Acquired
Companies. As a condition of the obligations of the parties under the Purchase
Agreement, the parties hereto are required to enter into this Agreement.
NOW, THEREFORE, in consideration of the obligations of the parties
hereto under the Purchase Agreement and the mutual promises set forth herein,
and intending to be legally bound hereby, the parties agree as follows:
1. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Purchase
Agreement.
2. Purchase and Sale of Stock.
(a) On the Closing Date the Company shall issue and sell to
the Buyers, and the Buyers shall purchase from the Company, a number of shares
of the Company's Class A Common Stock, par value $.01 per share (the "Voting
Common Stock"), such that, immediately following such issuance and all other
issuances of the Company's capital stock to occur on the Closing Date, the
Buyers will hold approximately 19.8% (3,456 shares) of the Company's capital
stock on a fully diluted basis, for an aggregate purchase price of
$2,468,586.24. Such stock shall be issued to the Buyers, and the Buyers shall
be liable for the purchase price therefor, in accordance with the percentages
set
<PAGE> 165
forth on Schedule 2(a).
(b) The closing of the purchase and sale of the Voting Common
Stock to be purchased by the Buyers hereunder (the "Stock Closing") shall occur
concurrently with the Closing under and as defined in the Purchase Agreement,
and the obligations of the parties hereunder shall be conditioned upon the
occurrence of such Closing. At the Stock Closing the Company shall deliver to
the Buyers certificates evidencing the stock purchased by them hereunder and
the Buyers shall deliver to the Company the purchase price for such shares in
immediately available funds.
(c) The obligations of the Buyers hereunder to proceed with
the Stock Closing shall be subject to the satisfaction by each of the Company,
the Subsidiary, the Parent and CCC (each an "Affiliated Entity" and
collectively, the "Affiliated Entities") on or prior to the Closing Date of
each of the following conditions precedent:
(i) The representations and warranties of each
Affiliated Entity set forth herein shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of such date.
(ii) Each Affiliated Entity shall have performed or
complied in all material respects with each covenant and agreement to be
performed or complied with by it hereunder on or prior to the Closing Date.
(iii) The Affiliated Entities shall have obtained or
made each consent, authorization, approval, exemption, filing, registration or
qualification, if any, listed on Schedules 3(d) and 3(f), unless it is a
condition precedent to obtaining or making the same that the Closing shall have
occurred or it is permissible to obtain or make the same after the Closing
Date.
- 2 -
<PAGE> 166
(iv) There shall be no action pending, and no action
which has been overtly threatened in a writing received by any party hereto, by
or before any Governmental Person or arbitrator seeking to restrain, prohibit
or invalidate any of the transactions contemplated hereby or seeking monetary
relief against any Buyer by reason of the consummation of such transactions,
and there shall not be in effect any Governmental Order which has such effect.
(v) Each Affiliated Entity shall have delivered to
the Buyers a certificate of its President dated the Closing Date and certifying
that each of the conditions specified in clauses (i), (ii), (iii) and (iv)
above have been met.
(vi) Each Affiliated Entity shall have delivered to
the Buyers a certificate of its Secretary dated the Closing Date and certifying
(A) that correct and complete copies of its Charter and By-Laws are attached
thereto, (B) that correct and complete copies of each resolution of its board
of directors and shareholders approving this Agreement and authorizing the
execution hereof and the consummation of the transactions contemplated hereby
are attached thereto and (C) the incumbency and signatures of the officers of
such Affiliated Entity authorized to execute and deliver this Agreement on
behalf of such Affiliated Entity.
(vii) The Affiliated Entities shall have delivered
to the Buyers an opinion of their counsel dated the Closing Date as to the
matters specified in subparagraphs (a) through (g) of Paragraph 3 and such
other matters as the Buyers and their counsel may reasonably request.
(d) The obligations of the Affiliated Entities hereunder to
proceed with the Closing shall be subject to the satisfaction by the Buyers on
or prior to the Closing Date of each of the following conditions precedent:
(i) The representations and warranties of each Buyer
set forth herein shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though made on and as of
such date.
(ii) Each Buyer shall have performed or complied in
all material respects with each covenant and agreement to be performed or
complied with by him hereunder on or prior to the Closing Date.
(iii) There shall be no action pending, and no
action which has been overtly threatened in a writing received by any party
hereto, by or before any Governmental Person or arbitrator
- 3 -
<PAGE> 167
seeking to restrain, prohibit or invalidate any of the transactions
contemplated hereby or seeking monetary relief against any Affiliated Entity by
reason of the consummation of such transactions, and there shall not be in
effect any Governmental Order which has such effect.
(iv) The Buyers shall have delivered to the
Affiliated Entities an opinion of their counsel dated the Closing Date as to
matters specified in subparagraphs (a) through (d) of Paragraph 4 and such other
matters as the Affiliated Entities and their counsel may reasonably request.
3. Representations and Warranties of the Affiliated Entities. Each
of the Affiliated Entities represents and warrants to the Buyers as follows:
(a) Organization. Each of the Company, the Subsidiary and
CCC is a corporation duly organized, validly existing and in good standing in
the State of Delaware. Each of the Company, the Subsidiary and CCC is duly
qualified to do business as a foreign corporation and is in good standing in
all jurisdictions in which the ownership of its properties or the nature of its
business makes such qualification necessary; provided, that CCC will not be
qualified to do business as a foreign corporation in Pennsylvania; and further
provided, that the Company will terminate its authorization to do business in
Pennsylvania after the Closing. The Parent is a corporation duly organized,
validly existing and in good standing in the State of Minnesota.
(b) Authority and Authorization. Each of the Affiliated
Entities has the corporate power and authority to own its properties and
assets, to conduct its business as presently conducted, to execute and deliver
this Agreement, to consummate the transactions contemplated hereby and to
perform its obligations hereunder. The execution and delivery by each
Affiliated Entity of this Agreement, the consummation of the transactions
contemplated hereby and the performance by the each Affiliated Entity of its
obligations hereunder have been duly and validly authorized by all necessary
corporate proceedings on their parts.
(c) Execution and Binding Effect. This Agreement has been
duly and validly executed and delivered by each Affiliated
- 4 -
<PAGE> 168
Entity and constitutes a legal, valid and binding obligation of each Affiliated
Entity enforceable against each Affiliated Entity in accordance with its terms.
(d) No Breach or Default. The execution and delivery by each
Affiliated Entity of this Agreement, the consummation of the transactions
contemplated hereby and the performance by each Affiliated Entity of its
obligations hereunder do not and will not:
(i) violate any Affiliated Entity's Charter or
By-Laws;
(ii) except as otherwise disclosed on Schedule 3(d),
breach or result in a default (or an event which, with the giving of notice or
the passage of time, or both, would constitute a default) under, require any
consent under or give to others any rights of termination, acceleration,
suspension, revocation, cancellation or amendment of any contract, agreement,
instrument or document to which any Affiliated Entity is a party or by which
any Affiliated Entity or any of its properties or assets is bound; or
(iii) except as otherwise disclosed on Schedule
3(d), breach or otherwise violate any Governmental Order which names any
Affiliated Entity or is directed to any Affiliated Entity or any of its
properties or assets.
(e) No Violation of Law. The execution and delivery by each
Affiliated Entity of this Agreement, the consummation of the transactions
contemplated hereby and the performance by each Affiliated Entity of its
obligations hereunder are not prohibited by, and do not and will not subject
any Affiliated Entity to any fine, penalty or similar sanction under, any
Governmental Rule.
(f) No Consent. Except as otherwise disclosed on Schedules
3(d) and 3(f), no consent, authorization, approval, exemption or other action
by, and no filing, registration or qualification with, any Person (including
without limitation any Governmental Person) is or will be necessary in
connection with the execution and delivery by each Affiliated Entity of this
Agreement, the consummation of the transactions contemplated hereby or the
performance by each Affiliated Entity of its
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obligations hereunder.
(g) Capitalization. Immediately after the closing of the
transactions which are to occur hereunder and under the Loan Documents (as
defined on Schedule 3(g)) on the Closing Date, the authorized capitalization
and the issued and outstanding shares of each of the Company, the Subsidiary
and CCC will be as set forth on Schedule 3(g). Each of such issued and
outstanding shares will have been duly and validly authorized and issued, fully
paid and non-assessable, and the ownership of such shares will be as set forth
on Schedule 3(g). Except as otherwise disclosed on Schedule 3(g), there are no
outstanding (i) options, warrants, agreements or other rights to acquire any
shares of the Company's, the Subsidiary's or CCC's capital stock, (ii)
securities or other obligations of the Company, the Subsidiary or CCC which are
convertible into such shares or (iii) options, sale agreements, shareholder
agreements, pledges, proxies, voting trusts, powers of attorney or other
agreements or instruments which are binding on any shareholder of the Company,
the Subsidiary or CCC and which relate to the ownership, voting or transfer of
such shares.
(h) Financial Condition.
(i) As of the Closing Date, the Company's assets
will consist solely of the stock of the Subsidiary and CCC owned by it as set
forth on Schedule 3(g), and the Company's liabilities, whether fixed or
contingent, will consist solely of its liabilities under this Agreement and
under the Loan Documents.
(ii) As of the Closing Date, the Subsidiary's assets
will consist of (A) the Assets and (B) the assets of Brighton as set forth in
the Brighton Current Financial Statements, plus assets acquired by Brighton in
the ordinary course of business after the date thereof, less assets sold or
otherwise disposed of by Brighton in the ordinary course of business after the
date thereof.
(iii) As of the Closing Date, the Subsidiary's
liabilities, whether fixed or contingent, will consist of (A) the Assumed
Liabilities, (B) the liabilities of Brighton as set forth in the Brighton
Current Financial Statements, plus liabilities
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incurred by Brighton since the date thereof in the ordinary course of business,
less liabilities satisfied by Brighton since the date thereof, (C) the
liabilities of the Subsidiary under this Agreement, the Purchase Agreement and
its Employment Agreements with each of the Buyers (collectively, the
"Employment Agreements"), (D) liabilities to (1) FINOVA Capital Corporation
(the "Senior Lender") and (2) The Paul Revere Life Insurance Company, The Paul
Revere Variable Annuity Insurance Company, The Paul Revere Protective Life
Insurance Company, The Paul Revere Investment Management Corporation and Rhode
Island Hospital Trust National Bank as Trustee for The Textron Collective
Investment Trust (collectively, the "Subordinate Lenders" and, together with
the Senior Lender, the "Lenders") under the Loan Documents and (E) transaction
expenses hereunder and under the Purchase Agreement and the Loan Documents
which are not paid on the Closing Date.
(iv) As of the Closing Date, CCC will have no assets
or liabilities; however, the parties agree that, promptly after the Closing
Date, the transactions set forth on Schedule 3(h) will occur, at which time
CCC's assets and liabilities will be as set forth on Schedule 3(h).
(i) Net Operating Losses. The Affiliated Entities have
reviewed that certain letter dated October 14, 1994 from Grant Thornton to the
Parent (the "Grant Thornton Letter") regarding net operating loss carryovers
available to the Parent (the "NOLs"), and have delivered to the Buyers a
correct and complete copy of the same. To the best of the Affiliated Entities'
knowledge, all of the facts assumed in the Grant Thornton Letter are accurate.
The Parent has available to it the NOLs as described in the Grant Thornton
Letter.
4. Representations and Warranties of the Buyers. Each of the Buyers
severally and not jointly represents and warrants to the Affiliated Entities as
follows:
(a) Execution and Binding Effect. This Agreement has been
duly and validly executed and delivered by each Buyer and constitutes a legal,
valid and binding obligation of each Buyer enforceable against each Buyer in
accordance with its terms.
(b) No Breach or Default. The execution and delivery
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by each Buyer of this Agreement, the consummation of the transactions
contemplated hereby and the performance by each Buyer of his obligations
hereunder do not and will not:
(i) breach or result in a default (or an event
which, with the giving of notice or the passage of time, or both, would
constitute a default) under, require any consent under or give to others any
rights of termination, acceleration, suspension, revocation, cancellation or
amendment of any contract, agreement, instrument or document to which such
Buyer is a party or by which such Buyer or any of his properties or assets is
bound; or
(ii) breach or otherwise violate any Governmental
Order which names such Buyer or is directed to such Buyer or any of his
properties or assets.
(c) No Violation of Law. The execution and delivery by each
Buyer of this Agreement, the consummation of the transactions contemplated
hereby and the performance by each Buyer of his obligations hereunder are not
prohibited by, and do not and will not subject such Buyer to any fine, penalty
or similar sanction under, any Governmental Rule.
(d) No Consent. No consent, authorization, approval,
exemption or other action by, and no filing, registration or qualification
with, any Person (including without limitation any Governmental Person) is or
will be necessary in connection with the execution and delivery by each Buyer
of this Agreement, the consummation of the transactions contemplated hereby or
the performance by each Buyer of his obligations hereunder.
(e) Investment Representations.
(i) Each Buyer represents that the Voting Common
Stock to be purchased by him hereunder is being acquired for investment
purposes and not with a view towards resale or distribution.
(ii) Each Buyer represents that (A) his domicile is
located in the Commonwealth of Pennsylvania, (B) he is an "accredited investor"
as defined in Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"), and
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(C) he is experienced in evaluating and investing in start-up companies, has
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of his investment hereunder and has
the ability to bear the economic risks of such investment.
(iii) Each Buyer understands that (A) the Voting
Common Stock purchased hereunder has not been registered under the Securities
Act or any other applicable federal or state securities law, (B) the Company
will permit transfers of the Voting Common Stock purchased hereunder only (1)
in accordance with this Agreement and (2) when such securities have been
registered under the Securities Act and any other applicable federal or state
securities law or when the proposed transfer does not require any such
registration and the Company has received an opinion of counsel (which opinion
and counsel shall be reasonably acceptable to the Company) to such effect, (C)
any transfer made or purportedly made in violation of the foregoing
restrictions shall be null and void and the Company shall not register or
record such attempted transfer in its books and records and (D) the following
legend shall be placed on the certificates representing any of such Voting
Common Stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
APPLICABLE FEDERAL OR STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE PROPOSED TRANSFER DOES
NOT REQUIRE ANY SUCH REGISTRATION AND THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL TO SUCH EFFECT.
(iv) Each Buyer further understands, and covenants
and agrees with the Company, that:
(A) the Voting Common Stock purchased
hereunder constitutes a "restricted security" as that term is defined in Rule
144 promulgated under the Securities Act;
(B) only the Company can register the Voting
Common Stock purchased hereunder under the Securities Act and applicable state
securities laws, and the Company has not made any undertaking to the Buyers
with respect to such registration,
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or with respect to compliance with any exemption therefrom, except as otherwise
specifically set forth herein;
(C) there are stringent conditions for any
Buyer obtaining an exemption for the resale of Voting Common Stock purchased
hereunder under the Securities Act or any applicable state securities laws;
(D) no Buyer nor anyone acting on any
Buyer's behalf has paid or will pay any commission or other comparable
remuneration to any person in connection with the issuance of the Voting Common
Stock purchased hereunder; and
(E) pursuant to Section 203(d)(i) of the
Pennsylvania Securities Act, as amended, no Buyer may sell any Voting Common
Stock purchased hereunder within 12 months of the date of purchase of such
stock.
5. Covenants of the Affiliated Entities. Each of the Affiliated
Entities covenants and agrees with the Buyers as follows:
(a) Reporting and Information Requirements. The Affiliated
Entities shall furnish to each Buyer who is not an employee of the Subsidiary
for so long as such Buyer owns any Acquired Securities (as hereinafter defined)
and, if such Acquired Securities are purchased by the Company or any other
Buyer hereunder, until such Buyer receives payment in full in cash for such
Acquired Securities, the following financial statements and other information:
(i) As soon as available, and in any event within 45
days after the end of each of the first three fiscal quarters of each fiscal
year of the Company, the Subsidiary and CCC, an unaudited balance sheet of the
Company, the Subsidiary and CCC as of the end of such fiscal quarter and
unaudited statements of income, retained earnings and changes in financial
position of the Company, the Subsidiary and CCC for such fiscal quarter and for
the portion of their current fiscal year ended with the last day of such fiscal
quarter, all in reasonable detail and stating in comparative form the figures
for the corresponding date or period in the previous fiscal year, prepared in
accordance with GAAP consistently applied and certified by an appropriate
officer
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of the Company, the Subsidiary or CCC, as applicable, subject, however, to
year-end adjustments and the lack of footnotes and other presentation items.
(ii) Within 10 days after the Parent files its
annual report on Form 10-K with the Securities and Exchange Commission (the
"SEC") in respect of any fiscal year (or, if none of the Affiliated Entities is
a public company, within 90 days after the end of each fiscal year of the
Company, the Subsidiary and CCC), a balance sheet of the Company, the
Subsidiary and CCC as of the end of such fiscal year and statements of income,
retained earnings and changes in financial position of the Company, the
Subsidiary and CCC for such fiscal year, and notes to each, all in reasonable
detail and stating in comparative form the figures for the previous fiscal
year, accompanied by a certificate from an independent certified public
accounting firm of national standing selected by the Board of Directors of the
Company, the Subsidiary or CCC, as applicable, stating that (A) such
accountants have examined such balance sheet and statements in accordance with
generally accepted auditing standards and have made such tests of accounting
records and such other auditing procedures as such accountants considered
necessary in the circumstances and (B) in the opinion of such accountants such
balance sheet and statements fairly present the financial position of the
Company, the Subsidiary or CCC, as applicable, and the results of operations
and changes in financial position for the year then ended in conformity with
GAAP consistently applied.
(iii) Within 10 days after the same are filed,
copies of all reports, definitive proxy statements and registration statements
filed by the Company, the Subsidiary or CCC, or by the Parent which relate to
or affect the Company, the Subsidiary or CCC, with the SEC, but only if such
filings are publicly available; provided, that if none of the Affiliated
Entities is a public company then, promptly upon becoming aware thereof, the
Company, the Subsidiary or CCC, as applicable, shall give notice to the Buyers
of the occurrence of any event or the existence of any condition which
constitutes, or is likely to result in, a material change in the business,
operations or financial condition of the Company, the Subsidiary or CCC or of
the Parent and its subsidiaries taken as a whole.
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(b) No Dividends. So long as (i) any Buyer is holding any
note of the Company in respect of an exercise by such Buyer of his Put Rights
(as hereinafter defined), (ii) any Buyer is holding any note of the Company in
respect of an exercise by the Company of its Company Call Rights (as
hereinafter defined) and the Company is not current in the payments due under
any such note or (iii) the Company remains unable to honor any Put Rights
following a withdrawal by any Buyer of his Put Rights pursuant to Paragraph
11(c), the Company shall not make or declare, or agree to make or declare, any
dividends or other distributions on or with respect to any of its capital stock
other than in shares of its capital stock.
(c) Net Operating Losses.
(i) The Parent shall use the NOLs solely to offset
the income of the Subsidiary and not for any other purpose. Such use shall be
without any charge to the Subsidiary. If necessary, the Parent and the
Subsidiary shall enter into, and shall cause any of their subsidiaries to enter
into, a tax sharing or similar agreement in order to effect the foregoing
obligation.
(ii) All warrants for the acquisition of the
Parent's capital stock which were issued to Trinity Investment Corporation
shall be canceled without consideration prior to the filing of the Parent's
1993 federal corporate income tax return.
(iii) The Parent shall make an election pursuant to
IRC Regulation Section 1.382-4(h)(2)(vi) on its 1993 federal corporate income
tax return.
(iv) None of the Affiliated Entities shall take, nor
permit any of their subsidiaries to take, any action which could make the NOLs
unavailable for the purpose specified in clause (i) above, including without
limitation any action which could cause the Affiliated Entities to cease to be
members of an "affiliated group" (as that term is defined in Section 1504 of
the Code) with the Parent as the ultimate parent thereof.
6. Board of Directors. The Parent, the Company and each Buyer shall
vote all capital stock of the Company, the Subsidiary and CCC owned by any of
them or over which any of them have
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voting control, and shall take all such other necessary or desirable actions
within their control, so that:
(a) the authorized number of directors constituting the Board
of Directors of each of the Company, the Subsidiary and CCC shall be
established at three;
(b) there shall be elected to the Board of Directors of each
of the Company, the Subsidiary and CCC (i) two representatives designated by
the Parent and (ii) one representative designated by the Buyers (which
representative shall be a Buyer and, if any Buyer is an employee of the
Subsidiary, an employee of the Subsidiary);
(c) the removal from the Board of Directors of each of the
Company, the Subsidiary and CCC of the director designated by the Buyers
without cause shall be effective only upon the vote of the Buyers;
(d) if a director designated by the Buyers ceases to serve in
such capacity prior to the end of his term for any reason, the resulting
vacancy on the Board shall be filled by a director designated by the Buyers;
and
(e) the Company's, the Subsidiary's and CCC's Certificate of
Incorporation and/or By-Laws at all times provide for release from director
liability and indemnification of directors and officers to the maximum extent
permitted by law.
The obligations of the Parent, the Company and the Buyers under this Paragraph
shall terminate at such time as no Buyer holds any capital stock of the
Company.
7. First Offer Rights.
(a) At least 30 days prior to making any sale or other
disposition (each a "Transfer") of any Voting Common Stock purchased hereunder,
any securities of the Company issued in respect thereof or any other securities
of the Company acquired in any manner (other than pursuant to Paragraph 15)
(collectively, the "Acquired Securities"), a transferring Buyer (the
"Transferring Buyer") shall give written notice (an "Offer Notice") to each
other Buyer (each an "Offeree Buyer"), which
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Offer Notice shall disclose in reasonable detail the proposed number of
Acquired Securities to be transferred, the identity of the prospective
transferee(s) and the proposed terms and conditions of the Transfer (including
representations, warranties, covenants and indemnities); provided, that if the
consideration being offered to the Transferring Buyer consists in whole or in
part of something other than U.S. dollars, then such notice shall also contain
a good faith estimate of the value of such consideration in U.S. dollars and an
explanation of the manner in which such estimate was made.
(b) Each Offeree Buyer shall have the right to purchase all
(but not less than all) of its Pro Rata Share (as hereinafter defined) of the
offered Acquired Securities, at the price and on the terms specified in the
Offer Notice, by giving written notice of such election to the Transferring
Buyer within 30 days after the Offer Notice is given; provided, that the
Offeree Buyers may decide on a different allocation of the offered Acquired
Securities so long as all of such Acquired Securities are purchased.
(c) If the Offeree Buyers elect to purchase all of the
offered Acquired Securities, the closing of the sale of such Acquired
Securities to the Offeree Buyers shall occur within 10 days after the end of
the 30-day period referred to above, and the consideration therefor shall be
paid in U.S. dollars (calculated using the estimate set forth in the Offer
Notice, if applicable) in immediately available funds at such closing.
(d) If the Offeree Buyers do not elect to purchase all of the
offered Acquired Securities then, during the 90-day period commencing 30 days
after the Offer Notice is given, the Transferring Buyer shall have the right to
Transfer all (but not less than all) of the offered Acquired Securities to the
transferee(s), and on terms no more advantageous to such transferee(s) than
those, specified in the Offer Notice. If such offered Acquired Securities are
not so transferred within such time period, then any subsequent Transfer of
such securities shall be subject to all of the provisions of this Paragraph.
(e) The provisions of this Paragraph shall not apply to (i)
Transfers to Qualified Trusts (as hereinafter defined), (ii) Transfers pursuant
to Paragraphs 8, 10 and 12 and
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(iii) Transfers of Acquired Securities which are registered under the
Securities Act.
(f) As used in this Agreement, the term:
"Pro Rata Share" shall mean, with respect to any
Buyer, an amount equal to the percentage determined by dividing the number of
Acquired Securities held by such Buyer by the number of Acquired Securities
held by all Buyers.
"Qualified Trust" shall mean a trust created by a
Buyer for estate planning purposes which gives such Buyer, as a trustee for
such trust, the sole power to vote the Acquired Securities held by such trust.
For purposes of this Agreement, all Acquired Securities held by a Qualified
Trust shall be deemed to be held by the Buyer who controls such trust and shall
be subject to all of the provisions of this Agreement applicable to Acquired
Securities held directly by such Buyer.
8. Participation Rights.
(a) At least 30 days prior to making any Transfer of any
equity securities of the Company ("Equity Securities") held by the Parent, the
Parent shall give written notice (a "Sale Notice") to each Buyer, which Sale
Notice shall disclose in reasonable detail the proposed number of Equity
Securities to be transferred, the identity of the prospective transferee(s) and
the proposed terms and conditions of the Transfer (including representations,
warranties, covenants and indemnities); provided, that if the consideration
being offered to the Parent consists in whole or in part of something other
than U.S. dollars, then such notice shall also contain a good faith estimate of
the value of such consideration in U.S. dollars and an explanation of the
manner in which such estimate was made.
(b) Each Buyer shall have the right to participate in the
proposed Transfer by giving written notice of such election to the Parent
within 30 days after the Sale Notice is given.
(c) If any Buyers have so elected to participate in a
proposed Transfer, each of the Parent and such Buyers shall be entitled to sell
in such Transfer, at the same price and upon the same terms, a number of Equity
Securities equal to the product of
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(i) the quotient determined by dividing the percentage of Equity Securities
owned by the Parent or such Buyer by the aggregate percentage of Equity
Securities owned by the Parent, all Buyers electing to participate and all
other Persons holding Equity Securities who have similar rights and have
elected to participate, multiplied by (ii) the number of Equity Securities to
be sold in the contemplated Transfer.
For Example, if (A) the Sale Notice contemplates a sale of 100
shares of Equity Securities, (B) the Parent owns 30% of all
Equity Securities and (C) one Buyer elects to participate and
owns 20% of all Equity Securities, the Parent would be
entitled to sell 60 shares (30% _ 50% x 100 shares) and such
Buyer would be entitled to sell 40 shares (20% _ 50% x 100
shares).
(d) The Parent shall use its reasonable best efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Buyers, and to the inclusion of all types of Equity Securities owned by the
Buyers, in any proposed Transfer, and the Parent shall not Transfer any Equity
Securities to the prospective transferee(s) if (i) any Buyer elects to
participate in such Transfer and (ii) the prospective transferee(s) refuses to
allow the participation of such Buyer or to purchase the type of Equity
Security owned by such Buyer.
(e) After compliance with the foregoing provisions of this
Paragraph, the Parent and any Buyers who have so elected shall be permitted to
Transfer the number of Equity Securities specified in the Sale Notice to the
transferee(s) specified in such Sale Notice on terms no more advantageous to
such Parent and such Buyers than those specified in such Sale Notice. The
closing of such Transfer shall occur during the 90-day period following the
period which is 30 days after the Sale Notice is given to the Buyers. If such
Equity Securities are not so transferred within such time period, then any
subsequent Transfer of such securities shall be subject to all of the
provisions of this Paragraph.
9. Registration Rights. If at any time the Company proposes to
register under the Securities Act any of its
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securities which are of the same class as any Equity Securities then owned by
any Buyer ("Registrable Securities"), and such registration is not an
underwritten primary registration solely on behalf of the Company, the Company
shall promptly give each Buyer written notice of such proposal. Upon the
written request of any Buyer given within 30 days after any such notice is
given, the Company shall cause to be included in such registration all
Registrable Securities with respect to which registration has been so
requested. Any such registration shall be subject to the following:
(a) Whether or not any registration statement prepared and
filed pursuant to this Agreement is declared effective, all expenses incurred
in connection with such a registration, including without limitation all
registration, qualification, application, filing, listing, transfer agent and
registrar fees, printing, messenger, telephone and delivery fees and expenses,
accounting fees and disbursements (including the expenses of any audit, review
and/or "cold comfort" letters) and fees and disbursements of counsel for the
Company, shall be borne by the Company.
(b) No Buyer shall have any registration rights under this
Paragraph unless:
(i) such Buyer timely furnishes to the Company
and/or the underwriters managing such registration, if any, all such
information regarding such Buyer, the Registrable Securities held by him and
his intended method of disposing of such Registrable Securities as the Company
or such underwriters may reasonably request;
(ii) such Buyer agrees, and each Buyer hereby does
agree, to notify the Company and/or any underwriters managing such registration
of the occurrence of any event which causes the prospectus prepared in
connection with any such registration to contain an untrue statement of a
material fact or omit to state a fact necessary to make the statements therein
not misleading promptly after such Buyer obtains knowledge of such occurrence;
and
(iii) in the case of an underwritten registration,
such Buyer agrees to (A) sell such Buyer's
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Registrable Securities on the basis of any underwriting arrangements approved
by the Person(s) entitled hereunder to approve such arrangements and (B)
complete, execute and deliver all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and consistent with this
Agreement.
(c) The Company shall have the right to select the investment
banker(s) and manager(s) to administer any offering to which this Paragraph is
applicable.
(d) If a registration pursuant to this Paragraph is an
underwritten registration and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold at the desired price
in such offering, the Company will include in such registration (i) first,
Registrable Securities to be sold for the account of the Company, and (ii)
second, the Registrable Securities requested to be included therein by the
Buyers and any other holders of Registrable Securities entitled to be included
in such registration, pro rata among the Buyers and such holders on the basis
of the number of shares of Registrable Securities owned by each Buyer and other
holder.
10. Sale of the Company. If the Parent approves a Sale of the
Company (as hereinafter defined), the Buyers will consent to and raise no
objections against such sale and, if such sale is structured as a sale of
stock, the Buyers will agree to sell their Acquired Securities on the terms and
conditions approved by the Parent; provided, that the foregoing obligations of
the Buyers are subject to the satisfaction of the condition that, upon the
consummation of such sale, all of the holders of securities of the Company
which are of the same class as the Acquired Securities will receive the same
form and amount of consideration per share or, if an option is given as to the
form or amount of consideration, each such holder will be given the same
option.
As used in this Paragraph, the term "Sale of the Company"
shall mean the sale of the Company to an independent third party or an
affiliated group of independent third parties
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pursuant to which such party or parties acquire (i) 100% of the outstanding
Equity Securities owned, directly or indirectly, by the Parent (whether by
purchase, merger, consolidation or otherwise) or (ii) all or substantially all
of the Company's assets, and the term "independent third party" shall mean any
Person who, immediately prior to the contemplated transaction, (A) is not an
owner of more than 5% of the Company's capital stock on a fully diluted basis
or (B) is not an Affiliate of any such owner.
11. Put Rights. The Company hereby grants to each Buyer the right
("Put Rights") to cause the Company to purchase all, but not less than all, of
his Acquired Securities upon the terms and subject to the conditions set forth
in this Paragraph.
(a) Put Rights may be exercised by a Buyer at any time after
the date which is the earlier to occur of (i) the later to occur of the fifth
anniversary of the Closing Date or the date when such exercise is permitted
under the terms of the Loan Documents or any documents which create, evidence
or secure any indebtedness of the Subsidiary which replaces any indebtedness
under the Loan Documents, but in no event later than the eighth anniversary of
the Closing Date, (ii) the date when such Buyer is subject to a Termination
Without Cause (as hereinafter defined) or (iii) the date when the Company's or
the Subsidiary's Board of Directors (if such action does not require
shareholder approval) or shareholders (if such action requires shareholder
approval) approves any sale of all or substantially all of the Company's or the
Subsidiary's assets (but only if such sale of assets is not accompanied by a
distribution of the net proceeds of such sale to the Company's shareholders).
(b) If a Buyer desires to exercise his Put Rights, he shall
give notice to the Company to such effect, whereupon the Company and such Buyer
shall promptly commence to take such action as is necessary to determine the
Put/Call Value (as hereinafter defined). The closing of the purchase by the
Company of such Buyer's Acquired Securities shall occur promptly after the
Put/Call Value has been determined and such Buyer has honored his obligations
under Paragraph 7, but in no event more than 90 days after the Put/Call Value
has been determined. At such closing, such Buyer shall surrender the
certificates evidencing his Acquired Securities and, except as otherwise
permitted by
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subparagraph (c) below, the Company shall pay the Put/Call Value to such Buyer
in immediately available funds. Subject to subparagraph (c) below, if the
Company shall fail to pay the entire Put/Call Value to such Buyer within such
90-day period for any reason other than such Buyer's failure to surrender the
certificates evidencing his Acquired Securities, then interest shall accrue on
such unpaid amount from the end of such 90-day period until the date when such
Buyer receives payment in full at the rate of 15% per annum (the "Penalty
Rate"); provided, that the Penalty Rate shall in no event be less than the
Finance Rate (as hereinafter defined).
(c) Notwithstanding any other provision of this Paragraph, if
the Company shall determine in good faith that (i) the Company and the
Subsidiary, individually or in the aggregate, lack sufficient funds to honor
any Put Right being exercised and that the Company and the Subsidiary,
individually or in the aggregate, are unable to borrow money for such purpose
upon terms generally prevailing at such time for senior or subordinate
financing, (ii) honoring such Put Right would cause a default with respect to
any outstanding indebtedness of the Company or the Subsidiary or would violate
Governmental Rules applicable to the Company or the Subsidiary or (iii)
honoring such Put Right would constitute or directly cause a material and
adverse change in the business, financial condition or prospects of the Company
and the Subsidiary taken as a whole (other than a change consisting solely of
having more debt outstanding), then the Company shall promptly notify the Buyer
exercising such Put Right of such fact. A Buyer who receives such a notice
shall have the right to elect, at his sole option by giving notice to the
Company to such effect, to either (A) exercise his Put Rights in return for the
Company's obligation to pay the Put/Call Value (including partial payments
thereof) as soon as the Company and/or the Subsidiary has funds available
therefor or can do so without causing such a default, violation or change, but
in no event later than three years from the date when such obligation is given,
together with interest on the unpaid balance thereof from the date when the
Put/Call Value is determined until the date when such Buyer receives payment in
full at a rate per annum equal to the rate announced by PNC Bank in Pittsburgh,
Pennsylvania from time to time as its prime rate plus 2% (the "Finance Rate"),
which obligation shall be evidenced by a promissory note of the Company
satisfactory in form and substance
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to each Buyer receiving the same, shall be secured by a Qualified Pledge (as
hereinafter defined) of the Acquired Securities being put and, if required by
the holders of the Company's or the Subsidiary's other outstanding indebtedness
or any replacement therefor, shall be subordinate in right of payment to such
other indebtedness so long as such subordination does not block payment on such
note during times when the Company or the Subsidiary is not in default (or when
such payment would not cause a default) with respect to such other
indebtedness, or (B) withdraw such exercise of his Put Rights, in which case
the Company shall inform such Buyer as soon as the Company and/or the
Subsidiary has funds available to honor such Put Rights or as soon as the
Company and/or the Subsidiary can honor such Put Rights without causing such a
default, violation or change. It is acknowledged that references to the
Subsidiary "honoring such Put Right" and "pay[ing] the Put/Call Value" means
the making of a distribution by the Subsidiary to the Company which will enable
the Company to do such things.
(d) None of the Affiliated Entities shall enter into any
financing arrangements which place greater restrictions on the ability of the
Company to make the payments due upon the exercise of the Put Rights or upon
the ability of the Subsidiary to make distributions to the Company for such
purpose than the restrictions which are placed on distributions by the
Subsidiary to the Company or any other Person, or by the Company to the Parent
or any other Person, in respect of any of their respective equity securities
(whether in the form of dividends, purchases or redemptions of stock or
otherwise), stock appreciation rights or other similar rights; provided, that
the foregoing obligation shall not apply to equity securities of the Company or
the Subsidiary which are issued to holders of the Company's or the Subsidiary's
indebtedness who receive such securities or rights to receive such securities
in connection with any such financing.
(e) As used in this Agreement, the term:
"Fair Market Value" of the Company shall mean the
fair market value of the Company as of the Valuation Date as determined by a
nationally-recognized investment banking firm chosen jointly by (i) in the case
of an exercise of Put Rights or Company Call Rights (as hereinafter defined),
the Company and the Buyer(s) who have exercised their Put Rights or who are
subject
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<PAGE> 185
to such Company Call Rights and (ii) in the case of an exercise of Buyer Call
Rights (as hereinafter defined), by the Calling Buyers and the Called Buyer (as
such terms are hereinafter defined). The parties acknowledge and agree that,
in order for such investment banking firm to value the Company's fully diluted
stake in the Subsidiary and CCC, it will also be necessary for such investment
banking firm to determine the fair market value of the Subsidiary and CCC. If
there shall be a dispute as to the selection of such investment banking firm,
such firm shall be appointed by the American Arbitration Association in
Pittsburgh, Pennsylvania upon application of the Company or any such Buyer. In
conducting such appraisals, such investment bankers shall value the Company,
the Subsidiary and CCC as though each of them were an independent,
publicly-owned corporation whose stock is traded on a national securities
exchange. The Company and/or such Buyer(s) shall be afforded adequate
opportunities to discuss said valuation with such investment bankers. The
expense of such valuation shall be borne (A) completely by the Company, in the
case of an exercise of Put Rights or Company Call Rights, or (B) one-half by
the Calling Buyers and one-half by the Called Buyers, in the case of an
exercise of Buyer Call Rights. Such appraisal shall be valid for 180 days
following its issuance.
"Put/Call Value" of an Acquired Security shall mean
(i) the Fair Market Value of the Company divided by (ii) the sum of the number
of shares of the capital stock of the Company of all classes issued and
outstanding; provided, that if any class or series of such capital stock has
rights or preferences which are different than those of the Voting Common Stock
then such formula shall be adjusted accordingly.
"Qualified Pledge" shall mean a pledge of the
Acquired Securities being put or called, as applicable, pursuant to a Pledge
Agreement which is reasonably satisfactory to the applicable Buyer and his
counsel, but which in any event (i) creates a perfected, first priority
interest in the Acquired Securities being pledged, (ii) permits the pledgor
thereunder to vote such securities so long as it is not in default thereunder
and (iii) provides that any dividends and other distributions paid on such
Acquired Securities while such Pledge Agreement is in effect (to the extent
that the Company is permitted to pay the same) shall be paid to the pledgee to
be applied toward the obligations secured thereby; provided, that
notwithstanding the
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foregoing, distributions consisting of shares of the Company's capital stock
may be paid to the pledgor so long as they are pledged pursuant to such Pledge
Agreement.
"Valuation Date" shall mean (i) the date when a Buyer
gives notice to the Company that he desires to exercise his Put Rights, (ii)
the date during the applicable Valuation Period (as hereinafter defined) when a
Buyer gives notice to the Company or the Calling Buyers, as applicable, that he
desires to have the Put/Call Value determined or, if such Buyer does not elect
a Valuation Date, the last day of the applicable Valuation Period or (iii) if
there is no Valuation Period, the date when the Company or the Calling Buyers,
as applicable, give notice exercising their Company Call Rights or Buyer Call
Rights.
12. Company Call Rights. Each Buyer hereby grants to the Company the
right ("Company Call Rights") to cause such Buyer to sell all, but not less
than all, of his Acquired Securities to the Company upon the terms and subject
to the conditions set forth in this Paragraph.
(a) Company Call Rights may be exercised by the Company at
any time following the occurrence of a Call Event (as hereinafter defined);
provided, that if such Call Event is a Termination Without Cause (as
hereinafter defined), then such Company Call Rights may only be exercised
during the 180-day period commencing with the date when such termination
becomes effective.
(b) If the Company desires to exercise its Company Call
Rights, it shall give notice to the applicable Buyer to such effect. Promptly
after such notice is given and any Buyer Call Rights have expired, the
applicable Buyer shall convey his Acquired Securities to the Company in return
for a note of the Company, in form and substance satisfactory to such Buyer and
his counsel, providing that the Company will pay the applicable Put/Call Value
when the same is determined (or, if permitted by this Paragraph, deliver a
substitute note in the amount of the Put/Call Value as determined or the
portion thereof that remains unpaid), which note shall be secured by a
Qualified Pledge.
(c) Promptly after the occurrence of the Valuation Date and
the expiration of any Buyer Call Rights, the Company and
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<PAGE> 187
such Buyer shall commence to take such action as is necessary to determine the
Put/Call Value. The closing of the purchase by the Company of such Buyer's
Acquired Securities shall occur promptly after the Put/Call Value has been
determined, but in no event more than 90 days thereafter. At such closing,
such Buyer shall surrender the certificates evidencing his Acquired Securities
and, except as otherwise permitted by subparagraph (d) below, the Company shall
pay the Put/Call Value to such Buyer in immediately available funds. Subject
to subparagraph (d) below, if the Company shall fail to pay the entire Put/Call
Value to such Buyer within such 90-day period for any reason other than such
Buyer's failure to surrender the certificates evidencing his Acquired
Securities, then interest shall accrue on such unpaid amount from the end of
such 90-day period until the date when such Buyer receives payment in full at
the Penalty Rate.
(d) Notwithstanding any other provision of this Paragraph, if
the Call Event which gives rise to the call is a Termination For Cause or a
Voluntary Termination then the Company shall have the right to pay all or any
portion of the Put/Call Value by means of a promissory note of the Company,
which note shall provide for equal quarterly payments of principal and interest
over a term of not more than three years, shall bear interest at the Finance
Rate, shall be secured by a Qualified Pledge and shall otherwise be
satisfactory in form and substance to such Buyer and his counsel; provided,
that the Company shall not be deemed to be in default under any note by reason
of its failure to make any such payment (other than payment in full of such
note upon the maturity thereof) if such failure is due to an event described in
the first sentence of Paragraph 11(c) (unless the Company or the Subsidiary is
insolvent or bankrupt, has made an assignment for the benefit of creditors, is
subject to any proceedings relating to any of the foregoing or is in default
with respect to any of its other indebtedness). Any such missed payment shall
be due and payable as soon as such event no longer exists, but in any event not
later than upon the maturity of such note, and interest shall accrue on such
missed payment at the Penalty Rate until the same is paid in full. If required
by the holders of the Company's or the Subsidiary's other outstanding
indebtedness or any replacement therefor, any such note shall be subordinate in
right of payment to such other indebtedness so long as such subordination does
not block payment on such note during times when the Company or the Subsidiary
is not in default
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<PAGE> 188
(or when such payment would not cause a default) with respect to such other
indebtedness.
(e) Notwithstanding any other provision of this Paragraph,
the Company shall have no right to exercise the Company Call Rights at any time
when it or the Subsidiary is insolvent or bankrupt, has made an assignment for
the benefit of creditors or is subject to any proceedings relating to any of
the foregoing, or when it is unlikely that the Company will be able to satisfy
its obligations with respect to such Company Call Rights on a timely basis
(assuming that the Put/Call Value payable upon exercise of such Company Call
Rights is immediately due and payable).
(f) As used in this Agreement, the term:
"Call Event" shall mean, with respect to any Buyer,
his death, Total and Permanent Disability, Employment Expiration, Termination
For Cause, Termination Without Cause or Voluntary Termination. A Call Event
shall be deemed to have occurred upon a Buyer's death or, in all other cases,
on the date when the termination of his employment with the Subsidiary becomes
effective.
"Employment Expiration" shall mean, with respect to
any Buyer, the expiration of the Employment Agreement between the Subsidiary
and such Buyer to be executed at the Closing, and any renewal thereof or
replacement therefor, by its own terms.
"Termination For Cause" shall have, with respect to
any Buyer, the meaning assigned to that term in Paragraph 5(a)(i) of the
Employment Agreement between the Subsidiary and such Buyer to be executed at
the Closing.
"Termination Without Cause" shall mean, with respect
to any Buyer, any termination by the Subsidiary of such Buyer's employment with
the Subsidiary other than a Termination For Cause or a termination by reason of
Employment Expiration, death or Total and Permanent Disability.
"Total and Permanent Disability" shall mean, with
respect to any Buyer, a disability which permits the Subsidiary or, in the case
of Howell A. Breedlove only, such Buyer to
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<PAGE> 189
terminate the Employment Agreement between the Subsidiary and such Buyer which
is to be executed at the Closing.
"Valuation Period" shall mean (i) two years after the
occurrence of an Employment Expiration, the death of a Buyer or the termination
of such Buyer's employment by reason of a Total and Permanent Disability and
(ii) three years after the occurrence of a Termination Without Cause; provided,
that if Howell A. Breedlove voluntarily terminates his Employment Agreement
with the Subsidiary to be executed at the Closing on or after the third
anniversary thereof but prior to the fifth anniversary thereof, or shall
terminate or have terminated his employment with the Subsidiary under such
Employment Agreement by reason of a Total and Permanent Disability at any time
prior to the fifth anniversary thereof, then the Valuation Period for his
Acquired Securities shall be two years plus the number of days between the
effective date of such termination and the fifth anniversary of such Employment
Agreement.
"Voluntary Termination" shall mean, with respect to
any Buyer, any termination of such Buyer's employment with the Subsidiary
effected by such Buyer other than, in the case of Howell A. Breedlove, a
termination by reason of Total and Permanent Disability.
13. Buyer Call Rights. Each Buyer hereby grants to each other Buyer
(each a "Calling Buyer") the right ("Buyer Call Rights") to cause such Buyer
(the "Called Buyer") to sell all, but not less than all, of his Acquired Stock
to the Calling Buyers upon the terms and subject to the conditions set forth in
this Paragraph.
(a) Buyer Call Rights may be exercised by the Calling Buyers
at any time during the 60-day period following the occurrence of a Call Event;
provided, that if the Company shall exercise its Company Call Rights and give
notice to the Calling Buyers to such effect, then the Calling Buyers may
exercise their Buyer Call Rights until the later to occur of the date which is
30 days after the Call Event occurs or five days after they receive such
notice, and any such exercise of Buyer Call Rights shall supersede such
exercise of Company Call Rights. Upon the occurrence of a Call Event, each
Calling Buyer shall have the right to purchase his Pro Rata Share of the Called
Buyer's
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<PAGE> 190
Acquired Securities by giving notice to the Called Buyer to such effect within
such 60-day period; provided, that the Calling Buyers may agree on a different
allocation of such Acquired Securities, so long as all of such Acquired
Securities are purchased. If the Calling Buyers do not give such notice to the
Called Buyer within such 60-day period, then the Buyer Call Rights shall be
terminated with respect to such Called Buyer's Acquired Stock.
(b) Promptly after receiving any notice described in
subparagraph (a) above, the Called Buyer shall convey his Acquired Securities
to the Calling Buyers in return for a note from each Calling Buyer, in form and
substance satisfactory to the Called Buyer and his counsel, providing that each
Calling Buyer will pay the portion of the Put/Call Value which corresponds to
the Acquired Stock he is purchasing when the same is determined (or, if
permitted by this Paragraph, deliver a substitute note in such amount or the
portion of such amount that remains unpaid), which notes shall be secured by
Qualified Pledges.
(c) Promptly after the occurrence of the Valuation Date, the
Calling Buyers and the Called Buyer shall commence to take such action as is
necessary to determine the Put/Call Value. The closing of the purchase by the
Calling Buyers of the Called Buyer's Acquired Securities shall occur promptly
after the Put/Call Value has been determined, but in no event more than 90 days
thereafter. At such closing, the Called Buyer shall surrender the certificates
evidencing his Acquired Securities and, except as otherwise permitted by
subparagraph (d) below, the Calling Buyers shall pay the Put/Call Value to the
Called Buyer in immediately available funds. Subject to subparagraph (d)
below, if the Calling Buyers shall fail to pay the entire Put/Call Value to the
Called Buyer within such 90-day period for any reason other than the Called
Buyer's failure to surrender the certificates evidencing his Acquired
Securities, then interest shall accrue on such unpaid amount from the end of
such 90-day period until the date when the Called Buyer receives payment in
full at the Penalty Rate.
(d) Notwithstanding any other provision of this Paragraph, if
the Call Event which gives rise to the call is a Termination For Cause or a
Voluntary Termination then the Calling
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<PAGE> 191
Buyers shall have the right to pay all or any portion of the Put/Call Value by
means of a promissory note of each Calling Buyer, which note shall provide for
equal quarterly payments of principal and interest over a term of not more than
three years, shall bear interest at the Finance Rate, shall be secured by a
Qualified Pledge and shall otherwise be satisfactory in form and substance to
the Called Buyer and his counsel.
(e) Notwithstanding any other provision of this Paragraph, no
Calling Buyer shall have the right to exercise his Buyer Call Rights at any
time when he is insolvent or bankrupt, has made an assignment for the benefit
of creditors or is subject to any proceedings relating to any of the foregoing,
or when it is unlikely that such Buyer will be able to satisfy his obligations
with respect to such Buyer Call Rights on a timely basis.
14. Interplay Among Rights; Restriction on Transfer.
(a) Except as otherwise specifically provided herein, the
exercise by a party of its rights under Paragraph 7 ("First Offer Rights"), Put
Rights, Company Call Rights or Buyer Call Rights, as applicable, shall
terminate the unexercised First Offer Rights, Put Rights, Company Call Rights
or Buyer Call Rights, as applicable, relating to such Acquired Securities;
provided, that in the event of an exercise of any of such rights which results
in the transfer of such Acquired Securities to another Buyer, such other Buyer
shall have the benefit of, and be subject to, all of such rights as if such
Acquired Securities had been purchased by him hereunder on the date hereof; and
further provided, that if any sale pursuant to the exercise of any such rights
shall fail to close or shall be rescinded then all of such rights shall be
reinstated.
(b) If (i) a Buyer elects to exercise his rights under
Paragraph 8, (ii) the Parent approves a Sale of the Company or (iii) such
Buyer's Acquired Securities are included in a public offering of the Company's
stock, then the First Offer Rights, Put Rights, Company Call Rights and Buyer
Call Rights in effect with respect to the Acquired Securities included in any
such transaction shall terminate; provided, that if any such transaction shall
fail to close or shall be rescinded such rights shall be reinstated.
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<PAGE> 192
(c) If any event described in clause (ii) or (iii) of
subparagraph (b) above occurs during a Valuation Period, then the Put/Call
Value shall be the price being paid for securities of the same class as the
Acquired Securities in such transaction.
(d) If any Call Event occurs by reason of a Termination for
Cause or a Voluntary Termination (other than a voluntary termination by Howell
A. Breedlove after the third anniversary of his Employment Agreement with the
Subsidiary to be executed at the Closing), then the Buyer subject to such Call
Event shall have no right to exercise his Put Rights for a period of three
years after the date of such Call Event.
(e) Except for (i) Transfers among the Buyers pursuant to
Paragraphs 7 and 13, (ii) Transfers to the Company in accordance with
Paragraphs 11 and 12, (iii) Transfers in accordance with Paragraphs 8 and 10
and Transfers to Qualified Trusts, no Buyer shall be permitted to Transfer any
of his Acquired Securities. Such restrictions on Transfer shall terminate
immediately upon the registration of any Acquired Securities under the
Securities Act as to the Acquired Securities so registered.
15. Limited Preemptive Rights.
(a) The Company hereby grants to each Buyer the right
("Preemptive Rights"), for so long as he shall own any Acquired Securities, to
purchase his Preemptive Share (as hereinafter defined) of any New Securities
(as hereinafter defined) issued or sold by the Company from time to time in
connection with any Qualified Acquisition (as hereinafter defined).
(b) If the Company proposes to issue or sell any New
Securities in connection with any Qualified Acquisition, it shall give each
Buyer who then has Preemptive Rights written notice (a "Preemptive Notice") of
its intention, which notice shall describe in reasonable detail such Qualified
Acquisition, the type of New Securities to be issued or sold, the identity of
the prospective transferee(s) and the consideration and the terms upon which
the Company proposes to issue the same. Each such Buyer shall have 30 days
from the date such notice is given to elect to purchase all, but not less than
all, of its Preemptive Share of such New Securities by giving written notice to
such
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<PAGE> 193
effect to the Company.
(c) Following the expiration of such 30-day period, the
Company shall sell to the Buyers and such other Persons as may have similar
preemptive rights the New Securities, if any, which they have elected to
purchase, and may sell to the transferee(s) identified in the Preemptive Notice
any New Securities which such Persons have not elected to purchase. The
closing of such sale shall be within 90 days after the expiration of such
30-day period, and the consideration paid for and the other terms upon which
such New Securities are sold shall not be any more favorable to the purchasers
than those specified in the Preemptive Notice. Any issuance or sale of New
Securities made other than in accordance with the foregoing sentences shall be
subject to all of the provisions of this Paragraph.
(d) Except as otherwise specifically provided in this
Paragraph, the Buyers shall have no preemptive rights and expressly waive all
such preemptive rights.
(e) As used in this Paragraph, the term:
(i) "Preemptive Share" shall mean, with respect to
any Buyer, an amount equal to the number of shares of the Company's capital
stock held by such Buyer on the date of determination on a fully diluted basis
divided by the number of shares of the Company's capital stock issued and
outstanding on such date on a fully diluted basis.
(ii) "New Securities" shall mean (A) any capital
stock of the Company, (B) any options, warrants, agreements or other rights to
acquire any shares of the Company's capital stock and (C) any securities or
other obligations of the Company which are convertible into such shares. It is
understood that the term "New Securities" shall not include any of the
Company's capital stock issued solely to the entity being acquired or its
shareholders as part of the consideration therefor.
(iii) "Qualified Acquisition" shall mean an
acquisition by the Company (whether by merger, consolidation, purchase of stock
or assets or otherwise) in which the Company sells any New Securities for cash
to finance such acquisition. It is understood that the term "Qualified
Acquisition" shall not
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<PAGE> 194
include an issuance of the Company's capital stock solely to the entity being
acquired or its shareholders as part of the consideration therefor.
16. Miscellaneous.
(a) Good Faith by the Parties. The Affiliated Entities
(by amendment to the Company's, the Subsidiary's or CCC's Certificate of
Incorporation or through any reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, issue or sale of securities or other
action) and the Buyers will not avoid or seek to avoid the observance or
performance of any of the terms of this Agreement, but will at all times in
good faith carry out all such terms and take all such actions as may be
necessary or appropriate to protect the rights of the Affiliated Entities and
the Buyers hereunder.
(b) Action by Buyers. Whenever any consent, waiver,
agreement or other action of the Buyers as a group is required or permitted
hereunder, such action shall be effective if it is taken by Buyers who own at
least 66-2/3% of the Acquired Securities then owned by all Buyers.
(c) Amendments. This Agreement may be amended or terminated
only by a writing signed by each of the Affiliated Entities and the requisite
number of Buyers as set forth in subparagraph (b) above, and any such amendment
or termination shall be effective only to the extent specifically set forth in
such writing.
(d) Counterparts; Telefacsimile Execution. This Agreement
may be executed in any number of counterparts, and by each of the parties on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all of which shall constitute but one and the same instrument.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile shall also deliver a manually executed counterpart of this
Agreement, but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability or binding effect of this Agreement.
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<PAGE> 195
(e) Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior written and oral agreements, and all contemporaneous oral
agreements, relating to such matters.
(f) Governing Law. This Agreement shall be a contract under
the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the laws of said
Commonwealth.
(g) Notices. Unless otherwise specifically provided herein,
all notices, consents, requests, demands and other communications required or
permitted hereunder:
(i) shall be in writing;
(ii) shall be sent by messenger, certified or
registered U.S. mail, a reliable express delivery service or telecopier (with a
copy sent by one of the foregoing means), charges prepaid as applicable, to the
appropriate address(es) or number(s) set forth below; and
(iii) shall be deemed to have been given on the date
of receipt by the addressee (or, if the date of receipt is not a Business Day,
on the first business day after the date of receipt), as evidenced by (A) a
receipt executed by the addressee (or a responsible person in his or her
office) or the records of the Person delivering such communication, if sent by
messenger, U.S. mail or express delivery service, or (B) a receipt generated by
the sender's telecopier showing that such communication was sent to the
appropriate number on a specified date, if sent by telecopier.
All such communications shall be sent to the following addresses or telecopier
numbers, or to such other addresses or telecopier numbers of which any party
may inform the others by giving five Business Days' prior notice:
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<PAGE> 196
If to the Buyers: With a copy to:
Howell A. Breedlove Cohen & Grigsby, P.C.
2015 Blairmont Drive 2900 CNG Tower
Pittsburgh, PA 15241 625 Liberty Avenue
Telecopier No.: (412) 831-7044 Pittsburgh, PA 15222
Attn: Richard D. Rosen
James E. Howe Telecopier No.: (412) 391-3382
871 Osage Road
Pittsburgh, PA 15243
Carl A. Snyder
103 Nancy Drive
McMurray, PA 15317
Telecopier No.: (412) 941-1379
If to the Company: With a copy to:
J&L Holdings Corp. Kelley, McCann & Livingstone
c/o CPT Holdings, Inc. BP America Building, 35th Floor
1430 Broadway, 13th Floor 200 Public Square
New York, NY 10018-3308 Cleveland, OH 44114-2302
Attn: William L. Remley Attn: Michael Schenker
Telecopier No.: (212) 391-1393 Telecopier No.: (216) 241-3707
If to the Subsidiary: With a copy to:
J&L Structural, Inc. Kelley, McCann & Livingstone
c/o CPT Holdings, Inc. BP America Building, 35th Floor
1430 Broadway, 13th Floor 200 Public Square
New York, NY 10018-3308 Cleveland, OH 44114-2302
Attn: William L. Remley Attn: Michael Schenker
Telecopier No.: (212) 391-1393 Telecopier No.: (216) 241-3707
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<PAGE> 197
If to the Parent: With a copy to:
CPT Holdings, Inc. Kelley, McCann & Livingstone
1430 Broadway, 13th Floor BP America Building, 35th Floor
New York, NY 10018-3308 200 Public Square
Attn: William L. Remley Cleveland, OH 44114-2302
Telecopier No.: (212) 391-1393 Attn: Michael Schenker
Telecopier No.: (216) 241-3707
If to CCC: With a copy to:
Continuous Caster Corp. Kelley, McCann & Livingstone
c/o CPT Holdings, Inc. BP America Building, 35th Floor
1430 Broadway, 13th Floor 200 Public Square
New York, NY 10018-3308 Cleveland, OH 44114-2302
Attn: William L. Remley Attn: Michael Schenker
Telecopier No.: (212) 391-1393 Telecopier No.: (216) 241-3707
(h) 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 portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
(i) Successors and Assigns. None of the Affiliated Entities
shall assign any of their rights or obligations hereunder except by operation
of law. The rights and obligations of the Buyers hereunder may only be
assigned to transferees of their Acquired Stock who are Qualified Trusts. This
Agreement shall be binding upon and shall inure to the benefit of each of the
parties and their respective heirs and permitted successors and assigns.
(j) Waivers. The due performance or observance by the
parties of their respective obligations hereunder shall not be waived, and the
rights and remedies of the parties hereunder shall not be affected, by any
course of dealing or performance or by any delay or failure of any party in
exercising any such right or remedy. The due performance or observance by a
party of any of its obligations hereunder may be waived only by a writing
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<PAGE> 198
signed by the party or parties against whom enforcement of such waiver is
sought, and any such waiver shall be effective only to the extent specifically
set forth in such writing.
(k) Certain Rights of Pennsylvania Residents.
WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE
COMPANY OF THE EXECUTED STOCK PURCHASE AGREEMENT, ANY PENNSYLVANIA PURCHASER
MAY ELECT, PURSUANT TO SECTION 207(M) OF THE PENNSYLVANIA SECURITIES ACT OF
1972, TO WITHDRAW HIS SUBSCRIPTION HEREUNDER AND RECEIVE FULL REFUND OF ALL
MONIES PAID. SUCH WITHDRAWAL SHALL BE WITHOUT ANY FURTHER LIABILITY TO ANY
PERSON.
TO ACCOMPLISH SUCH WITHDRAWAL, SUCH PENNSYLVANIA PURCHASER
NEED ONLY SEND A LETTER OR TELEGRAM INDICATING ITS INTENTION TO WITHDRAW TO THE
COMPANY AT ITS ADDRESS SET FORTH IN PARAGRAPH 16(G). SUCH LETTER OR TELEGRAM
SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND
BUSINESS DAY. IF A PENNSYLVANIA PURCHASER ELECTS TO SEND SUCH A LETTER, IT IS
PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT
IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME THAT IT WAS MAILED. SHOULD A
PURCHASER MAKE THIS REQUEST ORALLY, HE SHOULD ASK FOR A WRITTEN CONFIRMATION
THAT HIS REQUEST HAS BEEN RECEIVED.
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<PAGE> 199
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY
J&L HOLDINGS CORP.
By:___________________________
Title:________________________
SUBSIDIARY
J&L STRUCTURAL, INC.
By:___________________________
Title:________________________
PARENT
CPT HOLDINGS, INC.
By:___________________________
Title:________________________
CCC
CONTINUOUS CASTER CORPORATION
By:___________________________
Title:________________________
BUYERS
______________________________
Howell A. Breedlove
______________________________
James E. Howe
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<PAGE> 200
______________________________
Carl A. Snyder
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<PAGE> 201
SCHEDULE 2(a)
ALLOCATION AMONG BUYERS
<TABLE>
<CAPTION>
Buyer Allocation
----- ----------
<S> <C>
Howell A. Breedlove one-third (1,152)
James E. Howe one-third (1,152)
Carl A. Snyder one-third (1,152)
</TABLE>
<PAGE> 202
SCHEDULE 3(d)
NO BREACH OR DEFAULT
(COMPANY, SUBSIDIARY AND PARENT)
1. The transactions contemplated by this Agreement may constitute a
default under the GMAC Financial Services Lease Agreement between GMAC
Financial Services as Assignee of Lessor and the Company as Lessee,
covering a leased vehicle used by Brighton's President.
2. This Schedule excludes contracts, agreements, instruments and
documents with Affiliates of the Company, the Subsidiary or the Parent
which may require a consent for the transactions contemplated by this
Agreement but with respect to which consents have been or will by the
Closing be obtained by the Company, the Subsidiary or the Parent, as
applicable.
<PAGE> 203
SCHEDULE 3(f)
NO CONSENT
(COMPANY, SUBSIDIARY AND PARENT)
1. The GMAC Financial Services Lease Agreement listed on Schedule 3(d)
requires the consent of the other party thereto in order for the same
to be assigned to and assumed by the Subsidiary.
2. The following governmental permits held by the Company may require the
consent or approval of the issuing authorities in order for same to be
transferred to the Subsidiary:
(a) Pursuant to an Application for Transfer of Permit filed by the
Company and the Subsidiary, the Subsidiary has received verbal
confirmation from the Pennsylvania Department of Environmental
Resources ("PDER") that the Company's Renewal Operating Permit
No. 04-307-074 for an air emission source described as an
Electric Induction Furnace will be reissued in the name of the
Subsidiary's Brighton Division subsequent to the Closing.
(b) Pursuant to an Application for Transfer of Permit filed by the
Company and the Subsidiary, the Subsidiary has received verbal
confirmation from PDER that the Company's Renewal Operating
Permit No. 04-307-069 and a June 15, 1994 Modification
Application for an emission source described as a Baghouse
will be reissued in the name of the Subsidiary's Brighton
Division subsequent to the Closing.
(c) Notification of the transfer to the Subsidiary from the
Company of Tank Registration No. 273141 for one 550-gallon
gasoline storage tank must be submitted to PDER subsequent to
the Closing.
3. The National Industrial Group Pension Plan for Labor-Management Groups
("NIGPP") of which the Company is a party may require an
acknowledgment of the Subsidiary's obligation to contribute the same
number of hours as the Company has to NIGPP, the execution of a
Request for Variance from Purchaser's Bond Requirement and a
Supplemental Participation Agreement and approval of NIGPP subsequent
to
<PAGE> 204
the consummation of the transactions contemplated by this Agreement.
4. A filing must be made with the Pennsylvania Securities Commission and
other filings may have to be made under state or federal securities
laws in connection with the transactions contemplated by this
Agreement.
5. This Schedule excludes contracts, agreements, instruments and
documents with Affiliates of the Company, the Subsidiary or the Parent
which may require a consent for the transactions contemplated by this
Agreement and/or the Related Documents but with respect to which
consents have been or will by the Closing be obtained.
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<PAGE> 205
SCHEDULE 3(g)
CAPITALIZATION
1. The Subsidiary is authorized to issue 1,500 shares of common stock,
without par value. All of the issued and outstanding common stock of
the Subsidiary (847 shares) will be, as of the Closing Date, owned by
the Company. As of the Closing Date, warrants to purchase, in the
aggregate, 153 shares of common stock will have been issued under that
certain Note and Warrant Purchase Agreement by and among the
Subsidiary and various Purchasers, dated as of the Closing Date (the
"Note and Warrant Agreement"). The shares of common stock owned by
the Company are subject to the provisions of the Note and Warrant
Agreement and that certain Loan and Security Agreement by and between
the Subsidiary and FINOVA Capital Corporation, dated March 31, 1995
and effective as of the Closing Date (the "Loan Agreement") and the
related documents under each of the Note and Warrant Agreement and the
Loan Agreement, including, without limitation, the terms of Stock
Pledge Agreements executed in connection with each of the Note and
Warrant Agreement and the Loan Agreement. The Note and Warrant
Agreement, Loan Agreement, Stock Pledge Agreements, and all related
documents under all of the foregoing are hereinafter referred to
collectively as the "Loan Documents".
2. CCC is authorized to issue 1,500 shares of common stock, without par
value. Promptly after the Closing Date (as contemplated under
Schedule 3(h) hereof), all of the issued and outstanding common stock
(1,000 shares) of CCC will be owned by the Company.
3. The Company is authorized to issue 17,500 shares of common stock, par
value $.01. 14,000 shares of common stock of the Company are owned by
the Parent and 3,456 shares of common stock, in the aggregate, will be
owned by the Buyers pursuant to the terms hereof and in the amounts
set forth on Schedule 2(a) hereof. The shares of common stock of the
Company are subject to the provisions of the Loan Documents. In
connection with a loan obtained by the Parent to finance its
investment in the Company, all of the shares of common stock owned by
the Parent are pledged to an Affiliate of the Parent, Trinity
Investment Corp.
<PAGE> 206
SCHEDULE 3(h)
ASSETS/LIABILITIES OF CCC
1. Promptly after the Closing the following transactions shall occur:
(a) The Subsidiary shall, directly or indirectly, assign to CCC
all of its rights under (i) that certain Agreement of Sale
dated December 28, 1993, as amended (the "Agreement of Sale"),
between J&L Structural, Inc., a Pennsylvania corporation
("J&L"), and Beaver County Economic Development ("BCCED") and
(ii) that certain Escrow Agreement dated June 30, 1994, as
amended (the "Escrow Agreement") among J&L, BCCED and Lawyers
Title Insurance Company.
(b) CCC shall enter into a consent order with the Pennsylvania
Department of Environmental Resources regarding the
remediation of certain hazardous substances on the property
covered by the Agreement of Sale (the "DER Agreement").
(c) The closing shall occur under the Agreement of Sale and the
Escrow Agreement.
(d) CCC shall, directly or indirectly, enter into an agreement
with the Subsidiary pursuant to which, if the property covered
by the Agreement of Sale is repurchased by BCCED as provided
in the deed for such property, or if the transaction
contemplated by the Agreement of Sale fails to close, then all
funds received by CCC in connection therewith shall be paid
over to the Subsidiary (the "Subsidiary Reimbursement
Agreement").
2. Following the occurrence of the foregoing transactions:
(a) the assets of CCC shall consist of the property covered by the
Agreement of Sale; and
(b) the liabilities of CCC shall consist of its liabilities under
the Agreement of Sale, the deed executed in connection
therewith, the DER Agreement and the Subsidiary Reimbursement
Agreement.
<PAGE> 207
EXHIBIT B
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 5,
1995, between J&L STRUCTURAL, INC., a Delaware corporation formerly known as
J&L Acquisition Corp. (the "Company"), and JAMES E. HOWE, an individual
residing in the Commonwealth of Pennsylvania (the "Executive").
PREAMBLE
The Company desires to employ the Executive, and the Executive desires
to be employed by the Company, all upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and intending to be legally bound hereby, the parties agree as follows:
1. Employment.
(a) The Company hereby employs the Executive as its Vice
President and Secretary, and the Executive hereby accepts such employment, all
upon the terms and subject to the conditions hereinafter set forth.
(b) Notwithstanding the foregoing, in the event that Howell
A. Breedlove ("Breedlove") shall leave his position with the Company as
President and Chief Executive Officer, from and after such date the Executive
shall be employed, together with Carl A. Snyder, as the Company's senior
management, such that all then existing and future members of the Company's
management team shall report to the Executive and Carl A. Snyder.
2. Duties.
(a) The Executive shall perform all duties incident to the
position of Vice President and Secretary and such other duties as may from time
to time be reasonably requested by the Board of Directors or the President.
(b) At all times, the Executive shall devote his full time
and best efforts, knowledge and experience to performing his duties hereunder
and shall act in conformity with the written and oral policies and directives
of the Company and within the limits, budgets and business plans set by the
Company.
<PAGE> 208
3. Compensation and Benefits.
(a) Base Salary.
(i) During the period of the Executive's employment
under Paragraph 1(a), compensation shall be paid to the Executive by the
Company initially at the rate of $184,000 per annum, with an increase of five
percent (5%) per annum thereafter on each anniversary of the date hereof,
payable in accordance with the Company's normal payroll practice.
(ii) During the period of the Executive's employment
under Paragraph 1(b), compensation shall be paid to the Executive by the
Company (A) so long as Breedlove is employed by the Company as its Chairman (or
other similar title mutually agreed upon by the Company and Breedlove),
initially at the rate specified in clause (i) above, plus an amount equal to
one-half of the difference between what Breedlove's salary would be under his
Employment Agreement with the Company of even date herewith if he were employed
as the Company's President and Chief Executive Officer and Breedlove's then
current salary, with an increase of five percent (5%) per annum thereafter on
each anniversary of the date hereof, or (B) if Breedlove is not employed by the
Company in any capacity, initially at the rate specified in clause (i) above,
plus an amount equal to one-half of what Breedlove's salary would be under his
Employment Agreement with the Company of even date herewith if he were employed
as the Company's President and Chief Executive Officer, with an increase of
five percent (5%) per annum thereafter on each anniversary of the date hereof,
in each case payable in accordance with the Company's normal payroll practice;
provided, that in the event the Company shall hire an additional executive who
reports to the Executive and/or Carl A. Snyder, the additional amount based
upon Breedlove's salary to be paid to the Executive shall be reduced by
one-half of the amount of salary paid to such new executive.
(b) Additional Incentive Compensation. During the term of
the Executive's employment hereunder the Company shall pay to the Executive,
together with Breedlove and Carl A. Snyder, a total of $360,000 in additional
incentive compensation per year to be divided among all three executives as the
executives shall agree among themselves.
<PAGE> 209
(c) Employee Benefits.
(i) During the term of the Executive's employment
hereunder (A) the Executive and his immediate family shall be eligible to
participate in all medical and dental insurance plans generally available to
management employees of the Company and (B) the Executive shall be eligible to
participate in all other benefit plans or programs generally available to
management employees of the Company, including without limitation life
insurance, disability insurance and pension and profit sharing plans; provided,
that in no event shall the benefits available to the Executive under this
subparagraph be less than the benefits available to management employees of J&L
Structural, Inc. on the date hereof.
(ii) Following the termination of this Agreement,
the Company shall offer to the Executive the option of continuing any or all
employee benefits made available hereunder during the term hereof; provided
that the Executive shall reimburse the Company for its costs therefor.
(d) Holidays and Vacation. The Executive shall be entitled
to the same paid holidays as other management employees of the Company
(presently 8 days per year). In addition, the Executive shall be entitled to 4
weeks of paid vacation per calendar year. If the Executive is employed
hereunder for only a portion of any calendar year, then such number of vacation
days shall be reduced pro rata based upon the actual number of days in such
calendar year during which the Executive is employed hereunder.
(e) Reimbursement of Expenses. During the term of the
Executive's employment hereunder the Company shall reimburse the Executive for
all reasonable out-of-pocket expenses incurred by the Executive in the lawful
and ordinary course of the Company's business and reported to the Company in
accordance with its accounting procedures.
(f) Perquisites. During the term of the Executive's
employment hereunder the Executive shall be entitled to have paid by the
Company any and all expenses with respect to personal income tax preparation
and filing and audit assistance.
4. Term. The Executive's employment hereunder shall
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commence on the date hereof and shall terminate on March 31, 2000, unless
sooner terminated pursuant to Paragraph 5 or extended by the mutual agreement
of the parties.
5. Termination.
(a) Termination by Company.
(i) Termination For Cause. If the Executive shall
(A) materially breach any of his obligations under this Agreement, (B)
negligently or in bad faith engage in any conduct which is materially injurious
to the Company or (C) engage in any act of dishonesty or fraud or commit a
felony or a crime of moral turpitude, the Company may terminate the Executive's
employment hereunder, which termination shall be immediately effective upon
delivery to the Executive of written notice of such termination. Upon delivery
of such notice all of the Company's obligations under Paragraph 3 shall
terminate, except for its obligation to (1) pay any compensation under
Paragraph 3 which has accrued but is unpaid as of such date and (2) provide any
benefits under Paragraph 3(c)(ii) which it is required to provide after
termination.
(ii) Total and Permanent Disability. If a qualified
medical doctor reasonably acceptable to the Company and the Executive or his
personal representative shall have certified in writing that, because of any
physical or mental condition, it is unlikely that the Executive will be able,
with or without reasonable accommodation, to perform his essential duties
hereunder during the 90-day period following the date of such certification,
then the Company may terminate the Executive's employment hereunder immediately
upon delivery to the Executive of written notice of such termination.
Notwithstanding such termination, the Company shall continue to pay to the
Executive an amount equal to his monthly compensation under Paragraph 3(a) for a
period of 6 months after the date of such termination. Upon the delivery of
such notice, all of the Company's obligations under Paragraph 3 shall terminate,
except for its obligation to (A) pay any amounts pursuant to the preceding
sentence, (B) pay any compensation under Paragraph 3 which has accrued but is
unpaid as of such date and (C) provide any benefits under Paragraph 3(c)(ii)
which it is required to provide after termination. During such 6-month period
after notice of termination, the Executive's salary under Paragraph 3(a) shall
be
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reduced by any amounts payable to the Executive under any disability insurance
plan maintained by the Company.
(iii) Death. The Executive's employment hereunder,
and all of the Company's obligations under Paragraph 3, except for its
obligations to pay any compensation under Paragraph 3 which has accrued but is
unpaid as of such date, shall immediately terminate upon the death of the
Executive.
(iv) Termination Without Cause. The Company may
terminate the Executive's employment hereunder without cause upon 30 days' prior
written notice of such termination to the Executive; provided, however that,
notwithstanding such termination, the Company's obligations under Subparagraphs
3(a), 3(b) and 3(c)(i) shall continue throughout the balance of the term hereof
as if such termination had not occurred. In such event, salary shall be payable
to the Executive at the levels which would have otherwise been applicable under
Subparagraph 3(a) if the Executive had continued to be employed by the Company.
6. Confidential Information; Non-Competition and Non-Solicitation.
(a) Certain Definitions. As used in this Agreement the
following terms shall have the following meanings:
"Company Product" at any time shall mean any product or service which
the Company is marketing, selling or developing at such time or which the
Company or its predecessors in interest, J&L Structural, Inc. ("J&L") or
Trailer Components, Inc. ("TCI") have marketed, sold or developed in the past.
"Competing Business" shall mean the marketing, sale or development of
products or services which are competitive with any Company Products and which
are directly or indirectly marketed, sold or under development for marketing or
sale, in the Territory.
"Confidential Information" shall mean all information concerning or
related to the business, operations, financial condition or prospects of the
Company, regardless of the form in which such information appears and whether
or not such information has been reduced to a tangible form, and shall
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<PAGE> 212
specifically include (i) all information regarding the officers, directors,
employees, equity holders, customers, suppliers, distributors, sales
representatives and licensees of the Company, in each case whether past or
present, (ii) all inventions, discoveries, trade secrets, processes,
techniques, methods, formulae, ideas and know-how of the Company and (iii) all
financial statements, audit reports, budgets and business plans or forecasts of
the Company; provided, that Confidential Information shall not include (A)
information which is or becomes generally known to the public through no act or
omission of the Executive and (B) information which has been or hereafter is
lawfully obtained by the Executive from a source other than the Company (or its
officers, directors, employees, equity holders or agents) so long as, in the
case of information obtained from a third party, such third party was or is
not, directly or indirectly, subject to an obligation of confidentiality owed
to the Company at the time such Confidential Information was or is disclosed to
the Executive.
"Territory" at any time shall mean any state in the United States, any
Canadian province and any foreign country in which the Company is marketing or
selling any Company Products at such time.
(b) Confidential Information.
(i) Except as provided in clause (ii) below, the
Executive shall not disclose or use for his own benefit any Confidential
Information.
(ii) Notwithstanding clause (i) above, the Executive
shall be permitted to disclose Confidential Information to the extent, but only
to the extent, (A) reasonably necessary for the Executive to perform his duties
hereunder or (B) required by law; provided, that prior to making any disclosure
of Confidential Information required by law, the Executive shall notify the
Company of his intent to make such disclosure, and the Company shall have the
right to participate with the Executive in determining the amount and type of
Confidential Information, if any, which must be disclosed in order to comply
with applicable law.
(iii) Promptly after termination of the Executive's
employment hereunder for any reason, the Executive or
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his personal representative shall return to the Company any Confidential
Information which is in tangible form and which is then in his possession.
(iv) The provisions of this subparagraph shall
survive any termination of this Agreement or the Executive's employment
hereunder.
(c) Non-Competition and Non-Solicitation.
(i) During the term of the Executive's employment
hereunder and (A) if the Executive's employment hereunder shall be terminated
pursuant to Paragraphs 5(a)(ii) or 5(a)(iv), or following the expiration of the
term hereof, for one year thereafter and (B) if the Executive's employment
hereunder shall be terminated pursuant to Paragraph 5(a)(i), or the Executive
shall otherwise breach the terms hereof, for two years thereafter, the
Executive shall not, directly or indirectly, for himself or by or on behalf of
any third party, render any service, advice or information to, become involved
or retained in any capacity by, or participate in, engage in or have any
interest in, any entity or person which is engaged in, any Competing Business;
provided, that the Executive shall not be in violation of the foregoing by
reason of his inactive investment in and ownership of not more than 5% of the
outstanding shares of the stock of any corporation which is listed on a
national securities exchange or in the NASDAQ system.
(ii) During the term of the Executive's employment
hereunder and (A) if the Executive's employment hereunder shall be terminated
pursuant to Paragraphs 5(a)(ii) or 5(a)(iv), or following the expiration of the
term hereof, for one year thereafter and (B) if the Executive's employment
hereunder shall be terminated pursuant to Paragraph 5(a)(i), or the Executive
shall otherwise breach the terms hereof, for two years thereafter, the
Executive shall not (Y) solicit the trade of or business of, or trade or do
business with, or accept employment from, any customer or supplier of the
Company or any person or entity which has been a customer or supplier of the
Company or of J&L or TCI during the past two years or (Z) solicit or induce any
employee, distributor, sales representative, agent or contractor of the Company
to terminate or modify his employment or other relationship with the Company,
or engage or hire any such employee, distributor, sales representative, agent
or contractor
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of the Company, or otherwise interfere with, disrupt, or attempt to disrupt the
relationships, contractual or otherwise, between Company and any of its
employees, distributors, sales representatives, agents, contractors, customers,
or suppliers.
(d) Equitable Relief. The Executive acknowledges and agrees
that any violation, nonperformance, or other breach by Executive of the
provisions of this Paragraph 6 would give rise to irreparable injury to the
Company, the remedies at law for which would be inadequate, and that the
damages flowing from such violation would not be readily susceptible to being
measured in monetary terms. Accordingly, it is agreed that the Company shall
be entitled to an injunction or injunctions to prevent breaches or violations
of this Paragraph by the Executive and shall have the right to specifically
enforce performance under this Paragraph and the terms and provisions hereof
against the Executive in addition to any other remedy to which the Company may
be entitled hereunder, at law or in equity. Further, it is agreed that the
Company shall be entitled to immediate injunctive relief without bond or with
minimal bond and may obtain a temporary restraining order and preliminary
injunction restraining and enjoining any violation, threatened violation, or
further breach of same by Executive. The Executive further agrees to indemnify
and hold the Company harmless from and against any and all claims, demands,
actions, expenses, costs (including litigation costs and reasonable attorneys
fees), damages, liabilities and losses resulting or occurring from any
violation or threatened violation of this Paragraph 6 and/or the enforcement of
this Paragraph 6 by the Company. The Executive represents and agrees that the
Executive's experience and capabilities are such that the Executive can obtain
employment in businesses engaged in other lines and/or of a different nature
and/or in a different Territory than that of the Company, and that the
enforcement of a remedy by way of an injunction for a breach of the terms of
this Paragraph 6 will not prevent the Executive from earning a livelihood. The
Executive further represents that the Executive understands and agrees that the
provisions of this Paragraph 6 are reasonable in terms, scope, area, and
duration; are reasonably required for the protection of the business and
interests of the Company; and shall be strictly enforced and construed against
the Executive. In the event that any provisions of this Paragraph 6 relating
to time period, areas, and/or scope of restriction, and/or related aspects
shall be held by a court of competent jurisdiction to exceed the
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maximum restrictiveness such court deems reasonable and enforceable, then the
maximum time period, areas, and/or scope of restriction, and/or related aspects
deemed reasonable and enforceable by the court shall be construed to be the
terms hereunder, and shall be enforced and construed so as to give the Company
the maximum rights and protections permitted by law.
(e) Further Acknowledgment. It is acknowledged by the
Executive that this Agreement is being entered into as a condition of the
Company's obligations under that certain Asset Purchase Agreement among J&L,
TCI, the Executive, the Company, and other parties, dated as of November 10,
1994, and that the covenants of the Executive under this Paragraph 6 are being
given as a condition of the Company's purchase of the assets pursuant to, and
performance of the transactions contemplated under, said Asset Purchase
Agreement, and are being given in order to preserve the benefits of the
Company's bargain under said Asset Purchase Agreement. It is acknowledged that
the Executive is one of the legal and/or equitable owners of J&L Structural,
Inc. and/or Trailer Components, Inc., the sellers under said Asset Purchase
Agreement, and will receive direct and substantial benefits from the
consummation of the transactions contemplated by said Asset Purchase Agreement.
In consideration therefor, the Executive agrees that he will take such action
as is necessary to cause J&L and TCI to be bound by the terms of this Paragraph
6 as if they were the "Executive" hereunder, and will guarantee, for the
benefit of the Company, the performance by J&L and TCI of each of the covenants
of this Paragraph 6 as if J&L and TCI were contracting parties hereunder.
Further, the Executive agrees and acknowledges that he has received adequate
consideration for the covenants he has undertaken pursuant to this Paragraph 6
and that, irrespective of the unenforceability or breach by the Company of any
other provision of this Agreement, the provisions of this Paragraph 6 shall
nevertheless be binding and enforceable against the Executive, as if the same
were contained in an independent contract for which adequate consideration had
been given.
(f) Survival. The provisions of this Paragraph 6 shall
survive any termination or expiration of this Agreement or of the Executive's
employment hereunder.
7. Miscellaneous.
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(a) Amendments. This Agreement may be amended only by a
writing signed by each of the parties, and any such amendment shall be
effective only to the extent specifically set forth in such writing.
(b) Assignment. Neither the Company nor the Executive
shall assign, pledge or otherwise transfer any of its or his rights, interest
or obligations hereunder, whether by operation of law or otherwise.
(c) Counterparts; Telefacsimile Execution. This Agreement
may be executed in any number of counterparts, and by each of the parties on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all of which shall constitute but one and the same instrument.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile shall also deliver a manually executed counterpart of this
Agreement, but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability or binding effect of this Agreement.
(d) Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior written and oral agreements, and all contemporaneous oral
agreements, relating to such subject matter. The parties acknowledge and agree
that any prior employment agreements between the Executive and the Company, or
its predecessors, are expressly terminated by the execution and delivery of
this Agreement.
(e) Governing Law. This Agreement shall be a contract under
the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the laws of said
Commonwealth.
(f) Notices. Unless otherwise specifically provided herein,
all notices, consents, requests, demands and other communications required or
permitted hereunder:
(i) shall be in writing;
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(ii) shall be sent by messenger, certified or
registered U.S. mail, a reliable express delivery service or telecopier (with a
copy sent by one of the foregoing means), charges prepaid as applicable, to the
appropriate address(es) or number(s) set forth below; and
(iii) shall be deemed to have been given on the date
of receipt by the addressee (or, if the date of receipt is not a business day,
on the first business day after the date of receipt), as evidenced by (A) a
receipt executed by the addressee (or a responsible person in his or her
office) or the records of the person delivering such communication, if sent by
messenger, U.S. mail or express delivery service, or (B) a receipt generated by
the sender's telecopier showing that such communication was sent to the
appropriate number on a specified date, if sent by telecopier.
All such communications shall be sent to the following addresses or numbers, or
to such other addresses or numbers as either party may inform the other by
giving five business days' prior notice:
If to the Executive:
James E. Howe
871 Osage Road
Pittsburgh, PA 15243
Telecopier No.: (412)941-1379
If to the Company:
J&L Structural, Inc.
c/o CPT Holdings, Inc.
1430 Broadway, 13th Floor
New York, NY 10018-3308
Attn: William L. Remley
Telecopier No.:(212)391-1393
(g) 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 portions hereof or affecting the validity or
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enforceability of such provision in any other jurisdiction.
(h) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their respective
heirs, successors and permitted assigns.
(i) Consent to Jurisdiction and Service of Process.
(i) Each of the parties hereby:
(A) irrevocably submits to the jurisdiction
of the Court of Common Pleas of Allegheny County, Pennsylvania and to the
jurisdiction of the United States District Court for the Western District of
Pennsylvania for the purposes of any action or proceeding arising out of or
relating to this Agreement or the subject matter hereof and brought by the
other party;
(B) waives and agrees not to assert, by way
of motion, as a defense or otherwise, in any such action or proceeding, any
claim that (1) it is not personally subject to the jurisdiction of such courts,
(2) the action or proceeding is brought in an inconvenient forum or (3) the
venue of the action or proceeding is improper; and
(C) agrees that, notwithstanding any right
or privilege it may possess at any time, such party and its property are and
shall be generally subject to suit on account of the obligations assumed by it
hereunder.
(ii) Each party agrees that service in person or by
certified or registered U.S. mail to its address set forth in Subparagraph 7(f)
shall constitute valid in personam service upon such party and its respective
heirs, personal representatives, successors and assigns in any action or
proceeding with respect to any matter as to which it has submitted to
jurisdiction hereunder.
(iii) Each party hereby acknowledges that this is a
commercial transaction, that the foregoing provisions for consent to
jurisdiction and service of process have been read, understood and voluntarily
agreed to by each party and that by agreeing to such provisions each party is
waiving important legal rights.
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SIGNATURE PAGE
WITNESS the due execution of this Employment Agreement as of
the date first written above.
EXECUTIVE
_________________________
James E. Howe
J&L STRUCTURAL, INC.
By:______________________
Title:___________________
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EXHIBIT C
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 5,
1995, between J&L STRUCTURAL, INC., a Delaware corporation formerly known as
J&L Acquisition Corp. (the "Company"), and CARL A. SNYDER, an individual
residing in the Commonwealth of Pennsylvania (the "Executive").
PREAMBLE
The Company desires to employ the Executive, and the Executive desires
to be employed by the Company, all upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and intending to be legally bound hereby, the parties agree as follows:
1. Employment.
(a) The Company hereby employs the Executive as its Vice
President and Treasurer, and the Executive hereby accepts such employment, all
upon the terms and subject to the conditions hereinafter set forth.
(b) Notwithstanding the foregoing, in the event that Howell
A. Breedlove ("Breedlove") shall leave his position with the Company as
President and Chief Executive Officer, from and after such date the Executive
shall be employed, together with James E. Howe, as the Company's senior
management, such that all then existing and future members of the Company's
management team shall report to the Executive and James E. Howe.
2. Duties.
(a) The Executive shall perform all duties incident to the
positions of Vice President and Treasurer and such other duties as may from
time to time be reasonably requested by the Board of Directors or the
President.
(b) At all times, the Executive shall devote his full time
and best efforts, knowledge and experience to performing his duties hereunder
and shall act in conformity with the written and oral policies and directives
of the Company and within the limits, budgets and business plans set by the
Company.
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3. Compensation and Benefits.
(a) Base Salary.
(i) During the period of the Executive's employment
under Paragraph 1(a), compensation shall be paid to the Executive by the
Company initially at the rate of $184,000 per annum, with an increase of five
percent (5%) per annum thereafter on each anniversary of the date hereof,
payable in accordance with the Company's normal payroll practice.
(ii) During the period of the Executive's employment
under Paragraph 1(b), compensation shall be paid to the Executive by the
Company (A) so long as Breedlove is employed by the Company as its Chairman (or
other similar title mutually agreed upon by the Company and Breedlove),
initially at the rate specified in clause (i) above, plus an amount equal to
one-half of the difference between what Breedlove's salary would be under his
Employment Agreement with the Company of even date herewith if he were employed
as the Company's President and Chief Executive Officer and Breedlove's then
current salary, with an increase of five percent (5%) per annum thereafter on
each anniversary of the date hereof, or (B) if Breedlove is not employed by the
Company in any capacity, initially at the rate specified in clause (i) above,
plus an amount equal to one-half of what Breedlove's salary would be under his
Employment Agreement with the Company of even date herewith if he were employed
as the Company's President and Chief Executive Officer, with an increase of
five percent (5%) per annum thereafter on each anniversary of the date hereof,
in each case payable in accordance with the Company's normal payroll practice;
provided, that in the event the Company shall hire an additional executive who
reports to the Executive and/or James E. Howe, the additional amount based upon
Breedlove's salary to be paid to the Executive shall be reduced by one-half of
the amount of salary paid to such new executive.
(b) Additional Incentive Compensation. During the term of
the Executive's employment hereunder the Company shall pay to the Executive,
together with Breedlove and James E. Howe, a total of $360,000 in additional
incentive compensation per year to be divided among all three executives as the
executives shall agree among themselves.
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(c) Employee Benefits.
(i) During the term of the Executive's employment
hereunder (A) the Executive and his immediate family shall be eligible to
participate in all medical and dental insurance plans generally available to
management employees of the Company and (B) the Executive shall be eligible to
participate in all other benefit plans or programs generally available to
management employees of the Company, including without limitation life
insurance, disability insurance and pension and profit sharing plans;
provided, that in no event shall the benefits available to the Executive under
this subparagraph be less than the benefits available to management employees
of J&L Structural, Inc. on the date hereof.
(ii) Following the termination of this Agreement,
the Company shall offer to the Executive the option of continuing any or all
employee benefits made available hereunder during the term hereof; provided
that the Executive shall reimburse the Company for its costs therefor.
(d) Holidays and Vacation. The Executive shall be entitled
to the same paid holidays as other management employees of the Company
(presently 8 days per year). In addition, the Executive shall be entitled to 4
weeks of paid vacation per calendar year. If the Executive is employed
hereunder for only a portion of any calendar year, then such number of vacation
days shall be reduced pro rata based upon the actual number of days in such
calendar year during which the Executive is employed hereunder.
(e) Reimbursement of Expenses. During the term of the
Executive's employment hereunder the Company shall reimburse the Executive for
all reasonable out-of-pocket expenses incurred by the Executive in the lawful
and ordinary course of the Company's business and reported to the Company in
accordance with its accounting procedures.
(f) Perquisites. During the term of the Executive's
employment hereunder the Executive shall be entitled to have paid by the
Company any and all expenses with respect to personal income tax preparation
and filing and audit assistance.
4. Term. The Executive's employment hereunder shall
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commence on the date hereof and shall terminate on March 31, 2000, unless
sooner terminated pursuant to Paragraph 5 or extended by the mutual agreement
of the parties.
5. Termination.
(a) Termination by Company.
(i) Termination For Cause. If the Executive shall
(A) materially breach any of his obligations under this Agreement, (B)
negligently or in bad faith engage in any conduct which is materially injurious
to the Company or (C) engage in any act of dishonesty or fraud or commit a
felony or a crime of moral turpitude, the Company may terminate the Executive's
employment hereunder, which termination shall be immediately effective upon
delivery to the Executive of written notice of such termination. Upon delivery
of such notice all of the Company's obligations under Paragraph 3 shall
terminate, except for its obligation to (1) pay any compensation under
Paragraph 3 which has accrued but is unpaid as of such date and (2) provide any
benefits under Paragraph 3(c)(ii) which it is required to provide after
termination.
(ii) Total and Permanent Disability. If a qualified
medical doctor reasonably acceptable to the Company and the Executive or his
personal representative shall have certified in writing that, because of any
physical or mental condition, it is unlikely that the Executive will be able,
with or without reasonable accommodation, to perform his essential duties
hereunder during the 90-day period following the date of such certification,
then the Company may terminate the Executive's employment hereunder immediately
upon delivery to the Executive of written notice of such termination.
Notwithstanding such termination, the Company shall continue to pay to the
Executive an amount equal to his monthly compensation under Paragraph 3(a) for
a period of 6 months after the date of such termination. Upon the delivery of
such notice, all of the Company's obligations under Paragraph 3 shall
terminate, except for its obligation to (A) pay any amounts pursuant to the
preceding sentence, (B) pay any compensation under Paragraph 3 which has
accrued but is unpaid as of such date and (C) provide any benefits under
Paragraph 3(c)(ii) which it is required to provide after termination. During
such 6-month period after notice of termination, the Executive's salary under
Paragraph 3(a) shall be
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reduced by any amounts payable to the Executive under any disability insurance
plan maintained by the Company.
(iii) Death. The Executive's employment hereunder,
and all of the Company's obligations under Paragraph 3, except for its
obligations to pay any compensation under Paragraph 3 which has accrued but is
unpaid as of such date, shall immediately terminate upon the death of the
Executive.
(iv) Termination Without Cause. The Company may
terminate the Executive's employment hereunder without cause upon 30 days'
prior written notice of such termination to the Executive; provided, however
that, notwithstanding such termination, the Company's obligations under
Subparagraphs 3(a), 3(b) and 3(c)(i) shall continue throughout the balance of
the term hereof as if such termination had not occurred. In such event, salary
shall be payable to the Executive at the levels which would have otherwise been
applicable under Subparagraph 3(a) if the Executive had continued to be
employed by the Company.
6. Confidential Information; Non-Competition and Non-Solicitation.
(a) Certain Definitions. As used in this Agreement the
following terms shall have the following meanings:
"Company Product" at any time shall mean any product or service which
the Company is marketing, selling or developing at such time or which the
Company or its predecessors in interest, J&L Structural, Inc. ("J&L") or
Trailer Components, Inc. ("TCI") have marketed, sold or developed in the past.
"Competing Business" shall mean the marketing, sale or development of
products or services which are competitive with any Company Products and which
are directly or indirectly marketed, sold or under development for marketing or
sale, in the Territory.
"Confidential Information" shall mean all information concerning or
related to the business, operations, financial condition or prospects of the
Company, regardless of the form in which such information appears and whether
or not such information has been reduced to a tangible form, and shall
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specifically include (i) all information regarding the officers, directors,
employees, equity holders, customers, suppliers, distributors, sales
representatives and licensees of the Company, in each case whether past or
present, (ii) all inventions, discoveries, trade secrets, processes,
techniques, methods, formulae, ideas and know-how of the Company and (iii) all
financial statements, audit reports, budgets and business plans or forecasts of
the Company; provided, that Confidential Information shall not include (A)
information which is or becomes generally known to the public through no act or
omission of the Executive and (B) information which has been or hereafter is
lawfully obtained by the Executive from a source other than the Company (or its
officers, directors, employees, equity holders or agents) so long as, in the
case of information obtained from a third party, such third party was or is
not, directly or indirectly, subject to an obligation of confidentiality owed
to the Company at the time such Confidential Information was or is disclosed to
the Executive.
"Territory" at any time shall mean any state in the United States, any
Canadian province and any foreign country in which the Company is marketing or
selling any Company Products at such time.
(b) Confidential Information.
(i) Except as provided in clause (ii) below, the
Executive shall not disclose or use for his own benefit any Confidential
Information.
(ii) Notwithstanding clause (i) above, the Executive
shall be permitted to disclose Confidential Information to the extent, but only
to the extent, (A) reasonably necessary for the Executive to perform his duties
hereunder or (B) required by law; provided, that prior to making any disclosure
of Confidential Information required by law, the Executive shall notify the
Company of his intent to make such disclosure, and the Company shall have the
right to participate with the Executive in determining the amount and type of
Confidential Information, if any, which must be disclosed in order to comply
with applicable law.
(iii) Promptly after termination of the Executive's
employment hereunder for any reason, the Executive or
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his personal representative shall return to the Company any Confidential
Information which is in tangible form and which is then in his possession.
(iv) The provisions of this subparagraph shall
survive any termination of this Agreement or the Executive's employment
hereunder.
(c) Non-Competition and Non-Solicitation.
(i) During the term of the Executive's employment
hereunder and (A) if the Executive's employment hereunder shall be terminated
pursuant to Paragraphs 5(a)(ii) or 5(a)(iv), or following the expiration of the
term hereof, for one year thereafter and (B) if the Executive's employment
hereunder shall be terminated pursuant to Paragraph 5(a)(i), or the Executive
shall otherwise breach the terms hereof, for two years thereafter, the
Executive shall not, directly or indirectly, for himself or by or on behalf of
any third party, render any service, advice or information to, become involved
or retained in any capacity by, or participate in, engage in or have any
interest in, any entity or person which is engaged in, any Competing Business;
provided, that the Executive shall not be in violation of the foregoing by
reason of his inactive investment in and ownership of not more than 5% of the
outstanding shares of the stock of any corporation which is listed on a
national securities exchange or in the NASDAQ system.
(ii) During the term of the Executive's employment
hereunder and (A) if the Executive's employment hereunder shall be terminated
pursuant to Paragraphs 5(a)(ii) or 5(a)(iv), or following the expiration of the
term hereof, for one year thereafter and (B) if the Executive's employment
hereunder shall be terminated pursuant to Paragraph 5(a)(i), or the Executive
shall otherwise breach the terms hereof, for two years thereafter, the
Executive shall not (Y) solicit the trade of or business of, or trade or do
business with, or accept employment from, any customer or supplier of the
Company or any person or entity which has been a customer or supplier of the
Company or of J&L or TCI during the past two years or (Z) solicit or induce any
employee, distributor, sales representative, agent or contractor
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of the Company to terminate or modify his employment or other relationship with
the Company, or engage or hire any such employee, distributor, sales
representative, agent or contractor of the Company, or otherwise interfere
with, disrupt, or attempt to disrupt the relationships, contractual or
otherwise, between Company and any of its employees, distributors, sales
representatives, agents, contractors, customers, or suppliers.
(d) Equitable Relief. The Executive acknowledges and agrees
that any violation, nonperformance, or other breach by Executive of the
provisions of this Paragraph 6 would give rise to irreparable injury to the
Company, the remedies at law for which would be inadequate, and that the
damages flowing from such violation would not be readily susceptible to being
measured in monetary terms. Accordingly, it is agreed that the Company shall
be entitled to an injunction or injunctions to prevent breaches or violations
of this Paragraph by the Executive and shall have the right to specifically
enforce performance under this Paragraph and the terms and provisions hereof
against the Executive in addition to any other remedy to which the Company may
be entitled hereunder, at law or in equity. Further, it is agreed that the
Company shall be entitled to immediate injunctive relief without bond or with
minimal bond and may obtain a temporary restraining order and preliminary
injunction restraining and enjoining any violation, threatened violation, or
further breach of same by Executive. The Executive further agrees to indemnify
and hold the Company harmless from and against any and all claims, demands,
actions, expenses, costs (including litigation costs and reasonable attorneys
fees), damages, liabilities and losses resulting or occurring from any
violation or threatened violation of this Paragraph 6 and/or the enforcement of
this Paragraph 6 by the Company. The Executive represents and agrees that the
Executive's experience and capabilities are such that the Executive can obtain
employment in businesses engaged in other lines and/or of a different nature
and/or in a different Territory than that of the Company, and that the
enforcement of a remedy by way of an injunction for a breach of the terms of
this Paragraph 6 will not prevent the Executive from earning a livelihood. The
Executive further represents that the Executive understands and agrees that the
provisions of this Paragraph 6 are reasonable in terms, scope, area, and
duration; are reasonably required for the protection of the business and
interests of the Company; and shall be strictly enforced and construed against
the Executive. In the event that any provisions of this Paragraph 6 relating
to time period, areas, and/or scope of restriction, and/or related aspects
shall be held by a court of competent jurisdiction to exceed the
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maximum restrictiveness such court deems reasonable and enforceable, then the
maximum time period, areas, and/or scope of restriction, and/or related aspects
deemed reasonable and enforceable by the court shall be construed to be the
terms hereunder, and shall be enforced and construed so as to give the Company
the maximum rights and protections permitted by law.
(e) Further Acknowledgment. It is acknowledged by the
Executive that this Agreement is being entered into as a condition of the
Company's obligations under that certain Asset Purchase Agreement among J&L,
TCI, the Executive, the Company, and other parties, dated as of November 10,
1994, and that the covenants of the Executive under this Paragraph 6 are being
given as a condition of the Company's purchase of the assets pursuant to, and
performance of the transactions contemplated under, said Asset Purchase
Agreement, and are being given in order to preserve the benefits of the
Company's bargain under said Asset Purchase Agreement. It is acknowledged that
the Executive is one of the legal and/or equitable owners of J&L Structural,
Inc. and/or Trailer Components, Inc., the sellers under said Asset Purchase
Agreement, and will receive direct and substantial benefits from the
consummation of the transactions contemplated by said Asset Purchase Agreement.
In consideration therefor, the Executive agrees that he will take such action
as is necessary to cause J&L and TCI to be bound by the terms of this Paragraph
6 as if they were the "Executive" hereunder, and will guarantee, for the
benefit of the Company, the performance by J&L and TCI of each of the covenants
of this Paragraph 6 as if J&L and TCI were contracting parties hereunder.
Further, the Executive agrees and acknowledges that he has received adequate
consideration for the covenants he has undertaken pursuant to this Paragraph 6
and that, irrespective of the unenforceability or breach by the Company of any
other provision of this Agreement, the provisions of this Paragraph 6 shall
nevertheless be binding and enforceable against the Executive, as if the same
were contained in an independent contract for which adequate consideration had
been given.
(f) Survival. The provisions of this Paragraph 6 shall
survive any termination or expiration of this Agreement or of the Executive's
employment hereunder.
7. Miscellaneous.
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(a) Amendments. This Agreement may be amended only by a
writing signed by each of the parties, and any such amendment shall be
effective only to the extent specifically set forth in such writing.
(b) Assignment. Neither the Company nor the Executive
shall assign, pledge or otherwise transfer any of its or his rights, interest
or obligations hereunder, whether by operation of law or otherwise.
(c) Counterparts; Telefacsimile Execution. This Agreement
may be executed in any number of counterparts, and by each of the parties on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all of which shall constitute but one and the same instrument.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile shall also deliver a manually executed counterpart of this
Agreement, but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability or binding effect of this Agreement.
(d) Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior written and oral agreements, and all contemporaneous oral
agreements, relating to such subject matter. The parties acknowledge and agree
that any prior employment agreements between the Executive and the Company, or
its predecessors, are expressly terminated by the execution and delivery of
this Agreement.
(e) Governing Law. This Agreement shall be a contract under
the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the laws of said
Commonwealth.
(f) Notices. Unless otherwise specifically provided herein,
all notices, consents, requests, demands and other communications required or
permitted hereunder:
(i) shall be in writing;
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(ii) shall be sent by messenger, certified or
registered U.S. mail, a reliable express delivery service or telecopier (with a
copy sent by one of the foregoing means), charges prepaid as applicable, to the
appropriate address(es) or number(s) set forth below; and
(iii) shall be deemed to have been given on the date
of receipt by the addressee (or, if the date of receipt is not a business day,
on the first business day after the date of receipt), as evidenced by (A) a
receipt executed by the addressee (or a responsible person in his or her
office) or the records of the person delivering such communication, if sent by
messenger, U.S. mail or express delivery service, or (B) a receipt generated by
the sender's telecopier showing that such communication was sent to the
appropriate number on a specified date, if sent by telecopier.
All such communications shall be sent to the following addresses or numbers, or
to such other addresses or numbers as either party may inform the other by
giving five business days' prior notice:
If to the Executive:
Carl A. Snyder
103 Nancy Drive
McMurray, PA 15317
Telecopier No.: (412)941-1379
If to the Company:
J&L Structural, Inc.
c/o CPT Holdings, Inc.
1430 Broadway, 13th Floor
New York, NY 10018-3308
Attn: William L. Remley
Telecopier No.:(212)391-1393
(g) 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 portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
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(h) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their respective
heirs, successors and permitted assigns.
(i) Consent to Jurisdiction and Service of Process.
(i) Each of the parties hereby:
(A) irrevocably submits to the jurisdiction
of the Court of Common Pleas of Allegheny County, Pennsylvania and to the
jurisdiction of the United States District Court for the Western District of
Pennsylvania for the purposes of any action or proceeding arising out of or
relating to this Agreement or the subject matter hereof and brought by the
other party;
(B) waives and agrees not to assert, by way
of motion, as a defense or otherwise, in any such action or proceeding, any
claim that (1) it is not personally subject to the jurisdiction of such courts,
(2) the action or proceeding is brought in an inconvenient forum or (3) the
venue of the action or proceeding is improper; and
(C) agrees that, notwithstanding any right
or privilege it may possess at any time, such party and its property are and
shall be generally subject to suit on account of the obligations assumed by it
hereunder.
(ii) Each party agrees that service in person or by
certified or registered U.S. mail to its address set forth in Subparagraph 7(f)
shall constitute valid in personam service upon such party and its respective
heirs, personal representatives, successors and assigns in any action or
proceeding with respect to any matter as to which it has submitted to
jurisdiction hereunder.
(iii) Each party hereby acknowledges that this is a
commercial transaction, that the foregoing provisions for consent to
jurisdiction and service of process have been read, understood and voluntarily
agreed to by each party and that by agreeing to such provisions each party is
waiving important legal rights.
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SIGNATURE PAGE
WITNESS the due execution of this Employment Agreement as of
the date first written above.
EXECUTIVE
_________________________
Carl A. Snyder
J&L STRUCTURAL, INC.
By:______________________
Title:___________________
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EXHIBIT D
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 5,
1995, between J&L STRUCTURAL, INC., a Delaware corporation formerly known as
J&L Acquisition Corp. (the "Company"), and HOWELL A. BREEDLOVE, an individual
residing in the Commonwealth of Pennsylvania (the "Executive").
PREAMBLE
The Company desires to employ the Executive, and the Executive desires
to be employed by the Company, all upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and intending to be legally bound hereby, the parties agree as follows:
1. Employment.
(a) The Company hereby employs the Executive as its President
and Chief Executive Officer, and the Executive hereby accepts such employment,
all upon the terms and subject to the conditions hereinafter set forth.
(b) Notwithstanding the foregoing, from and after the third
anniversary of the date hereof, the Executive may, at his option, relinquish
the titles, duties, benefits and responsibilities of President and Chief
Executive Officer and be employed as the Company's Chairman (or other mutually
agreed upon title).
2. Duties.
(a) The Executive shall perform all duties incident to the
positions of President and Chief Executive Officer and such other duties as
from time to time may be reasonably requested by the Board of Directors.
(b) At all times, the Executive shall devote his full time
(provided, however, that from and after the third anniversary of the date
hereof, the Executive may work only such number of days per year as shall be
required to perform his duties hereunder, but in no event shall the Executive
work fewer than 100 days per year during such period) and best efforts,
knowledge and experience to performing his duties hereunder
<PAGE> 234
and shall act in conformity with the written and oral policies and directives of
the Company and within the limits, budgets and business plans set by the
Company.
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3. Compensation and Benefits.
(a) Base Salary.
(i) President and Chief Executive Officer. During
the first three years of the Executive's employment hereunder, compensation
shall be paid to the Executive by the Company initially at the rate of $343,000
per annum, with an increase of five percent (5%) per annum thereafter on each
anniversary of the date hereof, payable in accordance with the Company's normal
payroll practice. In the event that the Executive shall exercise his option to
retain the titles, duties, benefits and responsibilities of President and Chief
Executive Officer beyond the third anniversary of the date hereof, the salary
level set forth above shall continue to increase at a rate of five percent (5%)
per annum on each anniversary of the date hereof.
(ii) During the last two years of the Executive's
employment hereunder (unless the Executive shall exercise the option to
continue his service as President and Chief Executive Officer), compensation
shall be paid to the Executive by the Company at the rate of not less than
$250,000 per annum through March 31, 1999, and not less than $262,500 per annum
through March 31, 2000, payable in accordance with the Company's normal payroll
practice.
(b) Additional Incentive Compensation. During the term of
the Executive's employment hereunder the Company shall pay to the Executive,
together with Carl A. Snyder and James E. Howe, a total of $360,000 in
additional incentive compensation per year to be divided among all three
executives as the executives shall agree among themselves.
(c) Employee Benefits.
(i) During the term of the Executive's employment
hereunder (A) the Executive and his immediate family shall be eligible to
participate in all medical and dental insurance plans generally available to
management employees of the Company and (B) the Executive shall be eligible to
participate in all other benefit plans or programs generally available to
management employees of the Company, including without limitation life
insurance, disability insurance and pension and profit sharing
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plans; provided, that in no event shall the benefits available to the Executive
under this subparagraph be less than the benefits available to management
employees of J&L Structural, Inc. on the date hereof.
(ii) Following the termination of this Agreement,
the Company shall offer to the Executive the option of continuing any or all
employee benefits made available hereunder during the term hereof; provided
that the Executive shall reimburse the Company for its costs therefor.
(d) Holidays and Vacation. The Executive shall be entitled
to the same paid holidays as other management employees of the Company
(presently 8 days per year). In addition, the Executive shall be entitled to 4
weeks (or such longer period of time as is consistent with Subparagraph 2(b)
hereof) of paid vacation per calendar year. If the Executive is employed
hereunder for only a portion of any calendar year, then such number of vacation
days shall be reduced pro rata based upon the actual number of days in such
calendar year during which the Executive is employed hereunder.
(e) Reimbursement of Expenses. During the term of the
Executive's employment hereunder the Company shall reimburse the Executive for
all reasonable out-of-pocket expenses incurred by the Executive in the lawful
and ordinary course of the Company's business and reported to the Company in
accordance with its accounting procedures.
(f) Perquisites. During the term of the Executive's
employment hereunder the Executive shall be entitled to have paid by the
Company any and all expenses with respect to personal income tax preparation
and filing and audit assistance.
4. Term. The Executive's employment hereunder shall commence on the
date hereof and shall terminate on March 31, 2000, unless sooner terminated
pursuant to Paragraph 5 or extended by the mutual agreement of the parties.
5. Termination.
(a) Termination by Company.
(i) Termination For Cause. If the Executive
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shall (A) materially breach any of his obligations under this Agreement, (B)
negligently or in bad faith engage in any conduct which is materially injurious
to the Company or (C) engage in any act of dishonesty or fraud or commit a
felony or a crime of moral turpitude, the Company may terminate the Executive's
employment hereunder, which termination shall be immediately effective upon
delivery to the Executive of written notice of such termination. Upon delivery
of such notice all of the Company's obligations under Paragraph 3 shall
terminate, except for its obligation to (1) pay any compensation under
Paragraph 3 which has accrued but is unpaid as of such date and (2) provide any
benefits under Paragraph 3(c)(ii) which it is required to provide after
termination.
(ii) Total and Permanent Disability. If a qualified
medical doctor reasonably acceptable to the Company and the Executive or his
personal representative shall have certified in writing that, because of any
physical or mental condition, it is unlikely that the Executive will be able,
with or without reasonable accommodation, to perform his essential duties
hereunder during the 90-day period following the date of such certification,
then the Company may terminate the Executive's employment hereunder immediately
upon delivery to the Executive of written notice of such termination.
Notwithstanding such termination, the Company shall continue to pay to the
Executive an amount equal to his monthly compensation under Paragraph 3(a) for a
period of 6 months after the date of such termination. Upon the delivery of
such notice, all of the Company's obligations under Paragraph 3 shall terminate,
except for its obligation to (A) pay any amounts pursuant to the preceding
sentence, (B) pay any compensation under Paragraph 3 which has accrued but is
unpaid as of such date and (C) provide any benefits under Paragraph 3(c)(ii)
which it is required to provide after termination. During such 6-month period
after notice of termination, the Executive's salary under Paragraph 3(a) shall
be reduced by any amounts payable to the Executive under any disability
insurance plan maintained by the Company.
(iii) Death. The Executive's employment hereunder,
and all of the Company's obligations under Paragraph 3, except for its
obligations to pay any compensation under Paragraph 3 which has accrued but is
unpaid as of such date, shall immediately terminate upon the death of the
Executive.
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(iv) Termination Without Cause. The Company may
terminate the Executive's employment hereunder without cause upon 30 days' prior
written notice of such termination to the Executive; provided, however that,
notwithstanding such termination, the Company's obligations under Subparagraphs
3(a), 3(b) and 3(c)(i) shall continue throughout the balance of the term hereof
as if such termination had not occurred. In such event, salary shall be payable
to the Executive at the levels provided under Subparagraph 3(a) for service to
the Company as its President and Chief Executive Officer.
(b) Termination by Executive.
(i) Voluntary Termination. The Executive may
terminate his employment hereunder at any time after March 31, 1998 upon 30
days' prior written notice of such termination to the Company. Upon the
expiration of such 30-day period all of the Company's obligations under
Paragraph 3 shall terminate, except for its obligation to (A) pay any
compensation under Paragraph 3 which has accrued but is unpaid as of such date
and (B) provide any benefits under Paragraph 3(c)(ii) which it is required to
provide after termination.
(ii) Total and Permanent Disability. If a qualified
medical doctor reasonably acceptable to the Company and the Executive or his
personal representative shall have certified in writing that, because of any
physical or mental condition, it is unlikely that the Executive will be able,
with or without reasonable accommodation, to perform his essential duties
hereunder during the 90-day period following the date of such certification,
then the Executive may terminate his employment with the Company hereunder
immediately upon delivery to the Company of written notice of such termination.
Notwithstanding such termination, the Company shall continue to pay to the
Executive an amount equal to his monthly compensation under Paragraph 3(a) for a
period of 6 months after the date of such termination. Upon the delivery of
such notice, all of the Company's obligations under Paragraph 3 shall terminate,
except for its obligation to (A) pay any amounts pursuant to the preceding
sentence, (B) pay any compensation under Paragraph 3 which has accrued but is
unpaid as of such date and (C) provide any benefits under Paragraph 3(c)(ii)
which it is required to provide after termination. During such 6-month period
after notice of termination, the Executive's salary under Paragraph
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3(a) shall be reduced by any amounts payable to the Executive under any
disability insurance plan maintained by the Company.
6. Confidential Information; Non-Competition and Non-Solicitation.
(a) Certain Definitions. As used in this Agreement the
following terms shall have the following meanings:
"Company Product" at any time shall mean any product or service which
the Company is marketing, selling or developing at such time or which the
Company or its predecessors in interest, J&L Structural, Inc. ("J&L") or
Trailer Components, Inc. ("TCI") have marketed, sold or developed in the past.
"Competing Business" shall mean the marketing, sale or development of
products or services which are competitive with any Company Products and which
are directly or indirectly marketed, sold or under development for marketing or
sale, in the Territory.
"Confidential Information" shall mean all information concerning or
related to the business, operations, financial condition or prospects of the
Company, regardless of the form in which such information appears and whether
or not such information has been reduced to a tangible form, and shall
specifically include (i) all information regarding the officers, directors,
employees, equity holders, customers, suppliers, distributors, sales
representatives and licensees of the Company, in each case whether past or
present, (ii) all inventions, discoveries, trade secrets, processes,
techniques, methods, formulae, ideas and know- how of the Company and (iii) all
financial statements, audit reports, budgets and business plans or forecasts of
the Company; provided, that Confidential Information shall not include (A)
information which is or becomes generally known to the public through no act or
omission of the Executive and (B) information which has been or hereafter is
lawfully obtained by the Executive from a source other than the Company (or its
officers, directors, employees, equity holders or agents) so long as, in the
case of information obtained from a third party, such third party was or is
not, directly or indirectly, subject to an obligation of confidentiality owed
to the Company at the time such Confidential Information was or is disclosed to
the Executive.
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"Territory" at any time shall mean any state in the United States, any
Canadian province and any foreign country in which the Company is marketing or
selling any Company Products at such time.
(b) Confidential Information.
(i) Except as provided in clause (ii) below, the
Executive shall not disclose or use for his own benefit any Confidential
Information.
(ii) Notwithstanding clause (i) above, the Executive
shall be permitted to disclose Confidential Information to the extent, but only
to the extent, (A) reasonably necessary for the Executive to perform his duties
hereunder or (B) required by law; provided, that prior to making any disclosure
of Confidential Information required by law, the Executive shall notify the
Company of his intent to make such disclosure, and the Company shall have the
right to participate with the Executive in determining the amount and type of
Confidential Information, if any, which must be disclosed in order to comply
with applicable law.
(iii) Promptly after termination of the Executive's
employment hereunder for any reason, the Executive or his personal
representative shall return to the Company any Confidential Information which
is in tangible form and which is then in his possession.
(iv) The provisions of this subparagraph shall
survive any termination of this Agreement or the Executive's employment
hereunder.
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(c) Non-Competition and Non-Solicitation.
(i) During the term of the Executive's employment
hereunder and (A) if the Executive's employment hereunder shall be terminated
pursuant to Paragraphs 5(a)(ii), 5(a)(iv) or 5(b)(ii), or following the
expiration of the term hereof, for one year thereafter and (B) if the
Executive's employment hereunder shall be terminated pursuant to Paragraphs
5(a)(i) or 5(b)(i), or the Executive shall otherwise breach the terms hereof,
for two years thereafter, the Executive shall not, directly or indirectly, for
himself or by or on behalf of any third party, render any service, advice or
information to, become involved or retained in any capacity by, or participate
in, engage in or have any interest in, any entity or person which is engaged
in, any Competing Business; provided, that the Executive shall not be in
violation of the foregoing by reason of his inactive investment in and
ownership of not more than 5% of the outstanding shares of the stock of any
corporation which is listed on a national securities exchange or in the NASDAQ
system.
(ii) During the term of the Executive's employment
hereunder and (A) if the Executive's employment hereunder shall be terminated
pursuant to Paragraphs 5(a)(ii), 5(a)(iv) or 5(b)(ii), or following the
expiration of the term hereof, for one year thereafter and (B) if the
Executive's employment hereunder shall be terminated pursuant to Paragraphs
5(a)(i) or 5(b)(i), or the Executive shall otherwise breach the terms hereof,
for two years thereafter, the Executive shall not (Y) solicit the trade of or
business of, or trade or do business with, or accept employment from, any
customer or supplier of the Company or any person or entity which has been a
customer or supplier of the Company or of J&L or TCI during the past two years
or (Z) solicit or induce any employee, distributor, sales representative, agent
or contractor of the Company to terminate or modify his employment or other
relationship with the Company, or engage or hire any such employee,
distributor, sales representative, agent or contractor of the Company, or
otherwise interfere with, disrupt, or attempt to disrupt the relationships,
contractual or otherwise, between Company and any of its employees,
distributors, sales representatives, agents, contractors, customers, or
suppliers.
(d) Equitable Relief. The Executive acknowledges and agrees
that any violation, nonperformance, or other breach by
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Executive of the provisions of this Paragraph 6 would give rise to irreparable
injury to the Company, the remedies at law for which would be inadequate, and
that the damages flowing from such violation would not be readily susceptible
to being measured in monetary terms. Accordingly, it is agreed that the
Company shall be entitled to an injunction or injunctions to prevent breaches
or violations of this Paragraph by the Executive and shall have the right to
specifically enforce performance under this Paragraph and the terms and
provisions hereof against the Executive in addition to any other remedy to
which the Company may be entitled hereunder, at law or in equity. Further, it
is agreed that the Company shall be entitled to immediate injunctive relief
without bond or with minimal bond and may obtain a temporary restraining order
and preliminary injunction restraining and enjoining any violation, threatened
violation, or further breach of same by Executive. The Executive further
agrees to indemnify and hold the Company harmless from and against any and all
claims, demands, actions, expenses, costs (including litigation costs and
reasonable attorneys fees), damages, liabilities and losses resulting or
occurring from any violation or threatened violation of this Paragraph 6 and/or
the enforcement of this Paragraph 6 by the Company. The Executive represents
and agrees that the Executive's experience and capabilities are such that the
Executive can obtain employment in businesses engaged in other lines and/or of
a different nature and/or in a different Territory than that of the Company,
and that the enforcement of a remedy by way of an injunction for a breach of
the terms of this Paragraph 6 will not prevent the Executive from earning a
livelihood. The Executive further represents that the Executive understands
and agrees that the provisions of this Paragraph 6 are reasonable in terms,
scope, area, and duration; are reasonably required for the protection of the
business and interests of the Company; and shall be strictly enforced and
construed against the Executive. In the event that any provisions of this
Paragraph 6 relating to time period, areas, and/or scope of restriction, and/or
related aspects shall be held by a court of competent jurisdiction to exceed
the maximum restrictiveness such court deems reasonable and enforceable, then
the maximum time period, areas, and/or scope of restriction, and/or related
aspects deemed reasonable and enforceable by the court shall be construed to be
the terms hereunder, and shall be enforced and construed so as to give the
Company the maximum rights and protections permitted by law.
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(e) Further Acknowledgment. It is acknowledged by the
Executive that this Agreement is being entered into as a condition of the
Company's obligations under that certain Asset Purchase Agreement among J&L,
TCI, the Executive, the Company and other parties dated as of November 10,
1994, and that the covenants of the Executive under this Paragraph 6 are being
given as a condition of the Company's purchase of the assets pursuant to, and
performance of the transactions contemplated under, said Asset Purchase
Agreement, and are being given in order to preserve the benefits of the
Company's bargain under said Asset Purchase Agreement. It is acknowledged that
the Executive is one of the legal and/or equitable owners of J&L andTCI, the
sellers under said Asset Purchase Agreement, and will receive direct and
substantial benefits from the consummation of the transactions contemplated by
said Asset Purchase Agreement. In consideration therefor, the Executive agrees
that he will take such action as is necessary to cause J&L and TCI to be bound
by the terms of this Paragraph 6 as if they were the "Executive" hereunder, and
will guarantee, for the benefit of the Company, the performance by J&L and TCI
of each of the covenants of this Paragraph 6 as if J&L and TCI were contracting
parties hereunder. Further, the Executive agrees and acknowledges that he has
received adequate consideration for the covenants he has undertaken pursuant to
this Paragraph 6 and that, irrespective of the unenforceability or breach by
the Company of any other provision of this Agreement, the provisions of this
Paragraph 6 shall nevertheless be binding and enforceable against the
Executive, as if the same were contained in an independent contract for which
adequate consideration had been given.
(f) Survival. The provisions of this Paragraph 6 shall
survive any termination or expiration of this Agreement or of the Executive's
employment hereunder.
7. Miscellaneous.
(a) Amendments. This Agreement may be amended only by a
writing signed by each of the parties, and any such amendment shall be
effective only to the extent specifically set forth in such writing.
(b) Assignment. Neither the Company nor the Executive
shall assign, pledge or otherwise transfer any of its or his rights, interest
or obligations hereunder, whether by operation
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of law or otherwise.
(c) Counterparts; Telefacsimile Execution. This Agreement
may be executed in any number of counterparts, and by each of the parties on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all of which shall constitute but one and the same instrument.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile shall also deliver a manually executed counterpart of this
Agreement, but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability or binding effect of this Agreement.
(d) Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior written and oral agreements, and all contemporaneous oral
agreements, relating to such subject matter. The parties acknowledge and agree
that any prior employment agreements between the Executive and the Company, or
its predecessors, are expressly terminated by the execution and delivery of
this Agreement.
(e) Governing Law. This Agreement shall be a contract under
the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the laws of said
Commonwealth.
(f) Notices. Unless otherwise specifically provided herein,
all notices, consents, requests, demands and other communications required or
permitted hereunder:
(i) shall be in writing;
(ii) shall be sent by messenger, certified or
registered U.S. mail, a reliable express delivery service or telecopier (with a
copy sent by one of the foregoing means), charges prepaid as applicable, to the
appropriate address(es) or number(s) set forth below; and
(iii) shall be deemed to have been given on the date
of receipt by the addressee (or, if the date of receipt is
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not a business day, on the first business day after the date of receipt), as
evidenced by (A) a receipt executed by the addressee (or a responsible person
in his or her office) or the records of the person delivering such
communication, if sent by messenger, U.S. mail or express delivery service, or
(B) a receipt generated by the sender's telecopier showing that such
communication was sent to the appropriate number on a specified date, if sent
by telecopier.
All such communications shall be sent to the following addresses or numbers, or
to such other addresses or numbers as either party may inform the other by
giving five business days' prior notice:
If to the Executive:
Howell A. Breedlove
2015 Blairmont Drive
Pittsburgh, PA 15241
Telecopier No.: (412)831-7044
If to the Company:
J&L Structural, Inc.
c/o CPT Holdings, Inc.
1430 Broadway, 13th Floor
New York, NY 10018-3308
Attn: William L. Remley
Telecopier No.:(212)391-1393
(g) 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 portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
(h) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of each of the parties and their respective
heirs, successors and permitted assigns.
(i) Consent to Jurisdiction and Service of Process.
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(i) Each of the parties hereby:
(A) irrevocably submits to the jurisdiction
of the Court of Common Pleas of Allegheny County, Pennsylvania and to the
jurisdiction of the United States District Court for the Western District of
Pennsylvania for the purposes of any action or proceeding arising out of or
relating to this Agreement or the subject matter hereof and brought by the
other party;
(B) waives and agrees not to assert, by way
of motion, as a defense or otherwise, in any such action or proceeding, any
claim that (1) it is not personally subject to the jurisdiction of such courts,
(2) the action or proceeding is brought in an inconvenient forum or (3) the
venue of the action or proceeding is improper; and
(C) agrees that, notwithstanding any right
or privilege it may possess at any time, such party and its property are and
shall be generally subject to suit on account of the obligations assumed by it
hereunder.
(ii) Each party agrees that service in person or by
certified or registered U.S. mail to its address set forth in Subparagraph 7(f)
shall constitute valid in personam service upon such party and its respective
heirs, personal representatives, successors and assigns in any action or
proceeding with respect to any matter as to which it has submitted to
jurisdiction hereunder.
(iii) Each party hereby acknowledges that this is a
commercial transaction, that the foregoing provisions for consent to
jurisdiction and service of process have been read, understood and voluntarily
agreed to by each party and that by agreeing to such provisions each party is
waiving important legal rights.
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SIGNATURE PAGE
WITNESS the due execution of this Employment Agreement as of
the date first written above.
EXECUTIVE
_________________________
Howell A. Breedlove
J&L STRUCTURAL, INC.
By:______________________
Title:___________________
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=================================================================
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
J&L STRUCTURAL, INC.
AND
FINOVA CAPITAL CORPORATION
DATED MARCH 31, 1995,
EFFECTIVE APRIL 6, 1995
=================================================================
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TABLE OF CONTENTS
<TABLE>
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ARTICLE 1. DEFINITIONS AND DETERMINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.3 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . 26
1.4 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.5 Lender's Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.6 Borrower's Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1.1 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1.2 Reborrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1.3 Disbursement of Term Loan on Closing Date . . . . . . . . . . . . . . . . . 26
2.1.4 Notification of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.1.5 Capital Expenditure Line - Borrowing . . . . . . . . . . . . . . . . . . . 27
2.2 Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2.1 Revolving Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2.2 Reduction in Advance Rates; Revision in Eligibility Standards . . . . . . . 28
2.2.3 Maximum Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.2.4 Authorization; Deposit Account . . . . . . . . . . . . . . . . . . . . . . 29
2.2.5 Manner of Borrowing; Reaffirmation of Representations and
Warranties; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.2.6 Borrower's Overadvances . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.3.1 Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 30
2.3.2 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.3.3 Payment of L/C Reimbursement Amounts . . . . . . . . . . . . . . . . . . . 30
2.3.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.4 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.4.1 Term Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.4.2 Revolving Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.4.3 Interest Computation and Payment . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<TABLE>
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2.4.4 Maximum Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5 Payment of Principal on Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5.1 Acquisition Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5.2 Capital Expenditure Line . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.6 Revolving Loan Term; Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.7 Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.8 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.9 Prepayment of the Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.9.1 Voluntary Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.9.2 Excess Cash Flow Prepayments . . . . . . . . . . . . . . . . . . . . . . . 33
2.9.3 No Prepayment Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.9.4 Involuntary Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.9.5 Early Termination of Revolving Loan . . . . . . . . . . . . . . . . . . . . 33
2.10 Termination of Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.10.1 Revolving Loan Early Termination . . . . . . . . . . . . . . . . . . . . . . 34
2.10.2 Effect of Revolving Loan Termination . . . . . . . . . . . . . . . . . . . . 34
2.10.3 No Revolving Loan Termination Fee . . . . . . . . . . . . . . . . . . . . . 34
2.10.4 Involuntary Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.11 Application of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.11.1 General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.11.2 Application of Early Termination Payments . . . . . . . . . . . . . . . . . 35
2.12 Payments after Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.13 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.13.1 Closing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.13.2 Renewal Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.13.3 Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.13.4 Field Examination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.13.5 Loan Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.13.6 L/C Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.13.7 Wiring and Miscellaneous Charges . . . . . . . . . . . . . . . . . . . . . . 36
2.13.8 Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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2.14 Method of Payment; Good Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 3. CREATION OF SECURITY INTEREST;
PLEDGE; MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.2 Negotiable Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.3 Collection of Accounts, General Intangibles and Negotiable Collateral . . . . . . . 38
3.4 Delivery of Additional Documentation Required . . . . . . . . . . . . . . . . . . . 39
3.5 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.6 Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.7 Stock Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.8 Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.9 Releases Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.10 Recourse to Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 4. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.2 Delivery of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.3 Performance; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.4 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.5 Approval of Documents and Security Interests . . . . . . . . . . . . . . . . . . . . 42
4.6 Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.7 Environmental Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.8 Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . 42
4.9 Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.10 Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.11 Proceedings; Documents; Structure . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.12 Title to and Use of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.13 Compliance with Americans with Disabilities Act . . . . . . . . . . . . . . . . . . 44
4.14 Broker Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.15 Searches and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.16 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.17 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.18 Title Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.19 Pay-off Letters and Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.20 Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.21 Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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4.22 Equity Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.23 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.24 Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.25 Excess Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.26 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.27 Blocked Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.28 Tax Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.29 Tax Sharing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.30 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.3 Capital Stock and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.3.1 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.3.2 Other Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4 Binding Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4.1 Operating Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4.2 Business Sites. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4.3 Operation and Maintenance of Equipment. . . . . . . . . . . . . . . . . . . 48
5.4.4 Taxpayer Identification Number. . . . . . . . . . . . . . . . . . . . . . . 48
5.5 Title to Property, Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.6 Eligible Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.6.1 Bona Fide Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.6.2 Documents to Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.6.3 Borrower's Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.7 Eligible Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.7.1 Continuation of Security Interest; Right to Possession by Lender . . . . . 50
5.7.2 Additional Covenants and Representations . . . . . . . . . . . . . . . . . 51
5.7.3 Protection of Security Interest . . . . . . . . . . . . . . . . . . . . . . 51
5.7.4 Records of Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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5.8 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.8.1 Description and Location; Records of Equipment . . . . . . . . . . . . . . 52
5.8.2 Condition; Additional Covenants and Representations . . . . . . . . . . . . 52
5.8.3 Disposition of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.9 Location of Chief Executive Offices . . . . . . . . . . . . . . . . . . . . . . . . 53
5.10 Projections and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 53
5.10.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.10.2 Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.12 Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.14 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.15 Franchises and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.16 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.18 Application of Certain Laws and Regulations . . . . . . . . . . . . . . . . . . . . 55
5.18.1 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.18.2 Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.18.3 Regulations as to Borrowing . . . . . . . . . . . . . . . . . . . . . . . . 55
5.18.4 Foreign or Enemy Status . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.19 Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.20 Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.21 No Investments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.22 No Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.23 No Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.24 Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.25 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.26 Payment of Debts; Burdensome Obligations . . . . . . . . . . . . . . . . . . . . . . 57
5.27 No Contemplated Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.28 Hindering Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.29 Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.30 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.31 Compliance with Americans with Disabilities Act of 1990 . . . . . . . . . . . . . . 59
5.32 Violations of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.33 Use of Loan Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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5.34 Good Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.35 Reliance by Lender; Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.36 Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.1 Legal Existence; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.2 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.3 Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . 60
6.3.1 Monthly Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.3.2 Annual Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.3.3 Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.3.4 Accountants' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.3.5 Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.3.6 Annual Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.3.7 Notice of Change of Accountants . . . . . . . . . . . . . . . . . . . . . 62
6.3.8 Other Financial Information; Accountants' Cooperation . . . . . . . . . . 62
6.3.9 Notice of Defaults; Loss . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.3.10 Notice of Suits, Adverse Events . . . . . . . . . . . . . . . . . . . . . 63
6.3.11 Reports to Security Holders, Creditors and Governmental Bodies . . . . . . 63
6.3.12 ERISA Notices and Requests . . . . . . . . . . . . . . . . . . . . . . . . 64
6.3.13 Collateral Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
6.3.14 Schedules of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 64
6.3.15 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.3.16 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.3.17 Other Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . 65
6.3.18 Weekly Certification of Inventory . . . . . . . . . . . . . . . . . . . . 65
6.4 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.5 Reports to Governmental Bodies and Other Persons . . . . . . . . . . . . . . . . . . 65
6.6 Maintenance of Licenses and Other Agreements . . . . . . . . . . . . . . . . . . . . 65
6.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.8 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.9 Debt Service Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.9.1 Senior Debt Service Coverage . . . . . . . . . . . . . . . . . . . . . . . 67
6.9.2 Total Debt Service Coverage . . . . . . . . . . . . . . . . . . . . . . . . 67
6.10 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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6.11 Accounts System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.12 Covenants Concerning Intellectual Property . . . . . . . . . . . . . . . . . . . . . 67
6.13 Interest Rate Cap Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.14 Compliance With Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE 7. NEGATIVE COVENANTS
7.1 Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.3 Merger and Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.4 Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.5 Dividends; Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.6 Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.7 Fundamental Business Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.8 Sale or Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.9 Payments on Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 70
7.10 Amendment of Charter and By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.11 Acquisition of Additional Properties . . . . . . . . . . . . . . . . . . . . . . . . 71
7.12 Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.13 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.15 Subsidiaries, Joint Ventures, Management Contracts, Capital Structure Changes . . . 72
7.16 Corporate Offices, Corporate Name, Corporate Records . . . . . . . . . . . . . . . . 72
7.17 Sales Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.18 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.19 Amendments to Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.20 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.21 Proxy Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE 8. DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.1.1 Default in Payment . . . . . . . . . . . . . . . . . . . . . . . 73
8.1.2 Breach of Covenants . . . . . . . . . . . . . . . . . . . . . . . . 73
8.1.3 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . 73
8.1.4 Default Under Any Indebtedness . . . . . . . . . . . . . . . . . . 74
8.1.5 Bankruptcy, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 74
8.1.6 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
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8.1.7 Impairment of Licenses; Other Operating Agreements . . . . . . . . . . . . 74
8.1.8 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.1.9 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.1.10 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.1.11 Interest Rate Cap Agreements . . . . . . . . . . . . . . . . . . . . . . . 75
8.1.12 Ownership of Stock; Board of Directors of CPT . . . . . . . . . . . . . . . 75
8.2 Acceleration of Borrower's Obligations . . . . . . . . . . . . . . . . . . . . . . . 76
8.3 Remedies on Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.3.1 Enforcement of Security Interests . . . . . . . . . . . . . . . . . . . . . 76
8.3.2 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
8.4 Application of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
8.4.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
8.4.2 Borrower's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .79
8.4.3 Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
8.5 Payments by Lender on Behalf of Borrower . . . . . . . . . . . . . . . . . . . . . 79
8.6 Waiver of Notice, Sureties, Damages . . . . . . . . . . . . . . . . . . . . . . . . 79
8.7 No Obligation to Other Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.8 Remedies Regarding Interest Rate Cap Agreement . . . . . . . . . . . . . . . . . . . 80
ARTICLE 9. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE 10. EXPENSES AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
10.1 Attorneys' Fees and Other Fees and Expenses . . . . . . . . . . . . . . . . . . . . 80
10.1.1 Fees and Expenses for Preparation of Loan Documents. . . . . . . . . . . . 80
10.1.2 Fees and Expenses in Enforcement of Rights or Defense of
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.2.1 Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.2.2 Securities Violations, Matters Relating to Bankruptcy . . . . . . . . . . . 81
10.2.3 Operation of Collateral; Joint Venturers . . . . . . . . . . . . . . . . . 81
10.2.4 Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 81
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10.2.5 Americans with Disabilities Act . . . . . . . . . . . . . . . . . . . . . . 82
10.2.6 Additional Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.2 Survival of Term Loan Agreement; Indemnities . . . . . . . . . . . . . . . . . . . . 83
11.3 Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.4 Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.7 Modification of Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.10 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.11 Entire Agreement; Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.12 Assignment; Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.13 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.14 JURISDICTION AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.15 WAIVER OF RIGHT TO JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.16 TIME OF ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.17 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.18 Destruction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
EXHIBITS
1.1A List of Borrower's Facilities and Warehouses
1.1B Borrowing Base Certificate
1.1C Legal Description of Real Property
1.1D Disbursement Instructions
1.1E Environmental Reports
2.5.1 Principal Amortization of Acquisition Advance
5.3.1 Capitalization of Borrower; Liens on Borrower Stock
5.3.2 Agreements with respect to Borrower Stock
5.4.3 Operation and Maintenance of Equipment
5.5 Liens
5.6.1 Locations of Records Related to Accounts
5.7.2 Locations of Inventory
5.8.1 Locations of Equipment
5.11 Litigation
5.15 Franchises, Permits, Licenses and Approvals
</TABLE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION> PAGE
<S> <C>
5.21 Investments
5.24 Plans
5.25 Collective Bargaining Agreements
5.30 Intellectual Property
7.14 Transactions with Affiliates
</TABLE>
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<PAGE> 12
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "LOAN AGREEMENT") is entered
into this 31st day of March, 1995, effective April 6, 1995, by and between:
J&L STRUCTURAL, INC. (formerly known as J&L Acquisition Corp.), a
Delaware corporation ("BORROWER"); and
FINOVA CAPITAL CORPORATION, a Delaware corporation ("LENDER").
R E C I T A L S:
WHEREAS:
A. Borrower is a wholly owned subsidiary of J&L Holdings Corp., a
Delaware corporation ("J&L HOLDINGS") and J&L Holdings was formerly known as
Brighton Electric Steel Casting Company, a Delaware corporation ("BRIGHTON");
B. Borrower wishes to borrow from Lender the total sum of up to
Forty Million Dollars ($40,000,000), consisting of (i) a senior term loan in
the aggregate principal amount of Twenty-Five Million Dollars ($25,000,000),
and (ii) a revolving line of credit in the principal amount of up to Fifteen
Million ($15,000,000) Dollars;
C. Simultaneously with the funding by Lender of the initial
advances under the senior term loan and the revolving line of credit, J&L
Holdings will contribute to Borrower's capital all of Brighton's assets (other
than the capital stock of Borrower and of Continuous Caster Corporation, a
Delaware corporation ("CCC")) plus not less than $6,900,000 in cash and
Borrower will assume certain liabilities of Brighton;
D. The proceeds of the senior term loan and the revolving line of
credit, together with the proceeds from the sale of subordinated debt in an
amount of not less than Twenty-Three Million Dollars ($23,000,000) and the cash
equity contributed to Borrower, shall be used to purchase substantially all of
the assets of each of J&L Structural, Inc., a Pennsylvania corporation ("J&L")
and Trailer Components, Inc., a Pennsylvania corporation ("TCI"; J&L and TCI
are hereinafter sometimes referred to individually as a "SELLER" and together
as "SELLERS"), refinance certain existing indebtedness of Sellers and of
Brighton (assumed by Borrower), purchase new equipment and make other capital
expenditures, and provide for ongoing working capital needs and pay
transaction costs;
E. Immediately upon Borrower's acquisition from Sellers of the
assets constituting Sellers, J&L will change its name; and
F. Lender desires to provide the credit facilities requested by
Borrower subject to the terms and conditions set forth herein.
<PAGE> 13
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound, the parties hereto do hereby agree as
follows:
ARTICLE 1. DEFINITIONS AND DETERMINATIONS
1.1 DEFINITIONS. As used in this Loan Agreement and in
the other Loan Documents, unless otherwise expressly indicated herein or
therein, the following terms shall have the following meanings (such meanings
to be applicable equally to both the singular and plural forms of the terms
defined):
ACCOUNT DEBTOR: any Person who is or who may become
obligated under, with respect to, or on account of an Account.
ACCOUNTANTS: Grant Thornton or another independent
certified public accounting firm selected by Borrower and reasonably
satisfactory to Lender.
ACCOUNTS: all presently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
Borrower arising out of the sale of goods or the rendition of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, or security therefor.
ACQUISITION: the acquisition by Borrower from
Sellers of all of the assets and properties constituting both J&L and TCI
pursuant to and in accordance with the terms of the Acquisition Documents.
ACQUISITION ADVANCE: that portion of the Term Loan,
in the principal amount of $22,000,000, which shall be funded on the Closing
Date.
ACQUISITION AGREEMENT: the Asset Purchase Agreement
dated as of November 10, 1994 among J&L, TCI, the Shareholders, Borrower and
CPT, including all exhibits, schedules and annexes thereto, and all amendments,
modifications and supplements thereof, all as in effect on the Closing Date.
ACQUISITION DOCUMENTS: collectively, the Acquisition
Agreement, and all agreements, documents and instruments executed and delivered
in connection therewith, including all exhibits, annexes and schedules thereto,
the Employment Agreements and all other employment contracts of Borrower to be
in effect on, or to be entered into on, the Closing Date, any and all
non-competition agreements between Borrower and Sellers and/or the
Shareholders, and all amendments, modifications and supplements thereof, as in
effect on the Closing Date.
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ADA: the Americans with Disabilities Act of 1990 (42
U.S.C. Section 12101, et seq.) and all applicable rules, regulations, codes,
ordinances and guidance documents promulgated or published thereunder.
ADVANCE: any loan or advance by Lender with respect
to the Revolving Loan.
AFFILIATE: any Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with another Person. The term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. For the purposes hereof, any Person
which owns or controls, directly or indirectly, ten percent (10%) or more of
the securities, whether voting or nonvoting, of any other Person shall be
deemed to "control" such Person.
AGENT BANK: shall mean PNC (or such other financial
institution as shall be acceptable to Lender and Borrower), at which the
blocked account, dominion account, or other controlled accounts into which all
daily cash receipts of Borrower and all proceeds of Borrower's Accounts shall
be deposited.
APPROVALS: shall have the meaning set forth in
Section 8.1.7.
ASSIGNED CONTRACTS: the Acquisition Documents, all
agreements, documents and instruments executed in connection therewith, and
all of Borrower's leases (other than the Lease), contracts, permits, licenses
(to the extent permitted by applicable law or regulation), franchises,
certificates and other agreements, including, without limitation, the
CCC/Borrower Agreement, a certain Road and Utilities Agreement dated November
6, 1987 between Breedlove Enterprises, Inc. (now J&L) and LTV Steel Company,
Inc., as amended and as assigned to Borrower, the Initial Interest Rate Cap
Agreement and each interest rate contract subsequent thereto and all agreements
for the provision of management.
AUTHORIZED OFFICER: any of the Shareholders or
William L. Remley or Richard Kramer or such other officers or employees of
Borrower having authority to act on behalf of Borrower as reflected in
certificates of Borrower delivered to Lender from time to time.
AVERAGE DAILY OUTSTANDINGS: shall mean, for any
period, the average daily aggregate principal balance outstanding with respect
to the Revolving Loan for such period; provided, however, that for purposes of
calculating the Unused Line Fee pursuant to Section 2.13.3, there shall be
deducted from the difference determined under Section 2.13.3, the average daily
aggregate outstanding amount available for drawing under the L/C(s) during such
period.
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BANKRUPTCY CODE: the United States Bankruptcy Code
and any successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
BCCED: Beaver County Corporation Economic
Development Authority.
BLOCKED ACCOUNT(S): those certain accounts,
established with the Agent Bank and each bank at which Borrower maintains an
account pursuant to a Special Deposit Account Agreement (or such other
agreement in form and substance satisfactory to Lender), into which all
collections of Accounts of Borrower and all other receipts by Borrower shall be
deposited for the benefit of Lender. The Blocked Accounts shall include any
lockbox, dominion account, or other controlled account with respect to which
Borrower is prohibited from making withdrawals.
BORROWER: shall have the meaning set forth in the
heading of this Loan Agreement.
BORROWER STOCK: shall mean, at any given time, all
of the then issued and outstanding capital stock in Borrower.
BORROWER'S BOOKS: all of Borrower's books and
records including: ledgers; records indicating, summarizing, or evidencing
Borrower's assets or liabilities or the Collateral; all information relating to
Borrower's business operations or financial condition; and all computer
programs, disc or tape files, printouts, runs, or other computer prepared
information, and the equipment containing such information.
BORROWER'S OBLIGATIONS: all loans, advances
(including the Acquisition Advance, Subsequent Advances and Advances under the
Revolving Loan), L/C Obligations, debts, principal, interest (including any
interest that, but for the provisions of the Bankruptcy Code, would have
accrued), premiums (including the Prepayment Premium), liabilities (including
all amounts charged to Borrower's loan account pursuant to any agreement
authorizing Lender to charge Borrower's loan account), obligations (including
the performance of the covenants of Borrower contained in the Loan Documents),
fees (including the Revolving Loan Termination Fee, the Loan Fee, the Renewal
Fee, the Unused Line Fee, the Examination Fee and the Loan Maintenance Fee),
lease payments, guaranties, covenants, and duties owing by Borrower to Lender
of any kind and description (whether pursuant to or evidenced by this Loan
Agreement, any of the other Loan Documents, by the Term Note, the Revolving
Note or any other note or other instrument, or by any other agreement between
Lender and Borrower, and whether or not for the payment of money), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including any debt, liability, or obligation owing
from Borrower to others that Lender may have obtained by assignment or
otherwise, and further including all interest not paid when due and all Lender
Expenses that Borrower is required to pay or reimburse pursuant to the Loan
Documents, by law, or otherwise.
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<PAGE> 16
BORROWER'S FACILITIES: all facilities operated by
Borrower and located in the United States, a complete listing of which is set
forth on Exhibit "1.1A" hereto, together with all warehouse facilities used by
Borrower in the operation of the Business.
BORROWING BASE: as of the date of any determination
thereof, the lesser of:
(i) $15,000,000, or
(ii) the sum or difference of the following
amounts:
(A) eighty-five percent (85%) of the net
amount (i.e., after deduction for all discounts, credits or allowances which
have been taken or granted to Account Debtors, or which Account Debtors have
the right to claim, other than by reason of a warranty claim) of Eligible
Accounts, plus
(B) the lesser of (1) $8,000,000 or (2)
an amount equal to sixty percent (60%) of the value, determined on the basis of
the lower of cost (calculated on a first-in, first-out basis) or market, of
Eligible Inventory, minus
(C) the L/C Obligations and such
reserves as Lender may deem reasonably necessary from time to time.
BORROWING BASE CERTIFICATE: a borrowing base
certificate in the form of Exhibit "1.1B" hereto executed by Borrower setting
forth the Eligible Inventory and the Eligible Accounts of Borrower as of the
date of such certificate.
BRIGHTON: shall have the meaning set forth in
Recital A.
BRING ALONG AGREEMENT: shall mean a "bring along"
agreement executed by the holders of the Warrants and Lender in form and
substance satisfactory to Lender pursuant to which in the event the Borrower
Stock pledged to Lender is, in the exercise of Lender's remedies under the Loan
Documents or otherwise, transferred to a third party, the Borrower Stock issued
to such holders will be transferred on the same terms as the Borrower Stock
pledged to Lender, in accordance with the terms and provisions of such
agreement.
BUSINESS: the business conducted by Borrower of the
production of lightweight structural steel shapes, piercer points, value-added
finishing services relating thereto and all other activities ancillary or
related thereto.
BUSINESS DAY: any day other than a Saturday, Sunday
or other day on which banks in Phoenix, Arizona, Los Angeles, California, New
York, New York or Pittsburgh, Pennsylvania are required to close.
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<PAGE> 17
CAPITAL EXPENDITURES: for any period, the amount of
all payments made during such period by Borrower for the lease, purchase,
improvement, construction or use of any Property, the value or cost of which
under GAAP is required to be capitalized and appears on Borrower's balance
sheet in the category of property, plant or equipment, without regard to the
manner in which such payments or the instrument pursuant to which they are made
is characterized by Borrower or any other Person, and shall include, without
limitation, the principal components of payments for the installment purchase
of Property and payments under Capitalized Leases.
CAPITAL EXPENDITURE LINE: that portion of the Term
Loan, in the principal amount of up to $3,000,000, which shall be made
available to Borrower following the Closing, in accordance with the terms and
conditions set forth in Section 2.15.
CAPITAL EXPENDITURE LINE BORROWING TERMINATION DATE:
the last Business Day of the thirty-sixth (36th) month following the Closing.
CAPITALIZED LEASES: any lease of Property, the
obligation for rental of which is required to be capitalized in accordance with
GAAP.
CASH EQUIVALENTS: Borrower's (i) cash on hand or in
any bank or trust company, and checks on hand and in transit, (ii) monies on
deposit in any money market account, and (iii) treasury bills, certificates of
deposit, commercial paper and readily marketable securities at current market
value, and related repurchase agreement transactions, as to all of the
foregoing, to the extent such funds are located in the United States, or
represent investments in United States financial institutions, but excluding
any portion of the foregoing which is subject to a right of setoff or other
security interest to secure any obligation of Borrower to pay any Indebtedness
for Borrowed Money.
CCC: shall have the meaning set forth in Recital C.
CCC/BORROWER AGREEMENT: that certain agreement
between Borrower and CCC in form and substance satisfactory to Lender, pursuant
to which CCC agrees to pay to Borrower, concurrently with CCC's receipt
thereof, all sums due CCC under a certain Agreement of Sale dated December 28,
1993, as amended, between J&L and the BCCED, and under the Escrow Agreement
executed in connection therewith, each as assigned to CCC.
CHIEF EXECUTIVE OFFICER: the chief executive officer
of Borrower, who shall be an officer of Borrower appointed by Borrower's Board
of Directors.
CHIEF FINANCIAL OFFICER: the chief financial officer
of Borrower, who shall be an officer of Borrower appointed by Borrower's Board
of Directors.
CLOSING: the disbursement of the Acquisition Advance
under the Term Loan and the making of the initial Advance under the Revolving
Loan.
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CLOSING DATE: the date of the Closing.
CODE: the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
COLLATERAL: the Property upon which Lender is
granted the Security Interests, including, without limitation, the Assigned
Contracts, all Equipment, Inventory, Accounts, General Intangibles, and
Negotiable Collateral of Borrower, the Real Property, leases assigned pursuant
to the Mortgage, Borrower Stock and all other real or personal property now
owned or hereafter acquired by Borrower, whether tangible or intangible and
wherever located, and all proceeds and products thereof and all policies of
insurance insuring the same.
COLLATERAL ASSIGNMENT OF TRADEMARKS: a Collateral
Assignment of Trademarks and Security Agreement, pursuant to which, in
confirmation of the terms hereof, Borrower grants to Lender a Security Interest
in all existing and after-acquired trademarks, trademark registrations,
trademark applications, service marks, service mark registrations, service mark
applications, trade names, trade name registrations, and trade name
applications, patents and patent applications, and the goodwill related
thereto, owned by Borrower, as security for the payment and performance of all
of Borrower's Obligations.
CONTRACTUAL SENIOR DEBT SERVICE: for any period, the
sum of payments made or required to be made by Borrower during such period for
the following: (i) principal and interest due on the Term Loan (but excluding
any prepayment under Section 2.9.2 and excluding any repayments of Subsequent
Advances prior to the Capital Expenditure Line Borrowing Termination Date);
(ii) fees payable to Lender pursuant to this Loan Agreement; (iii) interest due
on the Revolving Loan; and (iv) principal and interest due on any other
Permitted Senior Indebtedness.
CONTRACTUAL TOTAL DEBT SERVICE: for any period, the
sum of payments made (or, as to clause (i) of this sentence, required to be
made) by Borrower during such period for the following: (i) Contractual Senior
Debt Service; (ii) interest payments made on the Senior Subordinated Notes and
interest and principal payments made on the State Debt; and (iii) management
fees paid to CPT.
CONTRIBUTION: the contribution to Borrower by J&L
Holdings of not less than Six Million Nine Hundred Thousand Dollars
($6,900,000) in cash and all of the assets and properties constituting Brighton
(other than the capital stock of Borrower and CCC).
CONTRIBUTION DOCUMENTS: all agreements, documents
and instruments, together with all exhibits, schedules and annexes thereto,
pursuant to which the Contribution is effected, including, without limitation,
a certain J&L Structural, Inc. Subscription Agreement for Common Stock dated
as of the Closing Date executed by J&L Holdings, together with
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related transfer documents including a certain Bill of Sale dated as the date
of the Closing executed by J&L Holdings in favor of the Borrower, a certain
Assignment and Assumption Agreement dated as of the date of the Closing Date
between J&L Holdings and the Borrower, and a certain Deed dated the date of the
Closing executed by J&L Holdings in favor of the Borrower, all as in effect on
the date hereof.
CONTROLLED GROUP: all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with Borrower, are treated as a single
employer under Section 414(b) and 414(c) of the Code.
CPT: CPT Holdings, Inc., a Minnesota corporation and
the owner of not less than 80.1% of all of the issued and outstanding capital
stock of J&L Holdings.
DEFAULT RATE: a per annum rate equal to the Interest
Rate in effect plus four percent (4%).
DEMISED PREMISES: those certain properties located
in Ambridge, Pennsylvania, in which Borrower holds a leasehold estate, all of
which shall be encumbered in favor of Lender pursuant to the Mortgage, as more
fully described on Exhibit "1.1C" hereto and by this reference made a part
hereof.
DEPOSIT: shall mean the amount of $100,000 which was
paid to Lender concurrently with the acceptance by CPT of the Proposal, and
which shall be applied toward Lender's out-of-pocket expenses and legal fees
pursuant to Section 4.10, with the excess, if any, to be applied toward payment
of the Loan Fee.
DEPRECIATION: in respect of any period, all
depreciation on Property taken during such period, as determined in accordance
with GAAP.
DISBURSEMENT INSTRUCTIONS: the disbursement
instructions of Borrower with respect to the Acquisition Advance and the
Initial Advance of the Revolving Loan set forth on Exhibit "1.1D" hereto.
DOCUMENTS: collectively, the Loan Documents, the
Senior Subordinated Note Documents, the Leases, the Acquisition Documents and
the Contribution Documents.
ELIGIBLE ACCOUNTS: those Accounts created by
Borrower in the ordinary course of business that arise out of Borrower's bona
fide sale of goods or rendition of services to Account Debtors, each of which
Account must strictly comply with all of Borrower's representations and
warranties to Lender; provided, however, that standards of eligibility may be
fixed and revised from time to time by Lender pursuant to Section 2.2.2.
Eligible Accounts shall not include the following:
(i) Accounts which the Account Debtor has failed
to pay within sixty (60) days of due date;
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(ii) Accounts with selling terms of more than
sixty (60) days from invoice date;
(iii) Accounts with respect to which the Account
Debtor is an officer, employee, Affiliate, or agent of Borrower.
(iv) Accounts with respect to which goods are not
yet actually sold outright but are placed on consignment, guaranteed sale, sale
or return, sale on approval, bill and hold, or other terms by reason of which
the payment by the Account Debtor may be conditional, or Accounts arising from
the leasing of goods;
(v) Accounts with respect to which the Account
Debtor is a resident of any jurisdiction other than the United States of
America or Canada unless supported by one or more letters of credit that are
assignable and have been delivered to Lender in an amount and of a tenor, and
issued by a financial institution, acceptable to Lender;
(vi) Accounts with respect to which the Account
Debtor is the United States of America or any department, agency, or
instrumentality of the United States of America; provided that an Account
shall not be deemed ineligible by reason of this clause if Borrower has
complied, to the satisfaction of Lender, with all requirements necessary under
the Federal Assignment of Claims Act of 1940;
(vii) Accounts with respect to which the Account
Debtor is any state of the United States of America or any city, town,
municipality or jurisdiction thereof;
(viii) Accounts with respect to which Borrower is or
may become liable to the Account Debtor for goods sold or services rendered by
the Account Debtor to Borrower to the extent that Borrower is or may become so
liable;
(ix) Accounts with respect to an Account Debtor
whose total obligations to Borrower, on a consolidated basis, exceed twenty
percent (20%) of all Eligible Accounts, to the extent of the obligations of
such Account Debtor in excess of such percentage;
(x) Accounts with respect to which the Account
Debtor disputes liability or makes any claim with respect thereto to the extent
of such dispute or claim, or is subject to any Insolvency Proceeding, or
becomes insolvent, or goes out of business;
(xi) the Account of any Account Debtor which
exceeds a credit limit determined by Lender, in its reasonable discretion, to
the extent such Account exceeds such limit;
(xii) Accounts the collection of which Lender
reasonably believes to be doubtful by reason of the Account Debtor's financial
condition;
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(xiii) Accounts owed by an Account Debtor that has
failed to pay twenty-five percent (25%) or more of the amount of its accounts
owed to Borrower within sixty (60) days of the due date of the applicable
invoices;
(xiv) Any portion of an Account resulting from the
application of a finance charge or other similar fee imposed as a result of
delayed payment;
(xv) Accounts with respect to which payment terms
require cash on delivery; and
(xvi) Accounts with respect to which the face
amount of any individual invoice exceeds $30,000, unless the Company, by
documentary evidence of the shipment of the goods subject thereto, satisfies
Lender.
ELIGIBLE INVENTORY: Inventory consisting of raw
materials and first quality finished goods held for sale in the ordinary course
of the Business that are located at any of Borrower's Facilities (but solely to
the extent there is in effect an acceptable Landlord's Consent as to any of
such facilities which are leased by Borrower which Inventory must strictly
comply with all of Borrower's representations and warranties to Lender;
provided, however, that the standards of eligibility may be fixed and revised
from time to time by Lender pursuant to Section 2.2.2. Eligible Inventory
shall only include products sold in the ordinary course of the Business.
Eligible Inventory shall not include obsolete items, spare parts, packaging and
shipping materials, supplies used or consumed in the Business, Inventory in
transit or, unless instruments or documents satisfactory in form and substance
to Lender are entered into in any particular instance, at the premises of third
parties (other than any of Borrower's Facilities, to the extent there is in
effect an acceptable Landlord's Consent as to such facility) or subject to a
security interest or lien in favor of any third party, bill and hold goods,
Inventory that is not subject to Lender's perfected Security Interest, returned
or defective goods, "seconds", Inventory in the possession of sales
representatives, and Inventory acquired on consignment. Eligible Inventory
shall be valued at the lower of cost (calculated on a first-in, first-out
basis) or at such Inventory's fair market value, and shall exclude any amount
representing an inter-company mark-up arising from sales between Affiliates or
any prepaid duty or tax.
EMPLOYMENT AGREEMENTS: collectively, the Employment
Agreement dated the Closing Date between Borrower and Howell A. Breedlove, the
Employment Agreement dated the Closing Date between Borrower and James E. Howe,
and the Employment Agreement dated the Closing Date between Borrower and Carl
A. Snyder.
ENVIRONMENTAL CERTIFICATE WITH COVENANTS,
REPRESENTATIONS AND WARRANTIES: an environmental certificate with covenants,
representations and warranties executed by Borrower, in form and substance
satisfactory to Lender.
ENVIRONMENTAL LAWS: any and all federal, state and
local laws that relate to or impose liability or standards of conduct
concerning public or occupational health
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and safety or the environment, as now or hereafter in effect and as have been
or hereafter may be amended or reauthorized, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.), the Hazardous Materials Transportation Act (42 U.S.C.
Section 1802 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.), the Toxic Substances Control Act (14 U.S.C. Section
2601 et seq.), the Clean Air Act (42 U.S.C. Section 7901 et seq.), the
National Environmental Policy Act (42 U.S.C. Section 4231 et seq.), the Refuse
Act (33 U.S.C. Section 407 et seq.), the Safe Drinking Water Act (42 U.S.C.
Section 300(f) et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), and all rules, regulations, codes, ordinances and
guidance documents promulgated or published thereunder, and the provisions of
any licenses, permits, orders and decrees issued pursuant to any of the
foregoing.
ENVIRONMENTAL REPORT: shall mean those reports,
notices, and items described on Exhibit "1.1E" hereto.
EQUIPMENT: all of Borrower's machinery, equipment,
office machinery, supplies, furniture, furnishings, fixtures, conveyors, tools,
parts, materials, storage and handling equipment, including, but not limited
to, computer equipment and hardware, including central processing units,
terminals, drives, memory units, printers, keyboards, screens, peripherals and
input or output devices, automotive equipment, trucks, goods (other than
consumer goods, farm products or Inventory), motor vehicles, and other
equipment of every kind and nature and wherever situated, now or hereafter
owned by Borrower or in which Borrower may have any interest (to the extent of
such interest), together with all additions and accessions thereto, all
replacements and all accessories and parts therefor, all manuals, blueprints,
know-how, warranties and records in connection therewith, all rights against
suppliers, warrantors, manufacturers, sellers or others in connection
therewith, and together with all substitutions for any of the foregoing.
ERISA: the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute thereto, and the rules and
regulations issued thereunder, as in effect from time to time.
ERISA AFFILIATE: any Person who is a member of a
group which is under common control with Borrower, who together with Borrower
is treated as a single employer within the meaning of Section 414(b), (c) and
(m) of the Code.
EVENT OF DEFAULT: any of the Events of Default set
forth in Section 8.1.
EXAMINATION FEE: shall have the meaning set forth in
Section 2.13.4.
EXCESS AVAILABILITY: shall mean, as of the date of
determination thereof, the amount by which the total Advances that Borrower
would be permitted to have outstanding, based on the formulas and reserves set
forth in Section 2.2.1 of this Loan Agreement, exceeds the sum of the Advances
then actually outstanding.
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EXCESS CASH FLOW: for any period, Operating Cash
Flow for such period less Contractual Total Debt Service for such period.
EXISTING INDEBTEDNESS: shall have the meaning set
forth in Section 2.15.
GAAP: generally accepted accounting principles as in
effect from time to time, which shall include the official interpretations
thereof by the Financial Accounting Standards Board or any successor thereto.
GENERAL INTANGIBLES: shall mean all of Borrower's
present and future general intangibles and other personal Property (including
without limitation, any and all rights of Borrower to all choses or things in
action, tax refund claims, credits, claims, demands, goodwill, licenses,
franchise agreements, subscription costs, patents, trade names, trademarks,
service marks, the Intellectual Property, copyrights, rights to royalties,
blueprints, drawings, customer lists, purchase orders, computer programs,
computer discs, computer tapes, literature, reports, catalogs, methods, sales
literature, video tapes, confidential information and trade secrets, consulting
agreements, employment agreements, leasehold interests in real and personal
Property (other than those leases subject to the Mortgage), insurance policies,
deposits with insurers relating to worker's compensation liabilities, deposit
accounts, tax refunds and proprietary rights in any Equipment), other than
"Equipment", "Inventory", "Accounts" and "Negotiable Collateral" as each such
term is defined in the Uniform Commercial Code, as well as Borrower's books and
records of any kind relating to any of the foregoing, and all products and
proceeds of the foregoing.
GOOD FUNDS: United States Dollars available to
Lender in federal funds at or before 2:00 p.m. New York, New York time on a
Business Day. Funds shall be deemed available to Lender upon receipt by
Chemical Bank, in accordance with Section 2.14.
GOVERNMENTAL BODY: any foreign, federal, state,
municipal or other government, any department, commission, board, bureau,
agency, public authority instrumentality thereof or any court or arbitrator.
HAZARDOUS MATERIALS: any pollutant (including,
without limitation, petroleum or any portion thereof), hazardous, toxic or
dangerous waste, substance or material defined as such in or for purposes of
any Environmental Law.
INCIPIENT DEFAULT: any event or condition which,
with the giving of notice or the lapse of time, or both, would become an Event
of Default.
INDEBTEDNESS: all liabilities, obligations and
reserves, contingent or otherwise, which in accordance with GAAP, would be
reflected as a liability on a balance sheet or would be required to be
disclosed in a financial statement, including, without duplication: (i) all
Indebtedness for Borrowed Money, (ii) all obligations secured by any Lien
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upon Property owned by Borrower, irrespective of whether such obligation or
liability is assumed; (iii) any obligation of Borrower guaranteeing or intended
to guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with
recourse to Borrower, but exclusive of obligations arising as the result of the
endorsement by Borrower of checks or other negotiable instruments in the
ordinary course of Borrower's business for purposes of depositing such items)
any indebtedness, lease, dividend, letter of credit, or other obligation of any
other Person; and (iv) liabilities in respect of unfunded vested benefits under
any Pension Plan or in respect of withdrawal liabilities incurred under ERISA
by Borrower or any ERISA Affiliate to any Multiemployer Plan other than in
respect to the Withdrawal Liability.
INDEBTEDNESS FOR BORROWED MONEY: without
duplication, all Indebtedness (i) in respect of money borrowed, (ii) evidenced
by a note, debenture or other like written obligation to pay money (including,
without limitation, all of Borrower's Obligations, the Permitted Senior
Indebtedness, and any Permitted Subordinated Indebtedness), and all
reimbursement or other obligations of Borrower in respect of letters of credit,
letter of credit guaranties, bankers acceptances, interest rate swaps,
controlled disbursement accounts, or other financial products; (iii) in respect
of Capitalized Leases or for the deferred purchase price of Property (other
than trade payables arising in the ordinary course of business that are not
represented by promissory notes or by other written evidence other than
invoices); or (iv) in respect of obligations under conditional sales or other
title retention agreements, and all guaranties of any or all of the foregoing.
INITIAL INTEREST RATE CAP AGREEMENT: an interest
rate cap agreement, in a form, and with a counterparty, acceptable to Lender,
pursuant to which $16,500,000 of the total amount of the Term Loan is, during
the first two Loan Years, protected against increases in the Prime Rate, to the
extent the Prime Rate exceeds 12% per annum.
INITIAL TERM: the period commencing on the Closing
Date and extending through and including the Renewal Date.
INSOLVENCY PROCEEDING: any proceeding commenced by
or against any Person under any provision of the Bankruptcy Code, or under any
other bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally
with its creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.
INTELLECTUAL PROPERTY: collectively, the Trademarks
and all patents, copyrights, trade secrets, software, etc. of Borrower and the
goodwill related thereto.
INTEREST RATE: as the context requires, either
or both of the Term Interest Rate and the Revolving Interest Rate.
INVENTORY: all present and future inventory in
which Borrower has any interest, including, but without limitation, all goods
intended for sale, lease or other disposition by Borrower, or to be furnished
under a contract of service, and all of Borrower's
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present and future raw materials, work in process, finished goods, goods
consigned to Borrower to the extent of its interest therein as consignee,
materials and supplies of any kind, nature or description which are or might be
used in connection with the packing, shipping, advertising, selling or
finishing of any such goods, all documents of title or documents representing
the same, and all records, files and writings with respect to any of the
foregoing.
INVESTMENT: shall mean, in any Person by Borrower:
(i) the amount paid or committed to be paid, or
the value of property or services contributed or committed to be contributed,
by Borrower for or in connection with the acquisition by Borrower of any stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of such Person; and
(ii) the amount of any advance, loan or extension
of credit to, or guaranty or other similar obligation with respect to any
Indebtedness of such Person by Borrower and (without duplication) any amount
committed to be advanced, loaned, or extended to, or the payment of which is
committed to be assured by a guaranty or similar obligation for the benefit of,
such Person by Borrower.
J&L: shall have the meaning set forth in Recital D.
J&L HOLDINGS: shall have the meaning set forth in
Recital A.
LANDLORD'S CONSENT: collectively, a landlord's
consent, agreement and estoppel certificate, in form and substance satisfactory
to Lender, to be delivered to Lender from the landlord of each of the leases
which is to be encumbered by Lender pursuant to the Mortgage.
LATE CHARGE: shall have the meaning set forth in
Section 2.7.
L/CS: shall have the meaning set forth in Section
2.3.1.
L/C FEE: shall have the meaning set forth in Section
2.13.6.
L/C BANK: First Interstate Bank of Arizona, N.A., or
another financial institution satisfactory to Lender.
L/C OBLIGATIONS: as at any date, an amount equal to:
(i) the aggregate outstanding amount available for drawing under the L/C(s),
as at such date; plus (ii) the aggregate L/C Reimbursement Amounts not paid to
Lender or converted into an Advance pursuant to Section 2.3.3.
L/C REIMBURSEMENT AGREEMENTS: shall have the meaning
set forth in Section 2.3.1.
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L/C REIMBURSEMENT AMOUNTS: shall have the meaning
set forth in Section 2.3.2.
LEASE: a certain Lease dated the Closing Date,
executed by Fourteenth Street Corporation, as Lessor, and Borrower, as Lessee.
LENDER: shall have the meaning set forth in the
heading of this Loan Agreement.
LENDER EXPENSES: all costs or expenses (including
taxes, photocopying, notarization, telecommunication, and insurance premiums)
required to be paid by Borrower under any of the Loan Documents that are paid
or advanced by Lender in accordance with the terms of the Loan Documents;
documentation filing, recording, publication, periodic Collateral appraisal,
environmental audit (conducted subsequent to Closing), and search fees
assessed, paid, or incurred by Lender in connection with Lender's transactions
with Borrower; reasonable costs and expenses incurred by Lender in the
disbursement of funds to Borrower (by wire transfer or otherwise); reasonable
charges paid or incurred by Lender resulting from the dishonor of checks; costs
and expenses paid or incurred by Lender in accordance with the terms of the
Loan Documents to correct any default or to enforce any provision of the Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, whether or not a sale is consummated;
reasonable costs and expenses paid or incurred by Lender in accordance with the
terms of the Loan Documents in examining Borrower's Books; costs and expenses
of third party claims or any other suit paid or incurred by Lender in enforcing
or defending the Loan Documents; and Lender's reasonable attorneys' fees and
expenses incurred in advising, structuring, drafting, reviewing, administering,
amending, terminating, enforcing (including attorneys' fees and expenses
incurred in connection with a "workout", a "restructuring", or an Insolvency
Proceeding concerning Borrower), defending, or concerning the Loan Documents,
whether or not suit is brought.
LICENSES: shall have the meaning set forth in the
Collateral Assignment of Patents and Trademarks.
LIABILITIES: shall mean, at any time, the total
liabilities of Borrower, determined in accordance with GAAP.
LIEN: any mortgage, pledge, assignment, lien,
charge, encumbrance or security interest of any kind, or the interest of a
vendor or lessor under any conditional sale agreement, Capitalized Lease, or
other title retention agreement.
LOAN: collectively, the Term Loan and all Advances
made by Lender hereunder.
LOAN DOCUMENT(S): collectively,
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(i) Loan Agreement;
(ii) Term Note;
(iii) Revolving Note;
(iv) Mortgage;
(v) Landlord's Consent;
(vi) Non-Disturbance Agreement;
(vii) Stock Pledge Agreement, including blank Stock
Powers and Assignments Apart from
Certificate, executed by J&L Holdings with
respect to the shares of Borrower pledged
thereby;
(viii) Collateral Assignment of Trademarks;
(ix) Subordination and Intercreditor Agreement;
(x) Bring Along Agreement;
(xi) Management Subordination Agreement;
(xii) Certificate of Chief Financial Officer;
(xiii) Closing Certificate;
(xiv) Solvency Certificate;
(xv) Pay-off Letters;
(xvi) Environmental Certificate with Covenants,
Representations and Warranties;
(xvii) Initial Interest Rate Cap Agreement;
(xviii) Uniform Commercial Code financing statements;
and
(xviv) such other instruments and documents as
Lender may require to evidence and
perfect the Security Interests and the
Loan,
and, individually, any one of them. As to each of the foregoing, together with
all alterations, amendments, changes, extensions, modifications, refinancings,
refundings, renewals, replacements, restatements or supplements thereto.
LOAN FEE: shall have the meaning set forth in
Section 2.13.1.
LOAN MAINTENANCE FEE: shall have the meaning set
forth in Section 2.13.5.
LOAN YEAR: a period from the Closing Date or
any annual anniversary of the Closing Date through the day preceding the
immediately succeeding annual anniversary of the Closing Date.
MAINTENANCE CAPITAL EXPENDITURES: shall have the
meaning set forth in Section 7.13.
MANAGEMENT AGREEMENT: that certain Management
Advisory Services Agreement effective as of the Closing Date among CPT, J&L
Holdings and Borrower, as in effect on the date hereof.
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MANAGEMENT EXPENSES: sums actually expended by CPT
as reasonable and necessary expenses incurred in connection with CPT's
performance of duties for which management fees are paid or payable to CPT
under the Management Agreement.
MANAGEMENT SUBORDINATION AGREEMENT: that certain
Management Subordination Agreement of even date herewith by and among Lender,
Borrower, J&L Holdings and CPT, pursuant to which the payment by Borrower to
CPT of all amounts due CPT under or arising out of the Management Agreement
(other than amounts due as payment of or reimbursement for Management Expenses)
shall be made subject and subordinate to the prior payment in full of
Borrower's Obligations, in the manner provided therein.
MATURITY DATE: shall have the meaning set forth in
Section 2.5.
MAXIMUM AMOUNT: at any given time, shall have the
meaning set forth in Section 2.2.3, after giving effect to any elections made
by Borrower pursuant thereto.
MILL-RELATED ASSETS: "essential", mill-related
assets (i.e., material components in the portion of the Business relating to
the rolling of steel shapes).
MILL-RELATED INDEBTEDNESS: Capitalized Leases
covering Mill-Related Assets and Indebtedness secured by Mill-Related PMSIs, in
each case incurred only if, after giving effect thereto: (i) no Incipient
Default or Event of Default would exist under this Loan Agreement, including,
without limitation, the limit on Capital Expenditures set forth in Section 7.13
would not be breached, (ii) the aggregate outstanding principal amount of such
Indebtedness would not at any time exceed $1,500,000, and (iii) such
Indebtedness would be financed by Lender; provided, however, that in no event
shall this provision or any other provision of the Loan Documents be, or be
deemed to be, a commitment on the part of Lender to provide such financing.
MILL-RELATED PMSI(S): purchase money security
interests, conditional sale arrangements and other similar security interests
on Mill-Related Assets; provided, however, that:
(i) Each Mill-Related PMSI shall attach only to
the asset or property acquired in such transaction and shall not extend or
cover any other assets or properties of Borrower; and
(ii) The Indebtedness secured or covered by any
Mill Related PMSI shall not exceed eighty percent (80%) of the purchase price
or cost of the asset or property acquired and shall not be renewed, extended or
prepaid from the proceeds of any Advance.
MORTGAGE: that certain Open-End Mortgage, pursuant
to which Borrower shall grant to Lender a first priority lien on and Security
Interest in the Real Estate and all improvements thereon, and in the Demised
Premises and all improvements thereon. In connection with Borrower's execution
and delivery of the Mortgage, Borrower shall provide
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Lender with a Landlord's Consent executed by the landlord with respect to the
Demised Premises.
MULTIEMPLOYER PLAN: a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA under which Borrower is an employer.
NEGOTIABLE COLLATERAL: all of Borrower's present and
future letters of credit, notes, drafts, instruments, documents, personal
property leases (wherein Borrower is the lessor), chattel paper, and Borrower's
Books relating to any of the foregoing.
NET INCOME: shall mean, for any period for which the
amount thereof is to be determined, the net income (net of any losses or
expenses) or loss of Borrower, during such period (as determined in accordance
with GAAP) after income taxes actually paid, but excluding:
(i) the earnings during such period of any Person
to which the assets of Borrower shall have been sold, transferred or disposed
of, or into which Borrower shall have merged, prior to the date of such
transaction;
(ii) any extraordinary gain or loss during such
period arising from the sale, exchange or other disposition of capital assets
including all fixed assets, whether tangible or intangible, and all inventory
sold in conjunction with the disposition of fixed assets);
(iii) any gain or loss during such period arising
from the write-up or write-down of any asset; and
(iv) any earnings or gains during such period
resulting from the receipt of any proceeds of any life insurance policy.
NOLS: shall have the meaning set forth in Section
4.28.
NON-DISTURBANCE AGREEMENTS: collectively, a
Non-Disturbance, Subordination and Attornment Agreement to be entered into
between Lender and each holder of a monetary encumbrance affecting any portion
of the Demised Premises.
NON-MILL RELATED ASSETS: "non-essential" non-mill
related assets such as office furniture, computer equipment, computer software,
telephone systems and copier machines, mobile and conveyance equipment and
non-mill real estate and improvements thereon.
NON-MILL RELATED INDEBTEDNESS: Capitalized Leases
relating to Non-Mill Related Assets and Indebtedness secured by Non-Mill PMSIs,
in each case incurred only if, after giving effect thereto: (i) no Incipient
Default or Event of Default would exist under this Loan Agreement, including,
without limitation, the limit on Capital Expenditures set forth
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in Section 7.13 would not be breached, and (ii) the aggregate outstanding
principal amount of such Indebtedness would not at any time exceed $1,500,000.
NON-MILL RELATED PMSI(S): purchase money security
interests, conditional sale arrangements and other similar security interests
on Non-Mill Related Equipment; provided, however, that:
(i) Each Non-Mill Related PMSI shall attach only
to the asset or property acquired in such transaction and shall not extend or
cover any other assets or properties of Borrower; and
(ii) The Indebtedness secured or covered by any
Non-Mill Related PMSI shall not exceed eighty percent (80%) of the purchase
price or cost of the asset or property acquired and shall not be renewed,
extended or prepaid from the proceeds of any Advance.
OPERATING AGREEMENT: any site lease, license,
equipment lease, collective bargaining agreement, servicing agreement, service
mark, trademark, permit, Governmental Body approval or other agreement of
material importance relating to the operation of the Business.
OPERATING CASH FLOW: for any period, Borrower's Net
Income plus each of the following items, to the extent deducted from the
revenues of Borrower in the calculation of Net Income for such period: (i)
Depreciation; (ii) amortization and other non-cash charges; (iii) interest
expense incurred and fees paid to Lender pursuant to this Loan Agreement; (iv)
total federal and state income tax expense determined as the accrued liability
of Borrower in respect of such period, regardless of what portion of such
expense has actually been paid by Borrower during such period; (v) loss on the
sale of property, plant or equipment; and (vi) all management fees paid to CPT
pursuant to the Management Agreement and in compliance with the terms of the
Management Subordination Agreement; and after deduction for each of (A) federal
and state income taxes, to the extent actually paid during such period; (B) all
non-cash income items recognized; (C) gain on the sale of property, plant or
equipment; and (D) all Maintenance Capital Expenditures paid by Borrower.
OVERADVANCE: shall have the meaning set forth in
Section 2.2.6.
PAY-OFF LETTER: a pay-off letter from the holder of
Existing Indebtedness, in form and substance satisfactory to Lender.
PBGC: the Pension Benefit Guaranty Corporation or
any Governmental Body succeeding to the functions thereof.
PERMITTED LIENS: any of the following Liens:
(i) the Security Interests;
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(ii) the Permitted Senior Indebtedness Liens;
(iii) Liens for taxes or assessments, judgments
that are bonded or stayed pending appeal and similar charges, which either are
(A) not delinquent or (B) being contested diligently and in good faith by
appropriate proceedings, and as to which Borrower has set aside reserves on its
books which are reasonably satisfactory to Lender;
(iv) statutory and common law Liens, such as
mechanic's, materialman's, warehouseman's, carrier's or other like Liens,
incurred in good faith in the ordinary course of business, provided that the
underlying obligations relating to such Liens are paid in the ordinary course
of business or the repayment of such obligations is otherwise secured in a
manner satisfactory to Lender;
(v) zoning ordinances and, to the extent
acceptable to Lender, easements, licenses, reservations, provisions, covenants,
conditions and other title exceptions;
(vi) Liens to secure payment of insurance premiums
(A) to be paid in accordance with applicable laws in the ordinary course of
business relating to payment of worker's compensation, or (B) that are required
for the participation in any fund in connection with worker's compensation,
unemployment insurance, old age pensions or other social security programs; and
(vii) Subordinated Indebtedness Liens.
PERMITTED PRIOR LIENS:
(i) the Permitted Liens described in clauses (ii)
of the definition of Permitted Liens;
(ii) the Permitted Liens described in clauses
(iii) and (iv) of such definition that are accorded priority to the Security
Interests by law; and
(iii) the Permitted Liens described in clauses (v)
and (vi) of such definition, subject to the limitations set forth therein.
PERMITTED SENIOR INDEBTEDNESS: shall mean (i)
Non-Mill Related Indebtedness and (i) Mill Related Indebtedness.
PERMITTED SENIOR INDEBTEDNESS LIENS: shall mean (i)
Non-Mill Related PMSIs, (ii) Mill Related PMSIs and (iii) the interests of the
lessor under any Capitalized Lease permitted to exist hereunder.
PERMITTED SUBORDINATED INDEBTEDNESS: shall mean (i)
the Indebtedness evidenced by the Senior Subordinated Notes, (ii) management
fees payable to CPT pursuant to the Management Agreement; and (iii) State Debt.
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PERSON: any individual, firm, corporation, business
enterprise, trust, association, joint venture, partnership, limited liability
company, Governmental Body or other entity, whether acting in an individual,
fiduciary or other capacity.
PLAN: any employee pension benefit plan subject to
Title IV of ERISA, established or maintained by Borrower, or any such Plan to
which Borrower is required to contribute on behalf of any of its employees.
PNC: PNC Bank, National Association.
PREPAYMENT PREMIUM: shall have the meaning set forth
in subsection 2.9.1(b).
PRIME RATE: that rate of interest announced publicly
by Citibank, N.A., New York, New York, as its base borrowing rate, as it exists
from time to time, notwithstanding the fact that some persons may borrow money
at less than the Prime Rate.
PROPERTY: all types of real, personal or mixed
property and all types of tangible or intangible property.
PROPOSAL: that certain proposal letter of Lender
dated February 3, 1995 addressed to CPT.
QUALIFIED DEPOSITORY: a member bank of the Federal
Reserve System having a combined capital and surplus of at least $100,000,000.
REAL ESTATE: all real estate and improvements
located thereon owned by Borrower, all of which shall constitute a portion of
the Collateral and which shall be encumbered by the Mortgage, specifically
being those certain parcels located in Aliquippa, Pennsylvania and Beaver
Falls, Pennsylvania, as legally described on Exhibit "1.1C" hereto and by this
reference made a part hereof.
REAL PROPERTY: collectively, the Demised Premises
and the Real Estate.
RELATED PERSON: as to any Person, any trade,
business or other entity, whether or not incorporated, which, together with
such Person, is treated as a single employer under Section 414(c) of the Code.
RENEWAL DATE: shall have the meaning set forth in
Section 2.6.
RENEWAL FEE: shall have the meaning set forth in
Section 2.13.2.
REPURCHASE AGREEMENT: that certain Repurchase
Agreement dated as of the Closing Date by and among Borrower, CPT and certain
holders listed therein, as in effect on the date hereof.
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REVOLVING INTEREST RATE: the Revolving Loan shall
bear interest at a variable rate per annum, equal to the Prime Rate plus one
and one-half percent (1.50%). Changes in the Prime Rate shall take effect in
the Revolving Interest Rate immediately.
REVOLVING LOAN: the loan provided in Section 2.2.
REVOLVING LOAN TERMINATION FEE: shall have the
meaning set forth in Section 2.10.1(b).
REVOLVING NOTE: that certain Multiple Advance Note,
dated the Closing Date, in an aggregate amount of up to $15,000,000, which
shall evidence the Revolving Loan.
SECURITIES ACT: the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, as in effect from
time to time.
SECURITY INTERESTS: the Liens in the Collateral
granted to Lender pursuant to certain of the Loan Documents.
SELLER(S): shall have the meaning set forth in
Recital A.
SENIOR SUBORDINATED NOTES: shall mean collectively
Borrower's 13% Senior Subordinated Secured Notes dated the Closing Date in the
aggregate principal amount of $23,000,000.
SENIOR SUBORDINATED NOTE DOCUMENTS: shall mean
collectively the Note and Warrant Purchase Agreement dated as of the Closing
Date by and among Borrower and the Subordinated Lenders, the Common Stock
Purchase Warrants issued thereunder, the Senior Subordinated Notes, the
Repurchase Agreement dated as of the Closing Date among Borrower, CPT and
certain holders named therein, the Management Subordination Agreement dated the
Closing Date by and among the Borrower, J&L Holdings, CPT and the Subordinated
Lenders, the Pledge Agreement dated the Closing Date by and between J&L Holdings
and the Subordinated Lenders, the Collateral Assignments of Trademarks and
Security Agreement dated the Closing Date by and between the Borrower and the
Subordinated Lenders, the Open-End Mortgage dated the Closing Date executed by
the Borrower in favor of the Subordinated Lenders, and all agreements, documents
and instruments executed and/or delivered in connection therewith, all as in
effect on the date hereof.
SHAREHOLDER(S): collectively, Howell A. Breedlove,
James E. Howe and Carl A. Snyder, and individually, any one of them.
SOLVENCY CERTIFICATE: a solvency certificate
executed by Borrower in form and substance satisfactory to Lender.
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SOLVENT: shall mean, when used with respect to any
Person, that as of the date as to which the Person's solvency is to be
measured:
(i) the fair saleable value of its assets is in
excess of the total amount of its liabilities (including contingent
liabilities) as they become absolute and matured;
(ii) it has sufficient capital to conduct its
business; and
(iii) it is able to meet its debts as they mature.
SPECIAL DEPOSIT ACCOUNT AGREEMENT(S): those certain
agreements, in form and substance satisfactory to Lender, by and among Lender,
Borrower and the Agent Bank pursuant to which the Blocked Account(s) are
established.
STATE DEBT: Indebtedness of Borrower to Pennsylvania
municipalities or state agencies incurred subsequent to the Closing only if:
(i) after giving effect thereto, no Incipient Default or Event of Default would
exist under this Loan Agreement, (ii) after giving effect thereto, the
aggregate principal amount of such Indebtedness would not exceed $2,500,000,
(iii) such Indebtedness, and the Liens securing such Indebtedness, would be
subject and subordinate to the Borrower's Obligations and the Security
Interests pursuant to one or more subordination and intercreditor agreements
executed in favor of Lender and in form and substance satisfactory to Lender
(each, a "STATE SUBORDINATION AGREEMENT"); and (vi) the proceeds of such
Indebtedness would be used to reimburse Borrower for funds expended in
connection with the purchase and installation of a reheat furnace and related
projects.
STATE SUBORDINATION AGREEMENT: shall have the
meaning set forth in the definition of State Debt in this Article 1.
STOCK PLEDGE AGREEMENT: that certain Stock Pledge
Agreement of even date herewith by and between Lender and J&L Holdings whereby
J&L Holdings pledges all of the issued and outstanding stock of Borrower to
Lender.
SUBORDINATED INDEBTEDNESS LIENS: Liens securing the
Indebtedness under the Senior Subordinated Notes subject to the terms of the
Subordination and Intercreditor Agreement and Liens securing the State Debt
subject to the terms of the State Subordination Agreement(s).
SUBORDINATED LENDERS: collectively, The Paul Revere
Life Insurance Company, The Paul Revere Variable Annuity Insurance Company, The
Paul Revere Protective Life Insurance Company and Rhode Island Hospital Trust
National Bank, as trustee for The Textron Collective Investment Trust.
SUBORDINATION AND INTERCREDITOR AGREEMENT: that
certain Subordination and Intercreditor Agreement dated the Closing Date by and
among Lender,
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Borrower and Subordinated Lenders pursuant to which the payment by Borrower to
Subordinated Lenders of any amounts due Subordinated Lenders in respect of the
Senior Subordinated Note Documents and the collateral security therefor, shall
be made subject and subordinate to the prior payment in full of Borrower's
Obligations, and to the Security Interests, to the extent and in the manner
provided therein.
SUBSEQUENT ADVANCE AMOUNT: that portion of the Term
Loan, in the aggregate principal amount of up to $3,000,000, which shall be
made available to Borrower following the Closing, in accordance with the terms
and conditions set forth in Section 2.1.5.
SUBSEQUENT ADVANCES: shall mean any portion of the
Capital Expenditure Line made available to Borrower pursuant to Section 2.1.5
or, when stated in the singular, any individual disbursement under the Capital
Expenditure Line.
SUBSIDIARIES: shall mean, collectively, any
subsidiary corporations organized by Borrower in the future, whether under the
laws of the United States of America, any state thereof, or any foreign country
or subdivision thereof, with respect to which Borrower owns not less than 51%
of the issued and outstanding equity interests in such entity.
SUNDERLAND: Sunderland Industrial Holdings
Corporation, a Delaware corporation.
TANGIBLE ASSETS: shall mean, at any time, the total
assets of Borrower determined in accordance with GAAP excluding deferred
assets, patents, copyrights, trademarks, goodwill and other General Intangibles
and Investments.
TANGIBLE NET WORTH: shall mean, at any time,
Tangible Assets minus Liabilities.
TAX SHARING AGREEMENT: shall have the meaning set
forth in Section 4.29.
TCI: shall have the meaning set forth in Recital D.
TERM INTEREST RATE: the Term Loan shall bear
interest at a variable rate per annum, equal to the Prime Rate plus two percent
(2%). Changes in the Prime Rate shall take effect in the Term Interest Rate
immediately.
TERM LOAN: the term loan made by Lender to Borrower
pursuant to the terms and subject to the conditions of this Loan Agreement, as
evidenced by the Term Note.
TERM NOTE: that certain promissory note, dated the
Closing Date, in an original aggregate principal amount of $25,000,000,
delivered by Borrower in favor of Lender, which shall evidence the Term Loan.
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TITLE POLICIES: shall have the meaning set forth in
Section 4.18.
TRADEMARKS: shall have the meaning set forth in the
Collateral Assignment of Trademarks.
UNUSED LINE FEE: shall have the meaning set forth in
Section 2.13.3.
WARRANTS: the Common Stock Purchase Warrants issued
by Borrower pursuant to the Senior Subordinated Note Documents, and all
Warrants issued in exchange therefor or replacement thereof.
WITHDRAWAL LIABILITY: the liability of Borrower
referred to in the Notice and Demand for Payment of Withdrawal Liability, dated
January 23, 1995 addressed to CPT from the Industrial & Allied Employees Union
Local No. 73 Pension Plan.
1.2 TIME PERIODS. In this Loan Agreement and the other
Loan Documents, in the computation of periods of time from a specified date to
a later specified date, (i) the word "from" means "from and including", (ii)
the words "to" and "until" each mean "to, but excluding" and (iii) the words
"through" "end of" and "expiration" each mean "through and including". Unless
otherwise specified, all references in this Loan Agreement and the other Loan
Documents to (i) a "month" shall be deemed to refer to a calendar month, (ii) a
"quarter" shall be deemed to refer to a calendar quarter, and (iii) a "year"
shall be deemed to refer to a calendar year.
1.3 ACCOUNTING TERMS AND DETERMINATIONS. All accounting
terms not specifically defined herein shall be construed, all accounting
determinations hereunder shall be made, and all financial statements required
to be delivered pursuant hereto shall be prepared, in accordance with GAAP.
1.4 REFERENCES. All references in this Loan Agreement to
"Article", "Section", "subsection", "subparagraph", "clause" or "Exhibit",
unless otherwise indicated, shall be deemed to refer to an Article, Section,
subsection, subparagraph, clause or Exhibit, as applicable, of this Loan
Agreement. All of the schedules and exhibits attached to this Loan Agreement
shall be deemed incorporated herein by reference.
1.5 LENDER'S DISCRETION. Whenever the terms
"satisfactory to Lender", "determined by Lender", "acceptable to Lender",
"consent of Lender", "Lender shall elect", "Lender shall request" or similar
terms are used in the Loan Documents, except as otherwise specifically provided
therein, such terms shall mean satisfactory to, at the election of, determined
by, acceptable to or requested by, as applicable, Lender in its sole and
unlimited discretion.
1.6 BORROWER'S KNOWLEDGE. Any statements,
representations or warranties that are based upon the knowledge of Borrower
shall be deemed to have been made after such due inquiry by Borrower as is
reasonable under the circumstances existing at the time of the
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making of such inquiry and at the time of the making of such statement,
representation or warranty with respect to the matter in question.
ARTICLE 2. LOAN AND TERMS OF PAYMENT
2.1 TERM LOAN.
2.1.1 TERM LOAN. Lender agrees, on the terms and
conditions hereinafter set forth, to extend a term loan to Borrower in the
aggregate principal amount of $25,000,000, including the Subsequent Advance
Amount available under the Capital Expenditure Line. The Term Loan shall be
evidenced by the Term Note in favor of Lender, executed by Borrower and
delivered to Lender on the date hereof.
2.1.2 REBORROWING. Except as permitted under
Section 2.1.5, Borrower shall not be entitled to reborrow any portion of the
principal balance of the Term Loan that is repaid or prepaid.
2.1.3 DISBURSEMENT OF TERM LOAN ON CLOSING DATE.
On the Closing Date, provided no Incipient Default or Event of Default shall
exist and all of the terms and conditions set forth in Article 4 shall have
been satisfied, Lender shall loan the Acquisition Advance, the proceeds of
which shall be disbursed in accordance with the instructions set forth on the
Disbursement Instructions.
2.1.4 NOTIFICATION OF CLOSING. Borrower shall have
provided Lender with at least forty-eight (48) hours prior written notice of
the Closing, to enable Lender to arrange for the availability of funds. In the
event the Closing does not take place on the date specified by Borrower to
Lender through no fault of Lender, Borrower shall reimburse Lender for Lender's
costs to maintain the necessary funds available for the Closing, at the rate of
two percent (2%) per annum on the amount of the Acquisition Advance, for the
number of days which elapse between the date specified in Borrower's notice and
the date upon which the Closing actually occurs (which number of days shall not
include the date specified in Borrower's notice, but shall include the Closing
Date).
2.1.5 CAPITAL EXPENDITURE LINE - BORROWING. The
Capital Expenditure Line shall be made available to Borrower during the period
commencing on the Closing and ending on the Capital Expenditure Line Borrowing
Termination Date in one or more revolving Subsequent Advances, subject to the
following terms and conditions: (i) no Subsequent Advances shall be made
which, after giving effect thereto, would cause the aggregate principal amount
of all Subsequent Advances then outstanding to exceed Three Million
($3,000,000) Dollars; (ii) no Incipient Default or Event of Default shall then
exist or would exist after giving effect to the proposed Subsequent Advance;
(iii) each Subsequent Advance shall be applied by Borrower to finance Capital
Expenditures for the expansion, improvement and/or replacement of Borrower's
United States facilities; (iv) Borrower shall have notified Lender in writing
not less than fifteen (15) days prior to the date upon which the
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proposed Subsequent Advance is to be made, specifying the amount of such
advance and the Capital Expenditure to be financed thereby; (v) each Subsequent
Advance (other than a Subsequent Advance which, after giving effect thereto,
would cause the aggregate of all Subsequent Advances to equal $3,000,000) shall
be in the amount of at least $100,000; (vi) Lender shall have received bills,
invoices, purchase orders or other documents satisfactory to Lender relating to
the proposed Capital Expenditure; (vii) Lender shall be satisfied that it will
receive concurrently with the funding of such proposed Subsequent Advance a
purchase money security interest in the Capital Expenditure being financed by
the Subsequent Advance; (viii) Lender shall be reasonably satisfied with the
cost benefit analysis relating to the proposed Capital Expenditure provided by
Borrower, or with Borrower's other justification for the proposed acquisition;
(ix) the amount of the advance shall not exceed eighty percent (80%) of the
purchase price or cost of the Capital Expenditures proposed to be purchased;
and (x) Lender shall have no obligation to fund any Subsequent Advances after
the Capital Expenditure Line Borrowing Termination Date. Lender reserves the
right, at its discretion, to make any Subsequent Advance by funding directly to
the seller of the Capital Expenditure being financed, and to require the filing
of a UCC-1 financing statement prior to such funding, if Lender deems such to
be necessary or appropriate in order to assure itself of a purchase money
security interest in the Capital Expenditure item. Borrower may, subject to
the terms and conditions hereof, repay and prepay the Subsequent Advances, in
whole at any time and in part from time to time. Any amounts so prepaid shall
be in increments of not less than $100,000 and (I) may, if repaid at any time
prior to the Capital Expenditure Line Borrowing Termination Date, be reborrowed
hereunder, and (II) shall, if prepaid thereafter, be subject to the provisions
of Section 2.9
2.2 REVOLVING LOAN.
2.2.1 REVOLVING ADVANCES. Subject to the terms and
conditions of this Loan Agreement, and so long as no Event of Default or
Incipient Default has occurred and is continuing, Lender agrees to make
revolving Advances (collectively, the "REVOLVING LOAN") to Borrower in an
aggregate principal amount not to exceed the lesser of (x) the Maximum Amount
and (y) the Borrowing Base; provided, however, that the aggregate principal
amount of all Advances made by Lender to Borrower shall not exceed the Maximum
Amount. The Revolving Loan shall be evidenced by and repaid pursuant to the
Revolving Note in favor of Lender, executed by Borrower and delivered to Lender
on the date hereof.
2.2.2 REDUCTION IN ADVANCE RATES; REVISION IN
ELIGIBILITY STANDARDS. Notwithstanding anything to the contrary contained in
Section 2.2.1 or in the definitions of Borrowing Base, Eligible Accounts and
Eligible Inventory to the contrary, Lender may, in its reasonable discretion,
reduce the advance rates applicable to Eligible Accounts and Eligible Inventory
set forth in the definition of Borrowing Base, and modify the standards for
eligibility of Accounts and Inventory set forth in the definitions of Eligible
Accounts and Eligible Inventory. In exercising its rights pursuant to this
Section 2.2.2, Lender acknowledges that the advance rates specified in the
definition of Borrowing Base, and the standards for eligibility set forth in
the definitions of Eligible Accounts and Eligible Inventory were negotiated for
by Borrower and constituted a material element of Borrower's
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decision to borrow the Revolving Loan from Lender. Borrower acknowledges that
the flexibility inherent in this Section 2.2.2 was of material importance to
Lender with respect to Lender's willingness to agree to the advance rates
specified in the definition of Borrowing Base and to the standards for
eligibility set forth in the definitions of Eligible Accounts and Eligible
Inventory for the duration of the Initial Term.
2.2.3 MAXIMUM BORROWINGS. Borrower acknowledges
that Lender is not obligated to permit Borrower's Obligations under the
Revolving Loan, at any time, to exceed the principal amount of Fifteen Million
($15,000,000) Dollars. The term "Maximum Amount" shall initially mean the
maximum principal indebtedness permitted under the Revolving Loan of
$15,000,000 as of the Closing. If Borrower's Obligations in respect of the
Revolving Loan exceeds the Maximum Amount or any other limitation herein set
forth, all Borrower's Obligations or liabilities shall nevertheless constitute
Obligations under this Loan Agreement, shall be entitled to the benefit of all
security and protection under this Loan Agreement and the other Loan Documents,
and such excess shall be paid immediately upon demand. The above provisions
and certain other provisions of this Loan Agreement are intended to set forth
the manner of computation of certain limitations of the amounts which Lender
may loan or Advance to Borrower, but the Security Interests, Liens or Mortgages
granted to Lender in any Collateral shall not in any way be limited by any such
provision or by the type or types of Collateral utilized in making any such
computation.
2.2.4 AUTHORIZATION; DEPOSIT ACCOUNT. Lender is
authorized to make Advances under this Loan Agreement based upon telephonic or
other instructions received from anyone Lender reasonably believes to be an
Authorized Officer of Borrower or, without instructions, if in Lender's
discretion such Advances are necessary to meet Borrower's Obligations.
Borrower agrees to establish and maintain a single designated deposit account
for the purpose of receiving the proceeds of the Advances requested by Borrower
and made by Lender hereunder. Unless otherwise agreed by Lender and Borrower,
any Advance requested by Borrower and made by Lender hereunder shall be made to
such designated deposit account. The proceeds of the Advances made under this
Section 2.2 shall be used by Borrower, consistent with this Loan Agreement.
Subject to Section 2.10, amounts borrowed pursuant to this Section 2.2 may be
repaid and, so long as no Incipient Default or Event of Default has occurred
and is continuing, reborrowed at any time during the term of this Loan
Agreement.
2.2.5 MANNER OF BORROWING; REAFFIRMATION OF
REPRESENTATIONS AND WARRANTIES; NO DEFAULT. Borrower shall notify Lender not
later than 12:00 noon New York, New York time, on any Business Day upon which
an Advance is requested to be made. Borrower shall deliver to Lender a request
for an Advance specifying the amount and the requested date of such Advance,
which shall be a Business Day. Each Advance shall be in a minimum amount of
$5,000 and integral multiples of $1,000 in excess of that amount. Each request
by Borrower for an Advance shall be deemed to constitute an affirmation by
Borrower that:
(i) each of the representations and warranties
made by Borrower in the most recent Borrowing Base Certificate, Article 5 of
this Loan Agreement and in each of
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the other Loan Documents (after taking into account and giving effect to all
notices or reports provided to Lender subsequent to the Closing Date, to the
extent such notices qualify or otherwise update matters addressed by such
representations and warranties, but excluding representations and warranties
contained in Section 5.10 to the extent any such representations or warranties
relate to pro forma balance sheets, financial statements, or projections as to
which Borrower is not required to deliver updated information) is true and
correct in all material respects as of the date of the request, and, as of the
date of such request, there does not exist any fact or condition known to
Borrower which Borrower is obligated, under the terms of this Loan Agreement or
any of the Loan Documents, to disclose to Lender which has not been so
disclosed or which is necessary to be disclosed in order to make the statements
contained herein or in the other Loan Documents not misleading; and
(ii) no Incipient Default or Event of Default has
occurred or would result from the making of an Advance.
2.2.6 BORROWER'S OVERADVANCES. If, at any time or
for any reason, the amount of Borrower's Obligations pursuant to this Section
2.2 is greater than the amount permitted to be outstanding pursuant to this
Section 2.2.1 (an "OVERADVANCE"), Borrower shall immediately pay to Lender, in
cash, the amount of such excess. All Overadvances shall constitute a portion
of Borrower's Obligations and shall be secured by the Security Interests.
2.3 LETTERS OF CREDIT.
2.3.1 ISSUANCE OF LETTERS OF CREDIT. Lender
shall, subject to the terms and conditions of this Loan Agreement, at the
request of Borrower at any time and from time to time prior to the termination
of the Revolving Loan, cause the L/C Bank to issue for the account of Lender in
support of certain obligations of Borrower, one or more standby letters of
credit, as may be requested from time to time by Borrower, available against
sight drafts and payable at sight, to beneficiaries to be designated by
Borrower (each an "L/C" and collectively, the "L/CS"). The L/Cs shall be in
form and substance satisfactory to the L/C Bank and Lender and shall provide
that drafts drawn thereunder must be presented to the L/C Bank on or prior to
the expiration date thereof. The L/Cs shall be issued by the L/C Bank pursuant
to reimbursement agreements in form and substance satisfactory to the L/C Bank
and Lender (each, an "L/C REIMBURSEMENT AGREEMENT" and collectively, the "L/C
REIMBURSEMENT AGREEMENTS"). The aggregate amount of all outstanding L/C
Obligations shall not exceed $500,000 and shall be reserved against the
availability of the Revolving Loan.
2.3.2 REIMBURSEMENT. Pursuant to the L/C
Reimbursement Agreements, Lender shall agree to reimburse the L/C Bank in full
for any amounts drawn under any L/C and all interest, fees, and other charges
payable with respect thereto and shall agree to indemnify the L/C Bank against
any loss, costs, claims, expenses and liabilities incurred by the L/C Bank in
connection with the issuance of an L/C (all such amounts paid by Lender
pursuant to this Section 2.3.2 are hereinafter referred to as the "L/C
REIMBURSEMENT AMOUNTS").
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2.3.3 PAYMENT OF L/C REIMBURSEMENT AMOUNTS.
Borrower shall pay to Lender in Good Funds immediately upon demand therefor any
L/C Reimbursement Amount incurred by Lender, and any amount thereof not paid
when due shall bear interest at the Default Rate; provided, however, that so
long as the Revolving Loan remains outstanding, Borrower hereby irrevocably
authorizes and directs Lender concurrently with the incurrence by Lender of any
L/C Reimbursement Amount to make an Advance under the Revolving Loan in a
principal amount equal to such L/C Reimbursement Amount and to apply the
proceeds of such Advance directly to the payment of such L/C Reimbursement
Amount without first disbursing such proceeds to Borrower.
2.3.4 INDEMNIFICATION. Without limiting the
foregoing, Borrower hereby agrees to protect, indemnify and hold Lender
harmless from and against any and all claims, actions, suits and other legal
proceedings, and from and against any and all losses, claims, demands,
liabilities, damages, costs, charges, reasonable counsel fees and other
expenses which Lender may, at any time incur by reason of or in consequence of
or arising out of the issuance of any L/C or the execution, delivery or
performance by Lender of the L/C Reimbursement Agreements.
2.4 INTEREST.
2.4.1 TERM INTEREST RATE. Except as provided in
Section 2.8, Borrower's Obligations with respect to the Term Loan shall bear
interest at the Term Interest Rate.
2.4.2 REVOLVING INTEREST RATE. Except as provided
in Section 2.8, Borrower's Obligations with respect to the Revolving Loan shall
bear interest at the Revolving Interest Rate.
2.4.3 INTEREST COMPUTATION AND PAYMENT. Interest
shall be computed on the basis of a year consisting of 360 days and charged for
the actual number of days during the period for which interest is being
charged. Interest on the Loan shall be payable monthly in arrears on the first
Business Day of each month, commencing May 1, 1995.
2.4.4 MAXIMUM INTEREST. Notwithstanding any
provision to the contrary herein contained, Lender shall not collect a rate of
interest on any obligation or liability due and owing by Borrower to Lender in
excess of the maximum contract rate of interest permitted by applicable law.
Lender and Borrower have agreed that the interest laws of the State of Arizona
shall govern the relationship between them, but in the event of a final
adjudication to the contrary, Borrower shall be obligated to pay, nunc pro
tunc, to Lender only such interest as then shall be permitted by the laws of
the state found to govern the contract relationship between Lender and
Borrower. All interest found in excess of that rate of interest allowed and
collected by Lender shall be applied to the principal balance in such manner as
to prevent the payment and collection of interest in excess of the rate
permitted by applicable law.
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2.5 PAYMENT OF PRINCIPAL ON TERM LOAN.
2.5.1 ACQUISITION ADVANCE. The principal balance
of the Acquisition Advance shall be paid in sixty-nine (69) consecutive monthly
installments on the first Business Day of each month commencing on the first
Business Day of the fourth calendar month following the Closing. The first
sixty-eight (68) installments shall be in the amounts set forth on Exhibit
"2.5.1" hereto. Any remaining principal and any other sums due and owing
pursuant to the Loan Documents in respect of the Acquisition Advance, plus
accrued and unpaid interest thereon shall be due and payable, together with the
sixty-ninth (69th) installment on the first Business Day of the seventy-second
(72nd) month following the Closing (the "MATURITY DATE").
2.5.2 CAPITAL EXPENDITURE LINE. Borrower shall pay
to Lender the principal amount of all Subsequent Advances made by Lender
outstanding on the Capital Expenditure Line Borrowing Termination Date in
consecutive monthly installments commencing on the first Business Day of the
first month following the Capital Expenditure Line Borrowing Termination Date
and continuing on the first Business Day of each month thereafter, with the
amount of each such installment to equal 1/36th of the principal amount of all
Subsequent Advances outstanding on the Capital Expenditure Line Borrowing
Termination Date. Any remaining principal and any other sums due and owing
pursuant to the Loan Documents in respect of the Subsequent Advances, plus
accrued and unpaid interest thereon, shall be due and payable on the Maturity
Date.
2.6 REVOLVING LOAN TERM; RENEWAL. The Revolving Loan
shall become effective upon the execution and delivery hereof by Borrower and
Lender and shall continue in full force and effect for a term ending on the
date (the "RENEWAL DATE") that is five (5) years from the Closing Date. The
Revolving Loan may be renewed for one (1) successive one (1) year period
thereafter, at the sole discretion of Lender. The foregoing notwithstanding,
Lender shall have the right to terminate its obligations under this Loan
Agreement immediately and without notice upon the occurrence of an Event of
Default.
2.7 LATE CHARGES. If a payment of principal or interest
to be made pursuant to this Loan Agreement becomes past due for a period in
excess of five (5) days, Borrower shall pay on demand to Lender a late charge
of two percent (2%) of the amount of such overdue payment (the "LATE CHARGE").
2.8 DEFAULT RATE. Following the occurrence of an Event
of Default, Borrower's Obligations shall bear interest at the Default Rate.
2.9 PREPAYMENT OF THE TERM LOAN.
2.9.1 VOLUNTARY PREPAYMENT. Borrower may
voluntarily prepay the principal balance of the Term Loan in whole, but (except
as provided in Section 2.9.3 and except for repayments of Subsequent Advances
prior to the Capital Expenditure Line Borrowing Termination Date) not in part,
at any time, subject to the following conditions:
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(a) not less than thirty (30) days prior to the
date upon which Borrower desires to make such prepayment, Borrower shall
deliver to Lender written notice of its intention to prepay, which notice shall
be irrevocable and state the prepayment date; and
(b) Borrower shall pay to Lender, concurrently
with such prepayment, (i) a prepayment premium (the "PREPAYMENT PREMIUM") equal
to three percent (3%) of the amount prepaid; (ii) accrued and unpaid interest
through the date of such prepayment on the principal balance being prepaid; and
(iii) any and all of the other Borrower's Obligations then due which remain
unpaid, including without limitation, all Lender Expenses and all fees payable
in accordance with Section 2.13.
All of the foregoing amounts, including without limitation the Prepayment
Premium, shall continue to be secured by all of the Collateral until paid in
full. Repayments of Subsequent Advances prior to the Capital Expenditure Line
Borrowing Termination Date shall not, unless made together with a prepayment in
full of the Acquisition Advance and a concurrent termination of the Revolving
Loan, be deemed a prepayment of the Term Loan and shall not be subject to the
Prepayment Premium.
2.9.2 EXCESS CASH FLOW PREPAYMENTS. Within thirty
(30) days after the receipt by Lender of the financial statements described in
Section 6.3.2 for any year beginning with Borrower's fiscal year ending June
30, 1995, Lender may deliver a notice to Borrower requiring Borrower to repay a
portion of the Term Loan in an amount up to fifty percent (50%) of Excess Cash
Flow for such year. Any prepayments required under this Section 2.9.2 are
strictly at the sole option of Lender; provided, however, that the amount of
such payment shall be reduced, or such payment shall not be made, as the case
may be, to the extent necessary to result, after giving effect to such payment,
in Borrower's Excess Availability not being less than $1,500,000.
2.9.3 NO PREPAYMENT PREMIUM. No Prepayment Premium
shall be payable with respect to any prepayment received by Lender (i) pursuant
to Section 2.9.2, (ii) resulting from the application by Lender of insurance or
condemnation proceeds arising from the Collateral, (iii) arising as the result
of the application of any proceeds from the sale or disposition of any
Collateral with respect to which such proceeds are not applied to the purchase
of replacement or substitute Collateral pursuant to Section 7.8, (iv) arising
as a result of a partial prepayment made after the first thirteen (13) months
following the Closing with the proceeds of an initial public offering of equity
securities by J&L Holdings or a secondary offering by CPT, or (v) arising as a
result of a prepayment in full of the Loan (and concurrent termination of the
Revolving Loan) made after the first thirteen (13) months following the Closing
with the proceeds of an initial public offering of equity securities by J&L
Holdings or a secondary offering by CPT or with the proceeds of Indebtedness to
an institutional lender, or a combination thereof.
2.9.4 INVOLUNTARY PREPAYMENT. Any payment of the
principal balance received by Lender resulting from the exercise by Lender of
any remedy available to Lender subsequent to the occurrence of an Event of
Default and the acceleration of Borrower's
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Obligations shall be deemed to be a prepayment subject to the provision of this
Section 2.9, and the applicable Prepayment Premium (calculated in accordance
with subsection 2.9.1(b)) and any other payment required under subsection
2.9.1(b) shall be payable on demand with respect to such payment.
2.9.5 EARLY TERMINATION OF REVOLVING LOAN. In the
event the Revolving Loan is terminated prior to the expiration of the Initial
Term, the entire balance owing with respect to the Term Loan, including,
without limitation, all accrued interest thereon, any and all other sums then
due to Lender with respect to the Revolving Loan and the Term Loan, and any
Prepayment Premium determined in accordance with Section 2.9.1, shall, at the
option of Lender, be simultaneously due and payable, and the Capital
Expenditure Line terminated, and all of the foregoing amounts shall continue to
be secured by all of the Collateral until paid in full.
2.10 TERMINATION OF REVOLVING LOAN.
2.10.1 REVOLVING LOAN EARLY TERMINATION. Borrower
may voluntarily terminate the Revolving Loan, at any time, subject to the
following conditions:
(a) not less than thirty (30) days prior to the
date upon which Borrower desires to terminate the Revolving Loan, Borrower
shall deliver to Lender written notice of its intention to terminate, which
notice shall be irrevocable and shall state the termination date; and
(b) Borrower shall pay to Lender, on the
termination date stated in Borrower's notice of termination: (i) a termination
fee (the "REVOLVING LOAN TERMINATION FEE"), in order to compensate Lender for
its reliance expenses and loss of anticipated profits, which the parties hereto
agree are not susceptible of accurate estimation, equal to three percent (3%)
of the Average Daily Outstandings calculated based on the 360 days immediately
preceding the effective date of the termination of the Revolving Loan; (ii)
accrued and unpaid interest through the date of such termination on the
outstanding amount under the Revolving Loan; and (iii) any and all of the other
Borrower's Obligations then due which remain unpaid, including, without
limitation, all Lender Expenses and all fees payable in accordance with Section
2.13.
2.10.2 EFFECT OF REVOLVING LOAN TERMINATION. On
the date of termination of the Revolving Loan, all of Borrower's Obligations
(including (if the termination of the Revolving Loan is an early termination
under Section 2.10.1), without limitation, at Lender's option, the Term Loan,
all accrued interest thereon, and any and all other sums then due to Lender
with respect to the Term Loan, including without limitation a Prepayment
Premium determined in accordance with Section 2.9.1 of this Loan Agreement),
shall become immediately due and payable without notice or demand. No
termination of the Revolving Loan, however, shall relieve or discharge Borrower
of Borrower's duties, Borrower's Obligations, or covenants hereunder, and
Lender's continuing Security Interest in the Collateral and the Assigned
Contracts shall remain in effect until all of Borrower's Obligations
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have been fully discharged and Lender's obligation to provide Advances
hereunder is terminated. If Borrower has sent a notice of termination pursuant
to the provisions of Section 2.10.1(a) but fails to pay in full all of
Borrower's Obligations as of the date set forth in said notice, then Lender
may, but shall not be required to, renew the provisions of this Loan Agreement
with respect to the Revolving Loan for an additional term through the original
Renewal Date.
2.10.3 NO REVOLVING LOAN TERMINATION FEE. No
Revolving Loan Termination Fee shall be payable with respect to any prepayment
received by Lender pursuant to (i) an application by Lender of insurance or
condemnation proceeds arising from the Collateral, or (ii) arising as a result
of a prepayment in full of the Loan (and concurrent early Termination of the
Revolving Loan) made after the first thirteen (13) months following the Closing
with the proceeds of an initial public offering of equity securities by J&L
Holdings or a secondary offering by CPT or with the proceeds of Indebtedness to
an institutional lender, or a combination thereof.
2.10.4 INVOLUNTARY PREPAYMENT. Any payment of the
principal balance received by Lender resulting from the exercise by Lender of
any remedy available to Lender subsequent to the occurrence of an Event of
Default and the acceleration of Borrower's Obligations shall be deemed to be a
prepayment subject to the provisions of this Section 2.10, and the applicable
Revolving Loan Termination Fee (calculated in accordance with subsection
2.10.1(b)) and any other payment required under subsection 2.10.1(b) shall be
payable on demand with respect to such prepayment.
2.11 APPLICATION OF PREPAYMENTS.
2.11.1 GENERAL RULE. Except to the extent
otherwise provided in Section 2.11.2, prepayments received by Lender shall be
applied in the following order of priority: (i) first, to the payment of
accrued and unpaid interest on the portion of the principal balance of the Term
Loan that is being repaid, (ii) next, to the payment of accrued and unpaid
interest on the Revolving Loan, (iii) next, to the payment of Borrower's
Obligations then due other than the principal balance and accrued and unpaid
interest on the Term Loan and the Revolving Loan, (iv) next, to the payment of
regularly scheduled installments of the principal balance of the Term Loan in
the inverse order of the maturity of such installments, (v) next, to the
payment of any Subsequent Advances then outstanding, and (vi) last, to the
payment of any Advances then outstanding.
2.11.2 APPLICATION OF EARLY TERMINATION PAYMENTS.
Notwithstanding the provisions of Section 2.11.1 to the contrary, all
prepayments received by Lender pursuant to Section 2.10.1 shall be applied in
the following order of priority: (i) first, to the payment of accrued and
unpaid interest on outstanding Advances, (ii) next, to reduce outstanding
Advances, and (iii) last, to all remaining Borrower's Obligations in the
inverse order of maturity.
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2.12 PAYMENTS AFTER EVENT OF DEFAULT. All payments
received by Lender during the existence of an Event of Default shall be applied
in accordance with Section 8.4.
2.13 FEES. Borrower shall pay to Lender the following
fees:
2.13.1 CLOSING FEE. A one time closing fee (the
"LOAN FEE") in the amount of Five Hundred Twenty-Five Thousand Dollars
($525,000), which is earned in full on the Closing Date and is due and payable
by Borrower to Lender on the Closing Date. Lender shall credit the Deposit
first against Lender's out-of-pocket expenses and legal fees pursuant to
Section 4.10, with the excess, if any, to be credited against the Loan Fee.
2.13.2 RENEWAL FEE. On the first anniversary of
the Closing Date, a renewal fee (the "RENEWAL FEE") in respect of the Revolving
Loan, in the amount of one-quarter of one percent (0.25%) of the Maximum
Amount, which fee shall be fully earned upon such anniversary date. The
Renewal Fee shall be additional compensation to Lender in consideration of the
availability of the Revolving Loan to Borrower, and shall not be applied to
principal or interest or any other sums owing to Lender in respect of the Loan.
2.13.3 UNUSED LINE FEE. For each month during the
term of the Revolving Loan with respect to which the Average Daily Outstandings
during such month is less than the Maximum Amount, Borrower shall pay to Lender
a fee in the amount of one-quarter of one percent (.25%) per annum on the
difference between the Maximum Amount and the Average Daily Outstandings for
such month (the "UNUSED LINE FEE"). The Unused Line Fee shall be payable to
Lender in arrears on the first Business Day of each month and shall be deemed
fully earned by Lender as of the last day of each month with respect to which
the payment of such fee accrues.
2.13.4 FIELD EXAMINATION FEE. Subject to the
provisions of Section 6.2, Lender's customary fee of Five Hundred Dollars
($500) per day per examiner (the "EXAMINATION FEE"), plus out-of-pocket
expenses for each financial analysis and examination of Borrower performed by
Lender or its agents; provided, however, that with respect to any fiscal year
of Borrower, so long as no Incipient Default or Event of Default then exists
(or is revealed by a financial analysis and examination of Borrower made during
such fiscal year), the aggregate amount of all Examination Fees payable by
Borrower in any such fiscal year shall not exceed $30,000 in the aggregate.
2.13.5 LOAN MAINTENANCE FEE. A loan maintenance
fee (the "LOAN MAINTENANCE FEE") in respect of the Term Loan, in the amount of
$600,000, which fee shall be fully earned upon the Closing and shall be payable
in six annual installments of $100,000 each on each anniversary of the Closing
Date, including the Maturity Date. In the event the Term Loan is prepaid in
full prior to the Maturity Date, an amount equal to $600,000 minus the sum of
all Loan Maintenance Fees theretofore received by Lender shall be due and
payable to Lender together with such prepayment. The Loan Fee shall be
additional compensation to Lender in consideration of the making of the Term
Loan to Borrower, and shall not be applied to principal or interest or any
other sums owing to Lender in respect of the Loan.
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2.13.6 L/C FEE. So long as any L/C is outstanding,
Borrower shall pay to Lender an L/C fee (the "L/C Fee") computed at the rate of
three percent (3%) per annum on the face amount of each L/C, computed on the
basis of a year of 360 days and actual days elapsed for the period such L/C is
outstanding, plus all fees charges by the L/C Bank to Lender in respect of the
L/Cs, payable monthly in arrears.
2.13.7 WIRING AND MISCELLANEOUS CHARGES. A fee in
the amount of $20 for each Advance made by wire transfer, and shall further pay
Lender a fee in the amount of $20 for each returned item deposited as a
collection on any Account, along with such other fees and expenses as are
contained in the Loan Documents.
2.13.8 PAYMENT OF FEES. Lender shall be entitled
to pay the Renewal Fee, the Unused Line Fee, the Examination Fee, the Loan
Maintenance Fee or any other amounts due and owing to Lender pursuant to the
Loan Documents, including, without limitation, any principal and interest which
is then due and payable with respect to the Term Loan or any interest which is
then due and payable with respect to the Revolving Loan, by making an Advance
and adding the amount of such fees, costs or other amounts to the then
outstanding principal balance of the Revolving Loan. In the event Lender makes
an Advance for the foregoing purposes, Lender shall notify Borrower of such
Advance within one (1) Business Day thereafter. All of the foregoing amounts
shall continue to be secured by all of the Collateral until the same have been
paid in full.
2.14 METHOD OF PAYMENT; GOOD FUNDS. Unless Lender
notifies Borrower to the contrary, Lender shall make payment of all amounts
owed by Borrower hereunder in the manner described by Section 2.13.8. All
payments not made in the manner described by Section 2.13.8 shall be made by
wire transfer to the account of Lender at Chemical Bank, New York, New York,
ABA No. 021000128, for the account of FINOVA Capital Corporation, Account No.
808011812, reference: J&L Structural, Inc., Attention: Patrick Cornell, or to
such other account as Lender shall notify Borrower. Payment shall not be
deemed to have been received by Lender until Lender is in receipt of Good
Funds.
2.15 USE OF PROCEEDS. The proceeds of the Acquisition
Advance under the Term Loan shall be used together with the proceeds of the
Senior Subordinated Notes solely to pay in full the purchase price payable in
connection with the Acquisition. The proceeds of the Subsequent Advances under
the Term Loan shall be used by Borrower solely for Capital Expenditures as
provided in Section 2.1.5. The Advances made by Lender on the Closing Date
shall be used by Borrower solely to repay the Indebtedness (the "EXISTING
INDEBTEDNESS") of J&L and Brighton to PNC and Sunderland and to pay fees and
expenses related to the Acquisition, the repayment of the Existing Indebtedness
and the other transactions contemplated by this Agreement. The Advances made
by Lender after the Closing Date shall be used by Borrower solely for working
capital purposes.
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ARTICLE 3. CREATION OF SECURITY INTEREST; PLEDGE; MORTGAGE
3.1 GRANT OF SECURITY INTEREST. Borrower hereby assigns
to Lender, and grants to Lender a continuing Security Interest in all currently
existing and hereafter acquired or arising Collateral in order to secure prompt
repayment of any and all of Borrower's Obligations. In addition, Borrower
hereby assigns to Lender and grants to Lender a continuing Security Interest in
all of Borrower's right, title and interest in, to and under the Assigned
Contracts in order to secure prompt repayment of all of Borrower's Obligations.
Lender's Security Interest in the Collateral and the Assigned Contracts shall
attach to all Collateral and the Assigned Contracts without further act on the
part of Lender or Borrower. Borrower hereby confirms and acknowledges that,
notwithstanding the foregoing assignment and grant of a Security Interest in
the Assigned Contracts, Lender has not assumed nor will it assume or be or
become liable for any of the obligations of Borrower under the Assigned
Contracts and Borrower shall remain fully liable for the performance of all
such obligations, except as specifically set forth herein.
3.2 NEGOTIABLE COLLATERAL. In the event that any
Collateral, including proceeds, is evidenced by or consists of Negotiable
Collateral, Borrower shall, immediately upon the request of Lender, endorse and
assign such Negotiable Collateral to Lender and deliver physical possession of
such Negotiable Collateral to Lender.
3.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES AND
NEGOTIABLE COLLATERAL. To expedite collection of Accounts of Borrower,
Borrower shall endeavor in the first instance to collect such Accounts for
deposit into the Blocked Accounts. All remittances received by Borrower shall
be held in trust for Lender and Borrower shall immediately deposit such
collections in the Blocked Accounts or, if requested by Lender, deliver to
Lender such collections in the exact form as received. Lender retains the
right (i) at any time, without notice to Borrower, if (A) there then exists an
Event of Default, or (B) in Lender's good faith judgment, Lender believes that
(1) the Blocked Accounts are being circumvented or other circumstances exist
which threaten Lender's ability to maintain its dominion over cash, (2) the
proceeds of Lender's Collateral are being diverted from it, or (3) Borrower's
properties or assets are otherwise being misappropriated, or (C) in Lender's
judgment, there has occurred a material impairment of the prospect of repayment
of Borrower's Obligations or a material impairment of the validity, priority,
or enforceability of Lender's Security Interests in the Collateral, or (ii)
upon not less than forty-eight (48) hours prior notice to Borrower, if there
then exists any Incipient Default as to which notice from Lender would have to
occur prior to such Incipient Default maturing into an Event of Default, upon
the occurrence of any of the foregoing circumstances, to take any or all of the
following actions: (A) notify customers that the Accounts have been assigned
to it, (B) collect Accounts directly in its own name, (C) charge the
collection costs and expenses, including reasonable attorneys' fees, to
Borrower, and (D) receive, open and dispose of all mail addressed to Borrower
in the manner set forth in Section 3.5(v). Lender shall additionally have all
rights of stoppage in transit, replevin, reclamation and other rights of an
unpaid seller and/or lienor under the Uniform Commercial Code. As a
convenience to Lender, and not as a condition of perfection, Borrower will
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provide Lender with a pledge and assignment of all Accounts, General
Intangibles and Negotiable Collateral and all related documents as Lender may
require. All amounts received by Lender in payment of Accounts assigned to it,
including without limitation, all amounts wired to Lender's account from the
Blocked Accounts in accordance with the terms of the Special Deposit Account
Agreements, will be credited to the account of Borrower, for purposes of
interest calculations, one (1) Business Day after the date of receipt of Good
Funds by Lender. At the times and upon the occurrence of the events described
in the third sentence of this Section 3.3, Lender or Lender's designee may:
(x) notify customers or Account Debtors of Borrower that the Accounts, General
Intangibles, or Negotiable Collateral have been assigned to Lender or that
Lender has a security interest therein; and (y) collect the Accounts, General
Intangibles, and Negotiable Collateral directly and charge the collection costs
and expenses to Borrower's loan account. Borrower agrees that it will hold in
trust for Lender, as Lender's trustee, any cash receipts, checks, and other
items of payment that it receives on account of the Accounts, General
Intangibles, or Negotiable Collateral and immediately will deliver such cash
receipts, checks, and other items of payment to Lender in their original form
as received by Borrower.
3.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.
Borrower shall execute and deliver to Lender, prior to or concurrently with
Borrower's execution and delivery of this Loan Agreement and at any time
thereafter at the request of Lender, all financing statements, continuation
financing statements, fixture filings, security agreements, chattel mortgages,
pledges, assignments, endorsements of certificates of title, applications for
title, affidavits, reports, notices, schedules of accounts, letters of
authority, and all other documents that Lender may reasonably request, in form
satisfactory to Lender, to perfect and continue perfection of the Security
Interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
3.5 POWER OF ATTORNEY. Borrower hereby irrevocably
makes, constitutes, and appoints Lender (and any of Lender's officers,
employees, or agents designated by Lender) as Borrower's true and lawful
attorney, with power to: (i) sign the name of Borrower on any of the documents
described in Section 3.4 or on any other similar documents to be executed,
recorded, or filed in order to perfect or continue perfection of the Security
Interests; (ii) sign Borrower's name on any invoice or bill of lading relating
to any Account, drafts against Account Debtors, schedules and assignments of
Accounts, verifications of Accounts, and notices to Account Debtors; (iii) send
requests for verification of Accounts; (iv) endorse Borrower's name on any
checks, notices, acceptances, money orders, drafts, or other item of payment or
security that may come into Lender's possession; (v) at any time that (A) there
then exists an Event of Default, or (B) in Lender's good faith judgment, Lender
believes that (1) the Blocked Accounts are being circumvented or other
circumstances exist which threaten Lender's ability to maintain its dominion
over cash, (2) the proceeds of Lender's Collateral are being diverted from it,
or (3) Borrower's properties or assets are otherwise being misappropriated, or
(C) in Lender's judgment, there has occurred a material impairment of the
prospect of repayment of Borrower's Obligations or material impairment of the
validity, priority, or enforceability of Lender's Security Interests in the
Collateral, notify the post office authorities to change the address for
delivery of Borrower's mail to an address designated by
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Lender, to receive and open all mail addressed to Borrower, and to retain all
mail relating to the Collateral and forward all other mail to Borrower; (vi) at
any time that an Incipient Default or an Event of Default has occurred, make,
settle, and adjust all claims under Borrower's policies of insurance or in
respect of condemnation proceedings, and make all determinations and decisions
with respect to such policies of insurance or condemnation proceedings; and
(vii) at any time that an Incipient Default or an Event of Default has
occurred, settle and adjust disputes and claims respecting the Accounts
directly with Account Debtors, for amounts and upon terms which Lender
determines to be reasonable, and Lender may cause to be executed and delivered
any documents and releases which Lender determines to be necessary. With
respect to the matters described in clauses (vi) and (vii) of the preceding
sentence, Lender shall not act pursuant to the foregoing power of attorney
until Lender has provided Borrower with notice of Lender's intent so to act not
less than five (5) Business Days prior to any such proposed action and, in the
event Borrower has taken the necessary steps during such period to settle or
adjust such disputes or claims in a manner satisfactory to Lender, or is
otherwise proceeding toward a resolution of such matters in a manner
satisfactory to Lender, Lender shall allow Borrower to complete such settlement
so long as Borrower continues to diligently prosecute the same toward a
conclusion. The appointment of Lender as Borrower's attorney, and each and
every one of Lender's rights and powers, being coupled with an interest, is
irrevocable until all of Borrower's Obligations have been fully repaid and
performed and Lender's obligations hereunder are terminated.
3.6 RIGHT TO INSPECT. Lender (through any of its
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect Borrower's Books and to check, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral,
in a manner consistent with Section 6.2.
3.7 STOCK PLEDGE AGREEMENT. In consideration for
Lender's providing financing to Borrower, J&L Holdings shall pledge to Lender
all of the issued and outstanding capital stock of Borrower to secure payment
and performance of all of Borrower's Obligations pursuant to the Stock Pledge
Agreement.
3.8 MORTGAGE. In consideration for Lender's providing
financing to Borrower, Borrower will execute and deliver to Lender the
Mortgage.
3.9 RELEASES UPON TERMINATION. Upon the termination of
this Loan Agreement and the full and permanent satisfaction of and payment in
full of all of Borrower's Obligations, Lender shall deliver to Borrower upon
its request therefor and at Borrower's expense, releases, reconveyances and
satisfactions of all financing statements, mortgages, notices of assignment and
other registrations of security, and Borrower shall also deliver to Lender an
unqualified release of all of Lender's obligations under all Loan Documents and
an acknowledgment that the same have been terminated.
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3.10 RECOURSE TO SECURITY. Recourse to security shall not
be required for any of Borrower's Obligations hereunder nor shall Lender be
required to first marshal, dispose of, or realize upon any security or
Collateral.
ARTICLE 4. CONDITIONS OF CLOSING
Lender's obligation to make the Loan shall be subject to the
satisfaction of all of the following conditions on or before the Closing Date
in a manner, form and substance satisfactory to Lender:
4.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date
the representations and warranties of Borrower set forth in the Documents to
which Borrower is a party shall be true and correct in all material respects
when made and at and as of the time of the Closing, except to the extent that
such representations and warranties expressly relate to an earlier date.
4.2 DELIVERY OF DOCUMENTS. The following shall have been
delivered to Lender, each duly authorized and executed, where applicable, all
of which shall be acceptable in form and substance to Lender:
(a) the Loan Documents;
(b) evidence of the insurance required by Section
6.7;
(c) a certificate of incumbency for Borrower;
(d) a certificate of good standing for Borrower
in each state in which it is organized and/or qualified to do business;
(e) copies of the corporate charter of Borrower
certified by the Secretary of State of its state of incorporation and bylaws of
Borrower certified by its secretary or assistant secretary, in each case,
together with certified copies of all effective and proposed amendments
thereto;
(f) copies of resolutions adopted by the board of
directors of Borrower, authorizing the execution and delivery of the Documents
to which it is a party and the consummation of the transactions contemplated
therein certified by its secretary or assistant secretary;
(g) certified or executed original copies of:
(i) the Lease;
(ii) the Senior Subordinated Note
Documents;
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(iii) the Acquisition Documents;
(iv) the Contribution Documents; and
(v) the CCC/Borrower Agreement.
(h) such other instruments, documents,
certificates, consents, waivers and opinions as Lender may reasonably request.
4.3 PERFORMANCE; NO DEFAULT. Borrower shall have
performed and complied with all agreements and conditions contained in the
Documents to be performed by or complied with by Borrower prior to or at the
Closing, and no Event of Default or Incipient Default shall then exist or
result from the making of the Loan.
4.4 OPINIONS OF COUNSEL. Borrower shall provide to
Lender, at Borrower's sole expense, a legal opinion of Kelley, McCann &
Livingstone, counsel for Borrower and J&L Holdings, dated the day of the
Closing, and otherwise in form and substance satisfactory to Lender, together
with such opinions of special counsel in jurisdictions where the Collateral is
located as shall be satisfactory in form and substance to Lender.
4.5 APPROVAL OF DOCUMENTS AND SECURITY INTERESTS. Lender
shall have received evidence that all approvals and/or consents of, or other
action by, any shareholder, Governmental Body or other Person whose approval or
consent is necessary or required to enable (i) Borrower to: (A) enter into and
perform its obligations under the Documents, and (B) consummate the Loan and
grant to Lender the Security Interests, and (ii) Borrower, Sellers and the
Shareholders and all other applicable parties to consummate the Acquisition and
the Contribution, have been obtained.
4.6 SECURITY INTERESTS. All filings of Uniform
Commercial Code financing statements, all recordings of the Mortgage, and all
other filings and actions necessary to perfect and maintain the Security
Interests as first, valid and perfected Liens in the Property covered thereby,
subject only to Permitted Prior Liens, shall have been filed or taken and
confirmation thereof shall have been received by Lender. Lender shall have
received the original of any certificates of title or other instruments
necessary to be delivered into Lender's possession in order to perfect Lender's
Security Interest therein.
4.7 ENVIRONMENTAL ASSESSMENT. Borrower shall provide
evidence satisfactory to Lender that the subject transaction is environmentally
acceptable. Lender has exercised its right to require that Borrower retain the
services of a firm acceptable to Lender and knowledgeable in environmental
matters to perform an environmental investigation of the real property owned,
operated or occupied by Borrower and the surrounding areas. Such investigation
was performed by Killam Associates and included, but was not limited to, a
review of Borrower's soil and ground water testing to fully identify the scope
of any environmental issues impacting the transaction. All costs incurred in
performing such investigation shall be borne by Borrower. The scope and
results of such investigation must be reasonably satisfactory to Lender. All
costs associated with compliance with the
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Environmental Laws shall be the responsibility of Borrower. Prior to the
Closing, there shall have been reported to the appropriate regulatory agencies
such matters concerning the condition of all real property owned, occupied, or
operated by Borrower as Lender, in its reasonable discretion, has determined
are subject to a reporting obligation under applicable Environmental Laws.
4.8 FINANCIAL STATEMENTS AND PROJECTIONS. Lender shall
have reviewed and approved such financial statements, reports and tax returns
relating to the operations of Borrower, Sellers and Brighton as Lender shall
request, including without limitation (i) with respect to each of J&L and TCI,
(A) its audited Balance Sheets as at September 30, 1992, 1993, and 1994,
December, 31, 1993 and June 30, 1994, together with its related audited Income
Statements and Statements of Changes in Financial Position/Cash Flow for the
fiscal years then ended, and (B) its unaudited Balance Sheets as at January 31,
1995 and February 28, 1995, together with its related unaudited Income
Statements and Statements of Cash Flow for the months then ended; (ii) with
respect to Brighton: (A) its audited Balance Sheets as at June 30, 1992, 1993,
and 1994, together with its related audited Income Statements and Statements of
Changes in Financial Position/Cash Flow for the fiscal years then ended, and
(B) its unaudited Balance Sheets as at January 31, 1995 and February 28, 1995,
together with its related unaudited Income Statements and Statements of Cash
Flow for the months then ended; (iii) projections of revenues and expenses for
Borrower on a yearly basis through the term of the Loan; (iv) a pro forma
balance sheet of Borrower after giving effect to the Closing of the Loan, the
consummation of the Acquisition and the Contribution, the issuance of the
Senior Subordinated Notes and payment of all costs and expenses associated
therewith; and (v) such other financial information regarding Borrower's,
Sellers' and/or Brighton's operations as Lender may require. The foregoing
projections must demonstrate that from and after the Closing Date, and after
giving effect to the transactions contemplated by the Documents, based on the
projections contained therein, Borrower shall remain Solvent and retain
sufficient capital to carry on the Business and pay its debts as they mature,
including the Loan.
4.9 MATERIAL ADVERSE CHANGE. No event shall have
occurred which has or shall have a material adverse effect on (i) the financial
condition, Property, business, operations, prospects or profits of Borrower or
its ability to perform its obligations under any of the Documents, or (ii) the
projections for financial performance of the Business as set forth in any of
the documents or papers furnished to Lender by Borrower or its representatives.
At the Closing, Borrower shall deliver to Lender an officer's certification
confirming that Borrower is unaware of any material adverse change in the
financial condition of Borrower, Sellers and Brighton from the financial
statements and other documents most recently submitted to Lender.
4.10 PAYMENT OF FEES. Concurrently with the Closing,
Borrower shall pay to Lender out of the proceeds of the Loan the Loan Fee as
defined in and described by Section 2.13.1, which shall be deemed to be fully
earned upon the Acquisition Advance under the Term Loan and the initial Advance
under the Revolving Loan. The Deposit previously paid to Lender by Borrower
shall be applied first to the payment of any and all third party costs and
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expenses incurred by Lender in making the Loan, including but not limited to,
attorneys' fees and costs, Lender's out-of-pocket costs, brokerage commissions
and title and recording charges, and the excess of the Deposit, if any, shall
be applied to payment of the Loan Fee.
4.11 PROCEEDINGS; DOCUMENTS; STRUCTURE. All corporate and
other proceedings in connection with the transactions contemplated by the
Documents, the structure of all such transactions, including without
limitation, the Acquisition, the Contribution and the issuance of the Senior
Subordinated Notes, and all documents and instruments incident to such
transactions shall be satisfactory to Lender and its counsel, and Lender and
its counsel shall have received all such counterpart originals or certified or
other copies as Lender or its counsel may request. Lender shall have received
such documents as Lender may require to establish (i) the proper organization
and good standing of Borrower and its authority to transact business in any
jurisdiction in which the failure to be so authorized would have a material
adverse effect on the Business of Borrower, (ii) the authority of Borrower and
every other Person a party thereto to execute the Loan Documents to which each
is a party, and (iii) the authority of Borrower and every other Person a party
thereto to consummate the Acquisition, the Contribution and the issuance of the
Senior Subordinated Notes. Without limiting the generality of the foregoing,
Lender and its counsel shall find satisfactory the capitalization and
indebtedness structure of Borrower which shall exist after giving effect to the
Acquisition, the Contribution and the issuance of the Senior Subordinated
Notes.
4.12 TITLE TO AND USE OF ASSETS. Lender shall be
satisfied that Borrower at all times shall have good and marketable title to,
and shall be entitled to the use and quiet enjoyment of, all assets necessary
and desirable for the continued ownership and operation of the Business at each
location at which the Business presently is conducted, including, without
limitation, the Real Property, the use of Equipment, Property, fixtures,
licenses, approvals, permits, trademarks, trade names, offices, inventory,
warehouses and means of ingress and egress thereto, including any easements or
rights-of-way necessary to reach any Equipment or other items necessary for the
operation of the Business.
4.13 COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT.
Evidence satisfactory to Lender that as of the Closing, Borrower is in
compliance with the ADA, or, if any renovations of Borrower's facilities or
modifications of Borrower's prior employment practices shall be required to
bring them into compliance with the ADA, review and approval by Lender of
Borrower's proposed plan to come into such compliance.
4.14 BROKER FEES. All fees owed to a broker for services
performed on Borrower's behalf shall be borne solely by Borrower and shall be
paid in full by Borrower simultaneously with the Closing.
4.15 SEARCHES AND REFERENCES. Customer, vendor and credit
reference checks on Borrower and the Shareholders, and tax lien, litigation,
Uniform Commercial Code, bankruptcy, and judgment searches on Borrower, Sellers
and Brighton, shall be acceptable to Lender.
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4.16 MATERIAL AGREEMENTS. Review and approval by Lender
of all material agreements to which Borrower is a party, including without
limitation, all documents in respect of the borrowing of money, all joint
venture agreements, supply agreements or requirements contracts, royalty
agreements, license agreements, employment/management incentive agreements, and
product warranties.
4.17 LEASE. Borrower shall deliver to Lender the Lease,
and which Lease shall be satisfactory to Lender in its sole discretion.
Without limiting the generality of the foregoing, Lender shall be satisfied
that the Lease contains standstill and non-disturbance covenants from the
lessors thereof and from each person holding a monetary encumbrance affecting
the Demised Premises which are acceptable to Lender, the lessor of the Lease
shall have entered into a Landlord's Consent with Lender, and each holder of
any monetary encumbrance effecting the Demised Premises shall have entered into
a Non-Disturbance Agreement with Lender. Borrower shall also provide the
Mortgage covering the Demised Premises in favor of Lender, and in form and
content satisfactory to Lender.
4.18 TITLE COMMITMENT. A commitment to issue one or more
title insurance policies (the "TITLE POLICIES"), issued by insurance companies
satisfactory to Lender, in amounts satisfactory to Lender, together with copies
of all title exception documents, easements, operating agreements and
declarations affecting the Real Property. The Title Policies shall (i) insure
the Mortgage to be valid first, prior and paramount liens upon the Real
Property, and all appurtenant easements, in each case subject only to the
Permitted Prior Liens, (ii) be in the form of an American Land Title
Association loan policy revised as of the most recent date, (iii) contain, to
the extent obtainable (A) so-called comprehensive endorsements if the
improvements on the Real Property have been completed; (B) an endorsement
protecting forfeiture of reversion as a result of covenants, restrictions or
encroachments; (C) endorsements specifically insuring Lender that no
restrictions of record affecting the Real Property have been violated; and (D)
such other endorsements and affirmative coverages as Lender may require, each
in form and content satisfactory to Lender in all respects. Lender also shall
have received evidence satisfactory to it that all premiums in respect to the
Title Policies have been paid.
4.19 PAY-OFF LETTERS AND RELEASES. Borrower shall provide
to Lender documents in form and substance satisfactory to Lender setting forth
the amounts necessary to repay and satisfy in full, and evidencing the
repayment and satisfaction in full of, the Existing Indebtedness, and the
release of any and all of BCCED's, PNC's and Sunderland's interest in the
Collateral, including without limitation, Uniform Commercial Code termination
statements.
4.20 TRANSACTION COSTS. Borrower shall provide to Lender
a complete, itemized summary of all transaction costs incurred in connection
with the making of the Loan, the consummation of the Acquisition and the
Contribution and the issuance of the Senior Subordinated Notes, as well as
appropriate documentation evidencing such costs and the payment thereof
including, without limitation, invoices and cancelled checks. All such
information must be acceptable to Lender, in Lender's sole discretion. Without
limiting the
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generality of the foregoing, Lender shall not find acceptable the payment of
any fees to BT Securities Corporation, except for an investment banking fee in
an amount not to exceed $1,200,000, which are not for the reimbursement of
actual transaction costs and expenses previously paid by BT Securities
Corporation and approved for reimbursement by Lender.
4.21 SUBORDINATED INDEBTEDNESS. The terms and conditions
of the Senior Subordinated Note Documents and all instruments and documents
related thereto shall be in form and substance satisfactory to Lender
including, without limitation, the terms of the subordination effected thereby.
Borrower shall provide evidence to Lender satisfactory to Lender that,
simultaneously with the Closing, the Indebtedness to be evidenced by the Senior
Subordinated Notes has been funded.
4.22 EQUITY INVESTMENT. Lender shall have received
evidence satisfactory to it that, simultaneously with the Closing, CPT shall
have made a cash equity investment in J&L Holdings of not less than $5,000,000
and the Shareholders shall have made a cash equity investment in J&L Holdings
of not less than $1,900,000 in the aggregate.
4.23 CONTRIBUTION. Lender shall have received evidence
satisfactory to it that, simultaneously with the Closing, J&L Holdings shall
have made a cash equity investment in Borrower of not less than $6,900,000 and
shall have contributed to Borrower all of the assets and properties
constituting Brighton (other than the capital stock of Borrower and CCC)
pursuant to the Contribution Documents.
4.24 ACQUISITION. Lender shall have reviewed and approved
executed copies of all of the Acquisition Documents. Without in any manner
limiting the scope of Lender's review, the Acquisition Documents shall contain
specific representations and warranties, in form and substance satisfactory to
Lender, with respect to the accuracy of the financial information submitted by
Sellers, and shall further contain indemnity provisions acceptable to Lender
which shall address, among other items, liability for environmental
contamination and clean-up. Prior to the funding of the Loan by Lender, Lender
shall have received a certificate of the Chief Executive Officer to the effect
that the closing of the Acquisition pursuant to the Acquisition Documents is
occurring simultaneously with the Closing of the Loan, and that no material
provisions of the Acquisition Documents were waived by Borrower without
Lender's prior consent.
4.25 EXCESS AVAILABILITY. Evidence that, following the
application of funds drawn on the Revolving Loan for the purpose of
effectuating the transactions described in the Documents, as of the Closing,
there shall be remaining Excess Availability of least $1,000,000, after
providing for payment of all accounts payable which are more than thirty (30)
days past their due date.
4.26 APPRAISALS. Review and approval by Lender of recent
orderly liquidation value appraisals of Borrower's machinery, Equipment and
Real Estate performed by Valuation Research Corporation, which appraisals
shall, in Lender's sole discretion, support a valuation for such assets of not
less than $19,500,000.
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4.27 BLOCKED ACCOUNT. Prior to the Closing, Borrower,
Lender and the Agent Bank shall have entered into a Special Deposit Account
Agreement, , and such other agreements with Borrower's local banks as Lender
may request, each in form and substance satisfactory to Lender, pursuant to
which all of Borrower's accounts receivable shall be deposited directly into
the Blocked Account. All amounts received by the Agent Bank shall be remitted
to Lender, as a repayment of any then outstanding advances under the Revolving
Loan, to the extent any amounts are owed to Lender thereunder. The remaining
balance of any receipts shall be paid by the Agent Bank to Borrower.
4.28 TAX COMFORT LETTER. Lender must review and find
satisfactory a letter from Borrower's tax advisors addressing the availability
for federal income tax purposes of net operating loss carryovers ("NOLS") of
CPT in an amount of not less than $68,000,000 which NOLs would be available
solely to Borrower during the term of the Loan to offset Borrower's taxable
income during such period.
4.29 TAX SHARING AGREEMENT. CPT, J&L Holdings, Borrower
and CCC shall have entered into a tax sharing agreement which shall be in form
and substance satisfactory to Lender (the "TAX SHARING AGREEMENT") and pursuant
to which the full amount of CPT's NOLs shall be available solely to Borrower
during the term of the Loan to offset Borrower's taxable income during that
period.
4.30 INSURANCE. Lender shall have received evidence
satisfactory to it of such casualty, hazard, public liability, product
liability and other insurance required by Lender, written by insurers and in
amounts and forms satisfactory to Lender.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
5.1 CORPORATE EXISTENCE AND POWER. Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own its Property and to carry on the Business, and is in good standing and
is authorized to do business in each jurisdiction in which the failure to so
qualify would have a materially adverse effect on its financial condition,
operations, prospects, profits, business or Property.
5.2 AUTHORITY. Borrower has full corporate power and
authority to enter into, execute, deliver and carry out the terms of the
Documents to which it is a party and to incur the obligations provided for
therein, all of which have been duly authorized by all proper and necessary
corporation action and are not prohibited by the corporate charter or by-laws
of Borrower.
5.3 CAPITAL STOCK AND RELATED MATTERS.
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5.3.1 CAPITALIZATION. All of the shares of the
Borrower Stock are validly issued, fully paid and nonassessable, and have been
issued in compliance with all applicable federal and state securities laws,
rules and regulations. As of the Closing Date, all shares of the stock of
Borrower are owned beneficially and of record by the Persons shown on Exhibit
"5.3.1" hereto, free and clear of all Liens, except the Security Interests.
Other than as set forth on Exhibit "5.3.1", there is no other Person which,
directly or indirectly, owns (beneficially or of record) any interest in any
Subsidiary.
5.3.2 OTHER RESTRICTIONS. Except as set forth in
Exhibit "5.3.2" hereto or in any of the Documents, Borrower (i) is not a party
to and has no knowledge of any agreements restricting the transfer of any
shares of the Borrower Stock other than the Documents, (ii) has no outstanding
stock or securities convertible into or exchangeable or exercisable for any
shares of the Borrower Stock, or 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, any shares of Borrower's Stock or any securities
convertible into or exchangeable or exercisable for any shares of the Borrower
Stock, and (iii) Borrower is not subject to any obligation to acquire or retire
any shares of the Borrower Stock or any convertible securities, rights or
options relating to Borrower Stock. Borrower is not required to file, and
Borrower has not filed, pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended, a registration statement relating to any class of debt or
equity securities.
5.4 BINDING AGREEMENTS. This Loan Agreement and the
other Documents, when executed and delivered, shall constitute the valid and
legally binding obligations of Borrower to the extent Borrower is a party
thereto, enforceable against Borrower in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by equitable principles (whether
or not any action to enforce such document is brought at law or in equity).
5.4.1 OPERATING AGREEMENTS. Upon the Closing all
Operating Agreements shall be in full force and effect, and no event shall have
occurred that could result in the cancellation or termination of any such
Operating Agreement or the imposition thereunder of any liability which could
have a material adverse effect on the Business or the financial condition,
operations, prospects, profits or Property of Borrower.
5.4.2 BUSINESS SITES. All Inventory, Equipment,
goods and offices that shall be used after the Closing Date in the operation of
the Business are located in Aliquippa, Pennsylvania, Ambridge, Pennsylvania,
Beaver Falls, Pennsylvania and Yellow Creek, Mississippi and at such additional
locations as are set forth on Exhibit "1.1A" hereto. None of these locations
shall be changed without the prior written consent of Lender.
5.4.3 OPERATION AND MAINTENANCE OF EQUIPMENT. To
the best of Borrower's knowledge, no Person owning or operating any Equipment
necessary for the operation of the Business has used, operated or maintained
the same in a manner which,
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whether now or hereafter, would result in the cancellation or termination of
the right of Borrower to use the same or which would result in any material
liability of Borrower for damages in connection therewith. To the best of
Borrower's knowledge, except as set forth on Exhibit "5.4.3" hereto, all the
equipment and other tangible personal property owned by Borrower and necessary
for the operation of the Business is in good operating condition and repair and
has been used, operated and maintained in substantial compliance with all
applicable laws, rules and regulations.
5.4.4 TAXPAYER IDENTIFICATION NUMBER. The taxpayer
identification number set forth opposite Borrower's signature on the signature
page of this Loan Agreement and furnished to Lender for the purpose of filing
all financing statements and continuation statements covering all or any part
of the Collateral is Borrower's correct taxpayer identification number.
5.5 TITLE TO PROPERTY, LIENS. Upon the Closing, Borrower
shall have (i) good and marketable title to all of its Property, except the
portion thereof consisting of leasehold estates and (ii) a valid leasehold
estate in each portion of its Property which consists of a leasehold estate.
As of the Closing all of such Property shall be free and clear of all Liens,
except Permitted Liens and except as set forth on Exhibit "5.5" hereto. Upon
the proper filing with the appropriate Governmental Bodies of the Mortgage and
appropriate Uniform Commercial Code financing statements, the applicable Loan
Documents shall create valid and perfected first priority Liens in the Property
described therein, subject only to Permitted Prior Liens, in each case
enforceable against all third parties in all relevant jurisdictions and
securing the payment of all of Borrower's Obligations purported to be secured
thereby. All filings and other actions necessary to perfect and protect such
first priority Liens and Security Interests have been, or, upon Closing will
have been, duly taken.
5.6 ELIGIBLE ACCOUNTS.
5.6.1 BONA FIDE OBLIGATIONS. The Eligible Accounts
are, and at all times hereafter shall be, bona fide existing obligations
created by the sale and delivery of Inventory or the rendition of services to
Account Debtors in the ordinary course of Borrower's business, unconditionally
owed to Borrower without defenses, disputes, offsets, counterclaims, or rights
of return (other than as the result of a valid warranty claim) or cancellation.
In the event Borrower at any time becomes aware that the foregoing statement is
inaccurate with respect to any Account by reason of claimed defense, dispute,
offset, counterclaim, right of return (other than in respect of a valid
warranty claim) or cancellation, or any other matter asserted by the Account
Debtor as a defense to or limitation upon the Account Debtor's obligation to
pay such Account, Borrower shall be deemed in compliance with this
representation if Borrower promptly, upon resolution of such dispute or claim,
issues a credit memorandum in favor of its Account Debtor and, concurrently
with the delivery of the financial reports which are due fifteen (15) days
after the end of each month, includes a copy of Borrower's sales ledger
disclosing separately the amounts of the various credit memoranda issued in the
prior month. Upon request of Lender, Borrower shall provide Lender with a copy
of any credit memorandum issued by Borrower. The Property giving rise to such
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Eligible Accounts has been delivered to the Account Debtor, or to the Account
Debtor's agent for immediate shipment to and unconditional acceptance by the
Account Debtor. Borrower has not, and at all times hereafter, shall not have
received notice of actual or imminent bankruptcy, insolvency, or other similar
events of any Account Debtor at the time an Account due from such Account
Debtor is created or first included in the Borrowing Base. Annexed hereto as
Exhibit "5.6.1" is a list showing all places at which Borrower maintains
records relating to Accounts.
5.6.2 DOCUMENTS TO LENDER. Promptly after the
creation of any Account, Borrower shall execute and deliver confirmatory
written assignments to Lender of Eligible Accounts, but the failure to execute
or deliver any schedule or assignment shall not affect or limit any security
interest or other right of Lender in and to any Account. On Lender's request
therefor, Borrower shall also furnish to Lender copies of invoices to customers
and shipping and delivery receipts or warehouse receipts thereof. Borrower
shall also furnish Lender with such other documents and instruments as it may
request in connection with any Accounts, including detailed monthly agings.
Borrower shall deliver to Lender the originals of all letters of credit, notes
and instruments in its favor and such endorsements or assignments as Lender may
request.
5.6.3 BORROWER'S MERCHANDISE. Borrower will
promptly notify Lender of all returns and recoveries of merchandise not in the
ordinary course of the Business and of all material claims asserted with
respect to merchandise and shall promptly report each such return, repossession
or recovery of merchandise to Lender, providing it with a description of such
goods and their location. Borrower shall be deemed in compliance with this
representation if, promptly upon any return or recovery of merchandise, and
after resolution of any dispute or claim related to such return, Borrower
issues a credit memorandum in favor of its Account Debtor, to the extent
consistent with such resolution, and includes disclosure of such credit
memoranda in the next report due to Lender, as required by Section 5.6.1. Upon
Borrower's receipt of Collateral of any kind or nature by reason of
transactions between itself and its customers or Account Debtors, it will hold
the same on Lender's behalf, subject to Lender's instructions. Upon Borrower's
receipt of an order from or making of a sale to a customer which also sells to
it or which may have other material claims against it (other than rebates
offered to customers in the ordinary course of business which have been
reflected on reports issued by Borrower to Lender), Borrower will so advise
Lender promptly upon being notified of such order or making such sale, and in
time to permit Lender to establish a reserve against possible offsets.
Effective on the occurrence and continuance of an Event of Default and after
notice from Lender, (i) Borrower shall not settle or adjust any dispute or
claim or grant any discount (except ordinary trade discounts), credit or
allowance or accept any return of merchandise, except in the ordinary course of
its business, without Lender's consent and (ii) Lender may, upon five (5)
Business Days' prior written notice thereof, settle or adjust disputes or
claims directly with customers or Account Debtors for amounts and upon terms
which it considers advisable.
5.7 ELIGIBLE INVENTORY.
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5.7.1 CONTINUATION OF SECURITY INTEREST; RIGHT TO
POSSESSION BY LENDER. Lender's Security Interests in Inventory shall continue
through all steps of manufacture and sale and attach without further act to raw
materials, work in process, finished goods, returned goods, documents of title,
warehouse receipts, and to proceeds resulting from sale or disposition of
Inventory. Until all of Borrower's Obligations have been satisfied and Lender
has no further obligation to make any Subsequent Advances under the Term Loan
or Advances under the Revolving Loan, Lender's Security Interest in Inventory
and in all proceeds thereof shall continue in full force and effect and Lender
shall have, during the continuance of an Event of Default, the right to take
physical possession of Inventory and to maintain it on Borrower's premises, in
a public warehouse, or at such place or places to which Lender may remove
Inventory or any part thereof. If Lender exercises its right to take
possession of Inventory, Borrower will, upon demand, and at Borrower's own cost
and expense, assemble Inventory and make it available to Lender at a place or
places reasonably convenient to Lender.
5.7.2 ADDITIONAL COVENANTS AND REPRESENTATIONS.
All Inventory is, and will be, owned by Borrower free and clear of all liens
and encumbrances in favor of any Person other than Lender, except as expressly
permitted hereunder, and shall be maintained at the locations shown on Exhibit
"5.7.2" hereto. The foregoing notwithstanding, in the event that any Inventory
becomes the subject of an involuntary lien, Borrower shall be deemed in
compliance with this representation if Borrower causes such lien to be bonded
over or released within thirty (30) days after Borrower's receipt of notice
thereof. No Inventory shall be removed therefrom, except for transfer to
another facility of Borrower or for the purpose of sale or return in the
ordinary course of Borrower's business. Except for sales and returns in the
ordinary course of business, Borrower will not sell, encumber, dispose of or
permit the sale, encumbrance, return or disposal of any Inventory without
Lender's prior written consent. If sales are made for cash, Borrower shall,
immediately upon its receipt of such cash, deliver it to Lender in the exact
form received for payment to the Blocked Account.
5.7.3 PROTECTION OF SECURITY INTEREST. Borrower
will perform at its own cost and expense any and all steps that Lender may
request to perfect or protect Lender's Security Interest in Inventory,
including, but without limitation, leasing or subleasing, as the case may be,
warehouses or warehouse space to Lender or its designee, placing and
maintaining signs, appointing custodians, executing and filing financing or
continuation statements in form and substance satisfactory to Lender,
maintaining stock records and the transferring of Inventory to warehouses. If
any Inventory is in the possession or control of any third party other than a
purchaser in the ordinary course of business or a public warehouseman where the
warehouse receipt is in the name of or held by Lender, Borrower shall notify
such Person of Lender's Security Interest therein and, upon request, instruct
such Person or Persons to hold all such Inventory for the account of Lender and
subject to Lender's instructions. If so requested by Lender, Borrower will
deliver to Lender warehouse receipts covering any Inventory located in
warehouses showing Lender as the beneficiary thereof and will also deliver to
the warehouseman such agreements relating to the release of warehouse Inventory
as Lender may request. A physical verification of all Inventory wherever
located will be taken by Borrower at least annually in connection with the
preparation of Borrower's
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fiscal year end financial statements and, in any case, upon the occurrence and
during the continuance of an Event of Default, as often as required by Lender,
and a copy of such physical verification shall be submitted to Lender. From
time to time, and at least once every week in any event, Borrower shall execute
and deliver to Lender a confirmatory written instrument, in form and substance
satisfactory to Lender, describing its Inventory, but any failure to execute or
deliver the same shall not affect or limit Lender's Security Interest in and to
Inventory.
5.7.4 RECORDS OF INVENTORY. Borrower shall
maintain fully accurate and complete records respecting its Inventory
describing the kind, type, quality and quantity of Inventory, such Person's
cost therefor and withdrawals therefrom and additions thereto, including a
perpetual inventory.
5.8 EQUIPMENT.
5.8.1 DESCRIPTION AND LOCATION; RECORDS OF
EQUIPMENT. Set forth on Exhibit "5.8.l" hereto is a list of the locations
where all Borrower's present Equipment is kept. All Equipment is, and will be,
owned by Borrower free and clear of all liens and security interests in favor
of any Person other than Lender, except as expressly permitted hereunder. All
Equipment hereafter acquired will be kept at the location or locations shown on
Exhibit "5.8.1" except as permitted by this Loan Agreement. Borrower shall at
all times hereafter keep correct and accurate records itemizing and describing
the location, kind, type, age and condition of Equipment, the cost therefor and
accumulated Depreciation thereof and retirements, sales, or other dispositions
thereof, all of which records shall be available for examination on demand to
any of the officers, employees or agents of Lender.
5.8.2 CONDITION; ADDITIONAL COVENANTS AND
REPRESENTATIONS. Borrower shall keep all Equipment in a good state of repair
and good operating condition (except to the extent of Equipment taken out of
service, consistent with the final clause of this sentence), and will make all
repairs and replacements when and where necessary, will not waste or destroy it
or any part thereof, and will not be negligent in the care or use thereof, all
in the ordinary course of the operation of the Business, and in a manner
consistent with that maintained by prudent businesspersons in similar
circumstances. Borrower shall repair and maintain all Equipment in a manner
sufficient to continue the operation of its business as heretofore described.
All Equipment shall be used in accordance with applicable law and the
manufacturer's instructions and shall be kept separate from and shall not be
annexed or affixed to or become part of the realty. To the best of Borrower's
knowledge, no Person owning or operating any Equipment necessary for the
operation of the Business has used, operated or maintained the same in a manner
which, whether now or hereafter, would result in the cancellation or
termination of the right of Borrower to use the same or which would result in
any material liability of Borrower for damages in connection therewith.
Equipment shall not be removed from the premises shown on Exhibit "5.8.l"
except with Lender's prior written consent or in the ordinary course of the
Business.
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5.8.3 DISPOSITION OF EQUIPMENT. Where Borrower is
permitted to dispose of any Equipment under this Loan Agreement or by any
consent thereto hereafter given by Lender, it shall do so at arm's length, in
good faith and by obtaining the maximum amount of recovery practicable therefor
and without impairing the operating integrity of the remaining Equipment and
shall remit all proceeds to Lender (unless otherwise permitted to redeploy such
funds as herein permitted) to be applied first to the Term Loan in the inverse
order of maturity of payments and then as Lender determines.
5.9 LOCATION OF CHIEF EXECUTIVE OFFICES. The chief
executive office of Borrower is located in Aliquippa, Pennsylvania.
5.10 PROJECTIONS AND FINANCIAL STATEMENTS.
5.10.1 FINANCIAL STATEMENTS. The financial
statements referred to in Section 4.8, copies of which have been delivered to
Lender, comport with the books and records of Borrower, Sellers and Brighton
(respectively), are complete and correct in all material respects and fairly
present in all material respects each such entity's financial condition and
results of operations as of such dates and for such periods and there have been
no material adverse changes since such date(s). None of Borrower, Brighton nor
either Seller has any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or unanticipated losses
from any unfavorable commitments which are not disclosed in such financial
statements or the exhibits thereto which either individually or in the
aggregate would be material, and there has been no material adverse change in
the Business, prospects, financial condition or operations of Sellers and
Brighton taken as a whole since the last date set forth in such financial
statements. Borrower has also delivered to Lender pro-forma balance sheets as
of the Closing Date (which assume the consummation of the transactions
contemplated by the terms of the Documents). Such pro-forma balance sheets
present fairly the anticipated financial condition of Borrower as of the
Closing Date.
5.10.2 PROJECTIONS. Borrower has delivered to
Lender projections of the future operations of Borrower. Such projections are
based upon Borrower's good faith assumptions, as of the Closing Date, regarding
such future operations.
5.11 LITIGATION. Except as described on Exhibit "5.11"
hereto, there are no actions, suits, arbitration proceedings or claims pending
or, to the best of Borrower's knowledge, threatened against Borrower or
maintained by Borrower, at law or in equity or before any Governmental Body
which, if adversely determined, could have a material adverse effect on the
financial condition, operations, business, prospects, profits or Property of
Borrower, or the validity or enforceability of any of the Documents or any of
the transactions contemplated thereby, or the priority of the Security
Interests.
5.12 CONFLICTING AGREEMENTS. Borrower is not in default
under any agreement to which it is a party or by which it or any of its
Property is bound, the effect of which default could have a material adverse
effect on the financial condition, operations, business, prospects, profits or
Property of Borrower or the validity or enforceability of any of
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the Documents or any of the transactions contemplated thereby or the priority
of the Security Interests. No authorization, consent, approval or other action
by, and no notice to or filing with, any shareholder, any Governmental Body or
any other Person which has not already been obtained, taken or filed, as
applicable, or which will be obtained, taken or filed simultaneously with the
Closing, is required (i) for the due execution, delivery or performance by
Borrower of any of the Documents to which it is a party or (ii) as a condition
to the validity or enforceability of any of the Documents to which Borrower is
a party or any of the transactions contemplated thereby or the priority of the
Security Interests, except for certain filings to establish and perfect the
Security Interests. No provision of any mortgage, indenture, contract,
agreement, statute, rule, regulation, judgment, decree or order binding on
Borrower, or affecting the Business of Borrower, (x) conflicts with any of the
Documents other than such conflicts which could not cause a material adverse
effect on the Business or the financial condition, operations, prospects,
profits or Property of Borrower; or (y) requires any consent which has not
already been obtained or is anticipated to be obtained as described above
(other than a consent, the failure of which to obtain could not cause a
material adverse effect on the Business or the financial condition, operations,
prospects, profits or Property of Borrower), or in any way would prevent the
execution, delivery or performance of the terms of any of the Documents. The
execution, delivery or performance of the terms of the Documents shall not
constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien upon the Property of Borrower pursuant to the
terms of any such mortgage, indenture, contract or agreement.
5.13 TAXES. Borrower and, to the best of Borrower's
knowledge, Sellers and Brighton, have each filed, or caused to be filed, all
tax returns required to be filed, and has paid, or has made adequate provision
for the payment of, all taxes due and payable on such returns or to become due
and payable upon the filing of such returns or in any assessments made against
any such entities and any of its or their respective Property and no tax liens
have been filed and, to the best knowledge of Borrower, no claims are being
asserted in respect of such taxes which are required by GAAP to be reflected in
the financial statements of such entities and are not so reflected therein.
The charges, accruals and reserves on the books of Borrower, and to the best of
Borrower's knowledge, Sellers and Brighton with respect to all federal, state,
local and other taxes are considered by the management of such entities to be
adequate, and Borrower has no knowledge of any unpaid assessment which is or
might be due and payable against any such entity or any Property of any such
entity, except such assessments as are being contested in good faith and by
appropriate proceedings diligently conducted, and for which adequate reserves
have been set aside in accordance with GAAP.
5.14 COMPLIANCE WITH APPLICABLE LAWS. Borrower is not in
default in respect of any judgment, order, writ, injunction, decree or decision
of any Governmental Body, which default would have a material adverse effect on
the financial condition, operations, business, prospects, profits or Property
of Borrower. Borrower is in compliance in all material respects with all
applicable statutes and regulations, including Environmental Laws, of all
Governmental Bodies, a violation of which would have a material adverse effect
on the financial condition, operations, business, prospects, profits or
Property of Borrower or
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the validity or enforceability of any of the Documents or any of the
transactions contemplated thereby or the priority of the Security Interests.
5.15 FRANCHISES AND AGREEMENTS. Subject to post-closing
completion of the matters set forth in Exhibit "5.15" hereto, in the manner set
forth on such Exhibit, Borrower shall own, possess or have the right to use all
franchises, permits and licenses, regulatory approvals, and all rights with
respect thereto, necessary for the conduct of the Business as heretofore
conducted and as proposed to be conducted after the Closing Date, without any
known conflict with the rights of others and, in each case, free of any Liens
other than Permitted Liens.
5.16 REGULATORY MATTERS. Borrower has duly and timely
filed all material reports and other filings which are required to be filed by
it under any rules or regulations promulgated by any Governmental Body or other
Person having jurisdiction over the operation of the Business.
5.17 ENVIRONMENTAL MATTERS. Except as otherwise disclosed
in the Environmental Report: (i) Borrower is in compliance in all material
respects with all applicable Environmental Laws, to the extent that the failure
to so comply could result in a material adverse effect on the financial
condition, operations, business, prospects, profits, or Property of Borrower;
(ii) no portion of any of the Real Property has been used for the disposal of
hazardous substances; and (iii) Borrower shall not cause or permit there to be,
and there currently are not any known, Hazardous Materials generated,
manufactured, released, transported to or from, stored, buried or deposited
over, beneath, in or on (or used in the construction and/or renovation of) the
Real Property in violation of applicable Environmental Laws.
5.18 APPLICATION OF CERTAIN LAWS AND REGULATIONS. Neither
Borrower nor any Affiliate of Borrower is:
5.18.1 INVESTMENT COMPANY ACT. An "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
5.18.2 HOLDING COMPANY ACT. A "holding company", a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.
5.18.3 REGULATIONS AS TO BORROWING. Subject to any
statute or regulation which regulates the incurrence of any Indebtedness for
Borrowed Money including, without limitation, statutes or regulations relative
to common or interstate carriers or to the sale of electricity, gas, steam,
water, telephone, telegraph or other public utility services.
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5.18.4 FOREIGN OR ENEMY STATUS. (i) An "enemy" or
an "ally of an enemy" within the meaning of Section 2 of the Trading With the
Enemy Act, (ii) a "national" of a foreign country designated in Executive Order
No. 8389, as amended, or of any "designated enemy country" as defined in
Executive Order No. 9095, as amended, of the President of the United States of
America, in each case within the meaning of such Executive Orders, as amended,
or of any regulation issued thereunder, (iii) a "national of any designated
foreign country" within the meaning of the Foreign Assets Control Regulations
or of the Cuban Assets Control Regulations of the United States of America
(Code of Federal Regulations, Title 31, Chapter V, Part 515, Subpart B, as
amended), or (iv) an alien or a representative of any alien or foreign
government within the meaning of Section 310 of Title 47 of the United States
Code.
5.19 MARGIN REGULATIONS. None of the transactions
contemplated by this Loan Agreement or any of the other Documents, including
the use of the proceeds of the Loan, shall violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including, without limitation, Regulations
G, T, U and X, and Borrower does not own or intend to carry or purchase any
"margin security" within the meaning of such Regulation U or G.
5.20 OTHER INDEBTEDNESS. Upon the Closing there shall be
no Indebtedness for Borrowed Money owed by Borrower to any Person, except (i)
Borrower's Obligations, (ii) the Permitted Senior Indebtedness and (iii)
Indebtedness evidenced by the Senior Subordinated Notes.
5.21 NO INVESTMENTS, ETC. Except as set forth on Exhibit
"5.21", Borrower (i) has not committed to make any Investment not otherwise
permitted hereunder; (ii) is not a party to any indenture, agreement, contract,
instrument or lease or subject to any charter, by-law or other corporate
restriction or any injunction, order, restriction or decree, which would
materially and adversely affect the business, operations, properties or assets
of Borrower; (iii) is not a party to any "take or pay" contract as to which it
is the purchaser; and (iv) has no contingent or long-term liability or
commitment, including management contracts (excluding the Employment
Agreements, the Management Agreement and other employment contracts of
full-time individual officers or employees previously disclosed to Lender in
writing) which would materially adversely affect the business or financial
condition of Borrower, in each case except those which have been disclosed to
Lender in writing.
5.22 NO GUARANTEES. Borrower has not assumed, guaranteed
or endorsed, or otherwise become directly or contingently liable in connection
with any liability of any other Person, except (i) for the endorsement of
checks and other negotiable instruments for collection in the ordinary course
of business, and (ii) for the L/C Obligations.
5.23 NO MISREPRESENTATION. No representation or warranty
made by Borrower contained herein or in the other Documents, and no
certificate, information or report furnished or to be furnished by Borrower in
connection with any of the Documents or any of the transactions contemplated
hereby or thereby, contains or shall contain a misstatement of
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material fact, or omits or shall omit to state a material fact required to be
stated in order to make the statements contained herein or therein not
misleading in the light of the circumstances under which such statements were
made. There is no fact or condition known to Borrower, or reasonably foreseen
by Borrower that shall (or, if it were to develop, would be likely to)
materially adversely affect Borrower or the financial condition, operations,
Property, business, prospects, profits or the ability of Borrower to consummate
the transactions and perform its obligations pursuant to the Documents, other
than facts which generally are known to the public, that has not expressly been
disclosed to Lender in writing.
5.24 PLANS. Except as set forth on Exhibit "5.24" hereto,
Borrower is not a member of any Multiemployer Plan. Each Plan maintained by
Borrower is set forth on Exhibit "5.24" and is in material compliance with the
applicable provisions of ERISA and the Code, and Borrower has filed all reports
required to be filed by ERISA and the Code in respect of such Plan. Borrower
and each of its Related Persons has met all requirements imposed by ERISA and
the Code in respect of the funding of all Plans, including, without limitation,
the making when due of all required installment contributions to such Plans.
Except as set forth on Exhibit "5.24" hereto, there has not been, with respect
to any Plan maintained by Borrower, any prohibited transaction, reportable
event, or accumulated funding deficiency, as those terms are defined in ERISA.
5.25 EMPLOYEE MATTERS. Upon the Closing, none of the
employees of Borrower shall be subject to any collective bargaining agreement
other than those set forth in Exhibit "5.25" and there are no strikes, work
stoppages or controversies pending or, to the best knowledge of Borrower,
threatened against Borrower by any of its employees, other than employee
grievances arising in the ordinary course of business which do not in the
aggregate have a material adverse effect on the financial condition,
operations, business, prospects, profits or Property of Borrower.
5.26 PAYMENT OF DEBTS; BURDENSOME OBLIGATIONS. Borrower
does not intend to incur debts beyond its ability to pay them as they mature,
and the aggregate of Borrower's Property at a fair valuation is sufficient in
amount to pay its debts. After giving effect to the transactions contemplated
by the Documents, Borrower will not be a party to or be bound by any franchise,
agreement, deed, lease, or other instrument, or be subject to any restriction,
which is so unusual or burdensome so as to cause, in the reasonably foreseeable
future, a material adverse effect on the Business of Borrower. Borrower does
not presently anticipate that future expenditures needed to meet the provisions
of federal or state statutes, orders, rules, or regulations will be so
burdensome as to have a material adverse effect on the operation of the
Business.
5.27 NO CONTEMPLATED BANKRUPTCY. Borrower does not
contemplate the filing of a petition in bankruptcy or for a reorganization
under the U.S. Bankruptcy Code (or other applicable laws), nor does Borrower
have any knowledge of any threatened bankruptcy or insolvency proceeding
against Borrower.
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5.28 HINDERING CREDITORS. Borrower does not, by
executing, delivering or performing this Loan Agreement, the other Loan
Documents, or by consummating the Acquisition or the Contribution, or by the
issuance of the Senior Subordinated Notes, or by taking any action with respect
thereto, intend to hinder, delay or defraud either its present or future
creditors.
5.29 INSOLVENCY. Immediately following each of (i) the
funding of the Acquisition Advance under the Term Loan, (ii) the funding of the
initial Advance under the Revolving Loan, (iii) the funding of the Indebtedness
evidenced by the Senior Subordinated Notes and (iv) the completion of all of
the transactions contemplated by Borrower at the time of the execution of this
Loan Agreement, including without limitation the Acquisition and the
Contribution, Borrower (A) will not be rendered "Insolvent" (for purposes of
the foregoing, Insolvent means that the present fair saleable value (i.e., the
amount that would be arrived at by a willing seller and a willing buyer under
no compulsion to make a sale) of Borrower's assets is less than the amount that
will be required to pay the probable liability on existing debts (including,
without limitation, any legal liability, whether matured or unmatured,
liquidated or unliquidated, absolute, fixed or contingent) as they become
absolute and matured); and (B) will not be left with remaining Property that
constitutes "unreasonably small capital" or Property the value of which was
unreasonably small in relation to the Business.
5.30 INTELLECTUAL PROPERTY.
5.30.1 Borrower is the owner of all of the right,
title and interest in and to the Intellectual Property as described on Exhibit
"5.30" hereto and in the licenses in which Borrower is licensor as used with
respect to the products designated on Exhibit "5.30". Borrower knows of no
third Person or Persons who claim to have any rights in or to any of the
Intellectual Property in conflict with Borrower's rights with respect to such
products. Exhibit "5.30" represents a true and accurate list of all material
Intellectual Property in which Borrower asserts an interest.
5.30.2 Subject to applicable provisions of federal
and state law, Borrower has the exclusive right to use the Intellectual
Property and the exclusive rights in the Licenses that are required to operate,
or have been used in connection with or which relate to, the Business, without
known or claimed infringement or conflict with the rights of other Persons.
Borrower has not been charged, nor to the best of Borrower's knowledge, is it
threatened to be charged, with infringement of, nor has it infringed, to its
knowledge, any registered or unregistered trademark, trade name, service mark,
patent, or other form of intellectual property of any other Person in
connection with the operation of the Business.
5.30.3 All items of the Intellectual Property have
been registered with the United States Patent and Trademark Office and all such
registrations are valid and subsisting as of the date hereof.
5.30.4 Borrower represents that it has continuously
used and is now continuously using each of the material Trademarks since the
date of first use cited in the
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registration pertaining to such Trademarks in connection with each of the
products cited in such registration, or since the date of acquisition by
Borrower of the Trademarks (where the original registration thereof was issued
to a third party and subsequently assigned to Borrower). To the best of
Borrower's knowledge, such Trademarks (where the original registration was
issued to a third party and subsequently assigned to Borrower) were, prior to
the assignment to Borrower, continuously used by the prior owner thereof since
the date of first use cited in the applicable registration pertaining to such
Trademarks in connection with each of the products cited in such registration.
True and correct copies of all such registrations have been delivered to
Lender.
5.30.5 The consummation of the transaction
contemplated hereby will not alter or impair any right, title or interest of
Borrower in any item of Intellectual Property or the Licenses, except for the
granting of the Security Interests in favor of Lender.
5.31 COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT OF
1990.
5.31.1 All portions of the Real Property are
presently used as administrative, manufacturing and distribution facilities and
for other commercial purposes, and, to the best of Borrower's knowledge, no
portions of the Real Property are used as or for a "public accommodation," as
described and defined in ADA.
5.31.2 Borrower has made all material modifications
and/or provided all accommodations which may be required to be made or provided
pursuant to the ADA in order to accommodate the needs and requirements of any
disabled employees of Borrower.
5.31.3 Borrower's employment practices and
procedures are in compliance with the requirements of the ADA in all material
respects.
5.31.4 Borrower has received no notice or complaint
regarding any noncompliance with the ADA of the Real Property or of Borrower's
employment practices and, to the best of Borrower's knowledge, except as set
forth on Exhibit "5.11" hereto, there has been no threatened litigation
alleging any such noncompliance by Borrower or the Real Property.
5.32 VIOLATIONS OF LAWS. The (i) execution, delivery or
performance of this Loan Agreement. the other Loan Documents, the Acquisition
Documents, the Senior Subordinated Note Documents, and the consummation of the
Acquisition and the Contribution, and (ii) performance of the other acts
contemplated thereby, is not ultra vires as to Borrower, does not violate any
applicable laws or the charter documents for Borrower and will not violate any
provisions of, or result in a default or acceleration of, any obligation under,
any agreement or instrument of any kind or any undertaking, order or decree or
judgment to which Borrower is a party or by which it is bound.
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5.33 USE OF LOAN PROCEEDS. The proceeds of the Loan will
be used for proper corporate purposes in accordance with the provisions of this
Loan Agreement and with applicable law.
5.34 GOOD CONSIDERATION. This Loan Agreement, the other
Loan Documents, the Senior Subordinated Note Documents, the Acquisition
Documents, and the Contribution Documents, and the consummation of the
transactions contemplated thereby have been or will be executed, delivered and
performed in good faith and in exchange for reasonably equivalent value.
5.35 RELIANCE BY LENDER; CUMULATIVE. Each warranty and
representation contained in this Loan Agreement shall be conclusively presumed
to have been relied on by Lender regardless of any investigation made or
information possessed by Lender. The warranties and representations set forth
herein shall be cumulative and in addition to any and all other warranties and
representations that Borrower shall now or hereafter give, or cause to be
given, to Lender.
5.36 ACQUISITION. Borrower has, concurrently with the
execution and delivery of this Loan Agreement and the consummation of the
initial Advance and the Acquisition Advance, consummated the Acquisition
pursuant to the Acquisition Agreement.
ARTICLE 6. AFFIRMATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in
full, Borrower agrees that:
6.1 LEGAL EXISTENCE; GOOD STANDING. Borrower shall
maintain its corporate existence and its good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure so to qualify would have a material adverse effect on the financial
condition, operations, business, prospects, profits or Property of Borrower.
6.2 INSPECTION. Borrower shall permit representatives of
Lender at reasonable times upon reasonable notice to (i) visit its offices,
(ii) examine the books and records of Borrower and Accountants' reports
relating thereto, (iii) make copies or extracts therefrom, (iv) discuss the
Business and affairs of Borrower with the employees of Borrower, (v) examine
and inspect the Property of Borrower, and (vi) meet and discuss the Business
and affairs of Borrower with the Accountants.
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Borrower
shall maintain a standard system of accounting in accordance with GAAP and
furnish or cause to be furnished to Lender:
6.3.1 MONTHLY STATEMENTS. (i) As soon as available
and in any event within fifteen (15) days after the end of each month, monthly
agings of Borrower's accounts
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receivable and payable, an accounts receivable trial balance, a perpetual
Inventory listing, and a reconciliation of Borrower's daily borrowing base
certificates to its month end financial statements, and to its perpetual
Inventory listing and accounts receivable aging report, and (ii) within thirty
(30) days after the end of each month (A) a statement of profit and loss of
Borrower, (B) a balance sheet, and (C) a cash flow statement as of the end of
such month, provided that, with respect to each set of monthly financial
statements relating to the third month in any fiscal quarter of Borrower,
Borrower shall also provide consolidating financial statements as of the end of
such quarter, all of the financial statements described in this clause (ii) to
be in a form acceptable to Lender, showing, in each case the operating results
for such month and for the period from the beginning of Borrower's fiscal year
through the end of such month on a comparative basis for the same period for
the previous year, and certified as complete and correct in all material
respects (subject to normal year end adjustments) by the Chief Financial
Officer. In addition, with respect to each set of monthly financial statements
which relates to the end of a fiscal quarter of Borrower, such statements shall
include calculations of each of Operating Cash Flow, Contractual Senior Debt
Service, Contractual Total Debt Service, and Excess Cash Flow for the period
from the beginning of Borrower's fiscal year through the end of such quarter,
which calculations shall be in reasonable detail, contain such information as
Lender may require, and be certified as complete and correct in all material
respects (subject to normal year end adjustments) by the Chief Financial
Officer.
6.3.2 ANNUAL STATEMENTS. As soon as available and
in any event within ninety (90) days after the close of each fiscal year of
Borrower (i) a statement of profit and loss, a balance sheet, and a statement
of cash flows of Borrower, as of the end of such fiscal year setting forth in
each case in comparative form the corresponding figures for the preceding year,
and (ii) statements of Operating Cash Flow, Contractual Senior Debt Service,
Contractual Total Debt Service, and Excess Cash Flow for such year setting
forth in each case in comparative form the corresponding figures for the
preceding year. Such annual financial statements shall be accompanied by: (A)
an opinion of the Accountants stating that (1) the examination by the
Accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards and, accordingly,
included such tests of the accounting records and such other procedures as were
considered necessary under the circumstances, (2) such financial statements
have been prepared in accordance with GAAP and in a manner consistent with
prior periods, and (3) such financial statements fairly present in all material
respects the financial position and results of operations of Borrower; (B) a
letter from the Accountants stating that the statements of Operating Cash Flow,
Contractual Senior Debt Service, Contractual Total Debt Service and Excess Cash
Flow were computed in accordance with the requirements of this Loan Agreement;
and (C) a certification by the Chief Financial Officer or the corporate
Controller that the statements, reports and other information delivered
pursuant to this Section 6.3.2 are complete and correct in all material
respects.
6.3.3 OFFICER'S CERTIFICATES. The financial
statements described in Sections 6.3.1 and 6.3.2 shall be accompanied by a
certificate of the Chief Financial Officer in reasonable detail (i) certifying
that no condition or event has occurred or exists which constitutes an
Incipient Default or an Event of Default, or, if so, specifying in any such
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certificate such violations, conditions and events, and the nature and status
thereof, and what actions Borrower proposes to take with respect thereto, and
(ii) showing all calculations necessary to demonstrate compliance with the
provisions of Sections 6.9, 6.10 nd 7.13 of this Loan Agreement.
Simultaneously with the delivery of the annual financial statements pursuant to
Section 6.3.2, Borrower shall also deliver to Lender a certificate of its Chief
Executive Officer certifying that Borrower is in compliance in all material
respects with all applicable Environmental Laws and confirming the absence of
matters which would require notice to Lender pursuant to the provisions of
Section 6.8.
6.3.4 ACCOUNTANTS' CERTIFICATE. Simultaneously
with the delivery of the certified statements required by Section 6.3.2, copies
of a certificate of the Accountants stating that (i) they have checked the
computations delivered by Borrower in compliance with Section 6.3.3, (ii) in
making the examination necessary for their audit of the financial statements of
Borrower for such year, nothing came to their attention of a financial or
accounting nature that caused them to believe that Borrower was not in
compliance with the terms, covenants, provisions, or conditions of any of the
Loan Documents, or that there shall have occurred any Incipient Default or
Event of Default, or, if so, specifying in such certificate all such instances
of non- compliance and the nature and status thereof, and (iii) to the extent
not previously covered by a separate letter from such accountants, they are
aware that Lender is relying upon their certification of such financial
statements and they authorize such reliance.
6.3.5 AUDIT REPORTS. Promptly upon receipt
thereof, a copy of each report, other than the reports referred to in Section
6.3.2, including any so-called "Management Letter" or similar report, submitted
to Borrower by the Accountants in connection with any annual, interim or
special audit made by the Accountants of the books of Borrower.
6.3.6 ANNUAL BUDGETS. Not earlier than thirty (30)
days prior to the beginning of each fiscal year (and in no event later than
thirty (30) days after the beginning of each such fiscal year) of Borrower, an
annual budget prepared in a manner consistent with GAAP and in such further
reasonable detail as Lender may request consisting of projected balance sheets,
and income and cash flow statements, on a monthly basis for each of the twelve
months during such fiscal year, together with such appropriate supporting
details and statements of assumptions, all as Lender may request.
6.3.7 NOTICE OF CHANGE OF ACCOUNTANTS. At least
ten (10) days prior to any change of Accountants, notice that such change is to
occur together with the name of the new Accountants and an appropriate letter
of the type described in Section 6.3.8 addressed to such new Accountants. Such
new Accountants shall be an independent, national accounting firm whose
professional reputation and capabilities are satisfactory to Lender.
6.3.8 OTHER FINANCIAL INFORMATION; ACCOUNTANTS'
COOPERATION. Such other information with respect to the financial condition of
Borrower or any property of Borrower in which Lender may have a Security
Interest as Lender may, from time to time,
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request. Borrower authorizes Lender to communicate directly with Borrower's
officers and with its Accountants at reasonable times and on reasonable notice.
Borrower authorizes its Accountants to disclose to Lender any and all financial
statements, work papers and other information of any kind that they may have
with respect to Borrower and its business and financial and other affairs.
Lender shall treat information so obtained as confidential. Upon Lender's
request, Borrower shall promptly deliver a letter addressed to its Accountants
instructing them to comply with the provisions of this Section 6.3.8.
6.3.9 NOTICE OF DEFAULTS; LOSS. Immediate written
notice if: (i) any Indebtedness of Borrower is declared or shall become due
and payable prior to its declared or stated maturity, or called and not paid
when due, (ii) an event has occurred that enables the holder of any note, or
other evidence of Indebtedness, certificate or security evidencing any such
Indebtedness of Borrower to declare such Indebtedness due and payable prior to
its stated maturity, (iii) there shall occur and be continuing an Incipient
Default or Event of Default, accompanied by a statement of the Chief Financial
Officer setting forth what action Borrower proposes to take in respect thereof,
or (iv) any event shall have occurred causing loss or depreciation in the value
of assets having a material adverse effect upon the financial condition,
operations, business, prospects, profits or Property of Borrower, including the
amount or the estimated amount of any such loss or depreciation or adverse
effect.
6.3.10 NOTICE OF SUITS, ADVERSE EVENTS. Prompt
written notice of: (i) any citation, summons, subpoena, order to show cause or
other order naming Borrower a party to any proceeding before any Governmental
Body which may have a material adverse effect on the financial condition,
operations, business, prospects, profits or Property of Borrower and include
with such notice a copy of such citation, summons, subpoena, order to show
cause or other order, (ii) any lapse or other termination of any license,
permit, franchise, agreement or other authorization issued to Borrower by any
Governmental Body or any other Person, (iii) any refusal by any Governmental
Body or any other Person to renew or extend any such license, permit,
franchise, agreement or other authorization and (iv) any dispute between or
among Borrower and any Governmental Body or any other Person, which lapse,
termination, refusal or dispute referred to in clauses (ii) or (iii) above or
in this clause (iv) may have a material adverse effect on the financial
condition, operations, business, prospects, profits or Property of Borrower.
6.3.11 REPORTS TO SECURITY HOLDERS, CREDITORS AND
GOVERNMENTAL BODIES.
(a) Promptly upon becoming available, copies of
all financial statements, reports, notices and proxy statements sent or made
available generally by Borrower to its security holders, of all regular and
periodic reports and all registration statements and prospectuses filed by
Borrower with any securities exchange or with the Securities and Exchange
Commission or any Governmental Body succeeding to any of its functions, and of
all statements made available by Borrower generally to others concerning
material developments in the business of Borrower.
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(b) Promptly upon becoming available, copies of
any periodic or special reports filed by Borrower with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of Borrower, or if copies thereof are
requested by Lender, and copies of any material notices and other
communications from any Governmental Body or Person which specifically relate
to Borrower.
(c) Copies of all notices given to the holders of
any Permitted Subordinated Indebtedness, simultaneously with the giving of such
notices.
6.3.12 ERISA NOTICES AND REQUESTS.
(a) Immediate written notice in the event that
(i) Borrower shall fail to make any payments when due and payable under any
Plan, (ii) Borrower shall receive notice from the Internal Revenue Service or
the Department of Labor that Borrower shall have failed to meet the minimum
funding requirements of any Plan, and include therewith a copy of such notice,
or (iii) Borrower gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Title IV of ERISA) in respect of any Plan
which might constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, or (iv) a notice of
intent to terminate any Plan is filed with the PBGC, or (v) proceedings are
instituted by the PBGC under Section 4042 of ERISA to terminate, or to appoint
a trustee to administer, any Plan of Borrower, or (vi) any prohibited
transaction occurs involving the assets of any Plan, or (vii) Borrower or any
of their Related Persons fails to make a required installment or other payment
to any Plan if such failure would result in the imposition of a Lien upon the
Property of Borrower pursuant to Section 412(n) of the Code.
(b) Copies of any request for a waiver of the
funding standards or any extension of the amortization periods required by
Sections 303 and 304 of ERISA or Section 412 of the Code promptly after any
such request is submitted to the Department of Labor or the Internal Revenue
Service, as the case may be.
6.3.13 COLLATERAL REPORTS. Copies of Borrower's
sales reports and cash receipts reports shall be mailed by Borrower to Lender
weekly, or, more frequently if requested by Lender. Original sales invoices
evidencing daily sales shall be mailed by Borrower to each Account Debtor with
a copy to Lender weekly if Lender so requests and, at Lender's direction at any
time that an Incipient Default or Event of Default has occurred and is
continuing, the invoices shall indicate on their face that the Account has been
assigned to Lender and that all payments are to be made directly to Lender.
Borrower shall deliver to Lender, as Lender may from time to time require,
collection reports, sales journals, invoices, original delivery receipts,
customer's purchase orders, shipping instructions, bills of lading, and other
documentation respecting shipment arrangements. Absent such a request by
Lender, copies of all such documentation shall be held by Borrower as custodian
for Lender.
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6.3.14 SCHEDULES OF ACCOUNTS. With such regularity
as Lender shall require, such other schedules describing all Accounts as Lender
may request. Lender's failure to request such schedules or Borrower's failure
to execute and deliver such schedules shall not affect or limit Lender's
Security Interest or other rights in and to the Accounts.
6.3.15 BORROWING BASE. On the Thursday of each
week, a certificate in form satisfactory to Lender setting forth the Borrowing
Base of Borrower as of the prior Saturday.
6.3.16 OTHER INFORMATION. Immediate notice of any
change in the principal officers or key employees of Borrower, change of
location of any Property of Borrower, any change in the name of Borrower, or
any sale or purchase of Property outside the regular course of business or
financial affairs of Borrower as Lender may request from time to time.
6.3.17 OTHER REPORTING REQUIREMENTS. The reports,
notices and documents described in Sections 5.6.1, 5.6.2, 5.6.3 and 5.7.3.
6.3.18 WEEKLY CERTIFICATION OF INVENTORY. On the
Thursday of each week, a certificate setting forth a schedule of inventory as
of the prior Saturday.
6.4 TAX RETURNS. Borrower shall, upon request, furnish
to Lender true, complete and correct copies of Borrower's income tax returns,
including all schedules and attachments thereto, as filed with the Internal
Revenue Service annually, within thirty (30) days following such filing. In
the event such tax returns are filed after the date upon which such returns
would otherwise be due, in light of Borrower's fiscal year end, absent the
granting of any extension, Borrower shall provide Lender with a copy of
Borrower's request for an extension of the time in which to file federal income
tax returns.
6.5 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS.
Borrower shall timely file all reports, applications, documents, instruments
and information required to be filed pursuant to all rules, regulations or
requests of any Governmental Body or other Person having jurisdiction over
Borrower, including, but not limited to, such of the Documents as are required
to be filed with any such Governmental Body or other Person pursuant to
applicable rules and regulations promulgated by such Governmental Body or other
Person.
6.6 MAINTENANCE OF LICENSES AND OTHER AGREEMENTS.
Borrower shall maintain in force at all times, and apply in a timely manner for
renewal of, all licenses, approvals, permits, franchises, Operating Agreements
and other agreements (including, without limitation, the Tax Sharing Agreement)
necessary for the continuation of the operation of the Business, the loss of
which would have a material adverse effect upon Borrower or upon the Business
or profits, prospects or the operation of Borrower. Borrower shall give Lender
at least thirty (30) days prior written notice of the proposed amendment of any
of such licenses, permits, franchises, Operating Agreements or other
agreements.
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6.7 INSURANCE. Parent and Borrower shall obtain and
maintain, and deliver to Lender evidence of, and keep at all times and in full
force and effect, such casualty, hazard, public liability, product liability,
and other insurance as is required by Lender, written by insurers and in
amounts and forms satisfactory to Lender. The net proceeds, after deducting
all costs and expenses (including attorneys' fees) of collection shall be
applied in the following manner. To the extent that any such insurance
proceeds arise as a result of the loss of or any other casualty to Inventory,
such proceeds shall be paid directly to Lender, for application against the
Revolving Loan. As to proceeds of insurance not arising from a loss of
Inventory, (a) if at the time such proceeds are realized there has occurred and
is continuing any Event of Default or Incipient Default (exclusive of any Event
of Default or Incipient Default arising solely from the casualty which gave
rise to such insurance proceeds, but without excluding an Incipient Default or
Event of Default arising from the failure to maintain sufficient insurance in
compliance with this Section 6.7) or (b) if the damage caused by such casualty
is not susceptible to repair or the items lost or destroyed are not susceptible
to replacement, then the net proceeds of such insurance, at Lender's
discretion, shall be applied either toward replacing or restoring the
Collateral, in a manner and on terms satisfactory to Lender, or to the payment
of Borrower's Obligations. In the event that neither of the preceding two
sentences applies, then such insurance proceeds shall be made available to
Borrower for purposes of replacing or restoring the Collateral subject to
providing Lender with evidence reasonable satisfactory to Lender of the
application of such proceeds toward the repair or replacement process. Without
limiting Lender's right to impose other reasonable terms and conditions, Lender
shall be entitled to require receipt of assurances adequate to Lender in its
reasonable judgment that the proceeds remaining after disbursement will be
sufficient, together with other amounts available from Borrower, to complete
such repair and replacement. Regardless of whether Lender or Borrower controls
the insurance proceeds during the repair and restoration process, the parties
agree that any excess proceeds of insurance remaining after completion of the
restoration or replacement process shall be delivered to Lender for application
against Borrower's Obligations. Any proceeds applied to the payment of
Borrower's Obligations shall be applied as provided by Section 2.11. In no
event shall such application relieve Borrower from payment in full of all
installments of principal and interest which thereafter become due in the order
of maturity thereof.
6.8 ENVIRONMENTAL MATTERS. Borrower shall, promptly upon
receipt thereof, provide Lender with a copy of (i) any notice of any violation
or administrative or judicial complaint or order having been filed or about to
be filed against Borrower, the Real Property or any other real property used by
Borrower alleging violations of any law, ordinance and/or regulation requiring
Borrower to take any action in connection with the release, transportation
and/or clean-up of any Hazardous Materials, or (ii) any notice from any
Governmental Body or any other Person alleging that Borrower is or may be
liable for costs associated with a response or clean-up of any Hazardous
Materials or any damages resulting from a release or transportation of
Hazardous Materials. Borrower, at its sole cost and expense, shall comply in
all respects as to which the failure to do so could have a material adverse
effect on the financial condition, operations, business, prospects, profits or
Property of Borrower with the foregoing notices or diligently contest in good
faith by appropriate proceedings any demands set forth in such notices and, in
all events, shall at all times comply
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in all respects as to which the failure to do so could have a material adverse
effect on the financial condition, operations, business, prospects, profits or
Property of Borrower with, and be responsible for, all Environmental Laws
applicable to Borrower's Property, the Real Property and any other real
property used or leased by Borrower.
6.9 DEBT SERVICE COVERAGE.
6.9.1 SENIOR DEBT SERVICE COVERAGE. Borrower shall
maintain the ratio of its Operating Cash Flow to Contractual Senior Debt
Service for (i) the three months ending on June 30, 1995 at not less than
2.00:1.00, (ii) the six months ending on September 30, 1995 at not less than
1.85:1.00, (iii) the nine months ending on December 31, 1995 at not less than
1.50:1.00, and (iv) the twelve month period ending on March 31, 1996 and on the
last day of each calendar quarter thereafter, at not less than 1.50:1.00.
6.9.2 TOTAL DEBT SERVICE COVERAGE. Borrower shall
maintain the ratio of its Operating Cash Flow to Contractual Total Debt Service
for (i) the three months ending on June 30, 1995 at not less than 1.40:1.00,
(ii) the six months ending on September 30, 1995 at not less than 1.20:1.00,
(iii) the nine months ending on December 31, 1995 at not less than 1.15:1.00,
and (iv) the twelve month period ending on March 31, 1996 and on the last day
of each calendar quarter thereafter, at not less than 1.15:1.00.
6.10 MINIMUM NET WORTH. Borrower shall maintain its
Tangible Net Worth, determined at the end of each fiscal quarter, at not less
than the sum of (i) $7,000,000 and (ii) the greater of (A) zero or (B)
twenty-five percent (25%) of the Net Income of Borrower for the period
beginning on the Closing Date and ending on the date of determination thereof.
6.11 ACCOUNTS SYSTEM. Borrower shall maintain a system
of accounting for Accounts, reserves and loan availability which is in
accordance with GAAP. Borrower shall not materially change its system of
accounting from that which is in effect as of the Closing Date, which system
Lender agrees is acceptable to Lender, without the prior consent of Lender,
which consent shall not unreasonably be withheld. Lender hereby acknowledges
that Borrower is modifying the method by which it accounts for its Inventory
from "last-in, first-out" to "first-in, first-out".
6.12 COVENANTS CONCERNING INTELLECTUAL PROPERTY. So long
as any of Borrower's Obligations remain outstanding, Borrower covenants that:
(i) it will maintain a level of quality in all
products sold under the Trademarks or Borrower's subsequently adopted
trademarks and trade names consistent with Borrower's practices as of the
Closing Date;
(ii) it will not aid any third party in attempting
to register any trademark or service mark which is the same or confusingly
similar to the Trademarks, or to trademarks and trade names subsequently
adopted by Borrower; provided, however, that
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nothing in the foregoing shall prevent Borrower from entering into agreements
with third parties whereby Borrower licenses the right to use the Trademarks;
(iii) it will provide such assistance as Lender may
reasonably require in relation to any application by Lender to register or
maintain the registration of any Trademark;
(iv) during the term of this Loan Agreement and at
its own expense, it will apply for registration with the U.S. Patent and
Trademark Office and do all things necessary to obtain and maintain such
registrations with respect to all Trademarks used in the United States which,
in the reasonable exercise of Borrower's business judgment, are material to the
Business;
(v) it will notify Lender of any unauthorized use
by others of the Trademarks or Patents which may have a material adverse effect
on the Business promptly as it comes to the attention of any executive officer
of Borrower possessing familiarity with the Trademarks or Patents;
(vi) in the event of unauthorized use of a
Trademark or Patent by a third party, it will diligently pursue all appropriate
action, as determined by Borrower in the reasonable exercise of its business
judgment, including, but not limited to, diligent efforts to persuade the
alleged infringer or violator to desist, and/or the bringing and prosecuting of
an appropriate suit or other proceeding against the infringer;
(vii) during the term of this Loan Agreement, it
will not further encumber the Trademarks, the Patents, or the Licenses without
the prior written consent of Lender; and
(viii) it shall grant a first priority Security
Interest to Lender in all trademarks, trade names and service marks, and in the
event any of the foreign registrations of trademarks, trade names or service
marks become material to the Business, it shall, upon the request of Lender,
take all steps necessary to allow Lender to perfect its Security Interest in
such foreign registrations.
6.13 INTEREST RATE CAP AGREEMENTS. Maintain and pay and
perform as and when due and payable or required to be performed, all amounts
and obligations in respect of all Initial Interest Rate Cap Agreements and all
interest rate cap agreements entered into by Borrower at the request of Lender
subsequent to the expiration thereof.
6.14 COMPLIANCE WITH APPLICABLE LAWS. Borrower shall
comply in all material respects with all applicable statutes and regulations of
all Governmental Bodies, including, without limitation, the ADA as it applies
to both the Real Property and Borrower's employment practices, a violation of
which would have a material adverse effect on the financial condition,
operations, business, profits or Property of Borrower, or the validity or
enforceability of any of the Documents or any of the transactions contemplated
thereby or the
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priority of the Security Interests. Borrower shall comply in all material
respects with any judgment, order, writ, injunction, decree or decision or any
Governmental Body applicable to it.
ARTICLE 7. NEGATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in
full, Borrower shall not:
7.1 BORROWING. Create, incur, assume or suffer to exist
any liability for Indebtedness for Borrowed Money except (i) Borrower's
Obligations, (ii) Permitted Subordinated Indebtedness, (iii) Permitted Senior
Indebtedness, (iv) the L/C Obligations, and (v) Indebtedness arising under the
Repurchase Agreement; provided, however, that the Indebtedness of Borrower
under the Repurchase Agreement, regardless of whether it is evidenced by a
promissory note, may not be repaid (A) prior to the day after the currently
scheduled Maturity Date (as the Maturity Date may be postponed as a result of
an Insolvency Proceeding or a "work-out" of Borrower) or (B) if there is no
such postponement of the Maturity Date, but if as at such date the Loan shall
not have been repaid in full because of an Event of Default, then for so long
as the Loan remains not fully repaid.
7.2 LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except
Permitted Liens.
7.3 MERGER AND ACQUISITION. Consolidate with or merge
with or into any Person, or acquire directly or indirectly all or substantially
all of the capital stock of any Person.
7.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse,
contingently agree to purchase, become liable in respect of any letter of
credit, or otherwise become liable upon the obligation of any Person, except
(i) liabilities arising from the endorsement of Negotiable Collateral for
deposit or collection or similar transactions in the ordinary course of
business, (ii) the L/C Obligations, and (iii) the Withdrawal Liability.
7.5 DIVIDENDS; DISTRIBUTIONS. Declare or pay any
dividends or apply any of its Property to the purchase, redemption or other
retirement of, set apart any sum for the payment of any dividends on, or make
any other distribution by reduction of capital or otherwise in respect of any
shares of its capital stock, except Borrower may pay cash dividends to J&L
Holdings in an amount sufficient to enable CPT, as the consolidated taxpayer
for itself, J&L Holdings and Borrower, if applicable, to pay taxes when due,
provided that such dividends are used within 30 days of their receipt thereof
and such dividends do not exceed the separate tax liability of Borrower if it
were the taxpayer.
7.6 INVESTMENTS AND LOANS. Purchase or otherwise
acquire, hold or invest in the capital stock of, or hold any other interest in,
make any arrangement for the purpose of
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providing funds or credit to, or make any other Investment, whether by way of
capital contribution or otherwise, in or with any Person, including, without
limitation, any Affiliate, except (i) Investments in direct obligations of, or
instruments unconditionally guaranteed by, the United States of America or in
certificates of deposit issued by a Qualified Depository, (ii) Investments in
commercial or finance paper which is rated either "Aaa", "AAA" or better by
Moody's Investors Services, Inc. or Standard & Poor's Corporation,
respectively, or at the equivalent rate by any of their respective successors,
(iii) any interests in any money market account maintained with a Qualified
Depository, the Investments of which are restricted to the types specified in
clause (i) above, (iv) Accounts arising from the sale of goods and services in
the ordinary course of business of Borrower, and (v) noncash proceeds from any
sale if such sale is otherwise permitted by this Agreement, and (vi) the
Initial Interest Rate Cap Agreement and any renewal thereof entered into by
Borrower at the request of Lender.
7.7 FUNDAMENTAL BUSINESS CHANGES. Engage in any business
other than the Business or a business substantially related to the Business or
materially change the nature of the Business.
7.8 SALE OR TRANSFER OF ASSETS. Sell, lease, assign,
transfer or otherwise dispose of any Property except for disposition of (i)
inventory in the ordinary course of business, (ii) Property which is not
material to or necessary for the continued operation of the Business; provided,
however, that the proceeds from such disposition shall remain subject to the
Security Interests, or (iii) unusable items or Equipment which, in the ordinary
course of Borrower's business (and subject to clause (ii) above), are replaced
with new items or Equipment of like function and comparable value to the
unusable items or Equipment when the same were new; provided, however, that
such replacement items and Equipment shall become subject to the Security
Interests.
7.9 PAYMENTS ON SUBORDINATED INDEBTEDNESS.
(a) Make any payment on the Senior Subordinated
Notes, except as permitted by the Subordination and Intercreditor Agreement,
and if, after giving effect to such payment, Borrower would have Excess
Availability of at least $1,000,000 assuming the Maximum Amount equals
$15,000,000, the standards of eligibility set forth in the definition of
Eligible Accounts and Eligible Inventory have not been modified or revised, no
reserves are deemed necessary by Lender as provided in the definition of
Borrowing Base, and Lender has not reduced the advance rates pursuant to
Section 2.2.2.
(b) Subject to the terms of the Management
Subordination Agreement, make any payment of management fees, except regularly
scheduled periodic payments of the compensation due to CPT under the Management
Agreement may be made to CPT in equal monthly installments in advance, provided
(i) no Event of Default or Incipient Default then exists under the Loan
Documents, or would exist as a result of giving effect to each such payment,
(ii) such payments are made in accordance with the terms of the Management
Agreement and in any event not more frequently than once each month, (iii)
after giving effect to such payment Borrower would have Excess Availability of
at least $1,500,000,
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(iv) each such payment in any month would not exceed the sum of (A) $37,500
plus (B) the excess, if any, of $12,500 over the amount actually expended by
Borrower during the immediately preceding month as Management Expenses
(assuming estimated accounting fees for standard auditing procedures are paid
on a monthly basis), and (v) after giving effect to each such payment, the
aggregate amount of all such payments in any fiscal year would not exceed the
sum of $600,000. In addition to the foregoing, Borrower shall be permitted to
reimburse CPT for Management Expenses; provided, however, to the extent that
the aggregate amount of all such Management Expenses exceed $12,500 in any
month, such Management Expenses shall be itemized and a copy of such
itemization, together with such bills, invoices or other documentation as
Lender may reasonably request relating to such Management Expenses shall be
delivered to Lender concurrently with the financial statements required to be
delivered to Lender pursuant to Section 6.3.1(ii);
(c) Subject to the terms of the State
Subordination Agreement(s) then in effect, make any payment of State Debt,
except payments of principal and interest due on the State Debt may be made to
the holder thereof provided (i) no Event of Default or Incipient Default then
exists under the Loan Documents, or would exist as a result of giving effect to
such payment, (ii) after giving effect to such payment Borrower would have
Excess Availability of at least $1,500,000, and (iv) the ratio of Borrower's
Operating Cash Flow to Contractual Total Debt Service for (i) the three months
ending on June 30, 1995 is not less than 1.40:1.00, (ii) the six months ending
on September 30, 1995 is not less than 1.20:1.00, (iii) the nine months ending
on December 31, 1995 is not less than 1.15:1.00, and (iv) the twelve month
period ending on March 31, 1996, and on the last day of each calendar quarter
thereafter, is not less than 1.25:1.00.
7.10 AMENDMENT OF CHARTER AND BY-LAWS. Amend, modify or
waive any term or provision of its corporate charter or by-laws, unless
required by law.
7.11 ACQUISITION OF ADDITIONAL PROPERTIES. Acquire or
engage in the acquisition of any Person engaged in the Business or in any
business that related to the Business.
7.12 ISSUANCE OF STOCK. Issue or cause to be issued or
sell any shares of capital stock or, except for the Warrants, any securities
convertible into or exercisable for any shares of capital stock of Borrower
resulting in a change of control of Borrower, or otherwise allow for any change
in control of Borrower. Any shares of capital stock or securities convertible
into or exercisable for any shares of capital stock of Borrower which may
hereafter be issued by Borrower shall be pledged to Lender as security for the
payment and performance of all of Borrower's Obligations, in form and substance
substantially identical to the Stock Pledge Agreement.
7.13 CAPITAL EXPENDITURES. Make Capital Expenditures in
any Loan Year in an amount exceeding $1,500,000 ("MAINTENANCE CAPITAL
EXPENDITURES"); provided, however, that in addition to Maintenance Capital
Expenditures, Borrower may make Capital Expenditures (i) during the period
commencing on the Closing and ending on June 30, 1996,
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for discretionary projects, including the purchase and installation of a reheat
furnace, in an aggregate amount not to exceed $8,000,000, and (ii) out of
Excess Cash Flow for additional projects subject to Lender's prior consent.
Other than with respect to Capital Expenditures financed to the extent of the
Permitted Senior Indebtedness and the State Debt, all Capital Expenditures
shall be made only out of internally generated funds, including Subsequent
Advances under the Term Loan and Advances under the Revolving Loan.
7.14 TRANSACTIONS WITH AFFILIATES. Except as set forth on
Exhibit "7.14" hereto and except for transactions otherwise specifically
permitted by this Loan Agreement, sell, lease, assign, transfer or otherwise
dispose of any Property to any Affiliate of Borrower, or lease Property, render
or receive services or purchase assets from any such Affiliate, unless such
transaction is on terms and at rates no more favorable to such Affiliate than
those that would have been provided in an arms-length transaction between
Borrower and an unrelated third party. Borrower shall not loan any monies to
any shareholders, directors, officers or partners of Borrower or any Affiliate
or partner of any such Person, other than for normal advances against salary in
the ordinary course of the Business.
7.15 SUBSIDIARIES, JOINT VENTURES, MANAGEMENT CONTRACTS,
CAPITAL STRUCTURE CHANGES. (i) Create any direct or indirect Subsidiary; (ii)
divest itself of any material assets by transferring them to any existing
Affiliate or any future Subsidiary or Affiliate or by entering into a
partnership, joint venture, similar arrangement; (iii) make any material change
in its capital structure; or (iv) except for the Management Agreement, enter
into any management contract (not including an employment contract for the full
time employment of an officer or employee entered into in the regular course of
Borrower's Business) granting or transferring to a third party management
rights in the nature of control over any material portion of Borrower's
Business.
7.16 CORPORATE OFFICES, CORPORATE NAME, CORPORATE RECORDS.
Transfer its executive offices or change its corporate name or maintain records
(including computer printouts and programs) with respect to Accounts or keep
Inventory or Equipment at any locations other than those at which the same are
presently kept or maintained, except upon Lender's prior written consent and
after the delivery to Lender of financing statements in form satisfactory to
Lender.
7.17 SALES PRACTICES. Sell merchandise on the basis of any
of the following: a sale on extended terms ("dating"), a bill-and-hold sale, a
consignment sale, a sale and return, a "guaranteed sale" (i.e., one in which
Borrower guarantees resale by vendee or agrees to accept return of the goods),
or any other sale pursuant to which Borrower agrees to accept the return of the
goods, or to exchange the same upon the happening of any event other than
failure to conform with quality specifications.
7.18 FISCAL YEAR. Change its fiscal year.
7.19 AMENDMENTS TO AGREEMENTS. Amend, or consent to any
amendment to, the Acquisition Documents, the Contribution Documents, the Tax
Sharing Agreement, the
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CCC/Borrower Agreement, or, except to the extent provided in the Subordination
and Intercreditor Agreement, the Senior Subordinated Note Documents.
7.20 COMPLIANCE WITH ERISA. Except as set forth on
Exhibit "5.24" hereto, (i) terminate, or permit any member of a Controlled
Group to terminate, or take any other action with respect to, any Plan
(including, without limitation, a substantial cessation of operations within
the meaning of Section 4068(f) of ERISA) which would result in any material
liability of Borrower or any member of a Controlled Group, to the PBGC or to
any Plan, or (ii) permit the occurrence of any "reportable event" (as defined
in Title IV of ERISA), or any other event or condition, which presents a risk
of such a termination by the PBGC of any Plan, or (iii) permit the present
value of all benefit liabilities under all Plans to exceed the current value of
the assets of such Plans allocable to such benefit liabilities, or (iv) permit
any unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA allocable to Borrower or its Related Persons.
7.21 PROXY RECOGNITION. Recognize or give effect to any
proxy given in violation of the Stock Pledge Agreement.
ARTICLE 8. DEFAULT AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any of the
following shall constitute an Event of Default under the Loan Documents:
8.1.1 DEFAULT IN PAYMENT. If Borrower shall fail
to pay all or any portion of Borrower's Obligations when the same become due
and payable.
8.1.2 BREACH OF COVENANTS.
(a) If Borrower shall fail to observe or perform
any covenant or agreement made by 6.7, 6.9, 6.10, or in Article 7;
(b) If Borrower shall fail to observe or perform
any covenant or agreement made by Borrower contained in Sections 5.6.2, 5.6.3,
5.7.2, 5.7.3, 5.7.4, 5.8.3, 6.1, 6.2, 6.3, 6.11 or 6.12, and failure shall
continue for a period of five (5) days after notice of such failure is given by
Lender;
(c) If Borrower or any other Person shall fail to
observe or perform any covenant or agreement (other than those referred to in
Section 8.1.2(a) or Section 8.1.2(b) above or in Section 8.1.8) made by such
Person in any of the Loan Documents to which such Person is a party, and
failure shall continue for a period of thirty (30) days after written notice of
such failure is given by Lender.
8.1.3 BREACH OF WARRANTY. If any representation or
warranty made by or on behalf of Borrower in or pursuant to any of the
Documents (other than those provisions
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of Article 5 referred to in subsection 8.1.2(a) above) or in any instrument or
document furnished in compliance with the Documents shall prove to be false or
misleading in any material respect on the date as of which made.
8.1.4 DEFAULT UNDER ANY INDEBTEDNESS. If Borrower
at any time shall be in default with respect to (i) the Permitted Subordinated
Indebtedness, or (ii) any Indebtedness for Borrowed Money or Capitalized Lease
(other than Borrower's Obligations), in each case (with resect to this clause
(ii)), beyond the grace period, if any, applicable thereto or thirty (30)
Business Days, if shorter, and the aggregate amount of such Indebtedness) then
in default shall exceed $75,000.
8.1.5 BANKRUPTCY, ETC.
(a) If J&L Holdings or Borrower shall (i)
generally not be paying its respective debts as they become due, (ii) file,
consent, by answer or otherwise, to the filing against such Person of a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy or insolvency under the laws of any jurisdiction, (iii) make an
assignment for the benefit of creditors, (iv) consent to the appointment of a
custodian, receiver, trustee or other officer with similar powers for such
Person, or for any substantial part of the Property owned by such Person, (v)
be adjudicated insolvent, or (vi) with respect to J&L Holdings or Borrower,
take corporate action for the purpose of any of the foregoing.
(b) If any Governmental Body of competent
jurisdiction shall enter an order appointing, without consent of J&L Holdings
or Borrower, a custodian, receiver, trustee or other officer with similar
powers with respect to J&L Holdings or Borrower, or with respect to any
substantial part of the Property belonging to J&L Holdings or Borrower, or if
an order for relief shall be entered in any case or proceeding for liquidation
or reorganization or otherwise to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of J&L Holdings or Borrower, or if any petition for any such relief
shall be filed against J&L Holdings or Borrower and such petition shall not be
dismissed or stayed within forty-five (45) days.
8.1.6 JUDGMENTS. If there shall exist a final
judgment or award against Borrower which shall have been outstanding for a
period of thirty (30) days or more from the date of the entry thereof and shall
not have been discharged in full or stayed pending appeal, provided that the
aggregate amount of all such judgments and awards exceeds $75,000.
8.1.7 IMPAIRMENT OF LICENSES; OTHER OPERATING
AGREEMENTS. If (i) any Governmental Body shall revoke, terminate, suspend or
adversely modify any license, permit, approvals, including without limitation,
any approvals required for the continued operation of the Business (the
"APPROVALS"), or trademark or trade name of Borrower, the failure of which to
continue would have a material adverse effect upon the financial condition,
business, operations, profit, Property or prospects of Borrower; or (ii) there
shall exist any violation or default in the performance of, or a failure to
comply with, any lease, agreement or condition or term of any license, permit
or other governmental approval or consent, which
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violation, default or failure would have a material adverse effect upon the
financial condition, business, operations, profit, Property or prospects of
Borrower, or any lease or any such agreement, license, permit, Approvals, or
governmental approval or consent shall cease to be in full force and effect, or
(iii) any Operating Agreement or other agreement which is necessary to the
operation of the Business shall be revoked or terminated and not replaced by a
substitute acceptable to Lender within thirty (30) days after the date of such
revocation or termination, such revocation or termination and non-replacement
would have a material adverse effect upon the financial condition, business,
operations, profit, Property or prospects of Borrower.
8.1.8 COLLATERAL. If any material portion of the
Collateral shall be seized or taken by a Governmental Body; or Borrower shall
fail to maintain the Security Interests and priority of the Loan Documents as
against any Person; or the title and rights of Borrower to any material portion
of the Collateral shall have become the subject matter of litigation which,
might, in the opinion of Lender upon final determination result in an
impairment or loss of the security provided by the Loan Documents.
8.1.9 MISREPRESENTATION. If any writing, document,
aging, certificate or other evidence of the Accounts or Inventory shall be
materially incomplete, incorrect, or misleading at the time the same is
furnished to Lender.
8.1.10 MATERIAL ADVERSE EFFECT. If, in Lender's
reasonable opinion, the occurrence and continuance of any condition has a
material adverse effect on the business, operations, prospects or financial
condition of Borrower, taken as a whole.
8.1.11 INTEREST RATE CAP AGREEMENTS. Borrower
shall fail (if requested by Lender in a written notice to Borrower delivered to
Borrower not less than thirty (30) days prior to the expiration of the Initial
Interest Rate Cap Agreement), concurrently with the expiration of the Initial
Interest Rate Cap Agreement, to enter into an additional interest rate cap
agreement for a period of not less than two (2) years on terms substantially
similar to the Initial Interest Rate Cap Agreement and otherwise in form and
substance satisfactory to Lender and with counterparties satisfactory to
Lender.
8.1.12 OWNERSHIP OF STOCK; BOARD OF DIRECTORS OF CPT.
(a) (i) J&L Holdings shall at any time prior to
the exercise of the Warrants by the holders thereof, own, beneficially and of
record, less than 100% in the aggregate of all of the issued and outstanding
shares of capital stock of Borrower having ordinary voting rights for the
election of directors.
(ii) J&L Holdings shall at any time
subsequent to the exercise of the Warrants by the holders thereof, own,
beneficially and of record, less than 80.1% in the aggregate of all of the
issued and outstanding shares of capital stock of Borrower having ordinary
voting rights for the election of directors.
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(iii) J&L Holdings and the holders of the
Warrants shall at any time subsequent to the exercise of the Warrants, own,
beneficially and of record, less than 100% in the aggregate of all of the
issued and outstanding shares of capital stock of Borrower having ordinary
voting rights for the election of directors.
(b) The Shareholders (or, in the event of the
death of any of them, his estate, legal representative or heirs) and CPT shall
at any time own, beneficially and of record, less than 100% in the aggregate of
all of the issued and outstanding shares of capital stock of J&L Holdings
having ordinary voting rights for the election of directors.
(c) CPT shall at any time own, beneficially and
of record, less than 80.1% in the aggregate of all of the issued and
outstanding shares of capital stock of J&L Holdings having ordinary voting
rights for the election of directors.
(d) William L. Remley and Richard Kramer (or
their designees) shall at any time constitute less than two-thirds of the Board
of Directors of CPT.
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the
occurrence of:
(i) any Event of Default described in Section
8.1.5, all of Borrower's Obligations at that time outstanding automatically
shall mature and become due, and
(ii) any other Event of Default, Lender, at any
time, (unless such Event of Default shall have been waived in writing or
remedied) at its option, without further notice or demand, may declare all of
Borrower's Obligations due and payable, whereupon, in either such case,
Borrower's Obligations immediately shall mature and become due and payable, all
without presentment, demand, protest or notice, all of which hereby are waived.
8.3 REMEDIES ON DEFAULT. If any of Borrower's
Obligations have been accelerated pursuant to Section 8.2, Lender, at its
option, may:
8.3.1 ENFORCEMENT OF SECURITY INTERESTS. Enforce its
rights and remedies under the Loan Documents in accordance with their
respective terms, and do any one or more of the following, all of which are
authorized by Borrower:
(i) cease advancing money or extending credit to
or for the benefit of Borrower under this Loan Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and Lender;
(ii) terminate this Loan Agreement and any of the
other Loan Documents as to any future liability or obligation of Lender, but
without affecting Lender's rights and Security Interest in the Collateral and
without affecting Borrower's Obligations and Borrower shall continue to assign
Accounts and consign Inventory to Lender and continue to turn over collections
to it;
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(iii) settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Lender considers
advisable, and in such cases, Lender will credit Borrower's loan account with
only the net amounts received by Lender in payment of such disputed Accounts
after deducting all Lender Expenses incurred or expended in connection
therewith;
(iv) cause Borrower to hold all returned Inventory
in trust for Lender, segregate all returned Inventory from all other property
of Borrower or in Borrower's possession and conspicuously label such returned
Inventory as the property of Lender;
(v) without notice to or demand upon Borrower,
make such payments and do such acts as Lender considers necessary or reasonable
to protect its security interest in the Collateral. Borrower agrees to assemble
the Collateral if Lender so requires, and to make the Collateral available to
Lender as Lender may designate. Borrower authorizes Lender to enter the
premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or Lien that in Lender's determination appears to be
prior or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of Borrower's owned premises,
Borrower hereby grants Lender a license to enter into possession of such
premises and to occupy the same, without charge, for up to one hundred twenty
(120) days in order to exercise any of Lender's rights or remedies provided
herein, at law, in equity, or otherwise;
(vi) without notice to Borrower (such notice being
expressly waived), set off and apply to Borrower's Obligations any and all (A)
balances and deposits of Borrower held by Lender, or (B) indebtedness at any
time owing to or for the credit or the account of Borrower held by Lender;
(vii) ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Collateral. Lender is hereby granted a license or
other right to use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service
marks, and advertising matter, and the goodwill associated with any of the
foregoing, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral and Borrower's rights under all licenses and all franchise
agreements shall inure to Lender's benefit;
(viii) assume any and all of the obligations of
Borrower under any of the Assigned Contracts and to perform any and all acts
that Borrower is required or entitled to perform thereunder, including, without
limitation, enforcement of Borrower's rights pursuant to the terms thereof;
(ix) sell the Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such
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places (including Borrower's premises) as Lender determines is commercially
reasonable. It is not necessary that the Collateral be present at any such
sale;
(x) Lender shall give notice of the disposition
of the Collateral as follows:
(A) Lender shall give Borrower and each
holder of a security interest in the Collateral who has filed with Lender a
written request for notice, a notice in writing of the time and place of public
sale, or, if the sale is a private sale or some other disposition other than a
public sale is to be made of the Collateral, then the time on or after which
the private sale or other disposition is to be made;
(B) the notice shall be personally
delivered or mailed, postage prepaid, to Borrower as provided in Section 11.1,
at least ten (10) calendar days before the date fixed for the sale, or at least
ten (10) calendar days before the date on or after which the private sale or
other disposition is to be made, unless the Collateral is perishable or
threatens to decline speedily in value. Notice to persons other than Borrower
claiming an interest in the Collateral shall be sent to such addresses as they
have furnished to Lender;
(C) if the sale is to be a public sale,
Lender also shall give notice of the time and place by publishing a notice one
time at least ten (10) calendar days before the date of the sale in a newspaper
of general circulation in the county in which the sale is to be held;
(xi) Lender may credit bid and purchase at any
public sale; and
(xii) any deficiency that exists after disposition
of the Collateral as provided above will be paid immediately by Borrower. Any
excess will be returned, without interest and subject to the rights of third
parties, by Lender to Borrower.
8.3.2 OTHER REMEDIES. Enforce any of the rights or
remedies granted to Lender under any other Loan Document and any other rights
or remedies accorded to Lender at equity or law, by virtue of statute or
otherwise.
8.4 APPLICATION OF FUNDS. Any funds received by Lender
after an Event of Default pursuant to the exercise of any rights accorded to
Lender pursuant to, or by the operation of any of the terms of, any of the Loan
Documents, including, without limitation, insurance proceeds, condemnation
proceeds or proceeds from the sale of Collateral, shall be applied by Lender in
the following order of priority:
8.4.1 EXPENSES. First, to the payment of (i) all
fees and expenses, including, without limitation, court costs, fees of
appraisers, title charges, costs of maintaining and preserving the Collateral,
costs of sale, and all other costs incurred by Lender in exercising any rights
accorded to Lender pursuant to the Loan Documents or by applicable law,
including, without limitation, attorneys' fees, and (ii) all Liens superior to
the Liens of
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Lender except such superior Liens subject to which any sale of the Collateral
may have been made.
8.4.2 BORROWER'S OBLIGATIONS. Next, to the payment
of the remaining portion of Borrower's Obligations, in such order as Lender may
determine.
8.4.3 SURPLUS. Any surplus, to the Person or
Persons entitled thereto.
8.5 PAYMENTS BY LENDER ON BEHALF OF BORROWER. In the
event that Borrower at any time fails to do or perform any act, or pay any
amount, or take any action, when such performance, payment or action is
required hereunder (and, if applicable, following the lapse of any grace or
compliance period in which such payment, performance or action may be taken by
Borrower hereunder), then Lender may make such payment or cause such
performance or action to be taken, and all amounts expended by Lender in making
such payment or causing such performance or action to be taken, together with
all expenses incurred by Lender in connection therewith, shall be immediately
due and payable by Borrower to Lender, the payment and performance of which
shall be an Obligation hereunder, and shall be secured by the Collateral. All
such amounts expended by Lender in making such payment or causing such
performance or action to be taken, together with all expenses incurred by
Lender in connection therewith, shall bear interest at the Default Rate from
the date incurred by Lender until paid.
8.6 WAIVER OF NOTICE, SURETIES, DAMAGES. Except as may
be otherwise specifically provided herein or in any other agreement between
Lender and Borrower which may be applicable, Borrower waives any right, to the
extent applicable law permits, to receive prior notice of or a judicial or
other hearing with respect to (i) any action or prejudgment remedy or
proceeding by Lender to take possession, exercise control over, or dispose of
any item of the Collateral in any instance (regardless of where the same may be
located) where such action is permitted under the terms of this Loan Agreement,
any other Loan Document or by applicable law, and (ii) of the time, place or
terms of sale in connection with the exercise of Lender's rights hereunder.
Borrower also waives, to the extent permitted by law, any bonds, security or
sureties required by any statute, rule or otherwise by law as an incident to
any taking of possession by Lender of Property subject to Lender's Lien.
Borrower also waives any damages (direct, indirect, consequential or otherwise)
occasioned by the enforcement of Lender's rights under this Loan Agreement
including the taking of possession of any Collateral or the giving of notice to
any account debtor or the collection of any Account, all to the extent that
such waiver is permitted by law. Borrower also consents that Lender may enter
upon any premises owned by or leased to Borrower without obligation to pay rent
or other compensation or for use and occupancy, through self help, without
judicial process and without having first given notice to Borrower or obtained
an order of any court. These waivers and all other waivers provided for in this
Loan Agreement, the other Loan Documents and any other agreements or
instruments executed in connection herewith have been negotiated by the parties
and Borrower acknowledges that it has been represented by counsel of its own
choice and has consulted such counsel with respect to its rights hereunder.
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8.7 NO OBLIGATION TO OTHER CREDITORS. Borrower agrees
that Lender shall not have any obligation to preserve rights to any Collateral
against prior parties or to proceed if against any Collateral or to marshal any
Collateral of any kind for the benefit of any other creditor of Borrower or any
other Person.
8.8 REMEDIES REGARDING INTEREST RATE CAP AGREEMENT. Upon
the occurrence of an Event of Default, Lender shall have the right to terminate
its obligations under the Initial Interest Rate Cap Agreement (or any
subsequent interest rate cap agreement) including without limitation, any and
all obligations to make payments to Borrower thereunder. In addition to the
foregoing, upon the occurrence of an Event of Default, and without regard to
whether any of Borrower's Obligations have been accelerated pursuant to Section
8.2 hereof, Lender, at its option, may set-off and apply any and all payments
due from Lender to Borrower pursuant to the Initial Interest Rate Cap Agreement
(or any subsequent interest rate cap agreement) against any and all
indebtedness due to or to become due, now existing or hereafter arising, of
Borrower to Lender pursuant to any of the Loan Documents. Following the
occurrence of an Incipient Default, Lender may suspend payment of any and all
amounts due from Lender to Borrower until the Incipient Default is cured, and
if such Incipient Default is not cured within the grace period provided, Lender
shall be entitled to set-off in accordance herewith all amount dues to
Borrower.
ARTICLE 9. CLOSING
The Closing Date shall be such date as the parties shall
determine, and the Closing shall take place on such date, provided all
conditions for the Closing as set forth in this Loan Agreement have been
satisfied or otherwise waived by Lender. The Closing shall take place at the
office of Winston & Strawn, 175 Water Street, New York, New York 10038, or such
other place as the parties hereto shall agree.
ARTICLE 10. EXPENSES AND INDEMNITY
10.1 ATTORNEYS' FEES AND OTHER FEES AND EXPENSES.
Whether or not any of the transactions contemplated by this Loan Agreement
shall be consummated, Borrower agrees to pay to Lender on demand all expenses
incurred by Lender in connection with the transactions contemplated hereby
(including, without limitation, any appraisal fees, title insurance premiums
and recording charges) and in connection with any amendments, modifications or
waivers (whether or not the same become effective) under or in respect of any
of the Loan Documents, including, without limitation:
10.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN
DOCUMENTS. All expenses, disbursements and reasonable attorneys' fees
(including, without limitation, charges for required lien searches,
reproduction of documents, long distance telephone calls and overnight express
carriers) of special counsel and other counsel retained by Lender in connection
with the preparation and negotiation of any of the Loan Documents or any
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amendments, modifications or waivers hereto or thereto (whether or not the same
become effective).
10.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS
OR DEFENSE OF LOAN DOCUMENTS. Any expenses or other costs, including
reasonable attorneys' fees and expert witness fees, incurred by Lender in
connection with the enforcement or collection against Borrower of any provision
of any of the Loan Documents, and in connection with or arising out of any
litigation, investigation or proceeding instituted by any Governmental Body or
any other Person with respect to any of the Loan Documents, whether or not suit
is instituted, including, but not limited to, such costs or expenses arising
from the enforcement or collection against Borrower of any provision of any of
the Loan Documents in any state or federal bankruptcy or reorganization
proceeding.
10.2 INDEMNITY. Borrower agrees to indemnify and save
Lender harmless of and from the following:
10.2.1 BROKERAGE FEES. The fees, if any, of
brokers and finders.
10.2.2 SECURITIES VIOLATIONS, MATTERS RELATING TO
BANKRUPTCY. Any loss, cost, liability, damage or expense (including reasonable
attorneys' fees) incurred by Lender in investigating, preparing for, defending
against, or providing evidence, producing documents or taking other action in
respect of any commenced or threatened litigation, administrative proceeding,
suit instituted by any creditors of Borrower or investigation under any federal
securities law, the Bankruptcy Code, any relevant state corporate statute or
any other securities law, bankruptcy law or law affecting creditors generally
of any jurisdiction, or any regulation pertaining to any of the foregoing, or
at common law or otherwise, relating, directly or indirectly, to the
transactions contemplated by the Documents, except that nothing herein shall
require Borrower to indemnify and save Lender harmless from liability for
losses, costs, damages or expenses, the sole and proximate cause of which is
(i) Lender's own gross negligence or willful misconduct or (ii) Lender's
violation of its corporate charter or by-laws or other laws or regulations
applicable to Lender.
10.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS.
Any loss, cost, liability, damage or expense (including reasonable attorneys'
fees) incurred in connection with the ownership, operation or maintenance of
the Collateral, the construction of Lender and Borrower as having the
relationship of joint venturers or partners or the determination that Lender or
Borrower has acted as agent for the other.
10.2.4 ENVIRONMENTAL INDEMNITY. Any and all
claims, losses, damages, response costs, clean-up costs and expenses suffered
and/or incurred at any time by Lender arising out of or in any way relating to
the existence at any time of any Hazardous Materials in, on, under, at,
transported to or from, or used in the construction and/or renovation of, any
of the Real Property, and/or the failure of Borrower to perform its obligations
and covenants hereunder with respect to environmental matters, including, but
not limited to: (i) claims of any Persons for damages, penalties, response
costs, clean-up costs,
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injunctive or other relief, (ii) costs of removal and restoration, including
fees of attorneys and experts, and costs of reporting the existence of
Hazardous Materials to any Governmental Body, and (iii) any expenses or
obligations, including reasonable attorneys' fees and expert witness fees,
incurred at, before and after any trial or other proceeding before any
Governmental Body or appeal therefrom whether or not taxable as costs,
including, without limitation, witness fees, deposition costs, copying and
telephone charges and other expenses, all of which shall be paid by Borrower to
Lender when incurred by Lender. The foregoing indemnity shall not extend to
any claims, losses, damages, response costs, clean-up costs, or expenses which
relate to or arise from contamination or other environmental matters to the
extent that any such contamination or matter was created solely by the actions
of Lender or its representatives, without in any manner limiting the scope of
such indemnity as it relates to environmental matters which may develop without
having been caused by Lender or its representatives, whether or not such
matters were caused by Borrower or its representatives.
10.2.5 AMERICANS WITH DISABILITIES ACT. Without
limiting the generality of any other provision of this Loan Agreement, Borrower
shall indemnify, defend and hold harmless Lender, its successors and assigns,
and the directors, officers, employees, agents and servants of the foregoing,
from any and all losses, costs, expenses (including court costs and reasonable
attorneys' fees), damages, demands, claims, suits, proceedings, orders and
judgments, penalties, fines and other sanctions arising from any claim that the
Real Property or Borrower's employment practices are not in compliance with the
requirements of the ADA or that Borrower has otherwise discriminated against
any disabled person in violation of the ADA.
10.2.6 ADDITIONAL MONIES. Borrower, concurrently
with Parent's acceptance of the Proposal, deposited the sum of One Hundred
Thousand Dollars ($100,000) with Lender as the Deposit for application by
Lender to Lender's costs, fees and expenses incurred in connection with the
documentation, due diligence and the closing of the Loan. Borrower shall be
responsible for all such costs, fees and expenses as more fully set forth in
Section 10.1.1 hereof.
ARTICLE 11. MISCELLANEOUS
11.1 NOTICES. All notices, communications and waivers
under this Loan Agreement shall be in writing and shall be (i) mailed, postage
prepaid, either by registered or certified mail, return receipt requested, or
(ii) delivered by overnight express carrier, addressed in each case as follows:
If to Borrower: J&L Structural, Inc.
c/o CPT Holdings, Inc.
1430 Broadway, 13th floor
New York, New York 10018-3308
Attention: William L. Remley
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with a copy to: Kelley, McCann & Livingstone
BP America Building, 35th floor
200 Public Square
Cleveland, Ohio 44114-2302
Attention: Michael D. Schenker, Esq.
If to Lender: FINOVA Capital Corporation
1850 North Central Avenue
Phoenix, Arizona 85002-2209
Attention: Vice President - Law
Vice President - Asset Management
with a copy to: FINOVA Capital Corporation
1060 First Avenue
King Prussia, Pennsylvania 19406
Attention: Jeffrey D. Weiss
Portfolio Manager
and a copy to: Winston & Strawn
175 Water Street
New York, New York 10038
Attention: Jonathan Goldstein, Esq.
or to any other address as to any of the parties hereto, as such party shall
designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section 11.1 shall be deemed received (i) if sent
by overnight express carrier, on the next Business Day immediately following
the day sent, or (ii) if sent by registered or certified mail, on the third
Business Day following the day sent.
11.2 SURVIVAL OF TERM LOAN AGREEMENT; INDEMNITIES. All
covenants, agreements, representations and warranties made in this Loan
Agreement and in the certificates delivered pursuant hereto shall survive the
making by Lender of the Loan and the execution and delivery to Lender of the
Term Note, the Revolving Note and of all other Loan Documents and shall
continue in full force and effect so long as any of Borrower's Obligations
remain outstanding, unperformed or unpaid. Notwithstanding the repayment of
all amounts due under the Loan Documents and the termination of Lender's
obligation to provide Subsequent Advances under the Term Loan and/or Advances
under the Revolving Loan, the cancellation of the Term Note and the Revolving
Note and the release and/or cancellation of any and all of the Loan Documents
or the foreclosure of any Liens on the Collateral, the obligations of Borrower
to indemnify Lender with respect to the expenses, damages, losses, costs and
liabilities described in Section 10.2 shall survive until all applicable
statute of limitations periods with respect to actions which may be brought
against Lender have run.
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11.3 FURTHER ASSURANCE. From time to time, Borrower shall
execute and deliver to Lender such additional documents as Lender may require
to carry out the purposes of the Loan Documents and to protect Lender's rights
thereunder.
11.4 TAXES AND FEES. Should any tax (other than taxes
based upon the net income of Lender), recording or filing fees become payable
in respect of any of the Loan Documents, or any amendment, modification or
supplement thereof, Borrower agrees to pay the same to Lender on demand,
together with any interest or penalties thereon attributable to any delay by
Borrower in meeting Lender's demand, and agrees to hold Lender harmless with
respect thereto.
11.5 SEVERABILITY. In the event that any provision of
this Loan Agreement is deemed to be invalid by reason of the operation of any
law, or by reason of the interpretation placed thereon by any court or other
Governmental Body, as applicable, this Loan Agreement shall be construed as not
containing such provision and the invalidity of such provision shall not affect
the validity of any other provisions hereof, and any and all other provisions
hereof which otherwise are lawful and valid shall remain in full force and
effect.
11.6 WAIVER. No delay on the part of Lender in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, and
no single or partial exercise of any right, power or privilege hereunder shall
preclude other or further exercise thereof, or be deemed to establish a custom
or course of dealing or performance between the parties hereto, or preclude the
exercise of any other right, power or privilege.
11.7 MODIFICATION OF LOAN DOCUMENTS. No modification or
waiver of any provision of any of the Loan Documents shall be effective unless
the same shall be in writing, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
No notice to or demand on Borrower in any case shall entitle Borrower to any
other or further notice or demand in the same, similar or other circumstances.
11.8 CAPTIONS. The headings in this Loan Agreement are
for purposes of reference only and shall not limit otherwise affect the meaning
hereof.
11.9 SUCCESSORS AND ASSIGNS. This Loan 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, that neither
this Loan Agreement nor any rights or obligations hereunder shall be assignable
by Borrower without the prior express written consent of Lender, and any
purported assignment made in contravention hereof shall be void. No standard
of reasonableness shall attach to Lender's discretion in consenting or not
consenting to any assignment.
11.10 REMEDIES CUMULATIVE. All rights and remedies of
Lender pursuant to this Loan Agreement, any other Loan Documents or otherwise,
shall be cumulative and non-exclusive, and may be exercised singularly or
concurrently. Lender shall not be required to
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prosecute collection, enforcement or other remedies against Borrower before
proceeding to enforce or resort to any security, liens, collateral or other
rights of Lender.
11.11 ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and
the other Loan Documents executed prior or pursuant hereto constitute the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby or thereby and supersede any prior agreements, whether
written or oral, relating to the subject matter hereof. In the event of a
conflict between the terms and conditions set forth herein and the terms and
conditions set forth in any other Loan Document, the terms and conditions set
forth herein shall govern.
11.12 ASSIGNMENT; PARTICIPATION. Lender shall have the
right without the consent of or notice to Borrower to assign to one or more
entities all or a portion of its rights and obligations under this Loan
Agreement or to grant participating interests in the Loan. In the event Lender
assigns or grants a participating interest in the Loan, payment to the assignee
or participant of such assignee's or participant's proportionate share of
payments due from Borrower with respect to the Loan shall be made by Lender
upon its collection of such amounts from Borrower.
11.13 APPLICABLE LAW. THE LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA.
FOR PURPOSES OF THIS SECTION 11.13, THE LOAN DOCUMENTS SHALL BE DEEMED TO BE
PERFORMED AND MADE IN THE STATE OF ARIZONA.
11.14 JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT
ALL ACTIONS OR PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR
INDIRECTLY OUT OF THE LOAN DOCUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT
OF ARIZONA, MARICOPA COUNTY DIVISION, OR THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF ARIZONA OR, IF LENDER INITIATES SUCH ACTION, IN ADDITION TO THE
FOREGOING COURTS ANY COURT IN WHICH LENDER SHALL INITIATE SUCH ACTION, TO THE
EXTENT SUCH COURT HAS JURISDICTION. BORROWER HEREBY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
BY LENDER IN ANY OF SUCH COURTS AND HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS TO
WHICH NOTICES ARE TO BE SENT PURSUANT TO SECTION 11.1. BORROWER WAIVES ANY
CLAIM THAT PHOENIX, ARIZONA OR THE DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM
OR AN IMPROPER FORUM BASED ON LACK OF VENUE. SHOULD BORROWER, AFTER BEING SO
SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS
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SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING
THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY
BE ENTERED BY LENDER AGAINST BORROWER AS DEMANDED OR PRAYED FOR IN SUCH
SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR
BORROWER SET FORTH IN THIS SECTION 11.14 SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT, BY LENDER, OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE
TAKING, BY LENDER, OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY
SUCH JUDGMENT OR ACTION.
11.15 WAIVER OF RIGHT TO JURY TRIAL. LENDER AND BORROWER
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE
LOAN DOCUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD
BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE
THAT ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY SHALL BE TRIED IN A COURT
OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Initials: Borrower _______ Lender _______
11.16 TIME OF ESSENCE. TIME IS OF THE ESSENCE FOR THE
PERFORMANCE BY BORROWER OF THE OBLIGATIONS SET FORTH IN THIS LOAN AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
11.17 COUNTERPARTS. This Loan Agreement may be
executed by the parties hereto in several counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same agreement.
11.18 DESTRUCTION OF DOCUMENTS. All documents,
schedules, invoices, agings, or other papers delivered to Lender may be
destroyed or otherwise disposed of by Lender four (4) months after they are
delivered to or received by Lender, unless Borrower requests, in writing, the
return of said documents, schedules, or other papers and makes arrangements, at
Borrower's expense, for their return.
[SIGNATURE PAGE TO FOLLOW]
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<PAGE> 97
IN WITNESS WHEREOF, this Loan Agreement has been executed and
delivered by each of the parties hereto by a duly authorized officer of each
such party on March 31, 1995, effective April __, 1995.
FINOVA CAPITAL CORPORATION,
A DELAWARE CORPORATION
BY _____________________________________
ADOLPH G. LETKE
VICE PRESIDENT
___ CHECK HERE TO CONFIRM THAT SECTION
11.15 HAS BEEN INITIALED.
BORROWER'S TAXPAYER J&L STRUCTURAL, INC., A DELAWARE
IDENTIFICATION NO.: CORPORATION
__________________
BY _______________________________________
WILLIAM L. REMLEY
PRESIDENT
___ CHECK HERE TO CONFIRM THAT SECTION
11.15 HAS BEEN INITIALED.
-86-
<PAGE> 98
BORROWER ACKNOWLEDGEMENT
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
I, __________________________, a Notary Public in and for said County,
in the State aforesaid, hereby certify that William L. Remley, personally known
to me to be President of J&L Structural, Inc., and personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as President of said corporation, as his free and voluntary act, and
as the free and voluntary act and deed of such corporation, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this ____ day of __________,
1995.
___________________________________
NOTARY PUBLIC
MY COMMISSION EXPIRES:_____________
LENDER ACKNOWLEDGEMENT
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
I, ___________________________, a Notary Public in and for said
County, in the State aforesaid, hereby certify that ________________________,
personally known to me to be [_____________] of FINOVA Capital Corporation, and
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that she/he signed and delivered said instrument as ______________] of said
corporation, as her/his free and voluntary act, and as the free and voluntary
act and deed of such corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ____ day of __________,
1995.
___________________________________
NOTARY PUBLIC
MY COMMISSION EXPIRES:_____________
<PAGE> 99
EXHIBITS TO
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
J&L STRUCTURAL, INC. AND
FINOVA CAPITAL CORPORATION
--------------------------
EXHIBITS
- - --------
1.1A List of Borrower's Facilities and Warehouses
1.1B Borrowing Base Certificate
1.1C Legal Descriptions of Real Property
1.1D Disbursement Instructions
1.1E Environmental Reports
2.5.1 Principal Amortization of Acquisition Advance
5.3.1 Capitalization of Borrower; Liens on Borrower Stock
5.3.2 Agreements with respect to Borrower Stock
5.4.3 Operation and Maintenance of Equipment
5.5 Liens
5.6.1 Locations of Records Related to Accounts
5.7.2 Locations of Inventory
5.8.1 Locations of Equipment
5.11 Litigation
5.15 Franchises, Permits, Licenses and Approvals
5.21 Investments
5.24 Plans
5.25 Collective Bargaining Agreements
5.30 Intellectual Propery
7.14 Transactions with Affiliates
<PAGE> 100
ALL EXHIBITS HAVE BEEN INTENTIONALLY OMITTED
<PAGE> 101
TERM NOTE
$25,000,000 Phoenix, Arizona
April 6, 1995
FOR VALUE RECEIVED, the undersigned, J&L STRUCTURAL, INC., a Delaware
corporation (the "BORROWER"), hereby promises to pay to the order of FINOVA
CAPITAL CORPORATION, a Delaware corporation (the "LENDER"), in such coin or
currency of the United States as shall be legal tender in payment of all debts
and dues, public and private, at the time of payment, the principal sum of
TWENTY-FIVE MILLION ($25,000,000) DOLLARS, or such lesser amount as shall equal
the Acquisition Advance and all Subsequent Advances outstanding on the Capital
Expenditure Line Borrowing Termination Date under the Loan and Security
Agreement dated March 31, 1995 by and between the Borrower and the Lender
(hereinafter, as it may from time to time be amended, modified and/or
supplemented, referred to as the "LOAN AGREEMENT") together with interest on the
unpaid principal amount hereof from that date the Acquisition Advance and each
Subsequent Advance is made, at the rates per annum set forth in or established
by, and as calculated by Lender pursuant to, and for the periods set forth in or
established by, the Loan Agreement. All capitalized terms used herein that are
defined in the Loan Agreement and that are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Loan Agreement.
The principal sum hereof shall be payable as follows:
(i) The principal balance of the Acquisition Advance shall be paid in
sixty-nine (69) consecutive monthly installments on the first Business Day of
each month commencing on the first Business Day of the fourth calendar month
following the Closing. The first sixty-eight (68) installments shall be in the
amounts set forth on Exhibit A hereto. Any remaining principal and any other
sums due and owing pursuant to the Loan Documents in respect of the Acquisition
Advance, plus accrued and unpaid interest thereon shall be due and payable,
together with the sixty-ninth (69th) installment on the first Business Day of
the seventy-second (72nd) month following the Closing (the "MATURITY DATE").
(ii) The Borrower shall pay to Lender the principal amount of all
Subsequent Advances made by Lender outstanding on the Capital Expenditure Line
Borrowing Termination Date in consecutive monthly installments commencing on the
first Business Day of the first month following the Capital Expenditure Line
Borrowing Termination Date and continuing on the first Business Day of each
month thereafter, with the amount of each such installment to equal 1/36th of
the principal amount of all Subsequent Advances outstanding on the Capital
Expenditure Line Borrowing Termination Date. Any remaining principal and any
other sums due and owing pursuant to the Loan Documents in respect of the
Subsequent Advances, plus accrued and unpaid interest thereon, shall be due and
payable on the Maturity Date.
<PAGE> 102
All indebtedness outstanding under this Note, including, to the extent
permitted by applicable law, interest, shall bear interest (computed in the same
manner as interest on this Note prior to the relevant due date) at the
applicable Default Rate for all periods when an Event of Default has occurred
and is continuing, commencing on the occurrence of such Event of Default until
such Event of Default has been cured or waived as acknowledged in writing by the
Lender, and all of such interest shall be payable on demand.
Notwithstanding any provision to the contrary contained herein, the
Lender shall not collect a rate of interest on any obligation or liability due
and owing by the Borrower to the Lender in excess of the maximum contract rate
of interest permitted by applicable law. The Lender and the Borrower have agreed
that the interest laws of the State of Arizona shall govern the relationship
between them, but in the event of a final adjudication to the contrary, the
Borrower shall be obligated to pay, nunc pro tunc, to the Lender only such
interest as then shall be permitted by the laws of the state found to govern the
contract relationship between the Lender and the Borrower. All interest found in
excess of that rate of interest allowed and collected by the Lender shall be
applied to the principal balance in such manner as to prevent the payment and
collection of interest in excess of the rate permitted by applicable law.
Unless the Lender notifies the Borrower to the contrary, Lender shall
make payment of all amounts owed by the Borrower hereunder in the manner
described by Section 2.13.8 of the Loan Agreement. All payments to be made by
the Borrower hereunder, not made in the manner described by Section 2.13.8 of
the Loan Agreement, shall be made by wire transfer to the account of the Lender
at Chemical Bank, New York, New York, ABA No. 021000128, for the account of
FINOVA Capital Corporation, Account No. 808011812, reference: J&L Structural,
Inc., Attention: Patrick Cornell, or to such other account as the Lender shall
notify the Borrower. Payment shall not be deemed to have been received by the
Lender until the Lender is in receipt of Good Funds.
This Note is the Term Note referred to in the Loan Agreement, is
secured in the manner provided in the Loan Agreement, is subject to prepayment
upon the terms and conditions thereof (including, without limitation, Section
2.9 thereof) and is entitled to the benefits thereof.
Upon the occurrence of any Event of Default, the principal amount of
and all accrued interest on this Note may be declared due and payable in the
manner and with the effect provided in the Loan Agreement and the other Loan
Documents.
The Borrower, for itself and its successors and assigns, expressly
waives presentment, demand, protest, notice of dishonor, notice of nonpayment,
notice of maturity, notice of protest, presentment for the purpose of
accelerating maturity, diligence in collection, or any other exemption or
insolvency laws, and consents that the Lender may release, surrender, exchange
or substitute any real property or personal property, or both, or other
collateral
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<PAGE> 103
security now held or that may hereafter be held as security for the payment of
this Note, and may extend the time for payment or otherwise modify the terms of
payment of any part or the whole of the debt evidenced hereby.
The Borrower shall pay costs and expenses of collection, including,
without limitation, attorneys' fees and disbursements in the event that any
action, suit or proceeding is brought by the holder hereof to collect this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO ITS RULES
PERTAINING TO CONFLICTS OF LAWS.
This Note has been executed and delivered by the Borrower by a duly
authorized officer of the Borrower on the date first set forth above.
J&L STRUCTURAL, INC.
BY____________________________________
WILLIAM L. REMLEY, PRESIDENT
-3-
<PAGE> 104
MULTIPLE ADVANCE NOTE
$15,000,000 Phoenix, Arizona
April 6, 1995
FOR VALUE RECEIVED, the undersigned, J&L STRUCTURAL, INC., a Delaware
corporation (the "BORROWER"), hereby promises to pay to the order of FINOVA
CAPITAL CORPORATION, a Delaware corporation (the "LENDER") on the Renewal Date
(as defined in the hereinafter defined Loan Agreement), in such coin or currency
of the United States as shall be legal tender in payment of all debts and dues,
public and private, at the time of payment the principal sum of FIFTEEN MILLION
($15,000,000) DOLLARS or such lesser amount as shall equal the aggregate amount
of the Revolving Loan under and as defined in the Loan and Security Agreement
dated March 31, 1995 by and between the Borrower and the Lender (hereinafter, as
it may from time to time be amended, modified and/or supplemented, referred to
as the "LOAN AGREEMENT") outstanding on such date, and to pay interest on the
unpaid principal amount of each Advance from the date each such Advance is made
at the rates per annum, and on the dates, set forth in, or established by, the
Loan Agreement, and calculated as provided therein.
All indebtedness outstanding under this Note, including, to the extent
permitted by applicable law, interest, shall bear interest (computed in the same
manner as interest on this Note prior to the relevant due date) at the
applicable Default Rate for all periods when an Event of Default has occurred
and is continuing, commencing on the occurrence of such Event of Default until
such Event of Default has been cured or waived as acknowledged in writing by the
Lender, and all of such interest shall be payable on demand.
Notwithstanding any provision to the contrary contained herein, the
Lender shall not collect a rate of interest on any obligation or liability due
and owing by the Borrower to the Lender in excess of the maximum contract rate
of interest permitted by applicable law. The Lender and the Borrower have agreed
that the interest laws of the State of Arizona shall govern the relationship
between them, but in the event of a final adjudication to the contrary, the
Borrower shall be obligated to pay, nunc pro tunc, to the Lender only such
interest as then shall be permitted by the laws of the state found to govern the
contract relationship between the Lender and the Borrower. All interest found in
excess of that rate of interest allowed and collected by the Lender shall be
applied to the principal balance in such manner as to prevent the payment and
collection of interest in excess of the rate permitted by applicable law.
Unless the Lender notifies the Borrower to the contrary, the Lender
shall make payment of all amounts owed by the Borrower hereunder in the manner
described by Section 2.13.8 of the Loan Agreement. All payments to be made by
the Borrower hereunder, not made in the manner described by Section 2.13.8 of
the Loan Agreement, shall be made by wire transfer to the account of the Lender
at Chemical Bank, New York, New York, ABA No. 021000128, for the account of
FINOVA Capital Corporation, Account No. 808011812, reference: J&L Structural,
Inc., Attention: Patrick Cornell, or to such other account as the Lender shall
notify the Borrower. Payment shall not be deemed to have been received by the
<PAGE> 105
Lender until the Lender is in receipt of Good Funds.
This Note is the Revolving Note referred to in the Loan Agreement, is
secured in the manner provided in the Loan Agreement, is subject to early
termination upon the terms and conditions thereof (including, without
limitation, Section 2.10 thereof) and is entitled to the benefits thereof. All
capitalized terms used herein that are defined in the Loan Agreement and that
are not otherwise defined herein shall have the respective meanings ascribed
thereto in the Loan Agreement.
The Lender is hereby authorized by the Borrower to record on the
schedule to this Note (or on a supplemental schedule thereto) the amount of each
Advance made by the Lender to the Borrower and the amount of each payment or
prepayment of principal of such Advances received by the Lender, it being
understood, however, that failure to make any such notation shall not affect the
rights of the Lender or the obligations of the Borrower hereunder in respect of
this Note. The Lender may, at its option, record such matters in its internal
records rather than on such schedule.
Upon the occurrence of any Event of Default, the principal amount of
and all accrued interest on this Note may be declared due and payable in the
manner and with the effect provided in the Loan Agreement and the other Loan
Documents.
The Borrower, for itself and its successors and assigns, expressly
waives presentment, demand, protest, notice of dishonor, notice of nonpayment,
notice of maturity, notice of protest, presentment for the purpose of
accelerating maturity, diligence in collection, or any other exemption or
insolvency laws, and consents that the Lender may release, surrender, exchange
or substitute any real property or personal property, or both, or other
collateral security now held or that may hereafter be held as security for the
payment of this Note, and may extend the time for payment or otherwise modify
the terms of payment of any part or the whole of the debt evidenced hereby.
The Borrower shall pay costs and expenses of collection, including,
without limitation, attorneys' fees and disbursements in the event that any
action, suit or proceeding is brought by the holder hereof to collect this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO ITS RULES
PERTAINING TO CONFLICTS OF LAWS.
This Note has been executed and delivered by the Borrower by duly
authorized officers thereof on the date first set forth above.
J&L STRUCTURAL, INC.
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<PAGE> 106
BY___________________________________
WILLIAM L. REMLEY, PRESIDENT
-3-
<PAGE> 107
SCHEDULE TO
MULTIPLE ADVANCE NOTE
This Note evidences Advances made under the within described Loan
Agreement, in the principal amounts, and on the dates set forth below, subject
to the payments or prepayments of principal set forth below:
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT PAID BALANCE
DATE MADE LOAN OR PREPAID OUTSTANDING INITIALS
- - --------- --------- ----------- ----------- --------
<PAGE> 108
OPEN-END MORTGAGE
BETWEEN
FINOVA CAPITAL CORPORATION
AND
J&L STRUCTURAL, INC.
--------------------------------
THIS MORTGAGE IS AN OPEN-END MORTGAGE
THIS MORTGAGE SECURES FUTURE ADVANCES
MORTGAGE made this 31st day of March, 1995, effective April 6, 1995 by
and between J&L STRUCTURAL, INC., a Delaware corporation, having an office c/o
CPT Holdings, Inc., 1430 Broadway, 13th Floor, New York, New York 10018-3308
(the "MORTGAGOR"), and FINOVA CAPITAL CORPORATION, a Delaware corporation,
having an office at 1850 North Central Avenue, Phoenix, Arizona 85002 (the
"MORTGAGEE"),
W I T N E S S E T H :
WHEREAS:
(A) The Mortgagor has entered into a certain Loan and Security
Agreement dated March 31, 1995, effective April 6, 1995 (hereinafter, as it may
from time to time be amended, modified and/or supplemented, referred to as the
"LOAN AGREEMENT") with the Mortgagee pursuant to which the Mortgagee has agreed
to make (i) a term loan to the Mortgagor in the original principal amount of
Twenty-Five Million ($25,000,000) Dollars (the "TERM LOAN"), and (ii) a
revolving loan to the Mortgagor in the aggregate principal amount of up to
Fifteen Million ($15,000,000) Dollars (the "REVOLVING LOAN"), all upon and
subject to the terms and conditions of the Loan Agreement (the Term Loan and the
Revolving Loan, together with interest thereon at the rate(s) set forth in the
Loan Agreement, is hereinafter sometimes collectively referred to and described
as the "DEBT");
(B) The Term Loan is evidenced by a certain Term Note of even date
herewith made by the Mortgagor payable to the Mortgagee and the Revolving Loan
is evidenced by a certain Revolving Note of even date herewith made by the
Mortgagor payable to the Mortgagee (such notes, as each may be amended, renewed,
extended and/or replaced, are hereinafter sometimes referred to together as the
"NOTES");
(C) It is a condition precedent to the obligation of the Mortgagee to
make the Term Loan and the Revolving Loan that the Mortgagor shall execute and
deliver this Mortgage; and
(D) All capitalized terms used herein without definition, shall have
the respective meanings ascribed thereto in the Loan Agreement.
NOW THIS INDENTURE WITNESSETH that for better securing the payment of
the Debt, and the performance by the Mortgagor of the
<PAGE> 109
terms, covenants and conditions contained herein, in the Notes and in any other
documents and agreements given to secure payment of the Notes according to the
true intent and meaning thereof, and also for and in consideration of one dollar
to the Mortgagor in hand paid by the Mortgagee at or before the sealing and
delivery of these presents, the receipt whereof is hereby acknowledged, the
Mortgagor has mortgaged, granted, bargained, sold, aliened, released, conveyed
and confirmed, and by these presents does mortgage, grant, bargain, sell, alien,
release, convey and confirm unto the Mortgagee, forever, and grants the
Mortgagee a security interest in:
MORTGAGED PROPERTY
A. All the land located in the County of Beaver, Commonwealth of
Pennsylvania described in Schedule A annexed hereto and made a part hereof
(collectively, the "FEE PREMISES").
B. All of the right, title, interest and leasehold estate of the
Mortgagor under the lease described in Schedule B annexed hereto and made a part
hereof (together with any and all modifications, extensions and renewals
thereof, the "LEASE") of all the land located in Ambridge, County of Beaver,
Commonwealth of Pennsylvania described in Schedule B annexed hereto and made a
part hereof (the "LEASEHOLD INTEREST", and together with the Fee Premises, the
"LAND").
C. All of the right, title and interest of the Mortgagor, in all
buildings, structures and improvements of every nature whatsoever now or
hereafter situated on the Land (collectively, the "IMPROVEMENTS").
D. All fixtures, machinery, appliances, materials, equipment, furniture
and personal property of every nature whatsoever now or hereafter owned by the
Mortgagor or in which the Mortgagor shall have an interest and located in or on,
or attached to, or used or intended to be used in connection with or with the
operation of, or with construction on, the Land or the Improvements, including
all extensions, additions, improvements, betterments, renewals and replacements
to any of the foregoing and all of the right, title and interest of the
Mortgagor in and to any such personal property or fixtures together with the
benefit of any deposits or payments now or hereafter made by the Mortgagor or on
its behalf with regard thereto (the "PERSONAL PROPERTY").
E. All right, title and interest of the Mortgagor, if any, in and to
the land in the bed of the streets or highways abutting the Land to the center
line thereof; all easements, rights of way, strips and gores of land, streets,
ways, sidewalks, curbs, alleys, passages, sewer rights, waters, water courses,
water rights and powers, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments, remainders, reversions and appurtenances
whatsoever, in any way belonging, relating or appertaining to the Land or the
Improvements, or which hereafter shall in any way belong, relate or be
appurtenant thereto, whether now owned or hereafter acquired by the Mortgagor
(the "APPURTENANCES").
-2-
<PAGE> 110
F. All leases, licenses (including, without limitation, the cash and
securities deposited thereunder), rents, issues and profits of the property
described in Paragraphs (A), (B), (C), (D) and (E) (the "RENTS") and all the
estate, right, title, interest, property, possession, claim and demand
whatsoever, at law as well as in equity, of the Mortgagor of, in and to, and all
proceeds of any sales or other dispositions of, the property described in
Paragraphs (A), (B), (C), (D) and (E) above and this Paragraph (F).
G. All proceeds of and any unearned premiums on any insurance policies
covering the Improvements or the Personal Property or the Rents including,
without limitation, the right to receive and apply the proceeds of any
insurance, judgments or settlements made in lieu thereof.
H. All awards ("AWARDS"), heretofore made and hereafter to be made by
any municipal, state or federal authorities to the Mortgagor and all subsequent
owners of the property described above in Paragraphs (A) through (F) including
any awards for any changes of grade of streets affecting the property described
above in Paragraphs (A) through (F) as the result of the exercise of the power
of eminent domain (a "TAKING").
I. All the other estate, right, title, interest, use, possession,
property, claim and demand whatsoever, contract rights, general intangibles,
actions and rights in action, relating to the property described above in
Paragraphs (A) through (H) and proceeds, products, replacements, additions,
substitutions, renewals and accessions of any of the foregoing.
All the property, interests and rights referred to in Paragraphs (A) through (I)
above and any additional property, interests or rights hereafter acquired by the
Mortgagor and subject to the lien of the Mortgage or intended to be so are
referred to in the Mortgage as the "MORTGAGED PROPERTY".
TO HAVE AND TO HOLD the Mortgaged Property to the Mortgagee, its
successors and assigns, forever.
The Mortgagor hereby grants to the Mortgagee a security interest in all
rights and property described above in Paragraphs (A) through Paragraph (I). The
Mortgage is a self-operative Security Agreement with respect to such rights and
property in Paragraphs (A) through Paragraph (I), but the Mortgagor agrees to
execute and deliver on demand such other instruments as the Mortgagee may
request in order to perfect its security interest or to impose the lien hereof
more specifically upon any of such rights and property. The Mortgagee shall have
all the rights and remedies or under any applicable law or agreements with the
Mortgagor of a Secured Party under the Uniform Commercial Code in addition to
those specified herein.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Subject to Paragraph 32 below, the Mortgagor covenants, represents and
warrants with the Mortgagee that:
1. The Mortgagor will pay the Debt as provided in the Notes.
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<PAGE> 111
2. The Mortgagor shall: maintain the Improvements in good repair and in
a rentable and tenantable condition; comply with the requirements of any
governmental department claiming jurisdiction of the Mortgaged Property within
three (3) months after an order making such requirement has been issued by said
department and comply with all statutes, orders, requirements or decrees
relating to the Mortgaged Property by any federal, state or municipal authority.
3. Except as permitted under the Loan Agreement, none of the
Improvements or any part or portion thereof shall be removed, altered or
demolished without the prior written consent of the Mortgagee in each instance
which consent shall not be unreasonably withheld.
4. The Mortgagor will pay when due all liens of any kind, taxes of any
kind and nature (including real and personal property taxes and income,
franchise, withholding, profits and gross receipts taxes), assessments, water
and sewer charges, rents and rates, and other governmental or municipal charges,
fines or impositions relating to the Mortgaged Property or any part thereof, or
upon the rents, revenues, income or profits of the Mortgaged Property, or
arising in respect of the occupancy, use or possession of the whole or any part
thereof, and, upon request, the Mortgagor will promptly deliver official
receipts therefor to the Mortgagee. If the Mortgagor shall fail to pay any of
the foregoing items, the Mortgagee shall have the right, but not the obligation,
to make any such payments. Any such sum paid by the Mortgagee shall be paid by
the Mortgagor to the Mortgagee, upon demand, together with the interest,
computed from the date of payment thereof by the Mortgagee, at the Default Rate
referred to in the Loan Agreement.
Any such sum paid by the Mortgagee and the interest thereon shall be a
lien on the Mortgaged Property prior to any claim, lien, right, title or
interest in, to or on the Mortgaged Property attaching or accruing subsequent to
the lien of the Mortgage, and shall be deemed to be evidenced by the Term Note
and secured by the Mortgage.
5. The Mortgagor will not claim any deduction from the taxable value of
the Mortgaged Property by reason of the Mortgage and the Mortgagor shall not
claim or be entitled to any credit against the principal and interest due and
owing under the Notes and the Mortgage for any taxes, assessments, water rates
or other governmental or municipal charges, bonds or impositions paid by the
Mortgagor relating to the Mortgaged Property.
6. In the event of the passage after the date of the Mortgage of any
law of the state wherein the Mortgaged Property is located deducting from the
value of land for the purposes of taxation any lien thereon, or changing in any
way the laws for the taxation of mortgages or debts secured by mortgages for
state or local purposes, or the manner of the collection of any such taxes so as
to affect the Mortgage, the Mortgagee or the Debt, the Mortgagee shall have the
right to give sixty (60) days written notice to the owner of the Mortgaged
Property requiring the payment
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<PAGE> 112
of the Debt (subject to the rights of the Mortgagor in the immediately following
sentence), and if such notice be given, the Debt shall become due, payable and
collectible at the expiration of said sixty (60) days. Unless prohibited by
applicable law, any notice given pursuant to this Paragraph requiring the
payment of the Debt shall provide an option to the Mortgagor, in lieu of such
acceleration, to either pay to the Mortgagee an amount or amounts equal to any
and all sums payable by the Mortgagee as taxes or otherwise by reason of such
laws including taxes, if any, payable on the amounts so paid to the Mortgagee
or, in the alternative, pay in full the Debt. If the notice as provided above be
given, the payment of said sums described in the preceding sentence or the Debt,
as may be the case, shall become due, payable and collectible at the expiration
of the sixty (60) day period referred to above.
7. If at any time the United States of America, any state thereof or
any governmental subdivision of any such state, shall require (i) revenue or
other stamps to be affixed to either of the Notes or the Mortgage, or (ii) the
payment of any taxes or fees on the Mortgage, or the Notes or in connection with
the recording of the Mortgage or any amendment, extension or modification
hereof, the Mortgagor will pay the same, with interest and penalties thereon, if
any. The Mortgagee shall have the right, but not the obligation, to make any
such payments. Any such sum paid by the Mortgagee shall be paid by the Mortgagor
to the Mortgagee, upon demand, together with the interest, computed from the
date of payment thereof by the Mortgagee, at the Default Rate. Any such sum paid
by the Mortgagee and the interest thereon shall be a lien on the Mortgaged
Property prior to any claim, lien, right, title or interest in, to or on the
Mortgaged Property attaching or accruing subsequent to the lien of the Mortgage,
and shall be deemed to be evidenced by the Term Note and secured by the
Mortgage.
8. The Mortgagor represents and warrants that it is (a) the fee simple
owner of the Fee Premises constituting a part of the Mortgaged Property, and (b)
the owner of the Leasehold Interest constituting a part of the Mortgaged
Property, free of defects, liens, and encumbrances of any nature, except as
permitted by Section 7.2 of the Loan Agreement or as are listed as exceptions to
title or exclusions from coverage in the title policy being issued by Lawyer's
Title Insurance Corporation to the Mortgagee concurrently with the recording of
this Mortgage (collectively, the "PERMITTED EXCEPTIONS"). The Mortgagor warrants
the title to the Mortgaged Property (including, without limitation, the
leasehold estate in the Mortgaged Property), warrants that the Mortgage is and
will be maintained as a valid first lien on the Mortgagor's interest in the
Lease and the Mortgaged Property, subject only to the Permitted Exceptions, and
will defend the same against the claims of all persons whomsoever. At the
Mortgagor's sole cost and expense, the Mortgagor forthwith upon the execution
and delivery of the Mortgage, and thereafter from time to time, will cause the
Mortgage, and any security instrument creating or evidencing the lien or
security interest hereof upon the Mortgaged Property and each instrument of
further assurance, to be filed, registered or recorded in such manner and in
such places as may be required by any present or future law to publish notice of
and fully to protect the lien hereof upon, and the lien of the Mortgagee in, the
Mortgaged Property.
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9. (a) The Mortgagee shall have the right to appear in and defend any
action or proceeding brought with respect to the Mortgaged Property and to bring
any action or proceeding, in the name and on behalf of the Mortgagor, which the
Mortgagee, in its sole discretion, believes should be brought to protect its
interest in or the title to the Mortgaged Property. The Mortgagee may take such
action by attorneys selected by the Mortgagee.
(b) If any action or proceeding be commenced, whether adversary or not
(including an action to foreclose the Mortgage or exercise of the power of sale
or to collect the Debt), to which action or proceeding the Mortgagee is made a
party, or in which it becomes necessary to defend, uphold or enforce the lien of
the Mortgage, the Mortgagee may prosecute, defend or participate in such action
or proceeding by attorneys selected by the Mortgagee.
(c) All sums paid by the Mortgagee for the expense of any action or
proceeding described in this Paragraph (including reasonable counsel fees and
expenses) shall be paid by the Mortgagor to the Mortgagee, upon demand, together
with the interest thereon, computed from the date of payment thereof by the
Mortgagee, at the Default Rate. Any such sum paid by the Mortgagee and the
interest thereon shall be a lien on the Mortgaged Property prior to any claim,
lien, right, title or interest in, to or on the Mortgaged Property attaching or
accruing subsequent to the lien of the Mortgage, and shall be deemed to be
secured by the Mortgage and evidenced by the Term Note.
(d) In any action or proceeding to foreclose the Mortgage, or exercise
of the power of sale, or to recover or collect the Debt, the Mortgagee may
recover reasonable attorneys' fees and disbursements and the provisions of law
respecting the recovery of costs, disbursements and allowances shall also be
applicable.
10. (a) The Mortgagor shall, until the Debt secured by the Mortgage
shall be fully paid and satisfied, keep the Improvements insured against loss or
damage by reason of the following: fire, including full extended coverage
endorsements, and such other hazards, casualties and contingencies as may be
required by the Mortgagee, in an amount to be approved by the Mortgagee not
exceeding in the aggregate one hundred per centum of their full insurable value
so that the Mortgagor will not be deemed a co-insurer under any such policy. All
such insurance shall be with a company or companies and in a form or forms to be
approved by the Mortgagee, which approval shall not be unreasonably withheld or
delayed.
(b) At the time of the execution of the Mortgage and at least twenty
(20) days prior to the expiration of each policy required to be provided by the
Mortgagor pursuant to the provisions of this Paragraph, the Mortgagor shall
deliver to the Mortgagee a policy or policies or a renewal policy or policies,
as the case may be, with appropriate evidence of the payment of the premium
therefor.
(c) All such insurance policies required to be procured pursuant to the
Mortgage shall (i) contain a standard non-contributory form of mortgagee clause
satisfactory to the
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Mortgagee, which clause shall name the Mortgagee, its successors or assigns as a
loss payable party; and (ii) provide, to the extent obtainable, that such
policies may not be cancelled or amended without at least thirty (30) days'
prior written notice to the Mortgagee.
(d) The Mortgagor will also provide and keep in force with respect to
the Improvements:
(i) If the Mortgaged Property is now located in an area having
special flood hazards or if such area hereafter shall be designated by
the United States Government, or any agency thereof, as having special
flood hazards, a policy insuring against floods in an amount equal to
the lesser of (A) the principal amount secured by the Mortgage or (B)
the maximum amount available pursuant to federal law; and
(ii) Liability insurance as required by the Mortgagee in an
amount required by the Mortgagee as specified in the Loan Agreement;
and
(iii) Insurance against such other hazards as may be reasonably
required by the Mortgagee from time to time and as are customarily
insured against with respect to like properties.
(e) The Mortgagor, at its expense, will furnish to the
Mortgagee, within ninety (90) days after demand (but not more frequently than
once in each consecutive period of twenty-four (24) calendar months) proof of
the then full insurable value of the Improvements and the Personal Property,
such proof to be by appraisals satisfactory in form and substance to the
Mortgagee and prepared by an appraiser (who may be an appraiser for the
insurance company insuring such property) designated and paid for by the
Mortgagor and approved by the Mortgagee.
(f) In the event that all or any part of the Improvements shall
be damaged or destroyed, in whole or in part, by fire or other casualty, the
Mortgagor shall promptly restore, replace, rebuild or alter the damaged or
destroyed Improvements as nearly as possible to the condition the Improvements
were in prior to such damage or destruction, without regard to the adequacy of
insurance proceeds and further subject to the Mortgagee making available and
paying over to the Mortgagor for such purpose all insurance proceeds, if any,
received by the Mortgagee as described in subparagraph 10(h) below. If the
damage be of such nature as to require the Mortgagor to construct a replacement
for, or to alter the damaged or destroyed items in any material or substantial
way, the Mortgagor shall, before commencing any such work, submit to the
Mortgagee for the Mortgagee's approval, which shall not be unreasonably withheld
or delayed, copies of the plans and specifications therefor to be prepared by an
architect or engineer selected by the Mortgagor, subject to the approval of the
Mortgagee, who shall then be licensed by the state in which the Mortgaged
Property is located, and who shall have been placed in charge of the
restoration.
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(g) Until the full payment of the Debt, the Mortgagee shall
have and hold the insurance policy or policies described in this Paragraph as
collateral and further security for the payment of the Debt. In default of the
Mortgagor's compliance with this Paragraph, the Mortgagee or its successors or
assigns may, but shall have no obligation to, place such insurance as described
above, from time to time, in an amount in the aggregate not exceeding one
hundred per centum of the full insurable value of the Improvements and the
Personal Property for the purpose aforesaid, and pay the premium or premiums
therefor. In the event of such payment, the Mortgagor will pay to the Mortgagee,
its successors or assigns, such premium or premiums so paid by the Mortgagee,
upon demand, together with the interest thereon computed from the date of
payment thereof by the Mortgagee, at the Default Rate. Any such sum paid by the
Mortgagee and the interest thereon shall be a lien on the Mortgaged Property
prior to any claim, lien, title or interest in, to or on or claim upon the
Mortgaged Property attaching or accruing subsequent to the lien of the Mortgage
and shall be deemed to be secured by the Mortgage and evidenced by the Term
Note.
(h) Should the Mortgagee by reason of any insurance described
in this Paragraph, receive any sum or sums of money for damage to the
Improvements, such amount may be retained and applied by the Mortgagee toward
payment of the Debt, or such amount may be paid over either wholly or in part to
the Mortgagor or to the successors or assigns of the Mortgagor for the repair of
the Improvements or for the erection of new Improvements, or for any other
purpose or object satisfactory to the Mortgagee, and, if the Mortgagee shall
receive and retain insurance money for such damage to the Mortgaged Property,
the lien of the Mortgage shall be affected only by a reduction of the amount of
said lien by the amount of such insurance money received and retained by the
Mortgagee and applied toward payment of the obligations secured hereby.
(i) The insurance required pursuant to this Paragraph may be
effected by a policy or policies of blanket insurance which may cover property
in addition to the Mortgaged Property, provided that the coverage shall be the
same as if the Mortgaged Property were the sole property insured and the
Mortgagor shall deliver to the Mortgagee a duplicate original copy or copies
thereof or original insurance certificates therefor.
11. (a) The Mortgagor shall give the Mortgagee prompt notice of any
damage or destruction by fire or casualty occurring on the Mortgaged Property,
as well as of any condemnation or eminent domain proceedings affecting the same.
(b) The Mortgagor will not enter into any agreement for a
Taking of the Mortgaged Property, or any part thereof, without the prior written
consent of the Mortgagee.
12. In the event the whole or any part of the Mortgaged Property
shall be the subject of a Taking, or shall be voluntarily conveyed in lieu
thereof prior to the payment in full of the Debt, the Mortgagor shall pay to the
Mortgagee, during the period from the date of a Taking or conveyance in lieu
thereof, until the payment in full of the Debt, the deficiency, if any, between
the
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interest payable thereon at the rate stipulated in the Notes in respect of
the Debt and the interest actually paid to the Mortgagor by the entity
exercising the power of eminent domain or to whom the Mortgaged Property was
conveyed in lieu of the exercise of such power.
13. (a) All Awards are hereby assigned to the Mortgagee. The
Mortgagee and its legal representatives, successors and assigns (at its or their
option) are hereby irrevocably authorized and empowered to collect and receive
the Awards from the authorities making the same, to give proper receipts and
acquittances therefor in any of their names or in the name of the Mortgagor, and
to apply the same toward the payment of the Debt, the Notes or the Mortgage, in
such priority and proportions as the Mortgagee in its discretion shall deem
proper, although the Debt secured by the Mortgage then may not be due and
payable. If the Mortgaged Property is sold, through foreclosure or exercise of
the power of sale or otherwise, prior to the receipt by the Mortgagee of any
Awards, the Mortgagee shall have the right, whether or not a deficiency judgment
on the Notes shall have been sought, recovered or denied, to receive any Awards,
or a portion thereof sufficient to pay the Debt, whichever is less.
(b) Notwithstanding any Taking, the Mortgagor shall continue to
pay the Debt at the time and in the manner provided for in the Notes and in the
Mortgage and the Debt shall not be reduced until any Awards shall have been
actually received and applied by the Mortgagee to the discharge of the Debt. The
Mortgagor shall file and prosecute its claim or claims for any Awards in good
faith and with due diligence and cause the same to be collected and paid over to
the Mortgagee. The Mortgagor, further, hereby irrevocably appoints the Mortgagee
and its officers and employees the attorney-in-fact of the Mortgagor, coupled
with an interest, to file, prosecute, settle, and compromise its claims for any
Awards, to receive any Awards and to endorse any instruments with respect
thereto. The Mortgagor further agrees that although it is hereby expressly
agreed that the same shall not be necessary in any event, the Mortgagor shall,
upon demand, of the Mortgagee, make, execute and deliver to it any and all
assignments and other instruments sufficient for the purpose of assigning any
Awards to the Mortgagee, free, clear and discharged of any encumbrances of any
kind or nature whatsoever, subject only to the Permitted Exceptions.
14. [Intentionally Omitted].
15. [Intentionally Omitted].
16. The Mortgagor shall not, without the consent in writing of
the Mortgagee, sell, transfer, or convey its interest in the Mortgaged Property
or any part thereof in or by any one or series of transactions or permit the
Mortgaged Property or any part thereof or any beneficial therein to be sold,
transferred, or conveyed. Consent to one such transaction shall not be deemed to
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be a waiver of the right to require such consent to further or successive
transactions.
17. Except as otherwise permitted by the Loan Agreement, the Mortgagor
shall not, without first obtaining the prior written consent of the Mortgagee in
each such instance:
(a) mortgage, convey or grant a lien subordinate to the Mortgage
on the Mortgaged Property, or on any or all of the Land, Improvements, Personal
Property or Appurtenances of which it is comprised; or
(b) grant a security interest subordinate to the lien and security
interest of the Mortgage on the Mortgaged Property or any part thereof; or
(c) assign the Rents, if any, of the Mortgaged Property. Consent
to one such transaction shall not be deemed to be a waiver of the right to
require such consent to future or successive transactions.
18. [Intentionally Omitted].
19. The Mortgagor shall not execute or file for record any instrument
which imposes a restriction upon the sale or occupancy of the Mortgaged Property
on the basis of race, sex, religion, national origin, color or creed. Upon any
violation of this undertaking, the Mortgagee may, at its option, declare the
unpaid balance of the Debt to be immediately due and payable.
20. [Intentionally Omitted].
21. [Intentionally Omitted].
22. In addition to the Notes, the Mortgage is intended to secure and
provide for the payment and performance of any and all obligations now due and
owing or which may hereafter be or become due or owing by the Mortgagor to the
Mortgagee, however the maximum amount secured by the Mortgage at execution or
which under any contingency may be secured hereby at any time in the future
shall not exceed in the aggregate (i) the stated principal amount of the
Mortgage, (ii) interest, and (iii) all other amounts advanced by the Mortgagee
and secured by the Mortgage in accordance with the terms hereof for the
protection of the Mortgaged Property or the preservation of the lien of the
Mortgage or both.
23. Neither the Mortgagor nor any tenant or subtenant of the Mortgaged
Property, if any, or the Improvements or any part of either shall have the right
or power, as against the Mortgagee without its consent, to cancel, abridge or
otherwise modify tenancies, subtenancies, leases or subleases now or hereafter
in effect in respect of all or any part of the Mortgaged Property or the
Improvements or to accept or make, as the case may be, prepayments of
installments of rent to become due thereunder. The
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Rents of the Mortgaged Property are hereby transferred and assigned to the
Mortgagee as further security for the payment of the Debt, and the Mortgagee
shall have the right to enter upon the Mortgaged Property for the purpose of
collecting the same and to let and operate the Mortgaged Property or any part
thereof and to apply the Rents, issues and profits, either in whole or in part,
as the Mortgagee elects, to the payment of all charges and expenses of the
Mortgaged Property or in reduction of any part of the Debt or other sums due or
to become due under the Notes or the Mortgage. This assignment and grant shall
continue in effect until the Debt and all other obligations secured by the
Mortgage are paid. The Mortgagee hereby waives the right to enter upon the
Mortgaged Property for the purpose of collecting the Rents and the Mortgagor
shall have a license to collect and receive the Rents until default hereunder,
but such license of the Mortgagor may be revoked by the Mortgagee upon any such
default. The Mortgagee may apply all Rents or any part thereof so received
hereunder, after the payment of all of its expenses including costs and
attorneys' fees, to the Debt in such manner as it elects or at its option the
entire amount or any part thereof so received may be released to the Mortgagor.
24. Nothing herein contained shall be construed as depriving the
Mortgagee of any right or advantage available under Section 254 or 271 of the
Real Property Law of the State of New York or any other similar, applicable law
of the state in which the Mortgaged Property is located, but all covenants
herein differing therefrom shall be construed as conferring additional and not
substitute rights and advantages, except that the provisions of the Mortgage
shall supersede the provisions of subdivision 4 of said Section 254.
25. The Mortgagee and its agents shall have the right to enter and
inspect the Mortgaged Property at all reasonable times upon reasonable notice.
26. The Mortgage may not be changed or modified orally, but only by an
agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought. THE MORTGAGOR ACKNOWLEDGES
DELIVERY TO IT, WITHOUT CHARGE THEREFOR, OF A COPY HEREOF AND OF THE NOTES.
27. The Mortgage may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to constitute but one and the
same instrument.
28. If any term, covenant or condition of the Mortgage shall be held to
be invalid, illegal or unenforceable in any respect, the Mortgage shall be
construed without such provision.
29. The relative words herein of single or plural number, or masculine
or feminine or neuter gender shall be read as if written in the single or
plural, or in the male, neuter or female gender, as the context and as the case
may be.
30. The covenants, agreements and options herein contained shall bind
and inure to the benefit of the successors and assigns of the parties hereto but
the foregoing provisions of this
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paragraph shall not constitute a waiver of the provisions of paragraphs 16 and
17 above.
31. If the Mortgagor shall well and truly pay to the Mortgagee the Debt
at the time and in the manner provided in the Notes and the Mortgage and shall
well and truly abide by and comply with each and every covenant and condition
set forth in the Mortgage and in the Notes, then these presents and the estate
hereby granted shall cease, determine and be void and in connection therewith,
the Mortgagee shall deliver to the Mortgagor such mortgage satisfactions and
releases as may be requested by the Mortgagor in accordance with Section 3.9 of
the Loan Agreement.
DEFAULTS
32. This Mortgage is governed by and made pursuant to the Loan
Agreement, and all the terms, covenants and conditions of the Loan Agreement are
incorporated herein by reference as if set forth at length herein, including the
terms thereof enabling the Mortgagee to declare a default under this Mortgage
upon the occurrence of an Event of Default as defined or specified in the Loan
Agreement. The occurrence of an Event of Default as defined or specified in the
Loan Agreement shall constitute a default under this Mortgage, and the Debt
shall become due and payable at the option of the Mortgagee. In the event of any
inconsistency between the terms, representations, warranties, covenants and
conditions of this Mortgage and the Loan Agreement, the Loan Agreement shall
control.
33. The Debt shall become due, at the option of the Mortgagee, upon the
occurrence of any of the following events (subject to any applicable notice or
grace periods otherwise provided in the Loan Agreement):
(a) after default in the payment of any installment of principal or
interest as provided in the Notes, or
(b) after default in payment and reimbursement of the Mortgagee,
after demand, for any costs, expenses, and fees advanced or incurred by the
Mortgagee, with interest as herein provided, in curing any default or failure of
the Mortgagor under the Mortgage, or
(c) upon the actual or threatened alteration, demolition or removal
of any of the Improvements erected or to be erected upon the Mortgaged Property
without the prior written consent of the Mortgagee, or
(d) if the Mortgagor does or permits to be done anything that may in
any way impair the lien of the Mortgage; or impair the value of the Mortgaged
Property or any of the Improvements; or
(e) upon the failure of the Mortgagor to perform or comply with any
other covenant, agreement or condition of the Mortgage, in accordance with the
terms hereof.
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34. The Debt shall also become due, at the option of the Mortgagee,
upon the occurrence of any of the following events:
(a) after default, for thirty (30) days after notice and demand, in
the payment of any taxes of any kind and nature, assessments, water and sewer
charges, rents and rates, and other governmental or municipal charges, fines or
impositions relating to the Mortgaged Property or any part thereof,
(b) after failure for thirty (30) days after notice and demand to
exhibit to the Mortgagee receipted bills for any tax, water rate or assessment
herein referred to, or
(c) if the Mortgagee shall give the written notice specified above
in paragraph 6.
35. [Intentionally Omitted].
36. Any check, draft, money order or other instrument given in
payment of all or any portion of the Notes or pursuant to the Mortgage may be
accepted by the Mortgagee and handled in collection in the customary manner, but
the same shall not constitute payment hereunder or diminish any rights of the
Mortgagee, except to the extent that actual cash proceeds of such instrument are
unconditionally received by the Mortgagee and applied as the case may be to the
Debt in the manner provided in the Notes or to the sum due under the Mortgage.
REMEDIES
If an Event of Default as defined or specified in the Loan Agreement
occurs or if the Mortgagor defaults in the performance of any of the terms,
covenants or conditions herein contained, then and in any such event:
37. (a) The Mortgagee, in any action to foreclose this Mortgage, shall
be entitled, without regard to the solvency or insolvency of any person or
entity obligated for the payment of the Debt or the adequacy of any security for
the Debt and without notice, to the appointment of a receiver and notice of such
appointment is hereby expressly waived. The Mortgagee or any receiver shall be
entitled to take possession of the Mortgaged Property from the owner, tenants
and/or occupants of the whole or any part thereof and to collect and receive the
Rents and the value of the use and occupation of the Mortgaged Property, or any
part thereof, from the then owner, tenants and/or occupants thereof for the
benefit of the Mortgagee. The Mortgagor will pay monthly in advance to the
Mortgagee or to any receiver appointed to collect the Rents the fair and
reasonable rental value for the use and occupation of the Mortgaged Property, or
of such part thereof as may be in the possession of the Mortgagor, and upon
default in any such payment the Mortgagor will vacate and surrender the
possession of the Mortgaged Property to the Mortgagee or such receiver.
(b) THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR
AN ATTORNEY TO CONFESS JUDGMENT AGAINST THE MORTGAGOR. IN GRANTING THIS WARRANT
OF ATTORNEY TO CONFESS
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JUDGMENT AGAINST THE MORTGAGOR, THE MORTGAGOR HEREBY KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY, AND, ON THE ADVICE OF SEPARATE COUNSEL OF THE MORTGAGOR,
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE MORTGAGOR HAS OR MAY HAVE TO PRIOR
NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND
LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA:
FOR THE PURPOSE OF OBTAINING POSSESSION OF THE MORTGAGED
PROPERTY IN THE EVENT OF ANY DEFAULT HEREUNDER OR UNDER THE NOTES, THE MORTGAGOR
HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD IN THE
COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, AS ATTORNEY FOR THE MORTGAGOR AND ALL
PERSONS CLAIMING UNDER OR THROUGH THE MORTGAGOR TO APPEAR FOR AND CONFESS
JUDGMENT IN EJECTMENT FOR POSSESSION OF THE MORTGAGED PROPERTY AND TO APPEAR FOR
AND CONFESS JUDGMENT AGAINST THE MORTGAGOR, AND AGAINST ALL PERSONS CLAIMING
UNDER OR THROUGH THE MORTGAGOR, IN FAVOR OF THE MORTGAGEE, FOR RECOVERY BY THE
MORTGAGEE OF POSSESSION THEREOF, FOR WHICH THIS MORTGAGE, OR A COPY THEREOF
VERIFIED BY AFFIDAVIT, SHALL BE A SUFFICIENT WARRANT; AND THEREUPON A WRIT OF
POSSESSION MAY IMMEDIATELY ISSUE FOR POSSESSION OF THE MORTGAGED PROPERTY,
WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER AND WITHOUT ANY STAY OF
EXECUTION.
38. In case of a sale in foreclosure, or exercise of the power of sale,
the Mortgaged Property, or so much thereof as may be affected by the Mortgage,
may be sold in one or more parcels or interests and in such order as the
Mortgagee shall determine. The Mortgagor waives and releases any right to have
the Mortgaged Property marshalled.
39. In the event of a foreclosure of the Mortgage, or the succession by
the Mortgagee to the interests of the Mortgagor hereunder, the purchaser of the
Mortgaged Property or such successor shall succeed to all rights of the
Mortgagor, including any right to proceeds of insurance and to unearned
premiums, and in and to all policies or certificates of insurance assigned and
delivered to the Mortgagee pursuant to the Mortgage.
40. If the Mortgagor shall fail to perform or comply (after any
applicable notice or grace period) with any covenant, representation, warranty,
agreement or condition of the Mortgage, the Mortgagee shall have the right, but
not the obligation, to perform and comply with any such covenant,
representation, warranty, agreement or condition. The cost thereof paid by the
Mortgagee together with all costs, expenses and disbursements shall be paid by
the Mortgagor to the Mortgagee, upon demand, together with the interest thereon
computed from the date of payment thereof by the Mortgagee, at the Default Rate.
Any such sum paid by the Mortgagee and the interest thereon shall be a lien on
the Mortgaged Property prior to any claim, lien, right, title or interest in, to
or on the Mortgaged Property attaching or accruing subsequent to the lien of the
Mortgage, and shall be deemed to be secured by the Mortgage and evidenced by the
Term Note.
41. The Mortgagee may be the purchaser of the whole or any part of the
Mortgaged Property or of any interest therein at any sale of the Mortgaged
Property whether pursuant to foreclosure or
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otherwise hereunder and may apply upon the purchase price any sum which is
secured by the Mortgage. The Mortgagee, upon any such purchase, shall acquire
good title to the properties so purchased free of the lien of the Mortgage and
free of all equities and rights of redemption in the Mortgagor.
42. The obligation of the Mortgage and of the Notes shall continue
until the Debt is paid in full notwithstanding any action or actions or partial
foreclosure which may be brought to recover any amount or amounts for
installments of principal, interest, taxes, assessments, water rates or
insurance premiums or other sums or charges due and payable under the provisions
of the Mortgage.
43. The Mortgagor hereby waives the right to a trial by jury in any
action or proceeding in which the Mortgagor and the Mortgagee are parties
brought by the Mortgagee to enforce its rights hereunder.
44. Any assignee of the Mortgage and the Notes shall take the same free
and clear of all offsets and counterclaims of any nature whatsoever which the
Mortgagor may have against any assignor of the Mortgage and the Notes and no
such offset or counterclaim (other than compulsory counterclaims) shall be
interposed or asserted by the Mortgagor in any action or proceeding brought by
any such assignee upon the Mortgage and/or the Notes and any such right to
interpose or assert any such offset or counterclaim in any such action or
proceeding is hereby expressly waived by the Mortgagor.
45. Regardless of consideration, and without the necessity for any
notice to or consent by the holder of any subordinate lien, encumbrance, right,
title or interest in or to the Mortgaged Property, the Mortgagee may release any
person at any time liable for the payment of the Debt or any portion thereof or
any individual or entity guaranteeing the payment of the Notes and/or of the
Mortgage or any part of the security held for the Debt or with respect to any
guarantee, and may extend the time of payment or otherwise modify the terms of
the Notes and/or the Mortgage, including, without limitation, a modification of
the interest rate payable on the principal balance of the Notes, without in any
manner impairing or affecting the Mortgage or the lien thereof or the priority
of the Mortgage, as so extended and modified, as security for the Debt over any
such subordinate lien, encumbrance, right, title and interest. The Mortgagee may
resort for the payment of the Debt to any other security or guarantee held by
the Mortgagee in such order and manner as the Mortgagee, in its discretion, may
elect. The Mortgagee shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled to every additional right and remedy now or
hereafter afforded by law or equity.
46. The Mortgagee shall have the right from time to time to take action
to recover any sum or sums which constitute a part of the Debt as the same
become due, without regard to whether or not the balance of the Debt shall be
due, and without prejudice to the right to the Mortgagee thereafter to bring an
action of foreclosure, or exercise of the power of sale, or any other action,
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for a default or defaults by the Mortgagor existing at the time such earlier
action was commenced.
47. All remedies provided in the Mortgage are distinct from and
cumulative to any other right or remedy under the Mortgage, the Notes, any
guarantee of the payment of the Notes and/or of the Mortgage or any other
agreement between, among others, if any, the Mortgagor and the Mortgagee
executed simultaneously or in connection herewith, or afforded by law or equity,
and may be exercised concurrently, independently or successively. Wherever in
the Mortgage the prior consent of the Mortgagee is required, the consent of the
Mortgagee given as to one such transaction shall not be deemed to be a waiver of
the right to require such consent to future or successive transactions. Any such
consents shall be in writing.
48. Any forbearance by the Mortgagee in exercising any right or remedy
hereunder, or otherwise afforded by applicable law, shall not be a waiver of or
preclude the exercise of any such right or remedy. The procurement of insurance
or the payment of taxes or other liens or charges by the Mortgagee or other
corrective or security protecting measures by the Mortgagee shall not be a
waiver of the Mortgagee's right to accelerate the maturity of the Debt.
SPECIAL PROVISIONS
49. The Mortgagor will, at the request of the Mortgagee and at the cost
and expense of the Mortgagor (a) promptly correct any defect, error or omission
which may be discovered in the contents of the Mortgage, or in the execution,
acknowledgment or recordation hereof, or (b) promptly do, execute, acknowledge
and deliver any and all such further acts, deeds, conveyances, mortgages, deeds
of trust, amendments, supplements, assignments, estoppel certificates, financing
statements and continuations thereof, notices of assignment, transfers,
certificates, assurances and other instruments as the Mortgagee may reasonably
require from time to time in order to (i) effectuate the purposes of the
Mortgage, (ii) subject to the lien and security interest hereby created any of
the Mortgagor's properties, rights or interests covered or now or hereafter
intended to be covered hereby, (iii) perfect and maintain such lien and security
interest, or (iv) convey, grant, assign, transfer and confirm unto the Mortgagee
the rights granted or now or hereafter intended to be granted to the Mortgagee
hereunder or under any other instrument executed in connection with the Mortgage
or which the Mortgagor may be or become bound to convey, mortgage or assign to
the Mortgagee in order to carry out the intention or facilitate the performance
of the provisions of the Mortgage.
50. [Intentionally Omitted.]
51. ENVIRONMENTAL MATTERS.
(a) (i) For purposes of the Mortgage, the following terms
shall have the following meanings:
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"GOVERNMENTAL AUTHORITIES" - shall mean any federal, state, or
local government, governing body, agency, court, tribunal, authority,
subdivision, bureau or other recognized body having jurisdiction to
enact, promulgate, interpret, enforce, review or repeal any
Environmental Law.
"ENVIRONMENTAL COMPLAINT" - shall mean any judgment, order,
complaint, notice, citation, action, proceeding or investigation
pending before any Governmental Authority, including, without
limitation, any environmental regulatory body, with respect to or
threatened against or affecting the Mortgagor or relating to its
business, assets, property or facilities or the Mortgaged Property, in
connection with any Hazardous Material or any Hazardous Discharge or
any Environmental Law.
"HAZARDOUS DISCHARGE" - shall mean any release of a Hazardous
Material caused by the seeping, spilling, leaking, pumping, pouring,
emitting, using, emptying, discharging, injecting, escaping, leaching,
dumping or disposing of any Hazardous Material into the air, water,
earth or environment, and any liability for the costs of any cleanup or
other remedial action.
(ii) In the event of any inconsistencies between the
terms, representations, warranties, covenants and conditions of this Paragraph
51 and the Environmental Certificate with Covenants, Representations and
Warranties (the "CERTIFICATE"), the Certificate shall control.
(b) The Mortgagor covenants, represents and warrants that:
(i) Except as otherwise set forth in the Loan
Agreement, the best of the Mortgagor's knowledge, none of the real property
owned or occupied by the Mortgagor and located in the state in which the
Mortgaged Property is situated, including, but not limited to the Mortgaged
Property, has ever been used by previous owners, operators or occupants or the
Mortgagor to use, generate, manufacture, refine, transport, treat, store,
handle or dispose of any Hazardous Material.
(ii) The Mortgagor has duly complied, and will
continue to comply (should compliance be appropriate), with the provisions of
the Environmental Laws governing it, its business, assets, property, and
facilities and the Mortgaged Property. The Mortgagor shall not, and shall not
permit any of its officers, partners, employees, agents, contractors,
licensees, tenants, occupants or others to, generate, manufacture, refine,
transport, treat, store, handle or dispose of any Hazardous Material on the
Mortgaged Property.
(iii) Mortgagor has, and will continue to have, all
necessary licenses, certificates and permits under the Environmental Laws
relating to Mortgagor and its facilities, property, assets, and business, and
the Mortgaged Property and the foregoing are in compliance with all
Environmental Laws.
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<PAGE> 125
(c) Without limitation of the Mortgagee's rights under the
Mortgage or applicable law, the Mortgagee shall have the right, but not the
obligation, to exercise any of its rights to cure as provided in the Mortgage or
to enter onto the Mortgaged Property or to take such other actions as it deems
necessary or advisable to correct, contain, cleanup, remove, resolve or minimize
the impact of, or otherwise deal with, any such Hazardous Material, Hazardous
Discharge or Environmental Complaint upon its receipt of any notice from any
person or entity or Governmental Authority, informing Mortgagee of such
Hazardous Material, Hazardous Discharge or Environmental Complaint, which if
true, could adversely affect the Mortgagor or any part of the Mortgaged Property
or which, in the reasonable opinion of the Mortgagee, could adversely affect its
collateral security under the Mortgage. All reasonable costs and expenses
incurred and paid by the Mortgagee in the exercise of any such rights shall be
paid by the Mortgagor to the Mortgagee upon demand together with the interest
thereon at the Default Rate of interest. Any such sum paid by the Mortgagee and
the interest thereon shall be a lien on the Mortgaged Property prior to any
claim, lien, right, title or interest in, to, on or upon the Mortgaged Property
attaching or accruing subsequent to the lien of the Mortgage, and shall be
deemed to be secured by the Mortgage and evidenced by the Term Note.
(d) Upon reasonable notice to Mortgagor, Mortgagee, its
officers, employees, agents and contractors may enter the Mortgaged Property to
inspect it and to conduct, complete and take such tests, samples, analyses and
other processes as Mortgagee shall reasonably require to determine Mortgagor's
compliance with this Paragraph and the Environmental Laws. The costs, expenses
and fees of Mortgagee of such entry, inspection, tests, samples, analyses and
processes shall be paid and reimbursed by Mortgagor upon demand by Mortgagee,
together with the interest thereon computed from the date of payment thereof by
the Mortgagee, at the Default Rate. Any such sum paid by the Mortgagee and the
interest thereon shall be a lien on the Mortgaged Property prior to any claim,
lien, right, title or interest in, to on or upon the Mortgaged Property
attaching or accruing subsequent to the lien of the Mortgage, and shall be
deemed to be secured by the Mortgage and evidenced by the Term Note.
(e) In addition to those events of default previously specified
in the Mortgage, the occurrence of any of the following events shall constitute
a default under the Mortgage, entitling the Mortgagee to all rights and remedies
provided therefor:
(i) If any Governmental Authority asserts or
creates a lien upon any or all of the Mortgaged Property by reason of the
presence of Hazardous Materials or the occurrence of a Hazardous Discharge or
Environmental Complaint or otherwise, or
(ii) If any Governmental Authority asserts a claim
against the Mortgagor, the Mortgaged Property or the Mortgagee for damages or
cleanup or remedial costs related to any Hazardous Materials or any Hazardous
Discharge or any Environmental Complaint; provided, however, such claim shall
not constitute a
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<PAGE> 126
default if, within thirty (30) business days of the Mortgagor's receipt of
notice of same:
(A) The Mortgagor can prove to the Mortgagee's
satisfaction that the Mortgagor has commenced and is diligently pursuing either:
(i) a cure, remedy or correction of the event which constitutes the basis for
the claim, and is continuing diligently to pursue such cure or correction to
completion, in strict compliance with the Environmental Laws or Environmental
Complaint, as applicable, or (ii) proceedings for injunction, a restraining
order or other appropriate emergency relief prevent such Governmental Authority
from asserting such claim, which relief is granted within thirty (30) days of
the occurrence giving rise to the claim and the injunction, order or emergency
relief is not thereafter dissolved or reversed on appeal; and
(B) The Mortgagor shall (i) post a bond or any
other security reasonably required by and satisfactory to such Governmental
Authority to secure the payment for and performance of all of the work, labor
and services required to effect a proper and complete cure or correction of the
condition which constitutes the basis for the claim or (ii) at the Mortgagee's
request, if no such bond or security has been posted, shall post a bond issued
by a surety satisfactory to the Mortgagee, or any other security reasonably
satisfactory to the Mortgagee, in form, substance and amount, satisfactory to
the Mortgagee, to secure the payment for all of the work, labor and services
required in effect a proper and complete cure or correction of the condition
which constitutes the basis for the claim.
(f) The Mortgagor covenants and agrees, at its sole cost and
expense, to indemnify, protect, and save Mortgagee harmless against and from any
and all damages, losses, liabilities, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, reasonable attorneys' and experts' fees and disbursements)
which may at any time be imposed upon, incurred by or asserted or awarded
against Mortgagee and arising from or out of:
(i) The Mortgagor's failure to perform and comply with
this Paragraph, or
(ii) Any Hazardous Material, any Hazardous Discharge,
any Environmental Complaint, or any Environmental Law applicable to the
Mortgagor, its operations, business, assets, property or facilities, or the
Mortgaged Property, or
(iii) Any action against Mortgagor under this indemnity.
52. With respect to the Leasehold Interest:
(a) The Mortgagor hereby represents, covenants and warrants
that:
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(i) The Lease is in full force and effect and unmodified.
(ii) All rents due or payable under the Lease have been
paid to the extent they were payable prior to the date hereof.
(iii) The Mortgagor shall maintain the quiet and peaceful
possession of the Leasehold Interest and shall defend the leasehold estate
created under the Lease for the entire remainder of the term set forth therein
subject to the Mortgagor's right to terminate the Lease as set forth in the
Lease, including all renewal options thereunder, against all and every person or
persons lawfully claiming, or who may claim the same or any part thereof, and to
the performance and observance of all of the terms, covenants, conditions and
warrants thereof.
(iv) There is no existing default under the provisions of
the Lease or in the performance of any of the terms, covenants, conditions or
warranties thereof on the part of the lessee to be observed and performed.
(v) The Mortgagor has not sublet the leased premises or
assigned the Lease.
(b) The Mortgagor shall pay or cause to be paid all rents,
additional rents, taxes, assessments, water rates, sewer rents, impositions, and
other charges mentioned in and made payable by the Lease, for which provision
has not been made hereinbefore, when and as the same shall become due and
payable, and shall cause the lessor of such premises, to the extent required by
the Lease, to pay any portion of said taxes, assessments, rates, charges and
impositions to be borne by the lessor that might become liens on the Leasehold
Interest prior to or on the date when they become due, and the Mortgagor shall
in every case take, or cause to be taken, a proper receipt for any such item so
paid by Mortgagor and shall deliver, or cause to be delivered to the Mortgagee
upon its request after any such payment, the original receipts for any such
payments by Mortgagor.
(c) The Mortgagor shall at all times promptly and fully
observe, keep and perform, or cause to be observed, kept and performed, all
agreements, terms, covenants and conditions contained in the Lease by the lessee
therein to be kept and performed in all respects. Mortgagor further covenants
that it will not do or permit anything to be done, the doing of which, or
refrain from doing anything, the omission of which, will impair or tend to
impair the security of this Mortgage or will be a default under the Lease. If
Mortgagor shall fail at all times to fully observe, perform and comply with all
agreements, covenants, terms and conditions under the Lease, or do or permit
anything to be done, the doing of which or refrain from doing, the omission of
which will impair the security of this Mortgage or will be a default under the
Lease, then, upon the happening of any such event, at the option of Mortgagee,
either:
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(i) An event of default shall occur under this Mortgage and
the Debt shall immediately become due and payable; or
(ii) Without limiting the generality of any other provision
of the Mortgage or any remedy of the Mortgagee hereunder and without waiving or
releasing the Mortgagor from any of its obligations hereunder, Mortgagee may
(but shall not be obligated to) take any action Mortgagee deems necessary or
desirable to prevent or to cure any default by Mortgagor in the performance of
or compliance with any of Mortgagor's covenants or obligations under the Lease.
Upon receipt by Mortgagee from the lessor under the Lease of any written notice
of default by lessee thereunder, Mortgagee may rely thereon and take any action,
as aforesaid, to cure such default even though the existence of such default or
the nature thereof be questioned or denied by Mortgagor or by any party on
behalf of Mortgagor.
(iii) Mortgagor hereby expressly grants to Mortgagee, and
agrees that Mortgagee shall have the absolute and immediate right to enter in
and upon the Mortgaged Property or any part thereof to such extent and as often
as Mortgagee, in its reasonable discretion, deems necessary or desirable, in
order to prevent or to cure any such default by Mortgagor. Mortgagee may pay and
expend such sums of money as Mortgagee, in its sole discretion, deems necessary
for such purpose, and Mortgagor hereby agrees to pay to Mortgagee, immediately
and without demand, all such sums so paid and expended by Mortgagee, together
with interest thereon from the date of such expenditure to the date of repayment
at the Default Rate. All sums so paid and expended by Mortgagee, and the
interest thereon shall be added to and be secured by the lien of this Mortgage.
(d) The Mortgagor shall not in any way materially alter the
terms of the Lease, or except in accordance with the terms of the Lease, cancel
or surrender the Lease, or waive, excuse, condone or in any way release or
discharge the lessor thereunder of or from the obligations, covenants,
conditions and agreements by said lessor to be done and performed; and Mortgagor
does by these presents expressly release, relinquish and surrender unto the
Mortgagee all its right, power and authority to cancel, surrender, amend, or
materially alter in any way the terms and provisions of the Lease, except in
accordance with the terms thereof and any attempt on the part of the Mortgagor
to exercise any such right without the prior written consent of the Mortgagee
shall constitute a default under the terms hereof.
(e) The Mortgagor will: provide the Mortgagee an exact copy of
any notice, communication, plan, specification or other instrument or document
received or given by it in any way relating to or affecting the Lease of the
Mortgaged Property which may concern or affect the estate of the lessor or the
lessee in or under the Lease or in the real estate thereby demised in any
material way; give the Mortgagee immediate notice of any receipt by it of any
notice of default from the lessor thereunder; furnish to the Mortgagee within 15
days any and all information which it may request concerning the performance by
the Mortgagor of the agreements, terms, conditions and covenants of the Lease or
of the Mortgage;
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<PAGE> 129
and permit the Mortgagee or its agents or representatives at all reasonable
times to investigate or examine Mortgagor concerning such performance.
(f) So long as any of the Debt secured by this Mortgage shall
remain unpaid, unless the Mortgagee shall otherwise in writing consent, the fee
title and the leasehold estate in the Mortgaged Property hereinbefore described,
shall not merge but shall always be kept separate and distinct, notwithstanding
the union of said estates either in the lessor or in the lessee, or in a third
party, by purchase or otherwise; and the Mortgagor further covenants and agrees
that, in case it shall acquire the fee title, or any other estate, title or
interest in the Mortgaged Property covered by the Lease, including, without
limitation, pursuant to the purchase option or right of first refusal, if any,
set forth in the Lease, this Mortgage shall attach to or cover and be a lien
upon such other estate so acquired, and such other estate so acquired by the
Mortgagor shall be considered as mortgaged, assigned or conveyed to the
Mortgagee and the lien hereof spread to cover such estate with the same force
and effect as though specifically herein mortgaged, assigned or conveyed, and
spread.
53. (a) (i) This Mortgage is an Open-End Mortgage as defined in Section
8143(f) of Title 42 of the Pennsylvania Consolidated Statutes (the "ACT") and,
as such, is entitled to the benefits of the Act. Mortgagor intends that, in
addition to any other debt or obligations secured hereby, this Mortgage shall
secure unpaid balances of loan advances made after this Mortgage is left for
record with the Recorder's Office of Beaver County, Pennsylvania, whether such
advances are made pursuant to an obligation of Mortgagee or otherwise. The
maximum amount of unpaid loan indebtedness (which shall consist of unpaid
balances of loan advances made either before or after, or both before and after,
this Mortgage is left for record), which may be outstanding at any time is Forty
Million Dollars ($40,000,000), plus accrued and unpaid interest thereon. In
addition to the obligations of Mortgagor secured hereby, this Mortgage secures
unpaid balances of advances made, with respect to the Mortgaged Property, for
the payment of taxes, assessments, maintenance charges, insurance premiums or
costs incurred for the protection of the Mortgaged Property or the lien of this
Mortgage, expenses, including but not limited to costs and attorneys' fees,
incurred by Mortgagee by reason of default by Mortgagor under this Mortgagor or
any of the other Loan Documents.
(ii) Delivery to Mortgagee of any notice provided
for in Section 8143(b) of the Act shall relieve Mortgagee of any obligation to
make any further advance of loan proceeds to Mortgagor until such time as
Mortgagee notifies Mortgagor in writing of Mortgagee's willingness to make
further loan advances. All notices given by Mortgagor to Mortgagee pursuant to
the Act shall be given to Mortgagee personally or by registered or certified
mail to Mortgagee at 1850 North Central Avenue, Phoenix, Arizona 85002 and such
notice must be signed by all parties necessary to bind Mortgagor in accordance
with applicable documents of formation of Mortgagor and all applicable laws.
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<PAGE> 130
(b) The amount of the Debt secured by this Mortgage shall not
- - -be reduced by reason of payments made from time to time by the Mortgagor or
amounts received by Mortgagee in respect of the Debt except to the extent that
such payment from the Mortgagor or amounts received reduce the outstanding
principal sum of the Debt to less than the stated principal amount hereof and in
such event the amount secured by this Mortgage shall be the amount outstanding
on the Debt. If, subsequently, advances, loans or extensions of credit are made
from time to time to the Mortgagor under the Loan Agreement, then the amount
secured by this Mortgage shall be increased as the amount outstanding on the
Debt is increased, but, as hereinabove described, the principal amount of the
Debt secured by this Mortgage shall not exceed the stated principal amount
hereof plus interest thereon and other amounts secured hereby. The Mortgagor
shall be liable for mortgage, deed of trust documentary, intangible, recording
or other taxes, fees, or charges, if any, payable by reason of any such
subsequent advances, loans or extensions of credit.
54. This Mortgage shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
[SIGNATURES ON FOLLOWING PAGE]
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<PAGE> 131
IN WITNESS WHEREOF, the Mortgage has been duly executed by the
Mortgagor on the day and year first above written.
WITNESS J&L STRUCTURAL, INC.
__________________ BY: _______________________
TITLE
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<PAGE> 132
CERTIFICATE OF RESIDENCE
I hereby certify that the precise residence of mortgagee is at 1850
North Central Avenue, Phoenix, Arizona 85002.
FINOVA CAPITAL CORPORATION
BY:___________________________
TITLE
WITNESS MY HAND THIS
____ DAY OF _________, 1995
___________________________
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<PAGE> 133
STATE OF NEW YORK )
) SS:.
COUNTY OF NEW YORK )
On the ____ day of April, 1995, before me personally came
___________________ to me known, who, by me duly sworn, did depose and say that
deponent resides at ________________________________, ___________________, that
deponent is the _____________________ of J&L STRUCTURAL, INC., the corporation
described in, and which executed the foregoing instrument; and that deponent
signed deponent's name as such officer by order of the board of directors of
said corporation.
GIVEN under my hand and notarial seal this ____ day of April,
1995.
-----------------------------------
Notary Public
My Commission Expires:_____________
<PAGE> 134
=========================================
COUNTY: BEAVER
J&L STRUCTURAL, INC.
TO
FINOVA CAPITAL CORPORATION
=========================================
OPEN-END MORTGAGE
=========================================
RETURN BY MAIL TO:
WINSTON & STRAWN
175 WATER STREET
<PAGE> 135
NEW YORK, NEW YORK 10038
ATTN: RICHARD S. TALESNICK, ESQ.
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<PAGE> 136
SCHEDULES AND EXHIBITS HAVE BEEN
INTENTIONALLY OMITTED
- - -
<PAGE> 137
MISSING INTENTIONALLY OMITTED SCHEDULE SHEET
<PAGE> 138
PLEDGE AGREEMENT
AGREEMENT, made this 31st day of March, 1995, effective April 6, 1995,
by and between:
J&L HOLDINGS CORP., a Delaware corporation, having an office at c/o
CPT Holdings, Inc., 1430 Broadway, 13th Floor, New York, NY 10018-3308
(hereinafter referred to as the "PLEDGOR"); and
FINOVA CAPITAL CORPORATION, a Delaware corporation, having an office
at 1850 North Central Avenue, Phoenix, Arizona 85002- 2209 (hereinafter
referred to as the "LENDER"),
PRELIMINARY STATEMENTS:
A. J&L STRUCTURAL, INC., a Delaware corporation (the "BORROWER")
has entered into a certain Loan and Security Agreement dated March 31, 1995
(hereinafter, together with all exhibits and schedules thereto, as it may from
time to time be amended, modified and/or supplemented, referred to as the "LOAN
AGREEMENT") with the Lender pursuant to which the Lender has agreed to lend to
the Borrower the aggregate principal sum set forth therein and to make certain
other financial accommodations available to the Borrower, upon and subject to
the terms and conditions of the Loan Agreement;
B. The Pledgor is the sole shareholder of the Borrower and by
virtue thereof, and otherwise, will derive benefits as a result of the loans to
be made by the Lender to the Borrower pursuant to the Loan Agreement;
C. In order to induce the Lender to execute and deliver the Loan
Agreement, the Pledgor has agreed to pledge all of the issued and outstanding
shares of capital stock of the Borrower owned by it as collateral security for
the performance of all of the Borrower's Indebtedness, liabilities and
obligations to the Lender, including, without limitation, those arising under
the Loan Agreement and any and all promissory notes from time to time issued
pursuant to the Loan Agreement (collectively, the "NOTE");
D. It is a condition precedent to the obligations of the Lender
under the Loan Agreement that the Pledgor shall execute and deliver this Pledge
Agreement; and
E. All capitalized terms that are used herein that are defined in
the Loan Agreement shall have the respective meanings provided therefor in the
Loan Agreement, unless otherwise defined herein or unless the context otherwise
requires;
ACCORDINGLY, in consideration of the foregoing, the Pledgor hereby
agrees with the Lender as follows:
<PAGE> 139
1. The term "PLEDGED STOCK" as used herein shall mean and include
all of the issued and outstanding shares, whether now owned or hereafter
acquired by the Pledgor, of the capital stock of the Borrower, including,
without limitation, all of the issued and outstanding stock of the Borrower
listed on Schedule A hereto, and, also, any shares, stock certificates, options
or rights issued by the Borrower as an addition to, in substitution of, or in
exchange for any such shares, and any and all proceeds thereof, now or
hereafter owned or acquired by the Pledgor.
2. (a) As collateral security for the due payment and
performance of all Indebtedness and other liabilities and obligations of the
Borrower and the Pledgor to the Lender, whether now existing or hereafter
arising, and whether or not currently contemplated, including, without
limitation, all Indebtedness, liabilities and obligations under, arising out
of, or in any way connected with the Loan Agreement and the Note and all
agreements, instruments and documents executed, issued and delivered pursuant
thereto, including, without limitation, this Pledge Agreement, and to secure
any other obligations of the Borrower and the Pledgor to the Lender (all of the
foregoing Indebtedness, liabilities and obligations are hereinafter referred to
collectively as the "OBLIGATIONS"), the Pledgor hereby pledges, assigns,
hypothecates, delivers and sets over to the Lender, all the Pledged Stock, and
hereby grants to the Lender a first security interest in all the Pledged Stock
and in any and all proceeds thereof and substitutions therefor.
(b) If the Pledgor shall become entitled to receive or
shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital), option or rights,
whether as an addition to, in substitution of, or in exchange for any shares of
the Pledged Stock, or otherwise, the Pledgor shall accept any such instruments
as the Lender's agent, shall hold them in trust for the Lender, and shall
deliver them forthwith to the Lender in the exact form received, with the
Pledgor's endorsement when necessary and/or appropriate stock powers duly
executed in blank, to be held by the Lender, subject to the terms hereof, as
further collateral security for the Obligations.
(c) Any or all shares of the Pledged Stock held by the
Lender hereunder may, at the option of the Lender or its nominee, be registered
in the name of the Lender or its nominee. The Lender or its nominee may
thereafter, without notice, and after the occurrence of any Event of Default,
exercise all voting and corporate rights at any meeting of any corporation
issuing any of the shares included in the Pledged Stock and exercise any and
all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any shares of the Pledged Stock as if it
were the absolute owner thereof, including, without limitation, the right to
receive dividends payable thereon, and the right to exchange, at its
discretion, any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other readjustment of any corporation
issuing any of such shares or upon the exercise by any such issuer of any
right, privilege or option pertaining to
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<PAGE> 140
any shares of the Pledged Stock, and in connection therewith, to deposit and
deliver any and all of the Pledged Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but the Lender shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure to do so or delay in so doing.
(d) In the event of the occurrence of any Event of
Default, the Lender shall have the right to require that all cash dividends
payable with respect to any part of the Pledged Stock be paid to the Lender to
be held by the Lender as additional security hereunder until applied to the
Obligations.
(e) In the event of the occurrence of any Event of
Default, the Lender, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Pledgor or any other Person
(all and each of which demands, advertisements and/or notices are, to the
extent permitted by law, hereby expressly waived), may forthwith collect,
receive, appropriate and realize upon the Pledged Stock, or any part thereof,
and/or may forthwith sell, assign, give an option or options to purchase,
contract to sell or otherwise dispose of and deliver the Pledged Stock, or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange, broker's board or at any of the Lender's offices or elsewhere at such
prices and on such terms (including, without limitation, a requirement that any
purchaser of all or any part of the Pledged Stock shall be required to purchase
the shares constituting the Pledged Stock for investment and without any
intention to make a distribution thereof) as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Lender or any purchaser upon any such sale or sales, whether
public or private, to purchase the whole or any part of the Pledged Stock so
sold, free of any right or equity of redemption in the Pledgor, which right or
equity is hereby expressly waived and released.
(f) The proceeds of any collection, recovery, receipt,
appropriation, realization or sale as aforesaid, shall be applied as follows:
(i) First, to the costs and expenses of every
kind incurred in connection therewith or incidental to the care, safekeeping or
otherwise of any and all of the Pledged Stock or in any way relating to the
rights of the Lender hereunder, including reasonable attorneys' fees and legal
expenses;
(ii) Second, to the satisfaction of the
Obligations;
(iii) Third, to the payment of any other amounts
required by applicable law (including, without limitation, Section 9-504(l)(c)
of the Uniform Commercial Code);
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<PAGE> 141
(iv) Fourth, to the Subordinated Lenders, or as
required by law, to the extent of the surplus proceeds, if any; and
(v) Fifth, to the Pledgor, or as required by law,
to the extent of the surplus proceeds, if any.
(g) The Lender need not give more than ten (10) days'
notice of the time and place of any public sale or of the time after which a
private sale may take place and such notice shall be deemed to be reasonable
notification of such matters.
(h) In the event that the proceeds of any collection,
recovery, receipt, appropriation, realization, or sale as aforesaid are
insufficient to pay all amounts to which the Lender is legally entitled, the
Pledgor will be liable for the deficiency, together with interest thereon, at
the Post-Default Rate, and the reasonable fees of any attorneys employed by the
Lender to collect such deficiency, pursuant to the Loan Agreement.
3. The Pledgor represents and warrants that:
(a) The Pledged Stock is owned directly and beneficially
and of record by the Pledgor in the amount set forth on Schedule A hereto;
(b) The shares of the Pledged Stock constitute 100% of
all of the issued and outstanding shares of capital stock of the Borrower;
(c) All of the shares of the Pledged Stock have been duly
and validly issued, are fully paid and non-assessable and are owned by the
Pledgor free and clear of any pledge, mortgage, hypothecation, Lien, charge,
encumbrance or any security interest in such shares or the proceeds thereof
except for the security interest granted to the Lender hereunder and, subject
to the terms of the Subordination and Intercreditor Agreement, to the
Subordinated Lenders pursuant to the Senior Subordinated Note Documents; and
(d) Upon delivery of the Pledged Stock to the Lender or
an agent for the Lender, this Pledge Agreement creates and grants a valid first
Lien on and perfected security interest in the shares of the Pledged Stock and
the proceeds thereof, subject to no prior security interest, Lien, charge or
encumbrance or to any agreement purporting to grant to any third party a
security interest in the property or assets of the Pledgor that would include
the Pledged Stock.
4. (a) The Pledgor hereby covenants that so long as the
Obligations shall be outstanding and unpaid, in whole or in part, the Pledgor
will not:
(i) sell, convey or otherwise dispose of any
shares of the Pledged Stock or any interest therein, nor will the Pledgor
create, incur or permit to exist any pledge,
-4-
<PAGE> 142
mortgage, Lien, charge, encumbrance or any security interest whatsoever with
respect to any of the Pledged Stock or the proceeds thereof other than that
created hereby and, subject to the terms of the Subordination and Intercreditor
Agreement, in favor of the Subordinated Lenders pursuant to the Senior
Subordinated Note Documents; or
(ii) consent to or approve the issuance of any
additional shares of any class of the issuer of the Pledged Stock except, in
connection with the exercise of the Warrants.
(b) The Pledgor warrants and will defend the Lender's
right, title, special property and security interest in and to the Pledged
Stock against the claims of any Person, firm, corporation or other entity.
5. (a) If the Lender shall determine to exercise its right
to sell all or any part of the Pledged Stock, and if in the opinion of counsel
for the Lender it is necessary to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions of the Securities Act of
l933, as amended (the "SECURITIES ACT"), the Pledgor will use its best efforts
to cause each issuer of shares included in the Pledged Stock contemplated to be
sold to execute and deliver, and cause the directors and officers of each such
issuer to execute and deliver, all at the Pledgor's expense, all such
instruments and documents, and to do or cause to be done all such other acts
and things as may be necessary to register the Pledged Stock, or that portion
thereof to be sold, under the provisions of the Securities Act and to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering
of the Pledged Stock, or that portion thereof so to be sold, and to make all
amendments thereto and/or to the related prospectus that, in the opinion of the
Lender or its counsel, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto; to cause each such
issuer to comply with the provisions of the "Blue Sky" law of any jurisdiction
that the Lender shall designate; and to cause each such issuer to make
available to its security holders, as soon as practicable, an earnings
statement (that need not be audited) covering a period of twelve months, but
not more than eighteen months, beginning with the first month after the
effective date of any such registration statement, which earnings statement
will satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Pledgor acknowledges that a breach of any of the
covenants contained in subparagraph 5(a) above will cause irreparable injury to
the Lender, that the Lender shall have no adequate remedy at law in respect of
such breach and, as a consequence, the covenants of the Pledgor contained in
subparagraph 5(a) above shall be specifically enforceable against the Pledgor,
and the Pledgor hereby waives, and shall not assert, any defenses against an
action for specific performance of such covenants, except for a defense that no
Event of Default has occurred.
-5-
<PAGE> 143
(c) Notwithstanding the foregoing, the Pledgor recognizes
that the Lender may be unable to effect a public sale of all or a part of the
Pledged Stock, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and
not with a view to the distribution or resale thereof. The Pledgor
acknowledges that any such private sales may be at places and on terms less
favorable to the seller than if sold at public sales and agrees that such
private sales shall be deemed to have been made in a commercially reasonable
manner, and that the Lender has no obligation to delay sale of any such
securities for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under the Securities
Act.
6. The Pledgor shall at any time and from time to time upon the
written request of the Lender, execute and deliver such further documents and
do such further acts and things as the Lender may reasonably request in order
to effect the purposes of this Pledge Agreement, including, without limitation,
delivering to the Lender on the date hereof or at any time hereafter
irrevocable proxies in respect of the Pledged Stock in the form of Exhibit A
hereto.
7. (a) Beyond the exercise of reasonable care to assure the
safe custody of the Pledged Stock while held hereunder, the Lender shall have
no duty or liability to preserve rights pertaining thereto, and shall, subject
to the Subordination and Intercreditor Agreement, be relieved of all
responsibility for the Pledged Stock upon surrendering it to the Pledgor or in
accordance with the Pledgor's instructions.
(b) No course of dealing between the Pledgor and the
Lender, nor any failure to exercise, nor any delay in exercising, on the part
of the Lender, any right, power or privilege hereunder or under the Loan
Agreement or the Note shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
(c) The rights and remedies herein provided, and provided
in the Loan Agreement and the Note and in all other agreements, instruments and
documents delivered pursuant to the Loan Agreement, are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law
including, without limitation, the rights and remedies of a secured party under
the Uniform Commercial Code.
(d) The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision in this
Pledge Agreement in any jurisdiction.
8. The parties hereto acknowledge and agree that the execution
and delivery of this
-6-
<PAGE> 144
Pledge Agreement shall not constitute a transfer of control of the Pledgor or
the Borrower.
9. All notices and other communications pursuant to this Pledge
Agreement shall be in writing, either by letter (delivered by hand or
commercial messenger service or sent by registered or certified mail, return
receipt requested) or telegram or telecopy, addressed as follows:
(a) If to the Pledgor:
J&L Holdings Corp.
c/o CPT Holdings, Inc.
1430 Broadway, 13th Floor
New York, NY 10018-3308
Attention: William L. Remley
Telecopier No.: (212) 391-1393
with a copy to:
Kelley, McCann & Livingstone
BP America Building, 35th Floor
200 Public Square
Cleveland, Ohio 44114-2302
Attention: Michael D. Schenker, Esq.
Telecopier No.: (216) 241-3707
(b) If to Lender:
FINOVA Capital Corporation
1850 North Central Avenue
Phoenix, Arizona 85002-2209
Attention: Vice President - Law
Vice-President - Asset Management
Telecopier No.: (602) 207-6833
with a copy to:
FINOVA Capital Corporation
1060 First Avenue
King of Prussia, Pennsylvania 19406
Attention: Jeffrey D. Weiss
Portfolio Manager
Telecopier No.: (610) 354-8482
-7-
<PAGE> 145
and a copy to:
Winston & Strawn
175 Water Street
New York, New York 10038
Attention: Jonathan Goldstein, Esq.
Telecopier No.: (212) 952-1474
Any notice, request, demand or other communication hereunder shall be deemed to
have been given: (x) on the day on which it is telecopied to such party at its
telecopier number specified above (provided such notice shall be effective only
if followed by one of the other methods of delivery set forth herein) or
delivered by receipted hand or such commercial messenger service to such party
at its address specified above, or (y) on the third Business Day after the day
deposited in the mail, postage prepaid, if sent by mail, or (z) on the day it
is delivered to the telegraph company, addressed as aforesaid, if sent by
telegraph. Any party hereto may change the Person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
10. This Pledge Agreement shall be binding upon the Pledgor and
its successors and assigns and shall inure to the benefit of the Lender and its
successors and assigns.
11. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD
TO ITS RULES PERTAINING TO CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to
be duly executed and delivered on March 31, 1995, effective April __, 1995.
J&L HOLDINGS CORP.
BY
-----------------------------------
TITLE
FINOVA CAPITAL CORPORATION
BY
-----------------------------------
TITLE
-8-
<PAGE> 146
EXHIBIT A
TO
PLEDGE AGREEMENT
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS THAT, the undersigned does hereby make,
constitute and appoint FINOVA CAPITAL CORPORATION (the "LENDER") and each of
the Lender's officers and employees, its true and lawful attorneys, for it and
in its name, place and stead, to act as its proxy in respect of all of the
shares of capital stock of J&L STRUCTURAL, INC., a Delaware corporation
(hereinafter referred to as the "CORPORATION"), that it now or hereafter may
own or hold, including, without limitation, the right, on its behalf, to demand
the call by any proper officer of the Corporation pursuant to the provisions of
its Certificate of Incorporation or By-Laws and as permitted by law of a
meeting of its shareholders and at any such meeting of shareholders, annual,
general or special, to vote for the transaction of any and all business that
may come before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Lender and to its officers and employees in
consideration of the loans to be made by the Lender to the Corporation and in
order to carry out the covenant of the undersigned contained in a certain
Pledge Agreement dated March 31, 1995 between it and the Lender, and this Proxy
shall not be revocable or revoked by the undersigned, shall be binding upon the
undersigned and its successors and assigns until the payment in full of all of
the Obligations (as defined in the aforesaid Pledge Agreement) and may be
exercised only after an Event of Default under the Loan Agreement (as such
terms are defined in the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable
Proxy this 31st day of March, 1995 effective April __, 1995.
J&L HOLDINGS CORP.
BY
-----------------------------------
TITLE
<PAGE> 147
SCHEDULE A
TO PLEDGE AGREEMENT
PLEDGED STOCK OF
J&L STRUCTURAL, INC.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES CERTIFICATE
AUTHORIZED ISSUED AND OUTSTANDING OWNED BY PLEDGOR NUMBER
- - -------------------- ---------------------- ---------------- ----------
<S> <C> <C> <C>
1500 847 847 2
</TABLE>
<PAGE> 148
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS THAT, the undersigned does hereby make,
constitute and appoint FINOVA CAPITAL CORPORATION (the "LENDER") and each of
the Lender's officers and employees, its true and lawful attorneys, for it and
in its name, place and stead, to act as its proxy in respect of all of the
shares of capital stock of J&L STRUCTURAL, INC., a Delaware corporation
(hereinafter referred to as the "CORPORATION"), that it now or hereafter may
own or hold, including, without limitation, the right, on its behalf, to demand
the call by any proper officer of the Corporation pursuant to the provisions of
its Certificate of Incorporation or By-Laws and as permitted by law of a
meeting of its shareholders and at any such meeting of shareholders, annual,
general or special, to vote for the transaction of any and all business that
may come before such meeting, or at any adjournment thereof, including, without
limitation, the right to vote for the sale of all or any part of the assets of
the Corporation and/or the liquidation and dissolution of the Corporation;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Lender and to its officers and employees in
consideration of the loans to be made by the Lender to the Corporation and in
order to carry out the covenant of the undersigned contained in a certain
Pledge Agreement dated March 31, 1995 between it and the Lender, and this Proxy
shall not be revocable or revoked by the undersigned, shall be binding upon the
undersigned and its successors and assigns until the payment in full of all of
the Obligations (as defined in the aforesaid Pledge Agreement) and may be
exercised only after an Event of Default under the Loan Agreement (as such
terms are defined in the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable
Proxy this 31st day of March, 1995 effective April __, 1995.
J&L HOLDINGS CORP.
BY
-----------------------------------
TITLE
<PAGE> 149
COLLATERAL ASSIGNMENT OF
TRADEMARKS AND SECURITY AGREEMENT
COLLATERAL ASSIGNMENT OF TRADEMARKS AND SECURITY AGREEMENT, made this
31st day of March 1995, effective April 6, 1995, by and between:
J&L STRUCTURAL, INC., a Delaware corporation (the "BORROWER"), having
an office at 1430 Broadway, 13th Floor, New York, NY 10018-3308; and
FINOVA CAPITAL CORPORATION, a Delaware corporation (the "SECURED
PARTY") with a place of business located at 1850 North Central Avenue, Phoenix,
Arizona 85002-2209;
W I T N E S S E T H:
WHEREAS:
(A) The Borrower and the Secured Party have entered into a certain
Loan and Security Agreement of even date herewith (hereinafter, as it may from
time to time be amended, modified and/or supplemented, referred to as the "LOAN
AGREEMENT") pursuant to which the Secured Party has agreed to lend to the
Borrower up to the aggregate principal amount set forth therein, upon and
subject to the terms and conditions of the Loan Agreement;
(B) All of the indebtedness, liabilities and obligations of the
Borrower to the Secured Party, whether now existing or hereafter arising,
including, without limitation, the indebtedness, liabilities and obligations of
the Borrower to the Secured Party under the Loan Agreement and all other
instruments and documents executed and delivered in connection with any of the
foregoing are hereinafter referred to collectively as the "DEBT";
(C) The Borrower has adopted, has used and is using the trademarks
and service marks described on Schedule A hereto, and is the owner of the U.S.
Trademark Registrations listed on Schedule A attached hereto (the "TRADEMARKS")
along with the goodwill of the business associated therewith;
(D) All of the Debt is secured by the grant by the Borrower to the
Secured Party of liens on and security interests in certain of the properties
and assets of the Borrower, including, without limitation, the Trademarks
pursuant to the Loan Agreement;
(E) The Loan Agreement requires that the Borrower shall execute
and deliver this Collateral Assignment of Trademarks and Security Agreement;
and
(G) All capitalized terms used herein without definition shall
have the respective
<PAGE> 150
meanings ascribed thereto in the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and subject to the terms and conditions set forth in the Loan
Agreement, the parties hereto hereby agree as follows:
1. The Borrower hereby assigns, conveys and transfers unto the
Secured Party on the terms and conditions contained in the Loan Agreement,
which are incorporated herein and made a part hereof, and as additional
security for the Debt, a first Lien upon all of the Borrower's right, title and
interest in, to and under (i) the Trademarks and under the goodwill of the
business symbolized by the Trademarks, and (ii) in, to, and under all assets
deriving from and relating to the Trademarks, including, without limitation,
license fees and other payments due thereon or in connection therewith.
2. The Borrower shall take all action, under both statutory and
common law, which in its reasonable business judgment, may be necessary or
useful to perfect title to the Trademarks and to maintain and/or defend the
Trademarks including, without limitation, the defense of the Trademarks,
surveillance of marks owned and/or used by third parties which may be related
to the Trademarks, bringing institution of said actions against infringing
marks and uses, and bringing cancellation or opposition proceedings in order to
enforce rights in the Trademarks.
3. This Collateral Assignment of Trademarks and Security
Agreement shall terminate upon written notice from the Secured Party to the
Borrower that all of the obligations secured hereby have been fully paid and
performed and, upon such termination, the Secured Party shall promptly execute
and deliver to the Borrower such release documents or instruments as the
Borrower may reasonably request in furtherance and in evidence of such
termination.
4. This Collateral Assignment of Trademarks and Security
Agreement shall be binding upon the Borrower, its successors and assigns and
shall inure to the benefit of the Secured Party and its successors and assigns.
5. This Collateral Assignment of Trademarks and Security
Agreement may not be amended or modified except with the written consent of the
Secured Party.
-2-
<PAGE> 151
6. The Borrower will provide any additional documentation to
support or confirm the security interest created under this Collateral
Assignment of Trademarks and Security Agreement as the Secured Party may
request.
IN WITNESS WHEREOF, the Borrower and the Secured Party have caused
this Collateral Assignment of Trademarks and Security Agreement to be executed
by their officers thereunto duly authorized on March 31, 1995, effective April
, 1995.
- - --
J&L STRUCTURAL, INC.
BY
------------------------------------------
TITLE
FINOVA CAPITAL CORPORATION
BY
------------------------------------------
TITLE
<PAGE> 152
SCHEDULE A TO
COLLATERAL ASSIGNMENT OF TRADEMARKS
AND SECURITY AGREEMENT
BETWEEN
J&L STRUCTURAL, INC.
AND
FINOVA CAPITAL CORPORATION
<TABLE>
<CAPTION>
TRADEMARK REGISTRATION NO. REGISTRATION DATE
- - --------- ---------------- -----------------
<S> <C> <C>
JUNIOR w/Design 510,211 May 31, 1949
</TABLE>
<PAGE> 153
J&L STRUCTURAL, INC. ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
I, , a Notary Public in and for said County, in
----------------------
the State aforesaid, DO HEREBY CERTIFY that , personally
-------------------
known to me to be of Structural, Inc., and personally
----------------------
known to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that (s)he
signed and delivered said instrument as of said corporation,
----------------
as his(her) free and voluntary act, and as the free and voluntary act and deed
of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this day of March, 1995.
--
-----------------------------------
NOTARY PUBLIC
My Commission Expires:
-------------
<PAGE> 154
FINOVA ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
I, , a Notary Public in and for said County, in the
-------------------
State aforesaid, DO HEREBY CERTIFY that , personally known
--------------------
to me to be a Vice President of FINOVA Capital Corporation, and personally
known to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that he
signed and delivered said instrument as a of said
-----------------
corporation, as his free and voluntary act, and as the free and voluntary act
and deed of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this day of March, 1995.
--
-----------------------------------
NOTARY PUBLIC
My Commission Expires:
-------------
<PAGE> 155
SUBORDINATION AND INTERCREDITOR AGREEMENT
-----------------------------------------
AGREEMENT (this "AGREEMENT"), made this 6th day of April, 1995, by and
among:
J&L STRUCTURAL, INC., a Delaware corporation (hereinafter referred to
as the "BORROWER"), having an office c/o Mentmore Holdings Corporation, 1430
Broadway, New York, New York 10018;
FINOVA CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as "FINOVA"), having an office at 1850 North Central Avenue,
Phoenix, Arizona 85002-2209; and
THE PAUL REVERE LIFE INSURANCE COMPANY, THE PAUL REVERE VARIABLE
ANNUITY INSURANCE COMPANY and THE PAUL REVERE PROTECTIVE LIFE INSURANCE COMPANY
(collectively, the "PAUL REVERE GROUP") and RHODE ISLAND HOSPITAL TRUST NATIONAL
BANK, as trustee for The Textron Collective Investment Trust (hereinafter
referred to as "RHODE ISLAND"; the Paul Revere Group and Rhode Island are
hereinafter referred to together as the "SUBORDINATED LENDER"), each having an
office at 18 Chestnut Street, Worcester, Massachusetts 01608;
PRELIMINARY STATEMENTS:
A. The Borrower and FINOVA have entered into a Loan and Security
Agreement dated March 31, 1994, effective on the date hereof (such agreement,
including all exhibits and schedules thereto, as it may hereafter be amended,
modified, supplemented and/or restated, is hereinafter referred to as the
"FINOVA LOAN AGREEMENT"), pursuant to which FINOVA has agreed to make loans to
the Borrower in the aggregate principal amount of up to $40,000,000
(collectively, the "FINOVA LOAN");
B. The FINOVA Loan is to be (i) evidenced by two promissory notes
(together, the "FINOVA NOTE") in the aggregate principal amount of $40,000,000,
and (ii) secured by a first lien on and security interest in (the "SENIOR
SECURITY INTEREST") (A) all existing and after-acquired Property (hereinafter
defined), and (B) the J&L Capital Stock (hereinafter defined) (the property
described in each of clauses (A) and (B) hereof is hereinafter referred to
collectively as the "FINOVA COLLATERAL");
C. Concurrently with the execution and delivery hereof, the Borrower
and the Subordinated Lender are entering into a certain Note and Warrant
Purchase Agreement dated the date hereof (the "SUBORDINATED AGREEMENT"),
pursuant to which, among other things, (i) the Borrower shall offer to sell, and
the Subordinated Lender shall purchase, the Borrower's 13% Senior Subordinated
Secured Notes due June 30, 2005 (collectively, the "SUBORDINATED NOTE") in the
original aggregate principal amount of $23,000,000, and certain Common Stock
Purchase Warrants (the "WARRANTS") entitling the holders thereof to purchase in
the aggregate
<PAGE> 156
153 shares of the Borrower's Common Stock (as adjusted), and (ii) the
Subordinated Lender shall, in order to secure the due payment of the
Subordinated Note, be granted a subordinated lien on and security interest in
(the "SUBORDINATED SECURITY INTEREST") (A) all existing and after acquired
Property other than Accounts and Inventory, and (B) the J&L Capital Stock (the
property described in each of clauses (A) and (B) hereof is hereinafter referred
to collectively as the "COLLATERAL"); and
D. As an inducement to and a condition precedent to the making by
FINOVA of the FINOVA Loan, FINOVA has required the subordination of (i) payments
on and performance of the terms of the Subordinated Debt (hereinafter defined)
except as permitted otherwise in Paragraph 4 hereof, to the payments on and
performance of the terms of the Senior Debt (hereinafter defined) and (ii) the
Subordinated Security Interest to the Senior Security Interest.
ACCORDINGLY, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein that are
defined in the FINOVA Loan Agreement (as originally executed or with such
amendments, modifications and/or such supplements to such definitions as are
approved by the Subordinated Lender) and that are not otherwise defined herein
shall have the respective meanings ascribed thereto therein. When used herein,
the following terms shall have the following meanings (such meanings shall be
applicable equally both to the singular and plural terms defined):
AFFILIATE: any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common control
with another Person. The term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. For the purposes hereof, any Person which owns or
controls, directly or indirectly, five percent (5%) or more of the securities,
whether voting or nonvoting, of any other Person shall be deemed to "control"
such Person.
AGREEMENT: as defined in the heading of this Agreement.
APPRAISED VALUE: the average of two appraisals of the fair market
value of certain Collateral that is the subject of any proposed sale based on
the value of such Collateral sold in an orderly manner as at the date of such
appraisals, determined as if such Collateral is not subject to any Indebtedness
for Borrowed Money and assuming, for purposes of such appraisals, that neither
the seller nor the buyer is under any compulsion to sell or to buy, as
applicable, such Collateral and that both the seller and the buyer have the same
level of full and adequate knowledge and information relating to the Collateral
and the proposed sale. Each such appraisal shall be determined by an independent
appraiser of nationally recognized standing having not less than 5 years of
experience in the business of the ownership and
-2-
<PAGE> 157
operation of the Borrower's Business and recognized in such industry as a
qualified and reputable appraiser, one of which appraisers shall be selected by
the Senior Lender, and the other of which shall be selected by the Subordinated
Lender.
BORROWER: as defined in the heading of this Agreement.
BORROWER'S OBLIGATIONS: all loans, advances (including the
Acquisition Advance, Subsequent Advances and Advances under the Revolving Loan),
L/C Obligations, debts, principal, interest, premiums (including the Prepayment
Premium), liabilities (including all amounts charged to Borrower's loan account
pursuant to any agreement authorizing the Senior Lender to charge Borrower's
loan account), obligations (including the performance of the covenants of
Borrower contained in the Loan Documents), fees (including the Revolving Loan
Termination Fee, the Loan Fee, the Renewal Fee, the Unused Line Fee, the
Examination Fee and the Loan Maintenance Fee), of any kind and description, all
pursuant to, arising out of, or evidenced by the Loan Agreement and/or any of
the other Loan Documents, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, and whether or not
currently contemplated, including (but only to the extent allowed hereunder as
part of a Permitted Increase) the amount paid by the Senior Lender in connection
with its acquiring any debt, liability, or obligation owing from the Borrower to
others that the Senior Lender may have obtained by purchase and/or assignment
from the holder(s) thereof under the Loan Documents or otherwise (collectively,
"PURCHASED DEBT"), and further including all Lender Expenses that the Borrower
is required to pay or reimburse pursuant to the Loan Documents or by law (but
only if such Lender Expenses arise out of, are contemplated by, or provided for
under, the Loan Documents).
BUSINESS: the business conducted by the Borrower of the production
of lightweight structural steel shapes, piercer points, value-added finishing
services relating thereto and all other activities ancillary or related thereto.
BUSINESS DAY: any day other than a Saturday, Sunday or other day on
which commercial banks in Phoenix, Arizona, Los Angeles, California, Pittsburgh,
Pennsylvania or New York, New York are authorized or required to remain closed
to the general public under the laws of such States.
COLLATERAL: as defined in Preliminary Statement C of this Agreement.
COVENANT DEFAULT: any Senior Default other than a Payment Default.
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CPT: CPT Holdings, Inc., a Delaware corporation and the owner of all
of the issued and outstanding capital stock of J&L Holdings.
CURRENT PORTION: as at each Payment Date, the amount of interest
and/or scheduled payments of principal that are payable in cash on the
Subordinated Debt in respect of the quarterly period ending on such Payment
Date.
DEBT: any of the Senior Debt or the Subordinated Debt.
DEFAULT: any Senior Default or any Subordinated Default.
DOCUMENTS: any of the Senior Debt Documents or the Subordinated Debt
Documents.
ENFORCEMENT ACTION: any action under Article 9 of the Uniform
Commercial Code with respect to personal property (including any action in the
nature of a self-help remedy permitted under the Uniform Commercial Code) or
under the provisions of any state laws with respect to foreclosure upon real
estate, in each case, to enforce, foreclose upon, take possession of or sell any
of the Collateral, or any other judicial or non-judicial action with respect to
the Collateral, including, without limitation, any action seeking to collect
against or realize upon any of the Collateral whether in connection with or as a
result of a Subordinated Lender Action, or otherwise or any action seeking to
terminate any agreement to which the Borrower and any party (other than the
Subordinated Lender) is a party, including without limitation the Management
Agreement.
FINOVA: as defined in the heading of this Agreement.
FINOVA COLLATERAL: as defined in Preliminary Statement B of this
Agreement.
FINOVA LOAN AGREEMENT: as defined in Preliminary Statement A of this
Agreement.
FINOVA LOAN: as defined in Preliminary Statement A of this
Agreement.
FINOVA NOTE: as defined in Preliminary Statement B of this
Agreement.
GOVERNMENTAL BODY: any foreign, federal, state, municipal or other
government, any department, commission, board, bureau, agency, public authority
instrumentality thereof or any court or arbitrator.
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INCIPIENT DEFAULT: an event or condition which, with the giving of
notice or lapse of time, or both, would become a Senior Default.
INITIAL STAND-BY PERIOD: as defined in subparagraph 10(a)(iii) of
this Agreement.
J&L HOLDINGS: J&L Holdings Corp., a Delaware corporation.
J&L CAPITAL STOCK: all of the issued and outstanding shares of
capital stock of the Borrower.
LENDERS: together, the Senior Lender and the Subordinated Lender.
LIEN: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor under any
conditional sale agreement, or other title retention agreement.
LOAN AGREEMENT: any agreement entered into between the Borrower and
the holder of any Senior Debt permitted to be outstanding hereunder including,
without limitation, the FINOVA Loan Agreement, together with any supplements,
amendments or modifications thereof or substitutions therefor, which
supplements, amendments or modifications thereof or substitutions therefor are
entered into or otherwise would be permitted pursuant to the consummation of a
Permitted Senior Substitution, whether or not any such Permitted Senior
Substitution actually occurs.
NEW SENIOR LENDER: any financial institution substituted for a
Senior Lender pursuant to a Permitted Senior Substitution.
PAUL REVERE GROUP: as defined in the heading of this Agreement.
PAYMENT DATE: the last Business Day of each calendar quarter,
beginning with the quarter ending June 30, 1995.
PAYMENT DEFAULT: any Senior Default consisting of a default in the
payment of the principal of and/or interest on the Senior Debt beyond any grace
period applicable thereto, including any payment due by reason of acceleration.
PERMITTED INCREASE: any increase in the principal amount of the
Senior Debt effected by a Senior Lender (including as a result of the
acquisition or incurrence of Purchased Debt), provided that the aggregate amount
of all such increases to all Senior Lenders shall not exceed $2,500,000.
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PERMITTED SENIOR SUBSTITUTION: The substitution of a New Senior
Lender for a Senior Lender, provided that, as a result of each substitution, the
Borrower has not entered into any documents or instruments which:
(i) provide for an increase in the (A) principal balance of the
Senior Debt, including, without limitation, the FINOVA Loan, (B) amount of the
installment payment of principal on the Senior Note, or (C) rate of interest on
the Senior Note; except that the Senior Note may be amended or new promissory
notes may be issued to a Senior Lender to evidence and provide for the repayment
of any Permitted Increase;
(ii) shorten the term or accelerate the date of payment of any
scheduled installment of principal of or interest on the Senior Note;
(iii) change the form or method of payment of the Senior Note, if
such change would have a material adverse effect on the business, operations,
prospects or profits of the Borrower; or
(iv) otherwise include, add to or modify terms or conditions,
including definitions, financial covenants and events of default if the effect
of such addition or modification would be to create (A) terms and conditions in
the Senior Debt Documents which, whether directly or indirectly, are materially
more onerous with respect to the Borrower or the Subordinated Lender than the
terms and conditions of the Senior Debt Documents, including, without
limitation, this Agreement, which are in effect immediately prior to the
consummation of any such Permitted Senior Substitution, or (B) additional Senior
Defaults or additional obligations, the failure with which to comply would
create additional Senior Defaults.
PERSON: any individual, firm, corporation, business enterprise,
trust, association, joint venture, partnership, limited liability company,
Governmental Body or other entity, whether acting in an individual, fiduciary or
other capacity.
PROCEEDING: any insolvency, bankruptcy, receivership, custodianship,
liquidation, reorganization, assignment for the benefit of creditors, or any
other judicial proceeding or non-judicial action for the liquidation,
dissolution or other winding up of the Borrower or of all or any portion of the
Property of the Borrower.
PURCHASED DEBT: as defined in the definition of Borrower's
Obligations in this Section 1.
REPURCHASE AGREEMENT: that certain Repurchase Agreement dated as of
the date hereof by and among Borrower, CPT and certain holders listed therein,
as in effect on the date hereof.
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RHODE ISLAND: as defined in the heading of this Agreement.
SECOND STAND-BY PERIOD: as defined in subparagraph 10(a)(iii) of
this Agreement.
SENIOR ACCELERATION NOTICE: a notice delivered to the Subordinated
Lender from the Senior Lender (or an agent for the Senior Lenders if more than
one exists) pursuant to which the Senior Lender notifies the Subordinated Lender
of the acceleration by the Senior Lender of the Senior Debt.
SENIOR DEBT: without duplication, all of the following:
(i) so long as the FINOVA Loan (as originally constituted) or any
refinancing, refunding, reborrowing or replacement thereof which constitutes a
Permitted Senior Substitution by FINOVA shall be outstanding, the Borrower's
Obligations (as defined herein) that are outstanding as of the date of any
calculation of Senior Debt;
(ii) the amount of Indebtedness for Borrowed Money incurred by the
Borrower pursuant to a Loan Agreement as part of a Permitted Senior
Substitution;
(iii) at any time after the release of the Senior Security Interest,
the amount of Senior Debt that is paid by one Senior Lender to another Senior
Lender pursuant to a Permitted Senior Substitution in order to repay, in full,
the amount owed by the Borrower to the Senior Lender that is being repaid;
provided that such amount shall not exceed the amount of Senior Debt that is
permitted to be outstanding hereunder as of the time of any such payment;
(iv) subject to the last sentence of this definition, interest
accrued after the commencement of any Proceeding relative to the Borrower on
such Senior Debt and any other interest that would have accrued thereon but for
the commencement of such Proceeding; and
(v) indebtedness which is a Permitted Increase.
For purposes of this Agreement, (A) the portion of any prepayment
premium, including, without limitation, the Prepayment Premium, that is payable
to the Senior Lender as a result of the exercise by the Senior Lender of any
remedy available to it subsequent to the occurrence of a Senior Default and the
acceleration of the Borrower's Obligations, and (B) the difference between the
amount of interest accrued after the commencement of any Proceeding relative to
the Borrower on the Borrower's Obligations at (I) any default rate (including
the Default Rate), and (II) the interest rate or rates in effect prior to a
Senior Default (including the Interest Rate), shall not be deemed "Senior Debt".
It is hereby understood and agreed by the parties hereto that the Loan
Maintenance Fee and any other fees that are earned at Closing and that are
scheduled to be paid throughout the term of the Senior Loan are "Senior Debt"
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hereunder, including any portion of such Loan Maintenance Fee or other fees, the
payment of which is accelerated in connection with a prepayment of the Senior
Loan or an acceleration of the Borrower's Obligations.
SENIOR DEBT DOCUMENTS: each Loan Agreement, the Senior Note, the
Pledge Agreement pursuant to which the J&L Capital Stock is pledged to the
Senior Lender, the Collateral Assignment of Trademarks and the Mortgage referred
to in the FINOVA Loan Agreement and all other instruments and documents executed
and delivered in connection therewith, together with any supplements. amendments
or modifications thereof or substitutions therefor, which supplements,
amendments or modifications thereof or substitutions therefor are entered into
or otherwise would be permitted pursuant to the consummation of a Permitted
Senior Substitution, whether or not any such Permitted Senior Substitution
occurs.
SENIOR DEFAULT: an "Event of Default" (or its equivalent) as defined
in a Loan Agreement after the expiration of any grace period applicable thereto.
SENIOR DEFAULT NOTICE: a written notice delivered to the
Subordinated Lender from the Senior Lender, (i) pursuant to which the
Subordinated Lender is informed by the Senior Lender of the existence of a
Senior Default and (ii) which states the provision(s) of the applicable Senior
Debt Documents that have been breached.
SENIOR LENDER: (i) FINOVA, until the time period described in clause
(i) of the definition of the term "Senior Debt" expires, and (ii) from and after
such expiration, any holder of the Senior Debt which is permitted to be
outstanding hereunder (or, if more than one such holder, an agent for all such
holders).
SENIOR NOTE: collectively, the FINOVA Note and any other notes
issued pursuant to a Loan Agreement for Senior Debt.
SENIOR SECURITY INTEREST: as defined in Preliminary Statement B of
this Agreement.
SENIOR WAIVER NOTICE: a written notice from the Senior Lender to the
Subordinated Lender that the Senior Defaults described in a Senior Default
Notice have been cured or waived.
STAND-BY PERIOD: any of the periods of time described in Paragraph
10 of this Agreement during which the Subordinated Lender is required to refrain
from taking a Subordinated Lender Action or receiving Subordinated Lender
Payments, or both.
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SUBORDINATED AGREEMENT: as defined in Preliminary Statement C of
this Agreement.
SUBORDINATED DEBT: all of the indebtedness now or hereafter owing by
the Borrower to the Subordinated Lender evidenced by the Subordinated Note, and
any of the other Subordinated Debt Documents (as they relate to the Subordinated
Debt), including any principal or interest to be paid on the Subordinated Note.
SUBORDINATED DEBT DOCUMENTS: the Subordinated Agreement, the
Subordinated Note, and all other instruments and documents executed and
delivered to the Subordinated Lender by the Borrower or J&L Holdings.
SUBORDINATED DEFAULT: a default under the Subordinated Debt
Documents.
SUBORDINATED DEFAULT NOTICE: a written notice from the Subordinated
Lender to the Borrower (unless prohibited by stay or applicable law) and the
Senior Lender, (i) pursuant to which the Subordinated Lender shall notify each
of such Persons of the existence of one or more Subordinated Defaults and (ii)
which states the provision(s) in the applicable Subordinated Debt Documents that
have been breached.
SUBORDINATED LENDER: as defined in the heading of this Agreement.
SUBORDINATED LENDER ACTION: any of the following: (i) acceleration
of the Subordinated Debt or (ii) suit for the payment of, or initiation or
participation with others in any suit, action or Proceeding against the Borrower
seeking a judgment for the payment of the whole or any part of the Subordinated
Debt.
SUBORDINATED LENDER PAYMENT: the making by the Borrower and the
acceptance, receipt and retention by the Subordinated Lender of a payment on the
Subordinated Debt in any form, directly or indirectly, of any kind or character,
whether in cash, property or securities.
SUBORDINATED NOTE: as defined in Preliminary Statement C of this
Agreement.
SUBORDINATED SECURITY INTEREST: as defined in Preliminary Statement
C of this Agreement.
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2. REPRESENTATIONS; COVENANTS.
(a) REPRESENTATIONS.
(i) ALL LENDERS. Each of the Senior Lender and the Subordinated
Lender represents and warrants to the other as follows:
(A) POWER AND AUTHORITY. Such Person has full power and
authority to enter into, execute, deliver and carry out the terms of this
Agreement and to incur the obligations provided for herein. No consent or
approval of, or other action by any Person, which has not already been obtained,
is required in connection with the execution, delivery or performance of this
Agreement, or is required as a condition to the validity or enforceability
thereof.
(B) ENFORCEABILITY. This Agreement, when executed and
delivered by such Person, will constitute the legal and validly binding
obligation of such Person, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles (whether or not any
action to enforce this Agreement is brought at law or in equity).
(ii) OWNER OF SUBORDINATED DEBT; SENIOR LENDER IN RESPECT OF SENIOR
DEBT.
(A) The Subordinated Lender hereby represents and warrants
to the Senior Lender that, as of the date hereof, it is the exclusive owner of
the Subordinated Debt set forth in the Subordinated Agreement.
(B) FINOVA hereby represents and warrants to the
Subordinated Lender that, as of the date hereof, it is the only Senior Lender.
(b) (i) COVENANT OF THE SUBORDINATED LENDER. The Subordinated Lender
hereby covenants with the Senior Lender that, notwithstanding the provisions of
Section 8.10 of the Subordinated Agreement, if the Senior Lender shall consent
to the sale by the Borrower and/or J&L Holdings, as applicable, of any of the
Collateral at a time when no Proceeding with respect to Borrower is then pending
(A) the consent of the Subordinated Lender shall also be deemed to have been
given to such sale, and (B) within 20 days after written request delivered by
the Senior Lender to the Subordinated Lender, the Subordinated Lender shall at
Borrower's expense execute and deliver to the Senior Lender such release and
termination instruments, satisfactory in form and substance to the Senior Lender
as may be necessary to release and terminate in full the Subordinated Security
Interest in order to permit the consummation of such sale (such instruments
shall include Uniform Commercial Code termination statements, real estate
mortgage satisfactions and assignments separate from
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certificates with respect to the J&L Capital Stock, providing for the complete
release and termination of the Subordinated Security Interest). Notwithstanding
clause (A) above, the Subordinated Lender shall not be deemed to have consented
to such sale unless (I) such sale is consummated in a commercially reasonable
manner for not less than (x) if a Senior Default then exists, 90%, and (y) if a
Senior Default does not then exist, 95%, in each case of the Appraised Value of
such Collateral (as determined in compliance with subparagraph (b)(ii) below) to
a Person who is not an Affiliate of the Borrower or the Senior Lender, (II) such
sale is for cash, (III) the proceeds of such sale (less direct, out-of-pocket
costs incurred by the Borrower in connection with the consummation of any such
sale), are, substantially concurrently with the consummation thereof, applied to
the payment of Senior Debt which then is outstanding and the excess, if any, is
remitted to the Subordinated Lender for payment of the Subordinated Debt and
(IV) after giving effect to any such sale, the aggregate Appraised Value of the
Collateral which is the subject of all such sales in any period of twelve (12)
consecutive months would not exceed $7,500,000;
(ii) DETERMINATION OF APPRAISED VALUE. The Senior Lender shall
advise the Subordinated Lender in writing that it proposes to consent to a sale
and that it has selected an appraiser. Not later than 10 days from the date of
receipt of such written notice, the Subordinated Lender shall have an option to
appoint its appraiser whereupon both the Senior Lender and the Subordinated
Lender shall instruct their respective appraisers to determine the Appraised
Value within 20 days of such date. If the Subordinated Lender does not appoint
an appraiser, the determination of the Senior Lender's appraiser shall be final
and binding. The Appraised Value shall be determined not less than 30 days prior
to them execution and delivery by the Borrower and the proposed purchaser of the
acquisition agreement pursuant to which the sale is proposed to be consummated.
Upon completion of each appraiser's computation of the Appraised Value, each of
the Lenders shall direct their respective appraisers to deliver simultaneously
their respective appraisals to the other Lender. The computation made by the
appraisers shall be final and binding as to the Appraised Value. All fees and
expenses related to the appraisals shall be borne by the Borrower; provided,
however, that in the event that the Borrower is unable to bear such fees and
expenses, the fees and expenses of the Senior Lender's appraiser shall be borne
by the Senior Lender and fees and expenses of the Subordinated Lender's
appraiser shall be borne by the Subordinated Lender.
3. SUBORDINATION.
(a) SUBORDINATED DEBT TO SENIOR DEBT. The payment of the
Subordinated Debt is hereby expressly subordinated to the prior payment in full
in cash of the Senior Debt, in the manner and to the extent set forth herein.
(b) SUBORDINATED SECURITY INTEREST TO SENIOR SECURITY INTEREST.
Notwithstanding any (i) priority in time of creation, attachment or perfection
of any security interest in any portion of the Collateral or (ii) provision of,
or any filing or recording or
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failure to file or record under, any applicable statute, rule or regulation of
any governmental body, including, without limitation, the Uniform Commercial
Code, the Subordinated Security Interest is hereby expressly subordinated to the
Senior Security Interest, in the manner and to the extent set forth herein.
4. PERMITTED PAYMENTS. Subject to Paragraph 5 of this Agreement, the
Borrower may pay and the Subordinated Lender may receive payments on the
Subordinated Debt at the time and in accordance with the terms of the applicable
Subordinated Debt Documents, including, without limitation, payments that were
due during any Stand-by Period, except that, for so long as any Senior Debt
shall be outstanding, the right of the Borrower to make any Subordinated Lender
Payment on any portion of the Subordinated Debt shall be subject to the
following restrictions:
For so long as a Stand-by Period is not in effect, interest payments
and regularly scheduled payments of principal may be made on the Subordinated
Debt, but only as follows:
(a) Each Current Portion may be paid on the Payment Date on which it
is due under the terms of the Subordinated Debt Documents, together with any
Current Portion which became due and owing on any preceding Payment Date
(including amounts which were not permitted to be paid in full pursuant to the
provisions of this paragraph or by virtue of the existence of a Stand-by
Period), only if and to the extent that, after giving effect to such payment,
the Borrower would have Excess Availability of not less than $1,000,000,
assuming for purposes of this subsection 4(a) that the Maximum Amount equals
$15,000,000, the standards of eligibility set forth in the definition of
Eligible Accounts and Eligible Inventory have not been modified or revised, no
reserves are deemed necessary by the Senior Lender as provided in the definition
of Borrowing Base, and the Senior Lender has not reduced the advance rates
pursuant to Section 2.2.2 of the FINOVA Loan Agreement; and
(b) Notwithstanding subsection 4(a) above, in no event shall any
such payment be made if, as a result of giving effect to such payment, there
would exist a new Senior Default or new Incipient Default under the Loan
Agreement, assuming for purposes of this subsection 4(b) that the financial
covenants under any Loan Agreement to which this subsection 4(b) applies are not
more onerous to the Borrower than those in effect on the date hereof under the
FINOVA Loan Agreement.
5. INSOLVENCY. In the event any Proceeding is continuing:
(a) PRIORITY OF PAYMENTS. All Senior Debt shall be paid in full in
cash before any payment or distribution shall be made in respect of any portion
of the Subordinated Debt.
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(b) INCORRECT DISTRIBUTIONS. Any payment or distribution that, but
for the terms hereof, would be payable or deliverable in respect of the
Subordinated Debt, shall be paid or delivered directly to the Senior Lender for
application to the payment of the Senior Debt until the Senior Debt is paid in
full in cash, and the Subordinated Lender irrevocably authorizes, empowers and
directs all receivers, trustees, liquidators, custodians, conservators and
others having authority in the premises to effect all such payments and
deliveries, and each of such Persons also irrevocably authorizes and empowers
the Senior Lender to demand, sue for, collect and receive every such payment or
distribution described herein.
(c) ACTIONS BY SUBORDINATED LENDER FOR THE BENEFIT OF THE SENIOR
LENDER. The Subordinated Lender shall immediately turn over to the Senior Lender
in precisely the form received, any payment of any kind or character on account
of the Subordinated Debt for application to the payment of the Senior Debt. The
Senior Lender shall not be entitled to exercise any voting rights in respect of
the Subordinated Debt unless both the Senior Lender and the Subordinated Lender
are members of the same class of secured creditors, in which case the Senior
Lender shall have the right to cast the Subordinated Lender's vote in such class
of secured creditors (but not in any other class) in any such Proceedings.
(d) FURTHER ASSURANCES. The Subordinated Lender or any other holder
of the Subordinated Debt shall execute and deliver to the Senior Lender or its
representative all such further instruments confirming the authorization
referred to in the foregoing subparagraphs (b) and (c), and any powers of
attorney specifically confirming the rights of the Senior Lender arising
hereunder, and shall take all such other actions as may be reasonably requested
by the Senior Lender or its representative in order to enable it, as
contemplated by this Agreement, to enforce its rights under this Agreement;
provided, however, that the Senior Lender agrees to deliver promptly to the
Subordinated Lender any amount received pursuant to the provisions of the
forgoing paragraphs (b) and (c) which is in excess of Senior Debt.
6. NO PREPAYMENT; INTEREST RATE ON SUBORDINATED DEBT. Until the Senior
Debt is paid in full in cash (i) there shall be no Subordinated Lender Payment
which constitutes a payment of any such indebtedness in advance of the date when
such payment is scheduled to be due, and (ii) the annual rate of interest on the
Subordinated Debt reflected by the amount of each Current Portion shall in no
event exceed 13% (except overdue interest).
7. LEGENDS ON CERTAIN DOCUMENTS. Simultaneously with the execution of
this Agreement the Subordinated Lender shall cause the following legend to be
placed at the top of the first page of each Subordinated Note delivered to the
Subordinated Lender by the Borrower, and upon the closing of the FINOVA Loan,
the Subordinated Lender shall deliver to FINOVA a photocopy of the original of
such note with such legend:
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"This instrument and the obligations evidenced hereby are subordinated,
in the manner and to the extent set forth in a Subordination and
Intercreditor Agreement (the "Agreement") dated April 6, 1995 by the
Maker of this instrument (the "Debtor"), FINOVA Capital Corporation,
and [the payee of this instrument and the payees of certain instruments
of like tenor], to certain other obligations of the Debtor to FINOVA,
and each holder of this instrument, by its acceptance hereof, agrees
(i) to be bound by the terms of the Agreement, and (ii) in the event
that any conflict exists between the terms of this instrument, any
document executed in connection with the delivery of this instrument
and the terms of the Agreement, the terms of the Agreement shall govern
and be controlling."
8. TRANSFER OF INDEBTEDNESS. In the event of any proposed sale,
assignment, disposition or other transfer of all or any portion of any Debt, the
Lender that proposes to consummate any such transfer shall, prior to the
consummation thereof, cause the transferee of such portion of the Debt to
execute and deliver to the other Lender an agreement substantially identical
with this Agreement, providing for the continued subordination of the
Subordinated Debt to the Senior Debt and of the Subordinated Security Interest
to the Senior Security Interest as provided herein and for the continued
effectiveness of all of the rights of each Lender arising under this Agreement.
Notwithstanding the failure to execute and/or deliver any such agreement, the
subordination effected hereby shall survive any sale, assignment, disposition or
other transfer of all or any portion of any Debt, and the terms of this
Agreement shall be binding upon the successors and assigns of each Lender, as
further described in subparagraph 16(b) below.
9. AMENDMENT OF SUBORDINATED DEBT DOCUMENTS. Prior to the payment in
full in cash of the Senior Debt and notwithstanding anything contained in the
Subordinated Debt Documents to the contrary, the Subordinated Lender shall not
agree to any amendment, modification or supplement to any of the Subordinated
Debt Documents if the effect of such amendment, modification or supplement would
be to (i) increase the principal, the amount of any installment of principal, or
the rate of interest on the Subordinated Note, (ii) shorten the term or increase
the frequency of the date of payment of the Subordinated Note, (iii) change the
form or method of payment on the Subordinated Note, if such change could have a
material, adverse effect on the business, operations, prospects or profits of
the Borrower or the ability of the Borrower to pay the Senior Debt, or (iv) add
to or modify any of the other terms of any of the Subordinated Debt Documents,
the effect of which addition or modification, as applicable, would be to create
additional Subordinated Defaults thereunder or additional obligations, the
failure to comply with which would create additional Subordinated Defaults
thereunder. Notwithstanding the foregoing, the Subordinated Debt Documents may
be amended in order to increase the Subordinated Debt by up to $2,500,000,
provided (x) such increased borrowing is made in connection with a "workout", or
"restructuring" of the Subordinated Debt or a Proceeding concerning the
Borrower, (y) such increased borrowing is
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subject to this Agreement, and (z) the terms of such increased borrowing are no
more onerous to the Borrower than those applicable to the Subordinated Note as
in effect on the date hereof.
10. DEFAULTS; RESTRICTIONS, PERMITTED ACTIONS.
Prior to the payment in full in cash of the Senior Debt and
notwithstanding anything to the contrary contained in the Subordinated Debt
Documents, the Subordinated Lender shall not take an Enforcement Action and, if
prohibited as provided below, shall not take a Subordinated Lender Action.
(a) SENIOR DEFAULT NOTICE, RESTRICTIONS ON SUBORDIN-
ATED LENDER PAYMENT, SUBORDINATED LENDER ACTION.
(i) NOTICES, RESTRICTIONS. If the Senior Lender delivers a
Senior Default Notice and if the Senior Default described in such Senior Default
Notice is a:
(A) Payment Default, then, unless and until (I) the
Subordinated Lender shall have received a Senior Waiver Notice, there shall be
no Subordinated Lender Payment, and (II) the earlier to occur of (1) 180 days
after the receipt by the Subordinated Lender of such Senior Default Notice, or
(2) receipt by the Subordinated Lender of a Senior Waiver Notice, there shall be
no Subordinated Lender Action; or
(B) Covenant Default, then, unless and until the earlier to
occur of (I) 120 days after the receipt by the Subordinated Lender of such
Senior Default Notice, or (II) receipt by the Subordinated Lender of a Senior
Waiver Notice, there shall be no Subordinated Lender Action and no Subordinated
Lender Payment.
(ii) RESTRICTIONS APPLY ONLY WITHOUT ACCELERATION. The
restrictions on Subordinated Lender Action and Subordinated Lender Payment set
forth in clause (i) above shall apply only if the Senior Lender has not
accelerated the Senior Debt. The Senior Lender shall use its best efforts to
deliver to the Subordinated Lender a Senior Acceleration Notice concurrently
with its notification to the Borrower of the acceleration of the Senior Debt. If
the Senior Lender delivers a Senior Acceleration Notice, the provisions of
clause (iv) below shall be applicable with respect to any restrictions on
Subordinated Lender Action and/or Subordinated Lender Payment which are in
effect as of the date of receipt of any such Senior Acceleration Notice.
(iii) LIMITATION ON STAND-BY PERIODS. If a Stand-by Period has
become effective pursuant to the terms of clause (i), a subsequent Stand-by
Period may not become effective (A) until 100 days have elapsed since the
expiration of the immediately preceding Stand-by Period and (B) with respect to
either (x) the specific event or the specific set of circumstances which
entitled the Senior Lender to deliver the Senior Default Notice
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pursuant to which such initial Stand-by Period was commenced or (y) any Senior
Default of which the Senior Lender had actual knowledge as of the date of the
delivery of the Senior Default Notice pursuant to which such initial Stand-by
Period was commenced; provided, however, that successive breaches of financial
covenants by the Borrower shall be deemed separate Senior Defaults.
(iv) DELIVERY OF SENIOR WAIVER NOTICE, SENIOR ACCELERATION
NOTICE.
If:
(A) any Senior Defaults described in a Senior Default Notice
have been cured or waived, the Senior Lender shall promptly deliver a Senior
Waiver Notice, or
(B) the Senior Lender delivers a Senior Acceleration Notice
then (I) any Stand-by Period with respect to a Subordinated Lender Action which
is in effect on the date of receipt by the Subordinated Lender of such Senior
Acceleration Notice shall automatically be deemed to be terminated, and (II) the
Subordinated Lender may take a Subordinated Lender Action.
(b) SUBORDINATED DEFAULTS.
(i) DELIVERY OF NOTICE. If a Subordinated Default shall
occur and if the Subordinated Lender intends to commence or, pursuant to
subclause (B)(II) below is commencing, a Subordinated Lender Action with respect
to such Subordinated Default, the Subordinated Lender shall send to the Senior
Lender a Subordinated Default Notice, which Subordinated Default Notice shall
(A) describe in general terms the Subordinated Lender Action which the
Subordinated Lender proposes to take with respect to the Subordinated Default
described in such Subordinated Default Notice, and (B) be delivered no later
than (I) 15 days prior to the date upon which the Subordinated Lender proposes
to commence such Subordinated Lender Action, if no Stand-by Period is in effect
as of the date of the delivery of any such Subordinated Default Notice, or (II)
if subclause (I) is not applicable, simultaneously with the commencement of the
Subordinated Lender Action described in such Subordinated Default Notice. The
Senior Lender hereby acknowledges that, after receipt of any Subordinated
Default Notice and commencement of the Subordinated Lender Action(s) described
in such Subordinated Default Notice, the provisions of this clause (i) shall not
require the Subordinated Lender continually to deliver Subordinated Default
Notices to the Senior Lender during the course of conduct described in such
initial Subordinated Default Notice; provided, however, that the Subordinated
Lender shall send an additional Subordinated Default Notice if the Subordinated
Lender intends to take any action which is inconsistent with the actions
described in such initial Subordinated Default Notice.
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(ii) DELIVERY OF SENIOR DEFAULT NOTICE. If the Senior Lender
receives a Default Notice described in subclause (B)(I) of clause (i) above, and
if, as the result of the receipt thereof:
(A) the Senior Lender is entitled pursuant to the terms
of this Agreement to send a Senior Default Notice, and if the Senior Lender
elects to send such a Senior Default Notice, the Subordinated Lender shall be
subject to the same restrictions with respect to Subordinated Lender Payments
and Subordinated Lender Action as those set forth in clause (B) of clause (a)(i)
above (as qualified by the provisions set forth in clause (a)(iii) above), or
(B) No Senior Default Notice is delivered by the Senior
Lender within the time period described in subclause (B)(I) of clause (i) above
as a result of the Subordinated Default described in such Subordinated Default
Notice, the Subordinated Lender shall be permitted to take the Subordinated
Lender Action described in such Subordinated Default Notice.
(c) PERMITTED ACTION IN A PROCEEDING. If any Proceeding shall
have been commenced by or against the Borrower, then, whether or not a Stand-by
Period shall then be in effect:
(i) RIGHTS AND OBLIGATIONS OF LENDERS. Notwithstanding the
terms of this Paragraph 10 to the contrary, the Subordinated Lender shall:
(A) be entitled to accelerate the Subordinated Debt
and file evidence and otherwise protect their respective interests in the
Subordinated Debt, except that, in any Proceeding, the Senior Lender may file a
proof of claim on behalf of the Subordinated Lender with respect to the unpaid
portion of the Subordinated Debt due and payable, or becoming due and payable to
such Subordinated Lender, if Subordinated Lender fails to file a proof of its
claim prior to 20 days before the expiration of the time period during which
such claims must be submitted, and the Senior Lender then shall be permitted to
accept and receive any payment or distribution which may be payable or
deliverable in such Proceeding at any time with respect to the Subordinated Debt
in an amount which, together with amounts previously collected with respect to
the Senior Debt, is not in excess of the Senior Debt; provided, however, that
(I) the provisions of this clause (A) shall not be deemed to create any
liability of the Senior Lender to prove any portion of the Subordinated Debt or
any liability for the failure of the Senior Lender to exercise any rights with
respect thereto, including, without limitation, any failure to collect any sums
payable with respect to such Subordinated Debt or failure to take any
affirmative action in connection with such Subordinated Debt, and (II) the
Senior Lender shall deliver to the Subordinated Lender promptly any amount
collected by the Senior Lender pursuant to the provisions of this clause (A) or
otherwise in excess of the Senior Debt, and
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(B) provide to the Senior Lender all information and
documents necessary to present claims described above.
11. THE COLLATERAL.
(a) POWERS AND RIGHTS OF THE SENIOR LENDER WITH RESPECT TO
COLLATERAL. Subject to the other provisions of this subparagraph 11(a), if
either Lender shall, at any time, have possession or control of any of the
Collateral, it shall hold or control such Collateral for the benefit of it and
the other, as their respective interests may appear. So long as any of the
Senior Debt shall remain unpaid to the Senior Lender, the Senior Lender may at
all times, in its sole discretion, exercise any and all powers and rights,
including, without limitation, the right to foreclose or otherwise realize upon
the Collateral, that the Senior Lender now has or hereafter may acquire with
respect to any of the Collateral, whether or not in its possession, all without
the necessity of obtaining any consent or approval of the Subordinated Lender
and without any accountability (except as provided by applicable law or as set
forth herein) to the Subordinated Lender, nor shall it have any liability to the
Subordinated Lender for any action taken or failure to act with respect to any
of such Collateral in its possession beyond the exercise of good faith and
reasonable care to assure the safe custody thereof. Upon payment in full in cash
of the Senior Debt, the Senior Lender shall assign and deliver to the
Subordinated Lender all of the Collateral then in the Senior Lender's
possession, but without recourse and without any representation or warranty
whatsoever (except as to the absence of Liens in favor of, or of persons
claiming by, through or under, the Senior Lender) and the Borrower hereby
consents to such assignment and delivery. Subject to the foregoing, the Senior
Lender acknowledges that it (i) is holding the J&L Capital Stock (and any other
Collateral in its possession which requires possession in order for a security
interest to be perfected) for itself, and as bailee for the Subordinated Lender,
subject to the terms and conditions hereof, and (ii) has notice of the Stock
Pledge Agreement and the other Loan Documents (as defined in the Subordinated
Agreement) to which the Subordinated Lender is a party. The Subordinated Lender
agrees that the foregoing acknowledgement is given solely for the purpose of
providing the Subordinated Lender with a perfected security interest in the
portion of the Collateral in the possession of the Senior Lender which requires
possession for perfection of a security interest therein, and shall in no way be
construed as the appointment of the Senior Lender as the Subordinated Lender's
agent or as imposing any duties whatsoever on the Senior Lender to the
Subordinated Lender, except such duties as are specifically imposed by this
Agreement and as are imposed by applicable law on a party serving as a bailee
for such purpose.
(b) INSURANCE PROCEEDS. With respect to the collection of the
proceeds of any policy of insurance, the proceeds of which are assigned to the
Senior Lender or the Subordinated Lender pursuant to any security agreement or
mortgage executed and delivered by the Borrower with the Senior Lender or the
Subordinated Lender, the Senior Lender and the Subordinated Lender shall join in
any instructions to the insurance companies involved so
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<PAGE> 173
that the proceeds will be delivered to the parties entitled thereto pursuant to
the terms of this Agreement.
12. DEBT OBLIGATIONS ABSOLUTE. Nothing herein shall impair, as
between the Borrower (and its creditors, other than the Lenders) and each
Lender, the obligations of the Borrower which are unconditional and absolute, to
pay all Debt as and when the same shall become due and payable and nothing
herein shall prevent either Lender from exercising all remedies provided for in
the Documents to which the Borrower and such Lender are a party, or otherwise
permitted by applicable law, upon the occurrence of a Default, subject, however,
to the terms of this Agreement.
13. RECEIPT OF PAYMENTS IN CONTRAVENTION
OF AGREEMENT; REINSTATEMENT OF SUBORDINATION.
(a) If, notwithstanding the provisions of this Agreement, any
payment or distribution is received by the Subordinated Lender in contravention
of the terms of this Agreement, and before payment in full in cash of the Senior
Debt, such payment or distribution shall (i) be held in trust by the
Subordinated Lender for the benefit of the Senior Lender and (ii) be paid over
to the Senior Lender, or its representative, for application to the payment of
the Senior Debt until all of the Senior Debt is paid in full in cash in
accordance with the terms hereof.
(b) The obligations of the Subordinated Lender under this Agreement
shall continue to be effective or be reinstated, as the case may be, as to any
payment in respect of any Senior Debt that is rescinded or must otherwise be
returned by the holder of such Senior Debt upon the occurrence or as a result of
any Proceeding, all as though such payment had not been made.
14. WARRANTS; REPURCHASE AGREEMENT.
(a) Prior to the payment in full in cash of the Senior Debt and
notwithstanding anything to the contrary contained in the Subordinated Debt
Documents, the Warrants (and any warrants issued in exchange therefor or
replacement thereof) shall not be exercised if, at the time of such exercise,
any holder of a Warrant shall have asserted in writing that the Bring Along
Agreement is not valid and/or enforceable against it for any reason.
(b) Indebtedness of the Borrower under the Repurchase Agreement,
regardless of whether it is evidenced by a promissory note, may not be repaid
(i) prior to the day after the currently scheduled maturity date of the
Borrower's Obligations which is the first business day of April, 2001 (the
"MATURITY DATE") (as the maturity date may be postponed as a result of a
Proceeding or a "work-out" of the Borrower) or (ii) if there is no such
postponement of the maturity date, but if as at such date the Borrower's
Obligations shall not
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have been repaid in full because of a Senior Default, then for so long as the
Borrower's Obligations remain not fully repaid. At such time as the Indebtedness
of the Borrower under the Repurchase Agreement may be repaid pursuant to the
terms hereof, such Indebtedness shall rank pari passu with the Senior Debt and
shall not constitute Subordinated Debt hereunder.
15. SUBROGATION. No payment or distribution of any kind to the
Subordinated Lender to which the Subordinated Lender would have been entitled
except for the provisions of this Agreement and which was made to or for the
account of the Senior Lender, as between the Borrower and the Subordinated
Lender, shall be deemed to be a payment or distribution by the Borrower to or
for the account of the Senior Lender, and from and after the payment in full in
cash of the Senior Debt, the Subordinated Lender shall be subrogated to the
right of the Senior Lender to receive any further payments or distributions
applicable to the Senior Debt until the Subordinated Debt is paid in full in
cash. By way of clarification, but not limitation, of the foregoing, if the
holder of Senior Debt to which the Subordinated Lender is subrogated has any
rights with respect to collateral or any lien, encumbrance or security interest,
the Subordinated Lender shall succeed to such rights. The Senior Lender agrees
but at the expense of the Subordinated Lender and without representation by or
recourse to the Senior Lender to execute such documents to effectuate the
foregoing subrogation provisions as the Subordinated Lender may reasonably
request.
16. CONTINUED EFFECTIVENESS OF THIS AGREEMENT. The terms of this
Agreement, the subordination effected hereby, and the rights and the obligations
of each Lender arising hereunder, shall not be affected, modified or impaired in
any manner or to any extent by: (i) the validity of enforceability of any of the
Documents, (ii) any exercise or non-exercise of any right, power or remedy under
or in respect of any Debt or any of the Documents, or (iii) any act or omission
of the Borrower or any other party in custody of the Collateral.
17. MISCELLANEOUS.
(a) PURPOSE OF AGREEMENT. The provisions of this Agreement are
solely for the purpose of defining the relative rights of each Lender and shall
not be deemed to create any rights or priorities in any other Person including,
without limitation, the Borrower.
(b) SUCCESSORS AND ASSIGNS. This Agreement, without further
reference, shall pass to and may be relied on and enforced by any transferee or
subsequent holder of any of the Senior Debt or the Subordinated Debt. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and assigns.
(c) CONFLICTS. As among the Lenders, in the event of any conflict
between any term, covenant or condition of this Agreement and any term, covenant
or condition of any of the Documents, the provisions of this Agreement shall
govern and be controlling.
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(d) NOTICES. Any notices required or permitted to be given hereunder
shall be given validly if set forth in writing and delivered by telecopy, by
hand or commercial messenger against receipt or mailed, either by overnight
express carrier or by registered or certified mail, postage prepaid, return
receipt requested, addressed to the parties hereto at their respective addresses
as set forth on the signature page of this Agreement. All notices sent pursuant
to the terms of this subparagraph 17(d) shall be deemed received if (i)
personally delivered, on the date of delivery, (ii) sent by telecopy before 1:00
p.m. Phoenix, Arizona time, on the day sent if a Business Day or if such day is
not a Business Day or if sent after 1:00 p.m. Phoenix, Arizona time, then on the
next Business Day, (iii) sent by overnight, express carrier, on the next
Business Day immediately following the day sent, or (iv) sent by registered or
certified mail, on the earlier of the fourth Business Day following the day sent
or when actually received. Any notice by telecopy shall be followed by delivery
on the next Business Day by overnight, express carrier or by hand. Any party
hereto may designate any other address to which any notices shall be given by
notice duly given hereunder; provided, however, that any such notice of other
address shall be deemed to have been given hereunder only when actually received
by the party to which addressed.
(e) AMENDMENT OF AGREEMENT; ENTIRE AGREEMENT; COUNTERPARTS. This
Agreement may be amended or modified by written instrument only, signed by each
of the parties hereto. No waiver of any term or provision of this Agreement
shall be effective unless it is in writing, makes specific reference to this
Agreement and is signed by the party against which such waiver is sought to be
enforced. This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof as of the date hereof, and
supersedes all prior agreements, representations and understandings, if any,
relating to such subject matter. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original and, all of which, when
taken together, shall constitute one and the same document.
(f) TERMINATION; EFFECT. This Agreement shall terminate upon payment
in full in cash of the Senior Debt. Such payment shall be acknowledged in
writing by the Senior Lender.
(g) NO THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement are only for the benefit of the parties hereto and their respective
successors and assigns. No other Person shall have any right, benefit, priority,
or interest under or as a result of this Agreement.
(h) SEVERABILITY OF PROVISIONS. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction, as to such jurisdiction,
shall be ineffective to the extent of such prohibition or unenforceability,
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
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(i) CAPTIONS. The captions in this Agreement are for convenience of
reference only and shall neither define nor limit any of the terms or provisions
hereof.
(j) ACCOUNTING. The Borrower hereby agrees to (i) render to each
Lender, upon demand, a statement of the account of the Borrower with any Lender
and (ii) give each Lender access to its books in order that each Lender may make
a full examination of the state of the account of the Borrower with each Lender.
(k) FURTHER ASSURANCES. The parties hereto agree to execute and
deliver all such other instruments and take all such other actions as any party
hereto reasonably may request in order to effectuate the provisions and the
purposes of this Agreement. No such request shall be unreasonable in scope or
frequency.
(l) NOTICE TO SUBORDINATED LENDER. Notwithstanding the provisions of
this Agreement to the contrary, the Subordinated Lender shall not be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment to the Subordinated Lender, unless (i) an officer or employee of the
Subordinated Lender whose regular duties include participating in the
administration, monitoring and/or review of the Subordinated Debt has knowledge
of or reason to know such facts (collectively, "OFFICER KNOWLEDGE"), or (ii) the
Subordinated Lender shall have received written notice thereof from the Borrower
or the Senior Lender with reasonable proof satisfactory to the Subordinated
Lender of the fact that such Senior Lender (if not FINOVA) holds Senior Debt. If
(x) no Officer Knowledge exists, and (y) the Subordinated Lender shall not have
received the notice provided for in this subparagraph (l) at least one (1)
Business Day prior to the date upon which by the terms hereof any money may
become payable for any purpose (including, without limitation, the payment of
the principal of or interest on the Subordinated Debt), then, anything herein
contained to the contrary notwithstanding, the Subordinated Lender shall have
full power and authority to receive such money and apply the same to the purpose
for which such money was received. Notwithstanding any provision in this
Agreement to the contrary, only the Borrower or the Senior Lender, may give
notice to the Subordinated Lender that a payment on account of principal or
interest on the Subordinated Debt would violate the provisions of this
Agreement.
(m) EVIDENCE OF STATUS. Upon any payment or distribution of assets
of the Borrower referred to in this Agreement, the Subordinated Lender shall be
entitled to rely upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution
delivered to the Subordinated Lender for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Debt, the holders of other Indebtedness of the Borrower, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent to this Agreement.
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<PAGE> 177
(N) APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA. FOR PURPOSES OF THIS
SUBPARAGRAPH 17(N), THIS AGREEMENT SHALL BE DEEMED TO BE PERFORMED AND MADE IN
THE STATE OF ARIZONA.
(O) JURY TRIAL WAIVER. EACH PARTY HERETO WAIVES THE RIGHT TO A JURY
TRIAL IN ANY DISPUTE ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT.
(P) JURISDICTION AND VENUE. THE SUBORDINATED LENDER HEREBY AGREES
THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY THE SUBORDINATED LENDER AGAINST AND
ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT SHALL BE LITIGATED IN THE
SUPERIOR COURT OF ARIZONA, MARICOPA COUNTY DIVISION, OR THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF ARIZONA OR, IF FINOVA INITIATES SUCH ACTION,
IN ADDITION TO THE FOREGOING COURTS, ANY COURT IN WHICH FINOVA SHALL INITIATE
SUCH ACTION, TO THE EXTENT SUCH COURT OTHERWISE HAS JURISDICTION. IN ANY SUCH
ACTION, THE SUBORDINATED LENDER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS
AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT
SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE SUBORDINATED LENDER AT THE ADDRESS
TO WHICH NOTICES ARE TO BE SENT PURSUANT TO SUBPARAGRAPH 17(D) OF THIS
AGREEMENT. THE SUBORDINATED LENDER WAIVES ANY CLAIM THAT PHOENIX, ARIZONA OR THE
DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK
OF VENUE. SHOULD THE SUBORDINATED LENDER, AFTER BEING SO SERVED, FAIL TO APPEAR
OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE
NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF, THE SUBORDINATED
LENDER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED
AGAINST THE SUBORDINATED LENDER AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS,
COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR THE SUBORDINATED
LENDER SET FORTH IN THIS PARAGRAPH SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT BY FINOVA OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM, OR THE TAKING
BY FINOVA OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION, AND THE SUBORDINATED LENDER HEREBY WAIVES THE RIGHT TO ATTACK
COLLATERALLY ANY SUCH JUDGMENT OR ACTION BASED UPON AN
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ARGUMENT THAT SUCH JUDGMENT WAS OBTAINED IN AN IMPROPER FORUM.
[SIGNATURE PAGES TO FOLLOW]
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<PAGE> 179
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement the date first above written.
FINOVA CAPITAL CORPORATION
By
----------------------------------
Adolph G. Letke
Vice President
Address:
1850 North Central Avenue
Phoenix, Arizona 85002-2209
Attn: Vice President, Operations
Control
Fax No.: (602) 207-5833
with a copy to:
Winston & Strawn
175 Water Street
New York, New York 10038-4532
Attn: Jonathan Goldstein, Esq.
Fax No.: (212) 952-1474
J&L STRUCTURAL, INC.
By
----------------------------------
William L. Remley
President
c/o Mentmore Holdings Corporation
1430 Broadway, 13th Floor
New York, New York 10018-3308
Attn: Mr. William L. Remley
Fax No.: (212) 391-1393
with a copy to:
Kelley, McCann & Livingstone
BP America Building, 35th Floor
200 Public Square
Cleveland, Ohio 44114-2302
Attn: Michael D. Schenker, Esq.
Fax No.: (216) 241-3707
<PAGE> 180
[SIGNATURES CONTINUED ON FOLLOWING PAGES]
<PAGE> 181
THE PAUL REVERE LIFE INSURANCE
COMPANY
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
THE PAUL REVERE VARIABLE ANNUITY
INSURANCE COMPANY
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
THE PAUL REVERE PROTECTIVE LIFE
INSURANCE COMPANY
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK, AS TRUSTEE FOR THE
TEXTRON COLLECTIVE INVESTMENT TRUST
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
Address:
c/o Paul Revere Investment
Management Corp.
18 Chestnut Street
Worchester, Massachusetts 01608
Attn: Mr. Gerry Knowles
Fax No.: (508) 793-5854
with a copy to:
Morgan Lewis & Bockius
101 Park Avenue
New York, New York 10178
Attn: Ian Shrank, Esq.
Fax No.: (212) 309-6273
<PAGE> 182
BRING ALONG AGREEMENT
AGREEMENT (this "AGREEMENT"), made this 6th day of April, 1995, by and
among:
FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA"), having
an office at 1850 North Central Avenue, Phoenix, Arizona 85002-2209; and
THE PAUL REVERE LIFE INSURANCE COMPANY, THE PAUL REVERE VARIABLE
ANNUITY INSURANCE COMPANY, THE PAUL REVERE PROTECTIVE LIFE INSURANCE COMPANY
and RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, as trustee for The Textron
Collective Investment Trust (individually, a "WARRANT HOLDER" and collectively,
the "WARRANT HOLDERS"), each having an office at 18 Chestnut Street, Worcester,
Massachusetts 01608;
PRELIMINARY STATEMENTS:
A. J&L Structural, Inc., a Delaware corporation (the "BORROWER")
and FINOVA have entered into a Loan and Security Agreement dated March 31,
1995, effective on the date hereof (such agreement, including all exhibits and
schedules thereto, as it may hereafter be amended, modified, supplemented
and/or restated, is hereinafter referred to as the "FINOVA LOAN AGREEMENT"),
pursuant to which FINOVA has agreed to make loans to the Borrower in the
aggregate principal amount set forth therein (collectively, the "FINOVA LOAN");
B. The FINOVA Loan is secured by a first lien on and security
interest in, among other things, all of the issued and outstanding shares of
capital stock of the Borrower (collectively, the "J&L STOCK") pursuant to a
certain Pledge Agreement (as such agreement may hereafter be amended, modified
and/or supplemented, the "STOCK PLEDGE AGREEMENT"), dated March 31, 1995,
effective the date hereof, by and between FINOVA and J&L Holdings Corp., a
Delaware corporation;
C. Concurrently with the execution and delivery hereof, the
Borrower and the Warrant Holders are entering into a certain Note and Warrant
Purchase Agreement dated the date hereof, pursuant to which, among other
things, the Borrower shall offer to sell, and the Warrant Holders shall
purchase, the Borrower's 13% Senior Subordinated Secured Notes dated the date
hereof due June 30, 2005 in the original aggregate principal amount of
$23,000,000, and certain Common Stock Purchase Warrants (the "WARRANTS")
entitling the holders thereof to purchase in the aggregate 153 shares of the
J&L Stock (as adjusted);
D. As an inducement to and a condition precedent to the making by
FINOVA of the FINOVA Loan, FINOVA has required that the Warrant Holders agree
to sell, on the terms set forth herein, the Warrants and the shares of J&L
Stock to be issued in connection with the exercise of the Warrants; and
<PAGE> 183
E. All capitalized terms used herein that are defined in the
FINOVA Loan Agreement (as originally executed or with such amendments,
modifications and/or such supplements to such definitions as are approved by
the Warrant Holders) and that are not otherwise defined herein shall have the
respective meanings ascribed thereto therein.
ACCORDINGLY, the parties agree as follows:
1. REPRESENTATIONS OF WARRANT HOLDERS. Each of the Warrant
Holders hereby represents and warrants to FINOVA that as of the date hereof:
(a) It is the owner directly and beneficially of Warrants
entitling the holder thereof to purchase in the aggregate the number of shares
of J&L Stock (as adjusted) set forth opposite such Warrant Holder's name on
Schedule 1 hereto.
(b) All of the Warrants owned by it are owned free and
clear of any pledge, mortgage, hypothecation, lien, charge, encumbrance or
other security interest.
2. BRING ALONG RIGHT. If at any time after an Event of Default
has occurred and FINOVA shall have commenced to exercise any one or more
remedies available to it under the Stock Pledge Agreement or applicable law
seeking to realize upon the J&L Stock pledged to it thereunder, and, in
connection therewith, FINOVA desires to sell, or cause to be sold, all of the
shares of J&L Stock pledged to it under the Stock Pledge Agreement in a sale to
one or more Persons (each, a "PROPOSED TRANSFEREE") in a single transaction,
then FINOVA shall have the right (the "BRING-ALONG RIGHT") to require the
Warrant Holders to sell to each Proposed Transferee for the same consideration
per share of J&L Stock then owned by the Warrant Holders or issuable to them
upon the exercise of the Warrants as the per share consideration to be received
by FINOVA from such proposed Transferee, that number of Warrants and shares of
J&L Stock issued upon the exercise of the Warrants then held by the Warrant
Holders, (including fractional shares) which shall be the product of:
(a) the sum of the number of Warrants and the number of
shares of J&L Stock issued upon the exercise of the Warrants then held by the
Warrant Holders, and
(b) a fraction, the denominator of which shall be the
total number of shares of J&L Stock then held by or pledged to FINOVA and the
numerator of which shall be the number of such shares indicated in the
Bring-Along Notice (as hereinafter defined) as is subject to purchase by such
Proposed Transferee.
3. NOTICE AND OBLIGATION TO SELL. The Bring-Along Right shall be
subject to:
(a) FINOVA giving to the Warrant Holders a written notice
(a "BRING-ALONG NOTICE") executed by FINOVA and the Proposed Transferee
containing:
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<PAGE> 184
(i) the number of shares of J&L Stock that the
Proposed Transferee proposes to acquire from FINOVA;
(ii) the name and address of the Proposed
Transferee;
(iii) the proposed purchase price per share of J&L
Stock;
(iv) a statement by the Proposed Transferee that
the Proposed Transferee has been informed of the Bring-Along Right provided for
in this paragraph; and
(v) an agreement by the Proposed Transferee to
purchase the number of shares of J&L Stock indicated in the Bring-Along Notice,
plus the number of Warrants and shares of J&L Stock issued upon the exercise of
the Warrants calculated in accordance with the foregoing provisions (the
"DESIGNATED WARRANTS/SHARES") for the purchase price per Designated
Warrant/Share so indicated payable within ninety (90) days from the date of the
Bring-Along Notice.
(b) Upon delivery to the Warrant Holders of the
Bring-Along Notice, the Warrant Holders shall be obligated to sell the
Designated Warrants/Shares free and clear of any pledge, hypothecation, lien,
charge, encumbrance or other security interest, simultaneously with the sale by
FINOVA of the number of shares of J&L Stock indicated in the Bring-Along
Notice, for the purchase price per Designated Warrant/Share so indicated within
ninety (90) days after the date of the Bring-Along Notice. If the sale to the
Proposed Transferee is not consummated within such ninety (90) day period, the
Warrant Holders shall no longer be obligated to sell pursuant to such
Bring-Along Notice, but the provisions of this agreement shall remain in effect
with respect to any subsequent Bring-Along Right.
4. APPRAISAL AND OTHER CONDITIONS. Notwithstanding the
foregoing, the Warrant Holders shall not be obligated to sell their Warrants or
the shares of J&L Stock issued upon the exercise of the Warrants unless:
(a) the sale is consummated at a price per Warrant or
share of J&L Stock that is not less than the proposed purchase price referred
to in the Bring-Along Notice or, if the Warrant Holders elect pursuant to
paragraph 5 below to use the Appraised Value, 90% of the Appraised Value (as
hereinafter defined) of the J&L Stock (as determined in compliance with
Paragraph 5 below);
(b) the Proposed Transferee is not an Affiliate of the
Borrower or FINOVA, and
(c) the sale is for cash.
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<PAGE> 185
5. DETERMINATION OF APPRAISED VALUE. The Warrant Holders shall
have the option to require, by written notice to FINOVA delivered not more than
ten (10) days following delivery to the Warrant Holders of a Bring-Along Notice,
the determination of the Appraised Value. FINOVA shall, within ten (10) days of
its receipt of such notice from the Warrant Holders advise the Warrant Holders
in writing that it has selected an appraiser. Not later than ten (10) days from
the date of receipt of such written notice, the Warrant Holders shall have an
option to appoint their own appraiser whereupon both FINOVA and the Warrant
Holders shall instruct their respective appraisers to determine the Appraised
Value within twenty (20) days of such date. If the Warrant Holders do not
appoint an appraiser, the determination of FINOVA's own appraiser shall be final
and binding. The Appraised Value shall be determined not less than thirty (30)
days prior to the date on which the sale to the Proposed Transferee is scheduled
to occur as provided in the Bring-Along Notice. Upon completion of each
appraiser's computation of the Appraised Value, FINOVA and the Warrant Holders
shall direct their respective appraisers to deliver simultaneously their
respective appraisals to each other. The computation made by the appraisers
shall be final and binding as to the Appraised Value. All fees and expenses of
FINOVA's appraiser shall be borne by FINOVA and all fees and expenses of the
Warrant Holders' appraiser shall be borne by the Warrant Holders.
For purposes of this Agreement, "APPRAISED VALUE" shall mean
the average of two appraisals of the fair market value of the J&L Stock that is
the subject of any proposed sale based on the value of such J&L Stock as at the
date of such appraisals, determined as if such J&L Stock is not subject to any
Liens and assuming, for purposes of such appraisals, that neither the seller
nor the buyer is under any compulsion to sell or to buy, as applicable, such
J&L Stock and that both the seller and the buyer have the same level of full
and adequate knowledge and information relating to the J&L Stock and the
proposed sale. Each such appraisal shall be determined by an independent
appraiser of nationally recognized standing having not less than 5 years of
experience in the business of the ownership and operation of the Borrower's
Business and recognized in such industry as a qualified and reputable
appraiser.
6. LEGEND ON STOCK CERTIFICATES; RESTRICTION ON TRANSFER. Each
of the Warrant Holders agrees that a conspicuous reference to the provisions of
this Agreement shall be made on all certificates evidencing shares of J&L Stock
owned by such Warrant Holders and that it will not sell, assign, give or
otherwise transfer such shares unless the purchaser, assignee, donee or
transferee agrees in writing to be bound by the provisions of this Agreement as
if it were a Warrant Holder hereunder.
7. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement, without
further reference, shall pass to and may be relied on and enforced by any
holder of Senior Debt (as defined in the Subordination and Intercreditor
Agreement dated the date hereof among FINOVA, the
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<PAGE> 186
Borrower and the Warrant Holders). This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
(b) This Agreement shall terminate upon the earlier to
occur of (i) the termination of the Stock Pledge Agreement, or (ii) the payment
in full of the Borrower's Obligations.
(c) NOTICES. Any notices required or permitted to be
given hereunder shall be given validly if set forth in writing and delivered by
telecopy, by hand or commercial messenger against receipt or mailed, either by
overnight express carrier or by registered or certified mail, postage prepaid,
return receipt requested, addressed to the parties hereto at their respective
addresses as set forth on the signature page of this Agreement. All notices
sent pursuant to the terms of this subparagraph 7(c) shall be deemed received
if (i) personally delivered, on the date of delivery, (ii) sent by telecopy
before 1:00 p.m. Phoenix, Arizona time, on the day sent if a Business Day or if
such day is not a Business Day or if sent after 1:00 p.m. Phoenix, Arizona
time, then on the next Business Day, (iii) sent by overnight, express carrier,
on the next Business Day immediately following the day sent, or (iv) sent by
registered or certified mail, on the earlier of the fourth Business Day
following the day sent or when actually received. Any notice by telecopy shall
be followed by delivery on the next Business Day by overnight, express carrier
or by hand. Any party hereto may designate any other address to which any
notices shall be given by notice duly given hereunder; provided, however, that
any such notice of other address shall be deemed to have been given hereunder
only when actually received by the party to which addressed.
(d) AMENDMENT OF AGREEMENT; ENTIRE AGREEMENT;
COUNTERPARTS. This Agreement may be amended or modified by written instrument
only, signed by each of the parties hereto. No waiver of any term or provision
of this Agreement shall be effective unless it is in writing, makes specific
reference to this Agreement and is signed by the party against which such
waiver is sought to be enforced. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof as
of the date hereof, and supersedes all prior agreements, representations and
understandings, if any, relating to such subject matter. This Agreement may be
signed in one or more counterparts, each of which shall be deemed an original
and, all of which, when taken together, shall constitute one and the same
document.
(e) SEVERABILITY OF PROVISIONS. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction, as to such
jurisdiction, shall be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
-5-
<PAGE> 187
(f) CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall neither define nor limit any of the
terms or provisions hereof.
(g) APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA. FOR PURPOSES
OF THIS SUBPARAGRAPH 7(G), THIS AGREEMENT SHALL BE DEEMED TO BE PERFORMED AND
MADE IN THE STATE OF ARIZONA.
(H) JURY TRIAL WAIVER. EACH PARTY HERETO WAIVES THE
RIGHT TO A JURY TRIAL IN ANY DISPUTE ARISING UNDER OR WITH RESPECT TO THIS
AGREEMENT.
(I) JURISDICTION AND VENUE. THE WARRANT HOLDERS HEREBY
AGREE THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY FINOVA AGAINST AND ARISING
DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT SHALL BE LITIGATED IN THE SUPERIOR
COURT OF ARIZONA, MARICOPA COUNTY DIVISION, OR THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA OR, IF FINOVA INITIATES SUCH ACTION, IN ADDITION TO
THE FOREGOING COURTS, ANY COURT IN WHICH FINOVA SHALL INITIATE SUCH ACTION, TO
THE EXTENT SUCH COURT OTHERWISE HAS JURISDICTION. IN ANY SUCH ACTION, THE
WARRANT HOLDERS HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR
OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS
AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO THE WARRANT HOLDERS AT THE ADDRESS TO WHICH NOTICES ARE TO BE
SENT PURSUANT TO SUBPARAGRAPH 7(C) OF THIS AGREEMENT. THE WARRANT HOLDERS WAIVE
ANY CLAIM THAT PHOENIX, ARIZONA OR THE DISTRICT OF ARIZONA IS AN INCONVENIENT
FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. SHOULD THE WARRANT HOLDERS,
AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT,
PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER
THE MAILING THEREOF, THE WARRANT HOLDERS SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED AGAINST THE WARRANT HOLDERS AS DEMANDED OR PRAYED
FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF
FORUM FOR THE WARRANT HOLDERS SET FORTH IN THIS PARAGRAPH SHALL NOT BE DEEMED TO
PRECLUDE THE ENFORCEMENT BY FINOVA OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM,
OR THE TAKING BY FINOVA OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER
APPROPRIATE JURISDICTION, AND THE WARRANT HOLDERS HEREBY WAIVE THE RIGHT TO
ATTACK COLLATERALLY ANY
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<PAGE> 188
SUCH JUDGMENT OR ACTION BASED UPON AN ARGUMENT THAT SUCH JUDGMENT WAS OBTAINED
IN AN IMPROPER FORUM.
[SIGNATURE PAGES TO FOLLOW]
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<PAGE> 189
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement the date first above written.
FINOVA CAPITAL CORPORATION
By
-------------------------------
Adolph G. Letke
Vice President
Address:
1850 North Central Avenue
Phoenix, Arizona 85002-2209
Attn: Vice President, Operations
Control
Fax No.: (602) 207-5833
with a copy to:
Winston & Strawn
175 Water Street
New York, New York 10038-4532
Attn: Jonathan Goldstein, Esq.
Fax No.: (212) 952-1474
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
<PAGE> 190
THE PAUL REVERE LIFE INSURANCE
COMPANY
By
------------------------------------
Name
----------------------------------
Title
---------------------------------
THE PAUL REVERE VARIABLE ANNUITY
INSURANCE COMPANY
By
------------------------------------
Name
----------------------------------
Title
---------------------------------
THE PAUL REVERE PROTECTIVE LIFE
INSURANCE COMPANY
By
------------------------------------
Name
----------------------------------
Title
---------------------------------
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK, AS TRUSTEE FOR THE
TEXTRON COLLECTIVE INVESTMENT TRUST
By
------------------------------------
Name
----------------------------------
Title
---------------------------------
Address:
c/o Paul Revere Investment
Management Corp.
18 Chestnut Street
Worchester, Massachusetts 01608
Attn: Mr. Gerry Knowles
Fax No.: (508) 793-5854
with a copy to:
Morgan Lewis & Bockius
101 Park Avenue
New York, New York 10178
Attn: Ian Shrank, Esq.
Fax No.: (212) 309-6273
<PAGE> 191
SCHEDULE 1 TO
BRING ALONG AGREEMENT
<TABLE>
<CAPTION>
NUMBER OF SHARES OF J&L STOCK
NAME OF WARRANT HOLDER ISSUABLE UPON EXERCISE OF WARRANTS
- - ---------------------- ----------------------------------
<S> <C>
The Paul Revere Life Insurance Company 33.26
The Paul Revere Life Insurance Company 6.65
The Paul Revere Life Insurance Company 6.65
The Paul Revere Variable Annuity
Insurance Company 19.96
The Paul Revere Protective Life
Insurance Company 9.98
Rhode Island Hospital Trust National
Bank, as Trustee for the Textron
Collective Investment Trust 76.50
</TABLE>
<PAGE> 192
MANAGEMENT SUBORDINATION AGREEMENT
Dated March 31, 1995,
effective April 6, 1995
FINOVA Capital Corporation
1850 North Central Avenue
Phoenix, Arizona 85002-2209
Gentlemen:
Reference is hereby made to the following:
(a) The Loan and Security Agreement dated March 31, 1995
(hereinafter, as it may from time to time be amended, modified or supplemented,
the "LOAN AGREEMENT") by and between J&L Structural, Inc., a Delaware
corporation (the "BORROWER"), and FINOVA Capital Corporation, a Delaware
corporation (the "LENDER");
(b) The Management Advisory Services Agreement dated April __,
1995 (hereinafter, as it may from time to time be amended, modified or
supplemented, the "MANAGEMENT AGREEMENT") by and among the Borrower, J&L
Holdings Corp. ("HOLDINGS") and CPT Holdings, Inc. ("MANAGEMENT"); and
(c) The conditions precedent, set forth in Article 4 of the Loan
Agreement, to the obligation of the Lender to make the loans and other
financial accommodations provided for therein, that this Agreement be executed
and delivered by the Borrower, Holdings and Management.
All capitalized terms used herein that are defined in the Loan
Agreement and are not otherwise defined herein shall have the respective
meanings ascribed to them in the Loan Agreement.
In order to induce the Lender to execute and deliver the Loan
Agreement and to consummate the transactions contemplated thereby, including,
without limitation, to make the loans and other financial accommodations
provided for therein, and in consideration of the benefits expected to accrue
to Management by reason of the making of the loans and other financial
accommodations to the Borrower provided for in the Loan Agreement, the
Borrower, Holdings and Management hereby jointly and severally agree with the
Lender, as follows:
1. SUBORDINATION. All fees and charges now or hereafter due and
payable from the Borrower to Management under the Management Agreement are
hereinafter referred to collectively as the "SUBORDINATED FEE" and the
Subordinated Fee and all other present and
<PAGE> 193
future indebtedness of the Borrower to Management (other than sums actually
expended by Management as reasonable and necessary expenses incurred in
connection with Management's performance of duties for which management fees
are paid or payable to Management under the Management Agreement (collectively,
"MANAGEMENT EXPENSES")) is hereinafter referred to collectively as the
"SUBORDINATED DEBT". The Subordinated Debt shall be subject and subordinate to
the prior payment in full of all the indebtedness of the Borrower to the
Lender, whether now existing or hereafter arising, and whether or not currently
contemplated, including, without limitation, the indebtedness, liabilities and
obligations of the Borrower to the Lender under the Loan Agreement, the Term
Note, the Revolving Note and the L/C Reimbursement Agreements referred to
therein (such indebtedness, liabilities and obligations, whether now existing
or hereafter arising, and whether or not currently contemplated, are
hereinafter referred to collectively as the "SENIOR DEBT"), in the manner and
to the extent set forth herein.
2. PERMITTED PAYMENTS.
(a) The Borrower may not make, and Management may not
demand, accept, or retain, any payment of any portion of the Subordinated Debt
except as expressly permitted by the terms of subparagraph 2(b) hereinafter set
forth.
(b) Subject to Paragraph 3 of this Agreement, the
Borrower may pay, and Management may receive, payments on the Subordinated Fee;
provided (i) no Event of Default or Incipient Default then exists under the
Loan Documents, or would exist after giving effect to such payment, (ii) such
payments are made in accordance with the terms of the Management Agreement and
in any event not more frequently than once each month, (iii) after giving
effect to each such payment Borrower would have Excess Availability of at least
$1,500,000, (iv) each such payment in any month would not exceed the sum of (A)
$37,500 plus (B) the excess, if any, of $12,500 over the amount actually
expended by the Borrower during the immediately preceding month as Management
Expenses (assuming estimated accounting fees for standard auditing procedures
are paid on a monthly basis), and (v) after giving effect to each such payment,
the aggregate amount of all such payments in any fiscal year would not exceed
$600,000.
(c) In addition to the foregoing, Borrower shall be
permitted to reimburse Management for Management Expenses; provided, however,
to the extent that the aggregate amount of all such Management Expenses exceeds
$12,500 in any month, such Management Expenses shall be itemized and a copy of
such itemization, together with such bills, invoices or other documentation as
Lender may reasonably request relating to such Management Expenses shall be
delivered to Lender concurrently with the financial statements required to be
delivered to Lender pursuant to Section 6.3.1(ii) of the Loan Agreement.
3. INSOLVENCY.
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<PAGE> 194
In the event of:
(a) any insolvency, bankruptcy, receivership,
custodianship, liquidation, reorganization, assignment for the benefit of
creditors, or other similar proceeding relative to the Borrower or its
property, or
(b) any proceeding for the voluntary liquidation,
dissolution or other winding up or bankruptcy proceedings of the Borrower, then
and in any such event:
(i) All of the Senior Debt shall first be paid in
full before any payment or distribution of any character, whether in cash,
securities or other property, shall be made in respect of the Subordinated
Debt; and
(ii) Any payment or distribution of any character
payable or deliverable in respect of the Subordinated Debt (including any
payment or distribution of any other indebtedness of the Borrower being
subordinated to the Subordinated Debt), shall be paid or delivered directly to
the Lender, or its representative, until all Senior Debt shall have been paid
and Management, or any other person having any right to receive the
Subordinated Debt, irrevocably authorizes, empowers and directs all receivers,
custodians, trustees, liquidators, conservators and others having authority in
the premises to effect all such payments and deliveries. Management or any
other person having any right to receive the Subordinated Debt shall execute
and deliver to the Lender or its representative all such further instruments
confirming the authorization referred to in the preceding sentence as the
Lender may request.
4. ACTIONS BY MANAGEMENT FOR BENEFIT OF LENDER. In the event that
the Borrower shall make an assignment for the benefit of creditors or any
proceedings are commenced by or against the Borrower under any bankruptcy,
reorganization, readjustment or debt, arrangement, dissolution, receivership,
liquidation or insolvency law or statute now or hereafter in effect, then and
in any such event and at any time thereafter, Management will, upon the written
request of the Lender, prove, enforce and endeavor to obtain payment of the
aggregate outstanding amount of all unpaid Subordinated Debt payments due and
payable, or thereafter becoming due and payable from the Borrower to
Management, and will turn over to the Lender in precisely the form received,
any payment of any kind or character on account of such Subordinated Debt for
application to the payment of the Senior Debt. In the event that Management
shall fail to take any such action requested by the Lender, the Lender may, as
attorney-in-fact for Management, take such action on behalf of Management, but
for the use and benefit of the Lender, and Management hereby appoints the
Lender as its attorney-in-fact to demand, sue for, collect and receive every
such payment and distribution and give acquittance therefor and to file claims
and to take such other proceedings in the Lender's own name or in the name of
Management or otherwise, and to vote, give consent and take any other steps
with regard thereto, all as the Lender may deem necessary or advisable for the
enforcement of this Agreement; and Management or any other holder of the
Subordinated Debt
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<PAGE> 195
will execute and deliver to the Lender such additional powers of attorney,
assignments and other instruments as may be requested by the Lender in order to
enable the Lender to enforce any and all claims upon or with respect to the
aforesaid Subordinated Debt and to collect and give any and all payments or
distributions that may be payable or deliverable at any time upon or with
respect to such Subordinated Debt.
5. WAIVER. Management waives any and all notice of the
acceptance of this Agreement or of the creation, renewal, extension or accrual,
now or at any time in the future, of any Senior Debt, or of the reliance of the
Lender on this Agreement. Management consents that, without notice to or
further assent by Management, the indebtedness, liabilities or obligations of
the Borrower or of any other party with respect to the Senior Debt may from
time to time, in whole or in part, be renewed, extended, modified or released
by the Lender, as it may deem advisable, that the Loan Agreement or any other
instrument or document executed and delivered in connection therewith, may be
amended, modified, supplemented or terminated, that any collateral security for
any of the Senior Debt may from time to time, in whole or in part, be
exchanged, sold, or surrendered by the Lender, as it may deem advisable, and
the Lender may take any other action it may deem necessary or appropriate in
connection with the Senior Debt, all without and in any manner or to any extent
impairing or affecting the obligations of the Borrower and Management contained
in this Agreement.
6. INCORRECT DISTRIBUTIONS. If, notwithstanding the provisions
of this Agreement, any payment or distribution of any character (whether in
cash, securities, or other property) or any security shall be received by
Management from the Borrower in contravention of the terms of this Agreement,
such payment, distribution or security shall not be commingled with any asset
of Management, shall be held in trust for the benefit of the Lender, and shall
be paid over or delivered and transferred to, the Lender or its representative,
for application to the payment of all Senior Debt remaining unpaid, until all
of the Senior Debt shall have been paid in full.
7. SUBROGATION. No payment or distribution of any kind to
Management to which Management would have been entitled except for the
provisions of this Agreement and which was made to or for the account of the
Lender, as between the Borrower and Management, shall be deemed to be a payment
or distribution by the Borrower to or for the account of Management, and from
and after the payment in full in cash of the Senior Debt, Management shall be
subrogated to the right of the Lender to receive any further payments or
distributions applicable to the Senior Debt until the Subordinated Debt is paid
in full in cash.
8. AMENDMENT OF MANAGEMENT AGREEMENT. Prior to the payment in
full of the Senior Debt and notwithstanding anything contained in the
Management Agreement or any other agreement or instrument evidencing the
Subordinated Debt to the contrary, Management and the Borrower shall not,
without the prior written consent of the Lender, amend, modify or supplement,
or agree to any amendment, modification or supplement of, the Management
Agreement or any other agreement or instrument evidencing the Subordinated Debt
in any
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<PAGE> 196
manner. All promissory notes and other negotiable instruments evidencing any
Subordinated Debt shall bear an appropriate legend referring to this Agreement
and reciting that the payment of the Subordinated Debt evidenced thereby is
subject to the provisions hereof.
9. MISCELLANEOUS. This Agreement may not be amended or
terminated orally, but may be amended or terminated only in writing, signed by
the parties hereto and the Lender. No waiver of any term or provision of this
Agreement shall be effective unless it is in writing, signed by the party
against whom such waiver is sought to be enforced, and making specific
reference to this Agreement. This Agreement shall inure to the benefit of the
Lender and its successors and assigns and shall be binding upon the Borrower
and Management and their respective successors and assigns. This Agreement may
be executed in one or more counterparts which, when taken together, shall
constitute one and the same document. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO
ITS RULES PERTAINING TO CONFLICTS OF LAWS.
Very truly yours,
CPT HOLDINGS, INC.
BY___________________________________
AGREED TO AND ACCEPTED: TITLE
J&L STRUCTURAL, INC.
BY__________________________________
TITLE
J&L HOLDINGS CORP.
BY__________________________________
TITLE
FINOVA CAPITAL CORPORATION
BY__________________________________
TITLE
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<PAGE> 197
BLOCKED COLLECTION ACCOUNT AGREEMENT
THIS BLOCKED COLLECTION ACCOUNT AGREEMENT (this "AGREEMENT"), dated as
of April 6, 1995, entered into by and among J&L STRUCTURAL, INC., a Delaware
corporation ("ACCOUNT PARTY"), PNC BANK, NATIONAL ASSOCIATION, a national
banking association ("BANK"), and FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA"), in light of the following facts:
RECITALS
A. Account Party and FINOVA are parties to that certain Loan and
Security Agreement and various additional agreements, documents and instruments
entered into in connection therewith, all of even date herewith (as they may be
amended, modified and/or supplemented, collectively, the "LOAN DOCUMENTS"),
pursuant to which FINOVA has agreed to extend certain loans and financial
accommodation to Account Party.
B. As collateral security for the payment and performance of its
obligations to FINOVA under the Loan Documents, Account Party has, pursuant to
the Loan Documents, granted FINOVA a security interest in all of Account Party's
accounts, equipment, inventory, general intangibles, deposit accounts, chattel
paper, documents, instruments and all other personal property of Account Party,
and in all proceeds and products of the foregoing (collectively, the
"COLLATERAL").
C. Pursuant to the Loan Documents, in order to facilitate FINOVA's
access to the Collateral and its applications of the Collateral to the reduction
of Account Party's obligations to FINOVA under the Loan Documents, Account Party
has agreed to establish with Bank deposit account no. 2167146, which has been
designated the "SPECIAL COLLECTION ACCOUNT OF FINOVA" (the "ACCOUNT"), into
which Account Party has agreed to deposit all proceeds of the Collateral, and
all other payments of money to Account Party from any person or entity and of
any kind or nature, all as set forth in the Loan Documents.
E. Account Party, Bank and FINOVA wish to enter into this Agreement to
determine their respective rights and obligations with respect to the Account
and the funds on deposit therein.
NOW, THEREFORE, the parties hereby agree as follows:
1. ACKNOWLEDGMENT OF FINOVA'S SECURITY INTEREST IN THE ACCOUNT.
Account Party hereby confirms, and Bank hereby acknowledges,
that Account Party, pursuant to the Loan Documents, has granted FINOVA a
security interest in all of Account Party's right, title and interest in and to
the Account and all sums now or hereafter on deposit therein. Account Party and
Bank hereby acknowledge and agree that delivery of an executed original of this
Agreement to Bank shall constitute notice from FINOVA to Bank,
<PAGE> 198
pursuant to the Pennsylvania Uniform Commercial Code, of FINOVA's security
interest in the Account and the sums now or hereafter on deposit therein.
2. RESTRICTED ACCESS TO ACCOUNT.
Account Party and Bank hereby acknowledge and agree that
Account Party shall not be entitled to withdraw any amounts from, draw upon, or
otherwise access or exercise any powers with respect to, the Account and/or the
funds now or hereafter deposited therein. FINOVA shall have the sole right to
withdraw amounts from, draw upon, access and otherwise exercise any and all
powers with respect to the Account and the funds now or hereafter deposited
therein.
3. PRE-AUTHORIZED DAILY TRANSFERS TO THE FINOVA ACCOUNT.
FINOVA hereby authorizes Bank to make daily federal funds wire
transfers, on each Banking Day of Bank, of the full amount of the Net Collected
Balances on deposit in the Account at the end of the immediately preceding
Banking Day of Bank to the Chemical Bank, New York, New York, ABA #021000128,
for the Account of: FINOVA Capital Corporation, Account #808011812, Ref: J&L
Structural, Inc., Attn: Patrick Cornell. For the purposes of this Section 3, the
terms "Banking Day of Bank" and "Net Collected Balances" shall have the
following respective meanings:
"Banking Day of Bank" shall mean a day on which Bank is open
to conduct its regular banking business, other than a Saturday, Sunday or public
holiday; and
"Net Collected Balances" shall mean the balance on deposit in
the Account, at the end of any Banking Day, determined after deducting from the
Account the face amount of all checks or other items credited to the Account and
returned unpaid on that Banking Day for any reason, and any and all returned
item fees or service charges due to Bank on that Banking Day.
4. WAIVER OF BANK'S RIGHT OF SET-OFF.
Notwithstanding any provision of any deposit account agreement
relating to the Account, or any right of Bank otherwise arising, by accepting
and establishing the Account under the terms of this Agreement, Bank hereby
waives any right which it now or hereafter may have to offset the current or
future balance in the Account to the payment of any current or future
indebtedness, liabilities or other obligations of Account Party to Bank, except
for Bank's right to charge the Account for returned items and service charges as
set forth in Section 5 below.
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<PAGE> 199
5. RETURNED ITEMS AND SERVICE CHARGES.
Any returned items or service charges relating to the Account
are to be charged first, to any other operating accounts maintained by Account
Party at Bank, and then, to the extent funds contained in such other accounts
are not sufficient for payment of returned items or service charges, to the
Account; provided, however, FINOVA shall have no liability to Bank for any
returned items. If at any time such other operating accounts and the Account
does not contain sufficient funds for payment of returned items or service
charges, Bank shall apply funds thereafter deposited into the Account to the
payment of such returned items or service charges.
6. BANK STATEMENTS.
Bank shall send to FINOVA at FINOVA's address for notices
hereinafter set forth a duplicate copy of each statement with respect to the
Account which Bank sends to Account Party. Such statements with respect to the
Account shall be sent to Account Party as follows: J&L Structural, Inc., 111
Station Street, Aliquippa, Pennsylvania 15001, Attention: Bob Ballantine.
7. INDEMNIFICATION OF BANK.
Bank shall have no responsibility for determining the source
or ownership of any funds on deposit in the Account. Account Party agrees to
indemnify Bank and hold Bank harmless from and against any and all claims,
liabilities, losses, damages and expenses incurred by Bank including, without
limitation, any and all reasonable fees and disbursements of Bank's counsel
related to or arising out of this Agreement. Account Party will not, however, be
responsible for any such claims, liabilities, losses, damages and expenses
incurred by Bank arising out of Bank's gross negligence or willful misconduct.
8. TERMINATION.
This Agreement may be terminated by Bank or FINOVA, but not by
Account Party, at any time upon written notice of 30 calendar days to the other
party and the Account Party. Bank's rights under Section 7 of this Agreement
will survive the termination of this Agreement.
9. NO ORAL AMENDMENTS OR WAIVERS.
This Agreement may not be amended, or any provision hereof
waived, except in a writing signed by Account Party, Bank and FINOVA.
10. NOTICES.
-3-
<PAGE> 200
All notices, demands, monthly Account statements, and general
correspondence by any party relating to this Agreement shall be in writing and
(except for Account statements and other informational documents which may be
sent by first class mail postage prepaid) personally delivered or sent by
registered or certified mail postage prepaid, return receipt requested, or by
prepaid telex, facsimile, telecopy, telegram (with messenger delivery specified)
or other method of electronic communication, to Bank, Account Party or FINOVA,
as applicable, at its address set forth below:
If to Bank: PNC Bank, National Association
-----------------------
- - - -----------------------
-----------------------
If to Account Party: J&L Structural, Inc.
c/o CPT Holding, Inc.
1430 Broadway, 13th floor
New York, New York 10018-3308
Attention: William L. Remley
with a copy to: Kelley, McCann & Livingstone
BP America Building, 35th floor
200 Public Square
Cleveland, Ohio 44114-2302
Attention: Michael D. Schenker, Esq.
If to FINOVA: FINOVA Capital Corporation
1060 First Avenue
King of Prussia, Pennsylvania 19406
Attention: Jeffrey D. Weiss
Portfolio Manager
and a copy to: Winston & Strawn
175 Water Street
New York, New York 10038
Attention: Jonathan Goldstein, Esq.
The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other. All
notices or demands sent in accordance with this Section 10 shall be deemed
received on the earlier of the date of actual receipt or five (5) calendar days
after the deposit thereof in the mail.
11. INTEGRATION.
-4-
<PAGE> 201
This Agreement is the final expression of, and contains the
entire agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior understands with respect thereto.
12. SEVERABILITY.
If any term or provision of this Agreement or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to which is held
invalid or unenforceable, shall not be affected thereby, and each such term and
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
13. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
14. ATTORNEYS FEES.
In the event any litigation is necessary to enforce any of the
provisions of this Agreement, the prevailing party shall receive from the
non-prevailing party all reasonable costs, expenses and attorneys fees incurred
in connection with pursuing any rights under this Agreement.
15. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit
of Account Party, Bank and FINOVA and their respective representatives,
successors and assigns.
16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts
with the same effect as if all parties had executed the same document. All
counterparts shall be construed together and shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By ________________________________
Adolph G. Letke
Vice President
-5-
<PAGE> 202
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
J&L STRUCTURAL, INC., a Delaware
corporation
By ___________________________________
William L. Remley
President
PNC BANK, NATIONAL ASSOCIATION
By _________________________________
Name ____________________________
Title ___________________________
-6-
<PAGE> 203
SCHEDULE A TO
BLOCKED ACCOUNT AGREEMENT
ACCOUNT PARTY'S OPERATING DEPOSIT ACCOUNTS
<PAGE> 204
ENVIRONMENTAL CERTIFICATE WITH
REPRESENTATIONS, COVENANTS AND WARRANTIES
The undersigned, J & L STRUCTURAL, INC., a Delaware corporation
("BORROWER"), hereby executes this Certificate for the purpose of inducing
FINOVA CAPITAL CORPORATION (formerly Greyhound Financial Corporation), a
Delaware corporation ("LENDER"), to make a loan to the Borrower in the original
principal sum of up to Forty Million ($40,000,000) Dollars (as the same may be
modified from time to time, the "LOAN") pursuant to a certain Loan and Security
Agreement dated of even date herewith (as it may hereafter be amended, modified
and/or supplemented, the "LOAN AGREEMENT") by and between Borrower and Lender,
which Loan is secured by, among other things, a certain mortgage (the
"MORTGAGE"), encumbering certain real and personal property as more
particularly described in the Mortgage (collectively, the "PROPERTY").
1. REPRESENTATIONS, COVENANTS AND WARRANTIES. Except as may be
otherwise expressly stated in the Disclosure Schedule attached hereto as
Exhibit A and made part hereof, Borrower hereby represents, covenants and
warrants to Lender and its successors and assigns, as follows:
(a) The location and construction, occupancy, operation
and use of all improvements now and hereafter attached to or placed, erected,
constructed or developed as a portion of the Property (the "IMPROVEMENTS") do
not and will not violate any applicable laws, statute, ordinance, rule,
regulation, policy, order or determination of any federal, state, local or
other governmental authority ("GOVERNMENTAL AUTHORITY") or any board of fire
underwriters (or other body exercising similar functions), or any restrictive
covenant or deed restriction affecting any portion of the Property, including
without limitation, any applicable zoning ordinances and building codes, flood
disaster laws and health and environmental laws, rules and regulations
(hereinafter collectively called "APPLICABLE LAWS").
(b) Without in any way limiting the generality of (a)
above, neither the Property nor Borrower is the subject of any pending or, to
the best of Borrower's knowledge, threatened investigation or inquiry by any
Governmental Authority, or is subject to any remedial obligations under any
Applicable Environmental Laws pertaining to health or the environment
("APPLICABLE ENVIRONMENTAL LAWS"), including without limitation, the
Comprehensive Environmental Response, Compensation, and
<PAGE> 205
Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation and
Recovery Act of 1987, as amended ("RCRA"), and the Toxic Substances Control Act,
The Clean Air Act, and The Clean Water Act, and applicable state laws, and this
representation and warranty would continue to be true and correct following
disclosure to any applicable Governmental Authority of all relevant facts,
conditions and circumstances pertaining to the Property and/or Borrower.
(c) Borrower is not required to obtain any permits,
licenses or authorizations to construct, occupy, operate or use any portion of
the Property by reason of any Applicable Environmental Laws, or if any such
permits, licenses or authorizations are required by any Applicable
Environmental Laws, such permits, licenses or authorizations have, as of the
date hereof, been obtained.
(d) Borrower has taken all steps necessary to determine
and has determined that no hazardous substances, solid wastes, or other
substances known or suspected to pose a threat to health or the environment
("HAZARDS") have been disposed of or otherwise released on or to the Property
or exist on or within any portion of the Property. No prior use, either by
Borrower or to the best of the Borrower's knowledge and belief, by the prior
owners of the Property, has occurred which violates any Applicable
Environmental Laws. The use which Borrower makes and intends to make of the
Property will not result in the disposal or release of any hazardous substance,
solid waste or Hazards on, in or to the Property. The terms "hazardous
substance" and "release" shall each have the meanings specified in CERCLA,
including, without limitation, petroleum product and petroleum wastes of any
kind, and the terms "solid waste" and "disposal" (or "disposed") shall each
have the meanings specified in RCRA; provided, however, that in the event
either that CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the effective
date of such amendment; and provided further that, to the extent that the laws
of the Commonwealth Of Pennsylvania establish a meaning for "hazardous
substance", "release", "solid waste", or "disposal" which is broader than that
specified in either CERCLA or RCRA; such broader definition shall apply.
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<PAGE> 206
(e) To the best of Borrower's knowledge and belief, there
are no on-site or off-site locations where hazardous substances generated from
the Property, including such substances as asbestos and Polychlorinated
Biphenyls, solid wastes, or Hazards have been stored, treated, recycled, or
disposed of.
(f) To the best of Borrower's knowledge and belief, there
has been no litigation brought or threatened nor any settlement reached by or
with any parties alleging the presence, disposal, release or, threatened
release, of any hazardous substance, solid wastes or Hazards from the use or
operation of the Property.
(g) To the best of Borrower's knowledge and belief, after
diligent investigation and inquiry, the Property is not on any federal or state
"Superfund" list, and not on EPA's Comprehensive Response, Compensation &
Liability System ("CERCLIS") list or on any state environmental agency list of
sites under consideration for CERCLIS, nor subject to any environmentally
related liens.
(h) Neither Borrower nor, to the best of Borrower's
knowledge and belief, any tenant of any portion of the Property, has received
any notice from any Governmental Authority with respect to any violation of any
Applicable Environmental Laws.
(i) Borrower shall not cause any violation of any
Applicable Environmental Laws, nor permit any tenant of any portion of the
Property to cause such a violation, nor permit any environmental liens to be
placed on any portion of the Property.
All of the foregoing representations and warranties shall be
continuing and shall be true and correct for the period from the date hereof
through and as of the date of the final payment of all indebtedness owed by
Borrower to Lender and the final performance of all obligations under all
instruments evidencing, governing, securing or relating to such indebtedness,
with the same force and effect as if made each day throughout such period, and
all of such representations and warranties shall survive such payment and
performance.
2. COVENANT TO CLEAN UP AND NOTIFY. Borrower shall conduct and
complete all investigations, studies, sampling, and
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<PAGE> 207
testing and all remedial, removal and other actions necessary to clean up and
remove hazardous substances, solid wastes or Hazards on, in, from or affecting
any portion of the Property: (a) in accordance with all Applicable
Environmental Laws, (b) to the satisfaction of Lender, and (c) in accordance
with the orders and directives of all Governmental Authorities. Borrower shall
(a) give notice to Lender immediately upon: (i) Borrower's receipt of any
notice from any Governmental Authority of a violation of any Applicable
Environmental Laws or acquiring knowledge of the receipt of any such notice by
any tenant of any portion of the Property, and (ii) acquiring knowledge of the
presence of any hazardous substances, solid wastes or Hazards (other than those
described on Exhibit A attached hereto) on the Property in a condition that is
resulting or could reasonably be expected to result in any adverse
environmental impact, with a full description thereof; (b) promptly comply with
all Applicable Environmental Laws requiring the notice, removal, treatment, or
disposal of such hazardous substances, solid wastes or Hazards and provide
Lender with satisfactory evidence of such compliance; and (c) provide Lender,
within thirty (30) days after demand by Lender, with a bond, letter of credit,
or similar financial assurance evidencing to Lender's satisfaction that
sufficient funds are available to pay the cost of removing, treating, and
disposing of such hazardous substances, solid wastes or Hazards and discharging
any assessments that may be established on the Property as a result thereof.
3. SITE-ASSESSMENT. If Lender shall ever have reason to believe
that there are hazardous substances, solid wastes or Hazards (other than those
described on Exhibit A attached hereto) affecting any of the Property, Lender
(by its officers, employees and agents) at any time and from time to time,
either prior to or after the occurrence of an Event of Default under the
Mortgage, may contract for the services of persons (the "SITE REVIEWERS") to
perform environmental site assessments ("SITE ASSESSMENTS") on the Property for
the purpose of determining whether there exists on the Property any
environmental condition that could result in any liability, cost, or expense to
the owner, occupier, or operator of such Property arising under any Applicable
Environmental Laws. The Site Assessments may be performed at any time or
times, upon reasonable notice, and under reasonable conditions established by
Borrower that do not impede the performance of the Site Assessments. The Site
Reviewers are
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<PAGE> 208
hereby authorized to enter upon the Property for such purposes. The Site
Reviewers are further authorized to perform both above and below the ground
testing for environmental damage or the presence of hazardous substances, solid
wastes and Hazards on the Property and such other tests on the Property as may
be necessary to conduct the Site Assessments in the reasonable opinion of the
Site Reviewers. Borrower will supply to the Site Reviewers such historical and
operational information regarding the Property as may be reasonably requested by
the Site Reviewers to facilitate the Site Assessment and will make available for
meetings with the Site Reviewers appropriate personnel having knowledge of such
matters. On request, Lender shall make the results of such Site Assessments
fully available to Borrower, which (prior to an Event of Default under the
Mortgage) may, at its election, participate under reasonable procedures in the
direction of such Site Assessments and the description of tasks of the Site
Reviewers. The cost of performing such Site Assessments shall be paid by
Borrower upon demand of Lender.
4. INDEMNITY AND HOLD HARMLESS. Borrower hereby defends,
indemnifies and holds harmless Lender, its employees, agents, shareholders,
officers and directors (collectively, the "INDEMNIFIED PARTIES"), from and
against any claims, demands, obligations, penalties, fines, suits, liabilities,
settlements, damages, losses, costs or expenses (including, without limitation,
attorney and consultant fees and expenses, investigation and laboratory fees and
expenses, cleanup costs, and court costs and other litigation expenses) of
whatever kind or nature, known or unknown, contingent or otherwise, arising out
of or in any way related to: (a) the presence, disposal, release, threatened
release, removal or production of any hazardous substances, solid wastes or
Hazards which are on, in, from or affecting any portion of the Property; (b) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to such hazardous substances, solid wastes or Hazards;
(c) any lawsuit brought or threatened, settlement reached, or order by
Governmental Authority relating to such hazardous substances, solid wastes or
Hazards; and/or (d) any violation of any Applicable Environmental Laws, or
demands of Governmental Authorities, or violation of any policies or
requirements of Lender, which are based upon or in any way related to such
hazardous substances, solid wastes or Hazards, regardless of whether or not any
of the conditions described
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<PAGE> 209
under any of the foregoing subsections (a) through (d), inclusive, was or is
caused by or within the control of Borrower. Borrower agrees, upon notice and
request by an Indemnified Party, to contest and defend any demand, claim, suit,
proceeding or action with respect to which Borrower has hereinabove indemnified
and held the Indemnified Parties harmless and to bear all costs and expenses of
such contest and defense. Borrower further agrees to reimburse any Indemnified
Party upon demand for any costs or expenses incurred by any Indemnified Party in
connection with any matters with respect to which Borrower has hereinabove
indemnified and held the Indemnified Parties harmless. The provisions of this
paragraph shall be in addition to any other obligations and liabilities Borrower
may have to Lender at common law, in equity or under documentation executed in
connection with the Loan, and shall survive the closing, funding and payment in
full of the Loan, as well as any foreclosure of the Loan or granting of any deed
in lieu of foreclosure and the recordation of any release of the lien of the
Mortgage.
5. LENDER'S RIGHT TO REMOVE HAZARDOUS MATERIALS. Lender shall
have the right, but not the obligation, without in any way limiting Lender's
other rights and remedies under the Mortgage, to enter onto the Property or to
take such other actions as it deems necessary or advisable to clean up, remove,
resolve, or minimize the impact of, or otherwise deal with, any hazardous
substances, solid wastes or Hazards on or affecting the Property following
receipt of any notice from any person or entity asserting the existence of any
hazardous substances, solid wastes or Hazards pertaining to the Property or any
part thereof that, if true, could result in an order, notice, suit, imposition
of a lien on the Property, or other action or that, in Lender's sole opinion,
could jeopardize Lender's security under the Mortgage. All reasonable costs
and expenses paid or incurred by Lender in the exercise of any such rights
shall be secured by the Mortgage and shall be payable by Borrower upon demand.
6. RELIANCE AND BINDING NATURE. Borrower acknowledges that Lender
has and will rely upon the representations, covenants, warranties and agreements
set forth in closing and funding the Loan and that the execution and delivery of
this Certificate is an essential condition but for which Lender would not close
or fund the Loan. The representations, covenants, warranties and agreements
herein contained shall be binding upon
-6-
<PAGE> 210
Borrower, its successors, assigns and legal representatives and shall inure to
the benefit of Lender, its successors, assigns and legal representatives.
Dated and Effective this ____ day of March, 1995.
J & L STRUCTURAL, INC.
BY:
-------------------
TITLE
-7-
<PAGE> 1
NOTE AND WARRANT PURCHASE AGREEMENT
DATED AS OF APRIL 6, 1995
REGARDING
13% SENIOR SUBORDINATED SECURED NOTES
DUE APRIL 6, 2005
OF
J&L STRUCTURAL, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. SALE AND PURCHASE OF NOTES AND WARRANTS . . . . . . . . . . . 1
SECTION 2. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . 31
4.1. Corporate Existence, Power and Authority . . . . . . . . 31
4.2. Stock Ownership . . . . . . . . . . . . . . . . . . . . 32
4.3. Subsidiaries; Joint Ventures . . . . . . . . . . . . . . 33
4.4. Business . . . . . . . . . . . . . . . . . . . . . . . . 33
4.5. No Defaults or Conflicts . . . . . . . . . . . . . . . . 33
4.6. Disclosure Materials; Other Information . . . . . . . . 34
4.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . 35
4.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.9. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.10. Legal Compliance . . . . . . . . . . . . . . . . . . . . 36
4.11. Permits, Licenses and Approvals . . . . . . . . . . . . 37
4.12. Patents, Trademarks and Other Rights . . . . . . . . . . 37
4.13. Status Under Certain Statutes . . . . . . . . . . . . . 37
4.14. Labor and Employment Matters . . . . . . . . . . . . . . 37
4.15. Properties . . . . . . . . . . . . . . . . . . . . . . . 39
4.16. Suppliers and Customers. . . . . . . . . . . . . . . . . 39
4.17. Offering of Notes . . . . . . . . . . . . . . . . . . . 40
4.18. Environmental Matters . . . . . . . . . . . . . . . . . 40
4.19. No Foreign Assets Control Regulation Violation . . . . . 42
4.20. Outstanding Securities . . . . . . . . . . . . . . . . . 42
4.21. Disaster . . . . . . . . . . . . . . . . . . . . . . . . 42
4.22. No Burdensome Agreements . . . . . . . . . . . . . . . . 42
4.23. Other Names. . . . . . . . . . . . . . . . . . . . . . . 43
4.24. Solvency . . . . . . . . . . . . . . . . . . . . . . . . 43
4.25. Chief Executive Office . . . . . . . . . . . . . . . . . 43
4.26. Filings Made . . . . . . . . . . . . . . . . . . . . . . 43
4.27. [Intentionally Not Used.] . . . . . . . . . . . . . . . 44
4.28. Business Sites . . . . . . . . . . . . . . . . . . . . . 44
4.29. Operation and Maintenance of Equipment . . . . . . . . . 44
4.30. Taxpayer Identification Number . . . . . . . . . . . . . 44
4.31. Title to Property, Liens . . . . . . . . . . . . . . . . 44
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
4.32. Description and Location; Records of
Equipment . . . . . . . . . . . . . . . . . . . . . . . 45
4.33. Condition; Additional Covenants and
Representations . . . . . . . . . . . . . . . . . . . . 45
4.34. Disposition of Equipment . . . . . . . . . . . . . . . . 45
4.35. Franchises and Agreements . . . . . . . . . . . . . . . 45
4.36. No Investment, Etc. . . . . . . . . . . . . . . . . . . 45
4.37. No Guarantees . . . . . . . . . . . . . . . . . . . . . 46
4.38. Intellectual Property . . . . . . . . . . . . . . . . . 46
4.39. Americans With Disabilities Act of 1990 . . . . . . . . 47
SECTION 5. REPRESENTATIONS OF THE PURCHASERS . . . . . . . . . . . . . . 47
SECTION 6. PREPAYMENTS AND REPAYMENTS . . . . . . . . . . . . . . . . . . 48
6.1. Mandatory Prepayments . . . . . . . . . . . . . . . . . 48
6.2. Prepayment at Holder's Option . . . . . . . . . . . . . 49
6.3. Optional Prepayments . . . . . . . . . . . . . . . . . . 49
6.4. Obligations Unconditional . . . . . . . . . . . . . . . 51
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 51
7.1. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 51
7.2. Financial Information . . . . . . . . . . . . . . . . . 51
7.3. Compliance Certificates . . . . . . . . . . . . . . . . 54
7.4. Inspection . . . . . . . . . . . . . . . . . . . . . . . 54
7.5. Maintenance of Existence, Properties and
Franchises; Compliance with Law; Taxes;
Insurance; Payments of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . 54
7.6. Office for Payment, Exchange and
Registration . . . . . . . . . . . . . . . . . . . . . 55
7.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . 56
7.8. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . 58
7.9. Payment of Dividends by Subsidiaries . . . . . . . . . . 58
7.10. ERISA Compliance . . . . . . . . . . . . . . . . . . . . 58
7.11. Communication with Accountants . . . . . . . . . . . . . 58
7.12. Environmental Matters . . . . . . . . . . . . . . . . . 58
7.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.14. Employment and Labor Matters . . . . . . . . . . . . . . 61
7.15. Further Assurances . . . . . . . . . . . . . . . . . . . 62
7.16. Accounts System . . . . . . . . . . . . . . . . . . . . 62
7.17. Covenants Concerning Intellectual Property . . . . . . . 62
7.18. Caster Finance . . . . . . . . . . . . . . . . . . . . . 63
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
7.19. Delivery of Information for Rule 144A
Transactions . . . . . . . . . . . . . . . . . . . . . . 63
7.20. No Impairment . . . . . . . . . . . . . . . . . . . . . 64
7.21. Mortgagee Waiver . . . . . . . . . . . . . . . . . . . . 64
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 64
8.1. Minimum Net Worth . . . . . . . . . . . . . . . . . . . 64
8.2. Borrowing . . . . . . . . . . . . . . . . . . . . . . . 64
8.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.4. Merger and Acquisition . . . . . . . . . . . . . . . . . 64
8.5. Contingent Liabilities . . . . . . . . . . . . . . . . . 64
8.6. Restricted Payments . . . . . . . . . . . . . . . . . . 65
8.7. Investments and Loans . . . . . . . . . . . . . . . . . 65
8.8. Fundamental Business Changes . . . . . . . . . . . . . . 65
8.9. Sale or Transfer of Assets . . . . . . . . . . . . . . . 65
8.10. Payments on Subordinated Indebtedness . . . . . . . . . 66
8.11. Amendment of Charter and By-Laws . . . . . . . . . . . . 67
8.12. Acquisition of Additional Properties . . . . . . . . . . 67
8.13. Issuance of Stock . . . . . . . . . . . . . . . . . . . 67
8.14. Capital Expenditures . . . . . . . . . . . . . . . . . . 67
8.15. Transactions with Affiliates . . . . . . . . . . . . . . 68
8.16. Subsidiaries, Joint Ventures, Management
Contracts, Capital Structure Changes . . . . . . . . . . 68
8.17. Corporate Offices, Corporate Name,
Corporate Records . . . . . . . . . . . . . . . . . . . 68
8.18. Amendments to Agreements . . . . . . . . . . . . . . . . 68
8.19. Proxy Recognition . . . . . . . . . . . . . . . . . . . 68
8.20. Private Placement Status . . . . . . . . . . . . . . . . 69
8.21. Amendments to Other Agreements . . . . . . . . . . . . . 69
8.22. Senior Debt Service Coverage . . . . . . . . . . . . . . 69
8.23. Total Debt Service Coverage . . . . . . . . . . . . . . 69
SECTION 9. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10. CONDITIONS TO PURCHASERS' OBLIGATIONS . . . . . . . . . . . . 69
10.1. Repurchase Agreement . . . . . . . . . . . . . . . . . . 70
10.2. Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . 70
10.3. Compliance with Agreements; No Defaults . . . . . . . . 70
10.4. Officers' Certificate . . . . . . . . . . . . . . . . . 70
10.5. Proceedings . . . . . . . . . . . . . . . . . . . . . . 70
10.6. Legality; Governmental and Other
Authorization . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
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<TABLE>
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10.7. Time of Purchase . . . . . . . . . . . . . . . . . . . . 71
10.8. No Change in Law, etc. . . . . . . . . . . . . . . . . . 71
10.9. Completion of Acquisition . . . . . . . . . . . . . . . 71
10.10. Environmental Report . . . . . . . . . . . . . . . . . 71
10.11. Contribution to Capital . . . . . . . . . . . . . . . . 71
10.12. Net Operating Loss . . . . . . . . . . . . . . . . . . 71
10.13. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.14. No Material Adverse Change . . . . . . . . . . . . . . 72
10.15. Other Financings . . . . . . . . . . . . . . . . . . . 72
10.16. Related Agreements. . . . . . . . . . . . . . . . . . . 72
10.17. Security Interests . . . . . . . . . . . . . . . . . . 72
10.18. Searches. . . . . . . . . . . . . . . . . . . . . . . . 73
10.19. Material Agreements . . . . . . . . . . . . . . . . . . 73
10.20. Lease . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.21. Title Commitment . . . . . . . . . . . . . . . . . . . 73
10.22. Pay-off Letters and Releases . . . . . . . . . . . . . 74
10.23. Transaction Costs . . . . . . . . . . . . . . . . . . . 74
10.24. Acquisition . . . . . . . . . . . . . . . . . . . . . . 74
10.25. Appraisals. . . . . . . . . . . . . . . . . . . . . . . 74
10.26. Tax Comfort Letter. . . . . . . . . . . . . . . . . . 74
10.27. Insurance . . . . . . . . . . . . . . . . . . . . . . . 75
10.28. Opinion of the Company Counsel . . . . . . . . . . . . 75
10.29. Senior Loan . . . . . . . . . . . . . . . . . . . . . . 75
10.30. Other Documents and Opinions . . . . . . . . . . . . . 75
SECTION 11. AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . 75
SECTION 12. EXCHANGE OF NOTES AND WARRANTS; CANCELLATION OF
SURRENDERED NOTES . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13. REGISTRATION; REPLACEMENT OF NOTES AND WARRANTS . . . . . . . 77
SECTION 14. DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 15. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 16. RESTRICTIONS ON TRANSFER . . . . . . . . . . . . . . . . . . 86
SECTION 17. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . 86
17.1. Piggyback Rights . . . . . . . . . . . . . . . . . . . 86
17.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . 87
17.3. Procedures . . . . . . . . . . . . . . . . . . . . . . 87
17.4. Provision of Documents . . . . . . . . . . . . . . . . 89
</TABLE>
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<TABLE>
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17.5. Indemnification . . . . . . . . . . . . . . . . . . . . 89
17.6. Certain Limitations in Connection with
Future Grants of Registration Rights . . . . . . . . . 90
SECTION 18. EXPENSES; INDEMNIFICATION . . . . . . . . . . . . . . . . . . 90
(a) Expenses; Taxes . . . . . . . . . . . . . . . . . . 90
(b) Indemnification . . . . . . . . . . . . . . . . . . 91
SECTION 19. HOME OFFICE PAYMENTS . . . . . . . . . . . . . . . . . . . . 92
SECTION 20. CREATION OF SECURITY INTEREST; PLEDGE;
MORTGAGES . . . . . . . . . . . . . . . . . . . . . . . . . . 93
20.1. Grant of Security Interest . . . . . . . . . . . . . . 93
20.2. Delivery of Additional Documentation\
Required . . . . . . . . . . . . . . . . . . . . . . . 93
20.3. Power of Attorney . . . . . . . . . . . . . . . . . . . 94
20.4. Right to Inspect . . . . . . . . . . . . . . . . . . . 94
20.5. Stock Pledge Agreement . . . . . . . . . . . . . . . . 94
20.6. Mortgage . . . . . . . . . . . . . . . . . . . . . . . 94
20.7. Releases Upon Termination . . . . . . . . . . . . . . . 94
20.8. Recourse to Security . . . . . . . . . . . . . . . . . 95
SECTION 21. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 95
21.1. Appointment . . . . . . . . . . . . . . . . . . . . . . 95
21.2. Delegation of Duties . . . . . . . . . . . . . . . . . 95
21.3. Reliance by Agent . . . . . . . . . . . . . . . . . . . 95
21.4. Notice of Default . . . . . . . . . . . . . . . . . . . 96
21.5. Non-Reliance on Agent and Other
Purchasers . . . . . . . . . . . . . . . . . . . . . . 96
21.6. Agent in Its Individual Capacity . . . . . . . . . . . 96
21.7. Successor Agent . . . . . . . . . . . . . . . . . . . . 96
21.8. Co-Agent . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 22. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 23. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 98
23.1. Entire Agreement . . . . . . . . . . . . . . . . . . . 98
23.2. Survival. . . . . . . . . . . . . . . . . . . . . . . . 98
23.3. Counterparts . . . . . . . . . . . . . . . . . . . . . 99
23.4. Headings . . . . . . . . . . . . . . . . . . . . . . . 99
23.5. Binding Effect and Assignment . . . . . . . . . . . . . 99
23.6. Severability . . . . . . . . . . . . . . . . . . . . . 99
23.7. Governing Law . . . . . . . . . . . . . . . . . . . . . 99
</TABLE>
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23.8. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS . . . . . . . . . . . . . . . . . . . . . . . 99
23.9. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . 100
</TABLE>
EXHIBITS
Exhibit A - Purchasers' Note and Warrant Amounts and Addresses
Exhibit B - Form of Note
Exhibit C - Form of Warrant
Exhibit D - Demised Premises
Exhibit E - [Intentionally not used]
Exhibit F - [Intentionally not used]
Exhibit G - Description of Real Estate
Exhibit H - Form of Repurchase Agreement
Exhibit I - Form of Legal Opinions of General Counsel and Local
Counsel to the Company
SCHEDULES
Schedule 2 - Company's Facilities
Schedule 4.1 - Corporate Existence, Power and Authority
Schedule 4.6 - Clarification of Disclosure Materials
Schedule 4.11 - Permits, License and Approvals
Schedule 4.12 - Patents, Trademarks and Other Rights
Schedule 4.14 - Labor and Employment Matters
Schedule 4.15 - Properties
Schedule 4.18 - Environmental Matters
Schedule 4.28 - Business Sites
Schedule 4.29 - Condition of Equipment
Schedule 4.31 - Title to Property, Liens
Schedule 4.32 - Equipment Locations
Schedule 4.36 - Investments, Etc.
Schedule 4.38 - Intellectual Property
Schedule 4.39 - Threatened Litigation
<PAGE> 8
NOTE AND WARRANT PURCHASE AGREEMENT, dated as of April 6,
1995, by and among J&L Structural, Inc. a Delaware corporation (the "Company"),
and The Paul Revere Investment Management Corporation, as agent (the "Agent"),
The Paul Revere Life Insurance Company, The Paul Revere Variable Annuity
Insurance Company, The Paul Revere Protective Life Insurance Company and Rhode
Island Hospital Trust National Bank (, as trustee for The Textron Collective
Investment Trust (each individually a "Purchaser" and collectively, the
"Purchasers").
WHEREAS, pursuant to that certain Acquisition Agreement (as
such term and other capitalized terms are defined below) the Company will
acquire the assets of J&L and TCI (the "Acquisition");
WHEREAS, pursuant to the Contribution Documents, J&L Holdings
will contribute to the Company at least $7,350,000, as a capital contribution
and all the assets and properties constituting Brighton (other than the capital
stock of the Company and CCC) as a capital contribution; and
WHEREAS, the proceeds of the sale of the Notes and Warrants
will be used to finance the Acquisition;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
SECTION 1. SALE AND PURCHASE OF NOTES AND WARRANTS
(a) The Company agrees to sell to the Purchasers and,
subject to the terms and conditions hereof and in reliance upon the
representations and warranties of the Company contained herein or made pursuant
hereto, the Purchasers agree to purchase from the Company on the Closing Date
specified in Section 2 hereof, (i) a Note or Notes in the aggregate principal
amount set forth opposite such Purchaser's name on Exhibit A hereto and (ii) a
Warrant or Warrants for the number of shares of the Company's Common Stock set
forth opposite such Purchaser's name on Exhibit A. The aggregate purchase
price to be paid to the Company by the Purchasers for such Notes and such
Warrants is 100% of the principal amount of the Notes to be purchased by the
Purchasers,
<PAGE> 9
which amount will be allocated in accordance with Section 2(c) hereof.
(b) As used herein, "Notes" means the aggregate of
$23,000,000 principal amount of the Company's 13% Senior Subordinated Secured
Notes Due June 30, 2005, together with all Notes issued in exchange therefor or
replacement thereof. Each Note will be substantially in the form of the Note
set forth as Exhibit B hereto. Interest on the Notes shall accrue from the
Closing Date and shall be payable quarterly on the 30th day of December, March,
June and September of each year, commencing June 30, 1995 (which first interest
payment shall be for the period from and including the Closing Date specified
in Section 2 hereof through and including June 30, 1995) at the interest rates
and in the manner specified in the form of Note attached hereto as Exhibit B.
(c) If all or a portion of (i) the principal amount of the
Notes, (ii) the interest payable thereon or (iii) any fee or other amount
payable hereunder or under any other Loan Document shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the Default Rate from
the date of such nonpayment until paid in full (both before and after
judgment).
(d) As used herein, "Warrants" means the aggregate of
Common Stock Purchase Warrants evidenced by certificates substantially in the
form of Exhibit C hereto, together with all Warrants issued in exchange
therefor or replacement thereof. Such Warrants in the aggregate initially
entitle the holders thereof to purchase shares of Common Stock of the Company,
no par value, at a purchase price of $.01 per share, such number and such price
being subject to adjustment as provided in the form of Warrant attached hereto
as Exhibit C.
SECTION 2. THE CLOSING
(a) Subject to the terms and conditions hereof, the
closing (the "Closing") of the purchase and sale of the Notes and Warrants will
take place at the offices of Winston & Strawn,
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<PAGE> 10
located at 175 Water Street, New York, New York, at such time and date as shall
be mutually agreed to by the Company and the Purchasers. Such time and date
are herein referred to as the "Closing Date".
(b) Subject to the terms and conditions hereof, on the
Closing Date (i) the Company will deliver to each Purchaser (A) a Note or
Notes, substantially in the form of Exhibit B hereto, payable to such Purchaser
(or its nominee as notified to the Company), and dated the Closing Date, in the
aggregate principal amount set forth opposite such Purchaser's name on Exhibit
A, and (B) a Warrant or Warrants evidenced by certificates substantially in the
form of Exhibit C hereto and dated the Closing Date, for the number of shares
of the Company's Common Stock set forth opposite such Purchaser's name on
Exhibit A, and (ii) upon such Purchaser's receipt thereof, such Purchaser will
deliver to the Company by wire transfer an amount equal to the purchase price
for such Notes and Warrants (as specified in Section 1(a) hereof) payable to
the order of the Company in federal or other immediately available funds.
(c) The Purchasers acknowledge that the Notes and the
Warrants constitute an "investment unit" within the meaning of Section
1273(c)(2) of the Code and that the Company will allocate the "issue price"
(within the meaning of Section 1273(b) of the Code) of such investment unit,
for all Income Tax purposes, between the Notes and Warrants as follows: (i) the
price at which all of the Warrants were sold by the Company is $153,000 and
(ii) the price at which all of the Notes were sold was $22,847,000. Each
Purchaser agrees to abide by Treasury Regulation Section 1.1273-2(h)(2) with
respect to such allocation of the issue price.
SECTION 3. DEFINITIONS
(a) For purposes of the Loan Documents, the following
definitions shall apply (such definitions to be equally applicable to both the
singular and plural forms of the terms defined):
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<PAGE> 11
"Accountants" means Grant Thornton or another independent
certified public accounting firm selected by the Company and
reasonably satisfactory to the Purchasers.
"Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to
the Company arising out of the sale of goods or the rendition of
services by the Company, whether or not earned by performance, and any
and all credit insurance, guaranties, or security therefor.
"Acquisition" has the meaning set forth in the recitals.
"Acquisition Agreement" means the Asset Purchase Agreement
dated as of November 10, 1994 among J&L, TCI, the Shareholders, the
Company and CPT, including all exhibits, schedules and annexes
thereto, and all amendments, modifications and supplements thereof,
all as in effect on the Closing Date.
"Acquisition Documents" means, collectively, the Acquisition
Agreement, and all agreements, documents and instruments executed and
delivered in connection therewith, including all exhibits, annexes and
schedules thereto, the Employment Agreements and all other employment
contracts of the Company to be in effect on, or to be entered into on,
the Closing Date, any and all non-competition agreements between the
Company and Sellers and/or the Shareholders, and all amendments,
modifications and supplements thereof, as in effect on the Closing
Date.
"ADA" means the Americans with Disabilities Act of 1990 (42
U.S.C. Section 12101, et seq.) and all applicable rules,
regulations, codes, ordinances and guidance documents promulgated or
published thereunder.
"Advance" means any loan or advance by the Senior Lender with
respect to the Revolving Loan.
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<PAGE> 12
"Affiliate", when used with respect to any Person, means (i)
if such Person is a corporation, any officer or director thereof
(other than a director nominated by one of the Purchasers) and any
Person (other than one of the Purchasers) which is, directly or
indirectly, the beneficial owner of more than ten percent (10%) of the
Voting Stock thereof, and, if such beneficial owner is a partnership,
any partner thereof, or if such beneficial owner is a corporation, any
Person, directly or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such
beneficial owner, or any officer or director of such beneficial owner
or of any corporation occupying any such control relationship, (ii) if
such Person is a partnership, any partner thereof, (iii) in all cases,
any Person (other than one of the Purchasers) which, directly or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person, and (iv) in
all cases, any Person 10% or more of whose Voting Stock is
beneficially owned, directly or indirectly through one or more
intermediaries, by such Person. For purposes of this definition,
"control" (including the correlative terms "controlling", "controlled
by" and "under common control with"), with respect to any Person,
shall mean possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or
otherwise.
"Agent" has the meaning set forth in the recitals.
"Agreement" means this Agreement (together with exhibits and
schedules) as from time to time assigned, supplemented or amended or
as the terms hereof may be waived.
"Ascott Wing, Inc." means Ascott Wing, Inc., a Delaware
corporation, and its successors.
"Assigned Contracts" means the Acquisition Documents, all
agreements, documents and instruments executed in connection
therewith, and all of the Company's leases (other
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<PAGE> 13
than the Lease), contracts, permits, licenses (to the extent permitted
by applicable law or regulation), franchises, certificates and other
agreements, including, without limitation, the CCC/Borrower Agreement,
a certain Road and Utilities Agreement dated November 6, 1987 between
Breedlove Enterprises, Inc. (now J&L) and LTV Steel Company, Inc., as
amended and as assigned to the Company, the Initial Interest Rate Cap
Agreement and each interest rate contract subsequent thereto, the
Employment Agreement, the Operating Agreements and all agreements for
the provision of management.
"Bankruptcy Code" means the United States Bankruptcy Code and
any successor thereto, and the rules and regulations issued
thereunder.
"Board" or "Board of Directors" means, with respect to any
Person which is a corporation, a business trust or other entity, the
board of directors or other group, however designated, which is
charged with legal responsibility for the management of such Person,
or any committee of such board of directors or group, however
designated, which is authorized to exercise the power of such board or
group in respect of the matter in question.
"Brighton" means Brighton Electric Steel Casting Co., a
Delaware corporation, now known as J&L Holdings, Inc., a Delaware
corporation.
"Business" the business conducted by the Company of the
production of lightweight structural steel shapes, piercer points,
value-added finishing services relating thereto and all other
activities ancillary or related thereto.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banks in Phoenix, Arizona, Los Angeles, California,
New York, New York or Pittsburgh, Pennsylvania are required to close.
"Capital Expenditures" means for any period, the amount of all
payments made by the Company or a Subsidiary during
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<PAGE> 14
such period for the lease, purchase, improvement, construction or use
of any Property, the value or cost of which under GAAP is required to
be capitalized and appears on the Company's or any Subsidiary's
balance sheet in the category of property, plant or equipment, without
regard to the manner in which such payments or the instrument pursuant
to which they are made is characterized by the Company or any other
Person, and shall include, without limitation, the principal
components of payments for the installment purchase of Property and
payments under Capitalized Leases.
"Capital Expenditures Line" means that portion of the Term
Loan, in the principal amount of up to $3,000,000, which shall be made
available to the Company following the Closing for Capital
Expenditures.
"Capitalized Leases" means any lease to which the Company or a
Subsidiary is party as lessee, or by which it is bound, under which it
leases any property (real, personal or mixed) from any lessor other
than the Company or a Subsidiary, and which is required to be
capitalized in accordance with GAAP, but also including any such
lease, whether or not so capitalized, where the Company or a
Subsidiary is treated as the owner of the leased property under the
Code.
"Caster Property" means the Agreement of Sale dated December
28, 1993, as amended, between J&L and Beaver County Corporation
Economic Development Authority, together with the Escrow Agreement
executed in connection therewith and the $330,842.25 held in escrow
pursuant to such Escrow Agreement, each as assigned to CCC pursuant to
the CCC/Borrower Agreement.
"CCC" means Continuous Caster Corporation, a Delaware
corporation, and its successors.
"CCC/Borrower Agreement" means that certain agreement between
the Company and CCC in form and substance satisfactory to the
Purchasers, pursuant to which CCC agrees to pay to the Company,
concurrently with CCC's receipt
-7-
<PAGE> 15
thereof, all sums due CCC under a certain Agreement of Sale dated
December 28, 1993, as amended, between J&L and Beaver County
Corporation Economic Development Authority, and under the Escrow
Agreement executed in connection therewith, each as assigned to CCC.
"Change of Control Event" means each of the following events:
(i) a change of control of the Company or J&L Holdings;
(ii) the ownership by Ascott Wing of less than 20% of
the outstanding Voting Stock of CPT; or
(iii) the failure of William Remley and Richard Kramer
and their designees to constitute two-thirds of
the Board of Directors of CPT.
For purposes of this definition, a change of control of the
Company or J&L Holdings shall occur if any Person, or group of Persons
(other than the shareholders of the Company and J&L Holdings,
respectively, as of the Closing Date) acting in concert, in one or
more transactions, acquires beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Securities Exchange Act) of shares
of capital stock of the Company or J&L Holdings, as the case may be,
the ownership of which (i) entitles the holder(s) to cast more than
20% of the votes entitled to vote generally in the election of the
Board of Directors of the Company or J&L Holdings, as the case may be,
or (ii) prohibits the consolidation under the Code of CPT and J&L
Holdings with the Company and any current Subsidiaries.
"Claims" has the meaning set forth in the definition of
"Environmental Claim."
"Closing" has the meaning set forth in Section 2 hereof.
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<PAGE> 16
"Closing Date" has the meaning set forth in Section 2 hereof.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations and interpretations thereunder.
"Collateral" means the Property upon which the Agent is
granted the Security Interests, including, without limitation, the
Assigned Contracts, all Equipment, General Intangibles, Negotiable
Collateral, the Real Property, the Demised Premises assigned pursuant
to the Mortgage, the Company Stock, and all other such Property now
owned or hereafter acquired by the Company, whether tangible or
intangible and wherever located and all proceeds and products thereof
and all policies of insurance insuring the same, but not including
Inventory and Accounts.
"Collateral Assignment of Trademarks" means a Collateral
Assignment of Trademarks and Security Agreement, pursuant to which, in
confirmation of the terms hereof, the Company grants to the Agent a
Security Interest in all existing and after-acquired trademarks,
trademark registrations, trademark applications, service marks,
service mark registrations, service mark applications, trade names,
trade name registrations, and trade name applications, patents and
patent applications, and the goodwill related thereto, owned by the
Company, as security for the payment and performance of all of the
Company's obligations under the Loan Documents.
"Commission" means the Securities and Exchange Commission and
any other similar or successor agency of the federal government
administering the Securities Act or the Securities Exchange Act.
"Common Stock" means that class of stock or other equivalent
evidences of ownership of a corporation, the holders of which are
entitled to vote generally to elect the Board of Directors of such
corporation.
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<PAGE> 17
"Company" means J&L Structural, Inc., a Delaware corporation,
its successors and permitted assigns, formerly known as J&L
Acquisition Corp., a Delaware corporation.
"Company's Books" means all of the Company's books and records
including: ledgers; records indicating, summarizing, or evidencing the
Company's assets or liabilities or the Collateral; all information
relating to the Company's business, operations or financial condition;
and all computer programs, disc or tape files, printouts, runs, or
other computer prepared information, and the equipment containing such
information.
"Company's Obligations" means all loans, debts, principal,
interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), premiums, liabilities,
obligations (including the performance of the covenants of the Company
contained in the Loan Documents), fees, lease payments, guaranties,
covenants, and duties owing by the Company to the Purchasers or the
Agent of any kind and description (whether pursuant to or evidenced by
this Agreement, any of the other Loan Documents, or any other note or
other instrument, or by any other agreement between the Purchasers or
the Agent and the Company, and whether or not for the payment of
money), whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including any debt,
liability, or obligation owing from the Company to others that the
Purchasers or the Agent may have obtained by assignment or otherwise,
and further including all interest not paid when due.
"Company's Facilities" means all facilities operated by the
Company and located in the United States, a complete listing of which
is set forth on Schedule 2 hereto, together with all warehouse
facilities used by the Company in the operation of the Business.
"Company Stock" means, at any given time, all of the then
issued and outstanding capital stock in the Company.
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<PAGE> 18
"Consolidated" or "consolidated", when used with reference to
any financial term in this Agreement, means the aggregate for the
Company and its Subsidiaries of the amounts signified by such term for
all such Persons, with intercompany items eliminated, and, with
respect to earnings, after eliminating the portion of earnings
properly attributable to minority interests, if any, in the capital of
any such Person (other than in the capital of the Company) and
otherwise as determined in accordance with GAAP.
"Consolidated Cash Flow" means for any period, the
Consolidated Net Income plus each of the following items, to the
extent deducted from the revenues of the Company in the calculation of
net income for such period: (i) Depreciation; (ii) amortization and
other noncash charges; (iii) interest expense incurred and fees paid
to the Senior Lender pursuant to the Loan and Security Agreement; (iv)
Income Taxes determined as the accrued liability of the Company and
any Subsidiary in respect of such period, regardless of what portion
of such expense has actually been paid by the Company and any
Subsidiary during such period; (v) loss on the sale of property, plant
or equipment; and (vi) all management fees paid to CPT pursuant to the
Management Agreement and in compliance with the terms of the
Management Subordination Agreement; and after deduction for (A) Income
Taxes, to the extent actually paid during such period; (B) all noncash
income items recognized; (C) gain on the sale of property, plant or
equipment; and (D) all Maintenance Capital Expenditures paid by the
Company and any Subsidiary.
"Consolidated Liabilities" means, at any time, the total
liabilities of the Company and its Subsidiaries, determined in
accordance with GAAP and after eliminating inter-company transactions
among the Company and its Subsidiaries.
"Consolidated Net Income" means, for any period for which the
amount thereof is to be determined, the net income (net of any losses
or expenses) or loss of the Company and
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<PAGE> 19
its Subsidiaries on a consolidated basis, during such period (such net
income to be determined in accordance with GAAP) after Income Taxes
actually paid, but excluding:
(i) the earnings during such period of any Person to
which the assets of the Company or any Subsidiary
shall have been sold, transferred or disposed of,
or into which the Company or such Subsidiary shall
have merged, prior to the date of such
transaction;
(ii) any extraordinary gain or loss during such period
arising from the sale, exchange or other
disposition of capital assets (such term to
include all fixed assets, whether tangible or
intangible, and all inventory sold in conjunction
with the disposition of fixed assets);
(iii) any gain or loss during such period arising from
the write-up or write-down of any asset; and
(iv) any earnings or gains during such period resulting
from the receipt of any proceeds of any life
insurance policy.
"Consolidated Tangible Assets" means, at any time, the total
assets of the Company and its Subsidiaries determined in accordance
with GAAP excluding deferred assets, patents, copyrights, trademarks,
goodwill and other General Intangibles, and Investments.
"Consolidated Tangible Net Worth" means, at any time,
Consolidated Tangible Assets minus Consolidated Liabilities.
"Consolidated Total Capitalization" means, at any time, the
sum of Consolidated Tangible Net Worth plus Consolidated Total
Indebtedness.
"Consolidated Total Indebtedness" means, at any time, the
aggregate amount of Indebtedness of the Company and its
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<PAGE> 20
Subsidiaries after eliminating intercompany transactions among the
Company and its Subsidiaries.
"Contractual Senior Debt Service" means, for any period, the
sum of payments made or required to be made by the Company during such
period for the following: (i) principal and interest due on the Term
Loan (but excluding any prepayment under Section 2.9.2 of the Loan and
Security Agreement and excluding any repayments of Subsequent
Advances, as that term is defined in the Loan and Security Agreement,
prior to the Capital Expenditure Line Borrowing Termination Date (as
defined in the Loan and Security Agreement)); (ii) fees payable to the
Senior Lender pursuant to the Loan and Security Agreement; (iii)
interest due on the Revolving Loan; and (iv) principal and interest
due on any other Permitted Senior Indebtedness.
"Contractual Total Debt Service" means for any period, the sum
of payments made (or, as to clause (i) of this sentence, required to
be made) by the Company during such period for the following: (i)
Contractual Senior Debt Service; (ii) interest payments made on the
Notes and interest and principal payments made on the State Debt; and
(iii) management fees paid to CPT.
"Contribution" means the contribution to the Company by J&L
Holdings of not less than Six Million Nine Hundred Thousand Dollars
($6,900,000) in cash and all of the assets and properties constituting
Brighton (other than the capital stock of the Company and CCC).
"Contribution Documents" means all agreements, documents and
instruments, together with all exhibits, schedules and annexes
thereto, pursuant to which the Contribution is effected, including,
without limitation, a certain J&L Structural, Inc. Subscription
Agreement for Common Stock dated as of the Closing Date executed by
J&L Holdings, together with related transfer documents including a
certain Bill of Sale dated as the date of the Closing executed by J&L
Holdings in favor of the Company, a certain Assignment and Assumption
Agreement dated as of the date of
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<PAGE> 21
the Closing Date between J&L Holdings and the Company, and a certain
Deed dated the date of the Closing executed by J&L Holdings in favor
of the Company, all as in effect on the date hereof.
"CPT" means CPT Holdings, Inc., a Minnesota corporation, and
its successors.
"Deemed Divided" means any dividend described in the proviso to
clause (i) of the definition of Restricted Payment.
"Default Rate" means a per annum rate equal to the interest
rate on the Notes plus four percent (4%).
"Demised Premises" means those certain properties located in
Ambridge, Pennsylvania, in which the Company holds a leasehold estate,
all of which shall be encumbered in favor of the Agent pursuant to the
Mortgage, as more fully described on Exhibit D attached hereto.
"Depreciation" means, in respect of any period, all
depreciation on Property taken during such period, as determined in
accordance with GAAP.
"Disclosure Material" has the meaning set forth in Section
4.6(a) hereof.
"Employment Agreements" means collectively, the Employment
Agreement dated the Closing Date between the Company and Howell A.
Breedlove, the Employment Agreement dated the Closing Date between the
Company and James E. Howe, and the Employment Agreement dated the
Closing Date between the Company and Carl A. Snyder.
"Environment" means all air, surface water, groundwater, or
land, including land surface or subsurface, including all fish,
wildlife, biota and all other natural resources.
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<PAGE> 22
"Environmental Auditors" has the meaning set forth in Section
7.12 hereto.
"Environmental Claim" means any and all administrative or
judicial actions, suits, orders, claims, liens, notices, notices of
violations, investigations, complaints, requests for information,
proceedings, or other communication (written or oral), whether
criminal or civil, (collectively, "Claims") pursuant to or relating to
any applicable Environmental Law by any person (including but not
limited to any Governmental or Regulatory Authority, private person
and citizens' group) based upon, alleging, asserting, or claiming any
actual or potential (i) violation of or liability under any
Environmental Law, (ii) violation of any Environmental Permit, or
(iii) liability for investigatory costs, cleanup costs, removal costs,
remedial costs, response costs, natural resource damages, property
damage, personal injury, fines, or penalties arising out of, based on,
resulting from, or related to the presence, or Release into the
Environment, of any Hazardous Materials at any location, including but
not limited to any off-site location to which Hazardous Materials or
materials containing Hazardous Materials were sent for handling,
storage, treatment, or disposal.
"Environmental Clean-up Site" means any location which is
listed or proposed for listing on the National Priorities List, the
Comprehensive Environmental Response, Compensation and Liability
Information System, or on any similar state list of sites requiring
investigation or cleanup, or which is the subject of any pending or
threatened action, suit, proceeding, or investigation related to or
arising from any alleged violation of any Environmental Law or the
presence or Release of a Hazardous Material.
"Environmental Law" means any and all current and future,
federal, state, local, provincial and foreign, civil and criminal
laws, statutes, ordinances, orders, codes, rules, regulations,
Environmental Permits, policies, guidance documents, judgments,
decrees, injunctions, or agreements with any Governmental or
Regulatory Authority, relating to the protection of health and the
Environment,
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<PAGE> 23
worker health and safety, and/or governing the handling, use,
generation, treatment, storage, transportation, disposal, manufacture,
distribution, formulation, packaging, labeling, or Release of
Hazardous Materials, whether now existing or subsequently amended or
enacted, including but not limited to: the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section
9601 et seq.; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Hazardous Material Transportation Act 49
U.S.C. Section 1801 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act 7 U.S.C. Section 136 et seq.; the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901
et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq.; the Occupational Safety & Health Act of 1970, 29 U.S.C. Section
651 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et
seq.; and the state analogies thereto, all as amended or superseded
from time to time; and any common law doctrine, including but not
limited to, negligence, nuisance, trespass, personal injury, or
property damage related to or arising out of the presence, Release, or
exposure to a Hazardous Material.
"Environmental Permit" means any federal, state, local,
provincial, or foreign permits, licenses, approvals, consents or
authorizations required by any Governmental or Regulatory Authority
under or in connection with any Environmental Law and includes any and
all orders, consent orders or binding agreements issued or entered
into by a Governmental or Regulatory Authority under any applicable
Environmental Law.
"Equipment" means all of the Company's and any Subsidiary's
machinery, equipment, office machinery, supplies, furniture,
furnishings, fixtures, conveyors, tools, parts, materials, storage and
handling equipment, including, but not limited to, computer equipment
and hardware, including central processing units, terminals, drives,
memory units, printers, keyboards, screens, peripherals and input or
output devices, automotive equipment, trucks, goods (other than
consumer goods, farm
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<PAGE> 24
products or Inventory), motor vehicles, and other equipment of every
kind and nature and wherever situated, now or hereafter owned by the
Company or a Subsidiary in which the Company or a Subsidiary may have
any interest (to the extent of such interest), together with all
additions and accessions thereto, all replacements and all accessories
and parts therefor, all manuals, blueprints, know-how, warranties and
records in connection therewith, all rights against suppliers,
warrantors, manufacturers, sellers or others in connection therewith,
and together with all substitutions for any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, or any successor statute.
"ERISA Affiliate" means each "person" (as defined in Section
3(9) of ERISA) which is under "common control" with the Company or any
of its Subsidiaries (within the meaning of Section 414(b), (c), (m) or
(o) of the Code).
"Event of Default" has the meaning set forth in Section 14
hereof.
"Excess Availability" means, as of the date of determination
thereof, the amount by which the total Advances that the Company would
be permitted to have outstanding, based on the formulas and reserves
set forth in Section 2.2.1 of the Loan and Security Agreement, exceeds
the sum of the Advances then actually outstanding.
"Excess Cash Flow" means, for any period, Consolidated Cash
Flow for such period less Contractual Total Debt Service for such
period.
"Existing Indebtedness" means the Indebtedness just prior to
the Closing of J&L and Brighton to Pittsburgh National Bank and
Sunderland Industrial Holding Corporation.
"Fair Market Value" of any property means the fair market sale
value which a willing buyer at retail would pay
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<PAGE> 25
a willing seller, each under no compulsion to buy or sell and in full
possession of all relevant facts.
"Fourteenth Street Corporation" means Fourteenth Street
Corporation, a Pennsylvania corporation.
"GAAP" means generally accepted accounting principles, as in
effect from time to time, which shall include the official
interpretations thereof by the Financial Accounting Standards Board or
any successor thereto, consistently applied.
"General Intangibles" means all of the Company's and any
Subsidiary's present and future general intangibles and other personal
Property (including without limitation, any and all rights of the
Company and any Subsidiary to all choses or things in action, tax
refund claims, credits, claims, demands, goodwill, licenses, franchise
agreements, subscription costs, patents, trade names, trademarks,
service marks, the Intellectual Property, copyrights, rights to
royalties, blueprints, drawings, customer lists, purchase orders,
computer programs, computer discs, computer tapes, literature,
reports, catalogs, methods, sales literature, video tapes,
confidential information and trade secrets, consulting agreements,
employment agreements, leasehold interests in real and personal
Property (other than those leases subject to the Mortgage), insurance
policies, deposits with insurers relating to workers' compensation
liabilities, deposit accounts, tax refunds and proprietary rights in
any Equipment), other than "Equipment," "Inventory," "Accounts" and
"Negotiable Collateral," as each such terms is defined in the Uniform
Commercial Code, as well as the Company's and any Subsidiary's books
and records of any kind relating to any of the foregoing, and all
products and proceeds of the foregoing.
"Governmental Body" means any foreign, federal, state,
municipal or other government, any department, commission, board,
bureau, agency, public authority instrumentality thereof or any court
or arbitrator.
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<PAGE> 26
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political
subdivision.
"Hazardous Materials" means petroleum, petroleum hydrocarbons
or petroleum products, petroleum by-products, radioactive materials,
underground storage tanks, asbestos or asbestos-containing materials,
gasoline, diesel fuel, pesticides, radon, urea formaldehyde, lead or
lead-containing materials, polychlorinated biphenyls, ionizing and
non- ionizing radiation including radon and electromagnetic frequency
radiation; and any other chemicals, materials, substances or wastes in
any amount or concentration which are now or hereafter become defined
as or included in the definition of "hazardous substances," "hazardous
materials," "hazardous wastes," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"pollutants," "regulated substances," "solid wastes," or
"contaminants" or words of similar import, under any Environmental
Law.
"Income Taxes" means all federal, state, local or foreign net
or gross income, gross receipts, net proceeds, franchise, bank shares,
withholding, payroll, employment, alternative or add-on minimum,
environmental or other taxes, assessments, duties, fees, levies or
other governmental charges of any nature whatever, whether disputed or
not, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
"Indebtedness" means all liabilities, obligations and
reserves, contingent or otherwise, which in accordance with GAAP,
would be reflected as a liability on a balance sheet or would be
required to be disclosed in a financial statement, including, without
duplication: (i) all Indebtedness for Borrowed Money, (ii) all
obligations secured by any Lien upon Property owned by the Company,
irrespective of whether such obligation or liability is assumed; (iii)
any obligation of the Company guaranteeing or
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<PAGE> 27
intended to guarantee (whether guaranteed, endorsed, co-made,
discounted, or sold with recourse to the Company, but exclusive of
obligations arising as the result of the endorsement by the Company of
checks or other negotiable instruments in the ordinary course of the
Company's business for purposes of depositing such items) any
indebtedness, lease, dividend, letter of credit, or other obligation
of any other Person; and (iv) liabilities in respect of unfunded
vested benefits under any Single Employer Plan or in respect of
withdrawal liabilities incurred under ERISA by the Company or any
ERISA Affiliate to any Multiemployer Plan, other than in respect to
the Withdrawal Liability.
"Indebtedness for Borrowed Money" means without duplication,
all Indebtedness (i) in respect of money borrowed, (ii) evidenced by a
note, debenture or other like written obligation to pay money
(including, without limitation, all of the Company's Obligations; the
Permitted Senior Indebtedness, and any Permitted Subordinated
Indebtedness), and all reimbursement or other obligations of the
Company in respect of letters of credit, letter of credit guaranties,
bankers acceptances, interest rate swaps, controlled disbursement
accounts, or other financial products; (iii) in respect of Capitalized
Leases or for the deferred purchase price of Property (other than
trade payables arising in the ordinary course of business that are not
represented by promissory notes or by other written evidence other
than invoices); or (iv) in respect of obligations under conditional
sales or other title retention agreements, and all guaranties of any
or all of the foregoing.
"Initial Interest Rate Cap Agreement" means an interest rate
cap agreement, in a form, and with a counterparty, acceptable to the
Senior Lender, pursuant to which $16,500,000 of the total amount of
the Term Loan is, during the first two Loan Years, protected against
increases in the Prime Rate, to the extent the Prime Rate exceeds 12%
per annum.
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<PAGE> 28
"Intellectual Property" means collectively, the Trademarks and
all patents, copyrights, trade secrets, software, etc. of the Company
and the goodwill related thereto.
"Internal Rate of Return" has the meaning set forth in the
definition of "Special Premium".
"Inventory" means all present and future inventory in which
the Company has any interest, including, but without limitation, all
goods intended for sale, lease or other disposition by the Company, or
to be furnished under a contract of service, and all of the Company's
present and future raw materials, work in process, finished goods,
goods consigned to the Company to the extent of its interest therein
as consignee, materials and supplies of any kind, nature or
description which are or might be used in connection with the packing,
shipping, advertising, selling or finishing of any such goods, all
documents of title or documents representing the same, and all
records, files and writings with respect to any of the foregoing.
"Investment" means, with respect to any Person:
(i) the amount paid or committed to be paid, or the value
of property or services contributed or committed to
be contributed, by the Company for or in connection
with the acquisition by the Company of any stock,
bonds, notes, debentures, partnership or other
ownership interests or other securities of such
Person; and
(ii) the amount of any advance, loan or extension of
credit to, or guaranty or other similar obligation
with respect to any Indebtedness of such Person by
the Company and (without duplication) any amount
committed to be advanced, loaned, or extended to, or
the payment of which is committed to be assured by a
guaranty or similar obligation for the benefit of,
such Person by the Company.
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<PAGE> 29
"J&L" means J&L Structural, Inc., a Pennsylvania corporation.
"J&L Holdings" means J&L Holdings Corp., a Delaware
corporation, and its successors and permitted assigns.
"Joint Venture" means a corporation, limited partnership or
other limited liability business entity, formed in the ordinary course
of business by the Company or any Subsidiary with Persons other than
Affiliates.
"Landlord's Consent" means collectively, a landlord's consent,
agreement and estoppel certificate, in form and substance satisfactory
to the Purchasers, to be delivered to the Agent from the landlord of
each of the leases which is to be encumbered by the Agent pursuant to
the Mortgage.
"L/C's" means letters of credit issued pursuant to Section 2.3
of the Loan and Security Agreement.
"Lease" means the Lease dated the Closing Date, executed by
Fourteenth Street Corporation, as Lessor, and the Company, as Lessee.
"Licenses" means the meaning set forth in the Collateral
Assignment of Trademarks.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security interest of any kind or nature
whatsoever (including, without limitation, any conditional sale or
other title retention agreement and any financing lease or Capitalized
Lease having substantially the same effect as any of the foregoing and
any assignment or other conveyance of any right to receive income).
"Loan Document(s)" means, collectively, the
(i) Agreement;
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<PAGE> 30
(ii) Notes;
(iii) Mortgage;
(iv) Warrants;
(v) Landlord's Consent;
(vi) Non-Disturbance Agreement;
(vii) Stock Pledge Agreement, including blank Stock
Powers and Assignments Apart from Certificate,
executed by J&L Holdings with respect to the shares
of the Company pledged thereby;
(viii) Collateral Assignment of Trademarks;
(ix) Subordination and Intercreditor Agreement;
(x) Management Subordination Agreement;
(xi) Loan and Security Agreement;
(xii) Certificate executed by an Authorized Officer of the
Company stating that the Company is "Solvent" (as
defined in Section 4.24 hereof);
(xiii) Pay-off Letter;
(xiv) Uniform Commercial Code financing statements; and
(xv) such other instruments and documents as Purchasers
may require to evidence and perfect the Security
Interests and the Notes,
and individually, any one of them.
As to each of the foregoing, together with all alterations,
amendments, changes, extensions, modifications, refinancings,
refundings, renewals, replacements, restatements or supplements
thereto.
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<PAGE> 31
"Loan and Security Agreement" means the Loan and Security
Agreement, dated March 31, 1995, effective the date hereof, between
the Company and the Senior Lender.
"Loan Year" means a period from the Closing Date or any annual
anniversary of the Closing Date through the day preceding the
immediately succeeding annual anniversary of the Closing Date.
"Maintenance Capital Expenditures" has the meaning set forth in
Section 8.14 hereof.
"Majority Noteholders" means the holders of Notes evidencing
more than 50% of the principal amount of all Notes then outstanding.
"Make Whole Premium" means, in connection with any prepayment
of a Note, the amount equal to the excess, if any, of:
(a) the sum (without duplication) of the Present Values (as
hereinafter defined) of (1) the principal amount of the Note being
prepaid (assuming the required prepayments pursuant to Section 6.1
hereof and the principal balance of such Note payable upon maturity
are paid when due) and (2) the amount of interest that would have been
payable on each repayment date pursuant to Section 6.1 hereof on the
amount of such principal being prepaid (assuming (x) such required
prepayments pursuant to Section 6.1 hereof, the principal of such Note
payable upon maturity and interest payments, are paid when due and (y)
the principal amount of the Note being prepaid is allocated
proportionately to each required prepayment pursuant to Section 6.1
hereof and the amount payable upon maturity), over
(b) the principal amount of the Note being prepaid.
For purposes of this definition, (i) "Present Value" shall be
determined in accordance with generally accepted financial practice on
a quarterly basis at a discount rate equal to the sum of the Treasury
Yield plus 150 basis
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<PAGE> 32
points; (ii) "Treasury Yield" for such purchase shall be determined by
reference to the most recent Federal Reserve Statistical Release
H.15(519) (or if such Statistical Release is no longer published, any
publicly available source of similar market data as designated by the
holders of a majority of the aggregate unpaid principal amount of all
Notes outstanding) that became publicly available on the Saturday next
preceding the date of the proposed redemption and shall be the
arithmetic average of the two most recent average yields on actively
traded marketable United States Treasury fixed interest rate
securities having a maturity equal to the then-remaining Weighted
Average Life to Maturity of the Notes as of the date of the proposed
redemption; provided that if such Weighted Average Life to Maturity is
not equal to the maturity of any actively traded United States
Treasury fixed interest rate security as set forth in said Statistical
Release (or said substitute source of market data), such yield shall
be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the yields of actively traded United
States Treasury fixed interest rate securities set forth in said
Statistical Release (or said substitute source of market data) having
a maturity closest to such Weighted Average Life to Maturity, (iii)
"Weighted Average Life to Maturity" of any Note means, as at the time
of determination thereof, the number of years obtained by dividing the
then Remaining Dollar Years of such Note by the then outstanding
principal amount of such Note, and (iv) "Remaining Dollar-Years" of
such Note means the amount obtained by (A) multiplying each of the
principal amounts thereof (including any additions thereto) that would
be outstanding on each succeeding mandatory prepayment date set forth
in Section 6.1 by the number of years (calculated at the nearest
one-twelfth) which will elapse between the date of determination and
the scheduled date of prepayment and (B) totaling all the products
obtained in the foregoing clause (A).
"Management Agreement" means that certain Management Advisory
Services Agreement effective as of the Closing Date, 1995 among CPT,
J&L Holdings and the Company, as in effect on the date hereof.
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<PAGE> 33
"Management Expenses" means sums actually expended by CPT as
reasonable and necessary expenses incurred in connection with CPT's
performance of duties for which management fees are paid or payable to
CPT under the Management Agreement.
"Management Subordination Agreement" means that certain
Management Subordination Agreement of even date herewith by and among
the Purchasers, the Company, J&L Holdings and CPT, pursuant to which
the payment by the Company to CPT of all amounts due CPT under or
arising out of the Management Agreement (other than amounts due as
payment or reimbursement for Management Expenses) shall be made subject
and subordinate to the prior payment in full of the Company's
Obligations in the manner provided therein.
"Mill-Related Assets" means "essential" mill-related assets,
i.e., material components in the portion of the Business relating to
the rolling of steel shapes.
"Mill-Related Indebtedness" means Capitalized Leases covering
Mill-Related Assets and Indebtedness secured by Mill- Related PMSIs, in
each case incurred only if, after giving effect thereto: (i) no
Potential Default or Event of Default would exist under this Agreement,
including, without limitation, the limit on Capital Expenditures set
forth in Section 8.14 would not be breached, (ii) the aggregate
outstanding principal amount of such Indebtedness would not at any time
exceed $1,500,000, and (iii) such Indebtedness would be financed by
Senior Lender.
"Mill-Related PMSI(s)" means purchase money security interests,
conditional sale arrangements and other similar security interests on
Mill-Related Assets; provided, however, that:
(i) Each Mill-Related PMSI shall attach only to the asset
or property acquired in such transaction and shall not
extend or cover any other assets or properties of the
Company; and
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<PAGE> 34
(ii) The Indebtedness secured or covered by any Mill
Related PMSI shall not exceed eighty percent (80%) of
the purchase price or cost of the asset or property
acquired.
"Mortgage" means that certain Mortgage pursuant to which the
Company shall grant to the Agent a second priority lien on and Security
Interest in the Real Estate and all improvements thereon and in the
Demised Premises and all Improvements thereon. In connection with the
Company's execution and delivery of the Mortgage, the Company shall
provide the Purchasers with a Landlord's Consent executed by the
landlord with respect to the Demised Premises.
"Multiemployer Plan" shall mean any multiemployer plan (within
the meaning of section 3(37) of ERISA) to which either the Company, any
Subsidiary, or any ERISA Affiliate has an obligation to contribute.
"Negotiable Collateral" means all of the Company's present and
future letters of credit, notes, drafts, instruments, documents,
personal property leases (wherein the Company is the lessor), chattel
paper, and the Company's Books relating to any of the foregoing.
"NOL" means net operating loss carry forwards under the Code of
CPT and available to offset taxable income earned by the Company.
"Non-Disturbance Agreement" means, collectively, a
Non-Disturbance, Subordination and Attornment Agreement to be entered
into between the Agent and each holder of a monetary encumbrance
affecting any portion of the Demised Premises.
"Non-Mill Related Assets" means "non-essential" non-mill
related assets such as office furniture, computer equipment, computer
software, telephone systems and copier machines, mobile and conveyance
equipment and non-mill real estate and improvements thereon.
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<PAGE> 35
"Non-Mill Related Indebtedness" means Capitalized Leases
relating to Non-Mill Related Assets and Indebtedness secured by
Non-Mill Related PMSIs, in each case incurred only if, after giving
effect thereto: (i) no Potential Default or Event of Default would
exist under this Agreement, including, without limitation, the limit on
Capital Expenditures set forth in Section 8.14 would not be breached,
and (ii) the aggregate outstanding principal amount of such
Indebtedness would not at any time exceed $1,500,000.
"Non-Mill Related PMSI(s)" means purchase money security
interests, conditional sale arrangements and other similar security
interests on Non-Mill Related Assets; provided, however, that:
(i) Each Non-Mill Related PMSI shall attach only to the
asset or property acquired in such transaction and
shall not extend or cover any other assets or
properties of the Company; and
(ii) The Indebtedness secured or covered by any Non-Mill
Related PMSI shall not exceed eighty percent (80%) of
the purchase price or cost of the asset or property
acquired.
"Note" or "Notes" has the meaning set forth in Section l(b)
hereof.
"Operating Agreement" means any site lease, license, equipment
lease, collective bargaining agreement, servicing agreement, service
mark, trademark, permit, Governmental Body approval or other agreement
of material importance relating to the operation of the Business.
"Outstanding" or "outstanding" means, when used with reference
to the Notes or Warrants as of a particular time, all Notes or
Warrants, as the case may be, theretofore duly issued except (i) Notes
or Warrants theretofore reported as lost, stolen, mutilated or
destroyed or surrendered for transfer, exchange or replacement, in
respect of which new
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<PAGE> 36
or replacement Notes or Warrants have been issued by the Company, (ii)
Notes theretofore paid in full, (iii) Warrants theretofore fully
exercised and (iv) Notes theretofore cancelled by the Company, whether
upon exercise of a Warrant in whole or in part or otherwise; except
that for the purpose of determining whether holders of the requisite
principal amount of Notes or Warrants have made or concurred in any
declaration, waiver, consent, approval, notice, annulment of
acceleration or other communication under this Agreement or under any
Notes or Warrants, Notes or Warrants registered in the name of, as well
as Notes or Warrants owned beneficially by, the Company, any Subsidiary
or any of their Affiliates (other than one of the Purchasers) shall not
be deemed to be outstanding.
"Pay-off Letter" means a pay-off letter from the holder of
Existing Indebtedness, in form and substance satisfactory to the
Purchasers.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means any of the following Liens:
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness Liens;
(iii) Liens for taxes or assessments, judgments that are
bonded or stayed pending appeal and similar charges,
which either are (A) not delinquent or (B) being
contested diligently and in good faith by appropriate
proceedings, and as to which the Company has set aside
reserves on its books which are reasonably
satisfactory to the Purchasers;
(iv) statutory and common law Liens, such as mechanic's,
materialman's, warehouseman's, carrier's or other like
Liens, incurred in good faith in the ordinary course
of business, provided that the underlying obligations
relating to such Liens are paid in the ordinary course
of
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business or the repayment of such obligations is
otherwise secured in a manner satisfactory to the
Purchasers;
(v) zoning ordinances and, to the extent acceptable to the
Purchasers, easements, licenses, reservations,
provisions, covenants, conditions and other title
exceptions;
(vi) Liens to secure payment of insurance premiums (A) to
be paid in accordance with applicable laws in the
ordinary course of business relating to payment of
workers' compensation, or (B) that are required for
the participation in any fund in connection with
workers' compensation, unemployment insurance, old age
pensions or other social security programs; and
(vii) Subordinated Indebtedness Liens.
"Permitted Prior Liens" means
(i) the Permitted Liens described in clauses (ii) of the
definition of Permitted Liens;
(ii) the Permitted Liens described in clauses (iii) and
(iv) of such definition that are accorded priority to
the Security Interests by law; and
(iii) the Permitted Liens described in clauses (v) and (vi)
of such definition, subject to the limitations set
forth therein.
"Permitted Senior Indebtedness" shall mean (i) Senior
Indebtedness, (ii) Non-Mill Related Indebtedness, (iii) Mill Related
Indebtedness, and (iv) the interests of the lessor under any
Capitalized Leases permitted to exist hereunder.
"Permitted Senior Indebtedness Liens" shall mean the (i) Senior
Security Interests, (ii) Non-Mill Related PMSIs, (iii) Mill Related
PMSIs, and (iv) the interests of the
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lessor under any Capitalized Leases permitted to exist hereunder.
"Permitted Subordinated Indebtedness" shall mean (i) management
fees payable to CPT pursuant to the Management Agreement and (ii) State
Debt.
"Person" or "person" means an individual, corporation,
partnership, firm, association, trust, unincorporated organization,
government, governmental body or political subdivision thereof.
"Plan" shall mean any employee benefit plan (within the meaning
of section 3(3) of ERISA) maintained or contributed to by the Company,
any Subsidiary, or any ERISA Affiliate, other than a Multiemployer
Plan.
"Potential Default" means a condition or event which, with
notice or lapse of time or both, would constitute an Event of Default.
"Prime Rate" means that rate of interest announced publicly by
Citibank, N.A., New York, New York, as its base borrowing rate, as it
exists from time to time, notwithstanding the fact that some persons
may borrow money at less than the Prime Rate.
"Property" means all types of real, personal or mixed property
and all types of tangible or intangible property.
"Purchaser(s)" has the meaning set forth in the recitals.
"Put Note" has the meaning set forth in Section 6(c) of the
Repurchase Agreement.
"Qualified Depository" means a member bank of the Federal
Reserve System having a combined capital and surplus of at least
$100,000,000.
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"Real Estate" means all real estate and improvements located
thereon owned by the Company, all of which shall constitute a portion
of the Collateral and which shall be encumbered by the Mortgage,
specifically being those certain parcels located in Aliquippa, PA and
Beaver Falls, PA, as legally described on Exhibit G hereto and by this
reference made a part hereof.
"Real Property" means collectively, the Demised Premises and
the Real Estate.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing of a Hazardous Material into the Environment.
"Reportable Event" shall mean, with respect to any Single
Employer Plan, an event described in section 4043(b) of ERISA, other
than an event as to which the notice requirement is waived under
applicable PBGC regulations.
"Repurchase Agreement" means the Repurchase Agreement, dated as
of the Closing Date among the Company, CPT and the Purchases.
"Restricted Payment" means (i) every direct or indirect
dividend or other distribution paid, made or declared by the Company or
any Subsidiary on or in respect of any class of its capital stock or in
respect of any partnership or Joint Venture, in all cases whether now
or hereafter outstanding, interests and any payment under or with
respect to anti- dilution provisions of any capital stock of the
Company or any
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<PAGE> 40
Subsidiary (provided, however, that none of the Company nor any
Subsidiary shall be considered to have made a Restricted Payment to the
extent that such entity have been deemed, solely for federal income tax
purposes, to have made a distribution with respect to its stock by
reason of the application of the second sentence of Treasury Regulation
Section 1.1552-1(b)(2)), (ii) every payment in connection with the
redemption, purchase, retirement or other acquisition, direct or
indirect, by or on behalf of the Company or any Subsidiary of any
shares of the Company's or a Subsidiary's capital stock, whether or not
owned by the Company or any Subsidiary or any partnership or Joint
Venture interests of the Company or any Subsidiary, or any warrants,
rights or options to acquire such stock or partnership interests, (iii)
every payment to or on behalf of any Affiliate of the Company or of any
Subsidiary on account of or with respect to any lease arrangements
(except for the Lease) and (iv) every payment by or on behalf of the
Company or any Subsidiary (whether as repayment or prepayment of
principal or as interest or otherwise) on or with respect to (A) any
obligation to repay money borrowed (other than the Notes) owing to any
Affiliate of the Company or of any Subsidiary or to any other holder of
shares of the Company's Common Stock (other than such a holder which
holds only Shares) or (B) any obligation, to any Person, of any
Affiliate of the Company or of any Subsidiary or of any other holder of
shares of the Company's Common Stock, which obligation is assumed or
guaranteed by the Company or a Subsidiary; provided, however, (a) that
the restrictions of the foregoing clauses (i) and (ii) shall not apply
to any dividend, distribution, or other payment to the extent payable
in shares of the Common Stock of the Company or in options, warrants or
other rights to purchase such Common Stock, (b) that none of the
foregoing clauses shall apply to any payments from a Subsidiary to the
Company, (c) that none of the foregoing clauses shall apply to any
purchases by the Company from a Wholly-Owned Subsidiary of additional
capital stock of such Subsidiary, (d) that none of the foregoing
clauses shall apply to any payments, distributions or other transfers
or actions on or with respect to the Notes or Warrants or pursuant to
the Repurchase Agreement, (e) that none of the foregoing clauses shall
apply to any cash dividends paid by the Company to J&L Holdings in an
amount sufficient to enable CPT, as the consolidated taxpayer for
itself, J&L Holdings and the Company, if applicable, to pay taxes when
due, provided that such dividends are so used within 30 days of the
receipt thereof and shall not exceed the separate tax liability of the
Company if it were the taxpayer and (f) a dividend by the Company to
J&L Holdings of the Caster Property. For purposes of this definition,
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"capital stock" shall also include warrants (other than the Warrants)
and other rights and options to acquire shares of capital stock.
"Revolving Loan" means the revolving loan provided to the
Company by the Senior Lender as provided in Section 2.2 of the Loan and
Security Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules, regulations and interpretations thereunder.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules, regulations and interpretations
thereunder.
"Security Interests" means the Liens granted to the Purchasers
pursuant to the Loan Documents.
"Sellers" means J&L and TCI.
"Senior Indebtedness" means (i) (A) until the Determination
Date (as defined in the Repurchase Agreement), Senior Debt as defined
in the Subordination and Intercreditor Agreement, and (B) thereafter
all amounts (including without limitation, principal, interest, fees,
premiums, penalties, charges of every kind and nature, but excluding
any fees, premiums, penalties or charges which are the equivalent of,
or in lieu of, an equity interest in or equity-related kicker with
respect to the Company) owing from time to time by the Company under
and pursuant to the Loan and Security Agreement (and the related Loan
Documents as defined therein), as in effect on the date hereof or
amended as permitted by the Subordination and Intercreditor Agreement
so that the obligations thereunder constitute "Senior Debt" and (ii) on
or after March 31, 1996, other Indebtedness provided that on the date
when it is incurred the covenants set forth in Sections 8.22 and 8.23
hereof would have been satisfied for each of the three calendar month
quarterly periods during the twelve calendar months next preceding such
date assuming such Indebtedness had been
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outstanding throughout such twelve-month period, and provided that for
this purpose the required ratio in Section 8.22 is 1.60:1.00 and in
Section 8.23 is 1.25:1.00.
"Senior Lender" means FINOVA Capital Corporation, a Delaware
corporation, and its successors and assigns.
"Senior Security Interests" means (i) Liens granted to the
Senior Lenders pursuant to the Loan and Security Agreement and certain
"Loan Documents" (as defined in the Loan and Security Agreement), as in
effect on the date hereof or amended as permitted by the Subordination
and Intercreditor Agreement so that the obligations thereunder
constitute "Senior Debt" and (ii) Liens granted in connection with any
other Senior Indebtedness.
"Share" or "Shares" means shares of the Company's Common Stock,
or other securities, which can be obtained or have been obtained by an
exercise in whole or in part of any Warrant or are obtained upon an
exchange of Shares pursuant to the terms of a Warrant.
"Shareholder(s)" means, collectively, Howell A. Breedlove,
James E. Howe and Carl A. Snyder, and individually, any one of them.
"Single Employer Plan" shall mean any Plan that is subject to
Title IV of ERISA.
"Site" means any of the real properties (including all soil,
subsoil, surface waters, groundwater and improvements thereat)
currently or previously owned, leased, operated or otherwise used by
the Company, TCI, Brighton, J&L, or any Subsidiary, or any entity
previously owned by the Company, TCI, Brighton, J&L, or any Subsidiary.
"Solvent" has the meaning set forth in Section 4.24 hereto.
"Special Premium" means, with respect to a prepayment of the
Notes, an amount necessary to achieve an Internal
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Rate of Return of 20% for the holders of the Notes on the prepaid
amount, on the assumption that such holders had held the Notes so
prepaid continuously since the Closing Date. For purposes of this
definition, "Internal Rate of Return" shall mean, as of the date of any
determination thereof with respect to any holder of Notes, that annual
interest rate which (determined on a quarterly compounding basis)
equates the original principal amount of the Notes purchased by said
holder of Notes to the discounted value of the sum of the following:
(i) the aggregate amount of interest payments in respect of the Notes
received or to be received by such holder through the contemplated
prepayment date, (ii) the principal payments (including the principal
amount of the Notes to be prepaid) in respect of the Notes received or
to be received by such holder through the contemplated prepayment date,
(iii) all cash amounts distributed by the Company to the holders of the
Warrants (or Shares issued upon the exercise of such Warrants) in
respect of rights derived from such holders' ownership of such Warrants
and Shares, and (iv) all cash amounts actually received by such holder
from the disposition of the Warrants (or Shares issued upon the
exercise of such Warrants) and/or of the Notes previously held by such
holder; provided, however, in computing the Internal Rate of Return on
the Note amount prepaid, the amount of proceeds from the sale of the
Warrants and related Shares to be included shall be equal to the total
proceeds received from the sale of said Warrants and related Shares
multiplied by a fraction equal to such amount of Notes prepaid divided
by the original principal amount of the Notes.
"State Debt" means Indebtedness of the Company to Pennsylvania
municipalities or state agencies incurred subsequent to the Closing
only if: (i) after giving effect thereto, no Potential Default or Event
of Default would exist under this Agreement, (ii) after giving effect
thereto, the aggregate principal amount of such Indebtedness would not
exceed $2,500,000, (iii) such Indebtedness, and the Liens securing such
Indebtedness, would be subject and subordinate to the Company's
Obligations and the Security Interests pursuant to one or more
subordination and
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intercreditor agreements executed in favor of the Purchasers and in
form and substance satisfactory to the Purchasers (each, a "State
Subordination Agreement") and (iv) the proceeds of such Indebtedness
would be used to reimburse the Company for funds expended in connection
with the purchase and installation of a reheat furnace and related
projects.
"State Subordination Agreement" shall have the meaning set
forth in the definition of State Debt.
"Stock Pledge Agreement" means that certain Stock Pledge
Agreement of even date herewith by and between the Agent and J&L
Holdings whereby J&L Holdings pledges all of the issued and outstanding
stock of the Company to the Agent.
"Subordinated Indebtedness Liens" means Liens securing the
State Debt subject to the terms of the State Subordination Agreement.
"Subordination and Intercreditor Agreement" means that certain
Subordination and Intercreditor Agreement of even date herewith by and
among the Senior Lender, the Company, the Agent and the Purchasers, as
amended or modified pursuant to the terms thereof.
"Subsidiary" means any corporation in which at least a majority
of the shares (other than any directors' qualifying shares required by
law) of each class of the capital stock (other than preferred stock),
at the time as of which any determination is being made, is owned,
beneficially and of record, directly or indirectly, by the Company or
one or more of its Subsidiaries, or both.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated
as of Closing, between the Company and CPT, as amended or modified as
permitted hereby.
"TCI" means Trailer Components, Inc., a Delaware corporation.
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"Term Loan" means the term loan made by the Senior Lender to
the Company pursuant to the terms and subject to the conditions of the
Loan and Security Agreement, as evidenced by the Term Note.
"Term Note" means that certain promissory note, dated the
Closing Date, in an original aggregate principal amount of $25,000,000,
delivered by the Company in favor of the Senior Lender, which shall
evidence the Term Loan.
"Termination Event" shall mean (a) a Reportable Event, (b) the
withdrawal by the Company or any ERISA Affiliate from a Single Employer
Plan during a plan year in which it was a substantial employer (within
the meaning of section 4001(a)(2) or 4062(e) of ERISA, (c) the
termination of a Single Employer Plan, or the filing of a notice of
intent to terminate a Single Employer Plan under section 4041(c) of
ERISA, (d) the institution of proceedings to terminate, or the
appointment of a trustee with respect to, a Single Employer Plan by the
PBGC, (e) any other event or condition which could constitute grounds
under section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Single Employer Plan, or
(f) the imposition of a Lien pursuant to section 412 of the Code or
section 302 of ERISA as to the Company or any ERISA Affiliate.
"Title Policies" has the meaning set forth in Section 10.21
hereto.
"Trademarks" shall have the meaning set forth in the Collateral
Assignment of Trademarks.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York, as amended, or as in effect in
any jurisdiction in which Collateral is located.
"Voting Stock" means capital stock or a partnership or
membership of any class or classes of a corporation, partnership or
other limited liability entity, respectively,
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the holders of which are ordinarily entitled to elect the directors, or
persons performing similar functions, of such corporation, partnership
or entity.
"Warrant" or "Warrants" has the meaning set forth in Section
1(c) hereof.
"Wholly-Owned Subsidiary" means any Subsidiary, all of the
equity securities of which (other than directors' qualifying shares)
are owned by the Company or one or more other Wholly-Owned Subsidiary
of the Company.
"Withdrawal Liability" means any liability arising out of the
Notice and Demand for Payment of Withdrawal Liability, dated January
23, 1995, received from the Industrial and Allied Employees Union Local
No. 73 Pension Plan.
(a) For all purposes of the Loan Documents, except as
otherwise expressly provided or unless the context otherwise requires:
(i) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to the particular Loan Document as
a whole and not to any particular Section or other subdivision thereof;
(ii) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with GAAP;
(iii) all computations provided for herein, if any,
shall be made in accordance with GAAP, unless another method of
computation is herein specified;
(iv) any uses of the masculine, feminine or neuter
gender shall also be deemed to include any other gender, as
appropriate; and
(v) the exhibits and schedules to this Agreement
shall be deemed a part of this Agreement and any Exhibit,
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Annex or Schedule to any other Loan Document shall be deemed a part of
such other Loan Document, as the case may be.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows as of the date
hereof and as of the Closing Date as if the Acquisition and the other
transactions contemplated hereby have been consummated:
4.1. Corporate Existence, Power and Authority.
(a) Each of the Company and each of its Subsidiaries (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and (ii) is duly qualified and authorized to do
business and is in good standing in each jurisdiction in which it owns or leases
any material property or in which the conduct of its business requires it to so
qualify or be authorized, except for such jurisdictions where the failure to so
qualify or be authorized would not have a material adverse effect on the
Company's assets, properties, liabilities, business, affairs, results of
operations, condition (financial or otherwise) or prospects on a consolidated
basis.
(b) No proceeding looking toward the dissolution or merger of
the Company or any Subsidiary or the amendment of its respective Certificate of
Incorporation has been commenced. Neither the Company nor any Subsidiary is in
violation in any respect of its Certificate of Incorporation or By-Laws.
(c) Subject to post-Closing completion of the matters set
forth on Schedule 4.1, each of the Company and each Subsidiary has all requisite
power, authority and legal right to own or to hold under lease and to operate
the properties it owns or holds and to conduct its business as now being
conducted.
(d) The Company has all power, authority and legal right to
execute, deliver, enter into, consummate and perform all Loan Documents to which
it is a party. The execution, delivery and performance of all Loan Documents to
which it is a party by
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the Company (including, without limitation, the issuance by the Company of the
Notes, the Warrants and the Shares as contemplated herein and therein) have been
duly authorized by all required corporate and other actions. The Company has
duly executed and delivered all Loan Documents to which it is a party, and all
Loan Documents to which it is a party (other than the Notes, the Warrants and
the Shares) constitute, and the Notes, the Warrants and the Shares, when issued
will constitute, the legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to the
rights of creditors generally and subject to the availability of equitable
remedies and the application of equitable principles.
4.2. Stock Ownership. The authorized capital stock of the
Company consists of 1,500 shares of Common Stock, without par value. On the
Closing Date 847 shares of the Company's Common Stock will be outstanding and
such outstanding shares will be duly authorized, validly issued and outstanding
and fully paid and nonassessable. Except for the warrants, there are no
outstanding options, warrants, rights, convertible securities or other
agreements or plans under which the Company may become obligated to issue, sell
or transfer shares of its capital stock or other securities.
4.3. Subsidiaries; Joint Ventures.
(a) The Company has no Subsidiaries or Investments in any
other Person on the Closing Date.
(b) The Company is not involved in any Joint Venture.
4.4. Business. The Company and its Subsidiaries are primarily
engaged in the Business.
4.5. No Defaults or Conflicts.
(a) No Event of Default or Potential Default has occurred and
is continuing.
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(b) Neither the Company nor any of the Subsidiaries is in
violation or default under any indenture, agreement or instrument to which it is
a party or by which it or its properties may be bound which could have a
material adverse effect on the financial condition, operations, business,
prospects, profits or Property of the Company or the validity or enforceability
of any of the Loan Documents or any of the transactions contemplated thereby or
the priority of the Security Interests.
(c) The execution, delivery and performance by the Company of
the Loan Documents to which it is a party and any of the transactions
contemplated hereby or thereby (including, without limitation, the issuance of
the Notes, the Warrants and the Shares as contemplated herein or therein) does
not and will not (i) violate or conflict with, with or without the giving of
notice or the passage of time or both, any provision of (A) the respective
Certificates of Incorporation or By-Laws of the Company or any of its
Subsidiaries or (B) any law, rule, regulation, order, judgment, writ,
injunction, decree, agreement, indenture or other instrument applicable to the
Company or any of its Subsidiaries or any of their respective properties (or to
which the Company or any of its Subsidiaries is a party or by which any of them
or any of their respective properties may be bound), (ii) other than pursuant to
the Loan Documents, result in the creation of any Lien upon any of the Company's
or any Subsidiary's Properties, (iii) except for compliance with federal and
state securities laws in connection with the offering of the Notes, require the
consent, waiver, approval, order or authorization of, or declaration,
registration, qualification or filing with, any Person (whether or not a
governmental authority and including, without limitation any shareholder
approval) or (iv) cause anti-dilution clauses of any outstanding securities to
become operative or give rise to any preemptive rights. No such provision
referred to in the preceding clause (i) materially adversely affects or will
materially adversely affect the assets, properties, liabilities, business,
affairs, prospects, results of operations, condition (financial or otherwise) of
the Company on a consolidated basis or the ability of the Company to perform the
Loan Documents to which it is a party or any of the transactions contemplated
hereby or thereby.
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4.6. Disclosure Materials; Other Information.
(a) The Company has previously furnished to the Purchasers the
following material (the "Disclosure Material"): (i) with respect to each of J&L
and TCI, (A) its audited Balance Sheets as at September 30, 1992, 1993, and
1994, December 31, 1993 and June 30, 1994, together with its related audited
Income Statements and Statements of Changes in Financial Position/Cash Flow for
the fiscal years then ended, and (B) its unaudited Balance Sheets as at December
31, 1994, January 31, 1995 and February 28, 1995, together with its related
unaudited Income Statements and Statements of Cash Flow for the months then
ended; (ii) with respect to Brighton: (A) its audited Balance Sheets as at June
30, 1992, 1993, and 1994, together with its related audited Income Statements
and Statements of Changes in Financial Position/Cash Flow for the fiscal years
then ended, and (B) its unaudited Balance Sheets as at December 31, 1994,
January 31, 1995 and February 28, 1995, together with its related unaudited
Income Statements and Statements of Cash Flow for the months then ended; (iii)
projections of revenues and expenses for the Company on a yearly basis through
the term of the Notes; (iv) a pro forma balance sheet of the Company after
giving effect to the Closing, the consummation of the Acquisition and the
Contribution, the issuance of the Notes and payment of all costs and expenses
associated therewith and (v) the Offering Memorandum of the Company prepared by
BT Securities Corporation, dated December 1994. The audited and unaudited
financial statements referred to in the preceding clauses (i) and (ii) fairly
present the financial condition of J&L, TCI, Brighton or the Company, as the
case may be, as of the respective dates thereof and the results of the
operations of J&L, TCI, Brighton or the Company, as the case may be, for such
periods and have been prepared in accordance with GAAP (except that any such
unaudited statements may omit notes and may be subject to year-end adjustments).
(b) There has been no material adverse change in the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of J&L or TCI since September 30, 1994,
and Brighton since December 31, 1994, taken as a whole.
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(c) Except for the Withdrawal Liability, the Company is not
aware of any material liabilities, contingent or otherwise, of the Company and
the Subsidiaries that have not been disclosed in the financial statements
referred to in Section 4.6(a) above or otherwise disclosed in the Disclosure
Material.
(d) The financial projections included in the Disclosure
Material were based on reasonable assumptions when made and have been prepared
in good faith.
(e) Except as set forth on Schedule 4.6, nothing has come to
the attention of the Company that would cause it to believe that any of the
Disclosure Material contained or contains a false or misleading statement of a
material fact or omits to state any material fact necessary in order to make the
statements made in such material, in light of the circumstances under which they
were made, not misleading; provided, however, that no forecast shall be deemed
to be misleading unless any such forecast was not based on reasonable
assumptions when made or was not prepared in good faith.
(f) Except as set forth on Schedule 4.6, there is no fact
known to the Company, other than facts of a general economic nature not relating
specifically to the Company or its business, which the Company has not disclosed
to the Purchasers in the Disclosure Material which materially and adversely
affects, or in the future would be likely to materially and adversely affect,
the assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or prospects of the Company on a consolidated
basis.
4.7. Litigation. There is no action, suit, proceeding,
investigation or claim pending or, to the knowledge of the Company, the
Subsidiaries, J&L, TCI or Brighton, threatened in law, equity or otherwise
before any court, administrative agency or arbitrator which either (i) questions
the validity of the Loan Documents or any action taken or to be taken pursuant
hereto or thereto, or (ii) could adversely affect the right, title or interest
of any Purchaser to the Notes, the Warrants or the Shares or (iii) could result
in a material adverse change in the assets, properties, liabilities, business,
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affairs, prospects, results of operations, condition (financial or otherwise) of
the Company on a consolidated basis.
4.8. Taxes. Each of the Company, J&L Holdings, J&L, Brighton,
TCI and each Subsidiary has filed all federal, state, local and other tax
returns and reports, and any other material returns and reports with any
governmental authorities required to be filed by it. Each of J&L Holdings, the
Company, J&L, Brighton, TCI, each Subsidiary and each other corporation included
in a consolidated or combined return with any of such companies, has paid or
caused to be paid all taxes (including interest and penalties) that are due and
payable, except those which are being diligently contested by it in good faith
by appropriate proceedings and in respect of which adequate reserves are being
maintained on its books. None of J&L Holdings, the Company nor any Subsidiary
has any material liabilities for taxes other than those incurred in the ordinary
course of business and in respect of which adequate reserves are being
maintained.
4.9. ERISA.
(a) Each Plan has been maintained and operated in all material
respects in accordance with all applicable laws, including ERISA and the Code,
and each Plan intended to qualify under section 401(a) of the Code so qualifies.
No Reportable Event has occurred in the last five years, and the present value
of all benefits under all Single Employer Plans (based on those assumptions used
to fund such Single Employer Plans) did not, in the aggregate, as of the last
annual valuation date applicable thereto, exceed the actuarial value of the
assets of such Single Employer Plans allocable to such benefits. Except for the
Withdrawal Liability, no material liability has been, and no circumstances exist
pursuant to which any material liability could be, imposed upon the Company or
any ERISA Affiliate (i) under sections 4971 through 4980B of the Code, sections
502(i) or 502(l) of ERISA, or under Title IV of ERISA with respect to any Single
Employer Plan or Multiemployer Plan, or with respect to any plan heretofore
maintained by the Company or any ERISA Affiliate, or any entity that heretofore
was an ERISA Affiliate, (ii) for the failure to fulfill any obligation to
contribute to any Multiemployer Plan, or (iii) with respect to any Plan that
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provides post-retirement welfare coverage (other than as required pursuant to
Section 4980B of the Code). Neither the Company nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization or
has been terminated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated.
(b) The execution, delivery and performance of the Loan
Documents and the consummation of the transactions contemplated hereby and
thereby (including, without limitation, the offer, issue and sale by the
Company, and the purchase by the Purchasers, of the Notes, the Warrants and the
Shares) will not involve any "prohibited transaction" within the meaning of
ERISA or the Code.
4.10. Legal Compliance.
(a) The Company and each Subsidiary are in compliance with all
applicable laws, rules, regulations, orders, licenses, judgments, writs,
injunctions, decrees or demands, except to the extent that failure to comply
would not materially adversely affect the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or otherwise) or
prospects of the Company on a consolidated basis.
(b) There are no adverse orders, judgments, writs,
injunctions, decrees or demands of any court or administrative body, domestic or
foreign, or of any other governmental agency or instrumentality, domestic or
foreign, outstanding against the Company or any Subsidiary.
4.11. Permits, Licenses and Approvals. Except as set forth on
Schedule 4.11, each of the Company and each Subsidiary possesses such
franchises, licenses, permits, consents, approvals and other authority
(governmental or otherwise) from any Person as are necessary for the conduct of
its business as now being conducted and as proposed to be conducted and none is
in default in any material respects under any of such franchises, licenses,
permits, consents, approvals or other authority.
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4.12. Patents, Trademarks and Other Rights. Each of the
Company and each Subsidiary possesses all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights and copyrights (each of which
is listed on Schedule 4.12 hereto) as are necessary to conduct its business as
now being conducted and as proposed to be conducted. The rights of each of the
Company and each Subsidiary in respect of such patents, patent rights,
trademarks, trademark rights, trade names, tradename rights or copyrights do not
conflict with or infringe any rights of others which might materially and
adversely affect the assets, properties, liabilities, business, affairs, results
of operations, condition (financial or otherwise) or prospects of the Company on
a consolidated basis, and no such claim of conflict or infringement has been
asserted by any Person.
4.13. Status Under Certain Statutes. Neither the Company nor
any Subsidiary is: (i) a "public utility company" or a "holding company", or an
"affiliate" or a "subsidiary company" of a "holding company", or an "affiliate"
of such a "subsidiary company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, (ii) a "public utility" as defined in
the Federal Power Act, as amended, (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person", as such terms are defined in the Investment Company Act of 1940, as
amended or (iv) a "common carrier" as defined in the Interstate Commerce Act.
4.14. Labor and Employment Matters.
(a) Except as set forth in Schedule 4.14 hereof, (i) no
employees of the Company are represented by a labor union or organization, no
labor union or organization has been certified or recognized as a representative
of any such employees, and the Company is not a party to or has any obligation
under any collective bargaining agreement or other labor union contract, white
paper or side agreement with any labor union or organization, or has any
obligation to recognize or deal with any labor union or organization, and there
are no such contracts, white papers or side agreements pertaining to or which
determine the terms or conditions of employment of any employee of the
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Company; (ii) there are no pending or threatened representation campaigns,
elections or proceedings or questions concerning union representation involving
any employees of the Company; (iii) the Company has no knowledge of any
activities or efforts of any labor union or organization (or representatives
thereof) to organize any employees of the Company, nor of any demands for
recognition or collective bargaining, nor of any strikes, slowdowns, work
stoppages or lock-outs of any kind, or threats thereof, by or with respect to
any employees of the Company or any actual or claimed representatives thereof,
and no such activities, efforts, demands, strikes, slowdowns, work stoppages or
lock-outs occurred during the 24-month period preceding the date hereof; (iv)
the Company has not engaged in, admitted committing or been held in any
administrative or judicial proceeding to have committed any unfair labor
practice under the National Labor Relations Act, as amended; (v) the Company is
not involved in any industrial or trade dispute or any dispute or negotiations
regarding a claim of material importance with any labor union or organization;
and (vi) there are no controversies, claims, demands or grievances of material
importance pending or, so far as the Company is aware, threatened, between the
Company and any of its employees or any actual or claimed representative
thereof.
(b) Schedule 4.14 hereof sets forth all contracts and
agreements, including, without limitation, employment agreements, consulting
agreements, independent contractor agreements, retainers and severance
agreements under which the Company has any obligation to provide wages, salary,
commissions, or other compensation or remuneration (other than obligations to
make current wage or salary payments terminable at will without notice) to or on
behalf of any employee, former employee, consultant or contractor (or any
designee, assignee or beneficiary thereof). The original or a complete and
correct copy of each written (and a complete and correct written description of
each such oral) contract or agreement, has been delivered to the Purchasers.
(c) Schedule 4.14 sets forth a correct and complete list of
all of the directors and executive officers of the Company. Except as set forth
in Schedule 4.14, the Company has
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no obligation in excess of $78,500 under any employment, consulting, severance,
retirement, change-in-control or similar agreement, written or oral, with any
officer, director, employee or agent of the Company.
(d) The Company has at all times complied in all material
respects and are in material compliance with all applicable federal, state, and
local laws, rules and regulations respecting employment, wages, hours,
compensation, benefits, occupational health and safety, and payment and
withholding of taxes in connection with employment. The Company has withheld
all amounts required by law or agreement to be withheld from wages, salaries,
commissions, etc., and the Company is not liable for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing. Except as
set forth on Schedule 4.14, there are no claims, complaints or legal or
administrative proceedings pending or, so far as the Company is aware,
threatened, against the Company before any federal, state or municipal court or
governmental agency, or any federal, state or municipal taxing authority
involving or relating to any past or present employee(s) or applicant(s) for
employment of the Company or relating to any acts, omissions or practices of the
Company relating to employment, compensation or benefits. The Company is not a
party to or bound by any court or administrative order, judgment, decree or
ruling of any kind respecting the employment, compensation or benefits of any
employees or prospective employees of the Company.
4.15. Properties.
(a) Each of the Company and each Subsidiary has good and
marketable title to its real property, all of which is disclosed on Schedule
4.15 hereto which lists each lease of real property with respect to which the
Company or any Subsidiary is a party, or is a guarantor of payment, or is
otherwise bound, and except as disclosed on Schedule 4.15 hereto good and
marketable title to each of its other properties (including without limitations
all of the Collateral). Certain real and personal property used by the Company
or the Subsidiaries in the conduct of their respective businesses is held under
lease, as identified on Schedule 4.15 hereto.
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(b) Each of the Company and each Subsidiary has the right to
and does enjoy peaceful and undisturbed possession under all leases pursuant to
which it leases property. Neither the Company nor any Subsidiary is aware of
any pending or threatened claim or action by any lessor of any such property to
terminate any such lease referred to on Schedule 4.15 hereto. None of the
properties owned or leased by the Company or any Subsidiary is subject to any
Liens which could materially and adversely affect the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis.
4.16. Suppliers and Customers.
(a) Each of the Company and each Subsidiary has adequate
sources of supply for any goods purchased by it and any services of independent
contractors hired by it in its business as currently conducted and as proposed
to be conducted. Each has good relationships with all of its material sources
of supply of goods and services and does not anticipate any material problem
with any such material sources of supply.
(b) Each of the Company and each Subsidiary has good
relationships with its franchisees and distributors, if any, and does not
anticipate any material problems with any of them.
(c) Neither the Company nor any Subsidiary has any knowledge
that its customer base might materially decrease.
4.17. Offering of Notes. Neither the Company nor any agent
nor other Person acting on its, or on TCI's, Brighton's or J&L's, behalf,
directly or indirectly, (i) offered any of the Notes, Warrants or any similar
security of the Company (A) by any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) or (B)
for sale to or solicited offers to buy any thereof from, or otherwise approached
or negotiated with respect thereto with, any Person other than the Purchasers
and not more than 73 other institutional investors each of which the Company
reasonably believed was an "accredited investor" within the meaning of
Regulation D under the Securities Act or (ii) has done, or caused
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to be done (or has omitted to do or to cause to be done) any act which act (or
which omission) would result in bringing the issuance or sale of the Notes,
Warrants or Shares within the provisions of Section 5 of the Securities Act.
4.18. Environmental Matters. Except as set forth in Schedule
4.18 or in any document listed therein:
(a) the Company and each Subsidiary holds all necessary
Environmental Permits for the ownership and operation of the Business;
(b) the Company and each Subsidiary is in compliance with all
terms, conditions and provisions of all (i) Environmental Permits, and (ii)
applicable Environmental Laws, except to the extent that the failure to so
comply could not materially adversely affect the assets, properties,
liabilities, business affairs, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis and to the best
of the Company's knowledge no facts or circumstances exist that would prevent
or interfere with such compliance with Environmental Permits or Environmental
Laws in the future;
(c) there are no pending or, to the best of the Company's
knowledge, threatened Environmental Claims against the Company, TCI, Brighton,
J&L or any Subsidiary and neither the Company nor any Subsidiary is aware of
any facts or circumstances which could reasonably be expected to form the basis
for any Environmental Claim against the Company, TCI, Brighton, J&L or any
Subsidiary;
(d) no Hazardous Materials are present at any Site and no
Releases of Hazardous Materials have occurred at, from, in, on, under or
adjacent to any Site that could materially and adversely affect the assets,
properties, liabilities, business affairs or results of operations, condition
(financial or otherwise) or prospects of the Company on a consolidated basis;
(e) neither the Company, TCI, Brighton, J&L, or any
Subsidiary, or any entity previously owned by the Company, TCI,
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Brighton, J&L, or any Subsidiary has transported or arranged for the treatment,
storage, handling, disposal, or transportation of any Hazardous Material to any
off-Site location which is an Environmental Clean-up Site; that could
materially and adversely affect the assets, properties, liabilities, business,
affairs or results of operations, condition (financial or otherwise) or
prospects of the Company on a consolidated basis;
(f) no Site is a current or, to the best of the Company's
knowledge, proposed Environmental Clean-up Site;
(g) there are no Liens (other than Permitted Liens) arising
under or pursuant to Environmental Laws on any Site and there are, to the best
of the Company's knowledge, no facts, circumstances, or conditions that could
reasonably be expected to restrict, encumber, or result in the imposition of
special conditions under any Environmental Law with respect to the ownership,
occupancy, development, use, or transferability of any Site;
(h) there are no (a) underground storage tanks, active or
abandoned, (b) polychlorinated biphenyl containing equipment, (c) asbestos
containing material, or (c) ionizing and non-ionizing radiation equipment or
source materials at any Site; that could materially and adversely affect the
assets, properties, liabilities, business, affairs or results of operations,
condition (financial or otherwise) or prospects of the Company on a
consolidated basis;
(i) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, on behalf of, or which
are in the possession of, the Company, TCI, Brighton, J&L, or any Subsidiary
with respect to any Site which have not been delivered to Purchaser prior to
the Closing;
(j) to the Company's knowledge, costs of compliance with
applicable Environmental Laws and Environmental Permits are not expected to
increase in the foreseeable future in a manner that could materially and
adversely affect the assets, properties, liabilities, business, affairs or
results of
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operations, condition (financial or otherwise) or prospects of the Company on a
consolidated basis.
4.19. No Foreign Assets Control Regulation Violation. The
transactions contemplated by this Agreement will not result in a violation of
any of the foreign assets control regulations of the United States Treasury
Department, 31 C.F.R., Subtitle B, Chapter V, as amended (including, without
limitation, the Foreign Assets Control Regulations, the Transaction Control
Regulations, the Cuban Assets Control Regulations, the Foreign Funds Control
Regulation, the Iranian Assets Control Regulations, the Nicaraguan Trade
Regulations, the Libyan Sanctions Regulations, the Soviet Regulations, the
Kuwaiti Assets Control Regulations and the Iraqi Sanctions Regulations
contained in said Chapter V), or any ruling issued thereunder or any enabling
legislation or other Presidential Executive Order granting authority therefor,
and the proceeds of the Notes will not be used by the Company in a manner which
would violate any such regulations.
4.20. Outstanding Securities. All securities (as defined in
the Securities Act) of each of the Company and the Subsidiaries have been
offered, issued, sold and delivered in compliance with, or pursuant to
exemptions from, all applicable federal and state laws, and the rules and
regulations of federal and state regulatory bodies governing the offering,
issuance, sale and delivery of securities. The Company is not required to file
on the date hereof or it has not filed prior to the date hereof, pursuant to
Section 12 of the Securities Exchange Act, a registration statement relating to
any class of debt or equity securities. The Company has not registered on or
prior to the date hereof or agreed to register any securities under the
Securities Act.
4.21. Disaster. Neither the business nor the properties
(including without limitation the Collateral) of the Company or its
Subsidiaries or TCI, J&L or Brighton is currently affected (or has been
affected at any time since January 1, 1994) by any fire, explosion, accident,
strike, lockout or other dispute, drought, storm, hail, earthquake, embargo,
act of God or of the public enemy or other casualty (whether or not covered by
insurance), (i) of any kind with respect to the Collateral or
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(ii) with respect to the business and the other properties of the Company, of a
kind which (individually or in the aggregate) has materially adversely
affected, or could materially adversely affect, the assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis.
4.22. No Burdensome Agreements. Neither the Company nor its
Subsidiaries is a party to any contract or agreement with any Affiliate of the
Company or of any Subsidiary, the terms of which are less favorable to the
Company or such Subsidiary, as the case may be, than those which might have
been obtained, at the time such contract or agreement was entered into, from a
person who was not such an Affiliate, it being agreed that the Lease and the
Management Agreement as in effect on the Closing Date comply with this Section
4.22.
4.23. Other Names. The business previously or presently
conducted by the Company and the Subsidiaries have not been conducted under any
corporate, trade or fictitious name, other than TCI, Brighton and J&L.
4.24. Solvency.
(a) The Company is and, immediately after giving effect to
the issue and sale of the Notes and Warrants and the consummation of the other
transactions contemplated hereby, will be Solvent.
(b) For purposes of this Section 4.24, the term "Solvent"
means, with respect to any Person, that:
(i) the assets of such Person, at a fair valuation,
exceed the total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Person;
(ii) the cash flow of such Person is sufficient to
enable it to pay its debts as they mature; and
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(iii) such Person does not have an unreasonably small
capital with which to engage in its anticipated business.
(c) For purposes of this Section 4.24, the "fair valuation"
of the assets of any Person shall be determined on the basis of the amount
which may be realized within a reasonable time, either through collection or
sale of such assets at their Fair Market Value.
4.25. Chief Executive Office. The chief executive office of
the Company and its records with respect to the Collateral are located at
Aliquippa, Pennsylvania.
4.26. Filings Made. Financing statements under the Uniform
Commercial Code in the form requested by the Purchasers have been executed by
the Company and have been delivered to the Purchasers for filing against the
Company in all jurisdictions where such filing is necessary or desirable in
order to protect and establish the Liens of the Purchasers granted under the
Security Agreement, no further action (including filing any financing statement
in respect thereof under the Uniform Commercial Code of any applicable
jurisdiction) is necessary in order to establish and perfect the Purchasers'
Liens granted thereunder against any third parties in any jurisdiction.
4.27. [Intentionally Not Used.]
4.28. Business Sites. All Inventory, Equipment, goods and
offices that shall be used after the Closing Date in the operation of the
Business are located in Aliquippa, Pennsylvania, Ambridge, Pennsylvania, Beaver
Falls, Pennsylvania and Yellow Creek, Mississippi, as set forth on Schedule
4.28. None of these locations shall be changed without the prior written
consent of Agent.
4.29. Operation and Maintenance of Equipment. To the best of
Company's knowledge, no Person owning or operating any Equipment necessary for
the operation of the Business has used, operated or maintained the same in a
manner which, whether now or hereafter, would result in the cancellation or
termination of the
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right of Company to use the same or which would result in any material
liability of Company for damages in connection therewith. Except as set forth
on Schedule 4.29, to the best of Company's knowledge, all the equipment and
other tangible personal property owned by Company and necessary for the
operation of the Business is in good operating condition and repair and has
been used, operated and maintained in substantial compliance with all
applicable laws, rules and regulations.
4.30. Taxpayer Identification Number. The taxpayer
identification number set forth opposite Company's signature on the signature
page of this Agreement and furnished to Agent for the purpose of filing all
financing statements and continuation statements covering all or any part of
the Collateral is Company's correct taxpayer identification number.
4.31. Title to Property, Liens. Except as disclosed on
Schedule 4.31, upon the Closing, Company shall have (i) good and marketable
title to all of its Property, except the portion thereof consisting of
leasehold estates and (ii) a valid leasehold estate in each portion of its
Property which consists of a leasehold estate. Except as disclosed on Schedule
4.31, as of the Closing all of such Property shall be free and clear of all
Liens, except Permitted Liens. Upon the proper filing with the appropriate
Governmental Bodies of the Mortgage and appropriate Uniform Commercial Code
financing statements, the applicable Loan Documents shall create valid and
perfected second priority Liens in the Property described therein, subject only
to Permitted Prior Liens, in each case enforceable against all third parties in
all relevant jurisdictions and securing the payment of all of Company's
Obligations purported to be secured thereby. All filings and other actions
necessary to perfect and protect such second priority Liens and Security
Interests have been, or, upon Closing will have been, duly taken.
4.32. Description and Location; Records of Equipment. Set
forth on Schedule 4.32 hereto is a list of the locations where all Company's
present Equipment is kept. All Equipment is, and will be, owned by Company
free and clear of all Liens in favor of any Person other than Agent, except as
expressly permitted hereunder and except as disclosed on Schedule 4.15
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hereof. All Equipment hereafter acquired will be kept at the location or
locations shown on Schedule 4.32 except as permitted by this Agreement.
Company shall at all times hereafter keep correct and accurate records
itemizing and describing the location, kind, type, age and condition of the
Equipment, the cost therefor and accumulated Depreciation thereof and
retirements, sales, or other dispositions thereof, all of which records shall
be available for examination on demand to any of the officers, employees or
agents of Agent.
4.33. Condition; Additional Covenants and Representations.
Company shall keep all Equipment in a good state of repair and good operating
condition (except to the extent of Equipment taken out of service, consistent
with the final clause of this sentence), and will make all repairs and
replacements when and where necessary, will not waste or destroy it or any part
thereof, and will not be negligent in the care or use thereof, all in the
ordinary course of the operation of the Business, and in a manner consistent
with that maintained by prudent businesspersons in similar circumstances.
4.34. Disposition of Equipment. Where Company is permitted
to dispose of any Equipment under this Agreement or by any consent thereto
hereafter given by Agent, it shall do so at arm's length, in good faith and by
obtaining the maximum amount of recovery practicable therefor and without
impairing the operating integrity of the remaining Equipment.
4.35. Franchises and Agreements. Subject to post-Closing
completion of the matters set forth in Schedule 4.11 hereof, the Company shall
own, possess or have the right to use all franchises, permits and licenses,
regulatory approvals, and all rights with respect thereto, necessary for the
conduct of the Business as heretofore conducted and as proposed to be conducted
after the Closing Date, without any known conflict with the rights of others
and, in each case, free of any Liens other than Permitted Liens.
4.36. No Investment, Etc. Except as set forth on Schedule
4.36, Company (i) has not committed to make any Investment not otherwise
permitted hereunder; (ii) is not a party
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to any indenture, agreement, contract, instrument or lease or subject to any
charter, by-law or other corporate restriction or any injunction, order,
restriction or decree, which would materially and adversely affect the
business, operations, properties or assets of Company; (iii) is not a party to
any "take or pay" contract as to which it is the purchaser; and (iv) has no
contingent or long- term liability or commitment, including management
contracts (excluding the Employment Agreements, the Management Agreement and
other employment contracts of full-time individual officers or employees
previously disclosed to Agent in writing) which would materially adversely
affect the business or financial condition of Company, in each case except
those which have been disclosed to Agent in writing.
4.37. No Guarantees. Except for the Withdrawal Liability,
the Company has not assumed, guaranteed or endorsed, or otherwise become
directly or contingently liable in connection with any liability of any other
Person, except (i) for the endorsement of checks and other negotiable
instruments for collection in the ordinary course of business, and (ii) for the
L/C Obligations.
4.38. Intellectual Property.
(a) Company is the owner of all of the right, title and
interest in and to the Intellectual Property as described on Schedule 4.38
hereto and in the licenses in which Company is licensor as used with respect to
the products designated on Schedule 4.38. Company knows of no third Person or
Persons who claim to have any rights in or to any of the Intellectual Property
in conflict with Company's rights with respect to such products. Schedule 4.38
represents a true and accurate list of all material Intellectual Property in
which Company asserts an interest.
(b) Subject to applicable provisions of federal and state
law, Company has the exclusive right to use the Intellectual Property and the
exclusive rights in the Licenses that are required to operate, or have been
used in connection with or which relate to, the Business, without known or
claimed infringement or conflict with the rights of other Persons.
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Company has not been charged, nor to the best of Company's knowledge, is it
threatened to be charged, with infringement of, nor has it infringed, to its
knowledge, any registered or unregistered trademark, trade name, service mark,
patent, or other form of intellectual property of any other Person in
connection with the operation of the Business.
(c) All items of the Intellectual Property have been
registered with the United States Patent and Trademark Office and all such
registrations are valid and subsisting as of the date hereof.
(d) Company represents that it has continuously used and is
now continuously using each of the material Trademarks since the date of first
use cited in the registration pertaining to such Trademarks in connection with
each of the products cited in such registration, or since the date of
acquisition by Company of the Trademarks (where the original registration
thereof was issued to a third party and subsequently assigned to Company). To
the best of Company's knowledge, such Trademarks (where the original
registration was issued to a third party and subsequently assigned to Company)
were, prior to the assignment to Company, continuously used by the prior owner
thereof since the date of first use cited in the applicable registration
pertaining to such Trademarks in connection with each of the products cited in
such registration. True and correct copies of all such registrations have been
delivered to Agent.
(e) The consummation of the transaction contemplated hereby
will not alter or impair any right, title or interest of Company in any item of
Intellectual Property or the Licenses, except for the granting of the Security
Interests in favor of Agent.
4.39. Americans With Disabilities Act of 1990.
(a) Company has made all material modifications and/or
provided all accommodations which may be required to be made or provided
pursuant to the ADA in order to accommodate the needs and requirements of any
disabled employees of Company.
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(b) Company's employment practices and procedures are in
compliance with the requirements of the ADA in all material respects.
(c) Company has received no notice or complaint regarding any
noncompliance with the ADA of the Real Property or of Company's employment
practices and, to the best of Company's knowledge, except as set forth on
Schedule 4.39, there has been no threatened litigation alleging any such
noncompliance by Company or the Real Property.
SECTION 5. REPRESENTATIONS OF THE PURCHASERS
Each purchaser severally represents and warrants, but only as
to itself, to the Company that:
(a) Such Purchaser has all requisite power, authority and
legal right to execute, deliver, enter into, consummate and perform the Loan
Documents to which it is a party. The execution, delivery and performance of
the Loan Documents to which it is a party by such Purchaser have been duly
authorized by all required corporate and other actions. Such Purchaser has
duly executed and delivered the Loan Documents to which it is a party, and the
Loan Documents to which it is a party constitute the legal, valid and binding
obligation of such Purchaser enforceable against such Purchaser in accordance
with their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to the rights of creditors generally
and subject to the availability of equitable remedies and the application of
equitable principles.
(b) Such Purchaser is capable of evaluating the risk of its
investment in the Notes and Warrants being purchased by it and is able to bear
the economic risk of such investment. Such Purchaser is purchasing the Notes
and Warrants to be purchased by it for its own account, and the Notes and
Warrants are being purchased by it for investment and not with a present view
to any distribution thereof. Such Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
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It is understood that the disposition of such
Purchaser's property shall, subject to the terms of this Agreement, at all
times be within such Purchaser's control. If such Purchaser should in the
future decide to dispose of any of its Notes, Warrants or Shares, it is
understood that it may do so only in compliance with the Securities Act and
this Agreement.
SECTION 6. PREPAYMENTS AND REPAYMENTS
6.1. Mandatory Prepayments. The Company agrees that it shall
prepay, at a price equal to the principal amount thereof, without premium, on
June 30, 2002 and on the last day of each September, December, March and June
thereafter to and including March 31, 2005, $1,500,000 aggregate principal
amount of all Notes outstanding and shall pay in full the remaining principal
amount of all Notes then outstanding on the maturity date of June 30, 2005.
If, on any such prepayment date, the aggregate principal amount of the Notes
outstanding is less than the amount required to be prepaid on such date, the
Company shall prepay all Notes in full. If any prepayment date is not a
Business Day, such prepayment shall be made on the next day which is a Business
Day. The aggregate principal amount of each prepayment of Notes pursuant to
this Section 6.1 shall be allocated among all Notes at the time outstanding, in
proportion, as nearly as practicable, to the respective unpaid principal
amounts of such Notes. The Company's obligation to prepay the Notes under this
Section 6.1 in the amounts required by this Section 6.1 shall be fixed until
there is no longer any remaining aggregate principal amount of outstanding
Notes, and the Company shall not receive any credit or off-set with respect to
such obligation as a result of any prepayment under Section 6.2 or 6.3 hereof
(except that the Company's obligation to prepay the Notes under this Section
6.1 shall terminate when there is no longer any outstanding principal amount
under any Notes).
6.2. Prepayment at Holder's Option.
(a) In the event of a Change of Control Event, each holder of
a Note or Notes shall have the right, at such holder's option, to require the
Company to prepay such holder's Note or Notes in whole or in part at a price
equal to (i) 101% of the
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aggregate principal amount of Notes to be prepaid plus (ii) all accrued
interest on the Notes to the date of prepayment. Such option shall be
exercised by written notice to the Company under Section 6.2(b) hereof given at
any time from and after the Change of Control Event. As soon as possible after
a Change of Control Event occurs, or the Company has knowledge that it is
likely to occur, the Company shall give written notice to each holder of a Note
or Notes notifying each such holder of the occurrence or likely occurrence of
such Change of Control Event and informing each such holder of its right to
exercise an option to require a prepayment under this Section 6.2(a).
(b) In order to exercise its rights to require a prepayment
under this Section 6.2, a holder requiring such prepayment shall send to the
Company a written notice demanding prepayment under this Section 6.2 and
specifying the date of such prepayment (which must be a Business Day and which
shall not be less than five (5) days after receipt of such notice by the
Company, but in no event earlier than such Change of Control Event).
(c) In the event that on any date for prepayment pursuant to
this Section 6.2 the Company, for whatever reason, does not pay in full the
prepayment amount or amounts due to any holder or holders of Notes who have
requested prepayment, then the amount actually prepaid by the Company to all
holders of Notes pursuant to this Section 6.2 shall be allocated among all such
holders of Notes in proportion, as nearly as practicable, to the respective
unpaid principal amount of Notes then held by each such holder; provided,
however, such non-payment in full shall nonetheless constitute a Potential
Default.
6.3. Optional Prepayments.
(a) At any time the Company may at its option (subject to the
other provisions of this Section 6.3) prepay all or part of the principal
amount of outstanding Notes, at a price equal to the aggregate principal amount
of the outstanding Notes to be prepaid plus accrued interest thereon to the
date of prepayment, together with an amount equal to the Make Whole Premium, if
any.
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(b) In the event of the sale of all of the Warrants and
Shares held by the holders of the Notes to Persons other than the holders of
Notes at any time after March 31, 2000, then the Company shall have the option
to prepay, in whole or in part, the Notes outstanding. Any such prepayment of
Notes shall be made within 30 days after the date of such sale of Warrants and
Shares and at a price equal to the principal amount thereof plus accrued
interest thereon to the date of such prepayment, together with an amount equal
to the Special Premium, if any.
(c) In the event of the sale of all of the Warrants and
Shares held by the holders of the Notes to Persons other than the holders of
Notes at any time after March 31, 1998 and prior to March 31, 2000, then the
Company shall have the option to prepay up to $8 million in aggregate principal
amount of the Notes outstanding. Any such prepayment of Notes shall be made
within 30 days after the date of such purchase of Warrants and Shares and at a
price equal to the principal amount thereof plus accrued interest thereon to
the date of such prepayment, together with an amount equal to the Special
Premium, if any.
(d) The aggregate amount of each prepayment of the principal
amount of Notes pursuant to this Section 6.3 shall be allocated among all Notes
at the time outstanding, in proportion, as nearly as practicable, to the
respective unpaid principal amounts of such Notes.
(e) Notwithstanding anything herein to the contrary, with
respect to an optional prepayment pursuant to this Section 6.3, (i) the holders
of the Notes shall not receive less than 100% of the principal amount of the
Notes being prepaid and (ii) the Special Premium, if any, shall not exceed the
Make Whole Premium if such amount were calculated at the same time.
(f) Any prepayment by the Company pursuant to this Section
6.3 shall be in a minimum amount of $500,000 and in integral multiples of
$500,000.
(g) The right of the Company to prepay Notes pursuant to this
Section 6.3 shall be conditioned upon its giving notice of prepayment, signed
by a principal financial officer, to the
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holders of Notes not less than thirty (30) days and not more than sixty (60)
days prior to the date upon which the prepayment is to be made (except that
with respect to any prepayment under Section 6.3(b) or 6.3(c) hereof, such
notice shall be given not more than twenty (20) days after the sale of all of
the Warrants or underlying Common Stock) specifying (i) the registered holder
of each Note to be prepaid, (ii) the aggregate principal amount being prepaid,
(iii) the date of such prepayment (which must be a Business Day), (iv) the
accrued and unpaid interest (to but not including the date upon which the
prepayment is to be made) and (v) that the prepayment of Notes is being made
pursuant to Subsection (a), (b) or (c) of this Section 6.3, as the case may be.
Notice of prepayment having been so given, the aggregate principal amount of
the Notes so specified in such notice, and all accrued and unpaid interest
thereon and the applicable Make Whole Premium or Special Premium, shall become
due and payable on the specified prepayment date, but the right to apply any or
all of the Notes as payment to exercise any Warrant or Warrants shall continue
to, but not including, the date of such prepayment.
6.4. Obligations Unconditional. The Company hereby agrees
and confirms that its obligations under the Notes shall be deemed to constitute
for all purposes obligations for the payment of indebtedness for borrowed money
and shall accordingly be absolute and unconditional in accordance with the
terms of the Notes and this Agreement and shall not be affected by (and the
Company agrees not to assert) any right the Company may now or at any time
hereafter have in connection with the Acquisition or the Acquisition Documents,
including (i) any right of set-off, counterclaim, recoupment or defense against
J&L, TCI or Brighton, (ii) any right by reason of any defect in the title to
the assets acquired in connection with the Acquisition, and (iii) any right to
terminate, cancel, quit or surrender this Agreement or any Note except in
accordance with the express terms thereof.
SECTION 7. AFFIRMATIVE COVENANTS
The Company covenants and agrees as follows:
7.1. Use of Proceeds. The Company will use the net proceed
realized from the sale of the Notes and Warrants to
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finance the Acquisition. No portion of such proceeds will be used for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying,
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended from time to time, any "margin stock" as defined in
said Regulation U, or any "margin stock" as defined in Regulation G of the
Board of Governors of the Federal Reserve System, as amended from time to time,
or for the purpose of purchasing, carrying or trading in securities within the
meaning of Regulation T of the Board of Governors of the Federal Reserve
System, as amended from time to time, or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase any such
margin stock or other securities.
7.2. Financial Information. The Company will deliver to the
Agent and/or to each holder of a Warrant (if such holder is not also a holder
of a Note):
(a) as soon as practicable, and in any event within one
hundred twenty (120) days after the close of each fiscal year of the Company
(subject to extensions to the extent provided to CPT for financial reporting
purposes pursuant to the Securities Exchange Act), (i) a consolidated and
consolidating with respect to the Company and its Subsidiaries, and a
consolidated with respect to CPT, balance sheet as of the end of such fiscal
year, (ii) consolidated and consolidating with respect to the Company and its
Subsidiaries, and a consolidated with respect to CPT, statements of income,
retained earnings and cash flows for such fiscal year, and (iii) statements of
Consolidated Cash Flow, Contractual Senior Debt Service, Contractual Total Debt
Service, and Excess Cash Flow for such year setting forth in each case in
comparative form the corresponding figures for the preceding year. Such annual
financial statements shall be accompanied by: (A) an opinion of the Accountants
stating that (1) the examination by the Accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards and, accordingly, included such tests of the
accounting records and such other procedures as were considered necessary under
the circumstances, (2) such financial statements have been prepared in
accordance with GAAP and in a manner consistent with prior periods, and (3)
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such financial statements fairly present in all material respects the financial
position and results of operations of the Company; (B) a letter from the
Accountants stating that the statements of Consolidated Cash Flow, Contractual
Senior Debt Service, Contractual Total Debt Service and Excess Cash Flow were
computed in accordance with the requirements of this Agreement; and (C) a
certification by the principal financial officer or the corporate controller
that the statements, reports and other information delivered pursuant to this
Section 7.2 are complete and correct in all material respects. With respect to
the Company and its Subsidiaries, such statements shall be accompanied by a
management analysis of any material differences between the results for such
fiscal year and the corresponding figures for such prior period and between
such results and the budgeted figures for such year as supplied pursuant to
paragraph (b) below;
(b) as soon as practicable, and in any event within 30 days
after the end of a fiscal year of the Company, a budget prepared on an annual
basis for the current fiscal year regarding the Company's operations and
capital expenditures on a consolidated basis and regarding the operations and
capital expenditures of each of the Company's operating units, together with an
analysis of such budget prepared in reasonable detail by the principal
financial officer of the Company; and, within fifteen (15) days following their
preparation, any (1) operating budget of the Company otherwise prepared and
submitted to the Board of Directors of the Company and (2) any revisions or
amendments made by the Company (and submitted to its Board of Directors) to any
budget submitted under this paragraph (b);
(c) as soon as practicable, and in any event within thirty
(30) days (or forty-five (45) days with respect to quarterly financial
statements of CPT) after the end of each month, (i) with respect to the Company
and its Subsidiaries, a consolidated and consolidating balance sheet as of the
end of such month and (ii) with respect to the Company and its Subsidiaries,
consolidated and consolidating statements of income, retained earnings and cash
flows for the end of such month, provided, that, with respect to each set of
monthly financial statements relating to the third month in any fiscal
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quarter of the Company and its Subsidiaries or CPT, the Company and its
Subsidiaries and CPT shall also provide consolidated and consolidating, with
respect to the Company and its Subsidiaries and consolidated with respect to
CPT, statements as of the end of such quarter, in each case to be in reasonable
detail, certified by the principal financial officer of the Company or CPT, as
the case may be, and with respect to the Company, setting forth in comparative
form (except for the consolidating information) the corresponding figures for
the comparable period one year prior thereto (subject to normal year-end
adjustments), together with a management analysis of any material differences
between such results and the corresponding figures for such prior period. In
addition, with respect to each set of monthly financial statements which
relates to the end of a fiscal quarter of the Company and its Subsidiaries or
CPT, such statements shall include calculations of each of Consolidated Cash
Flow, Contractual Senior Debt Service, Contractual Total Debt Service, and
Excess Cash Flow for the period from the beginning of the Company's or CPT's,
as the case may be, fiscal year through the end of such quarter, which
calculations shall be in reasonable detail, contain such information as the
Purchasers may require, and be certified as complete and correct in all
material respects (subject to normal year end adjustments) by the principal
financial officer;
(d) as soon as practicable, copies of any annual, special or
interim audit reports or management or comment letters with respect to the
Company or its Subsidiaries or their operations, submitted to the Company by
independent public accountants;
(e) as soon as practicable, copies of all financial
statements, proxy material or reports sent to the Company's or any Subsidiary's
stockholders, of any public or press releases and of all reports or
registration statements filed with the Commission pursuant to the Securities
Act or the Securities Exchange Act;
(f) promptly, copies of all (A) notices which the Company or
any Subsidiary provides to holders of Senior Indebtedness and (B) any other
material information requested by
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holders of the Notes and that is not otherwise provided by the Company to the
holders of Notes or Warrants;
(g) as soon as practicable, such other financial and business
data as may reasonably be requested by a holder of Notes or Warrants and as may
be relevant to the ability of the Company to perform its obligations under the
Loan Documents.
All such financial statements shall be prepared in accordance with GAAP (except
for any change in accounting principles specified in the accompanying
certificate and except that any interim financial statements may omit notes and
may be subject to year-end adjustments).
7.3. Compliance Certificates. All financial statements
delivered pursuant to Section 7.2(a) or (c) shall be accompanied by a
certificate of the principal financial officer of the Company and, in the case
of financial statements delivered pursuant to Section 7.2(a), a certificate of
the independent public accountants, stating that the audit or examination in
connection with the certification of the financial statements included a
reading of the terms of the Loan Documents and that in making such audit or
examination no knowledge was obtained of any Event of Default or Potential
Default, or, if any such Event of Default or Potential Default shall exist or
have existed, the nature and period of existence thereof. Each certificate of
the principal financial officer shall in addition state that to the best of his
knowledge there exists no Event of Default or Potential Default, or, if the
same shall exist, what the Company proposes to do with respect thereto. Each
certificate of the principal financial officer accompanying financial
statements delivered pursuant to this Section 7.3 shall in addition state that
the Company is in compliance with the provisions of this Agreement and set
forth in reasonable detail the computations necessary to establish compliance
with Sections 8.1, 8.2, 8.14, 8.22 and 8.23 hereof.
7.4. Inspection. The Company will permit each holder of a
Note or Warrant and any authorized representative of such holder to visit and
inspect any of the properties of the Company and its Subsidiaries and of any
Joint Ventures, to examine their
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respective books of account and to discuss their business, affairs, finances
and accounts with their officers, all at such reasonable times (during normal
business hours and after notice to the Company) and as often as may be
reasonably requested and, if there is no Event of Default continuing, at such
holder's expense, otherwise at the Company's expense.
7.5. Maintenance of Existence, Properties and Franchises;
Compliance with Law; Taxes; Insurance; Payments of Senior Indebtedness. The
Company will, and will cause each Subsidiary and each Joint Venture to:
(a) maintain their respective corporate existence (or, if not
a corporation, its existence as another entity), rights and other franchises in
full force and effect; provided, that the Company may terminate the corporate
existence of any Subsidiary or the corporate or other existence of any Joint
Venture if, or permit the termination or abandonment of rights or other
franchises if, in the opinion of the Company it is no longer in the Company's
best interests to maintain such existence, rights or other franchises and such
termination or abandonment will not be prejudicial in any material respect to
the holders of the Notes or Warrants;
(b) maintain their respective tangible properties and assets
in good repair, working order and condition so far as necessary or advantageous
to the proper carrying on of their respective businesses;
(c) comply in all material respects with all applicable laws
and with all applicable orders, rules, rulings, certificates, licenses,
regulations, demands, judgments, writs, injunctions and decrees; provided, that
such compliance shall not be necessary so long as (i) the applicability or
validity of any such law, order, rule, ruling, certificate, license,
regulation, demand, judgment, writ, injunction or decree shall be contested in
good faith by appropriate proceedings and (ii) failure to comply will not have
a material adverse effect on the business, affairs, assets, liabilities,
results of operations, condition (financial or otherwise) or prospects of the
Company on a consolidated basis;
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(d) pay promptly when due all taxes, fees, assessments and
other governmental charges imposed upon their respective properties, assets or
income and all claims or indebtedness (including, without limitation,
materialmen's, vendors', workmen's and like claims) which might become a Lien
upon such properties or assets; provided that payment of any such tax, fee,
assessment, charge, claim or indebtedness shall not be necessary so long as (i)
the applicability or validity thereof shall be contested in good faith by
appropriate proceedings and an appropriate reserve shall have been established
with respect thereto and (ii) failure to make such payment will not have a
material adverse effect on the business, affairs, assets, liabilities, results
of operations, condition (financial or otherwise) or prospects of the Company;
and
(e) keep adequately insured, by financially sound and
reputable insurers, all their respective properties of a character customarily
insured by entities similarly situated, against loss or damage of the kinds and
in amounts customarily insured against by such entities and with such
deductibles or coinsurance as is customary.
7.6. Office for Payment, Exchange and Registration. So long
as any of the Notes or Warrants are outstanding, the Company will maintain an
office or agency where Notes or Warrants may be presented for payment,
exchange, exercise or registration of transfer as provided in this Agreement or
in the Warrants. Such office or agency initially shall be the office of the
Company set forth in Section 20 hereof, which place may from time to time be
changed by notice to the holders of all Notes and Warrants then outstanding.
7.7. Notices. The Company will give notice to the Agent
and/or each holder of a Warrant (if such holder is not also a holder of a Note)
promptly after it learns (other than by notice from all of such holders) of the
existence of any of the following:
(a) any Event of Default or any Potential Default;
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(b) any default under any Senior Indebtedness or any material
default under any other evidence of Indebtedness or under any indenture,
mortgage or other agreement relating to any evidence of Indebtedness in respect
of which the Company or any Subsidiary is liable;
(c) any action or proceeding which has been commenced or
threatened against the Company or any of its Subsidiaries and which, if
adversely determined, would have, individually or in the aggregate, a material
adverse effect on the assets, properties, liabilities, business, affairs,
results of operations, condition (financial or otherwise) or prospects of the
Company on a consolidated basis or the ability of the Company to perform its
obligations under the Loan Documents;
(d) (A) any lapse or other termination of any license,
permit, franchise, agreement or other authorization issued to the Company by
any governmental regulatory body or any other Person, (B) any refusal by any
governmental regulatory body or any other Person to renew or extend any such
license, permit, franchise, agreement or other authorization and (C) any
dispute between or among the Company and any governmental regulatory body or
any other Person, which lapse, termination, refusal or dispute referred to in
clauses (A) or (B) above or in this clause (C) may have a material adverse
effect on the financial condition, operations, business, prospects, profits or
Property of the Company;
(e) any event causing loss or depreciation in the value of
assets having a material adverse effect upon the financial condition,
operations, business, prospects, profits or Property of the Company, including
the amount or the estimated amount of any such loss or depreciation or adverse
effect; and
(f) any (i) Reportable Event has occurred; (ii) "accumulated
funding deficiency" (within the meaning of Section 412(a) of the Code) has been
incurred with respect to any Plan or that an application may be or has been
made to the Secretary of the Treasury of a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the
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Code, in each case with respect to any Plan; (iii) Single Employer Plan or
Multiemployer Plan has been terminated, reorganized, petitioned or declared
insolvent under Title IV of ERISA; (iv) Single Employer Plan has a under
current liability giving rise to a Lien under ERISA or the Code; (v) proceeding
has been instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to any Plan; (vi) that the Company or any of its ERISA Affiliates
will or may incur any liability (including any contingent or secondary
liability) to or on account of the termination or withdrawal from any Single
Employer Plan under Section 4062, 4063, 4064 or 4975 of the Code or Section 409
or 502(i) or ERISA; (vii) "prohibited transaction" (as such term is defined in
Section 406 of ERISA and Section 4975 of the Code) in connection with any Plan;
(viii) receipt by the Company or any ERISA Affiliate of any notice from the
PBGC relating to the intention of the PBGC to terminate one or more Single
Employer Plans or to appoint a trustee to administer any Single Employer Plan;
(ix) receipt by the Company or any ERISA Affiliate from the sponsor of a
Multiemployer Plan of any notice concerning (A) the imposition on the Company
or an ERISA Affiliate of withdrawal liability (other than the Withdrawal
Liability) or (B) a determination that a Multiemployer Plan is, or is expected
to be, terminated or in reorganization, in each case within the meaning of
Title IV of ERISA; (x) receipt by the Company or any ERISA Affiliate of any
notice from the PBGC or the Internal Revenue Service which sets forth or
proposes any material adverse determination or action with respect to a Plan;
or (xi) assessment of any excise taxes against the Company or any ERISA
Affiliate by the Internal Revenue Service with respect to a Plan.
(g) any actual or threatened (i) union representation
campaigns, elections or proceedings concerning employees of the Company; (ii)
union organizing activities concerning employees of the Company; (iii) strikes,
slowdowns, work stoppages or lockouts of any kind by or with respect to any
employees of the Company; (iv) unfair labor practice charges filed by or
against the Company; and (v) controversies, claims, demands or grievances of
material importance with any labor union or organization.
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Such notice (i) with respect to (a) or (b), shall specify the nature and period
of existence of any such Potential Default, Event of Default or other default
and what the Company proposes to do with respect thereto and (ii) with respect
to (c), (d), (e), (f) or (g), shall specify the nature of any such matter
referred to in such clause, what action the Company or any Subsidiary proposes
to take with respect thereto and what action any other relevant Person is
taking or proposes to take with respect thereto.
7.8. Fiscal Year. The fiscal year of the Company and its
Subsidiaries for tax, accounting and any other purposes shall end on June 30 of
each calendar year.
7.9. Payment of Dividends by Subsidiaries. The Company will
cause its Subsidiaries to pay dividends or make other distributions or advances
to the Company, to the extent of funds legally available therefor, in
sufficient amounts and at sufficient times to enable the Company to have
sufficient earnings and funds to pay on a timely basis all amounts due with
respect to Senior Indebtedness and the Notes and any other amounts due under
the other Loan Documents.
7.10. ERISA Compliance. The Company shall, and shall cause
each ERISA Affiliate to, comply in all material respects with ERISA. If any
event occurs pursuant to which the Company is required to give notice pursuant
to Section 7.7(e), the Company shall furnish to each holder of Notes or
Warrants a written notice specifying what action the Company or any of its
ERISA Affiliates, the Internal Revenue Service, the Pension Benefit Guaranty
Corporation, or any other relevant party is taking or proposes to take with
respect thereto.
7.11. Communication with Accountants. The Company (on behalf
of itself and each of its Subsidiaries) hereby authorizes the Purchasers to
communicate directly with the independent certified public accountants for the
Company or any Subsidiary and authorizes such accountants to disclose to the
Purchasers any and all financial statements and any other information of any
kind that they may have with respect to the assets, properties, liabilities,
business, affairs, results of operations, condition
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(financial or otherwise) or prospects of the Company or any Subsidiary;
provided, that such accountants may require that the Company be informed of any
such disclosures and participate in any conversations between such accountants
and the Purchasers. The Company shall deliver a letter addressed to such
accountants instructing them to comply with the provisions of this Section
7.11.
7.12. Environmental Matters.
(a) The Company and each Subsidiary shall take all
appropriate actions to ensure that all properties, facilities and operations
owned, leased and/or operated by the Company and any Subsidiary are and remain
in compliance with applicable Environmental Laws, and the Company and each
Subsidiary implement appropriate engineering practices and/or technology to
maintain such compliance.
(b) The Company and each Subsidiary must obtain, maintain,
and shall take all appropriate actions to ensure compliance with any and all
Environmental Permits required in connection with all properties, facilities
and operations owned, leased and operated by the Company or any Subsidiary.
(c) The Company and each Subsidiary must respond in
accordance with applicable Environmental Laws, to the presence or any Release
or threatened Release of any Hazardous Materials generated, stored, handled,
treated, transported, disposed of or otherwise present at all properties and
facilities owned, leased or operated by the Company or any Subsidiary.
(d) The Company and each Subsidiary in connection with
off-site treatment, storage, handling, transportation, disposal or arrangements
for disposal of Hazardous Materials or materials containing Hazardous Materials
shall: (i) conduct such activities only at facilities and with carriers
maintaining valid Environmental Permits and to the Company's and each
Subsidiary's best knowledge, otherwise operating in compliance with
Environmental Law, and (ii) obtain certificates of compliance or disposal from
all contractors employed by the Company and each Subsidiary in connection with
such activities.
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(e) The Company shall keep all property owned, leased or
operated by the Company or any Subsidiary free and clear of any liens imposed
pursuant to Environmental Laws.
(f) To the extent not previously disclosed, including
Schedule 4.18, the Company shall promptly provide the Agent with written notice
of the following:
(i) Any actual, pending or threatened Environmental
Claim against the Company or any Subsidiary of which the Company or
any Subsidiary has knowledge or has received notice, for any past or
present acts, omissions, events or circumstances, including but not
limited to, the Release or presence of a Hazardous Material at, on,
in, under, about, to, from or adjacent to any property or facility now
or previously owned, operated or leased by the Company, TCI, Brighton,
J&L or any Subsidiary, any predecessor of the Company, TCI, Brighton,
J&L or any Subsidiary, or any entity previously owned by the Company,
TCI, Brighton, J&L or any Subsidiary;
(ii) Any pending or threatened Environmental Claim
against the Company or any Subsidiary of which the Company or any
Subsidiary has knowledge or has received notice, for any past or
present acts, omissions, events or circumstances, including but not
limited to, the presence or Release of any Hazardous Material at, on,
in, under, about, to, or from any off-site locations to which the
Company, TCI, Brighton, J&L or any Subsidiary, any predecessor of the
Company, TCI, Brighton, J&L or any Subsidiary or any entity previously
owned by the Company, TCI, Brighton, J&L or any Subsidiary sent
Hazardous Materials for handling, treatment, storage, or disposal;
(iii) Any Release of Hazardous Material at any
property or facility currently or in the future owned, operated or
leased by the Company or any Subsidiary at levels or amounts that are
required to be reported to a regulatory authority, remediated, or
responded to under any Environmental Law;
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(iv) Any notice that property currently or in the
future owned, operated or leased by the Company or any Subsidiary may
be subject to a lien pursuant to any Environmental Law; and
(v) Any investigatory, remedial, response or removal
activities the Company or any Subsidiary will undertake in response to
the Release or presence of Hazardous Materials.
(g) The Company agrees to indemnify, defend, protect and hold
harmless Purchasers, their officers, directors, shareholders, employees, and
agents from and against any and all liability, loss, damage, cost and expense,
including, but not limited to, attorneys' and consultants fees and
disbursements arising from any breach of representations and warranties set
forth in Section 4.18 or covenants set forth in 7.12 herein, the Release or
presence of Hazardous Materials on, under, about, adjacent to, or from at any
properties or facilities currently or previously owned, operated or leased by
the Company, TCI, Brighton, J&L or any Subsidiary, any predecessors of the
Company, TCI, Brighton, J&L or any Subsidiary or any entities previously owned
by the Company, TCI, Brighton, J&L or any Subsidiary, or at any off-site
location to which Hazardous Materials generated by the Company, TCI, Brighton,
J&L or any Subsidiary, any predecessors of the Company, TCI, Brighton, J&L or
any Subsidiary or any entities previously owned by the Company, TCI, Brighton,
J&L or any Subsidiary were sent for handling, treatment, storage, or disposal
or any violation of any Environmental Law or Environmental Permit by the
Company, TCI, Brighton, J & L or any Subsidiary or any entity previously owned
by TCI, Brighton, J & L or any Subsidiary. The obligation of the Company under
this section shall survive the Closing indefinitely.
(h) Purchasers shall have the right from time to time to
designate such persons ("Environmental Auditors") as the Purchaser may select
to visit, inspect and have access to any of the properties, facilities,
products or wastes owned, leased or operated by the Company or any Subsidiary
(including, without limitation, any location, where records and documents
created or maintained in connection with Environmental Law may be located)
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for the purpose of investigating actual or potential Environmental Claims or
any condition which could result in any liability, cost or expense to the
Purchasers. Such investigation may include, among other things, above and
below ground testing of air, soil, groundwater and surface water, for the
presence of Hazardous Materials and such other tests as may be necessary or
advisable in the opinion of the Purchasers or the Environmental Auditors. The
Company and the Subsidiaries will supply to the Environmental Auditors such
historical and operational information, including without limitation analytical
records and results, correspondence with governmental authorities and
environmental audits or reviews regarding properties, products and wastes of
the Company and Subsidiaries (including such information respecting
Environmental Cleanup Sites) as are within its possession, custody or control,
or which are available to it, and will make available for meetings with the
Environmental Auditors, appropriate employees of the Company or the
Subsidiaries having knowledge of such matters.
7.13. Taxes. All payments to a holder of Notes or to a
partner of a holder (or to a partner of such a partner) (any of the foregoing
referred to herein as a "recipient") of principal of, and interest on, the
Notes and all other amounts payable under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction for, any
present or future income, stamp or other taxes, fees, duties, withholding or
other charges of any nature whatsoever imposed by any taxing authority, other
than taxes imposed on or measured by the net income of such recipient (such
non-excluded items being herein called "Taxes"). In the event that any
withholding or deduction from any payment to be made hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Company will:
(a) pay to the relevant authority the full amount required to
be so withheld or deducted; and
(b) promptly forward to such recipient an official receipt or
other documentation satisfactory to such recipient evidencing such payment to
such authority.
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7.14. Employment and Labor Matters. Comply in all material
respects with all applicable federal, state and local laws, rules and
regulations concerning or relating to employment, wages, hours, compensation,
benefits, occupational health and safety, termination notice, including,
without limitation, the Worker Adjustment and Retraining Notification Act, and
payment and withholding of taxes in connection with employment. If any event
occurs pursuant to which the company is required to give notice pursuant to
Section 7.7(f), the Company shall furnish to the Agent and/or each holder of
Warrants (other than a holder which is also a holder of a Note) a written
notice describing precisely what event is occurring and what action the Company
is taking or proposes to take with respect thereto.
7.15. Further Assurances. The Company will from time to
time, upon the request of the Majority Noteholders, promptly and duly execute
and deliver any and all such further instruments and documents as the Majority
Noteholders may reasonably deem necessary or desirable to obtain the full
benefits of (i) the Liens created or intended to be created under the Security
Agreement, (ii) the other obligations of the Company under the Loan Documents,
and (iii) the other rights and powers granted in the Loan Documents. Upon the
instructions from time to time of the Majority Noteholders, the Company shall
execute and cause to be filed any financing statements (and any continuation
statement with respect to any such financing statement), or any other similar
document or mortgage relating to the Liens created under the Security
Agreement, or any other document or filing presented to the Company in proper
form for signing or filing, in each case as the Majority Noteholders may
reasonably deem necessary or desirable in light of the Company's obligations
under this Agreement and the Loan Documents, and the Company shall pay or cause
to be paid any filing or other fees in connection therewith.
7.16. Accounts System. The Company shall not materially
change its system of accounting from that which is in effect as of the Closing
Date, which system the Purchasers agree is acceptable to the Purchasers,
without the prior consent of the Purchasers, which consent shall not
unreasonably be withheld, except that the Company may change the method by
which it
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accounts for its inventory from "last in, first out" to "first in, first out".
7.17. Covenants Concerning Intellectual Property. So long as
any of the Company's Obligations remain outstanding, the Company covenants
that:
(i) it will maintain a level of quality in all
products sold under the Trademarks or the Company's subsequently
adopted trademarks and trade names consistent with the Company's
practices as of the Closing Date;
(ii) it will not aid any third party in attempting
to register any trademark or service mark which is the same or
confusingly similar to the Trademarks, or to trademarks and trade
names subsequently adopted by the Company; provided, however, that
nothing in the foregoing shall prevent the Company from entering into
agreements with third parties whereby the Company licenses the right
to use the Trademarks;
(iii) it will provide such assistance as the Agent
may reasonably require in relation to any application by the Agent to
register or maintain the registration of any Trademark;
(iv) during the term of this Agreement and at its
own expense, it will apply for registration with the U.S. Patent and
Trademark Office and do all things necessary to obtain and maintain
such registrations with respect to all Trademarks used in the United
States which, in the reasonable exercise of the Company's business
judgment, are material to the business;
(v) it will notify the Agent of any unauthorized use
by others of the Trademarks which may have a material adverse effect
on the business promptly as it comes to the attention of any executive
officer of the Company possessing familiarity with the Trademarks;
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(vi) in the event of unauthorized use of a Trademark
by a third party, it will diligently pursue all appropriate action, as
determined by the Company in the reasonable exercise of its business
judgment, including, but not limited to, diligent efforts to persuade
the alleged infringer or violator to desist, and/or the bringing and
prosecuting of an appropriate suit or other proceeding against the
infringer;
(vii) during the term of this Agreement, it will not
further encumber the Trademarks or the Licenses without the prior
written consent of the Majority Noteholders; and
(viii) it shall grant a second priority Security
Interest to the Agent in all trademarks, trade names and service
marks, and in the event any of the foreign registrations of
trademarks, trade names or service marks become material to the
business, it shall, upon the request of the Agent, take all steps
necessary to allow the Agent to perfect its Security Interest in such
foreign registrations.
7.18. Caster Finance. In the event the Caster Property is
dividended to J&L Holdings and thereafter J&L Holdings or any of its Affiliates
desires to finance a facility in connection therewith, the Company shall cause
J&L Holdings to give the Purchasers a good faith opportunity to bid on such
financing.
7.19. Delivery of Information for Rule 144A Transactions. If
a holder of Notes proposes to transfer any such Notes pursuant to Rule 144A
under the Securities Act (as in effect from time to time), the Company agrees
to provide (upon the request of such holder or the prospective transferee) to
such holder and (if requested) to the prospective transferee any financial or
other information concerning the Company and its Subsidiaries which is required
to be delivered by such holder to any transferee of such Notes pursuant to such
Rule 144A.
7.20. No Impairment. The Company will not, by amendment of
its Certificate of Incorporation or through any consolidation, merger,
reorganization, transfer of assets,
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dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of any Loan
Document.
7.21. Mortgagee Waiver. The Company shall provide to the
Agent within 10 days of the Closing Date an executed Mortgagee Waiver in
substantially the same form as delivered to the Senior Lender on the Closing
Date.
SECTION 8. NEGATIVE COVENANTS
The Company further covenants and agrees that it will not:
8.1. Minimum Net Worth. Permit its Consolidated Tangible Net
Worth determined at the end of any fiscal quarter to be less than the sum of
(i) $6 million and (ii) the greater of (x) zero or (y) twenty-five percent
(25%) of the Consolidated Net Income of the Company for the period beginning on
the Closing Date and ending the date of any such determination.
8.2. Borrowing. Create, incur, assume or suffer to exist
any liability for Indebtedness for Borrowed Money except (i) the Company's
Obligations, (ii) Permitted Subordinated Indebtedness, (iii) Permitted Senior
Indebtedness, and (iv) the L/C Obligations (as defined in the Loan and Security
Agreement as in effect on the date hereof).
8.3. Liens. Create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except
Permitted Liens.
8.4. Merger and Acquisition. Consolidate with or merge
with or into any Person, or acquire directly or indirectly all or substantially
all of the capital stock of any Person; provided that, so long as no Event of
Default or Potential Default is continuing, a merger after which the Company is
the surviving corporation and which does not cause a Potential Default shall be
permitted.
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8.5. Contingent Liabilities. Except for the Withdrawal
Liability, assume, guarantee, endorse, contingently agree to purchase, become
liable in respect of any letter of credit, or otherwise become liable upon the
obligation of any Person, except (i) liabilities arising from the endorsement
of Negotiable Collateral for deposit or collection or similar transactions in
the ordinary course of business, (ii) the L/C Obligations, and (iii) other
contingent liabilities not in excess of $500,000 in the aggregate.
8.6. Restricted Payments. Make any Restricted Payment.
8.7. Investments and Loans. Purchase or otherwise
acquire, hold or invest in the capital stock of, or hold any other interest in,
make any arrangement for the purpose of providing funds or credit to, or make
any other Investment, whether by way of capital contribution or otherwise, in
or with any Person, including, without limitation, any Affiliate, except (i)
Investments in direct obligations of, or instruments unconditionally guaranteed
by, the United States of America or in certificates of deposit issued by a
Qualified Depository, (ii) Investments in commercial or finance paper which is
rated either "Aaa", "AAA" or better by Moody's Investors Service, Inc. or
Standard & Poor's Rating Group, respectively, or at the equivalent rate by any
of their respective successors, (iii) any interests in any money market account
maintained with a Qualified Depository, the Investments of which are restricted
to the types specified in clause (i) above, (iv) Accounts arising from the sale
of goods and services in the ordinary course of business of the Company, and
(v) non-cash proceeds from any sale if such sale is otherwise permitted by this
Agreement and (vi) the Initial Interest Rate Cap Agreement and any renewal
thereof entered into by the Company at the request of the Purchasers.
8.8. Fundamental Business Changes. Engage in any business
other than the Business or a business substantially related to the Business or
materially change the nature of the Business.
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8.9. Sale or Transfer of Assets. Sell, lease, assign,
transfer or otherwise dispose of any Property except for disposition of (i)
Inventory in the ordinary course of business, (ii) Property which is not
material to or necessary for the continued operation of the Business; provided,
however, that the proceeds from such disposition shall remain subject to the
Security Interests, (iii) unusable items or Equipment which, in the ordinary
course of the Company's business (and subject to clause (ii) above), are
replaced with new items or Equipment of like function and comparable value to
the unusable items or Equipment when the same were new; provided, however, that
such replacement items and Equipment shall become subject to the Security
Interests, or (iv) Property disposed of on an arm's length basis to a Person
which is not an Affiliate of the Company and the aggregate proceeds of which in
any calendar year does not exceed $1,000,000 in the aggregate; provided,
further, that if when such Property is sold the proceeds of Property already
sold in such calendar year plus the proceeds of such Property to be sold will
exceed $500,000, then the aggregate Fair Market Value of such Property to be
sold and of all other such Property thereafter sold in such calendar year plus
the proceeds of Property already sold in such calendar year shall not exceed
$1,000,000.
8.10. Payments on Subordinated Indebtedness.
(a) Make any payment on the Notes, except as permitted by the
Subordination and Intercreditor Agreement and if after giving effect to such
payment, the Company would have Excess Availability of at least $1,000,000
assuming the Maximum Amount equals $15,000,000, the standards of eligibility
set forth in the definition of Eligible Accounts and Eligible Inventory have
not been modified or revised, no reserves are deemed necessary by the Senior
Lender as provided in the definition of Borrowing Base in the Loan and Security
Agreement, and Senior Lender has not reduced the advance rates pursuant to
Section 2.2.2 of the Loan and Security Agreement.
(b) Subject to the terms of the Management Subordination
Agreement, make any payment of management fees, except that regularly scheduled
periodic payments of the
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compensation due to CPT under the Management Agreement may be made to CPT in
equal monthly installments in advance, provided (i) no Event of Default or
Potential Default then exists under the Loan Documents, or would exist as a
result of giving effect to each such payment, (ii) such payments are made in
accordance with the terms of the Management Agreement and in any event not more
frequently than once each month, (iii) after giving effect to each such payment
the Company would have Excess Availability of at least $1,500,000, (iv) each
such payment in any month would not exceed the sum of (A) $37,500 plus (B) the
excess, if any, of $12,500 over the amount actually expended by the Company
during the immediately preceding month as Management Expenses (assuming
estimated accounting fees for standard auditing procedures are paid on a
monthly basis), and (v) after giving effect to each such payment, the aggregate
amount of all such payments in any fiscal year would not exceed the sum of
$600,000. In addition to the foregoing, the Company shall be permitted to
reimburse CPT for Management Expenses; provided, however, to the extent that
the aggregate amount of all such Management Expenses exceed $12,500 in any
month, such Management Expenses shall be itemized and a copy of such
itemization, together with such bills, invoices or other documentation as the
Purchasers may reasonably request relating to such Management Expenses shall be
delivered to the Agent and/or of each holder of a Warrant (if such holder is
not also a holder of a Note) concurrently with the financial statements
required to be delivered to the Agent and/or of each holder of a Warrant (if
such holder is not also a holder of a Note) pursuant to Section 7 hereof;
(c) Subject to the terms of the State Subordination
Agreement(s) then in effect, make any payment of State Debt, except payments of
principal and interest due on the State Debt may be made to the holder thereof
provided (i) no Event of Default or Potential Default then exists, or would
exist as a result of giving effect to such payment, (ii) after giving effect to
such payment the Company would have Excess Availability of at least $1,000,000,
and (iv) the ratio of the Company's Consolidated Cash Flow to Contractual Total
Debt Service for (i) the three months ending on June 30, 1995 is not less than
1.15:1.00, (ii) the six months ending on September 30, 1995 is not less than
1.00:1.00, (iii) the nine months ending on December
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31, 1995 is not less than 1.00:1.00, and (iv) the twelve-month period ending on
March 31, 1996, and on the last day of each calendar quarter thereafter, is not
less than 1.15:1.00.
8.11. Amendment of Charter and By-Laws. Amend, modify or
waive any term or provision of its corporate charter or by-laws, unless
required by law.
8.12. Acquisition of Additional Properties. Acquire or
engage in the acquisition of any Persons or of substantially all the assets of
any Persons the Fair Market Value of which in the aggregate is in excess of
$1,000,000.
8.13. Issuance of Stock. Issue or cause to be issued or sell
any shares of capital stock or, except for the Warrants, any securities
convertible into or exercisable for any shares of capital stock of the Company
resulting in a change of control of the Company, or otherwise allow for any
change in control of the Company. Except for any shares issued upon exercise
of the Warrants, any shares of capital stock or securities convertible into or
exercisable for any shares of capital stock of the Company which may hereafter
be issued by the Company shall be pledged to the Agent as security for the
payment and performance of all of the Company's Obligations, in form and
substance substantially identical to the Stock Pledge Agreement.
8.14. Capital Expenditures. Make Capital Expenditures in any
Loan Year in an amount exceeding $1,500,000 ("Maintenance Capital
Expenditures"), provided, however, that in addition to Maintenance Capital
Expenditures, the Company may make Capital Expenditures (i) during the period
commencing on the Closing and ending June 30, 1996, for discretionary projects,
including the purchase and installation of a reheat furnace, in an aggregate
amount not to exceed $8,000,000, and (ii) out of Excess Cash Flow for
additional projects subject to the Majority Noteholders' consent. Other than
with respect to Capital Expenditures financed to the extent of the Permitted
Senior Indebtedness and the State Debt, all Capital Expenditures shall be made
only out of internally generated funds, including Subsequent Advances (as
defined in the Loan and Security Agreement) under the Term Loan
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and Advances (as defined in the Loan and Security Agreement) under the
Revolving Loan.
8.15. Transactions with Affiliates. Except for transactions
otherwise specifically permitted by this Agreement, sell, lease, assign,
transfer or otherwise dispose of any Property to any Affiliate of the Company,
or lease Property, render or receive services or purchase assets from any such
Affiliate, unless such transaction is on terms and at rates no more favorable
to such Affiliate than those that would have been provided in an arm's-length
transaction between the Company and an unrelated third party. The Company
shall not loan any monies to any shareholders, directors, officers or partners
of the Company or any Affiliate or partner of any such Person, other than for
normal advances against salary in the ordinary course of the Business.
8.16. Subsidiaries, Joint Ventures, Management Contracts,
Capital Structure Changes. (i) Create or invest in any direct or indirect
Subsidiary or Joint Venture; (ii) divest itself of any material assets by
transferring them to any existing Affiliate or any future Subsidiary or
Affiliate or by entering into a partnership, joint venture, similar
arrangement; (iii) make any material change in its capital structure; or (iv)
except for the Management Agreement, enter into any management contract (not
including an employment contract for the full-time employment of an officer or
employee entered into in the regular course of the Company's Business) granting
or transferring to a third party management rights in the nature of control
over any material portion of the Company's Business.
8.17. Corporate Offices, Corporate Name, Corporate Records.
Transfer its executive offices or change its corporate name or maintain records
(including computer printouts and programs) with respect to Equipment at any
locations other than those at which the same are presently kept or maintained,
except upon the Majority Noteholders' prior written consent and after the
delivery to the Agent of financing statements in form satisfactory to the
Agent.
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8.18. Amendments to Agreements. Consent to any amendment to
the Acquisition Documents, the Contribution Documents, the Tax Sharing
Agreement, the CCC/Borrower Agreement, or, except to the extent provided in the
Subordination and Intercreditor Agreement, the Loan Documents (as that term is
defined in the Loan and Security Agreement).
8.19. Proxy Recognition. Recognize or give effect to any
proxy given in violation of the Stock Pledge Agreement.
8.20. Private Placement Status. Neither the Company nor any
agent nor other Person acting on the Company's behalf will do or cause to be
done (or will omit to do or to cause to be done) any act which act (or which
omission) would result in bringing the issuance or sale of the Notes, Warrants
or Shares within the provisions of Section 5 of the Securities Act (other than
in accordance with a registration and qualification of Shares under Section 17
hereof).
8.21. Amendments to Other Agreements. Without the prior
written consent of the Majority Noteholders, (i) amend the Tax Sharing
Agreement or (ii) consent to or request any amendment, modification, supplement
or waiver of any of the provisions of any agreement or instrument evidencing
(A) the rights of stockholders' of the Company or (B) the terms of (including
the purchase and sale of) any form of capital stock of the Company.
8.22. Senior Debt Service Coverage. The Company will not
permit the ratio of the Company's Consolidated Cash Flow to Contractual Senior
Debt Service (not including the Put Note) for (i) the three months ending on
June 30, 1995 to be less than 1.70:1.00, (ii) the six months ending on
September 30, 1995 to be less than 1.55:1.00, (iii) the nine months ending on
December 31, 1995 to be less than 1.25:1.00, and (iv) the twelve-month period
ending on March 31, 1996 and on the last day of each calendar quarter
thereafter, to be less than 1.25:1.00.
8.23. Total Debt Service Coverage. The Company will not
permit the ratio of the Company's Consolidated Cash Flow to Contractual Total
Debt Service (not including the Put Note) for
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(i) the three months ending on June 30, 1995 to be less than 1.15:1.00, (ii)
the six months ending on September 30, 1995 to be less than 1.00:1.00,
(iii) the nine months ending on December 31, 1995 to be less than 1.00:1.00,
and (iv) the twelve-month period ending on March 31, 1996 and on the last day
of each calendar quarter thereafter, to be less than 1.00:1.00.
SECTION 9. SUBORDINATION
Each holder of a Note, whether upon original issue or upon
transfer or assignment thereof, by his acceptance thereof agrees that the Notes
shall be subject to the provisions contained in the Subordination and
Intercreditor Agreement. The Subordination and Intercreditor Agreement shall
not apply to the right of a holder of Warrants to exercise Warrants using the
principal amount of Notes (or cash) in accordance with the terms of the
Warrants.
SECTION 10. CONDITIONS TO PURCHASERS' OBLIGATIONS
The Purchasers' obligations to purchase a Note or Notes and a
Warrant or Warrants hereunder is subject to satisfaction of the following
conditions at the Closing (any of which may be waived by the Purchasers):
10.1. Repurchase Agreement. The Company shall have entered
into a Repurchase Agreement dated the date hereof with the Purchasers in the
form of Exhibit H hereto (as from time to time assigned, supplemented or
amended or as the terms thereof may be waived, the "Repurchase Agreement").
10.2. Accuracy of Representations and Warranties. The
representations and warranties of the Company in the Loan Documents or in any
certificate or document delivered pursuant hereto or thereto shall be correct
and complete on and as of the Closing Date with the same effect as though made
on and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement).
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10.3. Compliance with Agreements; No Defaults. The Company
shall have performed and complied in all material respects with all agreements,
covenants in and conditions contained in the Loan Documents and any other
document contemplated hereby or thereby which are required to be performed or
complied with by the Company on or before the Closing Date. On the Closing
Date (after giving effect to the transactions contemplated hereby), there shall
be no Event of Default or Potential Default.
10.4. Officers' Certificate. The Purchasers shall have
received a certificate dated the Closing Date and signed by the President or
any Vice President and by the Secretary or the Treasurer (or chief financial
officer) of the Company, to the effect that the conditions of Sections 10.2,
10.3 and 10.9 have been satisfied.
10.5. Proceedings. All corporate and other proceedings in
connection with the transactions contemplated by the Loan Documents, and all
documents incident thereto, shall be in form and substance satisfactory to the
Purchasers and their counsel, and the Purchasers shall have received all such
originals or certified or other copies of such documents as the Purchasers or
their counsel may reasonably request.
10.6. Legality; Governmental and Other Authorization. The
purchase of and payment for the Notes and Warrants shall not be prohibited by
any law or governmental order, rule, ruling, regulation, release,
interpretation or opinion applicable to the Purchasers and shall not subject
the Purchasers to any penalty, tax, liability or other onerous condition. Any
necessary consents, approvals, licenses, permits, orders and authorizations of,
and any filings, registrations or qualifications with, any governmental or
administrative agency or other Person, with respect to the transactions
contemplated by the Loan Documents shall have been obtained or made and shall
be in full force and effect. The Company shall have delivered to the
Purchasers, upon their reasonable request setting forth what is required,
factual certificates or other evidence, in form and substance satisfactory to
the Purchasers and their counsel, to enable the Purchasers to establish
compliance with this condition.
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10.7. Time of Purchase. The Closing shall not occur later
than April 7, 1995.
10.8. No Change in Law, etc. No legislation, order, rule,
ruling or regulation shall have been proposed, enacted or made by or on behalf
of any governmental body, department or agency, and no legislation shall have
been introduced in either House of Congress, and no investigation by any
governmental authority or administrative body shall have been commenced or
threatened, and no action, suit or proceeding shall have been commenced before,
and no decision shall have been rendered by, any court, other governmental body
or arbitrator, which, in any such case, in the Purchasers' reasonable judgment
could adversely affect, restrain, prevent or change the transactions
contemplated by the Loan Documents (including without limitation the issuance
of the Notes and the Warrants hereunder or the issuance of Shares upon exercise
of the Warrants) or materially and adversely affect the business, affairs,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company on a consolidated basis.
10.9. Completion of Acquisition. The Company will have
completed upon Closing the acquisition of the business and assets of J&L and
TCI, and all other transactions contemplated by the terms of the Acquisition
Agreement shall have been consummated.
10.10. Environmental Report. Purchasers shall have received
an environmental site assessment report prepared by Killam Associates in form
and substance satisfactory to Purchasers concerning all properties and
facilities currently operated and leased by the Company, TCI, Brighton, J&L,
and any Subsidiaries.
10.11. Contribution to Capital. In connection with the
Acquisition, CPT and the Shareholders shall have made a capital contribution to
the Company in the amount of not less than $7,350,000 cash and CPT shall have
contributed as capital the business and assets of Brighton.
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10.12. Net Operating Loss. CPT's NOL shall be at least $68
million and available to offset the Company's taxable income, and the
Purchasers shall have approved the form of Tax Sharing Agreement, which shall
be in full force and effect.
10.13. Fees. The Purchasers shall have received on the
Closing Date a non-refundable fee in the amount of $230,000.00 plus payment of
their counsel's fee.
10.14. No Material Adverse Change. There shall have been no
material adverse change in the business, affairs, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of J&L and TCI since September 30, 1994, or Brighton since December
31, 1994.
10.15. Other Financings. The Purchasers shall have approved
the terms of, and received copies of all documents relating to, a senior debt
financing consisting of a term loan (including, a capital expenditure facility
in the amount of $3 million) in the amount of $25 million, a revolver loan with
a minimum aggregate principal amount availability (subject to the terms of the
Loan and Security Agreement) of $15 million, all of which have been completed
or will be completed simultaneously with the Closing.
10.16. Related Agreements. The Company shall have delivered
to the Purchasers certified or executed original copies of:
(i) the Lease;
(ii) the Loan Documents (as defined in the Loan and
Security Agreement);
(iii) the Acquisition Documents;
(iv) the Contribution Documents; and
(v) to the extent specifically requested by the
Purchasers at least two Business Days
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in advance of Closing, certain of the Assigned
Contracts.
10.17. Security Interests. All filings of Uniform Commercial
Code financing statements, all recordings of the Mortgage and all other filings
and actions necessary to perfect the Security Interests as
second, valid and perfected Liens in the Property covered thereby, subject only
to Permitted Prior Liens, shall have been filed or taken and confirmation
thereof shall have been received by Agent. Senior Lender shall have received
the original of any certificates of title or other instruments necessary to be
delivered into Senior Lender's possession in order to perfect Agent's security
interest therein.
10.18. Searches. Tax lien, litigation, Uniform Commercial
Code, bankruptcy, and judgment searches on the Company, TCI, J&L and Brighton,
shall be acceptable to the Purchasers.
10.19. Material Agreements. Review and approval by the
Purchasers of all material agreements to which the Company is a party,
including without limitation, all documents in respect of the borrowing of
money, all joint venture agreements, supply agreements or requirements
contracts, royalty agreements, license agreements, employment/management
incentive agreements, and product warranties.
10.20. Lease. The Company shall deliver to the Purchasers
the Lease, which Lease shall be satisfactory to the Purchasers in their sole
discretion. Without limiting the generality of the foregoing, the Purchasers
shall be satisfied that the Lease contains standstill and non-disturbance
covenants from the lessors thereof and from each person holding a monetary
encumbrance affecting the Demised Premises which are acceptable to the
Purchasers, the lessor of the Lease shall have entered into a Landlord's
Consent with the Purchasers, and each holder of any monetary encumbrance
effecting the Demised Premises shall have entered into a Non-Disturbance
Agreement with the Purchasers. The Company shall also provide the Mortgage
covering the Demised Premises in favor of the Agent, and in form and content
satisfactory to the Purchasers.
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10.21. Title Commitment. A commitment to issue one or more
title insurance policies (the "Title Policies"), issued by insurance companies
satisfactory to the Purchasers, in amounts satisfactory to the Purchasers,
together with copies of all title exception documents, easements, operating
agreements and declarations affecting the Real Property. The Title Policies
shall (i) insure the Mortgage to be a valid second lien upon the Real Property,
and all appurtenant easements, in each case subject only to the Permitted Prior
Liens, (ii) be in the form of an American Land Title Association loan policy
revised as of the most recent date, (iii) contain, to the extent obtainable;
(A) so-called comprehensive endorsements if the improvements on the Real
Property have been completed; (B) an endorsement protecting forfeiture of
reversion as a result of covenants, restrictions or encroachments; (C)
endorsements specifically insuring the Purchasers that no restrictions of
record affecting the Real Property have been violated; and (D) such other
endorsements and affirmative coverages as the Purchasers may require, each in
form and content satisfactory to the Purchasers in all respects. The
Purchasers also shall have received evidence satisfactory to it that all
premiums in respect to the Title Policies have been paid.
10.22. Pay-off Letters and Releases. The Company shall
provide to the Purchasers documents in form and substance satisfactory to the
Purchasers setting forth the amounts necessary to repay and satisfy in full,
and evidencing the repayment and satisfaction in full of, the Existing
Indebtedness, and the release of any and all of the holders' of such
Indebtedness interest in the Collateral, including without limitation, Uniform
Commercial Code termination statements.
10.23. Transaction Costs. The Company shall provide to the
Purchasers a complete, itemized summary of all transaction costs incurred in
connection with the making of the Term Loan by the Senior Lender, the
consummation of the Acquisition and the Contribution and the issuance of the
Notes, as well as appropriate documentation evidencing such costs and the
payment thereof including, without limitation, invoices and cancelled checks.
All such information must be acceptable to the Purchasers, in the Purchasers'
sole discretion. Without limiting
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the generality of the foregoing, the Purchasers shall not find acceptable the
payment of any fees to BT Securities Corporation, except for an investment
banking fee in an amount not to exceed $1,200,000, which are not for the
reimbursement of actual transaction costs and expenses previously paid by BT
Securities Corporation and approved for reimbursement by Senior Lender.
10.24. Acquisition. The Purchasers shall have reviewed and
approved executed copies of all of the Acquisition Documents. Without in any
manner limiting the scope of the Purchasers' review, the Acquisition Documents
shall contain specific representations and warranties, in form and substance
satisfactory to the Purchasers, with respect to the accuracy of the financial
information submitted by TCI and J&L, and shall further contain indemnity
provisions acceptable to the Purchasers which shall address, among other items,
liability for environmental contamination and clean-up. The Purchasers shall
have received a certificate of the Chief Executive Officer of the Company to
the effect that the closing of the Acquisition pursuant to the Acquisition
Documents is occurring simultaneously with the Closing, and that no material
provisions of the Acquisition Documents were waived by the Company without the
Purchasers' prior consent.
10.25. Appraisals. Review and approval by the Purchasers of
recent orderly liquidation value appraisals of the Company's machinery,
Equipment and Real Estate performed by Valuation Research Corporation, which
appraisals shall, in the Purchasers' sole discretion, support a valuation for
such assets of not less than $19,500,000.
10.26. Tax Comfort Letter. The Purchasers must review and
find satisfactory a letter from the Company's tax advisors addressing the
availability for NOLs of CPT in an amount of not less than $68,000,000 which
NOLs would be available solely to the Company during the term of the Notes to
offset the Company's taxable income during such period.
10.27. Insurance. The Purchasers shall have received
evidence satisfactory to it of such casualty, hazard, public liability, product
liability and other insurance required by the
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Purchasers, written by insurers and in amounts and forms satisfactory to the
Purchasers.
10.28. Opinion of the Company Counsel. The Purchasers shall
have received an opinion dated the Closing Date and addressed to the Purchasers
of each of Kelley, McCann & Livingstone, and Klett Lieber Rooney & Schorling
counsel for the Company, in form and substance satisfactory to the Purchasers,
to the effect set forth in Exhibit I hereto.
10.29. Senior Loan. The Company shall have satisfied (or the
Senior Lender shall have waived) all of the conditions to Closing set forth in
the Loan and Security Agreement.
10.30. Other Documents and Opinions. The Purchasers shall
have received such other certificates, documents and opinions, in form and
substance satisfactory to the Purchasers and their counsel, relating to matters
incident to the transactions contemplated hereby as the Purchasers may
reasonably request.
SECTION 11. AMENDMENT AND WAIVER
(a) The Loan Documents may be amended (or any provision
hereof or thereof waived) only with the written consent of (i) the Majority
Noteholders, and (ii) the holder or holders of Warrants or Shares and
representing at least a majority of the sum of the Shares then outstanding and
the Shares then obtainable upon the exercise of all Warrants then outstanding,
if any; provided, however, that no such amendment or waiver shall (i) change
the fixed maturity of any Note, the rate or the time of payment of interest
thereon, the principal amount thereof, the premium thereon, the currency in
which the Notes are payable, the prepayment provisions of Section 6 hereof, the
current exercise price of a Warrant or the registration rights under Section 17
hereof, without the consent of the holder of each Note, Warrant or Share so
affected or (ii) reduce the aforesaid percentage of Notes, or reduce the
aforesaid percentage of Warrants or Shares, the holders of which are required
to consent to any such amendment or waiver, without the consent of the holders
of all the Notes, or, as the case may be, the holders of all Warrants
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and Shares, then outstanding or (iii) increase the percentage of the amount of
the Notes, the holders of which may declare the Notes to be due and payable
under Section 14 hereof, without the consent of the holders of all the Notes
then outstanding.
(b) The Company agrees that all holders of Notes or Warrants
shall be notified by the Company in advance of any proposed amendment or waiver
of any Loan Document, but failure to give such notice shall not in any way
affect the validity of any such amendment or waiver. In addition, promptly
after obtaining the written consent of the holders herein provided, the Company
shall transmit a copy of any amendment or waiver which has been adopted to all
holders of Notes, Shares or Warrants then outstanding, but failure to transmit
copies shall not in any way affect the validity of any such amendment or
waiver.
(c) The Company and each holder of a Note or Warrant then or
thereafter outstanding shall be bound by any amendment or waiver effected in
accordance with the provisions of this Section 11, whether or not such Note or
Warrant shall have been marked to indicate such modification, but any Note or
Warrant issued thereafter shall bear a notation as to any such modification
(but the failure to bear any such notation shall not affect the validity of any
such subsequently issued Note or Warrant, which shall be enforceable in
accordance with its terms subject to any such modification).
SECTION 12. EXCHANGE OF NOTES AND WARRANTS; CANCELLATION OF SURRENDERED NOTES
(a) Subject to Section 16 hereof, at any time at the request
of any holder of one or more of the Notes to the Company at its office provided
under Section 7.6 hereof, the Company at its expense (except for any transfer
tax or any other tax arising out of the exchange) will issue and deliver to or
upon the order of the holder in exchange therefor new Notes, in such
denomination or denominations as such holder may request (which must be in
denominations of no less than $500,000 plus one Note in a lesser denomination,
if required), in aggregate principal amount equal to the unpaid principal
amount of the Note or Notes surrendered and substantially in the form thereof,
dated as of
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the date to which interest has been paid on the Note or Notes surrendered (or,
if no interest has yet been so paid thereon, then dated the date of the Note or
Notes so surrendered) and payable to such Person or Persons or order as may be
designated by such holder. Any such new Note shall bear any notation required
by Section 11 hereof.
(b) Subject to Section 16 hereof, at any time at the request
of any holder of one or more of the Warrants to the Company at its office
provided under Section 7.6 hereof, the Company at its expense (except for any
transfer tax or any other tax arising out of the exchange) will issue and
deliver to or upon the order of the holder in exchange therefor a new Warrant
certificate or certificates of like tenor, in such amount or amounts as such
holder may request and calling in the aggregate on the face or faces thereof
for the number of Shares which are called for on the face or faces of the
Warrant certificate or certificates so surrendered, and in the name of such
holder or as such holder may direct. Any such new Warrant certificate shall
bear any notation required by Section 11 hereof.
(c) In the event that any Note is surrendered to the Company
upon the exercise of all or a portion of any Warrant, or upon a prepayment
under Section 6 hereof, the Company shall pay all accrued and unpaid interest
on such Note or such portion thereof and interest shall cease to accrue upon
that portion of the principal amount of such Note used for such exercise or
which was prepaid, and the right to receive, and any right or obligation to
make, any prepayment on such portion of the principal amount pursuant to
Section 6 hereof shall terminate all upon the date of such exercise or
prepayment and upon presentation and surrender of such Note to the Company.
(d) Upon the exercise in whole or in part of any Warrant or
upon any prepayment under Section 6 hereof, if only a portion of the principal
amount of a Note is used in such exercise or prepayment, then such Note shall
be surrendered to the Company and the Company shall simultaneously execute and
deliver to or on the order of the holder thereof, at the expense of the
Company, a new Note or Notes in principal amount equal to the unused portion of
such Note.
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(e) All Notes or portions thereof which have been used to
exercise all or a portion of a Warrant, or which have been prepaid under
Section 6 hereof, shall be cancelled by the Company and no Notes shall be
issued in lieu of the principal amount so used for such exercise or prepayment.
SECTION 13. REGISTRATION; REPLACEMENT OF NOTES AND WARRANTS
(a) The Company shall keep a register in which provisions
shall be made for the registration of the Notes and Warrants and the
registration of transfers of the Notes and Warrants. The register shall be
kept at the chief executive office of the Company. Upon surrender for
registration of transfer of any Note or Warrant at the chief executive office
of the Company, the Company shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Notes or Warrants, as the
case may be, of a like aggregate principal amount of Notes or number of Shares.
At the option of the holder of the Note or Warrant, its Notes or Warrants, as
the case may be, may be exchanged for other Notes or Warrants, as the case may
be, of any authorized denominations, of a like aggregate principal amount of
Notes or number of Shares, upon surrender of the Notes or Warrants, as the case
may be, to be exchanged at the chief executive office of the Company. Each new
Note issued upon transfer or exchange shall be in a principal amount of at
least $500,000 and in integral multiples of $500,000 and dated the date or
dates to which interest on the Notes or Warrants surrendered shall have been
paid. Each new Warrant issued upon transfer or exchange shall be for at least
5% of the total number of Shares and dated the date of the original Warrant.
All Notes or Warrants issued upon any registration of transfer or exchange of
Notes or Warrants, as the case may be, shall be the valid obligations of the
Company evidencing the same respective obligations, and entitled to the same
security and benefits under this Agreement and the other Loan Documents, as the
Notes or Warrants surrendered upon such registration of transfer or exchange.
The Company shall make a notation on each new Note of the amount of all
payments of principal previously made on the old Notes with respect to which
such new Note is issued and the date to which interest accrued on such old Note
has been paid.
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(b) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any Note or Warrant
and, in the case of any such loss, theft or destruction, upon delivery of an
indemnity agreement reasonably satisfactory to the Company, or in the case of
any such mutilation, upon surrender of such Note or Warrant (which surrendered
Note or Warrant shall be cancelled by the Company), the Company will, without
charge, issue a new Note or Warrant, as the case may be, of like tenor in lieu
of such lost, stolen, destroyed or mutilated Note or Warrant as if the lost,
stolen, destroyed or mutilated Note or Warrant were then surrendered for
exchange.
SECTION 14. DEFAULTS
(a) Any of the following shall constitute an "Event of
Default" (whether any such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(i) the Company defaults in the payment (whether or
not such payment is prohibited under Section 9 hereof or under the
Subordination and Intercreditor Agreement) of (A) any part of the
principal of, or Make Whole Premium or Special Premium on, any Note,
when the same shall become due and payable, whether at maturity or at
a date fixed for prepayment or by acceleration or otherwise, or (B)
the interest on any Note, when the same shall become due and payable,
and such default in the payment of interest shall have continued for
five (5) days or (C) any amount required to be paid by the Company
pursuant to the Repurchase Agreement and such default in payment shall
have continued for five (5) Business Days (except a payment which is
not made pursuant to the Repurchase Agreement as a result of the
operation of clause (i) or (ii) (and the proviso) of Section 6(a) of
the Repurchase Agreement) or (D) the Company fails to pay any other
amount due under a Loan Document and such default shall have continued
for five (5) Business Days after notice thereof from the Agent; or
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(ii) the Company fails to observe any of the
covenants or agreements contained in Section 7 or 8 hereof and, with
respect to covenants in Section 7 hereof, such failure shall continue
for a period of ten (10) days after written notice of such failure is
given by the Agent and, with respect to covenants in Section 8 hereof,
such failure shall continue for a period of five (5) days after
written notice of such failure is given by the Agent ; or
(iii) the Company defaults in the performance of
any other agreement or covenant contained in the Loan Documents and
such default shall not have been remedied within forty-five (45) days
after written notice from the Agent; or
(iv) any representation or warranty by the Company
in the Loan Documents or any statement or representation in any
certificate or other document delivered by the Company pursuant hereto
or thereto proves to have been incorrect in any material respect when
made; or
(v) the occurrence of an event of default under
Indebtedness for Borrowed Money or a Capitalized Lease (other than the
Company's Obligations) in excess of $1,000,000 in the aggregate which
resulted in such Indebtedness becoming due and payable by virtue of
acceleration prior to the date on which it otherwise would have become
due and payable, without such acceleration having been rescinded or
annulled within any applicable grace period, if any, applicable
thereto or forty-five (45) Business Days, if shorter; or
(vi) a final judgment or order (excluding judgment
amounts covered by insurance) which, either alone or together with
other outstanding final judgments against the Company and its
Subsidiaries, exceeds an aggregate of $1,000,000 (or the equivalent in
other currencies) is rendered against the Company or any Subsidiary
and such judgment or order shall not have been discharged or execution
thereof shall not have been stayed within sixty (60) days after entry
thereof; or
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(vii) the Company or any Subsidiary shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts; or a receiver or trustee is appointed for
the Company or any Subsidiary or for substantially all of its assets
and, if appointed without its consent, such appointment is not
discharged or stayed within sixty (60) days; or proceedings under any
law relating to bankruptcy, insolvency or the reorganization or relief
of debtors are instituted by or against the Company or any Subsidiary,
and, if contested by it, are not dismissed or stayed within 60 days;
or any writ of attachment or execution or any similar process is
issued or levied against the Company or any Subsidiary or any
significant part of its property and is not released, stayed, bonded
or vacated within sixty (60) days after its issue or levy; or the
Company or any Subsidiary takes corporate action in furtherance of any
of the foregoing; or
(viii) the Company or any ERISA Affiliate fails to
make any contributions required to be made to a Single Employer Plan
or Multiemployer Plan, any accumulated funding deficiency (within the
meaning of Section 4971 of the Code) occurs or exists with respect to
any Single Employer Plan (whether or not waived), the present value of
all benefits under all Single Employer Plans (based on those
assumptions used to fund such Single Employer Plans) exceeds, in the
aggregate, as of the last annual valuation date applicable thereto,
the actuarial value of the assets of such Single Employer Plans
allocable to such benefits by more than $1,000,000, or a Termination
Event occurs; or
(ix) other than with respect to the Withdrawal
Liability, (A) the Company or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan, (B) the Company or
such ERISA Affiliate does not have reasonable grounds for contesting
such withdrawal liability or is not in fact contesting such withdrawal
liability in a timely and appropriate manner and (C) the amount of the
withdrawal liability specified in such notice, when aggregated with
all other amounts required to be paid to
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Multiemployer Plans in connection with withdrawal liabilities
(determined as of the date or dates of such notification), exceeds
$1,000,000 or requires payments exceeding $100,000 in any year; or
(x) the Company or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, if solely as a result of such
reorganization or termination, the aggregate annual contributions of
the Company and its ERISA Affiliates to all Multiemployer Plans that
are then in reorganization or have been or are being terminated have
been or will be increased over the amounts required to be contributed
to such Multiemployer Plans for their most recently completed plan
years by an amount exceeding $100,000; or
(xi) (A) any Governmental Body shall revoke,
terminate, suspend or adversely modify any license, permit, approvals,
including without limitation, any approvals required for the continued
operation of the Business (the "Approvals"), or trademark or trade
name of the Company, the failure of which to continue would have a
material adverse effect upon the financial condition, business,
operations, profit, Property or prospects of the Company; or (B) there
shall exist any violation or default in the performance of, or a
failure to comply with, any lease, agreement or condition or term of
any license, permit or other governmental approval or consent, which
violation, default or failure would have a material adverse effect
upon the financial condition, business, operations, profit, Property
or prospects of the Company, or any lease or any such agreement
license, permit, Approvals, or governmental approval or consent shall
cease to be in full force and effect, or (C) any Operating Agreement
or other agreement which is necessary to the operation of the Business
shall be revoked or terminated and not replaced by a substitute
acceptable to the Majority Noteholders within fifty (50) days after
the date of such revocation or termination, such revocation or
termination and non-replacement would have a
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material adverse effect upon the financial condition, business,
operations, profit, Property or prospects of the Company; or
(xii) if any material portion of the Collateral
shall be seized or taken by a Governmental Body; or the Company shall
fail to maintain the Security Interests and priority of the Loan
Documents as against any Person; or the title and rights of the
Company to any material portion of the Collateral shall have become
the subject matter of litigation which, might, in the opinion of the
Majority Noteholders upon final determination result in an impairment
or loss of the security provided by the Loan Documents; or
(xiii) Excluding any ownership of the capital stock
of the Company by the holders of the Warrants upon exercise of the
Warrants, (A) J&L Holdings shall at any time own, beneficially and of
record, less than 100% in the aggregate of all of the issued and
outstanding shares of capital stock of the Company having ordinary
voting rights for the election of directors, (B) the Shareholders (or,
in the event of the death of any of them, his estate, legal
representative or heirs) and CPT shall at any time own, beneficially
and of record, less than 100% in the aggregate of all of the issued
and outstanding shares of capital stock of J&L Holdings having
ordinary voting rights for the election of director or (C) CPT shall
at any time own, beneficially and of record, less than 80.1% in the
aggregate of all of the issued and outstanding share of capital stock
of J&L Holdings having ordinary voting rights for the election of
directors.
(b) If an Event of Default occurs pursuant to Sections
14(a)(i) through (vi) hereof, then and in each such event any holder or holders
of more than twenty-five percent (25%) in aggregate principal amount of the
Notes then outstanding may at any time (unless all such Events of Default shall
theretofore have been waived or remedied) at its or their option, by written
notice or notices to the Company, declare all the Notes to be due and payable
in full. Upon any such declaration or upon the occurrence of an Event of
Default pursuant to clause (vii) of
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Section 14(a) hereof (in which case no declaration is required), all Notes
shall forthwith immediately mature and become due and payable, together with
interest accrued thereon, plus an amount equal to the Make Whole Premium, if
any, without presentment, demand, protest or notice, all of which are hereby
waived. However, if, at any time after the principal of the Notes shall so
become due and payable and prior to the date of maturity stated in the Notes,
all arrears (without giving effect to any such acceleration) of principal and
interest on the Notes (with interest at the rate specified in the Notes on any
overdue principal and, to the extent legally enforceable, on any overdue
interest) shall be paid by or for the account of the Company, then the holders
of Notes evidencing at least 50% of the principal amount outstanding under all
Notes, by written notice or notices to the Company, may rescind or annul such
declaration, but not waive the underlying Event of Default, and thereafter the
Notes may be accelerated as a result of such Event of Default only upon notice
from the Majority Noteholders. If any holder of a Note shall give any notice
or take any other action with respect to a claimed default, the Company,
forthwith upon receipt of such notice or obtaining knowledge of such other
action, will give written notice thereof to all other holders of the Notes then
outstanding, describing such notice or other action and the nature of the
claimed default.
SECTION 15. REMEDIES
(a) In case any one or more Events of Default shall occur and
be continuing, the holder of a Note or Warrant then outstanding may proceed to
protect and enforce the rights of such holder by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or in any Loan Document, or for an injunction
against a violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or for any other
remedy (including, without limitation, damages). In addition, the Agent may:
(i) without notice to or demand upon the Company,
make such payments and do such acts as the Agent considers necessary
or reasonable to protect its
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security interest in the Collateral. The Company agrees to assemble
the collateral if the Agent so requires, and to make the Collateral
available to the Agent as the Agent may designate. The Company
authorizes the Agent to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or Lien that in the Agent's determination appears
to be prior or superior to its security interest and to pay all
expenses incurred in connection therewith. With respect to any of the
Company's owned premises, the Company hereby grants the Agent a
license to enter into possession of such premises and to occupy the
same, without charge, for up to one hundred twenty (120) days in order
to exercise any of the Agent's rights or remedies provided herein, at
law, in equity, or otherwise;
(ii) ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in
the manner provided for herein) the Collateral. The Agent is hereby
granted a license or other right to use, without charge, the Company's
labels, patents, copyrights, rights of use of any name, trade secrets,
trade names, trademarks, service marks, and advertising matter, and
the goodwill associated with any of the foregoing, or any property of
a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any collateral and
the Company's rights under all licenses and all franchise agreements
shall inure to the Agent's benefit;
(iii) assume any and all of the obligations of the
Company under any of the Assigned Contracts and to perform any and all
acts that the Company is required or entitled to perform thereunder,
including, without limitation, enforcement of the Company's rights
pursuant to the terms thereof;
(iv) sell the Collateral at either a public or
private sale, or both, by way of one or more contracts or
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transactions, for cash or on terms, in such manner and at such places
(including the Company's premises) as the Agent determines is
commercially reasonable. It is not necessary that the Collateral be
present at any such sale;
(v) give notice of the disposition of the Collateral
as follows:
(A) the Agent shall give the Company
and each holder of a security interest in the
Collateral who has filed with the Agent a written
request for notice, a notice in writing of the time
and place of public sale, or, if the sale is a
private sale or some other disposition other than a
public sale is to be made of the Collateral, then
the time on or after which the private sale or other
disposition is to be made;
(B) the notice shall be personally
delivered or mailed, postage prepaid, to the Company
as provided in Section 20, at least ten (10)
calendar days before the date fixed for the sale, or
at least ten (10) calendar days before the date on
or after which the private sale or other disposition
is to be made, unless the Collateral is perishable
or threatens to decline speedily in value. Notice
to persons other than the Company claiming an
interest in the Collateral shall be sent to such
addresses as they have furnished to the Agent;
(C) if the sale is to be a public sale,
the Agent also shall give notice of the time and
place by publishing a notice one time at least ten
(10) calendar days before the date of the sale in a
newspaper of general circulation in the county in
which the sale is to be held;
(vi) the Agent or any Purchaser may credit bid and
purchaser at any public sale; and
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(vii) any deficiency that exists after disposition
of the Collateral as provided above will be paid immediately by the
Company. Any excess will be returned, without interest and subject to
the rights of third parties, by the Agent to the Company.
(b) In case of a default in the payment of any principal of
or interest on any Note, or default in the payment of amounts owing under any
Loan Document, or default in the observance of any other agreement or covenant
of the Company in any Loan Document, the Company will pay to the holder thereof
or party thereto, in addition to any interest or premium otherwise required,
such further amount as shall be sufficient to cover any and all costs and
expenses of enforcement and collection, including, without limitation,
reasonable attorneys' fees and expenses.
(c) No course of dealing and no delay on the part of any
holder of any Note or Warrant or any party to any Loan Document in exercising
any rights or remedies shall operate as a waiver thereof or otherwise prejudice
such holder's or party's rights. No right or remedy conferred hereby or by any
Loan Document shall be exclusive of any other right or remedy referred to
herein or therein or available at law, in equity, by statute or otherwise. To
the extent permitted under any applicable law, each of the Company and each
Subsidiary hereby irrevocably waives and relinquishes the benefit of any
valuation, stay, appraisal, extension or redemption laws, whether such laws
presently exist or may exist in the future, which laws might, but for this
Section 15(c), be applicable to any sale of any or all of the assets of the
Company or any Subsidiary (including without limitation the Collateral) made
pursuant to any judgment, order or decree of any court, or otherwise based on
any claim relating to or arising out of any of the Loan Documents.
(d) The Purchasers shall, in addition to other remedies
provided by law, have the right and remedy to have the provisions of any Loan
Document specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of any Loan Document will cause irreparable injury to the Purchasers
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and that money damages will not provide an adequate remedy. Nothing contained
herein shall be construed as prohibiting the Purchasers from pursuing any other
remedies available to the Purchasers for such breach or threatened breach,
including, without limitation, the recovery of damages from the Company.
(e) Except as may be otherwise specifically provided herein
or in any other agreement between the Purchasers and the Company which may be
applicable, the Company waives any right, to the extent applicable law permits,
to receive prior notice of or a judicial or other hearing with respect to (i)
any action or prejudgment remedy or proceeding by the Agent to take possession,
exercise control over, or dispose of any item of the Collateral in any instance
(regardless of where the same may be located) where such action is permitted
under the terms of this Agreement, any other Loan Document or by applicable
law, and (ii) of the time, place or terms of sale in connection with the
exercise of the Agent's rights hereunder. The Company also waives, to the
extent permitted by law, any bonds, security or sureties required by any
statute, rule or otherwise by law as an incident to any taking of possession by
the Agent of Property subject to the Agent's Lien. The Company also waives any
damages (direct, indirect, consequential or otherwise) occasioned by the
enforcement of the Agent's rights under this Agreement including the taking of
possession of any Collateral or the giving of notice to any account debtor, all
to the extent t hat such waiver is permitted by law. The Company also consents
that the Agent may enter upon any premises owned by or leased to the Company
without obligation to pay rent or other compensation or for use and occupancy,
through self help, without judicial process and without having first given
notice to the Company or obtained an order of any court. These waivers and all
other waivers provided for in this Agreement, the other Loan Documents and any
other agreements or instruments executed in connection herewith have been
negotiated by the parties and the Company acknowledges that it has been
represented by counsel of its own choice and has consulted such counsel with
respect to its rights hereunder.
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SECTION 16. RESTRICTIONS ON TRANSFER
Each holder of a Note or Warrant by acceptance thereof agrees
that it will not sell or otherwise dispose of any Notes, Warrants or Shares
unless such Notes, Warrants or Shares have been registered under, or have been
sold pursuant to an exemption from registration under, the Securities Act. As
a condition to the Company's obligation to issue a new Note or Warrant to a
transferee thereof which (x) is not a holder of a Note or Warrant, the
transferor must certify to the Company the facts on which the transferor is
relying for such exemption and if the Company in its reasonable opinion does
not believe such facts indicate any such exemption is available, the Company
shall so notify the transferor within ten (10) days of receipt of such
certification and the transferor, in order to obtain such issuance by the
Company, must supply the Company with a legal opinion from counsel selected by
the transferor (who may not be inside counsel of the transferor) concluding, in
form reasonably satisfactory to the Company, that such transfer is exempt from
registration under the Securities Act and applicable state securities laws and
(y) is a holder of a Note or Warrant, the transferor must represent to the
Company in writing that the transfer is so exempt.
SECTION 17. REGISTRATION RIGHTS
17.1. Piggyback Rights.
(a) If the Company shall at any time propose to file a
registration statement under the Securities Act for any underwritten sales of
shares of the Company's Common Stock (or any warrants, units, convertibles,
rights or other securities related or linked to any shares of the Company's
Common Stock) on behalf of the Company or otherwise, the Company shall give
written notice of such registration no later than 60 days before its filing
with the Commission to all holders of Warrants or Shares. If holders of
Warrants or Shares so request within thirty (30) days of receipt of such
notice, the Company shall include in any such registration the Shares held or
to be held after exercise of Warrants by such holders and requested to be
included in such registration.
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(b) The Company agrees that J&L Holdings will not file a
registration statement for any sales of shares of J&L Holdings' capital stock,
or any warrants, units, convertibles, rights or other securities related or
linked to any shares of J&L Holdings' capital stock, by or on behalf of J&L
Holdings or otherwise, without the prior written consent of the Majority
Noteholders.
17.2. Expenses. Subject to the limitations contained in this
Section 17.2 and except as otherwise specifically provided in this Section 17,
the entire costs and expenses of any registration and qualification pursuant to
Section 17.1 hereof shall be borne by the Company. Such costs and expenses
shall include, without limitation, the fees and expenses of counsel for the
Company and of its accountants, all other costs, fees and expenses of the
Company incident to the preparation, printing and filing under the Securities
Act of the registration statement and all amendments and supplements thereto,
the reasonable fees and expenses of counsel to the holders of Warrants or
Shares relating to such registration and qualification, the cost of furnishing
copies of each preliminary prospectus, each final prospectus and each amendment
or supplement thereto to underwriters, dealers and other purchasers of the
Shares and the costs and expenses (including fees and disbursements of counsel)
incurred in connection with the qualification of the Shares under the Blue Sky
laws of various jurisdictions. The Company shall not, however, pay
underwriting fees or commissions to the extent related to the sale of Shares
sold in any registration and qualification.
17.3. Procedures.
(a) In the case of each registration or qualification
pursuant to Section 17.1, the Company will keep all holders of Warrants or
Shares advised in writing as to the initiation of proceedings for such
registration and qualification and as to the completion thereof, and will
advise any such holder, upon request, of the progress of such proceedings.
(b) At the Company's expense, the Company will keep each
registration and qualification under this Section 17 effective (and in
compliance with the Securities Act) by such
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action as may be necessary or appropriate for a period of one hundred twenty
(120) days after the effective date of such registration statement, including,
without limitation, the filing of post-effective amendments and supplements to
any registration statement or prospectus necessary to keep the registration
statement current and the further qualification under any applicable Blue Sky
or other state securities laws to permit such sale or distribution, all as
requested by such holder or holders. The Company will immediately notify each
holder on whose behalf Shares have been registered pursuant to this Section 17
at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of which
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
(c) The Company will furnish to each holder on whose behalf
Shares have been registered pursuant to this Section 17 a signed counterpart,
addressed to such holder, of (i) an opinion of counsel for the Company, dated
the effective date of such registration statement, and (ii) a so-called "cold
comfort" letter signed by the independent public accountants who have certified
the Company's financial statements included in such registration statement, and
such opinion of counsel and accountants' letter shall cover substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of such 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 underwriters in connection with underwritten public offerings of securities.
(d) Without limiting any other provision hereof, in
connection with any registration of Shares under this Section 17, the Company
will comply with the Securities Act, the Securities Exchange Act and all
applicable rules and regulations of the Commission, and will make generally
available to its securities holders, as soon as reasonably practicable, an
earnings statement covering a period of at least twelve (12) months, beginning
with
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the first month of the first fiscal quarter after the effective date of such
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act.
(e) In connection with any registration of Shares under this
Section 17, the Company will provide a transfer agent and registrar for the
Shares not later than the effective date of such registration statement.
(f) In connection with any registration of Shares under this
Section 17, the Company will, if requested by the underwriters for any Shares
included in such registration, enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, provisions relating to
indemnification and contribution. The holders on whose behalf Shares are to be
distributed by such underwriters shall be parties to any such underwriting
agreement, and 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 of Warrants or Shares.
Such underwriting agreement shall comply with Section 17.5 hereof.
(g) If the Company at any time proposes to register any of
its securities under the Securities Act, whether or not for sale for its own
account, and such securities are to be distributed by or through one or more
underwriters, then the Company will use its best efforts, if requested by any
holder of Warrants or Shares who requests registration of Shares in connection
therewith pursuant to Section 17.1 hereof, to arrange for such underwriters to
include such Shares among the securities to be distributed by or through such
underwriters.
(h) Upon request by any holder of Warrants or Shares who has
requested such registration, the Company will give such holder and their
underwriters, if any, and their respective counsel and accountants, (i) such
information regarding the
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preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, as
such holder may specify, and (ii) opportunities to discuss the business of the
Company with its officers, its counsel and the independent public accountants
who have certified its financial statements, as shall be necessary, in the
opinion of such holders or such underwriters or their respective counsel, in
order to conduct a reasonable and diligent investigation within the meaning of
the Securities Act. Without limiting the foregoing, each registration
statement, prospectus, amendment, supplement or any other document filed with
respect to a registration under this Section 17 shall be subject to review and
reasonable approval by the holders registering Shares in such registration and
by their counsel.
17.4. Provision of Documents. The Company will, at the
expense of the Company, furnish to each holder of Warrants or Shares with
respect to which registration has been effected, such number of registration
statements, prospectuses, offering circulars and other documents incident to
any registration or qualification referred to in Section 17.1 or 17.2 as such
holder from time to time may reasonably request.
17.5. Indemnification. The Company will indemnify and hold
harmless each holder of Warrants or Shares and any underwriter (as defined in
the Securities Act) for such holder and each person, if any, who controls the
holder or underwriter within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint or several, and expenses
(including reasonable attorneys' fees and expenses and reasonable costs of
investigation) to which the holder or underwriter or such controlling person
may be subject, under the Securities Act or otherwise, insofar as any thereof
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any registration statement under which such
Shares were registered under the Securities Act pursuant to Section 17.1
hereof, any prospectus or preliminary prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein for necessary to make the statements therein not misleading,
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except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or alleged untrue statement or
omission or alleged omission based upon information furnished to the Company in
writing by such holder or by any underwriter for such holder expressly for use
therein (with respect to which information such holder or underwriter shall so
indemnify and hold harmless each other and the Company, any underwriter for the
Company and each person, if any, who controls the Company, such holder or such
underwriter within the meaning of the Securities Act).
17.6. Certain Limitations in Connection with Future Grants of
Registration Rights. From and after the date of this Agreement, the Company
shall not enter into any agreement with any holder or prospective holder of any
Common Stock providing for the granting to such holder of incidental or
"piggy-back" registration rights unless such agreement includes provisions to
the effect that, in the case of a registered underwritten public offering of
the Company's Common Stock to which Section 17.1 hereof applies, such agreement
gives the complete priority to the registration and offering of Shares held by
holders of Warrants or Shares if marketing factors require a limitation on the
number of securities of the Company to be included in such offering.
SECTION 18. EXPENSES; INDEMNIFICATION
(a) Expenses; Taxes. Whether or not the transactions herein
contemplated are consummated, the Company will pay (i) the costs and expenses
of the preparation and printing of the Loan Documents and the furnishing of all
opinions by counsel for the Company, (ii) the fees and disbursements of Morgan,
Lewis & Bockius in connection with the Loan Documents and the transactions
contemplated hereby and thereby (whether or not a Closing occurs hereunder),
(iii) the fees and disbursements of counsel to the holders of Notes and
Warrants in connection with any amendments to or modifications or waivers of
any provisions of the Loan Documents or in connection with any other agreements
between such holders and the Company and (iv) the fees and expenses of any
investment banker, broker or finder involved with the Loan Documents or any of
the transactions contemplated hereby or thereby. The obligations of the
Company under this Section 18
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shall survive the Closing, the payment or cancellation of the Notes and the
exercise of the Warrants and any termination of the Loan Documents.
The Company agrees to pay, or cause to be paid, all
documentary, stamp and other similar taxes levied under the laws of the United
States of America or any state or local taxing authority thereof or therein in
connection with the issuance and sale of the Notes and the Warrants and the
execution and delivery of this Agreement and the Repurchase Agreement and any
other Loan Document or other documents or instruments contemplated hereby or
thereby and any modification of any of the Loan Documents or any such other
documents or instruments and will hold the Purchaser harmless without
limitation as to time against any and all liabilities with respect to all such
taxes; provided, however, that the Company shall not be required to pay any tax
or other governmental charge which may be payable in respect of any transfer
involved in the issue or delivery of any Warrant certificates or Share
certificates in a name other than that of the holder of record of such
Warrants.
(b) Indemnification. Whether or not the transactions
contemplated by this Agreement are consummated, the Company hereby agrees to
indemnify and hold each Purchaser and each holder of a Note or Warrant or Share
harmless (including any of such Purchaser's or holder's affiliated companies)
and any of such Purchaser's or holder's directors, officers, employees, or
agents and any person controlling (within the meaning of Section 20(a) of the
Securities Exchange Act) such Purchaser or holder or any of its affiliated
companies (collectively, the "Indemnified Persons") from and against any and
all losses, claims, damages, liabilities, securities law penalties, and
expenses whatsoever (including, but not limited to, any and all reasonable fees
and expenses whatsoever incurred by an Indemnified Person and its attorneys in
investigating, preparing for, defending against, acting as a witness, providing
evidence, producing documents, or taking any other action in respect of any
litigation or proceeding, commenced or threatened, or any claim whatsoever),
(collectively, the "Losses") arising out of or in connection with the Loan
Documents, other than to the extent Losses result from the gross negligence or
wilful misconduct of the Indemnified
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Person or breach of any covenant in the Loan Documents by the Indemnified
Person. The foregoing indemnity shall be in addition to any other rights which
the Indemnified Persons may have against the Company otherwise than under this
paragraph. If a court shall hold for any reason that the preceding
indemnification is unavailable to any Indemnified Person as to any matter for
which it would be available if enforceable in accordance with its terms, the
Company on the one hand and the Indemnified Person on the other agree to
contribute to such loss in such proportion as is appropriate to reflect the
relative benefits and the relative fault of the Company on the one hand and of
the Indemnified Person on the other in connection with the statements, actions,
or omissions which results in such Loss, as well as any other relevant
equitable considerations.
If any Indemnified Party is entitled to indemnification
hereunder, such Indemnified Party shall give prompt notice to the Company of
any claim or of the commencement of any proceeding with respect to which such
Indemnified Party seeks indemnification pursuant hereto and of which such
Indemnified Party knew or reasonably should have known; provided, however, that
the failure so to notify the Company shall not relieve the Company from any
obligation or liability except to the extent that the amount owed by the
Company has been increased by such failure. The Company shall have the right,
exercisable by giving written notice to an Indemnified Person within 20
Business Days after receipt of written notice from such Indemnified Person of
such claim or proceeding, to assume, at its expense, the defense of any such
claim or proceeding; provided, however, that an Indemnified Person shall have
the right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless: (1) the Company
agrees to pay such fees and expenses; or (2) the Company fails promptly to
assume, or to diligently pursue, the defense of such claim or proceeding; or
(3) the named parties to any such claim or proceeding (including any impleaded
parties) include both such Indemnified Person and one or more of the Company or
an Affiliate of the Company, and such Indemnified Person shall have been
advised by counsel that there may be one or more material defenses available to
such Indemnified Person which are different
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from or additional to those available to the Company or such Affiliate; or (4)
an Event of Default is continuing; or (5) the claim or proceeding seeks to
impose criminal penalties against the Indemnified Person (in which case if such
Indemnified Person notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not have the
right to assume the defense thereof, it being understood, however, that the
Company shall not, in connection with any one such claim or proceeding or
separate but substantially similar or related claims or proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such Indemnified
Person). Whether or not such defense is assumed by the Company, such
Indemnified Party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld or
delayed).
SECTION 19. HOME OFFICE PAYMENTS
As long as the Purchaser or any payee named in the Notes
delivered to the Purchaser on the Closing Date, or any institutional holder
which is a direct or indirect transferee from the Purchaser or such payee,
shall be the holder of any Note, the Company will make payments (whether at
maturity, upon mandatory or optional prepayment, upon repurchase or otherwise)
of principal, interest and premium, if any, (i) by check payable to the order
of the holder of any such Note duly mailed or delivered to the Purchaser at its
address specified in Exhibit A, or at such other address as the Purchaser or
such other holder may designate in writing, or, (ii) if requested by the
Purchaser or such other holder, by wire transfer to the Purchaser's or such
other holder's (or its nominee's) account at any bank or trust company in the
United States of America, notwithstanding any contrary provision herein or in
any Note with respect to the place of payment. IF THE PURCHASER HAS PROVIDED
AN ADDRESS ON EXHIBIT A HERETO FOR PAYMENTS BY WIRE TRANSFER, THEN THE
PURCHASER SHALL BE DEEMED TO HAVE REQUESTED WIRE TRANSFER PAYMENTS UNDER THE
PRECEDING CLAUSE (ii). All such payments shall be made in federal or other
immediately available funds and
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shall arrive by 1:00 p.m. local time at the place of payment on the day when
due.
SECTION 20. CREATION OF SECURITY INTEREST; PLEDGE; MORTGAGES
20.1. Grant of Security Interest. Company hereby assigns to
Agent, and grants to Agent a continuing Security Interest in, all currently
existing and hereafter acquired or arising Collateral in order to secure prompt
repayment of any and all of Company's Obligations. In addition, Company hereby
assigns to Agent and grants to Agent a continuing Security Interest in all of
Company's right, title and interest in, to and under the Assigned Contracts in
order to secure prompt repayment of all of Company's Obligations. Agent's
Security Interest in the Collateral and the Assigned Contracts shall attach to
all Collateral and the Assigned Contracts without further act on the part of
Agent or Company. Company hereby confirms and acknowledges that,
notwithstanding the foregoing assignment and grant of a Security Interest in
the Assigned Contracts, Agent has not assumed nor will it assume or be or
become liable for any of the obligations of Company under the Assigned
Contracts and Company shall remain fully liable for the performance of all such
obligations, except as specifically set forth herein.
20.2. Delivery of Additional Documentation Required. Company
shall execute and deliver to Agent, prior to or concurrently with Company's
execution and delivery of this Agreement and at any time thereafter at the
request of Agent, all financing statements, continuation financing statements,
fixture filings, security agreements, chattel mortgages, pledges, assignments,
endorsements of certificates of title, applications for title, affidavits,
reports, notices, schedules of accounts, letters of authority, and all other
documents that Agent may reasonably request, in form satisfactory to Agent, to
perfect and continue perfection of the Security Interests in the Collateral and
in order to fully consummate all of the transactions contemplated under the
Loan Documents.
20.3. Power of Attorney. Company hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as Company's
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true and lawful attorney, with power to: (i) sign the name of Company on any
of the documents described in this Section 20 or on any other similar documents
to be executed, recorded, or filed in order to perfect or continue perfection
of the Security Interests; (ii) endorse Company's name on any checks, notices,
acceptances, money orders, drafts, or other item of payment or security that
may come into Agent's possession (to the extent such constitutes Collateral);
and (iii) at any time that a Potential Default or an Event of Default has
occurred, make, settle, and adjust all claims under Company's policies of
insurance or in respect of condemnation proceedings, and make all
determinations and decisions with respect to such policies of insurance or
condemnation proceedings. With respect to the matters described in clause
(iii) of the preceding sentence, Agent shall not act pursuant to the foregoing
power of attorney until Agent has provided Company with notice of Agent's
intent so to act not less than five (5) Business Days prior to any such
proposed action and, in the event Company has taken the necessary steps during
such period to settle or adjust such disputes or claims in a manner
satisfactory to Agent, or is otherwise proceeding toward a resolution of such
matters in a manner satisfactory to Agent, Agent shall allow Company to
complete such settlement so long as Company continues to diligently prosecute
the same toward a conclusion. The appointment of Agent as Company's attorney,
and each and every one of Agent's rights and powers, being coupled with an
interest, is irrevocable until all of Company's Obligations have been fully
repaid and performed and Agent's obligations hereunder are terminated.
20.4. Right to Inspect. Agent (through any of its officers,
employees, or agents) shall have the right, from time to time hereafter to
inspect Company's Books and to check, test, and appraise the Collateral in
order to verify Company's financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral, in a manner
consistent with Section 7.4.
20.5. Stock Pledge Agreement. In consideration for Agent's
providing financing to Company, J&L Holdings shall pledge to Agent all of the
issued and outstanding capital stock of
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Company to secure payment and performance of all of Company's Obligations
pursuant to the Stock Pledge Agreement.
20.6. Mortgage. In consideration for Agent's providing
financing to Company, Company will execute and deliver to Agent the Mortgage.
20.7. Releases Upon Termination. Upon the termination of
this Agreement and the full and permanent satisfaction of and payment in full
of all of Company's Obligations, Agent shall deliver to Company upon its
request therefor and at Company's expense, releases, reconveyances and
satisfactions of all financing statements, mortgages, notices of assignment and
other registrations of security, and Company shall also deliver to Agent an
unqualified release of all of Agent's obligations under all Loan Documents and
an acknowledgment that the same have been terminated.
20.8. Recourse to Security. Recourse to security shall not
be required for any of Company's Obligations hereunder nor shall Agent be
required to first marshal, dispose of, or realize upon any security or
Collateral.
SECTION 21. THE AGENT
21.1. Appointment. (a) Each Purchaser hereby irrevocably
designates and appoints the Agent as the agent of such Purchaser under this
Agreement, and each such Purchaser irrevocably authorizes the Agent, as the
agent for such Purchaser, to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto.
(b) All Collateral shall be held or administered by the
Agent for the ratable benefit of the Purchasers. Any proceeds received by the
Agent from the foreclosure, sale, lease, or other disposition of any of the
Collateral and any other proceeds received pursuant to the terms of the Loan
Documents shall be applied, first, to the cost of any such foreclosure,
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sale, lease or other disposition and, second, to the payment in full of the
remaining Company's Obligations pro rata in proportion to the amount of the
Company's Obligations owed to each Person.
21.2. Delegation of Duties. The Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties.
21.3. Reliance by Agent. The Agent may deem and treat the
registered owner of any Note as the owner thereof for all purposes. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement unless it shall first receive such advice or concurrence of the
Majority Noteholders as it deems appropriate. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Majority Noteholders, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Purchasers and all future holders of the Notes.
21.4. Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Potential Default or Event of
Default hereunder unless the Agent has received notice from the Company
referring to this Agreement, describing such Potential Default or Event of
Default and stating that such notice is a "notice of default". The Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Potential Default or Event of Default as it shall
deem advisable in the best interests of the Purchasers.
21.5. Non-Reliance on Agent and Other Purchasers. Each
Purchaser expressly acknowledges that neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the Company, shall be
deemed to constitute any representation or warranty by the Agent to any
Purchaser.
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21.6. Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to and generally engage in any kind of business with
the Company as though the Agent were not the Agent hereunder. With respect to
its Loans made or renewed by it and any Note issued to it, the Agent shall have
the same rights and powers under this Agreement as any Purchaser and may
exercise the same as though it were not the Agent, and the terms "Purchaser"
and "Purchasers" shall include the Agent in its individual capacity.
21.7. Successor Agent. The Agent may resign as Agent upon 20
days' notice to the Purchasers. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Purchasers on whose behalf
such Agent is acting shall appoint a successor agent for the Purchasers,
whereupon such successor agent shall succeed to the rights, powers and duties
of the Agent, and the term "Agent" shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated, without any other or further act or deed on the part of
such former Agent or any of the parties to this Agreement or any holders of the
Notes. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 21 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the other Loan Documents. The Agent shall use its best efforts to notify the
Company of any such resignation; provided, however, neither the Agent nor the
Purchasers shall be held liable in any respect for the failure to provide such
notice; and further provided, however, that until the Company receives notice
of Agent's resignation and of the appointment of a successor agent, the Company
shall be entitled to rely upon the Agent as the Agent hereunder.
21.8. Co-Agent. Rhode Island Hospital Trust National Bank
shall be entitled to designate and appoint a co-agent (the "Co-Agent") to act
as Co-Agent with the Agent and to take such actions on its behalf as under the
provisions of this Agreement and to exercise the same type of powers and
perform the same type of duties as are expressly delegated to the Agent by the
terms of this Agreement, together with such other powers as are reasonably
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incidental thereto subject to the following (provided that at no time may there
be more than two Persons designated as Agent or Co- Agent):
(a) In the event either the Agent or the Co-Agent shall have
knowledge of any material default by the Company in respect of any of the
Notes, or shall have knowledge of any matter which may adversely affect the
interest of the other party in the Notes, the Warrants, the Loan Documents or
the Collateral, such party shall give prompt written notice of such default to
the other party; and
(b) Excepting as specifically elsewhere herein or in the Loan
Document, the Agent and the Co-Agent agree that all actions taken or not taken
with respect to the Company, the Notes, the Warrants, the Loan Documents or the
Collateral and all related matters shall be taken or not taken only with the
joint concurrence of the Agent and the Co-Agent (it being understood that the
Agent and the Co-Agent are in turn directed in their actions by their
respective Purchasers as provided in this Agreement). In particular, but not
by way of limitation of the foregoing, the Agent and the Co-Agent agree not to
do any of the following without the concurrence of the other (a) amend or waive
any provision of any Loan Document, (b) release the Company from any obligation
under a Loan Document, (c) grant any consent or approval under any Loan
Document, (d) after any taking of title, possession or control of any
Collateral, manage, operate, sell, lease or otherwise transfer any thereof or
(f) hire counsel, accountants, engineers or other experts or advisers if the
costs thereof are to be reimbursed or shared by the Agent and the Co-Agent.
SECTION 22. NOTICES
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, consents and other communications
hereunder or under the Loan Documents shall be in writing and shall be
delivered by hand or shall be sent by telex or telecopy (confirmed by
registered, certified or overnight mail or courier, postage and delivery
charges prepaid), to the following addresses:
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(a) if to the Purchaser, at the Purchaser's address as set
forth in Exhibit A hereto, or at such other address as may have been furnished
to the Company by the Purchaser in writing; or
(b) if to any other holder of a Note or Warrant, at such
address as the payee or registered holder thereof shall have designated to the
Company in writing; or
(c) if to the Company, at care of CPT Holdings, Inc., 1430
Broadway, 13th Floor, New York, NY 10018, attention: President, with a copy to
Kelley, McCann & Livingstone, BP America Building, 200 Public Square, 35th
Floor, Cleveland, Ohio 44114, attention: Michael D. Schenker, or at such other
address as may have been furnished in writing by the Company to the Purchaser
and to the other holders of Notes and Warrants.
Whenever any notice is required to be given hereunder, such notice shall be
deemed given and such requirement satisfied only when such notice is delivered
or, if sent by telex or telecopier, when received, unless otherwise expressly
specified or permitted by the terms hereof.
SECTION 23. MISCELLANEOUS
23.1. Entire Agreement. The Loan Documents, together with
any further agreements entered into by the Purchaser and the Company at the
Closing, contain the entire agreement between the Purchaser and the Company,
and supersede any prior oral or written agreements, commitments, terms or
understandings, regarding the subject matter hereof.
23.2. Survival. All agreements, representations and
warranties contained in the Loan Documents or any document or certificate
delivered pursuant hereto or thereto shall survive, and shall continue in
effect following, the execution and delivery of such Loan Documents, the
closings hereunder and thereunder, any investigation at any time made by the
Purchasers or on their behalf or by any other Person, the issuance, sale and
delivery of the Notes and the Warrants, any disposition thereof and any payment
or cancellation of the Notes, and any exercise of
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<PAGE> 132
the Warrants and any disposition thereof; provided, that Sections 7 and 8 shall
terminate upon the payment of all outstanding Notes. All statements contained
in any certificate or other document delivered by or on behalf of the Company
pursuant hereto shall constitute representations and warranties by the Company
hereunder.
23.3. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument, and all signatures need not appear on
any one counterpart.
23.4. Headings. The headings and captions in this Agreement
and the table of contents are for convenience of reference only and shall not
define, limit or otherwise affect any of the terms or provisions hereof.
23.5. Binding Effect and Assignment.
(a) The terms of this Agreement shall be binding upon, and
inure to the benefit of, the parties and their respective successors and
permitted assigns whether so expressed or not.
(b) The Company may not assign any of its obligations, duties
or rights under any of the Loan Documents, except pursuant to Section 8.4
hereof or with the Majority Noteholders consent.
(c) In addition to any assignment by operation of law, the
Purchaser may assign, in whole or in part, any or all of its rights (and/or
obligations) under any of the Loan Documents to any transferee of any or all of
its Notes, Warrants or Shares, subject to the terms of Section 16 hereof, and
(unless such assignment expressly provides otherwise) any such assignment shall
not diminish the rights the Purchaser would otherwise have under this Agreement
or under the Repurchase Agreement or with respect to any remaining Notes,
Warrants or Shares held by the Purchaser.
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<PAGE> 133
23.6. Severability. Any provision of any Loan Document 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 or
thereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which may render any provision hereof prohibited or
unenforceable in any respect.
23.7. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the Commonwealth of Pennsylvania
(other than any conflict of laws rule which might result in the application of
the laws of any other jurisdiction).
23.8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE
COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES
THAT, SUBJECT TO THE ELECTION OF THE PURCHASERS OR ANY OTHER HOLDER OF NOTES,
ALL ACTIONS OR PROCEEDINGS RELATING TO THE LOAN DOCUMENTS MAY BE LITIGATED IN
SUCH COURTS. THE COMPANY ACCEPTS GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LOAN DOCUMENTS. THE COMPANY
DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, AND SUCH OTHER PERSONS AS MAY
HEREAFTER BE SELECTED BY THE COMPANY AND WHICH IRREVOCABLY AGREE IN WRITING TO
SO SERVE AS THEIR AGENT, TO RECEIVE ON THEIR BEHALF SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED
BY THE COMPANY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF
ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE COMPANY AT
THE ADDRESS OF THE COMPANY PROVIDED IN SECTION 20 HEREOF, EXCEPT THAT UNLESS
OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT
AFFECT THE VALIDITY OF SERVICE OF PROCESS. AS AN ALTERNATIVE TO SERVICE OF
PROCESS ON SUCH AGENT (WHETHER OR NOT ANY SUCH AGENT HAS BEEN APPOINTED), THE
COMPANY HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
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<PAGE> 134
SUFFICIENT NOTICE AND SERVICE OF PROCESS. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE PURCHASER OR ANY OTHER HOLDER OF NOTES TO BRING PROCEEDINGS OR
OBTAIN OR ENFORCE JUDGMENTS AGAINST THE COMPANY IN THE COURTS OF ANY OTHER
JURISDICTION.
23.9. WAIVER OF JURY TRIAL. THE COMPANY AND THE PURCHASERS
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT, OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE COMPANY AND THE
PURCHASERS ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH
MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE PURCHASERS. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE COMPANY AND THE
PURCHASERS FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO (OR ASSIGNMENTS OF) ANY LOAN DOCUMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
(WITHOUT A JURY) BY THE COURT.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 135
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
J&L STRUCTURAL, INC.
By:
---------------------------------
THE PAUL REVERE INVESTMENT MANAGEMENT
CORPORATION
By:
---------------------------------
The Paul Revere Investment Management
Corporation, as agent for
THE PAUL REVERE LIFE INSURANCE
COMPANY
By:
---------------------------------
The Paul Revere Investment Management
Corporation, as agent for
THE PAUL REVERE PROTECTIVE LIFE
INSURANCE COMPANY
By:
---------------------------------
The Paul Revere Investment Management
Corporation, as agent for
THE PAUL REVERE VARIABLE
ANNUITY INSURANCE COMPANY
<PAGE> 136
By:
---------------------------------
Rhode Island Hospital Trust National
Bank, as Trustee for
THE TEXTRON COLLECTIVE
INVESTMENT TRUST
By:
---------------------------------
<PAGE> 137
COMPANY ACKNOWLEDGEMENT
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK)
I, ________________________, a Notary Public in and for said County,
in the State aforesaid, hereby certify that ________________, personally known
to me to be _____________ of J&L STRUCTURAL, INC., and personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that he signed and
delivered said instrument as _________________ of said corporation, as his free
and voluntary act, and as the free and voluntary act and deed of such
corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ____ day of ___________, 1995.
___________________________
NOTARY PUBLIC
MY COMMISSION EXPIRES:_________
PURCHASERS' ACKNOWLEDGEMENTS
STATE OF ___________)
) SS.:
COUNTY OF __________)
I, ________________________, a Notary Public in and for said County,
in the State aforesaid, hereby certify that ________________, personally known
to me to be _____________ of THE PAUL REVERE INVESTMENT MANAGEMENT CORPORATION,
and personally known to me to be the same person whose name is subscribed to
the foregoing instrument, appeared before me this day in person and
acknowledged that she/he signed and delivered said instrument as
_________________ of said corporation, as her/his free and voluntary act, and
as the free and voluntary act and deed of such corporation, for the uses and
purposes therein set forth.
<PAGE> 138
GIVEN under my hand and notarial seal this ____ day of ___________, 1995.
___________________________
NOTARY PUBLIC
MY COMMISSION EXPIRES:_________
<PAGE> 139
STATE OF ___________)
) SS.:
COUNTY OF __________)
I, ________________________, a Notary Public in and for said County,
in the State aforesaid, hereby certify that ________________, personally known
to me to be _____________ of RHODE ISLAND HOSPITAL TRUST NATIONAL BANK, AS
TRUSTEE FOR THE TEXTRON COLLECTIVE INVESTMENT TRUST, and personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that she/he signed and
delivered said instrument as _________________ of said corporation, as her/his
free and voluntary act, and as the free and voluntary act and deed of such
corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ____ day of ___________, 1995.
___________________________
NOTARY PUBLIC
MY COMMISSION EXPIRES:_________
<PAGE> 140
EXHIBIT A
PURCHASERS
<TABLE>
<CAPTION>
Number of
Shares, Subject
Principal to Adjustment,
Amount of Initially
Notes to Covered by
Name and Address of Purchaser be Purchased Warrants
----------------------------- ------------ ---------------
<S> <C> <C>
1. The Paul Revere Life Insurance Company $ 5,000,000 33.26
(Note 1)
(a) address for communications:
The Paul Revere Investment
Management Corporation
Attn: Lawrence G. Knowles, Jr.
18 Chestnut Street
Worcester, MA 01608
Telephone: (508) 751-7227
Facsimile: (508) 793-5854
(b) address for payments, by wire
transfer:
Mellon Bank, NA-West
ABA No. 043-000-261
Pittsburgh, PA 15259
Attn: Income Collections
Cost-Code: 3971-8
Account of: Paul Revere Life
Insurance
Company/Disability
Account No. 075-936
Attn: Karen Crawford
(providing sufficient information
with such wire transfer to
identify the source and
application of such funds)
(c) Tax Identification Number:
04-1768571
</TABLE>
<PAGE> 141
<TABLE>
<CAPTION>
Number of
Shares, Subject
Principal to Adjustment,
Amount of Initially
Notes to Covered by
Name and Address of Purchaser be Purchased Warrants
----------------------------- ------------ ---------------
<S> <C> <C>
2. The Paul Revere Life Insurance Company $ 1,000,000 6.65
(Note 2)
(a) address for communications:
The Paul Revere Investment
Management Corporation
Attn: Lawrence G. Knowles, Jr.
18 Chestnut Street
Worcester, MA 01608
Telephone: (508) 751-7227
Facsimile: (508) 793-5854
(b) address for payments, by wire transfer:
Mellon Bank, NA-West
ABA No. 043-000-261
Pittsburgh, PA 15259
Attn: Income Collections
Cost-Code: 3971-8
Account of: Paul Revere Life
Insurance
Company/Group
Account No. 075-937
Attn: Karen Crawford
(providing sufficient information
with such wire transfer to
identify the source and
application of such funds)
(c) Tax Identification Number:
04-1768571
</TABLE>
<PAGE> 142
<TABLE>
<CAPTION>
Number of
Shares, Subject
Principal to Adjustment,
Amount of Initially
Notes to Covered by
Name and Address of Purchaser be Purchased Warrants
----------------------------- ------------ ---------------
<S> <C> <C>
3. The Paul Revere Life Insurance Company $ 1,000,000 6.65
(Note 3)
(a) address for communications:
The Paul Revere Investment
Management Corporation
Attn: Lawrence G. Knowles, Jr.
18 Chestnut Street
Worcester, MA 01608
Telephone: (508) 751-7227
Facsimile: (508) 793-5854
(b) address for payments, by wire
transfer:
Mellon Bank, NA-West
ABA No. 043-000-261
Pittsburgh, PA 15259
Attn: Income Collections
Cost-Code: 3971-8
Account of: Paul Revere Life
Insurance
Company/Individual
Life
Account No. 075-935
Attn: Karen Crawford
(providing sufficient information
with such wire transfer to
identify the source and
application of such funds)
(c) Tax Identification Number:
04-1768571
</TABLE>
<PAGE> 143
<TABLE>
<CAPTION>
Number of
Shares, Subject
Principal to Adjustment,
Amount of Initially
Notes to Covered by
Name and Address of Purchaser be Purchased Warrants
----------------------------- ------------ ---------------
<S> <C> <C>
4. The Paul Revere Variable Annuity $ 3,000,000 19.96
Insurance Company
(a) address for communications:
The Paul Revere Investment
Management Corporation
Attn: Lawrence G. Knowles, Jr.
18 Chestnut Street
Worcester, MA 01608
Telephone: (508) 751-7227
Facsimile: (508) 793-5854
(b) address for payments, by wire
transfer:
Mellon Bank, NA-West
ABA No. 043-000-261
Pittsburgh, PA 15259
Attn: Income Collections
Cost-Code: 3971-8
Account of: Paul Revere
Variable Annuity
Company/MPDA
Account No. 080-350
Attn: Karen Crawford
(providing sufficient information
with such wire transfer to
identify the source and
application of such funds)
(c) Tax Identification Number:
04-2381280
</TABLE>
<PAGE> 144
<TABLE>
<CAPTION>
Number of
Shares, Subject
Principal to Adjustment,
Amount of Initially
Notes to Covered by
Name and Address of Purchaser be Purchased Warrants
----------------------------- ------------ ---------------
<S> <C> <C>
5. The Paul Revere Protective Life $ 1,500,000 9.98
Insurance Company
(a) address for communications:
The Paul Revere Investment
Management Corporation
Attn: Lawrence G. Knowles, Jr.
18 Chestnut Street
Worcester, MA 01608
Telephone: (508) 751-7227
Facsimile: (508) 793-5854
(b) address for payments, by wire
transfer:
Mellon Bank, NA-West
ABA No. 043-000-261
Pittsburgh, PA 15259
Attn: Income Collections
Cost-Code: 3971-8
Account of: Paul Revere
Protective
Life Insurance
Company/Disability
Account No. 075-940
Attn: Karen Crawford
(providing sufficient information
with such wire transfer to
identify the source and
application of such funds)
(c) Tax Identification Number:
04-2528304
</TABLE>
<PAGE> 145
<TABLE>
<CAPTION>
Number of
Shares, Subject
Principal to Adjustment,
Amount of Initially
Notes to Covered by
Name and Address of Purchaser be Purchased Warrants
----------------------------- ------------ ---------------
<S> <C> <C>
6. Rhode Island Hospital Trust National $11,500,000 76.50
Bank as Trustee for the Textron
Collective Investment Trust
(a) address for communications:
Rhode Island Hospital
Trust National Bank
Trustee for: The Textron
Collective
Investment Trust
Fund B
Attn: David Makin
P.O. Box 1882
Mail Stop 45-01-11
Boston, MA 02105-1882
With a copy to:
The Paul Revere Investment
Management Corporation
Attn: Lawrence G. Knowles, Jr.
18 Chestnut Street
Worcester, MA 01608
Telephone: (508) 751-7227
Facsimile: (508) 793-5854
(b) address for payments, by wire
transfer:
Bank of Boston
ABA No. 011-000-390
Institutional Trust Services
Canton Office
Mail Stop 45-01-11
For Credit to the account of:
Textron Collective Investment
Trust Fund B
Account No. 4-3510023
(providing sufficient information
with such wire transfer to
identify the source and
application of such funds)
</TABLE>
<PAGE> 146
<TABLE>
<CAPTION>
Number of
Shares, Subject
Principal to Adjustment,
Amount of Initially
Notes to Covered by
Name and Address of Purchaser be Purchased Warrants
----------------------------- ------------ ---------------
<S> <C> <C>
(c) Tax Identification Number:
05-6073359
</TABLE>
<PAGE> 147
EXHIBIT B
Form of Note
<PAGE> 148
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY APPLICABLE REGULATION OF ANY STATE AND IS NOT TRANSFERABLE EXCEPT
UPON THE CONDITIONS SPECIFIED IN SECTION 16 OF THE PURCHASE AGREEMENT REFERRED
TO HEREIN.
THIS INSTRUMENT AND THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED, IN THE
MANNER AND TO THE EXTENT SET FORTH IN A SUBORDINATION AND INTERCREDITOR
AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED APRIL , 1995 BY THE COMPANY,
FINOVA CAPITAL CORPORATION, AND THE PAUL REVERE LIFE INSURANCE COMPANY, THE
PAUL REVERE VARIABLE ANNUITY INSURANCE COMPANY, THE PAUL REVERE PROTECTIVE LIFE
INSURANCE COMPANY AND RHODE ISLAND HOSPITAL TRUST NATIONAL BANK AS TRUSTEE FOR
THE TEXTRON COLLECTIVE INVESTMENT TRUST, TO CERTAIN OTHER OBLIGATIONS OF THE
COMPANY TO FINOVA, AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE
HEREOF, AGREES (I) TO BE BOUND BY THE TERMS OF THE SUBORDINATION AGREEMENT, AND
(II) IN THE EVENT THAT ANY CONFLICT EXISTS BETWEEN THE TERMS OF THIS
INSTRUMENT, ANY DOCUMENT EXECUTED IN CONNECTION WITH THE DELIVERY OF THIS
INSTRUMENT AND THE TERMS OF THE SUBORDINATION AGREEMENT, THE TERMS OF THE
SUBORDINATION AGREEMENT SHALL GOVERN AND BE CONTROLLING.
J&L STRUCTURAL, INC.
13% Senior Subordinated Secured Note
Due June 30, 2005
Dated April , 1995
New York, New York
No. 1
FOR VALUE RECEIVED, the undersigned J&L STRUCTURAL, INC., a Delaware
corporation (herein, together with any successor, referred to as the
"Company"), hereby promises to pay to The Paul Revere Life Insurance Company or
registered assigns, the principal sum of Five Million Dollars ($5,000,000) in
<PAGE> 149
quarterly installments of $1,500,000 aggregate principal amount of all Notes
outstanding beginning on June 30, 2002 and on each September, December, March
and June thereafter to and including June 30, 2005, and shall pay in full the
remaining principal amount of all Notes then outstanding on the maturity date of
June 30, 2005, plus interest (computed on the basis of the actual number of days
elapsed over a 360-day year) on the unpaid balance of such principal sum from
the date hereof at the interest rate of 13% per annum, payable quarterly on the
30th day of December, March, June and September of each year, commencing June
30, 1995 (which first interest payment shall be for the period from and
including the date hereof through and including June 30, 1995) until the entire
principal amount hereof shall have become due and payable, whether at maturity
or at a date fixed for prepayment or by acceleration or declaration or
otherwise, and at the Default Rate on any overdue installment of principal
(including any overdue prepayment of principal) and on any overdue premium and
(to the extent permitted by law) on any overdue installment of interest until
paid. The Default Rate shall be equal to the per annum interest rate on this
Note, plus four percent (4%).
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to such term in the Note and Warrant Purchase Agreement dated as of
April , 1995 (the "Purchase Agreement"), by and among The Paul Revere
Investment Management Corporation, as agent, The Paul Revere Life Insurance
Company, The Paul Revere Variable Annuity Insurance Company, The Paul Revere
Protective Life Insurance Company, and Rhode Island Hospital Trust National
Bank, as trustee for the Textron Collective Investment Trust.
If any payment due hereunder becomes due and payable on a day which is
not a Business Day, the due date thereof shall be the next day which is a
Business Day, and the interest payable on such next Business Day shall be the
interest accruing through such actual date of payment.
Payments of principal and interest shall be made in lawful money of the
United States of America at the principal office of the Company at Aliquippa,
Pennsylvania, or at such other place as the Company shall have designated for
such purpose to the holder thereof in writing, and may be paid by check
-2-
<PAGE> 150
mailed, or shall be made by wire transfer, all as provided in the Purchase
Agreement referred to below, to the address or account designated by the holder
hereof for such purpose.
This Note is one of a duly authorized issue of Notes issued to the
Purchasers pursuant to the Purchase Agreement. This Note is subject to the
provisions of and is entitled to the benefits of the Purchase Agreement. In
addition, the payment of the principal of, premium, if any, and interest on
this Note is subordinated in right of payment to the prior payment in full of
certain other obligations of the Company to the extent and in the manner set
forth in the Purchase Agreement and the Subordination and Intercreditor Credit
Agreement, dated as of April , 1995 (the "Intercreditor Agreement"), among
FINOVA Capital Corporation, the Purchasers and the Company. Each holder of this
Note, by accepting the same, agrees to and shall be bound by the provisions of
the Purchase Agreement and the Intercreditor Agreement.
The obligations of the Company under this Note (and under the Purchase
Agreement) are secured by the Collateral. The existence of such Collateral does
not in any way reduce or restrict the rights and remedies available to a holder
of this Note whether such rights and remedies arise under this Note, the
Purchase Agreement or otherwise.
This Note is transferable only upon the terms and conditions specified
in the Purchase Agreement.
In case an Event of Default shall occur and be continuing, all amounts
then remaining unpaid on this Note shall become or may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
No reference herein to the Purchase Agreement and no provision hereof
or thereof shall alter or impair the obligations of the Company, which are
absolute and unconditional, to pay the principal hereof and interest hereon at
the respective times and places specified herein and in the Purchase Agreement.
This Note is delivered in and shall be construed and enforced in
accordance with and governed by the laws of the Commonwealth of Pennsylvania
(other than any conflict of laws
-3-
<PAGE> 151
rules which might result in the application of laws of any other jurisdiction).
Subject to the provisions of Section 16 of the Purchase Agreement, the
Companies may treat the person in whose name this Note is registered as the
owner and holder of this Note for the purpose of receiving payment of
principal of, premium, if any, and interest on this Note and for all other
purposes whatsoever, and the Company shall not be affected by any notice to
the contrary (except that the Company shall comply with the provisions of
Section 12 of the Purchase Agreement regarding the issuance of a new Note or
Notes to permitted transferees).
THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR ANY
ATTORNEY TO CONFESS JUDGMENT AGAINST THE UNDERSIGNED. IN GRANTING THIS WARRANT
OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE UNDERSIGNED, THE UNDERSIGNED,
FOLLOWING CONSULTATION WITH (OR DECISION NOT TO CONSULT) SEPARATE COUNSEL FOR
THE UNDERSIGNED AND WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF, HEREBY
KNOWINGLY, INTENTIONALLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE
UNDERSIGNED HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING
UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES OF AMERICA,
THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE. IT IS SPECIFICALLY AKNOWLEDGED
BY THE UNDERSIGNED THAT THE PURCHASER HAS RELIED ON THIS WARRANT OF ATTORNEY IN
RECEIVING THIS NOTE AND AS AN INDUCEMENT TO GRANT FINANCIAL ACCOMMODATIONS TO
THE UNDERSIGNED.
Upon and following the occurrence of an Event of Default, the
undersigned hereby jointly and severally authorizes and empowers any attorney
of any court of record or the prothonotary or clerk of any county in the
Commonwealth of Pennsylvania, or in any jurisdiction where permitted by law or
the clerk of any United States District Court, to appear for the undersigned in
any and all actions which may be brought hereunder and enter and confess
judgment against the undersigned or any of them in favor of the Purchaser for
such sums as are due or may become due hereunder or under any other Loan
Document, together with costs of suit and actual collection costs including,
without limitation, reasonable attorneys' fees equal to five percent (5%) of
the foregoing sums then due and owing but in no event less than $5,000, with or
without declaration, without prior notice, without stay of execution and with
release of all procedural
-4-
<PAGE> 152
errors and the right to issue executions forthwith. If a copy of this Note
verified by affidavit of any officer of the Purchaser shall have been filed in
such action, it shall not be necessary to file the original thereof as a
warrant of attorney, any practice or usage to the contrary notwithstanding. The
authority herein granted to confess judgment shall not be exhausted by any
single exercise thereof, but shall continue and may be exercised from time to
time as often as the Purchaser shall find it necessary and desirable and at all
times until full payment of all amounts due hereunder and under the other Loan
Documents. The Purchaser may confess one or more judgments in the same or
different jurisdictions for all or any part of the undersigned's obligations
arising hereunder or under any other Loan Document to which the undersigned is
a party, without regard to whether judgment has theretofore been confessed on
more than one occasion for the same obligations. In the event that any judgment
confessed against the undersigned is stricken or opened upon application by or
on behalf of the undersigned for any reason, the Purchaser is
hereby authorized and empowered to again appear for and confess judgment
against the undersigned for any part or all of the obligations due and owing
under this Note and the other Loan Documents, as herein provided.
-5-
<PAGE> 153
IN WITNESS WHEREOF, J&L STRUCTURAL, INC. has caused this Note to be
dated and to be executed and issued on its behalf by its officer thereto duly
authorized.
J&L STRUCTURAL, INC
By
--------------------------------
Name:
Title:
<PAGE> 154
COMPANY ACKNOWLEDGEMENT
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
I, ________________________, a Notary Public in and for said County, in
the State aforesaid, hereby certify that ____________________, personally known
to me to be ____________ of J&L STRUCTURAL, INC., and personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that he signed and
delivered said instrument as ______________ of said corporation, as his free and
voluntary act, and as the free and voluntary act and deed of such corporation,
for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ____________ day of
________________, 1995.
---------------------------
Notary Public
My Commission Expires: ________
<PAGE> 155
EXHIBIT C
Form of Warrant
<PAGE> 156
No. 1
THIS WARRANT CERTIFICATE (AND THE COMMON STOCK OR OTHER SECURITIES ISSUABLE
UPON EXERCISE HEREOF) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT of 1933
OR UNDER ANY APPLICABLE REGULATION of ANY STATE AND ARE NOT TRANSFERABLE EXCEPT
UPON THE CONDITIONS SPECIFIED IN SECTION 16 OF THE PURCHASE AGREEMENT REFERRED
TO HEREIN.
J&L STRUCTURAL, INC.
Common Stock Purchase Warrant Certificate
Dated April __, 1995
New York, New York
FOR VALUE RECEIVED, the undersigned J&L STRUCTURAL, INC., a
Delaware corporation (herein referred to as the "Company"), hereby certifies
and agrees that The Paul Revere Life Insurance Company purchase from the
Company up to an aggregate of Thirty-Three and 26/100 (33.26) duly authorized,
validly issued, fully paid and nonassessable shares of the Company's Common
Stock, no par value, or any stock into which such Common Stock shall have been
changed or any stock or other securities resulting from a reclassification
thereof (all such shares, stock or other securities which may be purchased by
this, and all other, Warrants are herein known as the "Shares") at a purchase
price per Share of $.01 at any time and from time to time after the earlier of
(X) the fifth anniversary of the date hereof or (Y) the occurrence of a
Triggering Event, but in any event not after the tenth anniversary of the date
hereof. The foregoing agreement and rights are all subject to the terms,
conditions and adjustments (in both the number of Shares and the purchase price
per Share) set forth below in this Warrant Certificate.
This Warrant Certificate is one of the Common Stock Purchase
Warrant Certificates (the "Warrants", which term includes all Warrants issued
in substitution therefor) originally issued in connection with the issue and
sale by the Company of
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$23,000,000 of its Senior Subordinated Secured Notes (the "Notes"). The
Warrants and the Notes have been issued pursuant to the Note and Warrant
Purchase Agreement dated as of April __, 1995 (the "Purchase Agreement")
between the Company, The Paul Revere Investment Management Corporation, as
agent, and the Purchasers named therein. The Warrants originally so issued
evidence rights to purchase an aggregate of 153 shares at an
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exercise price of $.01 per share, subject to adjustment as provided herein.
This Warrant is subject to the provisions, and is entitled to the benefits, of
the Purchase Agreement.
A "Triggering Event" shall be (i) any public offering of any
of the Company's Common Stock by J&L Holdings, or its successor holders of
Common Stock of the Company or by the Company, (ii) the merger, consolidation
or sale, lease or transfer (whether in one, or a series of related,
transactions) of all or substantially all business or assets of the Company or
of J&L Holdings, (iii) the cessation for any reason of Ascott Wing owning at
least 20% of all the outstanding common stock of CPT, (iv) any public offering
of any of CPT's common stock by any Person, (v) any Event of Default, (vi) the
cessation for any reason of J&L Holdings owning at least 80% of all of the
outstanding common stock of the Company, (vii) the cessation for any reason of
CPT owning at least 80% of all of the outstanding common stock of J&L Holdings,
or (viii) the failure of William Remley and Richard Kramer and their designees
to constitute two-thirds of the Board of Directors of CPT.
The Company agrees to give notice to the holder hereof or of
any Shares acquired by the exercise of this Warrant as soon as possible after a
Triggering Event has occurred, or is likely to occur, which notice shall state
that the holder thereof or hereof has 60 days to exercise its "put" rights
under the Repurchase Agreement as a result of such Triggering Event.
The Company represents that all Shares to which the holders of
the Warrants shall be entitled upon the exercise thereof (i) are duly
authorized by the Articles of Incorporation of the Company in accordance with
the laws of the State of Delaware, (ii) have been duly authorized to be issued
upon the exercise of the Warrants from time to time in whole or in part, (iii)
will be, when issued in accordance with the terms of the Warrants, duly
authorized and validly issued and fully paid and nonassessable and free and
clear of all Liens and rights of others whatsoever (other than Liens and rights
of others claiming by, through or under the holder hereof) and (iv) will not be
at the time of such exercise subject to any restrictions on transfer or sale
except as provided by applicable laws.
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Section 1. Exercise of Warrant.
1.1. Manner of Exercise.
(a) This Warrant may be exercised by the holder hereof, in
whole or in part, during normal business hours on any Business Day by surrender
of this Warrant, together with the form of subscription attached as Annex A
hereto (or a reasonable facsimile thereof) duly executed by such holder in
substantially such form, to the Company at its office designated pursuant to
the Purchase Agreement (or, if such exercise is in connection with an
underwritten public offering of Shares subject to this Warrant, at the location
at which the underwriting agreement requires that such Shares be delivered).
(b) Payment of the exercise price for Shares shall be made,
at the option of the holder (i) as provided in Section 1.5 hereof, (ii) as
provided in Section 2 hereof, or (c) by check or wire transfer payable to the
order of the Company, in any case, in an amount equal to (A) the number of
Shares specified in such form of subscription, multiplied by (B) the then
current exercise price. Such holder shall thereupon be entitled to receive the
number of Shares specified in such form of subscription (plus cash in lieu of
any fractional share as provided in Section 1.3 hereof).
1.2. Effective Date. Each exercise of this Warrant pursuant
to Section 1.1(a) hereof shall be deemed to have been effected immediately
prior to the close of business on the Business Day on which this Warrant is
surrendered to the Company as provided in Section 1.1 hereof (except that if
such exercise is in connection with an underwritten public offering of Shares
subject to this Warrant, then such exercise shall be deemed to have been
effected upon such surrender of this Warrant), and such exercise shall be at
the current exercise price in effect at such time. On each such day that an
exercise of this Warrant is deemed effected, the Person or Persons in whose
name or names any certificate or certificates for Shares are issuable upon such
exercise (as provided in Section 1.3 hereof) shall be deemed to have become the
holder or holders of record thereof.
1.3. Share Certificates, Fractional Shares, and Reissuance of
Warrants. As promptly as practicable after the
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exercise of this Warrant, in whole or in part, and in any event within five (5)
Business Days thereafter (unless such exercise shall be in connection with a
public offering of Shares subject to this Warrant, in which event concurrently
with such exercise), the Company at its expense (including the payment by it of
any applicable issue, stamp or other taxes) will cause to be issued in the name
of and delivered to the holder hereof or such other person as such holder may
direct:
(a) a certificate or certificates for the number (which may
be fractional) of Shares to which such holder shall be entitled upon such
exercise; and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces thereof
to the number (which may be fractional) of Shares (without giving effect to any
adjustment therein) equal to the number of such Shares called for on the face
of this Warrant minus the number of Shares which could have been obtained upon
such exercise for the exercise price paid if the current exercise price had
been $.01 per Share. If this Warrant shall have been fully exercised, the new
Warrant shall indicate that no additional Shares may be purchased by the
exercise thereof.
1.4. Acknowledgment of Obligation. The Company will, at the
time of or at any time after each exercise of this Warrant, upon the request of
the holder hereof or of any Shares issued upon such exercise, acknowledge in
writing its continuing obligation to afford to such holder all rights
(including, without limitation, any rights to registration of any such Shares
pursuant to the Purchase Agreement) to which such holder shall continue to be
entitled under this Warrant and the Purchase Agreement; provided, that if any
such holder shall fail to make any such request, the failure shall not affect
the continuing obligation of the Company to afford such rights to such holder.
1.5. Notes. The holder shall have the option, but not the
obligation, upon any exercise of this Warrant, to apply to the payment required
by Section 1.1 hereof all or any part of all or any part of the accrued and
unpaid interest on, or principal of, any Notes at the time held by the holder.
The Company will accept the amount of accrued and unpaid interest or principal,
if such election is selected, specified in the form of subscription
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in satisfaction of the exercise price for such Shares to be purchased. The
holder shall have the right to apply all or any portion of such accrued and
unpaid interest or principal to exercise all or any portion of this Warrant
whether or not payment on the Notes is otherwise prohibited.
1.6. Restriction. The holder acknowledges that the Shares
acquired upon exercise of the Warrant will be "restricted securities" as that
term is defined under the regulations promulgated under the Securities Act,
will not be saleable in the absence of an effective registration statement
under the Securities Act or an exemption from registration, and accordingly may
be required to be held for an indefinite period of time. The holder agrees
that Shares issued pursuant hereto may contain the following legend on the face
thereof: "This security has not been registered pursuant to the Securities Act
of 1933, as amended, and each holder of this security by the acceptance hereof
agrees that this security shall not be transferred in violation of said Act."
The Company agrees that such legend shall be removed from any Shares which are
sold pursuant to any of the methods specified in Section 17 of the Purchase
Agreement.
Each holder of a Warrant by acceptance thereof agrees that it
will not sell or otherwise dispose of any Warrants or Shares unless such
Warrants or Shares have been registered under, or have been sold pursuant to an
exemption from registration under, the Securities Act. As a condition to the
Company's obligation to issue a new Warrant to a transferee thereof which (x)
is not a holder of a Warrant, the transferor must certify to the Company the
facts on which the transferor is relying for such exemption and if the Company
in its reasonable opinion does not believe such facts indicate any such
exemption is available, the Company shall so notify the transferor within ten
(10) days of receipt of such certification and the transferor, in order to
obtain such issuance by the Company, must supply the Company with a legal
opinion from counsel selected by the transferor (who may not be satisfactory to
the Company, that such transfer is exempt from registration under the
Securities Act and applicable state securities laws or (y) is a holder of a
Warrant, the transferor must represent to the Company in writing that the
transfer is so exempt.
Section 2. Conversion of Warrant.
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(a) In addition to and without limiting the rights of the
holder under the terms of this Warrant, the holder shall have the option, but
not the obligation, to convert this Warrant, or any portion thereof (the
"Conversion Right") into Shares as provided in this Section 2 at any time when
this Warrant can be exercised pursuant to the first paragraph hereof. Upon
exercise of the Conversion Right with respect to a particular number of Shares
(the "Converted Warrant Shares"), the Company shall deliver to the holder
(without payment by the holder of any exercise price or any cash or other
consideration) that number (which may be fractional) of Shares equal to the
quotient obtained by dividing (x) the value of this Warrant (or the specified
portion hereof) on the Conversion Date (as defined in Section 2(b) hereof),
which value shall be determined by subtracting (A) the aggregate current
exercise price of the Converted Warrant Shares immediately prior to the
exercise of the Conversion Right from (B) the aggregate Market Price of such
Converted Warrant Shares on the Conversion Date by (y) the Market Price of one
Share on the Conversion Date.
(b) The Conversion Right may be exercised by the holder by
the surrender of this Warrant at the designated office of the Company together
with a written statement (a "Conversion Notice") specifying that the holder
thereby intends to exercise the Conversion Right and indicating the number of
Converted Warrant Shares (i.e., the Shares subject to this Warrant which are
being surrendered in exercise of the Conversion Right). Such conversion shall
be effective upon receipt by the Company of this Warrant together with the
Conversion Notice, or on such later date as is specified therein (the
"Conversion Date") and, at the election of the holder, may be made contingent
upon the occurrence of any event specified in the Conversion Notice.
Certificates for the Shares issuable upon exercise of the Conversion Right and,
if applicable, a new Warrant evidencing the balance of the Shares remaining
subject to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the holder promptly following the Conversion Date.
Section 3. Current Exercise Price and Adjustments.
3.1. Current Exercise Price. The term "current exercise
price" shall mean initially $.01 per Share, subject to adjustment from time to
time as hereinafter provided, in effect
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at any given time. In determining the current exercise price, the result shall
be expressed to the nearest $.01, but any such lesser amount shall be carried
forward and shall be considered at the time of and together with the next
subsequent adjustment which, together with any adjustments be carried forward,
shall amount to $.01 per Share or more.
3.2. Adjustment of Current Exercise Price. The current
exercise price shall be subject to adjustment, from time to time (but not below
zero), as follows:
(a) Adjustments for Stock Dividends, Recapitalization, etc.
In the event the Company shall, after the Closing Date, issue any shares of
Common Stock (i) by stock dividend or any other distribution upon the stock of
the Company payable in Common Stock or in securities convertible into or
exercisable or exchangeable for shares of Common Stock or (ii) in subdivision
of its outstanding Common Stock, by reclassification or otherwise, the current
exercise price then in effect shall be reduced proportionately; and, in like
manner, in the event of any combination of shares of Common Stock, by
reclassification or otherwise, the current exercise price then in effect shall
be proportionately increased. An adjustment made pursuant to this Section
3.2(a) shall become effective retroactively immediately after the record date
in the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision or combination.
(b) Adjustments for Other Distributions. In case the Company
shall, after the Closing Date, make a distribution to all holders of its Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of (i) cash
(whether or not payable out of earnings or surplus), (ii) other assets (other
than dividends payable in the Company's Common Stock), (iii) evidences of
indebtedness or other securities of the Company or of any entity other than the
Company (other than dividends payable in the Company's Common Stock), or (iv)
subscription rights, options or warrants to purchase any of the foregoing
assets or securities, whether or not such rights, options or warrants are
immediately exercisable (hereinafter collectively referred to as "Distributions
on Common Stock"), the Company shall deliver to the holders of outstanding
Warrants the
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Distributions on Common Stock to which the holders of outstanding Warrants
would have been entitled if they had exercised the Warrants held by them for
Common Stock immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distributions on Common
Stock. This Section 3.2(b) shall not apply to Deemed Dividends, to a dividend
of the Caster Property or to cash dividends permitted by clause (e) of the
definition of "Restricted Payment" in the Purchase Agreement.
(c) Adjustments for Issuance of Additional Stock. Subject to
the exception referred to in Section 3.2(e) hereof and except as otherwise
provided for in Section 3.2(a) hereof, in case the Company shall at any time or
from time to time after the Closing Date issue any additional shares of its
Common Stock ("Additional Common Stock") either (I) for consideration per share
less than the then current Market Price per share of the Company's Common Stock
(determined as provided in Section 3.2(g) hereof) immediately prior to the
issuance of such Additional Common Stock, or (II) for a consideration per share
less than the then current exercise price immediately prior to the issuance of
such Additional Common Stock, or (III) without consideration, then (in the case
of either clause (I), (II) or (III)), and thereafter successively upon each
such issuance, the current exercise price shall forthwith be reduced to a price
equal to the lesser of:
(A) the price determined by multiplying such current
exercise price by a fraction, of which
(1) the numerator shall be (i) the number of shares of the
Company's Common Stock outstanding when the then current exercise
price became effective plus (ii) the number of shares of the Company's
Common Stock which the aggregate amount of consideration, if any,
received by the Company upon all issues of its Common Stock since the
current exercise price became effective (including the consideration,
if any, received for such Additional Common Stock) would purchase at
the greater (x) the then current Market Price per share of the
Company's Common Stock or (y) the then current exercise price per
Share, and
(2) the denominator shall be (i) the number of shares of the
Company's Common Stock outstanding when the current
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exercise price became effective plus (ii) the number of shares of the
Company's Common Stock issued since the current exercise price became
effective (including the number of shares of such Additional Common
Stock); or
(B) the price determined by dividing (x) the aggregate
amount of consideration, if any, received by the Company upon
all issues of its Common Stock since the current exercise price
became effective (including the consideration, if any, received
for such Additional Common Stock) by (y) the number of shares
of Common Stock of the Company issued since the current
exercise price became effective (including the number of shares
of such Additional Common Stock),
provided, however, that such adjustment shall be made only if the current
exercise price determined from the aforesaid fraction shall be less than the
current exercise price in effect immediately prior to the issuance of such
Additional Common Stock. The Company may, but shall not be required to, make
any adjustment of the current exercise price if the amount of such adjustment
shall be less than $.0005, but any adjustment that would otherwise be required
then to be made which is not so made shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to not less than $.0005.
The adjustment described in this Section 3.2(c) shall be made whenever such
Common Stock is issued, and shall become effective retroactively immediately
after the date on which the Company committed to make such issuance.
(d) Certain Rules in Applying the Adjustment for Additional
Stock Issuances. For purposes of any adjustment as provided in Section 3.2(c),
the following provisions shall also be applicable:
(1) Cash Consideration. In case of the issuance of
Additional Common Stock for cash, the consideration received by the
Company therefor shall (subject to the last sentence of Section 3.2(g)
hereof) be deemed to be the net cash proceeds received by the Company
for such Additional Common Stock after deducting any commissions or
other
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expenses paid or incurred by the Company for any underwriting of, or
otherwise in connection with the issuance of, such Additional Common
Stock.
(2) Non-Cash Consideration. In case of the issuance
(other than upon conversion or application of obligations or shares of
stock of the Company) of Additional Common Stock for a consideration
other than cash, or a consideration a part of which shall be other
than cash, the amount of the consideration other than cash so received
or to be received by the Company shall be deemed to be the value of
such consideration at the time of its receipt by the Company as
determined in good faith by the Board of Directors of the Company,
provided, that where the non-cash consideration consists of the
cancellation, surrender or exchange of outstanding obligations of the
Company (or where such obligations are otherwise converted into shares
of the Company's Common Stock), the value of the non-cash
consideration shall be deemed to be the amount, including principal
and any accrued interest, as of the time of the Company's receipt, of
the obligations cancelled, surrendered, satisfied, exchanged or
converted. If the Company receives consideration, part or all of
which consists of publicly traded securities, the value of such
non-cash consideration shall be the aggregate market value of such
securities (based on the latest reported trades) as of the close of
the day immediately preceding the date of their receipt by the
Company.
(3) Options, Warrants, Convertibles, etc. In case of
the issuance (other than by way of a Distribution on Common Stock
pursuant to Section 3.2(b) hereof), whether by distribution or sale to
holders of its Common Stock or to others, by the Company of (i) any
security that is convertible into the Company's Common Stock or (ii)
any rights, options or warrants to purchase the Company's Common Stock
(except for the Warrants), if inclusion thereof would result in a
current exercise price lower than if excluded, the Company shall be
deemed to have issued, for the consideration described below, the
number of shares of the Company's Common Stock into which such
convertible security may be converted when first convertible, or the
number of shares of the Company's Common Stock deliverable upon the
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exercise of such rights, options or warrants when first exercisable,
as the case may be (and such shares shall be deemed to be Additional
Common Stock for purposes of Section 3.2(c) hereof). The
consideration deemed to be received by the Company at the time of the
issuance of such convertible securities or such rights, options or
warrants shall be the consideration so received determined as provided
in Sections 3.2(d)(1) and (2) hereof deducting any commissions or
other expenses paid or incurred by the Company for any underwriting
of, or otherwise in connection with, the issuance of such convertible
securities or rights, options or warrants, plus (x) any consideration
or adjustment payment to be received by the Company in connection with
such conversion, or, as applicable, (y) the aggregate price at which
shares of the Company's Common Stock are to be delivered upon the
exercise of such rights, options or warrants when first exercisable
(or, if no price is specified and such shares are to be delivered at
an option price related to the Market Price of the subject Common
Stock, an aggregate option price bearing the same relation to the
Market Price of the subject Common Stock at the time such rights,
options or warrants were granted). In case any such securities,
rights, options or warrants shall be issued in connection with the
issue or sale of other securities of the Company comprising one
integral transaction in which no specific consideration is allocated
to such securities, rights, options or warrants, such securities,
rights, options or warrants shall be deemed to have been issued
without consideration. If, subsequently, (1) such number of shares
into which such convertible security is convertible, or which are
deliverable upon the exercise of such right, options or warrants, is
increased or (2) the conversion or exercise price of such convertible
security, rights, options or warrants is decreased, then the
calculations under the preceding two sentences (and any resulting
adjustment to the current exercise price under 3.2(c) hereof) with
respect to such convertible security, rights, options or warrants, as
the case may be, shall be recalculated as of the time of such issuance
but giving effect to such changes (but any such recalculation shall
not result in the current exercise price being higher than that which
would be calculated without regard to such issuance). On the
expiration or termination of such rights, options or warrants, or
rights
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to convert, the current exercise price hereunder shall be readjusted
(up or down as the case may be) to such current exercise price as
would have been obtained had the adjustments made upon the issuance of
such rights, options, warrants or convertible securities been made
upon the basis of the delivery of only the number of shares of the
Company's Common Stock actually delivered upon the exercise of such
rights, options or warrants or upon the conversion of any such
securities and at the actual exercise or conversion prices (but any
such recalculation shall not result in the current exercise price
being higher than that which would be calculated without regard to
such issuance).
(4) Number of Shares Outstanding. The number of
shares of the Company's Common Stock as at the time outstanding shall
exclude all shares of the Company's Common Stock then owned or held by
or for the account of the Company but shall include the aggregate
number of shares of the Company's Common Stock at the time deliverable
in respect of the convertible securities, rights, options and warrants
referred to in Section 3.2(d)(3); provided, that to the extent that
such rights, options, warrants or conversion privileges are not
exercised, such shares of Common Stock shall be deemed to be
outstanding only until the expiration dates of the rights, warrants,
options or conversion privileges or the prior cancellation thereof.
(e) Exclusions from the Adjustment for Additional Stock
Issuances. No adjustment of the current exercise price under Section 3.2(c)
hereof shall be made as a result of or in connection with the issuance of
Shares upon exercise of the Warrants. To the extent that the issuance (or
deemed issuance) of the Company's Common Stock shall not result in any
adjustment of the current exercise price pursuant to the provisions of this
Section 3.2(e), then such Common Stock shall not be taken into account for
purposes of determining any fraction referred to in Section 3.2(c) hereof.
(f) Accountants' Certification. Whenever the current
exercise price is adjusted as provided in this Section 3.2, the Company will
promptly obtain a certificate of a firm of independent public accountants of
recognized national standing selected by the Board of Directors of the Company
(who may not be
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the regular auditors of the Company) setting forth the current exercise price
as so adjusted, the computation of such adjustment and a brief statement of
facts accounting for such adjustment, and will mail to the holders of the
Warrants a copy of such certificate from such firm of independent public
accountants.
(g) Determination of Market Price. The current "Market
Price" per share of the Company's Common Stock on any date shall be deemed to
be the average of the daily closing prices for the thirty (30) consecutive
trading dates commencing twelve (12) trading days before such date (subject to
the last sentence of this Section 3.2(g)). The closing price for each day
shall be the last reported sale price or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, in either case on
the principal national United States or Canadian securities exchange on which
the Company's Common Stock is listed or admitted to trading, or if the
Company's Common Stock is not listed or admitted to trading on any such
national securities exchange, the average of the highest reported bid and
lowest reported asked prices as furnished by the National Association of
Securities Dealers Inc., Automated Quotation System Level I, or comparable
system. If the closing price cannot be so determined, the Market Price shall
be determined:
(x) by the written agreement of the Company and the
holders of Warrants representing a majority of the Shares then
obtainable from the exercise of outstanding Warrants (the
"Majority Holders"); or
(y) in the event that no such agreement is reached
within fifteen (15) days after the event giving rise to the
need to determine the Market Price, by a nationally recognized
U.S. investment banking firm, selected by the Company
("Company Appraiser") not more than 5 Business Days after the
end of such 15 day period. Any appraiser appointed pursuant
to this paragraph shall be instructed to make its
determination as promptly as possible and in any event within
30 days of appointment. If no such selection is made within
such period, then the Majority Holders shall as promptly as
possible select such a firm whose determination shall be final
and binding. If such selection is timely made by the Company,
and the
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Majority Holders do not object to the Market Price as
determined by the Company Appraiser within 10 days of receipt
of notice thereof by all holders of Warrants, then the Market
Price as determined by the Company Appraiser shall be the
Market Price. If the Majority Holders do so object to the
Company Appraiser's determination of Market Price, then the
Majority Holders can select a nationally recognized U.S.
investment banking firm ("Alternate Appraiser") to review the
Company Appraiser's report and other relevant information.
Within 10 days after receipt by the Alternate Appraiser of
such report and such other information as is reasonably
requested by the Alternate Appraiser, the Company Appraiser
and Alternate Appraiser shall communicate and/or meet to
resolve any questions or differences with respect to the
Market Price. If such appraisers agree on a Market Price,
such Market Price shall be the Market Price. If no agreement
is reached then the Company Appraiser and Alternate Appraiser
shall select a third nationally recognized firm ("Third
Appraiser"). If the Company Appraiser and the Alternate
Appraiser cannot agree on a Third Appraiser within 20 days of
the end of such 10 day period, either may apply to the
American Arbitration Association to appoint the Third
Appraiser. The Third Appraiser shall, within 30 days of their
hire, issue a report with its determination of Market Price
which shall be conclusive and binding. All expenses of the
Company Appraiser shall be borne by the Company. All expenses
of the Alternate Appraiser shall be borne by the Holders. All
expenses of the Third Appraiser shall be borne equally by the
Company and the Holders.
Market Price shall be determined on the basis of the fair market value of the
Company as if it were sold as a going concern on the date of valuation and
without regard to the lack of any trading market for, or the lack of liquidity
in, the Common Stock of the Company.
The Company shall cooperate, and shall provide all necessary information and
assistance, to permit any determination under the preceding clause (x) or (y).
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Each Appraiser shall be instructed to use its best efforts to give the Company
and all holders reasonable advance notice of the Market Price and the contents
of its report (by delivering a draft report) before the report is delivered in
final form. Any communications or reports by an appraiser to either the
Company or any of the holders regarding Market Price shall be given
simultaneously to both the Company and all of the holders.
(h) Antidilution Adjustments Under Other Securities. Without
limiting any other rights available hereunder to the holders of Warrants, if
there is an antidilution adjustment (x) under any security which is convertible
into Common Stock of the Company whether issued prior to or after the date
hereof or (y) under any rights, options or warrants to purchase Common Stock of
the Company whether issued prior to or after the date hereof (except for the
Warrants and except as stated in Section 3.2(e) hereof) which (in the case of
the preceding clause (x) or (y)) results in a reduction in the exercise or
purchase price with respect to such security or rights or results in an
increase in the number of shares obtainable under such security or rights, then
an adjustment shall be made under this Section 3.2(h) to the current exercise
price hereunder. Any such adjustment under this Section 3.2(h) shall be
whichever of the following results in a lower current exercise price: (A) a
reduction in the current exercise price equal to the percentage reduction in
such exercise or purchase price with respect to such security or rights or (B)
a reduction in the current exercise price which will result in the same
percentage increase in the number of Shares available hereunder as the
percentage increase in the number of Shares available under such security or
rights. Any such adjustment under this Section 3.2(h) shall only be made if it
would result in a lower current exercise price than that which would be
determined pursuant to any other antidilution adjustment otherwise required
hereunder as a result of the event or circumstance which triggered the
adjustment to the security or rights described in clause (x) or (y) above (and
if any such adjustment is so made under this Section 3.2(h), then such other
antidilution adjustment otherwise required hereunder shall not be made as a
result of such event or circumstance).
(i) Reorganization Adjustments. In case of any capital
reorganization or reclassification of the capital stock of the Company (other
than a change in par value or a stock
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split-up), the holder of this Warrant shall thereafter be entitled to purchase
for the current exercise price the securities and property receivable upon such
capital reorganization or reclassification by a holder of the number of shares
of Common Stock which this Warrant entitled the holder hereof to purchase
immediately prior to such capital reorganization or reclassification. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 3.2(i), the holder of this Warrant shall become entitled to purchase
any other securities or property other than Common Stock, thereafter the number
of such other securities or property so purchasable upon exercise of this
Warrant and the current exercise price 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 Common Stock contained in this Section 3.2.
(j) Other Adjustments. Without limiting any provisions
of this Section 3.2 or any other provisions of this Warrant, in case any event
shall occur as to which any of the provisions of this Section 3.2 are not
strictly applicable but the failure to make any adjustment would not fairly
protect the exercise rights represented by the Warrants in accordance with the
intent and principles of this Section 3.2, the Company shall at its expense
appoint a firm of independent public accountants of recognized national
standing selected by the Board of Directors of the Company (who may not be the
regular auditors of the Company), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the intent and principles
established in this Section 3.2, necessary to preserve, without dilution, the
economic and other rights represented by the Warrants. Upon receipt of such
opinion, the Company will promptly mail copies thereof to the holders of the
Warrants and shall make the adjustments described therein.
(k) Meaning of "Issuance". References in this Warrant to
"issuance" of stock by the Company include issuances by the Company of
previously unissued shares and issuances, sales or other transfers by the
Company of treasury stock.
(l) Put Adjustment. In the event any Put Notes are issued
pursuant to Section 6 of the Repurchase Agreement, on each anniversary of the
issuance of such Put Notes if they have not
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been paid in full, this Warrant, and all other Warrants, will be deemed to have
been modified, without further act, so that they may purchase the additional
Shares computed by the next sentence at the same current exercise price, such
additional Shares to be allocated to all outstanding Warrants in proportion to
the Shares each such Warrant may purchase. The number of such additional
Shares shall equal X in the following formula:
W+S W+S+X+Y
_____ + .01 = _______
O+W O+W+X+Y
where Y = the number of Shares issued to the holders of outstanding
Shares pursuant to Section 6(c) of the Repurchase Agreement
and to be in the same proportion to X as the number of
outstanding Shares is to the number of Shares purchasable by
all outstanding Warrants
W = the number of Shares purchasable by all outstanding Warrants
O = the number of outstanding shares of Common Stock
S = the number of outstanding Shares
No consideration shall be due from the holder hereof as a result of such
modification of this Warrant and the current exercise price shall not change as
a result thereof.
In the event that such increase plus the additional number of
Shares to be issued pursuant to Section 6(c) of the Repurchase Agreement would
result in all holders of Shares and Warrants owning (and potentially owning as
a result of the exercise of Warrants) in excess of 19.9% of the outstanding
Common Stock of the Company in the aggregate, then the increase described in
the first sentence of this Section 3.2(l) in each Warrant, and the increase in
outstanding Shares, shall be distributed pro rata to all holders of Warrants
and Shares in proportion to their ownership and, by exercise of the Warrants,
potential ownership, of Shares so that all such holders hold (or
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potentially hold) no more than 19.9% of such Common Stock in the aggregate.
Section 4. Company's Consolidation or Merger. If the Company
shall at any time consolidate with or merge into another corporation (where the
Company is not the continuing corporation after such merger or consolidation),
the holder of a Warrant shall thereafter be entitled to receive, upon the
exercise thereof in whole or in part, the securities or other property to which
(and upon the same terms and with the same rights as) a holder of the number of
Shares then deliverable upon the exercise thereof would have been entitled upon
such consolidation or merger (subject to adjustments under Section 3.2 hereof),
and the Company shall take such steps in connection with such consolidation or
merger as may be necessary to assure such holder that the provisions of the
Warrants and the Purchase Agreement shall thereafter be applicable in relation
to any securities or property thereafter deliverable upon the exercise of this
Warrant, including, but not limited to, obtaining a written acknowledgment from
the continuing corporation of its obligation to supply such securities or
property upon such exercise and to be so bound by the Warrant and the Purchase
Agreement. A sale, transfer or lease (in one, or a series of related,
transactions) of all or substantially all of the assets of the Company to
another person shall be deemed a consolidation or merger for the foregoing
purposes.
Section 5. Notice to Holders of Warrants.
In case at any time
(i) the Company shall take any action which would
require an adjustment in the current exercise price pursuant to
Section 3.2(a), (c), (h), (i) or (j); or
(ii) the Company shall authorize the granting to the
holders of its Common Stock of any Distributions on Common Stock as
set forth in Section 3.2(b); or
(iii) there shall be any capital reorganization or
reclassification of the Company's Common Stock (other than a change in
par value or from par value to no par value or from no par value to
par value of the Common Stock), or any
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consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or any sale,
transfer or lease (in one, or a series of related, transactions) of
all or substantially all of the assets of the Company; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give written notice
to the holders of the Warrants, not less than twenty (20) days before any
record date or other date set for definitive action, of the date on which such
action, reorganization, reclassification, sale, transfer, lease, consolidation,
merger, dissolution, liquidation or winding-up, as the case may be, and the
terms thereof.
If the Company shall propose to issue or sell Common Stock (other than pursuant
to the Warrants) or options, rights or warrants to purchase Common Stock, it
shall, at least 30 days prior to the date of such proposed sale, notify the
holder in writing of the name and address of the proposed purchaser, whether
such purchaser is an Affiliate of the Company, the price and terms of the
proposed sale and the type of securities to be sold. Such notice shall be
accompanied by an investment letter, in form satisfactory to the Majority
Holders, to be signed by the proposed purchaser and stating that such
securities are not being acquired for resale. If the Company determines that
the provisions of Section 3.2 do not result in any adjustment, such notice
shall be accompanied by a written certification signed by the Board of
Directors of the Company to that effect. If the Majority Holders object they
shall, within 15 days after receipt of such notice, notify the Company of the
name of a nationally recognized investment banking firm which has been selected
by the Majority Holders to determine whether any such adjustment is required.
The Company shall promptly make available to such firm all information and data
it may reasonably acquire to make such determination. The determination of
such investment banking firm shall be final. If the investment banker does not
give notice to the Company and the Holder of its decision prior to a date 45
days following the Company's initial notice to the Holder, then the proposed
sale shall be deemed not to require an adjustment.
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All costs and expenses of the investment banker shall be paid by the Company.
Section 6. Number of Shares. Upon any adjustment of the
current exercise price, the holder of this Warrant shall thereafter (until
another such adjustment) be entitled to purchase at the current exercise price
the number of Shares, calculated to the nearest 1/100 of a Share, obtained by
multiplying the current exercise price in effect immediately prior to such
adjustment by the number of Shares purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the new current
exercise price resulting from such adjustment.
Section 7. Specific Performance. The Company stipulates that
the remedies at law of a holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or compliance with any
of the terms of this Warrant are not and will not be adequate and that, to the
fullest extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
Section 8. No Rights or Liabilities as Stockholder. Nothing
contained in this Warrant shall be construed as conferring upon the holder
hereof any rights as a stockholder of the Company (prior to exercise of all or
a portion of this Warrant) or as imposing any liabilities on such holder to
purchase any securities or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors or stockholders of the
Company or otherwise.
Section 9. Ownership; Transfer. The Company may treat the
Person in whose name this Warrant is registered pursuant to Section 13(a) of
the Purchase Agreement as the owner and holder of this Warrant for all
purposes, and the Company shall not be affected by any notice to the contrary
(except that the Company shall comply with the provisions of Section 16 of the
Purchase Agreement regarding the issuance of a new Warrant or Warrants to
transferees). This Warrant is transferable upon the conditions specified in
Section 16 of the Purchase Agreement.
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Section 10. Covenants
10.1. Financial Information. The Company will deliver to
each holder of a Share or Warrant:
(a) as soon as practicable, and in any event within one
hundred twenty (120) days after the close of each fiscal year of the Company
(subject to extensions to the extent provided to CPT for financial reporting
purposes pursuant to the Securities Exchange Act), (i) a consolidated and
consolidating with respect to the Company and its Subsidiaries, and a
consolidated with respect to CPT, balance sheet as of the end of such fiscal
year, (ii) consolidated and consolidating with respect to the Company and its
Subsidiaries, and a consolidated with respect to CPT, statements of income,
retained earnings and cash flows for such fiscal year, setting forth in each
case in comparative form the corresponding figures for the preceding year.
Such annual financial statements shall be accompanied by: an opinion of the
Accountants stating that (1) the examination by the Accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, included such tests of
the accounting records and such other procedures as were considered necessary
under the circumstances, (2) such financial statements have been prepared in
accordance with GAAP and in a manner consistent with prior periods, and (3)
such financial statements fairly present in all material respects the financial
position and results of operations of the Company or CPT, as the case may be.
(b) as soon as practicable, and in any event within thirty
(30) days after the end of each fiscal quarter, (i) a consolidated and
consolidating with respect to the Company and its Subsidiaries and a
consolidated with respect to CPT, balance sheet as of the end of such fiscal
quarter and (ii) consolidated 45 as to CPT and consolidating with respect to
the Company and its Subsidiaries and a consolidated with respect to CPT,
statements of income, retained earnings and cash flows for the end of such
fiscal quarter in each case to be in reasonable detail, certified by the
principal financial officer of the Company or CPT, as the case may be, and with
respect to the Company, setting forth in comparative form (except for the
consolidating information) the corresponding figures for the
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comparable period one year prior thereto (subject to normal year-end
adjustments).
(c) as soon as practicable, copies of all financial
statements, proxy material or reports sent to the Company's, CPT's or any
Subsidiary's stockholders, of any public or press releases and of all reports
or registration statements filed with the Commission pursuant to the Securities
Act or the Securities Exchange Act.
10.2. Reservation of Shares. There have been reserved, and
the Company shall at all times keep reserved, out of its authorized Common
Stock, a number of shares of Common Stock sufficient to provide for the
exercise of the rights of purchase represented by the then outstanding
Warrants.
10.3. No Dilution or Impairment. The Company will not, by
amendment of its Certificate of Incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant. The Company will at all
times in good faith assist in the carrying out of all such terms, and in the
taking of all such action, as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will not permit the par value of any shares of Common Stock receivable upon the
exercise of this Warrant to exceed the amount payable therefor upon such
exercise, (b) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of the Company's Common Stock, free from all taxes, Liens
and charges with respect to the issue thereof, upon the exercise of this
Warrant from time to time outstanding and (c) will not take any action which
results in any adjustment of this current exercise price under this Warrant if
the total number of shares of the Company's Common Stock (or other securities)
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock (or other securities) then
authorized by the Company's Certificate of Incorporation and available for the
purpose of issue upon such exercise.
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10.4. Listing of Shares. If the Company shall list any
shares of its Common Stock on any national securities exchange, it will take
such action as may be necessary, from time to time, to list the Shares, subject
to issuance, on such exchange.
10.5. Securities Exchange Act Registration. At any time that
the Company either files and such filing becomes effective, or is required to
file, a registration statement with respect to Common Stock of the Company
under Section 5 of the Securities Act or Section 12(b) or Section 12(g) of the
Securities Exchange Act, then thereafter:
(a) The Company will maintain effective a registration
statement (containing such information and documents as the Commission shall
specify and otherwise complying with the Securities Exchange Act) with respect
to the Common Stock of the Company under Section 12(b) or Section 12(g),
whichever is applicable, of the Securities Exchange Act and will file on time
such information, documents and reports as the Commission may require or
prescribe for companies whose stock has been registered pursuant to such
Section 12(b) or Section 12(g), whichever is applicable.
(b) The Company will, upon the request of the holder hereof
or of any Shares, make whatever other filings with the Commission, or otherwise
make generally available to the public such financial and other information, as
any such holder may deem reasonably necessary or desirable in order to enable
such holder to be permitted to sell Shares pursuant to the provisions of Rule
144 under the Securities Act (or any successor statute, rule or regulation to
Rule 144).
10.6. Maintenance of Public Market. At any time that the
Company is required to comply with Section 10.5(a) or 10.5(b) hereof, the
Company will not proceed with a program of acquisition of its own Common Stock,
initiate a corporate reorganization or recapitalization or authorize or consent
to any action which would have the effect of:
(a) removing the Company from registration with the
Commission under the Securities Exchange Act,
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(b) requiring the Company to make a filing under Section
13(e) of the Securities Exchange Act,
(c) reducing substantially or eliminating the public market
for shares of Common Stock of the Company,
(d) if any shares of the Company's Common Stock are at any
time listed on the National Association of Securities Dealers Inc. Automated
Quotation System, causing a delisting of the Company's Common Stock from such
System (unless such stock is delisted as a result of being listed on a national
securities exchange), or
(e) if any shares of the Company's Common Stock are at any
time listed on a national exchange, causing a delisting of such stock from such
exchange.
10.7. Delivery of Information for Rule 144A Transactions. If
a holder of Shares proposes to transfer any such Shares pursuant to Rule 144A
under the Securities Act (as in effect from time to time), the Company agrees
to provide (upon the request of such holder or the prospective transferee) to
such holder and (if requested) to the prospective transferee any financial or
other information concerning the Company and its Subsidiaries which is required
to be delivered by such holder to any transferee of such Shares pursuant to
such Rule 144A.
Section 11. Headings. The headings and captions in this
Warrant are for convenience of reference only and shall not define, limit or
otherwise affect any of the terms or provisions hereof.
Section 12. Governing Law. This Warrant shall be governed
by, and construed in accordance with, the laws of the Commonwealth of
Pennsylvania (other than any conflict of laws rule which might result in the
application of the laws of any other jurisdiction).
Section 13. Survival. The obligations of the Company under
this Warrant shall survive its full exercise.
Section 14. Definitions. Terms defined in the Purchase
Agreement are used herein with the same definition. The
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following terms are defined in the following Sections of this Warrant:
<TABLE>
<S> <C>
Shares First Paragraph
Warrants Second Paragraph
Purchase Agreement Second Paragraph
current exercise price 3.1
Distributions on Common 3.2(b)
Stock
Additional Common Stock 3.2(c)
Market Price 3.2(g)
Majority Holders 3.2(g)
</TABLE>
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<PAGE> 182
IN WITNESS WHEREOF, J&L STRUCTURAL, INC. has caused this
Warrant to be dated and to be executed and issued on its behalf by its officer
thereunto duly authorized.
J&L STRUCTURAL, INC.
By ________________________
Name:
Title:
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ANNEX A
FORM OF SUBSCRIPTION
(To be executed only upon exercise of the Warrant
in whole or in part)
To J&L STRUCTURAL, INC.
The undersigned registered holder of the accompanying Warrant
hereby irrevocably exercises such Warrant or portion thereof for, and purchases
thereunder, _____________(1)/ Shares (as defined in such Warrant) and herewith
[makes payment therefor by application pursuant to Section 1.5 or Section 2 of
such Warrant of ___________________] [or] [makes payment therefor of
$_________. The undersigned requests that the certificates for such Shares be
issued in the name of, and delivered to, _____________________ whose address is
_________________________________].
Dated: _______________________
___________________________________
(Name must conform to name of holder as specified
on the face of the Warrant)
__________________________________
(Street Address)
____________________
(1)/ Insert the number of Shares as to which this Warrant is
being exercised. In the case of a partial exercise, a new Warrant or
Warrants will be issued and delivered, representing the unexercised
portion of this Warrant, to the holder surrendering the same.
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<PAGE> 184
__________________________________
(City) (State) (Zip Code)
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<PAGE> 185
FORM OF ASSIGNMENT
(To be signed only a transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
__________________________ the right represented by the within Warrant to
purchase _________ shares of Common Stock of J&L STRUCTURAL, INC. to which the
within Warrant relates, and appoints ______________________ Attorney to
transfer such right on the books of J&L STRUCTURAL, INC. with full power of
substitution in the premises.
Dated: _________________
___________________________________
(Name must conform to name of
holder as specified on the face of
the Warrant)
___________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
Signed in the presence of:
_____________________________
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<PAGE> 186
EXHIBIT D
Demised Premises
(Intentionally omitted)
<PAGE> 187
EXHIBIT E
[Intentionally not used]
<PAGE> 188
EXHIBIT F
[Intentionally not used]
<PAGE> 189
EXHIBIT G
Description of Real Estate
(Intentionally omitted)
<PAGE> 190
EXHIBIT H
Form of Repurchase Agreement
<PAGE> 191
REPURCHASE AGREEMENT
REPURCHASE AGREEMENT dated as of April 6, 1995 among J&L
STRUCTURAL, INC., a Delaware corporation (the "Company"), CPT HOLDINGS, INC., a
Minnesota corporation ("CPT"), and the Holders listed on the signature page of
this Agreement ("Holders").
W I T N E S S E T H:
In order to induce each Holder to enter into the Note and
Warrant Purchase Agreement dated as of the date hereof (as from time to time
assigned, supplemented or amended or as the terms thereof may be waived, the
"Purchase Agreement") with the Company regarding the Company's 13% Senior
Subordinated Secured Notes Due June 30, 2005 and the Company's Common Stock
Purchase Warrants, the Company and CPT agree with the Holders as set forth
below.
SECTION 1. Certain Definitions.
(a) All terms defined in the Purchase Agreement or the
Warrants are used herein with the same definition.
(b) The term "Appraisal" means the process for
determining Market Price set forth in Sections 3.2(g)(x) and (y) of the
Warrants.
(c) The term "Buyer" means CPT and/or the Company,
whichever is purchasing Subject Securities pursuant to this Agreement.
(d) The term "Holder" means a holder of (i) Warrants
and/or (ii) Common Stock obtained from the exercise of Warrants. As used
herein, "Common Stock" obtained or obtainable from the exercise of Warrants
includes any securities obtainable upon the exercise of Warrants and any other
securities into which such securities may subsequently be changed or converted.
<PAGE> 192
(e) The term "Holder's Trigger Date" means the earlier of
the following dates:
(i) April 6, 2001; or
(ii) the date of a Triggering Event.
(f) The term "Purchase Price" means with respect to any
Holder's Subject Securities the repurchase price (determined under Section 5
hereof) to be paid for such Subject Securities by the Company under this
Agreement.
(g) The term "Repurchase Date" means with respect to any
Subject Securities the date, determined under Section 4(b) hereof, when the
Company is required to repurchase such Subject Securities under this Agreement.
(h) The term "Subject Securities" means with respect to a
Holder (i) all or part of the Warrants then held by such Holder and (ii) all or
part of the Common Stock which is then held by such Holder and which was
obtained from the exercise of Warrants, in each case to the extent specified by
the Holder in its notice pursuant to Section 2(a) as required to be purchased
by the Buyer.
SECTION 2. Repurchase at the Holder's Option.
(a) Upon written notice to the Company and/or CPT from a
Holder requesting that a repurchase of the Holder's Subject Securities take
place on or after a Holder's Trigger Date, the Company and/or CPT shall
repurchase from such Holder, and such Holder shall sell to the Company and/or
CPT, on the Repurchase Date (as determined under Section 4(b) hereof but
subject to Section 4(a) hereof) all of such Holder's Subject Securities,
subject to Section 6 hereof. A notice under this Section 2(a) may not be given
more than sixty (60) days prior to a Holder's Trigger Date and may not, in the
case of a Holder's Trigger Date arising solely under clause (ii) of the
definition thereof, be given (with respect to a particular Triggering Event)
more than 60 days after a Holder has received notice thereof pursuant to the
fourth paragraph of the Warrant. Either CPT or the Company may be the Buyer,
at their option, but both CPT and the Company
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<PAGE> 193
shall be jointly and severally liable to purchase the Subject Securities in the
event such purchase does not occur when required.
(b) The Purchase Price to be paid by the Buyer for a
Holder's Subject Securities upon a repurchase under this Section 2 shall be
determined pursuant to Section 5 hereof.
(c) Within five (5) days after the Company and/or CPT has
received a notice requesting repurchase of any Holder's Subject Securities
under this Section 2, the Buyer shall give written notice of such requested
repurchase to each other Holder.
(d) All obligations under this Agreement of the Company
and/or CPT or of the Buyer shall be the joint and several obligations of the
Company and CPT and any Holder may enforce any such obligation entirely against
the Company, entirely against CPT and/or in part against one and in part
against the other.
SECTION 3. Representations and Covenants of CPT.
(I) CPT represents and warrants to the Holders as follows:
(a) CPT is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation and (ii) is duly
qualified and authorized to do business and is in good standing in each
jurisdiction in which it owns or leases any material property or in which the
conduct of its business requires it to so qualify or be authorized, except for
such jurisdictions where the failure to so qualify or be authorized would not
have a material adverse effect on the Company's assets, properties,
liabilities, business, affairs, results of operations, condition (financial or
otherwise) or prospects on a consolidated basis.
(b) No proceeding looking toward the dissolution or merger of
CPT or the amendment of its Certificate of Incorporation has been commenced.
CPT is not in violation in any respect of its Certificate of Incorporation or
By-Laws.
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<PAGE> 194
(c) CPT has all requisite power, authority and legal right to
execute, deliver, enter into, consummate and perform this Agreement. The
execution, delivery and performance of this Agreement have been duly authorized
by all required corporate and other actions. CPT has duly executed and
delivered this Agreement and this Agreement constitutes the legal, valid and
binding obligation of CPT enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to the rights of creditors generally and subject to the availability
of equitable remedies and the application of equitable principles.
(d) CPT owns not less than 80.1% of the outstanding common
stock of J&L Holdings free and clear of any Liens other than the Lien granted
to Trinity Investment Corp.
(e) The execution, delivery and performance by CPT of this
Agreement and any of the transactions contemplated hereby do not and will not
(i) violate or conflict with, with or without the giving of notice or the
passage of time or both, any provision of (A) the Certificate of Incorporation
or By-Laws of CPT or (B) any law, rule, regulation, order, judgment, writ,
injunction, decree, agreement, indenture or other instrument applicable to CPT
or any of its properties (or to which CPT is a party or by which it or any of
its properties may be bound), (ii) result in the creation of any Lien upon any
of CPT's Properties or (iii) require the consent, waiver, approval, order or
authorization of, or declaration, registration, qualification or filing with,
any Person (whether or not a governmental authority and including, without
limitation, any shareholder approval).
(f) There is no action, suit, proceeding, investigation or
claim pending or, to the knowledge of CPT, threatened in law, equity or
otherwise before any court, administrative agency or arbitrator which either
(i) questions the validity of this Agreement or any action taken or to be taken
pursuant hereto or (ii) might adversely affect the right, title or interest of
any Holder or (iii) might result in a material adverse change in the assets,
properties, liabilities, business, affairs, prospects, results of operations,
condition (financial or otherwise) of CPT.
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<PAGE> 195
(g) Neither CPT nor any agent nor other Person acting on its
behalf, directly or indirectly, (i) offered any of the Notes, Warrants or any
similar security of the Company (A) by any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) or (B) for sale to or solicited offers to buy any thereof from, or
otherwise approached or negotiated with respect thereto with, any Person other
than the Holders and not more than 73 other institutional investors each of
which CPT reasonably believed was an "accredited investor" within the meaning
of Regulation D under the Securities Act or (ii) has done,or caused to be done
(or has omitted to do or to cause to be done) any act which act (or which
omission) would result in bringing the issuance or sale of the Notes, Warrants
or Shares within the provisions of Section 5 of the Securities Act.
(h) CPT is and, immediately after giving effect to this
Agreement and the consummation of the other transactions contemplated hereby,
will be Solvent.
For purposes of this clause (h), the term "Solvent" means,
with respect to any Person, that:
(i) the assets of such Person, at a fair valuation,
exceed the total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of such
Person;
(ii) the cash flow of such Person is sufficient to
enable it to pay its debts as they mature; and
(iii) such Person does not have an unreasonably
small capital with which to engage in its anticipated
business.
For purposes of this clause (h), the "fair valuation" of the
assets of any Person shall be determined on the basis of the amount which may
be realized within a reasonable time, either through collection or sale of such
assets at the regular market value, and the "regular market value" shall be the
Fair Market Value.
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(i) other than the Withdrawal Liability, there are no
Liens or claims that will arise against the Company as a result of prior
activities or business by CPT or its Affiliates.
(II) CPT covenants with the Holders as follows:
(a) CPT will deliver to each Holder:
(i) as soon as practicable, and in any event within one
hundred twenty (120) days after the close of each fiscal year of the Company
(subject to extensions to the extent provided to CPT for financial reporting
purposes pursuant to the Securities Exchange Act), (i) a consolidated balance
sheet of CPT as of the end of such fiscal year and (ii) consolidated statements
of income, retained earnings and cash flows of CPT for such fiscal year, in
each case setting forth in comparative form the corresponding figures for the
preceding fiscal year, all such balance sheets and statements to be in
reasonable detail and certified without qualification by independent public
accountants of recognized national standing selected by CPT and reasonably
satisfactory to the Holders;
(ii) as soon as practicable, and in any event within sixty
(60) days after the close of each of the first three (3) fiscal quarters of CPT
(i) a consolidated balance sheet of CPT as of the end of such fiscal quarter
and (ii) consolidated statements of income, retained earnings and cash flows of
CPT for the portion of the fiscal year ended with the end of such fiscal
quarter, in each case to be in reasonable detail, certified by the principal
financial officer of CPT and setting forth in comparative form the
corresponding figures for the comparable period one year prior thereto (subject
to normal year-end adjustments);
(iii) as soon as practicable, copies of all financial
statements, proxy material or reports sent to CPT's stockholders, of any public
or press releases and of all reports or registration statements filed with the
Commission pursuant to the Securities Act or the Securities Exchange Act.
(b) CPT will maintain its corporate existence, rights and
other franchises in full force and effect; provided, that CPT may permit the
termination or abandonment of rights or other
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franchises if, in the opinion of CPT, it is no longer in CPT's best interests
to maintain such rights or other franchises and such termination or abandonment
will not be prejudicial in any material respect to the Holders.
(c) CPT will from time to time, upon the request of the
Majority Holders, promptly and duly execute and deliver any and all such
further instruments and documents, and take such further actions, as the
Majority Holders may reasonably deem necessary or desirable to obtain the full
benefits, or effectuate the intent, of the rights and powers herein granted.
(d) CPT will not amend the Tax Sharing Agreement without the
prior written consent of the Majority Noteholders.
(e) After a Holder's Trigger Date has occurred and if,
during any time period within which a notice under Section 2(a) may be given,
CPT desires to contribute, loan or otherwise transfer cash or other property to
J&L Holdings which will be used to purchase stock owned by the Shareholders or
their successors in interest, CPT shall first notify the Holders of the
foregoing (including the number of shares of such stock to be purchased and the
price thereof) and if one or more Holders within 30 days of receipt of such
notice provide a notice under Section 2(a), CPT shall not contribute, loan or
otherwise transfer such property to J&L Holdings until the Subject Securities
described in such notice(s) from Holder(s) have been purchased for cash in
accordance with the terms of this Agreement.
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SECTION 4. Closing on the Repurchase Date.
(a) In any notice given by a Holder under Section 2(a)
hereof, the Holder may, in its sole discretion, condition the repurchase of
such Holder's Subject Securities (i) upon any prepayments of Notes required
under the Purchase Agreement being made or (ii) upon the Holder being satisfied
with the Purchase Price for the Holder's Subject Securities; provided, that if
a Holder so conditions a repurchase under the preceding clause (ii) and does
not proceed with such repurchase, then with respect to any such cancelled
repurchase by such Holder as a result of such clause (ii) (except for the first
two such cancelled repurchases involving an Appraisal), such Holder shall bear
all the costs of any Appraisal which was made as a result of such Holder's
request for such repurchase, as well as a reasonable charge (not to exceed
$50,000 in the aggregate) for the time of management personnel of CPT and/or
the Company spent in preparing for such Appraisal and the related purchase (but
this shifting of Appraisal costs to the Holder in such a situation shall not
apply to the first two such cancelled repurchases involving an Appraisal).
(b) The Repurchase Date with respect to any Subject
Securities shall be determined in the following manner:
(i) The Repurchase Date for any repurchase of a
Holder's Subject Securities under Section 2
hereof shall occur on the later of (A) a
Holder's Trigger Date or (B) the fifth
Business Day following the date that the
Appraisal is completed as to the Market
Price; provided, that if pursuant to Section
5(c) hereof there is no Appraisal with
respect to a repurchase or if pursuant to
subparagraph (iv) of Section 5(d) hereof a
new Appraisal is not required with respect to
a repurchase, then the Repurchase Date for
such repurchase shall be the thirtieth day
after notice under Section 2(a) hereof from
the Holder requesting such repurchase.
(ii) A Repurchase Date established under this
Section 4(b) shall be the Repurchase Date for
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all Subject Securities which the Holders
thereof have requested be repurchased under
Section 2 (and which have not been
repurchased on a previous Repurchase Date),
provided all such requests for repurchase
were delivered to the Company at least 5
Business Days prior to such Repurchase Date.
(c) On the Repurchase Date with respect to a Holder's
Subject Securities, the Buyer shall repurchase the Holder's Subject Securities
at the Purchase Price therefor by payment in federal funds or other immediately
available United States Dollars either by wire transfer to the account (as
designated to the Buyer) of the Holder or its nominee at any bank or trust
company in the United States of America.
(d) On the Repurchase Date with respect to a Holder's
Subject Securities, the Holder shall deliver its Subject Securities to the
Buyer upon receipt of the full Purchase Price therefor. In the event that the
full Purchase Price is not paid with respect to any portion of the Subject
Securities (as contemplated by Section 6 hereof or otherwise), then such Holder
shall not be obligated to deliver such portion of the Subject Securities until
receipt of the full Purchase Price therefor or, if requested by the Holder
pursuant to Section 6 below, receipt of the promissory notes referred to in
Section 6(c) hereof.
SECTION 5. Purchase Price for the Subject Securities.
(a) The Purchase Price for a Holder's Subject Securities
purchased by the Buyer on a Repurchase Date under Section 2 hereof shall be
equal to the Value of the Subject Securities of such Holder as determined under
this Section 5.
(b) The "Value of the Subject Securities" of a Holder
shall be the greater of
(x) the sum of (i) the Market Price per share of the
Company's Common Stock (calculated, in the case of Market Price determined
pursuant to clause (x) or (y) of Section 3.2(g) of the Warrants, as if all
Warrants had been fully exercised) multiplied by the number of Shares included
in such Holder's
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<PAGE> 200
Subject Securities and (ii) (I) the Market Price per share of the Company's
Common Stock (calculated, in the case of Market Price determined pursuant to
clause (x) or (y) of Section 3.2(g) of the Warrants, as if all Warrants had
been fully exercised) multiplied by the number of Shares obtainable upon the
exercise of Warrants included in such Holder's Subject Securities, less (II)
the aggregate amount necessary to exercise all such Warrants to obtain such
Common Stock and
(y) the product of
(A) the sum of the number of Shares included in such
Subject Securities plus the number of Shares so obtainable upon such
exercise multiplied by
(B) the quotient obtained by dividing (X) the sum of
(i) 5.3 multiplied by the sum of (I) the net income of the Company,
plus II interest expense, taxes, depreciation, amortization and
extraordinary items deducted at arriving at such net income, in the
case of both clause (I) and (II) earned on a consolidated basis during
the 12 complete calendar months next preceding the Pricing Date plus
(ii) cash, cash equivalents and marketable securities held by the
Company on the Pricing Date on a consolidated basis less (iii) all
Indebtedness of the Company on a consolidated basis on the Pricing
Date less (iv) the full amount payable on liquidation of the Company
to the holders of all preferred stock of the Company outstanding on
the Pricing Date, in all cases determined in accordance with GAAP,
consistently applied with the preparation of prior financial
statements delivered pursuant to the Purchase Agreement, by (Y) the
number of shares of Common Stock then outstanding (excluding treasury
stock but including for this purpose the shares being purchased
pursuant to Section 2 and the Shares which could be purchased pursuant
to all outstanding Warrants), and then subtracting from such quotient,
in the case of a purchase of Warrants, the current exercise price
thereof. In the case of a purchase of Shares (but not of Warrants),
there shall be included in "cash" described above the amounts the
Company has received in payment for the Shares. The "Pricing Date"
shall mean the end of the fiscal quarter of the Company immediately
preceding the date the Holder gives the related notice pursuant to
Section 2(a).
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<PAGE> 201
(c) If the Market Price is determinable pursuant to the
first two sentences of Section 3(g) of the Warrants with respect to any
repurchase under Section 2, the Market Price shall be determined as of the
Business Day immediately preceding the date on which notice is given under
Section 2(a) hereof requesting such repurchase; provided, that if the
repurchase has been requested under Section 2(a) hereof as a result of the
occurrence of a Holder's Trigger Date referred to in clause (ii) of the
definition of "Holder's Trigger Date" in Section 1(e) hereof, then the Market
Price shall be the greater of (x) the Market Price of the Company's Common
Stock on the Business Day immediately preceding the date on which notice is
given under Section 2(a) hereof requesting such repurchase or (y) the Market
Price of the Company's Common Stock on the Business Day immediately preceding
the public announcement of the event which resulted in such Holder's Trigger
Date.
(d) Appraisal.
(i) In determining Market Price, the appraisers
shall not take into account any transactions to occur on the
Repurchase Date pursuant to this Repurchase Agreement.
(ii) References in Section 3(g) of the Warrants to
"holders" shall for purposes of this Agreement include all
Holders whether or not the Holder's Subject Securities are
being repurchased.
(iii) There shall be only one determination of
Market Price with respect to all repurchases occurring on the
same Repurchase Date.
(iv) If a Holder or Holders request a repurchase
under Section 2 and do not proceed with the repurchase because
(pursuant to Section 4(a)) they have conditioned the
repurchase as provided in clause (ii) of Section 4(a) hereof,
then such Holder or Holders shall not require a new Appraisal
for a period of 12 months after the date on which such
repurchase would otherwise have occurred. Within any such
12-month period, if any such Holder's Subject Securities are
to
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<PAGE> 202
be repurchased under Section 2, then such previous appraisal
shall govern the determination of the applicable Market Price
for the Purchase Price for such Subject Securities.
SECTION 6. Limitations on the Company's Obligation to Repurchase.
(a) The Company or CPT shall make any required repurchase
of a Holder's Subject Securities under Section 2 hereof in full unless (i) such
full repurchase is not permitted by law or (ii) the Company and CPT are not
financially capable of such full repurchase without issuing new equity
securities or (iii) in the case of the Company only, such repurchase is
prohibited by the Loan and Security Agreement; provided, that with respect to
the foregoing clause (ii), the Board of Directors of the Company and CPT must
each deliver to all Holders a certificate stating (A) that the Company or CPT,
as the case may be, is not financially capable of purchasing the Subject
Securities under clause (ii), (B) that it is the reasonable belief of such
Board of Directors that if the purchase were made the Company's or CPT's, as
the case may be, liabilities would exceed the fair saleable value of the
Company's or CPT's, as the case may be, assets (as a going concern) or the
Company or CPT, as the case may be, would be unable to make the purchase and to
carry on its business without issuing new equity securities and (C) what
portion of the Subject Securities the Company or CPT, as the case may be, would
be able to repurchase; provided, further, that the foregoing proviso and the
foregoing clause (ii) shall not be applicable (and shall be disregarded) if an
Event of Default (as defined in the Purchase Agreement) occurs pursuant to the
Purchase Agreement.
(b) In the event that on the Repurchase Date the Company
and CPT are not permitted by law or are otherwise unable (as provided in
Section 6(a) above) to repurchase all of the Subject Securities to be
repurchased on such Date pursuant to this Repurchase Agreement, then the amount
of Subject Securities to be repurchased on such Repurchase Date by the Company
or CPT from all Holders under this Repurchase Agreement shall be limited to the
amount that can be repurchased by the Company or CPT without violating Section
6(a) hereof. Such amount that can be
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<PAGE> 203
repurchased shall be allocated among all Holders selling Subject Securities on
the same Repurchase Date in proportion, as nearly as practicable, to the
respective number of shares of Common Stock included in or underlying the
Subject Securities held by each such Holder whose Subject Securities are being
repurchased.
(c) In the event that on the Repurchase Date the Company
and CPT are not permitted by law or are otherwise unable (as provided in
Section 6(a) above) to repurchase all of the Subject Securities to be
repurchased on such Date from a Holder pursuant to this Repurchase Agreement
(but excluding a withdrawal by such Holder of a requested repurchase under
Section 4(a)), then, each Holder shall have the option to either (i) withdraw
the request retaining full rights to request a repurchase at a later date or
(ii) (A) if the Repurchase Date is on or before the Determination Date, elect
to receive a note (the "Put Note") from the Company on the Repurchase Date and
(B) if the Repurchase Date is after the Determination Date, allow the Buyer 12
months from the date of notice pursuant to Section 2(a) to repurchase with a
cash payment. "Determination Date" shall mean the date determined by Section
14(b) of the Subordination and Intercreditor Agreement.
The Put Note will be in the same form as the Notes, except
that it will have the following characteristics: (i) maturity equal to the
remaining term under the Notes with amortization ratable with that remaining
for the Notes; (ii) collateralized and ranking pari-passu with the Notes; (iii)
prepayable at any time without penalty and (iv) interest is capitalized, and is
not payable, on each interest payment date under the Notes until the payment
date which follows the Determination Date. Notwithstanding the foregoing,
after the Determination Date the Put Note shall no longer be subordinated to
any other Indebtedness of the Company. In order to accomplish the
collateralization described above, the Company will amend the Loan Documents to
provide the holders of the Put Notes the same collateral and rights relating
thereto as then exists for the holders of the Notes.
If option (ii) (B) above is elected, the Buyer will pay
interest at the prime or base rate announced from time to time by Citibank,
N.A. plus 1% on the Purchase Price from the date of such notice to the earlier
of (x) 12 months from the date of such
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<PAGE> 204
prepayable at any time without penalty. In order to accomplish the
collateralization described above, the Company will enter into security and
other documents with the holders of the Subordinated Put Notes in the same form
as then exists for the holders of the Notes.
With respect to any notes issued pursuant to this Section
6(c), on each anniversary of the issuance of such notes if they have not been
paid in full, (i) the interest rate thereon shall increase by 1% per annum and
(ii) the Company shall issue to each holder of Shares additional Shares, for no
additional consideration, such additional Shares to be allocated among all
Holders of Shares in proportion to the number of Shares held by them, in an
aggregate amount equal to "Y" determined by the formula set forth in Section
3.2(l) of the Warrants; provided, however, that in no event shall the ownership
of the Holders (plus the potential ownership if all Warrants were exercised) of
Common Stock of the Company exceed 19.9% of the outstanding Common Stock of the
Company in the aggregate. In the event that such increase would result in
ownership in excess of such 19.9%, then the increase in Shares, and the
increase in Shares which can be purchased by outstanding Warrants, shall be
distributed pro rata to all Holders of Shares and of Warrants in proportion to
their ownership and, by exercise of the Warrants, potential ownership, of
Shares.
(d) If a notice of repurchase has been given under
Section 2(a) of this Repurchase Agreement, then the Company and CPT shall
notify the Holders at least twenty (20) days prior to the expected Repurchase
Date (and the Company and CPT shall also notify the Holders at any other later
time prior to the Repurchase Date if the Company or CPT learns that the
following situation described in this sentence may exist) in the event that the
Company and CPT would not be or may not be permitted for any reason, legal or
otherwise, to repurchase all of the Subject Securities to be repurchased on the
expected Repurchase Date. Such notice shall state the reasons why such
repurchase may not be permitted. Upon receipt of such notice, any Holder whose
Subject Securities are to be repurchased under Section 2 of this Repurchase
Agreement shall have the right to rescind its notice of repurchase under such
Section 2. Delivery of the notice under this Section 6(d) shall not affect the
Company's obligation to
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<PAGE> 205
repurchase the Subject Securities and shall not affect the Holder's rights
under this Section 6.
(e) The Company and CPT shall take whatever actions are
within its power to prevent (or to remedy, as the case may be) any condition or
circumstance which may limit the amount of Subject Securities which may be
repurchased and which may make this Section 6 applicable.
SECTION 7.
Notices. Unless otherwise expressly specified or permitted by the terms hereof,
all notices, requests, demands, consents and other communications hereunder
shall be in writing and shall be given and deemed effective as provided in
Section 22 of the Purchase Agreement, and if to CPT to c/o Mentmore Holdings
Corporation, 1430 Broadway, 13th Floor, New York, NY 10018, Attention:
President, with a copy to Kelley, McCann and Livingstone, BP American Building,
200 Public Square, 35th Floor, Cleveland, Ohio 44114, Attention: Michael D.
Schenker.
SECTION 8. Sales of Stock. In the event the Holders hold any Shares and
the Company desires to sell or issue Common Stock to anyone other than such
Holders or to Holders as a result of the exercise of Warrants, the Company must
first arrange for an independent investment banking firm of national standing
selected by the Company to value the Common Stock of the Company. The report
of such value shall be sent to each Holder, and the Company may not so sell or
issue Common Stock for six months after the date of such report at a price less
than the value of such Common Stock set forth in such report.
SECTION 9. Miscellaneous.
(a) Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument, and all signatures need not appear on
any one counterpart.
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<PAGE> 206
(b) Headings. The headings and captions in this
Agreement are for convenience of reference only and shall not define, limit or
otherwise affect any of the terms or provisions hereof.
(c) Binding Effect. The terms of this Agreement shall be
binding upon, and inure to the benefit of, the parties and their respective
successors and permitted assigns whether so expressed or not. The Company and
CPT may not assign any of its obligations, duties or rights under this
Agreement, except with the Sellers' consent. In addition to any assignment by
operation of law, a Holder may assign, in whole or in part, any or all of such
Holder's rights (and/or any obligations) under this Agreement to any transferee
of Warrants or Warrant Stock.
(d) Severability. Any provision hereof 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 or thereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(e) Amendment. No amendment, modification or waiver of
this Agreement shall be effective unless in writing and signed by all of the
parties hereto.
(f) Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the Commonwealth of Pennsylvania
(other than any conflict of laws rules which might result in the application of
the laws of any other jurisdiction).
(g) No Waivers. No course of dealing and no delay on the
part of any party hereto in exercising any right, power, or remedy conferred by
this Agreement shall operate as a waiver thereof or otherwise prejudice such
party's rights, powers and remedies. No single or partial exercise of any
rights, powers or remedies conferred by this Agreement shall preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy.
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<PAGE> 207
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
J&L STRUCTURAL, INC.
By ________________________________
Name:
Title:
CPT HOLDINGS, INC.
By ________________________________
Name:
Title:
The Paul Revere Investment
Management Corporation as agent for
THE PAUL REVERE LIFE INSURANCE
COMPANY
By ________________________________
The Paul Revere Investment
Management Corporation as agent for
THE PAUL REVERE PROTECTIVE LIFE
INSURANCE COMPANY
By ________________________________
The Paul Revere Investment
Management Corporation as agent for
<PAGE> 208
THE PAUL REVERE VARIABLE ANNUITY
INSURANCE COMPANY
By ________________________________
Rhode Island Hospital Trust
National Bank as Trustee for
THE TEXTRON COLLECTIVE INVESTMENT
TRUST
By ________________________________
<PAGE> 209
EXHIBIT I
Form of Legal Opinions of
General Counsel and Local Counsel to the Company
(Intentionally omitted)
<PAGE> 210
SCHEDULE 2
Company's Facilities
(Intentionally omitted)
<PAGE> 211
SCHEDULE 4.1
Corporate Existence, Power and Authority
(Intentionally omitted)
<PAGE> 212
SCHEDULE 4.6
Exceptions to Section 4.6(e) with respect to Section 4.6(a)(v):
Mentmore Holdings Corporation does not own any of the outstanding
common stock of CPT. References to Mentmore Holdings Corporation as "sponsor"
and statements characterizing Mentmore Holdings Corporation as an "affiliate" of
other named entities should not be deemed to imply any legal tie to CPT or any
other named entity or any liability on Mentmore's part with respect to the
transactions contemplated by the Offering Memorandum. The term "affiliate" in
the Offering Memorandum does not imply the affiliatestatus under any statutory
or applicable contractual definition.
The information contained in the Offering Memorandum, particularly that
information pertaining to the financial condition of the Company and other
companies described therein or industry or company sales or trends, was static
in nature. Although the Offering Memorandum was, to the Company's knowledge,
accurate in all material respects as of the date given, circumstances and facts
underlying the basis for estimates or projections may have changed, estimates or
projections may not have been realized and the structure of the transactions
described therein may have changed, but new estimates and projections and a new
description of such structure have since been provided to the Purchasers which
satisfy the representations in Section 4.6(e).
<PAGE> 213
SCHEDULE 4.11
Permits, Licenses and Approvals
(Intentionally omitted)
<PAGE> 214
SCHEDULE 4.12
Patents, Trademarks and Other Rights
(Intentionally omitted)
<PAGE> 215
SCHEDULE 4.14
Labor and Employment Matters
(Intentionally omitted)
<PAGE> 216
SCHEDULE 4.15
Properties
(Intentionally omitted)
<PAGE> 217
SCHEDULE 4.18
Environmental Matters
(Intentionally omitted)
<PAGE> 218
SCHEDULE 4.28
Business Sites
(Intentionally omitted)
<PAGE> 219
SCHEDULE 4.29
Condition of Equipment
(Intentionally omitted)
<PAGE> 220
SCHEDULE 4.31
Title to Property, Liens
(Intentionally omitted)
<PAGE> 221
SCHEDULE 4.32
Equipment Locations
(Intentionally omitted)
<PAGE> 222
SCHEDULE 4.36
Investments, Etc.
(Intentionally omitted)
<PAGE> 223
SCHEDULE 4.38
Intellectual Property
(Intentionally omitted)
<PAGE> 224
SCHEDULE 4.39
Threatened Litigation
(Intentionally omitted)
<PAGE> 1
MORTGAGE
BETWEEN
THE PAUL REVERE INVESTMENT MANAGEMENT CORPORATION, AS AGENT
AND
J&L STRUCTURAL, INC.
MORTGAGE made this 6th day of April, 1995, by and between J&L
STRUCTURAL, INC., a Delaware corporation, having an office c/o CPT Holding,
Inc., 1430 Broadway, 13th Floor, New York, New York 10018-3308 (the
"MORTGAGOR"), and THE PAUL REVERE INVESTMENT MANAGEMENT CORPORATION, a
Massachusetts corporation, acting as agent under the Note and Warrant Purchase
Agreement (the "AGREEMENT") dated as of April 6, 1995, among the Mortgagor, the
Agent and the Purchasers named therein (the "MORTGAGEE"),
W I T N E S S E T H :
WHEREAS:
(A) The Mortgagor has entered into the Agreement with the Mortgagee
pursuant to which the Purchasers therein have agreed to purchase the Notes and
Warrants for an aggregate principal amount of Twenty-Three Million ($23,000,000)
Dollars (the "PURCHASE"), all upon and subject to the terms and conditions of
the Agreement (the Mortgagor's obligations created under the Agreement, and the
other Loan Documents referenced therein, together with interest thereon at the
rate(s) set forth in the Agreement, are hereinafter sometimes collectively
referred to and described as the "DEBT");
(B) Certain of the Mortgagor's obligations created under the Agreement
are evidenced by certain notes of even date herewith made by the Mortgagor
payable to the Purchasers (such notes, as each may be amended, renewed, extended
and/or replaced, are hereinafter sometimes referred to together as the "NOTES");
(C) It is a condition precedent to the obligation of the Purchasers to
make the Purchase that the Mortgagor shall execute and deliver this Mortgage;
and
<PAGE> 2
(D) All capitalized terms used herein without definition, shall have
the respective meanings ascribed thereto in the Agreement.
NOW THIS INDENTURE WITNESSETH that for better securing the payment of
the Debt, and the performance by the Mortgagor of the terms, covenants and
conditions contained herein, in the Notes and in any other documents and
agreements given to secure payment of the Notes according to the true intent and
meaning thereof, and also for and in consideration of one dollar to the
Mortgagor in hand paid by the Mortgagee at or before the sealing and delivery of
these presents, the receipt whereof is hereby acknowledged, the Mortgagor has
mortgaged, granted, bargained, sold, aliened, released, conveyed and confirmed,
and by these presents does mortgage, grant, bargain, sell, alien, release,
convey and confirm unto the Mortgagee, forever, and grants the Mortgagee a
security interest in:
MORTGAGED PROPERTY
A. All the land located in the County of Beaver, Commonwealth of
Pennsylvania described in Schedule A annexed hereto and made a part hereof
(collectively, the "FEE PREMISES").
B. All of the right, title, interest and leasehold estate of the
Mortgagor under the lease described in Schedule B annexed hereto and made a part
hereof (together with any and all modifications, extensions and renewals
thereof, the "LEASE") of all the land located in Ambridge, County of Beaver,
Commonwealth of Pennsylvania described in Schedule B annexed hereto and made a
part hereof (the "LEASEHOLD INTEREST", and together with the Fee Premises, the
"LAND"). A memorandum of the Lease is intended to be recorded in the Office of
the Recorder of Deeds for Beaver County immediately prior to the recording of
this Mortgage.
C. All of the right, title and interest of the Mortgagor, in all
buildings, structures and improvements of every nature whatsoever now or
hereafter situated on the Land (collectively, the "IMPROVEMENTS").
D. All fixtures, machinery, appliances, materials, equipment, furniture
and personal property of every nature
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<PAGE> 3
whatsoever now or hereafter owned by the Mortgagor or in which the Mortgagor
shall have an interest and located in or on, or attached to, or used or intended
to be used in connection with or with the operation of, or with construction on,
the Land or the Improvements, including all extensions, additions, improvements,
betterments, renewals and replacements to any of the foregoing and all of the
right, title and interest of the Mortgagor in and to any such personal property
or fixtures together with the benefit of any deposits or payments now or
hereafter made by the Mortgagor or on its behalf with regard thereto (the
"PERSONAL PROPERTY").
E. All right, title and interest of the Mortgagor, if any, in and to
the land in the bed of the streets or highways abutting the Land to the center
line thereof; all easements, rights of way, strips and gores of land, streets,
ways, sidewalks, curbs, alleys, passages, sewer rights, waters, water courses,
water rights and powers, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments, remainders, reversions and appurtenances
whatsoever, in any way belonging, relating or appertaining to the Land or the
Improvements, or which hereafter shall in any way belong, relate or be
appurtenant thereto, whether now owned or hereafter acquired by the Mortgagor
(the "APPURTENANCES").
F. All leases, licenses (including, without limitation, the cash and
securities deposited thereunder), rents, issues and profits of the property
described in Paragraphs (A), (B), (C), (D) and (E) (the "RENTS") and all the
estate, right, title, interest, property, possession, claim and demand
whatsoever, at law as well as in equity, of the Mortgagor of, in and to, and all
proceeds of any sales or other dispositions of, the property described in
Paragraphs (A), (B), (C), (D) and (E) above and this Paragraph (F).
G. All proceeds of and any unearned premiums on any insurance policies
covering the Improvements or the Personal Property or the Rents including,
without limitation, the right to receive and apply the proceeds of any
insurance, judgments or settlements made in lieu thereof.
H. All awards ("AWARDS"), heretofore made and hereafter to be made by
any municipal, state or federal authorities to the Mortgagor and all subsequent
owners of the property described above in Paragraphs (A) through (F) including
any awards for any changes
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of grade of streets affecting the property described above in Paragraphs (A)
through (F) as the result of the exercise of the power of eminent domain (a
"TAKING").
I. All the other estate, right, title, interest, use, possession,
property, claim and demand whatsoever, contract rights, general intangibles,
actions and rights in action, relating to the property described above in
Paragraphs (A) through (H) and proceeds, products, replacements, additions,
substitutions, renewals and accessions of any of the foregoing.
All the property, interests and rights referred to in Paragraphs (A) through (I)
above and any additional property, interests or rights hereafter acquired by the
Mortgagor and subject to the lien of the Mortgage or intended to be so are
referred to in the Mortgage as the "MORTGAGED PROPERTY".
TO HAVE AND TO HOLD the Mortgaged Property to the Mortgagee, its
successors and assigns, forever.
The Mortgagor hereby grants to the Mortgagee a security interest in all
rights and property described above in Paragraphs (A) through Paragraph (I). The
Mortgage is a self-operative Security Agreement with respect to such rights and
property in Paragraphs (A) through Paragraph (I), but the Mortgagor agrees to
execute and deliver on demand such other instruments as the Mortgagee may
request in order to perfect its security interest or to impose the lien hereof
more specifically upon any of such rights and property. The Mortgagee shall have
all the rights and remedies or under any applicable law or agreements with the
Mortgagor of a Secured Party under the Uniform Commercial Code in addition to
those specified herein.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Subject to Paragraph 32 below, the Mortgagor covenants, represents and
warrants with the Mortgagee that:
1. The Mortgagor will pay the Debt as provided in the Notes.
2. The Mortgagor shall: maintain the Improvements in good repair
and in a rentable and tenantable condition; comply with the requirements of any
governmental department claiming jurisdiction
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of the Mortgaged Property within three (3) months after an order making such
requirement has been issued by said department and comply with all statutes,
orders, requirements or decrees relating to the Mortgaged Property by any
federal, state or municipal authority.
3. Except as permitted under the Agreement, none of the Improvements or
any part or portion thereof shall be removed, altered or demolished without the
prior written consent of the Mortgagee in each instance which consent shall not
be unreasonably withheld.
4. The Mortgagor will pay when due all liens of any kind, taxes of any
kind and nature (including real and personal property taxes and income,
franchise, withholding, profits and gross receipts taxes), assessments, water
and sewer charges, rents and rates, and other governmental or municipal charges,
fines or impositions relating to the Mortgaged Property or any part thereof, or
upon the rents, revenues, income or profits of the Mortgaged Property, or
arising in respect of the occupancy, use or possession of the whole or any part
thereof, and, upon request, the Mortgagor will promptly deliver official
receipts therefor to the Mortgagee. If the Mortgagor shall fail to pay any of
the foregoing items, the Mortgagee shall have the right, but not the obligation,
to make any such payments. Any such sum paid by the Mortgagee shall be paid by
the Mortgagor to the Mortgagee, upon demand, together with the interest,
computed from the date of payment thereof by the Mortgagee, at the Default Rate
referred to in the Agreement. Any such sum paid by the Mortgagee and the
interest thereon shall be a lien on the Mortgaged Property prior to any claim,
lien, right, title or interest in, to or on the Mortgaged Property attaching or
accruing subsequent to the lien of the Mortgage, and shall be deemed to be
evidenced by the Notes and secured by the Mortgage.
5. The Mortgagor will not claim any deduction from the taxable value of
the Mortgaged Property by reason of the Mortgage and the Mortgagor shall not
claim or be entitled to any credit against the principal and interest due and
owing under the Notes and the Mortgage for any taxes, assessments, water rates
or other governmental or municipal charges, bonds or impositions paid by the
Mortgagor relating to the Mortgaged Property.
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6. In the event of the passage after the date of the Mortgage of any
law of the state wherein the Mortgaged Property is located deducting from the
value of land for the purposes of taxation any lien thereon, or changing in any
way the laws for the taxation of mortgages or debts secured by mortgages for
state or local purposes, or the manner of the collection of any such taxes so as
to affect the Mortgage, the Mortgagee or the Debt, the Mortgagee shall have the
right to give sixty (60) days written notice to the owner of the Mortgaged
Property requiring the payment of the Debt (subject to the rights of the
Mortgagor in the immediately following sentence), and if such notice be given,
the Debt shall become due, payable and collectible at the expiration of said
sixty (60) days. Unless prohibited by applicable law, any notice given pursuant
to this Paragraph requiring the payment of the Debt shall provide an option to
the Mortgagor, in lieu of such acceleration, to either pay to the Mortgagee an
amount or amounts equal to any and all sums payable by the Mortgagee as taxes or
otherwise by reason of such laws including taxes, if any, payable on the amounts
so paid to the Mortgagee or, in the alternative, pay in full the Debt. If the
notice as provided above be given, the payment of said sums described in the
preceding sentence or the Debt, as may be the case, shall become due, payable
and collectible at the expiration of the sixty (60) day period referred to
above.
7. If at any time the United States of America, any state thereof or
any governmental subdivision of any such state, shall require (i) revenue or
other stamps to be affixed to either of the Notes or the Mortgage, or (ii) the
payment of any taxes or fees on the Mortgage, or the Notes or in connection with
the recording of the Mortgage or any amendment, extension or modification
hereof, the Mortgagor will pay the same, with interest and penalties thereon, if
any. The Mortgagee shall have the right, but not the obligation, to make any
such payments. Any such sum paid by the Mortgagee shall be paid by the Mortgagor
to the Mortgagee, upon demand, together with the interest, computed from the
date of payment thereof by the Mortgagee, at the Default Rate. Any such sum paid
by the Mortgagee and the interest thereon shall be a lien on the Mortgaged
Property prior to any claim, lien, right, title or interest in, to or on the
Mortgaged Property attaching or accruing subsequent to the lien of the Mortgage,
and shall be deemed to be evidenced by the Notes and secured by the Mortgage.
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8. The Mortgagor represents and warrants that it is (a) the fee simple
owner of the Fee Premises constituting a part of the Mortgaged Property, and (b)
the owner of the Leasehold Interest constituting a part of the Mortgaged
Property, free of defects, liens, and encumbrances of any nature, except as
permitted by Section 8.3 of the Agreement or as are listed as exceptions to
title or exclusions from coverage in the title policy being issued by Lawyer's
Title Insurance Corporation to the Mortgagee concurrently with the recording of
this Mortgage (collectively, the "PERMITTED EXCEPTIONS"). The Mortgagor warrants
the title to the Mortgaged Property (including, without limitation, the
leasehold estate in the Mortgaged Property), warrants that the Mortgage is and
will be maintained as a valid second lien on the Mortgagor's interest in the
Lease and the Mortgaged Property, subject only to the Permitted Exceptions, and
will defend the same against the claims of all persons whomsoever. At the
Mortgagor's sole cost and expense, the Mortgagor forthwith upon the execution
and delivery of the Mortgage, and thereafter from time to time, will cause the
Mortgage, and any security instrument creating or evidencing the lien or
security interest hereof upon the Mortgaged Property and each instrument of
further assurance, to be filed, registered or recorded in such manner and in
such places as may be required by any present or future law to publish notice of
and fully to protect the lien hereof upon, and the lien of the Mortgagee in, the
Mortgaged Property.
9. (a) The Mortgagee shall have the right to appear in and defend any
action or proceeding brought with respect to the Mortgaged Property and to bring
any action or proceeding, in the name and on behalf of the Mortgagor, which the
Mortgagee, in its sole discretion, believes should be brought to protect its
interest in or the title to the Mortgaged Property. The Mortgagee
may take such action by attorneys selected by the Mortgagee.
(b) If any action or proceeding be commenced, whether adversary or
not (including an action to foreclose the Mortgage or exercise of the power of
sale or to collect the Debt), to which action or proceeding the Mortgagee is
made a party, or in which it becomes necessary to defend, uphold or enforce the
lien of the Mortgage, the Mortgagee may prosecute, defend or participate in
such action or proceeding by attorneys selected by the Mortgagee.
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<PAGE> 8
(c) All sums paid by the Mortgagee for the expense of any
action or proceeding described in this Paragraph (including reasonable counsel
fees and expenses) shall be paid by the Mortgagor to the Mortgagee, upon demand,
together with the interest thereon, computed from the date of payment thereof by
the Mortgagee, at the Default Rate. Any such sum paid by the Mortgagee and the
interest thereon shall be a lien on the Mortgaged Property prior to any claim,
lien, right, title or interest in, to or on the Mortgaged Property attaching or
accruing subsequent to the lien of the Mortgage, and shall be deemed to be
secured by the Mortgage and evidenced by the Term Note.
(d) In any action or proceeding to foreclose the Mortgage, or
to recover or collect the Debt, the Mortgagee may recover reasonable attorneys'
fees and disbursements and the provisions of law respecting the recovery of
costs, disbursements and allowances shall also be applicable.
10. (a) The Mortgagor shall, until the Debt secured by the
Mortgage shall be fully paid and satisfied, keep the Improvements insured
against loss or damage by reason of the following: fire, including full extended
coverage endorsements, and such other hazards, casualties and contingencies as
may be required by the Mortgagee, in an amount to be approved by the Mortgagee
not exceeding in the aggregate one hundred per centum of their full insurable
value so that the Mortgagor will not be deemed a co-insurer under any such
policy. All such insurance shall be with a company or companies and in a form or
forms to be approved by the Mortgagee, which approval shall not be unreasonably
withheld or delayed.
(b) At the time of the execution of the Mortgage and at least
twenty (20) days prior to the expiration of each policy required to be provided
by the Mortgagor pursuant to the provisions of this Paragraph, the Mortgagor
shall deliver to the Mortgagee a policy or policies or a renewal policy or
policies, as the case may be, with appropriate evidence of the payment of the
premium therefor.
(c) All such insurance policies required to be procured
pursuant to the Mortgage shall (i) contain a standard non-contributory form of
mortgagee clause satisfactory to the
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<PAGE> 9
Mortgagee, which clause shall name the Mortgagee, its successors or assigns as a
loss payable party (but subject to the rights of the Senior Lender); and (ii)
provide, to the extent obtainable, that such policies may not be cancelled or
amended without at least thirty (30) days' prior written notice to the
Mortgagee.
(d) The Mortgagor will also provide and keep in force with
respect to the Improvements:
(i) If the Mortgaged Property is now located in an
area having special flood hazards or if such area hereafter shall be
designated by the United States Government, or any agency thereof, as
having special flood hazards, a policy insuring against floods in an
amount equal to the lesser of (A) the principal amount secured by the
Mortgage or (B) the maximum amount available pursuant to federal law;
and
(ii) Liability insurance as required by the Mortgagee
in an amount required by the Mortgagee as specified in the Agreement;
and
(iii) Insurance against such other hazards as may be
reasonably required by the Mortgagee from time to time and as are
customarily insured against with respect to like properties.
(e) The Mortgagor, at its expense, will furnish to the
Mortgagee, within ninety (90) days after demand (but not more frequently than
once in each consecutive period of twenty-four (24) calendar months) proof of
the then full insurable value of the Improvements and the Personal Property,
such proof to be by appraisals satisfactory in form and substance to the
Mortgagee and prepared by an appraiser (who may be an appraiser for the
insurance company insuring such property) designated and paid for by the
Mortgagor and approved by the Mortgagee.
(f) In the event that all or any part of the Improvements shall
be damaged or destroyed, in whole or in part, by fire or other casualty, the
Mortgagor shall promptly restore, replace, rebuild or alter the damaged or
destroyed Improvements as nearly as possible to the condition the Improvements
were in prior to such damage or destruction, without regard to the adequacy of
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<PAGE> 10
insurance proceeds and further subject to the Mortgagee making available and
paying over to the Mortgagor for such purpose all insurance proceeds, if any,
received by the Mortgagee as described in subparagraph 10(h) below. If the
damage be of such nature as to require the Mortgagor to construct a replacement
for, or to alter the damaged or destroyed items in any material or substantial
way, the Mortgagor shall, before commencing any such work, submit to the
Mortgagee for the Mortgagee's approval, which shall not be unreasonably withheld
or delayed, copies of the plans and specifications therefor to be prepared by an
architect or engineer selected by the Mortgagor, subject to the approval of the
Mortgagee, who shall then be licensed by the state in which the Mortgaged
Property is located, and who shall have been placed in charge of the
restoration.
(g) Until the full payment of the Debt, the Senior Lender (and,
when the Senior Mortgage is discharged, the Mortgagee) shall have and hold the
insurance policy or policies described in this Paragraph as collateral and
further security for the payment of the Debt. In default of the Mortgagor's
compliance with this Paragraph, the Mortgagee or its successors or assigns may,
but shall have no obligation to, place such insurance as described above, from
time to time, in an amount in the aggregate not exceeding one hundred per centum
of the full insurable value of the Improvements and the Personal Property for
the purpose aforesaid, and pay the premium or premiums therefor. In the event of
such payment, the Mortgagor will pay to the Mortgagee, its successors or
assigns, such premium or premiums so paid by the Mortgagee, upon demand,
together with the interest thereon computed from the date of payment thereof by
the Mortgagee, at the Default Rate. Any such sum paid by the Mortgagee and the
interest thereon shall be a lien on the Mortgaged Property prior to any claim,
lien, title or interest in, to or on or claim upon the Mortgaged Property
attaching or accruing subsequent to the lien of the Mortgage and shall be deemed
to be secured by the Mortgage and evidenced by the Notes.
(h) Should the Mortgagee by reason of any insurance described
in this Paragraph, receive any sum or sums of money for damage to the
Improvements, such amount may be retained and applied by the Mortgagee toward
payment of the Debt, or such amount may be paid over either wholly or in part to
the Mortgagor or to the
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<PAGE> 11
successors or assigns of the Mortgagor for the repair of the Improvements or for
the erection of new Improvements, or for any other purpose or object
satisfactory to the Mortgagee, and, if the Mortgagee shall receive and retain
insurance money for such damage to the Mortgaged Property, the lien of the
Mortgage shall be affected only by a reduction of the amount of said lien by the
amount of such insurance money received and retained by the Mortgagee and
applied toward payment of the obligations secured hereby.
(i) The insurance required pursuant to this Paragraph may be
effected by a policy or policies of blanket insurance which may cover property
in addition to the Mortgaged Property, provided that the coverage shall be the
same as if the Mortgaged Property were the sole property insured and the
Mortgagor shall deliver to the Mortgagee a duplicate original copy or copies
thereof or original insurance certificates therefor.
11. (a) The Mortgagor shall give the Mortgagee prompt notice of
any damage or destruction by fire or casualty occurring on the Mortgaged
Property, as well as of any condemnation or eminent domain proceedings
affecting the same.
(b) The Mortgagor will not enter into any agreement for a
Taking of the Mortgaged Property, or any part thereof, without the prior written
consent of the Mortgagee.
12. In the event the whole or any part of the Mortgaged Property shall
be the subject of a Taking, or shall be voluntarily conveyed in lieu thereof
prior to the payment in full of the Debt, the Mortgagor shall pay to the
Mortgagee, during the period from the date of a Taking or conveyance in lieu
thereof, until the payment in full of the Debt, the deficiency, if any, between
the interest payable thereon at the rate stipulated in the Notes in respect of
the Debt and the interest actually paid to the Mortgagor by the entity
exercising the power of eminent domain or to whom the Mortgaged Property was
conveyed in lieu of the exercise of such power.
13. (a) All Awards are hereby assigned to the Mortgagee. The
Mortgagee and its legal representatives, successors and assigns (at its or
their option) are hereby irrevocably authorized and
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<PAGE> 12
empowered to collect and receive the Awards from the authorities making the
same, to give proper receipts and acquittances therefor in any of their names or
in the name of the Mortgagor, and to apply the same toward the payment of the
Debt, the Notes or the Mortgage, in such priority and proportions as the
Mortgagee in its discretion shall deem proper, although the Debt secured by the
Mortgage then may not be due and payable. If the Mortgaged Property is sold,
through foreclosure or exercise of the power of sale or otherwise, prior to the
receipt by the Mortgagee of any Awards, the Mortgagee shall have the right,
whether or not a deficiency judgment on the Notes shall have been sought,
recovered or denied, to receive any Awards, or a portion thereof sufficient to
pay the Debt, whichever is less.
(b) Notwithstanding any Taking, the Mortgagor shall continue to
pay the Debt at the time and in the manner provided for in the Notes and in the
Mortgage and the Debt shall not be reduced until any Awards shall have been
actually received and applied by the Mortgagee to the discharge of the Debt. The
Mortgagor shall file and prosecute its claim or claims for any Awards in good
faith and with due diligence and cause the same to be collected and paid over to
the Mortgagee. The Mortgagor, further, hereby irrevocably appoints the Mortgagee
and its officers and employees the attorney-in-fact of the Mortgagor, coupled
with an interest, to file, prosecute, settle, and compromise its claims for any
Awards, to receive any Awards and to endorse any instruments with respect
thereto. The Mortgagor further agrees that although it is hereby expressly
agreed that the same shall not be necessary in any event, the Mortgagor shall,
upon demand, of the Mortgagee, make, execute and deliver to it any and all
assignments and other instruments sufficient for the purpose of assigning any
Awards to the Mortgagee, free, clear and discharged of any encumbrances of any
kind or nature whatsoever, subject only to the Permitted Exceptions.
14. This Mortgage is subject and subordinate to the Open-End Mortgage
(the "SENIOR MORTGAGE") dated the date hereof, between the Mortgagor and FINOVA
Capital Corporation (the "SENIOR LENDER") as provided in the Subordination and
Intercreditor Agreement dated the date hereof, among the Senior Lender, the
Mortgagor and the Purchasers.
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<PAGE> 13
15. [Intentionally Omitted].
16. The Mortgagor shall not, without the consent in writing of the
Mortgagee, sell, transfer, or convey its interest in the Mortgaged Property or
any part thereof in or by any one or series of transactions or permit the
Mortgaged Property or any part thereof or any beneficial therein to be sold,
transferred, or conveyed. Consent to one such transaction shall not be deemed to
be a waiver of the right to require such consent to further or successive
transactions.
17. Except as otherwise permitted by the Agreement, the Mortgagor
shall not, without first obtaining the prior written consent of the Mortgagee
in each such instance:
(a) mortgage, convey or grant a lien subordinate to the
Mortgage on the Mortgaged Property, or on any or all of the Land, Improvements,
Personal Property or Appurtenances of which it is comprised; or
(b) grant a security interest subordinate to the lien and
security interest of the Mortgage on the Mortgaged Property or any part thereof;
or
(c) assign the Rents, if any, of the Mortgaged Property.
Consent to one such transaction shall not be deemed to be a waiver of the right
to require such consent to future or successive transactions.
18. [Intentionally Omitted]
19. The Mortgagor shall not execute or file for record any
instrument which imposes a restriction upon the sale or occupancy of the
Mortgaged Property on the basis of race, sex, religion, national origin, color
or creed. Upon any violation of this undertaking, the Mortgagee may, at its
option, declare the unpaid balance of the Debt to be immediately due and
payable.
20. [Intentionally Omitted].
21. [Intentionally Omitted].
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<PAGE> 14
22. In addition to the Notes, the Mortgage is intended to secure and
provide for the payment and performance of any and all obligations now due and
owing or which may hereafter be or become due or owing by the Mortgagor to the
Mortgagee or the Purchasers, however the maximum amount secured by the Mortgage
at execution or which under any contingency may be secured hereby at any time in
the future shall not exceed in the aggregate (i) the stated principal amount of
the Mortgage, (ii) interest, and (iii) all other amounts advanced by the
Purchasers and secured by the Mortgage in accordance with the terms hereof for
the protection of the Mortgaged Property or the preservation of the lien of the
Mortgage or both.
23. Neither the Mortgagor nor any tenant or subtenant of the Mortgaged
Property, if any, or the Improvements or any part of either shall have the right
or power, as against the Mortgagee without its consent, to cancel, abridge or
otherwise modify tenancies, subtenancies, leases or subleases now or hereafter
in effect in respect of all or any part of the Mortgaged Property or the
Improvements or to accept or make, as the case may be, prepayments of
installments of rent to become due thereunder. The Rents of the Mortgaged
Property are hereby transferred and assigned to the Mortgagee as further
security for the payment of the Debt, and the Mortgagee shall have the right to
enter upon the Mortgaged Property for the purpose of collecting the same and to
let and operate the Mortgaged Property or any part thereof and to apply the
Rents, issues and profits, either in whole or in part, as the Mortgagee elects,
to the payment of all charges and expenses of the Mortgaged Property or in
reduction of any part of the Debt or other sums due or to become due under the
Notes or the Mortgage. This assignment and grant shall continue in effect until
the Debt and all other obligations secured by the Mortgage are paid. The
Mortgagee hereby waives the right to enter upon the Mortgaged Property for the
purpose of collecting the Rents and the Mortgagor shall have a license to
collect and receive the Rents until default hereunder, but such license of the
Mortgagor may be revoked by the Mortgagee upon any such default. The Mortgagee
may apply all Rents or any part thereof so received hereunder, after the payment
of all of its expenses including costs and attorneys' fees, to the Debt in such
manner as it elects or at its option the entire amount or any part thereof so
received may be released to the Mortgagor.
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<PAGE> 15
24. Nothing herein contained shall be construed as depriving the
Mortgagee of any right or advantage available under Section 254 or 271 of the
Real Property Law of the State of New York or any other similar, applicable law
of the state in which the Mortgaged Property is located, but all covenants
herein differing therefrom shall be construed as conferring additional and not
substitute rights and advantages, except that the provisions of the Mortgage
shall supersede the provisions of subdivision 4 of said Section 254.
25. The Mortgagee and its agents shall have the right to enter and
inspect the Mortgaged Property at all reasonable times upon reasonable notice.
26. The Mortgage may not be changed or modified orally, but only by an
agreement in writing and signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought. THE MORTGAGOR ACKNOWLEDGES
DELIVERY TO IT, WITHOUT CHARGE THEREFOR, OF A COPY HEREOF AND OF THE NOTES.
27. The Mortgage may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to constitute but one and the
same instrument.
28. If any term, covenant or condition of the Mortgage shall be held to
be invalid, illegal or unenforceable in any respect, the Mortgage shall be
construed without such provision.
29. The relative words herein of single or plural number, or masculine
or feminine or neuter gender shall be read as if written in the single or
plural, or in the male, neuter or female gender, as the context and as the case
may be.
30. The covenants, agreements and options herein contained shall bind
and inure to the benefit of the successors and assigns of the parties hereto but
the foregoing provisions of this paragraph shall not constitute a waiver of the
provisions of paragraphs 16 and 17 above.
31. If the Mortgagor shall well and truly pay to the Mortgagee the Debt
at the time and in the manner provided in the Notes and the Mortgage and shall
well and truly abide by and comply
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with each and every covenant and condition set forth in the Mortgage and in the
Notes, then these presents and the estate hereby granted shall cease, determine
and be void and in connection therewith, the Mortgagee shall deliver to the
Mortgagor such mortgage satisfactions and releases as may be requested by the
Mortgagor in accordance with Section 20.7 of the Agreement.
DEFAULTS
32. This Mortgage is governed by and made pursuant to the Agreement,
and all the terms, covenants and conditions of the Agreement are incorporated
herein by reference as if set forth at length herein, including the terms
thereof enabling the Mortgagee to declare a default under this Mortgage upon the
occurrence of an Event of Default as defined or specified in the Agreement. The
occurrence of an Event of Default as defined or specified in the Agreement shall
constitute a default under this Mortgage, and the Debt shall become due and
payable at the option of the Mortgagee. In the event of any inconsistency
between the terms, representations, warranties, covenants and conditions of this
Mortgage and the Agreement, the Agreement shall control.
33. The Debt shall become due, at the option of the Mortgagee, upon the
occurrence of any of the following events (subject to any applicable notice or
grace periods otherwise provided in the Agreement):
(a) after default in the payment of any installment of
principal or interest as provided in the Notes, or
(b) after default in payment and reimbursement of the
Mortgagee, after demand, for any costs, expenses, and fees advanced or incurred
by the Mortgagee, with interest as herein provided, in curing any default or
failure of the Mortgagor under the Mortgage, or
(c) upon the actual or threatened alteration, demolition or
removal of any of the Improvements erected or to be erected upon the Mortgaged
Property without the prior written consent of the Mortgagee, or
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<PAGE> 17
(d) if the Mortgagor does or permits to be done anything that
may in any way impair the lien of the Mortgage; or impair the value of the
Mortgaged Property or any of the Improvements; or
(e) upon the failure of the Mortgagor to perform or comply with
any other covenant, agreement or condition of the Mortgage, in accordance with
the terms hereof.
34. The Debt shall also become due, at the option of the
Mortgagee, upon the occurrence of any of the following events:
(a) after default, for thirty (30) days after notice and
demand, in the payment of any taxes of any kind and nature, assessments, water
and sewer charges, rents and rates, and other governmental or municipal charges,
fines or impositions relating to the Mortgaged Property or any part thereof,
(b) after failure for thirty (30) days after notice and demand
to exhibit to the Mortgagee receipted bills for any tax, water rate or
assessment herein referred to, or
(c) if the Mortgagee shall give the written notice specified
above in paragraph 6.
35. [Intentionally Omitted].
36. Any check, draft, money order or other instrument given in payment
of all or any portion of the Notes or pursuant to the Mortgage may be accepted
by the Mortgagee and handled in collection in the customary manner, but the same
shall not constitute payment hereunder or diminish any rights of the Mortgagee,
except to the extent that actual cash proceeds of such instrument are
unconditionally received by the Mortgagee and applied as the case may be to the
Debt in the manner provided in the Notes or to the sum due under the Mortgage.
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REMEDIES
If an Event of Default as defined or specified in the Agreement occurs
or if the Mortgagor defaults in the performance of any of the terms, covenants
or conditions herein contained, then and in any such event:
37. (a) The Mortgagee, in any action to foreclose this Mortgage, shall
be entitled, without regard to the solvency or insolvency of any person or
entity obligated for the payment of the Debt or the adequacy of any security for
the Debt and without notice, to the appointment of a receiver and notice of such
appointment is hereby expressly waived. The Mortgagee or any receiver shall be
entitled to take possession of the Mortgaged Property from the owner, tenants
and/or occupants of the whole or any part thereof and to collect and receive the
Rents and the value of the use and occupation of the Mortgaged Property, or any
part thereof, from the then owner, tenants and/or occupants thereof for the
benefit of the Mortgagee. The Mortgagor will pay monthly in advance to the
Mortgagee or to any receiver appointed to collect the Rents the fair and
reasonable rental value for the use and occupation of the Mortgaged Property, or
of such part thereof as may be in the possession of the Mortgagor, and upon
default in any such payment the Mortgagor will vacate and surrender the
possession of the Mortgaged Property to the Mortgagee or such receiver.
(b) THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY
FOR AN ATTORNEY TO CONFESS JUDGMENT AGAINST THE MORTGAGOR. IN GRANTING THIS
WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE MORTGAGOR, THE MORTGAGOR
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF SEPARATE
COUNSEL OF THE MORTGAGOR, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE
MORTGAGOR HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER
THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH
OF PENNSYLVANIA:
FOR THE PURPOSE OF OBTAINING POSSESSION OF THE MORTGAGED
PROPERTY IN THE EVENT OF ANY DEFAULT HEREUNDER OR UNDER THE NOTES, THE MORTGAGOR
HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD IN THE
COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, AS ATTORNEY FOR THE MORTGAGOR AND ALL
PERSONS CLAIMING UNDER OR THROUGH THE MORTGAGOR TO APPEAR FOR AND CONFESS
JUDGMENT IN
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<PAGE> 19
EJECTMENT FOR POSSESSION OF THE MORTGAGED PROPERTY AND TO APPEAR FOR AND CONFESS
JUDGMENT AGAINST THE MORTGAGOR, AND AGAINST ALL PERSONS CLAIMING UNDER OR
THROUGH THE MORTGAGOR, IN FAVOR OF THE MORTGAGEE, FOR RECOVERY BY THE MORTGAGEE
OF POSSESSION THEREOF, FOR WHICH THIS MORTGAGE, OR A COPY THEREOF VERIFIED BY
AFFIDAVIT, SHALL BE A SUFFICIENT WARRANT; AND THEREUPON A WRIT OF POSSESSION MAY
IMMEDIATELY ISSUE FOR POSSESSION OF THE MORTGAGED PROPERTY, WITHOUT ANY PRIOR
WRIT OR PROCEEDING WHATSOEVER AND WITHOUT ANY STAY OF EXECUTION.
38. In case of a sale in foreclosure, the Mortgaged Property, or so
much thereof as may be affected by the Mortgage, may be sold in one or more
parcels or interests and in such order as the Mortgagee shall determine. The
Mortgagor waives and releases any right to have the Mortgaged Property
marshalled.
39. In the event of a foreclosure of the Mortgage, or the succession by
the Mortgagee to the interests of the Mortgagor hereunder, the purchaser of the
Mortgaged Property or such successor shall succeed to all rights of the
Mortgagor, including any right to proceeds of insurance and to unearned
premiums, and in and to all policies or certificates of insurance assigned and
delivered to the Mortgagee pursuant to the Mortgage.
40. If the Mortgagor shall fail to perform or comply (after any
applicable notice or grace period) with any covenant, representation, warranty,
agreement or condition of the Mortgage, the Mortgagee shall have the right, but
not the obligation, to perform and comply with any such covenant,
representation, warranty, agreement or condition. The cost thereof paid by the
Mortgagee together with all costs, expenses and disbursements shall be paid by
the Mortgagor to the Mortgagee, upon demand, together with the interest thereon
computed from the date of payment thereof by the Mortgagee, at the Default Rate.
Any such sum paid by the Mortgagee and the interest thereon shall be a lien on
the Mortgaged Property prior to any claim, lien, right, title or interest in, to
or on the Mortgaged Property attaching or accruing subsequent to the lien of the
Mortgage, and shall be deemed to be secured by the Mortgage and evidenced by the
Notes.
41. The Mortgagee may be the purchaser of the whole or any part of the
Mortgaged Property or of any interest therein at any
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<PAGE> 20
sale of the Mortgaged Property whether pursuant to foreclosure or otherwise
hereunder and may apply upon the purchase price any sum which is secured by the
Mortgage. The Mortgagee, upon any such purchase, shall acquire good title to the
properties so purchased free of the lien of the Mortgage and free of all
equities and rights of redemption in the Mortgagor.
42. The obligation of the Mortgage and of the Notes shall continue
until the Debt is paid in full notwithstanding any action or actions or partial
foreclosure which may be brought to recover any amount or amounts for
installments of principal, interest, taxes, assessments, water rates or
insurance premiums or other sums or charges due and payable under the provisions
of the Mortgage.
43. The Mortgagor hereby waives the right to a trial by jury, in any
action or proceeding in which the Mortgagor and the Mortgagee are parties
brought by the Mortgagee to enforce its rights hereunder.
44. Any assignee of the Mortgage and the Notes shall take the same free
and clear of all offsets and counterclaims of any nature whatsoever which the
Mortgagor may have against any assignor of the Mortgage and the Notes and no
such offset or counterclaim (other than compulsory counterclaims) be interposed
or asserted by the Mortgagor in any action or proceeding brought by any such
assignee upon the Mortgage and/or the Notes and any such right to interpose or
assert any such offset or counterclaim in any such action or proceeding is
hereby expressly waived by the Mortgagor.
45. Regardless of consideration, and without the necessity for any
notice to or consent by the holder of any subordinate lien, encumbrance, right,
title or interest in or to the Mortgaged Property, the Mortgagee may release any
person at any time liable for the payment of the Debt or any portion thereof or
any individual or entity guaranteeing the payment of the Notes and/or of the
Mortgage or any part of the security held for the Debt or with respect to any
guarantee, and may extend the time of payment or otherwise modify the terms of
the Notes and/or the Mortgage, including, without limitation, a modification of
the interest rate payable on the principal balance of the Notes, without in any
manner impairing or affecting the Mortgage or the lien thereof or the priority
of the Mortgage, as so extended and modified, as
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<PAGE> 21
security for the Debt over any such subordinate lien, encumbrance, right, title
and interest. The Mortgagee may resort for the payment of the Debt to any other
security or guarantee held by the Mortgagee in such order and manner as the
Mortgagee, in its discretion, may elect. The Mortgagee shall not be limited
exclusively to the rights and remedies herein stated but shall be entitled to
every additional right and remedy now or hereafter afforded by law or equity.
46. The Mortgagee shall have the right from time to time to take action
to recover any sum or sums which constitute a part of the Debt as the same
become due, without regard to whether or not the balance of the Debt shall be
due, and without prejudice to the right to the Mortgagee thereafter to bring an
action of foreclosure or any other action, for a default or defaults by the
Mortgagor existing at the time such earlier action was commenced.
47. All remedies provided in the Mortgage are distinct from and
cumulative to any other right or remedy under the Mortgage, the Notes, any
guarantee of the payment of the Notes and/or of the Mortgage or any other
agreement between, among others, if any, the Mortgagor and the Mortgagee or the
Purchasers executed simultaneously or in connection herewith, or afforded by law
or equity, and may be exercised concurrently, independently or successively.
Wherever in the Mortgage the prior consent of the Mortgagee is required, the
consent of the Mortgagee given as to one such transaction shall not be deemed to
be a waiver of the right to require such consent to future or successive
transactions. Any such consents shall be in writing.
48. Any forbearance by the Mortgagee in exercising any right or remedy
hereunder, or otherwise afforded by applicable law, shall not be a waiver of or
preclude the exercise of any such right or remedy. The procurement of insurance
or the payment of taxes or other liens or charges by the Mortgagee or other
corrective or security protecting measures by the Mortgagee shall not be a
waiver of the Mortgagee's right to accelerate the maturity of the Debt.
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<PAGE> 22
SPECIAL PROVISIONS
49. The Mortgagor will, at the request of the Mortgagee and at the cost
and expense of the Mortgagor (a) promptly correct any defect, error or omission
which may be discovered in the contents of the Mortgage, or in the execution,
acknowledgment or recordation hereof, or (b) promptly do, execute, acknowledge
and deliver any and all such further acts, deeds, conveyances, mortgages, deeds
of trust, amendments, supplements, assignments, estoppel certificates, financing
statements and continuations thereof, notices of assignment, transfers,
certificates, assurances and other instruments as the Mortgagee may reasonably
require from time to time in order to (i) effectuate the purposes of the
Mortgage, (ii) subject to the lien and security interest hereby created any of
the Mortgagor's properties, rights or interests covered or now or hereafter
intended to be covered hereby, (iii) perfect and maintain such lien and security
interest, or (iv) convey, grant, assign, transfer and confirm unto the Mortgagee
the rights granted or now or hereafter intended to be granted to the Mortgagee
hereunder or under any other instrument executed in connection with the Mortgage
or which the Mortgagor may be or become bound to convey, mortgage or assign to
the Mortgagee in order to carry out the intention or facilitate the performance
of the provisions of the Mortgage.
50. Intentionally Omitted.
51. Environmental Matters.
(a)(i) For purposes of the Mortgage, the following terms shall
have the following meanings:
"GOVERNMENTAL AUTHORITIES" - shall mean any federal, state, or
local government, governing body, agency, court, tribunal, authority,
subdivision, bureau or other recognized body having jurisdiction to
enact, promulgate, interpret, enforce, review or repeal any
Environmental Law.
"ENVIRONMENTAL COMPLAINT" - shall mean any judgment, order,
complaint, notice, citation, action, proceeding or investigation
pending before any Governmental Authority, including, without
limitation, any environmental regulatory
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<PAGE> 23
body, with respect to or threatened against or affecting the Mortgagor or
relating to its business, assets, property or facilities or the Mortgaged
Property, in connection with any Hazardous Material or any Hazardous Discharge
or any Environmental Law.
"HAZARDOUS DISCHARGE" - shall mean any release of a Hazardous
Material caused by the seeping, spilling, leaking, pumping, pouring,
emitting, using, emptying, discharging, injecting, escaping, leaching,
dumping or disposing of any Hazardous Material into the air, water,
earth or environment, and any liability for the costs of any cleanup or
other remedial action.
(ii) In the event of any inconsistencies between
the terms, representations, warranties, covenants and conditions of this
Paragraph 51 and the any environmental representations and warranties contained
in the Agreement, the Agreement shall control.
(b) The Mortgagor covenants, represents and warrants that:
(i) Except as otherwise set forth in the Agreement,
the best of the Mortgagor's knowledge, none of the real property owned or
occupied by the Mortgagor and located in the state in which the Mortgaged
Property is situated, including, but not limited to the Mortgaged Property, has
ever been used by previous owners, operators or occupants or the Mortgagor to
use, generate, manufacture, refine, transport, treat, store, handle or dispose
of any Hazardous Material.
(ii) The Mortgagor has duly complied, and will
continue to comply (should compliance be appropriate), with the provisions of
the Environmental Laws governing it, its business, assets, property, and
facilities and the Mortgaged Property. The Mortgagor shall not, and shall not
permit any of its officers, partners, employees, agents, contractors, licensees,
tenants, occupants or others to, generate, manufacture, refine, transport,
treat, store, handle or dispose of any Hazardous Material on the Mortgaged
Property.
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<PAGE> 24
(iii) Mortgagor has, and will continue to have, all
necessary licenses, certificates and permits under the Environmental Laws
relating to Mortgagor and its facilities, property, assets, and business, and
the Mortgaged Property and the foregoing are in compliance with all
Environmental Laws.
(c) Without limitation of the Mortgagee's rights under the
Mortgage or applicable law, the Mortgagee shall have the right, but not the
obligation, to exercise any of its rights to cure as provided in the Mortgage or
to enter onto the Mortgaged Property or to take such other actions as it deems
necessary or advisable to correct, contain, cleanup, remove, resolve or minimize
the impact of, or otherwise deal with, any such Hazardous Material, Hazardous
Discharge or Environmental Complaint upon its receipt of any notice from any
person or entity or Governmental Authority, informing Mortgagee of such
Hazardous Material, Hazardous Discharge or Environmental Complaint, which if
true, could adversely affect the Mortgagor or any part of the Mortgaged Property
or which, in the reasonable opinion of the Mortgagee, could adversely affect its
collateral security under the Mortgage. All reasonable costs and expenses
incurred and paid by the Mortgagee in the exercise of any such rights shall be
paid by the Mortgagor to the Mortgagee upon demand together with the interest
thereon at the Default Rate of interest. Any such sum paid by the Mortgagee and
the interest thereon shall be a lien on the Mortgaged Property prior to any
claim, lien, right, title or interest in, to, on or upon the Mortgaged Property
attaching or accruing subsequent to the lien of the Mortgage, and shall be
deemed to be secured by the Mortgage and evidenced by the Notes.
(d) Upon reasonable notice to Mortgagor, Mortgagee, its
officers, employees, agents and contractors may enter the Mortgaged Property to
inspect it and to conduct, complete and take such tests, samples, analyses and
other processes as Mortgagee shall reasonably require to determine Mortgagor's
compliance with this Paragraph and the Environmental Laws. The costs, expenses
and fees of Mortgagee of such entry, inspection, tests, samples, analyses and
processes shall be paid and reimbursed by Mortgagor upon demand by Mortgagee,
together with the interest thereon computed from the date of payment thereof by
the Mortgagee, at the Default Rate. Any such sum paid by the Mortgagee and the
interest thereon shall be a lien on the Mortgaged Property prior to any claim,
lien, right,
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<PAGE> 25
title or interest in, to on or upon the Mortgaged Property attaching or accruing
subsequent to the lien of the Mortgage, and shall be deemed to be secured by the
Mortgage and evidenced by the Notes.
(e) In addition to those events of default previously specified
in the Mortgage, the occurrence of any of the following events shall constitute
a default under the Mortgage, entitling the Mortgagee to all rights and remedies
provided therefor:
(i) If any Governmental Authority asserts or creates a
lien upon any or all of the Mortgaged Property by reason of the presence of
Hazardous Materials or the occurrence of a Hazardous Discharge or Environmental
Complaint or otherwise, or
(ii) If any Governmental Authority asserts a claim
against the Mortgagor, the Mortgaged Property or the Mortgagee for damages or
cleanup or remedial costs related to any Hazardous Materials or any Hazardous
Discharge or any Environmental Complaint; provided, however, such claim shall
not constitute a default if, within thirty (30) business days of the Mortgagor's
receipt of notice of same:
(A) The Mortgagor can prove to the Mortgagee's
satisfaction that the Mortgagor has commenced and is diligently pursuing either:
(i) a cure, remedy or correction of the event which constitutes the basis for
the claim, and is continuing diligently to pursue such cure or correction to
completion, in strict compliance with the Environmental Laws or Environmental
Complaint, as applicable, or (ii) proceedings for injunction, a restraining
order or other appropriate emergency relief prevent such Governmental Authority
from asserting such claim, which relief is granted within thirty (30) days of
the occurrence giving rise to the claim and the injunction, order or emergency
relief is not thereafter dissolved or reversed on appeal; and
(B) The Mortgagor shall (i) post a bond or any
other security reasonably required by and satisfactory to such Governmental
Authority to secure the payment for and performance of all of the work, labor
and services required to effect a proper and complete cure or correction of the
condition which constitutes the basis for the claim or (ii) at the Mortgagee's
request, if no such
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<PAGE> 26
bond or security has been posted, shall post a bond issued by a surety
satisfactory to the Mortgagee, or any other security reasonably satisfactory to
the Mortgagee, in form, substance and amount, satisfactory to the Mortgagee, to
secure the payment for all of the work, labor and services required in effect a
proper and complete cure or correction of the condition which constitutes the
basis for the claim.
(f) The Mortgagor covenants and agrees, at its sole cost and
expense, to indemnify, protect, and save Mortgagee harmless against and from any
and all damages, losses, liabilities, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, reasonable attorneys' and experts' fees and disbursements)
which may at any time be imposed upon, incurred by or asserted or awarded
against Mortgagee and arising from or out of:
(i) The Mortgagor's failure to perform and comply with
this Paragraph, or
(ii) Any Hazardous Material, any Hazardous Discharge,
any Environmental Complaint, or any Environmental Law applicable to the
Mortgagor, its operations, business, assets, property or facilities, or the
Mortgaged Property, or
(iii) Any action against Mortgagor under this indemnity.
52. With respect to the Leasehold Interest:
(a) The Mortgagor hereby represents, covenants and warrants
that:
(i) The Lease is in full force and effect and unmodified.
(ii) All rents due or payable under the Lease have been
paid to the extent they were payable prior to the date hereof.
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<PAGE> 27
(iii) The Mortgagor shall maintain the quiet and peaceful
possession of the Leasehold Interest and shall defend the leasehold estate
created under the Lease for the entire remainder of the term set forth therein
subject to the Mortgagor's right to terminate the Lease as set forth in the
Lease, including all renewal options thereunder, against all and every person or
persons lawfully claiming, or who may claim the same or any part thereof, and to
the performance and observance of all of the terms, covenants, conditions and
warrants thereof.
(iv) There is no existing default under the provisions of
the Lease or in the performance of any of the terms, covenants, conditions or
warranties thereof on the part of the lessee to be observed and performed.
(v) The Mortgagor has not sublet the leased premises or
assigned the Lease.
(b) The Mortgagor shall pay or cause to be paid all rents,
additional rents, taxes, assessments, water rates, sewer rents, impositions, and
other charges mentioned in and made payable by the Lease, for which provision
has not been made hereinbefore, when and as the same shall become due and
payable, and shall cause the lessor of such premises, to the extent required by
the Lease, to pay any portion of said taxes, assessments, rates, charges and
impositions to be borne by the lessor that might become liens on the Leasehold
Interest prior to or on the date when they become due, and the Mortgagor shall
in every case take, or cause to be taken, a proper receipt for any such item so
paid by Mortgagor and shall deliver, or cause to be delivered to the Mortgagee
upon its request after any such payment, the original receipts for any such
payments by Mortgagor.
(c) The Mortgagor shall at all times promptly and fully
observe, keep and perform, or cause to be observed, kept and performed, all
agreements, terms, covenants and conditions contained in the Lease by the lessee
therein to be kept and performed in all respects. Mortgagor further covenants
that it will not do or permit anything to be done, the doing of which, or
refrain from doing anything, the omission of which, will impair or tend to
impair the security of this Mortgage or will be a default under the Lease. If
Mortgagor shall fail at all times to fully
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<PAGE> 28
observe, perform and comply with all agreements, covenants, terms and conditions
under the Lease, or do or permit anything to be done, the doing of which or
refrain from doing, the omission of which will impair the security of this
Mortgage or will be a default under the Lease, then, upon the happening of any
such event, at the option of Mortgagee, either:
(i) An event of default shall occur under this Mortgage
and the Debt shall immediately become due and payable; or
(ii) Without limiting the generality of any other
provision of the Mortgage or any remedy of the Mortgagee hereunder and without
waiving or releasing the Mortgagor from any of its obligations hereunder,
Mortgagee may (but shall not be obligated to) take any action Mortgagee deems
necessary or desirable to prevent or to cure any default by Mortgagor in the
performance of or compliance with any of Mortgagor's covenants or obligations
under the Lease. Upon receipt by Mortgagee from the lessor under the Lease of
any written notice of default by lessee thereunder, Mortgagee may rely thereon
and take any action, as aforesaid, to cure such default even though the
existence of such default or the nature thereof be questioned or denied by
Mortgagor or by any party on behalf of Mortgagor.
(iii) Mortgagor hereby expressly grants to Mortgagee,
and agrees that Mortgagee shall have the absolute and immediate right to enter
in and upon the Mortgaged Property or any part thereof to such extent and as
often as Mortgagee, in its reasonable discretion, deems necessary or desirable,
in order to prevent or to cure any such default by Mortgagor. Mortgagee may pay
and expend such sums of money as Mortgagee, in its sole discretion, deems
necessary for such purpose, and Mortgagor hereby agrees to pay to Mortgagee,
immediately and without demand, all such sums so paid and expended by Mortgagee,
together with interest thereon from the date of such expenditure to the date of
repayment at the Default Rate. All sums so paid and expended by Mortgagee, and
the interest thereon shall be added to and be secured by the lien of this
Mortgage.
(d) The Mortgagor shall not in any way materially alter the
terms of the Lease, or except in accordance with the terms of the Lease, cancel
or surrender the Lease, or waive, excuse, condone
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<PAGE> 29
or in any way release or discharge the lessor thereunder of or from the
obligations, covenants, conditions and agreements by said lessor to be done and
performed; and Mortgagor does by these presents expressly release, relinquish
and surrender unto the Mortgagee all its right, power and authority to cancel,
surrender, amend, or materially alter in any way the terms and provisions of the
Lease, except in accordance with the terms thereof and any attempt on the part
of the Mortgagor to exercise any such right without the prior written consent of
the Mortgagee shall constitute a default under the terms hereof.
(e) The Mortgagor will: provide the Mortgagee an exact copy of
any notice, communication, plan, specification or other instrument or document
received or given by it in any way relating to or affecting the Lease of the
Mortgaged Property which may concern or affect the estate of the lessor or the
lessee in or under the Lease or in the real estate thereby demised in any
material way; give the Mortgagee immediate notice of any receipt by it of any
notice of default from the lessor thereunder; furnish to the Mortgagee within 15
days any and all information which it may request concerning the performance by
the Mortgagor of the agreements, terms, conditions and covenants of the Lease or
of the Mortgage; and permit the Mortgagee or its agents or representatives at
all reasonable times to investigate or examine Mortgagor concerning such
performance.
(f) So long as any of the Debt secured by this Mortgage shall
remain unpaid, unless the Mortgagee shall otherwise in writing consent, the fee
title and the leasehold estate in the Mortgaged Property hereinbefore described,
shall not merge but shall always be kept separate and distinct, notwithstanding
the union of said estates either in the lessor or in the lessee, or in a third
party, by purchase or otherwise; and the Mortgagor further covenants and agrees
that, in case it shall acquire the fee title, or any other estate, title or
interest in the Mortgaged Property covered by the Lease, including, without
limitation, pursuant to the purchase option or right of first refusal, if any,
set forth in the Lease, this Mortgage shall attach to or cover and be a lien
upon such other estate so acquired, and such other estate so acquired by the
Mortgagor shall be considered as mortgaged, assigned or conveyed to the
Mortgagee and the lien hereof spread to
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<PAGE> 30
cover such estate with the same force and effect as though specifically herein
mortgaged, assigned or conveyed, and spread.
53. (a) This Mortgage secures the Debt to the extent of the stated
principal amount of the Notes plus interest and other amounts secured hereby.
(b) The amount of the Debt secured by this Mortgage shall not be
reduced by reason of payments made from time to time by the Mortgagor or amounts
received by Mortgagee in respect of the Debt except to the extent that such
payment from the Mortgagor or amounts received reduce the outstanding principal
sum of the Debt to less than the stated principal amount hereof and in such
event the amount secured by this Mortgage shall be the amount outstanding on the
Debt. If, subsequently, advances, loans or extensions of credit are made from
time to time to the Mortgagor under the Agreement, then the amount secured by
this Mortgage shall be increased as the amount outstanding on the Debt is
increased, but, as hereinabove described, the principal amount of the Debt
secured by this Mortgage shall not exceed the stated principal amount hereof
plus interest thereon and other amounts secured hereby. The Mortgagor shall be
liable for mortgage, deed of trust documentary, intangible, recording or other
taxes, fees, or charges, if any, payable by reason of any such subsequent
advances, loans or extensions of credit.
54. This Mortgage shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
55. This Mortgage is a purchase money mortgage under the Lien
Priority Law of Pennsylvania, as amended.
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<PAGE> 31
IN WITNESS WHEREOF, the Mortgage has been duly executed by the
Mortgagor on the day and year first above written.
J&L STRUCTURAL, INC.
BY:______________________________
NAME:
TITLE:
ATTEST:
BY: ______________________
NAME:
TITLE:
[CORPORATE SEAL]
THE ADDRESS OF THE WITHIN-NAMED MORTGAGEE IS:
18 CHESTNUT STREET
WORCESTER, MA 01608
___________________________
ON BEHALF OF THE MORTGAGEE
<PAGE> 32
STATE OF NEW YORK )
) SS:.
COUNTY OF NEW YORK )
On the ____ day of April, 1995 before me personally came
___________________ to me known, who, by me duly sworn, did depose and say that
deponent resides at ________________________________, ___________________, that
deponent is the _____________________ of J&L STRUCTURAL, INC., the corporation
described in, and which executed the foregoing instrument; and that deponent
signed deponent's name as such officer by order of the board of directors of
said corporation.
GIVEN under my hand and notarial seal this ____ day of March,
1995.
-----------------------------------
Notary Public
My Commission Expires:_____________
<PAGE> 33
=========================================
COUNTY: BEAVER
J&L STRUCTURAL, INC.
TO
THE PAUL REVERE INVESTMENT
MANAGEMENT CORPORATION, AS AGENT
=========================================
MORTGAGE
=========================================
RETURN BY MAIL TO:
MORGAN, LEWIS & BOCKIUS
101 PARK AVENUE
NEW YORK, NEW YORK 10178
ATTN: IAN SHRANK, ESQ.
<PAGE> 34
SCHEDULE A TO
MORTGAGE
BETWEEN
THE PAUL REVERE INVESTMENT
MANAGEMENT CORPORATION, AS AGENT
AND
J&L STRUCTURAL, INC.
FEE PREMISES
(Intentionally omitted)
<PAGE> 35
SCHEDULE B TO
MORTGAGE
BETWEEN
THE PAUL REVERE INVESTMENT
MANAGEMENT CORPORATION, AS AGENT
AND
J&L STRUCTURAL, INC.
LEASEHOLD INTEREST
Lease Agreement dated March 28, 1995 between Fourteenth Street
Corporation, a Pennsylvania corporation, as Lessor and J&L Structural, Inc., a
Delaware Corporation, as Lessee, which Lease is of the following property:
<PAGE> 1
MANAGEMENT SUBORDINATION AGREEMENT
April 6, 1995
The Paul Revere Life Insurance Company,
The Paul Revere Variable Annuity
Insurance Company,
The Paul Revere Protective Life
Insurance Company and
Rhode Island Hospital Trust National
Bank (as trustee for The Textron
Collective Investment Trust)
c/o The Paul Revere Investment
Management Corporation
18 Chestnut Street
Worcester, MA 01608
Attn: Lawrence G. Knowles, Jr.
Gentlemen:
Reference is hereby made to the following:
(a) The Note and Warrant Purchase Agreement dated of even date
herewith (hereinafter, as it may from time to time be amended, modified or
supplemented, the "AGREEMENT") by and between J&L Structural, Inc., a Delaware
corporation (the "COMPANY"), The Paul Revere Investment Management Corporation,
as agent (the "AGENT"), and each of you (individually, a "PURCHASER" and
collectively, the "PURCHASERS");
(b) The Management Advisory Services Agreement dated April 6, 1995
(hereinafter, as it may from time to time be amended, modified or supplemented,
the "MANAGEMENT AGREEMENT") by and among the Company, J&L Holdings Corp.
("HOLDINGS") and CPT Holdings, Inc. ("MANAGEMENT"); and
<PAGE> 2
(c) The conditions precedent, set forth in Section 10 of the Agreement,
to the obligation of the Purchasers to make the purchases and other financial
accommodations provided for therein, that this Agreement be executed and
delivered by the Company, Holdings and Management.
All capitalized terms used herein that are defined in the Agreement and
are not otherwise defined herein shall have the respective meanings ascribed to
them in the Agreement.
In order to induce the Purchasers to execute and deliver the Agreement
and to consummate the transactions contemplated thereby, including, without
limitation, to make the purchases and other financial accommodations provided
for therein, and in consideration of the benefits expected to accrue to
Management by reason of the making of the purchases from and other financial
accommodations to the Company provided for in the Agreement, the Company,
Holdings and Management hereby jointly and severally agree with the Purchasers,
as follows:
1. SUBORDINATION. All fees and charges now or hereafter due and payable
from the Company to Management under the Management Agreement are hereinafter
referred to collectively as the "SUBORDINATED FEE" and the Subordinated Fee and
all other present and future indebtedness of the Company to Management [(other
than sums actually expended by Management as reasonable and necessary expenses
(provided such expenses, if payable to an affiliate of Management, are arm's
length) incurred in connection with Management's performance of duties for which
management fees are paid or payable to Management under the Management Agreement
(collectively, "MANAGEMENT EXPENSES"); provided that Management Expenses shall
not include any expenses paid by Management to its affiliates to the extent in
excess of $50,000 in a calendar year)] is hereinafter referred to collectively
as the "SUBORDINATED DEBT". The Subordinated Debt shall be subject and
subordinate to the prior payment in full of all the indebtedness of the Company
to the Purchasers, whether now existing or hereafter arising, and whether or not
currently contemplated, including, without limitation, the indebtedness,
liabilities and obligations of the Company to the Purchasers under the
Agreement, the Notes, the Warrants and all other Loan Documents referred to
therein (such indebtedness, liabilities and obligations, whether now existing or
hereafter arising, and whether or not currently contemplated, are hereinafter
referred to collectively as the "SENIOR SUBORDINATED DEBT"), in the manner and
to the extent set forth herein.
2. PERMITTED PAYMENTS.
(a) The Company may not make, and Management may not demand,
accept, or retain, any payment of any portion of the Subordinated Debt except as
expressly permitted by the terms of subparagraph 2(b) hereinafter set forth.
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<PAGE> 3
(b) Subject to Paragraph 3 of this Agreement, the Company may
pay, and Management may receive, payments on the Subordinated Fee; provided (i)
no Event of Default or Potential Default then exists under the Loan Documents,
or would exist after giving effect to such payment, (ii) such payments are made
in accordance with the terms of the Management Agreement and in any event not
more frequently than once each month, (iii) after giving affect to each such
payment Borrower would have Excess Availability of at least $1,000,000, (iv)
each such payment in any month would not exceed the sum of (A) $37,500 plus (B)
the excess, if any, of $12,500 over the amount actually expended by the Company
during the immediately preceding month as Management Expenses (assuming
estimated accounting fees for standard auditing procedures are paid on a monthly
basis), and (v) after giving effect to each such payment, the aggregate amount
of all such payments in any fiscal year would not exceed $600,000.
(c) In addition to the foregoing, the Company shall be
permitted to reimburse Management for Management Expenses; provided, however, to
the extent that the aggregate amount of all such Management Expenses exceeds
$12,500 in any month, such Management Expenses shall be itemized and a copy of
such itemization, together with such bills, invoices or other documentation as
Agent may reasonably request relating to such Management Expenses shall be
delivered to Agent concurrently with the financial statements required to be
delivered to Lender pursuant to Section 7.2(a) of the Agreement.
3. INSOLVENCY.
In the event of
(a) any insolvency, bankruptcy, receivership, custodianship,
liquidation, reorganization, assignment for the benefit of creditors, or other
similar proceeding relative to the Company or its creditors, as such, or its
property, or
(b) any proceeding for the voluntary liquidation, dissolution
or other winding up or bankruptcy proceedings of the Company,
then and in any such event:
(i) All of the Senior Subordinated Debt shall
first be paid in full before any payment or distribution of any character,
whether in cash, securities or other property, shall be made in respect of
the Subordinated Debt; and
(ii) Any payment or distribution of any character
payable or deliverable in respect of the Subordinated Debt (including any
payment or distribution of any other indebtedness of the Company being
subordinated to the Subordinated Debt), shall be paid or delivered directly to
the Purchasers, or their representatives, until all Senior Subordinated Debt
shall have been paid and Management, or any other person having any right to
receive
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<PAGE> 4
the Subordinated Debt, irrevocably authorizes, empowers and directs all
receivers, custodians, trustees, liquidators, conservators and others having
authority in the premises to effect all such payments and deliveries. Management
or any other person having any right to receive the Subordinated Debt shall
execute and deliver to the Purchasers or their representatives all such further
instruments confirming the authorization referred to in the preceding sentence
as the Purchasers may request.
4. ACTIONS BY MANAGEMENT FOR BENEFIT OF PURCHASERS. In the event that
the Company shall make an assignment for the benefit of creditors or any
proceedings are commenced by or against the Company under any bankruptcy,
reorganization, readjustment of debt, arrangement, dissolution, receivership,
liquidation or insolvency law or statute now or hereafter in effect, then and in
any such event and at any time thereafter, Management will, upon the written
request of the Purchasers, prove, enforce and endeavor to obtain payment of the
aggregate outstanding amount of all unpaid Subordinated Debt payments due and
payable, or thereafter becoming due and payable from the Company to Management,
and will turn over to the Purchasers in precisely the form received, any payment
of any kind or character on account of such Subordinated Debt for application to
the payment of the Senior Subordinated Debt. In the event that Management shall
fail to take any such action requested by the Purchasers, the Purchasers may, as
attorney-in-fact for Management, take such action on behalf of Management, but
for the use and benefit of the Purchasers, and Management hereby appoints the
Purchasers as its attorney-in-fact to demand, sue for, collect and receive every
such payment and distribution and give acquittance therefor and to file claims
and to take such other proceedings in the Purchasers' own name or in the name of
Management or otherwise, and to vote, give consent and take any other steps with
regard thereto, all as the Purchasers may deem necessary or advisable for the
enforcement of this Agreement; and Management or any other holder of the
Subordinated Debt will execute and deliver to the Purchasers such additional
powers of attorney, assignments and other instruments as may be requested by the
Purchasers in order to enable the Purchasers to enforce any and all claims upon
or with respect to the aforesaid Subordinated Debt and to collect and give any
and all payments or distributions that may be payable or deliverable at any time
upon or with respect to such Subordinated Debt.
5. WAIVER. Management waives any and all notice of the acceptance of
this Agreement or of the creation, renewal, extension or accrual, now or at any
time in the future, of any Senior Subordinated Debt, or of the reliance of the
Purchasers on this Agreement. Management consents that, without notice to or
further assent by Management, the indebtedness, liabilities or obligations of
the Company or of any other party with respect to the Senior Subordinated Debt
may from time to time, in whole or in part, be renewed, extended, modified or
released by the Purchasers, as it may deem advisable, that the Agreement or any
other instrument or document executed and delivered in connection therewith, may
be amended, modified, supplemented or terminated, that any collateral security
for any of the Senior Subordinated Debt may from time to time, in whole or in
part, be exchanged, sold, or surrendered by the Purchasers, as it may deem
advisable, and the Purchasers may take any
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<PAGE> 5
other action it may deem necessary or appropriate in connection with the Senior
Subordinated Debt, all without and in any manner or to any extent impairing or
affecting the obligations of the Company and Management contained in this
Agreement.
6. INCORRECT DISTRIBUTIONS. If, notwithstanding the provisions of this
Agreement, any payment or distribution of any character (whether in cash,
securities, or other property) or any security shall be received by Management
from the Company in contravention of the terms of this Agreement, such payment,
distribution or security shall not be commingled with any asset of Management,
shall be held in trust for the benefit of the Purchasers, and shall be paid over
or delivered and transferred to, the Purchasers or their representatives, for
application to the payment of all Senior Subordinated Debt remaining unpaid,
until all of the Senior Subordinated Debt shall have been paid in full.
7. SUBROGATION. No payment or distribution of any kind to Management to
which Management would have been entitled except for the provisions of this
Agreement and which was made to or for the account of the Agent, as between the
Company and Management, shall be deemed to be a payment or distribution by the
Company to or for the account of Management, and from and after the payment in
full in cash of the Subordinated Debt, Management shall be subrogated to the
right of the Agent to receive any further payments or distributions applicable
to the Subordinated Debt until the Senior Debt is paid in full in cash.
8. AMENDMENT OF MANAGEMENT AGREEMENT. Prior to the payment in full of
the Senior Subordinated Debt and notwithstanding anything contained in the
Management Agreement or any other agreement or instrument evidencing the
Subordinated Debt to the contrary, Management and the Company shall not, without
the prior written consent of the Purchasers, amend, modify or supplement, or
agree to any amendment, modification or supplement of, the Management Agreement
or any other agreement or instrument evidencing the Subordinated Debt in any
manner. All promissory notes and other negotiable instruments evidencing any
Subordinated Debt shall bear an appropriate legend referring to this Agreement
and reciting that the payment of the Subordinated Debt evidenced thereby is
subject to the provisions hereof.
9. TERMINATION OF MANAGEMENT. The parties agree that if (x) Management
breaks the Management Agreement or is grossly negligent with respect to its
obligations under the Management Agreement and (y) an Event of Default is
continuing and as a result thereof the Notes are and remain accelerated, the
Agent may, subject to the terms of the Subordination and Intercreditor
Agreement, terminate the Management Agreement.
10. MISCELLANEOUS. This Agreement may not be amended or terminated
orally, but may be amended or terminated only in writing, signed by the parties
hereto and the Purchasers. No waiver of any term or provision of this Agreement
shall be effective unless it is in writing, signed by the party against whom
such waiver is sought to be enforced, and making specific reference to this
Agreement. This Agreement shall inure to the benefit of the
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<PAGE> 6
Purchasers and their successors and assigns and shall be binding upon the
Company and Management and their respective successors and assigns. This
Agreement may be executed in one or more counterparts which, when taken
together, shall constitute one and the same document. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA WITHOUT REGARD TO ITS RULES PERTAINING TO CONFLICTS OF LAWS.
Very truly yours,
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<PAGE> 7
CPT HOLDINGS, INC.
BY___________________________________
TITLE
AGREED TO AND ACCEPTED:
J&L STRUCTURAL, INC.
BY__________________________________
TITLE
J&L HOLDINGS CORP.
BY__________________________________
TITLE
THE PAUL REVERE INVESTMENT MANAGEMENT
CORPORATION
BY___________________________________
TITLE
THE PAUL REVERE INVESTMENT MANAGEMENT
CORPORATION, AS AGENT FOR
THE PAUL REVERE LIFE INSURANCE COMPANY
BY___________________________________
TITLE
<PAGE> 8
THE PAUL REVERE INVESTMENT MANAGEMENT
CORPORATION, AS AGENT FOR
THE PAUL REVERE PROTECTIVE LIFE
INSURANCE COMPANY
BY___________________________________
TITLE
THE PAUL REVERE INVESTMENT MANAGEMENT
CORPORATION, AS AGENT FOR
THE PAUL REVERE VARIABLE
ANNUITY INSURANCE COMPANY
BY___________________________________
TITLE
RHODE ISLAND HOSPITAL TRUST NATIONAL
BANK, AS TRUSTEE FOR
THE TEXTRON COLLECTIVE
INVESTMENT TRUST
BY___________________________________
TITLE
<PAGE> 1
PLEDGE AGREEMENT
AGREEMENT, made this ____ day of April, 1995, by and between:
J&L HOLDINGS CORP., a Delaware corporation, having an office at c/o CPT
Holdings, Inc., 1430 Broadway, 13th Floor, New York, NY 10018-3308 (hereinafter
referred to as the "PLEDGOR"); and
THE PAUL REVERE INVESTMENT MANAGEMENT CORPORATION, a _______
corporation, as Agent under the Agreement referenced below (the "AGENT"),
PRELIMINARY STATEMENTS:
A. J&L STRUCTURAL, INC., a Delaware corporation (the "COMPANY") has
entered into a certain Note and Warrant Purchase Agreement of even date herewith
(hereinafter, together with all exhibits and schedules thereto, as it may from
time to time be amended, modified and/or supplemented, referred to as the
"AGREEMENT") with the Purchasers named therein and the Agent pursuant to which
the Purchasers have agreed to purchase the Notes and Warrants from the Company
for the aggregate principal sum set forth therein and to make certain other
financial accommodations available to the Company, upon and subject to the terms
and conditions of the Agreement;
B. The Pledgor is the sole shareholder of the Company and by virtue
thereof, and otherwise, will derive benefits as a result of the purchases to be
made by the Purchasers from the Company pursuant to the Agreement;
C. In order to induce the Purchasers to execute and deliver the
Agreement, the Pledgor has agreed to pledge all of the issued and outstanding
shares of capital stock of the Company owned by it as collateral security for
the performance of all of the Company's Indebtedness, liabilities and
obligations to the Purchasers, including, without limitation, those arising
under the Agreement and any and all promissory notes from time to time issued
pursuant to the Agreement (collectively, the "NOTES");
D. It is a condition precedent to the obligations of the Purchasers
under the Agreement that the Pledgor shall execute and deliver this Pledge
Agreement; and
E. The Company and the Purchasers have entered into a certain
Subordination and Intercreditor Agreement of even date herewith with Finova
Capital Corporation, a Delaware corporation, (the "SENIOR LENDER") (the
"SUBORDINATION AGREEMENT"), which subordinates the Agent's security interest in
the Pledged Stock created under this Agreement to a security interest created in
favor of the Senior Lender pursuant to the Pledge Agreement of even date
herewith between the Pledgor and the Senior Lender (the "SENIOR PLEDGE
AGREEMENT"); and
<PAGE> 2
F. All capitalized terms that are used herein that are defined in the
Agreement shall have the respective meanings provided therefor in the Agreement,
unless otherwise defined herein or unless the context otherwise requires;
ACCORDINGLY, in consideration of the foregoing, the Pledgor hereby
agrees with the Agent as follows:
1. The term "PLEDGED STOCK" as used herein shall mean and include all
of the issued and outstanding shares, whether now owned or hereafter acquired by
the Pledgor, of the capital stock of the Company, including, without limitation,
all of the issued and outstanding stock of the Company listed on Schedule A
hereto, and, also, any shares, stock certificates, options or rights issued by
the Company as an addition to, in substitution of, or in exchange for any such
shares, and any and all proceeds thereof, now or hereafter owned or acquired by
the Pledgor.
2. (a) As collateral security for the due payment and performance of
all Indebtedness and other liabilities and obligations of the Company and the
Pledgor to the Purchasers, whether now existing or hereafter arising, and
whether or not currently contemplated, including, without limitation, all
Indebtedness, liabilities and obligations under, arising out of, or in any way
connected with the Agreement and the Notes and all agreements, instruments and
documents executed, issued and delivered pursuant thereto, including, without
limitation, this Pledge Agreement, and to secure any other obligations of the
Company and the Pledgor to the Purchasers (all of the foregoing Indebtedness,
liabilities and obligations are hereinafter referred to collectively as the
"OBLIGATIONS"), the Pledgor hereby pledges, assigns, hypothecates, delivers and
sets over to the Agent, all the Pledged Stock, and hereby grants to the Agent a
second security interest in all the Pledged Stock and in any and all proceeds
thereof and substitutions therefor.
(b) If the Pledgor shall become entitled to receive or shall receive
any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital), option or rights, whether
as an addition to, in substitution of, or in exchange for any shares of the
Pledged Stock, or otherwise, the Pledgor shall accept any such instruments as
the Agent's agent, shall hold them in trust for the Agent, and shall deliver
them forthwith to the Senior Lender (and when the Senior Pledge Agreement is
discharged to the Agent) in the exact form received, with the Pledgor's
endorsement when necessary and/or appropriate stock powers duly executed in
blank, to be held by the Senior Lender (and when the Senior Pledge Agreement is
discharged to the Agent), subject to the terms hereof, as further collateral
security for the Obligations.
(c) Any or all shares of the Pledged Stock held by the Agent
hereunder may, at the option of the Agent or its nominee, be registered in the
name of the Agent or its nominee. The Agent or its nominee may thereafter,
without notice, and after the occurrence
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<PAGE> 3
of any Event of Default, exercise all voting and corporate rights at any meeting
of any corporation issuing any of the shares included in the Pledged Stock and
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any shares of the Pledged Stock as
if it were the absolute owner thereof, including, without limitation, the right
to receive dividends payable thereon, and the right to exchange, at its
discretion, any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other readjustment of any corporation
issuing any of such shares or upon the exercise by any such issuer of any right,
privilege or option pertaining to any shares of the Pledged Stock, and in
connection therewith, to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine, all without liability
except to account for property actually received by it, but the Agent shall have
no duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
(d) In the event of the occurrence of any Event of Default, the
Agent shall have the right to require that all cash dividends payable with
respect to any part of the Pledged Stock be paid to the Agent to be held by the
Agent as additional security hereunder until applied to the Obligations.
(e) In the event of the occurrence of any Event of Default, the
Agent, without demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of public or
private sale) to or upon the Pledgor or any other Person (all and each of which
demands, advertisements and/or notices are, to the extent permitted by law,
hereby expressly waived), may forthwith collect, receive, appropriate and
realize upon the Pledged Stock, or any part thereof, and/or may forthwith sell,
assign, give an option or options to purchase, contract to sell or otherwise
dispose of and deliver the Pledged Stock, or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange, broker's board or
at any of the Agent's offices or elsewhere at such prices and on such terms
(including, without limitation, a requirement that any purchaser of all or any
part of the Pledged Stock shall be required to purchase the shares constituting
the Pledged Stock for investment and without any intention to make a
distribution thereof) as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Purchasers
or any purchaser upon any such sale or sales, whether public or private, to
purchase the whole or any part of the Pledged Stock so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby
expressly waived and released.
(f) The proceeds of any collection, recovery, receipt,
appropriation, realization or sale as aforesaid, shall be applied as follows:
(i) First, to the costs and expenses of every
kind incurred in connection therewith or incidental to the care, safekeeping
or otherwise of any and all of the
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<PAGE> 4
Pledged Stock or in any way relating to the rights of the Agent hereunder,
including reasonable attorneys' fees and legal expenses;
(ii) Second, to the satisfaction of the Obligations;
(iii) Third, to the payment of any other amounts
required by applicable law (including, without limitation, Section 9-504(l)(c)
of the Uniform Commercial Code); and
(iv) Fourth, to the Pledgor, or as required by law, to
the extent of the surplus proceeds, if any.
(g) The Agent need not give more than ten (10) days' notice of
the time and place of any public sale or of the time after which a private sale
may take place and such notice shall be deemed to be reasonable notification of
such matters.
(h) In the event that the proceeds of any collection, recovery,
receipt, appropriation, realization, or sale as aforesaid are insufficient to
pay all amounts to which the Agent is legally entitled, the Pledgor will be
liable for the deficiency, together with interest thereon, at the Default Rate,
and the reasonable fees of any attorneys employed by the Lender to collect such
deficiency, pursuant to the Agreement.
3. The Pledgor represents and warrants that:
(a) The Pledged Stock is owned directly and beneficially
and of record by the Pledgor in the amount set forth on Schedule A hereto;
(b) The shares of the Pledged Stock constitute 100% of
all of the issued and outstanding shares of capital stock of the Company;
(c) All of the shares of the Pledged Stock have been duly
and validly issued, are fully paid and non-assessable and are owned by the
Pledgor free and clear of any pledge, mortgage, hypothecation, Lien, charge,
encumbrance or any security interest in such shares or the proceeds thereof
except for the security interest granted to the Agent hereunder and, subject to
the terms of the Subordination and Intercreditor Agreement, to the Senior
Lender pursuant to the Senior Pledge Agreement; and
(d) Upon delivery of the Pledged Stock to the Agent or an
agent for the Agent, this Pledge Agreement creates and grants a valid second
Lien on and perfected security interest in the shares of the Pledged Stock and
the proceeds thereof, subject to no prior security interest, Lien, charge or
encumbrance or to any agreement purporting to grant to any third party a
security interest in the property or assets of the Pledgor that would include
the Pledged Stock, other than the Senior Pledge Agreement.
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<PAGE> 5
4. (a) The Pledgor hereby covenants that so long as the
Obligations shall be outstanding and unpaid, in whole or in part, the Pledgor
will not:
(i) sell, convey or otherwise dispose of any
shares of the Pledged Stock or any interest therein, nor will the Pledgor
create, incur or permit to exist any pledge, mortgage, Lien, charge, encumbrance
or any security interest whatsoever with respect to any of the Pledged Stock or
the proceeds thereof other than that created hereby and, subject to the terms of
the Subordination and Intercreditor Agreement, in favor of the Senior Lender
pursuant to the Senior Pledge Agreement; or
(ii) consent to or approve the issuance of any
additional shares of any class of the issuer of the Pledged Stock except,
subject to the terms of the Subordination and Intercreditor Agreement, in
connection with the exercise of the Warrants.
(b) The Pledgor warrants and will defend the Agent's right,
title, special property and security interest in and to the Pledged Stock
against the claims of any Person, firm, corporation or other entity.
5. (a) If the Agent shall determine to exercise its right to sell all
or any part of the Pledged Stock, and if in the opinion of counsel for the Agent
it is necessary to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of l933, as amended (the
"SECURITIES ACT"), the Pledgor will use its best efforts to cause each issuer of
shares included in the Pledged Stock contemplated to be sold to execute and
deliver, and cause the directors and officers of each such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments and documents, and
to do or cause to be done all such other acts and things as may be necessary to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act and to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof so to be sold, and to make all amendments thereto and/or to the
related prospectus that, in the opinion of the Agent or its counsel, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto; to cause each such issuer to comply with the
provisions of the "Blue Sky" law of any jurisdiction that the Agent shall
designate; and to cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement (that need not be
audited) covering a period of twelve months, but not more than eighteen months,
beginning with the first month after the effective date of any such registration
statement, which earnings statement will satisfy the provisions of Section 11(a)
of the Securities Act.
(b) The Pledgor acknowledges that a breach of any of the
covenants contained in subparagraph 5(a) above will cause irreparable injury to
the Agent, that the Agent shall have no adequate remedy at law in respect of
such breach and, as a consequence, the
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<PAGE> 6
covenants of the Pledgor contained in subparagraph 5(a) above shall be
specifically enforceable against the Pledgor, and the Pledgor hereby waives, and
shall not assert, any defenses against an action for specific performance of
such covenants, except for a defense that no Event of Default has occurred.
(c) Notwithstanding the foregoing, the Pledgor recognizes that
the Agent may be unable to effect a public sale of all or a part of the Pledged
Stock, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sales may be at places and on terms less favorable to the
seller than if sold at public sales and agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner, and that the Agent
has no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act.
6. The Pledgor shall at any time and from time to time upon the written
request of the Agent, execute and deliver such further documents and do such
further acts and things as the Agent may reasonably request in order to effect
the purposes of this Pledge Agreement, including, without limitation, delivering
to the Agent on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit A hereto.
7. (a) Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Stock while held hereunder, the Agent shall have no duty
or liability to preserve rights pertaining thereto, and shall be relieved of all
responsibility for the Pledged Stock upon surrendering it to the Pledgor or in
accordance with the Pledgor's instructions.
(b) No course of dealing between the Pledgor and the Agent , nor any
failure to exercise, nor any delay in exercising, on the part of the Agent, any
right, power or privilege hereunder or under the Agreement or the Notes shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
(c) The rights and remedies herein provided, and provided in the
Agreement and the Notes and in all other agreements, instruments and documents
delivered pursuant to the Agreement, are cumulative and are in addition to, and
not exclusive of, any rights or remedies provided by law including, without
limitation, the rights and remedies of a secured party under the Uniform
Commercial Code.
(d) The provisions of this Pledge Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof,
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<PAGE> 7
in such jurisdiction and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision in this Pledge
Agreement in any jurisdiction.
8. The parties hereto acknowledge and agree that the execution and
delivery of this Pledge Agreement shall not constitute a transfer of control of
the Pledgor or the Company.
9. All notices and other communications pursuant to this Pledge
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by registered or certified mail, return receipt
requested) or telegram or telecopy, addressed as follows:
(a) If to the Pledgor:
J&L Holdings Corp.
c/o CPT Holdings, Inc.
1430 Broadway, 13th Floor
New York, NY 10018-3308
Attention: William L. Remley
Telecopier No.: (212) 391-1393
with a copy to:
Kelley, McCann & Livingstone
BP America Building, 35th Floor
200 Public Square
Cleveland, Ohio 44114-2302
Attention: Michael D. Schenker, Esq.
Telecopier No.: (216) 241-3707
(b) If to the Agent:
Pursuant to the instructions provided in Section 22 of
the Agreement.
Any notice, request, demand or other communication hereunder shall be deemed to
have been given: (x) on the day on which it is telecopied to such party at its
telecopier number specified above (provided such notice shall be effective only
if followed by one of the other methods of delivery set forth herein) or
delivered by receipted hand or such commercial messenger service to such party
at its address specified above, or (y) on the third Business Day after the day
deposited in the mail, postage prepaid, if sent by mail, or (z) on the day it is
delivered to the telegraph company, addressed as aforesaid, if sent by
telegraph. Any party hereto may change the Person, address or telecopier number
to whom or which notices are to be given hereunder,
-7-
<PAGE> 8
by notice duly given hereunder; provided, however, that any such notice shall be
deemed to have been given hereunder only when actually received by the party to
which it is addressed.
10. This Pledge Agreement shall be binding upon the Pledgor and its
successors and assigns and shall inure to the benefit of the Agent and its
successors and assigns.
11. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF PENNSYLVANIA WITHOUT
REGARD TO ITS RULES PERTAINING TO CONFLICTS OF LAWS.
12. This Pledge Agreement is subject and subordinate to the Senior
Pledge Agreement pursuant to the terms of the Subordination Agreement.
-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered the day and year first above written.
J&L HOLDINGS CORP.
BY___________________________________
TITLE
THE PAUL REVERE INVESTMENT
MANAGEMENT CORPORATION,
AS AGENT
BY___________________________________
TITLE
<PAGE> 10
J&L HOLDINGS CORP. ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY that ___________________, personally
known to me to be ______________________ of J&L Holdings Corp., and personally
known to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that (s)he
signed and delivered said instrument as ________________ of said corporation, as
his(her) free and voluntary act, and as the free and voluntary act and deed of
said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this __ day of April, 1995.
___________________________________
NOTARY PUBLIC
My Commission Expires:_____________
-10-
<PAGE> 11
EXHIBIT A
TO
PLEDGE AGREEMENT
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS THAT, the undersigned does hereby make,
constitute and appoint THE PAUL REVERE INVESTMENT MANAGEMENT CORPORATION, as
Agent (the "AGENT") and each of the Agent's officers and employees, its true and
lawful attorneys, for it and in its name, place and stead, to act as its proxy
in respect of all of the shares of capital stock of J&L STRUCTURAL, INC., a
Delaware corporation (hereinafter referred to as the "COMPANY"), that it now or
hereafter may own or hold, including, without limitation, the right, on its
behalf, to demand the call by any proper officer of the Company pursuant to the
provisions of its Certificate of Incorporation or By-Laws and as permitted by
law of a meeting of its shareholders and at any such meeting of shareholders,
annual, general or special, to vote for the transaction of any and all business
that may come before such meeting, or at any adjournment thereof, including,
without limitation, the right to vote for the sale of all or any part of the
assets of the Company and/or the liquidation and dissolution of the Company;
giving and granting to its said attorneys full power and authority to do and
perform each and every act and thing whether necessary or desirable to be done
in and about the premises, as fully as it might or could do if personally
present with full power of substitution, appointment and revocation, hereby
ratifying and confirming all that its said attorneys shall do or cause to be
done by virtue hereof.
This Proxy is given to the Agent and to its officers and employees in
consideration of the loans to be made by the Purchasers to the Company and in
order to carry out the covenant of the undersigned contained in a certain Pledge
Agreement of even date herewith between J&L Holdings Corp., a Delaware
corporation ("PLEDGOR") and the Agent, and this Proxy shall not be revocable or
revoked by the undersigned, shall be binding upon the undersigned and its
successors and assigns until the payment in full of all of the Obligations (as
defined in the aforesaid Pledge Agreement) and may be exercised only after an
Event of Default under the Agreement (as such terms are defined in the aforesaid
Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this ___ day of April, 1995.
J&L HOLDINGS CORP.
BY___________________________________
TITLE
<PAGE> 12
SCHEDULE A
TO PLEDGE AGREEMENT
PLEDGED STOCK OF
J&L STRUCTURAL, INC.
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES CERTIFICATE
AUTHORIZED ISSUED AND OUTSTANDING OWNED BY PLEDGOR NUMBER
1500 847 847 2
<PAGE> 1
COLLATERAL ASSIGNMENT OF
TRADEMARKS AND SECURITY AGREEMENT
COLLATERAL ASSIGNMENT OF TRADEMARKS AND SECURITY AGREEMENT, made this
____ day of April 1995, by and between:
J&L STRUCTURAL, INC., a Delaware corporation (the "COMPANY"), having an
office at 1430 Broadway, 13th Floor, New York, NY 10018-3308; and
THE PAUL REVERE INVESTMENT MANAGEMENT COMPANY, as agent (the "AGENT"),
under the Agreement referenced below (the "SECURED PARTY");
W I T N E S S E T H:
WHEREAS:
(A) The Company and the Secured Party and certain Purchasers have
entered into a certain Note and Warrant Purchase Agreement of even date herewith
(hereinafter, as it may from time to time be amended, modified and/or
supplemented, referred to as the "AGREEMENT") pursuant to which such Purchasers
have agreed to purchase the Notes and Warrants for an amount set forth therein,
upon and subject to the terms and conditions of the Agreement;
(B) All of the indebtedness, liabilities and obligations of the Company
to such Purchasers, whether now existing or hereafter arising, including,
without limitation, the indebtedness, liabilities and obligations of the Company
to such Purchasers under the Agreement and all other instruments and documents
executed and delivered in connection with any of the foregoing are hereinafter
referred to collectively as the "DEBT";
(C) The Company has adopted, has used and is using the trademarks and
service marks described on Schedule A hereto, and is the owner of, the U.S.
Patent and Trademark Office Service Mark Certificates listed on Schedule A
attached hereto (the "TRADEMARKS") along with the goodwill of the business
associated therewith;
(D) All of the Debt is secured by the grant by the Company to the
Secured Party of liens on and security interests in certain of the properties
and assets of the Company, including, without limitation, the Trademarks
pursuant to the Agreement;
(E) The Agreement requires that the Company shall execute and deliver
this Collateral Assignment of Trademarks and Security Agreement;
<PAGE> 2
(F) The Company and such Purchasers have entered into a certain
Subordination and Intercreditor Agreement of even date herewith with FINOVA
CAPITAL CORPORATION, a Delaware corporation, (the "SENIOR LENDER") (the
"SUBORDINATION AGREEMENT"), which subordinates the Secured Party's lien created
under this Agreement to a first lien in favor of the Senior Lender; and
(G) All capitalized terms used herein without definition shall have the
respective meanings ascribed thereto in the Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and subject to the terms and conditions set forth in the Agreement
and the Subordination Agreement, the parties hereto hereby agree as follows:
1. The Company hereby assigns, conveys and transfers unto the Secured
Party on the terms and conditions contained in the Agreement, which are
incorporated herein and made a part hereof, and as additional security for the
Debt, a second Lien upon all of the Company's right, title and interest in, to
and under (i) the Trademarks and under the goodwill of the business symbolized
by the Trademarks, and (ii) in, to, and under all assets deriving from and
relating to the Trademarks, including, without limitation, license fees and
other payments due thereon or in connection therewith.
2. The Company shall take all action, under both statutory and common
law, which in its reasonable business judgment, may be necessary or useful to
perfect title to the Trademarks and to maintain and/or defend the Trademarks
including, without limitation, the defense of the Trademarks, surveillance of
marks owned and/or used by third parties which may be related to the Trademarks,
bringing institution of said actions against infringing marks and uses, and
bringing cancellation or opposition proceedings in order to enforce rights in
the Trademarks.
3. This Collateral Assignment of Trademarks and Security Agreement
shall terminate upon written notice from the Secured Party to the Company that
all of the obligations secured hereby have been fully paid and performed and,
upon such termination, the Secured Party shall promptly execute and deliver to
the Company such release documents or instruments as the Company may reasonably
request in furtherance and in evidence of such termination.
4. This Collateral Assignment of Trademarks and Security Agreement
shall be binding upon the Company, its successors and assigns and shall inure to
the benefit of the Secured Party and its successors and assigns.
5. This Collateral Assignment of Trademarks and Security Agreement may
not be amended or modified except with the written consent of the Secured Party.
-2-
<PAGE> 3
6. The Company will provide any additional documentation to support or
confirm the security interest created under this Collateral Assignment of
Trademarks and Security Agreement as the Secured Party may request.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the Company and the Secured Party have caused this
Collateral Assignment of Trademarks and Security Agreement to be executed by
their officers thereunto duly authorized on the day and year first above
written.
J&L STRUCTURAL, INC.
BY
-------------------------
TITLE
THE PAUL REVERE INVESTMENT
MANAGEMENT CORPORATION, AS
AGENT FOR EACH OF THE
PURCHASERS
BY
-------------------------
TITLE
<PAGE> 5
SCHEDULE A TO
COLLATERAL ASSIGNMENT OF TRADEMARKS
AND SECURITY AGREEMENT
BETWEEN
J&L STRUCTURAL, INC.
AND
THE PAUL REVERE INVESTMENT MANAGEMENT CORPORATION, AS AGENT
TRADEMARK REGISTRATION NO. REGISTRATION DATE
JUNIOR w/Design 510,211 May 31, 1949
<PAGE> 6
J&L STRUCTURAL, INC. ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY that ___________________, personally
known to me to be ______________________ of J&L Structural, Inc., and personally
known to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that (s)he
signed and delivered said instrument as ________________ of said corporation, as
his(her) free and voluntary act, and as the free and voluntary act and deed of
said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this __ day of April, 1995.
____________________________________
NOTARY PUBLIC
My Commission Expires:______________
<PAGE> 7
PAUL REVERE INVESTMENT MANAGEMENT CORPORATION ACKNOWLEDGEMENT
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
I, ___________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that ____________________, personally known
to me to be a ______________ of The Paul Revere Investment Management
Corporation and personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged that he signed and delivered said instrument as a
_________________ of said corporation, as his free and voluntary act, and as the
free and voluntary act and deed of said corporation, for the uses and purposes
therein set forth.
GIVEN under my hand and notarial seal this __ day of April, 1995.
___________________________________
NOTARY PUBLIC
My Commission Expires:_____________
